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FAR Part 12 Applies to CMS Orders on Federal Supply Schedule Contract

By Lorraine M. Campos, Leslie A. Monahan & Nkechi Kanu on March 11, 2015
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On Tuesday, March 10, 2015, the Court of Appeals for the Federal Circuit reversed and remanded a decision by the Court of Federal Claims, which permitted the Centers for Medicare and Medicare Services (CMS) to include contract clauses that deviated from federal government commercial contracting rules. By doing so, the Court of Federal Claims held that Federal Acquisition Regulation (FAR) Part 12 – Acquisition of Commercial Items – applies to Federal Supply Schedule (FSS) contracts.

Through a pre-award bid protest appeal, CGI Federal Inc. (CGI) challenged the payment terms of requests for quotes (RFQs) issued by CMS that were pursuant to an underlying FSS contract. Specifically, CGI alleged that CMS violated FAR Part 12 by including payment terms in an RFQ for commercial items in a manner that is inconsistent with customary commercial practice for the item being acquired. While the government did not dispute that FAR Part 12’s proscription against terms inconsistent with customary commercial practice applies to solicitations for the underlying FSS contracts, it argued that the proscription did not apply to orders made pursuant to existing FSS contracts.

Judge Williams of the Court of Federal Claims agreed with the Government and found that CMS’s inclusion of the new payment clause was permissible. The Court of Federal Claims reasoned that FAR Subpart 8.4, which governs the FSS program, does not expressly state that FAR Part 12 applies to orders made pursuant to an existing FSS contract or orders placed against it.

On appeal, the Federal Circuit disagreed. The Federal Circuit found that FAR Part 12’s proscription against terms inconsistent with customary commercial practices applied to the RFQ. While not explicitly stated in FAR Subpart 8.4, FAR Part 12, in fact, applies to orders made pursuant to existing FSS contracts by its terms. The Federal Circuit also stated that, to the extent there is any perceived inconsistency between FAR Subpart 8.4 and FAR Part 12, FAR Part 12 controls.

 

Photo of Lorraine M. Campos Lorraine M. Campos

Lorraine M. Campos is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group and focuses her practice on assisting clients with a variety of issues related to government contracts, government ethics, campaign finance, and lobbying laws. Lorraine…

Lorraine M. Campos is a partner and member of the Steering Committee of Crowell & Moring’s Government Contracts Group and focuses her practice on assisting clients with a variety of issues related to government contracts, government ethics, campaign finance, and lobbying laws. Lorraine regularly counsels clients on all aspects of the General Services Administration (GSA) and the U.S. Department of Veterans Affairs (VA) Federal Supply Schedule (FSS) programs. She also routinely advises clients on the terms and conditions of these agreements, including the Price Reduction Clause, small business subcontracting requirements, and country of origin restrictions mandated under U.S. trade agreements, such as the Trade Agreements Act and the Buy American Act. Additionally, Lorraine advises life sciences companies, in particular, pharmaceutical and medical device companies, on federal procurement and federal pricing statutes, including the Veterans Health Care Act of 1992.

Lorraine has been ranked by Chambers USA since 2013, and she was recognized by Profiles in Diversity Journal as one of their “Women Worth Watching” for 2015. Additionally, Lorraine is active in the American Bar Association’s Section of Public Contract Law and serves as co-chair of the Health Care Contracting Committee.

Lorraine joined the firm from Reed Smith, where she chaired their Government Contracts & Grants Team since 2010. Prior to that, she worked as a consultant for Grant Thornton, where she advised the Intelligence Community, analyzed the Department of Defense utility privatization program, and performed numerous Circular A-76 studies for the Office of Management and Budget.

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Photo of Leslie A. Monahan Leslie A. Monahan
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Photo of Nkechi Kanu Nkechi Kanu
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  • Posted in:
    Government Contracts
  • Blog:
    Global Regulatory Enforcement Law Blog
  • Organization:
    Reed Smith LLP

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