The GAO published a decision today in the Matter of SunEdison, LLC, B-298583; B-298583.2, dated October 30, 2006, involving SunEdison’s protest of an award to PowerLight Corporation under request for proposals (RFP) No. FA4861-06-R-B501, issued by the Department of the Air Force for the construction and operation of a photovoltaic array to supply solar power to Nellis Air Force Base (AFB) in Nevada. The protester contended that the agency’s evaluation of offerors’ prices was flawed and the GAO sustained the protest.

The protester argued that the agency’s evaluation of the offerors’ prices was flawed in that it failed to take into consideration that PowerLight’s price was offered contingent upon “successful completion of an REC purchase agreement with Nevada Power,” whereas its own price was offered on an unconditional basis.  The GAO agreed that the agency’s price evaluation was flawed and found hat PowerLight’s inclusion of a contingency in its pricing rendered the proposal ineligible for award.  Where a solicitation requests offers on a fixed-price basis, an offer that is conditional and not firm cannot be considered for award.  Omega World Travel, Inc.; Sato/Travel, Inc., B-288861.5 et al., Aug. 21, 2002, 2002 CPD para. 149 at 6.  Here, not only did PowerLight make its offer conditional upon successful completion of an REC purchase agreement, but further, it acknowledged the uncertainty of such an agreement being reached.

Government contractors need to keep in mind, when responding to a sealed bid invitation or to a request for proposals, that conditional pricing is an almost certain way to have your bid, or offer, rejected.  Of course, this procurement seems to have been yet another of those all too frequent “negotiated” procurements were actual discussions, or negotiations, did not occur. The Contracting Officer simply furnished each of the offerors with “evaluation notices” describing required information that had not been fully addressed in the proposal or that required clarification.  Apparently the uncertainty in PowerLight’s proposal was not addressed, and there were no discussions during which additional issues could have been raised. (Unlike sealed bidding, where a bid cannot be revised after bid opening, offers submitted in response to a Request for Proposals can be revised after offers are submitted if the government conducts discussions, or negotiations, and gives the offerors in the competitive range an opportunity to submit best and final offers. The regulations regarding Contracting by Negotiation are found in FAR, Part 15).

Continue Reading Protest of Agency’s Flawed Evaluation of Awardee’s Conditional Pricing Sustained by the GAO

The Office of Federal Contract Compliance Programs (OFCCP) has published a Technical Assistance Guide designed to help federal government construction contractors and subcontractors comply with the federal laws and regulations that prohibit government contractors from discriminating in employment, and require that they undertake affirmative action to ensure equal employment opportunity in their workforces.  It is intended for government contractors who have construction contracts and/or subcontracts.  The obligations of government contractors and subcontractors who hold non-construction contracts differ in significant ways and are covered in a separate guide.

This Guide does not create new legal requirements or change current legal requirements. Instead, it reflects the views of OFCCP and is intended to serve as a basic resource document on OFCCP-administered laws. The legal requirements related to equal employment opportunity that apply to Federal supply and service contractors are contained in the statutes, executive orders, and regulations cited in the Guide. Every effort has been made to insure that the information contained in the Guide is accurate and up to date.

Continue Reading Technical Assistance Guide for Federal Construction Contractors

A new regulation announced by the Small Business Administration on November 15, 2006, to be effective on June 30, 2007, requires small businesses to recertify their size when they are purchased by or merged with a larger business, or at the end of the five-year point of a contract.  The rules are intended to help small businesses obtain more federal contracts and to assure that contracts set aside for small businesses are not going to larger companies.  As reported in the Thompson West publication, the Government Contractor Online Update, “According to SBA Administrator Steven Preston, the changes “will go a long way toward ensuring that contract awards get in the hands of small business owners, federal agencies get the proper credit toward their small business contracting goals and small business contracts are fairly and accurately reported..’”

