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DoD Issues new Other Transactions Guide

This week the Office of the Under Secretary of Defense for Acquisition and Sustainment (USD (A&S)) rescinded the January 2017 version of the Other Transactions (OT) Guide for Prototype Projects and issued a new, revised OT Guide.  OT agreements (OTAs) are not Federal Acquisition Regulation (FAR)-based procurement contracts, grants, or cooperative agreements.  As enunciated under the new OT Guide, OTAs are intended to utilize more commercial arrangements to accomplish particular projects.  While OTAs are subject to certain laws and provisions, they are not required to comply with the full panoply of procurement laws and regulations, such as the FAR and agency-specific supplemental acquisition regulations, applicable to FAR-based contracts.

Statutory authority for OTAs traditionally has been used to allow Department of Defense (DoD) to enter into agreements for new research, prototype development, and limited production.  This also includes Technology Investment Agreements (TIAs).  Revision of statutory authority has expanded the definition of non-traditional defense contractor (NTDC) and the use of OTAs to permit appropriate follow-on production agreements.  DoD uses OTAs to access state-of-the-art technology solutions from traditional defense contractors, non-traditional defense contractors that do not typically engage in contracts with the federal government, consortia, or through teaming arrangements involving these or other types of entities.    

The OT Guide provides a useful compendium of information on OTA authority, processes, administration and resources.  It includes a set of definitions, mythbusters, authorities, as well as examples of OTA arrangements, to clarify for both Government and industry the nature and scope of OTAs.  

Takeaways:

·       DoD is seeking access to state-of-the-art technology solutions.

·       OTAs provide one avenue through which NTDCs as well as traditional defense contractors, may be able to engage in research, prototyping, and appropriate follow-on production.

·       OTAs are not cookie-cutter.  The nature and scope of an OTA, as well as the terms, rights, and available remedies, are governed by the controlling statutory and policy provisions of the agency, and the negotiation and agreement of the parties.  OTAs can be issued to an individual entity, team, consortium, or a combination of entities.  It is wise to consider all aspects and options, including, for example, the nature of the problem; your proposed solution; terms for successful completion; the availability of your own, potential team members, and the DoD resources; cost-share and funding; and intellectual property rights needs, when seeking to work in this space.

Susan Warshaw Ebner, one of FortneyScott’s shareholders, has experience in OTAs and TIAs, as well as traditional FAR-based procurements, grants and cooperative agreements.  If you have questions about this advisory, or seek assistance with regard to these types of transactions, please contact Susan Warshaw Ebner or your FortneyScott counsel.

Bid Protests: A Way To Raise Your Procurement Concerns

September 30th is the end of the Federal government’s fiscal year.  Federal agencies spend significant portions of their annually appropriated funds entering into new contracts and exercising options on existing ones during the last quarter of its fiscal year.  Government contracting rules require that Federal agencies conduct these procurements in accordance with the stated terms of the specific solicitation.  The terms of the solicitation must be based on the procuring agency’s true needs and must not contain requirements that would unfairly restrict competition.  The agency’s designated contract and evaluation officials must act in a fair and objective manner, free from any impermissible conflict of interest, when making determinations during the procurement process.  Their evaluations and the ultimate award decision must be in accordance with the procurement’s stated evaluation and award criteria.

Because the Federal government wants to ensure that its procurements are fairly and properly conducted, it affords actual or potential offerors the opportunity to protest specific matters relating to the agency’s procurement.  For example, if you are a potential offeror who believes the terms of a solicitation are defective or unduly restrictive, you may have grounds to file a preaward bid protest to challenge the terms of the solicitation.  If you are an actual bidder or offeror who believes that you have not been fairly evaluated and considered for award in accordance with the terms of the solicitation, or that the decision to award the contract to another offeror was defective, then you may have grounds to file a post award bid protest.

If you are eliminated from the competitive range or not awarded the contract, you also may have the right to request a required debriefing to obtain more information prior to protesting.

Small businesses also have protest rights to challenge small business set-aside procurement size standards or the size or eligibility of an actual or proposed small business awardee under a small business set-aside procurement.

Bid protests can only be filed by interested parties, in specified forums, and within specified times in the procurement process.  Depending on the circumstances and timing of the protest, you may be able to obtain a stay of the procurement pending the disposition of the protest.

Key takeaways:

  • There are a number of rules governing debriefings, pre and post award bid protests, and size protests.  Consult counsel if you have questions regarding your rights, potential protestable issues, options, and timing requirements.
  • If you were eliminated from the competitive range or did not receive an award, you may be able to request a required debriefing to obtain information that may address your concerns, or provide more concrete information upon which to raise a protest.  At a minimum, learning what you did right or wrong can help you be a better competitor the next time.
  • If you have concerns, you need to raise them in a timely fashion in the right place to avoid losing the opportunity to exercise your rights.  Deadlines for seeking a required debriefing, filing a procurement integrity concern, filing a bid or size protest, are short.
  • On the flip side, if you are awarded a contract and there is a protest, you may want to retain counsel to defend your interests in the protest.

