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Vern Edwards

"Fair Opportunity" Breach of Contract Claim

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In a case of first impression, Judge Marian Blank Horn of the U.S. Court of Federal Claims has ruled that the court has jurisdiction over a claim [see the definitions in FAR 2.101 and 52.233-1( c)] that the government breached a multiple-award IDIQ contract by failing to provide the contractor with a fair opportunity to be considered for task orders. The government argued that the court did not have jurisdiction because such a claim is nothing more than a bid protest in disguise and that task order awards are not subject to protest to the Court of Federal Claims on the basis asserted. The court ruled that a claim is not a protest and that it has jurisdiction under the Contract Disputes Act.

Both the Armed Services Board of Contract Appeals and the U.S. Court of Federal Claims have now asserted jurisdiction over claims of breach for failure to provide a fair opportunity.

See Digital Technologies, Inc. v. United States, Dec. 4, 2009: http://www.uscfc.uscourts.gov/sites/defaul...N.DTI120909.pdf.

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The cited case has references to ?master contract? and ?master ID/IQ contract?. These terms are not in the FAR. On another thread earlier this year, we had discussion on whether a task order awarded under a multi-award ID/IQ contract was a contract. I believe the forum concluded that such a task order was indeed a contract and also a prime contract for purposes of FAR Part 15.4. Does the term ?master contract? impact that conclusion?

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The cited case has references to ?master contract? and ?master ID/IQ contract?. These terms are not in the FAR. On another thread earlier this year, we had discussion on whether a task order awarded under a multi-award ID/IQ contract was a contract. I believe the forum concluded that such a task order was indeed a contract and also a prime contract for purposes of FAR Part 15.4. Does the term ?master contract? impact that conclusion?

No.

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This contract or these contracts are "acquisitions from Hell" for all parties concerned. I felt like I was in Purgatory, trying to read it. Confusing terminology; long, tortuous paths taken to award base contracts and task orders; frought with litigation every step of the way!

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Vern:

Now that the COFC and ASBCA have decided to hear claims under fair opportunity processes, do you believe that Congress should eliminate contractor protests on orders under task order contracts?

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No. Protests and claims are different actions and have different objectives. Protests protect the interests of the public by ensuring that competition is effective. Claims and the disputes procedure protect the post-competition interests of a contracting party by providing remedies for injurious acts and omissions by the other party.

I think that multiple award task order contracts (contracts for services) bear no real resemblance to the IDIQ contracts envisioned by and described in FAR 16.504. They are a sham in that regard--many of them being contracts in name only--but they do serve certain legitimate administrative objectives. I would like to see less formality in protests against task order awards. I would like to see Congress prohibit GAO from applying the rules in FAR Part 15 when deciding such protests, even when the agency uses such terms as "competitive range" and "discussions" in its solicitation, and that it honor FAR 16.505(B) when deciding protests. (GAO has for too long used its protest decisions to engage in rulemaking.) I would also like to see Congress require that GAO issue a protest decision within 40 days after it receives a protest of a task order award, instead of 90 days.

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Perhaps task orders are not considered contracts whose award is subject to protest because task orders are not awarded contracts and are not considered contracts, but are only orders placed under a two part master contract, in which one part lays down the general provisions of the contract, and the other part (represented by one or more task orders) gives the details of the specific job to be performed. FAR 16.505 deals with the placement of orders not the award of contracts.

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When I look at the definition of ?contract? in 2.101, and try to determine if a ?task order? falls within the definition, I do indeed see the word ? order? but only after the words ?in addition to bilateral instruments?, so therefore I assume ?order? as used in this definition refers exclusively to unilateral orders and doesn?t fall within this meaning. I believe that task orders under multi award ID/IQ master contracts are bilateral orders.

I suppose ?task order" could fall within ?all types of commitments that obligate the Government to an expenditure of appropriated funds?. But if so, why does the definition go on to further define contracts? Everything else worded in the definition, with the exception of what isn't a contract, would merely be a subset to this broad catch all.

Maybe, I am not understanding the syntax of this defintion.

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Perhaps task orders are not considered contracts whose award is subject to protest because task orders are not awarded contracts and are not considered contracts, but are only orders placed under a two part master contract, in which one part lays down the general provisions of the contract, and the other part (represented by one or more task orders) gives the details of the specific job to be performed. FAR 16.505 deals with the placement of orders not the award of contracts.
When I look at the definition of "contract" in 2.101, and try to determine if a "task order" falls within the definition, I do indeed see the word " order" but only after the words "in addition to bilateral instruments", so therefore I assume "order" as used in this definition refers exclusively to unilateral orders and doesn't fall within this meaning. I believe that task orders under multi award ID/IQ master contracts are bilateral orders.

