The Toothpaste Has Left the Tube - Navigating Procurement Integrity Act Issues and Protecting Your Information

Transcription

1 ACC National Capital Region: Government Contractors Forum The Toothpaste Has Left the Tube - Navigating Procurement Integrity Act Issues and Protecting Your Information Andrew E. Shipley, Partner Seth H. Locke, Counsel Zachary Stewart, Assistant General Counsel, Serco Inc. March 16, 2016 Perkins Coie LLP

2 Presenters ANDREW E. SHIPLEY PARTNER WASHINGTON, DC Andrew Shipley serves as the chair of Perkins Coie s Government Contracts practice group. His practice focuses primarily on government contract litigation, bid protests, counseling, and commercial litigation. He has litigated in state and federal courts across the country, as well as various government Boards of Appeal and administrative agencies. He regularly advises clients on claims, contracts, regulatory and data rights matters. Prior to his return to private practice, Andrew managed an inhouse litigation/bid protest group for a FORTUNE 100, multinational government contractor. He has a Top Secret (TS) Security Clearance. 2

3 Presenters Seth Locke is a Counsel with the firm's Government Contracts practice. Seth focuses his practice on contract performance issues, claim preparation, bid protests, cost and pricing disputes, False Claims Act cases, internal investigations, technical data and computer software rights, and FOIA matters. SETH LOCKE COUNSEL WASHINGTON, DC 3

4 Presenters ZACHARY J. STEWART ASSISTANT GENERAL COUNSEL SERCO, INC. RESTON, VA Zack Stewart is the lead attorney supporting Serco s Defense business, where he manages bid protests, leads internal investigations, drives negotiations to closure, and counsels clients on a variety of government contract and employment compliance issues. Zack came to Serco from CA Technologies, where he won a Law Department Achievement award for his authorship of the company s first comprehensive U.S. Public Sector compliance plan. Previously, he served as government procurement counsel for the U.S. Marine Corps, and as an associate with the law firm of Arent Fox. He is a graduate of Rutgers University and Emory Law School. 4

5 Agenda Procurement Integrity Act History Statute and regulations Violation or no violation Case law scenarios Summary and best practices 5

6 History of PIA Operation Ill Wind PIA enacted in 1988, became fully effective in 1991 Purpose to provide clear requirements for contractor and Government employees Regulates Disclosure or receipt of procurement information Employment contacts Acceptance of compensation by former federal officials 6

7 Disclosing or Obtaining Procurement Information A person cannot knowingly disclose contractor bid or proposal information or source selection information before award of a federal agency procurement contract to which the information relates. 41 U.S.C. 2102(a). A person cannot knowingly obtain contractor bid or proposal information or source selection information before award of a federal agency procurement contract to which the information relates. 41 U.S.C. 2102(b). 41 U.S.C

8 Disclosing or Obtaining Procurement Information Contractor bid or proposal information Submitted to federal agency Not previously available in public Cost or pricing data Indirect costs and direct labor rates Marked proprietary information about manufacturing, operations or techniques Information properly marked as contractor bid or proposal information 41 U.S.C

9 Disclosing or Obtaining Procurement Information Source selection information Not publicly available and includes: Bid prices in sealed bids Proposed costs or prices Source selection plans Technical evaluation plans Technical, cost or price evaluations Competitive range determinations Rankings Reports and evaluations of source selection panels, boards or advisory councils Other information marked source selection information considered on case-by-case basis as jeopardizing integrity of procurement 41 U.S.C

10 Disclosing or Obtaining Procurement Information Federal agency procurement Using appropriated funds to acquire, by competitive procedures, good or services from non-federal sources. 41 U.S.C U.S.C

11 Penalties and Administrative Actions Criminal and civil penalties Administrative actions Cancel procurement Rescind the contract Suspension and debarment Adverse personnel action 41 U.S.C

12 Savings Provisions PIA does not apply: To the disclosure or receipt of information by authorized personnel When a contractor discloses its own information When a procurement has been canceled before award (unless plan to resume) To meetings between agency official and potential offeror, provided no unauthorized disclosure To restrict sharing information with Congress, GAO, a Federal agency or an IG U.S.C To limit a requirement, sanction, contract penalty or remedy established under another law or regulation

