good faith | The Contracting Education Academy

July 6, 2020 By cs

GAO: Oversight of contractor compliance with subcontracting plans needs improvement

Half of the contracts recently examined by the Government Accountability Office (GAO) didn’t contain evidence of compliance with small business subcontracting requirements.

The subcontracting report submission system is web-based. *Photo credit: GAO file photo*

Federal agencies are supposed to notify Small Business Administration (SBA) representatives about proposed contracts that contain small business subcontracting plans for possible review. But for about half of the 26 contracts we examined, agencies couldn’t show whether that happened.

Agencies also didn’t ensure that contractors submitted subcontracting reports, or that the reports were accurate.

Certain federal contracts that go to large businesses must have small business subcontracting plans. Under these plans, contractors have to make a good-faith effort to offer subcontracting opportunities to small businesses.

GAO Report Details

GAO, in its report publicly released on June 29, 2020, found that selected agencies did not consistently follow all required procedures for oversight of small business subcontracting plans, both before and after contracts were awarded. GAO reviewed 26 contracts with a subcontracting plan at four agencies — Defense Logistics Agency (DLA), General Services Administration (GSA), National Aeronautics and Space Administration (NASA), and the Department of the Navy (Navy).

For about half of the 26 contracts, agencies could not demonstrate that procedures for Procurement Center Representative (PCR) reviews were followed. These SBA representatives may review small business subcontracting plans and provide recommendations for improving small business participation. When an agency is awarding a contract that includes a subcontracting plan, contracting officers are required to notify these representatives of the opportunity to review the proposed contract. Without taking steps to ensure these opportunities are provided, agencies may not receive and benefit from suggestions for increasing small business participation.

For 14 of the 26 contracts, contracting officers did not ensure contractors submitted required subcontracting reports. After a contract is awarded, contracting officers must review reports contractors submit that describe their progress towards meeting approved small business subcontracting goals. In some cases, contracting officers accepted reports with subcontracting goals different from those in the approved subcontracting plans, with no documentation explaining the difference. Without complete and accurate information about a contractor’s subcontracting goals, an agency cannot adequately assess a contractor’s performance in meeting its subcontracting plan responsibilities.

The SBA encourages agency compliance with small business subcontracting plan requirements by providing training to contracting officers and contractors, and by conducting reviews. For instance, SBA Commercial Market Representatives conduct compliance reviews to evaluate a large prime contractor’s compliance with subcontracting program procedures and goal achievement. However, SBA could not provide documentation or information on almost all compliance reviews conducted in fiscal years 2016–2018. SBA has developed new procedures for conducting compliance reviews, but as of mid-March 2020, had yet to fully implement them. SBA has conducted fiscal year 2019 compliance reviews that reflect a first phase of their new procedures. SBA has draft guidance on the new compliance review process, including some specific information regarding what Commercial Market Representatives are to record as part of the compliance review. SBA has begun to conduct compliance reviews in accordance with the guidance, but does not have clearly documented and maintained records for the first phase of these reviews. Without consistent, clear documentation and records that will be maintained going forward, SBA’s ability to track contractor compliance and agency oversight efforts will be limited.

Why GAO Did the Review

Certain federal contracts must have a small business subcontracting plan if subcontracting opportunities exist. But recent Department of Defense Inspector General reports raised concerns about agency oversight of subcontracting requirements. GAO was asked to review oversight of subcontracting plans. Among its objectives, GAO’s report discusses: 1) the extent to which selected agencies (DLA, GSA, NASA, and Navy) oversee small business subcontracting plans, and 2) how SBA encourages agency compliance with subcontracting plan requirements.

GAO reviewed data and documentation for a non-generalizable sample of 32 federal contracts (including 26 contracts with a subcontracting plan) at four agencies, selected to include contracts over $1.5 million at both civilian and military agencies awarded in fiscal years 2016–2018. GAO also reviewed the Federal Acquisition Regulation, SBA and selected agency documentation, and interviewed agency officials.

