United States: Public Procurement

Federal public procurement in the United States is governed by a number of statutes, Executive Orders issued by the President, the Federal Acquisition Regulation (“FAR”) and agency regulations that supplement the FAR.  Each state and local government has its own laws, regulations and policies.  A basic tenet of each of these systems is a strong preference for full and open competition.  There is no intrinsic relationship between public procurement/government contracting laws in the United States and those of supra-national bodies such as the World Trade Organization (“WTO”) Agreement on Government Procurement (“GPA”), or the United Nations Commission on International Trade Law (“UNCITRAL”).  In certain cases, as a result of a treaty or other agreement entered into by the U.S. Government with certain foreign governments, eligible products from WTO GPA and/or countries that are parties to free trade agreements with the United States are entitled to nondiscriminatory treatment in procurements conducted under the FAR.

In the federal arena, whenever the United States government procures goods or services using money appropriated by Congress, government contracting laws and regulations apply.  The key legislation governing federal government contracting is codified in Title 41 of the United States Code (“U.S.C.”), and, with respect to the Department of Defense (“DoD”), the National Aeronautics and Space Administration (“NASA”), and the Coast Guard (an agency within the Department of Homeland Security), Title 10 of the United States Code. Within these Titles, the principal statutes governing federal procurement are:

• The Anti-Kickback Act, 41 U.S.C. ch. 87;
• The Buy American Act, 41 U.S.C. ch. 83 (as well as the Trade Agreements Act, 19 U.S.C. ch. 25);
• The Competition in Contracting Act (“CICA”), codified throughout several titles of the U.S.C.;
• The Contract Disputes Act, 41 U.S.C. ch. 71;
• The Federal Acquisition Streamlining Act, codified throughout 41 U.S.C.;
• The Procurement Integrity Act, 41 U.S.C. ch. 21;
• The Service Contract Act, 41 U.S.C. ch. 67;
• The Truth in Negotiations Act (known as “TINA,” but now captioned “Truthful Cost or Pricing Data” in the U.S.C.), 41 U.S.C. ch. 35; and
• The Walsh-Healey Public Contracts Act, 41 U.S.C. ch. 65.

Other important statutes include the Brooks Architect-Engineer Act, 40 U.S.C. ch. 11; the Clinger­Cohen Act, 40 U.S.C. ch. 111; the Contract Work Hours and Safety Standards Act, 40 U.S.C. ch. 37; the Davis-Bacon Act, 40 U.S.C. ch. 81; the Miller Act, 40 U.S.C. ch. 31; and the Small Business Act, 15 U.S.C. ch. 14A.

The FAR generally governs acquisitions by federal “executive agencies,” which are defined as executive departments, military departments, independent establishments of the federal executive branch, as defined in 5 U.S.C. §§ 101, 102, and 104(1), and wholly owned federal government corporations within the meaning of 31 U.S.C. § 9101. The U.S. Postal Service, the Federal Aviation Administration, and the Federal Deposit Insurance Corporation are not subject to the FAR, but have procurement regulations that are similar to the FAR in many respects. federal legislative and judicial branch agencies may choose to adopt the FAR, or elect to be governed by requirements similar to those contained in the FAR.

Non-federal government entities, such as states, municipalities, regulated utilities, universities and other public or quasi-public institutions and entities often have procurement codes or policies that have some similarities to FAR-based procurements.  These entities develop their own processes and procedures which are often geared towards maximizing competition, ensuring fairness to persons competing for contracts and providing some type of independent or quasi-independent forum for review of challenges or complaints about possible deviations from policies and procedures in the award of a contract.

The FAR applies to all acquisitions by federal agencies; however, the value of a particular contract and whether the contract is for “commercial items” determine the specific provisions of the FAR that apply.  Commercial items are supplies that are customarily used by the general public or by non-government entities for purposes other than government purposes, or services sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed.  FAR Part 12 governs commercial item contracts and procurements, and attempts to provide acquisition policies and procedures that more closely resemble the commercial market.

Purchases under the simplified acquisition threshold of $250,000 are subject to streamlined simplified acquisition procedures in FAR Subpart 13.3, and FAR Subpart 13.5 authorizes the use of these simplified acquisition procedures for purchases of commercial items up to $7.5 million.  Purchases under the micro-purchase threshold of $10,000 are subject to further simplified procedures in FAR Subpart 13.2.

