Month: January 2015

Teaming Agreement: Richmond Circuit Court Concludes More than Mere Agreement to Try and Agree

Teaming agreements are regularly used for collaborative bids or proposals. A significant related issues has increasingly been the enforceability of the teaming agreement, and in particular whether it is merely an agreement to try and agree or whether it creates an obligatory requirement to contract if the team successfully obtains award. Judge Hughes of the Richmond Circuit Court recently considered related questions in the context of a suit by a scorned teaming subcontractor. As framed by Judge Hughes, the lead question for him on summary judgment was whether the teaming agreement was merely an agreement to agree.

Defendant’s main contentions for the proposition were 1): no duration for the prospective subcontract was set in the teaming agreement; 2) the plaintiff subcontractor was not a Local Small Business or Local Small Business Enterprises as called for in the teaming agreement; and 3) the teaming agreement included a provision that provided: “Nothing herein shall be deemed to create a presumption that the parties have agreed to exclusively respond with the other.” Noting the case was before him on summary judgment, Judge Hughes rejected all three arguments.

Regarding the first, he held that the subcontract duration could be implied; that is, duration would be tied to the nature of the teaming prime’s contract with the owner – or, as he noted in his opinion, “In other words, the duration of the parties’ sub-contractual undertaking will be determined by the length of defendant’s general contract.”

Regarding the second, he held that, based on the wording of the LSB / LSBE requirement in the teaming agreement (e.g., “throughout the term of the Contract”), the compliance requirement did not arise until when and if the parties themselves contracted, and so the LSB / LSBE requirement did not come into play until the underlying contract itself came into play; and so the team subcontractor’s not meting those requirements for the teaming agreement was not fatal.

Finally, regarding the third, he held that the provision relied upon merely expressed the parties’ agreement that the teaming agreement did not create any presumptions, and that nothing about the provision excluded the existence of a contractual relationship as alleged in the complaint; only that exclusivity existed between those parties relating to the project.

In ruling on the summary judgment motion, Judge Hughes noted that the enforceability of the teaming subcontract would be subject to later proof; however, he concluded the defendant’s arguments were insufficient, as argued, for him to grant summary judgment and preclude the scorned subcontractor from presenting that proof. This is a helpful case for teaming agreement drafters, or litigators; although the outcome seems strongly tied – as are all of these cases – to the wording of the particular teaming agreement.

What Recourse do you have when a Competitor Protests your Government Contract Reward?

Authored by attorney Anthony J. Mazzeo

One of the most frustrating notices you can receive as a Government Contractor can come days after learning your company has won a contract award.  In the days or weeks after an award, it is possible you may receive a “stop work order” and be advised that a competitor has protested your award.  We all know that protests are a common occurrence in these days of fierce competition for government contract awards.

Your notice of protest might not follow immediately after the award because a protest is considered timely if filed within 10-days after the protester knew or should have known of the basis for its protest.  For acquisitions conducted on the basis of competitive proposals under which a debrief is required when requested, the protest will be timely if submitted within 10 days of the debriefing.  However, most protests are submitted within 5-days of the debrief so as to qualify for a statutory automatic stay of the contract performance.

Upon receiving notice of a protest from the GAO, an Agency must immediately advise the awardee, or if an award has not yet been made, the Agency must advise all offerors with a substantial chance of receiving an award.  The contracting officer should provide the awardee a redacted copy of the protest with the protester’s proprietary information removed, giving an idea of the basis of the protest.  The awardee will be permitted to intervene in the GAO Bid Protest to explain why the protester is incorrect and why the Agency’s award decision should stand.

Whether to intervene is an important decision for the awardee.  While you can sit back and rely upon the Agency to oppose the protest, it is generally a good idea to ensure you have a “seat at the table” to provide input to the GAO through your attorney.  Although a protective order issued in most cases will prevent the contractor itself from receiving un-redacted versions of the government’s Agency Report and source selection information, the intervenor’s attorney is able to fully review the material and make arguments to GAO on the contractor’s behalf.

While the Agency will often desire to support its award so as not to delay the contract performance by repeating the acquisition process, the Agency’s interests may not be the same as your company’s interests.  If the protest attacks the awardee’s proposal or past performance, the awardee is in the best position to explain the issues and counter the protester’s argument.  Just as importantly, the Agency counsel may have limited time or resources available to oppose the protest and can be bolstered by having an intervenor’s counsel making some of those arguments to GAO.

