HOW TO WRITE THE REA REVISITED

We wrote a blog post in 2012 on this subject which has received a lot of attention and some requests for copies of our 6 page guide on how to write the REA.  Many people have used this guide successfully and we are grateful for their recognition of its propriety given the fact that such instructions are not found in the regulations.  However, we feel it is time to revisit the subject with emphasis on constructive changes and breaches of contract giving rise to the need for the REA.

Implied by law in every contract are certain duties, the breach of which gives rise to constructive changes.  (As we have pointed out in some of our writings, on commercial item contracts, breach of these duties gives rise to breach of contract claims which really are constructive changes also.)  These implied obligations include the duty to provide specifications free of error, conflict and omission (defective specifications), the duty to provide commercially practicable specifications (commercial impracticability), the duty to disclose information critical to performance (superior knowledge), and the duty to cooperate, assist in and not interfere with performance (duty of good faith and fair dealing).  Constructive changes also arise from differing contract language interpretations and implied orders to accelerate performance.

This is the universe of constructive change theories.  Your REA must be based on one or more of these time honored grounds for recovery.  However, as we have advised in the past, you cannot recover on an REA which is all theory in search of supporting facts.  So, what are the basic principles of writing the REA?

Tell a story.  What you anticipated based on your careful reading of the contract requirements.  What occurred to destroy your reasonable expectations regarding the fruits of the contract.  How this impacted performance and with what result in additional costs.  What theory of recovery are you using.  Telling an elaborate story without a theoretical foundation is fatal.  Likewise, building a solid theoretical foundation without factual support is also fatal.

One final note.  Don't forget our admonition that in nearly every default and convenience termination case we've seen, constructive changes often play an important part.

bill@spriggsconsultingservices.com

THE KING CAN DO NO WRONG

We sought a new land to escape a monarchy.  We fought a revolution, declared our independence and wrote our own Constitution.  We, the people.  Of the people, by the people and for the people.  We established the United States Government in three equal parts: to make laws, execute laws and interpret laws.

We also brought with us the common law which grew up along side the monarchy.  It forms the basis of our system of jurisprudence.  It's the so called case law.  Law carried down through the ages by the written opinions of the courts.  We also passed statutes to codify laws.  We established what we call the rule of law.

Part of the common law was sovereign immunity.  Before, the king could do no wrong.  The sovereign was immune to suit for redress.  After, the sovereign U. S. Government, the government of, by and for the people, kept the concept of sovereign immunity.  For example, you cannot sue the government in contract unless there is a statute permitting it.  Thus, the Contract Disputes Act.  You cannot sue the government in tort, hence the Federal Tort Claims Act.  Sovereign immunity.

Our sovereign is the government of, by and for the people.  We are protected by our statutes and common law.  We replace the king.  We shed our blood to replace the monarchy.  Here, there can be no kings.  "The King can do no wrong" is on the trash heap of history. 

 bill@spriggsconsultingservices.com      bill@spriggslawgroup.com

ANOTHER SHUTDOWN LOOMS

Another government shutdown is possible before Thanksgiving.  There are 12 bills to fund all agencies which must be passed by November 21, 2019.  The current executive administration has shown it likes brinkmanship and the current resident of the White House likes to wrap as many issues as possible into a package to hold as hostage to Congressional approval of the entire package.  Also, there is the threat to shut down the government over the impending impeachment of the President.  So, it is time again to consider what government contractors should do if there is another shutdown.

We have discussed this before.  You can use our search tool to find what we've said.  However, we remain convinced that the situation again reminds us of the premium placed on sound contract administration.  Sound contract administration begins and ends with staying in close contact with your contracting officer.  It is extremely important to insist on clear direction.  Yes, insist on it to the point of importuning if necessary.  If your contracting officer gives you no direction or just stonewalls you, act reasonably to mitigate damages.

In the end, we believe a shutdown which interrupts your performance or delays or denies payments is a breach of contract.  This allows you to sue or file a claim for breach of contract.  It may be argued that the shutdown is covered by a contract clause giving rise to a suspension, changes or partial termination claim.  However, a shutdown is a serious repudiation of government obligations which should be viewed as a breach of contract.  The only remaining question is whether the government can defend by using the sovereign act defense.  We have written often about this defense.  We do not believe it applies since the government is taking this action to benefit itself and at least collaterally to relieve itself of contractual obligations.

