Our community blogs
Recent EntriesLatest Entry
Fans of the blog know that we’re wild about joint ventures: they allow small business contractors to use their size status while, at the same time, leveraging their joint venture partner’s experience and capabilities.
But joint ventures—particularly joint ventures under one of the SBA’s socioeconomic programs—can be tricky to create. For joint ventures between a small and a large company, the venturers first need an approved mentor-protégé agreement. And regardless, for the joint venture to qualify under a socioeconomic designation, that joint venture must have a compliant agreement.
But that’s still not enough to create a compliant joint venture. As a recent SBA Office of Hearings and Appeals decision explains, the small business venturer must unequivocally control the joint venture.
Control over a joint venture has long been a confusing subject for joint venturers. On the one hand, the SBA’s socioeconomic regulations require the person on whom the company’s eligibility is based to control the company. For SDVOSBs, as an example, this means that the service-disabled veteran owner must control all aspects of the company, save for five “extraordinary circumstances” that are specifically designated in the SBA’s regulations. 13 C.F.R. §§ 125.11, 125.13. On the other hand, the SBA’s joint venture regulations do not explicitly require that same level of control over the joint venture by the SDVOSB venturer; instead, they require the SDVOSB venturer to act as the managing venturer, and to designate a project manager “responsible for performance of the contract” awarded to the joint venture. 13 C.F.R. § 125.18(b)(2)(ii).
In Seventh Dimension, LLC, SBA VET-6057 (June 11, 2020), the SBA OHA had occasion to consider the level of control that an SDVOSB must exert over an SDVOSB joint venture. At issue was the eligibility of Aquila Alliance LLC—a mentor-protégé SDVOSB joint venture between Advanced Computer Learning Corporation (ACLC), as the SDVOSB venturer, and General Dynamics Information Technology (GDIT), as the non-managing venturer—under a procurement set aside for SDVOSBs by the U.S. Army Special Operations Command.
On its face, the joint venture checked the appropriate boxes for eligibility: ACLC was an eligible SDVOSB and had an approved-mentor-protégé agreement with GDIT. Moreover, the parties appeared to have a compliant joint venture agreement under the SBA’s SDVOSB joint venture regulations. Importantly, ACLC was designated as Aquila’s managing venturer and an ACLC employee was named its project manager.
Aquila’s joint venture agreement, however, also provided for a Member’s Committee. Representation on the Member’s Committee was tilted in favor of ACLC—having two committee members to GDIT’s one. The Committee, moreover, was authorized to “exercise complete and exclusive control over the management of the Company’s business, including controlling the performance of the Contracts[.]”
Notwithstanding the Member’s Committee’s control over the joint venture, the joint venture agreement identified several items that required unanimous approval of the venturers. Included in these requirements were the approval to bid on projects (and final approval for any bid); entering into any contract with the government; entering into subcontracts valued at $500,000 or more; incurring debt (other than trade payables or leases); incurring expenses valued at more than 5% of budget; and settling litigation.
After Seventh Dimension filed an eligibility protest, the SBA Area Office found that Aquila was an eligible SDVOSB joint venture. Seventh Dimension then appealed, arguing, in part, that ACLC does not control Aquila and, as a result, Aquila is not an eligible SDVOSB.
The OHA agreed with Seventh Dimension’s arguments, finding that ACLC’s inability to control Aquila meant that the joint venture was not eligible as an SDVOSB.
Citing the requirement that an employee of the SDVOSB be the joint venture’s project manager, the OHA wrote that “this means the [SDVOSB] must control the decision-making of the joint venture.” This control, the OHA wrote, “must be unequivocal.”
Such unequivocal control did not exist under the Aquila joint venture agreement, given the unanimity requirements. These requirements well-exceeded the “extraordinary circumstances” outlined in the SDVOSB regulations, including submitting proposals and entering into contracts—ordinary actions that go to the very purpose of the joint venture. Given these unanimity requirements, and considering other aspects of GDIT’s negative control over the functions of the joint venture, the OHA concluded that GDIT controls the ordinary functions of the joint venture. In other words, ACLC was not able to manage the joint venture and, therefore, Aquila’s joint venture agreement did not comply with the SBA’s regulations. OHA concluded that Aquila was not an eligible SDVOSB.
