Once again, the threat of a government shutdown looms over federal contractors and grantees. If Congress does not pass a continuing resolution or other funding legislation before midnight on Saturday, agencies will lack authorized appropriations to fund their operations. Although regrettable, the risk of a shutdown (or debt ceiling crisis) has been a fairly common occurrence over the last few years. Continue Reading Dusting off the Government Shutdown Playbook
Although the United States military’s role in Afghanistan effectively ended in August 2021, the Government’s fraud watchdog for operations in Afghanistan, the Special Inspector General for Afghanistan Recovery (“SIGAR”), continues to have an active supervisory and oversight role.
Continue Reading Recent SIGAR Reports Highlight Ongoing Oversight Role
Breaking into federal government contracting can be daunting. There are ever-changing compliance obligations to consider and complex bidding and proposal submission requirements to navigate. An entire industry of sales consultants, proposal writers, and lobbyists promising to help tap into the $600 Billion plus federal marketplace are only a Google search away. Engaging the services from one of these firms is generally allowed, but there are restrictions. This post deals with one of those restrictions—the Covenant Against Contingent Fees (FAR 52.203-5) which restricts how government contractors pay third-party sales agents.
Continue Reading “Vernon’s got prospects. He’s bona fide.” — Understanding the Covenant Against Contingent Fees
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—
- Civilian Personnel Guidance for DoD Components (Mar. 8, 2020). Risk-based measures to minimize risk to civilian personnel and a limited telework policy.
- Guidance for Personnel Traveling During the Novel Coronavirus Outbreak (Mar. 11, 2020). Pre-travel and post-travel health guidance.
- Planning for Potential Novel Coronavirus Contract Impacts (Mar. 10, 2020). Contractors are encouraged to work with government program managers and requirements owners to determine if new measures need to be taken to ensure the welfare and safety of the workforce. Empowers contracting officers as the authority when contract performance is affected by COVID-19.
- The Role of Continuity in the COVID-19 Pandemic Response (Mar. 18, 2020). Reinforces the localized power of the Health Protection Conditions (HPCON) framework and Pandemic Plans that are developed by DoD Components.
- Contract Place of Performance — Public Health Considerations (Mar. 20, 2020). Extends the same telework flexibilities that are available to DoD service members and civilians to contractors, where appropriate.
- Determining and Making Commercial Item Procurements (Mar. 27, 2020). Lists class Commercial Item Determination (CID) to allow Contracting Officers maximum flexibility in awarding critical contracts for supplies and services related to the COVID-19 pandemic in a streamlined manner.
- Undefinitized Contract Actions, Class Deviation 2020-O0012 (Apr 3, 2020). For undefinitized contract actions (UCA), it removes the requirement in DFARS 217.7404-4(a) to limit obligations, if the UCA is related to the national emergency. It also allows the head of the contracting activity to waive the limitations in DFARS 217.7404(a)(1)(i), 217.7404-3(a), and 217.7404-4(a) for a UCA if the head determines the waiver is necessary due to the national emergency for COVID-19.
- Submission of Interim Vouchers under Classified Contracts, Class Deviation 2020-O0011 (Apr. 3, 2020). Directs contractors to submit interim vouchers under classified contracts to the payment office listed in the contract. The vouchers are provisionally approved by the Defense Contract Audit Agency (DCAA).
- Progress Payment Rates, Class Deviation 2020-O0010 (Mar. 20, 2020). Increases progress payment rates at DFARS 232.502-2 for large business concerns to 90% and small business concerns to 95%.
- Progress Payment Rates Implementation Guidance (Apr. 3, 2020). Provides FAQs for Class Deviation 2020-O0010.
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.
Paying workers as independent contractors instead of as employees may land a former executive in jail for criminal wire fraud. On June 12, 2019, the former operations manager and vice president of a Florida-based mail transportation contractor pled guilty to two counts of wire fraud related to such treatment. The Government’s case was based on pricing estimates for employee-related costs that the contractor later did not incur because it instead used independent contractors.
In the June 1, 2018 indictment of Alexei Rivero, the Government contended that Rivero purposely misclassified the drivers it hired as independent contractors. According to the indictment, this allowed the contractor to “misappropriate” $1.5 million in USPS contract payments “designated” for fringe benefits and $1.2 million designated for payroll taxes.
Continue Reading Government contractor pleads guilty to fraud for paying drivers as independent contractors
[UPDATE: On May 26, 2015, the Supreme Court reversed the Fourth Circuit’s decision in Carter and held that the Wartime Suspension of Limitations Act is limited to criminal offenses. Kellogg Brown & Root Services, Inc. v. Carter, No 12-1497 (U.S. May 26, 2015) [pdf]. Our discussion of the Carter decision is available here.]
Whether the Wartime Suspension of Limitations Act tolls the six-year statute of limitations for civil claims under the False Claims Act will soon be addressed by the Supreme Court. In Kellogg Brown & Root Services, Inc. v. United States ex rel Benjamin Carter, No. 12-1497 (July 1, 2014), the Court will have the opportunity to address several important questions about the application of the WSLA. Should it apply to civil claims or be limited to criminal actions? Does the tolling specified in the WSLA require a formal declaration of war? And does the WSLA apply to a qui tam claim in which the United States declines to intervene?
