Translating Engineers’ Needs into Airtight Agreements

Kyle McEntee:

We're joined today by Marta Rajchel, a lawyer who works for the Department of Defense in the research and development arm of the Navy, where she focuses on procurement, which is all about how the government buys goods and services. So, Marta, what does the legal work in procurement actually entail?

Marta Rajchel:

So, it's very similar to the private sector, where it's a close intersection between business and law. As a federal procurement attorney, you're working closely with the contracting office and the business teams, the program offices, to understand their acquisition needs. So, if a program office is in need of a new software, you're working with them very closely to ensure that they are thinking through and touching on all the points.

If you're dealing with software, it's intellectual property. Like, what kind of licenses do we need? Are we paying for development where we would need to secure some data use rights, etc. Or, for example, there's an existing contractor who a program office is having issues with. So, is it ripe for a termination for cause, a termination for convenience, those types of things? So, you're really dealing with the intersection of business and law, and it's pretty dynamic. There's different things that come up every day.

Kyle McEntee:

It's interesting because when you think of procurement, you think you're buying something, but it's not just the contracts. It's also what happens when it doesn't go right, and so then there might be litigation.

Marta Rajchel:

Exactly. So, it's that and also alternative dispute resolutions. So, you can try to negotiate during a conflict, having a contractor who's not performing well.

As a federal agency, we have the responsibility of being stewards of the public taxpayer. So, at that point, you have to kind of balance that responsibility as well, where if you have a bad performing contractor, sometimes you need to terminate, and there's really no negotiation. But there's also a weighing of you know, is termination in the best interest of the taxpayer?

Kyle McEntee:

So, you mentioned that it's important to be good stewards of taxpayer money, but they're not really your client, right? So, how do you think about who your client is? Is it the DoD?

Is it the Navy? Is it the federal government in general?

Marta Rajchel:

So, it is the government and specifically the needs of that program office, the mission of that program office. It's intrinsically related to what's in the best interest of the government generally as well. So, for example, recently, I was working on a potential termination for default.

So, under the federal acquisition regulations, which is the regulation that most predominantly governs federal contracting, in addition to the agency-specific defense federal acquisition regulation. In there, you have specific procedures for a termination for default. You have to send a cure notice to the contractor, give them an adequate amount of time to respond.

Everything has to be documented so that if the contractor comes back and tries to defend against the termination for default, you have adequate documentation to ensure that the government is successful in the termination proceeding. And when I was working on this, there was a lot of talk with the contracting department on what would be the outcome of this termination for default. It came out that we would likely be unsuccessful.

And the issue was still there, that this contractor wasn't going to perform the work adequately. The government had to rewrite the requirement. So, really, the best route was going to be a termination for convenience.

The issue with the termination for convenience under the federal acquisition regulation is that the government ends up paying the contractor termination costs. So, essentially, you know, the contractor is terminating their services earlier than expected. And because it's for the government's convenience, per se, the government has to pay any early termination costs.

So, any kind of early wrap-up costs that the contractor would have to undertake. And we were in a discussion, is this really in the best interest of the government to have to pay this contractor to wrap up quickly? And there had to be a lot of cost and benefit analysis there between legal and the contracting office and the program office to kind of determine which route is going to ensure that, in the end, the government, the taxpayers, get a positive outcome or the best outcome in the situation.

So, likely, the government will have to go through a termination for convenience, which is obviously not the best thing given that the contractor is not performing adequately. But with all of the circumstances in play, it's still going to be the best outcome. So, there's a lot of that kind of analysis that goes in.

Kyle McEntee:

Yeah, I think that's pretty common within the law, right? It's not best in a vacuum, it's best under the circumstances.

Marta Rajchel:

Exactly. Exactly.

Kyle McEntee:

So, I want to talk about what leads up to the actual contracting itself. Because you have to have a contract before there's anything to terminate. But first, are we talking about buying things as small as office supplies?

