FUNDAMENTALS OF GOVERNMENT CONTRACTING. January 16, 2012 Anaheim, California. Sponsored by Crowell & Moring LLP

Transcription

1 FUNDAMENTALS OF GOVERNMENT CONTRACTING January 16, 2012 Anaheim, California Sponsored by Crowell & Moring LLP Presenters: Daniel R. Forman Mana Elihu Lombardo #IHCC12 1

2 Today s Presenters 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. dforman@crowell.com _2 2

3 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. melombardo@crowell.com _3 3

4 The Compliance Landscape 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 _4 4

5 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 _5 5

6 Government Enforcement Tools 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 _6 6

7 Civil False Claims Act 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 $4.9 billion recovered largest one year total ever _7 7

8 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 _8 8

9 Mandatory Disclosure 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 _9 9

10 Suspension and Debarment 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 _10 10

11 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 _11 11

12 Compliance Program Infrastructure 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 _12 12

13 Compliance Program Infrastructure (continued) Internal mechanisms for employees and other stakeholders to raise concerns, anonymously Self-monitoring and auditing Corrective action Discipline External disclosures Restitution Root cause analysis _13 13

14 Ethics & Compliance The Procurement Integrity Act and Off-Limits Information Prohibitions on Gifts and Entertainment The Anti-Kickback Act Employment Discussions and Hiring Government Employees _14 14

15 Off-Limits Information 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 _15 15

16 Off-Limits Information Doesn t matter where you receive the information from Doesn t matter how you receive the information Red flags _16 16

17 Off-Limits Information How Can A Government Contractor Protect Itself? 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 _17 17

18 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 _18 18

19 Gifts, Gratuities & Entertainment 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 _19 19

20 Covered 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 _20 20

21 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) _21 21

22 Gifts, Gratuities & Entertainment 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 _22 22

23 Gifts, Gratuities & Entertainment 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 _23 23

24 Federal Anti-Kickback Act 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 _24 24

25 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 _25 25

26 Hiring Government Personnel Two broad categories of restrictions Employment discussions Post-employment restrictions ( Revolving door restrictions) _26 26

27 Organizational Conflicts of Interest 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 _27 27

28 Organizational Conflicts of Interest Three Basic Categories Unequal access to information Impaired objectivity Biased ground rules _28 28

29 GSA Schedules Contracts 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 _29 29

30 Bid Protests 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 _30 30

31 Sequestration 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 _31 31

32 Sequestration Impact on Contractors 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 indefinitequantity, indefinite-deliver contract vehicles _32 32

33 Conclusion Men must turn square corners when they deal with the Government. Justice Oliver Wendell Holmes, Jr., _33 33

34 Questions? Daniel R. Forman Mana Elihu Lombardo _34 34

35 9 th Annual In-House Counsel Conference January 16, 2013 (Anaheim, CA) _35

36 Daniel R. Forman Daniel R. Forman Partner Practice Areas Government Contracts Technology, Media & Telecommunications Homeland Security Washington 1001 Pennsylvania Avenue, N.W. Washington, DC Phone: Fax: Daniel R. Forman is a partner in Crowell & Moring's Government Contracts Group, resident in the firm's Washington, D.C. office. Experience 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. He has been involved in bid protest litigation in six states and the District of Columbia. Dan has been named one of the top lawyers in the government contracts 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, Law Review, The Order of the Coif Page 1 of 1

37 Mana E. Lombardo Mana E. Lombardo Counsel Practice Areas Government Contracts Litigation False Claims/Qui Tam Los Angeles 515 South Flower St., 40th Floor Los Angeles, CA Phone: Fax: 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. In addition, Mana handles a wide range of civil and commercial litigation matters, including contract disputes, business torts, and labor and employment issues. 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. Education University of California at Berkeley, B.A. (2000) with honors University of California, Los Angeles School of Law, J.D. (2003) Page 1 of 1