Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives.

Commercial Item Contracting Update

A recent DFARS amendment restricts DoD contracting officers’ ability to include non-commercial FAR and DFARS clauses in new solicitations for commercial products and services. The new rule also curtails the types of clauses that DoD prime contractors can flow down to subcontracts for commercial products and services. Previously, the DFARS vaguely permitted prime contractors to flow down additional clauses above and beyond the mandatory flow-downs. Under the amended rule, only mandatory flow-downs are permitted. Additional DFARS amendments are expected as part of a broader initiative to clarify the rules for commercial subcontracts, including a much-anticipated definition of the term “subcontract.”

Artificial Intelligence Update

Byte-Sized Steps – Navigating the Biden Executive Order on AI and Other Recent Developments in AI Regulation

President Biden signed a long-awaited executive order that builds upon the administration’s previously released, non-binding Blueprint for an AI Bill of Rights, and seeks to catalyze both agency action and congressional legislation on artificial intelligence in the coming months. The Federal AI Executive Order covers myriad concerns that have been raised relating to AI—from cybersecurity to anti-discrimination to competition. This executive order builds on state executive and international efforts to regulate AI. Jenner & Block has compared the key elements of major orders and a new international code of conduct to regulate AI to help companies, including government contractors, understand the risks and concerns they face in building or integrating AI tools into their consumer or enterprise-facing products and services.

EEO-1 Data Collection Update

The 2022 EEO-1 Data Collection Process is Finally Open

After multiple delays, the collection is open. The deadline for completion is December 5, 2023.

The Director of the US Securities and Exchange Commission’s Enforcement Division issued guidance in a recent speech concerning Chief Compliance Officer liability. The SEC has brought enforcement actions where compliance personnel participated in misconduct outside of their compliance jobs, where compliance personnel misled regulators, and where there was a wholesale failure to carry out compliance responsibilities, such as failing to conduct compliance reviews and failing to remediate quality control problems. Director Grewal noted it is “rare” for compliance officers to be targeted, but the speech serves as an important reminder for compliance professionals about the rigors of, and risks involved with, their professions.

Protest Decisions

Myriddian, LLC v. United States, No. 23-1113C | November 20, 2023

• Court of Federal Claims Judge Bruggink issued an interesting decision upholding the evaluation of the awardee’s proposed key personnel where the underlying solicitation provided broad minimum education requirements and permitted flexible staffing approaches.
• CMS issued a solicitation to procure coding services to improve Medicare and Medicaid claim processing systems. After resolving a previous protest and conducting a reevaluation of proposals, CMS awarded the contract to J29. Myriddian, a technically superior but higher-priced offeror, protested. Myriddian argued that CMS conducted an improper best value determination because, in part, the agency misevaluated the qualifications of two of J29’s proposed personnel.
• Specifically, Myriddian contended that J29’s program director did not meet the solicitation’s minimum requirements because the individual had a bachelor’s degree in psychology, and the solicitation required the director to have a bachelor’s or master’s degree “in a field of study that can be reasonably interpreted to perform tasks related to this position.” Myriddian also argued that the agency unreasonably evaluated the risk posed by J29’s medical director, who was proposed as a part-time employee supported by an “assistant medical director” whose resume was not included in the proposal.
• The Court rejected these arguments. First, it was “eminently reasonable” for the agency to find that someone with a “quasi-medical” degree would be able to successfully lead a project team as the program director. Second, the Court rejected Myriddian’s complaints regarding the medical director position and noted that the solicitation neither required a full-time medical director nor required the submission of an associate medical director’s resume.

Although agencies cannot disregard minimum requirements set forth in a solicitation, agencies are generally afforded discretion to assess the adequacy of an offeror’s proposal. Myrridian provides an important reminder that COFC will uphold agency decision-making where it is reasonably consistent with the solicitation’s terms, notwithstanding recent decisions sustaining LCAT mapping and minimum requirements-related protests.

Global Alliant, Inc., B-421859.1 et al. | November 7, 2023

• GAO denied a protest challenging the issuance of a task order by the Department of Health and Human Services (HHS).
• Notably, HHS requested that GAO dismiss the protest, claiming that the protester was not an interested party because one of its proposed key personnel left the company prior to task order award and the protester did not advise HHS of the departure.
• HHS invoked GAO’s well-known rule—almost always applied by protesters to challenge the evaluation of an awardee—that a firm is required to advise an agency where it knows that its key personnel became unavailable after proposal submission but prior to award.
• GAO rejected the argument, finding that the evidence did not support the agency’s contention of unavailability: the proposed key person was employed by the protester’s subcontractor up to and through the date of award and only departed days later.

GAO’s rejection of the agency’s “interested party” dismissal request turned on the fact that the protester’s key person was not actually unavailable, but a different result presumably could have manifested under alternative circumstances. Key personnel availability issues thus should remain top of mind for both awardees and protesters under GAO’s precedent.

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