Let’s take a view from outer space, an alien’s view. It’s a view of reality we often cannot see, here in the trenches. Government contracting is an adversarial system. Face it. An alien can see it. Once we do see it, perhaps we can write a user’s guide for how to deal with it: something besides a FAR. We’re writing that book, one chapter at a time.

Government contracts are contracts of adhesion. That simply means the federal government dictates the terms and conditions. Why is that so? Because we taxpayers require rules and regulations on how our dollars are spent in the acquisition system. We demand a stack of statutes, regulations, executive orders, regulations supplements, memoranda and directives more voluminous than the tax code. We want government contracting to be the most regulated enterprise in the world.

All these rules and regulations produce an adversarial environment. We stick our heads in the sand or try to find the moral high ground and deny the parties to the contract are not really partners. But the aliens see the realities: a changes clause permitting unilateral changes and requiring performance despite what should be a breach of contract; a termination for convenience clause allowing the government to walk away from the contract; a disputes clause requiring continued performance while litigating whether it is necessary to do so; and a procedure to protest that the rules were broken.

We worry ourselves to death about whether our “partner” will be offended if we submit a claim under the changes clause, we dispute a contract interpretation or we protest an award. The alien scratches his head in disbelief. What do you expect? How can any reasonable person be offended by a contractor using the rule book it did not even write? It’s not even its rulebook!

It’s time we faced up to reality: the acquisition system, because of its rules and regulations, its contracts of adhesion and its available accusatory remedies, is adversarial. That’s not to say it needs to be contentious and unfriendly. Civility can live in even in our courtrooms. But there is no excuse for being in denial and not facing reality.

The user’s guide to government contracting in reality starts with simple maxims: 1) it’s okay to protest; 2) it’s okay to submit a claim; and 3) it’s okay to engage in a dispute under the disputes clause. It’s okay because that’s the way the system is set up, as any alien can see.

ARE INDEFINITE CONTRACTS UNFAIR? DEFINITELY!

It’s about time someone called the federal government to task for requirements type contracts and IDIQ ordering contracts, to say nothing of BPA’s. They are patently unfair and they are only available in the government arena where the government makes all the rules. It’s time we contractors organized ourselves and presented a united front to put an end to contractual abuse.

There’s even the awful aura of bait and switch afoot. Contractors are inveigled into indefinite delivery contracts with the promise of a fixed price. Sharpen your pencils and join in the reverse auction, the government says. The order is fixed price but now that you’re signed up, we’ll only pay if we really decide to go through with the bargain.

We used to think FAR Part 16 was contracts 101. But government buyers are finding sophisticated ways to use contract types to trap the unwary. Requirements contracts were all the rage 40 years ago. Then, because they were so unfair, they went into disuse only to be resurrected and introduced to a new generation of contractors.

Requirements type contracts are idiotic and legally illusory. They really are not contracts from a business point of view. Except for off the shelf commercial commodities, they have no counterpart in the real world of commercial commerce. Come price based on estimates but never mind our estimates because we really don’t know how to estimate, says the government. A guaranteed minimum order is not even required under FAR 16.503.

IDIQ’s do not fare better, in our opinion. They are requirements contracts with a guaranteed minimum. But that guarantee is so unrealistically low as to be minimal. FAR 16.504 states the minimum must be “more than nominal”. What does that mean? And when have you ever seen a minimum which even approaches a reasonable estimate of a value worth bidding on? This is a call to arms to insist on guaranteed minimums which realistically state what the government expects to order. Don’t expect a fixed price unless we have a solid minimum guarantee!

And what is this requirement that contracting officers MUST make multiple awards of IDIQ contracts for the same supplies or services and then re-compete every order? Let’s see, sharpen your pencil and compete once. Oh yes, then sharpen your pencil and compete again. Even when there is no double competition, multiple awards most assuredly result in less than reasonably anticipated work for one of the multiple award contractors.

It’s time to quit fooling around with contract types to try to save money at the contractor’s expense. It’s really pretty simple. If the scope of work is well defined, the contract should be straight firm fixed price. Even fixed price incentive could be fair. If the scope of work is ill-defined, cost reimbursement or time and materials is the fair way to go. That’s the way you and I do business in real life. The government’s bait and switch is unfair. Definitely!

ORGANIZATIONAL CONFLICT: NO DISCRETION TO IGNORE FAR

Can it be that the drafters of the FAR dedicated a whole subpart’s worth of guidance to how and when to identify such conflicts, as well as how and when to mitigate the conflicts so identified, yet subscribed to the notion that the failure to follow these procedures could be cured by having the awardee swear up and down it did nothing improper? Of course not.

If swearing up and down were enough, why would the drafters of the FAR have bothered to develop an extensive set of rules to deal with such conflicts, he asks. If swearing after the fact that no wrong was done was enough, the regulation would be meaningless, he suggests.

