Agencies Cannot Use Their Websites as Substitutes for FedBizOpps.gov Notices

Although government contractors have a duty to keep alert for contracting opportunities, agencies have a duty to use FedBizOpps.gov, and not their own websites, to give contractors FAR-required notice of those opportunities. Posting notices of solicitations, amendments, and awards on internal websites like the DLA internet bid board system (DIBBS) or the Army Single Face to Industry (ASFI) website is not enough. Unless the agency has posted notices on FedBizOpps.gov, the agency has not given contractors proper notice, according to several recent protest decisions of the Government Accountability Office (GAO).

In one case, the Army issued via ASFI a significant solicitation amendment one week before the due date for bids, but for technical reasons the amendment was not posted on FedBizOpps.gov until 7 PM the night before bids were due. GAO concluded that the Army did not give vendors sufficient FedBizOpps.gov notice, and recommended that the Army reopen the solicitation and set a new due date for bids.

In another case, a contractor learned about a DLA opportunity only after seeing in FedBizOpps.gov DLA’s notice of a purchase order award. After the contractor protested to GAO the agency’s failure to give FedBizOpps.gov notice of the solicitation itself, DLA claimed that the contractor should have seen notice of the solicitation posted on DIBBS and therefore the contractor’s protest was too late. GAO disagreed, holding that the contractor’s protest clock began only after DLA posted notice of the award on FedBizOpps.gov.

Contractors surprised by agency contract awards should not let an agency claim they should have known about the opportunity. Notice of a potential business opportunity is at the heart of full and open competition. Notice of an agency’s award of that business opportunity is at the heart of a contractor’s right to protest.

Terrence O'Connor is the Director of Government Contracts for Berenzweig Leonard, LLP, a business law firm in the D.C. region. Terry can be reached at toconnor@berenzweiglaw.com.

A Contractor Makes a Dangerous Gamble When Its Bid Price Assumes the Approval of Local Permitting Authorities

Should a federal government construction contractor assume that its permit request for a construction project will be approved by local state authorities? Absolutely not, according to the United States Court of Appeals for the Federal Circuit. The Federal Circuit found that the plain language of FAR’s Permits and Responsibilities Clause, which was incorporated into a Federal Bureau of Prisons contract, allocated any financial cost associated with permitting solely on the contractor.

Bell/Heery was awarded a design-build construction contract to build a new federal prison in New Hampshire. The project specifications detailed a “cut-to-fill” site, meaning that the project land had to be leveled by excavating, or “cutting” materials from one area of the work site and using the same materials to fill lower areas. Bell/Heery’s proposal incorrectly assumed that the local environmental officials, the New Hampshire Department of Environmental Sciences (NHDES), would approve the cut-to-fill operations – and as an unfortunate result, Bell/Heery had to incur approximately $7.7 million in excess costs to perform, because NHDES did not approve the anticipated efficient cut-to-fill operations.

Bell/Heery attempted to recover the excess $7.7 million from the Federal Bureau of Prisons, arguing that the agency was contractually required to engage with NHDES about the cut-to-fill specifications and that the agency breached its duty of good faith and fair dealing by failing to engage with NHDES, among other allegations. The Federal Circuit did not agree, citing the FAR Permits and Responsibilities Clause, which made the contractor responsible for all permitting costs. Contractors putting together bids for federal government work should keep this decision in mind when pricing their bids, to ensure that they account for the possibility of permitting roadblocks and how these hurdles will impact their bottom line.

Katie Lipp is an attorney with the Washington, DC regional business law firm Berenweig Leonard, LLP. Katie can be reached at klipp@berenzweiglaw.com. 

Decision 4. Bring an FSS Dispute to the One Contracting Officer Who Can Resolve It

Berenzweig Leonard is beginning the New Year with a summary of four important government contract legal decisions handed down in 2013. We began by describing in two blog articles the problems a government contractor can get into as a result of “apparent authority”, a one-sided legal concept that does not apply to the government but that does apply to a  government contractor and can be costly if not closely monitored. Later, we dealt with the two most fundamental, and most-ignored, rules in government contracting: an enforceable government contract decision can only come from the contracting officer and only if that decision is in writing.

We have saved THE most important decisions for last: decisions that dealt with disputes involving purchases under the GSA Federal Supply Schedule (FSS). Because a previous blog article on October 17, 2013 discussed these decisions in detail, we will only summarize their important conclusions here.

