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In this newsletter:

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WAGE DETERMINATIONS: MERE GUIDELINES OR MANDATORY REQUIREMENTS

FEDERAL POLICY LIKELY TO BAN TEXT MESSAGING WHILE PERFORMING GOVERNMENT CONTRACTS

EVEN IF THE CONTRACTING OFFICER DOESN'T UNDERSTAND THE SUM CERTAIN, THE BOARDS HAVE JURISDICTION

INVOICING THE AGENCY FOR INTEREST? ... NOT NORMALLY REQUIRED

SOMETHING NEW: THE PUBLIC CONTRACTING INSTITUTE

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The McCarthy, Sweeney & Harkaway, PC ("MSHPC") Government Contracts Newsletter provides news and tips to help you obtain and perform Government contracts. The editors are former high ranking Federal civilians, familiar with all aspects of both Federal civilian and military procurement. They bring to government contracts clients substantial legal experience in subcontracting, contract administration, contract formation (including bid protests), development of compliance programs and white collar criminal defense.

Government Contracts Newsletter Editor: Dick Lieberman, rlieberman@mshpc.com, Phone 202-775-5560 & Assistant Editor, Garry Grossman, ggrossman@mshpc.com; Phone: 202-775-5560

 
WAGE DETERMINATIONS: MERE GUIDELINES OR MANDATORY REQUIREMENTS?

A recent case at the Armed Services Board of Contract Appeals ("ASBCA") reminds us that Wage Determinations inserted in service contracts contain mandatory minimum wage and benefit amounts under the Service Contract Act, and not merely guidelines. Shawview Cleaners, LLC, ASBCA No. 56938, 2010 Westlaw 3737327.  In Shawview, a laundry and dry cleaning contractor asserted that Army and Air Force Exchange Service ("AAFES") personnel fraudulently induced it to enter into a contract by misrepresenting that the Department of Labor Wage Determination was merely a guideline and not a mandatory contract requirement.  The ASBCA held that Shawview was wrong on every count.

Shawview asserted that two AAFES employees known as "Service Business Managers" ("SBMs") with whom they worked had represented to them that the wage determination in their contract was a mere suggestion or guideline and the wages "were up to" Shawview.  Under the terms of the contract, only the contracting officer was authorized to waive or change contract terms, and neither of the SBMs was a contracting officer. Nor did the SBMs have written authority to change a wage determination. When the Department of Labor examined the contract and required Shawview to pay $64,000 in back wages because of wage determination underpayments, Shawview filed a claim, which the ASBCA denied.

The Service Contract Act of 1965, as amended, 41 USC Sec 351 et seq. requires the payment of minimum prevailing locality wage rates on government service contracts, such as this one for laundry and dry cleaning.  The contract here included appropriate Service Contract Act clauses, and contained a Department of Labor Wage determination, which Shawview was required to pay as a minimum wage with benefits.

The Board denied Shawview's appeal noting that there was no statutory provision, regulation or case law that gives any government contracting person, including the contracting officer, the authority to waive, modify, or exempt a service contract from the mandatory operation of the statute and the related wage determination.  Only the Secretary of Labor has that authority.  The Board noted that neither the contracting officer in this case, nor the SBMs had authority, either actual or apparent, to undermine the mandatory nature of the statutory wage determination as it applied to this contract.  To the extent appellant relied upon their legal opinions otherwise, this reliance was without legal basis and was unjustified as a matter of law.  "A misrepresentation, even if relied upon, has no legal effect unless the recipient's reliance on it is justified."  Restatement (Second) of Contracts, §164 cmt. d (1979).

TIPS: (1) If a wage determination is included or incorporated by reference in your contract, and the contract is subject to the Service Contract Act, which will be stated in the contract clauses, payment of at least the minimums in the wage determination is mandatory. They are not mere "guidelines."

(2) Except for the Secretary of Labor (who you are unlikely to encounter at any time during your contract performance) no one may modify, waive or exempt your contract from the Service Contract Act.  Never assume that anyone has such authority except for the Labor Secretary, regardless of what that person tells you.

(3) A wage determination states a mandatory minimum amount of wages and benefits.  Regardless of the wages and benefits you included in your offer (proposal or bid) to the Government, you must pay the minimums when you actually perform the contract.

(4) If you fail to pay minimums required by a wage determination, the Secretary of Labor may recommend that you be debarred, and prevented from receiving new government contracts.