In my mind, the OHA’s determination that an SDVOSB venturer must “unequivocally control” the joint venture is problematic, as it conflates the requirements for the underlying SDVOSB’s eligibility with the joint venture’s eligibility. Although the SDVOSB regulations require the service-disabled veteran owner to exercise unequivocal control over the SDVOSB under 13 C.F.R. § 125.13, the SDVOSB joint venture regulations don’t require this same level of control. Instead, to be an eligible SDVOSB joint venture, the company has to have a joint venture agreement that meets the regulatory requirements—including that the SDVOSB serve as managing venturer and that one of its employees serve as project manager, “responsible for performing the contract.” 13 C.F.R. § 125.18(b)(2)(ii). “Exercising unequivocal control over the joint venture” is simply not one of the requirements stated in the SDVOSB joint venture regulations.
The SDVOSB joint venture regulations differ from the underlying SDVOSB regulations in other important ways. First, the SDVOSB joint venture regulations specifically allow the non-managing venturer to exercise negative control not permitted to minority members of the SDVOSB entity itself, by requiring that both venturers co-sign any checks paid out of the joint venture’s bank account. 13 C.F.R. § 125.18(b)(2)(v). In other words, the SDVOSB regulations tacitly allow the non-managing venturer the ability to withhold its consent to paying for the joint venture’s indebtedness—a clear act of negative control. In an SDVOSB, however, requiring a minority member’s countersignature before a check can be issued would be an improper usurpation of the service-disabled veteran’s inherent control.
Second, the nature of the joint venture profit split demonstrates that an SDVOSB need not have unequivocal control. The SDVOSB regulations generally require that the service-disabled veteran owner receive the highest compensation from the SDVOSB; if a non-service-disabled veteran instead receives the highest compensation, the presumption is that that person controls the company. 13 C.F.R. § 125.13(i)(2). In an SDVOSB joint venture, however, the non-SDVOSB venturer can receive the highest compensation—because profits are split commensurate with the parties’ work, and because the non-SDVOSB venturer can perform up to 60% of the joint venture’s work, the non-SDVOSB venturer might receive an outsized share of the profits. 13 C.F.R. § 125.18(b)(2)(iv), (b)(3). Again, the SDVOSB regulations contemplate that the non-managing venturer might have some level of control over the joint venture.
Practically speaking, a relaxed control requirement makes sense in the context of a joint venture. Under the SBA’s regulations, a joint venture is, in many respects, a legal fiction: it is a separate unpopulated legal entity, under which two or more entities “combine their efforts, property, money, skill, or knowledge” in order to perform under a specific contract. 13 C.F.R. § 121.103(h). It is nothing more than the sum of its parts—including those parts contributed by the non-managing venturer. To say that the non-managing venturer cannot exercise any control over how the joint venture operates ignores the relationship of the parties. Moreover, it threatens to undermine the joint venture regime itself, as I can’t imagine many entities would be willing to participate in a joint venture if they are precluded from having a say over whether that joint venture will even submit an opportunity under a specific contract and, if so, how that contract will be performed.
I simply don’t read the joint venture regulations as requiring unequivocal control. But, at least for now, it’s clear the OHA considers the managing venturer’s ability to “unequivocally control” the joint venture as a prerequisite to eligibility.
If you have any questions about joint ventures, please give me a call.
- Read more...
- 0 comments
Last week, the Equal Employment Opportunity Commission (EEOC) issued updated technical assistance questions and answers entitled “What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws.” It was the second update to the guidance this month. If history is our guide, the science and guidance may be different by the end of next month; but the EEOC’s Q&A currently represents the most up to date direction for employers as they eye reopening offices and bringing employees back from remote work or layoffs.
While employers are well-counseled to be familiar with the entirety of the Q&A, the June updates have clarified the EEOC’s position with respect to several issues. For example, the EEOC had previously stated that COVID-19 viral tests were permissible under the Americans with Disabilities Act because the disease posed a “direct threat” to other employees. The Commission has now clarified that antibody tests do not share the same status and that employers cannot utilize antibody tests as a prerequisite for employees to reenter the workplace.
