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DFARS Update-Proposed Rules On Past Performance Information Used For Construction and A&E Contract Awards and On Postaward Debriefing Rights and Final Rule On Expedited Contract Closeouts

DFARS Update-Proposed Rules On Past Performance Information Used For Construction and A&E Contract Awards and On Enhanced Postaward Debriefing Rights and Final Rule On Expedited Contract Closeouts
 

Last month, on May 20, 2021, the U.S. Department of Defense (DoD) published proposed and final rules under the Defense Federal Acquisition Regulation Supplement (DFARS) covering expedited contract closeouts, the use of subcontractor and joint venturer past performance information for construction and A&E contract awards, and enhanced postaward debriefing rights.  The proposed and final rules are discussed briefly below.

DOD ISSUES FINAL DFARS RULE TO EXPEDITE CONTRACT CLOSEOUTS

On May, 20, 2021, DoD issued a final rule that amends DFARS in order to permit DoD to expedite contract closeouts.  Specifically, the final rule adds a new regulation at DFARS 204.804-70 providing that a contracting officer may include in solicitations and contracts, including contracts valued at or below the simplified acquisition threshold and contracts for commercial items and commercially available off-the-shelf (COTS) items, a new DFARS clause 252.204-7022 whenever the contracting officer intends to expedite the contract closeout process.  Under that new DFAR clause, the contractor and the Government waive entitlement to a residual dollar amount up to $1,000 that either party may be entitled to receive at contract closeout.  The new DFARS rule became effective on May 20, 2021.  To read the final rule, go here.

PROPOSED DFARS RULE REQUIRES USE OF SUBCONTRACTOR AND JOINT VENTURER PAST PERFORMANCE INFORMATION FOR CONSTRUCTION AND A&E CONTRACT AWARDS

On May 20, 2021, DoD proposed to amend DFARS to require the use of past performance evaluations of subcontractors and joint venturers when awarding DoD contracts for construction and architect-engineer (A&E) services.  Specifically, the proposed DFARS rule requires past performance evaluations for first-tier subcontractors performing a portion of construction or A&E services contracts or orders that are valued at or above either the threshold in FAR 42.1502(e), currently $750,000, or 20 percent of the value of the prime contract, whichever is higher.  Past performance evaluations are also required for individual partners of a joint venture for construction or A&E services contract awards or orders valued at or above the threshold in FAR 42.1502(e).  An exception can be granted if the submission of annual past performance evaluations would not provide the best representation of the contractor's performance.  Comments to the proposed rule are due by July 19, 2021.  To read the proposed rule, go here.

DOD PROPOSES TO AMEND DFARS TO PROVIDE ENHANCED POSTAWARD DEBRIEFING RIGHTS

On May 20, 2021, DoD issued a proposed rule that amends DFARS in order to implement changes made by the National Defense Authorization Act for Fiscal Year 2018 (NDAA 2018).  As explained more fully below, the NDAA 2018 changes enhance postaward debriefing rights of defense contractors for competitive negotiated contracts, task orders, and delivery orders that exceed $10 million, provide offerors the opportunity to submit follow-up questions and receive agency responses after a debriefing, and extend the timeframes during which a protest filed with GAO will result in a termination of a contract award or a suspension of contract performance.

Before NDAA 2018, defense agencies and contractors were bound by rules that apply to all federal contractors under FAR 15.506 and FAR 33.104.  With the passage of NDAA 2018 and its expanded protest and debriefing rights, and in the absence of implementing regulations, DoD issued a class deviation implementing some, but not all, of the NDAA 2018 protest and debriefing changes.  As amended by the proposed rule, DFARS will now reflect the following NDAA 2018 requirements for defense agency debriefings.

Required Debriefings
Notwithstanding FAR's rules on required debriefings, a written or oral debriefing is required to be given by defense agencies upon request when a contract award is valued at $10 million or more.

