Source: https://www.everycrsreport.com/reports/R45322.html
Timestamp: 2019-04-25 17:56:54+00:00

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Corrective Actions. In many instances, the FAR requires procurement contracts to include “inspection clauses” that explicitly authorize procuring agencies to require contractors to remove, correct, or replace rejected goods, or reperform services (together, to take “corrective actions”) for failing to conform to contract specifications and requirements. Relatedly, inspection clauses often authorize agencies to make equitable cost reductions or seek repayment to account for all of the costs associated with deficient services that cannot be reperformed or goods the agency received and accepted despite the deficiencies.
Incentive Fees. Under certain circumstances, procuring agencies are permitted to incentivize contractors with performance-based payments. These “incentive fees” can be an effective contractor accountability measure because they can be paid to reward contractors for meeting or exceeding goals or standards contemplated in the contract or withheld or reduced when contractors fail to meet or exceed those goals or standards.
Performance and Payment Surety Bonds. Under certain circumstances, government contractors are required to acquire a surety bond, through which a third-party surety promises to assume a contractor’s responsibilities in the event that the contractor fails to meet specified contractual obligations. A bond can serve as a contractor accountability measure because it subjects a contractor to potential additional costs, which could include liability expenses under indemnity agreements with the surety and increased costs of acquiring a bond for future contracts.
Liquidated Damages. Liquidated damages are predetermined sums a contractor must pay the procuring agency for specified contract breaches or performance failures. By predetermining the costs associated with a breach or failure to perform, liquidated damages clauses hold contractors accountable for noncompliance, while saving time and litigation costs.
Contract Termination for Default. Termination of a contract because of a contractor’s default is arguably the most consequential and dramatic contract-based contractor accountability tool at the government’s disposal. A default termination “discharges government duties under the contract while exposing the contractor to potential liability for the consequences of its breach.” In addition to other potential repercussions, the cause of the default could serve as grounds for suspending or debarring a contractor from future contracts.
Contractor Performance Evaluations. When selecting contractors, procuring agencies often consider various contractor accountability issues, notably including the contractor’s performance under other contracts, through (1) responsibility determinations and (2) source selections under negotiated contracting. To facilitate agency evaluations of a prospective contractor’s likelihood of success on future contracts, the FAR generally requires procuring agencies to conduct and document performance evaluations of contractors in federal databases and to review these databases before awarding contracts.
Suspension and Debarment. The FAR requires agencies to have policies and procedures in place to “suspend” and “debar” contractors—i.e., to exclude, except under limited circumstances—from being eligible to receive new federal contracts for some length of time due to various criminal convictions, civil judgments, serious contract performance failures, or other specified grounds. These policies and procedures are designed to ensure that agencies award contracts to responsible contractors that are capable of successful performance.
Civil Fraud Enforcement. Procuring agencies may hold contractors liable for acquiring contracts by fraud pursuant to the False Claims Act, the anti-fraud provision of the Contracts Dispute Act (CDA), and the Program Fraud Civil Remedies Act.
Corrective Actions. In many instances, the FAR requires procurement contracts to include "inspection clauses" that explicitly authorize procuring agencies to require contractors to remove, correct, or replace rejected goods, or reperform services (together, to take "corrective actions") for failing to conform to contract specifications and requirements. Relatedly, inspection clauses often authorize agencies to make equitable cost reductions or seek repayment to account for all of the costs associated with deficient services that cannot be reperformed or goods the agency received and accepted despite the deficiencies.
Incentive Fees. Under certain circumstances, procuring agencies are permitted to incentivize contractors with performance-based payments. These "incentive fees" can be an effective contractor accountability measure because they can be paid to reward contractors for meeting or exceeding goals or standards contemplated in the contract or withheld or reduced when contractors fail to meet or exceed those goals or standards.
Performance and Payment Surety Bonds. Under certain circumstances, government contractors are required to acquire a surety bond, through which a third-party surety promises to assume a contractor's responsibilities in the event that the contractor fails to meet specified contractual obligations. A bond can serve as a contractor accountability measure because it subjects a contractor to potential additional costs, which could include liability expenses under indemnity agreements with the surety and increased costs of acquiring a bond for future contracts.
Contract Termination for Default. Termination of a contract because of a contractor's default is arguably the most consequential and dramatic contract-based contractor accountability tool at the government's disposal. A default termination "discharges government duties under the contract while exposing the contractor to potential liability for the consequences of its breach." In addition to other potential repercussions, the cause of the default could serve as grounds for suspending or debarring a contractor from future contracts.
Contractor Performance Evaluations. When selecting contractors, procuring agencies often consider various contractor accountability issues, notably including the contractor's performance under other contracts, through (1) responsibility determinations and (2) source selections under negotiated contracting. To facilitate agency evaluations of a prospective contractor's likelihood of success on future contracts, the FAR generally requires procuring agencies to conduct and document performance evaluations of contractors in federal databases and to review these databases before awarding contracts.
Suspension and Debarment. The FAR requires agencies to have policies and procedures in place to "suspend" and "debar" contractors—i.e., to exclude, except under limited circumstances—from being eligible to receive new federal contracts for some length of time due to various criminal convictions, civil judgments, serious contract performance failures, or other specified grounds. These policies and procedures are designed to ensure that agencies award contracts to responsible contractors that are capable of successful performance.
This report analyzes a selection of the legal tools a procuring agency may use to hold contractors accountable. The report first assesses contractual remedies that procuring agencies could utilize to ensure full and satisfactory performance of existing contracts. Next, the report discusses performance-related contract source selection criteria that agencies may, and often must,7 utilize when evaluating new contract bid proposals. The report ends with a discussion of other legal tools—outside of contract law and the contract selection processes—that the government may employ to hold a contractor accountable.
Table 1 details selected common contract types for each category; the situations in which they are typically utilized; and a selection of regulatory conditions imposed on their use.
Good or service acquired for specified price. 48 C.F.R. § 16.202-1 (2017).
For acquiring goods and services where reasonable prices can be predetermined. 48 C.F.R. § 16.202-2 (2017).
Fixed-price contracts with economic price adjustments.
Good or service acquired for a specified price that, under certain circumstances, could be adjusted based on a predefined economic index or indicator. 48 C.F.R. § 16.203-1 (2017).
For acquiring goods or services whose costs can fluctuate as a result of economic factors. 48 C.F.R. § 16.203-2 (2017).
May be used only when "the contracting officer determines that it is necessary either to protect the contractor and the Government against significant fluctuations in labor or material costs or to provide for contract price adjustment in the event of changes in the contractor's established prices." 48 C.F.R. § 16.203-3 (2017).