There are critics of the new policy, however, who contend that the SBA has not gone far enough to prevent larges businesses from intruding into the small business marketplace.  The American Small Business League has commented that “A new policy proposed by the Small Business Administration (SBA) and the Office of Federal Procurement Policy (OFPP) will allow the government to continue reporting awards to large companies as federal small business contracts.” (See the full article).

Pertinent parts of the new regulation are as follows:

Continue Reading New SBA Regulations Require Small Businesses to Recertify After Five Years

The U.S. Army Corps of Engineers awarded an $88 million contract for the construction of a fifty-three mile road around a tropical island in the North Pacific. During contract performance, the contractor submitted a certified claim contending that the contract clause, "Time Extensions for Unusually Severe Weather," was defective, resulting in a gross misrepresentation of the number of adverse weather days that could be anticipated during performance of the work.  The contractor also contended that reliance on the defective specification led to an increase in the cost to perform the work. The certified claim included costs incurred up to the date of the claim submission and costs estimated to be incurred in the future.

The United States Court of Federal Claims found that $50 million of the contractor’s certified claim of $63.4 million was clearly fraudulent. During the trial, witnesses, including the corporate officer who certified the claim, testified that the $50 million claim "was a means to get the Government’s attention, and to show the Government what would happen if it did not approve the new compaction method that plaintiff wanted."  The Court stated that this part of the certified claim was not submitted in good faith, and was not for an amount which the Plaintiff honestly believed it was entitled. Daewoo Engineering and Construction Co., LTD. v. U.S., No. 02-1914C, October 13, 2006.  Accordingly, the projected additional costs based on estimates, and not yet incurred, were found to be fraudulent.

Continue Reading Contract Claim Designed to "Get the Government"s Attention" Found to be Fraudulent

Federal construction contractors need to be aware that an unbalanced bid can be rejected as nonresponsive. FAR 52.214-10(e) provides that:

“The Government may reject a bid as nonresponsive if the prices bid are materially unbalanced between line items or subline items.  A bid is materially unbalanced when it is based on prices significantly less than cost for some work and prices which are significantly overstated in relation to cost for other work, and if there is a reasonable doubt that the bid will result in the lowest overall cost to the Government even though it may be the low evaluated bid, or if it is so unbalanced as to be tantamount to allowing an advance payment.”

Unbalanced bidding becomes a problem if the government believes that the bidder who submitted the apparent low bid according to the method by which the low bid was to be determined for evaluation purposes, in all probability will ultimately perform the project at a higher cost than the second bidder. In other words, the idea is that the low bidder has managed to “trick” the system by managing to be evaluated as low at bid opening, but through an unbalancing strategy has made it likely that he will be paid more than it appears. For example, if a solicitation requests bids on both an underrun and an overrun quantity for the same item (i.e. a unit price price for over 10,000 cubic yards and a unit price for under 10,000 cubic yards), with both bid item prices to be counted for bid evaluation purposes, an unbalanced bid would insert a very high price for the item likely to overrrun, and a very low price for the item likely to underrun. The bidder thereby would be planning to be paid a lot more than reflected by its bid because of its “educated guess” that there will be a windfall occasioned by an overrun.

Continue Reading The Hazards of Unbalanced Bidding

The GAO issued a decision today reiterating a familiar theme: Where a protester’s proposal failed to provide information specifically requested by the solicitation and necessary for evaluation purposes, the agency’s evaluation of the proposal as “poor” was reasonable.

The solicitation required the submission of a proposal with sections addressing the offeror’s past performance, technical approach, staffing, and management approach, and supplied instructions as to what proposals were to address in relation to each of the RFP’s evaluation factors. Because the agency’s evaluation was dependent upon information furnished in the proposal, it was the offeror’s obligation to submit an adequately written proposal for the agency to evaluate. The protester simply failed to do so. Therefore, the agency’s evaluation of the proposal, and determination to not award a contract under this solicitation to the protester, was consistent with the terms of the solicitation and was reasonably based. See Matter of Phyllis M. Chestang, B-298394.3, November 20, 2006.

