Government contractors facing products liability suits may have a number of unique defenses available them, depending on the government’s role in the alleged act or omission giving rise to the plaintiff’s claimed harm. One such defense is the “government contractor defense.” Despite its name, successfully establishing the defense requires proof of more than just a government contract.
Punctual people often live by the maxim: “If you’re early, you’re on time. If you’re on time, you’re late.” When submitting electronic proposals under FAR 52.212-1, those are words to live by. Even if you submit your electronic proposal on time, and even if it reaches government servers before the proposal deadline, it might still be considered late if it gets caught in the agency’s spam folder or email quarantine.
Contractors are well aware that they cannot rely on the apparent authority of government officials. Under Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947), only an authorized contracting officer may bind the government. But what about the apparent authority of contractor representatives? That was the question presented for consideration in Aspen Consulting, LLC v. Secretary of the Army, No. 2021-1381 (Fed. Cir. 2022).
Aspen Consulting won a contract to outfit Army health and dental clinics at Rose Barracks in Vilseck, Germany. The contract provided for payments to be made by electronic funds transfer to an Aspen company account at Bank of America. It did so by incorporating FAR 52.232-33 (Oct. 2003), which required the government to make payment to the account that Aspen identified in the Central Contractor Registration database. Aspen’s Bank of America account was listed in its CCR file.
During the first year of Aspen’s performance, the government released twelve progress payments to the Bank of America account. For reasons that do not appear in the opinion, an Aspen vice-president and operations manager sent the contracting officer an email requesting that the government make future payments to another company-owned account at Commerzbank. The government honored this request, making two progress payments totaling more than $264,000 to the account at Commerzbank.
Aspen’s owners soon advised the contracting officer that its vice-president was not authorized to make a change in the payment instructions. Aspen filed a claim for breach of contract to recover the two progress payments, asserting that the government had breached the contract by failing to send progress payments to the Bank of America account.
The Armed Services Board of Contract Appeals denied Aspen’s claim. The Board concluded that the Army did not breach its payment obligation because the vice-president who sent the email instructions had apparent authority to bind the company. Under the circumstances, the Board concluded that it was reasonable to honor the vice-president’s email request. The duty to resolve the conflict between the payment instructions in the CCR file and those in the vice-president’s email fell on Aspen, not the Army.
In a February 2022 opinion, the Federal Circuit reversed. According to the court, whether or not the Aspen vice-president had apparent authority to change the payment instruction does not matter. The contract provided for payment to be made to the account at Bank of America, which was identified in Aspen’s CCR file. Changes in the payment instructions would need to have been made by updating the CCR file. Since the CCR file had not been changed, there had been no change in the account designated for payment. The Army’s failure to make payment to the account designated in the CCR file was a breach of contract. Aspen’s entitlement to damages arising from the breach will be addressed on remand.
Aspen Consulting does not spell the end of apparent authority in government contracting. There are still circumstances when the government may reasonably rely on the apparent authority of contractor representatives. It also does not make it impossible for the government and contractor representatives to communicate by email or even to use email to modify contract requirements. But it sure makes doing so more difficult.
As most federal contractors know, the standard FAR clauses grant the government the right to default a contractor for delay. These same clauses, however, protect contractors where the delay is “excusable” and involve “unforeseeable causes beyond the control and without the fault or negligence of the Contractor.” Examples listed in the clauses include, among other things, fires, floods, epidemics, and unusually severe weather.
While the excusable delay for epidemics has taken the spotlight recently due to COVID-19, the ASBCA recently issued a decision offering insight about what unusually severe weather actually entails. In Goodloe Marine, Inc., the ASBCA asserted that unusually severe weather had to be just that—unusually severe. Bad weather alone is not an excusable delay.
The case involved appellant Goodloe’s contract with the United States Corps of Army Engineering to dredge pipeline around the Gulf Intracoastal Waterway near Galveston, Texas. Under the terms of the contract, Goodloe was required to maintain a production rate of 360,000 cubic yards per month (or 12,000 cubic yards per day). Goodloe had 130 calendar days from the notice to proceed to complete performance.
