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For government-furnished property, the government not granting an equitable adjustment may be a breach of contract

The Federal Circuit’s published decision in BGT Holdings LLC v. United States (Dec. 23, 2020) holds that the government’s refusal to adequately consider a contractor’s request for equitable adjustment (REA) could be considered a breach of contract.

In this case, BGT Holdings LLC (BGT) was appealing a dismissal of its claims by the Court of Federal Claims (COFC) in a dispute with the Navy.

BGT was performing a fixed-price contract to build and deliver a gas turbine generator for the Navy.  As part of its performance, BGT was to receive and incorporate certain government-furnished equipment (GFE) into its deliverable. Well into performance, the Navy cancelled two of the GFE items, requiring BGT to purchase them on the open market. BGT filed an REA to recoup the costs to purchase the cancelled GFE, consistent with FAR § 52.245-1(d)(2)(i), Government Property and FAR § 52.243-1, Changes – Fixed-Price. The Navy rejected the REA.

On appeal, the Federal Circuit considered BGT’s five grounds for relief in its complaint:

  1. The Navy’s withdrawal of the GFE was a constructive change, entitling BGT to an equitable adjustment;
  2. The reduction of GFE was an official change to the contract for which BGT was entitled to an equitable adjustment;
  3. The Navy breached its contractual duty to deliver the GFE, and therefore BGT was entitled to damages;
  4. The Navy breached its contractual duty to provide an equitable adjustment after failing to deliver the GFE and obligating BGT to provide it; and
  5. The Navy breached its implied duty of good faith and fair dealing by failing to deliver the GFE.

Keep reading this article at: https://www.mondaq.com/unitedstates/government-contracts-procurement-ppp/1040080/for-government-furnished-property-the-government-not-granting-an-equitable-adjustment-may-be-a-breach-of-contract

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GAO: DoD has increased use of fixed-price-incentive contracts but should assess contributions to outcomes

Department of Defense guidance encourages the use of fixed-price-incentive (FPI) contracts to acquire major weapon systems, where appropriate.

These contracts can provide contractors with incentives to keep costs in check and stay on schedule.

The Government Accountability Office (GAO) found that the DoD’s use of these contracts has increased since 2010; they accounted for about half of all DoD obligations for its major weapon systems in 2019. But the DoD has not assessed whether using these contracts has actually kept costs and schedules in line.

GAO recommended that the DoD assess its use of these contracts.

Over the 10-year period from fiscal years 2010 through 2019, obligations on FPI contracts for major defense acquisition programs (MDAPs) grew to account for almost half of the $65 billion in obligations for fiscal year 2019.

Keep reading this article at: https://www.hstoday.us/federal-pages/government-reports-and-summaries/dod-has-increased-their-use-but-should-assess-contributions-to-outcomes/

See GAO’s full report on this topic at: https://www.gao.gov/products/GAO-21-181

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GSA proposes to standardize policies on reverse auctions

The General Services Administration (GSA) has proposed revisions to the Federal Acquisition Regulation on use of reverse auctions by federal agencies, saying that while they have been in common practice for more than 20 years, their use has been inconsistent.

In reverse auctions, multiple vendors compete with one another to win a contract by lowering the offered price.

They generally are used for acquiring commercial products and most often result in the award of a fixed price contract valued less than $150,000 to a small business, a Federal Register notice says.

The notice says GAO reports in 2013 and 2018 found that:

“Confusion exists concerning a lack of documentation about reverse auction service provider fees and their application to federal contracts;

“There is a lack of sufficient data available for agencies to verify actual cost savings resulting from a reverse auction; and

“The potential benefits of reverse auctions are not being maximized, as many reverse auctions are resulting in the receipt of only one offer or a lack of interactive competition amongst offerors.”

Keep reading this article at: https://www.fedweek.com/federal-managers-daily-report/gsa-proposes-to-standardize-policies-on-reverse-auctions/

 

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CAS Board clarifies commercial item exemption, but raises potential audit issue

After publishing a proposed rule more than five and a half years ago, the Cost Accounting Standards (CAS) Board on July 17, 2018 issued a final rule revising the CAS exemption for contracts or subcontracts for the acquisition of commercial items.

The final rule clarifies that the current CAS exemption for commercial items extends to all contract types listed in Federal Acquisition Regulation (FAR) 12.207. However, in doing so, it also creates a potential audit issue arising out of the conditions levied by FAR 12.207 on certain contract types.

FAR lists contract types the government may use to acquire commercial items, including firm-fixed-price (FFP) contracts in conjunction with award fee incentives or performance/delivery incentives, known as fixed-price incentive (FPI) contracts. The relevant CAS commercial item exemption states that certain types of contracts for the acquisition of commercial items are exempt from all CAS. CAS 9903.201-1(b)(6) lists various contract types, including FFP, fixed-priced with economic price adjustment, time-and-materials (T&M) and labor-hour (LH), but makes no mention of FPI contracts. This inconsistency is the result of various amendments over time by the FAR Council to FAR 12.207. The final rule amends the language in CAS 9903.201-1(b)(6) to exempt commercial item contracts and subcontracts authorized in FAR 12.207 from all CAS requirements. Look for this change to CAS 9903.201-1(b)(6) when the final rule becomes effective on August 16, 2018.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=726522

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GAO weighs in on the state of federal contracting

Contractors working with major federal agencies delivered $438 billion in products and services in fiscal 2015, a 24 percent decrease from fiscal 2011, according to a wide-ranging roundup from the Government Accountability Office.

The 66-page report titled “Contracting Data Analysis: Assessment of Government-wide Trends” said the drop-off occurred mostly at the Defense Department, which saw contracting go down by 31 percent in that timeframe.

Services contracts have now risen to 60 percent of total government obligations — 50 percent of Pentagon awards and 80 percent of those let by civilian agencies over the past five years, GAO said.

Such services as professional and management support to information technology needs were used most by the Air Force and Army, while the top civilian agencies procuring services (worth at least $10 billion) were the departments of Energy, Health and Human Services, NASA, Homeland Security and Veterans Affairs.

 

 

Keep reading this article at: http://www.govexec.com/contracting/2017/03/gao-weighs-state-federal-contracting/136082/

 

 

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