The applicability of many specific statutory and regulatory requirements depends on the dollar value of the procurement and/or contract action.  For example, TINA requires contractors to provide certified cost or pricing data to assist the government in determining whether contract prices are fair and reasonable for many contract actions over $2 million.  Similarly, the Cost Accounting Standards (“CAS”), which regulate how contractors estimate and account for their costs, may also apply to contracts over $2 million, and contractors holding large value CAS-covered contracts may be required to disclose their accounting practices to the government.

As discussed above, purchases under the simplified acquisition threshold of $250,000 are subject to the simplified acquisition procedures in FAR Subpart 13.3.  Simplified acquisition procedures can also be used for purchases of commercial items up to $7.5 million.  FAR 13.500(a).  Simplified acquisition procedures allow agencies to use “any appropriate combination” of the procedures in other parts of the FAR and encourage the use of “innovative approaches, to the maximum extent practicable.”  FAR 13.003(g)(1) & (h)(4).  Agencies are also expected to promote competition in simplified acquisitions “to the maximum extent practicable,” FAR 13.104, but this requirement generally only requires agencies to make a reasonable effort to obtain competition and not intentionally exclude an interested source.  Purchases below the simplified acquisition threshold may be solicited from a single source if the contracting officer makes a determination that “only one source [is] reasonably available.”  FAR 13.106-1 (b)(1).  The government generally must post notice of simplified acquisition opportunities in excess of $25,000, in the same manner as other procurement opportunities as discussed below in Item No. 5.  FAR 13.105.

Purchases under the micro-purchase threshold of $10,000 are subject to further simplified procedures in FAR Subpart 13.2.  Purchases under the micro-purchase threshold are generally made using the governmentwide commercial purchase card.  Micro-purchases may be awarded without soliciting competitive quotations if the contracting officer considers the price to be reasonable, and the contracting officer generally does not have to take action to verify price reasonableness unless there is reason to believe that the price may be unreasonably high.  FAR 13.203(a)(2)-(3).

Purchases over the micro-purchase threshold but not more than the simplified acquisition threshold must be set aside exclusively for small business concerns in accordance with FAR Subpart 19.5.  See FAR 13.003(b)(1).

The government’s policies and requirements for publicizing contract actions are set forth in FAR Part 5.  Contract actions are publicized to (a) increase competition; (b) broaden industry participation in meeting government requirements; and (c) assist small businesses in obtaining contracts and subcontracts.  In general, the FAR requires the publication of proposed contract actions in the Governmentwide Point of Entry (“GPE”), defined as “the single point where government business opportunities greater than $25,000, including synopses of proposed contract actions, solicitations, and associated information, can be accessed electronically by the public.”   The GPE is an online searchable database that is publicly available at beta.sam.gov, although the FAR still refers to a predecessor site at www.fbo.gov.

For each notice of a proposed contract action (also called a “synopsis”), the government must include a description of the supplies or services to be procured that is sufficient to allow a prospective offeror to make an informed business judgment as to whether to seek a copy of the solicitation.  The notice, which also includes a variety of other information set forth in the FAR, must be published at least 15 days prior to the issuance of the solicitation.  However, for acquisitions of commercial items, the government can establish a shorter period, or use a streamlined procedure by which the synopsis and the solicitation are combined.  The response time for bids or proposals, which will be set forth in the solicitation, can vary widely.  For proposed contract actions estimated to be between $25,000 and the simplified acquisition threshold (currently $250,000), as well as all acquisitions of commercial items estimated to be greater than $25,000, the FAR simply requires the government establish a response time “that will afford potential offerors a reasonable opportunity to respond,” taking into account factors such as complexity, availability and urgency.  For acquisitions expected to exceed the simplified acquisition threshold, the FAR requires agencies to allow at least 30 days for the submission of bids or proposals.  However, for complex procurements, the submission timeframe is typically significantly longer.

Most federal procurements do not include an initial selection stage before solicitation documents are issued.  However, FAR Subpart 16.5 authorizes agencies to enter into multiple-award indefinite-delivery, indefinite-quantity (“IDIQ”) contracts.  As the name implies, these are contracts awarded to multiple firms for supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award.  Agencies then place one or more orders for supplies (a delivery order) or services (a task order) on an as-needed basis against the IDIQ contracts.  More and more frequently, agencies are procuring supplies and services by ordering them under multiple-award IDIQ contracts, or government-wide or multi-agency acquisition contracts.  Only firms that have been awarded one of these contract vehicles are eligible to be considered for such orders.  Solicitations and awards of these IDIQ contracts are generally subject to full and open competition. When placing orders for supplies and services against these contracts, agencies generally must give all awardees of the multiple-award IDIQ contract a fair opportunity to be considered for each order.  The specific procedures for ordering are established in the multiple award contract and FAR Subpart 16.5.

