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Contract Cruncher

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  1. Thanks for taking time to look at it. I think you might be reading 1091 a little too narrowly. The authority to enter into PSCs is not explicitly limited to individuals. 1091(a) establishes the authority for PSCs: "The Secretary of Defense. . . and the Secretary of Homeland Security. . . may enter into personal services contracts to carry out health care responsibilities in such facilities, as determined to be necessary by the Secretary." There is a limitation on individuals, which you may be referring to, but that is only in 1091©, which describes procedures that are only applicable to PSCs with individual persons. 1091(d) states that the procedures described in 1091© are not applicable when a PSC is entered into "with entities other than individuals" (i.e., business entities). I agree though, it's all a little convoluted. I'm not aware of any tribunal decisions that have resolved these issues, but if anyone has any further guidance, I'd be delighted to investigate further!
  2. Thanks for adding this -- I probably should have included a similar disclaimer to my original post -- it's quite possible that the premise of my question is founded on a faulty legal conclusion or assumption. Any feedback received will not be regarded as legal advice, but I appreciate any suggestions or ideas!
  3. wvanpup, Sure, thank you for your interest. Try these links: https://www.jagcnet.army.mil/DOCLIBS/ARMYLAWYER.NSF/c82df279f9445da185256e5b005244ee/5230ba510359c87585256e5b0054d907/$FILE/Claims.pdf (the main article that puts doubt on whether the military will defend independent contractors working under a PSC) http://www.usuhs.mil/ogc/pdf/mhln12.pdf (pp. 10-11, briefly) http://www.dtic.mil/whs/directives/corres/pdf/600006p.pdf (see Section 3, "The term does not include any contract provider who is not a personal services contract employee.") http://www.apd.army.mil/pdffiles/r27_20.pdf *see the following sections 2–2b(4)( : "When the conduct of a health care provider performing services under a personal service contract is implicated in a claim, the CJA, MCJA, or claims attorney should consult with USARCS to determine if that health care provider can be considered an employee for purposes of coverage." 2-15(f)(1)©: "Health care providers hired under personal services contracts under the provisions of 10 U.S.C. § 1089 are not considered to be independent contractors but employees of the United States for tort claims purposes." http://www.apd.army.mil/pdffiles/p27_162.pdf This has a lengthy discussion of the issues beginning on p. 71 of the actual document (p. 87 of the adobe file) Thanks for your interest, and I'm sorry if this is more of a legal discussion at this point, and not much like the typical regulatory/procedural questions posed in the forums.
  4. My question concerns the applicability of the Federal Torts Claims Act to medical malpractice suits involving "personal services contract" health care workers. Let me provide some background. 10 USC 1089(a) states that the Federal Torts Claim Act provides the exclusive legal process for filing medical malpractice claims against health care workers employed by certain federal agencies. It also states that the FTCA remedies are equally applicable to similarly situated health care workers who are not civil service employees, but who are "serving under a personal services contract entered into under section 1091 of this title or a subcontract at any tier under such a contract that is authorized [under] section 1091." It's not clear to me what "serving under" means, exactly: Does it apply to HCWs working as independent contractors under a personal services contract awarded to them individually? Does it apply to HCWs working as direct employees of a federal contractor awarded a personal services contract?Does it apply to HCWs working as independent contractors for a federal contractor awarded a personal services contract?I'm most interested in the third question, but I included the first two to highlight potential differences that might affect your answers. It's important because 10 USC 1089( states that in such FTCA cases, the DOJ will defend the malpractice suit, which would enable HCWs to sign on as independent contractors without the need for medical malpractice liability insurance. I've come across some literature -- some of it over 10 years old -- suggesting that the DOJ has interpreted this very narrowly, and has scrutinized each HCW subjected to a malpractice suit to determine whether the HCW is an "employee" or not of the U.S. government. If the DOJ believes the HCW is an independent contractor and not an employee of the government, it may not defend the suit because it alleges 10 USC 1089 is inapplicable. Apparently, at one point or another, the DOJ has answered each of the three questions posed above in the negative, but maybe not in every case. I wonder what standard of law would govern the question of whether or not an employee-employer relationship exists -- under IRS laws governing such relationships for tax purposes; anti-discrimination laws, used for EEOC purposes; or state agency laws used for tort purposes? As noted in another discussion here, there seem to be different expectations and/or standards applied in determining whether an employee-employer relationship exists in personal services contracts. And what if a court/tribunal finds that the government and the federal contractor are joint or co-employers? I'll offer my