fundamentals of government contracting has appeared and argued before federal and state trial and...

1 2013 ACC-SoCal In-House Counsel Conference

#IHCC13

FUNDAMENTALS OF GOVERNMENT CONTRACTING

January 16, 2012 Anaheim, California

Sponsored by Crowell & Moring LLP

Presenters: Daniel R. Forman Mana Elihu Lombardo

#IHCC12

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090701_2 2 #IHCC13 2013 ACC-SoCal In-House Counsel Conference

Daniel R . Forman is a partner in Crowell & Moring's Government Contracts Group, resident in the firm's Washington, D.C. office. Mr. Forman's practice focuses on a wide variety of government procurement law, including bid protests, False Claims Act and qui tam litigation, investigations of potential civil and criminal matters, ethics and compliance, contract claims and disputes, GSA schedule contracting, and small disadvantaged business contracting. Dan is also experienced in negotiating and drafting teaming agreements and subcontracts, as well as providing counseling on the interpretation of FAR clauses and solicitations. Dan's practice also focuses on state and local procurement matters, including State False Claims Act issues, lobbying and contingency payment compliance. Dan has been named a top lawyer by the Washington Business Journal and is listed by Chambers. [email protected]

Today’s Presenters



Mana Elihu Lombardo is a counsel in Crowell & Moring's Government Contracts Group in Los Angeles. She concentrates her practice on government contracts litigation and counseling. Mana has extensive experience defending companies in fraud matters under the False Claims Act (FCA). She also conducts internal investigations and training programs on ethics and public sector contract compliance as well as procurement fraud.

Mana has appeared and argued before federal and state trial and appellate courts and has extensive experience developing and implementing litigation strategy as well as managing the process of large litigation matters. She works closely with clients to guide them through mediation and settlement proceedings.

[email protected]

Today’s Presenters



High stakes and high visibility

U.S. Government purchases more than $500 billion/year from the private sector – Department of Defense spends the most Air Force, Navy, Army

Expanded enforcement and oversight

Unique tools to investigate and enforce

The Compliance Landscape



Public Sector Contracts Are Unique Special regulations and contract terms

– Convenience terminations – Unilateral changes – Data Rights Clauses

Litigation limits (sovereign immunity)

Audit/investigations

Fines/penalties/jail/suspension/debarment

Compliance programs to meet unique requirements

Freedom of Information Act Requests

The Compliance Landscape



Audits and investigations – IGs, DOJ, FBI, DCAA

Federal & State Statutes – False Claims Acts – False Statements Acts

Suspension & Debarment Contract Termination Bid Protests

– Enforcement of rules by competitors

Government Enforcement Tools



Government’s Principal Anti-Fraud Weapon – Suit alleging contractor defrauded the government by

submitting false claims for payment – Over $35 billion recovered since the 1986 Amendments about 2/3 from qui tam suits

Heightened Enforcement Under Obama Administration – 2009 and 2010 amendments strengthened and

broadened the False Claims Act – Since January 2009, $13.3 billion recovered – Fiscal year ending Sept. 2012 – $4.9 billion recovered – largest one year total ever

Civil False Claims Act



Qui Tam Provisions – 15%-30% bounties for whistleblowers – Government required to investigate and make an

intervention decision

Severe Sanctions – Treble damages – $5,500 -$11,000 penalty per false claim/statement

California False Claims Act – Recently amended to mirror federal law

Civil False Claims Act



Requires contractors to timely disclose credible evidence of violations of certain criminal laws (fraud, conflict of interest, bribery, or gratuity violations found in Title 18), violations of the False Claims Act and significant overpayments.

Amendments to FAR added the following: – Basis for suspension and debarment – FAR clause for use in government contracts and

subcontracts

Mandatory Disclosure



Purpose – To protect the public interest – not to punish – Key concept of “present responsibility” – Details in FAR 9.4

Who can be suspended/debarred? – Individuals – Entities (e.g., corporations, partnerships, divisions, or

business units within an entity) – Parents and affiliates, if warranted – Prime contractors, subcontractors, and/or participants

at any tier

Suspension and Debarment



Increased activity due to: – Enhanced interagency cooperation – Reporting requirements – Competitors reporting directly to SDO – Media reports of contractor misconduct – Agency response to Congressional criticisms

Three key trends – Focus on number of suspensions and debarments – Focus on fact-based suspensions – Focus on conduct “unrelated” to government contract

Suspension and Debarment



Governing body with oversight of the program

Assignment of internal responsibility for the program – People, other resources, organizational placement

(audit, legal, compliance)

Internal controls – Written materials – Training (new employee, annual, general, specialized,

refresher) – Separation of duties, etc.