Though there are costs to intervening, failing to intervene in a protest can put your company at risk of losing the contract to Agency corrective action or an adverse GAO decision.  While intervening does not guarantee that you’ll keep the award, it gives you an opportunity to influence the discussion and allows you the best chance to ensure your strongest arguments are made to GAO to support the award.

Policy Changes in Government Contracting Regarding the Rights of Lesbian, Gay, Bisexual & Transgender Persons (LGBT)

Authored by attorney George Nicholos

The Office of Federal Contract Compliance Programs (OFCCP), which accepts and investigates administrative complaints regarding alleged acts of discrimination from applicants or employees, recently released its final ruling implementing Executive Order (EO) 13672, signed by president Obama on July 21, 2014. Executive Order 13672 amends prior Executive Order 11246 to add gender identity and sexual orientation to the protected categories of people. Essentially, the Final Rule implementing EO 13672 replaces the words “sex, or national origin” with the words “sex, sexual orientation, gender identity, or national origin” throughout the regulations set forth in EO 11246. Upon being implemented the following categories are protected from discrimination in the workplace: race, color, religion, sex, sexual orientation, gender identity, and national origin.

The Final Rule is scheduled to be published in the Federal Register in December 2014 and the rule will become effective 120 days from its publication.  The new nondiscrimination rules are not intended to be added as new terms and conditions to existing contracts, but rather will apply to federal contracts entered into or modified after the effective date. In practice, the only affirmative action obligations impacted by this rule are those contained in 41 CFR Part 60-1. Contractors can fulfill this requirement by including the updated Equal Opportunity Clause in new or modified subcontracts and purchase orders, ensuring that applicants and employees are treated without regard to their sexual orientation and gender identity. Likewise, contractors should also update equal opportunity language used in job solicitations and when posting notices.

Under OFCCP’s final rule, contractors are not required to set placement goals on the bases of sexual orientation or gender identity or to conduct any data analysis with respect to the sexual orientation or gender identity of applicants or employees. Contractors are also not required to collect any information about applicants’ or employees’ sexual orientation or gender identity, but the final rule does not prohibit contractors from asking applicants and employees to voluntarily provide this information. However, care must be taken as such a request may be prohibited by state or local law. Additionally, contractors may not use any information gathered to discriminate against an applicant or employee based on sexual orientation or gender identity.

Policy Changes in Government Contracting Regarding the Rights of Lesbian, Gay, Bisexual & Transgender Persons (LGBT)

Authored by attorney George Nicholos

The Office of Federal Contract Compliance Programs (OFCCP), which accepts and investigates administrative complaints regarding alleged acts of discrimination from applicants or employees, recently released its final ruling implementing Executive Order (EO) 13672, signed by president Obama on July 21, 2014. Executive Order 13672 amends prior Executive Order 11246 to add gender identity and sexual orientation to the protected categories of people. Essentially, the Final Rule implementing EO 13672 replaces the words “sex, or national origin” with the words “sex, sexual orientation, gender identity, or national origin” throughout the regulations set forth in EO 11246. Upon being implemented the following categories are protected from discrimination in the workplace: race, color, religion, sex, sexual orientation, gender identity, and national origin.

The Final Rule is scheduled to be published in the Federal Register in December 2014 and the rule will become effective 120 days from its publication.  The new nondiscrimination rules are not intended to be added as new terms and conditions to existing contracts, but rather will apply to federal contracts entered into or modified after the effective date. In practice, the only affirmative action obligations impacted by this rule are those contained in 41 CFR Part 60-1. Contractors can fulfill this requirement by including the updated Equal Opportunity Clause in new or modified subcontracts and purchase orders, ensuring that applicants and employees are treated without regard to their sexual orientation and gender identity. Likewise, contractors should also update equal opportunity language used in job solicitations and when posting notices.

