Government Contracts

The US government recovered a record $5.7 billion in FCA-related settlements in fiscal year 2014 and secured another $3.5 billion in fiscal year 2015. Given increasing DOJ scrutiny and the proliferation of qui tam whistleblowers under the FCA, the enforcement climate in the federal contracting space will remain challenging for years to come. Contractors increasingly turn to our government contracts team for assistance with federal investigations, FCA litigation, and mandatory disclosures.

Our government contracts team works as appropriate with colleagues in our white collar and government investigations practice, which includes more than a dozen former assistant US attorneys. Together, we resolve investigations by agency IGs, the DOJ, and other federal, state, and local enforcement authorities alleging government contracts noncompliance. We also resolve civil and criminal violations relating to the performance of government contracts.

We have defended clients in industries as diverse as technology, professional services, defense/aerospace, life sciences, nuclear energy, telecommunications, utilities, and international construction. We have dealt with virtually every leading enforcement agency, including the DOJ, the US Department of Defense (DOD), the US Air Force (USAF) Office of Special Investigations, the Naval Criminal Investigations Service, the Defense Contract Audit Agency (DCAA), the now-defunct Special Inspector General for Iraq and Afghanistan Reconstruction, and IGs at the General Services Administration (GSA), the US Department of Veterans Affairs (VA), the National Security Agency (NSA), the US Department of Homeland Security, the US Postal Service (USPS), the US Coast Guard, and the US Department of Transportation, among others.

Our government contracts practitioners also conduct compliance- and ethics-related internal investigations and serve as counsel for defense contractors in congressional inquiries in the defense and national security arenas.

One of the distinguishing features of our team has been its success in defending FCA cases relating to allegations of procurement fraud. In the recent past, members of our practice have filed four successful motions to dismiss FCA actions brought against two of the largest US technology contractors, and we have resolved numerous other FCA matters. We also have resolved related concerns with agency suspension and debarment officials (SDOs).

We routinely conduct internal investigations and assist with mandatory disclosures required by the Federal Acquisition Regulation (FAR) mandatory disclosure rule concerning credible evidence of certain criminal or civil violations related to a government contract, as well as overpayments.

Select Matters Handled by Our Lawyers

• Successful motions to dismiss three civil FCA cases against Fortune 10 IT contractors in United States ex rel. Folliard v. Synnex Corp., 2011 WL 2836372 (D.D.C. 2011); United States ex rel. Folliard v. Hewlett-Packard Co., 272 F.R.D. 31 (D.D.C. 2011); and United States ex rel. Crennen v. Dell Marketing L.P. et al, 711 F. Supp. 2d 157 (D. Mass. 2010)
• Conducted an internal investigation for one of the largest DOD contractors concerning allegations of potential defects in military/law enforcement products; defended the contractor in a DOJ FCA investigation in the District of Columbia, resulting in a settlement of civil FCA allegations.
• Conducted a worldwide internal investigation for a major DOD contractor involving allegations of cybersecurity violations relating to the handling and transmission of military personnel medical records; resolved the matter with the DOD with no contractual, civil, or criminal ramifications.
• Conducted an internal investigation for a DOD private security services contractor relating to alleged bribes/gratuities in connection with a contract award to provide services in Iraq; resolved the matter with no contractual, civil, or criminal ramifications.
• Conducted numerous investigations and filed related mandatory disclosures with the DOD, GSA, and NSA IGs; each matter was resolved with no civil or criminal ramifications.
• Successfully defended a matter involving a US Department of Energy (DOE) contractor operating a nuclear waste depository. A motion to dismiss the qui tam lawsuit was granted, and dismissal was summarily affirmed in United States ex rel. Rockefeller, 274 F. Supp. 2d 10 (D.D.C. 2003), aff’d, 2004 WL 180264 (D.C. Cir. 2004).
• Represented a major DOE contractor in an investigation and dispute over accounting practices; successfully persuaded the DOJ, agency investigators, and the DCAA to decline prosecution, without requirement of any payment by the client.
• Favorably settled a matter for a Fortune 250 supplier of office products accused of impermissibly supplying foreign-origin products in violation of Trade Agreement Act certifications.
• Favorably settled a matter for a supplier of spent nuclear fuel transportation services to the DOE accused of impermissible double billing.
• Successfully persuaded the government not to intervene against a client that supplied nuclear materials to the federal government, and persuaded a qui tam relator plaintiff to voluntarily dismiss claims against the client in United States ex. rel. Gonter v. Hunt Valve Company et al., No. 0:01CV634 (N.D. Ohio).

