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PSC Challenges Ruling Implicating RAC Contract Awards

On November 7, 2014, the Professional Services Council (“PSC”), a national trade association of the government technology and professional services industry, filed an amicus brief with the U.S. Court of Appeals for the Federal Circuit to overturn a ruling which would allow Centers for Medicare and Medicaid (“CMS”) to modify payment terms for Recovery Auditor (“RAC”) contracts.

In August 2014, the U.S. Court of Federal Claims upheld CMS’ decision to withhold payments to RACs until the second level of appeal has been exhausted, despite challenges raised by a RAC that the new payment terms were inconsistent with customary commercial practices.

The appeal submitted to the Federal Circuit focuses on the application of the Federal Acquisition Streamlining Act of 1994 (“FASA”) and the Federal Acquisition Regulation (“FAR”) to the General Services Administration’s Federal Supply Schedule (“FSS”) program–the program through which CMS contracts RACs.

In its brief, PSC argues that under the FASA and FAR, agencies can only use contract clauses that are “consistent with standard commercial practice.” Allowing Federal agencies to add non-commercial terms to orders from the FSS would “unfairly alter the terms of the original FSS Contract bargain and cause contractors to not participate in or leave the FSS program.”

PSC agrees with the RAC that if the decision form the Court of Federal Claims is upheld, commercial companies would be discouraged from bidding on federal procurements, undercutting the objectives that FASA originally set out to achieve.

For more information, or for questions regarding RAC audits and appeals, please contact Abby Pendleton, Esq. or Jessica Gustafson, Esq. at (248) 996 – 8510 or via email at apendleton@thehlp.com or jgustafson@thehlp.com.

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