Also, if a solicitation includes classified information, all interested bidders or offerors must have a facility security clearance at the requisite level in order to receive and review the solicitation.  Some procurements also include qualification requirements, meaning that offeror’s product must pass testing or a quality assurance demonstration in order to be eligible for award.  However, the FAR requires the government to distribute the solicitation to all prospective contractors, regardless of whether they have been identified as meeting the applicable qualification requirements.

The federal government can only contract with “presently responsible” contractors. FAR 9.4 establishes a process by which contractors deemed not presently responsible can be suspended or debarred from receiving federal contracts in order to protect the government and public interest.  The possible causes for a contractor to be suspended or debarred are listed in FAR 9.4, and generally involve the commission of offenses indicating a lack of business integrity or business honesty.  If a contractor is suspended, proposed for debarment, or debarred, agencies may not solicit offers from, award contracts to, or consent to subcontracts with that contractor absent a compelling reason documented by the agency head.

If a contractor is neither suspended nor debarred, absent the invocation of an exception to CICA, procurements generally are open to all “presently responsible” contractors, regardless of the jurisdiction in which the contractor resides.  Upon being found by an agency to be the apparently successful offeror in the competition, an agency will make a responsibility determination prior to awarding the contract.  To be determined responsible, a contractor must meet the requirements listed in FAR 9.104, including having adequate financial, organizational, and operational resources or the ability to obtain them; being able to comply with the proposed delivery or performance schedule; and having a satisfactory record of performance, integrity and business ethics.  For most procurements, contractors must also be registered in the System for Award Management (“SAM”) (www.sam.gov), which requires the contractor to complete a host of representations and certifications.  If the contractor is found to be presently responsible, it will be awarded the contract.  If the agency determines that the contractor does not meet the responsibility standards set forth in the FAR, the offeror will be found nonresponsible and excluded from consideration for award.

Although agencies are required by CICA to promote full and open competition to the maximum extent practicable, agencies reasonably may require specific qualifications, certifications, or licenses based on the circumstances of individual procurements, and these requirements may preclude certain firms from competing.  These requirements must be disclosed in the solicitation, and the bid protest process can be used to challenge unreasonable restrictions that unnecessarily limit competition.

CICA requires that agencies promote and provide for full and open competition.  The two principal sets of procedures that satisfy the requirement for full and open competition are sealed bidding under FAR Part 14 and competitive negotiation under FAR Part 15.  The FAR provides criteria for determining which of the various procedures in FAR Parts 8, 12, 13, 14, and 16 apply to a particular procurement.  Application of these criteria, however, involves a number of highly discretionary determinations, such as whether award will be based solely on price and price-related factors using sealed bidding under FAR Part 14, or a combination of price and non-price factors using competitive negotiation under Part 15.  Similarly, agencies enjoy discretion in performing market research to determine whether commercial items are available to satisfy their needs, such that FAR Part 12 would apply.

The FAR does not impose specific requirements regarding the timing for publication of solicitations.  For those procurements expected to exceed the simplified acquisition threshold (except for those involving commercial items), contracting officers generally must allow at least a 30-day response time from the date of the issuance of the solicitation.  This provision sets a minimum time limit, however, and the response time can be longer.  Additionally, an agency may adjust the deadline for the submission of proposals throughout the course of the procurement in response to changes in the terms of the solicitation or answers to offerors’ questions.

Under FAR Part 14, agencies generally are required to solicit sealed bids if (1) time permits; (2) contract award will be made on the basis of price and other price-related factors; (3) it is not necessary to conduct discussions with the responding offerors about their bids; and (4) there is a reasonable expectation of receiving more than one sealed bid.  Sealed bidding typically involves the following stages: publication of an invitation for bids (“IFB”); submission of bids by an established deadline; evaluation of bids following a public bid opening; and award based solely on price or price-related factors.  When using the sealed bidding procedures in FAR Part 14, the agency will publicly open all timely bids received, prepare an abstract of the bids for public inspection, and notify all offerors of the awardee.  Awards under FAR Part 14 are made to the responsible bidder whose bid, conforming to the solicitation, is most advantageous to the government in terms of price.

