Avoid Costly Mistakes With Contract Terminations

By Theodore Watson, Esq.

The staggering statistic of cases file at the Court of Federal Claims (COFC) should make contractors aware that the government does in fact deny claims that include terminations for convenience. The process is not as easy as most contractors may think.  By the time they reach the appeals stage, the damage is substantially done. An appeals attorney can only try to salvage the situation and recoupe and much damages as possible.

U.S. Court of Federal Claims (COFC)—Judgments and Appeals for the 12-Month Period Ending September 30, 2011

Number of cases terminated 609

Judgment Amounts Amount in Dollars

• Amount claimed in fiscal year 2011 filings 122,302,466,000
• Amount awarded in judgments for plaintiffs/petitioners ¹ 471,077,558
• Amount awarded in judgments for plaintiffs carrying interest 16,280,213
• Amount awarded in judgments for defendants on counterclaims or offsets 5,732,690
• Amount awarded in judgments for defendants on counterclaims or
• offsets carrying interest 87,879
• Amount awarded in judgments for third-party plaintiffs/petitioners 0
• Appeals pending October 1, 2010 302
• Appeals filed October 1, 2010, to September 30, 2011 120
• Appeals terminated October 1, 2010, to September 30, 2011 138

Decisions

• Affirmed 76
• Reversed (including those reversed in part) 11
• Dismissed 47
• Vacated 4

The following information should make government contractors aware of the dangers facing a termination for convenience.

First, government contractors must understand that in a termination for convenience, they bear the burden of proof to demonstrate compensable damages resulting from the termination. Jacobs Eng’g Grp., Inc. v. United States, 75 Fed. Cl. 752, 759 (2007). The scope of damages that contractors can recover following the Government’s termination for convenience is covered by the contract and the FAR terms incorporated therein. This means that:

• You are limited to statutory provisions
• You have to prove your damages to some extent
• You alleged damages are not always the government’s damages to you

To prevail on a termination for convenience claim, you must demonstrate that you have suffered an actual injury. See, e.g., Centex Corp. v. United States, 395 F.3d 1283 (Fed. Cir. 2005). In a breach of contract case, the innocent party should be placed in the same position that it would have been had the breach not occurred, but should not be placed in a better position. Bluebonnet Sav. Bank, FSB v. United States, 339 F.3d 1341, 1345 (Fed. Cir. 2003). Likewise, when the Government terminates a contract for convenience pursuant to the contract terms, the contractor is entitled to recover costs allowed by the contract and FAR clauses incorporated therein, but should not expect to be placed in a better position than had the contract run its normal course and the termination not transpired.

Even if you are attempting to assert that the agency has acted in bad faith, and you are looking to assert breach of contract damages, you simply cannot get a windfall. This is basic contract law. Any attempt to collect more than you would have absent the termination, such damages will be denied by the Court of Federal Claims.

Claims for Government’s Failure to Exercise Options

The Federal Circuit has also held that contractors are not entitled to damages based upon the Government’s failure to exercise options where the Government has the discretion to exercise the options, such as here. Hi-Shear Tech. Corp. v. United States, 356 F.3d 1372, 1380 (Fed. Cir. 2004).

Contractors face the danger of a dismissal if this is the basis for its claims. You must understand the power of a termination for convenience clause at the initial stages of the contract award. The government simply has a unilateral right to terminate for convenience when it is in the best interest of the government. The stunning question always becomes” what is an allowable reason for the agency’s termination of a contract?”

Pre-contract Costs Allowable in Termination for Convenience?

There is a difference between direct costs and pre-contract costs. Direct costs must be directly attributable to the performance of the terminated contract. Pre-contract cost are incurred prior to the contract award “in anticipation of being awarded a contract for the fire season.”

To recover pre-contract costs in a termination for convenience case, a contractor must show that the costs were (1) incurred in order to meet the contract delivery schedule, (2) incurred directly pursuant to the negotiation and in anticipation of the award, and (3) would have been allowable if incurred during contract performance. Penberthy Electromelt Int’l, Inc. v. United States, 11 Cl. Ct. 307, 315 (1986).

This is a danger that many contractors face when handling terminations for convenience without an attorney.

Settlement Costs and Proposals

Settlement costs generally are recoverable under FAR § 31.205 and include “[a]ccounting, legal, clerical, and similar costs reasonably necessary for . . . . [t]he preparation and presentation, including supporting data, of settlement claims to the contracting officer.” FAR § 31.205-42(g)(i). FAR § 49.206-1(c) provides:  

Settlement proposals must be in reasonable detail and supported by adequate accounting data. Actual, standard (appropriately adjusted), or average costs may be used in preparing settlement proposals if they are determined under generally recognized accounting principles consistently followed by the contractor.

Although every receipt is not required, you should always keep track of actual costs in anticipation for a termination for convenience. This is one internal control policy that you should always put into place at the initial award stage.

The FAR allows for the reimbursement of reasonable costs that a contractor incurs to prepare and submit a settlement proposal to a contracting officer following a contract termination. However, the danger is that the time spent for preparation of this level of termination must be in a manner that can be used for audit purposes. It must comply with the requirements of FAR § 49.206-1.

Furthermore, to the extent settlement proposal costs were incurred after the commencement of this litigation, the costs are improper because the FAR provides for settlement costs submitted to the contracting officer as a result of the termination. Settlement costs incurred because of pending litigation are not compensable under the FAR.

In sum, you must be aware of the subtle dangers lurking in a termination for convenience settlement stage. You must be aware of the certain types of damages allowed. Getting professional help can help you to avoid some costly mistakes. If you are seeking an attorney to assist in a termination for convenience case, call us  at 1-866-601-5518.