I suppose "task order" could fall within "all types of commitments that obligate the Government to an expenditure of appropriated funds". But if so, why does the definition go on to further define contracts? Everything else worded in the definition, with the exception of what isn't a contract, would merely be a subset to this broad catch all.

Maybe, I am not understanding the syntax of this defintion.

Are you trying to figure out why task order awards are not subject to protest?

If so, it's not in the definition. It's because the Federal Acquisition Streamlining Act of 1994 exempted task orders. This is from FAR 16.505(a)(9) which covers the regulatory implementation of FASA:

i) No protest under Subpart 33.1 is authorized in connection with the issuance or proposed issuance of an order under a task-order contract or delivery-order contract, except for?

(A) A protest on the grounds that the order increases the scope, period, or maximum value of the contract; or

( B) A protest of an order valued in excess of $10 million. Protests of orders in excess of $10 million may only be filed with the Government Accountability Office, in accordance with the procedures at 33.104

FASA orginally allowed protests only where the order increases the scope, period or maximum value of the contract - Part (A) above. The National Defence Authorization Act of 2008 provided the other exception in Part ( B) above where the order value exceeds $10 million.

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Because a horse is never too dead to stop beating it, I found this position from the ABA

FAR 2.101 defines "contract" as "a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the government to an expenditure ofapproved funds ...." On the other hand, the terms "delivery order" and "task order" are defined as orders "placed against an established contract" and, thus, arguably do not constitute "contracts" under the FAR.

http://www.abanet.org/contract/federal/reg...rmation_011.pdf

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Did anyone else see the horse move - just a little?

From The Government Contractor:

As for the CICA stay?the stay of a contract award decision that automatically comes into play when that contract award decision is challenged before GAO?this stay may simply be unavailable in the context of task orders because such orders may not be ?contracts.? The FAR councils could probably resolve

the CICA stay issue by redefining the term ?contract? under FAR 2.101 to include task orders, but given the serious nature of the controversy and its likely impact on other aspects of the multiple-award IDIQ contracting system, that sort of redefinition appears unlikely because treating task orders as ?contracts?

could trigger other procedural obligations.

and

The first time period, from the date of contract award to 10 days after contract award, is irrelevant to protesting task orders, since such orders are not ?contracts? in themselves. See definitions of ?task order? and ?delivery order? under FAR 2.101.

http://www.pubklaw.com/papers/TGC51-20-174.pdf

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While some cite the following sentence from the FAR Part 2 definition to support the belief that a D.O. is a contract "It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing." , in context, this part of the definition is actually referring to bilateral instruments that commit funds as the definition continues with "In addition to bilateral instruments, contracts include...." So, while a delivery order does obligate or commit the Government to an expenditure of appropriated funds...it is not by nature a bilateral instrument.

It is not by nature a bilateral instrument because there no discretion on the part of the contractor in terms of performance. The obligation to perform arises upon receipt of the order. The legal consideration for the obligation to honor unilateral deliver orders arises from the basic contract (promise to give all requirements in the case of a requirements contract or the guaranteed minimum in the case of an IDQ contract).

Under an IDQ contract the contractor must, if ordered, furnish any additional quantities, not to exceed the stated maximum. [see FAR 16.504 (a)(1)]. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the "maximum." [see 52.216-22 (B)].

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While some cite the following sentence from the FAR Part 2 definition to support the belief that a D.O. is a contract "It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing." , in context, this part of the definition is actually referring to bilateral instruments... .

What are you saying? Are you saying that a delivery order is not a contract because it is not a bilateral instrument?

Prove that your statement about the second sentence in the definition is true. I agree that a delivery order is not a bilateral instrument, but prove that the second sentence in the definition of contract in FAR 2.101 refers only to bilateral instruments. Show us something, because I think that what you just wrote is dead wrong. Nothing in that sentence or in the remainder of that definition indicates that the sentence means anything other than what it says and that it refers only to bilateral instruments. Show us an official explanation or finding that backs you up. I'm willing to be convinced, but only if you show us something that bears you out.

You might want to look at the decision of the GAO in Sea-Land Service, Inc., B-278404, 98-1 CPD ? 47, in which the GAO stated:

An IDIQ contract for services contemplates the issuance of orders for the performance of tasks during the period of the contract. See 10 U.S.C. ? 2304d(1) (1994). Such orders are contracts within the overall IDIQ contract, see FAR ? 2.101 (definition of contract), and are subject to the terms and conditions of that contract. FAR ? 52.216-18(B).