own answer as a starting point to the discussion: As provided in 10 USC 1089, the FTCA applies to HCWs subject to a medical malpractice suit if they are found to be an "employee" of the agency they serve, regardless of whether the agency is the sole employer, or a joint employer. A HCW will be an "employee" of the agency if (i) they are any of the following: (a) a direct civil service employee, ( directly awarded a personal services contract by the agency, © directly employed by a federal contractor who was awarded a personal services contract, or (d) they are an independent contractor of the federal contractor awarded a personal services contract; and (ii) an analysis of the factual circumstances of the services provided shows that, under state agency law, the federal government agency is found to be an employer or a joint or co-employer of the HCW. I recognize this does not apply to all federal agencies, but only those identified in 10 USC 1089. Also note that personal services contracts for medical services often do not require medical malpractice liability, either by the federal contractor or its employees and independent contractors. Apologies for the length -- just hoping to address potential questions in advance and provide a frame of reference for the discussion. Best regards, CC
  5. Vern, thank you for the research. I'm sorry that I misrepresented that you "suggested" the answer was "No," when, indeed, you declared it was "No" (I didn't hear you "say" anything). Sorry for the semantic confusion.
  6. Vern seems to have this locked down. It seems like the very simple solution is for the FAR council to remove the entire sentence: "However, a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 until certified as required by the Act." It's a useless sentence, because the consequences of not certifying a claim of more than $100,000 are already described in 41 USC 7103(b(3) -- i.e., there's no need for a regulatory definition that attempts to reiterate these consequences in a way that only creates confusion and uncertainty. Moreover, this sentence is contrary to the plain language of 7103(b(3), which specifically contemplates the possibility that some claims of more than $100,000 may be un-certified. Where an agency rule conflicts with the plain meaning of the statute it is interpreting, the rule is generally invalid. If not invalid, the "However" sentence is either meaningless or must be interpreted as Vern suggested -- that when a claim of more than $100,000 is not certified, it is subject to the limitations described in 41 USC 7103(b(3). EDIT: Vern, You suggested the answer to the question should be "No" -- did you mean "Yes"? Don asked: "Is a written demand by the contractor seeking, as a matter of right, an adjustment of the contract price exceeding $100,000 (but not seeking payment) a "claim" if it is not certified? Yes or no?" Then you stated: "A claim can be for payment, for adjustment, or for payment and adjustment." It seems to me that the demand Don described is a claim, albeit an un-certified claim, so wouldn't the answer be "Yes"?
  7. Thank you for the insight. The question appears to require significant analysis "outside the box" to get a final answer. Based solely on what I've read here, it seems: Whether or not a particular request constitutes the type of "claim" requiring certification is determined by an analysis of the CDA, since the CDA is the statutory authority requiring certification of certain claims. If the CDA's definition of the type of "claim" that is subject is certification requirements is, itself, subject to more than one reasonable interpretation, a court must determine which interpretation shall prevail, using the "canons" of statutory construction. While agency rulemaking and regulations that attempt to make such interpretations are accorded significant weight under the "Chevron rule," they are not finally determinative. A court may choose an interpretation that departs from what is prescribed in regulations where the court finds that its interpretation is superior to the agency's, in light of the other canons of statutory constructions, which usually begin with the plain meaning of the words, but may also include a consideration of legislative intent, the use of similar language in other laws, equity among affected parties, administrative and judicial efficiency, etc. So my final answer is: whether an un-certified request for an adjustment valued at over $100,000 could be a "claim" under the CDA depends on how the courts would construe the word "claim" as it is used within the CDA, which requires a more thorough analysis than is allowed in this exercise.
  8. From a purely literal perspective, the answer is a simple, "yes". Edit: Snipped the comments that went outside the box!
  9. Yeah, this may be the interpretation the DOL uses. But I can also see it going the other way. The ACA's coverage/benefits aspect is frequently referred to as a "mandate." Though it may appear to be an "option," it's not really a free choice if there's a penalty for non-compliance. I mean, you can commit a crime if you want -- it's your option -- but there's a penalty if you do! I would think you are "required" to obey the law, even if you have the option of breaking the law and incurring a penalty. I think, to me at least, it seems like the ACA mandate for employer provided health care benefits seems like a requirement, which, if violated, imposes a penalty (albeit a penalty that is somewhat modest, enough that some employers would prefer the penalty over complying with the mandate).
