- File your complaint with your notice of appeal. You should know enough about the case to construct the complaint so there is no need to wait for the notice of docketing.
- If the government has the burden of proof, consider filing a motion requiring the government to file the complaint. But do this only if you do not understand the government's position.
- Set a trial date as soon as the Board permits. You need an end date to push against in order to move the case along.
- Forget interrogatories. They are a waste of time. Narrow a request for production of documents only to those necessary to prove your case. But be persistent. Production of documents and supplementing the Rule 4 File is important. Consider a deposition of the contracting officer who wrote the final decision.
- Consider ADR. However, the government likely will not agree that it be binding. If agreement is not reached, you likely have delayed the trial date. Mediation can be an excellent way to conduct discovery.
- Use settlement discussions as one of your primary discovery tools. Open, honest and sincere discussions often expose and narrow the issues.
- Carefully craft your opening statement. This is your opportunity to explain the case to the hearing judge. Oral closing arguments are discouraged since the case will be decided on the record and written briefs are the rule.
- Prepare, prepare, prepare for trial. You must move the trial along smartly.
- Limit cross examination to leading questions to which you know you have an answer from the documents.
- Ask for simultaneous briefing if you have the burden of proof. If the government has the burden, sequential briefing will give you the last word.
Friday, November 23, 2018
TIPS FOR TRIAL AT THE ASBCA
Here are ten tips for trial at the Armed Services Board of Contract Appeals written from the perspective of the appealing contractor:
Thursday, November 22, 2018
CONTRACTS OF ADHESION; FAR 52.301
Federal contracts are contracts of adhesion. That is, the government dictates all elements of the contract including its terms and conditions. Your opportunities to negotiate the terms of agreement are almost totally nonexistent. This is just a reminder that when you deal in the federal marketplace, you must follow the rules including the restrictions on what goes into the agreement. See also what we have written on the Christian doctrine which will read certain clauses into your contract whether they were in the contract initially or not.
And, remember to pay attention to 31 fine print pages in FAR which contain a matrix of clauses to be included in contracts. See FAR 52.301. That matrix lists all clauses and explains the contracts to which they apply. You also can use this matrix in case you disagree that a clause belongs in your contract. Be sure to complain before the time for submission of your bid or offer.
bill@spriggsconsultingservices.com
And, remember to pay attention to 31 fine print pages in FAR which contain a matrix of clauses to be included in contracts. See FAR 52.301. That matrix lists all clauses and explains the contracts to which they apply. You also can use this matrix in case you disagree that a clause belongs in your contract. Be sure to complain before the time for submission of your bid or offer.
bill@spriggsconsultingservices.com
SUPERIOR KNOWLEDGE OR EQUAL IGNORANCE
Courts and boards have long recognized an implied by law duty of the government to disclose information vital to contract performance. Helene Curtis Industries v. United States, 315 F.2d 774 (Ct. Cl. 1963). The elements of a claim for breach of this duty are: (1) possession of information the government knows or should have known is material to successful contractor performance; (2) the contractor neither knows nor should have known of the information through normal reasonable investigation; (3) the government knows or should have known of the contractor's ignorance; (4) the government fails to disclose the information; and (5) the contractor suffers injury as a result.
Any information significant to a proper appraisal of the cost and scope of the work falls within the rule.
One aspect of this rule which often is overlooked is what we can call "equal ignorance". In a way, it is the corollary of the "should have known" rule. It is also based on an old rule from what is now known as the Court of Appeals for the Federal Circuit (CAFC). Aerodex, Inc. v. United States, 417 F.2d 1361 (Ct. Cl. 1969). In Aerodex, a vital component part needed for contract performance was described in the specifications by dimension and performance requirements. The contractor discovered during production that the government lacked the material specifications necessary to produce the component and therefore the contractor was unable to procure the component from the sole source supplier. The court held it was reasonable for the contractor to expect the part to be available and the court concluded that the government, being in the better position to know the information, must bear the risk of the costs of failure to perform.
Thus, the contractor and the government may be equally ignorant of the information vital to successful performance. However, the government may be in a better position to know and therefore the risk of performance extra costs is allocated to the government. So, don't forget the Aerodex rule. The government may well be allocated the risk of extra performance costs if it is in the better position to know or should have known as originally articulated in Helene Curtis, the seminal case on superior knowledge.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
Any information significant to a proper appraisal of the cost and scope of the work falls within the rule.
One aspect of this rule which often is overlooked is what we can call "equal ignorance". In a way, it is the corollary of the "should have known" rule. It is also based on an old rule from what is now known as the Court of Appeals for the Federal Circuit (CAFC). Aerodex, Inc. v. United States, 417 F.2d 1361 (Ct. Cl. 1969). In Aerodex, a vital component part needed for contract performance was described in the specifications by dimension and performance requirements. The contractor discovered during production that the government lacked the material specifications necessary to produce the component and therefore the contractor was unable to procure the component from the sole source supplier. The court held it was reasonable for the contractor to expect the part to be available and the court concluded that the government, being in the better position to know the information, must bear the risk of the costs of failure to perform.
Thus, the contractor and the government may be equally ignorant of the information vital to successful performance. However, the government may be in a better position to know and therefore the risk of performance extra costs is allocated to the government. So, don't forget the Aerodex rule. The government may well be allocated the risk of extra performance costs if it is in the better position to know or should have known as originally articulated in Helene Curtis, the seminal case on superior knowledge.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
Monday, November 12, 2018
CONTRACTING OFFICER'S APPROVAL NOT REQUIRED
You may find it difficult to find the contracting officer. See our post on Who is Your Contracting Officer? In that post we point out you must keep track of who your contracting officer is and then keep him or her fully informed about problems during performance. You must also seek redress for any changes as the problems arises. And, you must deal with the contracting officer who has the authority to commit the government.
But the approval or authorization of the contracting officer is not always required. If anyone in the government is responsible for a constructive change, approval of the contracting officer is not required. By that we mean you do not need to show that the contractive officer ordered, acknowledged or agreed with the change. In short, the constructive change doctrine arises on a totally separate theoretical basis from a formal change requiring the authorization of the contracting officer.
