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  • Vern Edwards

    Core Competencies? Outsourcing?

    By Vern Edwards

    An article in today's (Sept. 27, 2016) Wall Street Journal, "Amazon's Newest Ambition: Competing Directly with UPS and FedEx," the paper reports that Amazon is creating its own delivery system in response to rising shipping costs. An interesting comment: This seems to be a departure from the business model that developed in the 1980s and 1990s, in which a business identifies and focuses on its core competencies and outsources everything else. https://www.caycon.com/blog/2012/10/focus-on-core-competencies-and-outsource-the-rest/ There has even been talk about outsourcing core competencies. http://www.supplychain-forum.com/documents/articles/Premus & Sanders.pdf Goodness knows, the military has been accused of doing core competencies during the wars in Afghanistan and Iraq. https://www.brookings.edu/articles/outsourcing-war/ The government has pursued the outsourcing model (in its governmental way) for three decades now, and not without problems, as reflected in the misguided foray into "performance-based" contracting. Outsourcing has been administratively costly and time-consuming and has produced somewhat dubious results. Does the article about Amazon and its comment about the willingness of powerful tech companies to defy traditional business constraints suggest that we might be witnessing the return of an old business model within some industries? We've had the revolution. Are we seeing the beginnings of reaction? Has the cycle come full circle? Or are we just seeing a bold move by a bold entrepreneur, the kind of thing the government can't do. Say, isn't the OFPP Administrator going to Amazon? Maybe some of you should check to see if she's accepting resumes.
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  1. I don’t know about your part of the country, but here in Lawrence, the temperatures have plunged and it has finally felt like winter for the first time.  When temps get cold, I prefer to stay inside with a hot beverage, but I have to hand it to all of the die hard Chiefs fans who scoffed at the single-digit temperatures and spent the evening watching their team defeat the Raiders at Arrowhead Stadium last night.

    As we continue our wintry approach to the holidays, it’s been a big week in government contracting. Here on SmallGovCon, we’ve been focusing on the government contracting provisions of the 2017 NDAA, and this week’s SmallGovCon Week In Review has an additional update on the bill’s progress.  But that’s not all: our weekly roundup of government contracting news also includes a change to the FAR to reflect SBA regulations regarding multiple-award contracts, previews of contracting under President-elect Trump, and much more.

    • The 2017 NDAA conference bill has been approved by House and Senate, and is now on President Obama’s desk.  Will he sign it? [ExecutiveGov]
    • Speaking of the 2017 NDAA, it includes provisions restoring the GAO’s ability to hear protests of civilian task and delivery orders in excess of $10 million. [FCW]
    • Two men who executed “the largest disadvantaged business enterprise fraud in the nation’s history” will not have their sentences adjusted after a court denied a request for leniency. [Central Penn Business Journal]
    • Washington Technology takes a look at the incoming Trump administration and what is next for contractors. [Washington Technology]
    • Federal contracts played a factor in United Technologies’ decision to keep a Carrier plant in Indianapolis open at the request of President-elect Trump. [The Washington Post]
    • A bill protecting whistleblowers who expose what they think is wrongdoing in government contracts has been passed by the U.S. House of Representatives and is expected to be signed by President Obama. [St. Louis Post-Dispatch]
    • What will be the new administration’s acquisition priorities? Speculation opaquely says increased outsourcing of government activity, but what does that mean? Federal Times tries to answer these and other questions. [Federal Times]
    • President-elect Trump has nominated Linda McMahon, of World Wrestling Entertainment fame, to head the SBA. [ExecutiveGov]
    • The FAR Council has proposed important changes to implement regulatory changes made by the SBA, which provide Government-wide policy for partial set-asides and reserves, and set-aside orders for small business concerns under multiple-award contracts. [Federal Register]
    • The GSA has inked a government-wide deal for Adobe’s “data-centric” security and electronic signature software which the GSA believes could save American taxpayers $350 million. [fedscoop]
    • A commentator opines that improving government contracting should begin with “dumping the DUNS.” [The Hill]

    View the full article

  2. GSA OIG Reviews Industrial Operations Analysts:  What's In Your IOA’s Report Card? | Centre Law & Consulting in Tysons, VA
     
