This webinar covered top issues for government contracts mergers and acquisitions. It discussed purchases of single contract vehicles like IDIQs and GWACs, compliance with GSA's price reduction clause, dealing with organizational conflict of interest issues, protecting intellectual property, and disclosure issues discovered during M&A diligence. Specific topics included justification for vehicle sales, GSA schedule pricing requirements, identifying potential OCIs, tracking funding sources for IP, and approaches for addressing issues uncovered during due diligence like investigating, communicating with the government, and using escrow or indemnification.

1. FED GOV CON
Webinar Wednesdays
2019 Series
JSchaus & Assoc.
Washington DC
+ 1 – 2 0 2 – 3 6 5 – 0 5 9 8

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5. About Our Speaker:
Mary Beth Bosco
HOLLAND & KNIGHT
Government contracts partner
specializing in M&A, compliance
issues and compliance programs,
audits and investigations

6. Top Issues for Government
Contracts M&A

7. OVERVIEW – TRENDING ISSUES
1. Sales of single IDIQ Contract Vehicles/GWACS
2. GSA Price Reduction Clause Compliance
3. How to Deal with Organizational Conflict of Interest Issues
4. Protection of IP
5. Disclosure Issues Discovered During Diligence
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

8. PURCHASES OF SINGLE CONTRACTS
Asset purchases of multiple-award indefinite delivery indefinite quantity
contracts (IDIQs) and government-wide acquisition contracts (“GWACs”),
such as OASIS or ALLIANT have been steadily increasing, and COs have
become increasingly rigid about approving novations.
Typical problem areas:
Description of assets transferred.
Justification for vehicle sale; pricing of contract.
Transferee capability to perform, including financial health and prior
government contracting record.
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

9. PURCHASES OF SINGLE CONTRACTS
What should you ask about?
Many GWACs have their own rules and procedures governing contract
transfers. Examples:
1. An entity – and its affiliates – can only hold one Alliant II contract.
2. Size and 8(a) eligibility ramifications.
3. Some 8(a) vehicles allow transferor to bid on new task orders under
certain circumstances.
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

10. PURCHASES OF SINGLE CONTRACTS
Who submits proposals during period between acquisition and novation?
1. Wylie case: because transferee did not intend to perform contract, it
had no standing to protest.
2. Subcontract pending Novation should address this issue clearly.
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

11. GSA PRICE REDUCTION CLAUSE
GSA Federal Supply Service Contracts contain a “Most Favored Customer” or
Price Reduction Clause (“PRC”)/GSA Clause 552.238-75
1. Requires a Basis of Award (“BOA”) Customer, a price list, and a discount
relationship (i.e., GSA schedule orders always receive a 5% discount off of
commercial pricing).
2. If the contractor makes a similar sale in size, scope and terms to a BOA
customer and that sale is at a lower price than the GSA price or changes the
discount relationship, contractor must give GSA schedule customers the same
price or discount.
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

12. GSA PRICE REDUCTION CLAUSE
Compliance is complicated and violations are frequent.
This issue almost always comes up in diligence and requires attention.
What should you ask about:
1. Do you have all of the initial and renewal contract correspondence?
2. Do you know who your BOA customer is?
3. How are relevant sales flagged and verified?
4. Is there a process for internal audit?
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

13. GSA PRICE REDUCTION CLAUSE
What should you ask about:
5. Has GSA audited?
6. What volume of sales goes through the Schedule?
7. Do Schedule sales involve the same labor categories as commercial
customers?
8. Who is a commercial customer? If you sell to a prime contractor, are they
considered commercial customers even if the government is the end user?
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

14. Organizational Conflict of Interest:
Occurs when activities or relationships with other entities means that the
companyis unable to render impartial assistance or advice to the Government,
cannot perform the federal contract work in an objective way, or has an unfair
competitive advantage compared to other entities. OCI situations can result in
restrictions on future awards
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

15. Organizational Conflict of Interest:
There are three basic categories where OCIs may be found:
1. biased ground rules (FAR 9.505-2): Example – preparing/writing
specifications or work statements that are used in a funding opportunity;
2. impaired objectivity (FAR 9.505-3): Example – evaluating or assessing
performance of products/services of others within same organization; and
3. unequal access to information (FAR 9.505-4): Example – gaining access to
non-public information (i.e., budget(s)/budget information, statements of work,
evaluation criteria, etc.) through performance of a federal contract.
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

16. Organizational Conflict of Interest:
Organizational Conflicts of Interest in M&A – Special Concerns related
contractors performing technical and advisory support services.
What should you ask about?
1. Identify Clauses imposing requirements to monitor, identify, and report
potential OCIs – do they reach beyond the contractor to the corporate family?
2. Restrictions or limitations on future opportunities arising from performance
of contracts with OCIs – will they impact purchaser?
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

17. INTELLECTUAL PROPERTY
Government contractors must follow very specific rules governing
how data is marked, how costs must be tracked, and how and when
certain rights must be asserted. A failure to follow these regulations
may result in a loss of data rights or loss of the ability to protect
intellectual property from third-party use.
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

18. INTELLECTUAL PROPERTY – SOME EXAMPLES OF RIGHTS
The government receives unlimited rights in “data first produced in the
performance of this contract.” Unlimited rights means that the
government receives the rights to use, disclose, reproduce, prepare
derivative works, distribute copies to the public, and perform publicly and
display publicly the data or permit others to do so.
Limited rights apply to data developed at private expense. Limited rights
permit the government to reproduce or use the data within the
government only.
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

19. INTELLECTUAL PROPERTY
What should you ask?
1. Does target have processes in place to track funding source for IP
development?
2. Does target have processes in place to track IP delivered to the
government or used in a contract and for properly asserting IP rights?
3. Does target have processes in place to mark IP properly?
4. Does target have processes to track modifications to software?
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

20. WHAT HAPPENS WHEN DILIGENCE UNCOVERS AN ISSUE THAT MAY REQUIRE
REPORTING?
1. Pause deal or abandon deal?
2. If deal goes forward, who investigates and communicates with
government? Does other party have approval rights?
3. How is a potential settlement handled?
4. Can you set up an escrow? Indemnification?
5. Is R&W insurance possible?
2019 – Fed Gov Con Webinar Series - Washington DC
JSchaus & Associates

21. THANK YOU!
JSchaus & Assoc.
Washington DC
hello@JenniferSchaus.com
www.JenniferSchaus.com
+ 1 – 2 0 2 – 3 6 5 – 0 5 9 8
Speaker: Mary Beth Bosco
Email: Marybeth.bosco@hklaw.com
Phone: 202.469.5270