• Communications Were Not Public Disclosures under FCA
• Disqualified Small Business Could Not Challenge New Award
• No Consideration for Modification of Test Plan
• Protester Was Deprived of Reasonable Opportunity to Compete

• SBA Rule Establishes Secondary Market for 504 Loans
• FTR Rule Tightens Premium Class Travel Requirements

• Modification to Transportation and Storage Contract - $207 Million
• Avionics Support Contract - $143 Million
• Depot Maintenance and Repair Contract - $127 Million

GAO Focuses on Spending under Cost-Reimbursement Contracts

The Government Accountability Office has released a report making recommendations to improve the government’s use of cost-reimbursement contracts. GAO examined the government’s use of cost-reimbursement contracts because this type of contract—under which the government pays a contractor’s costs of performance regardless of whether the contractor completes the work—presents a high risk to the government with a potential for cost escalation.

According to GAO, the complete picture of the government’s use of cost-reimbursement contracts is unclear and key controls are not always used. GAO found agencies’ rationales for using cost-reimbursement contracts were difficult to determine because contracting officers frequently did not document why they chose this contract type. In addition, there was little evidence showing agency officials analyze contracts’ pricing history and requirements to determine if a contract type with firmer pricing could be used. GAO also found a significant number of contractors lacked adequate accounting systems, which can lead to the government making improper payments to contractors.

Consequently, GAO’s recommendations to the Office of Federal Procurement Policy address how contracts are coded in the government’s procurement database and are aimed at encouraging timely analysis to determine if a transition can be made to a contract with a firmer pricing basis. The text of the report, “Contract Management: Extent of Federal Spending under Cost-Reimbursement Contracts Unclear and Key Controls Not Always Used,” GAO-09-921, is available at http://www.gao.gov/cgi-bin/getrpt?GAO-09-921.

Communications Were Not Public Disclosures under FCA

An internal government publication and a statement to a contracting officer did not bar the exercise of jurisdiction by the District Court for the Southern District of Illinois, because neither communication constituted a “public disclosure” under the False Claims Act. The court denied the defendant contractor’s motion to dismiss, holding the FCA's jurisdictional bar did not apply. The Internet article cited by the defendant was an internal university publication, not a product of the news media. Also, the defendant's communications with a CO regarding a mistake involving the Industrial Funding Fee did not constitute a public disclosure. These types of disclosures must be made pursuant to an administrative investigation, and the disclosure here arose from the defendant's own internal audit. (U.S. ex rel. Liotine v. CDW Government, Inc., DC SD Ill, 53 CCF ¶79,186) [full story]

Disqualified Small Business Could Not Challenge New Award

A protester lacked standing to contest a contract award for program management services, according to the Court of Federal Claims, because the procurement was set aside for service-disabled veteran-owned small businesses, and the Small Business Administration determined the protester was not a small business. Once SBA determined the protester was “other than small,” the protester was not eligible for an award of a contract of the same or lesser size until it was recertified. Because the protester did not have a substantial chance of receiving a contract, it could not challenge the award. (Taylor Consultants, Inc. v. U.S., FedCl, 53 CCF ¶79,188) [full story]

No Consideration for Modification of Test Plan

An appeal seeking compensation for the government’s allegedly deficient first article testing procedures was granted by the Armed Services Board of Contract Appeals because the revised procedures increased the contract’s performance standards, and there was no consideration for a modification of the contract requirements. The government argued the contractor’s request for and acceptance of another change in the test plan constituted consideration. However, the change was neither a benefit to the contractor nor a determinant to the government. Accordingly, there was no consideration to support a modification of the contract's testing requirements. (Yardney Technical Products, Inc., ASBCA, ¶92,711) [full story]

Protester Was Deprived of Reasonable Opportunity to Compete

A sole-source award was not properly justified, because the government caused the unusual and compelling urgency that created the need for a sole-source procurement. The Comptroller General sustained the protest, finding the urgent need was caused by the government's failure to conduct advance planning, and the Competition in Contracting Act mandates that noncompetitive procedures may not be used as a result of the failure to perform advance planning. (RBC Bearings Inc., 24 CGEN ¶112,948) [full story]

SBA Rule Establishes Secondary Market for 504 Loans

The Small Business Administration has issued an interim final rule implementing Section 503 of the American Recovery and Reinvestment Act of 2009, which establishes a secondary market for the first mortgage loan that is a component of a financing under SBA's 504 Program. The 504 Program provides long-term, fixed-rate financing to small businesses for expansion or modernization, primarily of real estate. Comments on the interim rule, which carries an October 30, 2009, effective date, are due January 28, 2010. For the text of the rule, see ¶70,425.382. [full story]

FTR Rule Tightens Premium Class Travel Requirements

The General Services Administration has issued a final rule amending the Federal Travel Regulation to implement recommendations contained in the Government Accountability Office's, September 2007, report, “Premium Class Travel: Internal Control Weaknesses Governmentwide Led to Improper and Abusive Use of Premium Class Travel” (GAO-07-1268). The rule strengthens requirements related to the authorization and use of premium class transportation accommodations. For the text of the rule, which goes into effect November 27, 2009, see ¶70,030.138. [full story]

Modification to Transportation and Storage Contract - $207 Million.

American Auto Logistics, LP, of Park Ridge, N.J., is being awarded a $207,382,618 firm-fixed-price modification for an earned award term under a previously awarded contract to provide continuing services for the transportation and storage of privately owned vehicles. United States Transportation Command (USTRANSCOM), Directorate of Acquisition, Scott Air Force Base, Ill., is the contracting activity. [full story]

Avionics Support Contract - $143 Million.

Lockheed Martin Corp., Marietta, Ga., was awarded a $143,212,054 contract to provide C-5 Avionics Modernization Program sustainment support. The contracting activity is 330 SW, Robins Air Force Base, Ga. [full story]

Depot Maintenance and Repair Contract - $127 Million.

Davis Boat Works, Newport News, Va.; Associated Naval Architects, Portsmouth, Va.; Lyon Shipyard, Norfolk, Va.; and Tecnico Corporation, Chesapeake, Va., are being awarded combined $127,395,000 maximum value firm-fixed-price, indefinite-delivery/indefinite-quantity multiple-award contracts to furnish the necessary non-personal management, administrative and production services, materials, tools, equipment, facilities and required support to accomplish a full range of depot level troubleshooting, repair, renewal, refurbishment, modernization, maintenance and testing of Navy living barges and their auxiliary systems (hull, mechanical and electrical) including the potential of periodic docking. The contracting activity is the Norfolk Ship Support Activity, Portsmouth, Va. [full story]

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