December 2007

From the editors of CCH's government contracts products, here are summaries of the important recent developments in this practice area for the past month.  Complete coverage of these issues, and many more, appear in the Government Contracts Reporter and related products.

If you have comments or suggestions concerning the information provided or the format used, please feel free to contact me directly at aaron.broaddus@wolterskluwer.com.

Hot Topic

FAR Councils Issue FAC 2005-22
The Civilian Agency Acquisition and Defense Acquisition Regulations Councils have published Federal Acquisition Circular 2005-22. The Circular contains two final rules amending the Federal Acquisition Regulation. In order of appearance, the rules address: Implementation of Section 104 of the Energy Policy Act of 2005, Item I (FAR Case 2006-008); and Contractor Code of Business Ethics and Conduct, Item II (FAR Case 2006-007). Both rules carry a December 24, 2007, effective date. A Small Entity Compliance Guide also accompanies FAC 2005-22. A complete list of all FAR sections impacted by this FAC appears in the table below. For the text of FAC 2005-22, see ¶70,002.95.

A FAC 2005-22 final rule (FAR Case 2006-007) amends the FAR to address the requirements for a contractor code of business ethics and conduct, and the display of Office of the Inspector General Fraud Hotline Posters. The rule adds a new FAR Subpart 3.10 to specify that contractors must conduct themselves with the highest degree of integrity and honesty. Accordingly, contractors should have a written code of business ethics and conduct, and promote compliance with the code by having an employee business ethics and compliance training program and an internal control system (FAR 3.1002). In response to public comments to the proposed rule (¶70,006.205), this final rule reduces the burden on small entities by making the requirements for a formal training program and internal control system inapplicable to small businesses. For small businesses that encounter ethics compliance issues during the performance of a contract, the government will address the need for a training program and internal controls at that time, or during a criminal or civil lawsuit or debarment or suspension proceeding. The rule exempts commercial item contracts awarded pursuant to FAR Part 12 and contracts performed outside the United States (FAR 3.1004). The new contract clause mandating the contractor ethics code, FAR 52.203-13, applies if the value of the contract is expected to exceed $5,000,000 and the performance period is 120 days or more. The clause calling for the display of hotline posters, FAR 52.203-14, applies to contracts that exceed $5,000,000, or a lesser amount established by the agency, if the agency has a fraud hotline poster or the contract is funded with disaster assistance funds. A technical change is also made to the definition of "United States" in FAR 2.101 to refer to the specific definition in FAR 3.1001.

The final rule associated with FAR Case 2006-008 implements Section 104 of the Energy Policy Act of 2005. Section 104 requires all acquisitions of energy consuming products, and all contracts that involve the furnishing of energy-consuming products, to utilize ENERGY STAR® or Federal Energy Management Program designated products. The rule adopts a proposal (¶70,006.201) to ensure compliance with the federal mandate to promote energy efficiency when specifying or acquiring energy-consuming products. Specifically, the rule amends FAR 2.101 to add a definition for "Building or work" and to revise the definition of "Energy-efficient product." Also, the rule amends FAR 22.401 and FAR 23.201, revises FAR 23.203, redesignates FAR 23.204 as FAR 23.205, and adds two new provisions at FAR 23.204, "Procurement exemptions," and FAR 23.206, which prescribes a new contract clause at FAR 52.223-15, entitled "Energy Efficiency in Energy-Consuming Products," to ensure that suppliers and service and construction contractors recognize when energy-consuming products must be ENERGY STAR® or FEMP-designated. The rule makes corresponding technical amendments to FAR 36.601-3, FAR 52.212-5, and FAR 52.213-4.