Minimum Required Debriefing Information
In addition to the minimum debriefing information required to be provided to contractors under FAR 15.506(d), for contract awards over $10 million and up to $100 million that are made to small businesses or nontraditional defense contractors, the small business or nontraditional defense contractor has an option to request disclosure of the agency’s written source selection decision document, redacted to protect confidential and proprietary information of other offerors.  For any contract awards over $100 million, the minimum debriefing information required to be disclosed to all contractors shall include the agency’s written source selection document, redacted to protect confidential and proprietary information of other offerors.

Opportunity To Submit Questions After Debriefing
Contracting officers must provide successful and unsuccessful offerors an opportunity to submit additional questions related to a required debriefing within 2 business days after the debriefing, and agencies must respond in writing to timely submitted additional questions within 5 business days after receipt of the questions.

Conclusion of Postaward Debriefing
A postaward debriefing is not considered concluded until after the second business day after the debriefing is conducted if no additional questions are received, or until the agency delivers its written responses to timely submitted additional questions.

Time Periods For Receipt of Notice of GAO Protest Resulting in Contract Suspension or Termination
In lieu of the time periods set forth in FAR, contracting officers generally must immediately suspend performance or terminate an awarded contract, task order, or delivery order upon notice from the GAO of a protest filed within the later of the following time periods -

  • Within 10 days after the date a contract is awarded or a task order or delivery order is issued, where the value of the contract or order exceeds $25 million;
  • Within 5 days after the date that was offered to an unsuccessful offeror for a debriefing that is requested, and when requested is required, and the unsuccessful offeror submits no additional questions related to the debriefing;
  • Within 5 days after the date that was offered to an unsuccessful offeror for a debriefing that is requested, and when requested is required, if the debriefing date offered is not accepted; or
  • Within 5 days commencing on the day the Government delivers its written response to additional questions timely submitted by the unsuccessful offeror, when a requested and required debriefing is held on the date offered.

Comments to the proposed rule are due by July 19, 2021.  To read the proposed rule, go here.

FAR Update - Proposed HUBZone Small Business Rule and Final Rules On The Multiple-Award Fair Opportunity Threshold and Equipment Acquisitions

FAR Update-Proposed HUBZone Small Business Rule and Final Rules On The Multiple-Award Fair Opportunity Threshold and Equipment Acquisitions
 

Recently, on June 10 and June 14, the U.S. Department of Defense (DoD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) published proposed and final rules under the Federal Acquisition Regulation (FAR) covering HUBZone small businesses, the threshold for requiring fair opportunity on mutiple-award contract orders, and equipment acquisitions under FAR Subpart 7.4.  The proposed and final rules are discussed briefly below.

PROPOSED FAR RULE IMPLEMENTS THE SBA'S CHANGES TO THE HUBZONE PROGRAM

DoD, GSA, and NASA issued a proposed rule on June 14, 2021, that amends FAR in order to implement changes that the Small Business Administration (SBA) made to the SBA’s own regulations covering the Historically Underutilized Business Zone (HUBZone) Program.  Several of the proposed changes are to the definition of, and references to, “HUBZone small business concern” in FAR so that the definition and references direct readers to the Dynamic Small Business Search (DSBS). 

The proposed rule also eliminates requirements that a HUBZone small business notify a contracting officer of certain material changes.  Currently, under FAR, a HUBZone small business must be meet HUBZone eligibility requirements both at the time of its initial offer and at the time of contract award.  A small business, therefore, must notify a contracting officer of any changes that occur prior to contract award that might affect its HUBZone eligibility.  As amended, however, FAR only requires that a small business meet HUBZone eligibility requirements at the time of its initial offer.  Consequently, the requirement for notification to the contracting officer of material changes after an offer that could affect eligibility prior to contract award has been eliminated by the proposed rule. 

The proposed rule also made a number of changes to the procedures under FAR 19.306 for protesting a company’s status as a HUBZone small business, including by clarifying that HUBZone certification status for purposes of sole-source procurements can only be protested by the SBA and the contracting officer, while HUBZone status for purposes of all other procurements can be protested by the SBA, the contracting officer and other interested parties.  The proposed rule also specifies new requirements for protests filed against a HUBZone joint venture.  Specifically, the protests must state why the HUBZOne small business did not meet eligibility requirements at the time of certification and/or why the HUBZone joint venture did not meet HUBZone joint venture requirements under the SBA’s regulations at the time the HUBZone joint venture submitted its offer for a HUBZone contract.

