A recent Court of Federal Claims case, Diversified Maintenance Systems, Inc., December 4, 2006, reinforces the necessity for contracting officers to refer all protests regarding a company’s HUBZone status to the Small Business Administration (SBA). In Diversified, the agency set aside a procurement for HUBZone businesses only. All but two of the seven offerors were disqualified for various reasons. The agency awarded a contract to Cadence Contract Services and the other offeror, Diversified, immediately submitted a protest to the contracting officer, challenging the HUBZone status of the awardee. 

Diversified’s protest alleged that the awardee’s office in Utah was not located in a certified HUBZone and that Utah’s records did not list a HUBZone company by that name at that address.  The contracting officer denied the protest, stating that the awardee’s address in New York was in a HUBZone and that he had verified the HUBZone eligibility of the offeror at the New York address by checking the SBA’s website. Diversified then filed its protest with the Court of Federal Claims. After the litigation began, the government conceded to the Court that the contracting officer had failed to submit the offeror’s protest to the SBA, as required. Consequently, the government requested that the protest be submitted to the SBA. 

Continue Reading A HUBZone Protest Must Be Referred to the SBA

“Discussions” in a negotiated procurement between the government and an offeror are the exception, not the norm, as those of you who have submitted a response to a Request for Proposals know.  Too often the government awards a contract on the basis of the initial proposal, without any discussions or negotiations with the offerors.  The reason that the government refrains from formally opening up negotiations is that if discussions occur between the government and one offeror, then the government must hold discussions with all of the offerors in the competitive range.  (FAR 15.306(d)(1).  That can be time consuming.  (It can be argued that the term “Procurement by Negotiation,” as explained in FAR, Part 15, anticipates that discussions and negotiations will actually occur). 

            Of course, not all communications between the government and an offeror constitute “discussions.”   As the Government Accountability Office stated in a recent case, Overlook Systems Technologies, Inc., Nov 28, 2006, “the acid test is whether an offeror has been afforded an opportunity to revise or modify its proposal.” In Overlook, the contracting officer contacted the successful offeror regarding a perceived organizational conflict of interest because Overlook planned to use a subcontractor that had provided a system to the government that Overlook would now “troubleshoot.”  The GAO determined that the contracting officer’s communications with Overlook were similar to the sort of inquiries the government frequently makes to perform a responsibility determination.  The GAO relied heavily on the fact that the government was required to make such a responsibility determination, citing prior GAO decisions that have held that responsibility inquiries are not “discussions.”

            Continue Reading RFP – There Can Be Communications Without "Discussions"

A disappointed bidder (on an Invitation for Bids), or an offeror (on a Request for Proposals), has the option to file a protest to the agency, to the General Accountability Office (GAO), or to the United States Court of Federal Claims. It is not always easy to decide where, and whether, to file a protest and contractors need to be aware of the pitfalls. One thing is certain, it is not easy to win a protest and a great deal of deference is given to contracting officers by the GAO and by the Court of Federal Claims.  It is incumbent upon a contractor to be certain that the issue raised is not frivolous, and that prior decisions of the courts or the GAO have not already established the correctness of the government’s position.

It has been my experience that if a protest involves agency policy, it is usually a good idea to file a protest with the agency to give the Contracting Officer the opportunity to take corrective action. (See FAR 33.103 for the rules on Protests to the Agency). If a protester is dissatisfied with the result of an agency protest, the protester is still permitted to take the protest to the GAO or to the United States Court of Federal Claims. As far as taking a protest directly to the GAO is concerned, unless prior GAO decisions have shown a likelihood that the GAO will agree with your position, a GAO protest is not usually a very satisfying experience. (See FAR 33.104 for the rules on Protests to the GAO, and also see the Bid Protest Regulations issued by the GAO).  (Another useful resource is the GAO’s Descriptive Guide on Bid Protests).