Decision 4. Bring an FSS Dispute to the One Contracting Officer Who Can Resolve It

In the GSA FSS process, two contracting officers are involved: the GSA contracting officer and the ordering agency contracting officer. Each has a different contract vehicle to deal with: the GSA contracting officer is responsible for the FSS contract with a vendor and the ordering agency contracting officer is responsible for the delivery or task order the agency uses to buy something off that vendor’s GSA FSS contract. When a schedule vendor has a dispute with the government over a delivery or task order, only one contracting officer is the correct one for a contractor to file a claim under the Contract Disputes Act. Which one is it?

According to the new rules developed by the U.S. Court of Appeals for the Federal Circuit (CAFC) and the Armed Services Board of Contract Appeals (ASBCA) in the decisions described in the earlier blog:

Contract interpretation issues: the GSA contracting officer is the only contracting officer to handle a dispute involves interpretation of the terms and conditions of the FSS schedule contract. However, when the dispute is over the terms and conditions of the FSS order, the ordering contracting officer must resolve the dispute.

Performance issues: the ordering agency contracting officer is the only contracting officer that can decide performance issues not involving interpretation of the FSS contract such as whether the contractor’s default was excusable.

Terry O'Connor is the Director of Government Contracts with Berenzweig Leonard, LLP, a DC regional business law firm. He can be reached at toconnor@BerenzweigLaw.com.

The Government Shutdown’s Impact on Payment to Contractors

All companies contracting with the Federal Government should ensure that they are doing everything they can to protect themselves and maximize their chances of payment once the government shutdown ends. Congress has approved back pay for federal workers once the shutdown is over, and President Obama recently signed a bill requiring the DoD to continue paying civilian Federal Government employees and contractors that provide support to the armed services.  Government contractors, however, have been put in limbo, and need to make careful decisions while navigating the shutdown.

Contractors who do not serve the armed services must typically operate on a case-by-case basis, and should stay in contact with their Contracting Officers (COs) and Contracting Officer Representatives (CORs), if they are working, to understand what the procuring agency is doing and how it is operating during the shutdown. The worst thing to do is to drop off the CO’s communication radar and give the CO proof by way of an email track record that your company did not contact him or her during the shutdown to confirm understandings on contract performance. Assumptions cannot be made during this uncertain time, so it will be beneficial to contractors to send regular written communications to agency representatives to ensure everyone is on the same page.

Each contract will have varying factors affecting its appropriation, but generally speaking, a contractor should not expect to get paid for work it does not perform – the Federal Government cannot accept payment for voluntary services under the Anti-Deficiency Act. However, contractors covering work that is fully funded, or incrementally funded and not yet reaching the funding limit, should still be funded by the Government, although each case can differ. Time and materials contracts are more problematic, and contractors should proceed with caution. FAR § 52.242-15 gives the Government discretion to terminate or suspend work independent of whether a contract is funded, and so if contractors have not already initiated creative cost-cutting mechanisms, now is the time to think outside the box and be protective.

Hopefully Congress can lead the way to a solution so that the current standoff can end, and hard working contractors can go back to work and slowly resume a normal and uninterrupted routine to help federal customers achieve their missions.

Katie Lipp is an attorney the Washington, DC regional business law firm Berenzweig Leonard, LLP. She can be reached at KLipp@BerenzweigLaw.com.  

Can Contractors Ask the Government for More Price Information?

With budget cuts making price more important in winning government contracts, contractors should know that the government is allowed to provide more helpful information during price discussions than the standard “sharpen your pencil” refrain.  FAR 15.306 (e)(3) lets the government “inform an offeror that its price is considered by the Government to be too high, or too low, and reveal the results of the analysis supporting that conclusion. It is also permissible, at the Government's discretion, to indicate to all offerors the cost or price that the Government's price analysis, market research, and other reviews have identified as reasonable.”

Unfortunately, the government rarely uses this broad authority. Contracting officers can be reluctant to get more specific on price, and prefer to err on the side of caution when it comes to price discussions. In the end, they disclose only the bare minimum that they have to disclose.  This safe approach, however, is not always the right one. In one GAO decision, an agency told an offeror simply that its price was “overstated” when its price was 8 times the government estimate. GAO said that the agency had to tell the offeror much more than “overstated.”  Creative Information Technology, Inc.  B- 293073.10, Mar. 16, 2005.

If the government is stingy with price information, it might help to remind the agency that the FAR lets the government be more helpful in discussing price with government contractors.  In one case, the GAO had no problem with an agency telling offerors during the first round of discussions about those line item prices which varied from the government estimates by more than 20%, nor with telling offerors during the second round all of the agency's estimates. Kaneohe General Services, Inc., B- 293097.2, Feb. 2, 2004.

