Government Contracts: Federal, State and Local

Companies doing business with or for federal, state and local governments are required to navigate complex laws and regulations that impact not only the performance of the contract, but also their overall business operations.

Baker Hostetler’s Government Contracts team advises and represents clients in all aspects of public contract law, including contract formation, performance and administration disputes and controversies, intellectual property rights, protests, claims and appeals, audits and investigations, and criminal, civil and administrative proceedings and other enforcement proceedings.

We vigorously protect our clients’ rights and represent their interests throughout their dealings with government agencies, officials and other personnel.

Formation, Performance and Administration Disputes and Controversies

Baker Hostetler’s Government Contracts team includes individuals with significant experience guiding clients through all stages of the procurement process, including seasoned criminal, civil and administrative litigators who routinely develop and implement compelling strategies to protect our clients’ interests during investigations and in connection with litigation and administrative proceedings.

Starting with the bid protest, Baker’s Government Contracts team takes a proactive approach to the management of contract formation proceedings. We combine our experience and creativity to craft a plan of action that protects client interests while focusing on the range of potential protest outcomes. We consult with our clients every step of the way to ensure not only that we remain on target with their goals, but also that they are comfortable with the direction and pace of our activity given the exigencies of the procurement schedule established by the agency and the protest schedule imposed by the GAO or the Court of Federal Claims.

Our team’s experience covers the full spectrum of issues and contract types:

• Cost-type contracts
• Time and material contracts
• Fixed-price contracts
• Incentive fee awards
• Cooperative agreements
• Cooperative research and development agreements
• Licensing agreements
• State law contracts
• Subcontracts and subagreements in support of various federal and state contracts and programs
• Lease financing agreements for capital improvements, software licensing and similar capital-intensive requirements

We have represented clients involved in manufacturing and service sectors for such industries as:

• Aerospace—machining, instrumentation and assembly
• Automotive
• Energy recovery, refinement and distribution
• Chemical processing
• Software development
• Construction—vertical and horizontal
• Healthcare—delivery and billing
• Textiles, apparel and shoes
• Information—accumulation, storage and dissemination
• Research and development (academic, non-profit and commercial) in automotive, energy, medical, pharmaceutical, marine craft and environmental sectors
• Freight and shipping
• Environmental engineering and reclamation

Our team has obtained favorable outcomes in protest proceedings before the GAO and COFC. We frequently appear on behalf of clients in protest proceedings and appeals before the Small Business Administration (SBA). We also represent clients in claim appeals before the COFC, as well as the Armed Services and Civil Boards of Contract Appeals.

Audits, Accounting and Financial Matters

To ensure that the government is purchasing goods and services at fair and reasonable prices, government regulators have imposed a comprehensive regime of cost accounting rules and regulations, and a host of measures to enable contracting personnel to verify that contractors are complying with those requirements. Proposal audits, pre-award surveys, incurred cost audits, contract close-out audits, and Inspectors General audits are but a few of the many types of audits that the government may conduct upon inspecting the client’s books and financial records.

Socio-Economic Programs and Strategic Partnering

Our government contract attorneys have experience with socio-economic programs and the rules, regulations and legal proceedings associated with those programs. We advise our clients on issues relating to small business size status and program eligibility, including HUBZone criteria, business affiliations, 8(a) applications, self-certifications, etc. We regularly represent clients before the SBA District Offices and the Office of Hearings and Appeals (SBA OHA) in connection with size protests and size appeals.

We also advise clients in connection with socio-economic programs established under state laws.

Subcontracting

Subcontracting is an essential part of government contracting. Rarely can one entity perform all work required under a prime contract. Our attorneys represent companies that award subcontracts and receive subcontracts. Many of our clients are accustomed to working as subcontractors on selected programs, while working as prime contractors on still others.

One of the trickiest aspects of subcontracting in support of public prime contracts is the flow-down to the subcontractor of contract clauses and compliance requirements recited in the prime contract. Our lawyers, working side by side with client contracting personnel, work diligently to develop the most appropriate flow-down schedule for each subcontract. The most appropriate flow-down is the one that avoids future disputes and disagreements over the terms and conditions applicable to the subcontractor.

