COFC Case on Scope of the Contract

[Don Mansfield]

I thought I knew what "scope of the contract" meant. Apparently, I did not. See http://www.wifcon.com/cofc/12-293.pdf.

DLA awarded a contract for coats that contained a clause stating that they had the right to add or delete quantities. The original solicitation did not state (or estimate) additional quantities, nor did they receive or evaluate pricing for the potential additional quantities in making the award. After award, DLA decided to add the coats to the contract. They solicited prices from the two contractors that were awarded the original contracts, selected one, and modified their contract to include the additional quantities. The modification increased the value of the contract from ~$20 million to ~$37 million. COFC says no problem with CICA, modification is within scope.

Now, if the contract had contained a priced option for a definite (or estimated) quantity of additional coats, FAR 17.207(f) would have required evaluation of the option prices as part of the initial competition to be compliant with FAR part 6 (the part that implements CICA). Now, if I understand the COFC decision correctly, as long as I say I may order additional quantities in the solicitation without specifying (or estimating) a quantity or soliciting a price, I may do so without regard for FAR part 6. Go figure.

[ji20874]

I read this decision with great interest. This isn't a clean case, and sometimes courts have to make decisions that aren't pretty. Here, the plantiff (American Apparel) apparently argued that the post-award competition between it and Bluewater was flawed ONLY because the Government didn't considered non-price factors in its decision -- the plantiff apparently did not argue that the competition was improper from its inception because the work was out of scope of its and Bluewater's contract. Indeed, one supposes the plantiff would have been entirely happy had it won the limited competition and had the work added to its contract instead of to Bluewater's.

Thus, the plantiff willingly played in the competition but was disappointed in the outcome. The facts before the court would have been different if the plantiff had at the very beginning alleged that the work was not within the scope of its and Bluewater's contracts -- but the plantiff seemed to assume the limited competition was valid (provided the Government used some non-price factors) so it seems the plantiff at least tacitly agreed the work was within the scope of its and Bluewater's contracts. So whether the work was or was not within the scope of the contracts was not a question before the court. Since the parties didn't disagree on whether the work was within the scope of the contracts, the court didn't have to answer that question. Rather, it seems to me that the court simply showed that the work was within the scope of the two awarded contracts (that wasn't a point of disputation) and thereby concluded that this was a matter of contract administration -- as such, the competiiton requirements of CICA didn't apply.

So I would not look on this case as definitively establishing the definition of "scope of the contract" -- not at all.

[ji20874]

Another few facts to consider in looking at this case as being one which does not define the definition of "scope of the contract"--

(1) The argument before the court was not whether the added work was within the scope; rather, it was whether CICA's requirement for non-price factors applied.

(2) The decision was based on a preliminary motion for dismissal and other procedural motions -- it wasn't a decision after a trial and hearing of all the arguments (and even so, the scope of the contract wasn't part of the argument anyway). The court just took the parties agreement on scope as a starting point to show that CICA doesn't apply to within-scope modifications of existing contracts.

(3) The dismissal order was worded, "Plaintiff’s complaint is DISMISSED, regardless of whether the dismissal is for lack of subject matter jurisdiction or for failure to state a claim."

[Don Mansfield]

ji20874,

That's not how I read the case. The plaintiff needed to prove that CICA applied in order to make the case that nonprice factors should have been used in making the selection. The court explained how in-scope modifications were not subject to CICA. Thus, the court had to decide whether the addition to the contract was within scope or not. They decided it was in scope. Thus, CICA (and the requirement for nonprice evaluation factors) didn't apply.

American Apparel alleges that DLA violated the competition requirement in CICA and the Federal Acquisition Regulation in connection with the September 22, 2011 request for additional Items 0006 and 0007. Specifically, plaintiff contends that,

pursuant to 10 U.S.C. § 2305(a)(2)(A)(i), FAR 15.304©(2), and FAR 16.505((1)(v)(A)(1), the agency was required to include non-price factors in its award evaluation criteria in addition to an evaluation based on price. American Apparel claims that the September 22, 2011 request for additional items was a solicitation, and resulted in a “competitive negotiated procurement” between two current contractors. Therefore, according to American Apparel, DLA was obligated to comply with the

competition requirements mandated by CICA and the FAR and not only review price but also other factors, such as past performance. Plaintiff asserts that this court has jurisdiction to review its claims because it has alleged a “violation of statute or regulation in connection with a procurement or a proposed procurement.” See 28 U.S.C. § 1491((1).