By: Theodore Watson, Esq.

The Veterans Benefits, Health Care, and Information Technology Act of 2006 requires the Department of Veterans Affairs to determine whether two or more service-disabled veteran-owned small business concerns can meet its requirement at a reasonable price before proceeding with a Federal Supply Schedule acquisition. The VA seemed to believe that it has discretion to decide when, and when not to search for SDVOSB before determining that it would resort to the Federal Supply Schedule.

The protestor, Aldevra filed this protest prior to the closing time for the solicitation, arguing that the agency acted improperly by using FSS procedures without first conducting market research to determine whether the procurement should be set aside for SDVOSB concerns. Aldevra asserts that if the agency had conducted market research, it would have found that at least two SDVOSBs could meet the requirement at a reasonable price.  In an email to GAO, the VA conceded that it did not conduct market research to determine whether two or more SDVOSB concerns could meet the requirement at a reasonable price.

In an attempt to get the protest thrown out, the VA then argued that Aldvera was not an interested party. This is a common tactic by the agency to get a GAO bid protest thrown out in the early stages.

Under the bid protest provisions of the Competition in Contracting Act of 1984, 31 U.S.C. §§ 3551-3556 (2006), only an interested party may protest a federal procurement. That is, a protester must be an actual or prospective bidder or offeror whose direct economic interest would be affected by the award of a contract or the failure to award a contract. Bid Protest Regulations, 4 C.F.R. § 21.0(a)(1) (2011). A protester is not an interested party where it would not be in line for contract award were its protest to be sustained. Four Winds Servs., Inc. , B-280714, Aug. 28, 1998, 98-2 CPD ¶ 57. 

GAO disagreed with the agency that Aldevra is not an interested party to pursue this protest. The protest here involves an allegation that the VA is required to conduct set-asides where specific conditions are met under a unique statute applicable only to the VA (i.e., the VA Act), rather than meeting its requirements using the FSS. In addition, the agency here has not contended that there is a reasonable expectation that two or more SDVOSB concerns holding FSS contracts could meet the requirement.

The VA then went on to argue that it was not required to conduct market research in this situation. The VA has addressed this issue before with GAO.  In fact GAO brought this point up. The GAO actual mentioned that  although the agency has defended numerous protests before our Office involving precisely this issue, this is the first time that the agency has raised these arguments. Thus, until this protest, the agency had not suggested that the phrase “for purposes of meeting the goals under subsection (a)” as it appears in 38 U.S.C. § 8127(d) grants the agency discretion to decide that in some procurements the mandate in the statute will apply, and in other procurements it will not.  The VA then attempted to argue how the statute should be now interpreted.

In matters concerning the interpretation of a statute, the purpose is clear: to determine and give effect to the intent of the enacting legislature. Philbrook v. Glodgett, 421 U.S. 707, 713 (1975). In furtherance thereof, the first question is whether the statutory language provides an unambiguous expression of the intent of Congress. If it does, the matter ends there, for the unambiguous intent of Congress must be given effect. Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc. , 467 U.S. 837, 842-43 (1984).

GAO found that the plain language of 38 U.S.C. § 8127(d) mandates that the VA “shall” conduct its procurements using an SDVOSB (or VOSB) set-aside when there is a reasonable expectation that two or more SDVOSB (or VOSB) concerns can meet the requirement at a reasonable price. The phrase “for purposes of meeting the goals” is part of an introductory clause that establishes exceptions to the mandate (those exceptions being when subsections (b) and (c) apply). The phrase explains the purpose for the mandate, which is to meet the goals established under subsection (a); however, the phrase does not create an exception to the mandate.

The problem apparently was credibility. Since the agency dealt with the same issue before, it was questionable as to why only now did it raise these arguments.

In the end, the GAO recommended that the agency conduct reasonable market research regarding its requirement under the solicitation. If it determines that there is a reasonable expectation that two or more SDVOSB (or VOSB) concerns can meet the requirement at a reasonable price, we recommend that the agency cancel the solicitation and re-solicit the requirement as an SDVOSB (or VOSB) set-aside.

GAO also rewarded Adevera’s efforts by recommending that the agency reimburse the protester the costs of filing and pursuing the protest. 4 C.F.R. § 21.8(d)(1). Aldevra’s certified claims for costs, detailing the time expanded and costs incurred, must be submitted to the agency within 60 days after receipt of this decision. 4 C.F.R. § 21.8(f)(1). See full decision here.

The lesson here is that agency’s still must adhere to setting aside projects for small businesses. If the FSS was a mandatory source, then the VA would have a stronger argument. Agencies should be conducting market research to see what capabilities are out there in the commercial marketplace. 

For additional information or representation in a GAO bid protest, contact the government contract attorneys at Watson & Associates, LLC. Call toll free at 1-866-601-5518.

Avoid Common Mistakes in 8a Terminations

By Idris Keith

The SBA is actively seeking reasons to terminate participants from the 8(a) Program. The approach is very hard to overcome when you try to handle things on their own. The most viable tool that the SBA uses in 8a termination is to allege that the participant violated the terms of the participation agreement. This is a broad net that general sweeps up many 8a certified companies. The key to successfully defending any type of 8a termination is to seek advice of qualified counsel in the initial stages. This allows for proper responses to the SBA an attorney could properly preserve your rights (and the record) for appeal.