Federal government suspension and debarment officials (SDOs) recently have become more active in their efforts to ensure that the government does business with only those contractors deemed “presently responsible.” More frequently, SDOs are conducting informal reviews of contractors originated by “show cause” or “request for information” letters, and sometimes even based on media reports as well as more traditional suspension and debarment proceedings. We assist our clients in navigating suspension and debarment issues at a number of federal agencies, including all DOD components, the GSA, the US Environmental Protection Agency, and the USPS.

We also have assisted a number of clients in dealing with state suspension and debarment concerns. As part of these representations, we frequently assist contractors in enhancing their existing ethics and compliance programs and communications, internal controls, and other procurement-related policies and procedures so SDOs are comfortable dealing with responsible contractors and suspension or debarment is unnecessary to protect the government’s interests.

Select Matters Handled by Our Lawyers

• Successfully represented a major commercial item defense contractor in present responsibility proceedings before the Army SDO relating to a Foreign Corrupt Practices Act resolution with the US Securities and Exchange Commission; no administrative agreement required.
• Successfully represented a Fortune 500 technology contractor in present responsibility proceedings before the GSA SDO relating to a multimillion-dollar settlement with the DOJ relating to pricing and disclosure issues; no administrative agreement required.
• Successfully represented a Fortune 200 technology contractor in present responsibility proceedings before the US Army and GSA SDOs relating to a multimillion-dollar FCA settlement involving pricing and kickback issues; no administrative agreement required.
• Successfully represented a Fortune 250 defense/aerospace contractor in present responsibility proceedings before the US Army SDO relating to an FCA settlement involving defective product and false testing issues; no administrative agreement required.
• Successfully represented a Fortune 100 contractor in present responsibility proceedings before several SDOs on a number of separate occasions as a result of inquiries relating to FCA settlements and certain criminal and contractual matters; no administrative agreements required.

Companies regularly doing business with the US government often find themselves faced with circumstances involving actual or potential claims, or requests for equitable adjustments. Our lawyers have a track record of helping clients successfully resolve US government contract disputes through effective predispute positioning, avoidance, or settlement where possible, and through successful litigation and recovery where not.

We have a significant presence in all the major government dispute forums, including the Court of Federal Claims (COFC), the Armed Services Board of Contract Appeals (ASBCA), and the Civilian Board of Contract Appeals. Our track record speaks for itself: Morgan Lewis has secured some of the largest claims recoveries in the last decade. Our senior leadership team represents clients in claims proceedings involving the DOD, DOJ, VA, DOE, and GSA.

Our government contracts team includes a current member of the court-appointed COFC Advisory Council and a member of the council’s Emeritus Leadership Forum, as well as a former president of the COFC Bar Association and a Law360 Government Contracts MVP. A recently published COFC decision described our firm as having “extensive experience” in the court and as representing clients “zealously, creatively, and with civility.”

Select Matters Handled by Our Lawyers

• Secured a $50 million settlement of a copyright infringement claim before the COFC on behalf of an emerging software company involving a government contract with the US Army for a sophisticated logistics software package.
• Conducted a three-week trial before the ASBCA on a breach of contract claim, valued at approximately $400 million, against the USAF relating to satellite launch services.
• Secured multiple multimillion-dollar trial court judgments for nuclear utilities from the COFC in connection with so-called “spent nuclear fuel damages” claims against the US government, and successfully defended these judgments against government appeals to the US Court of Appeals for the Federal Circuit. We also have secured many favorable settlements of such claims, including the first settlement for the largest nuclear utility in the United States. Cumulatively, over the last several years, we recovered more than $2.5 billion on behalf of our utility clients in judgments and settlements for spent nuclear fuel damages claims.
• Secured a favorable settlement in federal court litigation involving breach of contract and tort claims by a supplier of advanced laser technology to the US Army against a subcontractor pursuant to a complex technology transfer agreement.
• Secured a favorable settlement of a multimillion-dollar dispute between a prime contractor and its sales consultant involving disputed treatment under the Cost Accounting Standards of sales agent service fees under a government contract valued at more than $1 billion.
• Secured favorable settlements of disputes involving construction of a $200 million radiological facility between a prime contractor at a DOE site and lower-tier subcontractors.
• Secured a favorable settlement in a dispute with the VA regarding the multimillion-dollar installation of a state-of-the-art surgical suite.
• Secured a favorable settlement in a dispute between a design/build subcontractor and a USAF prime contractor involving a $90 million delay/disruption claim concerning a major systems program.
• Secured a favorable settlement in a dispute over contractual lease terms involving use of government-owned materials for a DOE contractor.