    As a consultant assisting clients prepare for their Industrial Operations Analyst (IOA) visit, I am surprised by the anxiety that precedes these “I’m here to help you” visits. I receive comments from “I didn’t sleep all night” and “I forgot my Basis of Award (BOA) customer” to “Will the IOA cancel my contract as I forgot to pay my Industrial Funding Fee for the last quarter.” The anxiety has increased over the last two years as the IOAs are now reviewing your GSA Schedule annually if you have annual sales exceeding $150,000. While the majority of IOAs are trying to help you understand compliance with your schedule requirements, there are a few that want to add to your anxiety. I witnessed the IOA who started the visit with the comment that she was there to get money back for GSA and an IOA who threatened cancellation of the schedule (and no, IOAs cannot cancel your schedule contract).

    In GSA’s Office of Inspector General (OIG) Semiannual Report to Congress for the period of April 1, 2016 through September 30, 2016, the tables were turned and the IOAs were reviewed.

    IOA Assessment Report Purpose

    The OIG conducted an audit of the contractor assessments program to determine if:

    1. Contractor assessments were effective to determine contractors’ compliance with schedule contract terms and conditions
    2. IOAs were conducting their assessments in accordance with FAS guidance
    3. IOAs were communicating those results in a timely fashion and in the appropriate format
    4. IOAs were developing and completing training in accordance with program requirements

     

    IOA Assessment Report Findings

    As a result, the OIG concluded the following:

    1. Assessments add value as a method to monitor contractor compliance with terms and conditions of schedule contracts
    2. IOAs are generally conducting assessments in accordance with guidance
    3. OAs are effectively communicating those results in a timely fashion and in the required format

     

    IOA Assessment Areas of Improvement

    The OIG also concluded that although the assessments were generally effective, they identified areas that could be improved “to enhance the consistency, completeness, and value of the assessments and reports.” For example:

    1. FAS guidance does not provide specific requirements for sampling schedule sales transactions to ensure that contractors are properly reporting and remitting Industrial Funding Fees and resumes to verify that qualified labor for services are being provided for customer agencies.
    2. IOAs are not consistently reporting on labor qualifications. As a result, FAS does not have assurance that labor qualifications were assessed.
    3. FAS has not established a formalized, national training curriculum for experienced IOAs.

     
    Therefore, recommendations from the OIG to the FAS Commissioner include:

    1. Revising the IOA Training Manual to include details on a risk-based sampling methodology
    2. Revising the assessment report template to include a specific section for reviewing labor qualifications to ensure consistent assessments
    3. Establishing and implementing a formal national training curriculum for experienced IOAs

     

    What Can I Do?

    In summary, Contract Clause 552.215-71 (Examination of Records) allows the IOA to review contractors’ records to verify contractual compliance. Their role is to conduct contractor assessments as well as monitor sales reporting, sales adjustments, and Industrial Funding Fee remittance (previously conducted by your Administrative Contracting Officer).

    Remember that the results of the IOA visit are advisory to your Contracting Officer (CO). Their assessment will be included in your GSA file for review prior to your Option Renewal. If you receive a negative assessment or don’t agree with a finding, you should submit a letter of clarification to your CO.

    The best thing you can do to in advance of your IOA visit is to be prepared. Gather all documents requested by your IOA prior to the visit or virtual call. Review the terms and conditions of your schedule and know your Basis of Award and discounting. Ensure your GSA Schedule catalog is up to date and matches the last awarded modification. If you stay compliant with the requirements of your Schedule, then you will have a successful IOA review.

    Your IOA contact information can be found at https://vsc.gsa.gov/tools/aco_ioa.cfm and Centre’s GSA Consultants are available to assist you through the process as well.

    About the Author:

    Maureen Jamieson | Centre Law & Consulting Maureen Jamieson
    Executive Director of Contracts and Consulting

    Maureen Jamieson has more than twenty-five years of experience managing federal contracts. She is highly experienced in solving client pricing problems and implementing effective pricing strategies for placing products and services on GSA Schedule contracts.

     

    The post GSA OIG Reviews Industrial Operations Analysts: What’s in Your IOA’s Report Card? appeared first on Centre Law & Consulting.