Marta Rajchel:

So, it depends. It depends what your division's role is. Because I'm specifically working for a research and development division, we are mostly dealing with the purchase of equipment, services that support research and development for Navy technology and vessels, submarines. It depends. In some areas, I'm sure that it could be things like purchasing office supplies. In our specific realm, it's not.

Kyle McEntee:

So, let's just say that there's a new piece of equipment that the Navy needs for R&D purposes. What's the first step that you're doing to understand what the needs are? Are you identifying the actual equipment itself or someone else doing that and they're just kind of telling you like, here's what we need to buy?

Marta Rajchel:

Yeah. So, that program office is filled with scientists, engineers who are experts in the specific technologies utilized by the department. So, these are the people who are really starting the entire discussion with what we need and how we need it. And so, the need comes and when legal sees it, it's typically in the form of acquisition planning. So, this is where the need is already pretty well defined. We as the legal team, we try to engage as early as possible.

And of course, that's always limited by resources and just how many attorneys are in the office and can cover how many things and what is the highest risk and therefore needs someone or what is the most time sensitive and needs someone on it. So, of course, there's limitations to that, but we always like to be involved as early as possible because all of these things are so techy that it's hard to understand when you're already months and months into explaining what it is. So, we like to be there as early as possible in conversations and sometimes it is a phone call with one of the engineers and just kind of like, can you please explain to me exactly what you need and what you're trying to do?

So, it's pretty interesting starting to learn, but it's typically we get involved in the acquisition planning when the requirement is relatively well defined. And we're working closely with the contracting team to try to ensure that we are building a contract vehicle that is best suited to acquire that need.

Kyle McEntee:

And by that you mean like, what is the purchase actually look like in terms of the legal mechanisms that transfer ownership, right?

Marta Rajchel:

Or, for example, let's say that we need a contractor to build something, and the engineers are the ones who are explaining, this is what we need, this is how we need it built. And contracting and legal are looking at things like, okay, how can we structure this contract to ensure that the government is getting the best benefit without being overcharged? So, would it be a fixed price contract where we know exactly upfront what the service will cost?

Or is this an acquisition where it's really impossible to gauge what the services will cost and it needs to be more of like a time and material? So, we're always kind of trying to default to fixed price if we can, because at that point the government knows what it has to pay and it's unlikely, very unlikely, that the contractor can kind of overbill or, basically if it's a fixed price contract, the contractor has an incentive to perform and perform well because they also have, you know, past performance evaluations that can impact future contracts with the government, but also they want to make sure that they're not overrunning costs as well. So, it can create a very efficient contracting vehicle. So, you're really talking very openly about a lot of different business and technical issues with contracting and the program office.

Kyle McEntee:

So, are you doing that before you draft the solicitation for bids or is it after?

Marta Rajchel:

Yeah, it's definitely before. So, before anything goes public and this is all kind of in-house on the back end and after the acquisition plan gets approved, it goes through various approval and review processes, then that's the solicitation drafting and that's where by then you have the statement of work or the performance work statement and the solicitation appropriate clauses are getting put in and then legal is reviewing that for usually any ambiguities that we want to avoid.

So, a lot of times when we're reviewing a solicitation that is about to be published, we're looking at the performance work statement or the statement of work to see if there's any ambiguity. What are the delivery terms? Who's responsible for paying delivery? Who's responsible for the liability during transit? Those items that we're ensuring are being appropriately addressed before they're published.

Kyle McEntee:

So, you're working on the draft of the solicitation, the solicitation goes out, bids then come in. I'm assuming at that point you're going to review those bids for some kind of compliance with the law. What does that look like for you in particular?

What are you doing specifically to make sure that there is compliance?

Marta Rajchel:

So, if I were to review a bid on some of these technical products or services, it would not go well. So, we have the engineers and the subject matter experts in the program offices who are experts on these technologies, these products, and they are forming an evaluation panel and these are the people who are independently reviewing the bid. And so, they're following the Federal Acquisition Regulation and the solicitation and how they assess those bids. And once that's complete, legal comes in and we review those evaluations to ensure that they're in line with the Federal Acquisition Regulation and the solicitation that was published so that we are avoiding any type of issues with potential bid protests.