So, prepare for the worst and maintain tight contract administration.  Mitigate damages.  Above all, document, document, document.  Keep records of the impact and set up separate charge accounts for activities during the shutdown.

bill@spriggsconsultingservices.com

IS THE G7 DORAL DECISION LEGAL?

Is the decision to host the G7 Summit at the Doral resort legal?  Probably not, but the Government Accountability Office (GAO) should investigate the facts either through its protest jurisdiction if it applies or under its Congressionally approved audit function.  Although the facts at this point are unclear, it appears that a government procurement contract may be or has been awarded to the Trump owned resort complex in violation of procurement statutes and implementing regulations.

The Competition in Contracting Act (CICA), 10 U.S.C 2304 and 41 U.S.C. 3301 require, with certain very limited exceptions for sole source awards, that contracting officers for the government must promote and provide for full and open competition in soliciting offers and in awarding government contracts.  The GAO has jurisdiction to hear protests that the rules were violated.  Prospective bidders can have standing to pursue such protests.  It is unclear whether offers were solicited and if so from which prospective bidders.  (Even if simplified acquisition is used, stringent rules must be followed for selection, approval and transparency.)

The Procurement Integrity Act, 41 U.S.C. 2102 prohibits disclosing procurement information.  The Trump owned complex is a private entity to which a contract may be or has been awarded with the office of the owner overseeing the bidding by other contractors for the contract.  Again, we do not know if there was a bidding process.  If not, CICA is implicated.  Other statues abound, some with criminal penalties which may apply to the process by which the White House reached this decision.

There are circumstances which permit other than full and open competition but they are limited and require careful scrutiny and high level approval within the government acquisition system.  One exception is where only one source is available and no other source will meet the requirements.  Certainly, that is not the case here.  Another exception is for unusual and compelling urgency.  Again, not applicable here.  None of the other exceptions even comes close.  Even in the case of "public interest", which requires high level authority and notification to Congress, there must be proof it is not in the public interest to have competition.

So, we question the legality of the G7 Doral decision and call upon prospective competing bidders to file protests at GAO and we ask GAO to conduct an audit of how this decision was made.

bill@spriggsconsultingservices.com            bill@spriggslawgroup.com

DIVERTING FUNDS TO BUILD THE WALL

We've been asked if the President's order to build the wall by diverting military construction project funds violates the law.  Obviously, there is a question of whether the President has violated the Constitution.  But from a strictly procurement perspective, it is our opinion that the diversion may well be illegal.  This means certain tried and true remedies are available to contractors where solicitations are canceled, awards are not made and contracts that have been awarded are canceled or terminated.

If a solicitation is canceled, it may be possible to attack the cancellation based on a bad faith argument.  The President promised the wall would be built by funding from Mexico.  In bad faith, he now diverts money appropriated for military projects to fund his wall. 

If a contract award of an issued solicitation is canceled or not made, the same argument could apply.  The reason the award was not made was the decision, made in bad faith, to divert funding to build the wall.  The wall serves no legitimate military purpose.  The policy behind it, if any, is to cover the failed promise Mexico would provide the funding.

If an awarded contract is canceled or terminated, the contractor would have a breach of contract claim again based on the exercise of bad faith and abuse of discretion.  There is plenty of precedent supporting such a claim.

bill@spriggsconsultingservices.com                              bill@spriggslawgroup.com

USE OF ESTIMATES IN PRICING CHANGES

Nearly every changes claim, request for equitable adjustment and breach of contract claim we have handled have involved estimated labor costs.  In the heat of battle, while the change or breach is occurring, most people do not take the time and trouble to set up a separate account for the change or breach to which they charge their time.  Prudent contractors, on the other hand, quickly identify the change and require all people to charge to a separate account which can be used later to collect the change/breach related costs.

Of course, the claim or equitable adjustment must be based on actual costs.  The time must have been recorded somewhere so the reality of the cost can be demonstrated.  The people who charged the time must then estimate (and testify if necessary) that they spent the time working on the changed work or the breach claim.

The case law on estimating is solid and goes back to the seminal case of Wunderlich v. United States, 351 F.2d 956 (Ct, Cl. 1965) where the court (now the Court of Federal Claims) said: "A claimant need not prove his damages with absolute certainty or mathematical exactitude . . . .  It is sufficient if he furnishes the court with a reasonable basis for computation, even though the result is only approximate . . . ."

