October 14, 2017 Procurement Lawyer

News from the Committees

by Herman Levy

Commercial Products and Services Committee

January 19, 2017

John Howell introduced guest speaker William (Bill) Greenwalt, a Senate Armed Services Committee professional staff member focusing on acquisition. His background includes service in the commercial sector (vice president, acquisition policy, Aerospace Industries Association, and director, federal acquisition policy, Lockheed Martin Corporation) as well as serving as Deputy Undersecretary of Defense (Industrial Policy), and as a professional staff member, Senate Governmental Affairs Committee, where he helped write the Clinger-Cohen Act. He holds a master of arts in international relations and defense and security studies from the University of Southern California.

Bill opened with a discussion of Senator John McCain’s efforts to open up the commercial market to information technology. The United States is losing its commercial dominance in the world; the real difficulty is interpreting what is needed to restore our place. Bill believes, however, that our contracting system is not broken.

After World War II, the U.S. Department of Defense’s (DoD) needs changed; DoD sought scientific knowledge, including that of refugees from Nazi Germany. Among other things, it set up a Manhattan-type project to that end. DoD brought engineers together and made a procurement system around sole source and Truth in Negotiations Act (TINA). The next step came with the Federal Acquisition Streamlining Act (FASA) and the Federal Acquisition Reform Act (FARA) in 1994, with their emphasis on the commercial sector. Budgets were declining; the Cold War threat had receded. Last year, with the 2017 National Defense Authorization Act (NDAA), Congress gave DoD the tools it needed. Bill also would like Federal Acquisition Regulation (FAR) Part 12 restored to its 1990s status.

Nowadays, Bill said, research and development (R&D) is primarily in the private sector; DoD no longer has the necessary knowledge within itself; as well as commercial companies, DoD needs to access our foreign partners. In the interest of accessing knowledge, Congress, notably with the 2017 NDAA, has created exceptions to Cost Ac- counting Standards (CAS), TINA, and other statutes. Bill advised against contracting for R&D, which brings in Defense Contract Audit Agency, etc. He recalled the difficulties resulting from the A-12 contract, which called for fixed-price R&D. He also noted that nontraditional defense contractors will not touch CAS.

Discussion followed on several sections of the 2017 NDAA. Bill referred to the recent Palantir case in the Court of Federal Claims (Judge Marian Blank Horn), in which Palantir, a small engineering company, invoked FASA in protesting that the Army had not considered a commercial item. Palantir prevailed in its protest, although Judge Horn repeatedly refused to say how to do market research.

February 23, 2017

Cochair Jack Horan introduced the guest speakers, moderator Brian Miller, former inspector general of the U.S. General Services Administration (GSA) and presently shareholder, Rogers Joseph O’Donnell, PC; and Mary Clare Claud and Sarah Zaffina, assistant counsels, Office of Inspector General (OIG), GSA. The discussion centered on the Mandatory Disclosure Program. They are tasked with representing the GSA OIG’s interests during the mandatory disclosure process. During the course of the meeting, they discussed their roles, the status of the program, and what contractors can expect going forward.

Mary Clare said that she has had private practice and U.S. Department of Justice (DoJ) experience. She sees all the mandatory disclosures and shares them with counsel. Her office takes calls all the time and also runs a False Claims Act (FCA) program. She personally handles qui tam matters, using a team approach. Sarah said that she has had experience in private practice and with the Office of the Solicitor, U.S. Department of the Interior. Mary Clare said that she has an auditor review spreadsheets; the contracting officer gets a copy of acknowledgment letters. Jack asked about qui tam and FCA matters; DoJ reviews all mandatory disclosures. In addition, the IG notifies DoJ when it closes out a case. Brian said that there are not too many cases in which DoJ files a qui tam suit; the IG and DoD have a give-and-take relationship in such matters.

