Recently on the blog, I covered one of the major risks encountered by construction contractors – subsurface or unexpected physical conditions discovered after the work begins (commonly known as  Differing Site Conditions under Federal Acquisition Regulation (FAR) 52.236-2).

In that post, I explained that a government contractor that uncovers a Differing Site Condition on a federal project must take three basic steps:

(1) Properly document the condition

(2) Notify the government, and

(3) Preserve the right to bring a Request for Equitable Adjustment or Certified Claim.

Today, I’d like to drill down on the second requirement – providing proper notice to the government – by examining a recent decision from U.S. Court of Federal Claims (COFC).

The case concerned a contractor seeking additional compensation in connection with its performance of a construction contract with the International Boundary and Water Commission (for the widening and rehabilitation of the top surface of the Urban Presidio Level in Presidio, Texas).  The contractor was required to test the embankment soil to ensure compliance with certain performance specifications, including moisture content and compaction.

The contractor struggled to achieve the required soil conditions and, accordingly, experienced project delays.  The contractor sought to shift responsibility for the delays to the government, arguing that it was required to place the embankment material over an “unacceptable, non-constructible subgrade.” Specifically, the contractor alleged that the contract documents misrepresented the site’s subgrade conditions, resulting in a differing site condition under FAR 52.236-2.

The government sought summary judgment on the contractor’s claim based on an allegedly unreasonable contract interpretation.  That is, the government argued that no reasonable contractor would have interpreted the contract documents as indicating that the project’s subgrade would meet the embankment specifications.  Additionally, the government claimed that – even if there was a differing site condition – the contractor failed to provide adequate notice.

On the latter point, the contractor did not dispute that it failed to provide formal notice, but nevertheless argued that the government was “constructively” on notice of the subgrade condition.  The COFC disagreed, finding that “constructive notice” may only take the place of actual notice where there is no prejudice to the government.  Simply stated, the contractor must communicate with the contracting officer when or if it discovers a condition that does not meet its expectations.

In this case, the contractor did not provide such notice and, moreover, waited for more than a year to raise the issue through a request for equitable adjustment.

The takeaway for contractors is an easy one – communicate, communicate, communicate.  Regular updates to the government are probably part of your contract anyway, but regardless, should be part of your firm’s best practices.  If a differing site condition is encountered, providing notice to the government pivots from a best practice to an absolute necessity.

 

Bid protests at the Government Accountability Office (GAO) have spawned a distinct area of the law.  With multiple evaluation schemes to consider, there are an ever-growing number of strategies for disappointed offerors to challenge alleged agency procurement errors.

Just like there are best practices for bid protests, there are also strategies to avoid at all costs.  Chief among the arguments a protester should steer clear of is “mere disagreement” with the agency.

In a nut shell, “mere disagreements” arise where the protester challenges the agency’s decision based only on the notion that it deserved a better score, more strengths, better adjectival rating (and so on).  These arguments do not identify mistakes by the agency – they just wish the agency reached a different result during the evaluation.

GAO is not shy about denying “mere disagreement” protests out of hand.  For example, in a recent bid protest decision concerning an Army IT support services contract, GAO found that the protester’s arguments concerning the number of strengths/weaknesses and adjectival ratings assigned by GAO did not offer any grounds to sustain the protest.

The underlying rationale for the decision is GAO’s unwillingness to substitute its own judgment for that of the agency.  In other words, GAO finds that the agency is in the best position to assess its own needs and evaluate proposals.

GAO is also unwilling to split hairs when it comes to evaluation ratings.  For example, in this case, the protester unsuccessfully argued that the agency’s determination that a portion of its technical proposal included only strengths and no weaknesses should have automatically resulted in the assignment of a “significant strength.”  GAO disagreed, finding that the RFP defined a significant strength as an aspect of a proposal that would be “appreciably advantageous to the government during contract performance.” While the protester’s proposal may have exceeded certain requirements, GAO would not step in to overrule the agency’s determination that the proposal did not significantly exceed those requirements.

So, if “mere disagreement” is out, does that mean it is impossible to challenge an agency’s evaluation of your proposal?  Not at all.

The key is to focus on the essential element of all bid protests – a procurement error by the agency resulting in competitive prejudice (i.e., a diminished opportunity for contract award).  Rather than focus on ratings or strengths, the protest should address specific errors made during the evaluation process.  Did the agency misinterpret part of your proposal?  Or overlook something altogether?  Did the agency offer the awardee an advantage that your firm did not receive?

While these kinds of errors may be difficult to pinpoint at first, a skilled debriefing strategy can help draw them out.