Why? Because the constructive change theory is based on breaches of government duties which are implied by law in every contract. Defective specifications is based on breach of the government's warranty of its data package. A specification writer made a mistake. Superior knowledge is based on breach of the government's obligation to provide information necessary for successful performance. Someone in the government failed to alert the contractor to a change or problem. Failure to cooperate is based on breach of the government's obligation to cooperate and not interfere in the contractor's performance. Inspectors, engineers or contract specialists may be guilty of lack of cooperation and interference. Commercial impracticability is based on the government's obligation to provide a specification which is commercially practicable.
Many people don't know the history of constructive changes. Prior to the Contract Disputes Act of 1978, the boards of contract appeals did not have jurisdiction over breach of contract claims. As the boards encountered more and more problems based on breaches of contract, they developed the theory that a breach was a "constructive change" to the contract. That theory has now had a long history of approval from the boards and the courts.
And, constructive changes do not require approval of acknowledgement of the contracting officer.
bill@spriggsconsultingservices.com
But the approval or authorization of the contracting officer is not always required. If anyone in the government is responsible for a constructive change, approval of the contracting officer is not required. By that we mean you do not need to show that the contractive officer ordered, acknowledged or agreed with the change. In short, the constructive change doctrine arises on a totally separate theoretical basis from a formal change requiring the authorization of the contracting officer.
Why? Because the constructive change theory is based on breaches of government duties which are implied by law in every contract. Defective specifications is based on breach of the government's warranty of its data package. A specification writer made a mistake. Superior knowledge is based on breach of the government's obligation to provide information necessary for successful performance. Someone in the government failed to alert the contractor to a change or problem. Failure to cooperate is based on breach of the government's obligation to cooperate and not interfere in the contractor's performance. Inspectors, engineers or contract specialists may be guilty of lack of cooperation and interference. Commercial impracticability is based on the government's obligation to provide a specification which is commercially practicable.
Many people don't know the history of constructive changes. Prior to the Contract Disputes Act of 1978, the boards of contract appeals did not have jurisdiction over breach of contract claims. As the boards encountered more and more problems based on breaches of contract, they developed the theory that a breach was a "constructive change" to the contract. That theory has now had a long history of approval from the boards and the courts.
And, constructive changes do not require approval of acknowledgement of the contracting officer.
bill@spriggsconsultingservices.com
Sunday, November 11, 2018
WHO IS YOUR CONTRACTING OFFICER?
Who is your contracting officer and when did you last communicate with him or her? Please read my posts on contract management and contract management revisited. Most of the requests for equitable adjustment and claims we handle involve situations where the contractor fails to communicate effectively with the person who has the warrant to commit the government. Not the contract specialist. Not the contracting officer's representative. Contractors must communicate with the contracting officer.
The first problem we've seen is identifying the contracting officer with the warrant for the contract. This should be your first order of business. Contractors should do whatever is necessary to remain informed about who is the decision maker with the authority to commit the government.
The next problem is the failure to promptly raise with the contracting officer any issues which might conceivably give rise to a request for equitable adjustment or claim for breach of contract. This means constant surveillance of contract performance and quick identification of performance issues. Then, promptly notify the contracting officer with as much information as you possibly can muster.
Finally, submit the request for equitable adjustment as a place holder. I cannot over emphasize this. Yes, immediately submit your request or claim with as much information as you can. In fact, you may want to develop a form which you use to fill in the blanks. You always can amend your submission as more information, such as pricing, becomes available.
Deal with the contract specialist and contracting officer's representative as a matter of courtesy. But make a pest of yourself, if need be, in your constant effort to identify the real contracting officer and to discharge your absolute obligation to your employer/client to raise performance problems as they occur. And, don't just raise them. Document them. See our posts on how to write the request for equitable adjustment.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
The first problem we've seen is identifying the contracting officer with the warrant for the contract. This should be your first order of business. Contractors should do whatever is necessary to remain informed about who is the decision maker with the authority to commit the government.
The next problem is the failure to promptly raise with the contracting officer any issues which might conceivably give rise to a request for equitable adjustment or claim for breach of contract. This means constant surveillance of contract performance and quick identification of performance issues. Then, promptly notify the contracting officer with as much information as you possibly can muster.
Finally, submit the request for equitable adjustment as a place holder. I cannot over emphasize this. Yes, immediately submit your request or claim with as much information as you can. In fact, you may want to develop a form which you use to fill in the blanks. You always can amend your submission as more information, such as pricing, becomes available.
Deal with the contract specialist and contracting officer's representative as a matter of courtesy. But make a pest of yourself, if need be, in your constant effort to identify the real contracting officer and to discharge your absolute obligation to your employer/client to raise performance problems as they occur. And, don't just raise them. Document them. See our posts on how to write the request for equitable adjustment.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
Thursday, August 23, 2018
HOW TO WRITE A PASS THROUGH AGREEMENT
A contractor and subcontractor may agree to pass through to the government the subcontractor's request for equitable adjustment. Here is a suggestion on how to write that "pass through" or "sponsorship" agreement adapted from published literature of the Public Contract Law Section of the American Bar Association:
Subcontractor will give Contractor a fully supported written REA within five (5) years after the REA accrues but in no event later than final payment under this Agreement or Subcontractor shall be barred from any remedy for such REA.
Subcontractor will cooperate fully with Contractor in prosecuting the REA against the Owner and will be bound by the outcome unless Contractor does not afford Subcontractor a reasonable opportunity to participate in the resolution of the REA or Contractor, having determined to discontinue its own prosecution of the REA, does not afford Subcontractor an opportunity to continue to prosecute the REA in Contractor’s name.
SPONSORSHIP OF
REQUESTS FOR EQUITABLE ADJUSTMENT (REA)
Subcontractor will give Contractor a fully supported written REA within five (5) years after the REA accrues but in no event later than final payment under this Agreement or Subcontractor shall be barred from any remedy for such REA.
Subcontractor will cooperate fully with Contractor in prosecuting the REA against the Owner and will be bound by the outcome unless Contractor does not afford Subcontractor a reasonable opportunity to participate in the resolution of the REA or Contractor, having determined to discontinue its own prosecution of the REA, does not afford Subcontractor an opportunity to continue to prosecute the REA in Contractor’s name.