The statistics made available by the GAO demonstrate how difficult it is for a protester to win. In the period from 2001 through 2005, 6,543 protests were filed (an average of about 1,300 protests per year).  See the 2005 GAO report to Congress. Of these, only 1,528 resulted in a decision and in 303 of the decided cases the protester’s position was sustained. The way the GAO sees it, this means that protesters experience a 20% success rate. Of course, 20% is not very encouraging and, in reality, the way that the GAO calculates the percentage of sustained protests is misleading. By simply comparing the number of “sustains” to the number of decided cases during the period, the GAO ignores the 5,000 cases that were not decided for one reason or another. Some of those cases were probably dismissed summarily by the GAO, others were withdrawn only to be re-filed in the Court of Claims, and some of the protesters may have simply “thrown in the towel” as a result of frustration with the process. In any event, if you compare the number of “sustains” to the number of cases filed (303 out of 6,543), the protester prevailed in less than 5% of the protests. Take your pick, 20% or 5%, neither one is very good. (In 2006, there have been 1,327 protests filed to date, and 72 have been sustained).  See the 2006 GAO report to Congress. Continue Reading Where and Whether to File a Bid Protest

Effective January 6, 2007, the Boards of Contract Appeals for the General Services Administration, the Departments of Agriculture, Energy, Housing and Urban Development, Interior, Labor, Transportation, and Veterans Affairs will cease to exist and will become part of the new Civilian Board of Contract Appeals.  All of the judges of these boards and their pending cases will be transferred to the new Civilian Board of Contract Appeals.   This consolidation was authorized in the National Defense Authorization Act for Fiscal Year 2006 and notice was published in the Federal Register on November 9, 2006 of the consolidation. 

The agencies of the Department of Defense, (Army, Navy, Air Force), NASA and the United States Postal Service will continue to maintain their own boards of contract appeals. 

Since the rules of procedure for the various civilian boards of contract appeals are nearly identical, we do not anticipate any disruption of the disputes process as a result of this consolidation.  The transfer of existing appeals should be a seamless transition from a procedural standpoint. When the Engineer Board of Contract Appeals merged with the Armed Services Board of Contract Appeals, the transition was smoothly accomplished and the process was not disrupted.

The Baltimore District, in conjunction with the Society of American Military Engineers, is conducting a one-day forum on the workload created by the Base Realignment and Closure (BRAC) construction program in the District.  This multi-billion dollar program includes new construction and renovation work.  The forum will be held on December 7, 2006 in Hunt Valley, Maryland.

This recent Court of Federal Claims decision involves a USDA contract for the construction of a vegetable laboratory in Charleston, South Carolina. The contractor was terminated for default and the bonding company, Travelers Casualty and Surety of America, took over under the terms of the performance bond. 

While there is nothing particularly noteworthy about the Court’s lengthy recitation of the facts, the Court did restate some important rules governing the determination of defective specifications. The Court referred to one of the landmark cases in federal government contracting, Spearin v. U.S., where Justice Brandeis wrote the Supreme Court opinion that established the “Spearin Doctrine’ (a contractor will not be liable to an owner for loss or damage which results solely from insufficiencies or defects in plans and specifications). As the Supreme Court explained:

[I]f the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications. This responsibility of the owner is not overcome by the usual clauses requiring builders to visit the site, to check the plans, and to inform themselves of the requirements of the work . . . . In Spearin, the Supreme Court held that contract provisions “prescribing the character, dimensions and location of” a structure to be constructed “imported a warranty that, if the specifications were complied with, the [structure] would be adequate.”

Continue Reading A Contractor is Not Liable for the Consequences of Defective Specifications

This article describes a GAO decision that highlights how difficult it is to prevail on a protest that challenges an agency’s rating of a proposal where the protest is not supported by anything more than a difference of opinion as to how much weight, or what score, should be assigned to a particular evaluation factor. Absent a showing that there was no rational basis for an agency’s evaluation, contractors should not expect the GAO to overturn an evaluation.

The GAO published a decision today that was originally issued on July 19, 2006, but delayed in being made public because of the need for redactions.  The case involved a protest by East-West Industries, Inc. against the award of a contract to Regent Manufacturing, Inc.   The solicitation was issued under request for proposals (RFP) No. FA8518-04-R-70801, advertised by the Department of the Air Force for multi-aircraft canopy cranes (MACC). East-West challenged the past performance and risk evaluations of its and Regent’s proposals. The protest was denied.

