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Welcome to Jenner & Block’s Government Contracts Legal
Round-Up, a biweekly update on important government contracts
developments. This update offers brief summaries of key
developments for government contracts legal, compliance,
contracting, and business executives. Please contact any of the
professionals at the bottom of the update for further information
on any of these topics.
Protest Cases
1. VERSA Integrated Solutions, Inc.,
B-420530 (April 13, 2022)
- GAO denied a protest challenging the Food and Drug
Administration’s (FDA) decision not to consider a proposal that
was not timely received by the agency in a manner consistent with
the solicitation. - While the proposal was received in the government’s
electronic server before the submission deadline, the proposal
submission email was quarantined by the server and did not reach
the contracting officials before the deadline. - In presenting its case, VERSA emphasized that it submitted its
proposal prior to the deadline and maintained that the government
was in control of its proposal following that submission. The
protester relied on standard FAR provisions that allow the
government to consider a late proposal where there is no risk of
delay to the procurement and the proposal is under government
control before the proposal submission deadline. - But GAO strictly interprets the FAR’s “government
control” exception, routinely holding that it does not apply
to proposal submitted electronically. VERSA specifically asked GAO
to reconsider this line of decisions—i.e., declining
to apply the exception in circumstances similar to those here. - GAO declined the invitation to revisit is interpretation of the
government control exception and denied the protest.
As always, offerors should leave plenty of time to submit
proposals well in advance of the deadline and anticipate that
electronic submissions may encounter challenges that delay
submission. In the event an agency does reject an electronic
proposal submission as late, recognize that GAO and the Court of
Federal Claims (COFC) analyze these issues differently, and COFC
may provide the more favorable forum for protest. Specifically,
several COFC judges have found that an electronic proposal
submission that reaches a government server before the proposal
submission deadline does qualify for the “government
control” exceptions stated in FAR 52.212-1 and 52.215-1.
2. Rice Solutions, LLC, B-420475 (April
25, 2022)
- GAO sustained a protest because the agency unfairly engaged in
discussions with only the awardee. - The Department of Health and Human Services, Indian Health
Service (IHS), received three proposals in response to IHS’s
solicitation for certified registered nurse anesthetist (CRNA)
services in South Dakota. Protester Rice’s proposal was rated
as unacceptable. - Despite not establishing any competitive range, IHS thereafter
engaged in discussions with the awardee—the only offeror
initially rated as acceptable. - GAO faulted the agency for not conducting discussions with
Rice. In doing so, GAO rejected the agency’s position that an
initial rating of technically unacceptable automatically excluded
Rice from the competitive range, had one been established by the
agency. - GAO also rejected the agency’s contention that it
established “a de facto competitive range of
one” because nothing in the record supported this
contention. - Thus, GAO ruled that because no competitive range had been
established, the agency was required to conduct discussions with
all offerors. Indeed, GAO emphasized that such discussions could
have resulted in Rice submitting a revised final proposal that was
found to be technically acceptable.
Although an agency has broad discretion in establishing a
competitive range and is not required to memorialize its
competitive range determination expressly in a formal document, the
agency is required to provide sufficient information to adequately
support its rationale. GAO will sustain a protest where the record
is devoid of any documentation or support for the agency’s
contention that a competitive range had been established before
entering into discussions with only one offeror. Moreover, once an
agency chooses to conduct discussions, it must do so with all
offerors in the competitive range. FAR 15.306(d)(1).
3. NOVA Dine, LLC, B-420454, B-420454.2
(April 15, 2022)
- GAO rejected a protester’s contention that it was misled
during discussions to raise its proposed labor rates. - Over multiple rounds of discussions, the Defense Information
Systems Agency (DISA) advised NOVA that 73 proposed labor rates
appeared to be “unrealistically low,” and DISA asked NOVA
to “review and provide revised rates, or provide rationale for
the proposed rates.” - In the end, NOVA increased its rates, resulting in an increase
of nearly $50 million to the offeror’s total cost/price. - NOVA argued that it was misled during discussions because the
company’s total cost/price was higher than other offerors and
because DISA compared rates to salary data taken from a more
expensive geographic location (even though the contract would be
performed around the world). - GAO denied this ground of protest, finding that DISA did not
coerce NOVA into raising its direct labor rates; rather, NOVA made
an independent business judgment about how to respond to the
agency’s discussion concerns. - GAO also rejected the protester’s challenges to DISA’s
evaluation under the past performance and management approach
evaluation factors.
GAO generally will not find an agency’s discussions
objectionable when an agency advises an offeror that certain rates
appear low and provides the offeror the option of either raising
the rates or justifying the rates. An offeror’s decision to
raise rates—rather than justify—is typically viewed by
GAO as a business judgment of the offeror. As GAO concluded here,
“Ultimately, it was the offeror’s responsibility to
recognize where it disagreed with the agency’s cost realism
conclusions and explain why its own salary calculations were
correct.”
Claims Cases
1. GSC Construction, Inc. v. Secretary Of The
Army, Fed. Cir. 21-1803 (May 2, 2022)
- The United States Court of Appeals for the Federal Circuit
(CAFC) affirmed the Armed Services Board of Contract Appeals (ASBCA
or Board) decision holding that the United States Army Corps of
Engineers (the Army) properly had terminated the contractor’s
construction contract for default. - GSC Construction, Inc. (GSC) contracted with the Army to build
two warehouses, but then fell behind after disputing responsibility
to remove soil for foundation work and failing to meet design
requirements. Interestingly, the latter issue related to DOD’s
Unified Facilities Criteria (UFC) Minimum Antiterrorism Standards.
The contract required compliance only with an earlier, less
stringent version but GSC mistakenly submitted its design under the
more recent, more stringent version, with which it then failed to
comply. The Army itself didn’t identify the error and evaluated
the design under the wrong standard. - Ultimately the Army terminated for default, and GSC filed an
appeal with the ASBCA—arguing that the disputes concerning
the soil and the design standard provided ground for an excusable
delay, and seeking both damages and that the termination be
converted to one for convenience. - The Board denied the appeal and the Federal Circuit affirmed
the ASBCA’s decision, agreeing that the contract assigned site
preparation and design responsibility to GSC. The Army’s
failure to identify GSC’s design standard mistake did not shift
risk related to design to the government. - In addition, the Federal Circuit rejected the argument that the
Army had forfeited its right to enforce the contract by providing
GSC with an extensi
Publish on: “Given the Army’s repeated reservation of
its rights during construction, we fail to see how the Board erred
in holding that there was no forfeiture [and] GSC’s argument is
thus unpersuasive.”
Termination for default is a serious threat in government
contracting. Working with experienced counsel when encountering
project delays or design disapproval can help avoid more costly
litigation in the future, including by developing effective
recovery plans and fully protecting rights under the contract.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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