PNWC’s Government Contracting Update - page 60

The Department of Energy (DOE) is known for their gigantic cost-type contracts where all of the financial risks are ascribed to the Agency and ultimately American taxpayers. DOE spends billions of dollars every year cleaning up nuclear production sites across the land. It is dangerous work where safety is paramount. DOE contractors seem to generate more than their fair share of whistleblowers. Most of these whistleblowing events relate to safety issues though more than a few relate to financial improprieties (e.g. timecard mischarging or overtime pay for hours not worked).

Source: PNWC’s Government Contracting Update: DOE Trying to Limit Costs Related to Whistleblower Activities

A recent bid protest decision handed down by the Comptroller General sustained the incumbent contractors appeal that the Government did not evaluate the realism of the awardee’s pricing. The awardee had proposed to hire incumbent employees at lower compensation levels than they were currently earning. The Government should have looked into the matter – especially since the solicitation stated that price realism would be considered.

Source: PNWC’s Government Contracting Update: Proposing to Hire Incumbents at Lower Wages? – Be Prepared to Demonstrate Price Realism

When Government property is furnished to contractors for use on or incorporation into a Government contract or contract deliverables, the contract clause at FAR (Federal Acquisition Regulations) 52.245-1 – Government Property, applies. This clause requires, among many other things, that contractors develop and maintain a system of internal controls to manage, control, use, preserve, protect, repair, and maintain Government property in their possession. This required internal control system is rather extensive in scope and you can read more details here.

Source: PNWC’s Government Contracting Update: Government Property – Cannibalizing is Generally Prohibited

A former Commerce Department employee has been indicted on a conspiracy to pay and receive bribes. Back in 2006, the computer systems at a Commerce Department agency were infected by a computer virus. The infection required Commerce to shut down internet access to many of its computers for an extended period of time and to construct a new computer network that had not been infected by the virus.

Source: PNWC’s Government Contracting Update: Former Commerce Employee Indicted on Bribery Charges

When preparing price proposals, many – perhaps most – contractors attempt to develop discrete estimates for each direct cost element and for required activities or purchases within those cost elements. These methodologies, while sometimes unavoidable, require a great deal of judgmental estimates or engineering estimates that have no basis other than someone’s imagination. It also leads to inefficiencies during the negotiating process if the Government requires additional support or specificity.

Source: PNWC’s Government Contracting Update: Estimating – Use of Percentages and Conversion Factors

The Federal Government Ethics Office issued revised rules last week related to employees of the Executive Branch seeking other non-Federal employment. These new rules are certainly not controversial or difficult to understand and apply. They fall into the common sense category of regulations. In fact, when the Ethics Officer released it proposed rules back in February, no one bothered to respond.

Source: PNWC’s Government Contracting Update: New Rules Regarding Government Employees Seeking Post-Government Employment

The U.S. Small Business Administration (SBA) amended its regulations last week to implement provisions of the Small Business Jobs Act of 2010 (takes awhile to go from statute to regulation, it seems) and the 2013 NDAA (National Defense Authorization Act). The new rule establishes a Government-wide mentor-protege program for all small business concerns, similar to the SBA’s own mentor-protege program for participants in SBA’s 8(a) business development program.

Source: PNWC’s Government Contracting Update: SBA Expands its Mentor-Protege Program

Iraq and Afghanistan continue to be cesspools of Government contracting. Urgent requirements, huge amounts of money, and lax oversight contribute to an endless parade of contractors, subcontractors, and their employees engaged in or accused of fraud, waste, and abuse. Its a feeding frenzy over there. Many workers see what’s going on, notice huge risk/reward imbalances and decide to get a piece of the action.

Source: PNWC’s Government Contracting Update: Another Case of Alleged Contract Fraud in the Middle East

One provision in the Senate’s version of the fiscal year 2017 NDAA (National Defense Authorization Act) would require the Department of Defense to cut the number of Senior Executives (SES positions) by 25 percent before January 1, 2019. There are currently 1,000 such positions in the Defense Department so the cut would mean 250 positions. The House version of the 2017 contains no such provision and the two bills are now in compromise committee so the fate of this provision is unknown at this time.

Source: PNWC’s Government Contracting Update: Senate Wants DoD to Cut Senior Executive Positions by 25 Percent

Laguna Construction Company was awarded a government contract in 2003 to perform work in Iraq. After the work was completed, Laguna sought reimbursement of past costs, a portion of which the government refused to pay. Laguna sued the government for these costs at the Armed Services Board of Contract Appeals (ASBCA). The government alleged that it was not liable because Laguna had committed a prior material breach by accepting subcontractor kickbacks, thereby excusing the government’s nonperformance. The ASBCA granted the government’s motion for summary judgment on this ground, and declined to consider the merits of Laguna’s motion. Laguna then appealed to the U.S. Court of Appeals for the Federal Circuit. The Court of Appeals agreed with the ASBCA that Laguna committed the first material breach by violating the contract’s Allowable Cost and Payment clause and affirmed the ASBCA’s ruling.

Source: PNWC’s Government Contracting Update