The 8(a) program under the Small Business Administration is an opportunity for many entrepreneurs to gain access to contracts for which they would otherwise not be eligible.  Historically speaking; the intent of the United States Congress in establishing the 8(a) Program, HUBZones, WOSB, and SDB was to enable individuals who were chronically unemployed an opportunity to generate revenue for themselves.  The 8(a) application process can be an arduous and difficult task.  Be prepared to show the Government tax returns, resumes, flow charts, and other information necessary to make an informed decision regarding the likelihood of success in the 8(a) Program.

While the application process and eventual approval may be difficult, it is very easy to lose 8(a) certification.  Do not needlessly lose your 8(a) certification.  If you believe that you are different; that the SBA would not terminate your 8(a) status; or that you are too meticulous to fall into the difficulties that have befallen other 8(a) concerns.  My simple response to you is, “Not so fast.”  Termination of 8a certification is real and, regardless of your skill, it may happen to you. The walls of the SBA are paved with successful termination actions. Given the current need for accountability and transparency, the SBA is cracking down on misuse or noncompliance with the rules and law that regulates the 8(a) Program.

First, the SBA gives entrepreneurs 9 years to graduate from the 8(a) Program.  You may lose your 8(a) certification if you are an early graduate.  This means that prior to the end of the 9-year period, the revenues generated from your business exceed the NAICS Code upon which your business may be based.  For instance, in the field of construction, businesses cannot exceed $33.5 million in revenues.  In the event that this amount is exceeded, the SBA will determine that your business is other than “small” for the purposes of the SBA guidelines. 

Early graduation is not necessarily a good thing if you wish to continue under the 8(a) program in order to have access to federal contracts that you, otherwise, would not be eligible.  Upon a determination by the Director, Office of Business Development, you will have 45 days to appeal the decision of early graduation.  Similarly, you have 45 days to appeal a notice of termination.

For Further information on 8a terminations, call attorney Idris Keith at 1-866-601-5518 or contact him online.

[1] Early graduation is not a bad thing.  It means that your business is thriving.  If the participant does not appeal, the termination or graduation becomes the SBA’s final decision, effective on the forty-fifth day.[2]

Second, the SBA may find that your business is other than “small” when it exceeds the number of employees required under the program.  This number may vary, but for most industries, the maximum number of employees is 500.  This is also grounds for early graduation.

Third, the SBA may terminate businesses if it determines that you are affiliated.  In the event that businesses are determined by the SBA to be “affiliated,” their revenues and personnel will be combined by the SBA in makings its decision of whether the affiliated entities are “small” within the context of the SBA 8(a) program.  This issue deserves special attention.

In order to avoid needless size protests based upon affiliation, it is important that each entity under a joint venture, for example, have separate corporate offices, separate office space, separate fax and phone numbers, separate officers and/or directors, separate business accounts, separate personnel and separate equipment.  This evidences 2 separate and distinct entities that serve to rebut the initial ruling of affiliation.   

The foregoing represents common errors or inconsistencies that warrant the SBA to scrutinize the situation more closely.  After you have engaged in the necessary work to prevent termination, your 8(a) status may still be jeopardized if the 8(a) concern does not comply with every requirement of 13 CFR 124.513. 

Even still, the SBA may terminate 8(a) status if the 8(a) concern failed to notify the SBA of changes in the business entity.  Do not think that these “changes” must be major changes.  In fact, these “changes” sometimes can be rather minor.  The SBA wants to be made aware of any change in corporate form, membership, affiliations, partnerships, etc. 

Pay close attention.  Even in the event that the SBA is made aware of the existence of affiliations, partnerships, teaming agreements or mentor protégé relationships through means other than the 8(a) concern, the 8(a) concern must still notify the SBA of the relationships in order to maintain compliance with SBA guidelines.  If the 8(a) concern fails to do this, their 8(a) status may be terminated for failure to keep the SBA abreast of any changes with the business.

In order to avoid an  8a termination on this basis, always contact your District Office and notify them of all changes that may subsequently jeopardize 8(a) status.  You worked very hard to obtain certification.  Do not lose it in the blink of an eye. 

——————————————————————————–

[1]13 C.F.R. §§ 124.301-304.

[2]13 C.F.R. § 124.304(e).

The Decision to Terminate for Convenience

Know what to do and what not to do – avoid the most costly sins in termination.

By Theodore Watson, Government Contracts Attorney: The FAR Clauses give the government the right to terminate a contract for convenience when the contracting officer determines that the termination is in the government’sinterest. There is certainly no requirement to look out for a contractor’s best interest.

The FAR does not give a laundry list of situations that would be in the government’s best interest. The termination for convenience clause leaves this topic wide open. However,  as general rule, the government should not terminate a contract, but should allow it to run to completion, when the price of the undelivered part of the contract is less than $5,000.00. FAR 49.101(c).

Contractors should always ensure that delivery of notice is by certified mail or hand delivery. FAR 49.102.

Ways to Avoid Additional Damages in a Termination for Convenience Situation

One way to certainly cause yourself additional damages is to not follow the requirements imposed upon you after you receive notice.  You must attempt to terminate all subcontractors (beware of whether or not your subcontract contains the proper clauses); promptly submit your settlement proposal; protect and preserve property in your possession and stop work immediately.

As government contract attorneys, we generally inform clients that they should immediately notify the contracting officer of special circumstances that preclude work stoppage.

What is the Contracting Officer’s Duties after the Notice of Termination?

Many businesses, especially construction contractors, fall prey to listening to the people who cannot bind the government. This includes Contracting Officer Technical Representatives (COTR or COR).  These people are cannot bind the government – the contracting office can. Always consult a contract termination lawyer before you make these types of mistakes. Watson & Associates educates its clients on what  rules government must comply with during a termination for convenience. They include:

• Direct the action required of the prime contractor;
• Examine the contractor’s settlement proposal;
• Promptly negotiate settlement agreement ( or at least get through the parts that can be agreed upon.

