Recently in Government Contracts Category

Corrective Action Catch 22: Court of Federal Claims Holds Agency Action Must Be Rational Even If GAO Protest Decision Was Not

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By Pillsbury Winthrop Shaw Pittman

Today, Pillsbury attorneys Joël Van Over and Alex Ginsberg published their advisory titled Corrective Action Catch 22: Court of Federal Claims Holds Agency Action Must Be Rational Even If GAO Protest Decision Was Not. The Advisory discusses the U.S. Court of Federal Claims' July 15, 2014 decision in RUSH Construction, Inc. v. United States.

This decision reflects the unusual circumstance in which the court effectively sat in appellate review of an earlier bid protest decision by the Government Accountability Office (GAO) after the U.S. Army Corps of Engineers followed GAO's recommendation in that decision. The court ultimately overruled GAO when it found that it was arbitrary and capricious for the agency to follow GAO's recommendation. In so doing, the court cited numerous shortcomings in GAO's reasoning and its reliance on inapposite case law. The RUSH decision, authored by the Court of Federal Claims' new chief judge, may foretell greater judicial scrutiny of agency corrective action and a shift at the court away from deference to GAO's bid protest recommendations.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Joël Van Over or Alex Ginsberg, the authors of this blog.

Spotlight On Federal Contractors' Labor Practices

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Recently President Obama issued an Executive Order purportedly seeking to increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by ensuring that they understand and comply with labor laws. In sum, the Executive Order requires contractors seeking federal contracts to disclose labor law violations, and to require their subcontractors to do the same, and creates new compliance advisers at agencies to oversee decisions about which contractors are awarded federal work.

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CA: Public Works Contractors Online Application System

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Recently enacted law establishes a new public works program to replace the Compliance Monitoring Unit and Labor Compliance Program requirements for bond-funded and other public works projects. Effective July 1, 2014, the California Department of Industrial Relations' (DIR) program covers all bond-funded and public works projects in the state rather than just selected processes. Public works refers to construction, alteration, demolition, installation, or repair work (including maintenance) done under contract and paid by public funds. It does not include those done by a public agency with its own employees. With minor exceptions, all workers employed on public works projects must be paid the prevailing wage determined by the Director of the DIR according to the type of work and location, and the prevailing wage rates are usually based on rates specified in collective bargaining agreements.

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CSLB: California 2014 Legislative Bills That Could Impact Contractors

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The California Contractors State License Board (CSLB) monitors legislation that it is sponsoring as well as bills that may have an impact on the construction industry. In its Summer 2014 Newsletter, the CSLB identifies a handful of bills that it is watching.

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Operative August 28: Revised Missouri Public Prompt Payment Act

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On June 20, 2014, Missouri Governor signed into law Senate Bill 529. The Act revises and expands the scope of the Missouri Public Prompt Payment Act and the law relating to public works projects. The revised provisions are operative August 28, 2014. Of note, under existing law, all public works contracts made by a political subdivision for a public works project must provide for prompt payment to the contractor. Under the revised Act, these contracts must also provide for prompt payment of any professional engineer, architect, landscape architect, or land surveyor.

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Operative July 18: Revised Nebraska Construction Prompt Pay Act

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In mid-April 2014, Nebraska Governor signed into law Legislative Bill 961. Of note, it includes revisions to the Nebraska Construction Prompt Pay Act. The Act is set forth in Nebraska Revised Statutes §§ 45-1201 to 45-1210 and Section 8 of L.B. 961. The revised provisions are operative July 18, 2014.

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English Law: When Contractual Limitations on Damages Can Backfire

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By Pillsbury Winthrop Shaw Pittman

Today, Pillsbury attorney Raymond Sweigart published his advisory English Law: When Contractual Limitations on Damages Can Backfire. The Advisory discusses AB v. CD [2014] EWCA Civ 229, in which the Court of Appeal for England and Wales addressed an issue with surprisingly little precedent. It held that a claimant seeking an injunction to prevent an alleged wrongful termination of a contract was entitled to argue that damages could not be an adequate remedy because recoverable damages were limited or excluded under the contract.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Raymond Sweigart, the author of this blog.

Effective July 1, 2014, Tennesee Changes to Invitations to Bid Process

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On April 8, 2014, Tennessee Governor signed into law Senate Bill 1713, a bill amending by deleting the section in its entirety and substituting Title 62, Chapter 6, Part 1, § 62-6-119, relative to requirements for invitations to bid. The amended law is effective July 1, 2014.

Amended Section 62-6-119(b) will read:

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Contractor To Pay $2.4 Million Fine for DBE Fraud

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For any contractors who have ever considered manipulating disadvantaged business enterprise (DBE) requirements as a way to obtain work, this recent FBI press release provides a cautionary tale.

According to the press release, in 2007 a Connecticut contractor was awarded a highway project, funded by state and federal sources, based on its low bid of $39.6 million. In its bid documents, the contractor had represented that a certain DBE subcontractor would perform about $3.1 million of the work, furnishing all supervision, labor, and materials. Instead, the government claims the contractor used the DBE subcontractor as a shell to pass through payment to other subcontractors that the contractor negotiated with and supervised in actual performance of the work.