Despite receiving a notice to proceed on October 17, 2018, Goodloe did not begin dredging until December 17, 2018. Goodloe cited poor weather as the cause for the three-week delay and kept internal Quality Control Reports that purported to show weather delays for 30 different days between the notice to proceed and December 29, 2018. The Corps sent Goodloe a show cause notice on February 11, 2019, prompting Goodloe to send more weather information from the same period and commenting that anyone that lived or worked in the area knew the amount of rainfall received was unusual. Goodloe also cited other Corps projects in the region that had been delayed on account of the weather and provided a series of online articles implying these delays were caused by bad weather. Goodloe continued to dredge past the original February 24, 2019 completion date until the Corps terminated Goodloe on March 28, 2019. At the time of Goodloe’s termination, Goodloe had only completed 43% of the work.
Goodloe later submitted a claim to the Corps asserting that it had experienced weather delays and was entitled to a 41.5-day time extension. Following a denial of Goodloe’s claim, Goodloe filed an appeal with the ASBCA alleging it was entitled to additional time. The ASBCA disagreed and determined Goodloe’s delay was unexcused for several reasons.
First, the Board found it significant that Goodloe failed to use its other two dredges to complete the job. Although Goodloe argued that one of its dredges was damaged from a hurricane a year earlier, the Board found it was hardly unforeseeable that this dredge—which was inoperable at the time the work was solicited and commenced—could not be used to complete the work.
Second, even if the additional dredges had been used by Goodloe, the Board determined that Goodloe had not shown that the weather was unusually severe. Without addressing the accuracy or reliability of the weather data Goodloe presented, the ASBCA found that Goodloe failed to present any evidence that the weather was more severe than the norm for that area. As the Board commented, “[m]erely offering evidence of number of rainy, windy, foggy, or low tide days proves nothing if it is not shown to exceed a historical norm.” The Board thus concluded that Goodloe failed to show an excusable delay had occurred.
The lesson from the Goodloe decision is that bad weather is not enough by itself to justify an excusable delay. Delays from previous bad weather may be considered foreseeable in new contracts. And bad weather must be unusual for the region and proven by the contractor that it is unusual before it is considered an excusable delay. Contractors experiencing poor weather on a federal project are wise to check what is considered “normal” weather conditions for the area and figure out how to show the weather during contract performance departed from these conditions.
Now that we are two years into the COVID-19 pandemic in the United States, it should come as no surprise that several cases discussing whether COVID-19 is an excusable delay have made their way through the ASBCA and CBCA dockets. These cases show that although COVID-19 may be treated as an “epidemic” under the right circumstances according to the enumerated excusable delays in the FAR, the boards have no intention of treating the pandemic as a cure-all for contractors facing potential terminations for default.
The ASBCA’s November 2021 decision in Harry Pepper and Associates, Inc., No. 62038 et al. (Nov. 3, 2021) offers important guidance on the role of live witness testimony in one of the most challenging aspects of differing site conditions claims: proving that the actual site conditions were actually different from those that were expected.
The claims at issue in the case arose from a $36 million task order for the restoration of NASA’s B-2 rocket test stand, which was built in the 1960s as part of the Apollo program and used to test the Saturn V rockets. The restoration was needed so that the B-2 stand can be used to test rocket vehicles for use in NASA’s new moon-launch program, Artemis.
The Court of Federal Claims (CoFC) recently held that an offeror was not obligated to inform the agency of staffing changes, affecting its key personnel, that occurred following its proposal submission. This new CoFC decision conflicts with longstanding GAO precedent.
Key personnel are often a significant part of proposals and can greatly increase or diminish an offeror’s chance of award. However, as individuals, key personnel themselves, can give rise to protests when they become unavailable. GAO has long taken an expansive view of material misrepresentation regarding key personnel and has routinely held that offerors are obligated to inform agencies of changes in key personnel following the submission of proposals. See, e.g., Matter of: Ashlin Mgmt. Grp., B-419472.3 (Nov. 4, 2021) (sustaining a protest where the offeror failed to meet its “ongoing obligation to notify the agency in the event they obtained actual knowledge that a quoted key person had become unavailable”); Matter of: M.C. Dean, Inc., B-418553 (June 15, 2020).
