THE PROPER USE OF LPTA

Many commentators have noticed an abuse of lowest price technically acceptable (LPTA) source selection. In fact, there is growing concern that a solicitation is called best value, the evaluation criteria actually say there will be a cost/technical tradeoff analysis, but in practice, the source selection becomes LPTA. We'd like to set the record straight on the proper use of LPTA and call upon contracting officers to pay close attention to FAR Part 15 in writing evaluation criteria and in source selection practices.

Look carefully at FAR 15.101. There is a best value "continuum". The relative importance of cost or price may vary. May vary. Today's environment of budget austerity does not change the rule. If requirements are clearly definable and the risk of unsuccessful performance is minimal, cost or price may properly become the predominant source selection discriminator (LPTA okay). Conversely, the less definitive the requirement, the more development work is required or the greater the performance risk, the more technical excellence or past performance should come into play (LPTA not an option).

Then look very carefully at the language in FAR 15.101-2(a) dealing with LPTA. LPTA should only be used when best value is expected to result from choosing the lowest priced technically acceptable proposal. So harken back to the best value continuum. Is the risk of successful performance minimal? Will you get "best value" by ignoring the tradeoff process? If not, LPTA is proscribed. We'll wager that careful and close attention to this language in FAR 15.101 will result is fewer LPTA procurements. Again, budget constraints have not amended FAR. We believe that rules are necessary in public acquisition actions. The rules are there for a purpose and they should not be ignored.

Finally, and equally importantly, read FAR 15.304 and 305 carefully. The evaluation criteria must be clearly stated. Clearly. Too often we have seen evaluation criteria which are patently unclear. Even more importantly, they are to be rigorously adhered to in the source selection process. No deviations. That means, source selection officials are not permitted - not permitted - to change best value tradeoff criteria to LPTA (without a redo). In a recent example, LPTA was used, in our opinion, to include risky companies in what turned into a bidding war.

Contractors aggrieved by the government's failure to follow the regulation are not without remedy. The rules are meant to be enforced. Austerity does not waive procurement regulations. Cutting corners to achieve cost savings is not permitted. Unless or until Congress changes the system of rules and regulations, everyone - no exceptions - must follow them.
bill@spriggsconsultingservices.com. www.spriggsconsultingservices.com  bill@spriggslawgroup.com
  

THE ALMOST EQUAL ACCESS TO JUSTICE ACT

You may be familiar with the Equal Access to Justice Act. It is specifically designed to help small businesses. Actually, its more descriptive name would be the Almost Equal Access to Justice Act. Here is why.

The Act says the "prevailing party" may recover its fees and expense in an action against the United States unless the position of the United States was substantially justified or special circumstances make an award unjust. The applicant must be eligible for an award based on its net worth ($2M for individuals and $7M for companies). The applicant is the prevailing party if it succeeds on any significant issue in litigation which achieves some of the benefit it sought in bringing the action in the first place. Once the applicant crosses that threshold, the amount of recovery may be reduced depending on the degree of success.

Fees and expenses under the Act may be denied totally if the position of the United States was "substantially justified". The tribunal deciding the application must make a judgment call whether the government's position throughout the dispute had a reasonable basis in both law and fact. The determination is made on a case by case basis. Thus, since the decision is based on subjective judgment, it really is another test of what is seen by the eyes of the beholder.

Finally, under the Act, a $125 per hour cap applies to attorneys' fees unless the applicant can show an increase in the cost of living or a special factor, such as where the limited availability of qualified attorneys for the proceeding involved justifies a higher fee. Good luck with that one. Special factors are very rarely applied and one tribunal recently applied the cost of living formulas to arrive at a whopping $155 per hour. (The $125 rate was set in 1996). How many experienced lawyers charge $155 per hour?

The Act needs to be amended to remove the "substantially justified" takeaway and the hourly rate needs to be increased. Pure and simple. Either that or it should be renamed, perhaps, the Almost Equal Access to Justice Act.

bill@spriggslawgroup.com 

 

WHAT A CONTRACT MANAGER DOES

In a 2011 post we asked who is your contract manager?  We explained why you need one and listed most of the things a contract manager does.  You are in the most highly regulated industry in the world.  The procurement regulations are more voluminous and complicated than the U.S. Tax Code.  What does that tell you?