If sealed bids are not appropriate under the above criteria, executive agencies are required to request competitive proposals under FAR Part 15 or use competitive procedures established in other parts of the FAR.  Unlike sealed bidding, the procedures in FAR Part 15 allow agencies to consider a variety of price and non-price factors in awarding a contract, and further allow agencies to define the relative importance of those factors.  FAR Part 15 generally requires agencies to issue a solicitation that identifies the criteria that will be used to evaluate proposals and the relative importance of those criteria, and requires that agencies evaluate proposals solely on the basis of the identified criteria.  FAR Part 15 also provides guidance on the manner in which proposals are evaluated, award is made, and contractors are notified of the award decision.  Whereas sealed bidding requires agencies to award to the lowest responsive bid, FAR Part 15 allows agencies to make trade-offs among the evaluation factors and award a contract to a more expensive, technically superior proposal.

FAR Part 15 also permits agencies to engage in discussions with contractors about their proposals and to allow contractors to revise their proposals during those negotiations.  In addition, when using the competitive negotiation procedures in FAR Part 15, an agency may decide to eliminate contractors from the competition after an initial evaluation of proposals.  This process of establishing the “competitive range” is intended to allow agencies to efficiently conduct negotiations with only those contractors submitting the most highly rated proposals.  Agencies must promptly notify contractors when they are eliminated from the competitive range.

After its evaluation of proposals, an agency will select the successful offeror and issue the offeror a contract.  Agencies must provide written notification to each offeror that was not selected for award within three days of the date of award.  When FAR Part 15 procedures are used, offerors are entitled to request a debriefing that provides a summary of the rationale for the award or the elimination of the offeror from the competition.  Post-award debriefings will typically disclose the agency’s evaluation of the significant weaknesses or deficiencies in the offeror’s proposal, the overall cost/price and technical rating of the offeror and the awardee, and the overall ranking of the offerors. Post-award debriefings will not include a point-by-point comparison of offerors, and pre-award debriefings will only provide information regarding the agency’s evaluation of the eliminated offeror’s proposal.

A debriefing must be requested within three days, and the date when the debriefing concludes usually starts the time period for filing a bid protest.  Debriefings can occur orally, in writing, or by any other method acceptable to the contracting officer.  Debriefings may also take the form of iterative questions and answers that occur over several days.

FAR Parts 12 and 13 prescribe simplified procedures that are used in conjunction with FAR Parts 14 and 15 for the acquisition of commercial items (Part 12) and supplies and services under the simplified acquisition threshold (Part 13).  The simplified acquisition procedures exist to reduce an agency’s administrative costs, improve opportunities for small businesses, promote efficiency and economy in contracting, and to avoid unnecessary burden for agencies and contractors.  government purchases under $10,000 (the micro-purchase threshold) are subject to simplified regulatory requirements as outlined in FAR Subpart 13.2.  Purchases under $250,000 (the simplified acquisition threshold) are subject to streamlined regulatory requirements as outlined in FAR Subpart 13.3.  The two common types of simplified acquisitions are the issuance of purchase orders in accordance with FAR 13.302 and Blanket Purchase Agreements under FAR 13.303.  Purchases of commercial items up to $7.5 million may also utilize simplified acquisition procedures as governed by FAR Subpart 13.5.

As with more complex procurements, agencies must promote competition to the maximum extent practicable when using simplified acquisition procedures.  And, as with more complex procurements, when using simplified acquisition procedures, the agency will release a solicitation informing potential competitors of the agency’s requirements and the basis for award.  This generally will be accomplished through a Request for Quotation (“RFQ”).  For procurements of commercial items in an amount greater than $25,000 or procurements under the simplified acquisition threshold, agencies must establish a solicitation response time that will afford potential offerors a reasonable opportunity to respond to each proposed contract action.  The FAR does not define “reasonable response time,” but it does instruct contracting officers to consider the circumstances of the individual acquisition, such as the complexity, commerciality, availability, and urgency, when establishing the solicitation response time.

Potential sources can respond to the solicitation by submitting a quotation.  However, unlike a proposal, a quotation is not legally considered an offer and cannot be accepted by the government to form a binding contract.  Instead, the agency will evaluate the submitted quotations in accordance with the solicitation’s announced criteria and issue a purchase order to the successful supplier offering to buy the supplies or services under specified terms or conditions.  A binding contract is created when the supplier accepts the government’s purchase order.

Although there is no requirement as to how quickly an agency must issue an award in a simplified procurement, award decisions can generally be made quicker than under more complex acquisitions because of the reduction in applicable regulations.

