Recently, the CFC rejected a bid protest action filed by Kellogg Brown & Root (KBR) with respect to one of the Army's LOGCAP contracts. The contractor had performed the logistics and civil augmentation contract, under which the Army issued task orders for different years, on a "cost-reimbursement basis." When the Army tried to change to a firm-fixed price arrangement for the 2013 close-out period, KBR balked and refused to submit a proposal—instead filing a bid protest action. The CFC dismissed the case, ruling that KBR did not properly invoke the court's bid protest jurisdiction but rather was attempting to litigate a contract administration dispute.
After years of submitting cost-reimbursement proposals under the LOGCAP agreement, it seems reasonable that KBR didn't want to switch to a firm-fixed price basis for the close-out period, as "there was 'no way to accurately define the scope or duration of work' and [the] '[l]egal, administrative compliance, audit response, vendor issues, subcontract close-out, and dispute resolution . . . are all unknowns.'" KBR made a series of arguments that the agency's request for a fixed price close-out period proposal was improper—including alleging that "the task order to be awarded was beyond the scope of the expired" contract (thus bringing the action within the exception to the bar on CFC jurisdiction to consider protests related to task orders, 41 U.S.C. § 4106(f)). At bottom, KBR was compelled to resist the agency's attempt to force contractor to accept substantially more risk near the end of the contract period than it presumably ever would have chosen to bear.
But a serious problem for a contractor arises when the agency is applying intense pressure to accept a modification or, as here, submit a proposal that would result in changing important terms of an existing contract. In a situation like this, the CDA may not provide a reasonable way to challenge the contracting officer's instruction, as there was no final CO decision to challenge. Even putting that problem aside, it is difficult to conceive of a way that a contractor could get a CDA dispute resolved by the court in a timeframe that would be helpful. (The CO was demanding prompt action, and a CDA lawsuit takes time to litigate.) As KBR apparently saw no better alternative, the contractor characterized its challenge to the CO's demand as a bid protest and alleged that the Government's "request for a proposal concerning reimbursement closeout costs constitutes a new procurement."
The CFC rejected KBR's five different arguments attempting to characterize the CO's demand as something that could be challenged in a bid protest. Among other things, the court explained: "Although most federal contractors were at one point offerors for the contracts they received, once the contracts are awarded their interests in disputes with the government are those of contractors, not offerors." In other words, after the LOGCAP contract was awarded to KBR, it could not protest the prospective pricing of a year's performance under that contract. Among other problems with KBR's position, the court ruled that 28 U.S.C. § 1491's jurisdictional grant to consider challenges with respect to competitive solicitations requires multiple ("plural") "bids and proposals." A single proposal by a contractor for the pricing of an additional year of an already-awarded contract is not sufficient.
Contractors often face dilemmas regarding how to challenge a CO action, such as the one presented to KBR, as the CDA's retrospective nature is often insufficient. Unfortunately, as the CFC explained, there is "a lengthening line of mostly persuasive precedents holding that contract awardees may not challenge agency decisions regarding their contracts by bringing bid protests."
Tags: Task Order Contracting
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2014. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.