In this sense it reasonably may be said that because the proof of costs is required, estimates must be backed up by some cost data.  The time spent must be recorded somewhere and the estimates must be based on a reconstruction of the change/breach account where they should have been charged.

Most sophisticated contracting officers are aware of these rules and allow discussion of estimated actual costs in negotiation of equitable adjustments and claims.  However, it may be necessary to remind some contracting officers of these rules.  If necessary, in an appeal to a board or court, you should be able to demonstrate the efficacy of your calculation of estimates to the judge.

We should add that the cost of preparing these estimates may be charged as a cost of contract administration in the request for equitable adjustment.  As a reminder, costs of preparing the equitable adjustment may be recovered as part of the equitable adjustment.  These costs also may be based on estimates.  However, such costs are not allowed once the negotiations fail and the equitable adjustment becomes a claim.

bill@spriggsconsultingservices.com                                  bill@spriggslawgroup.com

HELP WITH REA AND TERMINATION

We wish to remind the contractor community that we remain available to handle advice on REA's and claims, writing and review of REA's and claims, defending terminations for default and appeal of claims and terminations to the Boards of Contract Appeals.  We have an excellent track record for responsiveness, thoroughness and good results.  We charge at a modest hourly rate although we are now in a position to consider contingency fee arrangements.  Our standard hourly fee is $250.00 per hour.  We always provide estimates to complete which are then converted to not to exceed prices.  Evaluation and estimates are free.

We also handle protests at the agency level only.

bill@spriggsconsultingservices.com                    bill@spriggslawgroup.com

THE JUDICIAL ROLE OF THE CONTRACTING OFFICER REVISITED

We've written often about the role of the contracting officer.  We also have emphasized the judicial role they must play.  And yet, we continue to hear complaints that contracting officers are not even handed.  They are partisan advocates for the government and grand guardians of the public purse.  So.....

It's time we reminded ourselves of the judicial role of the contracting officer in government contracts.  Contracting officers are required by law to act impartially and function in a judicial role when resolving disputes.  The history is clear but very often overlooked.

Abraham Lincoln once said:  "It is as much the duty of the government to render prompt justice against itself, in favor of citizens, as it is to administer the same between private individuals."  In 1912, the United States Supreme Court, in addressing the duties of the contracting officer, said:  "But the very extent of the power and the conclusive character of his decision raised a corresponding duty that the agent's judgment should be exercised not capriciously or fraudulently, but reasonably, and with due regard to the rights of both contracting parties."

The most resounding pronouncement, however, was made by the Court of Claims in a 1950 opinion when, after referring to the 1912 Supreme Court opinion, the Court of Claims said the contracting officer must not represent either side but must "act as an impartial, unbiased judge."  The Court of Claims went on to say the contracting officer's function was "to act impartially, weighing with an even hand the rights of the parties on the one hand and on the other."  The court recognized the obligation of the contracting officer to represent the government's interests in procurement matters, but it went on to state clearly that "in settling disputes this is not his function." 

This is pretty clear.  So why are there so many complaints about contracting officers failing to act judicially when disputes arise?

It's time to get back to basics and take heed of judicial precedent.  And just to bring all this up to date, read FAR 1.602-2(b) again.  "Contracting officers shall ensure that contractors receive impartial, fair and equitable treatment."  It's mandatory.  Impartial, fair and equitable treatment.  Sounds like something Abraham Lincoln might have said.

If you want to read more on this subject and see all the citations to case law, send us an email and we will send you a law journal article which covers the details.

bill@spriggsconsultingservices.com                  bill@spriggslawgroup.com     

WHEN TO APPEAL A DEFAULT TERMINATION

The Armed Services Board of Contract Appeals (ASBCA) enforces the 90 day statutory appeal requirement of terminations for default (or cancellation).  The 90 days runs from the time of the default termination or cancellation.  Or does it?  Look at what the ASBCA has said.

But first, look at the statute and the regulation.  FAR 33.211(a)(4)(v) requires a complete notification of appeal rights.  Requires.  A complete notification includes the right to appeal to the ASBCA within 90 days of the notification provided by the regulation (derived from the statute).