Kyle McEntee:

Is that more formulaic or do you really have to dive into the technical aspects with the engineers and other subject matter experts at this point?

Marta Rajchel:

Sometimes we have to dive in. So, for example, if I'm reviewing an evaluation and I see that an evaluator is docking a company for a specific thing, like say that, oh, they're not meeting this requirement. And I don't see that requirement expressly listed in the solicitation.

My thought is, okay, you're docking this company for not meeting this requirement, but I don't see that requirement in the solicitation. So, hey, can I talk to you, explain to me how that requirement is actually part of the solicitation, even if it's not expressly listed. And then they can explain to you, okay, it may not be expressly listed in the solicitation, but this is what it means. And then we may need to rewrite the evaluation or they would rewrite the evaluation. So, it really depends.

Kyle McEntee:

So, let's assume that one of the bids wins. You've done this pre-work on drafting the agreement. Are there many changes you need to that?

Or does it have to be really tight to what you originally did because of the regulations?

Marta Rajchel:

So, sometimes there are modifications, like after award. It really just depends. You can review and review and you'll still sometimes miss something because it's all very forward looking. And when you're reviewing acquisitions, solicitations, it's very forward thinking. So, you're trying to avoid conflict. Sometimes those conflicts still come up.

And so, with any contracting, as you know, you have to have a meeting of the minds. And if there's any ambiguity, there could be some type of issue where you assess and say, oh, you know what, maybe there's something there. The contractor thought that we needed X amount of this product and we meant we needed Y amount and there's some ambiguity. So, let's modify the contract then. Maybe that's the best route forward. So, there's usually things that come up.

Sometimes it just really depends on your relationship with the contractor too, and the contractor's relationship with the government. There's also post-award. Sometimes what we see are bid protests and that's when it gets into more of the litigation as well.

Kyle McEntee:

So, I think of contracting as private ordering. So, like you mentioned before, it's a meeting of the minds. In general, if you and I were to have a contract with each other, there are rules that apply to what we're allowed to do, like federal law, state law, but you have all these extra rules, extra hoops to jump through because you are representing the federal government.

So, you mentioned the federal acquisition regulation FAR. I think there's some DoD acquisition regulations. I think you've got some local Navy and Marine Corps acquisition regs. I think there's other statutes. How did you come up to speed on all that complexity when you started this position not too long ago?

Marta Rajchel:

So, you generally know where to go. These are federal statutes, federal regulations. So, they're all kind of in this tidy resource area.

Acquisitions.gov has everything published. You read through and you familiarize yourself as much as you can. There are also a lot of resources through the Government Accountability Office. They publish an attorney desk book that's really great that goes over all of the fiscal type requirements that as a procurement attorney, you need to be aware of. And a lot of reading. I mean, you got to always stay on top of any changes as well.

Kyle McEntee:

So, it's one thing to be aware. It's one thing to know where to find it. It's another to actually come to understand it.

Did you find that took you a little while?

Marta Rajchel:

It's just such a large amount of information that at times is open to interpretation. And there are still things that I read even in the federal acquisition regulations. I'm reading it like a couple times, a few times.

And then again, I'm like, wait, what is that saying? And then, you know, you start looking at potentially the Government Accountability Office publishes protest decisions. So, you can look at that and see how did the GAO interpret this requirement, for example. And that can kind of help. Or the federal, the Court of Federal Claims as well has jurisdiction over federal contracting. So, you can look at some judicial decisions that can help you with trying to understand. But there's a lot of reading, a lot of research, which if you're a person who enjoys learning, it's definitely a great area because there's just no end to what you can learn.

Kyle McEntee:

Do you have GAO lawyers on speed dial that you can call and say, hey, I don't understand this. Can you explain it?

Marta Rajchel:

Oh, 100%. GAO is great. They have such knowledgeable attorneys, especially ones who are really, really well versed in appropriation law, which is there are rules around using appropriated funds, which are the funds that Congress allots to specific agencies for specific purposes.

