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.

For government contractors frustrated by Federal agencies’ use of Lowest-Price Technically-Acceptable solicitations on complex services contracts – help may be on the way.

As I’ve discussed before, LPTA procurements can have a chilling effect on contractors that are able to provide increased technical benefits to the government – but at an increased price.  LPTA solicitations encourage contractors to get as lean as possible – focusing on price and only minimum technical competency.

A Bill currently before the U.S. House of Representatives proposes to limit the use of LPTA and leave it to the agency to weigh the “benefits of cost and technical tradeoffs in the source selection process.”  In other words, a Best Value Tradeoff approach.

If passed into law, the Bill would appear to been a boon for highly-skilled contractors capable of providing Federal agencies with great value at an increased (but still reasonable) price.  The Bill specifically earmarks certain industries where Best Value solicitations would take precedence over LPTA contracting:

  • Information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, audit or audit readiness services, or other knowledge-based professional services;
  • Personal protective equipment; and
  • Knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.

I will continue to track the progress of this Bill as makes it way towards becoming law.  It should certainly be on the radar for Department of Defense contractors providing any of the broad range of services outlined above.

Join me on Thursday, August 24, 2017 for lunch (11:30 am to 1:30 pm) and learn about the Small Business Administration’s All Small Mentor Protégé Program. The event is sponsored by Design-Build Institute of American Mid-Atlantic and will be held at Maggiano’s in Tysons Corner.

For months, we poured over the proposed and final rules – speculating about how the Program would look and operate.  Now it is here.  With the SBA accepting and processing applications at a healthy clip, there is no better time than the present to get up to speed.

During the event, we will walk through the basics of the All-Small Program, including the application and approval process.  We will also talk about big picture issues, including the Program’s general shield against affiliation and the most important questions for contractors (both large and small) considering taking the leap.

The event will also offer insights for contractors that have already investigated the Program.  For example, we will discuss the newly published requirements for mentor-protégé agreements and joint venture agreements formed between Program participants.  Careful consideration of the issues captured in these agreements can make the difference between a successful partnership . . . and the undesirable alternatives.

I hope that you can join us on the 24th.  I am happy to chat after the presentation about any specific questions facing your business.  If you can’t make the event, you can always contact me here to discuss your questions.

I’d like to you invite you to join Fox’s Government Contracts team of Reggie Jones, Doug Hibshman and Nick Solosky at the upcoming 2017 Associated General Contractors of American Federal Contractor Conference in Washington, DC.

We will lead a presentation and discussion entitled “Updated Federal Regulations Contractors Must Know – Cyber Security, Ethics & Compliance, SBA All-Small Program & More,” from 3:30 to 5:30 p.m. on Monday, May 1, 2017.

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The presentation will offer insights into the new cybersecurity requirements facing federal contractors – including unpacking the FAR and DFARS cybersecurity clauses and the steps that contractors need to get to get (and stay) compliant.  Cybersecurity is a cutting edge issue, but failing to stay ahead of the curve could land contractors in hot water.

In addition to cybersecurity, we’ll also be detailing the hot button government contracting issues of 2017.  For example, we’ll outline what all contractors – both large and small – need to know about the SBA’s “All Small” Mentor-Protégé Program (and how it could open the door to new business development opportunities for contractors).  We’ll also pull straight from the headlines by covering the new administration and the President’s “Buy American, Hire American” initiative.

If you’re unable to make it to DC or attend the presentation in person, we can still discuss cybersecurity or any other Federal contracting regulations with you.  Please feel free to contact us for more details.

Government agencies have ample discretion when it comes to corrective action in response to a bid protest.  A recent GAO bid protest shows that contractors must tread lightly when it comes to challenging that discretion.

Unlike negotiations in the private sector, power plays against the government can end in lost contracting opportunities.

The procurement that spawned the protest in question started as a sealed IFB by the U.S. Army Corps of Engineers (USACE) for dredging services.  In response, to the IFB, the Agency received three timely bids – and determined that all three were unreasonably high-priced (in comparison to a government estimate).  USACE therefore determined that it could not award the contract.

The lowest of those bidders submitted an agency-level protest, arguing that its bid was not unreasonably high – rather, the government’s estimate lacked a reasonable basis and was unrealistic.  In response to the agency protest, USACE attempted to engage the contractor in a dialogue concerning how its bid was formulated (in accordance with a USACE Acquisition Instruction, which authorizes the agency to share the details of the government estimate with the apparent low bidder), but the contractor declined to share details regarding its pricing.  Unsurprisingly, USACE then promptly denied the agency-level protest.

The contractor next took its argument to the GAO, where it again protested the government’s cost estimate as unreasonable.  This time, USACE elected to take corrective action and convert the acquisition from a sealed bid to a negotiated procurement.

The contractor again protested – this time arguing that the decision to convert the procurement was unreasonable and that the agency should have awarded the contract under the terms of the IFB at the originally-bid price.  This time, it was the GAO that dismissed the protest and allowed the agency to proceed with its corrective action.

Most interestingly, GAO dismissed the contractor’s challenges concerning the realism of the government’s price estimate as untimely.  According to GAO, the contractor failed to diligently pursue the basis for its protest when it declined to engage in an exchange of pricing information at the agency level.  But for this decision (according to GAO’s reasoning), the contractor would have been armed with a copy of the government’s estimate and equipped with the basis to pursue a protest (before both the agency and at the GAO).  The GAO also dismissed the protest arguments concerning the conversion to a negotiated procurement (again relying on the lack of any basis in the record to scrutinize the government estimate).

The series of protests is not a total loss for the contractor, as it is still eligible to engage in the continued competition and to negotiate its proposed price with the agency.  That said, the contractor finds itself right back where it started — leaving open the question of whether it would have been better served to engage with the agency over price as the lowest-priced bidder in response to the IFB.