In 2017, the Board dismissed an appeal for lack of jurisdiction in which the contractor failed to file within 90 days of the notice of termination.  However, the Board did not examine whether the notification complied with FAR 33.211.  See Military Aircraft Parts, ASBCA No. 60139, February 21, 2017.  The only case cited by the Board to support its decision was the Board's prior decision in another Military Aircraft Parts case in which the notification complied with FAR 33.211.  Scratch your head.  The notification was defective in that it in no way complied with FAR 33.211.  Based on the Board's own precedent, the Board should have examined whether the contractor was prejudiced by the government's failure to comply with FAR 33.211.  The Board's inquiry would address what caused the failure to appeal within 90 days.

Importantly, in 2014, the Board denied the government's motion to dismiss an appeal filed after the 90 day deadline from the termination notice because the contractor was able to show it was prejudiced by a default notification which did not provide the contractor details about its rights to appeal to the ASBCA within 90 days (as required by FAR 33.211).  Mansoor International Development, ASBCA No. 58423, September 4, 2014.

In Mansoor, the Board based its decision on a 1996 Federal Circuit opinion.  The default notification merely said "Your company has the right to appeal under the disputes clause."  The Board found this was deficient, and, under the Federal Circuit authority, the contractor proved it was prejudiced by saying "[w]e did not understand our appeal rights and obligations and MiDs was prejudiced by the failure of the Contracting Officer in March to explicitly recite them."

In 2016, the Board decided a case in which the default notification informed the contractor of its right to appeal the determination under the disputes clause cited in FAR 33.211.  The Board found this notification was insufficient to start the running of the 90 days if the contractor could show it was prejudiced by the failure to be fully informed of its appeal rights.  The contractor made no attempt to show prejudice and the appeal was dismissed for lack of jurisdiction.  Bushra Company, ASBCA No. 59918, April 22, 2016,

The lesson is loud and clear.  Contractors, insist that any final decision include the appeal notification requirements in FAR 33.211.  Contracting officers, follow the requirements of FAR 33.211.  Finally, contractors, when in doubt, appeal within 90 days of any default termination.

Other precedent at the Board interprets contractor's communications liberally in deciding whether notice of appeal is effective.  A letter to the contracting officer may be enough if it adequately informs that the contractor intends to appeal or uses language indicating a dispute and request for relief.

Postscript:  If the T for D notice is defective because it does not comply with FAR 33.211, is the T for D not also defective and therefore a nullity which would result in conversion to a T for C?  Where a cure notice is required, the failure to provide one nullifies the T for D and results in conversion to a T for C.  Why not the same result for failure to comply with FAR 33.211?

bill@spriggsconsultingservices.com

USING OUR SEARCH TOOL

When you go to http://spriggslawgroup.BlogSpot.com, you will see our latest articles.  If you go to the upper left hand corner, you will find a search tool where you can do a word search of other articles.  We currently have posted over 200 articles on various federal government contract subjects.

bill@spriggsconsultingservices.com          bill@spriggslawgroup.com

MISUSE OF DEFAULT TERMINATIONS REVISITED

On July 25, 2012, we warned of the misuse of terminations for default in connection with the government sequestration issue.  Lately, we've been concerned that the government may be misusing terminations for default in order to place the burden on the contractor to collect what it is owed when the government just wishes to abandon the contract for reasons other than a bona fide default by the contractor.  The government just wants to take the money off the contract for another use. 

Termination for default allows the government to move the funding off the contract. Conversely, funding must be left on the contract pending resolution of the termination for convenience settlement proposal.  Thus, the contracting officer has a funding motivation for turning the cancellation into a termination for default.

Termination for default is a drastic action which severely inhibits the contractor's ability to get new work with the government.  The law requires that it not be misused or abused. 

Termination for default shifts the burden of contract administration and all the contract risks to the contractor.  No termination contracting officer needs to be appointed and there is no administrative burden on the government.  There may be no reprocurement since the requirement is going away. The contractor must defend the termination for default action.

In defending the termination for default, it may take the contractor up to four (4) years of litigation to obtain a conversion of the termination to one for convenience which finally entitles the contractor to payment under the convenience termination clause.  We have seen many termination for default cases where the government has delayed the litigation for up to and sometimes longer than 4 years.

This is to say nothing of the expense of converting the default to a convenience termination and then going through the lengthy and expense process of collecting the convenience termination money.  We can think of no greater adverse action against increasing competition in government contracting than the misuse of terminations for default.