Firm-fixed price contract for a performance or delivery period, with predetermined adjustments of price for subsequent performance or delivery periods. 48 C.F.R. § 16.205-1 (2017).
For acquisitions in which "fair and reasonable firm fixed price" can be determined for an initial period but not for future periods. 48 C.F.R. § 16.205-2 (2017).
May be used only when a firm-fixed-price contract and fixed-price incentive contract would not be suitable for the circumstances and prices could be determined "promptly at the specified times." 48 C.F.R. § 16.205-3 (2017).
Fixed-price contract with profits or fees paid (or reduced) for reaching (or failing to reach) specified targets. 48 C.F.R. § 16.403-1(a) (2017).
For circumstances in which targets and profits/fees can be established "that will provide a fair and reasonable incentive and a ceiling that provides for the contractor to assume an appropriate share of the risk." 48 C.F.R. § 16.403-1(b) (2017).
May be used only when firm targets can be reasonably established at the beginning of contract negotiation. 48 C.F.R. § 16.403-1(c) (2017).
"[C]ost-reimbursement contract in which the contractor receives no fee." 48 C.F.R. § 16.302(a) (2017).
Typically used for research and development services with nonprofits, such as institutions of higher education. 48 C.F.R. § 16.302(b) (2017).
May be used only when a fixed-price contract would not be suitable for the circumstances, the procuring agency has sufficient "resources  available to award and manage a contract other than firm-fixed priced," and the acquisition is not for commercial items. 48 C.F.R. § 16.301-2–16.301-3 (2017).
Cost-reimbursement contract through which contractor may be reimbursed exclusively for specified "allowable costs" 48 C.F.R. § 16.303(a) (2017).
"[U]sed when the contractor agrees to absorb a portion of the costs, in the expectation of substantial compensating benefits." 48 C.F.R. § 16.303(b) (2017).
"[C]ost-reimbursement contract that provides for the initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs." 48 C.F.R. § 16.405-1(a) (2017).
Typically used when technical performance targets and cost incentives are "desirable and administratively practical," such as with contracts for major systems development. 48 C.F.R. § 16.405-1(b) (2017).
Source: 48 C.F.R. pt. 16 (2017).
What follows is an analysis of selected contractual rights and remedies that federal agencies may employ to obtain products and services that meet the quality, cost, and other specifications for which they contracted.
Under certain circumstances, procuring agencies are permitted to incentivize contractors with performance-based payments "to . . . motivate contractor efforts that might not otherwise be emphasized and . . . discourage contractor inefficiency and waste."45 Incentive fees can be an effective contractor accountability measure because they can be paid to reward contractors for meeting or exceeding goals or standards contemplated in the contract or withheld or reduced when contractors fail to meet or exceed those goals or standards.
This section of the report first analyzes FAR provisions requiring procuring agencies to evaluate prospective contractors in connection with122 (1) responsibility determinations and (2) the source selection process. It then analyzes FAR provisions requiring agencies to document contractor performance-related matters in PPIRS, FAPIIS, and SAM Exclusion while administering existing contracts.
1. Technical (quality of product or service).
2. Cost control (not applicable for firm-fixed-price or fixed-price with economic price adjustment arrangements).
4. Management or business relations.
5. Small business subcontracting, including reduced or untimely payments to small business subcontractors . . . (as applicable).
Procuring agencies generally must rate a contractor's performance under each applicable evaluation factor as either exceptional, very good, satisfactory, marginal, or unsatisfactory.144 These factors are described in Table 2.
Performance meets contractual requirements and exceeds many to the Government's benefit. The contractual performance of the element or sub-element being evaluated was accomplished with few minor problems for which corrective actions taken by the contractor were highly effective.
Performance meets contractual requirements and exceeds some to the Government's benefit. The contractual performance of the element or sub-element being evaluated was accomplished with some minor problems for which corrective actions taken by the contractor were effective.
Performance does not meet some contractual requirements. The contractual performance of the element or sub-element being evaluated reflects a serious problem for which the contractor has not yet identified corrective actions. The contractor's proposed actions appear only marginally effective or were not fully implemented.
Performance does not meet most contractual requirements and recovery is not likely in a timely manner. The contractual performance of the element or sub-element contains a serious problem(s) for which the contractor's corrective actions appear or were ineffective.
To justify an Unsatisfactory rating, identify multiple significant events in each category that the contractor had trouble overcoming and state how it impacted the Government. A singular problem, however, could be of such serious magnitude that it alone constitutes an unsatisfactory rating. An Unsatisfactory rating should be supported by referencing the management tools used to notify the contractor of the contractual deficiencies (e.g., management, quality, safety, or environmental deficiency reports, or letters).
Source: 48 C.F.R. § 42.1503, Table 42-1 (2017).
Another mechanism by which the federal government can hold contractors accountable is to enforce civil laws that make it unlawful to defraud the government. Three such laws frequently enforced against government contractors are the False Claims Act;179 the anti-fraud provision180 of the Contract Dispute Act;181 and the Program Fraud Civil Remedies Act.182 While not exclusively applicable to contracting issues, the government can use these laws to hold government contractors accountable for acquiring, or attempting to acquire, government contracts through fraudulent means or submitting a false claim for payment to the government. The remedies available to the government under each statute are not necessarily exclusive;183 rather, under certain circumstances, contractors can be held liable under multiple laws.184 These laws are discussed briefly below.
Fed. Procurement Data Sys., https://www.fpds.gov/fpdsng_cms/index.php/en/ (last visited Sept. 17, 2018) (The federal government obligated more than $500 billion in procurement contracts in FY2017).
See, e.g., Competition in Contracting Act of 1984, Pub. L. No. 98-369, Title VII, §§ 2701–53, 98 Stat. 494, 1175–1203 (1984) (codified as amended in scattered sections of U.S.C.); Federal Acquisition Regulation (FAR), 48 C.F.R. §§ 1.000–9905.506-63 (2017)); 10 U.S.C. § 2304 (2017); 41 U.S.C. § 3301 (2017).
48 C.F.R. § 1.102(a) (2017). Federal agencies also are required to "[e]nsure that contractors receive impartial, fair, and equitable treatment," which, at times, might create friction with their responsibilities of promoting the government's best interests. Id. § 1.602-2(b). See also Terrence M. O'Connor, Understanding Government Contract Law 1 (Mgmt. Concepts 2007).
For simplicity's sake, this report refers to actions taken by "procuring agencies." In practice, agency personnel—typically contracting officers—make contracting decisions, operating pursuant to appropriately delegated authority from the agency head or the agency head's designees. 41 U.S.C. § 1702(b); 48 C.F.R. §§ 1.602-1, 1.603-1.
