Eric Poppe, a Managing Director in Cherry Bekaert’s Government Contracting Industry practice and Ryan Bradel, a partner and leader of Ward & Berry’s Government Contracts practice, discuss recent court cases that impact government contractors. Eric & Ryan walk through cases pertaining to protests and solicitations requirements, discussing each ruling, its impacts and lessons learned, so that contractors can gain a better understanding of the rulings and how to better navigate these situations.
View All Government Contracting Podcasts
ERIC POPPE: Welcome to Cherry Bekaert's GovCom podcast, where we discuss current government contracting trends, compliance matters, and best practices to guide federal contractors forward. My name is Eric Poppe. I'm a senior manager in our government contract services group with Cherry Bekaert. With me today is Ryan Bradel, a partner at Wardenberry.
RYAN BRADEL: It's great to be here. Thanks for having me.
ERIC POPPE: Today we are giving a legal update relevant to many government contractors. I'm looking forward to discussing these court cases with you.
RYAN BRADEL: Discussing court cases is one of my favorite things. I like to break them down and give folks takeaways so they can avoid becoming part of the next court case.
ERIC POPPE: We all want to avoid issues with the government. We have three cases to outline today that relate to protests, solicitation requirements, and a settled case related to fraud. We'll give a brief description and a major takeaway for each. Ryan, do you want to lead off with the pre-award protest case you brought to my attention?
RYAN BRADEL: Yes. There are two pre-award protest cases I wanted to discuss. Pre-award protests are an underutilized tool for many contractors. A common mistake I see is contractors waiting until after award to challenge a solicitation provision, but pre-award protests must be filed before proposals are submitted.
RYAN BRADEL: The first case is a GAO bid protest called Kronos Solutions. The protesters succeeded in a pre-award protest, showing problems with the solicitation. The GAO found the solicitation terms were not reasonable in light of the COVID-19 pandemic.
RYAN BRADEL: The issue was whether the solicitation reflected the agency's needs, given the pandemic's effect. The Department of Housing and Urban Development issued a solicitation for mortgage insurance, servicing, and asset management of foreclosed properties. Potential offerors said the solicitation's scope of work did not align with conditions created by the pandemic.
RYAN BRADEL: Protesters noted HUD failed to account for provisions of the CARES Act. The CARES Act provided forbearance on mortgage payments, which meant an initially low volume of foreclosures, followed by a potential spike when forbearance expired. The solicitation's scope and level of effort allocation did not reflect those practical realities, and the GAO agreed the agency did not properly consider its actual needs.
ERIC POPPE: That affects technical proposals, approaches to the statement of work, and pricing depending on contract type. That can materially change your proposal.
RYAN BRADEL: Exactly. When preparing a proposal, contractors should consider whether the solicitation makes sense given practical realities. Contractors are often the industry experts; the government may not fully understand its needs. If the solicitation is wrong, contractors should raise the issue and seek to have the solicitation revised.
ERIC POPPE: If the protest had not occurred and a company won without clear expectations for pandemic-related performance, that could impact performance and give a poor CPARS rating. That could hinder future awards or use of past performance across agencies.
RYAN BRADEL: Too often contractors are eager to win work and do not consider how they will perform under the solicitation's terms. If performance proves impossible or excessively costly, it can be very expensive and have long-term consequences. Contractors should critically evaluate solicitations and whether they can truly perform.
ERIC POPPE: That's a perfect segue to the next case. Do you want to jump into that one?
RYAN BRADEL: The next case concerns the timeliness of pre-award protests. This is another GAO bid protest. The protester was IBM. The case had a complicated procedural history with an initial award, a protest, corrective action, and subsequent protests.
RYAN BRADEL: On the third round, IBM raised ambiguities in the solicitation. The government moved to dismiss that portion of the protest as untimely, and the GAO agreed. The GAO said IBM had its chance in the first protest to challenge solicitation issues. The rule contractors must know is that issues with the solicitation must be filed before proposals are submitted.
