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Government Contractor Roundup

June 23, 2022

Donald J. Walsh

OFCCP Registration Compliance

Government contractors and subcontractors have until June 30, 2022 to register with the OFCCP’s new Contractor Portal.  Contractors and subcontractors must use this new portal to annually certify compliance with the development and establishment of an affirmative action program for each establishment and/or functional unit and to submit their AAPs during compliance evaluations by the OFCCP. The OFCCP has provided resources to assist covered contractors and subcontractors in complying with this new requirement, available at www.dol.gov/agencies/ofccp/faqs/contractorportal.

Government Cannot Cancel Procurements So Easily

Contractors spending time, money and effort to prepare a bid only to have it cancelled by the Government have a new weapon to force the Government to pause its decision.  Although government agencies have broad discretion to define their needs, the United States Court of Federal Claims demonstrated that this discretion is not unlimited and must be performed thoughtfully.  

In Seventh Dimension, LLC v. U.S., No. 21-2275C (May 2022), the contractor challenged the cancellation and resolicitation after a two-year bidding and successful protest process solely relying on the Contracting Officer’s (CO) discretion. The decision focused on FAR 15.206(e) and whether the CO reasonably exercised her “judgment based on market research or otherwise” that the USASOC’s proposed amendment “is so substantial as to exceed what prospective offerors reasonably could have anticipated, so that additional sources likely would have submitted offers had the substance of the amendment been known to them.”

The court found that the CO failed to consult “market research or otherwise,” relying exclusively on FAR15.206(e). The court pointed out that the correct standard centers on whether “additional sources likely would have submitted offers had the substance of the amendment been known to them,” not whether an offeror “may view” the revised solicitation more favorably. The court reaffirmed the Administrative Procedure Act and requirement that the CO’s judgment to be supported with facts from the administrative record. The APA “requires reasoned judgment based on evidence or facts contained in the administrative record.”

SMO Responsibilities increase

In February 2021, the Department of Defense (“DoD”) promulgated 32 C.F.R. Part 117 transforming security requirements from DoD policy into federal law and added new requirements to NISPOM with potentially significant implications for cleared contractors and their senior management officials (“SMO”).   A cleared contractor’s SMO is the person “with ultimate authority over the facility’s operations and the authority to direct actions necessary for the safeguarding of classified information in the facility.” § 117.3(b).

Obligating the SMO consistent with standards for measuring the conduct of corporate officers and directors, the SMO is fully accountable for a cleared contractor’s industrial security program, can no longer delegate compliance to others to maintain but must maintain a proactive approach to security.  The SMO must: i) ensure the contractor maintains a system of compliant security controls; ii) appoint, in writing, a Facility Security Officer (“FSO”) and Insider Threat Program Senior Official; iii) keep updated and informed of the facility’s classified operations; iv) act consistent with classified threat reporting and the potential impacts caused by a loss of classified information; and v) retain accountability for the management and operations of the facility without delegation.  

Key Personnel Warning

In Sehlke Consulting, LLC, May 18, 2022, B-420538, the GAO sustained a protest because the agency failed to penalize the awardee when a proposed key person employed under the incumbent contract provided notice that he planned to resign and the COTR was informed of the pending departure. Even though still employed on the date of award, GAO held that the agency’s failure to consider his apparent “prospective unavailability” for the follow-on contract undermined the contract award.  The GAO held it was irrelevant that the key person was still employed on the date of award because “there was definitive knowledge of the proposed key person’s unavailability to perform the intended contract.” GAO noted that the key person “unambiguously resigned to take a position with a different firm, thereby making it clear that the individual would not be available to perform as part of the follow-on contract effort.” Because the key person was resigning to join another firm, GAO held there was “no basis to assume, without evidence to the contrary,” that the individual might return to perform the follow-on contract.

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