In his opinion permanently enjoining the performance of the awarded contract in Netstar-1, Judge Allegra says the contracting officer’s delayed identification of the potential organizational conflict of interest and efforts to mitigate that conflict well after the fact were arbitrary, capricious and otherwise contrary to law. The expediency of obtaining after the fact declarations denying wrongdoing just do not cut it.

So, the Court of Federal Claims (COFC) will not “defenestrate” (read, “throw out the window”) the FAR provisions by countenancing the “post-award palliative” urged by the government. The agency has neither the discretion to ignore the FAR nor to render any of its provisions useless. To hold otherwise runs counter to the reasons for having the OCI regulations in the first place.

We’ve written about this case at the preliminary injunction stage. This is its last chapter at the COFC. On a day we’ve been thinking about agency discretion (October 19, 2011), Judge Allegra most poignantly and eloquently upholds the virtue of sticking to the regulations, book, chapter and verse. After all, why have them if the government can run rough shod all over them?

“SHALL” MEANS SHALL IN SET ASIDES FOR VETERANS

GAO almost always gets it right in its protest decisions. Occasionally, the Court of Federal Claims (COFC) disagrees. But on one issue, all tribunals agree: shall means shall. GAO and the COFC agreed on the mandatory language in the HUBZone statute and regulation. Congress changed that to provide parity. But what about the VA? Is it required to conduct market research to determine if its procurements should be set aside for small business concerned owned by veterans before using the Federal Supply Schedule? According to GAO, emphatically, yes.

You would not think there would be a debate over the meaning of the word shall. And yet it has happened over and over again over the last 50 years (and beyond, we are sure). Again and again, we must consult our dictionary for the meaning of shall. If this seems ludicrous, remember federal agencies believe in the sacrosanctity of their discretion to do what they want to do. Hence, the invention of the fiction that shall really means may.

In Aldevra, B-405271; B-405524. October 11.2011, GAO went to the Veterans Benefits, Health Care, and Information Technology Act of 2006 which reads: “A contracting officer of [the VA] shall award contracts on the basis of competition restricted to small business concerns owned and controlled by veterans if the contracting officer has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States.”

The VA argued discretion. GAO saw no discretion in the language. Why? It says “shall”. GAO also quickly disposed of the VA’s other argument that FAR exempts the FSS program from small business preference programs. GAO said the exception in FAR permitting agencies to award task and delivery orders under the FSS without regard to government-wide small business programs does not govern or apply to the program created in the mandatory language of the Veterans Benefits, Health Care, and Information Technology Act of 2006.

UPDATE: VA recently argued in a Congressional hearing that it need not comply because it is meeting its goal of awards to small veteran owned businesses. GAO saw no such exception. [Posted 12/1/11]

ADDITIONAL UPDATE: GAO also sustained a protest on December 19, 2011, holding the VA improperly used non-mandatory FSS procedures to procure services, rather than using a set-aside for service-disabled veteran-owned small businesses. [Posted 12/21/11]

FIRST THINGS FIRST: CHECK THE EVALUATION FACTORS

What is the first thing you should do when you get a solicitation for a competitive government buy? Find the evaluation factors, read them, make sure you understand them, make sure they are fair, make sure they comply with the regulations and use them to manage your proposal effort. If they are not clear, fair or if they do not comport with the regulations, protest immediately. After 40 years of handling protests, we can assure you most problems in competitive procurements are caused by improperly articulated evaluation factors. The time to solve these problems is when the solicitation is first issued.

We are against protesting unless a regulation is violated. We also are against writing stuff people do not understand. If the evaluation factors are not written clearly and if they do not strictly follow regulatory requirements, protesting is an absolute necessity. This is probably the one situation where there is no doubt about the propriety of protesting all the way up the line. First, “protest” to the contracting officer. Write a letter (emails are legal letters) thoroughly explaining what is unclear or illegal about the evaluation factor section of the solicitation. Yes, it is illegal to fail to follow the regulation on evaluation factors. If that doesn’t work, protest to GAO. If that doesn’t work, protest to the Court of Federal Claims (COFC).

Evaluation factors are discussed In FAR Parts 12, 13, 14 and 15. All competitive procurements implicate FAR Part 15 principles, according to GAO. Part 15 has the most thorough discussion of evaluation factors. Although Parts 12, 13 and 14 have their own discussions and Parts 12 and 13 allow much more discretion as to what factors are used, Part 15 is the gospel on evaluation factors. The main point to remember is that all competitive procurements require a solicitation contain evaluation factors. They must also be written in plain English.

