Federal Contracting Disputes: Do All Roads Lead to Rome?

• Author: Levinson, Pamela G.
• Position: Part 1

"A ll Roads Lead to Rome," has come to mean that one can reach the same result in many different ways. (1) Putting aside ancient history, when a government contractor decides to protest a bid or make a claim on a federal contract, there is more than one way to approach the effort. This article explores those options, but often, whether protesting a bid or making a claim, the best option may be the Court of Federal Claims.

This article is divided into two parts. The first part introduces two hypothetical clients with government contract issues. One client has a claim for additional time and money. The other client has an issue with the contract award to a competitor. Both of these post-award disputes require analysis of several factors when deciding whether and how to protest a government contract or bring a claim. The second part of this article further examines a bid protest in greater detail.

Imagine you have a client, Annie. She owns a small construction company that she inherited from her grandmother, who won it in a poker game in Hallandale in the 1930s (yes--women played poker in Hallandale back then!). (2) Imagine Annie secured a lucrative federal contract with the Department of Transportation (DOT) to build several public rest stops along a new federal highway. She hired several new employees and times were good. Now imagine in the middle of the contract, Annie's contracting officer (CO) at the DOT changes her contract. She is told to add several new features to her roadside rest stops and upgrade many of the materials originally approved. The changes will cost a lot more in time and money. Annie's informal discussions with the CO fail to result in any revisions to the contract sum or completion time. She comes to you to see about what she can do. Her DOT contract, which seemed like a dream come true at the time she secured it, is now a nightmare threatening to take her 90-year-old company down with it.

Now imagine you have a second client, Betty, a service-disabled veteran. She tried for years to find a good federal contract for her portable heating and air conditioning company--a contract both well-suited for her expertise and large enough to be worth the lengthy process she knew would be required to get the contract award. Recently, the COVID-19 pandemic created a need that Betty's company was particularly qualified to fill--providing portable air purification systems under an Environmental Protection Agency (EPA) solicitation for federal buildings throughout Florida. When Betty saw the request for proposal (RFP), she was sure she had a fair shot at receiving the award, so she spent months preparing her bid. Unfortunately, the contract was awarded to her competitor. Betty feels certain that her Washington-state-based competitor is less qualified to do the job. Betty is confident that her company is an overall better fit, not just geographically, but also with superior equipment. She comes to you to see what she can do.

Both of your clients need help dealing with the largest purchaser of goods and services in the world--the U.S. federal government. Without accounting for COVID-19 pandemic spending, recent U.S. government spending on federal contracts reached nearly $600 billion. (3) Of that figure, over $200 billion came from agencies other than the Department of Defense. (4) And of that $200 billion, over $165 million of it was for services, rather than products. (5) Over 80% of these contracts were awarded competitively under the governing rules of the federal government's procurement of goods and services regulations, the Federal Acquisitions Regulations (FAR), a collection of principal rules codified at Ch. 1 of Tit. 48 of the Code of Federal Regulations. (6)

The government must set aside 23% of its contract awards for small businesses like Annie's and Betty's. (7) Within those contracting goals, federal agencies are required to award a certain percentage of small business contracts to women-owned businesses, to small, disadvantaged businesses, to service-disabled veteran-owned small businesses, and to businesses located in certain HUBZone areas. (8) Moreover, every federal government purchase made with a value between a micro-purchase threshold and a simplified acquisition threshold must be automatically and exclusively set aside for small businesses. (9) In those cases, the "rule of two" must be implemented, i.e., at least two or more responsible small businesses must be capable of performing the service or providing the product competitively in terms of price, quality, and delivery time. (10)

Just as it does in the country at large, in Florida, the federal government buys everything from complicated defense equipment to janitorial services. In 2018, the Florida Procurement Technical Assistance Center (PTAC), which is a partnership program with the Florida Small Business Development Center, assisted Florida businesses in securing over $520 million in federal government contract awards. (11)

But although Annie and Betty are both women-owned small businesses, their legal needs are distinct. In Annie's case, she wants to be paid for changes in her contract. She can either file a request for equitable adjustment (REA), or file a claim against the DOT, either at the Civilian Board of Contract Appeals (CBCA) or in the Court of Federal Claims (COFC). In Betty's case, she can file a bid protest at the Government Accountability Office (GAO) or at the COFC. After careful analysis, however, the COFC may serve both of them best.

Annie's Contract Dispute

Annie can first file an REA, or move forward with a claim, but even if the CO denies her REA, she can still file a claim, which starts, again, with the CO.

* The REA--While Annie's DOT contract's "changes" clause authorizes the government to make changes to the scope of her contract, it typically also provides that if scope changes result in Annie having to spend more time and money, then the government must compensate her.

Pursuant to statute, Annie's REA should include a detailed breakdown of direct...