Contractor shall cooperate with Subcontractor in
prosecuting the REA against the Owner but Contractor shall have the sole right
to make final decisions on prosecution and settlement of the REA. Subcontractor will take the lead in
prosecuting the REA against the Owner and Contractor will assist Subcontractor
by allowing Subcontractor to pursue the REA in Contractor’s name.
Subcontractor shall submit with the REA a certification
to Contractor, signed by an authorized representative of the Subcontractor that
the claim is made in good faith, the supporting date are accurate and complete
to the best of the signatory’s knowledge and belief, the amount requested
accurately reflects the contract adjustment for which Subcontractor believes
the U.S. Government is liable and the signatory is authorized to certify the
REA on behalf of Subcontractor.
Subcontractor indemnifies and holds Contractor harmless from damages,
costs (including attorney fees) and other liabilities arising from any breach
of such certification or any violation of law against misrepresentation, fraud
or false statements.
Contractor and Subcontractor will each bear its own costs
of prosecuting the REA.
Subcontractor shall proceed diligently with performance
of this Agreement pending final resolution of any REA arising under this
agreement.
This clause applies to any REA, claim or appeal arising
under or related to this subcontract agreement.
Friday, August 10, 2018
DO T FOR D DEFENSES REQUIRE SUBMISSION OF A CLAIM?
When a contractor appeals a decision to terminate its contract for default, must that contractor also submit to the contracting officer a claim, obtain a decision on that claim and appeal the decision or the failure to render it? At least 11 fairly recent cases have addressed this issue and the decisions have left the waters very murky. Until recently, all a contractor had to do was appeal the termination for default and avail itself of the panoply of defenses available including, for example, acts of the government in its contractual capacity, which include constructive changes.
As a result of Maropakis Carpentry, Inc. v. United States, 609 F. 3d 1323 (Fed. Cir. 2010), and its progeny, a contractor must consider the need to file a separate claim seeking an adjustment in the terms of the contract. When does a particular defense require an adjustment in the terms of the contract? When does the defense require that a claim be submitted to the contracting officer?
The cases addressing these issues do not provide a clear answer.
In ERKA Constr. Co., Ltd. ASBCA No. 57618, 12-2 BCA para. 35,129, the Board said if the defense could be a constructive change which could lead to a contract adjustment, the contractor was required to submit that claim and having failed to do so, the Board granted the government's motion to dismiss. Other cases have suggested that a defense requiring the interpretation of contract language but not a contract adjustment might also require a claim be submitted to the contracting officer.
Wow. Almost any defense may raise issues of contract interpretation.
So where does a contractor stand today? If terminated for default (or if defending any other government claim) must a contractor also submit a claim and request a contracting officer's final decision on that claim? Recently, the ASBCA stated: "Based on these decisions, it is clear that, while all possible defenses need not be submitted to a contracting officer for a final decision, a contractor contesting liquidated damages or a default termination due to excusable delay must submit a claim for a time extension before appealing to the Board." ECC CENTCOM Constructors, LLC, ASBCA No. 60647, September 4, 2018.
Our advice is that a contractor should always file a claim asserting entitlement to a contract adjustment in a default termination appeal. Request a final decision and either appeal the decision or appeal the failure to render it (FAR Part 33). If the adjustment requested to support the defense involves money, also submit with the claim a sum certain.
It may be better to be safe than sorry. The claim can be submitted after the appeal on the termination for default is taken. The second appeal of the claim itself can be consolidated with the T for D appeal. We've had two recent ASBCA appeals in which this has happened.
bill@spriggslawgroup.com
As a result of Maropakis Carpentry, Inc. v. United States, 609 F. 3d 1323 (Fed. Cir. 2010), and its progeny, a contractor must consider the need to file a separate claim seeking an adjustment in the terms of the contract. When does a particular defense require an adjustment in the terms of the contract? When does the defense require that a claim be submitted to the contracting officer?
The cases addressing these issues do not provide a clear answer.
In ERKA Constr. Co., Ltd. ASBCA No. 57618, 12-2 BCA para. 35,129, the Board said if the defense could be a constructive change which could lead to a contract adjustment, the contractor was required to submit that claim and having failed to do so, the Board granted the government's motion to dismiss. Other cases have suggested that a defense requiring the interpretation of contract language but not a contract adjustment might also require a claim be submitted to the contracting officer.
Wow. Almost any defense may raise issues of contract interpretation.
So where does a contractor stand today? If terminated for default (or if defending any other government claim) must a contractor also submit a claim and request a contracting officer's final decision on that claim? Recently, the ASBCA stated: "Based on these decisions, it is clear that, while all possible defenses need not be submitted to a contracting officer for a final decision, a contractor contesting liquidated damages or a default termination due to excusable delay must submit a claim for a time extension before appealing to the Board." ECC CENTCOM Constructors, LLC, ASBCA No. 60647, September 4, 2018.
Our advice is that a contractor should always file a claim asserting entitlement to a contract adjustment in a default termination appeal. Request a final decision and either appeal the decision or appeal the failure to render it (FAR Part 33). If the adjustment requested to support the defense involves money, also submit with the claim a sum certain.
It may be better to be safe than sorry. The claim can be submitted after the appeal on the termination for default is taken. The second appeal of the claim itself can be consolidated with the T for D appeal. We've had two recent ASBCA appeals in which this has happened.
bill@spriggslawgroup.com
Wednesday, May 30, 2018
CICA STAY OVERRIDE OVERRULED
The Court of Federal Claims (COFC) recently has overruled a Competition in Contracting Act (CICA) override of the mandatory stay in a bid protest case. The stay may be overridden by a contracting agency if it demonstrates urgent and compelling reasons or if performance of the contract is in the best interests of the government.
Obviously, the court pointed out, performance of most contracts would be in the best interests of the government or the contract would not have been awarded in the first place. So, something more must be shown by the agency to justify the override. The exception to the automatic say rule which permits an override to the stay based on best interests should not be permitted to cancel the rule that the stay be automatic.
The COFC has addressed the best interests exception in only a few cases. If meeting a performance deadline is critical to the entire purpose of the contract, the court has permitted the override to stand.
The problem is the agency must show that the timing is so crucial that a continuation of the existing contract pending the outcome of the protest or a bridge contract to accomplish the same thing would not suffice. The government's argument that lapse in services is an unacceptable risk is insufficient.