More recently, the GAO concluded that there was nothing wrong with the VA telling each offeror in the competitive range where its price stood in comparison to the average of all current offers in the competitive range. Walsh Investors, LLC, B-407717, B-407717.2, January 28, 2013.  These decisions show that an agency can often give government contractors information more helpful pricing than to just “sharpen your pencil.”  Because there is no harm in asking the government for more information, contractors should ask.

Terry O’Connor is the Director of  Government Contracts with Berenzweig Leonard, LLP, a DC region business law firm. Terry can be reached at toconnor@BerenzweigLaw.com.

What Are Common Bid Errors to Avoid?

The procurement process is fraught with many procedures and regulations, and therefore submitting a flawless solicitation is a difficult task.  But there are some errors committed with enough frequency that contractors can readily learn from the mistakes of others. Recent protest decisions of the Government Accountability Office (GAO) show good examples of common errors that government contractors make in submitting proposals for a contract or task order.  Here are five common proposal errors for all contractors to avoid in the proposal process.  

1. When in doubt, treat the words ‘may’ or ‘should’ as ‘shall.’  

Last year, we reported a decision in which GAO treated the word “should” as “shall”, concluding that a solicitation telling offerors they “should” submit resumes of some personnel really meant that offerors “shall” submit their resumes. According to GAO, “terms like ‘may’ and ‘should’ are capable of expressing a mandate." KPMG LLP, B-406409; B-406409.2; B-406409.3; B-406409.4, May 12, 2012.  In another case, “may” turned out to be “expressing a mandate” in a recent GAO opinion. The RFP warned offerors that the agency “may evaluate the past performance of subcontractors that would perform major or critical aspects of the requirement.” An offeror failed to provide past performance information for all subcontractors that would be performing the work. GAO concluded that the agency properly downgraded the offeror for failing to do so, even though the information was not required.  According to GAO, offerors were on notice that it would be wise for them to submit past performance information on major subcontractors. Paragon Technology Group Inc., B-407331, December 18, 2012.

2. Confirm that the government has actually received your offer. 

It may sound elementary, but make sure the proposal you send to the agency is actually received.  A vendor carries the burden of proving that the government received its quote and any requested vendor verification of that quote.  In one noteworthy case, the vendor claimed it had sent its quote and follow-up verification to the agency by email prior to the deadline.  After the agency awarded the work to another contractor, the vendor checked with the agency to see why its quote had not been selected.  After doing an email trace, the agency informed the contractor that it had not received the vendor’s verification.  The company’s protest to GAO included an email chain with a message, allegedly sent before the agency deadline to the relevant contract specialist, containing the vendor’s necessary verification. In denying the company’s protest, GAO stated that “although the protester has presented evidence that it timely sent an email verifying information about its quote, there’s no question that the agency did not receive B&S’s email verification prior to the contract specialist’s deadline.”  In addition, “the record does not show that the offeror took steps to confirm that its email message was received.” GAO cited a number of prior decisions agreeing with an agency and rejecting a quote where vendors could not prove that the agency timely received it.  B&S Transport Inc., B-407589, December 27, 2012.

3. Put the right information in the right section of the proposal. 

It is a bad idea to make the agency evaluators hunt for required information. They can hunt for it if they want to, but they need not do so.  For example, an agency properly did not assign a “strength” to a company’s home office management and support portion of its proposal when that information did not appear in the relevant section of its proposal, “but instead was presented in an executive summary of its past performance and in its discussion of its approach to design requirements.” Clark Construction Group, LLC, B-407334.2; B-407334.3, December 18, 2012.   One caveat here is that, although an agency may ignore information in an unrelated section, the agency “does not have license to ignore information in a proposal that is readily apparent.”  For instance, an agency’s evaluation of corporate experience required offerors to provide a range of information, including “contracting method.”  One vendor described its project experience in both his proposal narrative and in proposal exhibits. Although the proposal did not address the contracting method as required, the information was included on the general contractor reference form in its proposal exhibits. GAO concluded that the agency should have considered that information.  J.R.Conkey and Assoc., B-406024.4, Aug. 22, 2012.

