|
June 2007 |
From
the editors of CCH's government contracts products, here are summaries
of the important recent developments in this practice area for the past
month. Complete coverage of these issues, and many more, appear
in the Government Contracts Reporter and related products. Legal NewsGovernment Officials' Bad Faith Not
a "Close Case"
The record contained striking statements by government officials, most notably one official's advice to "following the Miami Hurricane's [g]ame [p]lan" in administering the lease by, for example, drawing the contractor "into a penalty situation" and remembering the government had "home field advantage." The court concluded the record "provide[d] a virtual rancid cornucopia of electronic messages and other communications evidencing a specific intent by key government officials to injure [the contractor]." In addition, government administrators hindered the contractor's performance and breached the lease by increasing the downtime of vacant units; miscalculating downtime; driving up the contractor's costs by, for example, unilaterally imposing a depreciation schedule to adjust reimbursements for carpet damage and refusing to correct occupant damage; and reducing the contractor's compensation by improperly assessing liquidated damages and arbitrarily reducing or eliminating incentive fees. Officials also disrupted the internal dispute resolution mechanism by repeatedly requesting changes to contracting officer decisions and harassed the contractor by recommending a fraud audit for a $135 item, which the contractor readily reimbursed. In the face of pressure from officials plainly driven by animus against the contractor, the CO representative and a successor CO abdicated their responsibility to accord the contractor fair treatment, which was "perhaps the most pernicious form of bad faith." (North Star Alaska Housing Corp. v. U.S., FedCl, 51 CCF ¶78,739)
Modification to 8(a) Set-Aside Did
Not Require SBA Approval
However, the modification was not a "procurement for award," and therefore was not subject to the requirements of SBA 124.504. In determining if SBA 124.504 applied, the critical issue was whether the modification was within the scope of the original contract or whether it was a "cardinal change." A cardinal change to a contract occurs when a modification requires a contractor to perform duties materially different than those originally bargained for, the work exceeds the scope of the contract's changes clause, and the modification could not have been reasonably anticipated under the terms of the original agreement. Here, the original contract was for help desk services, and the modification merely added a comparatively small unit of additional services to a division within the larger business unit to which the contract applied. Therefore, the modification was not a cardinal change and did not constitute a separate contract award. (Management Solutions & Systems, Inc. v. U.S., et al., FedCl, 51 CCF ¶78,735)
Criminal Defense Costs Were Not Indirect
Contract Costs
The board determined, regardless of the outcome of the post-conviction appeals, the legal costs were not allowable because they were not allocable to the contractor's government contracts. FAR 31.202(a) provides costs identified specifically with a contract are directs costs that are to be charged directly to the contract. The legal costs were identified specifically with the contractor's commercial contract with a foreign country, and there was no nexus between the costs and the government contracts at issue or any government contract. A cost may also be allocable to a government contract if it is necessary to the overall operation of the contractor's business (FAR 31.201-4(c)). However, there was no evidence the contractor risked going out of business if convicted. The contractor maintained its commercial business and had been awarded and performed government contracts since its suspension had been terminated. (Fiber Materials, Inc., ASBCA, ¶91,997)
Teaming Arrangement Created Privity
of Contract
However, the provisions of the RFQ created a relationship between the parties sufficient to establish privity of contract. Although the CDA generally restricts privity to the party named on the contract, exceptions have been allowed when the relationship between the government and a party is substantially more extensive than the normal relationship between the government and a subcontractor. Here, the RFQ specifically contemplated the CTA under which the contractor asserted privity, and the government approved the CTA prior to the award. Moreover, subsequent to the award the contracting officer signed an acknowledgement of an assignment instrument directing the contract payments to be made to the contractor. Furthermore, the RFQ referred offerors to the GSA website for guidance on teaming arrangements, which distinguishes CTAs from prime contractor/subcontractor agreements. The website specifically explained one of the differences between a contractor/subcontractor arrangement and a CTA is that in the former case only the prime contractor is in privity with the government, while in the latter instance each team member has privity. By referencing the website, the RFQ incorporated this interpretation of CTAs into the contract. (Key Federal Finance v. GSA, et al., CBCA, ¶91,989) Legislative and Regulatory ActivityFAC 2005-17 Revises Government Property
Provisions
DHS Finalizes Rule Transferring Appeals
Jurisdiction to CBCA
Final Rule Clarifies DoD's Small Business
Program
DFARS Interim Rule Prohibits Excessive
Pass-Through Charges
NASA Updates Security Requirements
for Unclassified IT Resources
Final Rule Amends EAR to Conform with
Missile Control Regime
Accordingly, this final rule amends ECCNs 1A102, 1C101, 1C107, 6A108, 6B108, 7A102, 7A103, 9A111, and 9B105 to clarify that these ECCNs apply to all systems capable of a range of at least 300 km, regardless of payload capacity. Prior to publication of this rule, these ECCNs utilized the defined term "missile," which meant they only controlled items "capable of delivering at least 500 kilograms payload." Other amendments regarding materials of proliferation concern are made to ECCNs 1C107 and 1C111, and ECCNs 6A108 and 9B117 are amended to clarify control parameters. Also, new ECCN 7A107 is added to control three axis magnetic heading sensors that are being added to the EAR to address concerns about their use in unmanned aerial vehicle systems, and conforming amendments to the addition of ECCN 7A107 are made to ECCNs 7D101 and 7E101. Additionally, ECCN 9A101 is amended by deleting extraneous language in order to better focus its controls.
