Thursday, November 16, 2017

THE GOVERNMENT'S DUTY TO COOPERATE

It's time we reminded ourselves of the government's duty to cooperate.  The government bears a specific duty to cooperate with the contractor when some action by the government is necessary for contract performance.  This duty is implied in every government contract.  We addressed this duty briefly in our post recently on the costs of delay in construction contracts.  The government's obligation, however, applies to all government contracts.

Perhaps the duty is articulated best in a old case from the Armed Services Board of Contract Appeals (ASBCA).  In G.W. Galloway, ASBCA Nos. 16656, 16975, 73-2 BCA paragraph 10,207, the Board said:
This requirement is an integral segment of the broadly recognized rule applicable to all government contracts which imposes an implied obligation on the government that it must do nothing that will interfere with the contractor in the performance of the contract.  [citation omitted]  In addition to the negative obligation of noninterference, this board has recognized an implied affirmative obligation on the part of the government that it will do whatever is reasonably necessary on its part to enable the contractor to perform.
73-2 BCA at 48,499,

The duty to cooperate includes the duty to communicate and disclose information vital to contract performance.

Good contract management requires the contractor to importune the government, if necessary, to obtain clear directions when problems arise such as government caused delays and constructive changes.  The duty works both ways.  The contractor has the duty to notify the government of the performance restricting occurrence and the government has the duty to "do whatever is reasonably necessary on its part to enable the contractor to perform."

bill@spriggsconsultingservices.com
 

Wednesday, November 15, 2017

DELAY COSTS ON CONSTRUCTION CONTRACTS

In the October 2017 case of MW Builders v. United States, the Court of Federal Claims held that the government's attempt to shift its contractual responsibility to execute utility agreements breached the government's implied duty of good faith and fair dealing and gave rise to a compensable delay claim under the Changes clause.  The court said:

"The duty of good faith and fair dealing includes 'the duty not to interfere with the other party's performance and not to destroy the reasonable expectations of the other party regarding the fruits of the contract.'  Centrex Corp. f. United States, 395 F.3d 1285, 1304 (Fed. Cir. 2005).  'Both the duty not to hinder and the duty to cooperate are aspects of the duty of good faith and fair dealing.'  Metcalf Construction Co. v. United States, 742 F.3d 984, 991 (Fed. Cir. 2014)."

Suspension of performance for time to execute utility agreements for which the government is responsible is a change under the Changes clause in that it changes the manner of performance of the work.  FAR 52.243-4(a)(2).  It also is a government caused delay of work and an admission the government has failed in its implied by law duty not to interfere with the contractor's performance.

The contractor should prepare a request for equitable adjustment (REA) for reasonable costs associated with demobilization, standby, remobilization and acceleration costs and profit on those costs as a result of the suspension and resumption of performance after the period of suspension.  Notice should be given under FAR 52.243-4(b) of the change and the right to the REA should be asserted as required by FAR 52-243-4(e).  Cost projections should be included and additional time to further refine the cost estimate should be requested.  FAR 52-243-4(e).

Among the types of costs allowed are unabsorbed overhead and G & A.  Calculating these costs requires the services of an expert.  However, the formula used for government contracts, know as the Eichleay formula, can be summarized as follows:

Divide total contract billings by total company billings times total overhead or G &A (fixed) for the period of contract performance to arrive at allocable overhead for the project.  Then, arrive at daily allocable overhead or G & A by dividing allocable overhead by the number of days of actual contract performance including delay days.  Then multiply the daily allocable overhead or G & A costs by the number of compensable delay days to arrive at the unabsorbed overhead or G & A cost for the period of delay and include the calculation in the REA.

bill@spriggsconsultingservices.com 

Tuesday, October 17, 2017

HOW TO PREPARE FOR A DEBRIEFING

First, read FAR 15.505 and 15.506 carefully.  You must submit a written request for a debriefing within 3 days after receipt of notice of exclusion from the competition or after the date on which you have been notified of contract award.

Next, be aware that the regulations list what, at a minimum, must be covered at or in (the debriefing can be done in writing) the debriefing.  For pre-award debriefings, the list is short but includes reasonable responses to relevant questions about whether the source selection procedures in the solicitation, the regulations and "applicable authorities" (case law) were followed.  Information about other offerors is prohibited in pre-award debriefings.

Post award debriefings require the government to provide the contractor the following information:
  1. The government's evaluation of the significant weaknesses or deficiencies in your proposal;
  2. The overall evaluated price (including unit prices) and technical rating of the successful offeror and your proposal and your past performance information;
  3. The overall ranking of all offerors;
  4. A summary of the rationale for award;
  5. For commercial buys, the make and model of the item proposed by the successful offeror;
  6. Reasonable responses to relevant questions  about whether the source selection procedures in the solicitation, the regulations and relevant case law were followed.
Insist that the government provide the information in items 1 through 5 of the above list.  What if the government does not?  Include the failure to follow the regulation in your protest.  But the most important item on the list is number 6.  That's where you need to do your homework and perhaps seek professional help.

