Source: http://www.wifcon.com/discussion/index.php?/blogs/&page=1&sortby=blog_last_edate&sortdirection=desc
Timestamp: 2017-09-19 22:19:12
Document Index: 381698039

Matched Legal Cases: ['art 15', 'art 15', '§ 2', '§ 2', '§ 24', 'art 15', 'art 15', 'art 2', '§ 2', '§ 2', '§ 24']

By Vern Edwards August 6
A signal feature of source selection under FAR Part 15 as conducted today is solicitation and evaluation of “technical” (and/or “management”) proposals. Although FAR 2.101 conflates proposals with offers,[1] that attributes more dignity to “technical” proposals than they deserve. Under FAR Part 15, contracts are formed through offer and acceptance. Offers are promises—prospectively binding commitments to act or refrain from acting in a specified way.[2] “Technical” proposals are packages of information, the specific content of which depends on the instructions in RFPs. “Technical” proposals may contain promises, to be sure, but if they do they also contain illusory promises and nonpromissory statements: assertions of fact, descriptions, estimates, statements of expectation and contingent intention, sales pitches, and so forth. In most cases the various kinds of statements in proposals are so intermingled and worded as to make it hard to distinguish between what is being promised and what it not. As explained by one commentator: See also the Restatement (Contracts) Second § (2)(1): And § 2, Comment e: So when an agency awards a contract to an offeror, it will not be contractually entitled to everything that is in the winner’s “technical” proposal. It will be entitled only to that offeror’s performance as its contractor and to what that offeror promised to do or deliver. Unfortunately, what is so often found in “technical” proposals is the product of what is little more than an essay-writing contest. That is because essays are what agencies instruct offerors to submit. Consider the following proposal preparation instruction in an RFP for sign language interpreter services: Those instructions do not call for promises. They call for “demonstrations”, i.e, persuasive descriptions of various things, i.e., a sales pitch.[4] Even if incorporated into a contract, they will not bind the contractor if not written as promises. The “technical” proposal approach to source selection, in which offerors describe (but do not necessarily promise) how they intend to do this or that during contract performance and submit various plans for facets of performance—such as systems engineering, safety management, staffing, use of agile software development techniques, task order management, cost control, schedule control, risk management, and quality assurance—is in widespread use in source selection. Such content usually is not subjected to a thorough legal analysis. Instead, “technical” evaluators with no legal training read offerors’ submissions and judge them largely on subjective bases. The evaluators react to what they read by tagging certain statements in proposals as “strengths,” “weaknesses,” or “deficiencies” and assigning what they consider to be an appropriate adjectival rating—outstanding, good, acceptable, marginal, unacceptable, and the like—much like a professor grading a college test essay. The result of this method of source selection is decisions that are based on what is essentially advertising copy. Such proposals may not have high predictive value, and such practices do not ensure that the Government will be entitled to, or will receive, “best value.” The value to which the Government will be entitled will be obtained, if at all, from the things that the agency will be entitled to receive under contract. What it will be entitled to receive is (a) fulfillment of the promises the winning offeror made and (b) competent performance by that offeror. Thus, the proper things to evaluate are not essays in “technical” proposals, but offerors and their offers (promises). The offerors and their offers are the proper objects of evaluation. Evaluation of offers determines the value that each offeror promises. Evaluation of offerors determines the likelihood that each offeror will deliver on its promises. Source selection planners must ensure that evaluations are based on the attributes of offerors and their offers and not merely on creative writing. When offers include descriptions of the products to be delivered or the services to be performed, they must be the objects of “technical” evaluation, but they should also be the objects of a legal analysis to determine whether the statements in them constitute promises and to detect vagueness, ambiguity, and loopholes, intentional or otherwise. When planning a source selection the first thing an agency must decide is what to evaluate, i.e., what are to be the objects of its evaluation. In common parlance and according to the FAR, agencies evaluate proposals. But such parlance is based on a misconception. Proposals are not the things to be evaluated. They are merely packages of information. The things to be evaluated are offerors and their offers. Unfortunately, rather than thinking matters through on the basis of clear concepts and sound principles, many agencies take a cut-and-paste approach to source selection, uncritically borrowing schemes used in past acquisitions and cutting and pasting text from past RFPs. The result is that many half-baked ideas and poor practices are deeply embedded in acquisition culture and are passed on to future generations of acquisition personnel through on-the-job training. Regrettably, acquisition culture and the bid protest system are very forgiving, despite catastrophes.[5] No one knows how such practices have affected the value actually received from contract outcomes. The solution to these problems begins with better understanding and thinking, better source selection planning, and better choices of evaluation factors for award. [1] See FAR 2.101 definition of “offer”: Offer’ means a response to a solicitation that, if accepted, would bind the offeror to perform the resultant contract. Responses to invitations for bids (sealed bidding) are offers called ‘bids’ or ‘sealed bids’; responses to requests for proposals (negotiation) are offers called ‘proposals’; however, responses to requests for quotations (simplified acquisition) are ‘quotations,’ not offers.” [2] Restatement ( Second) of Contracts § 2(1) and § 24, Comment a. [3] Shearer, “How Could It Hurt To Ask? The Ability To Clarify Cost/Price Proposals Without Engaging in Discussions,” 39 Pub. Cont. L.J. 583, 596–97 (Spring 2010) (footnotes omitted). [4] See Edwards, “Streamlining Source Selection by Improving the Quality of Evaluation Factors,” 8 N&CR ¶ 56; and Edwards, “Still Waiting for a Reformed and Streamlined Acquisition Process: Another Essay-Writing Contest,” 22 N&CR ¶ 47, asserting that source selection too often is based on essay-writing contests. [5] See Jacobs Tech., Inc., v, United States, 131 Fed. Cl. 430 (2017); EDC Consulting, LLC, Comp. Gen. Dec. B-414175.10, 2017 CPD ¶ 185.