  10. Do you know if the employer-provided health care coverage can then be calculated to be part of the "wage" in hawaii? So, if the minimum wage is $20/hr, can an employer pay $5/hr. toward health benefits and pay an actual cash wage of $15/hr to meet that minimum?
  11. That would seem contrary to how the DOL has issued WDs in connection with Hawaii's mandated employer health care law. This excerpt is from the June 11, 2012 memo regarding WD revisions for last year: Wage Determination for the State of Hawaii Under Section 2(a) (2) of the SCA, fringe benefit payments that are required by state law may not be used to satisfy the employers' fringe benefit obligations. In Hawaii, most employers are required by law to provide health insurance coverage for their employees. Therefore, employer contributions that are made to satisfy the employers' obligations under the Hawaii mandated prepaid Health Care Act may not be credited toward meeting the contractor's obligations under SCA. The SCA WDs have addressed this issue in the past by excluding the health insurance portion. Consistent with past practice, and in recognition of the fact that Hawaii law requires employers to provide health care coverage for most employees, the SCA WDs for Hawaii will continue to exclude the health insurance portion on the benefits for all employees on whose behalf the employer provides benefits pursuant to the Health Care Act. All employers, however, are not required to make, and in fact do not make, contributions for certain employees under Hawaii law. If this is the case, then the reduced fringe benefit level is not appropriate for these employees. Therefore, effective June 17, 2012, the SCA health and welfare fringe benefits level for Hawaii will be $1.50 per hour, or $60.00 per week, or $260.00 per month for all employees on whose behalf the contractor provides health care benefits pursuant to the Hawaii Health Care Act. For those employees not receiving mandated health care benefits, the new health and welfare amount will be $3.71 per hour.For what it's worth, SCA Section 2(a)(2), codified at 41 USC 351, states the following: Such fringe benefits shall include medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, unemployment benefits, life insurance, disability and sickness insurance, accident insurance, vacation and holiday pay, costs of apprenticeship or other similar programs and other bona fide fringe benefits not otherwise required by Federal, State, or local law to be provided by the contractor or subcontractor. However, you are probably right about employers who don't provide healthcare coverage -- as in Hawaii, employees who don't receive the mandated coverage would still be entitled to the $3.71. But what if an employer does provide health care coverage? It seems like that coverage amount would be excluded from the H&W/fringe calculation if that coverage is mandated by law. . .
  12. Has anyone discovered any guidance on how the DOL's Wage Determinations will be affected by the Affordable Care Act? It would seem that, since employer contributions toward group health care premiums would become mandated under ACA, those contributions would no longer be eligible to count toward the H&W component of fringe benefit minimums. If the DOL issues guidance -- and maybe, even if it doesn't, e.g., if this is simply a matter of law -- that, effective Jan. 1, 2014, employer contributions toward healthcare plans may not be considered part of the H&W component of WDs, it seems like contractors get slammed twice. On the one hand, the ACA will require many contractors to increase their costs for employer-sponsored healthcare benefits, and on the other hand, any benefits they provide will now be excluded from the H&W contribution calculation, such that employers now will have to pay more toward other fringe benefits. If this is the case, would the employer contributions to healthcare plans be considered as part of the base labor WDs? So if the WD base labor minimum is, say, $25, and the employer contributes $5 to a healthcare plan, could contractors pay out only $20? Also, if anyone has heard anything from any federal agencies about whether they will agree to modifications or other adjustments for federally mandated increases in benefit payouts to contract employees under the ACA (under, e.g., FFP contracts), your input would be greatly appreciated. Without some kind of assurance from the federal agencies, or a specific contract provision for increased costs caused by changes in the law, I think the 52.222-43 price adjustments will be a total mess, since the DOL WD data is always a year behind, if not more, considering WDs don't get incorporated until the next renewal period. I'm wondering how many contractors will feel the need to escalate wages in spite of the intent of -43 simply because revisions to DOL WDs may not be timely or sufficiently large enough to cover costs of ACA compliance. Thanks!