In its decision, East-West Industries, Inc. , B-297391.2; B-297391.3, the GAO stated that in reviewing a protest of an agency’s proposal evaluation, “our review is confined to determining whether the evaluation was reasonable and consistent with the terms of the solicitation and applicable statutes and regulations.” The GAO found that the evaluation of protester’s proposal under the past performance evaluation factor was unobjectionable where the agency reasonably concluded that only one of four prior contracts was of a magnitude and complexity essentially the same as the solicitation’s, and thus met the solicitation’s definition of very relevant. Since only one contract was rated very relevant and the protester received exceptional performance ratings under only two of its three relevant contracts, the GAO determined that the agency reasonably concluded that East-West’s performance record warranted assigning the firm a very good/significant confidence rating based on there being little doubt–rather than no doubt–as to its successful performance.

Continue Reading It is Difficult to Successfully Challenge an Agency's Past Performance and Risk Evaluation

The Navy recently awarded three cost-plus-award-fee, indefinite-delivery/indefinite-quantity (ID/IQ) contracts to Fluor International, Inc., URS-IAP, LLC (a joint venture of URS Corporation and IAP Worldwide Services, Inc.) and Atlantic Contingency Constructors, LLC (a limited liability company managed by The Shaw Group) for global contingency construction. Each contract was for a base year with four one year options, and the value of each contract was approximately one billion dollars. The contractors were to provide construction and related engineering services in response to war fighting needs, global natural disasters, and humanitarian assistance.

The awards were made following a "best value" evaluation based on experience, past performance, contingency planning, management, small business utilization, and cost. Non-cost factors were considered more important than cost. A disappointed offeror, Kellogg Brown & Root Services, Inc. (“KBR”), filed a GAO protest asserting that the Navy misevaluated the proposals under technical and cost factors. The GAO agreed and issued a decision sustaining the protest.

Continue Reading GAO Recommends Navy Return To Square One in Award of Billion Dollar Contracts

A GAO decision released today, but dated November 15, 2006, reported that Advanced Federal Services Corp. protested the award of a contract to Eastek, Inc. under request for proposals (RFP) No. W9128Z-06-R-0001, issued by the Department of the Army Communications-Electronics Life Cycle Management Command for business administrative support services (BASS).  The protester contended that the agency unreasonably evaluated offerors’ technical proposals and past performance and made an improper source selection decision.  The protest was denied.

The GAO stated that in reviewing a procuring agency’s evaluation of an offeror’s technical proposal, “our Office’s role is limited to ensuring that the evaluation was reasonable and consistent with the terms of the solicitation and applicable statutes and regulations. As with any evaluation review, our chief concern is whether the record supports the agency’s conclusions To the extent a protester disagrees with an agency’s evaluation, such mere disagreement does not render an evaluation unreasonable; our Office will not question an agency’s evaluation judgments absent evidence that its judgments were unreasonable or contrary to the stated evaluation criteria.”

In other words, contractors who want to challenge the government’s evaluation of an offer submitted in response to a Request for Proposals (RFP) should understand that the GAO gives great latitude to federal agencies. The GAO will almost always yield to the discretion of the source selection official unless the protester can provide evidence that there was not a rational basis for the evaluation.   See Advanced Federal Services Corp., B-298662, November 15, 2006.

The Court of Federal Claims, in Trafalgar House Construction v. United States, recently reiterated the criteria that a contractor must meet if it decides to use the total cost method to calculating damages for differing site conditions and delays. This method essentially involves subtracting the bid price from the total costs incurred and adding profit to the difference. In this way, a contractor takes the position that all of the costs it incurred above and beyond the bid price are the responsibility of the government. The courts disfavor this approach, as stated in the Trafalgar decision, because of “bidding inaccuracies” and “performance inefficiencies” that “skew” the accuracy of the damage calculation. The criteria that a contractor must meet to sustain a total cost method damage calculation are as follows:

1) That it was impractical to prove its actual losses directly

2) That its bid was reasonable

3) That the actual costs incurred were reasonable

4) That the contractor was not responsible for the added costs

In the Trafalgar case, the contractor failed to meet the first criteria and was unable to demonstrate why its costs could not be calculated directly.  The criteria established by the Court are very stringent and difficult for a contractor to meet. As a result, the message is quite clear: contractors should find another, more accurate, more reliable method of proving damages. Contractors are well advised to segregate labor and material costs for work items in dispute that involve such things as differing site conditions, delays, and changes in the work. By segregating costs, contractors are in a better position to negotiate and resolve disputes, and they will be able to prove their costs in a way that will be accepted by government auditors, administrative boards, and the courts. The bottom line is that the courts are very reluctant to accept the total cost approach as a method to calculate damages.