For federal construction contractors, payment and performance bond obligations in construction contracts with the federal government that exceed $150,000 should, typically, come as no surprise. However, what requirements should contractors expect from a contract that is ambiguous as to whether it is a construction contract, yet calls for construction-related services, but lacks explicit bonding requirement terms? Can bonding requirements be “read-in” to the contract? When should contractors raise such questions? This past November, the Federal Circuit addressed those questions in K-Con, Inc. v. Secretary of the Army, 908 F.3d 719 (Fed. Cir. 2018). This decision provides instrumental lessons contractors should keep in mind before submitting offers for projects that include construction-related services. Continue Reading No Bonding Requirements? Think Again, Instructs the Federal Circuit
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.”)
We’ve warned you before against relying on informal, or oral, directives from a Contracting Officer; get it in writing! A recent case before the Armed Services Board of Contract Appeals reminds us that contractors also need to be wary about who from the government is giving those directives.
In EEC International, ASBCA No. 55781 (Dec. 28, 2012), the contractor asserted claims against the government, alleging that constructive changes to the contract resulted in higher performance costs. Specifically, the contractor alleged that the government’s construction representative, as well as the contracting officer’s representative, interfered with its means and methods and directed the contractor to make many changes to its scope of work. According to the contractor, the construction representative and contracting officer representative also constructively accelerated its performance.
The Board did not address the merits or credibility of the contractor’s claims. It instead concluded that even if events occurred as the contractor claimed, it was barred from entitlement because neither the construction representative nor the contracting officer’s representative was authorized to modify the contact. The Board concluded that only the contracting officer had such authority, and the contractor had not alleged that the contracting officer directed it to take the actions at issue. Although the contractor argued that the acts of the construction representative and contracting officers representative were implicitly ratified by a higher authority who had knowledge of the facts, as well as the authority to bind the government, the Board rejected this argument.
The hard lesson: taking direction from someone other than the contracting officer is done at a contractor’s peril. We certainly feel that the Board’s decision was harsh here. Contracting officers are most often not those with whom the contractor has regular communications and there are situations where directives from others may be binding. However, as budgets shrink and possible sequestration looms, anticipate that agencies will rely more and more heavily on defenses such as this. We’re already seeing it happen. So contractors should avoid taking direction from anyone but the individual explicitly vested with authority to bind the government. If you find yourself in a difficult position, where you feel compelled to proceed without proper written authorization, contact an experienced legal professional for assistance.
Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.
Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.