48 C.F.R. §§ 9.400–9.409 (2017).
See, e.g., id. § 15.304(c)(3)(i) ("Past performance, except as set forth in paragraph (c)(3)(iii) of this section, shall be evaluated in all source selections for negotiated competitive acquisitions expected to exceed the simplified acquisition threshold.").
41 U.S.C. § 3101(a) (2011); 48 C.F.R. § 1.602-1(b) (2017). See also Yosemite Park & Curry Co. v. United States, 582 F.2d 552, 558 (Ct. Cl. 1978) ("We begin, as did the Government, with 41 U.S.C. § 252(a), which states unequivocally that executive agencies shall make all purchases of goods and services in compliance with the procurement statutes and implementing regulations . . . except where those statutes and regulations are 'made inapplicable pursuant to . . . any other law.'" (second alteration in original)); 41 U.S.C. § 252(a) (recodified at 41 U.S.C. § 3101(a) by Pub. L. No. 111-350, § 3, 124 Stat. 3742).
48 C.F.R. §§ 1.101–53.303-347 (2017).
See, e.g., id. § 16.203-4(a).
See, e.g., id. §§ 252.201-7000–252.251-7001.
See generally, id. § 1.102(b).
Gen. Eng'g & Mach. Works v. O'Keefe, 991 F.2d 775, 779 (Fed. Cir. 1993) ("Thus, under the Christian Doctrine a court may insert a clause into a government contract by operation of law if that clause is required under applicable federal administrative regulations. However, the Christian Doctrine does not permit the automatic incorporation of every required contract clause. . . . Accordingly, the Christian Doctrine applies to mandatory contract clauses which express a significant or deeply ingrained strand of public procurement policy."). (citing G. L. Christian & Assocs. v. United States, 312 F.2d 418 (Ct. Cl. 1963)). The Christian Doctrine is subject to limitations. See, e.g., Muncie Gear Works, Inc., ASBCA No. 16153, 72-1 BCA ¶ 9,429 (1972) ("The Christian case does not require the incorporation of a clause whose applicability is based on the exercise of judgment or discretion.").
See, e.g., Northrop Grumman Info. Tech., Inc. v. United States, 535 F.3d 1339, 1345 (Fed. Cir. 2008) ("[T]he language used in a contract to incorporate extrinsic material by reference must explicitly, or at least precisely, identify the written material being incorporated and must clearly communicate that the purpose of the reference is to incorporate the referenced material into the contract."). See also John Cibinic, Jr., James F. Nagle & Ralph C. Nash, Jr., Administration of Government Contracts 163 (Wolters Kluwer 5th ed. 2016) ("The written contract document is the primary evidence of the parties' agreement in virtually all cases involving government contract interpretation controversies.").
See generally 48 C.F.R. §§ 43.101–43.301 (2017). See also Nicholas T. Solosky, Contractor Alert: Beware Bilateral Modification Release Language, Fox Rothschild LLP The Federal Government Contracts & Procurement Blog, Jan. 31, 2017, https://governmentcontracts.foxrothschild.com/tag/government-contract-modification/.
28 U.S.C. § 1491(b)(1) (2018); see 41 U.S.C. §§ 7101–09 (2018). See generally, Sarah K. Carpenter, The Contract Disputes Act: What Every Federal Government Contractor Should Know, Smith, Currie & Hancock LLP (Jan. 29, 2018), https://www.smithcurrie.com/publications/common-sense-contract-law/contract-disputes-act-every-federal-government-contractor-know/.
See generally John Cibinic, Jr., James F. Nagle, Stephen D. Knight & Ralph C. Nash, Jr., Contract Changes, Disputes and Terminations: Mastering the Fundamentals 223–86 (Walters Kluwer L. & Bus. 2015) (discussing government contract dispute).
Cibinic, Administration, supra note 15, at 2 (comparing governmental rights, risks, and flexibilities associated with various contract types, acquisition goals, and other factors).
48 C.F.R. § 16.104 (2017).
Other types of contracts, such as time-material, and labor hour contracts, also may be used under certain circumstances. See, e.g., id. §§ 16.500–16.603-4.
The government still assumes some risk of cost overruns under firm-fixed-price contracts, for instance because of costs resulting from "acts of God" or certain other intervening acts. See, e.g., Id. § 52.249-8(c) (noting, as examples of the causes of failure to perform for which the contractor shall not be liable, "(1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions[,] (7) strikes, (8) freight embargoes, and (9) unusually severe weather").
48 C.F.R. § 16.202-1 (2017).
Cibinic, Contract Changes, supra note 18, at 287.
48 C.F.R. § 16.301-1 (2017).
See generally Memorandum from Peter R. Orszag, Director, Office of Mgmt. & Budget, Exec. Office of the President, to Heads of Departments and Agencies, M-09-25, 2 (Jul. 29, 2009), https://www.whitehouse.gov/wp-content/uploads/2017/11/m-09-25.pdf ("Cost-reimbursement contracts . . . pose a risk because they provide no direct incentive to the contractor for cost control.").
48 C.F.R. § 16-301-2(a)(2) (2017).
Granite Constr. Co. v. United States, 962 F.2d 998, 1006–07 (Fed. Cir. 1992).
48 C.F.R. § 52.246-2(c) (2017) (Inspection of Supplies—Fixed Price); Id. § 52.246-3(c) (Inspection of Supplies—Cost-Reimbursement); Id. §52.246-4(c) (Inspection of Services—Fixed Price); Id. §52.246-5(c) (Inspection of Services—Cost-Reimbursement); Id. §52.246-6(c) (Inspection—Time-and-Material and Labor Hour); Id. §52.246-7(b) (Inspection of Research and Development—Fixed-Price); Id. §52.246-8(c) (Inspection of Research and Development—Cost-Reimbursement).
48 C.F.R. §§ 52.246-2(f)–(g), 52.246-3(f), 52.246-4(e), 52.246-5(d), 52.246-6(e)–(f), 52.246-7(d)–(e), 52.246-8(f) (2017). For example, the standard inspection clause for fixed price supply contracts states, in relevant part: "The Government has the right either to reject or to require correction of nonconforming supplies. . . . The Contractor shall remove supplies rejected or required to be corrected. However, the Contracting Officer may require or permit correction in place, promptly after notice, by and at the expense of the Contractor." Id. §52.246-2(f)–(g).
Id. §§ 52.246-2(g), 52.246-4(e), 52.246-5(d), 52.246-7(d)–(e).
Id. §§ 52.246-3(f), 52.246-6(e)–(f), 52.246-8(f) (2017). Procuring agencies generally are permitted to use cost-reimbursement contracts only when the agency is unable to estimate costs or define contract requirements adequately enough to utilize a fixed-price contract. Id. § 16.301-2.