    View the full article

  3. I always thought that the FAR Matrix was a good idea that was poorly executed. To begin with, it's notorious for containing errors. Second, most of the entries in the "Principle Type and/or Purpose of Contract" columns are "A", Required when applicable, which means you have to look up the prescription anyway. Lastly, the matrix isn't going to tell you if your agency deviates from the FAR prescription, which DoD does a lot. As such, I created a matrix that I think overcomes these problems.

    A few things about the matrix:

    • It contains every provision and clause in the FAR, DFARS, and in DoD Class Deviation memoranda.
    • It doesn't have any "Principle Type and/or Purpose of Contract" columns except for a Commercial Items column.
    • It contains the actual prescription of the provision or clause. For readability, I removed the number and title of the provision or clause in the block and just wrote "use this provision..." or "use this clause..." The identifying information for the provision or clause is already contained in the row.
    • For DoD, it contains additional instructions for the use of FAR clauses that is contained in the DFARS or in a class deviation. This information appears in bold. If you work for a civilian agency, just ignore what's in bold.
    • In the "IBR" column (Incorporation by Reference), there are no "N" entries for "no", with the exception of the provisions and clauses prescribed at FAR 52.107. This may cause some people to freak out, so I'll explain. FAR 52.102(c) states:
    Quote

    Agency approved provisions and clauses prescribed in agency acquisition regulations, and provisions and clauses not authorized by Subpart 52.3 to be incorporated by reference, need not be incorporated in full text, provided the contracting officer includes in the solicitation and contract a statement that—

    (1) Identifies all provisions and clauses that require completion by the offeror or prospective contractor;

    (2) Specifies that the provisions and clauses must be completed by the offeror or prospective contractor and must be submitted with the quotation or offer; and

    (3) Identifies to the offeror or prospective contractor at least one electronic address where the full text may be accessed.

    Thus, if the FAR Matrix contained a "Y" in the IBR column, my matrix will also contain a "Y". If the FAR Matrix contained an "N" in the IBR column, or the provision or clause came from the DFARS or a DoD class deviation, then my matrix will contain a "Y*". The key at the top of the matrix contains an explanation for the "Y*" entry. If you're wondering how to incorporate a provision or clause that contains fill-in material or something the offeror must complete, see FAR 52.102(a) and FAR 52.104(d).

    You can see the matrix on the DAU Acquisition Community Connection. I'm open to suggestions for making it better. Also, I would like to think that it doesn't contain any errors. However, if you spot one please let me know. As an incentive, I will add your agency's provisions and clauses (the ones in Title 48 of the CFR) to the matrix if you point out a mistake.

     

  4. An article in today's (Sept. 27, 2016) Wall Street Journal, "Amazon's Newest Ambition: Competing Directly with UPS and FedEx," the paper reports that Amazon is creating its own delivery system in response to rising shipping costs. An interesting comment:

    Quote

    To constrain rising shipping costs, the online giant is building its own delivery operation, setting up a clash with its shipping partners...

    Amazon’s goal, these people say, is to one day haul and deliver packages for itself as well as other retailers and consumers—potentially upending the traditional relationship between seller and sender...

    Inside the company, executives describe, in the words of one senior official, how Amazon “is building a full-service logistics and transportation network effectively from the ground up.”

    Amazon’s push into the shipping sector reflects a willingness among today’s powerful tech companies to defy the traditional constraints of business and leap into new ones.

    This seems to be a departure from the business model that developed in the 1980s and 1990s, in which a business identifies and focuses on its core competencies and outsources everything else. https://www.caycon.com/blog/2012/10/focus-on-core-competencies-and-outsource-the-rest/

    There has even been talk about outsourcing core competencies. http://www.supplychain-forum.com/documents/articles/Premus & Sanders.pdf

    Goodness knows, the military has been accused of doing core competencies during the wars in Afghanistan and Iraq. https://www.brookings.edu/articles/outsourcing-war/

    The government has pursued the outsourcing model (in its governmental way) for three decades now, and not without problems, as reflected in the misguided foray into "performance-based" contracting. Outsourcing has been administratively costly and time-consuming and has produced somewhat dubious results.

