I. Informational Items
A. Sanford Cohen & Associates, Inc. IBCA No. 4239, September 8, 2004. EPA contract. Claim for breach of a level of effort cost reimbursement term contract with five renewal options. At the time of award, the contract provided that EPA "will order 119,000 direct labor hours for the base period which represents the Government's best estimate of the level of effort required to fulfill these requirements." At the time of the exercise of the options EPA unilaterally modified the contract to delete the above and replaced with language stating, "The Government's best estimate of the level of effort required to fulfill these requirements is [119,000 direct labor hours]." EPA ordered significantly less than the stated quantities in each period. The appellant claims entitlement to a fee adjustment based on the negligent estimates. The Board sustains the appeal. In an opinion by Chief Judge Steel, the Board adopts the proposal by Nash & Cibinic making the government liable for negligently prepared estimates in ID/IQ and requirements contracts. Although the instant contract is not such a contract, the Board finds that the appellant reasonably relied on the government's estimate and is entitled to an equitable adjustment for EPA's negligent estimates.
B. Individual Development Associates, Inc., ASBCA No. 53910, September 9, 2004. Contract for educational services for various military schools. The appellant's proposal indicated that each CLIN was "...offered as an inseparable whole and cannot be divided in any way." The commercial termination clause included in the contract provided that in the event of a termination for convenience the contractor "shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges..." The government terminated the contract for convenience and the appellant claimed it was entitled to the full price, rather than the percentage based on the "inseparable" language of its proposal. The Board disagreed, finding that the appellant's interpretation would read the government's termination for convenience rights out of the contract.
C. Northrop Grumman Corporation, Military Aircraft Division v. US, COFC No. 06-760C, November 5, 2004. Plaintiff challenges the validity of its fixed price contract, which was terminated for convenience. The court grants the government's motion to dismiss those counts that rely on the government's violation of Section 8118 of the 1987 Defense Appropriations Act. Judge Horn finds that the decision by the Court of Appeals for the Federal Circuit in American Telephone and Telegraph Company and Lucent Technologies, Inc. v. US, CAFC No. 01-5044 (2002) is controlling and binding precedent on the COFC. Although dismissing the Section 8118 counts, Judge Horn notes that the remaining counts may provide plaintiff some relief.
D. Pine & Timber, Inc. v. US, COFC No. 98-720C, November 23, 2004. Forest Service Lumber sale contract. Damages case. Plaintiff claims attorney fees resulting from a contract clause which provided that when disruption or delay exceeded 30 days the government would pay " ... out-of-pocket expenses incurred as a direct result of interruption or delay of operations under this provision. Out-of-pocket expenses do not include lost profits, replacement cost of timber, or any other anticipatory losses suffered by Purchaser." Judge Miller grants the government's motion for summary judgment on this claim finding that "The absence of any mention of attorneys' fees, in the context of the 'American Rule' and the requirement that 'waivers of sovereign immunity cannot be implied but must be unequivocally expressed,' Ledford, 297 F.3d at 1381, is fatal to Precision Pine's claim for attorneys' fees."
II. Regulatory Developments
A. Drafting Comments - Committee For Purchase From People Who Are Blind Or Severely Disabled: Notice Of JWOD Regulations Amendment, 69 FR 65395, November 12, 2004. Enclosed for potential comment by the Accounting Cost & Pricing Committee and the Small Business and Socioeconomic Programs Committee is a proposed rule that would amend the regulations of the Committee for Purchase From People Who Are Blind or Severely Disabled (the "Committee") to require nonprofit agencies awarded government contracts under the authority of the Javits-Wagner-O'Day ("JWOD") Act, as well as central nonprofit agencies designated by the Committee and nonprofit agencies that would like to qualify for participation in the JWOD Program, to comply with new governance standards. The proposed governance standards are primarily based on standards that are common practice in nonprofit and business communities. Draft comments should be received by December 23, 2004. Need volunteers to work on these comments.
B. Drafting Comments - DOD Notice And Request For Comments Re: Contract Financing: Contractor's Request For Progress Payments, 69 FR 67899, November 22, 2004. Enclosed for potential comment is a notice advising that the Defense Acquisition Regulations (DAR) Council is currently reviewing DOD's use of Standard Form (SF) 1443, Contractor's Request for Progress Payments. As part of this review, the DAR Council would like to hear the views of interested parties on what improvements could be made to the form, including the instructions, for use on DOD contracts. Respondents are also encouraged to describe any problems they have experienced in using the form on DOD contracts. Draft comments should be received by December 23, 2004.
C. Drafting White Paper - ATK Thiokol, Inc. v US, COFC No. 99-440C. Judge Braden has asked for assistance understanding the "context" relevant to the meaning of the phrase "required in the performance of a contract" as used in CAS 420 and FAR § 31.205-18. "Context" would include past practices and experience in the implementation of this phrase. White paper is due January 2005. (No Attachment)
D. Final Rule - General Services Administration Acquisition Regulation: Acquisition Of Leasehold Interests In Real Property: Historic Preference, 69 FR 66938, September 16, 2004. Final rule amending the General Services Administration Acquisition Regulation by revising the provision on Historic Preference.