Another recent revision addresses the intersection of accommodation and age discrimination. Specifically, the EEOC clarified that, even though individuals over the age of 65 are at higher risk for a severe case of COVID-19, it would be a violation of the Age Discrimination in Employment Act for an employer to preclude older workers from returning to the workplace even if it was for the benevolent reason of protecting that individual from the risk of infection. The guidance similarly clarified that employers would also violate the law (here Title VII) if they precluded pregnant women from returning to work even if motivated by benevolent concern for their health.
Another increasingly common question addressed by the guidance is an employer’s obligation to an employee who themselves may not be at risk of severe illness but who might expose a family member who is immunocompromised. The EEOC’s June 11 update clarified as follows:
D.13. Is an employee entitled to an accommodation under the ADA in order to avoid exposing a family member who is at higher risk of severe illness from COVID-19 due to an underlying medical condition?
No. Although the ADA prohibits discrimination based on association with an individual with a disability, that protection is limited to disparate treatment or harassment. The ADA does not require that an employer accommodate an employee without a disability based on the disability-related needs of a family member or other person with whom she is associated.
For example, an employee without a disability is not entitled under the ADA to telework as an accommodation in order to protect a family member with a disability from potential COVID-19 exposure.
The EEOC did note that an employer would be free to provide such flexibility if it chooses to do so, but such accommodation is not required as a matter of law.
Consistent with that principle, the updated guidance also provides best practices for employers to invite employees to request flexibility in work arrangements more generally. The EEOC encourages employers to begin the discussion around accommodation now – i.e., while employees are currently teleworking to provide time for an interactive process. Broadcast communications to staff beginning such discussions are also advised to include CDC-listed medical conditions that may place people at higher risk of serious illness, provide instructions about who to contact, and indicate that the employer is willing to consider requests on a case by case basis.
It’s a quickly evolving world for employers. Further updates as COVID-19 events and regulatory responses warrant!!
About the Author:
David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation, and litigation practices.
The post COVID-19 and Employee Accommodations: Current State of EEOC Guidance appeared first on Centre Law & Consulting.
- Read more...
- 0 comments
Scenario: Acme Corporation responds to two different RFPs issued by the Government. RFP 1 is for commercial items and contains the untailored version FAR 52.212-1, Instructions to Offerors--Commercial Items. Acme responds to RFP 1 with Proposal 1. RFP 2 is for noncommercial items and contains FAR 52.215-1, Instructions to Offerors--Competitive Acquisition. Acme responds to RFP 2 with Proposal 2. The deadline for submission of the proposals for both RFPs is June 30. Both of Acme's proposals were submitted on time.
On July 15, Acme realizes that it made an estimating mistake and has priced the proposals lower than they should have. Acme asks the contracting officer for each RFP if they can submit a revised proposal, since award has not yet been made. Both contracting officers refuse Acme's request. Acme then asks to withdraw both proposals.
The CARES Act and FFCRA provide multiple options of economic relief for government contractors. They also provide multiple opportunities for confusion and errors. The number one takeaway: NO DOUBLE DIPPING!…
The post PPP Loans for Government Contractors – No Double Dipping appeared first on Left Brain Professionals Inc.
- Read more...
- 0 comments
Each year about this time, I read an editorial by Francis Pharcellus Church that was published in The Sun on September 21, 1897. The editorial is in response to a letter written by eight-year-old Virginia O’Hanlon. Now, this entry is not about the contents of the editorial but I will add my favorite part of the editorial:Quote
Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.
* * * * *
No Santa Claus! Thank God! he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.
