November 13, 2017

Analysis of the Current Draft 2018 NDAA

Holland & Knight Government Contracts Blog
Eric S. Crusius | David S. Black

This is the first blog post in a series of blogs analyzing the current draft of the 2018 National Defense Authorization Act (NDAA) as agreed-to by House and Senate negotiators on November 8, 2017. Stay tuned for additional blog posts covering additional topics in the near future from Holland & Knight’s Government Contracts Team.

The conference version of the 2018 NDAA (H.R. 2810) contains a couple of significant changes that will impact bid protests. First, the NDAA creates a pilot program that would require some larger unsuccessful GAO protestors to pay DoD’s protest costs. Second, new enhanced debriefings will become standardized across DoD. We examine these two changes here. It is important to keep in mind that these changes are not yet effective; the conference version of the NDAA has not yet passed Congress, and, even after passage, regulations still have to be drafted to implement the changes.

Protestors to Pay DoD’s Protest Costs (Sometimes)

Under the current protest system, protestors generally pay their own costs and attorneys’ fees - except when a protestor prevails at GAO.  Under no circumstances currently do protesters have any liability for the costs of the Government in defending an unsuccessful protest.  Section 827 of the 2018 NDAA would require DoD to launch a pilot program beginning in late 2019 and ending in late 2022 that would require unsuccessful DoD protestors at GAO to pay DoD’s “costs incurred in processing protests.” Following the end of the pilot program, DoD is required to report on the success of the pilot program. This requirement would extend only to large protestors that have had at least $250 million in revenue during the previous year.

The language in the conference version is extremely bare bones (which we expect will be filled in either through subsequent amendment or rulemaking over the coming two years) and leave a lot of questions unanswered.

  • What are the “costs incurred in processing protests?” Do they include the costs for DoD attorneys to respond to protests or just the administrative costs of dealing with protests? If it is the former, how is their hourly rate determined?
  • How are years defined when calculating annual revenue? Is it the contractors previous fiscal year or the calendar year? If it is the latter and is not something already tracked by the contractor (at least prior to filing tax returns), compliance would be more difficult.
  • What if there is a dispute over revenue numbers; who resolves that dispute? Does the revenue requirement cover all revenue or just revenue attributable to federal government contracts?

There is also a parity issue. While many product resellers, for instance, have high revenue numbers that would exceed $250 million, they are essentially smaller businesses with smaller margins.

Because of the lack of detail in the NDAA provision, the rulemaking supporting this provision will obviously play a key role. We will continue to monitor it and report any significant developments in our blog.

Enhanced Debriefings Now Available (Sometimes)

A second NDAA provision would change debriefings for many larger procurements across all of DoD.

Currently, Federal Acquisition Regulation (FAR) 15.506 dictates the content, form, and time limits for post-award debriefings to offerors. Minimally, debriefings are supposed to convey:

  • (i) significant weaknesses or deficiencies in the offeror’s proposal;
  • (ii) the “overall evaluated cost or price (including unit prices) and technical rating, if applicable, of the successful offeror and the debriefed offeror, and past performance information on the debriefed offeror;”
  • (iii) the overall ranking of all offerors, if applicable;
  • (iv) a rationale for the award;
  • (v) the make and model of the item to be delivered by the successful offeror (in acquisitions for commercial items); and
  • (vi) “[r]easonable responses to relevant questions about whether source selection procedures contained in the solicitation, applicable regulations, and other applicable authorities were followed.”

Notwithstanding those requirements, the Air Force has been running a voluntary “extended” debriefing pilot program that allowed a disappointed bidder’s outside counsel to obtain source selection information so long as he or she signed an Extended Debriefing Agreement (which contains a Confidentiality and Nondisclosure Agreement). All parties, including the awardee, must consent to the extended debriefing. Following a review of the source selection documents, a bidder’s outside counsel then engages in a Question and Answer session with the contracting agency. It was the Air Force’s belief that an earlier disclosure of source selection information prevented some protests that may have been filed for the primary purpose of understanding the rationale of an award to a different bidder.

Section 818 of the conference version of the 2018 NDAA would provide a similar program across all of DoD provided the award is greater than $100 million. Under those circumstances, DoD would be required to disclose the agency’s written source selection and award decision. Such a disclosure, however, would be redacted to exclude confidential and proprietary information for other offerors — and apparently available to be viewed by the contractor as well as outside counsel. Small business and nontraditional contractors can receive the same briefing for awards greater than $10 million upon request.

In addition, regular debriefings would be required for all task orders valued in excess of $10 million no matter whether the procurement was conducted under FAR Part 15. The calculus of when contractors must file these protests will change in circumstances where debriefings were not previously mandatory.

Finally, offerors who receive debriefings would have the option of asking follow-up questions within two business days and receive a response within five business days. In those circumstances, the debriefing would be considered to remain open until the agency answers the questions.

A couple of other provisions proposed by the Senate were not adopted. They included shortening the time of GAO protests to 65 days (from 100) and requiring contractors to disgorge their profits if they unsuccessfully protested a contract on which they were the incumbent contractor.

If the conference version of the NDAA is passed by Congress and signed by the President, each of these provisions will significantly change how DoD protests work and the decision making process used when deciding whether to protest. Stay tuned for further 2018 NDAA analysis.

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