Legal News

Government Was Not Justified in Contradicting FAR Requirements
A protester was entitled to an award of fees and expenses under the Equal Access to Justice Act, according to the Court of Federal Claims, because the contracting officer's actions contravened the Federal Acquisition Regulation and therefore the government's position was not substantially justified. The prevailing party in a post-award protest of a contract award for military helicopter detachments (51 CCF ¶78,791) sought to recover its attorneys' fees pursuant to the EAJA. The government challenged the application on the basis its position was substantially justified because it followed "significant" precedent from the Government Accountability Office supporting the CO's issuance of solicitation amendments extending the closing dates for the awardee's revised proposal. The government also relied on the protester's unsuccessful action before the Comptroller General (22 CGEN ¶112,443).

However, in its decision on the merits, the court specifically disavowed and refused to follow the GAO precedents. Instead, the court looked directly to applicable FAR provisions and determined the plain language of FAR 52.215-1 precluded the government's consideration of the awardee's revised proposals. The court also examined the regulatory history of the provision and concluded revisions to the FAR in 1997 expressly rejected the position taken by the CO in the challenged procurement. According to the court, the FAR and not the GAO established the parameters for the CO's decision. The government's actions, therefore, violated the FAR. With regard to an EAJA application, the government's position cannot be considered substantially justified when, as in the instant case, explicit, unambiguous regulations directly contradict that position. Geo-Seis Helicopters, Inc. v. U.S., et al., FedCl, 51 CCF ¶78,842.

Maximum Anti-Kickback, False Claims Act Penalties Imposed
The Court of Federal Claims rejected a contractor's attempts to minimize its liability under the Anti-Kickback Act and the False Claims Act because the totality of circumstances warranted imposition of the maximum penalties and damages under both statutes. Two prior decisions (49 CCF ¶78,435, 51 CCF ¶78,699) established the contractor's liability under the AKA and the FCA. On quantum, the contractor raised several defenses to the government's request for the maximum award authorized by the statutes. Noting documents showing the government had considered estimating FCA damages based on the time-value of money, the contractor claimed its FCA penalties should be calculated on a time-value of money basis or, alternatively, be minimized because its fraudulent actions were limited to isolated portions of the contract committed by only a few mid-level employees. The contractor also argued penalization under both acts for the same fraudulent actions would be improperly duplicative and maximum penalties would violate the Fifth Amendment's Due Process clause and the Eighth Amendment's Excessive Fines clause.

The CFC summarily rejected the contractor's arguments, finding the totality of circumstances warranted the maximum penalty of $10,000 per violation under each statute, awards of double the amount of each kickback, and FCA treble damages. The court explained a damages calculation based on the time-value of money would be contrary to the text and intent of the FCA, which expressly provides for "a civil penalty ... plus 3 times the amount of damages." Furthermore, legislative history evidenced Congress' intent to allow both the FCA and AKA to apply to the same misconduct. The contractor's claim fraud was committed only by mid-level employees was in direct opposition to prior findings that "key executives knowingly defrauded the [g]overnment on six separate occasions involving four significant federal contracts." The contractor's Fifth Amendment defense, based on punitive damages limitations established by the Supreme Court, was inapplicable because the Supreme Court has recognized treble damages under the FCA are compensatory as well as punitive, and treble damages were directly and reasonably related to Congress' intent to eliminate fraud in government contracting. Moreover, the penalties, which amounted to $259,547, or 2.37 times the amount of the kickbacks, and $7,032,666, or 3.3 times the amount of the false claims, did not violate the Eighth Amendment's ban on penalties "grossly disproportionate to the gravity of the offense." Morse Diesel International, Inc. v. U.S., FedCl, 51 CCF ¶78,843.

Deferral of Compensation Disqualified HUBZone "Employee"
According to the Court of Federal Claims, a protester failed to achieve status as a Historically Underutilized Business Zone concern because a worker who was allegedly stationed in the HUBZone but deferred his compensation did not qualify as an "employee" for purposes of SBA 126.200(b)(4). The protest arose out of a solicitation for business development, awareness, IT and publications support that had been set aside for HUBZone small businesses. After originally winning the award, the protester encountered a challenge by disappointed bidders who alleged the protester was ineligible for HUBZone status because it did not have at least 35 percent of its employees residing in a HUBZone, in violation of SBA 126.200(b)(4). The government forwarded the challenge to the Small Business Administration, which directed the protester to submit payroll records and other employee information. The protester claimed it met the employee requirements because one of its two employees was stationed in a HUBZone. However, the employee alleged to be in the HUBZone did not appear on the payroll records for the period in question. When the SBA raised the issue, the protester explained the employee had worked full-time during the period, but had agreed to defer his salary to accommodate a period of financial hardship experienced by the protester. The SBA was unconvinced and revoked the protester's HUBZone status.