Finally, the rule amends the definitions of the terms "range" and "payload" in EAR 772.1 by adding double quotes around the terms to signify they are defined terms under the EAR. Similarly, ECCNs 9A120 and 9C110 are amended by placing double quotes around specific words and phrases to identify them as defined terms. In ECCN 9A120, double quotes are added around the word "payload." In ECCN 9C110, double quotes are placed around the phrases "specific tensile strength" and "specific modulus." ECCNs 7A002 and 7A102 are amended by adding technical notes to define the term "stability" as it pertains to these entries only. For the text of this final rule, effective May 7, 2007, see ¶72,750.118.
Executive Order Prohibits Expert Witness
Contingency Fees Major Contract AwardsSAIC - $6.2 Billion. Science Applications International Corp., Fairfield, NJ, won a maximum $6,200,000,000 fixed price with economic price adjustment contract for privatization of chemicals and packaged petroleum, oils and lubricants (POL). SAIC will provide services previously supplied by the Defense Logistics Agency for the comprehensive management of chemicals and POL. Using services are Army, Navy, Air Force, Marine Corps, and Federal civilian agencies. This is an indefinite quantity contract with a five-year base period and one 5-year option periods. Date of performance completion is May 1, 2012. Contracting activity is Defense Supply Center Richmond, Richmond, VA.
Haas TCM - $2 Billion. Haas TCM, Inc., West Chester, PA, is being awarded a maximum $2,000,000,000 fixed price with economic price adjustment for the management of compressed gases and cylinders. Using services are Army, Navy, Air Force, Marine Corps, and Federal civilian agencies. This is an indefinite quantity contract with a five-year base period and one 5-yr option periods. Date of performance completion is April 29, 2012. Contracting activity is Defense Supply Center Richmond, Richmond, VA.
Applied Research - $928 Million. Applied Research Laboratories, University of Texas at Austin, Austin, TX, is being awarded a $928,325,956 cost-plus-fixed fee, indefinite-delivery/indefinite-quantity order type modification to previously awarded contract (N00024-07-D-6200) for approximately 45,653 staff months of research and development and specialized engineering support. ARL:UT, as a Navy University Affiliated Research Center, will provide research and development, test and evaluation and specialized engineering capabilities. Work is expected to be completed by March 2012. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.
Multiple Contractors - $750 Million. The General Services Administration (GSA) awarded contracts totaling $750 million for the provision of satellite communications services through the SATCOM-II program. The contracts are five-year, indefinite delivery, indefinite quantity contracts. They will replace the existing GSA Satellite Services program. Large business awardees are Americom Government Services, Inc., Arrowhead Global Solutions, Inc., ARTEL, Inc., AT& T Corp., DRS Technical Services, EDS Corp., Global Communications Solutions, Inc., Hughes Network Systems, LLC, Intelsat General Corporation, Mackay Communications, Inc., Segovia, Inc., Stratos Mobile Network, Inc., Telecommunications Systems, Inc., Telenor Satellite Services, and ViaSat, Inc. Small businesses are CVG, Inc., DasNet Corporation, E& E Enterprises Global, Knight Sky Consulting and Associates, LLC, New Orleans Teleport, Inc., Psi Systems, Inc., RiteNet Corporation, Satellite Communication Systems, Inc., and Skjei Telecom, Inc. The network begins with a compact satellite station that fits in a car trunk but provides all computer, e-mail and broadband Internet capability normally found only in the office. SATCOM-II's broadband access also makes possible broadcast services as well as distance learning for federal customers in areas throughout the world that don't have a normal communications network, because it enables audio and video transmission of educational material.
