Understanding Government Contract Law, 2nd Edition

Understanding Government Contract Law, 2nd Edition

by Terrence M. O'Connor

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Overview

A “back-to-basics” guide to government contract law Finally! A plain-English presentation of the basic legal concepts of government contract law for professionals at any stage in their careers. Until now, anyone in the procurement field has had to trudge through dense and complex texts written in hard-to-follow “legalese” in their quest to understand procurement law. With Understanding Government Contract Law, they finally have a source of clear and concise explanations of the legal principles involved in government contract law, written by an authority on the subject. Part I of the book focuses on the unique problems facing each of the parties to a government contract – the contract officer and the contractor – and offers insight to the many roles played by the contract officer in the procurement process. Part II describes why and how the government contract is different from commercial contracts. Part III explores the ins and outs of a government contract lawsuit. The author presents key legal principles of government contract law by: • Stating a legal principle • Specifying where in the Federal Acquisition Regulation (FAR) that principle is found • Offering the rationale, context, and any public policy behind the principle • Describing, with case law examples, situations where the government applied the law correctly and situations where the government came to that conclusion incorrectly

Product Details

ISBN-13: 9781523097746
Publisher: Berrett-Koehler Publishers
Publication date: 11/13/2018
Pages: 336
Sales rank: 863,595
Product dimensions: 6.31(w) x 9.31(h) x 0.90(d)

About the Author

Terrence M. O’Connor is a Partner and Director of Government Contracts at the law firm of Berenzweig Leonard LLP in McLean VA. He has practiced government contract law for over 45 years, both as a federal government attorney and as a private litigator of government contract claims, appeals, and protests. For over 30 years, O’Connor has been teaching government contracts law to contracting officers, contract specialists, and other government procurement professionals. He is the author of several books, including the Government Manager’s Guide to Government Contracts.

Dave Clark is a professional narrator and audio producer with decades of recording and narration experience. His style is adaptive to the nature of the material.

Read an Excerpt

CHAPTER 1

The Contracting Officer as Judge

A "Fair and Reasonable" Judge

Three Simple Rules for Always Being Fair and Reasonable

Being Fair and Reasonable in Awarding a Government Contract

Being Fair and Reasonable in Administering a Government Contract

An "Independent" Judge

What kind of relationship is a contracting officer supposed to have with a contractor?

FAR 1.602-2(b) answers this critical and fundamental question this way: a contracting officer is supposed to "ensure that contractors receive impartial, fair, and equitable treatment."

In effect, this FAR provision adds black robes to the contracting officer's wardrobe by making the contracting officer a judge. A judge's decisions should be fair and reasonable, and they should be reached independently — without bias or pressure from someone else. As a judge, the contracting officer is not supposed to advocate for the government; that is, they are not driven by saving the government time or money or by making the process easier on the government. All decisions a contracting officer makes — those in the solicitation process and those in the contract administration process — have to be, first and foremost, fair and reasonable.

In the first section of this chapter, we will look at what this vague phrase means in day-to-day procurement. In trying to make this phrase understandable, we next look at the contracting officer's duty to be fair and reasonable from three perspectives. We will discuss general rules for how a contracting officer can be fair and reasonable. We will next look specifically at what it means to be fair and reasonable in the contract award process and after that, in the contract administration process.

In addition to being fair and reasonable, a contracting officer should reach decisions independently. Just as judges should not be pressured into making decisions that are not truly their own, the decisions of a contracting officer should be their own opinion. So in the last section of this chapter, we will look at what makes a contracting officer an independent decision maker.

A "FAIR AND REASONABLE" JUDGE

The requirement in FAR 1.602-2(b) that a contracting officer must "ensure that contractors receive impartial, fair, and equitable treatment" is too vague to be of any real help in the day-to-day life of a contracting officer working with contractors. So it is not surprising that there is little law on what this FAR provision means.