Constant calls for lower public-sector spending and the increasing use of indefinite-delivery, indefinite-quantity contracts have reduced available contracting opportunities in many parts of the public sector. Consequently, bid protests are an increasingly common occurrence in federal, state, and local government procurements. We litigate bid protests and small-business-size protests to attack or defend the award of contracts and to challenge the ability of competitors to receive such contracts.

We successfully represent large technology, defense/aerospace, professional services, and medical device contractors, as well as federally funded research and development centers and small businesses, in such proceedings. We appear in numerous bid protest tribunals, including the Government Accountability Office (GAO), the Court of Federal Claims (COFC), the Small Business Office of Hearing and Appeals, and other federal agency-level bid protest proceedings, as well as in a number of state and local tribunals.

Morgan Lewis’s lawyers work diligently to secure relief from government mistakes during the preaward procurement process, to challenge the improper award of contracts to our clients’ competitors, and to help the government defend contracts that have legitimately been awarded to our clients. Our team has strong relationships with government protest counsel and is also a known entity before these tribunals. Because of this experience, we efficiently and strategically respond to the complex issues and short filing deadlines typical in these forums. We are often successful in securing corrective action for our clients in bid protests before the conclusion of such proceedings, reducing costs and increasing competitive opportunities for our clients.

Select Matters Handled by Our Lawyers

• Represented an IT company as a protester in a COFC bid protest involving a $500 million procurement; the Army Corps of Engineers voluntarily took requested corrective action.
• Defended an award to a financial services company in a COFC bid protest involving renewal of a major US Department of Education (DOE) student loan servicing program in Coast Professional v. United States, 120 Fed. Cl. 727 (2015).
• Defended the awarding of a critical research and development contract for nuclear threat detection by the US Department of Homeland Security to a client in Smiths Detection, Inc., B-298838, 2007 CPD ¶ 5.
• Successfully protested an IT contract award by the US Army relating to material misrepresentations by the awardee; the GAO recommended a directed contract award to the client rather than recompeting the contract in ACS Government Services, B-293014, 2004 CPD ¶ 18.
• Successfully protested a contract award by the US Department of Health and Human Services to implement a 50-state child support enforcement network given flawed cost evaluation.

Morgan Lewis’s lawyers are leaders in assisting companies that sell commercial products and services to the government across industries such as technology, professional services, scientific equipment, tools, medical devices, and pharmaceuticals with the complex rules and issues associated with the Federal Supply Schedule (FSS) program.

We provide assistance to resellers, distributors, and manufacturers with issues such as proposal preparation, commercial sales practices disclosures, negotiation of appropriate tracking customers for price reductions clause (PRC) compliance purposes, systems compliance and training, domestic sourcing compliance and audits, investigations, and FCA litigation relating to FSS contract issues.

Select Matters Handled by Our Lawyers

• Conducted a compliance review for a major FSS contractor with multiple contracts held across numerous business units that included examining FSS contracting policies/procedures and compliance systems and focused on matters such as the company’s ability to comply with disclosure obligations, industrial funding fee requirements, Trade Agreements Act compliance, and PRC compliance. The review resulted in findings and recommendations regarding suggested improvements in the company’s compliance systems that were implemented to minimize contractual and audit risks.
• Conducted internal investigation and disclosures concerning pricing violations by a large FSS contractor on a series of contracts held across several business units that resulted in a FCA settlement for less than 3% of the government’s initial settlement figure.
• Conducted numerous mandatory disclosures to the GSA IG on pricing and other compliance issues for a variety of FSS contractors; each such disclosure was resolved with no civil or criminal ramifications.