Contracting with the government is different from contracting with a regular commercial party.  The requirements applicable to a given contractor depend on the solicitation and contract type and are governed by various statutes, the FAR, and the FAR Supplements.  Many federal contractors are required to have a written code of business ethics and conduct, conduct employee training on business ethics and compliance, maintain an internal control system, and display fraud hotline posters.  Companies contracting with the government are subject to audit and oversight from various government entities and must be mindful of applicable recordkeeping and reporting requirements.  Contractors may be required to submit certified cost or pricing data in their proposals under the Truthful Cost or Pricing Data statute (formerly known as TINA, the Truth in Negotiations Act), and may be subject to compliance with certain accounting requirements during performance, such as under the Cost Accounting Standards (“CAS”).  Contractors are required to make annual representations and certifications to the government, which include topics such as small business status, CAS coverage, and criminal violations.  The FAR and FAR Supplements’ contract clauses require contractors to comply with applicable rules and regulations to the extent such clauses are incorporated into the contract.  These requirements may include a preference for domestic products, affirmative action requirements, other labor and employment requirements, small business subcontracting requirements, most favored customer requirements, and others.  Contractors must have processes and controls in place to ensure continued compliance with all applicable requirements.

By statute, price or cost to the government must be evaluated in every source selection, except in very limited circumstances.  FAR Part 14 establishes the criteria that are used to award contracts by sealed bidding.  Agencies must make award to the responsible bidder whose bid, conforming to the solicitation, is the lowest price.

By contrast, when using the competitive negotiation procedures in FAR Part 15, agencies must evaluate proposals based solely on the evaluation criteria set forth in the solicitation, which must represent key areas of importance to be considered, support meaningful comparison between proposals, and address quality of the product or service.  FAR Part 15 solicitations must also notify offerors of the relative importance of the evaluation criteria and the extent to which the agency will make trade-offs among price and non-price factors.  Agencies must follow the evaluation scheme set forth in the solicitation when selecting an offeror for award.

Agencies generally must provide written notification to each offeror that was not selected for award within three days of the date of award.  Agencies must also promptly notify offerors that are eliminated from FAR Part 15 competitions prior to award.

When FAR Part 15 procedures are used, offerors are entitled to request a debriefing that provides a summary of the rationale for the award or the elimination of the offeror from the competition.  Post-award debriefings will typically disclose the agency’s evaluation of the significant weaknesses or deficiencies in the offeror’s proposal, the overall cost/price and technical rating of the offeror and the awardee, and the overall ranking of the offerors.  Post-award debriefings will not include a point-by-point comparison of offerors, and pre-award debriefings will only provide information regarding the agency’s evaluation of the eliminated offeror’s proposal.

Debriefings must be requested within three days, and the date when the debriefing concludes usually starts the time period for filing a bid protest.  Debriefings can occur orally, in writing, or by any other method acceptable to the contracting officer.  Debriefings may also take the form of iterative questions and answers that occur over several days.

Unsuccessful bidders may protest the award of a contract directly to the agency, or to the U.S. Government Accountability Office (“GAO”) or the U.S. Court of Federal Claims (“COFC”).

If an unsuccessful offeror is able to convince the agency, GAO, or the COFC that the agency has violated a procurement law or regulation, or otherwise failed to follow the evaluation criteria set forth in the solicitation, the typical remedy is for the agency to take “corrective action” to rectify the violation.  The nature and extent of the corrective action depends on the specific violation, but common corrective actions include re-evaluating the proposals, amending the solicitation, re-opening discussions or negotiations with the offerors, requesting revised proposals, and making a new award decision.  Based on the outcome of the corrective action, the agency may elect to terminate the awarded contract and select a new awardee.

In rare cases, such as those involving organizational conflicts of interest (“OCI”), an agency may decide to exclude an offeror from the competition.  In addition to obtaining corrective action, in some circumstances a successful protester is able to recover the costs incurred in litigating the protest, or the costs incurred in preparing its proposal.

It should be noted that GAO does not have the power to order agencies to take corrective action.  Instead, GAO can only provide recommendations, which agencies typically follow.  The COFC, on the other hand, has the authority to issue injunctions prohibiting the agency from moving forward with the awarded contract, which in effect forces the agency to take corrective action.

Challenges to the award of federal government contracts are common.  For Fiscal Year 2020, GAO reports that offerors filed 2,149 cases protesting a procurement, pursuing cost claims related to a successful protest, or seeking reconsideration of a protest decision.  Because challenges to federal procurements are common, and even expected by the agency in certain procurements, a good faith, colorable protest should not result in reputational harm.