In this recent case, Intelligent Waves, LLC v. United States, COFC No. 18-465 C, May 9, 2018, the court pointed out that the agency had ample time to consider how to take appropriate measures to avoid any lapse in services pending the conclusion of the protest. No claim was made by the government that the timing of the new contract performance, as opposed to continuation of the old contract or an interim bridge contract, would be crucial, in this case, to the health or safety of veterans.
The agency had waited to award the new contract until 6 days before the old contract expired. The court said the government essentially argued that the stay must be overridden to avoid a lapse in services because it waited too late to extent the existing contract or enter into a bridge contract.
The court concluded that it was in the best interest of the United States that the integrity of the competitive nature of the procurement process be upheld. In this case, the agency would not be allowed to manipulate the congressional mandate.
The court overruled the agency's override and reinstated the automatic stay.
bill@spriggsconsultingservices.com
Obviously, the court pointed out, performance of most contracts would be in the best interests of the government or the contract would not have been awarded in the first place. So, something more must be shown by the agency to justify the override. The exception to the automatic say rule which permits an override to the stay based on best interests should not be permitted to cancel the rule that the stay be automatic.
The COFC has addressed the best interests exception in only a few cases. If meeting a performance deadline is critical to the entire purpose of the contract, the court has permitted the override to stand.
The problem is the agency must show that the timing is so crucial that a continuation of the existing contract pending the outcome of the protest or a bridge contract to accomplish the same thing would not suffice. The government's argument that lapse in services is an unacceptable risk is insufficient.
In this recent case, Intelligent Waves, LLC v. United States, COFC No. 18-465 C, May 9, 2018, the court pointed out that the agency had ample time to consider how to take appropriate measures to avoid any lapse in services pending the conclusion of the protest. No claim was made by the government that the timing of the new contract performance, as opposed to continuation of the old contract or an interim bridge contract, would be crucial, in this case, to the health or safety of veterans.
The agency had waited to award the new contract until 6 days before the old contract expired. The court said the government essentially argued that the stay must be overridden to avoid a lapse in services because it waited too late to extent the existing contract or enter into a bridge contract.
The court concluded that it was in the best interest of the United States that the integrity of the competitive nature of the procurement process be upheld. In this case, the agency would not be allowed to manipulate the congressional mandate.
The court overruled the agency's override and reinstated the automatic stay.
bill@spriggsconsultingservices.com
Wednesday, May 23, 2018
MUST REQUEST CO'S DECISION ON CLAIM
We've written often on how to convert the request for equitable adjustment (REA) to a claim for purposes of appeal of the contracting officer's decision. Recently, the Armed Services Board of Contract Appeals (ASBCA) reminds us that the request for a contracting officer's decision is a prerequisite to an appeal in order for the ASBCA to have jurisdiction. Hejran Hejrat Co. LTD, ASBCA No. 61234, April 23, 2018.
The REA may be submitted in any form but the preferred form is set forth in our posts on how to write the REA. You must tell the story of what the contract required, what was changed, how the changes impacted performance, the theory of recovery upon which the REA is based and a calculation of the cost impact resulting directly from the changes enumerated in the REA.
The ASBCA reminds us that the claim, read REA if you wish, need not take any particular form or use any particular wording. "All that is required is that the contractor submit in writing to the contracting officer a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim." An REA can become a claim. But more is involved. "In addition to explaining the reason for the claim and the amount requested, a claim must also include a request for a final decision from the contracting officer and a certification if the amount sought is greater than $100,000."
Hejran Hejrat disavowed the notion that it was seeking a contracting officer's final decision. Perhaps the company was trying to be diplomatic in its approach.
Too bad. The ASBCA said that even the characterization of a submission by a contractor saying he would send a final decision cannot establish that a claim has been submitted.
"There can be no contracting officer's final decision on a claim if the contractor has not requested that the decision from the contracting officer." (Emphasis added.)
Postscript: The Court of Appeals for the Federal Circuit (CAFC) reversed this decision saying the facts indicated the contractor was asking for a final decision necessary for jurisdiction at the ASBCA. However, we recommend explicitly asking for the decision as required by the regulation. We suggest you do not rely on facts which may imply such a request.
bill@spriggsconsultingservices.com
The REA may be submitted in any form but the preferred form is set forth in our posts on how to write the REA. You must tell the story of what the contract required, what was changed, how the changes impacted performance, the theory of recovery upon which the REA is based and a calculation of the cost impact resulting directly from the changes enumerated in the REA.
The ASBCA reminds us that the claim, read REA if you wish, need not take any particular form or use any particular wording. "All that is required is that the contractor submit in writing to the contracting officer a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim." An REA can become a claim. But more is involved. "In addition to explaining the reason for the claim and the amount requested, a claim must also include a request for a final decision from the contracting officer and a certification if the amount sought is greater than $100,000."
Hejran Hejrat disavowed the notion that it was seeking a contracting officer's final decision. Perhaps the company was trying to be diplomatic in its approach.
Too bad. The ASBCA said that even the characterization of a submission by a contractor saying he would send a final decision cannot establish that a claim has been submitted.
"There can be no contracting officer's final decision on a claim if the contractor has not requested that the decision from the contracting officer." (Emphasis added.)
Postscript: The Court of Appeals for the Federal Circuit (CAFC) reversed this decision saying the facts indicated the contractor was asking for a final decision necessary for jurisdiction at the ASBCA. However, we recommend explicitly asking for the decision as required by the regulation. We suggest you do not rely on facts which may imply such a request.
bill@spriggsconsultingservices.com
Thursday, April 26, 2018
PROTESTING TERMINATIONS AND DEBRIEFINGS
A recent GAO decision addresses two important issues. Will GAO review terminations where an agency terminates a contract in response to a successful agency protest by another contractor? And, will GAO review a protest alleging an agency failed to give the contractor the required debriefing? The answer to the first question is yes and the answer to the second is no. AutoFlex, Inc., B-415926, April 19, 2018.
AutoFlex argued the agency unreasonably terminated the contract it had been awarded and in turn awarded the contract to another contractor. The agency took corrective action as a result of an agency level protest. GAO denied the protest on the merits, but GAO reiterated the rule that such actions may be challenged in a protest.