What GAO Recommends

GAO made 10 recommendations to strengthen oversight of these plans. GAO’s recommendations address ensuring that procedures for PCR reviews are followed, contractor subcontracting reports are monitored and reviewed for accuracy, and SBA compliance reviews are clearly documented and maintained. DLA, GSA, NASA, and Navy concurred with all of GAO’s recommendations. SBA partially concurred with the recommendation pertaining to that agency’s operation, although GAO maintains that its recommendation is warranted.

View GAO’s full report at: https://www.gao.gov/assets/710/707231.pdf.

May 9, 2017 By AMK

Reinforcing the implied duty of good faith and fair dealing in government contracts

The Court of Federal Claims has ruled that a contractor may continue to litigate its claim for breach of the implied duty of good faith and fair dealing against a federal agency.

Last month, in CanPro Investments Ltd. v. United States, COFC No. 16-268C (April 2017), the Court of Federal Claims (COFC or “Court”) denied the Government’s motion for reconsideration and reaffirmed its prior decision that CanPro Investments Ltd. (CanPro) may continue to litigate its claim for breach of the implied duty of good faith and fair dealing against the General Services Administration (GSA).

CanPro alleged that the Government breached the implied duty by receiving an unreasonable number of visitors at the building it leased from CanPro – and despite their being no specific contractual provision regulating the number of permitted visitors.

This decision is important because it reinforces the implied duty as a mechanism to protect a party’s reasonable expectations arising from a government contract.

In 2012, GSA leased certain office space in Boca Raton, Florida from CanPro for a local Social Security Administration (SSA) office. Although the lease included a release provision under which CanPro waived any claims arising from “the Government’s normal and customary use of the leased premises,” CanPro understood from GSA that visitors to the SSA during “peak times” would not exceed 250 per day. After the SSA’s West Palm Beach location closed, CanPro experienced an “overwhelming amount of visitors” to its Boca Raton building which, in turn, resulted in CanPro incurring significant additional expenses.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/05/long-live-reasonableness-reinforcing-the-implied-duty-of-good-faith-and-fair-dealing-in-government-contracts/

November 13, 2013 By AMK

False Claims Act overused, reform advocates say

The United States has come a long way since the Civil War era.

A once splintered nation torn apart by infighting is now whole, although an ideological split over hot-button political issues continues to keep the country divided.

Aside from an end to slavery and a patching up of our national identity, another thing to come out of the Civil War, at least on the legislative front, was the passage of the False Claims Act.

The measure was enacted with the goal of fighting profiteering by those who supplied the Union Army with things such as weapons and ammunition.

The measure, also referred to as “Lincoln’s Law,” allowed the government to hold contractors liable for bad faith dealings.

The False Claims Act came about during a time when contractors took advantage of wartime dependence to defraud the U.S. Government by dealing faulty ammunition and weaponry, sick live stock and tainted food rations, according to a summary of the statute on the website of the law firm Messa & Associates.

Today, however, court reform advocates maintain that the statute is being overused, and at times misused, by both the federal government and those who sue on behalf of the government.

The issue was touched upon this week in the nation’s capital during the 14^th Annual Legal Reform Summit of the U.S. Chamber Institute for Legal Reform. (The ILR owns Legal Newsline.)

The ILR contends that while the statute was well intentioned, it has since been turned into a “lucrative money machine for plaintiffs’ lawyers and their clients,” while simultaneously hurting businesses and U.S. taxpayers.

Keep reading this article at: http://legalnewsline.com/news/federal-government/245052-false-claims-act-overused-reform-advocates-say

Half of the contracts recently examined by the Government Accountability Office (GAO) didn’t contain evidence of compliance with small business subcontracting requirements.

GAO Report Details

Why GAO Did the Review

What GAO Recommends

The Court of Federal Claims has ruled that a contractor may continue to litigate its claim for breach of the implied duty of good faith and fair dealing against a federal agency.

Search this Website