Kyle McEntee:

I'm kind of curious about the balance of your time during the day. Is it spent alone a lot and just lots of reading and writing? Or are you interacting a lot with the subject matter experts who are helping you understand the technical details of anything that's coming across your plate?

Marta Rajchel:

There's a lot of collaboration, a lot of discussion. So, you always need some time to read up on something and that is obviously just you doing it. But there's a lot of conversation.

You learn so much in conversation that you can't in email too. So, I typically like to reach out and give someone a call or go over there and talk to them. And then in our legal suite, we really collaborate a lot too.

We have a close team and I love just being able to go in and, hey, can you check my thinking on this? We have a lot of knowledgeable attorneys there too who are very open door. And so, in law I've found, especially in-house where it is very dynamic, there's a lot of discussions and you never really feel alone when you're working.

Kyle McEntee:

I think one interesting thing about in-house business lawyers, they end up being involved in strategic decision-making pretty often. Do you find that that's been the case for you in government?

Marta Rajchel:

Yeah, I think so. The earlier you get in, the more strategic your discussions with the client become, right? So, if you are able to talk to the tech code very early on in their requirement building, then I think strategic questions come up more.

The later you get in, in the life of the acquisition, probably the more legal they become because you've kind of covered more of the business aspects already. So, if we can get involved earlier, I think it can only benefit the strategic aspects of that acquisition.

Kyle McEntee:

Yeah. I'd say that actually applies just as much in the private sector. We hear the same thing from in-house counsel.

The earlier you're involved, the better it is for everyone, even though it might feel annoying in the moment for the business side.

Marta Rajchel:

Exactly. Yeah. And I've seen this in private sector and in public where the legal office is often looked at as a barrier to innovation, but I don't 100% agree.

As a legal counsel, you're not there to tell your client no. You're only there to explain to them the risks of the decisions that they'll be making. So, if you go about it this way, XYZ can happen. If that amount of risk is okay to you as the client, go ahead. So, I think knowledge is power, right? And so, I wish that both private and public sectors looked at the legal office as more of a partner than a barrier.

But unfortunately, I think that's just kind of ingrained in the field for now.

Kyle McEntee:

Well, I think another element to this is a lot of defense contractors for a long time were just like the big giant ones that, you know, you would see in the news. But more, I feel like the Navy is working with these non-traditional contractors, startups, universities that kind of work outside that standard FAR process. Can you talk a little bit about that?

Marta Rajchel:

Yeah, yeah. So, statutorily, it's pretty exciting because the Department of Defense has statutory authority to contract with other than traditional defense contractors. So, like you're saying, these big players. So, these smaller businesses, for example. And we have a statutory authority to go around the Federal Acquisition Regulation and really have a lot of flexibility to negotiate and contract with smaller players that may not, for example, want to undergo all of the labor-intensive and cost-intensive accounting standards that the Federal Acquisition Regulation would mandate. So, those are really great ways of helping innovation through these small businesses entering the field too.

Kyle McEntee:

Well, you're just talking about risk. I would imagine there is potentially some risk involved in going outside of those standard processes.

Marta Rajchel:

Yeah, absolutely there is. And I think that that goes into the cost-benefit analysis. So, we always do that as well, as any client does.

As the legal office, we outline the legal risk and the client will typically do a cost-benefit analysis of whether they're willing to take on that level of risk for the benefit.

That's not to say that we don't build in safeguards in the contract that result. So, for example, I was working on one of those types of other instruments with other than a traditional defense contractor and, you know, they were asking for financing ahead of time.

And we see that in the private sector, too. You put money up front for a service or a product if they're manufacturing something. So, you have installment payments. And that's very common in the private sector. And so, with this other instrument, we agreed to this installment payment. But, when the client showed us the actual schedule of payments, legal was able to say, okay, well, you're paying such a huge chunk at the very outset before performance even begins. Let's spread that risk out a bit to ensure that there's still incentive for the contractor to perform the work and they don't get – I'm just throwing out a number – but like 50% of the payment before they even start and then can just say, bye.