The government typically takes its time.  In some instances, businesses rely on damages owed by the government in order to pay its bills. These amounts can be substantial. This is why having a law firm that understands federal procurement law can be beneficial.

Improper Use of the Termination for Convenience Clause

The government has a broad right to terminate a contract for convenience. This was especially true during the world wars when their end nullified the need for continued contracts. However, the bottom line is that businesses must be careful when challenging the agency’s use of the termination for convenience clause.

Does the government abuse its discretion at times? Of course it does. The question is how to you correctly challenge the decision. The reality is the government rarely writes laws to punish itself. Courts tend to rule on the side of the government most of the times. The court decisions of the ASBCA will support this comment.

Nevertheless, there are certain ways to prove a valid breach of contract. They include:

• Show that the government abused its discretion
• Prove bad faith

Skilled government contract termination lawyers should always analyze a particular case to determine whether in fact the contracting officer unlawfully used the termination for convenience clause to escape paying lost profits under a breach of contract and whether litigation is advisable.

By terminating in bad faith or arbitrary of capriciously, the government breaches the contract. Thus, permitting the contractor to recover breach of contract damages, including lost anticipatory (lost) profits.

Avoid a Costly Mistake

Understanding when a T4C proposal becomes a claim. Here you must submit your settlement proposal after the T4C is issued. Only when the contracting officer actually denies part of you damages does become a claim under the Contract Disputes Act. Contractors should seriously consult with a T4C lawyer on this matter.

For additional assistance contact the government contract termination law firm of Watson & Associates, LLC. Call toll free 1-866-601-5518.

Helpful Bid Protest Information

When you decide to file a bid protest, there are certain important points to keep in mind. The legal requirements of your bid protest submission must meet certain standards.  Facts must be sufficiently stated and considerations for the automatic stay rule are important.

Did you know that:

Protests must be clear and concise? Failure to submit a coherent bid protest may be grounds for dismissal. FAR 33.102(d) (1).

That as a protester, you must use due diligence to obtain the information necessary to pursue a bid protest? The most common mistake made by dissatisfied contractors is to not request a debriefing. GAO ruled that a protest based upon FOIA-disclosed information was not timely simply because the protester failed to request a debriefing.  Having a skilled bid protest law firm can help you to avoid some of these pitfalls.

Interested parties may request a review a level above the contracting officer of any decision by the contracting officer that allegedly violated applicable statutes or regulations and, therefore prejudiced the protestor/ offeror. FAR 33.103(d) (4).

Suspension of procurement. The contracting officer shall not make an award if an agency bid protest is filed before the award. FAR 33.103(f) (1) provides for an administrative stay of the contract award. In addition, under 31 U.S.C. § 3553(c) and (d) under a pre-award bid protest an agency may not award a contract after receiving notice of a timely protest from the GAO.

The government can override the automatic stay provision.  Many government contractors know about the general automatic stay rules. However, many businesses and even attorneys find themselves at the peril of the government when the agency overrides the stay.  For the agency to prevail, the head of the contracting activity – not the contracting officer, may, on a nondelegable basis, authorize the award of the contract: upon a written finding that urgent and compelling circumstances which significantly affect the interest of the United States will not permit waiting for the decisions of the Comptroller General AND the agency is likely to awards the contract within 30 days of the written override determination.

GAO Protests

An interested party should be next in line for award. As a bid protester, if you cannot receive award when you prevail on the merits of a GAO bid protest, then you may be deemed to be not an interested party. However, an actual bidder, not in-line for award, can be an interested party of it would regain the opportunity to compete if the GAO sustains the protest.  This can happen if GAO recommends resolicitation. Teltara, Inc., B-245806, Jan. 30, 1992, 92-1 CPD 128.

What can be protested? A bid protester must allege a violation of a procurement statute or regulation. 31 U.S.C. § 3552. In addition, GAO can review allegations of unreasonable agency actions. However, there are certain allegations that GAO will not review. This includes contract administration, Small Business Size Determinations, Small Business Certificate of Competency Determinations (COC) and 8(a) procurement decisions.

As government bid protest attorneys, we often receive calls from contractors that want to file a bid protest where the agency held extensive discussions with them but the government then decides not to issue the solicitation. In such an instance, one of GAO bid protest lawyers can help. GAO has elevated to consider such cases.  Health Servs. Mktg. & Dev. Co., B-241830, Mar. 5, 1991.

Bid protest filing deadlines.  Time limits for bid protests are set forth in 4 C.F.R. § 21.2 (2000). Pre-award protests challenging the propriety of the solicitation, must be filed prior to the bid opening or the date for receipt of proposals. In all other cases, the contractor must file its bid protest to the agency 10 days of when the protester knew or should have known of the bases for the protest.

Note: for GAO protests, they must be filed within 10 after receiving actual or constructive notice of the basis for the protest. This can include when you were thrown out of the competitive range.

Don’t get your case dismissed.  The GAO can dismiss your protest if it does not contain a valid ground for a protest. By having a bid protest attorney on your team can avoid dismissals of frivolous cases. You simply can make general allegations upon “information and belief. See Federal Computer Int’l Corp.—Recon., B-257618, July 14, 1994, 94-CPD ¶ 2.

A protest claim must also show material harm and enough information to show timeliness.

What Damages Can You Get?

GAO may award bid preparation costs when no other practical relief is feasible.

Cost is limited to that which is incurred in pursuing the claim before GAO.

Reasonable attorney fees are allowed.

Anticipatory profits are not recoverable.