After losing the award and an SBA appeal, the protester challenged the SBA's determination in the CFC. The court upheld the reasonableness of the SBA's decision. In accordance with long-standing precedent, the court gave SBA "substantial deference" to interpret its own regulations with regard to ambiguous topics or those not specifically addressed. The definition of "employee" in SBA 126.103 provides "[t]he totality of the circumstances ... will determine whether persons are employees of a concern." Consistent with this broad grant of discretion, the SBA reasonably determined the protester failed to meet the requirements of SBA 126.200(b)(4), finding it was "implausible that a non-owner would work for several months or more without compensation." The CFC agreed with the SBA's conclusion that "allowing a non-owner individual who works for deferred compensation to be counted as an employee for HUBZone program purposes would open the HUBZone program up to potential abuse," and would run contrary to the program's objective to increase gainful employment in HUBZones. Aeolus Systems, LLC v. U.S., et al., FedCl, 51 CCF ¶78,844.

No Breach, But Government Constructively Suspended Work
Although the government did not breach its duties to cooperate and not hinder an electrical contractor, the contractor was entitled to an adjustment under the Suspension of Work clause because the government's requirement for sequential, rather than simultaneous, installation of transformers delayed the contractor for an unreasonable amount of time, according to the Armed Services Board of Contract Appeals. The dispute arose from a firm fixed-price contract for rehabilitation and modification of a high voltage power system at a research facility. The contractor alleged the government breached implied contractual duties to cooperate and not hinder. According to the contractor, the government was responsible for critical path delays resulting from a requirement to perform sequential work on transformers.

However, the government did not willfully hinder the contractor's work, as it had a legitimate concern that it have sufficient electrical coverage to accommodate the significant research conducted at its facility. The government acted reasonably in limiting outages and cooperated with the contractor by granting time extensions. Although the contractor could not establish the government's requirement for sequential work delayed the project's completion, the contractor had recourse under the contract's Suspension of Work clause, which did not require the contractor to prove its overall work was delayed if it established the work was interrupted for an unreasonable period of time and the delay increased the contractor's performance costs. Here, the government constructively suspended the contractor's work for an unreasonable amount of time by requiring sequential work and separate installation of the transformers. The government failed to establish the contractor's performance was suspended for any other reason and it therefore was responsible for the constructive suspension and increased costs. Webb Electric Company of Florida, Inc., ASBCA, 07-2 BCA ¶33,717.

Protester Failed to Show Unequal Treatment or Arbitrary Conduct
The Court of Federal Claims denied a post-award bid protest and request for injunctive relief because the protester failed to demonstrate the government's evaluation of proposals treated offerors unequally or was arbitrary and capricious, and any evaluation error did not result in competitive prejudice. The dispute arose out of an award for guard services at domestic federal buildings. The protester alleged several errors in the procurement process, including unequal treatment in the technical capability evaluations, and arbitrary and capricious conduct with regard to the technical capability, past performance, and socioeconomic evaluation factors. Specifically, the protester alleged unequal treatment in the evaluation of its proposed corporate security officer and contract manager, and an irrational evaluation of its proposed on-site supervisors. The protester also claimed the government gave less weight to the socioeconomic factor than required by the solicitation, ignored the socioeconomic factor in its source selection decision, and improperly evaluated past performance.