An offeror’s costs involved in pursuing a protest in any forum may include attorneys’ fees, consultant fees, and filing fees.  Attorneys’ fees vary greatly from one protest to another; however, protests are relatively less expensive than many complex civil litigation matters because protests are generally decided on an expedited schedule, and decisions are based on an administrative record without substantial discovery.  Factors driving cost include the number and complexity of the issues, the size and complexity of the administrative record, and whether GAO or the COFC believes that a hearing is necessary.  Protests before the COFC are generally more expensive than protests before GAO, as the procedures applied by the COFC more closely resemble traditional rules of civil procedure.

Agencies are represented by government counsel.  Awardees and other interested parties may intervene in a protest, in which case they may incur attorneys’ fees and other litigation costs as well.  If a challenge to a procurement is upheld, the agency may be directed to pay the protester’s costs in connection with challenging the procurement or preparing its proposal.

The length of protest proceedings depends upon the venue where a protest is filed.  federal agencies are required to make their best efforts to resolve agency-level protests within 35 calendar days, but this is not a strict deadline.  GAO, on the other hand, has a statutory requirement to issue a decision on a protest within 100 calendar days after it is filed.  GAO also offers an “express option” under which it decides cases within 65 days.  There is no statute or regulation limiting the amount of time for a protest at the COFC, but the Court typically issues protest decisions on an expedited basis in order to avoid a substantial interruption of the procurement process.

Foreign offerors’ rights and remedies are generally the same as offerors based within the United States.  Procurements are generally open to all “presently responsible” offerors, regardless of the jurisdiction in which the offeror is organized or based.  To be determined responsible, an offeror must have adequate financial, organizational, and operational resources or the ability to obtain them; be able to comply with the proposed delivery or performance schedule; and have a satisfactory record of performance, integrity and business ethics.  The FAR establishes a process by which offerors deemed not presently responsible can be suspended or debarred from receiving federal contracts.  For most procurements, offerors must also be registered in the System for Award Management (“SAM”) (www.sam.gov), which requires the offeror to complete representations and certifications.

Agencies may place reasonable jurisdictional and other limitations on particular procurements, but any such restrictions must be balanced with the statutory requirement under CICA that federal agencies promote and provide for full and open competition to the maximum extent practicable.  Some restrictions that could be justified under CICA would affect foreign offerors. For example, contracts involving access to classified national security information may only be awarded to companies with the necessary security clearances.  Agencies may require that some or all contract performance take place in the United States or at a specific location, and may prohibit the storing or transmission of certain information outside of a specific facility or territory.  Agencies may also require specific qualifications, certifications, or licenses that may be unavailable to firms in certain jurisdictions, such as being a member of a particular international organization.

The bid protest process discussed in Item Nos. 12-15 is an available remedy to all offerors, whether based in the United States or foreign, and can be used to challenge unreasonable restrictions that unnecessarily limit competition contrary to CICA.

As provided in Item No. 16, procurements are generally open to all “presently responsible” offerors, regardless of the jurisdiction in which the offeror is organized or based.  Therefore, an overseas-based offeror with a subsidiary in the United States and a U.S. subsidiary with a foreign parent will generally have the same rights and remedies as other offerors, unless an agency has enacted competition limitations under CICA that would affect a foreign offeror or an offeror with a foreign parent.

For example, as discussed in Item No. 16, foreign offerors will not be eligible for procurements that require the offeror to have a security clearance to access classified information.  Moreover, U.S. companies with foreign ownership will usually need to negotiate an agreement with the government to mitigate or limit the foreign owner’s ability to influence or control the U.S. subsidiary before that subsidiary can receive a security clearance.

There are few “nationally owned” companies in the United States, and it would be rare for one of these companies to compete in a procurement subject to the FAR with private companies.  However, a foreign offeror or an offeror with a foreign parent generally should be afforded the same rights and remedies as a nationally owned company.

As discussed above with respect to Item No. 13, protests can be filed with the contracting agency, GAO, or the COFC.  These protest venues will have jurisdiction of a protest so long as the protest satisfies the venues’ relevant standing and timeliness requirements. To have standing to bring a protest before the contracting agency, GAO, or the COFC, the protester must be an interested party.  An interested party is an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of a contract or the failure to award a contract.  If a protester is not an interested party, none of the three protest venues will have jurisdiction over the protest. There are also various timeliness rules that a protester must satisfy for the venues to have jurisdiction, depending on the posture of the procurement.  For example, if an offeror seeks to file a pre-award protest challenging the terms of a solicitation, it must file the protest prior to the time set for receipt of proposals.  If an offeror seeks to file a protest challenging its elimination from competition or the agency’s contract award, the timeliness rules vary by venue.  For an agency-level protest, the protester generally must file its protest no later than 10 days after the basis of the protest is or should have been known, whichever is earlier, although certain agencies may have their own timeliness requirements for such a protest that differ from the general 10-day rule.  For a GAO protest, the protester also generally must file its protest no later than 10 days after the basis of the protest is or should have been known, whichever is earlier, although there may be additional timeliness considerations based on the debriefing process discussed in the responses to Items 8 and 12 above.  For a COFC protest, there are no strict timeliness limitations for post-award protests, although a delay in filing a protest at the COFC may harm a protester’s ability to receive the remedy it seeks.

