Federal Circuit Maintains That Contractors Must Read between the Lines to Determine Expressly Unallowable Costs

Scott Arnold and Carolyn Cody-Jones

A recent Federal Circuit decision has sustained an expansive judicial reading of what constitutes an expressly unallowable cost under FAR Part 31. This decision, reached in the context of lobbying expenses, provides the potential for expansive precedent for future disputes regarding what expenses constitute expressly unallowable costs. Including expressly unallowable costs in submissions to the government can result in penalties up to two times the amount of the disallowed cost. Taking into account this decision as well as the Defense Contract Audit Agency’s (“DCAA”) expressly unallowable cost guidance released earlier this year, contractors should review their policies and procedures for identifying and excluding unallowable costs from invoices and proposals on government contracts, and consider whether to broaden their policies. Continue reading “Federal Circuit Maintains That Contractors Must Read between the Lines to Determine Expressly Unallowable Costs”

Technical Data Rights Protections Eroded by FY19 NDAA

Scott Arnold and Carolyn Cody-Jones

The Fiscal Year (“FY”) 2019 National Defense Authorization Act (“NDAA”), H.R. 5515, 115th Cong., 2d Sess. (2018), passed both chambers of Congress at breakneck speed this year, the fastest pace in approximately 20 years, and was presented to President Trump on August 3, 2018. The bill enjoyed substantial bipartisan support in both the Senate and the House. It authorizes a $717 billion national defense budget and also reforms certain practices. Continue reading “Technical Data Rights Protections Eroded by FY19 NDAA”

Certified Cost and Pricing Data Thresholds to Increase July 1, 2018

Scott Arnold and Sara N. Gerber

On July 1, 2018, the threshold for obtaining certified cost and pricing data increases substantially from $750,000 to two million dollars. The change was authorized by the Department of Defense pursuant to a class deviation, pending official rulemaking and publication in the Federal Acquisition Regulation (“FAR”). The class deviation implements Section 811 of the National Defense Authorization Act (“NDAA”) for Fiscal Year 2018, which raised the certified pricing threshold contained in the Truthful Cost or Pricing Data Act (still commonly referred to as “TINA” based on the former name of the relevant statute, the Truth in Negotiations Act). The Civilian Agency Acquisition Council recently followed suit, advising other federal agencies that they “may authorize a class deviation to implement the threshold change.” In addition to the increase under the NDAA, the TINA threshold is also subject to adjustment every five years to keep pace with inflation. See 41 U.S.C. § 1908. The last adjustment for inflation, made in 2015, raised the threshold by $50,000. Continue reading “Certified Cost and Pricing Data Thresholds to Increase July 1, 2018”

GAO’s New Bid Protest Regulations in Effect Now

Scott Arnold

Many of you are aware of the Government Accountability Office’s (“GAO’s”) new bid protest regulations; this is a reminder that they went into effect today, May 1, and include several significant changes. You can see the April 2, 2018, Federal Register text of the revisions here, and in addition to the changes themselves, the background and discussion of comments received in response to GAO’s earlier proposed changes are worth reading to fully understand the new rules and where GAO is coming from.

A quick summary of the most important changes: Continue reading “GAO’s New Bid Protest Regulations in Effect Now”

New DOD Class Deviation Changes Debriefing Process

Scott Arnold

The United States Department of Defense (“DOD”) has amended the process for debriefings required under Federal Acquisition Regulation (“FAR”) 15.506 to allow for offeror questions related to the debriefing. Offerors are allowed up to two business days following a debriefing to submit written questions, and the agency has up to five business days after receipt of the questions to submit written responses. The agency must hold the debriefing open until it delivers its written responses to the disappointed offeror. The new process applies to all DOD debriefings required under FAR 15.506.

The purpose of this new rule implementing section 818 of the 2018 National Defense Authorization Act (“NDAA”) is to improve the quality of debriefings and reduce the number of situations where disappointed offerors feel compelled to protest because the information they receive in debriefings is insufficiently detailed to convince them that the selection decision was fair. More fulsome debriefings should allow offerors to make more informed decisions about whether to protest. Continue reading “New DOD Class Deviation Changes Debriefing Process”

NDAA Section 811: New Waiver Authority—What Does It Mean?

Scott Arnold

The Senate’s markup of the 2018 National Defense Authorization Act (“NDAA”) adds new language to 10 U.S.C. § 2304 that would give the Secretary of Defense authority to waive provisions of law that result in only one responsible bidder for a contract for purposes of expanding competition. However, the new provision, which appears in Section 811 of the bill and which, if enacted, would be part of a new subsection (m) added to 10 U.S.C. § 2304, contains a significant carve-out such that it would not permit the Secretary of Defense to impose additional competition in connection with the Small Business Administration’s 8(a) program.

Continue reading “NDAA Section 811: New Waiver Authority—What Does It Mean?”

Final Rule Expanding the FAR’s Compensation Cap to All Contractor Employees on DoD, NASA, and Coast Guard Contracts

Scott Arnold and Stephanie M. Harden

Scott ArnoldStephanie Marie ZechmannOn May 30, 2014, the Federal Acquisition Regulatory Council issued a final rule expanding the FAR’s executive compensation cap—which is currently set at $952,308—to all contractor employees on contracts for the Department of Defense (DoD), NASA, and the Coast Guard. The final rule adopts without any changes the interim final rule issued on June 26, 2013, as modified by a subsequent technical amendment.

Overview of the Final Rule

The FAR’s executive compensation cap limits the allowability of executive compensation to an amount set each year by the Administrator of the Office of Federal Procurement Policy. The rule, which is implemented by FAR 31.205-6(p), previously applied only to the CEO and the next four most highly compensated employees in management at the company’s headquarters, as well as the five most highly compensated employees at certain other home offices of the contractor. The updated rule expands the applicability of the cap to all contractor employees on DoD, NASA, and Coast Guard contracts awarded on or after December 31, 2011.

The final rule was issued pursuant to Section 803 of the National Defense Authorization Act (NDAA) for Fiscal Year 2012 (Pub. L. 112-81). In response to a comment that the final rule will reduce contractors’ ability to attract and retain experienced and talented individuals, the comments to the final rule explain that a June 2013 GAO report found that less than .4 percent of defense contractor employees would be affected by a cap set at the President’s salary of $400,000. The comments also note that GAO found that fewer than .1 percent of employees covered by the existing cap were affected by the cap from 2010 to 2012. The final rule also indicated that the DoD is not prohibited from considering an exception to the cap for scientists and engineers. Continue reading “Final Rule Expanding the FAR’s Compensation Cap to All Contractor Employees on DoD, NASA, and Coast Guard Contracts”