    Does the article about Amazon and its comment about the willingness of powerful tech companies to defy traditional business constraints suggest that we might be witnessing the return of an old business model within some industries?

    We've had the revolution. Are we seeing the beginnings of reaction? Has the cycle come full circle? Or are we just seeing a bold move by a bold entrepreneur, the kind of thing the government can't do.

    Say, isn't the OFPP Administrator going to Amazon? Maybe some of you should check to see if she's accepting resumes.

  5. A key challenge to improving acquisition is defining what good contracting really is—and the proper skill sets necessary for those working within it. There are many different views on this topic that show up in various legislation, course curricula, job descriptions, and a variety of professional certifications across public- and private-sector agencies, firms, and associations. These include large government contractors; Defense Acquisition University; Federal Acquisition Institute; colleges and universities with supply chain, contract management, and business programs; corporate training criteria; and all manner of nonprofit standards and certifications. Unlike many other professions, there is no universally agreed upon “Good Housekeeping Seal of Approval” that gives those working in or contemplating entry into contracting a universally adopted set of competencies for today’s acquisition manager. Instead, “good contracting” and its skill sets are defined (if at all) piecemeal, employer by employer, segmented by type and size of organization.

    However, there are models in use today that could be a starting point. For example, the Volcker Alliance recently published a list of fundamental skills and experience required for those responsible for public procurement, based on interviews with procurement officials and academic experts, leveraging their expertise to develop a competency model and evaluate the current public procurement workforce against those competencies. 

    Very close to this model, with perhaps more depth and historical iterations, is the Contract Management Body of Knowledge (CMBOK), maintained by the National Contract Management Association. The initial compilation began with a job analysis of functions performed in public- and private-sector contracting. Now in its fourth edition, the CMBOK is a comprehensive standard that includes definitions from within the field, practices and processes, and the procedural steps applicable to contract management generally and to the commercial and government sectors in particular.

    Other organizations related to the field offer certifications based on smaller standards or high-level competency models. How difficult would it be to align these models more closely, recognizing their similarities? Are the basic principles of contract/procurement/supply chain/acquisition so unique to each sector, devoid of any overlap or redundancy? Or is it simply the case that depending on where the function is performed, some competencies require a greater or lesser degree of knowledge, experience, complexity, emphasis, or prominence?

    As is often the case, most organizations consider themselves unique, different, one of a kind, etc. However, aren’t the skill sets required for effective acquisition uniform, regardless of sector or employer? Leveraging the overwhelming numbers working in this field (known as strategic sourcing when involving purchasing power) could create a large, influential “market” of existing and potential professionals. This would drive competency-based education and training at the university level and offer lucrative, flexible career opportunities to entice people into the field earlier and convince them to stay longer.

    At the federal level, this might limit the routine attempts to legislate competencies and skill sets only pertinent to the U.S. government, (leaving large and small organizations throughout the nation to figure it out for themselves, depending on a smorgasbord of competency models to choose or ignore).

    An agreed to standard can emanate from existing competency models and professional communities, with the leadership of existing professionals in the field and existing professional organizations. It’s likely that some could view such collaboration as a threat, affecting existing business models and profit centers.  However, aligning the profession together will bring far greater improvement and efficiencies to private and public sector costs of doing business, so the sooner the process begins, the sooner the fruits of this labor will be realized.


    Michael P. Fischetti
    Executive Director
    National Contract Management Association

     

  6. Had you ever speculated on why April Fools’ Day seems to be such an important day for federal acquisition? After all, consider some of the regulatory and policy issuances on that day:

    • The Federal Acquisition Regulation (FAR) became effective on April Fools’ Day (1984).

    • The Federal Aviation Administration became exempt from the FAR on April Fools’ Day (1996).

    • The Office of Federal Procurement Policy (OFPP) memorandum on “Protests, Claims, and Alternative Dispute Resolution (ADR) as Factors in Past Performance and Source Selection Decisions” was issued on April Fools’ Day (2002).

    • Army Federal Acquisition Regulation Supplement (AFARS) Revision #25 was issued on April Fools’ Day (2010).

    • FAR Case 2010-015 on the Women-Owned Small Business (WOSB) Program was published in the Federal Register on April Fools’ Day (2011).