Compliance Program Infrastructure



Internal mechanisms for employees and other stakeholders to raise concerns, anonymously

Self-monitoring and auditing

Corrective action – Discipline – External disclosures – Restitution – Root cause analysis

Compliance Program Infrastructure (continued)



The Procurement Integrity Act and Off-Limits Information

Prohibitions on Gifts and Entertainment

The Anti-Kickback Act

Employment Discussions and Hiring Government Employees

Ethics & Compliance



Rules on “off-limits” government or competitor information – Procurement Integrity Act, 41 U.S.C. § 423 Applicable to dealings with all government agencies

– Federal & state trade secrets laws

Procurement Integrity Act Establishes Two Main Types of Off-Limits Information – Government source selection information – Competitor information

Off-Limits Information



Doesn’t matter where you receive the information from

Doesn’t matter how you receive the information Red flags

Off-Limits Information



Use formal communication methods – Communicate with Contracting Officer – Put it in writing

Questionable information – Do not accept – Do not distribute – Do not discuss its contents

Contact Legal Department

Off-Limits Information – How Can A Government Contractor Protect Itself?



The contractor has a right to have its proprietary and intellectual property protected

Mark title page of all company proposals with an appropriate legend: – Example: this proposal includes data that shall not be

disclosed outside the Government and shall not be duplicated, used or disclosed – in whole or in part – for any purpose other than to evaluate this proposal.

Mark each sheet of data with an appropriate legend: – Example: Use or disclosure of the data contained on this sheet

is subject to the restriction on the title page of this proposal – Example: [Contractor Name] Proprietary/Trade Secrets

Off-Limits Information – How Can A Government Contractor Protect Itself?



Basic federal rule – With few exceptions, cannot offer or give anything of

value to a government employee – Government employees cannot accept gifts from

prohibited sources (e.g., contractors) or gifts given because of the employee’s official position

Gifts, Gratuities & Entertainment



Anything of value includes food, alcohol, discounts, airplane tickets, lodging, samples, admissions fees, transportation, training, tickets to theater and sporting events, flowers.

Covered Gifts, Gratuities & Entertainment



Some exceptions: – $20 per occasion per source/$50 per calendar year per

source – Modest food & refreshments not part of a meal – Free attendance at widely attended gathering (but not

travel, lodging, entertainment, or meal expenses)




Exceptions to the exceptions: – Can never provide gift to influence

performance of an official act – Government employees cannot solicit

or coerce offering of a gift – Government employees cannot accept gift on basis

so frequent that reasonable person would be led to believe that the employee is using public office for private gain




Pitfalls “Everyone does it” “We’re friends” “Sometimes she pays; sometimes I pay” “No one will know” “It’s just a sample”

Traps for the unwary Contractor personnel assisting the government Industry wining/dining practices off limits




Basic rule – restrictions on entertainment and gift-giving – Cannot provide, attempt to provide, offer, solicit,

accept, or attempt to accept a kickback

What is a kickback? – Anything of value given to improperly obtain or reward

favorable treatment under a federal government prime or subcontract, at any tier

Federal Anti-Kickback Act



Improper intent can be inferred from the circumstances No bright line dollar value provided in the rules Includes improper benefit to employees or the

company

Includes contractor personnel or vendors assisting the government

Federal Anti-Kickback Act



Two broad categories of restrictions Employment discussions Post-employment restrictions

(“Revolving door” restrictions)

Hiring Government Personnel



“Organizational conflict of interest means that because of other activities or relationships with other persons, a person is unable or potentially unable to render impartial assistance or advice to the Government, or the person’s objectivity in performing the contract work is or might be otherwise impaired, or a person has an unfair competitive advantage.” FAR 2.101.