4. Don’t be ambiguous that you intend to comply with the solicitation requirements.

Some contractors’ proposals will be less than clear regarding their intent to adhere to the solicitation requirements, thus jeopardizing any chance of getting the award.  The FAR mandates that a proposal that “contains an ambiguity as to whether the offeror will comply with a material requirement of the solicitation renders the proposal or quotation unacceptable."  In one recent case, an agency required an offeror to provide an item that would comply with "ISO 17357." One offeror promised to comply with "ISO 17357:2000 (E) /eqvt. ASTM standard," which on its face signaled that the contractor may choose to comply with an equivalent standard as opposed to the stated requirement.  GAO concluded that this "qualified designation created ambiguity regarding the offeror's intentions and introduced uncertainty regarding whether the offeror intended to perform in accordance with the terms of the RFP." In other words, was the offeror promising to comply with ISO 17357:2002 (E) or in accordance "with what it viewed to be an equivalent ASTM standard?"  GAO agreed with the agency that the proposal was ambiguous and, therefore, unacceptable.  Kirti International, B-407612, January 16, 2013.

5. Promptly correct any bid deficiencies that the agency points out.

Contractors should consider it a gift when an agency points out a proposal error. In one case, an agency told an offeror that its technical approach did not include a necessary component. Rather than revise the proposal, the offeror responded along the lines that it could do the work.  After being told that its proposal remained deficient on this technical issue and provided an opportunity to correct it, the offeror again failed to address it in its final revision.  GAO agreed with the agency that the proposal was deficient: “although the offeror insists that it will adequately perform the required work, it failed to adequately explain this approach in its proposal as required by the RFP.” Tidewater, Inc., B-407483: B-407483.2, Jan. 8, 2013.

Terry O’Connor is the Director of  Government Contracts with Berenzweig Leonard, LLP a DC region business law firm. Terry can be reached at Toconnor@BerenzweigLaw.com.

Small Business Subcontractors: Accelerated Payments

The Office of Management and Budget has told federal agencies that they should accelerate their payments to prime contractors in order for the primes to pay their subcontractors sooner.  Instead of paying primes 23-30 days after they submit an invoice as is typical, agencies should now pay the prime’s invoices 15 days after submission and the primes are “required …to the maximum extent practicable” to make accelerated payments to their subcontractors.

The new policy is being carried out by a new clause in the Federal Acquisition Regulation (FAR), FAR Sec. 52.232-99, Providing Accelerated Payment to Small Business Subcontractors (DEVIATION).

Although technically this new policy can apply only to government solicitations issued on or after August 16, 2012, agencies can insert this new clause into existing contracts “with appropriate consideration.”
Berenzweig Leonard’s government contract experience is something prime contractors as well as small business subcontractors can count on to help them take advantage of this new accelerated payment policy.

Terrence M. O’Connor is the Director of Government Contracts at Berenzweig Leonard, LLP, a business law firm in the Washington, DC area. He can be reached at TOConnor@BerenzweigLaw.com.

Debarment Under the “Catch-All” Regulation

Government contractors do not like to think about debarment . . . and with good reason.  For a government contractor, debarment is like dreaded terminal illness.  It is unpleasant to contemplate.  Nonetheless, as unpleasant as it is, government contractors need to know a few basics about debarment: one of which is the “catch-all” regulation.

Probably, most contractors know that if a contractor is convicted of a crime related to federal procurement, then the government can propose the contractor for debarment without any other facts in the record.  The conviction is sufficient.  It is a prima facie basis for debarment.  The same is true of a civil judgment for procurement fraud; that too is prima facie basis for debarment.  But, how many contractors know about the catch-all regulation, which greatly expands a debarring official’s authority?

The catch-all regulation says that the government may debar a contractor for any cause of “. . . so serious or compelling a nature that it affects the present responsibility of the contractor . . . .”  (FAR 9.406-2(c))  Think about this broad language.  It seems to give a debarring official unbridled discretion to debar a contractor for any reason that the official thinks, in his or her subjective judgment, is serious or compelling.  The regulation lacks objective standards.  It is vague and overly broad, and one court, the U.S. Court of Appeals for the D.C. Circuit, held that the government can invoke the catch-all regulation only if a preponderance of the evidence shows that the contractor committed a crime related to federal procurement.  However, some debarring officials continue to apply the catch-all regulation more broadly, even though the evidence does not prove the commission of the crime.   If a contractor is proposed for debarment under the catch-all regulation, the contractor should consider challenging the regulation on the ground that it is unconstitutionally vague and over-broad.

The author, John W. Polk, is Special Counsel to Berenzweig Leonard LLP, a business law firm located in the Washington, D.C. region.  He can be reached at jpolk@BerenzweigLaw.com.