Lastly, the proposed rule eliminates restrictions that prevent the application of HUBZone set-aside procedures to, and the award of HUBZone set-aside and sole-source contracts in, procurements at or below the simplified acquisition threshold and procurements for commercial items, including contracts for commercially available off-the-shelf (COTS) items.

Comments to the proposed rule are due by August 13, 2021.  To read the proposed rule, go here

FINAL FAR RULE INCREASES THRESHOLD FOR REQUIRING FAIR OPPORTUNITY ON MULTIPLE-AWARD CONTRACT ORDERS

On June 10, 2021, DoD, GSA, and NASA issued a final rule that increases the threshold under FAR Part 16 for requiring fair opportunity on orders under multiple-award contracts.  Currently, under FAR 16.505, contracting officers generally are required to give every awardee of a multiple-award contract a fair opportunity to be considered for an order under the contract if the order exceeds $3500.  As amended by the final rule, FAR 16.505 requires contracting officers to provide all awardees a fair opportunity to be considered for orders that exceed the micro-purchase threshold, which is currently $10,000.  DoD, GSA, and NASA expect that the rule change will streamline procurements for FAR part 16 orders that are below the micro-purchase threshold, since contracting officers will not be required to review multiple offers to make an award, resulting in time savings for each order awarded. 

The final rule becomes effective on July 12, 2021.  To read the final rule, go here.

FINAL FAR RULE IMPLEMENTS CHANGES MADE BY THE FAA REAUTHORIZATION ACT OF 2018 TO EQUIPMENT ACQUISITIONS

On June 10, 2021, DoD, GSA, and NASA issued a final rule under the Federal Acquisition Regulation (FAR) implementing provisions of the FAA Reauthorization Act of 2018 that require, when acquiring any equipment, a case-by-case comparative analysis of certain acquisition methods - namely, purchases, short-term rentals or leases, long-term rentals or leases, interagency acquisitions, and, if applicable, acquisition agreements with a State or local government.  The comparative analysis of the acquisition methods must consider cost and certain other factors.  The changes to equipment acquisitions made by the final rule are implemented in FAR Subpart 7.4 - Equipment Acquisition.

The final rule becomes effective on July 12, 2021.  To read the final rule, go here.

GovCon Legal Round Up™ - May 19, 2021

The GovCon Legal Round Up™                                                                                                                                                      May 19, 2021
 

U.S. COURT OF APPEALS FOR THE FEDERAL CIRCUIT DECISIONS

Pacific Coast Community Services, Inc. v. U.S. (April 30, 2021)
A government contractor (Pacific Coast Community Services) filed an appeal of a decision by the U.S. Court of Federal Claims dismissing its case.  Contractor alleged that the federal government agency (Federal Protective Service) breached its firm-fixed price contract by underpaying it.  Under the contract, the contractor was required to provide five full-time employees (FTE’s) to perform the contract work and submit invoices at the end of each month reflecting work actually performed.  The contracting officer made unilateral deductions for hours invoiced but not actually worked. Contractor did not allege that its invoices were accurate or that its employees worked the required monthly hours.  Rather, contractor essentially argued that because the contract was a firm fixed price contract, it was owed the monthly fixed price regardless of its performance.  The Court of Appeals disagreed, concluding that the contract as a whole was for a deliverable number of productive hours, and that a firm fixed-price contract does not require the government to pay when a contractor does not deliver services.  (Read decision here.)

