Government Contracts Law360 - May 5, 2011
Contracting by negotiation, or “best value” procurement, has been increasingly used by the federal government over the years to purchase goods and services. The government likes this form of procurement because it provides agencies with the flexibility to choose a contractor that the agency feels is best suited to provide the goods or services being purchased. The government is not forced to contract with the lowest bidder, which, even if that contractor is deemed responsible, may not, in the government's eyes, be up to the task.
From the contractor's perspective, the use of "best value" procurement presents an interesting issue. The process introduces a certain level of subjectivity that does not exist in a straight bidding situation, where the lowest responsive and responsible bidder is guaranteed an award. If a contractor is lucky enough to receive an award on a negotiated procurement, human nature would dictate that the contractor will want to develop a good working relationship with the agency that deemed it worthy of that award. The contractor is hoping that developing the relationship will lead to yet another award down the road. But what if the contractor encounters a situation on a project that will cost it additional money? There seems to be a growing fear amongst contractors that claims are frowned upon by contracting officers and that they will be counted against a contractor during future proposal evaluations. While understandable, contractors must understand and appreciate that contracting officers are accustomed to dealing with claims and will entertain those that are not frivolous and are technically and legally supported in a professional manner.
The Contract Disputes Act of 1978, 41 U.S.C. § 601 et. seq., requires contractors to certify that claims in excess of $100,000 are “made in good faith,” that all “supporting data are accurate and complete to the best of [the contractor's] knowledge and belief,” and that the amount requested “accurately reflects the contract adjustment for which the contractor believes the government is liable.” 41 U.S.C. § 605(c)(1). A contractor who is willing to make such a certification should not, and will not, be denied the opportunity to recover the additional costs, or time, that the contract and the law specifically allow. There are a number of clauses in federal construction contracts, for example, including the “Changes” (FAR 52.243-4), “Differing Site Conditions” (FAR 52.236-2) “Suspension of Work” (FAR 52.242-14) and “Termination for Convenience” (FAR 52.249-2) clauses that afford contractors with the right to seek an equitable adjustment to its contract. These clauses apply to sealed bidding and negotiated procurements alike, and the fear of retribution on proposal evaluations should not, and will not, be used to deny contractors the very rights that the contract and the law provide.
Contracting officers are required to deal with claims fairly, and there is a duty of good faith and fair dealing in government contracting. As the U.S. Court of Federal Claims noted in Lavezzo v. United States, a contracting officer is obligated to “put his own mind to the problems and render his own decisions.” Such decisions must be “personal [and] independent,” and “even the appearance of coercion [must] be avoided.” 74 Fed.Cl. 502, 509 (2006). In addition, a contracting officer's outright denial of meritorious contractor claims to gain some advantage over the contractor will not be condoned by the Court. In other words, a contracting officer's review of certified claims submitted in good faith is not intended to be a negotiating game where the agency may deny meritorious claims to gain leverage over the contractor. Moreland Corp. v. U.S., 76 Fed.Cl. 268 (2007). Contractors are legally entitled to submit claims, to have those claims fairly and impartially reviewed, and are entitled to do so without fear of the impact on future source selections. Most contracting officers understand and appreciate this concept.
Therefore, use of the "best value" procurement process should not prevent a contractor from advancing legitimate claims.
Edward T. DeLisle is a Partner at Cohen Seglias Pallas Greenhall & Furman, PC. A member of the Federal Contracting Group, Ed concentrates his practice in the areas of construction law, construction litigation and small business procurement and litigation. He is also a frequent contributor to the Firm’s Federal Construction Contracting blog. Ed can be reached at 215.564.1700 or firstname.lastname@example.org.