Protection of Contractor Rights

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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.Continue Reading Important New Rules on Electronically Stored Information

As we have mentioned previously, the growing use of multiple award task order contracts in federal construction contracting, as can be seen in much of the disaster recovery work in New Orleans, is limiting the competitive opportunities for small and mid-sized construction contractors.  Unless a contractor is the recipient of one of the major task order contract awards, there is no opportunity for a contractor to compete for upcoming individual task orders and the contractor is effectively precluded from competing for potentially millions of dollars of work to be awarded over a period of years. In the past, when there were more single award contracts, if a contractor lost out to a competitor, there was always another solicitation on the horizon.  If a contractor fails to become one of those selected to compete under a multiple award task order contract, there may be no, or very little, work “waiting in the wings.”

It follows that it is important to monitor the decisions of the GAO and the courts to see what is being done to protect the rights of contractors, and we will continue to do so.  In a newly issued GAO decision, Palmetto GBA, LLC, B-299154, December 19, 2006, the Comptroller General stated that according to the legislative history of the Federal Acquisition Streamlining Act (FASA), task and delivery-order contracts were intended to encourage the use of multiple-award, rather than single-award contracts, in order to promote an ongoing competitive environment in which each awardee would be fairly considered for each order issued.  H.R. Conf. Rep. No. 103-712, at 178 (1994), reprinted in 1994 U.S.C.C.A.N. 2607, 2608; S. Rep. No.103258, at 15-16 (1994), reprinted in 1994 U.S.C.C.A.N. 2561, 2575-76. In this regard, the Federal Acquisition Regulation (FAR) requires agencies to provide all awardees “fair opportunity to be considered for each order exceeding $3,000 issued under multiple delivery-order contracts or multiple task-order contracts.”  FAR sect. 16.505(b)(1)(i).

An interesting aspect of the Palmetto case is that the GAO reiterated that a task or delivery order that precludes competition for future task or delivery orders for the duration of the contract performance period may constitute a “downselection.”  The GAO has recognized downselections in circumstances not only where all work under a contract will be foreclosed from future competition, but also where specific categories of work will be similarly foreclosed for the duration of the contract.  While the GAO did not find that “downselection” occurred in the Palmetto case, it is important for contractors to recognize that a task order award that eliminates competition for future work can be successfully protested.
Continue Reading Task Order Contractors Must be Given a Fair Opportunity to Compete for Individual Task Orders

The cover story, “New Marching Orders,” in the most recent edition of Constructor, published by McGraw-Hill Construction, highlights a trend in military construction that should concern small to mid-size general contractors.  In the past, many projects for construction of military housing and other facilities were procured as individual contracts through sealed bid solicitations issued by the U.S. Army Corps of Engineers.  Small and mid-size contractors, familiar with the local market conditions, were well positioned to compete for, win, and perform these contracts.  E. Michael Powers reports that today, however, the Corps is focusing its procurement efforts on multiple-award construction contracts and indefinite delivery/indefinite quantity contracts with task orders.  These contracts tend to be for greater volumes of work, resulting in contracts that exceed the bonding capacity of many small to mid-size firms.

Powers also notes that a contract to build fifty buildings at a cost of $10 million per building, spread across a large geographic area, might not even appeal to firms that have the bonding capacity to bid on such a large contract.  In addition, where so much work is included in one contract, there is only one prime contractor, whereas before there could have been as many as fifty contractors performing fifty separate projects.

These large procurements are often the subject of negotiated procedures under FAR, Part 15, where price is no longer the controlling factor in determining who receives the contract.  In these “best value” procurements, the experience and past performance of a larger contractor may be decisive in the Corps’ award decision.Continue Reading Declining Opportunities for Small and Mid-Sized Federal Construction Contractors