GAO BID PROTEST DECISIONS

In re M R Pittman Group, LLC (Released May 6, 2021)
GAO dismissed a government contractor’s (M R Pittman Group, LLC) bid protest as untimely.  The agency (Army, Corp of Engineers) issued an invitation for bids (IFB) for repair and maintenance services.  Although the agency intended to set aside the requirement for small businesses, it did not identify in the IFB the NAICS code or the small business size standard.  The IFB did, however, incorporate several FAR clauses that are applicable to small business set aside contracts, including FAR 52.219-6, Notice of Total Small Business Set-Aside.  Although contractor’s bid was the lowest, the agency applied the NAICS code and size standard contained in its pre-solicitation notice and found contractor ineligible because it was other than a small business. Contractor challenged the agency’s denial of the award, arguing that by failing to include in the IFB a NAICS code and size standard, as FAR requires for small business set-asides, the agency should not have treated the IFB as a set-aside.  GAO, however, determined that the IFP was “patently ambiguous” and that the time for contractor to raise the solicitation’s ambiguity was before the closing time for receipt of bids.  (Read decision here.)

In re AECOM Management Services, Inc. (Released April 30, 2021)
GAO sustained the protest of a government contractor (AECOM Management Services, Inc.) that alleged an agency (Navy) conducted unfair exchanges with a winning bidder awarded a task order under a fair opportunity submission request (FOSR).  Although the procurement was conducted under FAR 16.505, which applies to indefinite delivery contracts, and, thus, oral and written discussions under FAR Subpart 15.3 were not required, the FOSR stated that all offerors would be treated fairly.  The agency gave the winning bidder an opportunity to make significant revisions to its proposal after the agency identified deficiencies in the agency's interchange notice.   In contrast, the agency failed to alert the protesting contractor of a confidence decreaser with regard to one of the evaluation factors and did not permit the contractor to submit proposal changes or to revise its proposal.  Instead, the agency merely permitted the contractor to submit evidence that clarified an unclear element of one of its evaluation factors.  GAO concluded, therefore, that the interchanges were not fair because the winning bidder was provided with a significantly greater opportunity to enhance its proposal. (Read decision here.)

In re Deloitte Consulting, LLP (Released April 27, 2021)
GAO also ruled in favor of a government contractor (Deloitte Consulting, LLP) that protested the award of a task order issued by the General Services Administration (GSA) under a federal supply schedule (“GSA schedule”).  The GSA’s request for proposal (RFP) sought quotations to provide cybersecurity support services for the Department of Housing and Urban Development (HUD).  Contractor argued that the winning bidder had submitted quotations for labor categories specified by the RFP that went beyond the labor categories that were actually set forth in the bidder’s GSA contract. GAO agreed, finding that the labor categories in the bidder’s GSA contract that formed the basis for award could not be reasonably interpreted to include the services that the bidder proposed and that were required by the solicitation.  (Read decision here.)

In re US21 (Released April 27, 2021)
GAO ruled that a government contractor’s (US21, Inc.) bid protest was untimely.  The agency (Defense Logistics Agency) issued a request for information (RFI) seeking potential sources of supply for its fuel requirements.  The agency later issued a solicitation for its fuel requirements but mistakenly posted the requirement as a “sources sought” rather than as a “solicitation.”  After the solicitation was closed, contractor telephoned the agency to inquire about the procurement and was informed of the mistaken posting and that the solicitation requirement was closed.  For several weeks after that telephone call, contractor made repeated requests to the agency to re-open the solicitation, but the agency declined and subsequently made an award to another bidder.  Contractor then filed its bid protest arguing that the agency’s mischaracterization of the solicitation as a sources sought notice unreasonably limited competition and prevented it from submitting a response.  Although contractor insisted that its protest was of the agency’s award, GAO agreed with the agency that the basis for the protest solely concerned the manner of solicitation and not the purported award. Consequently, since contractor failed to submit a protest within ten (10) days after its telephone call with the agency during which it was informed of the agency’s mistaken solicitation, GAO dismissed the protest as untimely.  (Read decision here.)

In re Innovate Now, LLC (Released April 26, 2021)
GAO sustained the protest of a government contractor (Innovate Now, LLC) that challenged the terms of a request for proposal (RFP) issued by an agency (Air Force) seeking engineering, professional and administrative support services.  The contractor argued that the RFP violated SBA regulations applicable to mentor-protégé relationships by requiring each member of a joint venture offeror to satisfy the same work experience requirements applicable to all offerors.  GAO agreed that the requirement violated the prohibition against requiring a protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.  GAO also sustained contractor’s arguments that other aspects of the RFP were ambiguous and not likely to provide insight to the agency.  (Read decision here.)