Watson & Associates are GAO Bid protest lawyers seeking to avoid costly mistakes made by contractors. The above information is not intended s legal advice and should be a substitution for hiring a government contracts law firm. For addition help with GAO protests, contact us for a confidential consultation. Call toll free 1-866-601-5518.

Release Date: Friday, February 11, 2011

 Get specific guidance on how the 8a certification changes impact you

Call 1-866-601-5518 for the help of experienced 8a certification lawyers and consultants

Release Number: 11-12

WASHINGTON – The U.S. Small Business Administration today published a package of final rules that will revise regulations to strengthen its 8(a) Business Development program to better ensure that the benefits flow to the intended recipients and help prevent waste, fraud and abuse.

The rules were published today in The Federal Register and will become effective in 30 days on March 14, 2011.

The revisions are the first comprehensive overhaul of the 8(a) program in more than 10 years. The regulations incorporate technical changes and substantive changes that mirror existing or new legislation enacted since the last revision in June 1998.

“The 8(a) Business Development Program is an effective tool for providing small businesses with support to help them compete for and win federal government contracts, and in turn put them in the best possible position to drive economic growth and create jobs,” SBA Administrator Karen Mills said. “Through public meetings held in cities throughout the country, SBA gained valuable input from members of the small business community on ways to strengthen the program to provide the best opportunities for eligible firms, while also stepping up efforts to combat waste, fraud and abuse.”

The rules cover a variety of areas of the program, ranging from clarifications on determining economic disadvantage to requirements on Joint Ventures and the Mentor-Protégé program. Some of the components of the 8(a) program that the revised regulations will affect include:

• Joint Ventures – requiring that the 8(a) firm must perform 40 percent of the work of each 8(a) joint venture contract that is awarded, including those awarded under a Mentor/Protégé agreement, to ensure that these companies are able to build capacity;
• Economic Disadvantage – providing more clarification on factors that determine economic disadvantage as it relates to total assets, gross income, retirement accounts and a spouse of an 8(a) company owner when determining the owner’s ability to access capital and credit;
• Mentor-Protégé Program – adding consequences for a mentor who does not provide assistance to their protégé, ranging from stop-work orders to debarment
• Ownership and Control Requirements – providing flexibility on whether to admit 8(a) program companies owned by individuals with immediate family members who are owners of current and former 8(a) participants;
• Tribally-Owned Firms – requiring firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations and Community Development Corporations to report benefits flowing back to their respective communities;
• Excessive Withdrawals – amending regulations on what amount is considered excessive as a basis for termination or early graduation from the 8(a) program; and
• Business Size for Primary Industry – requiring that a firm’s size status remain small for its primary industry code during its participation in the 8a certification program.

The SBA initially published the proposed rule on Oct. 28, 2009 and provided a 60-day comment period for the public to submit their comments. Many businesses requested more time, so the SBA extended the comment period an additional 30 days, allowing the public to submit their comments by Jan. 28, 2010. In addition to requesting written comments from the public, the SBA also embarked on a “Listening Tour” and hosted public meetings between December 2009 and January 2010 in 10 cities around the country: Albuquerque, N.M., Atlanta, Ga., Boston, Mass., Chicago, Ill., Dallas, Texas, Los Angeles, Calif., Miami, Fla., New York, N.Y., Seattle, Wash. and Washington, D.C.

The SBA also conducted tribal consultations to gain further public input to the revisions in Albuquerque, Fairbanks and Anchorage, Alaska, and Seattle. In total, the SBA received more than 2,500 individual comments from the public.

The 8(a) program is a nine-year business development program for small businesses where the owner(s) fits the SBA’s criteria of being socially and economically disadvantaged and the same owners control the firm. The 8(a) program helps these firms develop their business and provides them with access to government contracting opportunities, allowing them to become solid competitors in the federal marketplace. It also provides specialized business training, counseling, marketing assistance and high-level executive development to its participants. In FY09, small businesses received $18.6 billion in 8(a) contract dollars.

For more information about the revised 8(a) regulations, a compliance guide and the 8(a) program, visit http://www.sba.gov/content/revised-8a-regulations.

Also contact the 8a certification consultants  and lawyers at Theodore Watson & Associates, LLC at -866-601-5518.

Colorado Limited Liability – Protecting Your Assets

Personal liability when operating a business is one main issue that most Colorado business owners tend not to worry about until someone tries to pierce the corporate veil (break the legal protections against personal liability when the business cannot afford the debt.) By then it can be too late. Having a good attorney that can advise you how to run your business can avoid personal liability claims.

Personal Liability Under  Colorado Business Law

As compared to a sole proprietorship or general partnership where your personal assets can be exposed to business debt, operating a business entity such as a limited liability company can shield your personal assets such as your car, personal bank accounts and home for exposure to creditors such as landlords and other creditors. When you for a new business entity, ensure that you consult with a reputable Colorado business lawyer that can explain the do’s and don’ts. For example,

• Never writer business checks in just your personal name
• Always ensure that you practice responsible behavior when contracting with third parties (avoid negligence)
• When advertising your business always add the proper designation ( LLC, LLP etc.)
• Ensure that the business formation is done correctly with the Secretary of State
• Ensure that you understand your role when you engage in contracts

Tax and Liability

A Colorado LLC is considered a “pass through” tax entity. This means that the profit and losses of the company are passed on to those who own it and reported on their personal tax filings / returns. The Colorado Limited Liability Company does not pay business taxes at the company level. Any tax due is handled on the personal taxes of the individual owners. Colorado llc formation has tax advantages that include the option to have the company taxed as a corporation, otherwise it is taxed as a partnership or sole proprietorship, however the need to file itemized business deductions, or a schedule K-1, is unnecessary. Nothing substitutes for the advice of a Colorado business law attorney and tax lawyer. For help forming a new Colorado limited liability company, contact the Denver lawyers of Watson & Associates. Call toll free 1-866-601-5518.