You might also read the GAO's letter to the Secretaries of the Army and Air Force, Letters to the Air Force and Army concerning Valenzuela Engineering, Inc. (B-277979, December 9, 1997), B-277979, 98-1 CPD ? 51, footnote 1:

[T]ransactions under the Economy Act are ?acquisitions? where they result in the placement of a ?contract.? See FAR subpart 17.5 and the definition of ?contract? in FAR ? 2.101. We think it clear that the delivery order under the IDIQ contract for this stand-alone O&M services work at the Nellis Air Force Base hospital is the ?contract? implementing the acquisition.

Tell us why you think the GAO is wrong.

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In addition, the DAR Council and the ASBCA have both interpreted the definition of "contract" at FAR 2.101 to include task and delivery orders. The DAR Council stated in the publication of the final rule under DFARS Case 2010-D004 (72 FR 76296):

5. Applicability to task or delivery orders. One respondent recommended that the language at 222.7401(a), Policy, delete the reference to task or delivery orders and bilateral modifications adding new work.

Response: DoD does not agree. In accordance with FAR 2.101, a contract includes all types of commitments that obligate the Government to an expenditure of appropriated funds. Task orders and delivery orders obligate funding, and if they utilize funds appropriated or otherwise made available by the DoD Appropriations Act for Fiscal Year 2010 that are in excess of $1 million, the section 8116 restriction would apply.

From Ameresco Solutions, Inc. ASBCA Nos. 56824, 56867:

The above FAR definition [of "contract"] is sufficiently comprehensive to include "delivery" orders. The fact that "delivery" (as opposed to "purchase") "orders" are not expressly enumerated is not significant. The listing of examples was not all inclusive. The delivery order here was clearly a bilateral "mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them." Moreover, delivery orders also qualify as "orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance." Id. Although the definition of "delivery order" in FAR 2.101 refers to orders "against an established contract," that language does not exclude the existence of both an "established contract" and a delivery order that also qualifies as a contract. We have, in fact, described delivery orders as contracts in decisions such as Mach II, ASBCA No. 56425, 09-2 BCA ~ 34,224 and Winding Specialists Co., ASBCA No. 37765, 89-2 BCA ~ 21,737. The DESC delivery order also describes itself as "this DO contract award" (SOF ~ 15). This case involves two different government "buyers." The relevant "buyer" for purposes of this dispute was not DOE but DESC, the only agency obligated to pay for the supplies/services furnished by Ameresco. Basic, essential operative contractual terms and details in dispute here were not in place prior to issuance of the delivery order. There was no "commitment" to purchase definite supplies/services, obligation to buy or sell such services/supplies, or agreement to expend appropriated DoD funds in a specific amount prior to execution of the DO. The DO's incorporation of some provisions in the DOE contract by reference, does not convert the DO into a DOE acquisition.

Our conclusion that the delivery order constitutes a discrete contract under the above FAR definition is consistent with traditional case law analyses of what constitutes a contract. In determining whether an arrangement is a contract for purposes of jurisdictional statutes, the Federal Circuit has stated that "any agreement can be a contract within the meaning of the Tucker Act, provided that it n1eets the requirements for a contract with the Government, specifically: mutual intent to contract including an offer and acceptance, consideration, and a Government representative who had actual authority to bind the Government." California Federal Bank, FSB v. United States, 245 F.3d 1342, 1346 (Fed. Cir. 2001), cert. denied, 534 U.S. 1113 (2002); Massie v. United States, 166 F.3d 1184, 1188 (Fed. Cir. 1999).3 We have reached similar conclusions with respect to our jurisdiction under the CDA. Factek, LLC, ASBCA No. 55345,07-1 BCA ~ 33,568. Both appellant and the government characterize agreements that meet the requirements listed above as "common law" contracts. The government goes on to propose that even if delivery orders could be considered "common law" contracts, they would not have "contract status" because they are not set out in the above FAR definition of contracts. (Gov't reply at 2-3) Nothing in California Federal Bank, Massie, or Factek suggests that a contract for purposes ofjurisdictional statutes has to be explicitly listed in FAR 2.101. Implied-in-fact contracts are not listed and both the Court of Federal Claims and this Board have unquestioned authority to hear appeals relating to such contracts. 28 U.S.C. ? 1491(a)(I); 41 U.S.C. ? 7102(a). And, as noted, delivery orders are not excluded from the definition of "contract" in FAR 2.101. The listing of some contractual types and vehicles in that FAR section is not intended to be exhaustive and exclude others that satisfy the basic prerequisites.

But maybe eriand2 knows something that nobody else does. I can't wait to find out.

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