On cross-motions for judgment on the administrative record, the protest was denied in its entirety. The record showed the government applied the same standard to each proposal in evaluating the proposed corporate security officer, and reasonably downgraded the protester in this area due to its failure to demonstrate a complete understanding of the applicable requirements. Similarly, the government reasonably assigned the protester a weakness for its proposed contract manager on the basis of the lack of detail regarding the credentials of the proposed individual, and assigned the awardee a strength based on information showing its contract manager was well qualified. The government acted irrationally when it assigned the protester a weakness for failing to submit resumes for proposed on-site supervisors because there was no such requirement, but the protester was not prejudiced by the error. Finally, the record showed the government properly considered and rationally applied the socioeconomic and past performance factors in evaluating the proposals. HWA, Inc. v. U.S., et al., FedCl, 51 CCF ¶78,838.

Regulatory News

DoD Issues Final Rule on Contractor Patent Rights
A Department of Defense final rule amends the Defense Federal Acquisition Regulation Supplement to add a clause pertaining to patent rights under contracts awarded to large business concerns for experimental, developmental, or research work. The rule finalizes the proposed rule (¶70,020.169) with a minor change to add the new clause, entitled Patent Rights --Ownership by the Contractor (Large Business), at DFARS 252.227-7038. The clause is substantially the same as a Federal Acquisition Regulation clause that was removed by a final rule in FAC 2005-21 because DoD was the only agency using the clause. The new DFARS clause also contains changes for consistency with current statutory provisions and other amendments made to FAR Part 27 by FAC 2005-21. The rule makes corresponding changes by revising the contract prescription provision at DFARS 227.303, removing DFARS 227.304-4 and DFARS 252.227-7034, and amending DFARS 252.227-7039. For the text of the rule, effective December 7, 2007, see ¶70,016.456.

Dept. of Veterans Affairs Removes VABCA Provisions
The Department of Veterans Affairs has issued a final rule amending its regulations at 38 CFR Parts 1 and 2 to remove provisions concerning VA's former Board of Contract Appeals. Pursuant to Section 847 of the National Defense Authorization Act for Fiscal Year 2006 (PL 109-163), the VABCA was terminated and its cases under the Contract Disputes Act of 1978 were transferred to the new Civilian Board of Contract Appeals established within the General Services Administration. Accordingly, this rule removes all references to the former VABCA from the VA regulations. The rule, effective November 21, 2007, appears at 72 FR 65461. Government Contracts Report Letter No. 1936, December 5, 2007.

Additional Ethics Compliance Rule Proposed for the FAR
The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council are proposing to amend the Federal Acquisition Regulation, at the request of the Department of Justice, to require contractors to report any violations of federal criminal law in connection with the award or performance of contracts or subcontracts worth $5,000,000 or more. The rule would require contractors to establish and maintain specific internal controls to detect and prevent improper conduct. Contractors must notify contracting officers without delay whenever they become aware of violations of federal criminal law or face possible suspension or debarment from contracting. FAC 2005-22 finalized a prior proposed rule (FAR Case number 2006-007, ¶70,006.205) to add consistent FAR policy on contractor ethics and business conduct (see FAC 2005-22 story above). Following the release of the first proposal, the Office of Federal Procurement Policy received a request from the Department of Justice to require contractors to maintain an ethics code and implement disclosure and enforcement mechanisms.

This new proposed rule, issued under a new FAR case number, would require contractors to take action to detect and prevent improper conduct, and to disclose to the government any criminal acts committed in connection with a federal contract. Small business concerns would be exempt from the requirements of a formal ethics awareness program and internal control system. Also, the new rules would not apply to contracts performed outside the United States. Contracts for commercial items, which are regulated by FAR Part 12, would be exempt on the basis PL 103-355 requires the acquisition of commercial items to resemble customary marketplace practices to the maximum extent practicable. This rule would amend newly added FAR Subpart 3.10 and the associated contract clause, FAR 52.203-13. The proposal would also make corresponding technical changes to FAR 9.104-1, FAR 9.406-2, FAR 9.407-2, and FAR 42.1501. Comments on the proposed rule, identified by FAR Case 2007-006, are due January 14, 2008. For the text of the rule, see ¶70,006.215.

