Which Contracting Officer Resolves Disputes Involving Agency Purchases from the GSA Federal Supply Schedule?

A recurring issue faced by vendors on the Federal Supply Schedule (FSS) is which the vendor must deal with when it gets into a disagreement with an ordering agency during the performance of a delivery order – the ordering contracting officer or the GSA contracting officer. The Federal Circuit recently addressed this issue in Sharp Electronics Corp. v. McHugh, 707 F.3d 1367 (Fed. Cir. 2013).

The Federal Circuit interpreted FAR 8.406-6 as creating a bright line rule that “all disputes requiring interpretation of the schedule contract go to the schedule CO, even if those disputes also require interpretation of the order, or involve issues of performance under the order. … Requiring that all schedule contracts must be construed by the GSA CO maintains a clear, predictable allocation of jurisdiction between agency contracting office and GSA.” The Court also stated that “the ordering CO is certainly authorized to construe the language of the order (or its modifications). … We also see no reason why an ordering CO resolving a dispute cannot apply the relevant provisions of the schedule contract, as long as their meaning is undisputed. … The dispute only need go to the GSA CO if it requires interpretation of the schedule contract’s terms and provisions.”

From the Federal Circuit’s decision, we have three important guidelines regarding these “mixed-authority” disputes:

1. The GSA contracting officer resolves all disputes requiring interpretation of the schedule contract according to FAR 8.406-6.

2. The ordering contracting officer could “decide routine disputes about order performance not involving interpretation of the schedule contract, such as whether the contractor’s default was excusable.”

3. The ordering contracting officer can also get involved in issues other than performance claims, such as issues construing the language of the order or its modifications.

The ASBCA recently decided two cases dealing with this issue. In Impact Associates, Inc., ASBCA No. 57617 (Apr. 19, 2013), the ASBCA concluded that because both Impact and the Army “plainly dispute the meaning” of three clauses in the GSA FSS contract, the issue was one for the GSA contracting officer and the CBCA. In Hewlett-Packard Company, ASBCA No. 57940 (July 9, 2013), the Navy had issued a blanket purchase agreement allowing it to buy HP software and the Army issued two delivery orders for HP software under the BPA. A dispute arose regarding the terms of the delivery orders. The ASBCA concluded that because HP’s dispute did not involve any interpretation of the FSS contract, HP properly brought its claim to the ordering agency contracting officer and, subsequently, the ASBCA.

The Federal Circuit acknowledged that the guidelines it set forth in Sharp Electronics are “less than perfect” and openly invited the FAR Council to set different rules by changing the FAR provisions on which the court based its decision. However, until the FAR Council takes such action, these rules can help guide contractors as they navigate disputes arising during the performance of a delivery order under a GSA FSS contract.

Stephanie Wilson is an attorney at Berenzweig Leonard, LLP, a business law firm in the Washington metro area. She can be reached at swilson@berenzweiglaw.com.