An agency’s decision in response to an agency-level protest is not appealable, but the protester may be able to follow the agency protest with a new protest at GAO or the COFC.  GAO decisions are also not appealable, but a protester can request that GAO reconsider its decision if the protester believes the decision includes an error of fact or law, or if it wishes to present information not previously considered.  Under some circumstances, a protester can also file a new protest at the COFC if it receives an unfavorable GAO decision.  Decisions of the COFC are appealable to the U.S. Court of Appeals for the Federal Circuit.

Federal contracts can be modified after award through bilateral agreement; however, the competition requirements in CICA have been interpreted to prohibit modifications that materially alter the scope of the contract in a manner that could not have been foreseen by a reasonable offeror responding to the solicitation.  In those circumstances, agencies must conduct a new procurement for the modified requirement.

Standard contract terms in most federal contracts also permit agencies to make unilateral changes within the general scope of the contract, including changes to the contract specifications, description of services to be performed, the method and manner of performance, the time or place of performance, or the time within which performance must occur.  These standard contract terms generally provide that, if such a change causes an increase or decrease in the cost or the time required for performance of the work, the contract price and/or schedule shall be adjusted.

Federal law generally prohibits a contractor from transferring a contract or interest in a contract to another party without the government’s consent, and the FAR provides a “novation” process through which that consent is obtained.  See FAR 42.1204.  In some situations a novation is not necessary, such as when there is a change in the contractor’s ownership resulting from a stock purchase, with no legal change in the contracting party, which continues to control the assets and perform under the contract.  Other situations, including sales of some or all of the contractor’s assets to a third party, usually require a formal novation agreement between the contractor and the agency.  The agency can refuse to novate a contract if it determines that novation is not in the agency’s best interest.  In that case, the original contractor remains liable under the contract.  Further, if a contractor merely changes its name but the rights and obligations of the parties remain unaffected, the FAR sets forth a process for executing a formal name change agreement under the contract.  FAR 42.1205.

CICA generally requires that agencies provide for full and open competition to the maximum extent practicable.  CICA permits the use of other than full and open competition, including through the issuance of sole source contract awards, only in the following circumstances:

• When the supplies or services required by the agency are available from only one responsible source, or, for DoD, NASA, and the Coast Guard, from only one or a limited number of responsible sources, and no other type of supplies or services will satisfy agency requirements.
• When the agency’s need for the supplies or services is of such an unusual and compelling urgency that the government would be seriously injured unless the agency is permitted to limit the number of sources from which it solicits bids or proposals.
• When it is necessary to award the contract to a particular source or sources in order to maintain a facility, producer, manufacturer, or other supplier in case of a national emergency or to achieve industrial mobilization, or to establish or maintain an essential engineering, research or development capability.
• When full and open competition is precluded by the terms of an international agreement or a treaty.
• When a statute expressly authorizes or requires that an acquisition be made through another agency or from a specified source, or when the agency’s need is for a brand name commercial item for authorized resale.
• When the disclosure of the agency’s needs would compromise the national security.
• When the agency head determines that full and open competition is not in the public interest in the particular acquisition.

A potential offeror can challenge an agency’s decision to restrict competition or award through other than full and open competition using the bid protest processes discussed above in response to Item Nos. 12-15.  The precise grounds on which a contractor can challenge a procuring agency’s decision to limit competition, however, depends on the specific circumstances of the procurement, the procedures followed by the agency, and the justifications given by the agency.  For example, contractors have alleged that agencies’ justifications for not using full and open competition were unreasonable, agencies failed to adequately follow the procedures required for limiting competition, and agencies failed to adequately consider other available sources before limiting competition.

