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