Id. § 52.246-3(f)–(h). The standard Inspection Clauses for Time-and-Material and Labor-Hour contracts include similar protections. Id. § 52.246-6(f)–(h).
Id. §§ 52.246-2(h), 52.246-3(g), 52.246-4(e), 52.246-5(d)–(e), 52.246-6(g), 52.246-7(d)–(e), 52.246-8(f). For example, the standard inspection clause for fixed price supply contracts states, in relevant part: "If the Contractor fails to promptly remove, replace, or correct rejected supplies that are required to be removed or to be replaced or corrected, the Government may either (1) by contract or otherwise, remove, replace, or correct the supplies and charge the cost to the Contractor or (2) terminate the contract for default." Id. § 52.246-2(h). See, e.g., Armour of Am. v. United States, 96 Fed. Cl. 726, 759–69 (2011) (awarding the procuring agency excess costs for the reprocurement of similar goods, as well administrative costs that "were 'foreseeable, direct, natural and proximate' costs resulting from plaintiff's failure to fulfill its contract" (quotations omitted)).
48 C.F.R. §§ 52.246-2(h), (l), 52.246-3(g), 52.246-4(f), 52.246-5(e), 52.246-7(e)–(f), 52.246-8(g) (2017). The standard inspection clause for time-and-material and labor-hour contracts generally allows for the contractor to be compensated for the labor involved in replacing and correcting deficiencies, but compensation should be reduced by the portion allocated for profit. Id. § 52.246-6(f) ("the hourly rate for labor hours incurred in the replacement or correction shall be reduced to exclude that portion of the rate attributable to profit").
See, e.g., Cameo Bronze, Inc., GSBCA No. 3646, 73-2 BCA ¶ 10,135. See also Cibinic, Administration, supra note 15, at 759.
Munson Hammerhead Boats, ASBCA No. 51377, 00-2 BCA ¶ 31,143. See also Cibinic, Administration, supra note 15, at 760–61.
Cibinic, Administration, supra note 15, at 760.
48 C.F.R. § 16.401(a)(2) (2017).
Id. § 16.401(a). The lead contracting officer must justify, in writing, why the utilization of an incentive fee was appropriate in each particular procurement. Id. § 16.401(d).
An award fee is a type of incentive fee that is used when "predetermined objective incentive targets applicable to cost, schedule, and technical performance" cannot be predetermined due to the nature of the work to be performed. Id. § 16.401(e)(1). Award fees are subject to addition conditions and limitations. Id. § 16.401(e)–(g).
George Sollitt Constr. Co. v. United States, 64 Fed. Cl. 229, 247 (2005) ("So, if the contract language supports a finding that unilateral discretion has been granted to the government to determine the amount of a performance award, this court is limited to reviewing whether the government's award decision was arbitrary or capricious.").
See, e.g., Kellogg Brown & Root Servs. v. United States, 109 Fed. Cl. 288, 298-99 (2013) (denying a motion to dismiss because it was ambiguous as to whether a separate clause of the contract constrained the government's "unilateral determination" to set the incentive fee; "Clause H.36 does not clearly resolve whether the AFDO's discretion extended to his calculation of the award fee or was limited to amending the AFEB's evaluations and numerical ratings. Because Clause H.36 is ambiguous, the Court must deny defendant's motion to dismiss plaintiff's claim that the Army breached Clause H.36.").
See 48 C.F.R. § 52.216-7 (2017) (Allowable Cost and Payment); Id. § 52.216-10 (2017) (Incentive Fee); Id. § 52.216-16 (Incentive Price Revision - Firm Target); Id. § 52.216-17 (Incentive Price Revision - Successive Targets).
E.g., compare id. § 52.216-7 (Allowable Cost and Payment) with id. § 52.216-16 (Incentive Price Revision - Firm Target).
See generally Off. of the Undersec'y of Def., Guidance on Using Incentive and Other Contract Types 20–21 (Apr. 1, 2016), https://www.acq.osd.mil/dpap/policy/policyvault/USA001270-16-DPAP.pdf.
48 C.F.R. §§ 28.001–28.204-4 (2017).
Id. § 28.001. Under certain circumstances, contractors may secure a bond through means other than a surety, such as through irrevocable letters of credit or certified check. See Id. §§ 28.204–204-3.
Morrison Assurance Co. v. United States, 3 Cl. Ct. 626, 632–33 (1983) ("Essentially, the payment bond and the performance bond are distinguished by the different obligations a surety has under the respective bonds. Under the performance bond, the surety must assume primary responsibility for the completion of the contract. Under the Federal Procurement Regulations, the surety has the option of completing the project itself or allowing the government to find a new contractor and pay the government the expense of completion. Under either method, however, the surety is responsible for the expense of completion up to the applicable bond limit. Under the payment bond, the surety is responsible for certain unsatisfied debts of its bonded contractor and has no responsibility for the completion of the project. Although the actual expenses paid under each bond may often be similar, the surety has primary responsibility for the project itself only under its performance bond." (citations omitted)).
48 CF.R. § 28.203-2(b) (2017).
See Surety Info. Office, How to Obtain Surety Bonds 3–5 (2015), https://suretyinfo.org/?wpfb_dl=57 (noting that surety bond eligibility and cost can be affected by past performance and that sureties "usually require a demonstration of commitment from the construction company's owners through personal and/or corporate indemnity.").
Other bonds include bid bonds, advance payment bonds, and patent infringement bonds. See 48 C.F.R. § 28.001 (2017) (defining "Bond").
Id. § 28.001. See also Morrison Assurance Co. v. United States, 3 Cl. Ct. 626, 632 (1983).
41 U.S.C. § 134 (2018).
48 C.F.R. §§ 28.102-1, 102-2, 103-2(a). (2017).
Id. § 28.103-2(a). Performance bonds also might be warranted when the relevant contract provides "[s]ubstantial progress payments" prior to the delivery of finished products, or the contractor will be using government property to perform the contract. Id.
Id. § 28.001. See also Morrison Assurance Co. v. United States, 3 Cl. Ct. 626, 632–33 (1983).
48 C.F.R. § 28.103-3(a) (2017) ("A payment bond is required only when a performance bond is required, and if the use of payment bond is in the Government's interest.").
Id. § 28.102-2(b)(2). Slightly different payment bond standards are applicable to relatively low value contracts. Id. § 28.102-2(c).
Ralph C. Nash, Jr., Steve L. Schooner, Karen R. O'Brien-DeBakey & Vernon J. Edwards, The Government Contracts Reference Book 318 (Wolters Kluwer L. & Bus. 4th ed. 2013).
