Redstone Government Contractors DFARS ConsultingTwo recent decisions by the General Accountability Office (GAO) and the ASBCA make it clear that the contractor will be held responsible for incorrect assumptions when they fail to follow up on known inconsistencies or missing information with the government, even when the government is responsible for providing the information.

On February 10, 2014, the Armed Services Board of Contract Appeals (ASBCA) issued its decision in Case No. 58006, an appeal by a contractor of the denial of its claim for equitable adjustment.

The contractor submitted a request for equitable adjustment for increased fringe and health benefits costs because the collective bargaining agreement (CBA) referenced in the solicitation did not contain details of required fringe benefits.  The contractor was apparently aware that the CBA lacked the information needed to determine the full wage and fringe benefit amounts, required to comply with Service Contact Act (SCA) and Federal Acquisition Regulation (FAR) requirements, when it submitted its proposal.  Instead of going back to the government for the additional information, the contractor submitted its bid based on its assumptions about the wage and fringe benefit amounts.

The ASBCA agreed that the Contracting Officer was responsible for providing a complete CBA; however, it ruled that, since the contractor was aware that the CBA was incomplete when it submitted its bid, there is nothing in the SCA or FAR making the government responsible for the difference between the contractor’s offer and the eventual cost of the fringe benefits.  The ASBCA held that the government cannot guarantee the correctness of the contractor’s assumptions when it fails to make an inquiry with the government. 

On January 17, 2014, the GAO denied a bid protest filed by another contractor related to a Department of the Interior (DOI), Bureau of Land Management’s (BLM) award under request for proposals (RFP) No. 783465. 

The government rejected the contractor’s proposal as unacceptable based on its failure to provide fixed prices for all proposed software.  In part, the contractor argued that it relied on BLM’s response to an early offeror question, related to contractor use of BLM currently owned software licenses, to conclude it was not required to submit additional software license pricing because the agency already had access to the software at no cost.  Later responses to offerors clearly stated that offerors were expected to include all proposed software license costs in their submissions.  The contractor did not seek clarification from the government regarding this apparent inconsistency.  Rather, the contractor assumed, since later responses did not indicate BLM was withdrawing the earlier answer, it did not need to submit additional software license pricing.

In its decision, GAO stated:

 “In such situations an offeror may not simply make unilateral assumptions regarding the meaning of patently ambiguous terms in the RFP and then expect relief when the agency does not act in the manner assumed. Rather, the offeror must challenge the alleged ambiguity prior to the time set for receipt of initial proposals.”

These decisions illustrate the critical need for government contractors to fully understand the RFP requirements when preparing and updating a proposal.  Simply making an assumption when a requirement is unclear or where there is conflicting contracting officer guidance will be at the contractor’s peril!  Contractors should not risk losing the contract or losing money on a contract because of an incorrect assumption.

If you don’t know, ask!  If you don’t have the expertise, get help!

 

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Written by Robert Eldridge

Robert Eldridge Robert (Bob) Eldridge is a Director with Redstone Government Consulting Inc. He provides Government Contract Consulting services to our Government contractors primarily related to compliance with Federal Acquisition Regulations and Cost Accounting Standards, equitable adjustment claims, and business systems. Prior to joining Redstone Government Consulting, Bob served in a number of capacities with DCAA for over 32 years. Upon his retirement, Bob was a Regional Audit Manager with DCAA. Bob began his DCAA career in 1981 as an auditor-trainee with the Pratt & Whitney Resident Office in West Palm Beach, Florida. Bob served two three year tours at the Defense Contract Audit Institute teaching multiple contract audit courses including “Auditing Internal Controls”, “Technical Management of Audits”, and “Advanced Cost Accounting Standards” and writing Agency courses on Cost Accounting Standards and Equitable Adjustment Claims. He returned to the Eastern Region in 1999, holding various audit positions before ultimately becoming a Regional Audit Manager in February 2007. As Chief of the Eastern Region Quality Assurance Division, Bob was heavily involved in developing DCAA guidance related to auditor consideration of internal controls and risk assessment preparation. In 2012, Bob was assigned to the U.S. Senate Committee for Homeland Security and Governmental Affairs, serving as a subject matter expert on a wide range of federal contract and grant matters for Senator Susan Collins. During Bob’s tenure with DCAA, he had overall management responsibility for audits performed by over 200 employees. He was directly involved in conducting or managing a wide variety of compliance audits, including: forward pricing proposals, incurred cost submissions, business system internal controls, Cost Accounting Standards, claims, and defective pricing. Bob was also directly involved in complex quantitative methods applications, particularly regression analysis and improvement curve applications. Bob currently specializes in assisting clients with more complex DCAA audit issues related to business system internal controls and Disclosure Statements and with developing and maintaining government compliant accounting and estimating systems. Bob also provides expert advice on compliance with FAR cost principles and Cost Accounting Standards and assists with the more complex forward pricing proposals and equitable adjustment claims.

About Redstone GCI

Redstone Government Consultants are a team of the most senior industry veterans and the brightest new talent in the industry. Many have held senior government positions including leadership roles in the DCAA. Our new talents bring significant accounting and software experience along with fresh perspectives, inspiration and energy to our team. Through our leadership and combined experience, we provide a unique perspective, bringing both government and contractor proficiencies to bear and ensuring rock-solid government compliance for our clients.

Topics: Compliant Accounting Infrastructure, Small Business Compliance