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Is A Lease A CDA “Contract?” Federal Circuit Says Yes
Although a lease may be a “contract” in common parlance, does a lease qualify as a contract under the Contract Disputes Act?
The answer is important, because the Contract Disputes Act provides jurisdiction for the Court of Federal Claims and Board of Contract Appeals to decide challenges to contracting officers’ final decisions. If a lease isn’t a contract under the Contract Disputes Act, government lessors could be in a bind.
The United States Court of Federal Claims recently decided the issue–and came down on the side of lessors, at least under the facts at hand.
In Lee’s Ford Dock, Inc. v. Secretary of the Army, 865 F.3d 1361 (Fed. Cir. 2017), the Court of Appeals for the Federal Circuit was called on to resolve a dispute between the United States Army Corps of Engineers and Lee’s Ford Dock, a marina operator on Lake Cumberland, Kentucky.
Lake Cumberland is a man-made lake resulting from the damming of the Cumberland River. The dam was constructed in 1951 by the Corps and has been in continuous operation ever since.
In 2000, Lee’s Ford Dock, Inc. entered into a lease with the Corps for roughly 166 acres of land and water real-estate on Lake Cumberland. The lease was for a 25 year term, with an option to extend for an additional 25 years. Importantly, under the lease, the Corps reserved the right to manipulate the water levels of Lake Cumberland.
In 2007, seven years into the lease, the Corps determined the dam was at a high risk of failure and initiated risk reduction measures, including lowering the water level. It was not until 2014 that remedial work on the dam was completed and the water level returned to its pre-2007 levels.
The drawdown of Lake Cumberland had significant ramifications for Lee’s Ford Dock, which was dependent on the higher water-levels for its marina operations. It filed a claim with the contracting officer for damages associated with the depressed water levels and reduced marina revenues. Lee’s Ford Dock alleged these damages totaled at least $4 million dollars.
The Contracting Officer denied the claim, and Lee’s Ford Dock appealed to the Armed Services Board of Contract Appeals. After the ASBCA ruled in the Corps’ favor, Lee’s Ford Dock appealed yet again, this time to the Federal Circuit.
The Corps argued that the Federal Circuit lacked jurisdiction because the case did not arise under the Contract Disputes Act. That forced the Federal Circuit to address a threshold question, is a lease a “contract” subject to the Contract Disputes Act?
Pursuant to Section 7102(a), the Contract Disputes Act generally applies to “any express or implied contract . . . made by an executive agency for” the following:
(3) the procurement of construction, alteration, repair, or maintenance of real property; or
Of the available options, the best chance for jurisdiction would be if the lease was considered personal property that the Corps disposed–the fourth item on the list above.
The Federal Circuit found the lease to constitute a contract for personal property. As the Court explained, “t is well settled that leasehold interests are items of personal property unless a statute commands otherwise.” As the Corps could point to no statute commanding otherwise, the Federal Circuit concluded that Lee’s Ford Dock’s right to operate a marina on the leased premises was personal property.
Next, the Federal Circuit considered whether the Corps “disposed” of property when it entered into the lease. The Court concluded the Corps did dispose of property through the lease and explained its reasoning accordingly:
“Dispose” is a broad term meaning “to exercise control over; to direct or assign for a use; to pass over into the control of some one else; to alienate, bestow, or part with.” By entering into the Lease with [Lee’s Ford Dock], the Corps “bestowed,” “directed,” and “assigned”—and therefore disposed of—a personal property right to [Lee’s Ford Dock] to operate a marina on the leased premises. The Lease therefore embodies a contract for “the disposal of personal property” within the purview of the [Contract Disputes Act].
