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.

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.

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.