 From the Colorado Secretary of State

If you forgot to put “LLC”, “Inc”, “Corp”, or another required term or abbreviation in your business name.
If you did not include a required term or abbreviation indicating your type of entity when you registered your entity, you may add a term or abbreviation by filing a Statement of Correction or by filing Articles of Amendment.

Completing and submitting the Statement of Correction Correcting Information Other Than Principal Office Address or Registered Agent Information will allow you to correct the name by adding the appropriate term or abbreviation. Filing a Statement of Correction indicates that the name should have included the term or abbreviation at the time of registration.

Completing the Articles of Amendment will allow you to change the name. Articles of Amendment may be filed online.

To file a Statement of Correction or Articles of Amendment, go to the Business Home page, click “File a document affecting an existing record”, search for the entity, confirm you found the correct entity, and then select the document to be filed.

Most business entities are required by law to include a term or abbreviation indicating the type of entity, such as “LLC”, “Inc”, or “Corp” in their names. Specifically, a corporation’s name is required to include the term or abbreviation “corporation”, “incorporated”, “company”, “limited”, “corp”, “inc.”, “co.” or “ltd.” A limited liability company’s name is required to include the term or abbreviation “limited liability company”, “ltd. liability company”, “limited liability co.”, “ltd. Liability.co.”, “limited”, “l.l.c.”, “llc”, or “ltdThe terms or abbreviations may be capitalized in any fashion.

For additial assistance with your Colorado limited liability company issues contact Watson & Associates, LLC at 1-866-601-5518.

By Theodore Watson, Esq.

Many government contractors struggle in understanding their rights when the agency imposes a notice of termination for default or termination for convenience. There are a myriad of situations that could amplify a contractor’s rights or, conversely, minimize them. This is one reason why federal defense contractors should consider bringing an experienced government contract termination lawyer on board.

The government has a unilateral right to issue a termination for convenience. However, specific care must be used to analyze whether in fact the reasoning given by the agency meets the legal threshold. For example, an agency should merely terminate a contract for convenience merely because a contractor challenges the decision of the Contracting Officer (CO). A more acceptable reason would be lack of funding or the requirement no longer supports the mission.

Decision to Terminate For Convenience

When deciding the government’s interest, the FAR provides no specific guidance as to what the CO must consider.The termination for convenience clause under FAR 49.101(b) merely states that the CO shall terminate contracts only when in the government’s interest.

In reality the government has wide latitude. It is even allowed the preference for a constructive termination for Convenience instead of being faced with a breach of contract. For example, a government directive to end performance of work will not be considered a breach of contract but rather a convenience termination if the action could lawfully fall under that clause, even if the government mistakenly thinks a contract invalid, erroneously thinks the contract can be terminated on other grounds, or wrongfully calls a directive to stop work a “cancellation.” See G.C. Casebolt Co. v. United States, 421 F.2d 710 (Ct.Cl.1970); John Reiner & Co. v. United States, 325 F.2d 438 (Ct. Cl. 1963).

On the other hand, the government cannot use constructive termination for convenience as a defense to retroactively terminate a fully performed contract and to limit its liability for failing to order the contract’s minimum amount of goods or services. See Ace-Federal Reporting , Inc., v. Barram, 226 F.3d 1329 (Fed. Cir. 2000).

What Must A Contractor Do When Given Notice of a Termination for Convenience?

When you receive a termination letter, you should consider do the following:

1. Terminate all subcontracts (hopefully, you have a provision in your subcontracts to allow this);
2. Immediately stop work and order subcontractors to stop work;
3. If there are special circumstances when you cannot stop work, then immediately notify the CO
4. You should consider immediately settling subcontract claims. Always seek the advice of an experienced government contract attorney
5. Any property in your possession, then immediately preserve it
6. Promptly retain a contract termination for convenience attorney to help you draft and submit your termination settlement proposal

Is the Termination for Convenience Really a Breach of Contract Instead?

Oftentimes, federal contractors have privy to facts that question the government’s decision to terminate for convenience.  Sometimes, the facts are so egregious, that businesses want to challenge the termination decision. Unfortunately, the legal burden is substantially high. The Contractor has to show bad faith or clear abuse of discretion (often called the “Kalvar Test”). See Kalvar Corp., Inc., V. United States, 543 F.2d 1298 (Ct. Cl. 1976). In other words, inept government actions do not constitute bad faith.

If you are contemplating challenging a termination for convenience decision, ensure that you have an experience government contract law attorney to provide you with guidance.

What Options are There for Settlement ?

Normally, a contractor has one year to submit a settlement proposal from the date of the contract termination notice.  The two bases of settlement include (a) inventory settlement and (b) total cost basis. See FAR 49.206-2. Inventory basis in the preferred method.

• Cost of subcontractor settlement
• Settlement expenses
• Rentals under unexpired leases
• Subcontractor claims
• Profits

These are but only a few issues that arise under a termination for convenience. If you are a contractor seeking help with settlement or negotiations, contact Watson & Associates online or call 866-601-5518.

Budget & Plan for Government Effective Proposal Writing

By Theodore P. Watson , Esq.