Force Protection Industries - $481 Million. Force Protection Industries, Inc., Ladson, SC, is being awarded $481,414,500 for firm-fixed-priced delivery order under a previously awarded contract for additional Mine Resistant Ambush Protected (MRAP) Low Rate Initial Production (LRIP) vehicles. The Government shall purchase 300 Category I Vehicles and 700 Category II Vehicles, for a total of 1,000 vehicles. Work is expected to be completed by May 2008. This contract was competitively procured. The Marine Corps Systems Command, Quantico, VA, is the contracting activity.
Jacobs Technology - $480 Million. Jacobs Technology Inc., Tullahoma, TN, is being awarded a $480,000,000 indefinite-delivery/indefinite-quantity contract to procure engineering and technical advisory and assistance services for the Air Force's Electronic Systems Center for the next three years. These services include but are not limited to providing a broad range of engineering acquisition support such as engineering services, engineering support, technical support, provisioning and logistics support, modeling and simulation, configuration, and data management, architectural support, text and evaluation, security engineering and certification, capability based planning , commercial off-the-shelf integration, support, integration master plans, integration scheduling, and technical reviews in support of various research, development and production activities. This work will be complete May 2010. Headquarters Electronic Systems Center, Hanscom Air Force Base, MA, is the contracting activity.
International Oil Trading - $457 Million. International Oil Trading Co., Boca Raton, FL, is being awarded a maximum $456,802,652.00 fixed price with economic price adjustment contract for aviation turbine fuel, diesel fuel, and motor gasoline. Using service is Defense Energy Support Center (DESC). Date of performance completion is April 30, 2008. Contracting activity is DESC, Fort Belvoir, VA.
Lockheed Martin - $447 Million. The U.S. Army Corps of Engineers issued a Letter of Obligation to the Government's Most Efficient Organization (MEO) to provide Information Management and Information Technology (IM/IT) services. Lockheed Martin, Bethesda, MD, will partner with the Government's Most Efficient Organization (MEO) to provide information management and information technology (IM/IT) services to the U.S. Army Corps of Engineers. The agreement is valued at approximately $447 million over the next five years. The MEO, supported by Lockheed Martin, will provide Direct IM/IT services and contractor support at 55 major locations throughout the Continental United States and the Pacific Ocean Division Office, including the Alaska and Honolulu Districts. The MEO won the public-private competition under the Office of Management and Budget Circular A-76. The Letter of Obligation calls for support to the Corps' civil works, military construction and research and development missions, providing infrastructure systems management, records management and document management, communications, desktop support, service desk, strategic planning, testing and solutions, information security, visual information, and printing and publications.
Harris Corp. - $422 Million. Harris Corp., RF Communications Division, Rochester, NY, is being awarded a $422,000,000 not to exceed ceiling, indefinite delivery/indefinite quantity five year contract (with an optional five year ordering period) for the procurement of Improved Special Operation Forces High-Frequency Multi-Band Radio System in support of the Special Operations Acquisition and Logistics, Intelligence and Information Systems, Program Management of Command, Control and Communications Office.
Sikorsky Aircraft - $394 Million. Sikorsky Aircraft, Stratford, CT, is being awarded a $73,705,470 firm-fixed-price, indefinite-delivery/ indefinite-quantity long-term contract for repair, overhaul, and modification of various configurations for the main rotor head, sleeve and spindle assemblies, main gearbox assemblies, free wheel units, as well as other components for the CH-53E, MH-53E and CH-53D helicopters. This contract contains one five-year base period and four one-year option periods, which if exercised, bring the total estimated value of the contract to $394,212,081. Work is expected to be completed by September 2007. The Naval Inventory Control Point is the contracting activity.
Lockheed Martin - $380 Million. The U.S. Army awarded Lockheed Martin, Bethesda, MD, a performance based logistics (PBL) contract, with a potential value of $380 million over four years, to support the Target Acquisition Designation Sight/Pilot Night Vision Sensor (TADS/PNVS™) and Modernized TADS/PNVS (M-TADS/PNVS) systems on the AH-64 Apache helicopter. The contract provides complete post-production supply chain management, including spares planning, procurement, repairs, maintenance, modifications and inventory management of fielded systems. Support under this four-year contract will continue through 2010. The first year's contract value is expected to be approximately $123 million.