At the very least, the government should explore with the contractor, whether it may be possible to agree on a no cost termination for convenience settlement.  We suspect at least some of the drastic termination for default actions could be avoided by exploring this possibility.

bill@spriggsconsultingservices.com

CORRECTION OF CPARS RATINGS

The Armed Services Board of Contract Appeals (ASBCA) and Civilian Board of Contract Appeals (CBCA) have jurisdiction to decide whether the contracting officer acted reasonably in determining that performance was unsatisfactory or if such a CPARS rating was arbitrary and an abuse of discretion.  The Boards may decide whether the government acted arbitrarily and capriciously in making an inaccurate and unfair performance evaluation.  Cameron Bell Corporation d/b/a Gov Solutions Group (GovSG), ASBCA No. 61856, May 1, 2019.

The Boards also have jurisdiction to decide whether the government breached is implied by law duty of good faith and fair dealing when it assigned the CPARS rating.

The Boards do not have jurisdiction to grant specific performance (direct the contracting officer to change the CPARS rating) or grant injunctive relief.  The Boards cannot direct that the CPARS rating be changed.  However, the Boards may remand the matter to the contracting officer and require the contracting officer to follow applicable regulations and provide the contractor a fair and accurate performance evaluation.

So, it is possible to challenge a CPARS rating at the ASBCA.  The complaint must allege the contracting officer did not act reasonably and made an arbitrary determination which was an abuse of discretion.  The complaint also could allege breach of the obligation of good faith and fair dealing.  But the relief sought must be limited to requesting the Board to remand the matter to the contracting officer for a redo of the CPARS rating consistent with applicable regulations, fairness and accuracy.

bill@spriggslawgroup.com

NOTICE REQUIREMENTS FOR REA'S AND CLAIMS

Often, the notice requirements in the Changes clause and the Differing Site Conditions clause are difficult if not impossible to meet.  Fortunately, a contractor may still be able to recover on requests for equitable adjustment (REA's) and claims depending on the close examination of the facts of each case.

As a general rule, the notice requirements should be observed and enforced.  However, as the law has developed, the exceptions to the rule have become the rule. 

If the government in fact knew or should have known the facts involved in the REA or claim, the contracting officer considered the claim without complaining about notice or the failure of the contractor to provide the notice did not materially prejudice the government, the notice requirement will not be enforced.  Government records may show knowledge or the presence of government representatives at the site and their assistance in the attempts to solve the problem may also show knowledge of the issues.

The purpose of the notice clauses is to be sure that government knows of problems so it can act to solve them to its satisfaction.  However, if there is no prejudice to the government in that it is not materially harmed by the failure of prompt notice, the notice requirement will not be enforced.

The same rules apply to the Differing Site Conditions clause notice requirements.  The purpose of the notice requirement is to give the government the chance to change the design or construction and to mitigate its costs.  Unless the lack of notice results in actual prejudice, the government's defense of lack of notice will be rejected.

Perhaps most importantly, notice requirements to not apply to breach and constructive changes claims.

bill@spriggsconsultingservices.com

THE RULES ON DISCLAIMER CLAUSES

The government often disclaims responsibility and shifts risks to contractors through various disclaimer clauses. As a consequence, contractors often find themselves unable to obtain relief when they encounter conditions giving rise to claims for additional compensation.  They lose their case based on the government's defense that the risk of extra costs was shifted to the contractor through a disclaimer clause.  So just what are the rules governing the interpretation and enforcement of so called disclaimer clauses?

First, the government may assign a specific risk to a contractor even if such an assignment is ridiculous and should never be accepted by the contractor.  If clearly stated, a contract may shift the risk to a contractor "to make snowmen in August."  Rixon Electronics, Inc. v. United States, 536 F.2d 1345, 1351 (Ct. Cl. 1976). 

However, when the contract clause merely says information in the solicitation may be inaccurate, the clause does not transfer the risk to the contractor.  Metcalf Construction Co. v. United States, 742 F.3d 984, 988, 995-96 (Fed. Cir. 2014).  If there is not clear language alerting the contractor that it should bear the risk, the disclaimer clause probably will not be enforced.

