What would you do if you found that you had made a significant mistake in a bid submitted to the Government? A mistake so material that it could jeopardize your financial position.Would you ask to be allowed to revise your bid? Would you request that it be disregarded? There is a provision in the FAR (Federal Acquisition Regulations) that allow bidders to correct mistakes. However, the criteria for allowing that is very restrictive.
Are contractors (and subcontractors) harmed financially because the Government can’t (or won’t) definitize change orders in a reasonable amount of time? Are small business contractors more harmed than non-small businesses? That seems to be the case based on legislation recently introduced in the House by Congressman Bacon (Nebraska).
The Department of Defense (DoD) commissioned a study by RAND Corporation, a federally funded research and development center, to assess the prevalence and impact of bid protests on DoD acquisitions.
In 2015, Julie Atwood, a senior project manager with DOE (Department of Energy) contractor MSA (Mission Support Alliance LLC) filed a lawsuit against MSA alleging retaliation, discrimination, and wrongful termination. Also named in the suit was Steve Young, MSA’s Vice President of Portfolio Management (also the mayor of a local city) and its COO (Chief Operations Officer). At the time of filing, MSA was a joint venture of Lockheed, Centera, and Jacobs Engineering. Lockheed has since sold its interest in the joint venture to Leidos.
Most Government contractors and prospective contractors realize that an “adequate” accounting system is a necessary prerequisite to winning a negotiated contract. And, there is no mystery to what constitutes an “adequate” system. The attribute are listed on SF Form 1408 – Pre-Award Survey of Prospective Contractor Accounting System. We’ve covered these attributes on this blog several times. See, for example Preaward Surveys – SF From 1408 and Two Kinds of Accounting System Audits. Contractors (and prospective contractors) should not underestimate the importance of an adequate accounting system. Companies have lost out on opportunities by not having adequate systems. See, for example Accounting System Adequacy and Bidder Disqualified for Failing to Provide Evidence of an Adequate Accounting System.
Situations sometimes occur during contract performance where work is suspended for one reason or another. There are several categories of work suspension identified in the FAR (Federal Acquisition Regulations).
We here the term “fraud, waste, and abuse” frequently and we ourselves use it often on these pages. The word “fraud” is well understood but what about the other two elements of this triad; waste and abuse? The GAO’s (Government Accountability Office) Yellow Book (i.e. Government Auditing Standards) includes the following definitions for Waste and Abuse.
In 2011, The Navy awarded a contract to Fluor Federal Solutions (Fluor) to provide base operations support services at four Navy installations in Florida. In 2015, Fluor submitted an REA (Request for Equitable Adjustment) proposal (actually a consolidated REA of previously submitted REAs). In 2016 (seven months later), the Navy denied Fluor’s REA stating that the submission was insufficient to reverse the Navy’s position on previously submitted REAs. Fluor then submitted the consolidated REA as a certified claim.
It’s not often that a Government contractor files for bankruptcy. It is probably a less frequent occurrence among Government contractors than in the general population. First of all, prospective Government contractors must endure pre-award surveys which include a financial responsibility determination. If a contractor cannot satisfy the Government that it has the financial resources to complete the contract (or can acquire the financial resources), it will be disqualified from the selection process. And then there is the matter of contract financing. With the ability to to earn progress payments and/or obtain monthly reimbursements of cost, contractors need only two to three months of working capital before the cash pipeline begins flowing.
SOURCE: Contractors Filing Bankruptcy
Would you like to forestall the Government from taking exception to certain items of costs? If so, consider an advance agreement.
The extent of allowability of costs covered by the cost principles in FAR Part 31 applies broadly to many accounting systems in varying contract situations. Thus, the reasonableness, the allocability and the allowability under specific cost principles of certain costs may be difficult to determine. To avoid possible subsequent disallowance or dispute based on unreasonableness, unallocability or unallowability, FAR 31.109 encourages contractors and contracting officers to seek advance agreement on the treatment of special or unusual costs.