Mr. Church's prose is beautiful. He died in 1906 and Virgina died in 1971. Check out the brief description of the two in Wikipedia. In her letter to The Sun, Virginia printed her address as 115 W. 95th St. Does it still exist? Yes, see 115 W. 95th St. Between 113 and 117 you will see 115 in the center above the windows. To the left of 115, you will see The Studio School at the entrance. The Studio School is a private, elementary-middle school and was founded in 1971, the year Virginia died. In 2009, The Studio School honored Virginia by attaching a plaque to 115 which you can see on the Google Maps image. What does the placque say? You cannot read it on Google Maps but I've added the contents as the final part of this entry.Quote
1889 - 1971
This site, 115 West 95th Street, was once the residence of Virginia O'Hanlon, who in 1897, at the age of eight, wrote a letter to The New York Sun asking, "Is there a Santa Clause?" Editor Francis Pharcellus Church was inspired to respond with the most famous newspaper editorial in American history. Published in the Sun, on September 21, 1897, Church's editorial went beyond the child's simple question to uphold the faith that sustains life confirming that "Yes, Virginia, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy."
Mrs. Laura Virginia O'Hanlon (Douglas) went on to become an educator and a staunch supporter of children's rights. In 1961, she reaffirmed her belief in the spirit of Santa Claus, saying it "stands for love and sharing, the joy of giving and the extension of it to all people."
In the 2019 National Defense Authorization Act (NDAA), Congress placed serious limitations on the Government’s use of Lowest Price, Technically Acceptable (LPTA) procurements. As a result, we should be seeing the Government issue more RFPs in which technology and innovation outweigh price. In these instances, contractors can seek a higher price but are expected to show substantial technological advantages. Two recent protests cases out of GAO illustrate the principles of technical proposal evaluation when technical factors are more important than price, and demonstrate the potential cost/technical trade-offs under these circumstances.
Read the full article here.
- Read more...
- 0 comments
ASHBURN, Virginia (September 19, 2018) The National Contract Management Association (NCMA)
President Charlie Williams Announces the New NCMA Chief Executive Officer
On behalf of the National Contract Management Association (NCMA) Board of Directors, I am pleased to announce the appointment of Kraig Conrad, CAE, CTP, as the new NCMA Chief Executive Officer. Kraig will formally take his position on November 1, 2018. Kraig joins NCMA with 20 years of association leadership experience. He most recently served as Chief Executive Officer of the Professional Risk Managers’ International Association (PRMIA), where he guided the PRMIA Board of Directors and its global network of more than 50,000 risk professionals to craft an enhanced vision for the group that includes a long-range strategic plan; new advocacy, certification, and training efforts; promoting the PRMIA brand; and enhancing membership benefits.
Prior to PRMIA, he held many roles at the National Investor Relations Institute, including Acting Co-Chief Executive Office and Vice President for Programs and Development. Kraig has also served as Research Lead for Strategy Practice at Corporate Executive Board, Director of Corporate Finance and Risk Management and Director of Strategic Alliances at the Association for Financial Professionals. He started his career as a Financial Analyst at Credit Suisse.
Kraig earned a Bachelor of Arts in Economics from the University of Southern California and a Master of Business Administration from the University of Illinois at Chicago. He is a Certified Association Executive and member of the American Society of Association Executives, and a Certified Treasury Professional and member of the Association for Financial Professionals.
“We are excited to have Kraig join our team. Kraig has demonstrated time and time again exemplary leadership skills and thoughtful approaches to the business of association management,” says NCMA President Charlie Williams. “We are confident that Kraig is the right person at the right time for NCMA as we continue the NCMA journey that was begun over 59 years ago. As our new CEO, Kraig’s association leadership skills will be critical to the Board of Directors as it charts the association’s strategic path forward and seeks to further elevate the association’s relevance to the profession it serves.”
The selection of Kraig concludes a national search supported by Staffing Advisors, a Washington, DC-based executive search firm. Kraig shares the NCMA dedication to professional growth and the educational advancement of acquisition and contracting professionals worldwide. Please join us in congratulating Kraig as we welcome him to the organization.
Founded in 1959, the National Contract Management Association (NCMA) is the world's leading professional resource for those in the field of contract management. The organization, which has over 18,000 members, is dedicated to the professional growth and educational advancement of procurement and acquisition personnel worldwide. NCMA strives to serve and inform the profession it represents and to offer opportunities for the open exchange of ideas in neutral forums. For more information on the association, please visit www.ncmahq.org.
