Government Contracts Update
News for the Week of April 29, 2019

Hot Topic:
Six Final Rules Amend the DFARS
The Department of Defense has issued six final rules that amend the Defense Federal Acquisition Regulation Supplement. All of these final rules have an April 1, 2019, effective date.

The final rule in DFARS Case 2019-D006 (¶70,016.977) removes the clause at DFARS 252.204-7005, Oral Attestation of Security Responsibilities, and the associated clause prescription at DFARS 204.404-70. This clause, which was used in solicitations and contracts when the contractor may have needed access to classified information, required certain cleared contractor employees to attest orally that they would conform to requisite security responsibilities by reading aloud the first paragraph of Standard Form 312, Classified Information Nondisclosure Agreement, in the presence of a person designated by the contractor and a witness.

The purpose of this clause was to make individuals more aware of the significance of the access being granted. Upon further review, DoD subject matter experts determined that the clause was not necessary to safeguard classified information in industry.
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Regulatory News:
Proposed DFARS Rule on Employing Persons with Disabilities
The Department of Defense is proposing to amend the Defense Federal Acquisition Regulation Supplement. This rule proposes to add new DFARS Subpart 226.7X, Demonstration Project for Contractors Employing Persons with Disabilities, which would include guidance for the contracting workforce regarding the demonstration project.
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DoD Rule Would Require Preference for Use of Fixed-Price Contracts
A Department of Defense proposed rule would amend the Defense Federal Acquisition Supplement to require a preference for the use of fixed-price contracts in the determination of contract type, require review and approval for certain cost-reimbursement contract types at specified thresholds and established time periods, and require the use of firm fixed-price contract types for foreign military sales unless an exception or waiver applies.
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DFARS Rule Would Update Nonmanufacturer Rule Requirements
A proposed rule would amend the Defense Federal Acquisition Regulation Supplement to implement a Small Business Administration final rule that revised and standardized limitations on subcontracting, including the non manufacturer rule, as applied to small business concerns, including participants in the 8(a) Program. Small business concerns must meet certain requirements when they offer an end item they did not manufacture, process, or produce.
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DoD Adds Clause for Accounting Firms Supporting Audits
Department of Defense Class Deviation 2019-O0007, Accounting Firms Used to Support Department of Defense Audits, requires contracting officers to use deviation clause DFARS 252.237-7999, Requirement for Accounting Firms Used to Support Department of Defense Audits, when contracting with accounting firms providing financial statement auditing or audit remediation services in support of audits required under 31 USC 3521.
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Legal News:
Multiple Evaluation Errors Halt Awards
The Court of Federal Claims enjoined the government from proceeding with 81 contract awards for information technology services because the contracting officer's evaluation failed to comply with the terms of the solicitation and was irrational. For two of the offerors, the CO relied solely on DCAA letters discussing the adequacy of the offerors' incurred cost proposals to conclude the offerors had verified they possessed a CAS that the DCAA had audited and found adequate. (Citizant, Inc. v. U.S., et al., FedCl, 63 CCF ¶81,617)
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Government's Immunity Waived but Settlement Barred Claims
Although the government could not assert sovereign immunity for alleged violations of jus cogens norms of international law, the District Court for the Eastern District of Virginia granted the government summary judgment and dismissed the contractor's third-party complaint, because the contractor agreed to a settlement of all claims against the government "arising out of or related to" the two task orders to provide interrogators. Foreign nationals brought Alien Tort Statute (28 USC 1350) claims against the contractor, alleging their treatment while detained at Abu Ghraib prison constituted torture; cruel, inhuman, or degrading treatment; or war crimes. (Al Shimari, et al. v. CACI Premier Technology, Inc., DC ED Va, 63 CCF ¶81,616)
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Price and Technical Evaluations Were Unreasonable
The Comptroller General sustained a protest of a task order award for information technology operations and services and remediation support services because the price and technical evaluations were unreasonable. In response to the protester's challenge to the price reasonableness evaluation, the government maintained that it properly used the technique set forth in FAR 15.404-1(b)(2)(i), which states "[n]ormally, adequate price competition establishes a fair and reasonable price." However, "the presence of competition—alone—does not render every price received reasonable per se" (Cognosante, LLC, 34 CGEN ¶116,331)
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Undisclosed Utility Line Entitled Contractor to Costs
An appeal seeking additional compensation was sustained by the Armed Services Board of Contract Appeals because the government's direction to provide gas service was outside the scope of the contract. The contractor's provision of temporary and permanent gas service to the adjacent building was extra work for which it was entitled to recover under the Changes clause. (GSI & Whitesell-Green JV, ASBCA, ¶95,723)
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Major Contract Awards:
Weapons Systems — $14.3 Billion
The Boeing Co., Oklahoma City, Oklahoma, has been awarded a $14,314,300,000 indefinite-delivery/indefinite-quantity contract for the modification, modernization, engineering, sustainment and test of the B-1/B-52 weapons systems. Air Force Life Cycle Management Center, Wright-Patterson Air Force Base, Dayton, Ohio, is the contracting activity.
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E-2D Aircraft — $3.2 Billion
Northrop Grumman Systems Corp., Aerospace Systems, Melbourne, Florida, was awarded $3,169,708,972 for modification P00006 to definitize the previously awarded E-2D Advanced Hawkeye Lot 7 advance acquisition contract to a multi-year fixed-price-incentive-firm contract. This modification provides for the procurement of 24 full-rate production Lots 7-11 E-2D AHE aircraft. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.
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THAAD Interceptor — $2.4 Billion
Lockheed Martin Corp. Missiles and Fire Control, Dallas, Texas, is being awarded a $2,457,390,566 modification to a previously-awarded contract for the production of Terminal High Altitude Area Defense interceptors and associated one-shot devices to support the U.S. government and the Kingdom of Saudi Arabia Foreign Military Sales case requirements. The Missile Defense Agency, Huntsville, Alabama, is the contracting activity.
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Energy Services — $1.6 Billion
Keenan Fort Detrick Energy LLC, Columbia, South Carolina, was awarded a $1,600,000,000 firm-fixed-price contract for energy services. U.S. Army Mission and Installation Contracting Command, Fort Sam Houston, Texas, is the contracting activity.
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From Wolters Kluwer Legal & Regulatory's Government Contracts editors, here are summaries of the important recent developments in this practice area. Complete coverage of these issues, and more, appears in Government Contracts Reports, the Government Contracts Reporter, and related CCH products.

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