The bottom line is that bid protests require a significant investment of time and resources.  If your firm’s only arguments amount to mere disagreement with the agency, those resources are likely better spent elsewhere.

For federal contractors, affirmative action plan (AAP) audits may be just around the corner.

The U.S. Department of Labor Office of Federal Contract Compliance Programs sent 750 courtesy scheduling announcement letters (CSAL’s) last week to federal contractors, notifying them that their affirmative action plans (AAP) may be audited.

This latest round of notifications, which supplements the 1,000 CSAL’s sent out earlier this year, alerts federal contractors that the Office of Management and Budget (OMB) will be sending scheduling letters in 45 days. The OMB-approved letters will then provide recipients the standard 30 days to submit their AAP.

Preparation is key. In our latest alert, Fox Rothschild’s Kenneth Rosenberg offers takeaways on how federal contractors can ready themselves for complying with this regulatory procedure and the potential audits that may follow.

 

As I’ve covered here before, low-priced, technically acceptable procurements (LPTA) shine a light on a contractor’s ability to provide the required services at the lowest possible cost to the government.  Leave your style points at home.  It is all about getting lean to win the award.

But when the evaluation is that simple, is there any room to challenge an LPTA award decision?  The answer is Yes — and a recent GAO protest offers some important insights into best practices.

The protest concerned an Air Force contract to provide tactical recovery kits.  Covering both LPTA bases, the protester argued that the agency (1) unreasonably found the awardee technically acceptable and (2) conducted inadequate discussions concerning price.

On the first question, GAO disagreed that the agency erred in evaluating the awardee’s proposal.  Stated differently, the agency determined that the awardee’s proposal was technically acceptable and GAO found no basis for overturning that conclusion.

With the technical acceptability side settled, only the question of the lowest price remained.

The protester argued that the agency held inadequate discussions, but GAO would not consider the issue because it lacked a key allegation.  Specifically, the protester never alleged that it would have lowered its price if the discussions had been adequate.  Without that allegation, GAO found there could be no prejudice.  The awardee remained technically acceptable and offered the lowest price.

Although it was unsuccessful, this protest nevertheless offers a great roadmap for firms considering an LPTA protest.  If possible, the protest should identify that the awardee was not, in fact, technically acceptable.  In that case, the award should skip over that offeror and proceed to the next in line.

In the alternative, the protest should identify a procurement error resulting in a misevaluation of your firm’s price (i.e., the missing element of the protest examined in this post).  It only makes sense that a LPTA protest should take a stance on your firm’s ability to offer the government the lowest price.

 

 

Federal procurements often include a competitive range of offerors seeking the contract award.  The Federal Acquisition Regulation (FAR) competitive range procedure offers the agency an incremental stage in the competition where it can pare down a large pool of offerors into a narrow group consisting of only those proposals with a reasonable chance of receiving the award.

But what qualifications are used to determine the offerors included in the competitive range?  And can you protest your firm’s improper exclusion from a competitive range?

Let’s start with that second question.  Yes.  Your firm is absolutely entitled to protest an agency’s competitive range decision if it was made unfairly or not in accordance with the solicitation requirements.  In fact, competitive range proposals sometimes have a greater window for success.  There is much less heartburn involved for the agency in adding one more qualified offeror to the pool (as opposed to traditional protests that challenge the agency’s final decision and seek to wrestle a contract award away from someone else).

Now, circling back to the first question, FAR 15.306 (Exchanges with offerors after receipt of proposals) defines a competitive range as consisting of “all of the most highly rated proposals.”  The agency evaluates proposals against the criteria included in the solicitation to narrow the field.

In a recent protest, an offeror challenged its exclusion from the competitive range for a contract for base operations and spaceport services to be performed at the John F. Kennedy Space Center and NASA facilities on Cape Canaveral Air Force Station.  In part, the protester challenged the agency’s decision on the basis that its proposal included an acceptable technical approach (i.e., the proposal was not defective and conceivably could have received the contract award).

GAO took the opportunity to emphasize that mere technical compliance does not guarantee inclusion in a competitive range.  Specifically, GAO accepted the agency’s conclusion that the lack of strengths in the protester’s proposal, combined with its high price (as compared to other similar offers), rendered it unlikely to be considered for award, even if some of the proposal’s weaknesses could be addressed in future discussions with the agency.

In other words, the proposal was excluded from the competitive range because there was no reasonable chance it would receive the contract award.

Interestingly, GAO’s decision also addresses the protester’s argument that the agency was required to conduct a best-value tradeoff analysis among all of the evaluation factors when establishing the competitive range.  Again, GAO disagreed with protester.  The focus of a competitive range is on culling down the group of offers to only the most highly rated – not following the procedures included in the solicitation for the ultimate contract award decision.

