Crisis averted – at least for the time being.

The government shutdowns in January and February 2018 were big news, but ultimately resulted in very little actual downtime for the Federal government.  But does that mean its back to business as usual for government contractors?  Not by a longshot.

As Politico Playbook reported today, March has its own funding deadline.  With political hot-button issues (like immigration reform) still unresolved, there are legitimate concerns that another shutdown looms on the horizon.

In light of this uncertainty, there is no time like the present for firms who do business with the Federal government to get prepared.  That means creating a plan for how to address existing contractual obligations without assuming unnecessary risks in the event that the government does, in fact, shut down (again).  It is far better to think about and address these issues in advance, rather than face the real time pressure of a last minute Capitol Hill budget deal (or failed deal).

Let’s start with the bad news:  your government contract (like almost every other procurement contract) will very likely be impacted by a shutdown.  The Anti-Deficiency Act prohibits Federal agencies from exceeding appropriation limits unless the contract falls into a narrow exception.  For contractors, that means a Stop Work Order.  Remember that the risk of continuing performance in the event that funding is not available may fall on your company.

Now, some good news.  By thinking ahead and planning in advance, you can mitigate that risk and place your business in better position to weather the storm.  Here are a few practical pointers aimed at doing just that:

  • Review Your Contract.  Understanding how the government funds your contract will shed light on how it likely will be treated by the agency in the event of a shutdown.  According to the Office of Management and Budget, most “routine ongoing activities” will not be authorized to continue during a lapse in appropriation.
  • Communicate with the Contracting Officer.  Just like your business, the agency is also likely working on a plan on how to administer on-going contracts during a shutdown.  A mutual understating with the CO will go a long way towards avoiding disputes when the work inevitably ramps back up.
  • Develop Contingency Plans.  Work internally to create a contract specific contingency plan to mitigate risk in the event of a funding issue.  These will vary greatly depending upon the specifics of each procurement, so bringing in outside consulting and expertise to set up an individualized plan may reap benefits, particularly for more complex work.

Of note:  these tips – and the last one in particular – are not limited to government shutdown concerns alone.  Any government contract can experience unanticipated delays or even a long-term suspension of work.  Thinking ahead and creating a plan is the best way for contractors to avoid assuming unnecessary performance risks.

For contractors, defending (and overcoming) bid protests that challenge contract awards based on alleged Organizational Conflicts of Interest (OCI) may hinge on what a contractor does at the very beginning of the procurement process.  Whether the contractor revealed, acknowledged, addressed, and documented potential OCI with the Contracting Officer (CO) could determine the fate of the protest (and, in turn, the contract award).

In a recent decision, GAO sustained a protest asserting that the Department of Health and Human Services (HHS) failed to meaningfully consider the threat of OCI posed by the awardee.

In the opinion, GAO details several material points that all contractors should consider:

  1.  The awardee disclosed to the CO that its parent company might pose an OCI, but the awardee did not believe there was a conflict.
  2. The CO did not address this potential OCI in the pre-award OCI memorandum.
  3. GAO rejected the agency’s argument that the CO did not need to consider the OCI issue presented because the agency had considered and dismissed a similar conflict in a different jurisdiction.

Based on these points, GAO offers a bright line principle that operates in accordance with the FAR:  GAO will not substitute its judgment for the agency’s, provided that the agency gives meaningful consideration to whether a significant conflict of interest exists.  In other words, GAO is saying that if there is no meaningful consideration of potential OCI, as in this case, GAO may sustain a protest on that fact alone.

There are a couple of take-away lessons for contractors:

  • Contractors must always actively search for potential OCI during every procurement.
  • Contractors should take an active role in informing the CO about potential OCI and ensure that the CO adequately documents any potential issues.
  • Contractors cannot rely on OCI waivers in other contracts to determine whether their potential OCI might give rise to a successful protest.

So next time you have a potential OCI issue, do not count on the CO to document the issue properly. Instead, insist that the CO consider the OCI, determine that it is not an issue, and document that process.

The Contract Disputes Act (CDA) provides a remedy for contractors seeking to recover additional time or costs on a government contract (as part of a Claim or Request for Equitable Adjustment).  But when the basis for recovery is tied up in a contract modification, contractors must beware the agency’s standard waiver language – or risk losing the battle before it even begins.

The government utilizes contract modifications to implement any number of contract changes, ranging from minor adjustments to major alterations.  Modifications come in two general varieties:  Unilateral (the government directs the contractor to perform without negotiation) and Bilateral (the government and the contractor agree and both sign off on the change).

Bilateral changes can present a major stumbling block when the government and the contractor are on different pages when it comes to the terms of the change.