In many ways, subcontracts present their own complexities when it comes to dispute resolution. Subcontracts are commercial agreements, normally governed by state law. But, to the extent that the parties have included, by way of flow-down, selected federal clauses and other requirements, those clauses and requirements are governed by federal procurement law and precedent.

We have represented clients in resolving subcontract disputes through litigation and alternative dispute resolution means, such as mediation, arbitration or mini-trial, to name but a few. As with other contracting matters, we encourage our clients to be proactive in identifying controversies and disputes at the earliest possible occasion before small matters mushroom into much bigger problems. Regardless of when we are engaged to advise the client, we strive to achieve cost-effective resolution of disputes and other controversies at the earliest occasion.

Intellectual Property Rights

Companies involved in government contracts routinely use proprietary information to meet government requirements. More often than not, the proprietary information is a starting point; during performance it may be adapted, modified or deconstructed and reconstructed to make a new configuration specifically tailored for government requirements. Newly developed information (aka data) may be generated during performance. New data is paid for with government funding; whereas the proprietary data was paid for using non-governmental funding. At some point in time, the parties must figure out who owns the new configuration and underlying data and who retains rights to that same configuration and data.

Enter the realm of intellectual property rights under government contracts. It is in this context that companies confront, perhaps for the first time, the accuracy and completeness of their developmental records (which includes internal financial records and technological concept to reduction records).

Our Government Contracts team works very closely with our intellectual property attorneys to counsel clients on the benefits and challenges of using existing trade secrets, know-how, patents and inventions when bidding on and performing public contracts—and to assist clients in developing their plans for protecting intellectual property that is to be used in connection with, or developed under, a public contract.

Government-Funded Construction Contracting

Baker Hostetler has built a team of construction attorneys ready to assist you navigate every aspect of a project—from site selection, regulatory approval, project finance, insurance and bonding needs to contract negotiation and administration, project closeout and claim resolution. Our team of construction lawyers has worked on some of the largest and most complex construction projects in the world.

Baker Hostetler attorneys do not limit their practice to a particular “side” of the construction paradigm. To the contrary, our team’s capabilities allow us to represent owners, contractors, design professionals, landowners and specialty subcontractors. We bring to each engagement not just a breadth of knowledge of the law governing construction disputes, but also an in-depth understanding of construction itself, and of the practical needs that attend any construction project. With that background, we are able to quickly and proactively assess what will be the most timely, efficient and cost-effective approach to resolving each client’s particular problems.

Program Classification and Security Clearances

Our government contract team is familiar with the National Industrial Security Program (NISP), and the underlying rules, regulations and due process requirements. We advise and represent clients—companies and individuals—in connection with preparing their respective clearance applications, conducting internal reviews and examination of personnel records, conducting interviews, advising management and the board of directors on mitigation of foreign ownership, control and influence. We know well and understand the adjudicative guidelines used by government clearance personnel to determine whether an individual should be granted or denied a security clearance.

Our attorneys have represented clients in connection with appeal proceedings before the Department of Defense (DOD) Office of Hearings and Appeals, the forum with jurisdiction to decide cases where clearances have been denied. Many of our attorneys hold security clearances issued by the DOD and DOE.

Compliance and Enforcement Matters

Although it has been more than 20 years since the 1986 amendment of the False Claims Act, we continue to see a dramatic increase in the number of false claims actions brought by both the United States and qui tam relators in connection with false claims, false statements and false certifications arising under or relating to government contract matters.

Our team has experience representing government contractors that become the subject or target of compliance investigations or enforcement proceedings. These investigations can be triggered by any of several events or developments: routine agency-level audits, Inspector General audits, Inspector General investigations, DOD Hotline reports, anonymous letters, subpoenas, search warrants, etc.

We defend clients in civil, criminal and administrative proceedings arising out of alleged fraud in defense procurement, healthcare, environmental compliance and many other areas of government contracting. We represent clients doing business directly with the government, or indirectly with the government as a subcontractor. Our clients include not only commercial entities, but universities, hospitals and other non-profit enterprises.