Contact: Amanda Gillespie, Marketing & Communications Director firstname.lastname@example.org (571) 382-1127
- Read more...
- 0 comments
In the 1973 futuristic mystery thriller Soylent Green there’s an exchange between Detective Thorn (Charlton Heston) and Hatcher (Brock Peters):
Det. Thorn: Ocean's dying, plankton's dying . . . it's people. Soylent Green is made out of people. They're making our food out of people. Next thing they'll be breeding us like cattle for food. You've gotta tell them. You've gotta tell them!
Hatcher: I promise, Tiger. I promise. I'll tell the Exchange.
Det. Thorn: You tell everybody. Listen to me, Hatcher. You've gotta tell them! Soylent Green is people! We've gotta stop them somehow!
Acquisition Reform is like Soylent Green, it’s people. I don’t mean the Congresscritters, like Representative Thornberry and Senator McCain, and their Committees. I don’t mean the Administrator of the Office of Federal Procurement Policy, whoever he or she may turn out to be. I don’t mean the acquisition and procurement policy wonks in the Pentagon and elsewhere.
This past week (i.e., 14 – 20 May 2017) was a big week for the professional acquisition reformers:
The Advisory Panel on Streamlining and Codifying Acquisition Regulations issued the “Section 809 Panel Interim Report” (May 2017). Read the 60 page report, and formulate your own opinion if it will fix the problems in Government acquisition. Frankly, I think it will take more than getting rid of the $1 coin requirement, but I could be wrong.
Representative William McClellan "Mac" Thornberry introduced H.R. 2511 “To amend Title 10, United States Code, to streamline the acquisition system, invest early in acquisition programs, improve the acquisition workforce, and improve transparency in the acquisition system.” The short title on that would be ‘‘Defense Acquisition Streamlining and Transparency Act’’. (sic) Read the 80 page resolution, and formulate your own opinion if it will fix the problems in Government acquisition. [If we have Representative Thornberry, can Senator McCain be far behind? (Or, is that FAR behind?)]
A (moderately) reliable source has told me that the Department of Defense will be leaving Better Buying Power behind, now that Mssrs. Carter and Kendall are gone. But, wait, acquisition reform has not been abandoned. Apparently, it will go on, but now as “Continued Acquisition Reform.” Presumably that will be abbreviated as “CAR.” Continued Acquisition Reform should not be confused with Continuous Acquisition Reform nor Continued Acquisition Reform, nor Continuous Process Improvement, for that matter, those would all be bygone days.
The professional acquisition reformers have time and again passed legislation and issued regulations to “fix” the acquisition process. This fiscal year (2017) Title VIII (i.e., Acquisition Policy, Acquisition Management, and Related Matters) of the National Defense Authorization Act (NDAA) had 88 sections. The year before, 77 items. And, yet, Representative Thornberry and Senator McCain believe there is a need for a lot more acquisition reform legislation this year. Title VIII has included over 500 sections over the last ten years, but we still need more. What we have at issue here is what is referred to as the Law of the Instrument. Although he was not the first to recognize the Law, Abraham Maslow is probably the one best remembered for articulating it, "I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail." For those of us on the receiving end of the Congressional output that would be, “I suppose it is tempting, if the only tool you have is a legislation, to treat everything as if it were a bill." I suspect, although I cannot be positive, that most, if not all, of the folks doing the legislating have never had to use the Federal Acquisition Regulation (FAR) to buy anything. If they had, they would not be nearly so cavalier in tossing around statements about how bad the acquisition process is, and how more legislation is the answer.
Will such legislation solve the acquisition problem? According to the Honorable Frank Kendall the answer is a resounding “NO.”Quote
Frank Kendall, then undersecretary of defense for acquisition, technology and logistics (USD(AT&L)), condemned, or “slammed,” or “blasted,” such legislation.
Frank Kendall, who has served as the Pentagon's top weapons buyer since October 2011, blasted Congress's acquisition reform efforts, which he said almost inevitably create more bureaucracy and regulation.
Kendall called legislative action “an imperfect tool to improve acquisition results.”