Bilateral changes very often include waiver language releasing the agency from any future claims for compensation (time / costs) arising out of the change that are not included in the modification.  Contractors must therefore be conscious of: (1) the compensation included in the modification and (2) whether that compensation makes the contractor whole.

If the contractor believes the terms of the modification fall short, it must specifically reserve the right to pursue damages at a later date before signing.

The importance of modification waiver language was highlighted in a recent Court of Federal Claims (COFC) case involving alleged delay damages on a U.S. Army contract related to the construction of water bottling facilities in the Middle East during the Iraq War.

As one part of the multifaceted claim, the contractor sought to recover based on alleged government-caused delays to the completion of a bottling plant.  The plant was the subject of two separate contract modifications – but the contractor argued that the modifications did not address the specific issue of delay (and, therefore, that it retained the right to seek the costs associated with the delay as part of the appeal).

The government, on the other hand, argued that the delay was incorporated as part of the second modification and therefore released by the contractor through the modification’s standard waiver language (under the legal theory of accord and satisfaction).  The Court sided with the government – specifically relying on the contractor’s failure to include a reservation of rights before signing the second modification.

The takeaway for contractors is clear:  Read and understand your modifications – and if there are any discrepancies, be crystal clear about reserving the right to seek compensation at a later date before you sign.

If you are interested in an overview of the unique framework of laws, regulations, and rules that govern the interpretation of government contracts, I invite you to join me for a live webinar on Monday, December 18.

More information on registration and attending the webinar can be found here.

During the webinar, I will discuss the unique interaction between your business and the Federal government when it comes to contracting in the public sector.  A marked departure from private contracting, businesses must understand how government contracts are formed and administered in order to successfully play the game.  Contractors that fail to understand the rules run the risk of losing out on contract awards or dealing with the often severe consequences of unsuccessful performance.

Additionally, the webinar will cover how government contractors are required to engage with the government when a dispute arises.  We will examine common causes of contract changes, the dispute resolution process (REAs, Claims, and more), and even the procedure for protesting erroneous contract award decisions.

Even if you are not able to attend the webinar, I’m happy to answer any questions related to this (or any other) topic.  You can reach me at or (202) 696-1460.

Understanding claims under the Contract Disputes Act is an essential skill for government contractors.  Claims (and related requests for equitable adjustment) are by far the most common remedy for contractors seeking to recover additional time and/or costs from the agency administering the contract.

Part of understanding the claims process is appreciating what kind of impacts do – and do not – lead to recovery for the contractor.  For example, and as I’ve covered before, contractor claims often arise in the context of differing site conditions (i.e., a subsurface, latent, or unknown physical condition at the project site that differs materially what is indicated in or anticipated under the contract).  In order to successfully pursue a claim for a differing site condition, the contractor must understand the concept of “reasonable foreseeability” and document the actual damages incurred due to the changed condition.

Contractors seeking to recover based on project delays must conduct a related – but distinct – analysis.  Generally speaking, the agency administering the contract is bound to act reasonably and timely respond to the contractor.  If a contractor submits an RFI and does not receive a timely response (based either on a contract requirement or other reasonable standard), the government could be on the hook for the time and costs extending out from that delay.

However, any contractor seeking to recover for a delay must first be sure that its own house is in order – that is, that it acted in good faith in interpreting and performing the contract.  A good example is presented in a recent Armed Services Board of Contract Appeals decision, where the Board denied the contractor’s claim for costs relating to alleged government delays.

The contract at issue was for the repair and calibration of a U.S. Air Force power supply unit.  During its performance, the contractor claimed that it submitted requests for clarification related to its duties under certain contract CLINs.  Because the agency did not timely respond to those requests (the contractor argued), the government bears responsibility for the corresponding delays.

In response, the agency offered a simple yet effective defense:  If the contractor consulted its PWS, all of its questioned would have been answered in full.  The Board agreed with the government.  According to the decision, there was no evidence that the contractor was somehow prevented from accessing the PWS and – even though the government certainly could have been more cooperative – all of the information allegedly sought by the contractor was available in the PWS.

The case obviously presents an extreme example – reading the contract would seem to be an essential first step for every new project – but the lesson is still the same.  The government can bear responsibility for delays, but the claim will far easier to support if there are not overriding or even competing faults on the part of the contractor.

It seems that when we discuss GAO bid protests, we most often refer to the post-award variety.  Your company lost a contract award due to a procurement error by the agency (like the failure to adhere to the RFP requirements or properly evaluate proposals) – and the fight is on to win it back.

However, Federal contractors have another effective tool at their disposal – the pre-award protest.