Northrop Grumman - $371 Million. Northrop Grumman Systems Corp., Integrated Systems Air Combat Systems, San Diego, CA, is being awarded a $371,376,333 fixed-price-incentive / firm-target contract modification to provide for 5 Global Hawk Air Vehicles, 3 Mission Control Elements, 3 Launch and Recovery Elements, along with associated equipment. This work will be complete March 2010. Headquarters Aeronautical Systems Center, Wright-Patterson Air Force Base, OH, is the contracting activity.
General Dynamics - $227 Million. The U.S. Department of Homeland Security (DHS) awarded General Dynamics, Falls Church, VA, a task order to provide Technology Operations and Maintenance Infrastructure Support (TOMIS) services for the U. S. Citizenship and Immigration Services (USCIS). The initial award is valued at approximately $24 million; the task order has a total potential value of approximately $227 million over a 77-month period if all options are exercised. General Dynamics will support the USCIS information technology (IT) infrastructure by providing TOMIS services to approximately 16,000 Federal and contractor employees at more than 280 U.S. Citizenship and Immigration Services (USCIS) locations nationally through the implementation of an IT Infrastructure Library (ITIL) set of best practices. These services include program management, service desk operations, hardware maintenance, infrastructure operations server and PC management, mainframe computer operations and problem management.
Northrup Grumman/MPRI/Blackwater - $200 Million. The U.S. Department of State has selected Northrop Grumman, Los Angeles, CA, MPRI, Alexandria, VA, and Blackwater USA, Moyock, NC, for its Global Peace Operations Initiative (GPOI). The companies will provide training to militaries and peacekeeping forces worldwide. The GPOI contracts have a potential value of $200 million, collectively, over five years. The Department of State created the GPOI to build worldwide capacity to provide well- trained troops for international peacekeeping. The GPOI incorporates lessons learned and peacekeeping successes of the African Contingency Operations Training Assistance (ACOTA) program, under which Northrop Grumman has provided peacekeeping training to 13 African nations since the 1990s.
Raytheon - $184 Million. Raytheon Company, Waltham, MA, finalized a $184 million U.S. Navy contract for radar equipment for the Royal Australian Navy's Air Warfare Destroyer (AWD) and the Spanish Navy's F-105 Frigate. Under the Foreign Military Sales contract, Raytheon IDS will manufacture, integrate and test AN/SPY-1 D(V) system transmitters and MK99 Fire Control Systems for the AWD and F-105 programs. The so-called "definitized "contract reflects the fully negotiated firm fixed price and includes an increase in funding over the original $72 million contract awarded June 2006.
Raytheon - $144 Million. Raytheon Company, Waltham, MA, won a $144 million contract modification by the U.S. Army Aviation and Missile Command to provide engineering services for the Patriot Air and Missile Defense program. This award represents the third of four annual options to the base contract awarded in fiscal year 2004. The contract embodies the U.S. Army's Air and Missile Defense visionary commitment for a cost-effective approach to systems enhancements and capabilities. Raytheon Integrated Defense Systems (IDS), prime contractor for Patriot, manages the contract.
Raytheon Missile Systems - $141 Million. Raytheon Missile Systems of Tucson, AZ, is being awarded a sole source $140,696,593 cost contract for long lead material required for the manufacture and delivery of thirty-six Standard Missile-3 Block IA missiles to meet U.S. and Foreign Military Sales requirements in support of the Aegis Ballistic Missile Defense System. Work is expected to be complete by May 2008. The Naval Sea Systems Command, Washington, D.C. is the contracting activity.
Lockheed Martin - $125 Million. Lockheed Martin Corp., Bethesda, MD, was awarded a $124,981,841 modification to a firm-fixed-price contract for the guided multiple launch rocket system; dual purpose improved conventional munitions, and unitary GMLRS rockets. Work is expected to be completed by Nov. 30, 2008. The U.S. Army Aviation and Missile Command, Redstone Arsenal, AL, is the contracting activity.
Osborne Construction - $118 Million. Osborne Construction Co., Kirkland, WA, was awarded an $117,508,318 firm-fixed-price contract for design and construction of family housing replacements. Work is expected to be completed by Dec. 31, 2009. The U.S. Army Engineer District, Elmendorf, AK, is the contracting activity.
Sabre Systems - $117 Million. Sabre Systems, Inc., Warminster, PA, was awarded a $117,193,273 cost-plus-fixed-fee modification to their previously awarded indefinite-delivery/indefinite-quantity (IDIQ) for RDT & E Technical and Scientific Support of Sensor Systems for AIR 4.5 Avionics. Sabre is one of 5 primes on this multiple award contract to provide for the research, development, integration, analysis, assessment and test and evaluation of avionics and sensor systems equipment. |