In a sound rejection of GAO’s rule, the Court of Federal Claims recently held that an offeror has no obligation to update the agency regarding availability of key personnel after the submission of proposals, absent an express RFP requirement to do so. Golden IT, LLC v. United States, No. 21-1966C, (Fed. Cl. Feb. 4, 2022) (“[T]he Court will not conjure up a rule — and particularly not one untethered from a statute, regulation, or Federal Circuit decision — requiring offerors or quoters to routinely update the government when facts and circumstances change post-proposal or quote submission, during the course of the government’s evaluation period.”).
In Golden IT, the protester challenged the Agency’s award decision, in part based on material misrepresentation regarding key personnel. The Technical Factor of the RFP identified six key personnel. While it did not require letters of commitment, the RFP did state that the “availability and commitment of Key Personnel is important to the Government and will be evaluated through information contained in the written quote[.]” Golden IT, LLC v. United States, No. 21-1966C, at *7 (Fed. Cl. Feb. 4, 2022). The Agency awarded the contract to Spatial Front, Inc. (SFI) under a best value principle and assigned SFI a significant strength within the Key Personnel category for its Information Specialist / Knowledge Engineer, Mr. [JH].
At some point following the submission of proposals, Mr. [JH] left the employment of SFI and Golden IT brought a protest alleging that SFI “misrepresented the availability of Mr. [JH] either when it submitted its quote or because it failed to notify the Agency of the material change to its quote when it had knowledge of Mr. [JH]’s unavailability.” Golden IT, LLC v. United States, No. 21-1966C, at *16 (Fed. Cl. Feb. 4, 2022). The Court found that there was no evidence to indicate that SFI was aware of Mr. [JH]’s impending departure ahead of the submission of its proposal and therefore could not have knowingly misrepresented his availability. As far as a duty to notify is concerned, the Court held that absent an RFP requirement to do so it, it would be unfair to require offerors to “routinely update the government when facts and circumstances change post-proposal or quote submission, during the course of the government’s evaluation period ” especially given the length of evaluation periods. Golden IT, LLC v. United States, No. 21-1966C, at *21 (Fed. Cl. Feb. 4, 2022). In sum, the Court determined that SFI did not have an obligation to notify the agency of Mr. [JH]’s departure and denied Golden IT’s challenge.
While Golden IT, may appear to alleviate some of the burden on offerors to notify the agency of material changes throughout the evaluation period, contractors should be aware that CoFC decisions are not binding on GAO and so far, GAO has not indicated that it plans to move away from the duty to notify. Nonetheless, this divide may indicate change is on the horizon. Until the CoFC and GAO agree on an approach to this issue, protesters may want to carefully evaluate in which forum they choose to file protests concerning key personnel issues.
On February 4, 2022, President Biden issued Executive Order 14063, requiring certain federal construction contractors and subcontractors “to negotiate or become party to a project labor agreement with one or more appropriate labor organizations.”
The EO’s Project Labor Agreement (PLA) requirement applies to “large-scale construction projects,” defined to include domestic federal construction projects “for which the total estimated cost of the construction contract to the Federal Government is $35 million or more,” subject to adjustment based on inflation.
When Congress enacted the National Defense Authorization Act for Fiscal Year 2020 in December 2019, Congress included the Fair Chance to Compete for Jobs Act of 2019 (the Act). The Act, in relevant part, restricts federal contractors from requesting criminal history information from certain job applicants until after the applicant has received a conditional offer of employment. While the Act was enacted back in 2019, it applies only “to contracts awarded pursuant to solicitations issued after” December 20, 2021.
In June 2007, the U.S. Court of Appeals for the Federal Circuit held that a party who fails to object to patent errors in a solicitation before the conclusion of the bidding process waives those objections. Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308 (Fed. Cir. 2007). Commonly, referred to as Blue & Gold, this decision warned contractors that challenges to the terms of a solicitation must be brought early or risk being lost forever. Blue & Gold was further solidified in 2015 in Bannum. Bannum held that “mere notice of dissatisfaction or objection is insufficient to preserve [a] defective-solicitation challenge.” Bannum, Inc. v. United States, 779 F.3d 1376 (Fed. Cir. 2015). In Bannum the protester’s failure to formally protest the solicitation resulted in a waiver of those challenges. Id. The court indicated that a formal challenge would have likely preserved the protester’s post-award challenges, Id., but this was not solidified until now.