Small Business Runway Extension Act Adjusts Look-back Period from Three to Five Years for Calculating Size Determinations, but SBA May Not Immediately Implement the Law

Carolyn R. Cody-Jones

The New Law

Shortly after passage by the Senate, President Trump signed the Small Business Runway Extension Act, P.L. No. 115-324, into law on December 17, 2018. The new law amends the Small Business Act to adjust the look-back period for calculating a company’s size based on average annual gross receipts from three years to five years.

Proponents of the law have lauded the assistance it will provide to growing small businesses, which in the past have been unceremoniously closed out of small business set-aside procurements before they have the resources to compete with larger government contractors. The longer look-back period benefits companies with lower revenue in prior years by allowing them to include those earlier years in calculating the company’s average annual receipts. The longer period also allows additional years of gross revenue to balance out a unique year of significant growth or income. Critics, however, worry this will hurt small businesses that must now compete with “larger” small businesses that remain eligible for small business set-aside procurements for longer. Continue reading “Small Business Runway Extension Act Adjusts Look-back Period from Three to Five Years for Calculating Size Determinations, but SBA May Not Immediately Implement the Law”

FY 2018 GAO Protest Statistics Show Continued Success through Corrective Action

Luke W. Meier and Ioana Cristei

The Government Accountability Office (“GAO”) has released its Annual Report to Congress detailing the bid protest statistics for Fiscal Year 2018 (B-158766). The report shows a continuation of recent trends: the sustain rate is low; overall success is nevertheless quite strong; and hearings have become nearly extinct.

The GAO issued a decision on the merits for 622 protests in FY 2018. That represents only a fraction of the 2,607 total protests received, but is the most decisions GAO has issued in at least 10 years. As is typically the case, less than 20 percent of those protests resulted in “sustain” decisions finding in favor of the protester—just 92 protests, or 15 percent of those decided in FY 2018. Despite that seemingly grim rate of success in merits decisions, protesters’ overall rate of success, what GAO terms the “effectiveness” rate, continues to hover around 45 percent. As before, protesters are obtaining desired relief in nearly half of all protests filed—but their “win” typically comes well before a final merits decision with the agency taking voluntary corrective action, usually within the first 30 days of the protest, before the agency report has been filed. Continue reading “FY 2018 GAO Protest Statistics Show Continued Success through Corrective Action”

Supreme Court Grants Cert to Resolve Circuit Split on FCA Statute of Limitations

Sara N. Gerber

The U.S. Supreme Court has granted a writ of certiorari to address a Circuit Court split concerning whether False Claims Act (“FCA”) relators may rely on the statute of limitations in 31 U.S.C. § 3731(b)(2)—a limitations period which is triggered by the government’s knowledge of the fraud—when the government does not intervene. The Supreme Court granted cert on November 16, 2018, to review the Eleventh Circuit’s decision in U.S. ex rel. Hunt v. Cochise Consultancy, Inc. The Eleventh Circuit reversed the Alabama District Court, reviving the relator’s complaint by giving the relator the benefit of the longer limitations period in § 3731(b)(2).

At the center of the matter is the interplay between the two limitations periods in the FCA after which a “civil action under section 3730” is time-barred: (1) “6 years after the date” of an alleged violation, see 31 U.S.C. § 3731(b)(1); or (2) “3 years after the date” when material facts “are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no more than 10 years after the date” of the alleged violation, see 31 U.S.C. § 3731(b)(2). The relator in Cochise Consultancy filed his claim more than six years after the alleged fraud occurred, but within three years of his disclosure of the fraud to FBI agents who had interviewed him about his role in a separate kickback scheme, to which he ultimately pled guilty and served time in federal prison. Continue reading “Supreme Court Grants Cert to Resolve Circuit Split on FCA Statute of Limitations”

What Is the Christian Doctrine and Why Should You Care?

Merle M. DeLancey Jr.

The Christian Doctrine

The Christian doctrine provides that a mandatory statute or regulation that expresses a significant or deeply ingrained strand of public procurement policy shall be read into a federal contract by operation of law, even if the clause is not in the contract. G. L. Christian & Associates v. United States, 312 F.2d 418 (Ct. Cl. 1963). The doctrine is an exception to the general rule that the government must put vendors on notice of contract requirements, whether expressly or through incorporation by reference. It also is an exception to standard commercial contracting practices and contract interpretation principles. The rationale for the doctrine is that procurement policies set by higher authority cannot be avoided or evaded (deliberately or negligently) by lower government officials. Continue reading “What Is the Christian Doctrine and Why Should You Care?”