Second, contractors are responsible for making a reasonable pre-proposal site visit.  The rule is that if a reasonable contractor would have noticed the problem, the risk shifts to the contractor.  However, the duty to make a reasonable inspection of the site does not require the contractor to discover conditions "beyond the limits of an inspection appropriate to the time available."  Foster Constr. C.A, and Williams Bros. Co. v. United States, 435 F.2d 873, 888 (Ct. Cl. 1970). 

The whole idea is that the contractor has only a limited time to prepare its proposal and is bound by the disclaimer clause only to the extent he has a reasonable time to assess the cost of the problem.  The more specific the clause, the more obvious the problem and the more time to assess, the more likely the disclaimer clause will be enforced.

For the rules on interpretation of contract language generally, see our articles on contract interpretation by using the search tool in the upper left hand corner.  Insert these words: contract interpretation.

bill@spriggsconsultingservices.com

PROTESTING CORRECTIVE ACTION

Yes, you can challenge corrective action through a protest at the GAO.  NavQSys, LLC, B-417028.3, March 27, 2019.

Although corrective action is within the discretion of the contracting agency and GAO will not object to specific corrective action provided it is an appropriate remedy, GAO will sustain a protest if the agency's decision is inconsistent with the solicitation or is otherwise unreasonable.

Importantly, the agency must document its decision and preserve the materials upon which it is based so that GAO may review the action.

In this case, the agency determined it would terminate the awarded contract for its convenience and make the award to a competitor.  When the contractor to which the contract originally had been awarded protested, GAO examined the record to see what justified the agency's decision.  As it turned out, there was nothing in the record to show the agency's decision to terminate the award was justified.  The agency failed to provide a clear explanation of its action.

The case stands for the proposition that GAO will sustain a protest where the record fails to provide GAO with an opportunity to review in a meaningful way whether the agency's decision was reasonable.

Of course, a protester must show prejudice in order to prevail.  On this point, GAO resolved any doubt in favor of the protester since a reasonable possibility of prejudice is a sufficient basis for sustaining a protest.

Unfortunately, the remedy GAO provided was hardly a victory for the protester.  GAO's recommendation to the agency was that it document the basis for its decision to reject the proposal submitted by the protester.  We see a follow up protest coming.

bill@spriggsconsultingservices.com 

READ THE EVALUATION FACTORS!

What is the first thing you should do when you get a solicitation for a competitive government buy?  Find the evaluation factors, read them, make sure you understand them, make sure they are fair, make sure they comply with the regulations and use them to manage your proposal effort.  If they are not clear, fair or if they do not comport with the regulations, protest immediately.  We can assure you most problems in competitive procurements are caused by improperly articulated evaluation factors.  The time to solve these problems is when the solicitation is first issued.

We are against protesting unless a regulation is violated.  We also are against writing stuff people do not understand.  If the evaluation factors are not written clearly and if they do not strictly follow regulatory requirements, protesting is an absolute necessity.  This is probably the one situation where there is no doubt about the propriety of protesting all the way up the line.  First, “protest” to the contracting officer.  Write a letter (emails are legal letters) thoroughly explaining what is unclear or illegal about the evaluation factor section of the solicitation.  Yes, it is illegal to fail to follow the regulation on evaluation factors.  If that doesn’t work, file a formal agency protest or protest to GAO.

Evaluation factors are discussed In FAR Parts 12, 13, 14 and 15.  All competitive procurements implicate FAR Part 15 principles, according to GAO.  Part 15 has the most thorough discussion of evaluation factors.  Although Parts 12, 13 and 14 have their own discussions and Parts 12 and 13 allow much more discretion as to what factors are used, Part 15 is the gospel on evaluation factors.  The main point to remember is that all competitive procurements require a solicitation contain evaluation factors.  They must also be written in plain English. 

If nothing else, failure to state evaluation factors is egregiously unfair.  How in the world can you compete if you don’t know how you will be judged?  Why would you engage in any competition without knowing the rules of the game? 

 bill@spriggsconsultingservices.com

IMPROVING THE FEDERAL AQUISITION WORKFORCE

The problem with today’s federal procurement workforce is that experienced hands are leaving, leadership is underperforming in finding ways to transfer expertise to the new generation and the younger workers lack the requisite initiative to find best practice experience and to follow it.

One of the main problems is communication with industry.  OPFF has issued best practice experiences in the form of myth busting memos which emphasize the need for communication.  The feds need to buy more like it’s done in the commercial world.  They need to talk more with industry to find out how it’s done and how commercial products and services can fill government needs.  Talking more with industry also helps the feds by encouraging private innovation and by learning how to take advantage of it.  But the myth busting best practice guide languishes in many agencies.  The word just does not get to the field. 

