Publications

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This unprecedented historical era is bringing with it dramatic changes that affect the laws and rules surrounding government real estate. Here is a brief summary of some of the most important changes.

Inside the GSA: While many of the top positions at the General Services Administration have not been permanently staffed yet by the Obama Administration’s appointees, the GSA has plenty to keep itself busy. In addition to the management of the funds provided to the GSA through the American Recovery and Reinvestment Act of 2009 (a total of $5.5 billion to be spent primarily on courthouse and border station construction and high-performance green building modernization), the GSA has also implemented a “national consistency” program to help unify the organization names, titles and real estate procedures across the 11 regions.

American Recovery and Reinvestment Act of 2009: Since our breakfast seminar the largest economic stimulus package in American history has been passed. Due to the size and specificity of the law, we have addressed a number of topics related to this important legislation through separate alerts. If you would like to receive more information about this law, or would like to speak to us about the opportunities it may provide, please .

E-Verify: Originally, it was anticipated that solicitations issued after January 15, 2009 for contracts valued at more than $100,000 (likely including government leases) would contain a new FAR clause: 52.222-54, “Employment Eligibility Verification (January 2009),” which would require contractors to use the federal government’s E-Verify program to confirm their employees’ eligibility to work in the US.

E-Verify is an Internet-based system administered by United States Citizenship and Immigration Services in partnership with the Social Security Administration, created to ensure that workers are eligible to hold jobs in the United States. Through the system, the federal government—and, through the new FAR clause, government contractors – would confirm that a company’s employees are US citizens, legal permanent residents or immigrants authorized to work. Under the E-Verify FAR clause, contractors enter into a Memorandum of Understanding with the government requiring that they abide by legal hiring procedures and not discriminate against their employees because of the program. Through the E-Verify website, participating employers submit an Employment Eligibility Verification Form for newly hired employees that includes workers’ personal information. The government checks that information against its databases to confirm eligibility. Red flags raised during the process would trigger an administrative review process, during which the contractor is prohibited from terminating the employee in question. However, should the government ultimately determine that the employee is ineligible to work in the US, a contractor faces significant penalties for continuing to employee that individual.

In late December 2008, industry groups filed a lawsuit in federal court challenging the validity of the new E-Verify requirements for government contractors. In response, the government agreed to delay implementation of the rule until February 20, 2009. That implementation date was subsequently delayed until May 21, 2009 and then again until June 30, 2009. Thus, it remains unclear whether the Obama Administration will attempt to forge ahead with the new requirements. If it does, then the disposition of the pending lawsuit will determine whether the new rule survives. Likewise, it remains to be seen whether—as part of a litigation settlement or otherwise—the Administration will alter or abandon the rule altogether.

Solicitation for Offers: An updated Solicitations for Offers form has appeared, including language adopted by the GSA as of August 2008. Some of the provisions are upgrades of standards to such building features as window glazing and accessibility, and others contain clarifications of previous provisions (such as flagpole display). However, a few may have significant consequences. For example:

• The beginning of the “Unique Requirements” section now states that “the offered building and/or location must have the following features” (emphasis added). This, in effect, broadens the contracting officer’s discretion for a non-responsive finding.
• The new section “Building and Site Information Submittals” expands the list of mandatory documents related to the building and the site and clarifies the timetable for delivery of such information.
• The “Overtime Usage” paragraph now includes a requirement that invoices for overtime utilities be submitted within 120 days after the service is provided. Failure to timely submit the invoice shall constitute a waiver of payment by the lessor.
• The GSA has also included new sections regarding Novation and Change of Name Agreements, and Central Contractor Registration. The inclusion of these provisions does not change the obligations of the parties, but simply memorializes the requirements within the “four corners” of the lease.
• There is a new Waiver of Restoration provision that limits the government’s liability for certain claims related to its use or alterations.
• Several green provisions have been included covering a broad range of areas from product standards to LEED certification requirements for new construction and tenant spaces.

Small Business Size Thresholds: Many leases have used the 2004 version of the Representations and Certifications (Form 3518), which set the small business size standard at $17.5 million. The newer (2007) version, which pushed the threshold for small business size to $19 million annual average gross for the past three fiscal years, is now becoming more prevalent. If this or any other change makes your previously small business a large business, you may find yourself preparing a Small Business Subcontracting Plan and submitting annual reports. In addition, the GSA has a preferred form of Small Business Subcontracting Plan that should be closely reviewed and considered based on the subcontracting practices of each lessor.

Compliance: A recently amended FAR clause (52.203-13, “Contractor Code of Business Ethics and Conduct (Dec 2008)”), which will be included within solicitations when the anticipated contract value is expected to exceed $5 million and the performance period is 120 days or more, requires, among other things, that a contractor have a written Code of Business Ethics and Conduct, exercise due diligence to prevent and detect criminal conduct and promote an organizational culture that encourages ethical conduct and compliance with the law. Under the clause, some contractors also will be required to create and implement a business ethics awareness and compliance program as well as an internal control system. The clause also requires mandatory disclosure when the contractor has “substantial evidence” of certain criminal conduct or potential violations of the civil False Claims Act.

Suspension/Debarment Mandatory Disclosure Requirements: In addition to the obligations set forth above, pursuant to a recent FAR amendment, a knowing failure to make certain disclosures will create suspension and debarment liability for government contractors, irrespective of what clauses are included in its government contracts. Such disclosure obligation, which exists on all current contracts and those closed out within the past three years, applies when there is “credible evidence” of certain criminal conduct or violations of the civil False Claims Act. This includes disclosure of “significant overpayments” to a contractor and imposes an immediate look-back requirement on all contractors.

A good deal of uncertainty still surrounds this provision. Thus, contractors should understand which “best practices” can be employed to maximize their protection. We understand that the GSA will be issuing guidance on the amendments application to leases.

For more information about these or any other Government Real Estate issues, please contact the DLA Piper GRE Team Leader, Jeff Keitelman.