Morgan Lewis’s lawyers help companies handle government contract issues that arise during the contract life cycle. We assist companies by preparing them before a solicitation is even issued. We help clients make strategic decisions about entering government markets at the prime or subcontract level and through different channels and partnerships. We also advise small and large businesses about small business socioeconomic preferences, as well as the markets and strategic arrangements under which such preferences are most beneficial. Our lawyers also advise clients on obtaining grants as well as compliance issues that arise under federal government grant programs.

We counsel clients on presolicitation agency contacts, including responses to requests for information and submission of unsolicited proposals. The best way to help a company involves requests to an agency to modify inappropriate or unfair solicitation provisions before submitting proposals or to file a preaward bid protest to correct solicitation defects. We also help prepare proposals, assess a company’s ability to comply with proposed contract terms, devise strategies to preserve intellectual property and other rights through proposal submission, and negotiate contract terms and conditions.

We advise clients on Federal Acquisition Regulation (FAR), Defense Federal Acquisition Regulation, and other agency FAR supplement and regulatory requirements, including the following:

• Contractor, subcontractor, and government rights in patents and technical data developed under government contracts, subcontracts, and novel funding agreements (such as “other transactions,” technology investment agreements, cooperative agreements, cooperative research and development agreements, and “work for others” agreements)
• Domestic sourcing requirements under the Trade Agreements Act, the Buy American Act, counterfeit parts, and other special regulatory provisions
• Ethics and compliance program design and training, and substantive government contracts training
• Commercial item, FSS, and indefinite delivery, indefinite quantity (IDIQ) contract, task order, and delivery order issues
• Government audits
• Small business subcontracting plans and reporting requirements
• Small business status, relationships, and programs
• Requirements under the Service Contract Act and other obligations imposed by the US Department of Labor’s Office of Federal Contract Compliance Programs
• Davis-Bacon Act and Walsh-Healy Public Contracts Act compliance
• Subcontract, teaming agreement, and joint venture relationships
• Cost principles and cost accounting issues
• Government property issues
• Contract performance, technical, cost, and schedule issues
• Terminations and closeouts
• Cybersecurity and cloud computing obligations

We also counsel on issues associated with classified efforts, including security clearance matters implicated by the National Industrial Security Program Operating Manual.

Our government contracts team has experience working with our corporate business transactions colleagues in advising clients engaged in mergers or acquisitions of government contractors on the unique risks associated with such transactions. We also counsel clients that are targets in such deals. We work seamlessly to assess risks, provide appropriate coverage in deal documents, and identify potential preclosing and postclosing remediation issues.

We advise clients on related issues, such as contract novations and the assignment of payments. Our lawyers counsel both non-US buyers and US domestic acquirees through the Committee on Foreign Investment in the United States and have obtained clearance of transactions in the network infrastructure, defense, shipyard, chemical and biological threat detection, and software industries, among others.

Select Matters Handled by Our Lawyers

• Assisted a major DOD defense/aerospace contractor in its $1 billion acquisition of a major military vehicle supplier.
• Assisted a major technology company in its $250 million acquisition of a software publisher, including post-acquisition remediation of government contract compliance issues initially identified in due diligence.
• Assisted several life science companies in due diligence relating to the intellectual property aspects of target companies’ work under a number of different government-funded research and development contracts.
• Represented a private equity buyer on the acquisition of a large provider of private security services to the DOD, the US State Department, and other agencies, including advice on multiple on-going civil False Claims Act matters; settlement of multiple International Traffic in Arm Regulations violations; and Foreign Ownership, Control, or Influence mitigation.
• Advised a government contractor with more than $40 billion in annual revenue on multiple strategic acquisitions of defense contractors and other government contractors.
• Advised a government contractor on the strategic acquisition of provider of IT and cybersecurity services to the DOD, DOE and other agencies, including addressing small business issues, 8(a) joint venture issues, and teaming agreements.