“It is not a good instrument to achieve the results that I think the Hill is after, but they keep trying,” he said. “To be honest, I believe that as often as not, what they do does not help. In some cases, it has the opposite effect.”
Bloomberg Federal Contracts Report, “Outgoing DOD Weapons Buyer Slams Congress’ Acquisition
But, in all fairness, it’s not just them. Since we last had a reissuance of the FAR in March 2005, the FAR Council has brought us 95 Federal Acquisition Circulars (FACs) to update and expand the FAR. Since we last has a reissuance of the Defense Federal Acquisition Regulation Supplement (DFARS) in January 2008, the Defense Acquisition Regulations Council has brought us 211 Defense FAR Supplement Publication Notices (DPNs). With all of that, there are still dozens of open FAR and DFARS cases yet to be heaped on our plate. Although legislation may have been a major root cause of much that change activity, we can probably offer some of our “thanks” to the President, OMB, OFPP, GAO, Boards of Contract Appeals and Courts. Admittedly, now and again, a good idea actually gets slipped into the regulations. [Note: The number of FACs and DPNs issued in 2017 was artificially suppressed as a result of Executive Order 13771 – Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs. The two councils (i.e., FAR Council, Defense Acquisition Regulations Council (DAR Council) and the Civilian Agency Acquisition Council (CAA Council)) withheld publication of a large number of cases while policies and procedures were “sorted out.”]
[Note: Refer to Augustine’s Laws, Law Number XLIX: Regulations grow at the same rate as weeds.]
And, if that were not enough, we have institutional acquisition reform (e.g., policy letters, memoranda, directives, instructions, guidebooks, handbooks, manuals). Everyone seems to want to get into the act in one way or another. It is interesting to note, however, that the “perpetrators” of this institutional acquisition reform do not see it in the same light as acquisition reform legislation.
But, I recognize the lesson that King Canute was trying to teach when, in the apocryphal anecdote, he had his throne taken to the sea and ordered the tides not to come in. They did anyway. Legislators will legislate, it’s what they do. Regulators will regulate, it’s what they do. Policy makers will policymake, it’s what they do. None of them will willingly give up their rice bowls.
Let’s get back to Soylent Green.Quote
“Acquisition improvement is going to have to come from within. It is not going to be engineered by Hill staffers writing laws for us,” Kendall said. “It's going to be done by people in the trenches every day, dealing with industry, trying to get incentives right, trying to get the performance right, trying to set up business deals and enforce them, set reasonable requirements in our contracts.”
Bloomberg Federal Contracts Report, “Outgoing DOD Weapons Buyer Slams Congress’ Acquisition Fixes,” Andrew Clevenger, January 17, 2017
Better Buying Power (BBP)? The Honorable Mssrs. Carter and Kendall were responsible for BBBP, in all its iterations. Did that rise up from the trenches? Or, was it handed (or pushed) down from above? Isn’t this a bit like the pot calling the kettle black? If you will permit the adding of a single letter to a line of Hamlet by William Shakespeare, "The laddy doth protest too much, methinks."
[Note: Refer to Augustine’s Laws, Law Number L: The average regulation has a life span one-fifth as long as a chimpanzee's and one-tenth as long as a human's, but four times as long as the official's who created it.]
Well, whichever way you look at it (i.e., upside, downside, sidewise) it is all more work for the acquisition professionals that must do the daily work of buying supplies and services for the Government. If you want to have an idea of how all of this acquisition reform weighs us down, then take a look at William Blake’s illustration “Christian Reading in His Book” for John Bunyan’s The Pilgrim's Progress. It will depend on how many pixels the image you find has, but it looks to me that he is reading the FAR.
Who are the Soylent Green? Not the policymakers, but the people in the trenches, doing the hard work of acquisition on a daily basis, day in and day out, week in and week out, month in and month out, year in and year out. The contract specialist, contract negotiator, contract administrator, cost or price analyst, purchasing agent or procurement analyst just trying to get the job done. These are, for the most, part the unsung heroes and heroines of acquisition reform. These are the ones who, through innovation and personal initiative reform that acquisition process, one acquisition at a time. And, if we are lucky, or clever, are able to pass successes along to others.