(5) You may always pay more than the required wages and benefits in the wage determination in your contract, but you may never pay less.
 
 

FEDERAL POLICY LIKELY TO BAN TEXT MESSAGING WHILE PERFORMING GOVERNMENT CONTRACTS

A new FAR clause, mandated in all contracts, requires that contractors "should adopt and enforce policies that ban text messaging while driving company-owned or -rented vehicles or Government-owned vehicles, or privately-owned vehicles when on official Government business or when performing any work for or on behalf of the Government."  FAR 23.1105 prescribes the clause, which is at FAR 52.223-18,  Contractor Policy to Ban Text Messaging While Driving.  Note that the definition of "should" in FAR 2.101 is "an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance," so the ban is not mandatory. The clause appears below.
52.223-18  Contractor Policy to Ban Text Messaging While Driving.  (Sep 2010)
(a) Definitions. As used in this clause-

Driving-

(1) Means operating a motor vehicle on an active roadway with the motor running, including while temporarily stationary because of traffic, a traffic light, stop sign, or otherwise.

(2) Does not include operating a motor vehicle with or without the motor running when one has pulled over to the side of, or off, an active roadway and has halted in a location where one can safely remain stationary.

Text messaging means reading from or entering data into any handheld or other electronic device, including for the purpose of short message service texting, e-mailing, instant messaging, obtaining navigational information, or engaging in any other form of electronic data retrieval or electronic data communication. The term does not include glancing at or listening to a navigational device that is secured in a commercially designed holder affixed to the vehicle, provided that the destination and route are programmed into the device either before driving or while stopped in a location off the roadway where it is safe and legal to park.

(b) This clause implements Executive Order 13513, Federal Leadership on Reducing Text Messaging While Driving, dated October 1, 2009.

(c) The Contractor should-

(1) Adopt and enforce policies that ban text messaging while driving-

(i) Company-owned or -rented vehicles or Government-owned vehicles; or

(ii) Privately-owned vehicles when on official Government business or when performing any work for or on behalf of the Government.

(2) Conduct initiatives in a manner commensurate with the size of the business, such as-

(i) Establishment of new rules and programs or re-evaluation of existing programs to prohibit text messaging while driving; and

(ii) Education, awareness, and other outreach to employees about the safety risks associated with texting while driving.

(d) Subcontracts. The Contractor shall insert the substance of this clause, including this paragraph (d), in all subcontracts that exceed the micro-purchase threshold.

EVEN IF THE CONTRACTING OFFICER DOESN'T UNDERSTAND THE SUM CERTAIN, THE BOARDS HAVE JURISDICTION

Even if a contracting officer does not understand the "sum certain" in your claim, the Boards of Contract Appeals have jurisdiction to consider your appeal under the Contract Disputes Act.  This newsletter recently explained how critical it is to identify a "sum certain" when a contractor submits a claim to a contracting officer.  See "A 'Sum Certain' Means A Certain Sum, Nothing More Or Less," MSHPC Government Contracts Newsletter, Issue No. 86 (September 2010). Contractors should never say "approximately $XXX" or "no less than $YYY."  Be precise -- you may amend your sum certain later if you obtain additional information.  The Armed Services Board recently emphasized the importance of a sum certain, even if the contracting officer did not understand completely how it was arrived at.  Utility Const. Co., Inc., ASBCA No. 57224, Oct. 27, 2010.

In Utility, the contractor submitted a certified claim for $1,418,683.52.  The contractor submitted a chart summarizing the sixteen elements of the claim, one of which was "Delay and Disruption Costs" totaling $689,359.25, without any further breakdown.  The Government sought to dismiss the claim for lack of jurisdiction, arguing that the claim did not state a sum certain.  The Government stated that the contracting officer was unable to ascertain how appellant arrived at the delay and disruption portion of the claim.

The Board noted that the definition of claim in the FAR is "a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract."  The Board noted that this claim "meets the requirements relating to a sum certain and a contractor's failure to provide the contracting officer with sufficient detail in the claim so that the contracting officer can ascertain exactly how the sum certain was arrived at is not necessary for this Board to have jurisdiction over this appeal."  The Government's motion to dismiss for lack of jurisdiction was denied by the Board.

TIPS: (1) Always state a "sum certain" in a monetary claim.  You may always amend your claim if you obtain more information at a later date.

