At times, a prime contractor can effectively be the middle man between the government and a subcontractor. The FAR directs that the prime contractor should always provide value to the overall procurement; however, many prime contractors require the assistance of subcontractors to fulfill this contract requirement. The recent CBCA case VSE Corporation v. Department of Justice spotlights that, even in fixed-price contracting, the prime contractor may or may not have bid with locked in subcontract rates.  If the government accepts the prime contractor’s offer and the subcontractor raises their rates, the prime contractor is liable for the additional costs, not the government.  In VSE, this led to fireworks for the prime contractor, literally.

VSE provided storage services to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to store seized property. The initial contract was a cost-reimbursement contract for which VSE was paid on a per pound basis.  ATF stored seized fireworks with VSE at a facility owned by VSE’s subcontractor Heritage Disposal & Storage and Heritage charged VSE $0.10 per pound to store the fireworks. Subsequently, the government asked VSE to reconfigure the fireworks for safety reasons. Despite VSE’s contract with Heritage, Heritage increased its storage billing rate from $0.10 per pound to $0.195 per pound based on the reconfiguration.

The government then issued a new solicitation for nationwide seized property to include fireworks. Rather than a cost-reimbursement contract, this contract was fixed-price. VSE submitted a bid where it identified the fireworks and proposed a base year price of $1.95 per square foot. However, this price would not be sufficient to cover the expenses for the fireworks storage as Heritage had been charging VSE approximately $170,000 per month to store the fireworks while the government had only been paying VSE approximately $77,000 per month for storage.   Continue Reading Boom: Fireworks between Subcontractor, Prime Contractor, and Government (Literally)

Despite the fact that the U.S. Court of Federal Claims (COFC) has concurrent jurisdiction with the U.S. Government Accountability Office (GAO) over the vast majority of federal bid protests, GAO is the primary forum utilized by protesters—and by a wide margin. GAO handles approximately twenty-five times as many protests per year as the COFC. While GAO does have certain advantages that attract protesters to that forum, this wide margin is likely less a result of the actual advantages provided to protesters in that forum and more a result of the misconceptions and lack of familiarity with the COFC protest process and the advantages of that forum. This article sheds light on the bid protest process at the COFC, providing a guide on protest practice and procedure at that forum.

Continue Reading Roadmap to Bid Protests at the U.S. Court of Federal Claims

Other Transaction Authority (“OTA”) describes the streamlined procedures that federal agencies may use to procure innovative research or prototypes, without the constraints of a typical contract, grant, or cooperative agreement. This flexibility has made OTA an increasingly popular choice for federal acquisitions in recent years. OTA helps open the door for contractors to partner with the Government in new and exciting areas. OTA allows for much greater speed, flexibility, and accessibility in performing research and prototype projects.

Who Qualifies for Agreements under OTA?

Congressional legislation has granted OTA to five federal departments: The Departments of Defense (DoD), Energy (DOE), Health and Human Services (HHS), Homeland Security (DHS), and Transportation (DOT), as well as the National Aeronautics and Space Administration (NASA). Congress has also specifically extended OTA to certain agencies and programs within these departments, such as the Federal Aviation Administration (FAA, within DOT), the Advanced Research Projects Agency–Energy (ARPA-E, within DOE), the Transportation Security Administration (TSA, within DHS), the Domestic Nuclear Detection Office (DNDO, also within DHS), and certain National Institute of Health research programs (within HHS).

This authority gives the agencies the opportunity to craft procurement arrangements specifically targeted to novel ideas and technologies, without having to shoehorn the process into the complex and often arcane world of traditional government contracting.       Continue Reading An Overview of “Other Transaction Authority”

The Armed Services Board of Contract Appeals (the “Board”) recently issued another reminder in [Redacted], ASBCA No. 61065, that government contractors need to specifically reserve their rights to Contract Disputes Act claims in modifications and releases for final payment. While its name doesn’t quite rival the best of those associated with civil forfeiture cases (for example, United States of America v. An Article Consisting of 50,000 Cardboard Boxes More or Less, Each Containing One Pair of Clacker Balls), [Redacted] does serve as a useful reminder to keep an eye out for any waiver language in payment requests, modifications, or (as here) an invoice for final payment.  Continue Reading Contractor Waives its Right to Pursue Claim Through its Invoice for Final Payment

It is a common principle of contract interpretation that a court will not set aside the clear intent of the parties particularly when it comes to assignments or releases of claims. However, the unique legislative history of the Contract Disputes Act (“CDA”) grants the agency boards of contract appeals the power to set aside an assignment of a claim, if that assignment would waive the contractor’s right to appeal a Contracting Officer’s decision to the boards. A recent Armed Services Board of Contract Appeals (ASBCA) decision highlights this power, which is of great importance to contractors because they keep their right to file affirmative monetary contractor claims against the government and appeal government claims, such as a termination for default.