Kyle McEntee:

So, you're contracting with entities that are making things that the Navy, Department of Defense, the United States need. Some of that, I would imagine, requires ownership. How does that work in terms of negotiating ownership over various parts of the equipment that you're procuring?

Marta Rajchel:

Yeah, definitely. So, if we're having, for example, a contractor build something, obviously, that title would move to the government, right? So, we would own the title.

But what's interesting with intellectual property, so say you're building, you know, you're procuring software and the contractor is actually building new software. Under the Federal Acquisition Regulations, there are data - they're called data rights. And what's interesting is that if a contractor is building something like software, they can actually own the rights to that indefinitely, but the government will just have perpetual unlimited license to use and enhance that software too.

So, that is part of ensuring that the government is not putting a stop on innovation, right? And that's where that comes in, which is different because in the private sector, you can literally contract for someone to build you a software and they hand over all rights and ownership to that software to you, where that's not the same in the federal government.

Kyle McEntee:

Well, it's interesting because to make edits to the software, generally, you need to actually own it unless you've licensed it in that way.

So, are you having to then forecast what kind of updates the software is going to need in this contracting process or is that kind of left more like that's a problem for later?

Marta Rajchel:

Right, Yeah. So, anytime there's software involved, the government ensures that it has all rights to enhancements in the future to build enhancements on the software. And then whatever those enhancements may be - whoever the contractor is - then the same rights would follow that the government has the rights to use, have contractors use the software.

So, it's built in that the private sector contractor continues to own it, but the government just has the license. We always assume that the government will need to make enhancements at some point and we need all the flexibility possible.

Kyle McEntee:

So, you do all this work to ensure that things are actually done right, but that doesn't mean everyone will be happy with the outcome. You mentioned that there are bid protests. So, that's like when a contractor has concerns about the way a contract was awarded to someone else.

What's your specific role when that happens, when there's a bid protest?

Marta Rajchel:

So, when there's a bid protest and they can come in a couple different forms. So, you can get a bid protest at the Government Accountability Office or you can get a protest that's filed at the Court of Federal Claims.

So, in the first instance with Government Accountability Office, the attorney, so that would be me at the agency, would step in as the representative in front of the GAO and argue the protest there. So, depending if it has merit. If it has merit, then maybe the legal counsel would review the filings and the record, the contract file, and determine, hey, it looks like there really was an error here and we should as the agency go forward with corrective action, which would likely mean re-evaluating the bids and potentially issuing a new award to a new contractor. Or, if the bid protest has no merit and the agency did not make an error, then there are various filings similar to filings in court where there would be an agency report due that kind of outlines the legal stance and supporting documentation to show the GAO that really this procurement was done in accordance with the laws and the regs and the award should stand and the GAO will issue their decision either way. And then at the Court of Federal Claims, it gets a little bit more interesting, I guess, because the Department of Justice takes representation for the agency but legal counsel at the agency, so, me in this instance would work with the Department of Justice attorney as almost like a liaison between the contracting and program office to gather all the appropriate files and help with any of the filings going forward.

Kyle McEntee:

So, my understanding is that you moved to federal practice for work-life balance. Do you feel like that has played out for you?

Marta Rajchel:

Yes and no. I feel like definitely the culture is more accepting than in the private sector. So, I feel like in the private sector, I was almost afraid to say, hey, my kid's sick and I got to go home early today.

Whereas in the public sector, you have a much more open and accepting culture, and it varies between companies too in the private sector, I'm sure. But there's just like a culture of, you know, we all have mostly have families that we need to take care of, whether it's parents or kids. The workload is heavy as well. I think I've kind of come to just accept that no matter what legal office you're in, you're going to have a lot of work and it always ebbs and flows. But I think that that culture of acceptance of family values is more pronounced generally in the federal space. Hopefully, it stays that way.