What are the questions you should ask?  Put them in your written request for the debriefing.  Many, if not most debriefings these days are in writing (an unfortunate development).  So, you must include the questions up front.  In fact, remind the government in your written request that it is mandatory that the government follow the list of required items in its debriefing.

The evaluation factors are of paramount importance.  Fashion your questions around the evaluation criteria to elicit responses which address whether the evaluation criteria were in fact followed.  Failure to follow those factors is a primary ground for protest.  Ask questions about whether the procedures in FAR 15.304, 305, 306, 307 and 308 were followed.  Tailor your questions and be as specific as possible based on your best intelligence regarding what apparently happened during the pre-award process.

Above all, treat the debriefing as seriously as you did your proposal.  Press for a full and fair debriefing including, most importantly, answers to your well thought out questions.

We've written several articles about debriefings, mostly suggesting improvements in the process.  You can find them by entering "debriefing" in the Google search box in the upper left hand corner.  One thing we feel strongly about is the need for the government to release the source selection decision to the contractor requesting the debriefing, preferably before the debriefing.  We continue to believe this would make the debriefing meaningful and probably reduce frivolous or "blind" protests.

This just in:

The Senate version of the National Defense Authorization Act imposes new requirements for debriefings for unsuccessful offerors. If enacted, the bill would direct DoD to issue new regulations requiring contracting offices to:

·         Disclose the agency’s written source selection award determination, redacted as necessary

·         Provide a combined written and oral debriefing for all contract awards and task or delivery orders valued at $10 million or higher

·         Provide outside counsel the option to access an unredacted copy of the source selection award determination and the supporting agency record for contract awards and task or delivery orders valued at $10 million or higher

·         Allow unsuccessful offerors to submit additional, follow-up questions related to the debriefing

The bill also would require GAO to issue DoD-related protest decisions within 65 days, instead of the current 100 days.
 

bill@spriggsconsultingservices.com

Tuesday, June 20, 2017

HOW TO CONVERT THE REA TO A CLAIM


HOW TO CONVERT A REQUEST FOR EQUITABLE ADJUSTMENT (REA) TO A CLAIM



1.       Send a letter to the contracting officer which either attaches the REA or refers to it and incorporates it by reference.

2.       In the letter, refer to the REA and state it is incorporated by reference as part of the letter.

3.       In the letter say that you are converting the REA to a claim pursuant to the Contract Disputes Act of 1978 and FAR Parts 2.101 and 33.201 through 214.

4.       In the letter, state that you request a final decision of the contracting officer as required by the Contract Disputes Act of 1978 and FAR 33.211.

5.       Certify the claim (if it exceeds $100,000.00) as follows:  I certify that the claim is made in good faith, that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable; and that I am duly authorized to certify the claim on behalf of the contractor.  Do not deviate from this language found in FAR 33.207(c).

6.       Be sure to state a sum certain as the amount of the claim.

7.       Point out that interest runs on the claim from the time of its receipt.  FAR 33.208.

8.       Be sure to request a final decision as required by FAR 33.211.

9.       If represented by counsel, ask the contracting officer to advise you of the contact information for the contracting officer’s legal representative so your counsel may make contact.

10.   Indicate a willingness to participate in Alternative Dispute Resolution (ADR) such as mediation to resolve the dispute.
 
11.  Appeal to the decision (or the failure to render one) to the appropriate Board.

 
bill@spriggsconsultingservices.com
 


 

Sunday, April 30, 2017

THE REAL ART OF NEGOTIATION

There is a lot of fiction about how to negotiate settlements of government contract claims.  In reality, there are a few principles which are immutable, unassailable and nearly universal in application.  Here are my favorite few.

Bargaining position.  Know your bargaining position and enhance it.  Don't enhance it by bluffing (see below).  Know the opposing party's strengths and weaknesses and be equally circumspect about your own.  Get outside help.  Listen to others about the relative positions.  Set a realistic goal based on your position.  Don't negotiate if your position is demonstrably weaker than that of the other side.

Preparation.  Prepare, prepare, prepare.  Hire experts to help.  You can significantly increase your bargaining position by intensive preparation.  Exhaust this one.  The side that is the best prepared will always come out with a good result.  To win the battle of the experts, document, document, document.  Rehearse, do mock negotiations and hire a mediator to critique your approach.

Bluffing.  Don't.  Two problems.  You probably are lying and the other side most likely will think so.  And, the other side may well call your bluff or completely ignore it as if you have not made it.  Taking an extreme position is nonsense.  A reasonable person on the other side will just ignore you.  You must have integrity and nothing kills that like bluffing.

