Georgia Tech Procurement Assistance Center

Government’s subjective views about contractor’s performance do not justify termination for default

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The U.S. Court of Federal Claims recently overturned an agency’s decision to terminate a government contractor for default ─ finding that the government allowed a series of contract disputes, poor practices, conflicting personalities, and a lack of effective communication to cloud its termination analysis.  The case serves as an important reminder that, when reviewing a termination for default, the Court gives little credence to the government’s “subjective beliefs” regarding the contractor’s ability to perform.  Rather, the Court conducts an objective inquiry and scrutinizes the events, actions, and communications that led to the agency’s termination decision.

Background

The National Guard Bureau (“Agency”) awarded a firm-fixed price construction contract in 2014 to Alutiiq Manufacturing Contractors, LLC (“AMC”) to repair asphalt roads at an Air Force base.  From the outset, AMC experienced performance issues on the project: its key personnel were not staffed on the project; it had difficulty finding a qualified subcontractor; and it failed to timely submit required contract documentation.  None of these deficiencies, however, would have prevented the contractor from timely completing the contract.

Nevertheless, these early performance problems engendered hostility towards the contractor among the government’s contract management personnel.  The Agency issued a Letter of Concern and multiple cure notices to the contractor.  In response, AMC adopted corrective measures to help move the project forward.  AMC developed a new asphalt design, made personnel changes, and submitted a revised baseline schedule.  It also worked with its main subcontractor to develop a recovery schedule under which AMC anticipated it could complete its work two days ahead of the original contract deadline.

At the same time the contractor was working to get the project back on schedule, however, Agency personnel were holding discussions on when and how to terminate AMC’s contract for default.  Ultimately, an onsite Agency representative took a “quick glance” at AMC’s proposed recovery schedule and determined it was not viable.  The Agency did not conduct a critical path analysis of the recovery schedule, but instead performed only a “cursory assessment” of the plan.  The Agency terminated AMC’s contract for default shortly thereafter.  AMC then challenged the Agency’s grounds for termination at the Court of Federal Claims.

Continue reading at:  Covington

If you’re working on a military installation, don’t lose your base access

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In the classic 1993 movie Gettysburg, Colonel Joshua Chamberlain, a great American hero (played by Jeff Daniels), commented on the power wielded by military commanders, particularly generals:  “Generals can do anything.  Nothing quite so much like God on Earth as a general on a battlefield.”

It turns out that this this power extends to actions that might affect your Government contract.  For instance, a base commander can revoke a contractor’s access to the base; if that happens, and the contract required the contractor to maintain base access eligibility, the Government can rightly terminate the contract for default.

Continue reading at:  SmallGovCon

 

Are you prepared for a contract cancellation?

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Going back to his campaign pledges, President Trump promised to cut government waste in conjunction with cutting corporate tax rates. As part of this, the president threatened to terminate contracts with the two largest government contractors: Lockheed Martin’s F-35 and Boeing’s Air Force One programs.

A surge in contract terminations could be in the offing as federal agencies align their goals with White House intentions. With this in mind, preparing for the possibility of a contract termination is a defensive strategy that contractors should undertake now. Here are three key steps you should consider immediately:

  1. Plan ahead. Never consider your contract as “termination-proof.”
  2. Fully understand the contract termination process
  3. Learn how to calculate and submit your Request for Equitable Adjustment or settlement proposal.

The possibility of a contract termination should be incorporated into every government contractor’s business continuity plan. Implementing safeguards and procedures designed to mitigate the risk of a termination will limit the impact it has on your organization’s operations. Ask yourself, “Does my organization have procedures in place to deal with cure notices, customer complaints, and quality issues? What about monitoring subcontractors?”

Keep reading this article at: https://washingtontechnology.com/articles/2017/06/09/insights-contractor-termination.aspx

VA demands review of company’s small business status, days after awarding it a contract

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Days after the Department of Veterans Affairs awarded a contract to manage its verification program for veteran-owned small businesses, it’s questioning the winner’s own status as a small business.