13 Protest PIA Violation Must report PIA violation within 14 days of discovery to maintain protest Report to agency responsible for procurement 41 U.S.C

14 PIA Regulations FAR Definitions FAR General FAR Statutory and related prohibitions, restrictions and requirements FAR Disclosure, protection, and marking of contractor bid or proposal information and source selection information 14

15 PIA Regulations FAR Violations or possible violations CO that obtains information of a violation or possible PIA violation must determine if violation or possible violation has impact on award If CO concludes no impact second level agency review If CO concludes there is impact HCA must review and take action 15

16 Scenario 1: Inadvertent Disclosure The agency inadvertently s an offeror involved in a competitive procurement the agency s Business Case and underlying market research data. 16

17 The Facts Business Case marked Pre-Decisional Source Selection Material and is not releasable. Attachments contained market research Some labeled as proprietary responses Notes from interviews marked Proprietary and Confidential Evidence that the contractor shared information with some offerors, but not all of them 17

18 Violation or No Violation 18

19 No Prejudice, No Protest Nexagen Networks, Inc.; LinTech Global, Inc., B , B , July 28, 2014, 2014 CPD 223. Protesters argued prejudice because offerors could tailor their proposal GAO disagreed, saying agency set up objective, evaluation system disclosure had no impact Disclosure may have violated PIA, but no prejudice to protesters. An unfair competitive advantage is a necessary element of a procurement integrity allegation since it relates to the resulting prejudice. 19

20 Scenario 2: More Inadvertent Disclosure Agency inadvertently disclosed proprietary information from the incumbent contractor in RFP documents and on agency webpages 20

21 The Facts Offeror unlocked a password protected pricing matrix in an RFP document that included incumbent s cost information from the prior program Agency investigated, found evidence of additional disclosures on agency website Disclosures contained incumbent s historical contract information Agency promptly removed proprietary information 21

22 Violation or No Violation 22

23 History Lessons S&K Aerospace, LLC, B , Sept. 18, 2015, 2015 CPD 336. Release of information regarding prior incumbent contract does not violate PIA. See Eng g Support Personnel, Inc., B , Dec. 24, 2014, 2015 CPD 89 at 6. Historical data not deemed to be related to procurement at issue Not released in connection with award of a Federal agency procurement contract to which the information relates 23

24 Knowing Disclosure Protester could not show that agency knowingly disclosed information knowingly equals intentionally No evidence that other offeror knowingly obtained information 24

25 Unfair Competitive Advantage Addressed separately from PIA claim Inadvertent disclosure must result in competitive prejudice (unfair advantage) No competitive prejudice The two procurements differed in several aspects 25

26 Actions After Disclosure Kellogg Brown & Root Services, Inc., B , B , Feb. 23, 2009, 2009 CPD 54. Program Manager (PM) claimed to delete Army s inadvertent disclosure of source selection information PM actually opened information KBR refused to isolate PM from ongoing proposals Agency reasonably determined that the integrity of procurement was at risk Agency reasonably disqualified KBR from open RFPs 26

27 Scenario 3: Even More Inadvertent Disclosure Air Force inadvertently disclosed source selection sensitive information to contractor Without reviewing, employee forwarded to proposal team Air Force tried to recall within 10 minutes and issued containment instructions 27

28 The Facts Contractor took 2 days to properly quarantine information Additional employees exposed to the information while contractor addressed disclosure 28

29 Violation or No Violation 29

30 The SDO View 30 MCR Federal, LLC Suspension ( ) Suspension and debarment officials may apply PIA slightly differently than GAO or Court of Federal Claims Air Force suspended MCR for its wrongdoing found policies and procedures were insufficient MCR instituted Business Ethics program Questionable if knowingly obtained MCR received unsolicited Alleged failure to quarantine properly led to harsh results

31 SDO View Cont. - Fulsome Investigations Booz Allen limited investigation to misconduct of one employee Former Government official used Government information to help secure contracts Broad investigation would have uncovered systemic ethical problems Administrative Agreement with significant outside monitoring 31