Finding the lease was personal property that was disposed of by the government, the Federal Circuit concluded it had jurisdiction to decide the case on the merits. But unfortunately for Lee’s Ford Dock, it won the battle but lost the war: the Federal Circuit dismissed a portion of the appeal on different jurisdictional grounds, and affirmed the ASBCA’s ruling as to the remainder of the appeal.
Although Lee’s Ford Dock didn’t win its appeal, the Federal Circuit’s decision establishes an important precedent for those who engage in lease transactions with the government. While the Lee’s Ford Dock decision was specific to the facts at hand and won’t necessarily apply to every lease, the Court’s broad reading of the Contract Disputes Act is a good thing for contractors.
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A signal feature of source selection under FAR Part 15 as conducted today is solicitation and evaluation of “technical” (and/or “management”) proposals. Although FAR 2.101 conflates proposals with offers,[1] that attributes more dignity to “technical” proposals than they deserve.
Under FAR Part 15, contracts are formed through offer and acceptance. Offers are promises—prospectively binding commitments to act or refrain from acting in a specified way.[2] “Technical” proposals are packages of information, the specific content of which depends on the instructions in RFPs. “Technical” proposals may contain promises, to be sure, but if they do they also contain illusory promises and nonpromissory statements: assertions of fact, descriptions, estimates, statements of expectation and contingent intention, sales pitches, and so forth.
In most cases the various kinds of statements in proposals are so intermingled and worded as to make it hard to distinguish between what is being promised and what it not. As explained by one commentator:
The meaning of an “offer” for contract purposes is well settled. FAR Part 2 defines an “offer” as “a response to a solicitation that, if accepted, would bind the offeror to perform the resultant contract.” This accords with the commercial meaning of an offer, defined as “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” Both the GAO and the [Court of Federal Claims] have used this commercial definition to determine whether a government contract has been created.
In accord with the general rule for commercial contracts as expressed in the Restatement [(Second) of Contracts] and the FAR definition, the offer in a government contract consists of (1) a proffer of terms, i.e., performance specifications and clauses, consistent with those specified in the solicitation, and (2) the price specified by the offeror. If the Government selects an offer for award, it forms a contract by accepting the terms, including the price, of the offer….
The FAR does not define the word “proposal,” and the definition of “offer” [in FAR 2.101] fails to distinguish between the two terms, stating that “responses to requests for proposals (negotiation) are offers called ‘proposals.”’ However, proposals in response to a solicitation frequently contain much more than what is within the legal concept of an offer, as that term is used in contract law and defined in the FAR. The response may include other proposal information, such as past performance data, the qualifications of proposed key personnel, capability descriptions, and cost estimates not to be incorporated into any subsequent contract.[3]
See also the Restatement (Contracts) Second § (2)(1):
A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promise in understanding that a commitment has been made.
And § 2, Comment e:
Illusory promises; mere statements of intention. Words of promise which by their terms make performance entirely optional with the “promisor” whatever may happen, or whatever course of conduct in other respects he may pursue, do not constitute a promise. Although such words are often referred to as forming an illusory promise, they do not fall within the present definition of promise. They may not even manifest any intention on the part of the promisor. Even if a present intention is manifested, the reservation of an option to change that intention means that there can be no promisee who is justified in an expectation of performance.
So when an agency awards a contract to an offeror, it will not be contractually entitled to everything that is in the winner’s “technical” proposal. It will be entitled only to that offeror’s performance as its contractor and to what that offeror promised to do or deliver.
Unfortunately, what is so often found in “technical” proposals is the product of what is little more than an essay-writing contest. That is because essays are what agencies instruct offerors to submit. Consider the following proposal preparation instruction in an RFP for sign language interpreter services:
NON-COST/PRICE EVALUATION CRITERIA
Factor 1: Technical Approach - Offeror will be evaluated on interpreter service involving unusual or unique problems demanding creative approach and solutions. Offerors will be evaluated on problem solving alternative approaches and recommended solutions. Offeror should address the following topics relative to your overall approach:
· Demonstrate the company’s knowledge of current trends in the Deaf Community and interpreting profession;
· Demonstrate the ability to provide services in all location within five business days of award of the contract;
· Demonstrate your scheduling process to meet the scope of this contract;
· Demonstrate the ability to provide the community building activities and trainings;
· Demonstrate bills are current, complete, timely and accurate.