A common stumbling block for most government contractors is the expensive costs for proposal writing. Responding to a government RFP can range between $16,000 and $50,000 (if you are seeking quality government proposal writers with experience and knowledge about the procurement rules.) There are several ways that you can save thousands in proposal writing efforts. They include:

1. Avoiding companies that build on numerous hours on unnecessary drafts. Reviewing the RFP and developing a compliance metrics up front will pave the way for gathering information on award criteria. Once the information is gathered, proposal writers are in a better position to start writing the first draft. You should never have to pay for four or more drafts. This is overkill.
2. Developing a plan of action up front on how to beat potential competitors. This is a highly missed, but very important, area because the government wants to get an instant impression of your company. Things to include:
   1. Addressing risk mitigation strategies
   2. Consider any warranty or free re- performance ( service contracts)
   3. Not trying to gain too much profit (the government is looking for lower pricing – not necessarily cheapest)
   4. Explaining why past performance (previous projects) are relevant ( it is your job to explain why)

Budgeting for government proposal writing is a critical aspect of obtaining government contracts. Our company finds that may bidders wait until a requirement for government opportunities is published to then scramble for funds. The result is that they try to find the cheapest person out there. There are many technical writers around the country but there are very few that truly understand the government contracting source selection process and how the federal agency thinks.

The end result is that you spend for cheapest proposal writing efforts that have no substance. This leads to no awards and a repetitive cycle that gets no results.  As government proposal consultants, we advise clients to increase the substance and depth of what you propose to the government and then increase the amount of bids. This strategy will increase the probability of award.

Avoid Common Mistakes in Proposal Writing & Teaming

Another way to save thousands of dollars in government proposal writing is avoid pitfalls when teaming with another contractor. This is especially important when small businesses are teaming with large contractors. In this scenario, a large business will probably supply the proposal writer. If you spend funds for proposal writingbut let the large company create substantial input, you could run the risk of losing the bid on a SBA size protest. When our consulting teamwrites government proposals, our attorneys also ensure that the efforts avoid this commonly missed mistake. Simply put, don’t spend thousands in a response to solicitation only to lose on a bid protest. Other common mistakes that can save money in the long run include:

• Hiring proposal writers based solely on technical writing (winning a government bid needs a more high-level and in-depth thought process.)
• Spending money on a ‘fluff’ only government RFP (the government agency knows this approach and will immediately discard your proposal.)
• Using proposal templates must be avoided at all cost. This is a costly mistake simply because each government RFP is unique and specific. Companies utilize templates over and over again in hope of landing millions. The truth is that agencies take the time to conduct market research, write the statement of work to suit a particular requirement. When you use templates you run the risk of:

• Not addressing specific concerns in the current response to solicitation
• Non-responsiveness
• Immediately losing credibility

What Does It Really Take To Succeed in a Government Proposal?

This is the six million-dollar question for many contractors. The key to successful proposal writing is to:

1. Understand what the government is asking for. Many contractors respond to government RFPs by attempting to change the requirement to what they want it to say. This is considered ‘the kiss of death.”
2. For each solicitation you must create a proposal development strategy that sets you apart from the competition. Only one person gets the bid.
3. Show the agency that you present the least risk (quality assurance plans).
4. Strengthen your management team. The government wants to know who is in charge (for this particular project.) Many bidders make the subtle mistake of just sending in an every-day organizational chart – another fatal mistake.
5. Take advantage of teaming partners or experienced subcontractors. For small businesses, this can be a very powerful way to escape the brutal hurdle of substandard past performance. The Federal Acquisition Regulations and case law allow the Contracting Officer to consider the prime’s past performance (they don’t have to). Note: A winning proposal must avoid allowing subcontractors to appear in control of the project.

In sum, government contractors should budget for meaningful proposal writing services. The adage that “you get what you pay for” applies in responding to government RFPs. Assuming that you have a proposal writer that understands government contracting and procurement (inside and out), the cost of a quality response to a government solicitation ( above $1Million) should cost between $16,000 to $40, 000 ( for contracts above $10million). If you need additional information or looking for high-level government proposal writers, contact us or call toll free at 1-866-601-5518.

Adjust Your Proposal Writing Strategies to Avoid Common Mistakes and Win Government Contracts

By Theodore Watson, Government Contracts Attorney & Consultant. When deciding to submit a bid for a federal government proposal, many businesses attempt to fly by the seats of their pants. The result is non-selection. Then, they repeatthe cycle only to get the same results. As government contract attorneys who handle bid protests on a daily basis, and having successfully led companies to winning proposals, we find that there are common mistakes made when it comes to government proposal writing.