Not all contract managers are lawyers.  But in government contracting and subcontracting, your contract manager should be a lawyer well schooled in public contract law.  You need someone who can navigate the rigorous labyrinth of laws and regulations.  Or, be sure to hire a contract manager who has a contract management lawyer at her fingertips.  Yes, a contract management lawyer, not just any lawyer.  Your team needs contract management with legal expertise and talent steeped in government contracts and subcontracts experience.  Whether it's getting a contract, keeping it, or making a profit on it, you need complete contract management coverage.

What does a contract manager do?  Here's a list (not all inclusive):

1. Knows the statutes, regulations and case law thoroughly and in depth;
2. Know, writes and speaks the English language clearly and concisely;
3. Reviews solicitation documents for clarity and legal sufficiency;
4. Assures proposals are well written and meet solicitation and regulation requirements;
5. Handles discussions, clarifications and negotiations of proposals;
6. Handles debriefings and protests;
7. Monitors performance and assures compliance with all contract terms and conditions and regulation requirements;
8. Handles all contract interpretation issues and questions about contract requirements and procurement regulations;
9. Investigates, identifies, analyzes and solves all contractual performance issues;
10. Keeps a daily diary of contract performance issues and communications with the contracting officer;
11. Handles all requests for equitable adjustment, claims, cure notices, terminations and disputes;
12. Handles all communications with the contracting officer;
13. Prepares, reviews and signs all contractual documents;
14. Reads all publications relating to acquisition news and keep current on all statutes, regulations and case law; and
15. Handles contract closeout.

One last important point.  Make the contracting officer your best friend and talk to her daily about what's going on.  Stay in constant touch with her and keep her advised in writing of all important contract management issues and events.

bill@spriggsconsultingservices.com   bill@spriggslawgroup.com  

MODEL REA SPONSORSHIP CLAUSE

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 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.

 bill@spriggslawgroup.com 

MODEL SUBCONTRACT DISPUTES CLAUSE

Disputes

 

(a) Any dispute that arises under or is related to this Agreement and which relates to a matter that gives the Prime Contractor recourse against the U.S. Government under the Prime Contract or applicable law shall be resolved in accordance with the Disputes clause of the prime contract as follows:

(1) Subcontractor will give Prime Contractor a fully supported written claim concerning any such dispute within five (5) years after the claim accrues, but in no event later than final payment under this Agreement, or Subcontractor shall be barred from any remedy for such claim.

 

(2) Subcontractor will cooperate fully with Prime Contractor in prosecuting any such dispute and will be bound by the outcome unless: (i) Prime Contractor does not afford Subcontractor a reasonable opportunity to participate in the resolution of the dispute, (ii) without Subcontractor's written consent, Prime Contractor settles or takes other action to prejudice Subcontractor's rights concerning the dispute, or (iii) Prime Contractor, having determined to discontinue its own prosecution of the dispute, does not afford Subcontractor an opportunity to continue to prosecute the dispute in Prime Contractor's name;

 

(3) If Prime Contractor and Subcontractor agree to prosecute Subcontractor's claim under this subparagraph (a), for any such claim for more than $100,000, Subcontractor shall submit with the claim a certification to Prime Contractor and to the contracting officer for the prime contract, signed by an authorized representative of the Subcontractor that: (i) the claim is made in good faith; (ii) the supporting data are accurate and complete to the best of the signatory's knowledge and belief; (iii) the amount requested accurately reflects the contract adjustment for which Subcontractor believes the U.S. Government is liable; and (iv) the signatory is duly authorized to certify the claim on behalf of Subcontractor. Furthermore, Subcontractor shall indemnify and hold Prime Contractor harmless from damages, judgments, (including reasonable attorney's fees), and other liabilities arising from any breach of such certification or any violation of Section 5 of the Contracts Disputes Act of 1978 (4I U.S.C. 604) or any violation of costs common law or statutory prohibitions against misrepresentations, fraud or false statements;

 

(4) Prime Contractor and Subcontractor will each bear their own costs of prosecuting any such dispute;

 

(5) If the parties do not agree to proceed in accordance with this paragraph (a), the dispute will be decided in accordance with subparagraph (b) hereof;

 

(6) Nothing in this Agreement Grants Subcontractor a direct right of action against the United States under the Disputes clause of the prime contract, except insofar as certain intellectual property clauses flowed down from the prime contract may so state or be construed to so provide.

