AGENDA
February 8, 2005 Meeting
I Informational Items
A) Singleton Contracting Corporation v. Harvey (Secretary of the Army), U.S. Court of Appeals for the Federal Circuit ("CAFC") No. 04-1119, January 26, 2005. Court affirms the Armed Services Board of Contract Appeals ("ASBCA") decision that Singleton's failure to furnish an insurance certificate was a concurrent source of the delay and therefore did not justify an unabsorbed overhead claim. The court did reverse and award Singleton termination for convenience settlement costs which the ASBCA did not address in its decision.
B) California Federal Bank v US, CAFC Nos. 03-5070, -5082, January 19, 2005. Winstar case. Court affirms the decision of the U.S. Court of Federal Claims ("COFC") denying CalFed's damages on a lost profit theory. The COFC based its ruling on
1. "that CalFed had failed to prove its loss of profits from the sale of the assets, including the ARMs, was foreseeable;
2. that CalFed had failed to prove that the ARMs and other assets were sold because of the breach; and
3. that the method of calculating damages advocated by CalFed was too speculative to serve as the basis for a damages award."
Judge Bryson, writing for the court, upholds the COFC opinion on the causation issue, and because that is dispositive, does not reach the forseeability and measurement of damages issues. Judge Bryson rejects CalFed's argument that the COFC applied wrong standard and that the breach need only be a "substantial factor" contributing to the loss. Instead, Judge Bryson notes that "the causal connection between the breach and the loss of profits must be 'definitely established'. . ."
C) Bannum, Inc. v. US, CAFC 04-5105, January 12, 2005. Not citable as precedent. Court affirms COFC holding that Contract Disputes Act ("CDA") interest does not begin to accrue until a claim is received or the contractor requests a final decision. Bannum Inc. appealed "Šthe decision of the United States Court of Federal Claims that ordered entry of judgment in Bannum's favor in the amount of $258,891, plus interest from August 20, 2001, in Bannum's CDA action against the United States." The CAFC agreed "Šthat the court should have awarded [Bannum] interest from various dates ranging from February 16, 2001 to April 18, 2001."
D) Jacobs Engineering Group, Inc. v US, COFC No. 02-1500C, January 12, 2005. Department of Energy ("DOE") contract. Contractor was to share 20 percent of the cost of a contract for the development of gasification technology. Faced with a cost overrun, which could not be funded, the DOE terminated the contract for convenience. Jacobs argued that the termination for convenience entitled it to 100 percent of its costs. Judge Miller rejects this argument and finds that the Termination for Convenience clause language referring to all costs "reimbursable under this contract" recognizes the 20 percent cost sharing arrangement. Therefore, the government's motion for summary judgment was granted.
E) United Technologies Corporation, ASBCA Nos. 51410, 53089, 53349, January 21, 2005. The Armed Services Board of Contract Appeals (ASBCA) considered and ruled upon an appeal made by United Technologies Corporation, Pratt & Whitney and the Air Force (AF) in regard to the decision made in United Technologies Corporation. The ASBCA "Šsustained the appeals, and concluded that the AF had not proven entitlement to an affirmative recovery on its claims under the Truth in Negotiations Act (TINA). " The ASBCA "Šfound entitlement under a number of the AF claims, but also found that appellant was entitled to offsets that exceeded the government's claims."
In its previous decision (i.e., June 23, 1999), the ASBCA denied the motion by the Air Force. "The Air Force sought payment of $95,783,413 plus interest from [United Technologies Corporation] based on the submission of defective cost or pricing data under its 1984 contract for jet fighter engines pursuant to the contract clause entitled "Price Reduction for Defective Cost or Pricing Data (1970 JAN)," DAR7-104.29.(a).
F) Hook Construction, Inc., GSBCA No. 16470, January 24, 2004. Contractor appeals the denial of its claim for an equitable adjustment for supplying brand name casework alleging that Contracting Officer ("CO") wrongfully rejected an "or equal" product. The Board denies the appeal noting that "In order to prevail upon a claim based on the Material and Workmanship clause, the contractor bears the burden of either proving it supplied the contracting agency with sufficient information to establish its proposed alternative product met the specified essential requirements and functions the same in all essential respects as the brand name product, or of proving its failure to supply such information was excusable. If the contractor cannot make such a showing, the agency is not liable for rejecting the proposed product." Contrary to appellant's allegation, Judge DeGraff noted that " GSA was not required ... to accept Hook's general assurances regarding [the alternative supplier's] capabilities and was not obligated either to contact [the alternative supplier] or to revise Hook's shop drawings."
G) "The Davis Plan," Federal Computer Week. January 24, 2005. Representative Tom Davis (Republican-Virginia.) was interviewed on January 13, 2005 and discussed his agenda for the 109th Congress. Representative Davis is chairman of the House Government Reform Committee. Among the items on his agenda:
1. The General Services Administration: "Davis is focusing on a number of issues, including whether to maintain the organization's structure, which features various regionsŠ. Davis said he is concerned that the Federal Supply Service and the Federal Technology Service seem to be competing with each other."