Factor 2: Personnel (Staffing) - Offerors academic, technical, and professional qualifications of interpreting staff are the most important aspects of personnel. Offeror must demonstrate the ability to obtain sufficient subject matter experts with recognized industry expertise to understand the technical factors. The Offeror shall present resumes, limited to two (2) pages each, representing the qualifications and certifications of the interpreters who will be assigned to this contract to provide core services. Resumes for Key Personnel and Non-Key Personnel shall address the following topics relative to the Contractors overall approach:
· Demonstrate the ability to provide interpreters with various interpreting styles as indicated in the RFP
· Demonstrate your staffing to meet criteria 1 of this contract.
· Demonstrate your staffing to meet criteria 2 of this contract.
Those instructions do not call for promises. They call for “demonstrations”, i.e, persuasive descriptions of various things, i.e., a sales pitch.[4] Even if incorporated into a contract, they will not bind the contractor if not written as promises.
The “technical” proposal approach to source selection, in which offerors describe (but do not necessarily promise) how they intend to do this or that during contract performance and submit various plans for facets of performance—such as systems engineering, safety management, staffing, use of agile software development techniques, task order management, cost control, schedule control, risk management, and quality assurance—is in widespread use in source selection. Such content usually is not subjected to a thorough legal analysis. Instead, “technical” evaluators with no legal training read offerors’ submissions and judge them largely on subjective bases. The evaluators react to what they read by tagging certain statements in proposals as “strengths,” “weaknesses,” or “deficiencies” and assigning what they consider to be an appropriate adjectival rating—outstanding, good, acceptable, marginal, unacceptable, and the like—much like a professor grading a college test essay. The result of this method of source selection is decisions that are based on what is essentially advertising copy. Such proposals may not have high predictive value, and such practices do not ensure that the Government will be entitled to, or will receive, “best value.”
The value to which the Government will be entitled will be obtained, if at all, from the things that the agency will be entitled to receive under contract. What it will be entitled to receive is (a) fulfillment of the promises the winning offeror made and (b) competent performance by that offeror. Thus, the proper things to evaluate are not essays in “technical” proposals, but offerors and their offers (promises). The offerors and their offers are the proper objects of evaluation. Evaluation of offers determines the value that each offeror promises. Evaluation of offerors determines the likelihood that each offeror will deliver on its promises. Source selection planners must ensure that evaluations are based on the attributes of offerors and their offers and not merely on creative writing. When offers include descriptions of the products to be delivered or the services to be performed, they must be the objects of “technical” evaluation, but they should also be the objects of a legal analysis to determine whether the statements in them constitute promises and to detect vagueness, ambiguity, and loopholes, intentional or otherwise.
When planning a source selection the first thing an agency must decide is what to evaluate, i.e., what are to be the objects of its evaluation. In common parlance and according to the FAR, agencies evaluate proposals. But such parlance is based on a misconception. Proposals are not the things to be evaluated. They are merely packages of information. The things to be evaluated are offerors and their offers. Unfortunately, rather than thinking matters through on the basis of clear concepts and sound principles, many agencies take a cut-and-paste approach to source selection, uncritically borrowing schemes used in past acquisitions and cutting and pasting text from past RFPs. The result is that many half-baked ideas and poor practices are deeply embedded in acquisition culture and are passed on to future generations of acquisition personnel through on-the-job training. Regrettably, acquisition culture and the bid protest system are very forgiving, despite catastrophes.[5] No one knows how such practices have affected the value actually received from contract outcomes.
The solution to these problems begins with better understanding and thinking, better source selection planning, and better choices of evaluation factors for award.
[1] See FAR 2.101 definition of “offer”: Offer’ means a response to a solicitation that, if accepted, would bind the offeror to perform the resultant contract. Responses to invitations for bids (sealed bidding) are offers called ‘bids’ or ‘sealed bids’; responses to requests for proposals (negotiation) are offers called ‘proposals’; however, responses to requests for quotations (simplified acquisition) are ‘quotations,’ not offers.”
[2] Restatement ( Second) of Contracts § 2(1) and § 24, Comment a.
[3] Shearer, “How Could It Hurt To Ask? The Ability To Clarify Cost/Price Proposals Without Engaging in Discussions,” 39 Pub. Cont. L.J. 583, 596–97 (Spring 2010) (footnotes omitted).
[4] See Edwards, “Streamlining Source Selection by Improving the Quality of Evaluation Factors,” 8 N&CR ¶ 56; and Edwards, “Still Waiting for a Reformed and Streamlined Acquisition Process: Another Essay-Writing Contest,” 22 N&CR ¶ 47, asserting that source selection too often is based on essay-writing contests.
[5] See Jacobs Tech., Inc., v, United States, 131 Fed. Cl. 430 (2017); EDC Consulting, LLC, Comp. Gen. Dec. B-414175.10, 2017 CPD ¶ 185.
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