For these clients, we:

• Conduct internal investigations of alleged misconduct by employees, vendors, customers and others, advising boards and in-house counsel on findings conclusions and recommendations, and preparation of disclosure submissions.
• Negotiate with the Department of Justice (DOJ) in connection with civil fraud cases brought by qui tam relators.
• Negotiate “global” settlements with the government that involve civil, criminal and administrative authorities, and counsel clients on dealings with agency personnel overseeing the agreements.
• Represent clients, including individual officers, directors and employees, in administrative proceedings related to suspension, debarment or other forms of exclusion from participation in government procurements.
• Provide defense counsel for insureds on behalf of the insurance company in connection with coverage claims that involve alleged noncompliance with government contract requirements.
• Defend False Claims Act lawsuits brought by individual relators with or without intervention by the United States, and defend clients in criminal actions arising from False Claims Act cases.
• Assist clients with the creation, implementation and administration of compliance programs.
• Negotiate and prepare administrative settlement agreements as an alternative to debarment.
• Advise clients and interact directly with governmental authorities and investigators in connection with subpoenas issued by, among others, the Federal Bureau of Investigation, Defense Criminal Investigative Service and agency Offices of Inspector General (such as, Department of Health and Human Services, U.S. Agency for International Development, DOD, U.S. General Services Administration, U.S. Department of the Interior, U.S. Department of Labor, Corporation for National and Community Service, National Aeronautics and Space Administration, U.S. Department of Agriculture, U.S. Department of Energy and others).

Many team members came to Baker Hostetler following distinguished careers in government as Assistant United States Attorneys, Assistant District Attorneys, DOJ Special Litigation Counsel and U.S. Securities and Exchange Commission (SEC) enforcement attorneys.

Import/Export and Domestic Preferences

Contractors have for a long time been subject to the requirements of the Buy American Act, 41 USC 10a-10d, and the domestic preference requirements mandated therein, as well as U.S. Customs laws applicable to imports and various export laws, such as the International Arms Export Control Act 22 US 2751 et seq. The Department of Transportation has its own rules and regulations establishing domestic preferences for the transportation projects that it funds in whole or in part. Additionally, the government has crafted additional restrictions and limitations on projects that receive funding under the American Recovery and Reinvestment Act of 2009 (ARRA). There are, of course, many regulations applicable to these domestic preference requirements, along with exceptions, limitations and prohibitions. We help our contractor clients to understand these very complicated laws as they bear upon compliance and performance requirements. We assist our clients in developing reasonable scoped compliance programs appropriate for their operations. We conduct internal audits and investigations to verify that internal controls are working properly and identify weaknesses and/or instances of non-compliance. We represent our clients in connection with civil, criminal and administrative proceedings resulting from non-compliance with these laws.

International Government Contracts

Members of our team represent government contracting clients in their dealings with foreign governments. Many of our clients participate in foreign military sales programs, while others are involved in international relief efforts, the design, improvement and construction of infrastructure, enhancement of food distribution and agricultural capacity, and development and dissemination of all manner of health and nutrition capacity throughout the world, including the Middle East, Asia, South and Central America and parts of Africa. And, in turn, our representation places us directly in front of the World Bank, Export/Import Bank, Overseas Private Investment Corporation (OPIC), USDA, USAID and private donor foundations—each of which funds many international transactions and projects.

Our firm has for decades represented clients across international borders. We have lawyers providing sophisticated international tax advice and representing clients in significant cross-border mergers and acquisitions. Our intellectual property lawyers work through comprehensive networks of foreign law firms to provide patent and trademark services to major global corporations. We have international trade, customs and immigration lawyers assisting clients with the movement of products and people throughout the world.

Our litigators are regularly involved in cross-border disputes, both civil and criminal.

Directly, and through long-term relationships with foreign firms, we assist clients with their needs in Europe, Asia, North and South America, the Middle East and Africa. And we have deep experience in the international aspects of many industries, including hospitality, construction, manufacturing, automotive and energy. In particular, our attorneys have assisted clients in connection with transactions and controversies in Afghanistan, Brazil, Canada, China, Germany, India, Iraq, Israel, Jordan, Mexico, Pakistan, South Africa and the United Kingdom.