All government contractors should be aware that federal agencies have a great deal of discretion in determining whether a proposal is responsive to the listed evaluation factors. Before submitting a proposal, contractors should try to put themselves in the position of the government’s source selection team. Does the proposal answer the questions that the government will have about an offeror’s experience, past performance, and technical qualifications? If your proposal doesn’t seem convincing and responsive to you, the chances are that the government will not think very much of it either. In the world of negotiated procurement and proposal preparation, it is vital to be thorough, responsive, and persuasive. A contractor needs to sell the company’s capabilities and approach throughout the process.

The Armed Services Board of Contract Appeals recently reiterated the requirements a contractor must meet in order to recover unabsorbed home office overhead using the Eichleay Formula.  In Kato Corporation, ASBCA No. 51462, the Board held that a contractor must establish three elements to successfully maintain a claim for recovery of its home office costs as a result of a delay:

1) There must be a government-caused delay of an indefinite duration that delays completion of the entire project and there must be no concurrent contractor caused delay;

2) The original contract performance time must be extended by the delay, or the contractor must prove that it was going to finish early and was prevented from doing so by a government-caused delay; and

3) The contractor must show that it was required to remain on standby, ready to resume work, once the delay had ceased. 

In Kato, the contractor failed to prove that the government delayed the completion of the work. Although the contractor presented evidence that the government issued three change orders that delayed completion of specific portions of the work, it did not prove a causal link between those changes and a delay to the critical path, thus failing to demonstrate that the overall project had been delayed. The ASBCA further found that the work had not been suspended for an indefinite period of time because Kato had continuously performed some work at the site during the claimed delay period. Since Kato had been performing work, the Board also concluded that it could not prove that it was on “standby” during the purported delay. 

This decision points out the critical importance of proving that a government-caused delay occurred that it actually delayed completion of the overall project. 

Many contractors prepare bids on a computer, using either commercially prepared bid packages or “home grown” spreadsheets using Excel or similar programs, to automatically calculate their bids.  A recent decision by the Comptroller General, however, reveals some of the dangers that these “automatic” packages hold for a contractor.  A bidder on a sewer lagoon project for the Corps of Engineers recently utilized a computer program and contended that an erroneous entry resulted in its bid of $6,881,800 being 25 percent lower than the next competitor’s bid.  The low bidder alleged that it had made a “mistake” in preparing its bid and requested upward correction.  The Federal Acquisition Regulations (FAR) allow upward correction of a bid when the bidder provides clear and convincing evidence of both the existence of a mistake and the bid actually intended, but only where the correction would not result in displacing one or more lower bids. See FAR 14.407-3(a).  The low bidder alleged that a “mistake” occurred because it “overrode” the automatic calculations in the spreadsheet by manually entering a dollar amount in the “total” column for a bid item rather than allowing that total amount to be automatically calculated by the formula in that cell.

Continue Reading Upward Correction of Low Bid Disallowed

When the individual Corps of Engineers’ Districts used the Tri-Service Solicitation Network to provide access to electronic documents, not only were the solicitations, specifications, plans, and amendments available, other useful information that was also included.  However, with the deactivation of the Tri-Service Network and the Federal Government’s adoption of the Federal Technical Data Solutions (FedTeDS) centralized procurement information system, it has become difficult for contractors to find useful, such as lists of planholders or the results of bid openings on Corps of Engineers’ solicitations.  Fortunately, Some Districts have begun to provide bid abstracts on their websites. (See the Baltimore District for an example).  Hopefully, more districts will adopt this practice so that this vital information will be available for contractors to review.

Strangely, the Department of Homeland Security’s Supplemental Federal Acquisition Regulations (HSAR) is not included on the official Code of Federal Regulations website. However, an unofficial online beta test site, the Electronic Code of Federal Regulations (e-CFR), does include the HSAR.  This beta test site is updated daily and also contains the Federal Acquisition Regulation, FAR, as well as the individual agency supplements.  By accessing Title 48 of the CFR on this website, the most recent versions of these regulations were accessible.