Dept. of State Proposes Identity Verification Requirements
The Department of State has issued a proposed rule that would amend the Department of State Acquisition Regulation to implement requirements regarding personal identity verification of contractor personnel. On January 3, 2006, Federal Acquisition Circular 2005-07 revised the Federal Acquisition Regulation to implement the contractor personnel identification requirements of Homeland Security Presidential Directive 12, and Federal Information Processing Standards Publication Number 201, Personal Identity Verification of Federal Employees and Contractors. While the FAR requires compliance with contractor personnel identification standards, it does not provide specific procedural language for inclusion in affected contracts in order to allow agencies flexibility to meet their mission needs. Rather, the FAR requires contractors to "... comply with agency personal identity verification procedures identified in the contract ..." (see FAR 4.1303, FAR 52.204-9). Accordingly, this proposed rule would add a new contract clause at DOSAR 652.204-70 to implement specific DOS requirements regarding personal identity verification of contractor personnel. The clause will apply to contracts that require contractor employees to perform on-site at a DOS location and/or have access to DOS information systems. In addition to the new contract clause, the rule would add new regulations at DOSAR Subpart 604.13, Personal Identity Verification of Contractor Personnel. The rule would also amend DOSAR 637.110, DOSAR 652.237-72, and DOSAR 652.237-73, and remove DOSAR 652.237-71. Comments on the proposed rule, identified by RIN 1400-AC32, are due by January 18, 2008. For the text of the rule, see ¶71,330.05.

DoD Proposes Rule Revising Ground and Flight Risk Clauses
A Department of Defense proposed rule seeks to amend the Defense Federal Acquisition Regulation Supplement to revise and combine contract clauses governing risk of loss for contracts involving the furnishing of aircraft to the government. DFARS 252.228-7001, Ground and Flight Risk, and DFARS 252.228-7002, Aircraft Flight Risk, are presently used in contracts involving aircraft procurement. The proposed rule would delete DFARS 252.228-7002 and combine the two clauses into a single ground and flight risk clause at revised DFARS 252.228-7001 to establish requirements that apply consistently to all contract types. Revised DFARS 252.228-7001 would require the inclusion of the clause in all subcontracts, state the government property clause does not apply if the government withdraws its self-insurance coverage, and provide commercial insurance costs or self-insurance charges duplicating the government's self-insurance are unallowable. The revised clause would also establish a contractor share of loss equal to the lesser of $100,000 or 20 percent of the estimated contract cost or price, which is consistent with the contractor share of loss currently specified at DFARS 252.228-7002. DFARS 252.228-7001 presently prescribes a $25,000 share of loss for the contractor. New DFARS 231.205-19 would specifically reference the treatment of insurance costs under DFARS 252.228-7001 and the existing clause at DFARS 252.217-7012, Liability and Insurance. The rule also proposes conforming changes to DFARS 228.370, DFARS 252.228-7003, DFARS 252.228-7005, and DFARS 252.228-7006. Comments on the proposed rule, identified by DFARS Case 2007-D009, are due February 5, 2008. The text of the proposed rule is located at ¶70,020.247.

Proposed Rule Would Amend FMR Exchange/Sale Provisions
The General Services Administration has issued a proposed rule that would make extensive amendments to the Federal Management Regulation at FMR Part 102-39, Replacement of Personal Property Pursuant to the Exchange/Sale Authority. In accordance with recommendations made by the 2005 Federal Asset Management Evaluation project, the proposed rule would seek to update, streamline, and clarify FMR Part 102-39. The proposed amendments include adding a new section that would explain the exchange/sale authority, adding and revising definitions, adding a section to address deviations, adding and revising sections to explain when and why agencies should use the exchange/sale authority, and revising sections with regard to documentation of transactions, accounting and annual reporting requirements, and other restrictions, prohibitions, and requirements applicable to the sale/exchange of personal property. The rule would also remove and redesignate several sections. A complete list of the provisions affected by the proposed rule appears in the regulation table below. Comments on the proposed rule are due by January 10, 2008.