GAO stated that it generally will decline to review termination of contracts because such actions are a matter of contract administration. However, GAO will review terminations if they result from a defect in the award process. In such cases, GAO will review the protest to see if the initial award was improper. If so, GAO will scrutinize whether the corrective action taken was appropriate to "protect the integrity of the competitive procurement system." GAO most likely will defer to the agency if there were in fact flaws in the initial award. However, the corrective action must be an appropriate remedy for the improper award.
The decision is a reminder that if a contractor receives an award but finds its contract terminated, the contractor may seek relief at GAO by challenging the propriety of the corrective action.
The same decision reminds us that there just is no remedy if the agency fails to provide a required debriefing. GAO considers debriefings "procedural" matters that do not involve the validity of an award and therefore beyond GAO's jurisdiction. Not good. There needs to be some teeth in the debriefing requirement.
bill@spriggsconsultingservices.com
AutoFlex argued the agency unreasonably terminated the contract it had been awarded and in turn awarded the contract to another contractor. The agency took corrective action as a result of an agency level protest. GAO denied the protest on the merits, but GAO reiterated the rule that such actions may be challenged in a protest.
GAO stated that it generally will decline to review termination of contracts because such actions are a matter of contract administration. However, GAO will review terminations if they result from a defect in the award process. In such cases, GAO will review the protest to see if the initial award was improper. If so, GAO will scrutinize whether the corrective action taken was appropriate to "protect the integrity of the competitive procurement system." GAO most likely will defer to the agency if there were in fact flaws in the initial award. However, the corrective action must be an appropriate remedy for the improper award.
The decision is a reminder that if a contractor receives an award but finds its contract terminated, the contractor may seek relief at GAO by challenging the propriety of the corrective action.
The same decision reminds us that there just is no remedy if the agency fails to provide a required debriefing. GAO considers debriefings "procedural" matters that do not involve the validity of an award and therefore beyond GAO's jurisdiction. Not good. There needs to be some teeth in the debriefing requirement.
bill@spriggsconsultingservices.com
"UNCLEAN HANDS" APPLIES TO CLAIMS
The Armed Services Board of Contract Appeals (ASBCA) recently reaffirmed the doctrine of "unclean hands" as it applies to contractor's claims. The doctrine, which has long been a staple of the common law in equity, is described by the Board as "one who seeks equity must do equity." The doctrine prevents the contractor tainted with inequity or bad faith from obtaining the relief sought.
The recent case arose on the issue of whether the government could amend its Answer to the contractor's Complaint to include the affirmative defense of unclean hands. We expect we may see more of this approach from government attorneys. The Board concluded, however, that there was insufficient evidence for the Board to decide whether the government had a reasonable basis for its allegation. Appeal of Raytheon Company, ASBCA Nos. 60448, 60785, April 9, 2018.
The government alleged Raytheon tried to sell more missiles to the government than otherwise would be paid for by the fund amount available for the contract when signed, in violation of the Anti-Deficiency Act. Raytheon contended the government had not submitted its position in the form of a claim. The Board rejected the argument saying the government was not seeking money or an adjustment of the contract terms.
To us, the articulation of the unclean hands doctrine in this case is just another way of alleging bad faith on the part of the contractor.
You might think the unclean hands doctrine might work the other way when the government takes unreasonable positions on contractors' claims. However, keep in mind that it is hard wired in government contract law that there is a presumption that government officials act in good faith and that presumption may be overcome only by clear and convincing evidence.
bill@spriggsconsultingservices.com
The recent case arose on the issue of whether the government could amend its Answer to the contractor's Complaint to include the affirmative defense of unclean hands. We expect we may see more of this approach from government attorneys. The Board concluded, however, that there was insufficient evidence for the Board to decide whether the government had a reasonable basis for its allegation. Appeal of Raytheon Company, ASBCA Nos. 60448, 60785, April 9, 2018.
The government alleged Raytheon tried to sell more missiles to the government than otherwise would be paid for by the fund amount available for the contract when signed, in violation of the Anti-Deficiency Act. Raytheon contended the government had not submitted its position in the form of a claim. The Board rejected the argument saying the government was not seeking money or an adjustment of the contract terms.
To us, the articulation of the unclean hands doctrine in this case is just another way of alleging bad faith on the part of the contractor.
You might think the unclean hands doctrine might work the other way when the government takes unreasonable positions on contractors' claims. However, keep in mind that it is hard wired in government contract law that there is a presumption that government officials act in good faith and that presumption may be overcome only by clear and convincing evidence.
bill@spriggsconsultingservices.com
Wednesday, April 18, 2018
COMMERCIAL ITEM CHANGES CLAUSE
It's time to revisit the commercial item changes clause. That clause says changes only can be made by written agreement of the parties. The government cannot make unilateral changes. A unilateral change is a breach of contract, just as it is in the commercial world. The clause does not mention the contracting officer and certainly does not give the contracting officer the authority to order unilateral changes. In fact, the concept of constructive changes does not apply to commercial item contracts.
Prior to the Contract Disputes Act (CDA), the Boards did not have jurisdiction to hear breach of contract claims. So, the Boards developed the theory that breaches of contract could be characterized as constructive changes under the standard Changes clause. They took breach of the duty to provide a specification free of errors, conflicts and omissions and made it the constructive change called defective specifications. They took other breaches such as the duties to cooperate and not interfere and made them constructive changes. Thus, the Boards have had a long history of recognizing breaches of contract as constructive changes.
Prior to the Contract Disputes Act (CDA), the Boards did not have jurisdiction to hear breach of contract claims. So, the Boards developed the theory that breaches of contract could be characterized as constructive changes under the standard Changes clause. They took breach of the duty to provide a specification free of errors, conflicts and omissions and made it the constructive change called defective specifications. They took other breaches such as the duties to cooperate and not interfere and made them constructive changes. Thus, the Boards have had a long history of recognizing breaches of contract as constructive changes.
The CDA gave the Boards jurisdiction to hear breach of
contract claims. Commercial item
contracting eliminated the unilateral right of the government to make changes
by introducing the requirement that changes be made only by written agreement
of the parties. In breach cases such as defective specifications and the
duty to cooperate and not interfere (based on the obligation of good faith and
fair dealing), the Boards have recognized that a government employee writing a
defective specification or an inspector interfering in the contractor’s performance
can cause a breach of contract giving rise to a breach of contract claim.