    No doubt a little research would provide a number of additional examples.

    Frankly, if it were me, April Fools’ Day would probably be the last day that I would pick for issuing important regulations or policy statements. That is one day that I would avoid like the plague. [Note: The last statement is not technically correct, I would go to greater extremes to avoid the plague than to publish an acquisition policy or procedure on April Fools’ Day.] Why not just wait a day, and avoid all the innuendo and snickering? After all, consider, April has 29 other days that are perfectly suitable for issuing regulations, policies, procedures, guidance and information.

    Comparison of Major Contract Types

    For example, on Monday, April 25, 2016, the Defense Acquisition University/Defense Systems Management College updated the Acquisition Community Connection with a revised version of its Comparison of Major Contract Types (i.e., Comparison of Major Contract Types - April 2016). [For those who would like a direct link: https://acc.dau.mil/CommunityBrowser.aspx?id=214513.] The new version better aligns with the terminology in the Contract Pricing Reference Guides, updates the charts on the reverse, and adds a chart on “Achieving a Reasonably Challenging but Achievable (RCA) Target Cost,” one of topics discussed extensively in the new Guidance on Using Incentive and Other Contract Types.

    Over the years, various versions of the “Comparison” have been fairly popular (i.e., 94,863 Page Views and 80,840 Attachments Downloaded. Although, given the number of personnel in the Defense Statutory Acquisition Workforce Contracting Career Field, 29,690 as of the 2nd quarter of 2015, those Lifetime Activity numbers may not be all that high, relatively speaking.

    The April Fools’ Day Announcements for 2016

    So, it can be done. However, this April Fools’ Day (2016) Defense Procurement and Acquisition Policy (DPAP) elected to issue two important pieces of procedures/guidance to the Defense Statutory Acquisition Workforce:

    • Guidance on Using Incentive and Other Contract Types (April 1, 1016).

    • Department of Defense Source Selection Procedures (SSP) (April 1, 1016).

    The Guidance

    Both documents have their warts. For instance, the Guidance incorrectly identifies one of the two statutory references for limitations on negotiation of price or fee. The good news is that thee one applicable to the DoD was identified correctly. Running the Spelling and Grammar checker one last time would not have been amiss.

    Warts aside, the results of this Better Buying Power (BBP) are somewhat disappointing. The Specific Action in the USD(AT&L) memorandum “Implementation Directive for Better Buying Power 2.0 - Achieving Greater Efficiency and Productivity in Defense Spending” was, “Director, DP will provide a draft policy guidance document on the use of incentives in contracting to the BSIG for review by July 1, 2013. The starting point for this document will be the DoD and NASA Guide, “Incentive Training (sic) Guide,” originally published in 1969.”

    For those of you unfamiliar with the Incentive Contracting Guide, it was the last of a number of such guides published in the 1960s. That particular version of the Guide was 252 pages. By comparison, the new Guidance is 41 pages. About 40 % of the Guidance is devoted to negotiation of fixed-price incentive (firm target) (FPIF) contracts in a sole-source environment a discussion of Reasonably Challenging but Achievable Target Cost (RCA), which go hand-in-hand. The coverage for Time and Materials/Labor Hour (T&M/LH) Contracts amounts to a paltry nine (9) lines. Ask yourself these two questions, “How many sole-source FPIF contracts does the Department award? If ‘T&M is the least preferable contract type,’ where should the emphasis have been placed?”

    For those of you who need guidance on structuring multiple incentive contracts the DOD and NASA Guide: Incentive Contracting Guide 1969 may be a better bet than the new Guidance. The good news is that it is still available on the Defense Acquisition University’s Acquisition Community Connection. [For those who would like a direct link: https://acc.dau.mil/CommunityBrowser.aspx?id=189615.]

    The Procedures

    The updated Source Selection Procedures are more than 505 longer than the previous version. The Procedures would have benefited from fact checking, copy editing and proof reading. Another warts issue.

