Government Contracts Update
News for the Week of August 19, 2019

Hot Topic:
E.O. Promotes Principles Underlying Buy American Act
Executive Order 13881, dated July 15, 2019, emphasizes the federal government's policy to "buy American and to maximize, consistent with law, the use of goods, products, and materials produced in the United States." The order directs the Federal Acquisition Regulation Council to consider changes in the FAR's Buy American Act regulations, which are codified in FAR Part 25.

Specifically, the order directs the FAR Council to review and revise the FAR, as appropriate, "to most effectively carry out the goals of the Buy American Act and [the current] Administration's policy of enforcing the Buy American Act to its maximum lawful extent."

In particular, this E.O. calls on the FAR Council to issue a proposed rule to amend applicable provisions in the FAR to state that materials will be considered to be of foreign origin if: for iron and steel end products, the cost of foreign iron and steel used in such iron and steel end products constitutes five percent or more of the cost of all the products used in such iron and steel end products; or for all other end products, the cost of the foreign products used in these end products constitutes 45 percent or more of the cost of all the products used in the end products.

This E.O. follows two related orders: E.O 13788 of April 18, 2017, Buy American and Hire American; and E.O. 13858 of January 31, 2019, Strengthening Buy-American Preferences for Infrastructure Projects.
Regulatory News:
SBA Adjusts Monetary-Based Size Standards for Inflation
The Small Business Administration has amended its regulations to adjust the monetary-based industry size standards for inflation. The rule updates the standards located in the table at SBA 121.201, entitled "Small Business Size Standards by NAICS Industry." The updates pertain to receipts-based size standards for 518 industries and 9 subindustries, as well as assets-based size standards for 5 industries.
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GSA Updates Issuance of Acquisition Policy
A direct final rule amends the General Services Administration Acquisition Regulation to remove internal agency guidance regarding deviations from the Federal Acquisition Regulation and the GSA Acquisition Manual and move it to GSA's nonregulatory acquisition policy. This rule is part of GSA's effort to identify internal agency guidance on roles and responsibilities on issuing GSA acquisition policies and approval requirements that need to be moved to GSA's non-regulatory acquisition policy located within the GSAM.
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Legal News:
REA Bore All Hallmarks of a Request for a Final Decision
A board's dismissal of an appeal for lack of jurisdiction was reversed and remanded because the Court of Appeals for the Federal Circuit found the contractor's submission constituted a request for a final decision by the contracting officer, and the CO's denial of the submission was a final decision on a claim. The fact the submission was styled as an REA, and the contractor's request that the document "be treated as an REA," were not determinative under the court's decision in Reflectone, Inc. v. Dalton (40 CCF ¶76,803) and subsequent cases finding an REA could satisfy all Contract Disputes Act requirements for a claim. (Hejran Hejrat Co. v. U.S. Army Corps of Engineers, CA-FC, 63 CCF ¶81,703)
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Contractor Entitled to Increase from Estimated Prices
Appeals for additional compensation were granted because, according to the Armed Services Board of Contract Appeals, the construction contract provided for an increase in estimated prices for supplies and testing. The contract provided that the contractor "will be allowed to request an equitable adjustment to the contract after award to adjust [its estimated] price if the price for concrete, aggregate and concrete testing varies more than 10% as of [December 1, 2010] from the estimated price." (BRDC, JV, ASBCA, ¶95,825)
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Cost Realism Evaluation Was Unreasonable
A protest of a cost realism evaluation was sustained because the government did not reasonably evaluate the protester's proposed direct labor rates. After the protester raised its direct labor rates for all new hires, the government increased rates that were below the 25th percentile to the rate. These increases contributed to a $3.7 million upward adjustment to the protester's proposal. (Valkyrie Enterprises, LLC, 34 CGEN ¶116,467)
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Potential for Overpayment Justified Cancellation of Solicitation
The government's decision to cancel a commercial item solicitation for a drug was reasonable because, even though its price analysis was flawed, the government reasonably determined canceling and resoliciting the requirement could enhance competition and result in a better price. The government provided a reasonable explanation why it would be prejudiced if it made an award to the protester—namely, that it might pay substantially more than necessary for the requirement, particularly in light of the goal of obtaining volume-based pricing from the efficiencies of a national requirements contract. (AvKARE, Inc., 34 CGEN ¶116,463)
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Major Contract Awards:
Desktop & Mobile Computing — $5 Billion
Eight contractors will compete for each order of the $5,000,000,000 firm-fixed-price contract for Army Desktop and Mobile Computing-3. U.S. Army Contracting Command, Rock Island Arsenal, Illinois, is the contracting activity.
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Fuel — $1.9 Billion
Eleven contractors were awarded a fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract under solicitation for various types of fuel. The contracting activity is the Defense Logistics Agency Energy, Fort Belvoir, Virginia.
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Projectile Parts — $891 Million
Medico Industries Inc., Wilkes Barre, Pennsylvania, was awarded a $891,165,000 fixed-price with economic-price-adjustment contract to manufacture and deliver 155mm M795 projectile metal parts and 120mm mortar shell bodies. U.S. Army Contracting Command, New Jersey, is the contracting activity.
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Energy Conservation — $829 Million
Siemens Government Technologies Inc., Arlington, Virginia, was awarded a $828,828,020 firm-fixed-price task order under a previously awarded multiple-award, indefinite-delivery/indefinite-quantity, energy savings performance contract at Naval Base Guantanamo Bay. Department of Energy, Office of Energy Efficiency and Renewable Energy, Golden, Colorado, is the contracting activity for the basic contract.
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About this Newsletter

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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