A pre-award protest is based on alleged improprieties in the RFP that are apparent prior to the time set for receipt of initial proposals (or, in the case of an IFB, bid opening).  If a firm detects a solicitation defect while preparing its proposal, a protest concerning that defect must be filed before the deadline set by the agency for the submission of proposals.

Pre-award protests are important for a number of reasons.  First, they are waived if not timely raised.  That is, if your firm loses out on a contract, you cannot turn back the clock to challenge an unclear RFP term.  That ship has sailed.  Second, pre-award protests can an essential part of your firm’s proposal preparation process.  By clarifying the RFP upfront, you can set your firm up to be in the best position to win the award later down the line.

A recent GAO decision presents a great example of the effective use of a pre-award protest.  The protest concerns an RFP issued by the U.S. Department of Agriculture for large air tanker services for wild land firefighting.

After reviewing the solicitation, one potential offeror filed a pre-award protest arguing that the agency’s restriction on retardant tank sizes (no larger than 5,000 gallons) was unduly restrictive.   The protester argued that the restriction unnecessarily excludes larger tanker fleets and is not grounded in a reasonable basis (i.e., not related to the agency’s actual needs).

In responding to the protest, the agency argued that larger tankers are not suitable for a number of technical reasons related to the logistics of coordinating and operating firefighting missions.  The contractor disagreed – and proceeded to poke holes in the agency’s logic with facts and statistics related to (among other things) airfield weight limits, dimensions, and locations.

GAO sustained the protest and directed the agency to go back to the drawing board to reassess its actual needs.  GAO’s decision is less about firefighting management and more an indictment of the agency’s lack of logical planning related to logistics of the tanker size limitation.

By filing the protest, the potential offeror (whose fleet of tankers all exceed the size restriction) not only clarified the RFP, but also opened itself up to a potentially new contracting opportunity.  Federal contractors should be mindful of the potential upside of pre-award protests – even with respect to procurements where your firm starts on the outside looking in.


As I have covered here before, every small business owner needs to be aware of the Small Business Administration’s (SBA) ostensible subcontractor rule.

In a nutshell, ostensible contractor affiliation occurs when a small business holds a prime contract – but a subcontractor hired for the job actually ends up controlling the work.  The SBA targets instances where the subcontractor (and not the small business prime) performs the “primary and vital” work of the contract.  Affiliation can also arise under the ostensible subcontractor rule if the small business is “unusually reliant” on its subcontractor.

The typical ostensible subcontractor rule violation involves a small business (prime contractor) and a large business (subcontractor).  For example, if the small business lacks the needed resources or expertise, it can find itself leaning on its large subcontractor to run the project to too great of an extent.  Anytime the large sub takes over a primary role on the project, there is danger of ostensible contractor affiliation.

However, in a recent decision, the SBA’s Office of Hearings and Appeals (OHA) drew out an important distinction in the law.  While the small prime/large sub relationship is more common, the ostensible subcontractor rule remains firmly in play even as between two small businesses.

The OHA decision arises out of a size protest filed in connection with a health services contract offered by the Florida Army National Guard.  After the SBA Area Office found the contract awardee small for purposes of the contract, the protester appealed and argued that the Area Office improperly failed to consider whether the awardee was affiliated with its proposed subcontractor under the ostensible subcontractor rule.

The Area Office based its decision on the size of the proposed contractor/subcontractor team.  Specifically, the Area Office reasoned that – because both firms were small for the purposes of the procurement – even if they formed a joint venture, affiliation by the ostensible subcontractor rule would not be found.  According to the Area Office, the SBA’s regulations intend for joint ventures to be treated as small as long as each of the joint venture members is small, without regard to the ostensible subcontractor rule.

On appeal, OHA disagreed with the Area Office.  OHA pointed out that the ostensible subcontractor rule does not include any exceptions for joint ventures where both members are small. To the contrary, the rule requires SBA to evaluate whether the firms are ostensible subcontractors; if they are, they will be considered joint venturers and affiliated for the purposes of a size determination.

OHA found that it could not accept Area Office’s conclusion that there had been no violation of the ostensible subcontractor rule because it never performed the required analysis.  Accordingly, OHA granted the appeal and ordered the Area Office to make a new size determination, including an examination of whether the participating firms were affiliated under the ostensible subcontractor rule.


Every government contractor that begins performance on a new engagement has the same basic goal – superior performance that bolsters the company’s bottom line and garners excellent past performance ratings from the agency.

But, when the contract ends, will your company’s status as a successful incumbent contractor increase the odds of winning future follow-on work from the agency?  While it never hurts to have exemplary past performance, GAO recently cautioned that nothing is guaranteed.

