Affirmative action requirements waived for contracts specifically related to COVID-19 relief

As in past times of national emergency, the Office of Federal Contract Compliance Programs has stepped up to exempt certain new federal supply and service contractors and subcontractors from having to comply with most OFCCP requirements over the course of the contract. Announced March 17, OFCCP calls the action the “National Interest Exemption.” Contractors providing supplies and services specifically related to COVID-19 relief must still abide by OFCCP’s non-discrimination and non-retaliation obligations and are subject to OFCCP complaint investigations. The exemption extends to the obligations of all three laws enforced by OFCCP: Executive Order 11246, § 503 of the Rehabilitation Act, and § 4212 of VEVRAA.

Continue Reading OFCCP announces exemptions for new federal contracts

Federal agencies and contractors are working hard to address the realities of the COVID-19 pandemic. In some cases, work must stop. In others, the work will increase or change dramatically. While contractors should look to contracting officers for guidance with respect to specific contracts, agency-wide guidance documents are beginning to shed light on the government’s expectations. We will be using this blog entry to collect and share agency guidance on performance of government contracts during the Coronavirus pandemic.

Department of Defense—

Department of the Army—

  • Planning for Potential Novel Coronavirus Impacts (Mar. 12, 2020). Encourages increased communication, notes that contracting officers do not bear the responsibility to determine whether the excuse of COVID—19 applies, outlines causes for performance delays that are excusable and FAR provisions that excuse performance delays, and clarifies situations in which compensation is an option.

Continue Reading Federal agency guidance on the COVID-19 pandemic

In response to the growing Coronavirus pandemic, President Trump announced that the federal government will invoke the Defense Production Act to obtain necessary medical equipment and supplies from private industry. In this post we address some of the most frequently-asked questions about the DPA.

What is the Defense Production Act?

Originally conceived during the Korean War, the DPA allows the President to divert goods and supplies from civilian use to promote the national defense. This authority is not limited to sourcing aircraft parts or ammunition, or to supporting active military operations. The text of the Act expressly extends to matters involving “national economic security and national public health or safety.”

The Defense Priorities and Allocations System regulations in 15 C.F.R. Part 700 implement the Defense Production Act. The DPAS regulations provide detail about how the government will issue rated orders and what contractors and commercial suppliers must do to respond.

How does the government prioritize orders for specific supplies?

The government specifies the relative priority for specific supplies by issuing a “rated order,” which may be designated “DX” or “DO.” A DX order has the highest priority. It must be fulfilled before any other DO or unrated order. A DO rated order must be fulfilled before an unrated order. A rated order must be fulfilled first, even if it means the contractor must divert items already in process or ready for delivery under another contract. Continue Reading Contractor FAQs on the Defense Production Act

The spread of COVID-19 (Coronavirus) remains unclear, but its impacts are already being felt. Supply chains are being disrupted and companies are implementing preventative measures to protect their employees. Many businesses have already suspended non-essential travel, encouraged remote working arrangements, and advised employees to follow the Centers for Disease Control risk-reduction strategies. Given these delays and disruptions, it’s logical to wonder:  Are delays or impacts related to the Coronavirus an excusable delay?

The answer is yes, if you can prove it. Below we outline the standard contract clauses dealing with delays from epidemics and discuss how courts have interpreted those clauses in the past when contractors claimed their delays should be excused due to an epidemic. Continue Reading Is Coronavirus an excusable delay?

Transportation is central to mail delivery, so it is no surprise that the companies who move the mail dominate the list of the Top 150 U.S. Postal Service Suppliers in Fiscal Year 2019. Seven of the Top 10 companies are involved in transportation. Federal Express tops the list, as it has since 2002, with just over $2 billion in USPS receipts.

All three newcomers to the Top 10 are transportation-related companies, with several more positioned in the Top 20. Transportation spending in 2019 reached an all-time high, totaling $9 billion. While that’s a large figure, it’s only 11 percent of the Postal Service’s operating expenses. More than two-thirds of the Postal Service’s operating expenses are spent on employee compensation and benefits.

Technology companies are also prevalent on the list, with HP Enterprise Services, Accenture Federal Services, Northrop Grumman, and IBM all in the top 25. Good ‘ole paper products are also represented. Victory Packaging, maker of USPS-branded packaging, is ranked seventh.

The Postal Service spent $10.3 billion on its top 150 suppliers in 2019, about five percent more than last year. The Top 10 USPS suppliers accounted for $4.2 billion of that amount.

Unlike other agencies, the Postal Service is exempt from many – but not all – federal procurement laws and regulations.  Bedrock rules, such as the Federal Acquisition Regulation (FAR), the Competition in Contracting Act (CICA), and GAO bid protest jurisdiction, do not apply.  Instead, the Postal Service has its own 714-page Supplying Principles and Practices manual and a unique procurement environment.  The Postal Service is also off-budget, funding its own purchases.

Below are the Top 10 suppliers in FY 2019:

Top 10 USPS Suppliers, FY 2019*

2019 Rank Supplier Name FY19 Totals Payment Location 2018 Rank
1 Federal Express Corporation $2,050,716,860.98 Pasadena, CA 1
2 EnergyUnited Electric Membership Corporation $419,662,347.85 Statesville, NC 3
3 Eagle Express Lines, Inc. $390,444,985.04 Homewood, IL 2
4 Pat Salmon & Sons, Inc. $341,072,753.43 Little Rock, AR 28
5 Postal Fleet Services, Inc. $248,967,211.46 St. Augustine, FL 12
6 United Parcel Service of America, Inc. $211,210,699.94 Louisville, KY 5
7 Victory Packaging $210,917,649.33 Houston, TX 4
8 HP Enterprise Services, LLC $193,053.629.38 Plano, TX 7
9 United Airlines, Inc. $177,324,474.78 Pasadena, CA 10
10 Kalitta Air, LLC $170,893,464.38 Ypsilanti, MI 21

*As in past years, not included are purchases made via credit cards (including U.S. Bank and Voyager card fuel purchases). When companies are believed to be affiliated or under common ownership, we have often consolidated their separate entries under the company with the highest individual ranking or best-known name. Our consolidations vary from year to year, and this may affect numerical rankings. City/state designations are derived from USPS’s payment records and may not be the contractor’s primary location.