The Federal Government Encourages Contractors to Adopt Policies Against Texting While Driving

The dangers associated with texting while driving are well known. Today, thirty-nine states, D.C., Guam and the Virgin Islands ban text messaging for all drivers.   On August 4, 2011, the FAR was amended to include Clause 52.223-18, Encouraging Contractor Policies To Ban Text Messaging While Driving. This rule was published in response to Executive Order 13513, entitled “Federal Leadership on Reducing Text Messaging while Driving,” which requires each Federal agency to encourage contractors and subcontractors to adopt and enforce policies that ban texting while driving.  Agencies are now required to insert FAR 52.223–18 in all solicitations and contracts.

Paragraph (c) of this Clause encourages contractors to: 

(1) Adopt and enforce policies that ban text messaging while driving--
(i) Company-owned or -rented vehicles or Government-owned vehicles; or
(ii) Privately-owned vehicles when on official Government business or when performing any work for or on behalf of the Government.
(2) Conduct initiatives in a manner commensurate with the size of the business, such as--
(i) Establishment of new rules and programs or re-evaluation of existing programs to prohibit text messaging while driving; and
(ii) Education, awareness, and other outreach to employees about the safety risks associated with texting while driving.

Paragraph (d) of the Clause also requires contractors to insert the substance of this clause in all subcontracts that exceed the micro-purchase threshold.

Although the implementation of the policies set forth in FAR 52.223-18(c) is not mandatory, government contractors and subcontractors should seriously consider the benefits associated with adopting policies against texting while driving. Not only could such policies head off possible accidents caused by distracted driving, but they could help insulate the company from liability should an employee cause an accident by texting while driving while arguably acting “in the scope” of his or her employment.

Stephanie Wilson is a Senior Associate at the business law firm Berenzweig Leonard, LLP, located in the Washington, DC region. She can be reached at swilson@berenzweiglaw.com.

Pay Attention to Payment Clauses in Contracts

Under a Labor Hour contract, a government contractor can legally be paid for 50 hours of work performed by a salaried employee in one week, even though that employee does not receive more than what his salary pays based on 40 hours per week. Although the government claimed that this would let a contractor “pocket undue windfall profits at taxpayer expense," the Armed Services Board of Contract Appeals (ASBCA) concluded that the contract required payment.

The contract’s payment clause (FAR 52.232-7 Payment Under Time-and-Materials Labor-hour Contracts [FEB 2007]) required the government to pay the contract’s “hourly rates …for all labor performed on the contract that meets the labor qualifications specified in the contract.” According to the board, as long as the salaried employees received their salary, the government was obligated to pay the contractor for the 50 hours worked by these employees, as long as the contractor paid those employees their salary based on a 40-hour work week.

As this decision makes clear, it is critical to carefully read the specific payment clause in the contract as there can be significant differences among the more than half-dozen payment clauses available to the government.

Author Terrence O’Connor is the Director of Government Contracts for the Washington, DC business law firm, Berenzweig Leonard, LLP.  Email Terrence O'Connor 

Contracting options and rights expand

A recent Board of Contract Appeals case highlights that government contractors may be missing out on new business opportunities available under the GSA Federal Supply Schedule (FSS) by not taking advantage of a direct teaming opportunity unique to the GSA FSS.

Although teaming in government contracting is common among vendors, it can take a variety of forms.  FAR 9.601 describes some of them, including a “contractor team arrangement” (CTA).  This differs from more traditional arrangements, such as teaming agreements and joint ventures.  One variation of such an arrangement is the GSA Schedule CTA, a particularly useful approach because it allows vendors who have an FSS contract for some but not all work the government needs under a particular solicitation to team up with another vendor to fill in that gap with its own FSS contract.

Litigation highlighing the rights of CTA team members is rare. However, the Civilian Board of Contract Appeals recently resolved the issue of whether an individual team member, as opposed to the team leader, can file and recover a payment claim.  In Lockheed Martin Aspen Medical Services  v. Dept. of Health and Human Services, a CTA member appealed an adverse decision by a contracting officer rejecting a claim for payment, where the government asked the Board to dismiss the case since it was not filed by the CTA team leader whose name was actually on the underlying contract. According to the government, the company filing the claim was not in privity with the government, but was simply a subcontractor and therefore had no right to pursue the case.

The Board nevertheless rejected the government’s argument for dismissal and concluded that the member of the CTA was in privity with the government because the agency itself had dealt directly with each team member.  Since the petitioner provided services under its own FSS contract, the contractor was deemed to possess an existing government contract under which it was providing services to the government, rather than stemming from a prime contract that flowed down to subcontractor.  Companies need to be aware of this development and learn more about its options including CTAs, which present a unique opportunity to directly generate and get paid for work without relying on any assistance from a prime or team leader.