Fortunately, laws passed by Congress — statutes — and decisions handed down by courts — case law — give the contracting officer a lot more guidance. One federal law gives the U.S. Government Accountability Office (GAO) the right to review decisions a contracting officer makes in the solicitation process. The GAO's test of the contracting officer's actions is rationality or reasonableness, so good examples of what fair and reason- able means come from GAO decisions.

Other federal laws make courts the judge of whether a contracting officer's decision is reasonable. In legalese, courts ask whether a contracting officer's decision was "arbitrary and capricious." Thus, good examples of what fair and reasonable means come from court decisions dealing with the "arbitrary and capricious" test.

What does this almost clichéd phrase "arbitrary and capricious" mean? It means that a contracting officer must use a reasonable way (process) to reach a reasonable decision (substance).

To determine whether or not a contracting officer's decision is arbitrary and capricious, precedent says that the contracting officer must consider "relevant data and provide a coherent and reasonable explanation of" the decision.

When you think about it, having a contracting officer act reasonably can be both a blessing and a curse. It can be a blessing as it acknowledges that, in procurement, there is not only one decision that is the right decision. Courts use the phrase "zone of reasonableness" to show this.

For example, if you are buying a car to use in a neighborhood carpool, it would be reasonable for you to buy an SUV, a minivan, or a six-passenger sedan. Each vehicle is in the "zone of reasonableness." But it would be unreasonable to buy a two-seater sports car or a large bus. If a contracting officer chose a six-passenger sedan for a carpool vehicle, a judge who might have chosen an SUV for their carpool would have a hard time finding the contracting officer's decision unreasonable. In a sense, the reasonableness test makes judges leave their personal preferences at home.

That's the way the founding fathers wanted it. Under the theory of separation of government power, Congress (the legislative branch of government) has told judges (the judicial branch) to let the procurement people (the executive branch) do their job. Courts will generally defer to an executive branch decision, even if a particular judge might not agree with it and might prefer a different decision, as long as the contracting officer's decision is "reasonable."

If the court finds a reasonable basis for the agency's action, the court should stay its hand even though it might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations.

So, it's a blessing that a court won't force a contracting officer to follow a judge's personal belief.

But "reasonable" is also a curse. First, it seems too vague to work with as a practical matter. Aren't we all reasonable? Or, at least, aren't we reasonable? (It's usually the other person who isn't being reasonable, right?) It is hard for everybody to agree on what is reasonable and what is not. Second, people always have a reason for doing something. By this logic, isn't everything, therefore, automatically reasonable? It's at this point that the apparently redundant word "good" has to be added to "reason."

Although there might be gray areas allowing reasonable people to disagree, sometimes a contracting officer's decision is clearly unreasonable, whether the decision is made in the solicitation process or in the administration process.

Three good rules for reasonable decisions can be found in the decisions of the courts, boards, and GAO.

Three Simple Rules for Always Being Fair and Reasonable

Rule 1: To be reasonable, the contracting officer's decision must be in writing.

One of the surest ways for a contracting officer to be found "unreasonable" is to make an important decision and have nothing in writing to explain it. According to GAO:

It is able to assess the reasonableness of an agency's source selection process only where adequate documentation of that process exists. Without such documentation, we cannot be certain that the agency action was not arbitrary.

Without documentation, a contracting officer's decision is unreasonable.

Rule 2: To be reasonable, the contracting officer's written decision must show that the contracting officer actually thought about the decision instead of making a thoughtless, knee-jerk decision.

One judge made this point nicely when he said, "Procurement officials must use judgment ...; they cannot act as 'automatons."'

Rule 3: To be reasonable, the contracting officer's written, thoughtful decision must follow the rules for making a decision.

FAR gives good advice here. For example, a contracting officer's decision on who won a contract should follow the rules in FAR 15.308:

The source selection decision shall be documented, and the documentation shall include the rationale for any business judgments and tradeoffs made or relied on by the SSA [Source Selection Authority], including benefits associated with additional costs.

