admin, Author at Nichols Law

Technical Direction Letters Can Constitute Protestable Out-of Scope Modifications

admin on September 11, 2018

Competition is a foundational pillar of the Federal government’s procurement system. Having contractors compete to fulfill the government’s requirements enables agencies — and by extension the taxpayer — to receive better prices for goods and services. Agencies, however, do not always adhere to the rules promoting competition. And given the complexity of federal procurement, agencies can adopt opaque practices that intentionally or inadvertently hinder effective competition. In this alert, we discuss one such practice: the issuance of out-of-scope Technical Direction Letters. The Technical Direction Letter (TDL) A TDL (also sometimes called “Technical Instructions”) provides agency guidance to a contractor after award about a task in a contract’s performance work statement. For example, a TDL can specify an exact time or place for the contractor to perform a task or identify the sequence of tasking. While a TDL provides further detail to the contractor for performing a task, it cannot conflict with the terms of the contract or task order under which it was issued. TDLs are generally considered to be a tool of contract administration. As such, TDLs are not posted publicly but are typically transmitted from the agency through the contracting officer to the contractor. Generally, only the contracting parties know of the TDL. Given the non-public nature of TDLs, third parties in most instances do not receive notice of agency direction to a contractor. The non-public aspect of TDLs may be why there are hardly any bid protest decisions discussing them from the U.S. Court of Federal Claims or the Government Accountability Office (GAO).

Co-Authors: Robert Nichols

Government’s Annual Suspensions & Debarment Report

admin on September 6, 2018

By law, the Interagency Suspension and Debarment Committee (ISDC) is required to report to Congress on government-wide progress toward improving suspension and debarment, and to summarize each constituent agency’s suspension and debarment activities. The ISDC’s report for FY2017 was issued July 31, 2018 (the “Report”). The Report also appends data about suspensions and debarments in FY2017. Overall, suspensions and debarments are down 14% from FY2016, though still nearly double the FY2009 numbers (when ISDC first started tracking these data). The report generally apprises Congress that traditional tools—proactive engagement, administrative agreements—continue to play valuable roles in avoiding or resolving potential suspensions or debarments. Increased use of “pre-notice” letters. Suspending and Debarring Officials (“SDOs”) are increasingly using nonexclusionary tools—such as show-cause letters or requests for information—to “better assess the risk to Government programs and determine what measures are necessary to protect the Government’s interest without immediately imposing an exclusion action.” These letters were sent 21% more frequently this year than last, and are up almost three-fold since FY2009. This suggests a more tempered approach and movement away from a ‘suspend first, ask questions later’ attitude.

Co-Authors: Steven Shaw, Jason C. Lynch.

Prepare to “Deliver Uncompromised”

admin on August 20, 2018

The next big thing in defense contracting may be procurement security. On June 21, the Principal Deputy Undersecretary of Defense for Intelligence, Kari Bingen, testified before the House Armed Services Committee (HASC) on “Military Technology Transfer: Threats, Impacts, and Solutions for the Department of Defense.” In Ms. Bingen’s prepared testimony, she informed HASC that the Department of Defense (DoD) had established a “deliver uncompromised” initiative “to elevate the private sector’s focus on security.” That initiative “aims to establish security as a fourth pillar in acquisition, on par with cost, schedule, and performance, and to create incentives for industry to embrace security, not as a ‘cost center,’ but as a key differentiator.” The DoD had asked the MITRE Corporation to study the issue further, and it recently published its 37-page report on the matter, “Deliver Uncompromised – A Strategy for Supply Chain Security and Resilience in Response to the Changing Character of War.” So, what do you need to know about “Deliver Uncompromised”? The proposal is principally one of acquisition reform. Of the 15 proposed courses of action, the very first is to “Elevate Security as a Primary Metric in DoD Acquisition and Sustainment.” The report recommends that DoD “define requirements to incorporate new security measures, reward superior security measures in the source selection process, include contract terms that impose security obligations, and use contractual oversight to monitor contractor accomplishments.” This would have obvious ramifications for defense contractors, from how they write proposals to how their performance is evaluated. Security as the “fourth pillar.” MITRE makes specific recommendations on how to “Elevate Security as a Primary Metric in DoD Acquisition and Sustainment.” The first of these is to revise DoD Instruction 5000.02 to make security the fourth “pillar” of acquisition management, along with cost, schedule, and performance.

So, what do you need to know about “Deliver Uncompromised”?

Co-Authors: Robert Nichols

West Year In Review – Fraud Debarment and Suspension,” Thomson-Reuters West Year-In-Review Conference Briefs

admin on January 5, 2017

FEDERAL FALSE CLAIMS ACT

Co-Authors: Robert Rhoad, W. Stanfield Johnson.

