Last month, we outlined Congress’ plan to block the implementation of President Obama’s Fair Play and Safe Workplaces executive order. Today, we report that the prognosis has grown even more grim for the former President’s initiative, as both the House of Representatives and Senate have passed measures blocking the order from taking effect – now, the only remaining hurdle to a full repeal of the Fair Play and Safe Workplaces order is the signature of the President. Continue Reading The End is Near for “Fair Play and Safe Workplaces”
For the last few months, we have been following the troubled rollout of the “Fair Play and Safe Workplaces” rules, an Obama-era Executive Order that placed new requirements on contractors prohibiting certain labor practices. It is now becoming increasingly clear that the controversial act is likely to be a casualty of the new administration’s deregulatory agenda. Continue Reading Congress Strikes Blow to “Fair Play and Safe Workplaces”
In the wake of November’s elections, just about the only thing that Washington can agree on is a pervasive sense of uncertainty about the future, which includes the direction of government regulation. The fact that many incoming agency heads and cabinet secretaries come from nontraditional backgrounds and, consequently, do not have a long record of public comments only serves to deepen the apprehension across regulated industries. Continue Reading A New World Order?
Last month, we reported that the Government Accountability Office’s (“GAO”) statutory authority to hear bid protests on civilian task orders exceeding $10 million had expired, leading to a parade of dismissed protests and disappointed contractors left without legal recourse. As of last week, there is reason to be hopeful, as the House of Representatives and Senate agreed on legislation that promises to permanently restore the GAO’s authority to hear civilian bid protests. Continue Reading Proposed 2017 NDAA is a Mixed Bag for Government Contractors
In a recent decision, the Government Accountability Office (“GAO”) disappointingly, if unsurprisingly, confirmed that it no longer has jurisdiction to hear protests against a task order issued by a civilian agency. Continue Reading Sun Sets on Civilian Task Order Protests
- Report labor law “violations” of itself or any of its subcontractors (where the estimated value of the subcontract exceeds $500,000) under various federal employment and labor laws;
- Restrict the use of binding, pre-dispute arbitration provisions in non-collectively bargained employment contracts; and
- Establish “paycheck transparency” through the issuance of wage statements to all individuals performing work under a covered contract.
The Government Accountability Office (“GAO”) issues statistics each year regarding the outcome of bid protests. In 2015, there were 2,639 cases filed and there we 587 decisions on the merits. Of those, only 68 protests were sustained. According to the way the GAO presents its statistics, that would indicate that protestors prevailed approximately 12% of the time. In reality, since many protests were withdrawn or summarily dismissed, the protesters only prevailed in 68 of the 2,639 protests filed and the true success rate was closer to 3%. With those odds, why would anyone file a GAO bid protest? The answer requires a little closer scrutiny since statistics can be misleading.
In a recent decision by the Armed Services Board of Contract Appeals, Dick Pacific Construction Co., Ltd., ASBCA No. 57675 et. al., decided on December 15, 2015, the Board repeated something that has been said many times before:
We consider daily logs to be the most reliable evidence of what actually happened during construction. Technocratica, ASBCA No. 46567 et al., 99-2 BCA ¶ 30,391 (“Daily inspection reports have been held to be prima facie evidence of the daily conditions as they existed at the time of performance.”)
In a recent decision issued by the United States Court of Federal Claims, Anthem Builders, Inc. v. United States, April 6, 2015, WL 1546437, the Court considered a protest involving the proposed use of an individual surety to furnish required bonds. Under FAR 28.203, an individual surety may be accepted on a federal construction project, instead of a corporate surety on the approved list found on Treasury Department Circular 570, provided that certain requirements are met. FAR 28.203 provides, in relevant part:
(a) An individual surety is acceptable for all types of bonds except position schedule bonds. The contracting officer shall determine the acceptability of individuals proposed as sureties, and shall ensure that the surety’s pledged assets are sufficient to cover the bond obligation. . .
(b) An individual surety must execute the bond, and the unencumbered value of the assets (exclusive of all outstanding pledges for other bond obligations) pledged by the individual surety, must equal or exceed the penal amount of each bond. . .
(c) If the contracting officer determines that no individual surety in support of a bid guarantee is acceptable, the offeror utilizing the individual surety shall be rejected as nonresponsible. . .
The proposed use of an individual surety has frequently been problematic because of the questionable practices of some individual sureties, and because the required assets have often been difficult to verify. In addition, when questions arise, FAR 28.203(a) grants the Contracting Officer with the discretion to “determine the acceptability of individuals proposed as sureties” and to reject “the offeror utilizing the individual surety . . . as nonresponsible.” Although there were a number of arguments that the Court considered, the Court ultimately agreed with the Government’s position that Anthem was nonresponsible because its proposed individual surety offered an Irrevocable Trust Receipt issued by First Mountain Bancorp (FMB”) that was unacceptable because FMB was not a FDIC insured financial institution. (The Court also cited other reasons for agreeing that the individual surety should be rejected).