DJ Mfg. Corp. v. United States, 86 F.3d 1130, 1133 (Fed. Cir. 1996).
See, e.g., 48 C.F.R. § 19.708(b) (2017) (certain contracts incorporating small business subcontracting plans); id. § 22.305 (certain contracts that involve hiring laborers or mechanics); id. § 22.2110 (certain construction and service contracts).
Id. § 11.501(a). The FAR generally requires contracting officers to "take all reasonable steps to mitigate liquidated damages . . . [to] prevent excessive loss to defaulting contractors and protect the interests of the Government." Id. § 11.501(c).
See id.; see also DJ Mfg. Corp., 86 F.3d at 1137 ("[R]egardless of how the liquidated damage figure was arrived at, the liquidated damages clause will be enforced 'if the amount stipulated is reasonable for the particular agreement at the time it is made.'" (citations omitted)); Kothe v. R.C. Taylor Trust, 280 U.S. 224, 226 (1930). See also K-Con Bldg. Sys., Inc. v. United States, 107 Fed. Cl. 571, 594 (2012) ("[C]ourts will not enforce a liquidated damages clause when the amount of liquidated damages is 'plainly without reasonable relation to any probable damage which may follow a breach' or is 'so extravagant, or so disproportionate to the amount of property loss, as to show that compensation was not the object aimed at or as to imply fraud, mistake, circumvention, or oppression.'" (citations omitted)).
48 C.F.R. § 11.501(b) (2017) ("Liquidated damages are used to compensate the Government for probable damages. Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contract.").
K-Con Bldg. Sys., 107 Fed. Cl. at 595.
Cibinic, Administration, supra note 15, at 791.
See, e.g., Russell Motor Car Co. v. United States, 261 U.S. 514, 521 (1923) ("With the termination of the war[,] the continued production of war supplies would become, not only unnecessary, but wasteful. Not to provide, therefore, for the cessation of this production, when the need for it had passed, would have been a distinct neglect of the public interest."); United States v. Corliss Steam-Engine Co., 91 U.S. 321, 322 (1875) ("[T]he power to suspend work contracted for, whether in the construction, armament, or equipment of vessels of war, when from any cause the public interest requires such suspension, must necessarily rest with [the Secretary of the Navy]."); Torncello v. United States, 681 F.2d 756, 764 (Ct. Cl. 1982) ("The concept that the government may, under certain circumstances, terminate a contract and settle with the contractor for the part performed dates from the winding down of military procurement after the Civil War. . . . The case that first articulated this idea, and which generally is credited as providing the basic legal theory to support the modern termination for convenience clause, is United States v. Corliss Steam-Engine Co.").
See, e.g., 48 C.F.R. §§ 12.403, 49.501–505 (2017).
McDonnell Douglas Corp. v. United States, 567 F.3d 1340, 1350 (Fed. Cir. 2009) (designated by the Federal Circuit as McDonnell-Douglas XIV), vacated and remanded, 563 U.S. 478 (2011). See also McDonnell Douglas Corp. v. United States, 323 F.3d 1006, 1016–17 (Fed. Cir. 2003) (designated by the Federal Circuit as McDonnell-Douglas XII).
Id. at 1351 ("Of course, in some cases, it is possible that a conclusion drawn from a comparison of the entire contract effort and the time remaining for contract performance is so clear that it becomes dispositive. However, in cases such as the present one, where such a comparison is inapplicable, the court must examine other factors, including the contractor's failure to meet progress milestones, its problems with subcontractors and suppliers, its financial situation, and its performance history." (citations omitted)).
48 C.F.R. §§ 49.402-3, 49.403 (2017).
Id. § 49.402-3(c), (d). See also id. §§ 52.249-8(a)(2), 52.249-9(a). 52.249-10(a). Agencies do not have to provide a cure notice under certain circumstances, such as when the default is for failure to meet delivery or performance deadlines. Id. § 49.402-3(c).
Cibinic, Administration, supra note 15, at 792.
48 C.F.R. § 49.402-2(a) (2017). The procuring agency might also exercise its right to equitable price adjustment. See infra "Corrective Actions for Nonconforming Goods & Services."
48 C.F.R. § 52.248-8(f) (2017). See also Cibinic, Administration, supra note 15, at 792.
48 C.F.R. §§ 52.249-9(f), 52.249-10(a) (2017). See also Cibinic, Administration, supra note 15, at 791–92.
48 C.F.R. § 49.402-6 (2017). The excess procurement costs must be reasonable. Cascade Pac. Int'l v. United States, 773 F.2d 287, 293–94 (Fed. Cir. 1985) ("[E]xcess reprocurement costs may be imposed only when the Government meets its burden of persuasion that the following conditions (factual determinations) are met: (1) the reprocured supplied are the same as or similar to those involved in the termination; (2) the Government actually incurred excess costs; and (3) the Government acted reasonably to minimize the excess costs resulting from the default.").
48 C.F.R. § 49.402-2(a) (2017).
Id. § 49.402-7(a)–(b). See also id. §§ 52.249-8(h), 52.249-9(h), 52.249-10(d) (each stating: "The rights and remedies of the Government in this clause are in addition to any other rights and remedies provided by law or under this contract."). See, e.g., Armour of Am. v. United States, 96 Fed. Cl. 726, 771 (2010) ("Defendant has demonstrated that the termination for default of plaintiff's contract was reasonable and not in bad faith or an abuse of discretion . . . and defendant is awarded reprocurement costs in the amount of $1,507,438.00 and $45,630.00 in administrative costs, for a total sum of $1,553,068.00.").
See infra "Evaluation of Prospective Contractors During the Selection Process."
See infra "Exclusion Through Suspension & Debarment."
As previously mentioned, procuring agencies and contractors can voluntarily resolve disagreements over the performance of a contract, or when agreement cannot be reached, a federal court (typically, the U.S. Court of Federal Claims) or a board of contract appeals can review the dispute and enforce any remedies in accordance with the Contract Disputes Act. See supra notes 17-18.
48 C.F.R. § 52.249-14(a) (2017) ("[T]he Contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of these causes are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Contractor.").
See, e.g., Electro-Magnetic Refinishers, Inc., GSBCA No. 5035, 79-1 BCA ¶13,697.
"Success" could be achieved through the voluntary agreement of the procuring agency or pursuant to an opinion of a contract board of appeals or federal court. See supra notes 17-18 & 103 and surrounding text.
48 C.F.R. § 49.402-3(j) (2017) ("If the contracting officer determines before issuing the termination notice that the failure to perform is excusable, the contract shall not be terminated for default. If termination is in the Government's interest, the contracting officer may terminate the contract for the convenience of the Government."). See also id. §§ 52.249-6(b), 52.249-8(g), 52.249-9(g). 52.249-10(c). See also supra note 86 and surrounding text.