E. Final Rule - DFARS Case 2003-D036, Cost Principles and Procedures, 69 FR 63331, November 1, 2004. DOD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to update text pertaining to contract cost principles. This rule is a result of a transformation initiative undertaken by DOD to dramatically change the purpose and content of the DFARS. Effective date: November 1, 2004.
F. Final Rule - DFARS Case 2003-D074, Acquisition of Commercial Items, 69 FR 65089, November 10, 2004. DOD has issued a final rule amending the DFARS to update text pertaining to the acquisition of commercial items. This rule is a result of an initiative undertaken by DOD to dramatically change the purpose and content of the DFARS. Effective date: November 10, 2004.
G. Final Rule – DOD Cost Principles and Procedures, November 22, 2004. DFARS Case 2003-D105, Contracting for Architect-Engineer Services, 69 FR 67855. DOD has adopted as final, without change, an interim rule amending the DFARS to implement Section 1427 of the National Defense Authorization Act for Fiscal Year 2004. Section 1427 increases, from $85,000 to $300,000, the threshold below which acquisitions for architect-engineer services for military construction or family housing projects are set aside for small business concerns.
H. Office of Federal Procurement Policy launches online Acquisition Center of Excellence (ACE) for Services, November 18, 2004. (See http://acc.dau.mil/simplify/ev.php?ID=27518_201&ID2=DO_TOPIC)
I. DOD Memo to OMB Regarding Section 8014(a)(3) of 2005 Defense Appropriations Act, November 12, 2004. DOD voices its support for the repeal of the Defense Appropriation Act provision that relates to employee health benefits in competitive sourcing situations.
J. DOD Issues "Defense Acquisition Guidebook," October 8, 2004. Acting Under Secretary of Defense (Acquisition, Technology and Logistics) Michael W. Wynne, approved provisional release of the Defense Acquisition Guidebook. The stated "purpose is to provide members of the acquisition community and our industry partners with an interactive, on-line reference to policy and discretionary best practices (and) a valuable resource as you design your programs." The Guidebook is available at http://akss.dau.mil/dag/. (No Attachment)
K. ABA Responds to the National Reconnaissance Office's Policy on "Prohibition of Teaming," October 25, 2004. The ABA Public Contract Law Section sent a letter to the Contracts Director of the National Reconnaissance Office (NRO) on recent NRO web postings relative to the NRO's Exclusive Teaming Prohibition clause that was published on April 2004. "Thisclause prohibits any team arrangement . . . to pursue an NRO procurement program where the parties further agree not to team with any competitors for that program. The stated concern is that the exclusive team arrangement may unduly limit competition." The ABA letter reviews in detail past and current government policies in the area of teaming, and the industry and government's recognition of the benefits of teaming arrangements. It concludes by stating: "The (Public Contract) Section strongly supports efforts to protect the integrity of the acquisition process, and seeks to foster competition. This includes the avoidance of anticompetitive behavior. We believe that the issue of exclusive team arrangements and whether such arrangements inhibit competition have been thoroughly examined in the past, and the interests of the federal government would not be served by a blanket prohibition against exclusive team arrangements."
L. ABA Responds to Wynne Memorandum, October 27, 2004. Patricia Witte, Chair of the Section of Public Contract Law, addressed a letter to Michael Wynne, Acting Under Secretary of Defense (Acquisition, Technology and Logistics), outlining four comments about Mr. Wynne's memorandum entitled "Selection of Contractors for Subsystems and Components." On August 16, 2004 Michael Wynne, issued a memorandum on the subject of "Performance Based Logistics (PBL): Purchasing Using Performance Based Criteria." PBL "performance" guidance criteria is specified in the memorandum for the areas of operational availability, operational reliability, cost per unit usage, logistics footprint, and logistics response time. Metrics were encouraged.
M. ABA Responds -Regarding Commercial Contract Types, November 18, 2004. FAR Case 2003-027, Additional Commercial Contract Types, Advanced Notice Of Proposed Rulemaking, 69 FR 56315, September 20, 2004. Section 1432 amends section 8002(d) of the Federal Acquisition Streamlining Act to expressly authorize the use of time-and-materials (T&M) and labor-hour (LH) contracts for the procurement of commercial services. Implementation of section 8002(d) will require revisions to the FAR to address the risks associated with T&M and LH contracting. Current policies were designed only to support purchases through firm-fixed price contracts and fixed-price contracts with economic price adjustments.
N. Under Secretary of Defense Memo Re: Utilities Privatization – Contract Pricing. This memo provides instructions for contracting officers to apply in pricing contracts for privatization of utilities. It also outlines the conditions for deviations from the application of the Cost Accounting Standards and the provisions at FAR Part 31.
The next meeting of the Accounting Cost and Pricing committee will be on Tuesday, January 11, 2005.