I.        Informational Items

A.     Bill J. Copeland v. Ann M. Veneman, Secretary Of Agriculture, CAFC No. 03-1326, November 26, 2003. Court affirms the Agriculture Board of Contract Appeals (AGBCA) which had upheld a default termination finding that performance had been delayed and the delay was not excusable. Appellant had argued that the COs withholding of funds from progress payments for alleged Davis Bacon Act (DBA) violations was improper, and the cause of the delay. A Department of Labor administrative law judge had eventually dismissed the DBA violations and ordered that withheld funds be returned. In an opinion by Judge Dyk, the court finds that the determination by the CO was reasonable and in accordance with the DBA provisions which were incorporated within the contract. The court also noted that because appellant had the burden of showing that the delay was excusable, it also had the burden of showing that the withholding was excessive. As appellant met neither of these burdens, the AGBCA decision was affirmed.

B.     Dyncorp Information Systems, LLC v. US, COFC No. 01-16C, November 10, 2003. Summary judgment. Decision concerned language in the Contract Disputes Act of 1978 whether in effect on the date of this contract for purposes of applicable cost accounting standards means date the contract was executed or the designated effective date. Issue was whether the regulation preventing the contractor from recovering costs on stepped-up assets does not apply because contracts effective date preceded effective date of CAS standard.

C.     Jim Phillips Contracting, Inc., IBCA Nos.44319, 3220, November 6, 2003. Dispute related to a Bureau of Land Management("BLM") contract. On February 10, 1999, BLM awarded a one-year Indefinite Delivery Indefinite Quantity (ID/IQ) contract, with four one-year options, to Phillips with a guaranteed minimum of $655,000 over the life of the contract. By the time a delayed task order was issued, the ground was already covered by snow. Work had not yet begun when BLM issued a winter suspension order on December 15. A "resume work" order was issued on August 15, 2000, but Phillips refused to perform claiming that the option had not been exercised. BLM claimed that a letter exercising the option had been mailed on February 8, 2000, by regular mail. Phillips claimed it was never received. Phillips filed a claim, which was denied, and this appeal ensued. The Board follows the White v. Delta Construction decision of the Federal Circuit and awards damages of $75,000 plus interest in damages. The Board rejects BLM's argument "...that BLM had never given Phillips any indication that the option would not be exercised; thus, the Contractor should have assumed that BLM intended for the Contract term to be extended."

D.     Volume I Of GAOs Principles Of Federal Appropriations Law. The GAO will shortly publish Volume I of Principles of Federal Appropriations Law, third editionalso known as The Red Book. This publication is part of a multi-volume set intended to present a basic reference work covering those areas of law in which the Comptroller General renders decisions. [No Attachment]

E.      R.F. Lusa & Sons Sheetmetal, Inc., LBCA No. 2000-CA-00002, December 15, 2003. Dispute involved a Department of Labor, Employment and Training Administration contract for the removal and replacement of two roofs in Aquadilla, Puerto Rico. Contract awarded to appellant for $658,000. Contract terminated for default because appellant was 1) handling and disposing of asbestos containing materials without required permits and approvals as required by the contract and was 2) unable to complete the project in a timely manner. The Labor Board of Contract Appeals (LBCA) upheld the termination for default and rejected all of the contractor's arguments for excusable delay. The Board also rejected the government's claim for liquidated damages, which was first raised in the government's brief. Writing for the Board, Judge Levin noted that although "..the failure of the Contracting Officer to render a written final decision assessing liquidated damages may deprive the Board of jurisdiction to grant the request, the manner in which liquidated damage issues were inserted into this appeal constitutes prejudicial surprise and would otherwise persuade us to stay our hand even if we were empowered to act."