The VA filed a size protest with the Small Business Administration against Loch Harbour Group Inc. of Alexandria, less than a week after awarding the company a $39.9 million contract to manage the VA’s Center for Veterans Enterprise, said Lee Doughterty, a principal at the Vienna office of law firm Offit Kurman who represents Loch Harbour.

That contract, which was set aside for veteran-owned small businesses and involves processing contractor applications to be verified as veteran-owned, was originally awarded to Monterey Consultants Inc. of Dayton, Ohio. The VA terminated the Monterey award in November, opting to take corrective action in response to a protest filed by Loch Harbour in the U.S. Court of Federal Claims.

“It is a terrible tactical move,” said Dougherty, who added that Loch Harbour was deemed qualified to compete for the work during the contract evaluation process. “The retaliation taken by the program and contracting officer is absolutely inappropriate and a gross violation.”

Keep reading this article at: http://www.bizjournals.com/washington/blog/fedbiz_daily/2014/12/va-demands-review-of-companys-small-business.html?page=all

Subcontractor wants out of shipping contract; hearing set for Oct. 30

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A key subcontractor wants to stop shipping troops’ privately owned vehicles for the Department of Defense, further threatening a system that has been plagued by long delays and complaints from troops.

A U.S. District Court on Sunday enjoined Liberty Global Logistics of Lake Success, N.Y., to stick to its agreement to ship vehicles to and from Europe. Liberty is a subcontractor to Brunswick, Ga.-based International Auto Logistics, which in May took over a DOD contract to ship the personal vehicles of servicemembers and DOD civilian employees.

The temporary injunction will be the subject of a Thursday hearing at the U.S. District Court for the Southern of Georgia, Brunswick Division.

Liberty, of Lake Success, N.Y., has questioned whether International is financially capable of servicing a contract it won in May to ship the personal vehicles of DOD personnel when they transfer duty stations. In documents filed with the court by International, Liberty said that International had taken out an $8 million line of credit last year, which expired in July.

Keep reading this article at: http://www.stripes.com/news/subcontractor-wants-out-of-pov-shipping-contract-hearing-set-for-thursday-1.309580

How to manage a Federal contract during the Government shutdown

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In the wake of the Government’s October 1, 2013 shutdown, clients of the Georgia Tech Procurement Assistance Center (GTPAC) have been asking our counselors a lot of questions about the implications.  Here is a summary of the advice we are giving:

  • Generally, if you are competing for a Federal contract, everything is on hold.  Watch FedBizOpps (www.fbo.gov) where a majority of Federal solicitations are posted to see updates on the status of anything you are bidding on, or have bid on recently.  Don’t expect up-to-the-minute information since so many Federal employees are on furlough, but that’s the best place to check on the status of most Federal procurements.  If you discover that the procurement official assigned to managing the solicitation in which you are interested is not on furlough, an inquiry by email is permissible.  Be patient in waiting for a reply — remember that literally hundreds of thousands of Federal employees are on furlough status at the moment.
  • Some procurements, related to essential Government functions, are proceeding with minimal disruption, but expect delays.
  • If you have an active Federal contract, it is imperative that you comply with all contractual terms and conditions, and that accurate records of shutdown-related impacts be maintained.  Knowing the terms and conditions of your contract inside-out will pay-off right now.  Be sure to read the rest of this article for tips on managing an active Federal contract.

Specific contractual actions to protect your company’s interest will vary by contract type and contract terms.  All have to do with the specific provisions contained in your contract.   Some things to consider include:

Cost-Type/Fixed Price-Type (incrementally funded) Contracts

  • Ensure compliance with the notification requirements of the “Limitation of Cost” or “Limitation of Funds” provision of the contract (cost-type contracts).
  • Develop plans to minimize the impact to the customer (the end-user within the Government) and your firm (i.e., curtail non-essential program elements to stretch program funding) and request a Stop Work be issued by the Government’s Procurement Contracting Officer (PCO or just CO) for the non-essential elements.
  • If a Stop Work is not issued, notify the PCO/CO of potential delays under “Government Delay” and/or “Excusable Delay” provisions. (fixed price-type contracts).
  • Provide direction to your supplier base consistent with the PCO/CO’s direction.
  • Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.
  • Segregate costs as documentation for a potential delay and disruption under the Request for Equitable Adjustment (REA) provision of your contact.