As acquisition professionals, we must pass on our successes, and failures, to others, so that they may join in the fruits of success, and avoid the pitfalls of failure. You cannot count on “Lessons Learned,” alone. How often do lessons learned go unread and unlearned? You cannot count on “Best Practices,” alone. How often do best practices, go unread and unpracticed? Share with others. Share quickly. Share often. Share wherever you can.
A final thought.Quote
So what is to be done? By and large the answer to that question is well understood—in fact, many friends of mine such as former Deputy Secretary of Defense David Packard; the head of the Skunk Works Kelly Johnson; Air Force General Bennie Schriever; Admiral Wayne Meyer and Army General Bob Baer, among others, were providing the answer decades ago. What is required is simply Management 101. That is, decide what is needed; create a plan to provide it, including assigning authority and responsibility; supply commensurate resources in the form of people, money, technology, time and infrastructure; provide qualified leadership; execute the plan; and monitor results and strenuously enforce accountability. Ironically, little of this requires legislation—but it does require massive amounts of will . . . from all levels of government. Unfortunately, many of the problems are cultural—and it is difficult to legislate culture. But there is much that could be done.
Views from the Honorable Norman R. Augustine
The Acquisition Conundrum
DEFENSE ACQUISITION REFORM: WHERE DO WE GO FROM HERE? A Compendium of Views by Leading Experts, STAFF REPORT PERMANENT SUBCOMMITTEE ON INVESTIGATIONS UNITED STATES SENATE (October 2, 2014)
The absolute final thought. I’m sorry, I can’t help myself. I don’t care about King Canute: Don’t legislate. Don’t regulate. Just leave us alone to do our work as best we can.
Recent EntriesLatest Entry
The long-standing principle that the federal government had the same implied duty of good faith and fair dealing as any commercial buyer was put in jeopardy by a 2010 decision of the U.S. Court of Appeals for the Federal Circuit, Precision Pine & Timber, Inc. v. U.S., 596 F.3d 817 (Fed. Cir. 2010). There a panel of the court adopted a narrow rule seemingly limiting application of the principle to situations where a government action was “specifically targeted” at the contractor or had the effect of taking away one of the benefits that had been promised to the contractor. Although the decision concerned a timber sales contract not a procurement contract, when I wrote it up in the May 2010 Nash & Cibinic Report (24 N&CR ¶ 22), I expressed the fear that the reasoning would be subsequently applied to procurement contracts.
My fear was realized in a construction contract case, Metcalf Construction Co. v. U. S., 102 Fed. Cl. 334 (2011). In that decision, the judge described eggregious conduct on the part of the government officials that would have been held to be a breach of the implied duty of good faith and fair dealing under many earlier cases. However, the judge held that under the Precision Pine standard, the contractor had not proved that the actions were specifically targeted at the contractor. In the February 2012 Nash & Cibinic Report (26 N&CR ¶ 9), I criticized this decision but stated that I believed that even if the decision was affirmed on appeal, most contracting officers would not take this as a signal that the proper way to administer contracts was to abuse the contractor.
Fortunately, a panel of the Federal Circuit has reversed the decision, Metcalf Construction Co. v. U. S., 2014 WL 519596, 2014 U.S. App. LEXIS 2515 (Fed. Cir. Feb. 11, 2014). The court held that the lower court had read Precision Pine too narrowly and that “specific targeting” was only one example of the type of conduct that could constitute a breach of the implied duty of good faith and fair dealing. Importantly, the court also rejected the government’s argument that this “implied duty” only could be found when it was footed in some express provision of the contract. The court concluded that the correct rule was only that the express provisions of a contract had to be examined to ensure that they had not dealt with the conduct of the government; for if they had, they would override the implied duty.
This leaves us in a tenuous position with regard to the views of the Federal Circuit. We have one panel in Precision Pine stating a narrow rule, another panel in Metcalf Construction stating the traditional rule, and a third panel in Bell/Heery A Joint Venture v. U.S., 739 F.3d 1324 (Fed. Cir. 2014), ruling in favor of the government because the contractor had not alleged facts showing that the government had “engaged in conduct that reappropriated benefits promised under the contract” (which is part of the Precision Pine reasoning). Thus, it is difficult to state where the judges of the Federal Circuit stand. Hopefully, the court will agree to take either Metcalf Construction or Bell/Heery to the full court for an en banc review of the issue.