A contracting officer's documentation on a contract award has to compare the pros and cons of the offers.

In addition to these general rules, there are specific rules for being reasonable in each of the two phases of government contracting — the contract solicitation phase and the contract administration phase.

Being Fair and Reasonable in Awarding a Government Contract

The contracting officer must reasonably carry out every step in the solicitation process. From the start of the solicitation process (drafting the solicitation, getting it out on the street, receiving bids or offers, and evaluating them) to the end of the solicitation process (choosing the winner and deciding whether or not the winner is responsible), the contracting officer must be fair and reasonable.

For example, a losing vendor can challenge the contracting officer's use of a firm fixed-price contract instead of a cost-reimbursement contract or the use of a negotiated procurement instead of a sealed bid process. The test for the contracting officer is "How reasonable was the choice I made?" Although the solicitation process has many steps, the four steps that bring the most vendor complaints are as follows.

1. Competition — was it full and open?

2. Discussion — were the discussions the contracting officer had with those vendors in the competitive range of a negotiated procurement "meaningful"?

3. Evaluation — did the contracting officer or evaluation panel fairly evaluate the proposals?

4. Award — did the contracting officer choose fairly in picking the winning contractor?

We will look more closely at these four problem areas in the solicitation process. In doing so, we will look at the decisions of GAO and the courts to determine whether or not the contracting officer's decision was reasonable.

Fair Competition

"Full and open competition" is the law as per the Competition in Contracting Act (CICA). This law is carefully monitored by GAO and the Court of Federal Claims (COFC), both of which review how a contracting officer carries out CICA.

A common example of competitions that are not fair and reasonable is a sole-source procurement. In these "non-competitions," the contracting officer concludes that only one source can provide what the government needs, and so the contracting officer does not conduct a full and open competition.

However, sometimes the contracting officer can only do a sole-source procurement. To be fair and reasonable, a contracting officer's sole-source justification must make sense and must have the proper paperwork to prove it. Confusion and bad documentation can sink a contracting officer's sole-source justification.

Perhaps the most important part of this decision is GAO's criticism of the contracting officer's thought process. GAO said there was no indication that the "contracting officer ever questioned why the item was needed or when information could be obtained from the OEM." As GAO stated plainly: "The DSCC is requiring absolute adherence to unknown parameters which may or may not be necessary to satisfy the government's actual need." It concluded that contracting officers "cannot take a docile approach and remain in the sole source situation when they could reasonably take steps to enhance competition. The agency cannot blindly rely on statements to justify a blanket rejection of any alternative part submitted without the OEM's technical data."

Notice, however, that it is fair and reasonable for a contracting officer to significantly limit competition when human safety is involved. When procurements for a unique agency requirement involve human safety — such as building security at the Pentagon — the government clearly has the right to set high security requirements, regardless of whether or not some or many vendors are excluded because they can't meet the high requirement.

Fair and Meaningful Discussions

One of the more difficult and protestable jobs a contracting officer has in the solicitation process is making sure that the discussions with vendors in the competitive range are fair and reasonable. In other words, are these discussions "meaningful"?

In plain English, FAR says a contracting officer's job here includes a "must," a "must not," and a "maybe."

FAR 15.306(d)(3) gives the legalese for the "must" and the "maybe."

At a minimum, the contracting officer must ... indicate to, or discuss with, each offeror still being considered for award, deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond. The contracting officer also is encouraged to discuss other aspects of the offeror's proposal that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposal's potential for award. However, the contracting officer is not required to discuss every area where the proposal could be improved. The scope and extent of discussions are a matter of contracting officer judgment.

The "must." At a minimum, a contracting officer must discuss "deficiencies, significant weaknesses, and adverse past performance information to which the offeror has not yet had an opportunity to respond."

The "maybe." The contracting officer "is encouraged to discuss other aspects of the offeror's proposal that could, in the opinion of the contracting officer, be altered or explained to enhance materially the proposal's potential for award. However, the contracting officer is not required to discuss every area where the proposal could be improved. The scope and extent of discussions are a matter of contracting officer judgment."