SBA OFFICE OF HEARING AND APPEALS DECISIONS

In re Joint Information Network (April 7, 2021)
In this decision, the SBA’s Office of Hearing and Appeals (OHA) ruled that a contractor (Joint Information Network) was not a women-owned small business (WOSB).  The agency (U.S. Navy Naval Information Warfare Center) had awarded a WOSB sole-source contract to the contractor, which had self-certified as a WOSB.  However, when the contract period expired three years later, a final voucher was left unpaid.  Indeed, six months after the contract closing date, rather than paying the voucher the agency’s contracting officer filed a protest challenging the contractor’s WOSB status and concluded that the contractor improperly misrepresented its WOSB status at the time of its offer and throughout contract performance.  The contracting officer based the claims on a report by the agency’s office of inspector general (OIG) detailing the origins of the contractor business, which was purportedly owned by a father-daughter partnership.  OIG found that the contractor's partnership agreement was inconsistent with the company’s actual business practices and that, contrary to the terms of the partnership agreement, the daughter-owner had not actually made capital contributions to the partnership.  OIG ultimately recommended that the agency contracting officer file a status protest with the SBA, which the contracting officer did.  After reviewing the contractor’s submissions, the SBA concluded that the contractor did not meet the WOSB eligibility requirements and could no longer represent itself as a WOSB.  The contractor then appealed the decision to OHA, which affirmed the SBA’s determination.  However, in affirming that the contractor was not an eligible WOSB, OHA pointed out that its determination might have no impact on the procurement.  Under the SBA’s regulations, upon a finding that a contractor is ineligible, a contracting officer is directed to terminate a contract or contract award or to suspend contract performance, but these remedies seemingly are ineffective when the contractor has already completed contract performance.  (Read decision here.) 

Executive Order Raises Minimum Wage For Government Contractor Employees

April 30, 2021
EXECUTIVE ORDER RAISES MINIMUM WAGE FOR GOVERNMENT CONTRACTOR EMPLOYEES

On April 27, 2021, President Biden announced an executive order that raises the minimum wage for non-tipped employees of federal government contractors and subcontractors to $15 per hour beginning on January 30, 2022.  Significantly, the executive order requires the minimum wage to be increased annually by an amount determined by the U.S. Department of Labor (DOL) and based on the Bureau of Labor Statistic’s Consumer Price Index.

Under the executive order, the minimum wage for tipped employees of federal government contractors and subcontractors increases to $10.50 per hour on January 30, 2022, and increases, on January 30, 2023, to 85% of the minimum wage for non-tipped employees.  Beginning on January 30, 2024, the minimum wage for tipped employees of contractors and subcontractors will be the same as the minimum wage for non-tipped employees.

The executive order requires DOL to issue regulations by November 24, 2021, in order to implement the executive order’s requirements. The executive order also requires the Federal Acquisition Council to amend the Federal Acquisition Regulation (FAR) within 60 days of the issuance of the DOL regulation in order to ensure that government contracts entered into after January 30, 2022 comply with the minimum wage requirements.

The executive order does not apply to federal government grants, but will apply to new solicitations on or after January 30, 2022, and to new government contracts, government contract extensions and government contract renewals entered into on or after January 30, 2022.  It will also apply to the exercise of options on or after January 30, 2022, on contracts for services or construction, on contracts for services covered by the Services Contract Acts, on contracts for concessions, and on certain contracts with the Federal government in connection with Federal lands or property, if the workers are covered by the Fair Labor Standards Act, the Services Contract Act, or the Davis-Bacon Act. 

As for employees under existing federal government contracts, the executive order strongly encourages agencies to ensure that wages paid to employees of contractors and subcontractors are consistent with the executive order.

To read the executive order, go here.

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