Splitting the difference.  This is time honored.  But there is a time and a place for it.  Always split the difference when the positions are close.  Never even think about it when the positions are far apart.  This is always the last resort.  Offering to split the difference must be made when the negotiations have been exhausted.

Honesty and sincerity.  At the foundation of the real art of the deal is a negotiator who has a reputation for honest and sincerity.  You have to be believable.  The other side must know that you tell the truth and that you are candid and forthcoming.  This also means you are not given to game playing and tricks commonly associated with used car salesmen.

In the end, success may well include other factors.  But you are unlikely to succeed without following these five fundamental principles.

bill@spriggsconsultingservices.com 

Monday, April 24, 2017

RULES OF CONTRACT INTERPRETATION


The first rule of contract interpretation is to examine the plain meaning of contract language giving reasonable meaning to all parts of the contract.  LAI Services, Inc. v. Gates, 573 F.3d 1306, 1314 (Fed. Cir. 2009).  See also, Coast Fed. Bank, FSB v. United States, 323 F.3d 1035 (Fed. Cir. 2003); Philadelphia Authority for Industrial Development v. United States, 114 Fed. Cl. 519 (2014). 

A contract must be construed in its entirety “so as to harmonize and give meaning to all its provisions.”  Thanet Corp. v. United States, 219 Ct. Cl. 75, 82, 591 F.2d 629, 633 (1979).  The entire contract clause, not just a portion of it, must be analyzed to ascertain the clear meaning of the clause.  See, e.g., Tri-O, Inc. v. United States, 28 Fed. Cl. 463 (1993). 

When construing a contract, the rule is to read the contract as a whole so as to give meaning to each of its provisions.  Hol-Gar Mfg. Corp v. United States, 351 F.2d 972 (Ct. Cl. 1965).  Proper contract interpretation gives meaning to all provisions and makes sense.  McAbee Constr. Inc. v. United States, 97 F.3d 1431, 1435 (Fed. Cir. 1996).  Proper contract interpretation requires a review of all relevant language in a contract schedule to resolve the meaning of language in the specification.  Boyajian v. United States, 423 F.2d 1231 (Ct. Cl. 1970).  The rules on contract interpretation seek to avoid ambiguity.  C. Sanchez and Son, Inc. v. United States, 6 F.3d 1539, 1543 (Fed Cir. 1993); Beta Systems, Inc. v. United States, 838 F.2d 1179, 1185 (Fed. Cir. 1988).

If the words are ambiguous, the second step in contract interpretation is to examine the conduct of the parties at the time to determine if that conduct resolves the ambiguity.  If so, the ambiguity is resolved in favor of the party arguing for that meaning.  KDI Development, Inc. v. Johnson, 495 Fed. Appx. 84 (Fed. Cir. 2012).  The intended interpretation of the parties often can be gleaned from their actions prior to the time the dispute arose.  Evidence of this behavior has been given controlling weight.  Macke Co. v. United States, 467 F.2d 1323 (Ct. Cl. 1972). 
If the language is latently ambiguous, and the contractor’s interpretation is reasonable, the contractor’s interpretation will prevail over the one advanced by the government.  Input/Output Tech, Inc. v. United States, Fed. Cl. 65, 72-73 (Ct. Cl. 1999).  A latent ambiguity usually becomes evident when two conflicting interpretations appear reasonable.  Id.  The contractor is not required to prove the ambiguity. If the contractor’s interpretation is reasonable, the government’s reasonable alternative interpretation demonstrates the ambiguity which results in interpretation against the government.  United States v. Turner Constr. Co., 819 F.2d 283 (Fed. Cir. 1987).

bill@spriggsconsultingservices.com

Monday, April 17, 2017

HOW TO WRITE A REQUEST FOR EQUITABLE ADJUSTMENT REVISITED

Since we wrote How to Write a Request for Equitable adjustment, June 24, 2012, the note has received 7,427 page views.  There is no regulatory guidance on what needs to go into this document.  There is, however, a 6 page outline of what can be called the anatomy of a request for equitable adjustment.

I have offered to send this outline to anyone who asks.  Sadly, I must apologize to those of you who have asked and I have not responded.  The best way to contact me is to send an email to bill@spriggsconsultingservices.com and I will send you the outline.

Do not make your presentation a long discussion of legal theories in search of the facts.  Also, do not tell a long story in search of a theory.  Keep the legal theories in mind, but concentrate on a logical, detailed statement of facts with supporting documentation.

And I again say I am sorry for those who missed getting the outline.  Send me an email and I will respond with the anatomy of a request for equitable adjustment.

bill@spriggsconsultingservices.com