Major Contract Awards

Sikorsky Aircraft Corp. - $1.4 Billion. Sikorsky Aircraft Corp., Stratford, CT, was awarded on Dec. 12, 2007, a $1,477,061,371.00 firm-fixed-price contract for procurement of Army and Navy helicopters, tooling, program systems management and production of technical publications. Work will be performed in Stratford, CT, and is expected to be completed by Dec. 31, 2012. Contract funds will not expire at the end of the current fiscal year. There was one bid solicited on Oct. 20, 2005, and one bid was received. The USA Aviation & Missile Command, Redstone Arsenal, AL, is the contracting activity (W58RGZ-08-C-0003). Government Contracts Report Letter No. 1938, December 19, 2007.

Lockheed Martin Space Systems - $848.9 Million. Lockheed Martin Space Systems Co., Sunnyvale, CA, is being awarded an $848,932,718 modification (PZ0001) to previously awarded cost plus incentive fee/cost plus fixed fee contract (N00030-07-C-0100) to provide TRIDENT II (D5) Missile production and deployed system support (C4 and D5). Specific tasks may include: missile body, re-entry body, D5 instrumentation systems and support equipment production (D5 only); D5 production continuity hardware (D5 only); procurement of components and requalification activities in support of D5 life extension requirements; critical components in support of D5 life extension requirements; field processing; engineering and operational support services; training material development and maintenance; trainer design and operational support; spares and integrated logistics support; flight test analysis and range support; safety assurance including Nuclear Weapon Security (NWS); missile and support equipment repair; flight test planning and flight test data acquisition and processing (D5 only); development, production and installation of SPALTs/PADs/Sers [Special Projects Alterations, POMF (POLARIS Missile Facility) alteration documents, and support equipment requirements]; develop and produce an alteration release assembly; technical services in support of the C4/D5 ballast system and test instrumentation mast program; technical services in support of all requirements associated with TRIDENT I(C4) related to asset dispositions and disposal. In addition to TRIDENT II (D5), and TRIDENT I (C4) missile subsystem requirements, there is also a requirement to: provide storage and maintenance for the Tomahawk Land Attack Missile, Nuclear (TLAM-N) at the Strategic Weapons Facilities. Work will be performed in Sunnyvale, Irvine, Torrance, and Santa Ana, CA (40 percent); St. Mary's, GA (12 percent); Brigham City, UT (13 percent); Cape Canaveral and Clearwater, FL (11 percent); Silverdale and Nepoulsbo, WA (9 percent); Pittsfield, MA (2 percent); Gainesville, VA (2 percent); Rockford, IL (1 percent); Baltimore, MD (1 percent); Albuquerque, NM (1 percent); East Aurora, NY (1 percent); Kingsport, TN (1 percent); and other (6 percent), and work is expected to be completed September 2011. Contract funds in the amount of $5,989,099 will expire at the end of the current fiscal. Strategic Systems Programs, Arlington, VA, is the contracting activity. Government Contracts Report Letter No. 1936, December 5, 2007.

Northrop Grumman - $730 Million. Northrop Grumman Systems Corp., of Linthicum Heights, MD, is being awarded a indefinite delivery/indefinite quantity and firm-fixed price contract for $730,000,000. This action will provide up to 514 AN/APG-68 (V) 9 radar systems with first delivery order being issued for 30 radar systems for the government of Turkey. The procurement of the 30 radar systems will be accomplished under the firm fixed price portion of the contract. This effort supports foreign military sales to Turkey. At this time $36,000,005 has been obligated. 312 AESG/PKD, Wright-Patterson Air Force Base, OH, is the contracting activity (FA8615-08-D-6035, D001). Government Contracts Report Letter No. 1937, December 12, 2007.