32 Scenario 4: Bad Teammates A subcontractor helps prepare a proposal with a prime contractor under a teaming agreement Subcontractor then submits own proposal for follow-on contract, using the prime contractor s proprietary information. 32

33 The Facts Subcontractor helped prime prepare proposal for predecessor contract, then used identical passages to submit own proposal as a prime for follow-on contract Agency noticed similarity and investigated Only sought explanation from the subcontractor 33

34 Violation or No Violation 34

35 No Violation for Private Dispute DynCorp International, LLC, B , et al., Oct. 29, 2013, 2013 CPD 243. GAO found no PIA violation Prime contractor voluntarily shared information with subcontractor Savings provision of PIA voluntary disclosure Use of proprietary information in contravention of teaming agreement = private dispute 35

36 Compliance with Investigatory Requirements DynCorp alleged violation of FAR (b) and (c) Agency review all information available Take appropriate action Request information from appropriate parties regarding violation or possible violation 36

37 Compliance with Investigatory Requirements Agency did not need to comply with FAR (b) and (c) because no PIA violation But see Satellite Tracking of People LLC, B , B , Nov. 6, 2015, 2015 CPD 347 Protester s proprietary information in awardee s proposal CO investigated possible conflict of interest, but ignored PIA GAO recommended that agency address conflict and investigate possible PIA violation 37

38 Scenario 5: Bad Employees Company executive worked extensively on proposal until one week before due Left to work full time for company he had started years before Submitted proposal virtually identical to one submitted by former employer Agency noticed similarity and conducted investigation 38

39 Violation or No Violation 39

40 No Violation for Private Disputes GEO Group, Inc., B , July 26, 2011, 2011 CPD 153 Allegation former employee inappropriately used GEO information at new company Protester argued that savings clause should not apply because of former employee s breach of duty and outright lies. We have repeatedly determined that the PIA s savings provisions apply notwithstanding the fact that the voluntarily provided information is subsequently misused or not properly safeguarded. 40

41 PIA Takeaways Red Flags Legends Close Hold Pre-decisional Procurement Sensitive Source Selection Information Competition Sensitive Company Proprietary Business Sensitive Not for Public Release Not for Release to Contractors For Official Use Only / For Internal Use Only 41

42 Potentially Sensitive Information Minutes or notes from internal Government meetings Internal Government briefing or presentation documents to Government officials Unreleased drafts of Government documents, including briefing documents Contractor information marked with restrictive legend 42

43 Best Practices Be aware that some Government officials may not understand the rules up to you to take precautions Information may have been improperly disclosed to you during a procurement - if you are not sure if others have the information, ask 43

44 Best Practices Potential Disclosure Red Flags Source of information does not want to be identified Source indicates that information should not be publicly shared 44

45 Best Practices Receipt of Information Taking action after receipt of potentially restricted information STOP READING, and think about whether you may have received it in error Immediately notify your superior or legal counsel Quarantine information limit disclosure within company Do not speak to or share the information with anyone else 45

46 Best Practices Receipt of Information Investigate circumstances Firewall tainted personnel until investigation is completed Review whether disclosure to Government is necessary Ability to continue with competition Potential protest Suspension and debarment concerns 46

47 Best Practices Avoiding Problems Always mark own information with appropriate restrictive legends Maintain training program that includes PIA guidance Maintain records of training and employees that have gone through process Regularly review written policies related to PIA and receipt of restricted information Make sure employees know who to contact with questions about PIA and in case of potential violation 47

48 Best Practices Protecting Rights Timely act to comply with 14 day notice requirement for protests Information voluntarily shared with private party, i.e. dispute between private parties Bring action in court to enforce employment agreement, teaming agreement, subcontract, NDAs, breach of contract, etc. Misappropriation of trade secrets 48

49 Questions? All rights reserved. This seminar handout is not intended to be and should not be used as a substitute for specific legal advice, since legal opinions may be given only in response to inquiries regarding specific factual situations. Subsequent legal developments after the date of specific seminars may affect some of the legal standards and principles discussed. If legal advice is required, the services of counsel should be sought. Copyright Perkins Coie LLP