United States: Government Contracts Legislative And Regulatory Updates - April 2018

Our April edition of "Government Contracts Legislative and Regulatory Update" offers a summary of the relevant changes that took place during the month of March.

Highlights this month include:

  • Government Accountability Office (GAO) changes bid protest systems
  • The National Aeronautics and Space Administration (NASA)
  • DoD guidance enhances post award debriefing rights

This update will also be available in Contract Management Magazine, which is published monthly by the National Contract Management Association (NCMA).

Regulations

Industry Developments

Regulations

Government Accountability Office (GAO) changes bid protest systems

GAO announced amendments to the GAO Bid Protest Regulations.  The amendments, which are effective on May 1, 2018, strive to reflect current practices, streamline the bid protest process, and make clerical corrections.  The amendments affect bid protesting contractors as follows:

  • Bid protestors at the GAO must protest using the Electronic Protest Docketing System (EPDS).
  • Bid protestors at the GAO must pay a $350 filing fee.
  • The filing deadline, 5:30 p.m. ET, is only satisfied if the filings are received in EPDS by that time.
  • EPDS is the sole method for filing documents in connection with a bid protest UNLESS the documents contain classified material or the documents, for reasons of size or format, are not suitable for filing through EPDS.

Note that GAO did not revise the requirement to provide a copy of the protest to the contracting officer, which is required by 4 C.F.R. § 21.1(e).  Although bid protestors must file in EPDS, bid protestors must also provide a copy of the protest to the contracting officer.

GAO guidance regarding the use of EPDS is available at https://epds.gao.gov/login.  (83 Fed. Reg. 13,817, 04/02/2018).

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Department of Defense's Mentor- Protégé Program amended to add new reporting requirement for mentor firms

On March 13, 2018, the Department of Defense (DoD) issued a final rule implementing a section of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 that amends the DoD Pilot Mentor-Protégé Program.  The amendments aim to provide the DoD's Office of Small Business Programs (OSBP) with information to support decisions regarding continuation of particular mentor-protégée agreements.

The most significant amendment provides a new reporting requirement for mentor firms.  Mentor firms must provide information to OSBP to support decisions regarding continuation of particular mentor-protégée agreements.  Mentor firms must provide additional information regarding the assistance provided to protégé firms and the success of this assistance.  The mentoring firms will also need to obtain supporting information from the protégée firms in order to properly assess, and allow the OSBP to assess, the success of the assistance provided. 

Additionally, there are new eligibility criteria for the program, including additional limitations on protégé firm participation.  Finally, the agreement is extended for three additional years until September 30, 2021.  (83 Fed. Reg. 12,682, 03/23/2018).

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The National Aeronautics and Space Administration (NASA) amends its payment process

NASA issued a final rule amending its voucher and invoice submittal and payment process, effective April, 26, 2018.  The rule amends NASA Federal Acquisition Regulation Supplement (NFS) to ensure that NASA complies with Office of Management and Budget Memorandum M-15-19, which directs federal agencies to transition to electronic invoicing for federal procurements before the end of FY 2018.  This rule revises NASA's submission-and-payment process requiring invoicing for fixed price contracts and fee vouchers for cost-type contracts to be submitted electronically.

As of April 26, 2018, NASA will only process invoices and vouchers through an electronic eInvoicing Secure File Transfer (SFT).  The transition to exclusively processing invoices and vouchers through electronic eInvoicing SFT is predicted to save NASA $139,964 per year, in addition to creating administrative cost savings for contractors.  (83 Fed. Reg. 13,113, 03/27/2018).

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Industry Developments

DoD guidance enhances post award debriefing rights

On March 22, 2018, the DoD issued guidance enhancing post-award debriefing rights for unsuccessful offerors.  Pursuant to the guidance, unsuccessful offerors may submit to the awarding agency additional questions relating to the contracting officer's debriefing.  The questions must be submitted within two business days after receiving the debriefing.  The awarding agency has five business days to respond, in writing, and the post-award debriefing will not be considered concluded until the agency delivers its written responses.

The enhanced debriefing rights modify the GAO's protest timelines under FAR 33.104(c).  Contracting officers must now suspend contract performance or terminate the awarded contract upon receipt of a protest filed with the GAO within:

  • Ten days after the date of contract award;
  • Five days after a debriefing date offered to the protestor under a timely request; or
  • Five days after the awarding agency delivers its written response to the additional questions submitted pursuant to this guidance, whichever is latest.

This guidance implemented paragraphs (b) and (c) of section 818 of the NDAA for FY 2018 (Pub. L. 115-91), which amends 10 USC 2305(b)(5) and 31 USC 3553(d)(4).

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President's Management Agenda lays out plan for modernizing government

On March 20, 2018, the White House Office of Management and Budget released the President's Management Agenda (PMA), the administration's blueprint for modernizing the federal government while considering the importance of effectively using taxpayer dollars. The PMA's three priorities are IT modernization, data accountability and transparency, and creating a 21st century workforce.