In Department of Veterans Affairs Procurements, Veteran-Owned Businesses Trump All Other Contractors

Merle M. DeLancey Jr.

On October 17, 2018, the Federal Circuit ruled that the Department of Veteran Affairs (“VA”) must give priority to veteran-owned small businesses (“VOSB”) when awarding contracts. PDS Consultants Inc. v. U.S., et al., Nos. 17-2379 and 17-2512, 2018 WL 5019735 (Fed. Cir. Oct. 17, 2018). At first blush, no one would argue with the foregoing statement. But, this mandate became less clear when the VA was faced with awarding a contract to a VOSB or following an otherwise mandatory requirement for all federal agencies to buy a specific list of items made by nonprofits employing the blind and significantly disabled.

Here is the source of confusion. More than 40 years ago, Congress enacted the Javits-Wagner-O’Day Act (“JWOD”), which required federal agencies to buy certain items and services from nonprofits that employ the blind or people with other significant disabilities. Today, this mandatory procurement policy is implemented through the AbilityOne program. In 2006, Congress passed the Veterans Benefits, Health Care, and Information Technology Act (“VBA”). As the U.S. Supreme Court stated in Kingdomware, the VBA made it mandatory in almost every procurement for the VA to follow the “Rule of Two.” The “Rule of Two” requires the VA to award a contract to a VOSB whenever at least two VOSBs can perform the work at a reasonable price. Continue reading “In Department of Veterans Affairs Procurements, Veteran-Owned Businesses Trump All Other Contractors”

Is There No Balm in Gilead? The Federal Circuit’s Decision in Dell Federal Systems L.P. v. United States Reinforces Contractors’ Dwindling Options to Effectively Challenge Agency Corrective Action

Michael J. Slattery

Any company that has participated in a federal procurement, and has been involved in subsequent bid protest litigation, is likely familiar with the procuring agency’s ability to take “corrective action.” In a nutshell, “corrective action” refers to a procuring agency’s recognition that it may have committed an error during a procurement, and the agency’s determination that it will take steps to correct this error. Procuring agencies take corrective action in a number of different circumstances.

Perhaps most commonly, procuring agencies take corrective action after the U.S. Government Accountability Office (“GAO”) sustains a protest and recommends that the agency remedy the flaws that GAO has identified in the procurement. Agencies also take corrective action in the context of “outcome prediction” Alternative Dispute Resolution (“ADR”). Pursuant to 4 C.F.R. § 21.10(e), GAO, on its own initiative or upon a request filed by the parties, may use flexible alternative procedures to promptly and fairly resolve a protest, including ADR. Often, when GAO informs a procuring Agency during an ADR conference that GAO is likely to sustain a protest, the procuring Agency will announce that it will take corrective action in order to remedy the procurement errors identified by GAO. See, e.g., Deloitte Consulting, LLC, B-412125.6, Nov. 28, 2016, 2016 U.S. Comp. Gen. LEXIS 348 at *1, *5 (wherein agency took corrective action after GAO sustained a protest). Continue reading “Is There No Balm in Gilead? The Federal Circuit’s Decision in Dell Federal Systems L.P. v. United States Reinforces Contractors’ Dwindling Options to Effectively Challenge Agency Corrective Action”

The Ninth Circuit Reluctantly Joins Majority of Courts in Mandating Escobar’s Two-Part Test for Implied Certification

Robyn N. Burrows

Over two years ago, the Supreme Court in Universal Health Servs. v. U.S. ex rel. Escobar, 136 S. Ct. 1989 (2016) upheld the implied certification theory of liability under the federal False Claims Act (“FCA”). Applying a two-part test, the Court stated that implied liability would attach where “at least two conditions” are satisfied: (1) the claim makes specific representations about goods or services provided and (2) the defendant’s failure to disclose noncompliance with a material statutory, regulatory, or contractual requirement renders those representations “misleading half-truths.” Courts interpreting Escobar have disagreed as to whether this two-part test is the exclusive means for establishing liability under the implied certification theory, or whether other circumstances might also trigger liability. For example, several courts have noted that Escobar’s reference to “at least two conditions” implies that other, unspecified factors might also be sufficient to create an implied certification claim. The Fourth Circuit, along with several other district courts, have adopted this more liberal view. Most other circuits that have addressed this issue, however, have found the two-part test to be mandatory. The First, Third, Fifth, and Seventh Circuits, as well as many district courts, have either explicitly or implicitly held that Escobar’s two-part test is the exclusive means of establishing implied certification. Continue reading “The Ninth Circuit Reluctantly Joins Majority of Courts in Mandating Escobar’s Two-Part Test for Implied Certification”