GAO’s decision should not discourage contractors from pursuing a debriefing after exclusion from the competitive range – or even filing a protest.  The protester’s procedural basis was solid – the agency is accountable for making its competitive range decision in a fair, reasonable, and well-documented manner.  With better facts, a competitive range protest offers a low-risk, high-reward opportunity to get back into the competition for the award.

Here we go again.  Back in March, I discussed the impact of the brief government shutdowns in January and February and risks associated with what could have been (had the stand-off gone on much longer).

Today, news from the White House and Capitol Hill raises concerns over another possible shutdown in September (when the government will run out of money without action by Congress and the President).

In light of this uncertainty, I thought it made sense to again share practical steps that contractors can take to get prepared.  That includes 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 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 risks 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.

I recently had the opportunity to present an online CLE for LawLine on Risk Management in Government Contracting. This is my second time presenting a course for LawLine (I previously taught a course on Small Business Compliance).

Risk Management is a broad topic that can mean different things to different people. In this course, I decided to focus on practical steps that contractors can take to develop a corporate Culture of Compliance. There is little value in limiting compliance training to only the upper leadership – employees at all levels must become ethics and compliance watchdogs.

I recommend developing a compliance program in four steps (that not coincidentally track the requirements of FAR 52.203-13):

  • Implement a Contractor Code of Business Ethics and Conduct
  • Establish a Regular and Robust Training Program for All Employees
  • Institute an Internal Control System
  • Understand the Difference between Reportable and Non-Reportable Evidence

To be effective, none of these steps are “one and done.”  It will not do much good to draft a Code of Business Ethics and Conduct, only to put it in a drawer to collect dust.  Your Code should be a living document that your employees read, understand, and utilize often.

In addition to these broad strokes, the course also delves into a few hot button issues relevant to today’s enforcement environment.  Most prominently, I discussed the requirements of FAR 52.204-21 and Cybersecurity best practices.  It may not have fully hit yet – but I think firms that lag behind in this area will soon find themselves on the wrong side of government enforcement actions.

If you have any questions about this Risk Management presentation, or have other questions you’d like to discuss, I’m happy to connect with you off-line.  I’m available by phone (202-696-1460) and email (nsolosky@foxrothschild.com).

In today’s Federal marketplace, it is very common to see solicitations that give the Agency the option of entering into discussions with offerors.  The primary objective of discussions is to maximize competition and, in turn, the Agency’s ability to obtain the best possible value.

Once it makes the decision to enter into discussions, the Agency must do so in good faith and with all offerors remaining in the competition.  Further, the discussions themselves must be “meaningful” – a fairly subjective standard that (predictably) often works its way into bid protests.

In a nutshell, to be meaningful, discussions must identify proposal deficiencies and significant weaknesses that reasonably could be addressed in order to materially enhance the offeror’s potential for award.  The discussions also need to be sufficiently detailed to lead the offeror to the areas of its proposal that require revision or amplification.  Discussions should not be misleading or prompt the offeror to engage in a way that will not address the Agency’s actual concerns.

All of that said, the Agency is not required to hold the offeror’s hand (so to speak) to conduct meaningful discussions.  The Agency is not required to hold all-encompassing discussions, or to discuss every aspect of a proposal that receives less than the maximum score.  The Agency also need not advise of minor or insignificant weaknesses, even if those weaknesses are later used to differentiate between closely ranked offers.

Federal Acquisition Regulation (FAR) 15.306 is a good beginning resource for learning more about the Agency’s requirements during discussions.

As I mentioned above, discussions tend to be a fertile ground for bid protests because of the ample opportunity for disparate treatment between offerors – intentionally or otherwise.  Understanding the how the Agency should conduct discussions opens the door to potentially winning bid protest arguments.

For example, in a recent decision, GAO sustained a protest alleging that the Agency failed to conduct meaningful discussions.  Specifically, the protester argued the Agency did not do enough to shed light on how certain solicitation requirements would be applied during the evaluation process.

GAO agreed with the protester and even took it one step further – concluding that not only were the discussions not meaningful, they actually mislead the offeror.  That is, the Agency’s discussions led the offeror to believe that it needed to amplify certain past performance experience included in its proposal when, in fact, the Agency did not consider that experience relevant to begin with.

Today’s takeaway is that contractors disappointed with an award decision should take a long look at the way the Agency conducted discussions before walking away.  If there is a legitimate question as to whether the discussions were conducted in a fair and meaningful way, it could form a strong basis for a bid protest.