Our government contracting clientele benefit immensely from the breadth and depth of our international capabilities.

Recent Representative Government Contracts Matters

Transactions and Licensing

• Represent foreign defense manufacturers in contract negotiations involving foreign military sales of U.S. military vehicles to Saudi Arabia.
• Represent sellers in connection with the sale of business with significant government contract portfolio.
• Negotiated lead subcontracts for personal security services for clients working in Afghanistan, Iraq and Pakistan.
• Represent seller in dispute over sale of flight simulators and related services to Ministry of Defense for Ministry of Defense for Egypt.
• Represent estate of private investor to recover proceeds of loan used to purchase surplus aircraft from the Royal Jordanian Air Force.
• Advise buyer on contract portfolio issues and in post-closing novation proceedings.

Litigation, Administrative Proceedings and Investigations

• Successfully represented international construction company in protest proceedings before the GAO involving DOD’s worldwide environmental reclamation services (WERS) procurement.
• Lead counsel representing aerospace company in connection with classified programs and security clearance proceedings.
• Represent individual in suspension and debarment proceedings before the Army.
• Represent WOB in multiple protests before the GAO and SBA resulting ultimately in client’s retention of program award by NAVAIR.
• Represent individual in suspension and debarment proceedings before the Corporation for National and Community Service and in appeal proceedings before U.S. District Court.
• Provide insurance defense to multiple entities and individuals suspended for alleged procurement irregularities.
• Advise client on security clearance matters involving FOCI and develop plan for mitigation of same.
• Conduct internal corporate investigation of minority owned construction company in connection with cost and pricing issues arising under federal construction contracts.
• Represent company in connection with federal suspension and debarment proceedings pending before the National Institutes of Health.
• Represent prime contractor in multiple protest proceedings challenging award of contract for manufacture and delivery of helicopter flight training simulators to the Ministry of Defense for Government of Iraq.

Domestic Preference and Customs Issues

• Advise numerous manufacturing clients on domestic preferences, free trade agreements, ARRA funding restrictions, import/export matters and related sourcing issues in performance of federally funded prime contracts, subcontracts, grants and cooperative agreements.

Government Construction Contract Cases

• Handled multiple engagements by property owners affected by the T-Rex highway expansion project, the largest roadway project in Colorado.
• Represented the developer of a large-scale wind energy project in Nevada.
• Represent environmental services company in multiple claim appeals arising under contracts for archeological surveying services.
• Represent SDVOSB in proceedings before Department of Veterans Affairs (DVA) to challenge removal from list of approved entities.
• Represent lead prime contractor in claim appeal arising under the NAS VRE program.
• On-going representation of FORTUNE 100 construction contractor on multimillion-dollar claims arising under Army Corps of Engineers contracts for post-Katrina reconstruction of levees, floodwalls, locks and related flood control measures.
• Currently representing a contractor on claims arising under Army Corps of Engineers contract for construction of aviation facility in Kabul, Afghanistan.
• Assisted a client in obtaining favorable resolution of REAs for changes to Army Corps of Engineers contract for construction of fuel tanker offloading facility in Oman.
• Advised a large contractor on risk mitigation measures for submission of a proposal on $700 million DOD project for constructing 100-year flood control protection in the Inner Harbor Navigation Canal (IHNC) near New Orleans.
• Represented a client in arbitration proceedings on a multimillion-dollar claim for changes, differing site conditions and defective specifications.
• Represented prime contractor on a DOE project in connection with a multimillion-dollar termination for convenience claim brought by subcontractor.
• Represented a client to recover payment of $10 million in claims related to soil excavation and hauling services provided to the Army Corps of Engineers.
• Obtained a summary judgment on $1 million of overtime claims for client on a DOE project.
• Represented a specialty builder in multiple trials before the Contract Appeals Board in disputes related to construction of a facility on U.S. Capitol grounds, prevailing on a delay and acceleration claim and recovering more than $1 million of retainage and $250,000 on change orders.