The rules governing procurements, debriefings and protests are myriad.  If you have concerns about a particular procurement, find out your rights and options.  Well-articulated concerns, timely raised with the appropriate official and forum, can help ensure your challenge is appropriately considered. FortneyScott will be hosting a bid protest lunch and learn webinar in September.   If you have questions about how to raise your concerns in a procurement, debriefing or protest, or are interested in learning more about this upcoming webinar, contact Susan Warshaw Ebner or your FortneyScott counsel.

Be Sure To Exercise Care In Vetting Your Supply Chain

Now, more than ever before, contractors need to employ good contracting and subcontracting practices to secure their supply chains.  Government contractors are required to deliver what they promise in their proposals and, ultimately, under their contracts.  As a prime contractor, or higher tier subcontractor, you are responsible for the integrity and compliance of your supply chain.  Recent developments may make that supply chain a potential trap for the unwary unless you are taking adequate steps to vet your suppliers:

  • Supply Chain Risk clauses: Department of Defense (DoD) is including several clauses in acquisitions and contracts that warrant your increased attention. DFARS 252.239-7018 Supply Chain Risk clause is being included in DoD information technology procurements. This clause allows DoD to decide not to award a contract, or to cancel one that has been awarded, if DoD considers the prime contractor or its supply chain to pose “the risk that an adversary may sabotage, maliciously introduce unwanted function, or otherwise subvert the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of a national security system… so as to surveil, deny, disrupt, or otherwise degrade the function, use, or operation of such system.”  DFARS 252.246-7007 Contractor Counterfeit Electronic Part Detection and Avoidance System and DFARS 252.246-7008 Sources of Electronic Parts require contractors to protect against counterfeit electronic parts in all tiers of their supply chain.  Contractors and subcontractors must employ trusted sources, maintain traceability, and report on actual or suspect counterfeit parts. FAR 52.204-21 Basic Safeguarding of Covered Contractor Information Systems, as well as DFARS 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, require contractors and their subcontractors to comply with specific cyber security controls and cyber incident reporting requirements.
  • DHS Binding Operational Directive (BOD) Ban on Products: The Department of Homeland Security (DHS) has authority to ban the use of certain products that pose risks to the national security. In Fall 2017, DHS issued its first BOD 17-01, requiring government agencies to take steps to scan, identify and remove/replace Kaspersky products in their systems.
  • Other Legal Bans on Products: In December 2017, Congress passed the National Defense Authorization Act for FY 2018, prohibiting the use of any software platform developed in whole, or in part, by Kaspersky Lab. Effective July 16, 2018, FAR 52.204-23 Prohibition on Contracting for Hardware, Software, and Services Developed or Provided by Kaspersky Lab and Other Covered Entities will be included in procurements and resultant contracts; the clause also may be added to existing contracts through a bilateral amendment.
  • Tariffs and Other Actions: President Trump’s National Security Strategy issued in December 2017 identified national security risks posed by certain economic activities of foreign countries. Tariffs and other actions are being taken to address these concerns.
  • Private Lawsuits and Government Investigations: Counterfeit parts continue to infiltrate the market. Counterfeit parts may involve the theft of a company’s intellectual property, and result in the loss of sales and good will for the company’s brand.  In addition, counterfeit parts that do not work as intended pose significant safety and security risks to the United States, other countries, and our citizens. Private companies as well as the Government are seeking to address this problem. For example, in 2018, CISCO Systems filed a lawsuit against two Florida companies for importing and selling counterfeit electronic parts.  One of these companies is a government contractor and is now under investigation by the Defense Logistics Agency.

Key Takeaways –

  • Failing to adequately protect the integrity of your supply chain has untold costs. Take steps to protect your supply chain by vetting your suppliers and their products throughout the procurement lifecycle.
  • Track notices of product and supplier risks and bans to reduce your supply chain risks.
  • Negotiate and include appropriate clauses in your contracts to assure supply chain integrity and to identify appropriate processes and remedies for reporting, correcting and obtaining recourse in the event of a problem.
  • Identify your incident response team members and develop a plan so you can take the necessary steps to prepare for and address any detected quality or performance problem, actual or suspected counterfeit part or cyber incident.

 

A safe and secure supply chain is in everyone’s interest.  If you are a government contractor or subcontractor and have questions about your supply chain responsibilities, or the impact of these supply chain risk rules and requirements, contact Susan Warshaw Ebner, or your FortneyScott contact, for assistance.