In Ikhana, LLC, the Armed Services Board of Contract Appeals held that an assignment of all claims to a surety in an indemnity agreement for a performance and payment bond in the event of a default did not prevent the contractor from bringing claims and an appeal of that default to the Board.  ASBCA No. 60462.  Ikhana entered into a contract with the Army Corps of Engineers to provide secured access lanes and remote screening facilities at the Pentagon.  In October 2015, Ikhana filed four claims with the Contracting Officer.  In December 2015, the Contracting Officer terminated the contract for default.  On February 25, 2016, Ikhana appealed the termination for default as well as its four affirmative claims.  The government then made a claim against Ikhana’s performance bond. Continue Reading Assignment of Claims to a Surety Cannot Waive A Contractor’s CDA Appeal Rights

The Randolph-Sheppard Act (“RSA”) grants blind persons, operating through State Licensing Agencies, mandatory priority in the award of contracts for the operation of vending facilities on federal property so long as the SLA contractor satisfies criteria established by the RSA’s implementing regulations prescribed by the U.S. Secretary of Education.  In its recent decision in State of Texas v. United Statesthe Court of Federal Claims (“COFC”) made two key rulings in relation to the RSA:

  1. Prior Government Accountability Office (“GAO”) decisions related to the RSA are not persuasive on the COFC, as GAO lacked jurisdiction to hear these protests, and
  2. The RSA creates a two pronged test before granting a State Licensing Agency (“SLA”) priority in a solicitation for vending services — (i) the SLA must be within the procurement’s competitive range, and (ii) the the contracting agency must perform cost and food quality evaluations pursuant to the solicitation, which may be in addition to a determination of whether the proposal falls within the competitive range.

In State of Texas v. United States, the Air Force issued a solicitation for vending services at Joint Base San Antonio.  The State of Texas, acting by and through one its state agencies that qualified as a SLA under the RSA for the purposes of the procurement, submitted a proposal.  The Air Force originally found that the State of Texas’ proposal did not fall within the competitive range.  In response to being excluded from the competitive range, the State of Texas filed for arbitration with the U.S. Department of Education, as is required by the RSA.

Continue Reading Texas Gets Burned: Court of Federal Claims Finds State’s Randolph-Sheppard Act Protest Premature

In Appeal of American West Construction, LLC, the Armed Services Board of Contract Appeals considered whether the U.S. Army Corps of Engineers (Government) lost its right to claim a credit under the Changes Clause by waiving its right to insist on compliance with the contract specifications prior to insisting on such compensation.  Finding the Government was fully aware of the Contractor’s use of a less expensive construction method than in the specifications, the Board found the right to claim there was a change to the contract was “dead” and no credit was owed for the work not performed.

American West was awarded a MATOC contract for design-build construction services.  In August 2015, the Government awarded Delivery Order 02 (DO2) under the MATOC contract for construction of bridges over irrigation canals in El Paso, Texas.  The DO2 specifications provided that the work would be performed by first building two temporary bridges over the canals so the Contractor could access the site.  The Contractor, however, sought access to the construction site via a levee owned by the local water district.  However, because negotiations with the water district over access to the levee were pending and the Contractor could not be sure that access would be granted, the Contractor proceeded under the assumption the temporary bridges would still be necessary. Continue Reading You Don’t Always Get What You Pay For: Government Waives a Credit for Work Not Performed

Federal government contractors, grantees and those with cooperative agreements may find themselves in possession of (or handling) government information which the U.S. Department of Defense (DoD) considers to be sensitive or confidential but not considered “classified.” On Dec. 31, 2017, in accordance with DFARS 252.204-7012 the National Institute of Standards and Technology (NIST) Special Publication 800-171 “Protecting Controlled Unclassified Information (CUI) in Nonfederal Information Systems and Organizations” or the “Cyber Clause” went into effect. The purpose of the clause is to provide a uniform standard for the handling of CUI and to provide a roadmap for safeguarding CUI and covered defense information (CDI) that is a subset of CUI.  Specifically, the new regulation focuses on addressing “deficiencies in managing and protecting unclassified information” including “inconsistent markings” and “inadequate safeguarding” by “standardizing procedures” for the handling of CDI/CUI and “providing common definitions through a CUI Registry.

CDI is defined as unclassified information, as described in the CUI Registry that requires safeguarding or dissemination controls and requires, at minimum, the implementation of NIST SP 800-171 controls. Continue Reading DoD Cyber Security Rules Took Effect for Contractors Dec. 31, 2017

 

In Industrial Maintenance Services, CBCA 5618, the Civilian Board of Contract Appeals (CBCA) found a contractor was entitled to additional payment where the Agency paid certain direct costs associated with a change in the critical path of performance, but failed to include the costs of impacted, unchanged work in the modification.

Contractor Industrial Maintenance Services appealed the denial of its claim by the Department of Veterans Affairs (Agency) for direct costs and markups associated with changes and additions to its scope of work for renovation of a medical center.  The parties executed a bilateral modification, which increased the contract price and provided that the adjustment included “all costs direct and indirect, associated with the work and the time agreed to herein, including, but not limited to…the changes’ impact on unchanged work.”  Despite the language of the modification, the Agency’s representative stated the parties would address the “impact to the schedule” at a later date.  The Contractor similarly noted on the modification that it “reserved the right to be compensated for additional days if needed once the schedule is revised to incorporate this change.” Continue Reading Compensation for Changed Work Not Enough to Fully Compensate for Unchanged Work According to CBCA

The Armed Services Board of Contract Appeals (ASBCA) recently issued its Fiscal Year 2017 annual report, as well as its annual report on Alternate Dispute Resolution (ADR). The reports offer statistics that highlight the high success rate for contractors based on the contractor winning outright or receiving some recovery, a doubling of ASBCA Rule 12 accelerated and expedited appeals, a very high number of appeals resolved through ADR, and a reduction in the ASBCA’s backlog of appeals.  All in all, great news for contractors. Continue Reading ASBCA Reports High Appeal Success Rate for FY 2017; Accelerated and Expedited Appeals Double