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. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Cybersecurity Update

• Four years after first being announced, on July 24, 2023, the Office of Information and Regulatory Affairs (OIRA) formally received the Cybersecurity Maturity Model Certification (CMMC) Program proposed rule from DoD.
• Industry should expect to see the publication of a rule later this fall.
• While contractors will likely have another opportunity to provide comments, this is the clearest indication to date that the CMMC program is continuing to move forward towards widespread implementation.

Protest Cases

RTD Middleburg Heights, LLC, B-421477, B-421477.2, May 31, 2023 (Published July 13, 2023)

• GAO sustained a protest challenging the GSA’s award of a lease but the protester was afforded no relief other than the costs of proposal preparation and litigating the protest.
• In this procurement GSA sought to lease office space in Ohio, with award to be made on a lowest-priced, technically-acceptable basis. The Solicitation required GSA to add certain costs to proposed gross present value costs, including the cost of relocating furniture and telecommunications and other move-related costs.
• GSA awarded the lease to a company proposing new construction on the land next to the property provided by Middleburg, the incumbent vendor.
• GAO sustained Middleburg’s protest alleging that the agency’s price analysis was flawed because it excluded relocation and replication costs as required by the solicitation. Moreover, the agency conceded that it used the wrong rates in a supplemental cost-benefit analysis when assessing the awardee’s rates and determining that it offered the lowest price.

Although the protester here was able to demonstrate that it was competitively prejudiced by the agency’s several evaluation errors, the awarded lease did not contain a standard termination for convenience clause, and in the absence of such a clause, GAO ordinarily does not recommend termination of an awarded lease even where it sustains a protest. Accordingly, the protester’s relief was limited to reimbursement of its proposal preparation costs and costs of litigating the protest. This is a good reminder that companies should be savvy about the type of potential relief available when pursuing a protest.

Claims Cases

Bear Mountainside Realty, LLC v. United States, No. 23-457, Fed. Cl. (July 7, 2023)

Court of Federal Claims Judge Hertling issued a useful and interesting decision applying the rules for supplementing the administrative record in a bid protest. The protester sought to supplement the record with documents obtained through a FOIA request, and further sought discovery from the agencies involved, including depositions of certain agency officials.

• Judge Hertling questioned the protester’s “global approach” to the FOIA documents, seeking supplementation with all documents received through the FOIA request rather than providing document-specific argument as to why each document warranted supplementation. He noted that the government failed to object to the protester’s global approach, and—had it done so—the court may have denied the supplementation motion in full. Because the government waived that argument, the court permitted the protester to present arguments as to specific documents.
• Ultimately, the court admitted some but not all of the FOIA documents. Judge Hertling, however, denied the requests for additional discovery and depositions, explaining that the protester failed to establish an inference of bad faith or that the information sought was necessary for effective judicial review.

The contents of the administrative record often dictate the outcome of a bid protest. The substantive and procedural rules for completing and supplementing the record are major points of distinction between protests litigated at the GAO and the Court of Federal Claims. This opinion provides a good primer on the fundamentals that all protest counsel should master.

False Claims Act Update

• In recent years, there has been an increase in False Claims Act cases based on violations of customs laws and regulations. In Island Industries Inc. v. Sigma Corp., the Ninth Circuit is set to decide whether federal courts have subject matter jurisdiction over customs fraud cases within the context of a False Claims Act qui tam.
• While the defendant argues that the Court of International Trade should have exclusive jurisdiction, the government argues that customs fraud cases can come under the False Claims Act. In late February, the parties submitted supplemental briefing on this issue. We will keep you updated on the impact of this ruling on government contractors.

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