The PMA also states that the federal government could reduce its annual spending on common goods and services—currently about $300 billion—through the use of agency share contracts. Although the goal of leveraging common contracts is to save the federal government money, the PMA's IT modernization and increased data accountability/transparency goals present significant revenue opportunities for government contracting companies. Federal agencies will likely spend large amounts of money on federal contracts to update their technological processes and systems.

The full PMA can be accessed at 
https://www.whitehouse.gov/wp-content/uploads/2018/03/Presidents-Management-Agenda.pdf.

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President signs $1.3 trillion FY18 omnibus spending bill as Congress shifts focus to FY19 budget

On March 23, 2018, President Trump signed into law the Consolidated Appropriations Act of 2018, a comprehensive appropriations measure that funds the federal government through the remainder of FY 2018 (September 30, 2018). The $1.3 trillion omnibus spending bill includes $654.6 billion in discretionary funding for the DoD, including $89.2 billion for research, development, testing and evaluation of new defense technologies, and $144.3 billion for equipment procurement and upgrades. With midterm elections and a potential party shift or divided government looming, it is possible that Congress will not pass another major piece of legislation before November 2018 rolls around—with the exception of the National Defense Authorization Act for Fiscal Year 2019 (NDAA). Congress' annual defense policy bill has been passed and signed into law for each of the past 57 years, and is expected to authorize approximately $716 billion in funding for DoD in FY19.

With passage of the FY18  spending bill complete and the potential for any additional legislative battles over short-term federal government funding measures (i.e., continuing resolutions) in FY18 eliminated, Congressional authorizers and appropriators have already shifted their focus to consideration of the FY19 federal budget. The House Armed Services Committee (HASC) is scheduled to hold subcommittee markups of the NDAA on April 26, and the marathon full committee markup is slated for May 9. Floor debate on the NDAA in the House has not been announced, but HASC Chairman Mac Thornberry (R-TX 13th) is targeting House passage of its version of the NDAA before Memorial Day. Although the Senate Armed Services Committee (SASC) has not, at this writing, released its NDAA markup schedule, its initial consideration of the bill at the subcommittee and full committee levels is expected to take place within a similar timeframe as the HASC's consideration.

Thornberry and SASC Chairman John McCain (R-AZ) have driven annual defense acquisition reform initiatives via the NDAA since taking control of their respective committees in 2015. However a nascent, but nevertheless genuine, cultural change is afoot at the DoD, which recognizes a need for speed in deploying new technologies and capabilities to its warfighters if the US is to maintain an asymmetric advantage over its adversaries. Ash Carter, former secretary of defense in the Obama administration, created the DoD's modern innovation and acquisition reform movement with the formation of components such as the Defense Innovation Unit-Experimental (DIUx) and the Strategic Capabilities Office, and by placing greater emphasis on, and increasing funding for, the missions of legacy components, such as the Defense Advanced Research Projects Agency (DARPA). Current Secretary of Defense James Mattis has strongly endorsed and continued Carter's innovation and acquisition reform efforts.

It is within this evolving defense acquisition reform landscape and renewed push by the DoD to innovate faster and smarter with the help of non-traditional commercial partners that Thornberry and bicameral, bipartisan supporters are expected to incorporate into the this year's NDAA additional defense acquisition reform and innovation solutions.

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Senator Sanders criticizes DoD procurement system and contractor compensation

Senator Bernie Sanders (I-VT) sent a letter to Defense Secretary James Mattis on March 14, 2018, calling for reforms to the DoD procurement systems. The Senator's grievances, which stemmed from a recent meeting of the Senate Budget Committee, of which he is the ranking member, focused on defense contractor compensation, defense contractor fraud, and cost overruns in the DoD's acquisition budget.

First, the Senator found issue with the executive compensation packages of the large defense contractors, specifically Lockheed Martin and Raytheon. Senator Sanders compared the Secretary of Defense's salary, which is capped at $205,700, with the salaries and other compensation of Lockheed Martin and Raytheon's CEOs, which in 2017 were approximately $19.4 million and $13.8 million, respectively. Senator Sanders expressed concern that the "exorbitant salaries" of defense contractor risked corporate interests taking precedence over taxpayer interests in policymaking.

Second, the Senator addressed defense contractor fraud, specifically the awarding of defense contracts worth billions of dollars to government contractors who have paid fines and settlements for fraud or misconduct.

Finally, Senator Sanders addressed the cost overruns in the acquisition budget. According to the GAO, $484 billion of the DoD's $1.46 trillion in procurement spending is attributable to cost overruns.  The Senator asked Secretary Mattis what the Pentagon plans to do to hold defense contractors accountable for the overruns.

Although Senator Sanders' letter does not augur any immediate changes for government contractors, his grievances are worth noting as they may eventually be attended to due to his national platform.

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