(2) It is not necessary to provide sufficient detail so the contracting officer can determine how you developed your claim amount, however, there is a greater chance that the contracting officer will allow all or part of your claim if you provide him/her with the necessary details.  Indeed, one of the major purposes of the Contract Disputes Act is to encourage resolution of contract disputes by negotiation at the contracting officer level rather than through litigation, and avoid appeals.   Stay, Inc, ASBCA No. 35496, 88-2 BCA ¶ 20650.

(3) Even if a contractor forces the contracting officer to consider its claim without detail, but then must appeal the claim, the contractor must prove its claim. An appellant bears the burden of proof on each of its claimed cost items.  See Environmental Safety Consultants, Inc., ASBCA No. 53485, 05-1 BCA ¶ 32,903, modified on other grounds on recons., 05-2 BCA ¶ 33,073. The contractor must prove both the reasonableness of each cost claimed and its causal connection to the event upon which the cost is based.  LA Limited, LA Hizmet Isletmeleri, ASBCA No. 53447, 04-1 BCA ¶ 32,478. The proof cannot be mere speculation or conclusory assertion.
 
 
 

INVOICING THE AGENCY FOR INTEREST? ...  NOT NORMALLY  REQUIRED

Many Government agencies seem to have a special desire to obtain an invoice for any money they disburse.  Sometimes this goes too far, as was the situation in Champion Bus. Svcs. V. General Services Admin., CBCA 1735-R, Recon. Nov. 10, 2010.  The GSA lost part of an appeal on a claim, but then refused to pay interest on the amount awarded by the Civilian Board of Contact Appeals.  The question there was interest on a Contract Disputes Act claim.

The Board held that the Contract Disputes Act of 1978 provides for the payment of interest on contractor claims "from the date the contracting officer receives the claim...until payment thereof."  41 U.S.C. §611.  The Board noted that interest on the award in Champion must be calculated as of the date the claim was received by the contracting officer, and thus, it was unnecessary for the contractor to invoice the amount because the contractor had already filed the requisite invoices for work performed when it submitted the disputed claim.

What about interest that arises because the agency fails to pay an invoice on time?  The Prompt Payment Act generally requires that agencies make payment within 30 days after a proper invoice.  If the payment is not timely, the Government must pay interest to the contractor for its tardiness.  (There is an exception for payment of interest only if there is a dispute over the amount of payment or regarding compliance with the contract.)  Under Prompt Payment Act regulations, interest must be paid automatically,  5 C.F.R. §1315.4(i), regardless of whether the vendor requests payment of the interest penalty.  5 C.F.R. §1315.10(b)(2). 

TIPS:  (1) It is not necessary to invoice an agency for interest on Contract Disputes Act claims, assuming you have already invoiced the agency for the disputed claim amount. Payment of interest is automatic and is required by law.

(2) It is not necessary to invoice an agency for interest on a proper invoice that was not paid on time by the agency -- the payment of interest is automatic and required by regulation.

(3) Agencies should not request invoices, but should cite to the regulations and law as the basis of automatic payment of interest.
 
 
SOMETHING NEW: THE PUBLIC CONTRACTING INSTITUTE

PCI was founded to deliver the highest quality acquisition training available today. PCI offers instruction by the most experienced and distinguished faculty in the field. Our faculty are practicing and expert professionals, with a wealth of knowledge and experience in their specialties and in teaching. They come from Government, industry, academia, and prestigious law and accounting firms. PCI guarantees first-rate instruction and course materials.   

Why choose PCI?

PCI was founded by a group of practicing professionals with extensive subject-matter expertise and instructional skills. PCI will deliver the most practical, immediate-use instruction and the highest quality learning experience.
 PCI will provide the most current and exceptional course materials.
PCI will tailor course content to meet your needs.
 

What PCI Offers

PCI offers training in all facets and at every level of Government Contracting, both to the public and private sectors.
Over 70 courses, covering a wide range of topics, including:

Bid Protests
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Cost Principles
Cost-Reimbursement Contracting
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CONTACT Tracy Andrle at 202-575-5770 or PCI, PO Box 27951, Washington, DC 20038
 
 
 
 
Contact Us
For any Government Contracts matter, contact Dick Lieberman or Garry Grossman at 202-775-5560.  We are located at  1825 K St., NW, Ste 700
Washington, District of Columbia 20006
rlieberman@mshpc.com
ggrossman@mshpc.com