Gordon Rees Scully Mansukhani presents the latest insights from our Government Contracts group, offering a comprehensive overview of recent significant decisions, regulatory developments, and practical updates for businesses contracting with federal and state governments. Our team compiled the most pertinent legal developments to keep you informed in the dynamic landscape of government contracts.
Tune in to The Essential GovCon Brief podcast on Spotify or YouTube for an in-depth discussion of the issues highlighted here.
GAO Releases FY 2025 Bid Protest Annual Report
In December, the Government Accountability Office (GAO) released its Bid Protest Annual Report to Congress for Fiscal Year 2025, providing an overview of protest activity and common procurement errors identified during the past fiscal year. GAO reported 1,688 protest-related cases filed in FY 2025, representing a 6% decrease from FY 2024.
GAO closed 1,737 cases during the fiscal year, including 380 decisions on the merits, cases in which GAO reached a substantive ruling on whether the agency complied with procurement law, rather than dismissing the protest on procedural grounds. Of those cases decided on the merits, GAO sustained 14% of protests, down slightly from the 16% sustain rate in FY 2024.
While the sustain rate declined, GAO’s effectiveness rate, which reflects the percentage of protests in which the protester obtained some form of relief through a sustained decision or voluntary corrective action, remained steady at 52%, matching the prior year.
GAO identified the most prevalent grounds for sustaining protests as unreasonable technical evaluations, unreasonable cost or price evaluations, and unreasonable rejection of proposals. GAO also reported continued use of alternative dispute resolution, with a 91% success rate in cases where ADR was employed.
The FY 2025 data show that bid protests continue to provide a meaningful opportunity for relief where agencies commit evaluation errors, particularly in technical and cost reviews.
Administrative False Claims Act Implementation Expands
Federal agencies continue to roll out the Administrative False Claims Act (AFCA), which closely mirrors the federal False Claims Act but allows agencies to pursue alleged false claims and false statements through agency-level administrative proceedings, rather than relying exclusively on enforcement by the Department of Justice in federal court. The AFCA is designed to give agencies a faster, more streamlined enforcement mechanism for addressing alleged misrepresentations and fraud involving smaller dollar amounts.
Most notably, NASA issued a proposed rule on December 30, 2025, signaling its intent to adopt AFCA procedures. If finalized, NASA would be able to pursue alleged false claims or misrepresentations administratively, including issues arising during contract performance, invoicing, or compliance with contractual representations and certifications. Public comments on NASA’s proposal are due by February 13, 2026.
NASA’s action follows final AFCA rules already adopted by several other agencies, including the Nuclear Regulatory Commission, the U.S. Postal Service, and the Railroad Retirement Board. Additional agencies are widely expected to follow suit as the federal government continues to expand the use of administrative enforcement tools under the AFCA.
Impact: As AFCA adoption grows, contractors should anticipate increased scrutiny of certifications, cost submissions, performance representations, and other statements to the government, and should ensure those statements are accurate, consistent, and well-documented.
Federal Circuit Rejects Informal Cost Agreement in Major Defense Contract Dispute
In Secretary of Defense v. Pratt & Whitney, the U.S. Court of Appeals for the Federal Circuit addressed a long-running dispute over how overhead costs were allocated under cost-plus defense contracts. The case centered on whether Pratt & Whitney could rely on an informal agreement with the government that allowed it to stop reducing its overhead pool by certain costs associated with its commercial engine program, costs that were partially reimbursed by suppliers.
The Federal Circuit held that, while the Armed Services Board of Contract Appeals had authority to consider the dispute, the alleged agreement itself was not enforceable because the contracting officer lacked authority to bind the government. The court emphasized that even negotiated or settlement-type agreements must comply with federal procurement rules, and contracting officers cannot approve arrangements that deviate from those requirements without proper authorization.
The court reversed the Board’s ruling that had upheld the agreement and sent the case back for further proceedings, leaving open the question of how the disputed costs must ultimately be treated.
Impact: The decision serves as a reminder that contractors cannot rely on informal understandings or side agreements, even those reached in the context of resolving disputes, unless they are properly authorized and documented. For cost-reimbursement contracts in particular, contractors should ensure that any agreement affecting cost treatment is clearly incorporated into the contract and complies with applicable procurement rules.
Citation: Pratt & Whitney, No. 2023-1337, 2023-1338, 2025 WL 3492677 (Fed. Cir. Dec. 5, 2025).
GRSM Government Contracts Practice Group
GRSM’s Government Contracts team has considerable experience defending and enforcing the rights of our contractor clients in disputes against government entities and private businesses. In addition to litigating claims in state and federal courts, we routinely handle matters before administrative tribunals, such as the Government Accountability Office, the Small Business Administration, and the Armed Services Board of Contract Appeals.
Our team of attorneys is located throughout the United States, which allows the firm to represent contractors, regardless of size, in a wide variety of industries, including defense, information technology, construction, and aerospace, among others.
Please contact Patrick Burns or Meredith Thielbahr with any questions or for more information.