I’ve never been sure why the Department of Justice has so vigorously argued that the government should not be held to the same standards of conduct as a commercial buyer. Of course, persuading the courts and boards that a narrower standard should be applied to the government is a way to win litigated cases. But, in my view, encouraging abusive or non-cooperative conduct hurts the government as much as it hurts its contractors. I have taught for many years that in the long run the government benefits from actions that show industry that it is a fair contracting partner. A line of published judicial decisions that demonstrates that the government is not such a partner is one more of the many messages that tell companies they should sell to the government only when they can find no other customer. Surely, this is not the message that government agencies in need of products and services on the commercial marketplace want to convey to companies that can provide those products and services.
Many years ago when I came to Washington to work in the field of government contracting, I concluded that there was one major advantage to being on the government side of the negotiating table. That advantage was that I was under no pressure to extract money from the contractor by unfair bargaining or unfair contract administration. To me fairness was an integral part of the job of a government employee. I still believe it and teach it. Thus, no matter what the outcome of the good faith and fair dealing litigation, I will continue to urge government employees that fair treatment of contractors is the only way to go.
Ralph C. Nash
When I get older, losing my hair
Many years from now . . . .
When I'm Sixty-Four
John Lennon, Paul McCartney
Shortly after we celebrate our country's independence on July 4, 2013, Wifcon.com will end its 15th year on the internet. With much help from the Wifcon.com community, I've raised a growing teenager. When I started, I was 49 and my hair was so thick that I often shouted ouch or some obscenity when I combed it. Wifcon.com has existed in 3 decades and parts of 2 centuries. During that period, I've updated this site for every work day--except for the week or so when I called it quits. I remember the feeling of relief. I thought it was over. However, many of you convinced me to bring it back. Yes, just when I thought I was out, many of you pulled me back in.
As I mentioned in an earlier post, someone once told me that Wifcon.com was my legacy. I once had great hopes for a legacy. Perhaps, a great saxophone player belting out a solo in front of thousands of fans and seeing them enjoying themselves. Instead, here I sit in my solitude looking for news, decisions, etc., to post to the home page. For many years, my dog Ambrose kept me company. Now, my dogs Blue Jay and Lily stare at me and look for attention. With my sights now set realistically, I accept that Wifcon.com is my legacy. It's the best I could do.
Every now and then, I receive an e-mail from someone thanking me for Wifcon.com. They tell me how it helped their careers. These e-mails keep me and Wifcon.com going.
Send me a postcard, drop me a line,
Stating point of view
Indicate precisely what you mean to say
Yours sincerely, wasting away
Give me your answer, fill in a form
When I'm Sixty-Four
John Lennon, Paul McCartney
The thoughts in these e-mails won't let me quit. I still search each night for something to add to the site in hopes that it will increase your knowledge. If I find something new, I still get excited. Often, it feels like a self-imposed weight around my neck. What started as a release for my imagination has evolved into a continuing and daily addition to the contracting community. In the evenings, it is as if I'm Maillardet's automaton. I head over to my office, sit before the computer, and update. Then I send the updated pages to Virginia where it is accessed from around the world. Maybe I'm addicted to Wifcon.com; maybe I was born with the Wifcon.com gene.
If you haven't added the numbers, I'm 64 now. Wifcon.com and I are showing our age. I can comb the top of my head with my fingers. The ouches and other obscenities caused by my once thick hair are gone. A recent upgrade to the discussion forum requires that I turn the "compatibility mode" off on my browser. In that mode, I realized that Wifcon.com is ugly. I have current software for the needed future redo of this site.
I am Wifcon.com; Wifcon.com is me. It is my legacy and my albatross. As always, thank you for your support.
You'll be older too,
And if you say the word,
I could stay with you.
When I'm Sixty-Four
John Lennon, Paul McCartney