Mary Clare said that some disclosures are as low as $9,000. Herman asked about the nature of cases coming to the GSA OIG. Sarah replied that most are from merger and acquisition matters, including P/R, TAA, and overbilling. Sarah further said that overbilling matters generally arise from ordering agencies; she believes that they go mainly to GSA OIG rather than to ordering agency OIGs. Mary Clare noted that some disclosures result in debarment/ suspension; nevertheless, GSA OIG does not handle debarment/suspension matters, but refers them to the debarment/ suspension office. Phil Seckman asked if Mary Clare could predict developments at GSA OIG; she did not foresee a change in workload, but because GSA did not yet have an administrator, it would be hard to say.

Brian asked what would happen if a disclosure is uncertain in amount and it turns out to be for an amount smaller than previously thought. The OIG will require proof of reduction in amount, but is not disappointed with a smaller amount. Sam Knowles asked about the element of in- tent. Brian noted that the U.S. Department of Health and Human Services has found six months a reasonable time for disclosures; Mary Clare said that she does not seek a hard-and-fast rule. Brian observed that the best part of the disclosure program is that it fosters cooperation between the OIG and agency counsel.

April 20,  2017

Cochair Jack Horan introduced guest speakers Rich Rec- tor and Kevin Mullen for their annual presentation on re- cent legislation, regulation, policy, and case law of interest to the Committee.

Rich discussed several provisions of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017:

Section 871, Market Research for Determination of Price Reasonableness in Acquisition of Commercial Items;

Section 872, Value Analysis for the Determination of Price Reasonableness;

Section 873, Clarification of Requirements Relating to Commercial Item Determinations;

Section 874, Inapplicability of Certain Laws and Regulations to the Acquisition of Commercial Items and Available Off-the-Shelf Items;

Section 875, Use of Commercial Non-Government Standards in Lieu of Military Specifications and Standards;

Section 876, Preference for Commercial Services;

Section 877, Treatment of Comingled Items Purchased by Contractors as Commercial Items;

Section 878, Treatment of Services Provided by Nontraditional Contractors as Commercial Items;

Section 879, Defense Pilot Program for Authority to Ac- quire Innovative Commercial Items, Technologies, and Ser- vices Using General Solicitation Competitive Procedures; and Section 880, Pilot Programs for Authority to Acquire Innovative Commercial Items Using General Solicitation Competitive Procedures.

Kevin then discussed several recent cases of interest.

Kingdomware Technologies v. United States, 136 S. Ct. 1969 (2016), petition granted June 22, 2014, argued Feb. 22, 2016, decided June 16, 2016;

Coast Professional, Inc. v. United States, 126 Fed. Cir. 2821 (2016);

National Air Cargo Group Inc. v. United States, 126 Fed. Cir. 2821 (2016);

AvKARE Inc. v. United States, 125 Fed. Cl. 11 (2016);

Palantir Technologies, Inc. v. United States, 128 Fed. Cl. 21 (2016);

DLT Solutions, Inc., B-412237.2, B-412237.3, 2016 CPD ¶ 19, 2016 WL 241468;

EA Engineering, Science, and Technology, Inc., B-411967.2 et al., 2016 CPD ¶ 106, 2016 WL 1458916;

Department of the Army—Reconsideration and Request for Modification of Recommendation, B-411760.3, 2016 CPD ¶ 162, 2016 WL 3401684;

KPMG LLP, et al., B-412732, 2016 CPD ¶ 149, 2016 WL 3226576;

Tempus Nova, Inc., B-412821, 2016 CPD ¶ 161, 2016 WL 345753;

M Inc. d/b/a Minc Interior Design, B-413166.2, 2016 CPD ¶ 339, 2015 WL 6723876;

AllWorld Language Consultants, Inc., B-411481.3, 2016 CPD ¶ 12, 2016 WL 358949;

Ryan Consulting Group, Inc., B-414014, 2016 CPD ¶ 324, 2016 WL 6576639; and

Brent Packer and Myrna Palasi v. Social Security  Administration, CBCA 5038, 5039, 16-1 BCA ¶ 36260, 2016 WL 721705.