[Note: The case also asks the Court to address whether the FCA’s “first-to-file” bar applies to cases filed after the first case is dismissed. We’ll look at that question in another post.]
The case comes to the Supreme Court following the Fourth Circuit’s decision in U.S. ex rel Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013). In that case, the Fourth Circuit held that the WSLA tolled all civil actions—including civil FCA claims brought by qui tam relators—until the President or Congress declared a “termination of hostilities.” The Supreme Court accepted Halliburton’s petition for certiorari and will hear the case in 2015.
We believe the Fourth Circuit’s opinion represents a significant expansion of the WSLA. As Judge Agee points out in his dissenting opinion, a particularly troublesome aspect of the Fourth Circuit’s decision is its application of the WSLA to civil qui tam actions in which the United States has not intervened. The underlying purpose of the WSLA is to allow the law enforcement arm of the United States government to focus on its “duties, including the enforcement of the espionage, sabotage, and other laws’” in times of war. Id. (citing Bridges v. United States, 346 U.S. 209, 219 n. 18 (1953)). In a qui tam action initiated by a private citizen, the rationale for tolling the limitations period is diminished.Continue Reading Will the Supreme Court uphold tolling of the six-year limitations period for civil False Claims Act cases during times of war?
The Federal Circuit’s decision in Raytheon Co. v. United States, No. 2013-5004 & 2013-5006 (Fed. Cir. April 4, 2014) [pdf] affirms a $59-million judgment arising from a government challenge to Raytheon’s calculation and payment of pension fund adjustments. It is certainly an important case because of the money at stake for Raytheon and its analysis…
It should come as no surprise that the contracting policy changes in the National Defense Authorization Act for 2014 [pdf] reflect a continued focus on reducing spending. But they also encourage collaboration between the government and the private sector and emphasize the need for innovative contracting strategies and greater flexibility in the procurement process, which may benefit contractors in the long run. Here is a breakdown of a few of the highlights:
- Extension of restrictions on contractor services spending. Section 802 of the 2014 NDAA amends Section 808 of the 2012 NDAA to extend the temporary limit on the amounts obligated for DOD spending on contract services in FY 2014 to the amount requested for contract services in the President’s budget for FY 2010. It also requires that the heads of each Defense Agency continue the 10-percent-per-fiscal-year reductions in spending for staff augmentation contracts and contracts for inherently governmental function for FY 2014, and requires that any unimplemented amounts of the 10 percent reductions for FY 2012 and FY 2013 be implemented in FY 2014.
Continue Reading Procurement reforms in the FY 2014 National Defense Authorization Act
Metcalf Construction Company and the Navy argued their positions today in the appeal of Metcalf’s $27-million claim on its contract to design and build military housing in Kaneohe Bay, Hawaii. The appeal focuses on the December 9, 2011 decision by Judge Susan G. Braden of the United States Court of Federal Claims, which addresses the liability issues presented by Metcalf’s claim. See Metcalf Constr. Co. v. United States, 102 Fed. Cl. 334 (2011) (Metcalf I). A second decision issued on December 10, 2012 addresses the damages issues presented in the case. Metcalf Constr. Co. v. United States, 107 Fed. Cl. 786 (2012) (Metcalf II). Regardless of how the Federal Circuit resolves the appeal, the case is bad for federal construction contracting.
Duty of good faith and fair dealing
In Metcalf I, the court found that Metcalf could not establish its claim that the Navy breached its duty of good faith and fair dealing. This conclusion is based entirely on the Court’s interpretation of the applicable standard for proving such a claim. In Judge Braden’s view, “a breach of the duty of good faith and fair dealing claim against the Government can only be established by a showing that [the Government] ‘specifically designed to reappropriate the benefits [that] the other party expected to obtain from the transaction, thereby abrogating the government’s obligations under the contract.’” Metcalf I § C.1.b (quoting Precision Pine & Timber, Inc. v. United States, 596 F.3d 817, 829 (Fed. Cir. 2010)).Continue Reading The story of Metcalf Construction and why it’s bad for federal construction contracting
The Contract Disputes Act imposes a six-year statute of limitations on all claims, whether they are asserted by the contractor or by the Government. See 41 U.S.C. § 7103(a)(4)(A). The limitations period begins to run upon accrual of a claim, which is “the date when all events . . . that fix the alleged liability of either the Government or the contractor and permit assertion of the claim . . . were known or should have been known.” FAR 33.201. Because six years must pass before the claim expires, the precise date of accrual is often little more than an academic question. Indeed, there have been relatively few cases applying the CDA limitations period to Government claims. But accrual has recently become a real and sometimes insurmountable obstacle to Government claims. Here is a short summary of the basic concepts that have emerged from the decisions that have addressed the issue.
1. The government has the burden of proving timeliness.
The CDA limitations period is “jurisdictional.” When the government asserts a claim against a contractor, the government has the burden of proving jurisdiction. To do so, the government must establish that the claim was timely asserted. If the government cannot show that the claim was asserted within six years of accrual, the Board or the Court lacks jurisdiction to hear the claim. Raytheon Missile Systems, ASBCA No. 58011 (Jan. 28, 2013) [pdf].Continue Reading “Accrual” of government claims under the Contract Disputes Act