Contract Administration

The National Defense Authorization Act for Fiscal Year 2012 [pdf] puts an end to OFCCP’s effort to impose subcontractor status on retail pharmacies and health care providers serving TRICARE beneficiaries. The controversy had been brewing for some time. As we discussed in an earlier client alert, the October 2010 decision in OFCCP v. Florida Hospital, …

Contributed by Kyle J. Gilster, Esq. of Husch Blackwell’s Governmental Affairs Practice Group

The government contracting community is concerned about the repercussions of the failure of the Joint Select Committee on Deficit Reduction (aka “the Super Committee”) to reach an agreement before the November 23rd deadline. In light of this failure, the question of the day is what happens now on deficit reduction and what impact this will have on government contractors.

The Department of Labor has announced its final rule [pdf] implementing Executive Order 13495 [pdf], which addresses nondisplacement of qualified workers under federal service contracts. Under the DOL rule, federal contractors and subcontractors on service contracts over the $150,000 simplified acquisition threshold will be required to offer employment to non-managerial employees whose employment would otherwise end at the close of the predecessor contract.

The Commission on Wartime Contracting’s final report [pdf] asserts that upwards of $60 billion in U.S. tax dollars have been lost to fraud, waste, and abuse in Iraq and Afghanistan over the past decade. The independent Commission was created in 2008 to assess contingency contracting for logistics, security, and reconstruction, as well as to make recommendations to Congress in order to improve contracting practices. The Commission’s final report blames the staggering losses on a lack of oversight, poor planning, and corruption. 

Is every routine contract dispute a potential false claim? Is it a false claim to adopt an interpretation of an ambiguous contract provision that was the subject of debate within the company? As a matter of law and common sense, the answer to these questions must be “no.” But Chief Judge Royce Lamberth’s August 3 decision in United States v. Kellogg Brown & Root Services, Inc., No. 10-cv-530 (D.D.C. Aug. 3, 2011) [pdf], casts sobering doubt on this answer.

Corrections to the proposed rewrite of FAR 42.1503 reinstate the contractor’s role in past performance evaluations. As published on June 28, 2011, the rewritten FAR provision omitted language from the existing clause that protects the contractor’s interests in the process. As corrected on August 9, the contractor protections have been restored.

Improving agency assessments of contractor past performance has been a priority since the Government Accountability Office published its 2009 report criticizing the system. A number of new FAR rules can be linked to GAO’s recommendations. For example, GAO pointed to the lack of reporting on default terminations and defective pricing. The FAR has now been amended to require default terminations and defective pricing be reported as part of a contractor’s past performance. See 75 Fed. Reg. 60258 (Sept. 29, 2010) [pdf]. The latest proposed revision to the FAR responds to GAO’s recommendation that there be greater uniformity in past performance reporting. See 76 Fed. Reg. 37704 (June 28, 2011). The proposed rule would revise FAR 42.1503 to include five minimum evaluation factors for which contractors are to be evaluated:  (i) Technical or Quality; (ii) Cost Control (as applicable); (iii) Schedule/Timeliness; (iv) Management or Business Relations; and (v) Small Business Subcontracting (as applicable).  The proposed rule would also impose a uniform ratings scale for use by past performance evaluators. As defined in the CPARS Policy Guide, past performance would have to be described as exceptional, very good, satisfactory, marginal, or unsatisfactory.

The FAR Councils are taking their first major steps toward reducing the federal government’s energy usage. The interim rule published on May 26, 2011 [pdf] requires that 95% of all future government acquisitions be “sustainable.” It implements Executive Order 13423 (Jan. 24, 2007) [pdf] and Executive Order 13514 (Oct. 5, 2009) [pdf], which require that federal agencies improve their energy efficiency and leverage their buying power to create a market for sustainable goods and services. The rule changes the FAR in some significant ways, most of which are likely to affect contractors.