    Warts aside, for those of you who will be involved in DoD source selections that meet the thresholds in the Procedures, you will want to give it a thorough read. Among other things, you will see some new descriptions of adjectival ratings and a new source selection procedure in APPENDIX B, “TRADEOFF SOURCE SELECTION PROCESS: SUBJECTIVE TRADEOFF AND VALUE ADJUSTED TOTAL EVALUATED PRICE (VATEP) TRADEOFF.” The latter came about as the result of USD(AT&L) memorandum “Implementation Directive for Better Buying Power 2.0 - Achieving Greater Efficiency and Productivity in Defense Spending.” Under the heading of Better define value in “best value” competitions there was a Specific Action, “Director, DP will review the ‘Process Manual’ developed by the joint Service team led by the Air Force and present a recommendation for adoption with any recommended changes to the BSIG by July 1, 2013.” You need to read the entire section to understand the direction. No doubt you will see a good deal of discussion about VATEP percolating up.

    Understand that although the Guidance and Procedures were issued on April Fools’ Day, they are no joke. Read them carefully, and implement them wisely.

  7. The Competition in Contracting Act of 1984 requires the Government Accountability Office (GA0) to report to the U. S. Congress annually when government agencies fail to fully implement its bid protest recommendations. GAO has posted these reports on its website since fiscal year (FY) 1995. Initially, these reports provided little information but by FY 2004, GAO published its "Bid Protest Statistics" covering FY 2004 through 2001. I have added every one of these reports to the fiscal year numbers at the top of the bid protest statistics.

    Beginning in its report for FY 2013, GAO began listing its "most prevalent reasons for sustaining protests" during the FY. This has continued for FY 2014 and FY 2015. Although the information provided does not include cases where an agency took corrective action before a formal sustained decision was reached, it does provided information on 227 sustained decisions. In that sense, it may provide some help whether you are trying to prevent a protest or whether you may protest a procurement.

    Below is my ranking of the most prevalent reasons for sustained protests listed by GAO for FY 2015 through FY 2013:

    1. failure to follow the evaluation criteria (listed 3rd in FY 2015 and 1st in FYs 2014 and 2013).
    2. unreasonable cost or price evaluation (listed 1st in FY 2015 and 4th in FY 2013) and
    3. inadequate documentation of the record (listed 4th in FY 2015 and 2nd in FY 2013)
    4. unequal treatment of offerors (listed 4th in FY 2014 and 3rd in FY 2013)
    5. unreasonable technical evaluation (listed 5th in FY 2015 and 3rd in FY 2014)

    This ranking also requires a caveat because the number of sustained protests varied significantly for FY 2015 (68), FY 2014 (72), and FY 2013 (87).

    Other reasons for sustained protests GAO listed include

    • unreasonable past performance evaluation (listed 2nd in FY 2015)
    • flawed selection decision (listed 2nd in FY 2014)

    In addition to listing the most prevalent reasons, GAO also gives 1 example decision for each of the most prevalent reasons it lists in a FY. For example, under unreasonable cost or price evaluation which GAO placed first in FY 2015, GAO lists Computer Sciences Corp.; HP Enterprise Servs., LLC; Harris IT Servs. Corp.; Booz Allen Hamilton, Inc., B-408694.7 et al., Nov. 3, 2014, 2014 CPD ¶ 331.

    My listing of each decision that GAO provided as a most prevalent reason with a link to the decision is here.

    To me, the most striking reason for GAO sustaining a protest is inadequate documentation. That can be prevented by a thorough review of what documents are provided in the evaluation and selection decision. If there is something missing, identify it and correct it. You can get more information on the documentation issue by looking at the Wifcon.com protest page FAR 15.305 (a)(3): Technical Evaluation - Documentation.

    Another striking reason for sustained protests is the first that I list--failure to follow the evaluation criteria. One time a friend of mine was sitting on an evaluation panel for a GAO procurement that I had no involvement in at all. He had something extra he wanted to include in his evaluation of proposals and he asked me about it. Although I was stunned at the question, I simply told him that he must follow the evaluation criteria in the solicitation and if he had any questions he should ask the contracting officer--not me.

    Before ending this entry, I will once again remind you that the information provided by GAO only includes sustained protests. These are decisions in which the agency digs in its heels and fights the protest to a final decision. As GAO explains, "agencies need not, and do not, report any of the myriad reasons they decide to take voluntary corrective action." What you see here may be the tip of the iceberg.

  8. 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

  9. 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