IN A FIXED PRICE CONTRACT, THE CONTRACTOR GENERALLY ASSUMES THE RISK OF HIGHER COSTS

Many contractors do not fully understand the implications of a “firm-fixed-price” contract.  Agility Defense and Government Services, Inc. (formerly Taos Industries, Inc.) learned the hard way.  Agility Def. & Gov’t Svcs., 115 Fed. Cl. 247 (2014). Agility had a firm-fixed-price indefinite quantity contract to deliver Soviet-style weapons in support of the Army’s security assistance mission in Afghanistan. In December 2007, the Army issued a $1.3 million fixed price delivery order for 225 SPG-9 recoilless guns (a Soviet anti-tank gun).  The guns were to be delivered by April 7, 2008.  Agility sought to obtain the guns from both a Hungarian and a Bulgarian company, but both governments refused to release the weapons.  Agility did not deliver as required, and still hadn’t delivered by two years later, … Continue reading

USE IT OR LOSE IT: A PRIMER

The Acting Secretary of the Army recently issued Army Directive 2016-16, “Changing Management Behavior: Every Dollar Counts,” April 15, 2016.  The purpose was to “be innovative and good stewards of taxpayer dollars” and to “adapt financial management practices and improve outcomes.”  Probably the most important change to Army thinking was the section on “use or lose” funding practices, which said: Eliminate “use or lose” funding practices.  While the Office of the Secretary of Defense and Congress will hold us accountable for execution metrics that we will have to meet, commanders and staffs will not automatically decrement commands or programs in future allotments when they do not spend all funds without further investigation to evaluate the reason for under-execution and determine if it was a onetime … Continue reading

WHEN CAN A SUBCONTRACTOR SUE THE GOVERNMENT WHEN THE PRIME FAILS TO PAY IT: RARELY

A recent Court of Federal Claims case provides some clarification on when and how a subcontractor may sue the government and recover, when the prime contractor fails to pay it.  G4S Technology LLC v. United States, No. 12-8C, (Fed. Cl. Feb. 11, 2014).  It is the general rule that a subcontractor that agrees to supply materials or labor to a prime contractor is only an incidental beneficiary of any contract between the prime and the government, and therefore cannot sue the government on the prime contract.  The key difference is between an “intended beneficiary” of a prime contract (which establishes a government duty to the subcontractor) and contracts that mere create “incidental beneficiaries” which do not establish any such obligation on the part of the … Continue reading

CAN YOU “APPEAL” A BID PROTEST DECISION OF THE GOVERNMENT ACCOUNTABILITY OFFICE (“GAO”)?

Readers are aware that many disappointed bidders submit their initial bid protest to the GAO, but if they lose, they can take their case to the Court of Federal Claims (“COFC”).  But is this an appeal?  The short answer is “no,” because the GAO is not a court nor are its decisions statutorily appealable, but a little background is helpful in understanding the questions. Who is the Comptroller General? The Comptroller General of the United States is the director of the Government Accountability Office (“GAO,” formerly, the “General Accounting Office” but renamed in 2004). an investigative arm of Congress that examines all matters relating to the receipt, disbursement, and use of public funds. Established by the Budget and Accounting Act of 1921 (31 U.S.C. §§ … Continue reading

IMPOSSIBILITY OR COMMERCIAL IMPRACTICABILITY: A GOOD DEFENSE?

Can “impossibility” or “commercial impracticability” be used as a good defense to non-performance if the Government defaults your contract?  Although they may sometimes be helpful, both defenses are difficult to maintain and win. This was recently demonstrated in Hearthstone, Inc. v. Dept of Agriculture, CBCA 3725, Feb. 27, 2015. Impossibility To establish the defense of impossibility, a contractor must show that performance was objectively impossible.  It is not sufficient to show that performance was impracticable for the individual contractor–you must prove that performance would have been impossible for any similarly situated contractor.  Jennie-O Foods, Inc. v. United States, 580 F. 2d 500, 410 (Ct. Cl. 1978). The ability of any other contractor to perform the disputed work is persuasive evidence that the contract was not … Continue reading

