8.5.09 Summit - Freling - Protests and Claims Presentations

Fundamentals of Government Contract Claims and Protests

Scott A. Freling

August 5, 2009

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Overview

• Differences Between Protests and Claims

• Protests – Where to protest – When to protest– Protest procedures– Examples of protest issues and remedies– Strategic considerations

• Claims – Basic statutory requirements– Examples of claims– Subcontract claims– Alternative Dispute Resolution

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What is the difference between a Protest and a Claim?

• PROTEST – a complaint about the Government’s handling of the procurement process up to and including award– Pre-award (complaints about the rules of the game)– Post-award (complaints about the award decision and how the

game was played)

• CLAIM – a complaint by a party to an existing contract against another party to the contract– Contractor Claims vs. Government– Government Claims vs. Contractors

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Why do these differences matter?

• Strict timing rules apply, especially to protests.

• Special procedures apply, especially to claims.

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Examples of Grounds for Claims and Protests • HHS releases an RFP that says that any party awarded a

contract for vaccine will have to produce it in the United States.

• Manufacturer’s contract is terminated by DoD for default because of late deliveries, and DoD announces it will reprocure the item from another source.

• VA awards a contract to a competitor that you know lacks the capacity to do the job right.

• DoD instructs contractor to make changes to its product under fixed-price contract that will greatly increase contractor’s costs of performance.

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Protests

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Protests – Where to Protest?• Agency

– Contracting Officer– Higher Level Intra-Agency Authority

• in the first instance OR as an appeal of the CO’s adverse decision

• Government Accountability Office (GAO)

• U.S. Court of Federal Claims

• Small Business Administration (SBA)– protests of small business status in set-asides

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Protests – Who and When?

• Who can Protest?– Must be an “Interested Party” (i.e., an actual or

prospective offeror whose direct economic interest would be affected by the award of a contract or by the failure to award the contract)

– Subcontractors may not protest

• When to Protest?– It depends on (a) the type of protest and (b) the protest

forum– Deadlines are strictly enforced – a trap for the unwary!

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Protests – Basic Timing Requirements

• Agency or GAO– Pre-award protests – before next offers are due– Post-award protests – if no debriefing, 10 days after

notice• Debriefing request – 3 days after notice• Protest filing – 5 days after a “required” debriefing to

invoke automatic stay– Protest filing still timely if 10 days after debriefing

• Exclusion from competitive range – similar to award notice

– Other Issues – within 10 days of knowledge• Intra-agency appeal of the CO’s adverse decision does

not extend the time for appeal.

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Protests – Basic Timing Requirements

• Court of Federal Claims– Court generally follows GAO rule as to pre-award

protests.– Equitable timing requirements – court will assess

whether plaintiff has acted unfairly or without excuse in bringing suit long after award

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Protests – Sample Protest Issues

• Pre-Award Issues:– Restrictive Specifications– Ambiguous Specifications– Improper Sole Source or Limit on Competition– Unreasonable Bundling of Agency Requirements– Improper RFP Terms

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Protests – Sample Protest Issues

• Post-Award Issues:– Improper Evaluation

• Use of unannounced criteria• Failure to follow RFP criteria• Unfair application of criteria

– Improper Exclusion from Competitive Range• Failure to discuss significant weaknesses• Improper evaluation (see above)

– Unequal Discussions• Technical transfusion

– Basic Theme – lack of equal treatment among offerors

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Protest Procedures• Agency

– Quick, informal resolution (generally, within 35 days).– Relatively low legal costs.– Little discovery, if any.

• GAO– Resolution in 100 days.– Relatively full discovery with protective order.– Supplemental protests based on documents produced.– Possible hearings.

• Court of Federal Claims– No set time for resolution, but proceedings can be extremely

expedited.– Relatively full discovery – possible depositions.– Supplemental or amended protests possible.– Oral argument on cross-motions.

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Protests – Strategic Considerations

• Angering the customer.– Agency protests less disruptive than GAO or Court.

• Likelihood of success.– Depends on the issue.

• Effectiveness of a stay.• Cost / speed of decision.• Likelihood of discovery to uncover new errors.• Winning the protest vs. winning the contract.

– Possibility of “corrective action” that cures problem without helping protester.

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Protests – Strategic Considerations

Forum “Angering Customer”

Cost / Speed Discovery Stay

Agency LowestLowest cost / Fastest decision

Least discovery

Subject to override

GAOModerate (depends on situation)

Relatively expensive / 100 days

Extensive discovery, protective order

Subject to override

Court

Moderate (depends on situation)

Most expensive / Depends on the case

Extensive discovery, protective order

Not subject to override, but can be more difficult to obtain

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Claims

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Claims – Basic Statutory RequirementsContract Disputes Act• CDA procedures begin with making a written demand or

assertion to the Contracting Officer, which is called a “claim.”– Claim may be presented within 6 years of when it accrues.

(Note different from appeal time from final decision.)– Claims over $100,000 must be certified.

• Claim results in the CO’s “final decision.”• Appeal from final decision

– To the appropriate Board of Contract Appeals within 90 days, OR

• Civilian Board of Contract Appeals (CBCA)• Armed Services Board of Contract Appeals (ASBCA)

– To the Court of Federal Claims within one year.• CDA procedures are exclusive.

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Civilian Board of Contract Appeals

• Established effective Jan. 6, 2007, by the National Defense Authorization Act for FY 2006.

• CBCA’s authority extends to all executive agencies other than DOD, NASA, the United States Postal Service, the Postal Rate Commission, and the Tennessee Valley Authority.

• Prior to the CBCA, contract disputes involving civilian executive agencies were heard and decided by eight different boards of contract appeals (i.e., GSA, Agriculture, Energy, HUD, Interior, Labor, Transportation, VA).

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Claims – Subcontractor Claims

• CDA claims do not generally include subcontractor claims against prime contractor.

• Subcontractor claims are generally subject to ordinary state contract law governing contracts between private parties, with federal law used to interpret FAR-type provisions

• Some subcontractors may obtain agreement of prime contractor to “sponsor” a CDA claim, in which the sub sues the Government in the prime’s name.

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Claims – Examples of CDA Claims

• Price Adjustment issues• Excusable delay/Government-caused delay• Appeal of default termination• Defective pricing• Alleged noncompliance with contract terms

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Claims – Examples of Claims NOT covered by CDA

• Fraud / criminal matters• Tort Claims• Subcontractor claims• Contracts between U.S. and Foreign Govt.

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Claims – Alternative Dispute Resolution• The Boards and the Court encourage ADR and have

a variety of approaches:– Non-binding mini-trials;– Mediation;– Advisory opinions; and– Party-designed processes.

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• Scott A. Freling– sfreling@cov.com– Tel: 202.662.5244

Questions?