Federal Construction Contracting Blog : Federal Construction Contracting Law Firm : Cohen Seglias Pallas Greenhall & Furman PC : Construction Law, Dredging and Claims

A recently reported decision by the Armed Services Board of Contract Appeals underscores the necessity for bidders to review pre-bid data listed in the solicitation. In Mass Construction Group, Inc., ASBCA No. 55440, the contractor pursued a claim for a differing site condition, alleging that it had encountered a Type II condition, namely “unanticipated” groundwater flooding into its footing excavations.

The ASBCA, in denying the contractor’s appeal, made the following findings of fact:

1)  The solicitation advised bidders that subsurface data was available for review at a specified location. (the government’s contracting office).

2)  The subsurface data disclosed a groundwater table that existed between three and one half and six feet of the surface elevation.

3) The contractor did not review any of the subsurface data before submitting its bid and did not attend the pre-bid site visit.

4) The site conditions encountered by the contractor were quite similar to those disclosed in the subsurface drilling logs that the contractor neglected to review.

The ASBCA, therefore, found that the contractor had not established that it had encountered unanticipated site conditions. Significantly, the Board stated that the failure to review the subsurface data at the scheduled pre-bid site visit,” put Mass at risk of any unexpected subsurface conditions which it encountered.” 

The message in this decision is unmistakable: If the government’s solicitation advises potential bidders of subsurface data that is available for inspection, bidders must review this data or be willing to risk the potentially serious consequences of failing to do so.

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There are many resources available to federal construction contractors, but there a few as useful as the services provided by Paul Perkins and his company, Construction Contract Specialists.  We have had the privilege of working with Paul on a number of construction cases, and we continue to be impressed by his tireless efforts on behalf of his clients, and his extensive knowledge of construction contracting.  All too often, construction contractors do not have the time, or the manpower, to properly respond to a letter from the government, or to develop and document a construction claim.  That is where Paul comes in – he never fails to get the job done in a timely and competent manner.  He is willing to immerse himself and do the hard work that needs to done when it comes to developing and documenting the facts relating to a construction issue.

Paul worked in various management and supervisory positions with the U. S. Army Corps of Engineers for more than twenty-five years before he founded Construction Contract Specialists, Inc. in 1995.  He organized the company for “for the express purpose of providing reliable and highly qualified cradle-to-grave type assistance to small and medium sized contractors at an affordable price in their quest to level the playing field and, at the end of the day, end up with a successful and profitable project and an above average or even outstanding overall performance evaluation.”   Since Paul has served as both an Administrative Contracting Officer and an Authorized Representative of the Contracting Officer, it is his first-hand knowledge of how the government does business that makes him such a valuable resource to federal construction contractors.  He literally understands what is happening on both sides of the fence.

Construction Contract Specialists publishes a very informative and free newsletter, the Federal Construction Project Manager’s Bulletin, that is packed with useful information and practical insights for construction contractors.  It is easy to subscribe and we highly recommend that contractors take advantage of this free offer by signing up a CCSI’s website.  The latest issue, dealing with the “Enforceability of Contracts,” is attached.

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After a hiatus in the posting of new decisions on its website dating back to October 2006, the Armed Services Board of Contract Appeals recently posted a series of new decisions.  We will review and comment on the most interesting ones in upcoming articles and we begin today with the decision in Emerson Construction Co. Inc., ASBCA No. 55165, dated December 8, 2006. 

The government filed a motion for partial summary judgment alleging that the contractor was not entitled to an equitable adjustment under FAR 52.211-18, VARIATION IN ESTIMATED QUANTITY (APR 1984) (VEQ clause), as a matter of law.  According to the government, the VEQ clause was not applicable to firm, fixed-price requirements type construction contracts. The contract required Emerson to provide “All Labor, Equipment and Materials for Miscellaneous Roads, Grounds, Site Repairs and Improvements at Fort Hood, Texas.”  The schedule included 23 pages listing each item of work to be accomplished along with the estimated quantity of each.

The government admitted that it ordered less than 85% of the estimated quantities overall, but argued that the VEQ clause should be applied to each individual delivery order, and not to the overall estimated quantity estimated in the contract.  In other words, unless each individual delivery order provided an estimated quantity of unit-priced items, the VEQ clause shuld not apply. The Board disagreed and held that the VEQ clause was applicable to the overall requirements contract, not just to the individual awarded delivery orders. The VEQ clause stated that it was applicable to “this contract.”  In the Board’s view, “this contract” indisputably referred to the overall requirements contract.  The contractor submitted an affidavit with an item-by-item analysis showing that the government ordered 85% of estimated quantities on only 7 of the 76 line items for the base year and only 6 of the 76 line items for the first option year.  In fact, for a majority of the 76 line items for the base year and first option year, the Government ordered less than 50% of the estimated quantities.

            The Board concluded that under the VEQ clause, a contractor is entitled to an equitable adjustment in the contract price for increased costs due solely to the variation of unit-priced items actually ordered by the Government below 85 percent of the quantities of the unit-priced items estimated to be ordered under the contract. Henry Angelo & Co., ASBCA No. 43669, 94-1 BCA ¶ 26,484 at 131,824. The Board ruled that Emerson had shown, for purposes of entitlement, that there was such a variation.

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MATOC – IDIQ – “Best Value” – BRAC

These are the terms that contractors are hearing more and more and they are part of the rapidly changing world of construction contracting with the federal government.  It is no longer enough to simply be the low bidder; now, in many federal procurements, it is the “best value” that gets the job.  To make matters even more complicated, projects that were once bid individually, on a project-by-project basis, are now being awarded under Indefinite Delivery Indefinite Quantity (IDIQ) or Multiple Award Task Order Contracts (MATOC) and the number of contracting opportunities is shrinking.  Nevertheless, for those who understand the system and know how to put an effective proposal together, there continue to be many opportunities for construction contractors and subcontractors to participate in the federal government’s vast construction program, including the upcoming Base Realignment & Closure (BRAC) program.