Two pieces of advice I often provide to government contractors are:

1.When responding to a solicitation, give the government precisely what it asks for – right down to the letter.  This includes providing the information in the correct section of your proposal.  The agency will not play hide-and-seek; and

2.  If you think there is something askew with a procurement or award decision – act fast.  There are lots of different deadlines enforced by GAO, but they all come and go very quickly.  A contractor typically must act within 10 days of when it knows (or should have known) of a protestable issue.  An even shorter timeline (5 days) applies in order to obtain an often essential stay of contract award and/or performance.

These concepts converge when it comes to bid protests related to defective solicitation terms.  GAO Bid Protest Rule 21.2(a)(1) states that a protest alleging improprieties or errors on a solicitation that are apparent on the face of the solicitation must be filed prior to bid opening or the closing date for the receipt of initial proposals.

In other words, a contractor cannot adopt a wait-and-see approach.  The protest must be filed before the contractor submits its bid or proposal.

In a recent GAO decision, a contractor gambled on waiting and ultimately lost the protest and a chance at the contract award.  The procurement at issue involved an Army contract for LED lighting.  The protester believed that its proposal was lower-priced that the awardee’s proposal and exceeded the solicitation requirements.

The Army rejected the protester’s proposal as non-responsive.  The solicitation included three categories of lights.  CLINS 1 and 2 required “type two” LED lights while CLIN 3 required “type three.”  All lights were also required to have a minimum glare rating of “two.”  According to the agency, the protester’s proposal included “type three” lights for all CLINS and a glare rating of “three.”

The protester did not dispute that its proposal differed from the solicitation requirements, but argued that the requirements were unclear and unreasonably restrictive.  With ever getting to the merits of these arguments, GAO denied the protest as an untimely challenge to the solicitation:   “To the extent that the protester now argues that it was unreasonable for the agency to have a minimum requirement for the type of light to be procured, or that the [solicitation’s] technical specifications were unclear, these arguments allege improprieties in the solicitation that, in order to be timely, were required to be raised prior to the closing time for receipt of quotations.  Accordingly, these allegations are untimely and will not be considered.”

At the end of the day, it did not matter whether (or not) the LED lights offered by the proposal were “better.”  The contractor did not follow the solicitation to the letter and lost as a result.

The lesson here for contractors is an easy one.  Address any solicitation uncertainties early and to your complete satisfaction.  Most issues can be addressed through Q&A or other pre-bid closing communications.  If problems are resolved, proceed and comply with the solicitation as-written.  If a defect remains even after your best efforts, the only solution is a bid protest filed before the closing date for proposals.

Please see the following link for Fox Rothschild LLP’s Federal Contractors’ Guide to Small Business Administration Set-Aside Contracts, Size Standards, Size Protests, and Affiliation. 

http://www.foxrothschild.com/douglas-p-hibshman/publications/federal-contractors-guide-to-small-business-administration-set-aside-contracts-size-standards-size-protests-and-affiliation/

The federal government sets aside a significant portion of its procurement dollars each year for purchasing goods and services from small businesses.  Small business set-aside procurements and small business contract awards (“Set-Aside Procurements” and “Set-Aside Contracts,” respectively) provide substantial opportunities for a certified small business concern (SBC) to compete for and perform federal contract work. However, SBCs awarded Set-Aside Contracts are frequently subjected to size protests filed with the U.S. Small Business Administration (SBA) by disappointed competitors looking to challenge the awardee’s size, and if successful, to disqualify the awardee from the procurement.

This guide educates federal contractors on the following issues and concepts:

  • SBA Set-Aside Procurements, Set-Aside Contracts, and Size Standards;
  • The parameters and purposes for SBA size protests, how they are filed, and how contractors can avoid and defend against such protests; and
  • The parameters of SBA affiliation, which contractors can use to their advantage to challenge Large Businesses masquerading as small business concerns, and, as importantly, must understand to protect themselves from being adversely affected by a finding of affiliation at the hands of a size protest.

Doug Hibshman is a partner in the firm’s Federal Government Contracts & Procurement; Construction; Litigation; Privacy & Data Security; Mergers & Acquisitions; White-Collar Compliance & Defense; Health Law; and Architecture, Engineering & Design Professional Firms practice groups.  He represents small, medium, and large clients in the defense, health care, engineering, information technology, construction, manufacturing, and services industries with all manner of complex contract, compliance, and litigation issues.  Doug routinely advises and represents clients on all manner of issues related to the SBA small business regulations, to include size protests, size protest appeals, and SBA affiliation mitigation efforts.