 

(b) Any other dispute that arises under or is related to this Agreement, as well as any dispute that the parties to do agree to resolve according to the procedures set forth in the foregoing subparagraph (a), may be decided by a court of competent agree that jurisdiction and venue lies exclusively in the courts of the Commonwealth of Virginia.

 

(c) The Subcontractor shall proceed diligently with performance of this Agreement, pending final resolution of any request for relief, claim, appeal, or action arising under or relating to the Agreement.

SUSPENSION VERSUS CHANGES CLAUSE

The Suspension clause says in pertinent part:  “However, no adjustment shall be made under this clause . . . for which an equitable adjustment is provided for or excluded under any other term or condition of this contract.”  FAR 52.243-4, Changes, says the contracting officer may make changes in the work including changes in the method or manner of performance of the work. 

In addition, any other order shall be treated as a change provided proper notice is given by the contractor to the contracting officer. 

The Changes clause provides for an equitable adjustment in the cost of or the time required for performance of any part of the work under the contract, whether changed or not.  The contracting officer is obliged to make the equitable adjustment and modify the contract in writing.

Moreover, there is a time-honored constructive change based on the duty of the government of good faith and fair dealing.  Under this constructive change theory, the government may breach its duty to cooperate and to not interfere in the contractor’s performance.  Interference in performance thus is compensable under the Changes clause.

In conclusion, the Changes clause takes precedence over the Suspension clause based on the clear language in the Suspension clause which precludes action under the Suspension clause when the Changes clause is also present in the contract.

bill@spriggsconsultingservices.com   bill@spriggslawgroup.com 

THE GOVERNMENT'S DUTY TO COOPERATE

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

Perhaps the duty is articulated best in a old case from the Armed Services Board of Contract Appeals (ASBCA).  In G.W. Galloway, ASBCA Nos. 16656, 16975, 73-2 BCA paragraph 10,207, the Board said:

This requirement is an integral segment of the broadly recognized rule applicable to all government contracts which imposes an implied obligation on the government that it must do nothing that will interfere with the contractor in the performance of the contract.  [citation omitted]  In addition to the negative obligation of noninterference, this board has recognized an implied affirmative obligation on the part of the government that it will do whatever is reasonably necessary on its part to enable the contractor to perform.

73-2 BCA at 48,499,

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

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

bill@spriggsconsultingservices.com   bill@spriggslawgroup.com 

 

DELAY COSTS ON CONSTRUCTION CONTRACTS

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

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

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

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

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

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

bill@spriggsconsultingservices.com    bill@spriggslawgroup.com 

HOW TO PREPARE FOR A DEBRIEFING

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

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

Post award debriefings require the government to provide the contractor the following information:

1. The government's evaluation of the significant weaknesses or deficiencies in your proposal;
2. The overall evaluated price (including unit prices) and technical rating of the successful offeror and your proposal and your past performance information;
3. The overall ranking of all offerors;
4. A summary of the rationale for award;
5. For commercial buys, the make and model of the item proposed by the successful offeror;
6. Reasonable responses to relevant questions  about whether the source selection procedures in the solicitation, the regulations and relevant case law were followed.

Insist that the government provide the information in items 1 through 5 of the above list.  What if the government does not?  Include the failure to follow the regulation in your protest.  But the most important item on the list is number 6.  That's where you need to do your homework and perhaps seek professional help.

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

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

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

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

This just in:

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

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

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

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

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

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

 

bill@spriggsconsultingservices.com    bill@spriggslawgroup.com 

HOW TO CONVERT THE REA TO A CLAIM

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

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

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

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

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

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

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

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

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

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

10.   Indicate a willingness to participate in Alternative Dispute Resolution (ADR) such as mediation to resolve the dispute.

 

11.  Appeal  the decision (or the failure to render one) to the appropriate Board.

 

bill@spriggsconsultingservices.com   bill@spriggslawgroup.com