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.

Know How to Enforce Your Rights For Winning Task Orders

Although task order contracts are common, the rights contractors have to win one are complex and vary widely depending on whether the task orders are under FAR Part 8, the GSA Federal Supply Schedule (FSS) or FAR Part 16, Government-wide Acquisition Contracts (GWAC). It is important, therefore, to know exactly what your rights are under your specific contract – FSS contract or a GWAC – and  how to enforce them, as a recent decision of the Armed Services Board of Contract Appeals (ASBCA or Board) shows.

The decision deals with one significant difference between FAR Part 8 and FAR Part 16 task order competitions: the GWAC holder’s significantly limited right to challenge how an agency misuses the solicitation process.  Unlike FSS contract holders that have broad rights to protest to the Government Accountability Office (GAO) and the Court of Federal Claims (CFC), GWAC holders’ right to protest to GAO or the CFC is very limited. The Board’s decision is, therefore, significant because it shows that GWAC holders still can sue the government, not as a protest but as a claim under the contract’s Disputes clause.

PAW and Associates submitted a task order proposal under its GWAC with the National Guard, but the contracting officer refused to award a task order. PAW filed a claim under the contract’s Disputes clause arguing that the government did not evaluate PAW’s task order proposal fairly and honestly and, therefore, violated PAW’s right to a “fair opportunity” to be solicited and to be fairly evaluated. The Board agreed with PAW, and concluded that GWAC holders can file a claim to enforce their “fair opportunity” right.

This decision shows just one significant difference in the task order solicitation process. There are others that contractors must be aware of. For example, GWAC contract holders must be given a “fair opportunity” to be considered for ALL task orders over $3,000.  In contrast, not all contractors on a particular GSA Federal Supply Schedule have to be solicited; although FSS Requests for Quotations over $150,000 must be posted on e-Buy, a contracting officer has the alternative of simply trying to get quotes from at least three Schedule vendors seeking a FAR Part 8 task order.

These differing and complex rules affect significant contractor rights to future business. The lawyers at Berenzweig Leonard LLP have decades of experience working with these rules and helping government contractors understand and enforce their rights.

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.

Decision 2. Corporate Liability for Employee Kickbacks

Berenzweig Leonard is beginning the New Year with a summary of four important government contract legal decisions handed down in 2013. A previous blog article discussed the one-sided legal concept of “apparent authority” that applies to a government contractor but not to the government. Today we discuss another problem presented by “apparent authority”: how the management of a government contractor could be liable for kickbacks company employees receive.

Decision 2. Corporate Liability for Employee Kickbacks

Apparent authority can cost a contractor significant penalties under the Anti-Kickback Act (AKA). Regardless of whether a government contractor knew that its employees were violating the AKA), the company may be civilly liable – for each occurrence, double damages plus $11,000 – for kickbacks its employees received. Alternatively, regardless of what a government contractor knew, the contractor may be liable for the actual amount of the kickback. An appeals court held that the company could be liable for “double damages plus $11,000” for its employees’ violations of the AKA based on “apparent authority” if, later in the litigation, the government proved that the kickback-accepting employees had the apparent authority to implicate their employer. United States ex rel., David Vavra  v. Kellogg Brown and Root, U.S. Court of Appeals for the Fifth Circuit No. 12-40447, July 19, 2013.

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.

Contractors Should Beware of Broad Assignments

Government contractors often assign government contract payments to banks in exchange for loans to finance the contract. This is sometimes also known as “factoring.” Recently, a broadly worded assignment was interpreted to include not only payments under the original contract, but also payments under a sole-source bridge contract during a protest of the follow-on contract.