BAE Systems - $709.3 Million. BAE Systems Land and Armaments, York, PA, was awarded on Nov. 29, 2007, a $709,356,689 firm-fixed-price and cost-reimbursable contract for RESET of Bradley Fighting Vehicles. Work will be performed in York, PA, and is expected to be completed by Dec. 31, 2009. Contract funds will not expire at the end of the current fiscal year. There was one bid solicited on Jul. 25, 2007, and one bid was received. The Tank, Automotive and Armaments Command, Warren, MI, is the contracting activity W56HZV-05-G-0005. Government Contracts Report Letter No. 1938, December 19, 2007.

Lockheed Martin - $512 Million. Lockheed Martin Corp., of Fort Worth, Texas, is being awarded an undefinitized contract for $512,104,000. This action provides for Sustainment of the F-22 Weapon System during the calendar year 2008. At this time $384,082,000 has been obligated. ASC 478 AESW/PK, Wright-Patterson Air Force Base, OH is the contracting activity (FA8611-05-C-2850 P00076). Government Contracts Report Letter No. 1938, December 19, 2007.

Charles Stark Draper Laboratories - $318.5 Million. The Charles Stark Draper Laboratories Inc., Cambridge, MA, is being awarded a $318,522,566 cost-plus-incentive-fee, cost-plus-fixed-fee contract to provide TRIDENT II (D5) guidance system tactical engineering support and guidance application support. Specific tasks will include advanced investigative and corrective maintenance and engineering support for repairs. Work will be performed at The Charles Stark Draper Laboratory, Cambridge, MA. (58 percent); General Dynamics Advanced Information Systems, Pittsfield, MA. (15 percent); Raytheon Company, El Segundo, CA. (9 percent); Honeywell International, Inc., Phoenix, AZ. (6 percent); Honeywell International, Inc., Aerospace Defense and Space, Plymouth, MN. (4 percent); Honeywell International, Inc., Defense and Space, Clearwater, FL. (4 percent); and Dynamic Research Corporation, Andover, MA. (4 percent), and work is expected to be completed September 2012. Contract funds in the amount of $74,667,027 will expire at the end of the current fiscal year. This contract was awarded based on a sole source acquisition. Strategic Systems Programs, Arlington, VA, is the contracting activity (N00030-08-C-0010). Government Contracts Report Letter No. 1936, December 5, 2007.

Electric Boat Corp. - $270 Million. Electric Boat Corp., Groton, CT, is being awarded a not-to-exceed $270,000,000 modification to previously awarded contract (N00024-03-C-2101) for long lead time material associated with steam and electric plant, main propulsion unit, ship service turbine generator set components critical to maintaining submarine component industrial base and miscellaneous hull, mechanical and electrical system components in support of SSN 784 ship construction commencing in FY 09 (SSN 784). Work will be performed in Groton, Conn./Quonset Point, RI (5 percent); Newport News, VA (5 percent); Sunnyvale, Long Beach and South El Monte, CA (40 percent); Coatesville, York and Cheswick, PA (10 percent); Temple and Tucson, AZ (5 percent), other efforts performed at various sites throughout the United States (35 percent), and is expected to be completed by July 2011. Contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington Navy Yard, D.C., is the contracting activity. Government Contracts Report Letter No. 1936, December 5, 2007.

EADS North American Defense - $213.7 Million. EADS North American Defense, Arlington, VA, was awarded on Dec. 12, 2007, a $213,795,474.00 firm-fixed-price contract for Army's Light Utility Helicopter. Work will be performed in Columbus, MS, and is expected to be completed by Sept. 30, 2008. Contract funds will not expire at the end of the current fiscal year. There was one bid solicited on Dec. 12, 2007, and one bid was received. The USA Aviation & Missile Command, Redstone Arsenal, AL, is the contracting activity (W58RGZ-06-C-0194). Government Contracts Report Letter No. 1938, December 19, 2007.