 

Happy New Year to mid-size government contractors! SBA’s determination of small business status under receipts-based size standards is transitioning from a three-year to a five-year lookback period starting today. The change is the result of a final rule that SBA issued on December 5, 2019. The rule is intended to allow mid-size businesses to regain or keep their small business status longer. The expectation is that this will increase small business contracting dollars and set-asides. A breakdown of the rule is below.

Continue Reading The new five-year lookback period for small business size status

The Military Housing Privatization Initiative was intended to address the availability and adequacy of housing for military service members and their families. As a result of the MHPI, approximately 99 percent of military family housing in the United States is now operated and maintained by private developers. MHPI developers have recently been the target of litigation seeking to hold them responsible for mold and other environmental contamination. Plaintiffs are not only seeking damages for personal injury. They are seeking class certification. In one case they are seeking injunctive relief that would require changes to how the MHPI project is managed.

In this post, we provide some background on the MHPI program, the environmental contamination litigation filed so far, and some perspective on the legal issues presented in these cases. We explain why MHPI developers have a basis to assert derivative sovereign immunity and why the federal enclave doctrine presents an obstacle to some state law claims. We also point out why plaintiffs may face insurmountable hurdles in achieving certification to proceed in a class action. Continue Reading How MHPI developers can defend against class actions for environmental contamination

United States Court of Appeals for the Federal Circuit
The entrance to the United States Court of Appeals for the Federal Circuit in Washington, D.C.

In order to bring a bid protest in the Court of Federal Claims, you must have standing. To win the protest, you have to show prejudice. Although distinct, these two requirements are related and often confused. The Federal Circuit’s decision in American Relocation Connections, L.L.C. v. United States, No. 2019-1245 (Fed. Cir. Oct 2019), explains the difference between the “standing” needed to bring a bid protest and the “prejudice” needed to win.

Standing involves the threshold legal question of whether the protester has alleged a sufficiently direct economic interest to bring the case. It operates as a limit on the universe of plaintiffs eligible to file a protest. A protester has standing to challenge the award of a federal contract in the Court of Federal Claims only if it was an actual bidder or offeror that had a “substantial chance” of winning the contract. For pre-award protests, only a prospective offeror that would suffer a “nontrivial competitive injury” has standing to protest.

Unlike standing, “prejudice” is the ultimate factual question of whether the protester was actually harmed by a procurement error. Establishing prejudice is an element of the protester’s burden of proof. Without it, the protest will fail.

Continue Reading The difference between standing and prejudice in a federal bid protest

As if over-reaching under the False Claims Act wasn’t bad enough, government contractors will now be subject to a new area of investigation. On November 5, 2019, the U.S. Department of Justice announced its new Procurement Collusion Strike Force, focusing on ferreting out antitrust violations in the government contracts arena.

The PCSF will focus on deterring, detecting, investigating, and prosecuting antitrust crimes under government contracts. These areas include bid-rigging conspiracies and related fraudulent schemes that undermine competition in government procurement. The new strike force is composed of 13 U.S. Attorneys’ Offices, and investigators from the FBI, Office of Inspector General offices of the Department of Defense OIG, the U.S. Postal Service, and other federal agencies.

Buoyed by a guilty plea by five South Korean oil companies, which netted $156 million in criminal fines and $205 million in separate civil settlements, the DOJ Antitrust Division believes this is just the tip of the iceberg. Indeed, in a speech to the American Bar Association, Deputy Assistant Attorney General Richard A. Powers cited a study that eliminating bid rigging could reduce procurement costs by 20% or more. Government contractors, most of whom likely have a profit rate of 10% or less, will find that figure hard to believe.

The problem that government contractors will face is this:  If DOJ believes procurement costs are being inflated by 20% due to bid rigging, once DOJ starts looking for it, DOJ will find it, whether it exists or not. And DOJ is looking for criminal antitrust violations, with penalties that include up to 10 years imprisonment, steep fines, and double damages. Corporations can be fined up to $100 million.

Continue Reading Contractors: get ready for the new DOJ anti-trust task force!

Arizona State Capitol

Bid protests on statewide and local public procurements in Arizona are allowed, in one form or another, if an unsuccessful offeror has both “standing” and a basis for protest. Protestors can seek to be awarded the contract or to have the solicitation thrown out and reissued, which in many cases is itself a success.

But winning a bid protest in Arizona is not easy. The process is designed to move quickly to promote efficient contracting and to limit protests. Failure to meet any of the strict procedural requirements can lead to outright dismissal or waiver of an argument. Even when a protester properly follows the procedure, the applicable legal standard is a high one. To win a protest in Arizona, a protestor needs to demonstrate that an award decision was “clearly erroneous, arbitrary and capricious or an abuse of discretion.”

The question is what does it take to win an Arizona protest? Here are four steps that can maximize a protester’s chance of success. Continue Reading Four steps to winning an Arizona bid protest