Five Big Federal Contracts Cases to Watch in 2020

Here’s a look at five major federal contracts cases to watch in 2020:

1. The JEDI Award

Amazon.com Inc. is challenging the Defense Department’s decision to award Microsoft Corp. the $10 billion cloud computing contract known as Joint Enterprise Defense Infrastructure, or JEDI, inAmazon Web Servs. Inc. v. United States, Fed. Cl., No. 1796.

“[I]mproper pressure from President Donald J. Trump” caused the Defense Department to commit “egregious” errors that led to Microsoft’s selection, the public complaint filed at U.S. Court of Federal Claims says.

The errors “are hard to understand and impossible to assess separate and apart from the President’s repeatedly expressed determination to, in the words of the President himself, ‘screw Amazon,’ ” the complaint says.

The Defense Department took actions to hurt Amazon’s chances as Trump’s critiques increased, such the department’s mid-2018 refusal to evaluate bidders’ past performance, which only Amazon possessed with regard to a contract of JEDI’s size and complexity, the complaint says.

Amazon’s protest chances, however, may be hampered by Oracle America Inc.’s unsuccessful attempt to show it was prejudiced by Amazon’s own improper conduct in the procurement.

Oracle is appealing the claims court’s conclusion that the violation of a rule prohibiting conflicts or the appearance of conflicts in government-contractor relationships wasn’t enough to force a JEDI award redo in Oracle Am. Inc. v. United States, Fed. Cir., No. 19-2326.

The Defense Department reasonably concluded an Amazon employee who joined DOD to work on JEDI and then returned to Amazon didn’t provide the company with competitively useful information, the claims court said in July.

JEDI “suffers from corruption of a high order,” and DOD may not “proceed with a procurement indifferent to such misconduct,” Oracle told the U.S. Court of Appeals for the Federal Circuit in its opening brief.

2. Boeing’s Accounting Appeal

Boeing Co. is appealing the claims court’s dismissal of its legal challenge to the government’s withholding of $1 million in a contracts accounting dispute in The Boeing Co. v. United States, Fed. Cir., No. 19-2148.

The government was “shaking down” Boeing, the company said in its effort to seek contractual and declaratory relief.

The claims court erroneously decided Boeing waived the right to raise claims because the company didn’t inquire into an accounting rule ambiguity on entering into a $66 million U.S. Navy contract, Boeing told the Federal Circuit.

Boeing also says the claims court erred in concluding it doesn’t have jurisdiction over its claim that the government’s effort to recover the $1 million, despite receiving $1.5 million in aggregate savings from Boeing’s two contract accounting changes, was an unlawful taking.

The government says in a Dec. 23 brief that Boeing’s “failure to raise what it considers to be an obvious statutory conflict to the government, prior to entering into the contract, precludes its recovery now.”

3. Cybersecurity Fraud

Aerojet Rocketdyne Holdings Inc., a missile defense and rocket engine contractor, is facing a False Claims Act suit alleging it failed to comply with federal cybersecurity requirements under DOD and NASA contracts in United States ex rel. Markus v. Aerojet Rocketdyne Holdings Inc., E.D. Cal., No. 15-cv-2245.

A whistleblower adequately asserted that Aerojet Rocketdyne entered into the contracts despite knowing it didn’t meet minimum cybersecurity standards that the government viewed as critical, the Eastern District of California ruled in May 2019.

Discovery will conclude in May 2020.

This ruling preceded the July announcement of an $8.6 million settlement of FCA claims accusing Cisco Systems Inc. of concealing security vulnerabilities in video surveillance systems it sold to the federal government.

Counsel in that case said it was the first cybersecurity whistleblower case ever successfully litigated under the FCA.

4. ‘No-Poach’ Agreements

Defense contractors performing intelligence work in England for the U.S. Defense Intelligence Agency are facing a class action accusing them of violating antitrust rules by agreeing not to hire one another’s workers in Hunter v. Booz Allen Hamilton Holding Corp., S.D. Ohio, No. 19-cv-411.

Plaintiffs adequately accused Booz Allen Hamilton Inc., Mission Essential Personnel LLC, and CACI International Inc. of violating the Sherman Act by saying the contractors’ “no-poach” agreements prevented individuals from switching companies for more pay, the Southern District of Ohio ruled Nov. 12.

The contractors have said the restrictions were necessary to advance their mission for the agency.

The court’s ruling came a week after the DOJ announced the formation of the Procurement Collusion Strike Force.

The DOJ said this group of prosecutors and FBI officials will focus on deterring antitrust crimes, such as bid-rigging conspiracies and related fraud schemes, that undermine competition in federal contracting.

5. Logistics Services Totaling $82 Billion

The claims court is reviewing multiple complaints asserting that the U.S. Army improperly awarded contracts and task orders under LOGCAP V, an $82 billion procurement to provide worldwide logistics services.

DynCorp International LLC, PAE-Parsons Global Logistics Services LLC, AECOM Management Services Inc. and Fluor Intercontinental Inc. are challenging awards to Kellogg Brown & Root Services Inc., Vectrus Systems Corp., and PAE and Fluor.

PAE, which received a task order to provide the Southern Command with services, is protesting the decision to award Fluor the Africa Command order.

Fluor is protesting awards to KBR, which received orders to support the European, Northern, and Afghanistan Commands.

The government said Dec. 9 that the Army is taking corrective action by reopening the procurement and issuing new price reasonableness determinations. The court Dec. 17 stayed the protests for 45 days to allow for the corrective action.

The protesters filed complaints under seal, but Government Accountability Office decisions rejecting their protests show that DynCorp and AECOM believed the Army improperly reviewed bidders’ labor staffing plans.

PAE argued that it lost the award to Fluor because the Army didn’t give proper weight to its technical strengths as required by the solicitation.

Companies that emerge from the protests with contracts and task orders will provide the Army with engineering, construction, food, recreation, and other services.

The cases are DynCorp Int’l LLC v. United States, Fed. Cl., No. 19-1133, PAE-Parsons Global Logistics Servs. LLC v. United States, Fed. Cl., No. 19-1205, AECOM Mgmt. Servs. INc. v. United States, Fed. Cl., No. 19-cv-1176, and Fluor Intercontinental Inc. v. United States, Fed. Cl., No. 19-1580 C.

To contact the reporter on this story: Daniel Seiden in Washington at dseiden@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com