Under OFCCP’s final rule, contractors are not required to set placement goals on the bases of sexual orientation or gender identity or to conduct any data analysis with respect to the sexual orientation or gender identity of applicants or employees. Contractors are also not required to collect any information about applicants’ or employees’ sexual orientation or gender identity, but the final rule does not prohibit contractors from asking applicants and employees to voluntarily provide this information. However, care must be taken as such a request may be prohibited by state or local law. Additionally, contractors may not use any information gathered to discriminate against an applicant or employee based on sexual orientation or gender identity.

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Issues in Workers’ Comp: Legislative Update

Here is a first look at some legislative changes that may be coming our way in the workers’ compensation world. We will keep you updated. And as always, if you have any questions or concerns about these potential Bills, please contact us.

HB 1285 Workers’ compensation; definition of employee; property owners’ associations.

Chief patron: Scott

A BILL to amend and reenact § 65.2-101 of the Code of Virginia, relating to the Virginia Workers’ Compensation Act; definition of employee; property owners’ associations.

15100389D

Summary as introduced:

Workers’ compensation; definition of employee; property owners’ associations. Amends the definition of employee within the Virginia Workers’ Compensation Act to exclude non-compensated employees, directors, and executive officers of any entity that constitutes a property owners’ association under the provisions of the Property Owners’ Association Act.

09/19/14 House: Prefiled and ordered printed; offered 01/14/15 15100389D
09/19/14 House: Referred to Committee on Commerce and Labor

HB 1372 Workers’ compensation insurance; use of experience rating, loss limitation.

Chief patron: Webert

A BILL to amend and reenact § 65.2-817 of the Code of Virginia and to amend the Code of Virginia by adding a section numbered 38.2-1908.1, relating to workers’ compensation insurance; use of experience rating; loss limitation for not-at-fault motor vehicle accidents.

15100792D

Summary as introduced:

Workers’ compensation insurance; use of experience rating; loss limitation for not-at-fault motor vehicle accidents. Directs the State Corporation Commission (SCC) to adopt regulations that establish standards for determining a loss limitation to be included in the calculation of workers’ compensation insurance experience modifications when a motor vehicle accident is determined to be a not-at-fault motor vehicle accident. The bill requires the SCC to establish how all loss experience remaining after such deduction of the loss limitation should be distributed among workers’ compensation classifications. The SCC is also required to ensure that the amount, if any, by which an employer’s experience rating would otherwise be modified as the result of a motor vehicle accident in which an employee is injured or killed shall be reduced if the accident was a not-at-fault motor vehicle accident.

12/07/14 House: Prefiled and ordered printed; offered 01/14/15 15100792D
12/07/14 House: Referred to Committee on Commerce and Labor

HB 1486 Workers’ compensation; exclusivity of remedy.

Chief patron: Habeeb

A BILL to amend and reenact § 65.2-307 of the Code of Virginia, relating to the Virginia Workers’ Compensation Act; exclusivity of remedies.

15101541D

Summary as introduced:

Workers’ compensation; exclusivity of remedy. Provides that if a court determines that an accident, disease, injury, or death is barred by the exclusivity provisions of the Workers’ Compensation Act, then that finding shall be res judicata between the parties and estop them from arguing before the Workers’ Compensation Commission that the accident, injury, or death did not arise out of and in the course and scope of the employee’s employment. The measure also provides that if the Commission or a court determines that the accident, injury, or death does not arise out of or in the course and scope of such employee’s employment, then that finding shall be res judicata and estop those same parties from arguing before a court that the accident is barred by the Act’s exclusivity provisions.

01/05/15 House: Prefiled and ordered printed; offered 01/14/15 15101541D
01/05/15 House: Referred to Committee on Commerce and Labor

HJ 532 Virginia’s workers’ compensation system; JLARC to study.

Chief patron: Lingamfelter

Directing the Joint Legislative Audit and Review Commission to study Virginia’s workers’ compensation system. Report.

15101898D

Summary as introduced:

Study; JLARC to study the Virginia’s workers’ compensation system; report. Directs the Joint Legislative Audit and Review Commission (JLARC) to study Virginia’s workers’ compensation system. In its study, JLARC is directed to (i) examine whether claims are reviewed and processed in a timely and fair manner; (ii) assess whether the dispute resolution process is timely, effective, and fair and equitable toward all parties; (iii) compare the structure and administration of workers’ compensation programs in other states with that of Virginia’s; (iv) analyze the rate of growth in medical prices and examine any changes that occur in access to medical care in states that have adopted medical service fee schedules or treatment guidelines; and (v) review any other issues and make recommendations as appropriate.