The COVID-19 pandemic has presented unique challenges in government contracting, including difficulties associated with accessing facilities, scheduling personnel and keeping them safe, spending limited resources on personal protective equipment (“PPE”) and other COVID-19-related measures, and, in the face of these challenges, meeting deliverable and contract completion dates. In March 2020, the Office of Management and Budget (“OMB”) issued guidance to federal department and agency heads with specific recommendations on managing contract performance during the pandemic. Recommendations included:

• Working with contractors to maximize teleworking by contractor employees where possible, including modifying contracts that do not allow for telework;
• Allowing for flexible delivery schedules and contract completion dates for contracts in which telework is not possible;
• Exercising rights under “changes” clauses to “retool” certain service contracts to provide services in response to the pandemic;
• Keeping key personnel or other skilled professionals in “mobile ready state” for critical national security or high priority activities;
• Using special emergency procurement authorities for micro-purchases, simplified acquisitions, and purchases of commercial items; and
• Considering requests for equitable adjustments, taking into account the reasonableness of the requested costs in light of the pandemic.

Office of Mgmt. & Budget, Exec. Office of the President, Memorandum M-20-18: Managing Federal Contract Performance Issues Associated with the Novel Coronavirus (COVID-19) (Mar. 20, 2020).

As indicated in the above recommendations, some contracts may already contain clauses that allow contracting authorities and contractors to modify contracts in response to COVID-19. Further, contracts may incorporate clauses such as FAR 52.242-14 and 52.242-15, which permit a contracting officer to suspend or stop work under a contract but also allow the contractor to seek an equitable adjustment in the delivery schedule or price. Such clauses may enable contractors to recoup costs associated with the pandemic.

On March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136, 134 Stat. 281. The CARES Act responded to challenges presented by COVID-19 in a variety of areas, including government contracts. For instance, the CARES Act included loans for businesses critical to maintaining national security. See id. § 4003. Most significant, however, is Section 3610 of the CARES Act. Section 3610 grants the government the discretion to reimburse contractors’ minimum applicable contract billing rates when contractor employees or subcontractors cannot perform contract work at specific types of facilities or worksites due to facility closures or restrictions, the employees cannot telework, and the employer has kept those employees in “ready state.” Section 3610 initially allowed reimbursement for work performed through September 30, 2020. Congress has extended that expiration date three times through additional relief bills, with the comprehensive December 2020 spending and relief bill extending the date to March 31, 2021. In some cases, contractors may be able to work with contracting officers to modify contracts to specifically address Section 3610 reimbursements.

Although Section 3610 has helped contracting authorities and federal contractors address challenges they have encountered on their contracts during the COVID-19 pandemic, Section 3610 has limitations. Section 3610 reimbursements are limited to the minimum applicable contract billing rates and do not apply to other costs of doing business, such as procuring PPE or taking other measures in response to COVID-19. In addition, Congress has not appropriated additional funds specifically for Section 3610 reimbursements, and contracting authorities must make these payments out of their agency’s regular budget. Further, the CARES Act gives contracting authorities the discretion to reimburse government contractors for specified costs; it does not require them to reimburse these costs. Thus, although a federal contractor may incur costs for keeping employees in ready state when employees cannot work on the project site, contractors are not guaranteed to be reimbursed those costs. The CARES Act deadline also limits the time period for which contractors can seek reimbursements, and neither contracting authorities nor federal contractors can count on another extension even if they continue to face contract challenges beyond the current expiration date for Section 3610 reimbursements.

Agencies’ approaches to Section 3610 reimbursements also vary. The OMB issued general guidance for agencies to follow when interpreting Section 3610. See Office of Mgmt. & Budget, Exec. Office of the President, Memorandum M-20-27: Additional Guidance on Federal Contracting Resiliency in the Fight Against Coronavirus Disease (COVID-19) (July 14, 2020); Office of Mgmt. & Budget, Exec. Office of the President, Memorandum M-20-22: Preserving the Resilience of the Federal Contracting Base in the Fight Against the Coronavirus Disease 2019 (COVID-19) (Apr. 17, 2020). Agencies, however, issued their own agency-specific guidance for Section 3610 reimbursements that differed in some respects from the more general OMB guidance, although OMB has revised its guidance to minimize those differences. See U.S. Gov’t Accountability Off., GAO-20-662, COVID-19 Contracting: Observations on Contractor Paid Leave Reimbursement Guidance and Use 4-10 (Sept. 2020). There may be some inconsistencies in the type of documentation that agencies require contractors to produce to support these reimbursement requests. and the burden that gathering and producing that documentation places on federal contractors.

It is too early to tell whether lessons learned during this period will give rise to longer term changes by the U.S. Government or its contracting authorities. However, agencies may seek pressure from contractors to include clauses in future contracts to address issues that have arisen during the COVID-19 pandemic. Examples include clauses related to minimum guaranteed hours and payment, force majeure clauses that include “pandemic”-related events, and flexibility on scheduling personnel.