  13. Thank you for your thoughtful response. I think we agree on how -43 should be intepreted, and I have concluded, as you noted, that clarifying any reliance on minimum WDs and/or -43/SCA adjustments within the proposal will hopefully minimize ambiguity and the opportunity for misunderstanding. FWIW, the DAU advances an interpretation of -43 that is very much like the one you and I propose (See Section 7.3.1 of Vol. 3 of its Contract Pricing Reference Guide): If the contract is a multi-year contract or includes an option to extend the contract, remember that the Fair Labor Standards Act and Service Contract Act -- Price Adjustment (Multiple Year and Option Contracts) clause provides for price increases based on changes in the wage determination or minimum wage. Affected labor rates are based on the wage determination or minimum wage that is current on the contract anniversary or the beginning of each renewal option period.The offeror cannot project a labor rate increase and also benefit from an additional adjustment due to a change in a related wage determination or the minimum wage. By submitting an offer under a solicitation that includes the above clause, the offeror certifies that the offer does not include any allowance for any contingency covered by the clause. The offeror can project labor rate increases that are not the covered by the clause. For example, if the offeror's labor rate is $7.25 and the wage determination is $7.00, the labor rate would not be affected by an increase in the wage determination from $7.00 to $7.05. If the offeror projects an increase in the $7.25 labor rate to $7.30 after one year, that must be separately estimated. Still, remember that wage determinations are based on the prevailing wage in the locality, the collective bargaining agreement negotiated by the contractor under any predecessor contract (FAR 22.1008-3), or the minimum wage set forth in the Fair Labor Standards Act. Unfortunately, the Air Force and Army have more restrictive interpretations advanced in their guides. For example, Section 4.2 of the FLSA & SCA Air Force Price Adjustment Guide states: 4.2 Assumptions with Respect to Contract Pricing Both FLSA/SCA price adjustment clauses state, at paragraph ‘(’, "The Contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause." Thus, contract price should not have included amounts for known or projected increases in wage rates, fringe benefits, or allowable accompanying costs that may become effective after the base period of the contract. I couldn't find an updated FORSCOM handbook, but this older Wifcon thread references what is most likely an out of date interpretation of -43. But until I find a more recent version of the Army's policy with respect to -43 (the "FORSCOM Publications" link on their webpage isn't resolving for me), I'm operating under the assumption that they maintain the same rigid interpretation of -43 that's copied and pasted into that older Wifcon thread, i.e., that no wage escalations are allowed at all, even where DL rates above the minimum WDs is required! Thanks again for your help.
  14. This is correct. The only time you could run into problems is through the legal theory of estoppel, and only then under certain circumstances. Estoppel is a doctrine grounded in "good faith" and "fair dealing," which may find a party liable for intentionally misrepresenting information with the intent that the information be used or relied upon by another party to its detriment. Though you may feel confident your estimates are prepared entirely in good faith and based on reasonable judgment, the possibility that you could have overlooked a cost or misstated something accidentally could be perceived by someone else as an intentional misrepresentation with a fraudulent purpose. The "non-binding estimate" language may protect you even if there was such a misrepresentation, as it indicates to the government that this is not an actual bid. But if it were me, out of an abundance of caution, I would want to further qualify the estimate with additional disclaimers like "This estimate is not final, and should not be used or relied upon by the recipient in conducting its affairs." And I just want to be clear, Joel is correct -- your estimation is almost certainly not the basis for any contract. As I said, the only potential liability I foresee is some kind of strange circumstnace where, you estimate, say $500,000, and the government somehow uses that information in a reasonable price analysis or relies on the information in some other way, and then rejects bids or acts in some way that they pass on offers to do the job for, say $600,000. Then the government asks you to submit your final bid, and you are now at some significantly higher amount, like $1,500,000. If the government can still get someone to do it for $600,000, you're probably fine, you just lose the contract. But if they can no longer get that $600,000 contract, and it's because they relied on your estimate to their detriment, and they discover you intentionally lowballed your estimate by omitting costs, AND that you intentionally did that to defraud them or give yourself some advantage, AND now they have to pay someone else $800,000, then -- if all those things are true -- you could potentially be liable under the theory of estoppel for the $200,000 difference they are now having to pay, when, in the absence of your estimate, they would have selected the cheaper $600k offer. Like I said, a really unusual circumstance. And even then, you could point to your "non-binding" language to demonstrate you did not intend for the government to rely on your estimate for any reason. But I would just add the disclaimer to my estimate to help ensure the government wouldn't rely on the information in some detrimental way, and further insulate me from a potential lawsuit.
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