The commercial item changes clause requires a written agreement of the parties to effect a change. Thus, if the government wants a change, it must negotiate the change and enter into a bilateral agreement with the contractor. Constructive changes, which are unilateral changes, are breaches of the contract entitling the contractor to damages which will be measured in the traditional way of actual costs plus profit on those costs.
Thursday, April 5, 2018
CONTRACT MANAGEMENT REVISITED
Indulge me in a personal note. The purpose is to leave you with a word of advice based on 50 years of experience in government contracting.
I began at Boeing as a contract administrator reviewing contract actions. Then to Itek Corporation as a contract manager with daily contact with the contracting officer. From there, I moved to the Martin Marietta (now Lockheed Martin) legal office where I was trial counsel in ASBCA appeals. I moved to Washington, D.C. in 1972 to join the Gil Cuneo firm where I engaged in government contract litigation for 10 years before forming my own firm, Spriggs & Hollingsworth, where I practiced government contract law for 27 years. For the last 8 years, I have continued in government contract counseling and litigation as Spriggs Consulting Services and Spriggs Law Group.
My ambition always has been to be a contract manager. Hence, a consulting firm. Alas, however, I have continued to engage in litigation. Although I enthusiastically enjoy litigation, I am sorry that I have not been called upon often enough to engage in day to day contract management.
Now to the word of advice. The salient thing I have learned over the years is that my clients have failed to see a contract problem early enough and failed to engage the contracting officer immediately upon recognizing the problem. Too often, clients have not imaginatively created procedures to prevent problems. But the bigger point is that they have not acted promptly by contacting the contracting officer when problems arise. Too many of the litigation matters I have handled involve a client's failure to promptly contact the contracting officer and pursue an appropriate response in a timely manner.
So, read my post entitled "Good Contract Management" and undertake to resolve issues with the contracting officer promptly.
bill@spriggsconsultingservices.com
I began at Boeing as a contract administrator reviewing contract actions. Then to Itek Corporation as a contract manager with daily contact with the contracting officer. From there, I moved to the Martin Marietta (now Lockheed Martin) legal office where I was trial counsel in ASBCA appeals. I moved to Washington, D.C. in 1972 to join the Gil Cuneo firm where I engaged in government contract litigation for 10 years before forming my own firm, Spriggs & Hollingsworth, where I practiced government contract law for 27 years. For the last 8 years, I have continued in government contract counseling and litigation as Spriggs Consulting Services and Spriggs Law Group.
My ambition always has been to be a contract manager. Hence, a consulting firm. Alas, however, I have continued to engage in litigation. Although I enthusiastically enjoy litigation, I am sorry that I have not been called upon often enough to engage in day to day contract management.
Now to the word of advice. The salient thing I have learned over the years is that my clients have failed to see a contract problem early enough and failed to engage the contracting officer immediately upon recognizing the problem. Too often, clients have not imaginatively created procedures to prevent problems. But the bigger point is that they have not acted promptly by contacting the contracting officer when problems arise. Too many of the litigation matters I have handled involve a client's failure to promptly contact the contracting officer and pursue an appropriate response in a timely manner.
So, read my post entitled "Good Contract Management" and undertake to resolve issues with the contracting officer promptly.
bill@spriggsconsultingservices.com
GOOD CONTRACT MANAGEMENT
Good contract management starts with knowing what is in the contract. "When all else fails, read the contract." Then, know the regulations and contract common law. You cannot function effectively without daily building your knowledge of the law applicable to government contracts. Every day, you must add to your understanding of the contract terms and the law applicable to your government contract. You must also be aware of all of the recent developments in case law. You should read recent decisions from GAO and the boards and courts.
Next, what ever happened to management by walking around? You must know what is going on with performance on your contracts. You must communicate with the people performing the work. Fortunately, email helps. It can help you reach out when physically getting around is difficult.
Stay in close touch with the contracting officer. You must keep track of the contracting officer who has the authority to change the contract. Hopefully, you can visit the contracting officer often in person. Email also is effective. When there is a problem requiring direction from the contracting officer, send a letter attached to an email. When you think a change has occurred, immediately notify the contracting officer in writing (letter attached to an email). Make the contracting officer your friend.
Prepare a daily report on your activities, like a diary. After the day is done, when you have advanced your education, informed yourself on the performance of the contract, maintained contact with the contracting officer and sent out any necessary emails and letters, hit your computer and write up the events of the day. We used to call these "memos to file." Periodically index these daily reports by subject matter.
When all is said and done, contract management is the most challenging job in government contracting. Government contracts are the most highly regulated instruments in the world. Becoming an expert on all of the legal implications is a constant challenge. Making sure your employer is protected and earns a profit requires your constant vigilance, attention to detail and communication with the contracting officer.
bill@spriggsconsultingservices.com
Next, what ever happened to management by walking around? You must know what is going on with performance on your contracts. You must communicate with the people performing the work. Fortunately, email helps. It can help you reach out when physically getting around is difficult.
Stay in close touch with the contracting officer. You must keep track of the contracting officer who has the authority to change the contract. Hopefully, you can visit the contracting officer often in person. Email also is effective. When there is a problem requiring direction from the contracting officer, send a letter attached to an email. When you think a change has occurred, immediately notify the contracting officer in writing (letter attached to an email). Make the contracting officer your friend.
Prepare a daily report on your activities, like a diary. After the day is done, when you have advanced your education, informed yourself on the performance of the contract, maintained contact with the contracting officer and sent out any necessary emails and letters, hit your computer and write up the events of the day. We used to call these "memos to file." Periodically index these daily reports by subject matter.
When all is said and done, contract management is the most challenging job in government contracting. Government contracts are the most highly regulated instruments in the world. Becoming an expert on all of the legal implications is a constant challenge. Making sure your employer is protected and earns a profit requires your constant vigilance, attention to detail and communication with the contracting officer.
bill@spriggsconsultingservices.com
Wednesday, April 4, 2018
BETTER DEBRIEFINGS REVISITED
On December 24, 2017 we announced that better debriefings are coming. Finally, for DOD agencies and contracts, they are here. We have been suggesting for years that better debriefings will reduce frivolous and so-called blind protests where a protester just wants to see the record. A contractor now has the opportunity on DOD procurements to ask questions after the debriefing and the debriefing is held open for purposes of protest and automatic stay of performance until the agency answers.
