Government Contracts Update
News for the Week of February 5, 2018

Hot Topic:
Student Loan Debt Collection Injunctions Revered in Part
The Court of Appeals for the Federal Circuit reversed portions of preliminary injunction orders because they altered the pre-litigation status quo and the balance of hardships favored the government.

After the Government Accountability Office sustained 13 protests of 7 contract awards for student loan debt collection services, unsuccessful offerors filed suit in the Court of Federal Claims, and the CFC issued 6 orders enjoining performance of the new contracts and prohibiting the government from transferring the work to other contracts.

On appeal, the Federal Circuit reversed the second part of the orders, which enjoined the government from "transferring work to be performed ... to other contracting vehicles to circumvent or moot [the protests]."

The court explained that the purpose of preliminary injunctive relief is to preserve the status quo pending a determination of the action on the merits.

Here, when the litigation began, the government was free to assign accounts to any of its valid contracts and to recall accounts from contractors with expired contracts. The injunction appeared to alter, not preserve, this status quo by mandating a complete cessation of account assignment and recall.

In terms of the balance of hardships, the injunction interfered with the government's interest and statutory obligation to collect on defaulted student loans and assist delinquent borrowers in repaying and rehabilitating their loans.

Declarations before the CFC established that by the end of June 2017, the government would lose over $2.4 million in collections and over a quarter million borrowers in default would be denied collection services. The scale of the loss only multiplied as borrowers continued to default and the government remained unable to assign new collections work. (Continental Service Group, Inc., et al. v. U.S., et al., CA-FC, 62 CCF ¶81,305)
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Legal News:
Government's Replacement of Funding Clause Was Material Breach
The government materially breached a contract to construct harbor improvements, according to the Armed Services Board of Contract Appeals, because it unilaterally changed a funding clause, which reduced its contractual obligation without giving the contractor any valuable consideration in return. Contrary to the government's assertion, the record clearly showed significant differences between the clauses in the way they affected the funding of contract work, claims, and termination costs. (Kelly-Ryan, Inc., ASBCA, ¶95,378)
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Government Waited Too Long to Seek Share of Cost Savings
The Armed Services Board of Contract Appeals sustained an appeal of a government claim for cost savings realized by a bridge construction contractor because the government waived its right to insist on strict compliance with specifications. The contractor was concerned it could not complete the project on time if it built two temporary bridges, so it arranged access to the construction site via a levee. (American West Construction, LLC, ASBCA, ¶95,369)
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Awardee Didn't Follow RFQ's Pricing Instructions
A protest of the award of a blanket purchase agreement for cloud computing services was sustained because the awardee's discounts and pricing did not comply with the request for quotations' requirements. The awardee's methodology was inconsistent with the RFQ, which required vendors to provide prices and discounts "at the BPA level," and by ignoring this requirement, the awardee realized a tremendous price advantage over vendors that followed the solicitation's instructions. (Red River Computer Co., et al., 33 CGEN ¶115,803)
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Evidence Didn't Support Pre-Award Bid Correction
A protest of a contract award for construction services was sustained because the government improperly allowed the awardee to correct an alleged mistake in its bid. The awardee informed the government that it erroneously used a $500,000 "plug" number instead of its drywall subcontractor's actual quotation of $1.5 million and requested that it be allowed to correct or withdraw its bid. The Comptroller General found no clear and convincing evidence of a mistake. (Herman Construction Group, Inc., 33 CGEN ¶115,800)
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Regulatory News:
FAR Council Publishes Semiannual Regulatory Agenda
The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have published the semiannual regulatory agenda for the Federal Acquisition Regulation. The agenda indicates there are 22 rules at the proposed stage and 16 rules at the final stage.
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DoD Issues Two Class Deviations
The Department of Defense has issued Class Deviation 2018-O0009—Pilot Program for Streamlining Awards for Innovative Technology Projects, and Class Deviation 2018-O0010—Temporary Extension of the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. Both class deviations are dated January 9, 2018.
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Major Contract Awards:
Laser Weapon System — $943 Million
Lockheed Martin Aculight Corp., Bothell, Washington, is being awarded a $150,022,901 cost-plus-incentive-fee contract for Surface Navy Laser Weapon System Increment 1, High Energy Laser and Integrated Optical-dazzler with surveillance system. This contract includes options which, if exercised, would bring the cumulative value of this contract to $942,818,114. The Naval Sea Systems Command, Washington Navy Yard, District of Columbia, is the contracting activity.
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Aviation and Missile Research — $911 Million
Georgia Tech Applied Research Corp., Atlanta, Georgia, was awarded a $910,570,376 cost-plus-fixed-fee contract for Aviation and Missile Research, Development and Engineering Center research, engineering, science, and technology development for state-of-the-art systems. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity.
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THAAD Interceptors — $459 Million
Lockheed Martin Corp. Missiles and Fire Control, Dallas, Texas, is being awarded a $459,230,468 modification to a previously-awarded contract to exercise an option for the production of additional Lot 10 Terminal High Altitude Area Defense interceptors (one-shot devices); and to provide associated production support efforts under fixed-price incentive-firm target contract line item numbers. The Missile Defense Agency, Huntsville, Alabama, is the contracting activity.
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Design-Build — $240 Million
Black Construction/Mace International JV, Harmon, Guam; DOD Constructors JV, Napa, California; and SJC-BVIL, Montrose, Colorado, were each awarded an indefinite-delivery/indefinite-quantity, multiple award design-bid-build and design-build construction contract for construction projects at Navy Support Facility, Diego Garcia. The maximum dollar value including the base period and four option years for all three contracts combined is $240,000,000. The Naval Facilities Engineering Command, Far East, Yokosuka, Japan, 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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Recent Developments in Government Contracts: Regulations and Legislation

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Federal Acquisition Regulation (FAR) & Department of Defense FAR Supplement (DFARS), January 2018 Combo