48 C.F.R. § 2.101 (2017).
Agencies cannot exercise this authority through an "abuse of discretion" or in "bad faith." Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1544–45 (Fed. Cir. 1996). ("A contracting officer may not terminate for convenience in bad faith, for example, simply to acquire a better bargain from another source. When tainted by bad faith or an abuse of contracting discretion, a termination for convenience causes a contract breach." (citing Torncello v. United States, 681 F.2d 756, 772 (Ct. Cl. 1982)); Allied Materials & Equip. Co. v. United States, 215 Ct. Cl. 902, 905–06 (1977); Nat'l Factors, Inc. v. United States, 492 F.2d 1383, 1385 (Ct. Cl. 1974); Keco Indus., Inc. v. United States, 492 F.2d 1200, 1203–04 (Ct. Cl. 1974); John Reiner & Co. v. United States, 325 F.2d 438, 442 (Ct. Cl. 1963).
See, e.g., Russell Motor Car Co. v. United States, 261 U.S. 514, 521 (1923); United States v. Corliss Steam-Engine Co., 91 U.S. 321, 322–23 (1875).
See, e.g., Krygoski Constr. Co., 94 F.3d at 1541.
Cibinic, Administration, supra note 15, at 964 ("The conversion of default to convenience terminations by boards [of contract appeals] and courts is a very common practice and has been extended to practically any reason for wrongful default termination."). See also Salsbury Indus. v. United States, 905 F.2d 1518, 1521 (Fed. Cir. 1990) ("It is not the province of the courts to decide de novo whether termination was the best course. In the absence of bad faith or clear abuse of discretion the contracting officer's election to terminate is conclusive." (citations omitted)).
Cibinic, Contract Changes, supra note 18, at 175. See, e.g., 48 C.F.R. § 52.249-6(h) (2017) (Termination (Cost-Reimbursement)) ("If the Contractor and the Contracting Officer fail to agree in whole or in part on the amount of costs and/or fee to be paid because of the termination of work, the Contracting Officer shall determine . . . the amount, if any, due the Contractor . . . which shall include the following: (1) All costs reimbursable under this contract, not previously paid, for the performance of this contract before the effective date of the termination . . . ; (2) The cost of settling and paying termination settlement proposals under terminated subcontracts . . . ; (3) The reasonable costs of settlement of the work terminated . . . ;" and (4) potentially portions of incentive fees.). See also id. §§ 52.249-8(f) (Default (Fixed-Price Supply and Service)), 52.249-9(f) (Default (Fixed-Price Research and Development)), 52.249-10(c) (Default (Fixed-Price Construction).
Torncello v. United States, 681 F.2d 756, 759 (Ct. Cl. 1982) ("The [termination for convenience] clause is intended to enable the contracting officer to stop or curtail a contractor's performance without involving the government in a breach that would render it liable for the contractor's anticipatory profits.").
See, e.g., 48 C.F.R. §§ 9.104-1, 15.304(c) (2017).
See, e.g., id. §§ 9.104-3(b), 9.104-6(b)(3) ("Contracting officers shall use sound judgment in determining the weight and relevance of the information contained in [the Federal Awardee Performance and Integrity Information System] and how it relates to the present acquisition.").
This discretion is subject to Administrative Procedure Act review. 5 U.S.C. § 706 ("The reviewing court shall . . . hold unlawful and set aside agency action, findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law . . . without observance of procedure required by law . . . ."). See, e.g., Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1333 (Fed. Cir. 2001) ("The traditional APA standard adopted by the Scanwell [Laboratories, Inc. v. Shaffer] line of cases allows for review of an agency's responsibility determination if there has been a violation of a statute or regulation, or alternatively, if the agency determination lacked a rational basis."); Todd Constr., LP v. United States, 88 Fed. Cl. 235, 247 (2009) ("In the bid protest context, the assignment of a past performance rating is reviewed only to ensure that it was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations, since determining the relative merits of the offerors' past performance is primarily a matter within the contracting agency's discretion." (internal quotations and citation omitted)).
Under certain circumstances, contractors have due process rights to at least receive notification of an agency's nonresponsibility determination "and some opportunity to respond to the charges before adverse action is taken." Old Dominion Dairy Prods., Inc. v. Sec'y of Def., 631 F.2d 953, 956–57 (D.C. Cir. 1980) ("We are mindful of the fact that Government agencies require sufficient latitude to ensure the efficient functioning of agency operations, and that the imposition of stringent due process requirements on every governmental decision could have devastating effects on the conduct of Government business. Nevertheless, we hold that when the Government effectively bars a contractor from virtually all Government work due to charges that the contractor lacks honesty or integrity, due process requires that the contractor be given notice of those charges as soon as possible and some opportunity to respond to the charges before adverse action is taken.").
48 C.F.R. §§ 9.105-2, 9.406-3, 9.407-3, 42.1501, 42.1502, 42.1503 (2017).
See, e.g., id. §§ 9.105-1(c), 9.104-6(a)(1); 42.1503.
See, e.g., id. §§ 9.105-1(c), 9.104-6(a)(1), 42.1503.
Past performance is just one component of the source selection evaluation criteria. See id. § 15.305(a)(2)(i) ("Past performance information is one indicator of an offeror's ability to perform the contract successfully. The currency and relevance of the information, source of the information, context of the data, and general trends in contractor's performance shall be considered. This comparative assessment of past performance information is separate from the responsibility determination required under subpart 9.1.").
A responsibility determination is generally required for all contracts other than those with state, local, and foreign governments, federal agencies and instrumentalities, and agencies for the blind and severely disabled, or where it "would be inconsistent with the laws or customs where the contractor is located." Id. § 9.102(a)(2).
Id. § 9.104-1(c). Contractors cannot be considered nonresponsible or responsible exclusively because they lack performance history. Id.
Id. § 9.104-1(g) ("To be determined responsible, a prospective contractor must . . . [b]e otherwise qualified and eligible to receive an award under applicable laws and regulations.").
Id. § 9.104-7(d) ("The contracting officer shall insert the provision 52.209-11, Representation by Corporations Regarding Delinquent Tax Liability or a Felony Conviction under any Federal Law, in all solicitations."). This solicitation clause requires contractors to attest affirmatively that they have not been convicted of federal crimes in the last two years and are not delinquent on their federal taxes. Id. § 52.209-11(b).
Past performance evaluation is generally required for "all source selections for negotiated competitive acquisitions expected to exceed the simplified acquisition threshold," unless the agency determines that such an evaluation is not suitable under the circumstances. 48 C.F.R. § 15.304(c)(3) (2017). However, there are exceptions, including at times, when using a Lowest Price Technically Acceptable contract selection process. Id. § 15.101-2(b).