Under the non-prosecution and civil settlement agreement reached between the government and the contractor, the contractor agreed to a number of reforms, such as establishing an Ethics and Compliance Officer and removing the personnel directly involved in the scheme, in addition to paying a $2.4 million fine. The non-prosecution agreement only addressed the contractor's corporate criminal liability--the government's investigation of individuals continues.

Executive Order Issued on Minimum Wage for Federal Contractors and Subcontractors

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On February 12, 2014, President Obama issued an Executive Order to raise the minimum wage for Federal contractors and subcontractors under certain contracts, as he had foreshadowed in this year's State of the Union. The Executive Order sets forth the new wage rate, when it may take effect, and what contracts will be affected by this minimum wage increase.

Click here for a link to the full alert, which I co-authored with my colleague Meghan Doherty.

Who Says Life's Not Fair: Good Faith and Fair Dealing Prevails in Metcalf Case

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Yesterday, Pillsbury attorneys Joël Van Over and Alex Ginsberg published their advisory titled Who Says Life's Not Fair: Good Faith and Fair Dealing Prevails in Metcalf Case. The Advisory discusses the Federal Circuit's highly anticipated decision in Metcalf Construction Company, Inc. v. United States, No. 2013-5041 (Fed. Cir. Feb. 11, 2014). The Federal Circuit ruled that a contractor suing the government for breaching the implied duty of "good faith and fair dealing" need not show that the government's conduct was "specifically targeted" to reappropriate the contractor's benefits under the subject contract except in limited circumstances present in the court's 2010 decision in Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010). Rather, in Metcalf, the court reaffirmed the vitality of traditional standards used to prove a breach of the duty of good faith and fair dealing, such as where the government hindered or failed to cooperate with the contractor's performance so as to "destroy the [contractor's] reasonable expectations. . . regarding the fruits of the contract."

Government Contractors Face Expanded Affirmative Action Requirements -- Regulations relate to veterans and individuals with disabilities

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By Pillsbury Winthrop Shaw Pittman

Yesterday, Pillsbury attorney Julia E. Judish and Maryelena Zaccardelli, Principal, MEZ Consulting, LLC, published their advisory titled Government Contractors Face Expanded Affirmative Action Requirements Regulations relate to veterans and individuals with disabilities discussing the Obama Administration's Office of Federal Contract Compliance Programs' expansive new regulations. The Advisory discusses, among other things, what the new regulations require, including that government contractors will be required to undertake greater efforts to employ veterans and individuals with disabilities.

Court Affirms City's Discretion to Waive Bid Defect, Clarifying the Meaning of Inconsequential Deviation

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Recently a California Court of Appeal affirmed a superior court's judgment and order confirming that the City of San Leandro (City) had not abused its discretion by waiving a bid defect and awarding the public project contract to that bidder. The court, in Bay Cities Paving & Grading, Inc. v. City of San Leandro, Case No. A137971 (Jan. 28, 2014), rejected Bay Cities Paving & Grading, Inc.'s (Bay Cities) contention that the City improperly awarded the contract to Oliver Desilva, Inc. dba Gallagher & Burk (hereafter G&B) because G&B inadvertently omitted the first page of its bid bond, a bond required by the contract specifications. The court found that the City had before it the information needed to determine that G&B had satisfied the bid bond requirement when it concluded that G&B was the lowest responsible bidder.

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Subcontractors Are Victorious, Iowa State Agency Required To Cover General Contractor's Payment Shortfalls

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Star Equipment, Ltd., Manatt's, Inc., and Short's Concrete Cutting Co. recently secured a victory in the Iowa Supreme Court when the Court, Iowa Supreme Court.jpgin Star Equipment, Ltd., v. State of Iowa, Iowa Department of Transportation, Case No. 12-1378 (Jan. 31, 2014), reversed the district court's ruling on the scope of remedies available to subcontractors under Iowa Code § 573.2 for unpaid work. For the state projects, the Iowa Department of Transportation (IDOT) had waived the requirement of a construction surety bond because the general contractor qualified as a Targeted Small Business (TSB). Ruling in favor of the subcontractors, the Court construed Section 573.2 "as a waiver of sovereign immunity that allows subcontractors to recover from IDOT the unpaid balances TSBs owe for work on public improvements." It went on to rule that the subcontractors, as prevailing parties, are eligible, in the district court's discretion, to recover their reasonable attorneys' fees from IDOT.

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OMB Publishes Final Uniform Guidance Governing Grants, Cooperative and Other Funding Agreements With Federal Agencies

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On February 4, 2014, Pillsbury attorneys C. Joël Van Over and Clare M. Cavaliero published their alert titled OMB Publishes Final Uniform Guidance Governing Grants, Cooperative and Other Funding Agreements With Federal Agencies discussing the Office of Management and Budget's recently published series of significant reforms to the Government's policies relating to grants and cooperative agreements. These reforms are part of a larger Federal effort to increase efficiency and reduce waste.