Organizational Conflicts of Interest



Three Basic Categories Unequal access to information

Impaired objectivity

Biased ground rules

Organizational Conflicts of Interest



Streamlines federal acquisition process – Federal agencies can acquire commercial products

and services directly from commercial suppliers

Risk Areas: – Most Favored Customer Pricing – Industrial Funding Fee

GSA Schedules Contracts



Legal challenges to the federal government’s conduct of procurements

Statutorily created right to challenge procurement ground rules (Solicitation terms) and evaluation and award decisions

Provides offerors an opportunity to ensure a fair and objective chance to compete for and win government business

If you don’t know what the procurement rules and your rights are or when to challenge issues, you may lose your ability to protest

Bid Protests



Sequestration: OMB applies automatic, indiscriminate, across-the-board budget cuts of $1.2 trillion – Scheduled to begin on Jan. 2, 2013 – Reduce discretionary spending by $109 billion/year – Split evenly between defense and nondefense

December 2012: OMB directed agencies to begin preparing for sequestration – agencies planned to furlough employees, reduce

office hours, and scale back or eliminate contracts

January 2013: Congress delays sequestration cuts by two months

Sequestration



Delayed Sequestration – Contractors struggle with uncertainty, stifling of

long-term business plans and investment

Sequestration Cuts – Reduced agency resources means fewer federal

contracts awarded – Down-scoping and termination of existing contracts – Agencies likely to select lowest price, technically

acceptable evaluations, and use their indefinite-quantity, indefinite-deliver contract vehicles

Sequestration – Impact on Contractors



Men must turn square corners when they deal with the Government.

Justice Oliver Wendell Holmes, Jr., 1920

Conclusion



Daniel R. Forman

Mana Elihu Lombardo

[email protected]

[email protected]

Questions?


mailto:[email protected]



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9th Annual In-House Counsel Conference January 16, 2013 (Anaheim, CA)

#IHCC13 35

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Daniel R. Forman

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Daniel R. Forman is a partner in Crowell & Moring's Government ContractsGroup, resident in the firm's Washington, D.C. office.

ExperienceMr. Forman's practice focuses on a wide variety of government procurementlaw, including bid protests, False Claims Act and qui tam litigation,investigations of potential civil and criminal matters, ethics and compliance,contract claims and disputes, GSA schedule contracting, and smalldisadvantaged business contracting. Dan is also experienced in negotiatingand drafting teaming agreements and subcontracts, as well as providingcounseling on the interpretation of FAR clauses and solicitations. Dan'spractice also focuses on state and local procurement matters, including StateFalse Claims Act issues, lobbying and contingency payment compliance. Hehas been involved in bid protest litigation in six states and the District ofColumbia. Dan has been named one of the top lawyers in the governmentcontracts field by Chambers USA.

Education

Vassar College, B.A. Political Science (1994) Men's Varsity Soccer

Benjamin N. Cardozo School of Law, J.D. (1997) cum laude, LawReview, The Order of the Coif

Daniel R. [email protected]

Washington1001 Pennsylvania Avenue, N.W.Washington, DC 20004-2595Phone: 202.624.2504Fax: 202.628.5116

Practice Areas Government Contracts Technology, Media &

Telecommunications Homeland Security

Mana E. Lombardo

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Mana Elihu Lombardo is a counsel in Crowell & Moring's GovernmentContracts Group in Los Angeles. She concentrates her practice on governmentcontracts litigation and counseling. Mana has extensive experience defendingcompanies in fraud matters under the False Claims Act (FCA). She alsoconducts internal investigations and training programs on ethics and publicsector contract compliance as well as procurement fraud.

In addition, Mana handles a wide range of civil and commercial litigationmatters, including contract disputes, business torts, and labor andemployment issues. Mana has appeared and argued before federal and statetrial and appellate courts and has extensive experience developing andimplementing litigation strategy as well as managing the process of largelitigation matters. She works closely with clients to guide them throughmediation and settlement proceedings.

Education

University of California at Berkeley, B.A. (2000) with honors

University of California, Los Angeles School of Law, J.D. (2003)

Mana E. [email protected]

Los Angeles515 South Flower St., 40th FloorLos Angeles, CA 90071Phone: 213.443.5563Fax: 213.622.2690

Practice Areas Government Contracts Litigation False Claims/Qui Tam

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