14287520378_7b26b29d20_kMaritime government contracting is a multi-billion dollar industry involving the Navy, Army, Coast Guard and other agencies. Most contractors are familiar with the Federal Acquisition Regulation (FAR) 33.211 provision at the end of each contracting officer’s (“CO’s”) decision on a Contract Disputes Act (“CDA”) claim stating: “Instead of appealing to the agency board of contract appeals, you may bring an action directly in the United States Court of Federal Claims (except as provided in 41 U.S.C. 7102(d), regarding Maritime Contracts) within 12 months of the date you receive this decision.” As a result of this language specifically referencing the U.S. Court of Federal Claims (“COFC”), some maritime contractors incorrectly appeal CO final decisions on maritime claims to the COFC.  Unfortunately these contractors do not understand that this language limits court appeals of a CO’s decision on a maritime contract claim to U.S. District Courts.  The question for the COFC then becomes whether to transfer to U.S. District Court or dismiss the case. Certainly, no contractor wants to find itself in this situation because their claim has appealed to the wrong court.

The CDA’s language establishes the alternative procedure for claims arising under maritime contracts, such as contracts for the repair of vessels, ship management, stevedoring, port facilities and dredging.  The effect of § 7102(d) is that contractors who are a party to a maritime contract may, after receiving a decision from the CO, (1) file an appeal at the board of contract appeals (“BCAs”) within 90 days of receipt of the decision, or (2) file an “action” appealing the decision directly in U.S. District Court within 12 months.
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9101006675_6dfba6afa4_kSea Sheppard Conservation Society (“Sea Sheppard”) recently found itself in the unfortunate situation of being in an auction bidding war against a single ineligible bidder in a General Services Administration (“GSA”) auction, resulting in Sea Sheppard having to pay a substantially higher sum for two vessels than if only eligible buyers had been allowed to participate in the auction.  Sea Sheppard submitted a claim contending that it should have been permitted to buy the vessels at lower prices than those it actually paid, because it was required to raise its own bid solely to beat out bids submitted by an ineligible bidder.  In denying Sea Sheppard’s claim on appeal, the U.S. Civilian Board of Contract Appeal (“CBCA”) may have created a real dilemma for future contractors bidding in government auctions.

In December 2014, the GSA listed for sale two Coast Guard vessels via an online auction.  As a condition to participate in the auction, all bidders were required to recognize that the sale was subject to specific Terms and Conditions (Standard Form 114C, April 2001).  Under the “Eligibility of Bidders” provision, the Terms and Conditions generally required bidders to: (a) be over 18 years of age; (b) not be a government employee of certain agencies or relative of same, and (c) not be debarred.  The Terms and Conditions also stated that bidding was not limited to U.S. Citizens, but some items would only be sold to U.S. Citizens.  Also, the Terms and Conditions put bidders on notice that all property was subject to all applicable export laws and regulations, including International Trafficking in Arms Regulations (“ITAR”) 22 CFR Part 120, et seq.

Sea Sheppard participated in the auction, ultimately against one other bidder (“Bidder 2”).  On the first vessel, the Pea Island, Sea Sheppard started with a bid of $100,000, and after submitting multiple bids, ultimately outbid Bidder 2 at $275,800.  On the second vessel, the Block Island, Sea Sheppard also started with a bid of $100,000, with its last bid being $155,100, before being outbid by Bidder 2.

Subsequently, the GSA determined that Bidder 2 was ineligible because it was not a U.S. Citizen.   Thus, GSA offered the Block Island to Sea Sheppard as the next highest bidder, at $155,100.  Sea Sheppard requested a price of $100,000, but that was rejected by the GSA contracting officer.  Sea Sheppard accepted the Block Island at $155,100.
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