RYAN BRADEL: Ambiguities are a key nuance. If a solicitation provision can be read multiple ways, the contractor must raise that ambiguity immediately. Once the government adopts an interpretation, it is generally too late to protest that interpretation. If you see ambiguity, raise it through questions or dialogue with the contracting officer, and if unresolved, file a pre-award protest.
ERIC POPPE: Ambiguities affect technical approach, pricing, and scoring criteria, especially in a scorecard evaluation. Most solicitations have a Q&A period with a deadline for questions. What are your thoughts about timing for submitting questions and when a protest must be filed?
RYAN BRADEL: The solicitation will set a deadline for questions, and you should meet that deadline. Informal dialogue with the contracting officer can also be useful, though the officer may forward clarifications to all offerors to preserve fairness. The meaningful deadline for a pre-award protest is before the proposal deadline, but I recommend filing as early as possible. Early filing increases the chance of corrective action without GAO decision.
ERIC POPPE: At Cherry Bekaert, we've helped many clients with cost proposals. We often find ambiguities and ask clients whether they followed up with the government. Some contractors miss the Q&A deadline because they are hesitant to engage informally for fear of unequal discussions.
RYAN BRADEL: Document any informal dialogue. Missing the Q&A deadline does not prevent filing a pre-award protest. You should still try informal clarification and, if necessary, file a pre-award protest.
ERIC POPPE: We're coming up on time, so let's hit the last case, the fraud case.
RYAN BRADEL: This is a recent DOJ settlement with a service-disabled veteran-owned small business (SDVOSB). From 2007 to 2013, the company received 14 federal set-aside contracts for SDVOSBs. The company, Kadena, was actually ineligible because the service-disabled veteran did not truly own and control the company.
RYAN BRADEL: The veteran owner was nearing retirement and relied on a larger company's executive to help run day-to-day operations. The DOJ found the larger company was effectively running the SDVOSB and its employees were performing much of the work. The DOJ concluded Kadena was ineligible for the set-aside contracts and the settlement was $2.5 million.
RYAN BRADEL: This shows even well-intentioned arrangements can violate set-aside rules and be costly. Careful monitoring of compliance with small business programs is essential.
ERIC POPPE: This impacts large and small firms and potential teaming partners, including prime contractors with small business subcontracting plans. How would you suggest vetting potential small business partners after this case?
RYAN BRADEL: Conduct an audit of your company or a prospective teaming partner. Ask the partner to submit to an audit to ensure arrangements comply with the rules. The audit involves reviewing corporate documents, teaming agreements or joint venture arrangements, and how the contract is actually performed, including which employees of which company work on the contract and who makes key decisions.
RYAN BRADEL: It can be cost-effective to have firms like yours or mine work jointly on such an audit. The purpose is to confirm the arrangement meets regulatory requirements and avoid costly enforcement actions.
ERIC POPPE: There's increased emphasis on subcontractor monitoring, purchasing systems, selection processes, and vetting. New or recently graduated small businesses may be eager to team, but taking time to understand partners and performing internal or external audits is important to demonstrate compliance.
RYAN BRADEL: An ounce of prevention is worth a pound of cure. It's better to spend a modest amount up front than face multimillion-dollar liabilities later.
ERIC POPPE: We're right up against our time limit. Any closing thoughts, Ryan, or a quick overview of your practice?
RYAN BRADEL: Briefly, our law firm represents government contractors and provides a broad range of services, including compliance, legal audits, litigation, disputes with primes and subs, negotiating contracts, regulatory advice, and handling disputes with the government such as bid protests, REAs, and claims. We also engage in thought leadership and conversations like this to help contractors succeed.
ERIC POPPE: Thank you, Ryan. I'm glad you joined us. Thank you to everyone listening to the GovCom podcast. Please join us next time when we discuss new federal rules that will impact government contractors. Ryan, thanks again.
RYAN BRADEL: Thank you, Eric. Great to be with you.