Communication isn’t the only problem.  Among the most serious is the emphasis on lowest price, technically acceptable procurement actions.  When the government overused detailed design specifications, performance specifications were born.  Detailed requirements lend themselves to pass or fail technical evaluation and award to the lowest price.  But we’re now in the performance specification era where best value tradeoffs should rule.  Performance specifications and lowest price technically acceptable selection are a bad mix.  Poor leadership at the top and inexperience at the bottom have created this problem.

There is such a thing as the wisdom of the ages in federal procurement.  We’ve learned that fixed prices for ill-defined statements of work are a bad idea.  We’ve also flirted with the notion that buying like the commercial world can be a good idea.  We’ve also learned that full and open debriefings prevent more protests than they encourage and that cooperation and communication with the contractor not only are legal requirements, they also help assure successful contractor performance.  There is a vast storehouse of valuable best practice information available in the memory of the retiring workforce on any number of subjects relevant to today’s procurement activities.  

We see a simple solution which will take some hard work.  First, OFPP needs to do more memo writing like the myth busters memos.  It needs to follow up on its best practices for contract administration guide and update and expand on it.  Senior acquisition executives who receive the OPFF memos need to do a better job of leadership in making sure the word gets to the field.  They also need to be held accountable for making sure the best practice experience is in fact practiced in the field.  Finally, the new generation needs to find the winners, understand their winning ways, and adopt the practices experience has taught will work.  In other words, they need to exercise better initiative in finding the wisdom of the ages in procurement. 

We propose that the retiring generation assist OFPP in writing down best practices for contract formation and administration.  Senior acquisition executives need to commit to making sure the word gets to the field.  And the new generation needs to exercise initiative in finding the best practice experience and in following it.  Start with communication.  The myth busting memos are the model.  Those best practices have been vetted thoroughly by the most experienced professionals in the business.  They represent the wisdom of the procurement ages.  The new generation would be well served by starting with OFPP’s advice on dealing with industry.

bill@spriggsconsultingservices.com

ANOTHER CICA STAY OVERRIDE OVERRULED

Former Chief Judge, now Senior Judge, Loren Smith of the Court of Federal Claims (COFC) has just overruled another CICA stay override decision this time of the United States Department of Homeland Security, Transportation Security Administration.  See Technica LLC v. United States and Aviation Security Management, LLC, COFC No. 18-2003-C, February 22, 2019.

The CICA stay is an integral part of the procurement system which assures the GAO time to render its decision on a bid protest.  It's tantamount to an automatic preliminary injunction if the protest is timely filed.  The stay is a protection of the integrity of the procurement system and can only be overridden under specific and special circumstances.

Judge Smith recites the court's four part test for review of an agency's decision to override the stay:

1. Whether significant adverse consequences will necessarily occur if the stay is not overridden;
2. Whether reasonable alternatives to the override exist;
3. How the potential cost of proceeding with the override, including the costs associated with the potential that the GAO might sustain the protest, compares to the benefits associated with the approach being considered for addressing the agency's needs; and
4. The impact of the override on competition and the integrity of the procurement system, as reflected in CICA.

In addition, the COFC must consider whether the agency's decision substantively meets the arbitrary and capricious APA review standard.  The agency decision would be arbitrary and capricious if the agency relied on factors which Congress has not intended, entirely failed to consider an important aspect of the problem, offered an explanation running counter to the evidence or is so implausible that it could not be considered a difference in view or the product of agency expertise.

Judge Smith ruled in favor of Technica LLC, declared the override was arbitrary and capricious and he overturned the override decision granting Technica's request for a preliminary injunction.

bill@spriggsconsultingservices.com                       bill@spriggslawgroup.com

GAO: TRADEOFF ANALYSIS BECAME LPTA

We've written about the problem with best value tradeoff analyses becoming lowest price technically acceptable (LPTA) awards.  GAO also is concerned and recently sustained a protest.  See Cyberdata Technologies, Inc., B-417084, February 9, 2019.  The protest involved the Department of Commerce source selection decision which failed to go beyond the adjectival ratings to explain why proposals were technically equal resulting in award to the lowest price offeror.