West Year In Review – Fraud Debarment and Suspension,” Thomson-Reuters West Year-In-Review Conference Briefs

admin on December 21, 2015

FEDERAL FALSE CLAIMS ACT

1. Statistics – Fiscal Year 2014
FY 2015 FY 2014
Total Settlements & Judgments $3.58 Billion $5.69 Billion
Qui Tam Settlements & Judgments $2.8 Billion $2.99 Billion
New Qui Tam Matters 632 713
All New Matters 737 804
Recovery in Procurement Fraud $1.1 Billion $65 Million
Recovery in Nonintervened Cases $1.1 Billion $80 Million

The Justice Department reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices that were implanted in Medicare patients in violation of Medicare coverage requirements. The settlement stemmed from a qui tam suit brought by a cardiac nurse and a health care reimbursement consultant. DaVita Healthcare Partners, Inc. The country’s largest provider of dialysis services agreed to pay $450 million to resolve claims that it violated the FCA by knowingly creating unnecessary waste in administering the drugs Zemplar® and Venofer® to dialysis patients, and then billing the federal government for such avoidable waste. The government had elected not to intervene in the lawsuit despite two years of investigating. c. MetLife Home Loans LLC. MetLife has agreed to pay $123.5 million to resolve allegations that MetLife Bank violated the FCA by knowingly originating and underwriting mortgage loans insured by the Federal Housing Administration that did not meet applicable requirements. d. UFC Aerospace. The aerospace supply chain company and its former president agreed to pay $20 million to resolve a suit alleging that the company fraudulently said it was a women-owned small business in order to procure $48 million in government contract

Co-Authors: Robert Rhoad, W. Stanfield Johnson.

Cybersecurity for Government Contractors

admin on April 14, 2014

By Robert Nichols, Susan Booth Cassidy, Anuj Vohra, Kayleigh Scalzo, and Catlin Meade

President Obama has identified “cyber threats” as “one of the gravest national security dangers that the United States faces.”1 Indeed, U.S. federal agency computer systems are subject to billions of cyber attacks every month.2 The U.S. Government does not publish statistics regarding cyber attacks on its contractors. But without a doubt, contractors face a similar proliferation of attempted breaches to their information systems. The U.S. Government and its contractors are frequent cyber targets in part because the Government “is the largest single producer, collector, consumer, and disseminator of information in the United States and perhaps the world.”3 This repository of information includes highly classified national security secrets, details on the operations and security systems of the nation’s critical infrastructure, public- and private-sector intellectual property, and the personal information of private individuals. Such data are often stored on or flow through contractor systems, which increasingly are tied to Government information technology (IT) networks. The Legislative and Executive Branches have responded by issuing various laws, regulations, policies, and guidance that apply to federal agencies and, increasingly, to contractors.

Myth-Busting the LPTA Conundrum

admin on December 18, 2013

As fiscal pressures grow and agency budgets shrink, contractors are increasingly facing lowest-price, technically acceptable (LPTA) procurements. Yet the procurement community has not found common ground on when and how LPTA should be used. All too often, the contracting industry, outside legal counsel, and procuring agencies are in express conflict. Consider the following: Contractors. Industry-oriented letters and white papers criticize agencies for using LPTA to procure sophisticated, vaguely defined, missionessential supplies and services. E.g., “The Challenge of Applying the LPTA Process to the Procurement of Complex Services” (November 2012) (TASC White Paper); Letter from Stan Soloway, President and CEO, Prof’l Servs. Council, to Hon. Frank Kendall, Undersec’y of Def. (Acquisition, Technology and Logistics) (Sept. 26, 2012). Outside legal counsel. Representing frustrated contractors, outside counsel use bid protests to challenge LPTA methodologies—an adversarial tactic that can backfire, harming clients’ customer relations and setting bad precedent for the industry. E.g., Grant Thornton, LLP, Comp. Gen. Dec. B-408464, 2013 CPD 238; PDL Toll, Comp. Gen. Dec. B-402970, 2010 CPD 191; Crewzers Fire Crew Transport, Inc., Comp. Gen. Dec. B-402530, 2010 CPD 117. Procuring agencies. On the one hand, agencies might acknowledge that LPTA has limitations. E.g., “Implementation Directive for Better Buying Power 2.0—Achieving Greater Buying Efficiency and Productivity in Defense Spending,” Memorandum from Under Sec’y of Def. (AT&L) (April 24, 2013)

Contractor Responsibility: Toward an Integrated Approach to Legal Risk Management

admin on March 14, 2013

By Steven A. Shaw, Mike Wagner, and Robert Nichols

In this era of heightened Government demands for contractor responsibility, Government contractors face myriad risks. The authors of this Briefing Paper have been involved, in one capacity or another, in some of the largest Government enforcement actions facing contractors. They have prosecuted and defended criminal and civil actions against contractors, negotiated the resolution of civil actions involving substantial fines and penalties, and handled suspension and debarment actions with multi-billion dollar contracting implications. They have also seen shareholder suits against board members and executives and have witnessed c-suite executives lose their jobs (and a few companies go out of business) due to their failures to comprehend and manage the risks relating to contractor responsibility. This Briefing Paper is designed as a guide for Government contractors—including their boards of directors, c-suite executives, and legal counsel who bear fiduciary duties for managing corporate risks— for undertaking risk management strategies to avoid such problems. In the 1980s, “Operation Ill Wind” exposed widespread corruption by U.S. Government officials and defense contractors. The scandal, which resulted in the conviction of over 100 contractors and individuals, is often cited as the defining moment for increased contractor responsibility.