The "must not." FAR 15.306(e) describes what a contracting officer cannot do. A contracting officer must not, for example, favor one offeror (i.e., competing vendor) over another, reveal "an offeror's technical solution, including unique technology, innovative and unique uses of commercial items, or any information that would compromise an offeror's intellectual property to another offeror"; or reveal "an offeror's price without that offeror's permission."

It's the "maybe" that gives a contracting officer the most problems. FAR gives contracting officers a lot of discretion or freedom in deciding how to carry out discussions with those in the competitive range. But this broad discretion is not unlimited. At some point, a contracting officer can abuse this discretion.

Good examples of a contracting officer's not having meaningful discussions come from GAO decisions. Notice that GAO sees "meaningful discussions" as being slightly different from the FAR requirement but certainly consistent with FAR's emphasis on fairness: discussions cannot be misleading or inadequate:

It is a fundamental precept of negotiated procurements that discussions, when conducted, must be meaningful; that is, discussions may not mislead offerors and must identify deficiencies and significant weaknesses in each offeror's proposal that could reasonably be addressed in a manner to materially enhance the offeror's potential for receiving award.

So, in GAO terms, misleading and/or inadequate discussions violate the requirement that the contracting officer have "meaningful discussions" with offerors who are in the competitive range of a negotiated procurement. By conducting misleading or inadequate discussions, a contracting officer would be unreasonable.

Before looking more closely at what makes discussions misleading or inadequate, some general rules apply. According to GAO, a contracting officer is not required:

• To advise an offeror of a minor weakness that is not considered significant, even if the weakness subsequently becomes a determinative factor in choosing between two closely ranked proposals.

• To disclose deficiencies still remaining in the offeror's proposals or to conduct successive rounds of discussions until omissions are corrected.

But a contracting officer is required:

• To tell an offeror that its proposal would have to be fundamentally altered to be acceptable.

• To say more than simply that an offeror has to "review [proposed labor hours] and revise if necessary" when those hours were substantially less than the government estimate and to discuss the disparity of prices from the undisclosed government estimate.

Misleading Discussions

GAO has described how a contracting officer can have misleading discussions:

An agency may not, through its questions or silence, lead an offeror into responding in a manner that fails to address the agency's actual concerns; may not misinform the offeror concerning a problem with its proposal; and may not misinform the offeror about the government's requirements.

Here's a great description of what GAO considered misleading discussions:

The protester was encouraged to reduce its price during discussions and, after it did so, its price in its best and final offer was evaluated as so "unrealistically low [as to] evidence a lack of understanding. ..." In [this case] not only had the agency failed to inform the protester that its pricing was already viewed as unrealistically low, but the agency had advised the protester that its pricing was rather high and encouraged the firm to review its proposal for additional savings.

(Continues…)


Excerpted from "Understanding Government Contract Law"
by .
Copyright © 2018 Terrence M. O'Connor.
Excerpted by permission of Berret-Koehler Publishers, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Introduction, 1,
Suggestions on How to Use This Book, 1,
Overview, 2,
Part I. The Parties to a Government Contract, 5,
1. The Contracting Officer as Judge, 7,
2. The Contracting Officer as Sheriff, 37,
3. The Contracting Officer as Defendant, 63,
4. The Contracting Officer as Plaintiff, 76,
5. The Contractor's Responsibilities, 80,
Part II. The Contract, 95,
6. Types of Procurement Vehicles, 97,
7. Contract Interpretation, 122,
8. Contract Administration Quirks, 147,
Part III. Lawsuits over Government Contracts, 173,
9. Federal Litigation: Suing the Federal Government, 175,
10. Protests, 220,
11. Claims, 241,
12. Costs of Litigation, 261,
Notes, 275,
List of Abbreviations, 287,
Index, 291,
About the Author, 311,

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