The protester claimed the government abandoned the best value selection process to award the contract to the lowest offeror because the adjectival ratings were technically equal.  The government argued it did nothing wrong since the contracting officer determined the proposals were technically equal.  GAO saw that conclusion as superficial and unsupported by the record.

GAO restated its position that it does not reevaluate proposals, but instead examines the record to see if the decision is consistent with the stated evaluation criteria and applicable procurement laws and regulations.

GAO emphasized that the award decision must be adequately documented for review.  GAO also has explained consistently that adjectival ratings are guides only.  The evaluation of proposals must be based on a qualitative assessment consistent with the solicitation's evaluation scheme.  Importantly, GAO reminded us the selection official must explain the basis for why proposals are considered technically equivalent.

In this case, the source selection decision did not demonstrate that the contracting officer conducted a meaningful analysis of the strengths of each of the proposals.  The contracting officer concluded that because each offeror received an overall rating of good, the determining factor became price.  The contracting officer failed to consider the qualitative value of the proposals.  GAO send the matter back for reevaluation consistent with its decision.

The lesson is clear.  Adjectival ratings are not the end all.  And the source selection official must carefully analyze and document a decision based on a thorough review of the quality of the proposals.  Above all, the government must follow the evaluation criteria and not turn a best value tradeoff procurement into one for lowest price, technically acceptable.

bill@spriggsconsultingservices.com           bill@spriggslawgroup.com 

CONTRACTORS CAN SUBMIT SHUTDOWN CLAIMS

When the government shuts down or restricts spending, some of all of the following things may take place: solicitations may be canceled; options may not be exercised; limitation of funds clauses will be used by agencies; payments may be delayed; only minimum orders may be placed under Indefinite Delivery/Indefinite Quantity (IDIQ) contracts; the changes clause may be used with greater frequency; the level of work may be reduced; the period of performance may be revised; the stop work order clause may be used; the suspension of work clause may be used; acceleration of performance may be ordered; and contracts may be terminated for default or convenience.

Theories of recovery include breach of contract and constructive changes.

This is quite a list and most commentators believe government agencies will use any or all of these actions.  So what should contractors do?  The preparations guide is simple but difficult.

Any interference in the contractor's performance gives rise to a constructive change for the breach of the government's obligation to cooperate with the contractor and not interfere in its performance.  Explicit contract clauses may be implicated.  So, contractors should set up separate charge accounts for the financial effects of a government shutdown.  The immediate effect may be a failure to pay or the inability to reach the contracting officer for direction.  The contracting officer may issue a suspension or stop work order because she is concerned about the Anti-deficiency Act (discussed elsewhere in these blog posts).

There is no question that a government shutdown is a government act in its sovereign capacity and therefore an excusable delay.  (The shutdown also is an act of the government in its contractual capacity.)  There should be no trouble extending schedules for delays caused by the government shutdown. 

Since the shutdown also is an act of the government in its contractual capacity, claims may be submitted under the Changes, Suspension or Stop Work clauses.  In response, the government may assert the sovereign act defense.  We've written about this elsewhere in these blog posts.  Simply put, the government can defend itself by showing the action was not undertaken to benefit it in its contractual capacity but rather was undertaken for the broad benefit of the public at large.  There are arguments on both sides.  The government will argue the shutdown was necessary for the public good.  Contractors may argue the action was in part self serving and designed to further the government's interests in its contractual capacity.

In United States v. Winstar Corp., 578 U.S. 839 (1996), the Supreme Court drew a distinction between a pubic act intended to accomplish a broad government objective and an action tainted by  a government objective of self-relief.  In the latter case, the sovereign act defense does not apply.  We believe that since the shutdown is a government act in its contractual capacity which furthers the government's interests, the sovereign act defense will fail.  In a shutdown, the government fully intends that its actions will result in non-payments, delayed payments, changes, claims and terminations.

So, what should a contractor do?  Document the effects of the shutdown.  Treat it as any other potential claim for equitable adjustment.  Set up a separate charge account to collect the financial impact of the shutdown.  Consider submitting a request for equitable adjustment or claim.  But most importantly, try to keep in touch with the contracting officer and request direction.  If she is unavailable, put in writing what you intend to do in response to the shutdown and ask for confirmation from the contracting officer.

And consult a professional to help you submit your claim.

bill@spriggsconsultingservices.com   bill@spriggslawgroup.com