This has to do with FAR 15.506(d). FAR 15.506 contains a list of things a contractor should insist the agency provide in the debriefing. That list includes answers to pertinent questions. That has always been in the regulation.
Now, however, the contractor has the opportunity, after the debriefing, to ask questions within two days. The DOD agency then has 5 days to respond. The debriefing is deemed to be open (for purposes of protest) until the DOD agency responds. Once the DOD agency responds, the contractor has 5 days in which to protest to GAO and obtain the CICA automatic stay of performance.
DOD applies the class deviation to FAR which permits this new procedure to all DOD agency contracts.
We applaud this move by DOD. Better debriefings ensure better procurements all around. The only thing missing now is a requirement that the source selection decision be released immediately upon request. Most questions can be answered in that decision. There is no good reason to withhold it (carefully redacted to prevent disclosure of confidential and proprietary information).
bill@spriggsconsultingservices.com
This has to do with FAR 15.506(d). FAR 15.506 contains a list of things a contractor should insist the agency provide in the debriefing. That list includes answers to pertinent questions. That has always been in the regulation.
Now, however, the contractor has the opportunity, after the debriefing, to ask questions within two days. The DOD agency then has 5 days to respond. The debriefing is deemed to be open (for purposes of protest) until the DOD agency responds. Once the DOD agency responds, the contractor has 5 days in which to protest to GAO and obtain the CICA automatic stay of performance.
DOD applies the class deviation to FAR which permits this new procedure to all DOD agency contracts.
We applaud this move by DOD. Better debriefings ensure better procurements all around. The only thing missing now is a requirement that the source selection decision be released immediately upon request. Most questions can be answered in that decision. There is no good reason to withhold it (carefully redacted to prevent disclosure of confidential and proprietary information).
bill@spriggsconsultingservices.com
Thursday, March 1, 2018
HOW TO WIN A GAO PROTEST
A recent GAO decision (B-415497) provides a roadmap for how to win a GAO protest. The solicitation provided for award on a best value basis with technical factors more important than price. The protester complained that the award was made to the offeror with the lowest price, essentially converting the best value evaluation scheme to lowest priced, technically acceptable (LPTA). The solicitation also provided that the agency would evaluate strengths and weakness of the various proposals.
(The case reminds us of the importance of parsing the language of the evaluation factors in a solicitation. The first thing a contractor should do when receiving a solicitation is examine the evaluation factors. If there are errors, omissions or ambiguities, raise them with the contracting officer and if they are not corrected, protest. Then, build the response to the solicitation on the framework of the evaluation criteria.)
GAO's roadmap to a successful protest starts with the often repeated rule that in reviewing an agency's decision, GAO will examine the supporting record to determine if it was reasonable and consistent with the solicitation's evaluation scheme and applicable law. Then the evaluation of proposals must be based on a qualitative assessment consistent with the evaluation factors. Where a solicitation provides for a tradeoff, even where price is the least important factor, an agency may select the lowest priced, lowest rated technically if the agency reasonably concludes that a price premium is not justified.
However, if the tradeoff analysis fails to provide a meaningful explanation as to why a higher rated proposal does not offer technical advantages or why those technical advantages are not worth the price premium, the agency has not sufficiently documented and therefore justified awarding to the lowest priced, technically inferior offeror. The rule is of particular importance where price is less important than the technical factors. Finally, the source selection decision must be robust. It must provide a substantive analysis and comparison of the offerors' proposals and a thorough rationale for the determination that the higher rated, higher priced proposal is not worth a price premium.
In sum, most protests are won if the protester can show the evaluation factors were not followed and the source selection decision was inadequate. All the more reason to release the source selection decision at the debriefing stage.
bill@spriggsconsultingservices.com
(The case reminds us of the importance of parsing the language of the evaluation factors in a solicitation. The first thing a contractor should do when receiving a solicitation is examine the evaluation factors. If there are errors, omissions or ambiguities, raise them with the contracting officer and if they are not corrected, protest. Then, build the response to the solicitation on the framework of the evaluation criteria.)
GAO's roadmap to a successful protest starts with the often repeated rule that in reviewing an agency's decision, GAO will examine the supporting record to determine if it was reasonable and consistent with the solicitation's evaluation scheme and applicable law. Then the evaluation of proposals must be based on a qualitative assessment consistent with the evaluation factors. Where a solicitation provides for a tradeoff, even where price is the least important factor, an agency may select the lowest priced, lowest rated technically if the agency reasonably concludes that a price premium is not justified.
However, if the tradeoff analysis fails to provide a meaningful explanation as to why a higher rated proposal does not offer technical advantages or why those technical advantages are not worth the price premium, the agency has not sufficiently documented and therefore justified awarding to the lowest priced, technically inferior offeror. The rule is of particular importance where price is less important than the technical factors. Finally, the source selection decision must be robust. It must provide a substantive analysis and comparison of the offerors' proposals and a thorough rationale for the determination that the higher rated, higher priced proposal is not worth a price premium.
In sum, most protests are won if the protester can show the evaluation factors were not followed and the source selection decision was inadequate. All the more reason to release the source selection decision at the debriefing stage.
bill@spriggsconsultingservices.com
Thursday, January 25, 2018
HOW TO RESPOND TO A CURE NOTICE
Paragraphs (a)(1)(ii) and (a)(1)(iii) of the standard Default clause for supply and services contracts refer to failure to make progress endangering performance or failure to perform a provision of the contract other than delivery on time. The government's right to terminate under these two provisions of the clause, however, only exists if the government issues a cure notice and gives the contractor at least 10 days to cure the failure. The 10 days may be extended in writing by the contracting officer.
The format for the cure notice is in FAR 49.607(a).
In preparing the cure notice, the government must specify the failures, provide a reasonable time for the contractor to cure them and suggest what the contractor needs to do to accomplish the cure. The contractor, on the other hand, may use the failure to provide the cure notice or its inadequacy as an absolute defense in its termination for default appeal.
So, how should a contractor respond to the cure notice?