2. Cybersecurity: "This will be a major priority of our committee."
3. Procurement: "With a number of scandals grabbing headlines, such as the Defense Department's tanker deal with Boeing, some lawmakers might try to roll back procurement reforms from the 1990s. Davis said he will move to deflect any such efforts."
4. Privacy officers: "Davis said he will seek to eliminate the provision of the fiscal 2005 omnibus spending bill that mandates the creation of chief privacy officer positions at agencies."
H) "Teaching Uncle Sam to Be a Better Buyer: New Procurement Administrator Will Oversee How Federal Contracts Are Awarded," Washington Post, January 21, 2005. "While David Safavian, the Bush administration's new chief for government-wide procurement policy, cooled his jets waiting for Senate confirmation, federal contracting got hot. The government's procurement community was rocked by court testimony from Darleen A. Druyun, a former top acquisition official at the Air Force, that she had favored Boeing Co. in contract decisions. A review by the inspector general at the General Services Administration found that employees of the GSA's Federal Technology Service, which buys high-tech products and services on behalf of the government, had not followed the rules in awarding and managing millions of dollars in contracts, raising questions about whether taxpayers paid too much on some of the contracts. The law that created Safavian's position -- administrator for federal procurement policy at the Office of Management and Budget -- does not allow Safavian to intervene in ongoing procurement actions, but he can use the OMB's budget clout to call agencies on the carpet."
I) "OMB Announces Establishment of Services Acquisition Advisory Panel," OMB Press Release, February 1, 2005. The Office of Management and Budget announced "Šthe membership of an acquisition advisory panel to review various aspects of Government contracting. The Panel is authorized by Section 1423 of the Services Acquisition Reform Act (SARA), and is comprised of recognized experts in Government acquisition law and policy. Some of the topics the Panel will examine include the use of commercial practices, performance-based contracting, and government-wide contracts."
II. Regulatory Developments
A) General Accountability Office Report GAO-05-207, Update of High-Risk Series Reports, January 25, 2005. "GAO's four areas of high risks include the management of interagency contracting. Interagency contracts can leverage the government's buying power and provide a simplified and expedited method of procurement. But several factors can pose risks, including the rapid growth of dollars involved combined with the limited expertise of some of agencies in using these contracts and recent problems related to their management. Various improvement efforts have been initiated to address this area, but improved policies and processes, and their effective implementation, are needed to ensure that interagency contracting achieves its full potential in the most effective and efficient manner."
B) General Accountability Office Report GAO-05-55, Capital Financing: Partnership And Energy Savings Performance Contracts Raise Budgeting and Monitoring Concerns, December 2004. GAO studied energy savings performance contracts ("ESPC") and public/private partnerships to determine
1. what specific attributes of ESPCs and partnerships contributed to budget scoring decisions,
2. the costs of financing through ESPCs compared to the costs of financing via timely, full, and up-front appropriations, and
3. how ESPCs and partnerships are monitored.
GAO recommends that OMB require and suggests Congress consider requiring agencies that use ESPCs to present an annual analysis comparing the total contract cycle costs of ESPCs entered into during the fiscal year with estimated up-front funding costs for the same ECMs. GAO also recommends
1. OMB work with scorekeepers to develop a scorekeeping rule to ensure that the budget reflects the government's full commitment for partnerships and
2. agencies perform business case analyses and ensure that the full range of funding alternatives, including useful segments, are analyzed when making capital financing decisions.
C) General Accountability Office Report GAO-01-136, Homeland Security: Further Action Needed to Promote Successful Use of Special Acquisition Authority, December 2004. The Homeland Security Act of 2002 authorized the Department of Homeland Security ("DHS") to establish a pilot program for the use of acquisition agreements known as "other transactions." Other transactions are exempt form many of the requirements that apply to government contracts. The act requires GAO to report to Congress on the use of other transactions by DHS. GAO determined that DHS has not developed policies and established a workforce to manage other transactions effectively and that DHS has not yet developed mechanisms to capture and assess the knowledge gained about the use of other transactions to leverage this information for future solicitations that use other transactions. To promote the efficient and effective use of its other transactions authority GAO recommends that DHS
1. provide guidance on including audit provisions in other transactions agreements,
2. develop a training program in the use of other transactions, and
3. capture knowledge obtained during the acquisition process for use in planning and implementing future other transactions projects.
D) Update- Defense Acquisition Guidebook Finalized, November 17, 2004. "On November 17th, 2004, Michael Wynne, the Acting Under Secretary of Defense (Acquisition, Technology, and Logistics) formally completed the introduction of the Defense Acquisition Guidebook by changing its status from provisional to final. The final Guidebook contains updated chapter content, a new tutorial, advanced search capability and a new Integrated Defense AT&L Life Cycle Management Framework Chart. The final Guidebook, identified as v1.00, is an interactive, web-based resource designed to provide the acquisition workforce and their industry partners with instant online access to best business practices as well as supporting policy, statute, and lessons learned. The Guidebook is available on the internet at http://www.akss.dau.mil/dag."
III. 11th Annual Federal Procurement Institute – Mitigating Business Risks and Legal Liabilities in Federal Contracting – February 24 to 26, 2005 – Annapolis, MD
The next meeting of the Accounting Cost and Pricing committee will be on March 12, 2005.