10 Biggest Mistakes in Government Proposal Writing

1. Have you ever actually read the entire Request for Proposal? Government Contracting agencies publish solicitations for the public to bid on. There various sections that address certain aspects of the proposal. In order to effectively stand a chance of winning, you must understand the entire proposal requirement. Are you a company that merely skips to sections L and M? These sections are important. However, the other sections are equally important. For example, Section K (Representations and Certifications) mean that you must attest and certify certain things. For example if you are a small business, you must ensure that all questions are answered completely and truthfully. If not, your competitor may do your homework for you and file a bid protest to challenge your representations. This is common is a size protest. Reading the contents of an entire government contract proposal can be stressful and confusing. Sometimes, having an expert consultant on your team can make this process easier and more meaningful. However, never become tempted to avoid reading the entire proposal.
2. Do you understand the government’s problem in the proposal? Does this seem like an obvious question?  It may be.  Government contract proposals are often evaluated on the bidders understanding of the requirements. This means not only telling the government that you have done the same thing for so many years but also explaining the underlying problem. In a construction project, a further reading of the proposal can reveal unique site conditions. An explanation of the various problems that can arise on such situations may put you ahead of the competition.  Another example is a proposal for facility services on a remote island in the tropics. Here, you may want to discuss the various problems that may arise such as shipment of supplies and limited transportation avenues to the island. Nevertheless, many companies hire proposal writers that have no clue what the agency’s problem is. You can increase credibility by putting this in your proposal.
3. What have you done in the past that is similar in size and scope to this proposal? This is where many companies lack in their proposal writing efforts. Many make the mistake of just listing the past projects but never digging deeper to explain to the agency why the project is similar in scope and size. Many companies simply copy and paste the same projects used in a previous proposal. They do this simply because they won the last project and hope to repeat the same end result here.  Big mistake!  As government contract attorneys and consultants, we often see and attack such traps in bid protest, where the past performance submitted either was outside the time period stated in the solicitation or showed no relevance. The burden is on you to demonstrate similar projects both is scope and size. This problem especially arises in construction proposals.  A bidder may simply state that it had previously built a building for the Army Corp of Engineers. However, the proposal does not state the square footage or the level of electrical raceways included in the project. Nor did it state that the building was mostly concrete-based. In this situation, the government contracting agency and source selection team reads the proposal at face value. The result? You meet the competitive range but no award.
4. Have you ever looked into the benefit of teaming agreements? This is one of the most underutilized strategies in government proposal writing efforts.  Bidding on federal contracts often means going after larger projects. As mentioned in mistake # 3, when you go after large projects, it often means that you may be lacking in previous projects of similar size and scope. Hence the term “larger projects.” The simplest way to try to overcome this hurdle is to propose a teaming partner that has the experience with such large projects. Federal Acquisition Regulation (FAR) Subsection 9.6 allows you to do this. Here, you then up play the success and experience of the teaming partner. This can supplement any deficiencies that your proposal may have. This mistake often leads to no award.
5. Does your proposal accurately present the strengths of your management and key personnel? If it does not, your proposal will end up on the “possible awardees” and not the winner. When there are millions of dollars at stake, government contracting agencies want to look at the key players, the management staff, and frankly who is behind your business if they award the contract to you. Inexperienced proposal writers merely copy existing resumes into the proposal package. However, there is no analysis of the resume to see if it speaks to the important parts of the Statement of Work (SOW). This is a common mistake that ends up costing you points in your technical proposal.  You must also tell the government how the key personnel will contribute to the performance of the contract. Never let the agency assume. They simply don’t.
6. Do you actually tell the government HOW you will perform the various aspects of the SOW? One point that most successful companies WILL NOT tell you, is that a successful government proposal actually tell the source selection team HOW it intends to perform each aspect of the SOW. Never assume that any part of the SOW is a “no brainer.” You actually have to spell it out in your proposal. The Source Selection Team MUST justify in the record how it got to the award decision. It is common for bidders to simply summarize what they will do. This is a big mistake. Also never simply state  that “ we have read, understand and will comply with….” Your proposal will be tossed into the losers pile.
7. Do you propose a sound Quality Assurance Plan? If not, then you are failing to let the government contracting agency see that you have actually thought this project out. With every project or contract there are risks. Your task in successful proposal writing is to tell the government that you can see the problems and propose a way to minimize/solve them. Although many government proposals may not expressly ask for them – do it anyway.
8. Does your pricing even come close to the government’s estimate?  Many bidders lose out on federal contract because their prices are too high or too low. Each agency often conducts research to arrive at an independent government estimate (IGE). Always keep in mind that the United States Government is not a ‘cash cow.’ Government contracts are paid for by tax payers’ dollars.  Many companies, especially in construction proposals, simply get their estimators to put the numbers together and then roll the dice. The key to adequate pricing is to also see what the market is charging for such services or products. The analysis is not just what you need to make in profit.  Yes, there must be a go/no-go business decision. However, the government (if it does an adequate job in its research) will also inquire into market prices. You must come within the government estimate. Another point is that the lowest price is not the legal standard for award in government contracts – most solicitations expressly state that low pricing can send a message that the bidder does not understand the requirements. Instead, best value is the key.  You should also go over and beyond to tell the government what else you can offer besides sending them the widget it asks for. If you offer warranties, then tell them. An agency may pay other than lowest price for that warranty. Inadequate pricing is the biggest reason why government proposals fail.
9. Are you one of those companies that focus on customer satisfaction? If so, don’t spend unnecessary time talking about it in a government proposal. Frankly, the government doesn’t care. All it want to know is can you perform the work with minimal risk and at a fair and reasonable price.  In the commercial sector, consumers want to know that you care about them individually. However, in government contracts, avoid the “fluff” in proposal writing. It simply will not get you points.
10. Have you developed a winning strategy based upon the award criteria? Many bidders for government contracts jump right into proposal writing. However, they do not sit back for a minute to really analyze the award criteria and the approach to how they intend to maximize their scores. Government proposal writing means thinking things through and then putting the results on paper in a way that makes you more competitive. Again, the agency is required to grade your proposal against the stated award criteria in the solicitation. This is your road map. Follow it and learn to beat the competition in every aspect.

Conclusion

Submitting a successful government contract proposal is demanding and requires a well thought plan of action. Understanding the rules and clauses are also critical. You must thoroughly read each and every proposal as though it were your first. Pay attention to the award criteria and focus on telling the government that you understand the requirements, the risks associated with the requirement, and how you intend to overcome them. Contemplate the strengths of your management team and learn how to overcome any weaknesses. Finally, ensure that you know what the market calls for in pricing. The government does its homework by conducting its own estimate.

For help with your next government proposal, contact Watson & Associates, LLC. Call toll free 1-866-601-5518.