[internal citations omitted].

[Guest Vern Edwards]

The plaintiff (protester) complained that the agency did not consider evaluation factors other than price, as required by CICA and FAR 15.304. It argued that the acquisition was a "procurement" and subject to CICA and FAR 15.304, and thus the agency was required to consider factors other than just price. See decision pages 11, 27, and 31.

The defendant (Government) argued that it did not have to consider factors other than price, because the acquisition was a within scope modification that was not subject to CICA and FAR 15.304. See decision pages 28 - 29.

The court addressed the question of whether or not the acquisition was subject to CICA and FAR 15.304. In so doing it pointed out that within scope modifications are not subject to CICA and FAR 15.304. See decision pages 23 - 24. It then addressed the question of whether the procurement was a within scope modification. In order to resolve that issue it reviewed the case law about what constitutes being "within scope." It devoted several pages, 23 - 27 and 30 - 38, to an analysis of "scope of the competition.

The court held that the acquisition was a within-scope mod that was not subject to CICA and FAR 15.304. See decision page 39. On that basis, the court denied plaintiff's motion and granted the defendant's motion to dismiss.

A poorly argued case by the plaintiff's lawyers and a poorly reasoned, organized, and written decision by the court, and much too long. Moreover, the decision is wrong. The government was trying to work its way around CICA by putting an "Addition/Deletion of Items" clause in the contract, which said that it might buy more stuff after award and add it to the contract. The clause amounted to little more than an unpriced option and was inconsistent with CICA. But because the government put that clause in the solicitation and contract, the court held that the mod was within the scope of the competition. See decision page 38. Oddly, the "Addition/Deletion" clause acknowledged that an addition of "new items" would be subject to synopsis.

The court's decision, if followed by the other judges, would let the government avoid CICA by putting a clause in the contract saying that it would do so. The "Addition/Deletion" clause is prescribed by Defense Logistics Agency Directive (DLAD) 16.506(90):

16.506 (90). Additions or deletions.

The clause at 52.216-9006 may be used in solicitations when a mechanism is needed for making additions or deletions to items covered by the contract, e.g. corporate contracts, long term contracts (LTCs) incorporating a manufacturer’s price list, comprehensive weapon system spare parts support or a specific range of items

(1) Competition requirements must be addressed before new items may be added to a contract.

(2) A scope of contract statement is necessary in both solicitation and contract to clearly establish the Government's intentions and rights under the contract. The contract scope statement should communicate a comprehensive objective for the acquisition, i.e. whether it is based on a specific stock class, weapon system, product line, manufacturer, or distributor. The scope statement must not include information that conflicts with Section B or other terms of the solicitation. Contract specialists have flexibility in defining contract scope but must be careful to avoid ambiguities.

I read subparagraph (1) to mean that the agency must comply with CICA and FAR Part 6 when adding items. The court's decision appears to ignore that requirement. The Additions/Deletions clause reads as follows:

ADDITION/ DELETION OF ITEMS (AUG 2005)

(a) The Government reserves the right to unilaterally delete items that were available from only one manufacturer at the time of award if an alternate source of supply becomes available or the Government’s requirements are modified to provide for full and open competition. The Government will provide a 30 day advance notice to the Contractor prior to deleting any item from the Contract.

( New items may be added to the contract through bilateral modification with negotiated prices. All new requirements are subject to synopsis prior to addition to the contract.

( c) Discontinued items:

(1) The Contractor agrees to provide the Government with immediate, written notification when an item is to be discontinued by the manufacturer, including a recommendation for any potential substitute or replacement items. If the Government elects to include a substitute or replacement item in the contract, the contract will be modified accordingly.

(2) If an item is discontinued without replacement, the notice should include a recommendation concerning the availability of items that are comparable in form, fit, and function. The Contractor shall not incur any costs related to alternate sources of supply without the express written approval of the Contracting Officer. The Government has the option to make a last time order, or series of orders, within 30 days after receiving written notification of the discontinued item after which the item will be deleted from the contract. The Contractor shall honor any last time order unless it is returned to the ordering office within 10 days after issuance, with written notice stating the full quantity is not available for shipment. The terms of such order(s) will be negotiated by the parties, including changes to the delivery schedule and maximum quantity available for shipment.

(End of Clause)

Read in conjunction with DLAD 16.506(90), the clause permits the government to add items to an existing contract if a new competition or sole source status results in award of the items to the contractor. The court's decision is inexplicable.