Philadelphia	Dallas	Charlotte	Orlando	New Orleans
Feb. 1	Feb. 8	Feb. 13	Feb. 15	Feb. 27

If you are interested in learning more about construction contracting with the Army Corps of Engineers, NAVFAC, and other federal agencies, we invite you to attend one of the upcoming seminars sponsored by Payne Hackenbracht & Sullivan on How to Succeed in the New World of Federal Construction Contracting.  The seminars are to be held in Charlotte, Dallas, New Orleans, Orlando, or Philadelphia on one of the dates in February 2007 listed above and on the attached agenda.  The speakers include former Corps of Engineers attorneys and engineers, the former Deputy District Engineer of the New Orleans District, and the former Chief of the Construction Division of the Philadelphia District. The program will be presented from 8:30 a.m. until 1:00 p.m.

The program will focus upon Identifying Contracting Opportunities, Understanding the Latest Contracting Methods, Successfully Competing for Negotiated Procurements (including effective proposal preparation), and How to Deal Effectively with Federal Agencies, and will include information about how to protect your rights in both the bidding and contract performance stages of a project.  While contracting with the government provides many potentially profitable opportunities for a contractor, the federal contracting process is fraught with peril for those who do not understand federal procedures.  We will help you understand both what you should do, and what you should not do, when dealing with the federal government.

Please review the enclosed agenda and registration form, and feel free to contact us if you have any questions.  The attendance fee is $195, and additional attendees from the same company will only be charged $95.  Please register early because space is limited.

Our Seminar Coordinator, Rachel McNally, is available to answer your questions and she may be contacted at 215-542-2777, rem@phslegal.com.

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In order to implement the 2005 Base Realignment and Closure Program (BRAC), Congress has a bill under consideration to fund recommendations in the amount of 5.43 billion dollars (H.R. 5385).   Although this is a substantial amount of money, it is 400 million dollars less than the Administration requested.  Nonetheless, once a funding bill is passed for this phase of the BRAC program, a significant number of projects are planned for Texas, Maryland, Virginia, North Carolina, Georgia, and Kentucky.  

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On December 1, 2006, amendments to the Federal Rules of Civil Procedure became effective and made something that had already been established by court decisions very clear – that virtually every kind of electronically stored information (“ESI”) is discoverable in litigation.  Government construction contractors, and their attorneys, need to be concerned about the preservation and disclosure of electronic information, including e-mail messages, voicemail messages, and any kind of a file stored on a computer.  Unfortunately, as the information age makes an exponentially greater volume of information available, the seemingly easy storage of that information may actually be creating a vast minefield for the unwary.

Contractors need to be aware that even computer files that have been intentionally or inadvertently deleted are potentially discoverable.  (Simply because data has been “deleted” from a hard drive does not necessarily mean that it cannot be retrieved).  Courts may no longer accept the excuse that “the files were erased” if there was an obligation to preserve the data, or if the company failed to have an established ESI retention policy to assure the reasonable retention of electronic information.  The new rules provide guidance and clarification on a number of topics related to electronic discovery (e-discovery), including the discoverability of data that is difficult to access, such as back-up tapes, the form in which electronically stored information should be produced, and how to deal with the inadvertent production of privileged information when large amounts of electronic data are produced.

One of the difficulties with the production of electronic data is that it is often harder to review than paper documentation because it involves the examination of large amounts of data stored on CDs, DVDs, floppy disks, hard drives, backup tapes, network servers, Internet backup services, and other storage devices.  A company often finds it to be an overwhelming task to gather the data, and an equally daunting and costly task to electronically produce it.  Electronic information on a complex matter involving technical data can occupy hundreds or even thousands of CDs (we are currently involved in exactly such a case). 

It is important to recognize that the content of electronic information can be very different, and far less formal, than paper documentation.  We have noticed that there is often a tendency to be careless when writing an e-mail message because of the informality, as compared to a letter.  Contractor personnel are frequently very candid in e-mail messages and they may make off-the-cuff remarks that give the other side “ammunition” to discredit the contractor’s position.   In addition, electronic information often contains “metadata” (underlying data that states when a document was created, modified, accessed, etc.).  Without realizing it, or intending to do so, an electronic file may provide much more information than the author or the company ever intended, or was required, to preserve and that information may be a goldmine for the other side in litigation.

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In the most recent edition of Defense AT&L, a magazine published by the Defense Acquisition University, author Wayne Turk discusses the skills that a competent project manager needs to possess in the 21st Century.  In addition to people, financial and scheduling skills, Turk emphasizes seven attributes of a good project manager - patience, wisdom, sense of humor, flexibility, creativity, understanding of the law of unintended consequences, and subject matter expertise.  While Turk points out that there is no substitute for practical experience, he also provides sources of information and training for neophyte, as well as experienced, managers.  Reading this article, as well as Turk's earlier “Ten Rules for Success as a Manager,” Defense AT&L, July-August 2004, provides useful information to prospective federal construction contractors about what agency source selection officials may look for when they review the qualifications of management personnel in connection with proposals on negotiated procurements.

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The January 3, 2007 edition of ENR.com, an online publication of McGraw-Hill Construction, contains a webcast of the construction industry "matchmaking" session that the Bureau of Overseas Buildings Operations (OBO) of the Department of State held with representatives of over 900 companies on October 10, 2006 in Arlington, Virginia. The webcast provides contractors with important information on the dramatically increased embassy design and construction program of the Department of State. Contractors need to know that the State Department employs the design-build negotiated procurement process found in Section 36 of the FAR in almost all of OBO's capital program.

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