Category: Bid Protests

After Acetris Decision, Trade Agreements Act Compliance Questions Abound: Contractors Need Guidance

Merle M. DeLancey Jr., Jay P. Lessler, and James R. Staiger

The Federal Circuit’s recent decision in Acetris has left many contractors scratching their heads and asking questions. To recap, on February 10, 2020, the Federal Circuit held that, under the Federal Acquisition Regulation (“FAR”), to qualify as a “U.S.-made end product” under the Trade Agreements Act (“TAA”), a drug must be either “manufactured” in the United States or “substantially transformed” in the United States. (See Federal Circuit Holds Generic Drugs Manufactured in the U.S. from API Produced in India Qualify for Sale to U.S. under Trade Agreements Act (Acetris Decision).) This is a stark change from the Government’s long-held position that manufacturing and substantial transformation were one in the same.

As a result of the Acetris decision, federal contractors seeking to comply with or maintain compliance with the TAA are facing many questions. Some of the more prominent questions are below. Continue reading “After Acetris Decision, Trade Agreements Act Compliance Questions Abound: Contractors Need Guidance”

Federal Circuit Holds Generic Drugs Manufactured in the U.S. from API Produced in India Qualify for Sale to U.S. under Trade Agreements Act (Acetris Decision)

Merle M. DeLancey Jr., Jay P. Lessler, and James R. Staiger

Earlier today, the United States Court of Appeals for the Federal Circuit issued a decision that is sure to send shockwaves through the generic drug industry. In Acetris, the Federal Circuit held that a generic drug manufactured in the United States complied with the Trade Agreements Act (“TAA”) and could be sold to the Department of Veterans Affairs. The court made this determination even though the drug’s active pharmaceutical ingredient (“API”) came from a non-designated country, India. In reaching its decision, the court broke away from longstanding Customs and Border Protection (“CBP”) precedent that the country where the API was produced dictated the location of “substantial transformation” and thus the country of origin for any resulting drug. The court held that under the Federal Acquisition Regulation (“FAR”), to qualify as a “U.S.-made end product” under the TAA, a drug must be either “manufactured” in the United States or “substantially transformed” in the United States—but not be both.

For years, generic drug manufacturers that manufacture drugs in the United States from API produced in India and China have been precluded from selling their drugs to the U.S. Government under the TAA. The Federal Circuit’s Acetris decision opens up the U.S. Government market for generic drugs manufactured in the U.S. from API produced in India and China.

 

 

Still Effective: Four Takeaways from the FY 2019 GAO Protest Statistics

Luke W. Meier and Albert B. Krachman

The Government Accountability Office (“GAO”) has released its Annual Report to Congress summarizing bid protest activity for Fiscal Year 2019 (B-158766). The report shows that the number of protests has fallen, the effectiveness rate has remained high and remarkably stable, and hearings have made a bit of a comeback.

The chart below summarizes the GAO protest statistics from FY 2014 to FY 2019.

Here are four key takeaways from the latest report. Continue reading “Still Effective: Four Takeaways from the FY 2019 GAO Protest Statistics”

Evaluations That Prompt Corrective Action Must Be Documented

Michael J. Slattery

We discussed in a previous blog post how the current state of the law at the U.S Government Accountability Office (“GAO”) and within the Federal Circuit limits offerors’ ability to effectively challenge agency corrective action. See 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. Specifically, we demonstrated that GAO has adopted a highly deferential, “hands off” position with regard to agency corrective action, holding that “the details of a corrective action are within the sound discretion and judgment of the contracting agency.” Northrop Grumman Tech. Servs., Inc., B-404636.11, June 15, 2011, 2011 CPD ¶ 121 at 3. Under governing GAO case law, agencies have discretion to decide the scope of corrective action, including whether discussions will be held, the breadth of such discussions, which offerors shall be included in the corrective action, and the scope of permitted revisions to proposals. Deloitte Consulting, LLP, B-412125.6, Nov. 28, 2016, 2016 U.S. Comp. Gen. LEXIS 348 at *1, *11 (citing Computer Assocs. Int’l., B-292077.2, Sept. 4, 2003, 2003 CPD ¶ 157 at 5). Indeed, GAO will not disturb an agency’s proposed corrective action so long as the corrective action is deemed reasonable—that is, so long as the corrective action is “appropriate to remedy the flaw which the agency believes exists in its procurement process.” Onésimus Def., LLC, B-41123.3, B-41123.4, July 24, 2015, 2015 CPD ¶ 224 at 5. Continue reading “Evaluations That Prompt Corrective Action Must Be Documented”

Agency Protests: An Emerging Tool and Potential Threat for Contractors

Merle M. DeLancey Jr. and Michael Joseph Montalbano

In May 2018, the Government Accountability Office (“GAO”) implemented a $350 filing fee for bid protests. There are differences of opinion regarding why GAO implemented the fee. GAO publicly states that the fee was implemented to cover the costs of its new Electronic Protest Docket System (“EPDS”). Many, however, believe the fee was implemented to deter the filing of frivolous protests. Regardless, there “may” be an unintended consequence of the protest filing fee—an increase in agency-level protests. Recently, several agency contracting officers have stated that they are handling more agency protests, and, in their opinion, it is a direct result of GAO’s protest filing fee. As a result, contractors should understand and be prepared to mitigate the risk of agency protests to protect their contracts and position themselves for new ones.

Pros and Cons of Agency Protests Continue reading “Agency Protests: An Emerging Tool and Potential Threat for Contractors”

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”

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?”

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”

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”