12/23/14 House: Prefiled and ordered printed; offered 01/14/15 15101898D
12/23/14 House: Referred to Committee on Rules

SB 745 Workers’ compensation; exclusion of certain truck owner-operators.

Chief patron: Cosgrove

A BILL to amend and reenact § 65.2-101 of the Code of Virginia, relating to the Virginia Workers’ Compensation Act; exclusion for owner-operator of leased motor vehicle.

15102550D

Summary as introduced:

Workers’ compensation; exclusion of certain truck owner-operators. Excludes any owner-operator of a motor vehicle that is leased with or to a common or contract carrier in the trucking industry from the definition of an employee for purposes of the Virginia Workers’ Compensation Act, if certain conditions establish that the owner-operator is an independent contractor.

12/18/14 Senate: Prefiled and ordered printed; offered 01/14/15 15102550D
12/18/14 Senate: Referred to Committee on Commerce and Labor

SB 770 Workers’ compensation; exclusivity of remedy.

Chief patron: McEachin

A BILL to amend and reenact § 65.2-307 of the Code of Virginia, relating to the Virginia Workers’ Compensation Act; exclusivity of remedies.

15100341D

Summary as introduced:

Workers’ compensation; exclusivity of remedy. Provides that if a court determines that an accident, disease, injury, or death is barred by the exclusivity provisions of the Workers’ Compensation Act, then that finding shall be res judicata between the parties and estop them from arguing before the Workers’ Compensation Commission that the accident, injury, or death did not arise out of and in the course and scope of the employee’s employment. The measure also provides that if the Commission or a court determines that the accident, injury, or death does not arise out of or in the course and scope of such employee’s employment, then that finding shall be res judicata and estop those same parties from arguing before a court that the accident is barred by the Act’s exclusivity provisions.

12/23/14 Senate: Prefiled and ordered printed; offered 01/14/15 15100341D
12/23/14 Senate: Referred to Committee on Commerce and Labor

 

Fourth Circuit Clarifies Federal False Claims Standards in January 2015 Majority Decision

Last month the United States Court of Appeals for the Fourth Circuit (which has Federal Court appellate jurisdiction for Virginia, North Carolina, South Carolina, West Virginia, Maryland and the District of Columbia) clarified a number of aspects of Federal False Claim actions. The case is United States, et al. v. Triple Canopy, Inc., Nos. 13-2190 and 13-2191, decided January 8, 2015, and involves a whistleblower (“qui tam”) claim by an ex-employee of a security contractor, Triple Canopy, respecting Triple Canopy security service contracts with the Federal Government.

The whistleblower, a medic named Omar Badr, claimed that Triple Canopy had knowingly provided non-qualified guards, asked him to falsify related records, and then when he refused falsified them and invoiced for the non-conforming services. The Attorney General elected to intervene and proceed with the action after it was filed by Badr, and then filed an amended complaint alleging additional violations, and bringing several common law claims against Triple Canopy. The district court dismissed the False Claims Act claims and common law claims, as well as the whistleblower’s claims, and the appeal resulted.

Reviewing the district court’s decisions “de novo” (anew; the applicable review standard), the Fourth Circuit reversed several aspects of the district court’s decision, and in the process clarified the pleading (and proof) standards applicable to False Claims Act (“FCA”) actions. Particularly of note as being clarified by the court are the following:

– Implied Certifications: The Fourth Circuit clarified that false claims include falsehoods by silence, and that such “implied” certifications (as opposed to affirmative representations) arise when the contractor’s silence infers the contractor has met contractual prerequisites for the Government action being induced (in that case, the prerequisites for payment). The court clarified that the silence must go to a “material” (as opposed to minor) contractual requirement though; in that case the non-qualification of the guards being held as material by the court.

– Whistleblower as Plaintiff: The Fourth Circuit clarified that the whistleblower remains a proper party plaintiff claimant even after the Attorney General elects to intervene and proceed with the action. The district court had held that the whistleblower’s claims were superseded by the Government’s claims; but the Fourth Circuit reversed holding the whistleblower had the right to continue as a party in the action subject to the limitations in FCA Code Sec. 3730(c)(2); which the court noted the district court was free to consider on remand.