Fixed-Price Type Contracts (fully funded)

  • The Government shutdown does not have an immediate impact on contract performance but, over time, the unavailability of Government inspectors or support could lead to delays and disruptions and should be documented for future Request for Equitable Adjustment (REA) consideration.
  • Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.

Other Items to Consider

  • Proposals and unexercised options could expire during an extended shutdown period.  If it is in the best interest of your firm, a non-solicited proposal extension/option exercise date extension could be provided to the Government.
  • The Government may not be able to provide inspectors (e.g., Defense Contract Management Agency) under a shutdown and delay, so disruption impacts should be captured and documented for a future Request for Equitable Adjustment (REA).
  • The Anti-Deficiency Act (ADA) does not allow the government to spend money that is not obligated, therefore and firms should be leery of      non-warranted individuals requesting you to work and get paid later; e.g., contracting officer representatives (CORs) or other Government officials.  Only COs and PCOs can make binding commitments.
  • Be mindful of mission creep, where the Government requests you to perform additional contract tasks due to Government personnel unavailability.
  • The Government shutdown potentially impacts to your rates and long-range plans based on prolonged funding gaps and/or stop work orders, so alert your accounting staff to document all impacts of the shutdown.

As always, feel free to contact a GTPAC procurement counselor if you have questions or need guidance.  All contact information is posted at: http://gtpac.org/team-directory.

 

Should contractors fear sequestration?

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If sequestration of federal funds kicks in, agencies will face making deep cuts to programs and that pain will flow down to contractors, experts say.

A sequestration causes automatic, indiscriminate, across-the-board budget cuts. The failure of the so-called supercommittee to find $1.2 trillion dollars in savings over a decade triggered the cuts. They’re set to take effect Jan. 2, 2013.

As a result, contractors too “are hostages in a showdown between the president and Congress over fundamental decisions on taxing and spending,” said John Cooney, former general counsel at the Office of Management and Budget and now a partner at the Venable law firm.

He spoke Jan. 17 at a panel discussion hosted by the Professional Services Council that looked at sequestration in detail. Cooney broke down the possible routes federal officials may take to deal with the cuts.

Cooney expects agencies to:

  • Try to avoid terminating contracts. Instead, officials will reduce the amount of money obligated under their contracts.
  • Become less willing to extend contracts into their option years.
  • Obligate money for one fiscal year at a time on task order and services contracts.
  • Possibly use the prospect of the sequester’s cuts to renegotiate contracts.

He also said agency officials will more often decide to not award new contracts.

“This will be a common agency practice in year one of a sequester. Procurements that can be put off will be put off,” he said during the discussion.

With available money, agency officials will maximize contracts that meet their agency’s core duties, said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, who spoke on the panel as well.

Meanwhile he expects agencies to look for more flexibility to avoid hard-and-fast commitments, such as fixed-price contracts and minimum revenue guarantees. And on the other hand, officials may use more time-and-materials contracts, which are based on labor hours and materials.

However, Chvotkin said there are some policy constraints as the Obama administration has railed against this type of contract, which places a lot of risk on the government.

IDIQs and the General Services Administration’s Multiple Award Schedules program may become more attractive to agencies. They allow for more negotiations at the task order level, he said.

Cooney had several suggestions for companies in light of what may happen. Advocate for the importance of a program and stay in close contact with a contracting officer. Realize though that the officer may not know the fate of a program until very late in the process.

Businesses should also emphasize what they can do for the agency, including the options the company is willing to agree to that may even decrease its revenue, Chvotkin said.

He recommended checking the Past Performance Information Retrieval System (PPIRS) and the Federal Awardee Performance and Integrity Information System (FAPIIS). The information needs to be correct, and it should reflect as favorably as possible on the company’s performance.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Jan. 19, 2012 at http://washingtontechnology.com/articles/2012/01/18/sequestration-effects-contracts.aspx?s=wtdaily_200112.

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