Bechtel Plant Machinery Inc. - $165 Million. Bechtel Plant Machinery Inc., Pittsburgh, PA, is being awarded a $165,678,110 modification to previously awarded contract (N00024-07-C-2100) for Naval Nuclear Propulsion Components. Work will be performed in Pittsburgh, PA (74 percent), and Schenectady, N.Y. (26 percent). Contract funds will not expire at the end of the current fiscal year. No completion date or additional information is provided on Naval Nuclear Propulsion Program contracts. The Naval Sea Systems Command, Washington Navy Yard, D.C., is the contracting activity. Government Contracts Report Letter No. 1937, December 12, 2007.

Raytheon Missile Systems - $161.2 Million. Raytheon Missile Systems of Tucson AZ, is being awarded a firm fixed price contract for $161,278,400. This action provides 300 miscellaneous unit air foil groups, 300 miscellaneous armament unit enhanced computer control groups, 1,298 weapon guidance unit computer control groups, 1,300 stabilizing and retarding unit air foil groups, 600 global positioning system adapter kits, 1 lot enhanced Paveway III and test equipment spares, 1 lot enhanced Paveway II, 700 certain adapter groups, six readiness test set, six bomb tool kits, three lots of enhanced Pavewaytool sets, three each common munitions bit/reprogramming equipment adapter kits, one each mission planning software, one lot DATA. This effort supports foreign military sales to Pakistan. At this time $75,698,968 has been obligated. 784th Combat Sustainment Group (AFMC), Hill Air Force Base, UT is the contracting activity (FA8213-08-C-0028). Government Contracts Report Letter No. 1938, December 19, 2007.

Raytheon Integrated Defense Systems - $155 Million. Raytheon - Integrated Defense Systems, Andover, MA, was awarded on Dec. 12, 2007, a $155,000,000.00 firm-fixed-price contract for Patriot "Pure Fleet" tactical assets. Work will be performed in Andover, MA, and is expected to be completed by Apr. 30, 2010. Contract funds will not expire at the end of the current fiscal year. There was one bid solicited on Dec. 20, 2006, and one bid was received. US Army Aviation & Missile Command, Redstone Arsenal, AL, is the contracting activity (W31P4Q-07-C-0151). Government Contracts Report Letter No. 1938, December 19, 2007.

MMG - $151.9 Million. International Military and Government LLC (IMG), Warrenville, IL, is being awarded a $151,989,035 firm-fixed-priced modification under previously awarded contract (M67854-07-D-5032) for sustainment items for the Mine Resistant Ambush Protected vehicles. MRAP vehicles are required for the Marine Corps and other Joint Forces to increase survivability and mobility of troops operating in a hazardous fire area against known threats such as small arms fire, improvised explosive devices and other explosives. The sustainment items shall support the vehicles that are in theater or scheduled for deployment. Work will be performed in WestPoint, MS, and work is expected to be completed Feb. 2008. Contract funds will not expire by the end of the current fiscal year. The basic contract was competitively procured. The Marine Corps Systems Command, Quantico, VA, is the contracting activity. Government Contracts Report Letter No. 1937, December 12, 2007.

BAE Systems - $135 Million. BAE Systems Land and Armaments, York, PA, was awarded on Nov. 29, 2007, a $135,163,802 cost-reimbursable contract for reset of Bradley Fighting Vehicles. Work will be performed in York, PA, and is expected to be completed by Dec. 31, 2007. Contract funds will not expire at the end of the current fiscal year. There was one bid solicited on Aug. 14, 2007, and one bid was received. The Tank, Automotive and Armaments Command, Warren, MI, is the contracting activity W56HZV-05-G-0005. Government Contracts Report Letter No. 1938, December 19, 2007.

United Technologies Corp. - $114.6 Million. United Technologies Corp., Pratt and Whitney Aircraft Group of East Hartford, CT, is being awarded an undefinitized contract for $114,663,000. This action provides for F119-PW-117-PW-100 engines, CY08 sustainment undefinitized contract action. At this time $85,997,000 has been obligated. Headquarters Aeronautical Systems Center, Wright-Patterson Air Force Base, OH is the contracting activity (FA8611-05-C-2851). Government Contracts Report Letter No. 1938, December 19, 2007.