Gordon Rees Scully Mansukhani presents the latest insights from our Government Contracts group, offering a comprehensive overview of recent significant decisions, regulatory changes, and essential 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.
Agency Update
SBA Launches Sweeping 8(a) Program Audit Following $550 Million Contract Fraud Probe
The Small Business Administration (SBA) recently announced a comprehensive audit of its 8(a) Business Development Program following findings from a Department of Justice investigation. The investigation identified improper awarding of federal contracts totaling more than $550 million, involving bribery and collusion between a contracting officer at the U.S. Agency for International Development and two 8(a) contractors.
SBA Administrator Kelly Loeffler stated that the audit aims to identify and address potential fraud and misconduct within the program. The audit will be conducted by the SBA’s Office of General Contracting and Business Development, focusing on high-dollar, limited-competition contracts awarded over the past 15 years. Any identified issues will be referred to the SBA Office of Inspector General and the Department of Justice for further investigation and enforcement action. Details regarding the extent of the investigation or specific contracts involved were not provided.
Learn more on the SBA’s website.
Recent Cases/Decisions
GAO Sustains Protest Concerning Inadequate OCI Investigation
Overview
The Department of the Army issued a task order proposal request (TOPR) under its Information Technology Enterprise Solutions Services (ITES-S) indefinite delivery/indefinite quantity (IDIQ) contract to obtain cybersecurity IT support for the Army’s new Global Cyber Center (GCC). DirectViz Solutions, LLC, protested the issuance of the task order to Peraton, Inc., alleging the Army unreasonably failed to identify and address organizational conflicts of interest (OCIs), improperly evaluated proposals, and made a flawed best-value tradeoff decision. The protest was sustained in part and denied in part.
Key Issues
- Impaired Objectivity OCI: The Government Accountability Office (GAO) found the Army unreasonably concluded there was no potential for an impaired objectivity OCI despite Peraton’s concurrent performance of a separate task order supporting Army Cyber Command (ARCYBER). Under that contract, Peraton helped develop cybersecurity policy and oversight tools for ARCYBER, some of which would apply to the GCC, where Peraton would simultaneously be implementing them. GAO held this dual role gave rise to a significant potential for impaired objectivity.
- Inadequate OCI Investigation: GAO concluded the contracting officer failed to meaningfully investigate the alleged conflict. The Army relied on conclusory declarations and Peraton’s self-assessment without analyzing the actual performance work statements or considering whether Peraton’s policy-making role under ARCYBER could impact its impartiality at GCC.
- Ineffective Mitigation: GAO rejected the Army’s reliance on government review and internal firewalls as sufficient mitigation. The decision emphasized that structural conflicts arising from overlapping roles require thorough analysis and proactive avoidance or mitigation, not after-the-fact assumptions.
- Evaluation & Tradeoff Claims Denied: GAO denied challenges to the agency’s technical evaluation and best-value tradeoff, finding that the Army reasonably evaluated both proposals and documented its decision. However, the award could not stand due to the unresolved OCI.
Citation: DirectViz Solutions, LLC, B-423366; B-423366.3; B-423366.4 (June 11, 2025)
U.S. District Court Enjoins AmeriCorps Shutdown
Overview
In a case brought by several states and the District of Columbia, a federal court partially blocked the shutdown of over 1,000 AmeriCorps programs. The court found that the agency’s interim CEO tried to make sweeping changes, including removing all members of the National Civilian Community Corps (NCCC), without going through the legally required public comment process.
States’ Argument
The plaintiffs claimed the agency broke several rules, including:
- Skipping the public notice and comment period required for major program changes.
- Ignoring funding restrictions set by Congress.
- Overstepping executive authority by making changes that needed Congressional approval.
- Disrupting important services like disaster relief and youth programs with no planning in advance.
Legal Questions for the Court
The judge reviewed several important legal questions, such as:
- Can the courts review this type of agency decision?
- Did the states suffer real and direct harm from the shutdown?
- Were the agency’s actions final and impactful enough to be challenged under federal law?
- Would the shutdown cause serious harm to states and the public?
- Would stopping the shutdown protect the public interest?
Court’s Decision
- The states had the right to sue over the loss of funding and service members, but not over the agency’s internal staffing decisions.
- The shutdown of funding and removal of NCCC members were considered final actions, making them subject to legal review.
- The agency likely violated the law by making such big changes without public input.
- The shutdown would cause serious, immediate harm to vital public services like disaster response and youth engagement.
- Blocking the shutdown would help maintain stability and ensure the agency follows the law.
Outcome
The court granted a partial win to the states, stopping the shutdown of AmeriCorps and NCCC programs. The agency was ordered to:
- Reinstate AmeriCorps and VISTA members to affected programs.
- Reinstate grant allocations to state governments.
- Follow public rulemaking procedures before making major program changes.
However, the court did not block the agency’s internal staff cuts, since those actions were not directly tied to the states’ legal claims.
Citation: Maryland v. Corp. for Nat’l & Cmty. Serv., No. DLB-25-1363, 2025 WL 1585051 (D. Md. June 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, and in a wide variety of industries, including defense, information technology, construction, and aerospace, among others.
Please contact Patrick Burns, Meredith Thielbahr, or Quyen Dang for further information or with any questions.