Id. § 15.101 ("[I]n acquisitions where the requirement is clearly definable and the risk of unsuccessful contract performance is minimal, cost or price may play a dominant role in source selection. The less definitive the requirement, the more development work required, or the greater the performance risk, the more technical or past performance considerations may play a dominant role in source selection."). See also id. § 15.101-1(a), (c) ("A tradeoff process is appropriate when it may be in the best interest of the Government to consider award to other than the lowest priced offeror or other than the highest technically rated offeror. . . . This process permits tradeoffs among cost or price and non-cost factors and allows the Government to accept other than the lowest priced proposal. The perceived benefits of the higher priced proposal shall merit the additional cost . . .").
Id. § 15.305(a)(2)(ii). Prospective contractors generally must be given the opportunity to respond to material adverse past performance information. Id. § 15.306(d)(3). See also Q Integrated Cos., LLC v. United States, 126 Fed. Cl. 124, 145 (2016) ("The court concludes that during its discussions, the government failed to disclose to Q Integrated that its past performance submission either showed 'significant weaknesses' or constituted 'adverse past performance information,' in contravention of FAR § 15.306(d)(3) and the definitional terms of the solicitation.").
48 C.F.R. § 15.305(a)(2)(v) (2017).
Todd Constr., L.P. v. United States, 88 Fed. Cl. 235, 247 (2009) ("In the bid protest context, the assignment of a past performance rating is reviewed only to ensure that it was reasonable and consistent with the stated evaluation criteria and applicable statutes and regulations, since determining the relative merits of the offerors' past performance is primarily a matter within the contracting agency's discretion." (internal quotations and citation omitted)).
48 C.F.R. § 42.1501(a) (2017).
Id. § 42.1502(a). Past performance evaluations are not required for every contract. Id. § 42.1502(b)-(f), (h).
Id. § 42.1503(b)(2). Procuring agencies also are generally required to evaluate incentive fee performance, if applicable. Id. § 42.1503(c).
See, e.g., id. § 42.1503(h).
See, e.g., id. 9.405(a) ("Contractors debarred, suspended, or proposed for debarment are excluded from receiving contracts, and agencies shall not solicit offers from, award contracts to, or consent to subcontracts with these contractors, unless the agency head determines that there is a compelling reason for such action.").
See, e.g., 48 C.F.R. §§ 9.402, 9.406-2, 9.407-2 (2017).
See, e.g., id. §§ 9.402, 9.406-2, 9.407-2.
A procuring agency generally may suspend a contractor when there is "adequate evidence" that a contractor has committed the specified offenses. Id. § 9.407-2(a). An indictment of a specified offense qualifies as adequate evidence. Id. § 9.407-2(b). Grounds for debarment generally must be supported by a criminal conviction, a civil judgment, or "a preponderance of the evidence." Id. § 9.406-2(a), (b).
Id. §§ 9.406-2(a)(1), (debarment), 9.407-2(a)(1) (suspension).
Id. §§ 9.406-2(a)(3) (debarment), 9.407-2(a)(3) (suspension).
Id. §§ 9.406-2(a)(5) (debarment), 9.407-2(a)(9) (suspension).
Id. §§ 9.406-2(c) (debarment), 9.407-2(c) (suspension). A contractor may also be debarred for the "[w]illful failure to perform" and other "serious" violations of procurement contracts. Id. § 9.406-2(b)(1).
See, e.g., 40 U.S.C. § 3144(b) (2018) ("The Comptroller General shall distribute to all departments of the Federal Government a list of the names of persons whom the Comptroller General has found to have disregarded their obligations to employees and subcontractors [consistent with wage rate requirements of the Davis-Bacon Act]. . . . No contract shall be awarded to persons appearing on the list or to any firm, corporation, partnership, or association in which the persons have an interest until three years have elapsed from the date of publication of the list."). See also 48 C.F.R. § 2.101 (2017) (defining the term "Ineligible" to mean "excluded from Government contracting (and subcontracting, if appropriate) pursuant to statutory, Executive order, or regulatory authority other than this regulation (48 CFR chapter 1) and its implementing and supplementing regulations; for example, pursuant to—(1) 40 U.S.C. chapter 31, subchapter IV, Wage Rate Requirements (Construction), and its related statutes and implementing regulations; (2) 41 U.S.C. chapter 67, Service Contract Labor Standards; (3) The Equal Employment Opportunity Acts and Executive orders; (4) 41 U.S.C. chapter 65, Contracts for Material, Supplies, Articles, and Equipment Exceeding $15,000; (5) 41 U.S.C. chapter 83, Buy American; or (6) The Environmental Protection Acts and Executive orders.").
Clean Water Act, 33 U.S.C. § 1368 (2018) (amended by John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. No. 115-232, 132 Stat. 1636 (Aug. 13, 2018)); Clean Air Act, 42 U.S.C. § 7606 (2018).
48 C.F.R. §§ 9.405(b), 9.405-2 (2017).
Id. §§ 9.406-3 (debarment), 9.407-3 (suspension).
See, e.g., Horne Bros., Inc. v. Laird, 463 F.2d 1268, 1271 (D.C. Cir. 1972) ("While Gonzalez related to a five year disqualification, we think an action that 'suspends' a contractor and contemplates that he may dangle in suspension for a period of one year or more, is such as to require the Government to insure fundamental fairness to the contractor whose economic life may depend on his ability to bid on government contracts. That fairness requires that the bidder be given specific notice as to at least some charges alleged against him, and be given, in the usual case, an opportunity to rebut those charges.").
48 C.F.R. §§ 9.406-3(c) (debarment), 9.407-3(c) (suspension) (2017).
Id. §§ 9.406-3(b) (debarment), 9.407-3(b) (suspension).
Id. §§ 9.406-3(d) (debarment), 9.407-3(d) (suspension).
Id. §§ 9.406-3(f) (debarment), 9.407-3(e) (suspension). Information about such an administrative agreement must be submitted in FAPIIS. Id. §§ 9.406-3(f) (1)(debarment), 9.407-3(e)(1) (suspension).
31 U.S.C. §§ 3729-33 (2018).
41 U.S.C. § 7103(c) (2018).
31 U.S.C. §§ 3801-12 (2018). Although criminal provisions are outside the scope of this report, government contractors also potentially could be held criminally liable under certain circumstances. Potentially relevant provisions of the federal Criminal Code include 18 U.S.C. § 1001 (false statements), 18 U.S.C. § 287 (false claims), and 18 U.S.C. § 371 (conspiracy to defraud the government).