The protest in question (filed by the incumbent contractor) challenged the agency’s best value award decision on a contract to provide security services at a nuclear facility.  Specifically, the contractor argued that the agency’s evaluation of its technical proposal and staffing approach were unreasonable (and, in fact, “inconceivable”).

The agency rated these factors as merely “Good.”  However, based on its past performance as the incumbent, the contractor maintained it deserved “Excellent” ratings.  GAO disagreed, holding that the contractor’s protest lacked merit and was based on a selective reading of the RFP and the agency’s evaluation record.

GAO’s decision provides incumbent contractors with a clear path forward when approaching a proposal for follow-on work.  In a nutshell, highlight your outstanding past performance, but don’t rest on your laurels.  The agency will approach evaluations for the new award with a clean slate, and so should your business.

This lesson learned is particularly significant with respect to a best value competition.  As I’ve discussed previously, contractors approaching a best value procurements have to strike a balance between technical superiority and price.  Here, the contractor appears to have hung its hat too much on the technical side (and, even more narrowly, on its past performance as the incumbent) and, as a result, lost out on the contract.

Join me on Friday, November 10, 2017 to discuss the impact of the Small Business Administration’s All Small Mentor Protégé Program on the Design-Build Community.  My program is part of the Design-Build Institute of America’s Conference & Expo (Philadelphia, PA).

The impact of design-build in the public sector is well documented.  Federal agencies are increasingly employing integrated delivery services on government construction projects.

Now, the rise of design-build is coupled with the new opportunities (and challenges) presented by the Small Business Administration’s “All Small” Mentor-Protégé Program.  The Program opens the door to allow any small business to partner with a large contractor-mentor.  Together, the mentor-protégé team can chase contracts previously reserved for performance by only small businesses.  In a nutshell, contractors have unprecedented access to contracts of increasing size, scope, and complexity.

The presentation will cover best practices for forming winning designer-contractor teams.  We will walk through the Federal regulations that govern teaming arrangements and take an intensive look at the All Small Program and all of its implications.

The session will also cover the risks and rewards of teaming arrangements for contractors.  For example, we will explore the proper way for teaming partners to deal with potentially tricky issues of compensation and risk allocation.  How should teaming partners divide the cost savings on a successful project?  What about how to shoulder losses if the project fails to meet the team’s expectations?

Finally, the program will cover the special considerations of small business teams – from both the small and large business perspective. The U.S. Small Business Administration provides special rules and regulations that apply only to teams involving small businesses.  Failure to follow these rules can lead to major compliance problems and even False Claims Act liability.

If you are unable to attend the conference in person, please feel free to contact me to discuss any questions.

The most common basis to establish timeliness for a Government Accountability Office (GAO) bid protest is found in Section 21.2 of the GAO’s regulations.  Under the regulation, the protester must file the protest “not later than 10 days after the basis of protest is known or should have been known”.

Important Disclaimer:  There are plenty of other events that can trigger the running of a GAO bid protest filing deadline.  Please feel free to reach out to me directly if you need guidance in this area.

In a recent decision, GAO placed a hard emphasis on the “should have known” element of the regulation.  The case involved a protest over the Department of Veterans Affairs’ award of a contract for construction services.  Among other things, the protest alleged that the agency improperly relied on a Small Business Administration (SBA) Certificate of Competency (COC) finding the awardee responsible for the procurement.

On review, GAO dismissed the entire protest as untimely.  Specifically, GAO determined that the clock on the protest started to run when the protester received a letter from the agency stating its award decision (and also indicating reliance on the SBA’s COC).  Because the filing was not made within 10 days of that “should have known date,” the window to protest closed.

Of note, GAO specifically rejected the protester’s argument that its time to file a protest should be expanded based on its lack of knowledge concerning the COC program.  According to the protester, it did not understand the purpose/process of the program and sought clarification from the agency.  Ultimately, it took until several weeks after the agency’s award letter for the protester to gain a sufficient comfort level to file the protest.

The protester’s delay argument failed because the SBA’s COC program is detailed in both the Federal Acquisition Regulation and the SBA’s own regulations – i.e., publicly available sources.  Accordingly, GAO found that there was no basis to extend the applicable 10-day deadline for filing.

For federal contractors contemplating a bid protest at GAO – this case demonstrates that the time for contemplation is very short.  Any information giving rise to knowledge of a potential protest basis must be treated as potential triggering event.  If a stay of award or performance is needed, the time to file could be even shorter (as little as 4 calendar days).

The only option to preserve the important rights vested in the GAO bid protest process is to act fast and stay out in front of these deadlines.