Tiger Enterprises, Inc. agreed to assign payments under a 2007 Air Force contract to Chain Bridge Bank of McLean, Virginia. The assignment covered the original Air Force contract as well as “all modifications, supplements and replacements.” After that contract ended in 2010, the Air Force gave Tiger a “Bridge Contract” for several more months, so that laundry services could continue until a protest of the follow-on contract ended. When the Air Force continued to send payments for Tiger’s bridge contract to the bank, Tiger filed a claim, arguing that the bridge contracts payments were not covered by the assignment and as a result, the government should have sent the bridge payments to Tiger.

The Armed Services Board of Contract Appeals disagreed, because the assignment’s terms applied not only to Tiger’s initial contract but also “all modifications, supplements and replacements” of that contract.  According to the Board, the sole-source bridge contract was a “supplement” or “replacement” to Tiger’s original contract “using the same performance work statement and Equipment as Contract 0001 due to exigent circumstances arising from the filing of bid protests regarding the follow-on procurement for Contract 0001.” To the Board, its interpretation of the assignment was “in accordance with the modern trend away from tying a particular loan to a particular security [because] the use of a revolving credit financing device has been regarded as acceptable” under federal law.

Carefully reviewing the scope of an assignment is essential, as this decision points out. Otherwise, factoring agreements can have unforeseen consequences. Berenzweig Leonard’s Government Contracts attorneys can help contractors protect themselves from overly-broad agreements like the one that burned Tiger. 

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.

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.

Does a Previous Equitable Adjustment Guarantee Another Under Similar Circumstances?

Although the government can be flexible and agree to pay an equitable adjustment for extra work on a fixed-price government contract instead of fighting a claim, doing so just once does not create a “course of dealing” that guarantees the government must always do so in the future.

In a recent decision, although the IRS had paid a snow removal contractor an extra $109,000 for removing 3 times the expected snowfall at its Ogden, Utah office during the 2007-2008 winter, a different Contracting Officer refused to pay extra for an equally-heavy snow removal effort by the same contractor the next winter. The Civilian Board of Contract Appeals (CBCA) agreed with the new Contracting Officer’s refusal to pay. Although precedent held that, for example, the government could not refuse to make an exception on the 8th time after agreeing to do so for 7 previous times, a single transaction cannot create a course of dealing.

As the decision shows, contractors cannot assume that the government will continue to pay for extras unless it has done so numerous times before. This is especially true because, over the course of a multi-year contract, the Contracting Officers will very likely change.  Therefore, it is critical that contractors get written confirmation before performing additional work and keep good records to demonstrate that costs for a future equitable adjustment are similar to expenses  previously covered by the government.

Author Terrence O’Connor is the Director of Government Contracts for the Washington, DC regional business law firm of Berenzweig Leonard,LLP.  He can be reached at  toconnor@BerenzweigLaw.com.

False Bidding Estimates = Fraud

Extreme competition among government contractors for ever-increasing federal dollars has sparked a wave of “how low can you go” bidding wars among contractors.  Although a bidder may want to submit low bid prices to win a cost-reimbursement contract, the bids must be the actual prices and must have the facts to support  them.  

A recent federal court case involving a large government contractor confirms that purposefully bidding prices lower than the actual charge can constitute fraudulent bidding under the False Claims Act.  In the case, the contractor’s initial bid prices came in too high so they lowered the bids without considering the actual cost.  The contractor won the contract but a whistleblower successfully claimed that the contractor’s bidding process violated the FCA.  Although bids are only estimates and opinions, they must have some facts justifying them.  This decision shows that courts will continue to broadly interpret the False Claims Act.

The decision highlights a solid government contracts principle:  always make sure that your bid prices are backed up with solid pricing and market research data to avoid costly bid protests, FCA treble damages, and findings of non-responsibility based on ethical and legal violations.

Katie Lipp is an Associate Attorney with Berenzweig Leonard, LLP, a business law firm in the DC region.  She can be reached at klipp@BerenzweigLaw.com.  Terry O’Connor is the Director of Government Contracts for Berenzweig Leonard, LLP and can be reached at toconnor@BerenzweigLaw.com.