Recently, we saw a commercial buy competitive RFQ under FAR Part 12, using FAR Part 13 simplified procedures, which contained no evaluation factors. I was flabbergasted. How, in today’s world, with all the education about our procurement system, can this happen? FAR 12.602(b) says: “Offers shall be evaluated in accordance with the criteria contained in the solicitation.” FAR 12.602(c): “Select the offer that is most advantageous to the Government based on the factors contained in the solicitation.” FAR 12.603 mandates describing the evaluation factors in the solicitation. FAR 13.106-2 allows “broad discretion” but requires evaluation factors, nonetheless. See FAR 13.106-1(a)(2) and 13.106-2(a)(2).

If nothing else, failure to state evaluation factors is egregiously unfair. How in the world can you compete if you don’t know how you will be judged? Why would you engage in any competition without knowing the rules of the game?

ANATOMY OF A SUCCESSFUL BID PROTEST REVISITED

We've been asked to comment further on how to win protests. Let's get really practical about this. You have submitted your proposal and have called the contracting officer to be sure you will get the required notification of award promptly. Notification is required, but you need to stay alert and if necessary prompt the proper response. You get the notification and you did not win. What next?

You need someone with considerable protest experience to guide you through the next steps. The analysis of whether to protest is the first critical step. The timeliness rules, discussed in another blog in more detail, also are of the utmost importance. Asking for a debriefing is almost always smart and such a request tolls the running of the time limits on a protest. FAR 15.506 includes a list of specific items the government must cover in the debriefing. Insist on disclosure of all the required information. Even if a debriefing is not required or you are told FAR Part 15 does not apply, insist nonetheless on a thorough debriefing. Almost all competitive procurements implicate the principles set forth in FAR Part 15.

The debriefing should give you some (although usually very limited) insight into why you lost the award. Unfortunately, agencies generally do not heed Dan Gordon's advice to be forthright, forthcoming and candid in these debriefings. Agencies still are concerned that too much information will only lead to the inevitable protest. Nevertheless, in our opinion, more transparency actually does avoid protests. We have too much experience to allow our clients to waste time, money and customer relations on losing protests.

Now we go to the critical step: the evaluation of the merits and the decision to protest. As we have said until we are blue in the face, do not protest unless a regulation has been violated. Here, again, you need an outside expert with extensive experience to help you with the analysis. If you decide to protest, you must do so through an outsider who can gain access to the complete record under a protective order. The analysis of whether a regulation has been violated is grist for the person who has been there many times before. We've listed the relevant regulations in the prior discussion of the Anatomy of a Successful Bid Protest.

Finally, here is the secret. The debriefing only gave you a slight hint as to what is in the record and yet it looks as if a regulation may have been violated. What do you do? Often, the only way to find out whether you have solid ground to protest is to protest. An outside consultant will be able to see the entire record. The secret is you must file a "speculative" protest that is not "too speculative". We used to call these blind protests. No one likes to talk too much about this. But since agencies are not forthcoming in debriefings, contractors have to engage in a type of speculation about what actually happened. The key is to make the protest stick, get the record for the outside consultant to examine, and then decide whether to continue the protest. Just where is the line between acceptable speculation and too much speculation? Frankly, only an experienced protest consultant can tell you.

JUDGE BRADEN STOPS SECURITY SERVICES CONTRACT

On September 27, 2011, Judge Susan G. Braden of the Court of Federal Claims (COFC) granted a preliminary injunction stopping work on a contract awarded by the government to perform security services for the United States Court of Appeals for the Fourth Circuit. The injunction is to remain in effect until November 15, 2011 by which time Judge Braden will have an opportunity to decide the merits of the case. The government refused to delay the start date for the contract voluntarily.

What is unique about this case? To answer this question, it is important to review the factors the court must consider in granting an injunction. There are four factors the court must weigh: (1) the immediate and irreparable injury to the plaintiff; (2) the plaintiff's likelihood of success on the merits; (3) the public interest; and (4) the balance of the hardship on all parties.

As to the first factor, the court said the lost opportunity to compete was sufficient. As to the second test, Judge Braden said the court is unable to render a judgment about the likelihood of success on the merits. As to the third factor, she said the public interest certainly requires that the court be afforded a reasonable opportunity to review the documents, consider the arguments, determine the merits and write a decision. As to the last factor, she said both parties will be equally inconvenienced but the plaintiff is entitled to the process.

What makes the case unique is that Judge Braden made no determination of the likelihood of success on the merits. All she said was that the weakness of a showing on one factor may be overcome by the strength of others. However, she did not discuss how, in her view, the strength of the other factors outweigh the total absence of any determination on the likelihood of success on the merits. This, in our view, is a fatal flaw. In fact, we fail to see how Judge Braden possibily could make such a determination in this situation. Perhaps that is why she did not discuss the issue.

We should note she left open the possibility that the injunction could be extended past November 15th if the case is not ready for her final decision by that time.

The case is indeed unique. In our opinion, it is unlikely another judge would grant an injunction without any determination of the likelihood of success on the merits. In our experience, the plaintiff has a heavy burden in these cases and most often the merits of the case weigh heavily in the decision to grant relief.