F.      Hansford T. Johnson, Acting Secretary of the Navy v. Advanced Engineering & Planning Corporation, Inc. D. E.D. Virginia, No. CIV.A. 03-652-A, November 17, 2003. Navy appeals an ASBCA decision which allowed the contractor to recover its preparation costs for a request for equitable adjustment (REA). Court affirms the ASBCA finding that, when submitted, the REA was not a claim under the Contract Disputes Act. The Court agreed with the ASBCA that the REA was not a claim as it had not been certified in accordance with FAR 33.207, but only in accordance with the requirements of DFARS 252.243-7002, implementing 10 U.S.C. Section 2410(a). Summary excerpt provided below:

Contrary to the Navy's contention, Reflectone did not overrule the portion of the Bill Strong decision on which the Board relied, or eliminate the CDA certification requirement. Reflectone [*18] merely overruled Dawco Construction, Inc. v. United States, 930 F.2d 872 (Fed. Cir. 1991), and its progeny, holding instead that the "FAR 33.201 definition of 'claim' does not require a pre-existing dispute unless the submission is a 'routine request for payment.'" Reflectone, 60 F.3d at 1579 (emphasis in original). Reflectone clearly did not address the portion of FAR 33.201 that concerns certification. See id. at 1578 n.8 ("We do not comment on those conversion requirements or any other requirements, that like certification, a contractor may have to satisfy to submit a CDA 'claim' the CO has jurisdiction to decide.") (emphasis added). For this reason, Reflectone's three-part test understandably makes no mention of the certification requirement that is also necessary for a CDA claim. n15 Id. at 1575. Since Reflectone, moreover, the Federal Circuit has made clear that Reflectone's three-part test is not the only prerequisite for a CDA claim, citing Bill Strong for the proposition that a "submission 'cannot be considered a formal CDA claim [if] [it] did not request a final decision of the [*19] CO.'" See James M. Ellett Construction Co., Inc. v. United States, 93 F.3d 1537, 1543 (Fed. Cir. 1996); n16 see also 41 U.S.C. 605(a). Like submission to the CO for a final decision, the requirement that a CDA claim be certified in a particular manner is a statutory requirement. See 41 U.S.C. 605(c)(1); 48 C.F.R. 33.207 (regulation implementing statutory certification requirement). Although a defect in certification does not deprive the Board of jurisdiction over a claim, the Board cannot enter a final judgment until a defective certification is corrected. See 41 U.S.C. 605(c)(6). As noted earlier, the certification required for an REA differs from that required for a claim under the CDA. See 48 C.F.R. 243.204-70. Reflectone did not alter any of this, nor did it eliminate the certification requirement for a CDA claim. Thus, the Board in this case did not run afoul of Reflectone, nor did it improperly rely on Bill Strong to determine that AEPCO's September 29, 2000 REA was not a CDA claim.

 

II.     Regulatory Developments

 

A.     Federal Acquisition Regulation: Insurance And Pension Costs, Final Rule, 68 FR 69251, December 11, 2003. The Councils have agreed on a final rule amending the FAR to revise the insurance and indemnification cost principle, and the portion of the compensation for personal services cost principle relating to pension costs. The rule revises both cost principles by improving clarity and structure and removing unnecessary and duplicative language. Effective date: January 12, 2004.

B.     Defense Federal Acquisition Regulation Supplement: Payment Withholding, Final Rule, 68 FR 69631, December 15, 2003. The Department of Defense has issued a final rule amending the DFARS to provide additional flexibility when determining the need to withhold payments under time-and-materials and labor-hour contracts. The rule clarifies that normally there should be no need to withhold payment for a contractor with a record of timely submittal of a release discharging the Government from all liabilities, obligations, and claims under a contract. Effective date: December 15, 2003.

C.     Prompt Payment Interest Rate Change, 68 FR 75317, December 30, 2003. For the period beginning January 1, 2004 and ending on June 30, 2004, the prompt payment interest rate is 4.000 per centum per annum. [No Attachment]

 

III. Tenth Annual Federal Procurement Institute

 

A.     Seminar Thursday and Friday February 26 and 27.

B.     Council Meeting Saturday February 28.

 

 

 

The next meeting will be on Tuesday February 10, 2004.