The first rule is that this is serious business and the response must be robust, thorough, complete, detailed and persuasive. Now is the time to treat the matter very seriously and devote all the resources the contractor can muster to prepare a convincing response.
The contractor must show that the failure to perform arises from causes beyond control and without its fault or negligence. Show in detail. Among the listed possible causes are acts of the government in its contractual or sovereign capacity. Eight other possible causes are listed in the clause. But just asserting a cause from the list is not enough. Not by far. Each cause must be fully documented and supported. This is the time to put together every document the contractor can find to support its response.
Acts of the government in its contractual capacity often form the basis of a successful response to a cure notice. Now is the time to look for changes for which the government is responsible. Among these are defective specifications, failure to disclose vital information, lack of cooperation, interference from government personnel, commercial impracticability and lack of good faith and fair dealing. In other words, if the contractor has a request for equitable adjustment (REA) under the changes clause, now is the time to assert it in defense of the threat to terminate for default.
A valid REA defeats a termination for default. But the contractor has not finished its response by merely asserting a just cause for its failure. The contractor must go on to lay out a plan for how to cure the problems raised by the government. This may be the most difficult part of all because it may well involve the cooperation of the government. In the final analysis, a strong REA may carry the day and force the government to reconsider the propriety of termination for default.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
The format for the cure notice is in FAR 49.607(a).
In preparing the cure notice, the government must specify the failures, provide a reasonable time for the contractor to cure them and suggest what the contractor needs to do to accomplish the cure. The contractor, on the other hand, may use the failure to provide the cure notice or its inadequacy as an absolute defense in its termination for default appeal.
So, how should a contractor respond to the cure notice?
The first rule is that this is serious business and the response must be robust, thorough, complete, detailed and persuasive. Now is the time to treat the matter very seriously and devote all the resources the contractor can muster to prepare a convincing response.
The contractor must show that the failure to perform arises from causes beyond control and without its fault or negligence. Show in detail. Among the listed possible causes are acts of the government in its contractual or sovereign capacity. Eight other possible causes are listed in the clause. But just asserting a cause from the list is not enough. Not by far. Each cause must be fully documented and supported. This is the time to put together every document the contractor can find to support its response.
Acts of the government in its contractual capacity often form the basis of a successful response to a cure notice. Now is the time to look for changes for which the government is responsible. Among these are defective specifications, failure to disclose vital information, lack of cooperation, interference from government personnel, commercial impracticability and lack of good faith and fair dealing. In other words, if the contractor has a request for equitable adjustment (REA) under the changes clause, now is the time to assert it in defense of the threat to terminate for default.
A valid REA defeats a termination for default. But the contractor has not finished its response by merely asserting a just cause for its failure. The contractor must go on to lay out a plan for how to cure the problems raised by the government. This may be the most difficult part of all because it may well involve the cooperation of the government. In the final analysis, a strong REA may carry the day and force the government to reconsider the propriety of termination for default.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
Friday, January 19, 2018
GOVERNMENT WAIVER OF CONTRACT TERMS
The government can specify contract requirements even if they seem ill-advised. In fact, the government can require contractors to perform work which, by any reasonable standard, may be unnecessary and even stupid. It has long been held that the government "can engage a contractor to make snowmen in August, if [it spells] it out clearly." Rixon Electronics, Inc. v. United States, 536 F.2d 1345, 1351 (Ct. Cl. 1976).
Moreover, if the contractor fails to perform the work believing it to be unnecessary or ill-advised, the contractor may be terminated for default or the government may make a downward equitable adjustment under the Changes clause and deduct from payments owned the contractor the cost that the contractor would have incurred if it had complied with the contract. When all else fails, read the contract. Then, follow it.
However, the government may waive compliance with the contractual requirements through its actions or inactions and thereby be prevented from enforcing the requirements. We all are familiar with the doctrine of waiver of due date in default termination cases. However, the waiver doctrine has broader application and can shield a contractor from liability for failure to follow contract requirements which, by the government's action or inactions, appear to be unnecessary.
"There can be no doubt that a contract requirement for the benefit of a party becomes dead if that party knowingly fails to exact its performance, over such an extended period, that the other side reasonably believes the requirement to be dead." Gresham & Co. v. United States, 470 F.2d 542- 554 (Ct. Cl. 1972).
Breaking the rule down, the contractor must show the government acts "knowingly". Then there must be an extended period of time such that the contractor reasonably believes the government is not going to enforce the requirement. Because it is dead. Each case turns on its facts. So contractors are well-advised not to pronounce the requirement dead until it appears from the government's actions or inactions that the government knows of the requirement, has considered it and let sufficient time go by that a reasonable person would presume the requirement is dead.
The doctrine of waiver, akin to the doctrine of estoppel (preventing enforcement of an apparent right) is alive and well. It may also be true that a contract requirement is dead.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
Moreover, if the contractor fails to perform the work believing it to be unnecessary or ill-advised, the contractor may be terminated for default or the government may make a downward equitable adjustment under the Changes clause and deduct from payments owned the contractor the cost that the contractor would have incurred if it had complied with the contract. When all else fails, read the contract. Then, follow it.
However, the government may waive compliance with the contractual requirements through its actions or inactions and thereby be prevented from enforcing the requirements. We all are familiar with the doctrine of waiver of due date in default termination cases. However, the waiver doctrine has broader application and can shield a contractor from liability for failure to follow contract requirements which, by the government's action or inactions, appear to be unnecessary.
"There can be no doubt that a contract requirement for the benefit of a party becomes dead if that party knowingly fails to exact its performance, over such an extended period, that the other side reasonably believes the requirement to be dead." Gresham & Co. v. United States, 470 F.2d 542- 554 (Ct. Cl. 1972).
Breaking the rule down, the contractor must show the government acts "knowingly". Then there must be an extended period of time such that the contractor reasonably believes the government is not going to enforce the requirement. Because it is dead. Each case turns on its facts. So contractors are well-advised not to pronounce the requirement dead until it appears from the government's actions or inactions that the government knows of the requirement, has considered it and let sufficient time go by that a reasonable person would presume the requirement is dead.
The doctrine of waiver, akin to the doctrine of estoppel (preventing enforcement of an apparent right) is alive and well. It may also be true that a contract requirement is dead.
bill@spriggsconsultingservices.com bill@spriggslawgroup.com
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