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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