THE SECRET’S IN THE SAUCE—WHY YOU NEED THE FAR

One of best movies in the 1990s was “Fried Green Tomatoes,” a story about a depression era café named The Whistle Stop in a little town in Alabama. Kathy Bates and Jessica Tandy starred. The Whistle Stop was known for its barbecue, as well as its fried green tomatoes. In the movie, Frank Bennett leaves the town and his family to go to Georgia.  Bennett, who had abused his wife, eventually returns to Alabama and tries to kidnap his young son. The mother’s friend kills Frank with a blow to the head from a cast-iron skillet when she tries to stop the kidnapping. The staff of the Whistle Stop then covertly barbecues Frank’s body and serves it to the Georgia sheriffs who show up later … Continue reading

G.L. CHRISTIAN & ASSOCIATES v. THE LIONS

For more than 50 years, the “Christian Doctrine” has been established law.  The doctrine provides that if a mandatory contract clause is omitted from a government contract, and the clause expresses a significant strand of public procurement policy, it will be incorporated into the contract by operation of law.  G.L. Christian & Assoc. v. United States, 312 F. 2d 418, reh. denied, 320 F. 2d 345, cert. denied, 375 U.S. 954 (1963). For almost the same 50 years, the Government Accountability Office (“GAO”) has stated that the Christian doctrine does not apply to solicitations, and such provisions will not be “similarly incorporated by law into solicitations.”  The earliest reported case at GAO is Administrator of GSA, B-163753, 47 Comp. Gen. 682, May 28, 1968. The … Continue reading

NO “DERIVATIVE SOVEREIGN IMMUNITY” IF CONTRACTOR’S CONDUCT VIOLATES CONTRACT OR LAW

The Supreme Court rarely considers government contracting cases.  Recently, in Campbell-Ewald Co. v. Gomez, No. 14-857, 2016 Westlaw 228345 (2016), the Court ruled on two questions, one of which concerned sovereign immunity of a government contractor, or what was called “derivative sovereign immunity” since the contractor asserted its immunity derived from the government’s immunity. The Navy contracted with Campbell to develop a recruiting campaign that included sending text messages to young adults, but the contract stated that messages could be sent only if those individuals had “opted in” to receive marketing solicitations.  Campell (through its subcontractor) developed a list of cellular phone numbers for contacting 18-24 year old users, and then transmitted the Navy’s message to more than 100,000 people, including Jose Gomez, a 40 … Continue reading

PUBLIC NOTICE IN CONTRACTING ACTIONS

The official public medium for providing notice of contracting actions by federal agencies is the FedBizOpps.gov website, which has been designated by statute and regulation as the government-wide point of entry (“GPE”). 15 U.S.C. § 637(e); 41 U.S.C. § 416; Federal Acquisition Regulation (“FAR”) §§ 2.101, 5.101(a)(1), 5.201(d).  The use of the FedbizzOpps website enables agencies to meet the notice requirement for full and open competition in the Competition in Contracting Act of 1984 by using a well-recognized and well-accepted website. Sometimes agencies will announce the contracting action in the GPE, but provide a link to a document, such as a solicitation, which is located in another website Several agencies provide notices of contracting actions on other, publicly accessible websites, like the Department of Interior’s … Continue reading

RESPONSES TO RFQs ARE NOT OFFERS: DON’T MAKE THE RFQ MISTAKE

Request for Quotations (“RFQs”) may create a “no-win” situation for a government contractor. That is particularly true when the contractor misses the delivery date, as in TTF, LLC, ASBCA Nos. 58495, 58516, 2013 BCA ¶ 35403. The supplier has made what is called “the RFQ mistake.” Follow the scenario below, which is abbreviated, but is essentially what TTF faced: Agency issues an RFQ for 37 aircraft fuselage fairings. TTF submits a responsive quote to the agency, which negotiates the price down slightly Agency issues a unilateral Purchase Order (“PO”). The PO states that TTF is not required to sign the PO in order to indicate acceptance. TTF does not sign it. Delivery date specified in the PO is 180 days after award TTF cannot comply … Continue reading