– False Records Claim Basis: The Fourth Circuit clarified that the Government was not required to have actually reviewed or relied upon the false record to support a false records claim. The district court had focused on the actual effect of the false statement rather than its potential effect, but the Fourth Circuit held that – in appropriate circumstances – a record is false if it has the potential to influence Government payment; even if the Government ultimately did not review the record. Additionally, the court expressly declined to adopt the view that such implied representations can only give rise to FCA claims when the condition is expressly designated as a condition for payment; but that not every part of the contract can be assumed as a condition of payment – leaving the question of materiality for case by case analysis.

As part of its analysis, the court noted the importance of construing the FCA as a “strong remedy” when one was needed to confront fraud upon the government. While noting that its decisions in Triple Canopy might be “prone to abuse” by efforts to turn minor contractual violations into FCA claims, the court noted the FCA purposes overrode that concern and further noted the available remedies for any such “abusive litigation.”

How the Fourth Circuit’s decision in Triple Canopy expands FCA claims, and whistleblower actions in particular, remains to be seen; but it clearly seems to widen the door of FCA action-ability, and should serve as a caution to any Federal contractor respecting both what is said, and not said, to the Government throughout contractual performance.

Warranty Provisions Deserve Careful Consideration from Contractors

Authored by attorney Casaundra Maimone

It goes without saying that a contractor should carefully review all of the proposed terms and negotiate all of the final terms of a construction contract such that the provisions are best tailored to their role on the project.  Nonetheless, attentiveness to warranty terms is especially important due to the fact that, after a product warranty expires, the Contractor’s workmanship warranty could be relied upon instead.  The Contractor should consider requiring the same type of warranties from its subcontractors as well. Likewise, warranties for equipment and materials should flow down from the manufacturer and supplier directly to the owner.

Generally, contracts for construction projects will include statutory and implied warranty obligations to the owner. To the extent possible, the Contractor should not agree to any additional or extra warranty obligations. A one-year warranty on workmanship is typical and acceptable but the Contractor should still attempt to establish definite commencement/end dates for all warranties and make sure that timely notice is required.

Contractors should also be careful to ensure that the one-year warranty is not extended by an obligation to perform remedial work.  In context, this means paying attention to whether the contract characterizes repairs as “punch list” or “warranty” work. It may be advisable to seek counsel in order to determine whether it is in the Contractor’s best interests to describe repair activity as warranty work or punch list work.

Foreign Owners of U.S. Businesses: Time is Running Out

If you are a foreign owner doing business in the U.S. you should review the requirements by the Bureau of Economic Analysis/U.S. Department of Commerce (“BEA”). BEA is collecting data to measure foreign direct investments in the U.S., and they are doing so retroactively back to January 1, 2014. The BE-13 Survey form will have to be filed by January 12, 2015. Even if you do not qualify you may still have to file an exemption. Please be sure to review the BEA requirements, as there are penalties for not filing. Going forward reports are due, at the latest, 45 days after the certain transactions occur as set out by BEA.

Who needs to file?

Any foreign owner who:

  • Established an entity in the U.S.?
  • Participated in a merger and acquisition of a U.S. entity?
  • Expanded existing presence in the U.S.?

Foreign owners meeting any of the aforementioned criteria must determine:

  • If the ownership interest of the foreign entity is at least 10% (direct and indirect), or if the investment is greater than 3 million U.S. dollars (actual or expected)?

If so, the BE-13 Survey form needs to be filed by January 12th, 2015.  However, and this is important, even if a foreign owner does not qualify as to the above requirements the company may still be required to file for an exemption. For instances, if you are contacted by BEA you will have to file – either the BE-13 Survey form or the exemption form. (Examples as to when you may be contacted by BEA would be if a foreign entity already holds 10% or more voting rights, or the foreign entity has purchased real estate.) An exemption will also have to be filed if the investment is less than 3 million U.S. dollars. Note there are specific requirements as to how to file for an exemption for a holding company.

These are just a few examples, a more detailed explanation of the specific filing requirements and the necessary forms may be found at https://www.bea.gov/surveys/respondent_be13.htm.

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