In our experience, it is very difficult to convince a Contracting Officer to accept an individual surety. First of all, the inability of the bidder to obtain bonding from a surety on the approved list raises a red flag and, secondly, there have been a number of cases of fraud in the proposed use of individual sureties. Contracting Officers, therefore, will rightfully exercise great caution in protecting the government’s interests.
Michael H. Payne is the Chairman of the firm’s Federal Contracting Practice Group and, together with other experienced members of the group, frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues, and dispute resolution.
In December 2014, the Court of Appeals for the Federal Circuit issued an important decision that impacts how the 6 year statute of limitations (SOL) is applied under the Contract Disputes Act (CDA). In Sikorsky Aircraft Corporation v. United States, the Court of Appeals determined that the CDA’s 6 year SOL for filing a claim is not jurisdictional, contrary to number of lower court opinions. This ruling has a number of important consequences that Federal Government contractors should understand.
The CDA states that, “each claim by a contractor against the Federal Government…and each claim by the Federal Government against a contractor…shall be submitted within 6 years after the accrual of the claim.” Prior to Sikorsky, this requirement was considered by most to be jurisdictional. This meant that the 6 year time limit was absolute and, even in extenuating circumstances, could not be missed. Therefore, any claim brought beyond 6 years simply could not be considered by the court. The court would not have the jurisdiction.
While the decision in Sikorsky did not eliminate the CDA’s 6 year SOL, it does open the door to “equitable tolling” an important exception in applying a limitations period. Equitable tolling is a legal concept that, in certain circumstances, allows contractors to bring claims after the time allowed by an applicable SOL. Specifically related to the 6 year SOL under the CDA, a claim can be equitably tolled if a claimant diligently pursues its rights to bring that claim but extraordinary circumstances stood in its way. For example, in Sikorsky the activities that brought about that claim began in 1999 but did not become material until 2003. The claim was eventually brought in 2008 and a dispute ensued regarding whether the claim was timely filed. The claimant, in this case the Government, argued that because the claim was not material until 2003 the SOL did not start to run until then and, therefore, when the claim was filed with the court in 2008, it was brought within the 6 year SOL. Sikorsky, on the other hand, argued that the claim accrued in 1999 and was, therefore, barred by the 6 year SOL because it was not brought until 2008. Ultimately, the court did not decide whether the claim was timely filed because it found that the appellant failed to meet its burden in proving the merits of the claim. In the process of discussing that issue, however, the court made the important determination that the 6 year SOL was not jurisdictional.
In addition to opening the door for equitable tolling, Sikorsky will also change how SOL issues are litigated under the CDA. Prior to this decision, because the CDA’s 6 year SOL was largely considered jurisdictional, any challenge to the Court’s jurisdiction had to be decided if and when it was raised. The issue could not be waived and could come up at any time. After review, if it was found that the court did not have jurisdiction, the matter would be dismissed because jurisdiction is a prerequisite for the court to decide a matter on the merits. Based upon Sikorsky, things have changed. First, a defendant must now raise SOL as an affirmative defense. An affirmative defense must typically be plead at the first opportunity possible (usually in the Answer to a Complaint) or it is waived. Second, a non-jurisdictional challenge to the SOL is normally decided when a court renders a decision on the merits. For contractors doing business with the Federal Government this has an important practical effect. If a contractor brings a claim against the Federal Government and also argues that equitable tolling should apply, post-Sikorsky a judge or jury will likely decide whether equitable tolling has taken place after all of the evidence on the facts have been heard. This means that a claimant may have to litigate its entire claim before the court will even determine if the claim was raised within the 6 year SOL.
As a practical matter, if you have a claim, or a potential claim, do not sit on your rights. While Sikorsky is helpful and important in terms of how the SOL is considered under the CDA, do not take any chances. 6 years represents a very generous limitations period. Seek professional assistance as early as possible and get the claim submitted. If you have any questions, please let us know.
Edward T. DeLisle is Co-Chair of the Federal Contracting Practice Group. Ed frequently advises contractors on federal contracting matters including bid protests, claims and appeals, procurement issues, small business issues and dispute resolution.
Amy M. Kirby is an Associate in the firm’s Federal Contracting Practice Group and focuses her practice on government construction litigation. Amy’s practice includes a wide variety of federal construction matters.