Government Contracts Monitor

Federal Judge Strikes Down Enforcement Provisions of National Labor Relations Board’s “Notification of Employee Rights Under the National Labor Relations Act” Regulations

On Friday, March 2, 2012, United States District Court for the District of Columbia Judge Amy Berman Jackson partially affirmed and partially struck down the National Labor Relations Board’s (“NLRB”) “Notification of Employee Rights Under the National Labor Relations Act” regulations in National Association of Manufacturers v. National Labor Relations Board, No. 1:11-cv-01629-ABJ (D.D.C. March 2, 2012).  Judge Jackson, a recent Obama Administration appointee, found that the NLRB had the statutory power to require employers to post notices of an employee’s statutory rights.  More importantly, she also ruled that the NLRB lacked the statutory authority to punish employers who fail to post the notices, in the manner contemplated by the regulations.

GAO Sustains Price Realism Protest

The GAO recently sustained a price realism protest where the agency failed to consider the proposed prices of all technically acceptable offerors.    Digital Technologies, B-406085 (Feb. 6, 2012), available here.  The RFP requested proposals for a fixed price contract with a 6-month base period and four 1-year options for computer maintenance and support.  According to the RFP, the award would be made on a best value basis, with technical capability and past performance considered significantly more important than price.  The RFP also stated that the agency would “evaluate price based on comparative, competitive pricing among the offerors,” and that the “overall price offered will be used for comparison for evaluation purposes.”  Id. at 2.

SBA Increases Small Business Size Standards for 22 Industries in NAICS Sectors 48-49, “Transportation and Warehousing,” Effective March 26, 2012

The U.S. Small Business Administration (“SBA”) recently issued a new Final Rule, effective March 26, 2012, increasing the small business size standards for 22 industries in NAICS Sectors 48-49, “Transportation and Warehousing.”  Small Business Size Standards: Transportation and Warehousing, 77 Fed. Reg. 10943 (Feb. 24, 2012).  These increases will enable many formerly small companies to once again qualify and compete as small businesses for new procurement opportunities in these industries.  These increases also will expand the pool of qualified small businesses with which large companies can contract under their small business subcontracting plans.  It therefore will behoove all businesses, both large and small, involved with these industries, to familiarize themselves with these new size standards.

The Race to Suspend & Debar Heats Up

We recently wrote about the November 15, 2011 directive from the Director of OMB telling agencies to step up their suspension and debarment procedures.  Click hereto read the OMB directive in its entirety.   

More current events make clear that Congress means business when it comes to this issue.

The Constitution Saved the Day (and $50 Million) in False Claims Case

In the modern application of the False Claims Act, where multi-million or even multi-billion dollar settlements and fines are increasingly common, a recent case demonstrates that there is some limit and rationality to the financial exposure that a government contractor may face.  In United States ex. rel. Bunk v. Birkhart Globistics, 02-CV-1168 (E.D. Va. Feb. 14, 2012), after a jury found in favor of the Plaintiffs, Judge Anthony J. Trenga of the United States District Court for the Eastern District of Virginia refused to apply the mandatory civil penalty of $50,248,000 because it constituted an unconstitutionally excessive fine, and awarded no civil penalty.

False Country of Origin Certifications – A Reminder



The Buy America Act (BAA) is a domestic preference statute that attempts to protect the U.S. labor force by providing a preference for American goods purchased by the government.  A contractor’s “nationality” is not considered – it is the place where the goods are mined, produced or manufactured that controls whether or not they are considered “American” goods.  Most government solicitations contain a BAA clause requiring contractors to certify that the goods they propose to provide to the government are domestic.  Federal Acquisition Regulation (FAR) Clause 52.225-3.

Suspension & Debarment Gets A Push From OMB



The Government Accountability Office recently found that most federal agencies lack active and effective suspension and debarment programs, putting the government at unnecessary risk of waste, fraud, and abuse.

DCAA Increases Focus on Costs Associated with Lobbying and Earmarks

Contractors who have received legislative earmarks may soon face increased scrutiny of their cost accounting practices from DCAA auditors.  Since 1984, FAR cost principles have declared that costs associated with lobbying efforts are generally unallowable.  See FAR 31.205-22.  In general, DCAA defines lobbying costs as “amounts incurred to influence the outcome of elections, referendums, legislation, and other governmental actions at all levels of Government.”[1]  See DCAA Contract Audit Manual § 7-2116.  Until recently, the DCAA has primarily limited its audit review of costs associated with government affairs personnel and registered lobbyists.  However, DCAA is broadening its examination to cover all direct and indirect costs related to such lobbying efforts, and it is focusing its attention on recipients of legislative earmarks.

SBA Increases Size Standards for NAICS Sector 54 and NAICS Code 811212, Effective March 12, 2012

The U.S. Small Business Administration (“SBA”) recently issued a new Final Rule, effective March 12, 2012, increasing the small business size standards for 34 industries and 3 sub-industries in NAICS Sector 54, “Professional, Technical and Scientific Services,” as well as for NAICS Code 811212, “Computer and Office Repair and Maintenance.”  Small Business Size Standards: Professional, Technical, and Scientific Services, 77 Fed. Reg. 7490 (Feb. 10, 2012) (to be codified at 13 C.F.R. Part 121).  These increases will enable many formerly small companies to once again qualify and compete as small businesses for new procurement opportunities in these industries.  These increases also will expand the pool of qualified small businesses with which large companies can contract under their small business subcontracting plans.  It therefore will behoove all businesses, both large and small, competing in these industries, to familiarize themselves with these new size standards. 

A Stitch in Time Saves $18.7 Million in Criminal Fines – A Primer for Criminal Enforcement of False Claims Act Cases

The elements of a criminal false claims act case are substantially similar to the elements of a civil false claims act case: generally the knowing submission of a materially false or fraudulent claim for money or property to the government.  So, what prompts the Federal Government to pursue a criminal false claims act case in addition to a civil one? Although the Department of Justice has wide discretion regarding whether to bring a criminal case, some guidance for mitigating that risk is provided by the recent Louis Berger Group (“LBG”) case in the United States District Court for the District of New Jersey (Mag. No. 10-3198), in which the company engaged in a pattern of overbilling overhead costs over an 8 year period.  Specifically, the company repeatedly inflated the overhead rate it charged to the government by classifying non-federal overhead as federal overhead.  The pervasive and long-standing nature of the conduct and the intent of the individuals, particularly management, involved in improperly increasing the overhead rate to benefit the company likely elevated the conduct to a criminal offense.