See, e.g., 31 U.S.C. § 3802(a)(1)(D) (2018) (stating the remedies provided under the Program Fraud Civil Remedies Act are "in addition to any other remedy that may be prescribed by law.").
Roberts v. Shinseki, 647 F.3d 1334, 1341 (Fed. Cir. 2011) ("[T]he PFCRA is not an exclusive remedy. The remedies it provides are 'in addition to any other remedy that may be prescribed by law.'" (quoting 31 U.S.C. § 3802(a)(1)(D))).
31 U.S.C. § 3729(a)(1)(A)–(G) (2018). See also CRS Report R40785, Qui Tam: The False Claims Act and Related Federal Statutes, by Charles Doyle ("The False Claims Act . . . proscribes (1) presenting a false claim; (2) making or using a false record or statement material to a false claim; (3) possessing property or money of the U.S. and delivering less than all of it; (4) delivering a certified receipt with intent to defraud the U.S.; (5) buying public property from a federal officer or employee, who may not lawfully sell it; (6) using a false record or statement material to an obligation to pay or transmit money or property to the U.S., or concealing or improperly avoiding or decreasing an obligation to pay or transmit money or property to the U.S.; or (7) conspiring to commit any such offense.").
31 U.S.C. § 3729(a)(1)(A)–(B) (2018).
Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 2001 (2016) ("The second question presented is whether . . . a defendant should face False Claims Act liability only if it fails to disclose the violation of a contractual, statutory, or regulatory provision that the Government expressly designated a condition of payment. We conclude that the Act does not impose this limit on liability. But we also conclude that not every undisclosed violation of an express condition of payment automatically triggers liability. Whether a provision is labeled a condition of payment is relevant to but not dispositive of the materiality inquiry.").
Id. at 1998–99 ("By punishing defendants who submit 'false or fraudulent claims,' the False Claims Act encompasses claims that make fraudulent misrepresentations, which include certain misleading omissions. When, as here, a defendant makes representations in submitting a claim but omits its violations of statutory, regulatory, or contractual requirements, those omissions can be a basis for liability if they render the defendant's representations misleading with respect to the goods or services provided.").
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 787 (4th Cir. 1999) ("Another set of cases involves False Claims Act liability for claims that would not be false under the district court's interpretation of the statute—the fraud-in-the-inducement cases. In these cases, courts, including the Supreme Court, found False Claims Act liability for each claim submitted to the government under a contract, when the contract or extension of government benefit was obtained originally through false statements or fraudulent conduct." (footnote omitted)).
31 U.S.C. § 3729(b)(1) (2018).
United States ex rel. Bettis v. Odebrecht Contractors of Cal., Inc., 393 F.3d 1321, 1326 (D.C. Cir. 2005) (quoting 31 U.S.C. § 3729(c), a subsequently amended statutory provision that is substantially similar to the current 31 U.S.C. § 3729(b)(2)).
Harrison, 176 F.3d at 788 ("The test for False Claims Act liability distilled from the statute and the sources discussed above is (1) whether there was a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and (4) that caused the government to pay out money or to forfeit moneys due (i.e., that involved a 'claim.'")).
31 U.S.C. § 3729(b)(4) (2018).
The maximum civil penalties for FY2018 are $21,916 to $22,363. Civil Monetary Penalty Adjustments for Inflation, 83 Fed. Reg. 13,826, 13,827–28 (Apr. 2, 2018).
31 U.S.C. §§ 3729(a)(1)(G), (a)(2)–(3); 3730(d), (g) (2018).
Id. § 3730(b). The government generally has the right to intervene in claims brought by individual relators. Id.
See 41 U.S.C. §§ 7101–09 (2018). See generally Cibinic, Contract Changes, supra note 18, at 223–86.
Daewoo Eng'g & Constr. Co. v. United States, 557 F.3d 1332, 1340 (Fed. Cir. 2009) (quoting S. Rep. No. 95-1118, at 20 (1978)).
41 U.S.C. § 7103(c)(2) (2018).
Daewoo Eng'g & Constr. Co., 557 F.3d at 1335 (quoting Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed. Cir. 1995)).
41 U.S.C. § 7101(9) (2018).
Commercial Contractors, Inc. v. United States, 154 F.3d 1357, 1362 (Fed. Cir. 1998).
41 U.S.C. § 7103(c)(2) (2018). See Daewoo Eng'g & Constr. Co., 557 F.3d at 1339 ("The Court of Federal Claims found Daewoo's entire $ 64 million calculation likely was fraudulent, but concluded that a penalty of only $ 50.6 million should be assessed because the remaining $ 13 million incurred cost claims could have been ultimately supported by alternative methodologies which, while incorrect, would not necessarily have been fraudulent." (footnote omitted)).
31 U.S.C. § 3802(a)(1) (2018).
%20Guide.pdf ("The PFCRA does not create any new civil fraud violations or change the way agencies receive allegations of false claims or false statements," except one: contractors can be held liable under the PFCRA for making false statements that are not tied to a claim).
31 U.S.C. § 3103 (2018).
Practitioner's Guide, supra note 211, at 2–4. See also 31 U.S.C. § 3103 (2018).
31 U.S.C. § 3803(c)(1) (2018). See also Roberts v. Shinseki, 647 F.3d 1334, 1341 (Fed. Cir. 2011) ("The PFCRA does not apply when more than $150,000 'is requested or demanded in violation of [31 U.S.C. § 3802]' in a fraudulent claim or a group of related fraudulent claims. 31 U.S.C. § 3803(c)(1); 38 C.F.R. § 42.6(a)(2). As indicated above, legislative history expressly refers to this restriction as a 'jurisdictional cap.' H.R. Rep. No. 99-1012, at 259 . . . ." (alteration in original)).
The maximum civil penalty for FY2018 is $10,781. Program Fraud Civil Remedies Act of 1986, Civil Monetary Penalties Inflation Adjustment, 82 Fed. Reg. 40,957, 40,957 (Aug. 29, 2017).
31 U.S.C. § 3802(a)(1)(D) (2018).
Id. § 3801(a)(4) (defining the term "investigating official.").
5 U.S.C. § 556 (2018). But see 31 U.S.C. 3803(g)(1)(B) (2018).
31 U.S.C. § 3803(f) (2018); see id. § 3801(7) (defining the term "presiding officer."). If the contractor does not request a hearing, the presiding officer may issue a decision on the matter based on the record submitted by the reviewing officer. See Practitioner's Guide, supra note 211, at 3.
31 U.S.C. § 3803(h) (2018).
Practitioner's Guide, supra note 211, at 3.
31 U.S.C. § 3805 (2018). The act only authorizes appeals by the contractor. Id.

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