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.

Claims Updates

The Federal Circuit took the second major step towards correcting the jurisdictional framework that applies to Contract Disputes Act (CDA) litigation in ECC International Constructors, LLC v. Secretary of the Army, holding that the requirement for contractors to state a sum certain in a CDA claim is not a jurisdictional rule. The Federal Circuit explained that Congress did not clearly state that a claim submitted under the CDA must include a sum certain in order for the board or a court to exercise jurisdiction, and Supreme Court precedent further supports that the sum-certain requirement fits comfortably within the class of mandatory, nonjurisdictional claim-processing rules that concern the elements of a claim.

Stay tuned for more detailed analysis from Special Counsel Nathan Castellano in the next issue of The Nash & Cibinic Report.

PAE Applied Technologies LLC, ASBCA No. 63233 (August 24, 2023)

• The ASBCA denied the Navy’s motion to dismiss in a decision addressing what constitutes a government claim under the Contract Disputes Act.
• Specifically, the ASBCA determined that a Navy demand letter—in which the Navy sought repayment of COVID-19-related costs previously paid to the contractor—could constitute a final decision and government claim under the CDA. Accordingly, the ASBCA determined it had jurisdiction over the contractor’s appeal.
• The Navy’s demand letter asked the contractor to reimburse the Navy $4,302,782.8 plus the applicable indirect rates plus a 2% fee. The Navy wrote that the payments to the contractor were unallowable “non-productive” COVID-19 costs. In addition, the Navy placed a 30-day payment deadline, after which the Navy stated it would calculate interest on the amount owed.
• The ASBCA looked to the “totality of the previous correspondence between the parties” to determine whether a final decision, and thus a government claim under the CDA, existed.
• Using this test, the ASBCA determined that the demand letter sufficiently stated the amount the Navy was seeking to recoup and Navy’s basis for seeking recoupment. The board concluded it did not matter that the demand letter was not formally labeled as a final decision. The board also determined that the sum certain requirement was met regardless of whether the correct applicable indirect rates and fee were applied; the sum certain was the amount the government previously paid the contractor.

The boards will look to substance over form when determining whether a final decision and claim by the government has been issued. Contractors receiving requests for monetary payments from their government customer should take care to not miss any appeal deadlines.

Protest Decisions

Raytheon Intelligence & Space, Electronic Warfare Self Protect Systems, B-421672.1; B 421672.2 (August 17, 2023)

• GAO upheld the exclusion of Raytheon from a competition for electronic-warfare self-protection decoys where the contracting officer determined that Raytheon gained an unfair competitive advantage by hiring a former government employee.
• The contracting officer’s investigation found that the former government employee served as a technology advisor for a predecessor phase of the program and provided input on draft documents for the current acquisition.
• GAO rejected all the protester’s arguments, including that the former government employee’s access to information was limited. GAO noted that the contracting officer conducted a thorough investigation that documented the scope of the employee’s responsibilities and the relevance of his work on the predecessor program to the current procurement.
• Similarly, despite the protester’s contention that the former government employee provided only limited input into preparing Raytheon’s proposal, GAO found that there were “hard facts” (and not mere speculation) based on the official’s access to proprietary information and involvement in prior government work. Under such circumstances, there is a rebuttable presumption that judgments involved in preparing a proposal may be shaped—consciously or subconsciously—by knowledge of restricted information.
• Finally, GAO found unobjectionable the contracting officer’s decision to place little weight in the post-government employment opinion letter for the former government employee. Although the letter imposed no restriction relating to participation in the procurement, the opinion letter was based solely on information volunteered by the employee to the Navy lawyers, and the employee did not identify any role on this program.

The FAR prohibits conflicts of interest in the government’s procurements, directing agencies to strictly avoid even the appearance of a conflict of interest in relationships between the government and contractors. Accordingly, where an offeror chooses to hire a former government official who has had recent access to competitively useful information and uses that official to help prepare the offeror’s proposal, the proposal may be properly disqualified based on the appearance of an unfair competitive advantage.

Small Business Updates

A recent decision from the Small Business Administration (SBA) Office of Hearing and Appeals (OHA) serves as a good reminder that OHA is a stickler for its service rules. In this matter, VSBC Appeal Of: Better Metal, LLC, the appellant appealed the denial of its application for certification as a Veteran-Owned Small Business to OHA, but served a copy of its appeal to the wrong SBA email address. Despite the appellant’s arguments that this was an unknowing and inadvertent typographical error with no prejudicial effect on the SBA, OHA nonetheless dismissed the appeal as noncompliant. For companies filing at OHA, it is critical to ensure that all service requirements have been met—or suffer dismissal.

8(a) Applications/Eligibility

In the wake of a court decision preventing the government from using a “rebuttable presumption of social disadvantage in administering” the 8(a) program, GSA has issued guidance on how to administer the program. 8(a) program participants and prospective participants should review the guidance here.

Investigations and Enforcement

Joint Commerce, Treasury and Justice Announcement Regarding Disclosing Export Control Violations

The Departments of Commerce, Treasury and Justice recently released a note describing the voluntary self-disclosure policies applying to US sanctions, export controls, and other national security laws, and highlighting recent changes. This helpful guide contains timelines and summary guidance that government contractors and recipients of federal funds are well advised to review and, if necessary, use to update existing company policies and procedures.

COVID-19 Relief Fraud Enforcement Results Announced

DOJ recently announced the results of its COVID-19 fraud enforcement efforts. The results include criminal charges against 371 defendants for offenses relating to over $836 million in alleged COVID-19 fraud. DOJ also highlighted its seizure of “over $1.4 billion in COVID-19 relief funds” and charged “over 3,000 defendants with crimes in federal districts across the country.” The DOJ press release may be found here.

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