Notable CoFC Decision - FAR Part 31 incorporated via Chistian Doctrine

[here_2_help]

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In short, the court reads FAR § 31.205-47 into pre-modification Task Order 10 as a mandatory element—FAR Part 31’s cost principles and procedures are mandated by regulation because the Army was required to conduct cost analysis on Tolliver’s level-of-effort, developmental contract—and such principles are deeply ingrained in procurement policy as indicated by decades of their implementation in the regulatory framework of federal procurement.

To me, Judge Lettow's analysis is fascinating. Here's something that caught my eye:

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Tolliver cites to CAS § 9904.406-50 and § 9905.506-60(b) to argue that its attorneys’ fees may properly be allocated to the period they benefit—the pre-modification period of performance—instead of the period in which they were incurred—the post-modification period of performance. Pl.’s Mot. at 6-7. The government’s response is silent on the question of accounting standards. The court has not identified any accounting principles or standards relevant to Task Order 10 that would prohibit reimbursement of attorneys’ fees incurred in the qui tam litigation over Tolliver’s pre-modification performance.

I've never seen that argument made with respect to attorney's fees. The fees are not only direct costs (which has been a controversial position; contrast FMC Corp. at the Federal Circuit with Caldera v. Northrop and Boeing North American v. Roche), but they are also direct costs of a prior period! Wow! Now I have that argument in my back pocket for future use.

If you want to read the entire decision here it is.

[Don Mansfield]

This is surprising. I don't agree with the following:

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(“[F]ixed-price level of effort contracts . . . operate more like cost-reimbursement contracts with limitation of costs clauses.  The [g]overnment sets contract prices based on labor hours and when that price is reached, the contractor is relieved of any further liability.”

What does "price is reached" mean? Under a firm-fixed-price level-of-effort contract, the Government agrees to pay a fixed dollar amount for the contractor to provide a specified level of effort over a stated period of time. Unlike a cost-reimbursement contract, payment is not dependent on the the contractor's costs.

The Court proceeds from the flawed assumption that payment under a FFP LOE contract is the same as a cost-reimbursement contract. The Government should be able to win this if they appeal.

[here_2_help]

1 hour ago, Don Mansfield said:

The Court proceeds from the flawed assumption that payment under a FFP LOE contract is the same as a cost-reimbursement contract. The Government should be able to win this if they appeal.

This case was back before the Judge on remand from the Federal Circuit. It would be a shame if the Judge was reversed on appeal (again).

[Don Mansfield]

A few more questions about this case:

The Court said that the cost principles "applied" to the contract. What does that mean? FAR 31.000 states:

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This part contains cost principles and procedures for-

      (a) The pricing of contracts, subcontracts, and modifications to contracts and subcontracts whenever cost analysis is performed (see 15.404-1(c)); and

      (b) The determination, negotiation, or allowance of costs when required by a contract clause.

 

Are they saying it applied to the pricing of the contract? Or the determination, negotiation, or allowance of costs? Or both? If it's the latter, what contract clause required the use of the cost principles?

It seems like they are saying that because the cost principles applied to the pricing of the contract, they apply to determining allowance of costs under the contract. However, they don't mention what contract clause would require this. Perhaps they thought FAR 31.205-47 was a contract clause?

[here_2_help]

22 minutes ago, Don Mansfield said:

A few more questions about this case:

The Court said that the cost principles "applied" to the contract. What does that mean? FAR 31.000 states:

Don, see Subpart 31.1 "Applicability" especially 31.102.

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The applicable subparts of part  31 shall be used in the pricing of fixed-price contracts, subcontracts, and modifications to contracts and subcontracts whenever (a) cost analysis is performed, or (b)a fixed-price contract clause requires the determination or negotiation of costs. 

The decision appears to be stating that, since part 31 was required to be used to analyze the price, that somehow means it is now applicable to costs that are incurred and billed. I mean ... pretty much the whole decision just seems to be a stretch, doesn't it? Which is why I described it as "notable." 

It breaks new ground and goes places I've never seen before. Kind of like an ice road trucker at the end of winter.

[Don Mansfield]

20 minutes ago, here_2_help said:

The decision appears to be stating that, since part 31 was required to be used to analyze the price, that somehow means it is now applicable to costs that are incurred and billed. I mean ... pretty much the whole decision just seems to be a stretch, doesn't it? Which is why I described it as "notable." 

Yes it does. I can't see the Government not appealing. Poor judge.