Chapter 7: Protests, Claims, Disputes, and Appeals
- The contingency contracting environment does not reduce or relieve the contractor’s right to protest, dispute, or submit claims, including appealing decisions.
- After receipt of a protest, the contingency contracting officer (CCO) needs to act quickly and contact the supporting legal counsel.
- To avoid time-consuming disputes and litigation, the CCO should strive to resolve contract performance issues by mutual agreement with the contractor.
- A CCO may be able to take simple, proactive actions to resolve disagreements between contractors and government team members. Resolve issues before they become full-blown protests, disputes, or claims and litigation when possible.
- Proper documentation is critical in protecting the rights of the government.
- Alternative dispute resolution (ADR) procedures should be added to contracts.
- CCOs must review and understand the requirements in Federal Acquisition Regulation (FAR) Part 33 and should be familiar with local acquisition instructions (AIs) and standard operating procedures (SOPs) that may exist to provide tailored guidance for the respective contingency location.
Effective lines of communication between the contingency contracting office and the supporting legal office are critical in dealing with protests, claims, disputes, and appeals. As part of deployment preparations, the CCO must identify and understand agency procedures and be familiar with the regulations and policy in FAR Part 33 that govern contracting officer response to protests, claims, disputes, and appeals. Introduce yourself to the supporting legal counsel to ensure the contracting and legal departments are synchronized with local procedures for the respective contingency environment. In addition, protests can sometimes be averted by frank and open communications with the vendors, which might recognize significant errors in solicitations and evaluations overlooked by the CCO because of the pace of the operation. The CCO should encourage vendors to attempt to resolve their concerns with the CCO before pursuing an agency protest. As a last resort, a protest can be filed with the Government Accountability Office (GAO). Although the vendor has complete freedom to protest in any forum, and the CCO is never an advocate of the vendor, the interests of the government can often be best protected when vendor concerns are resolved quickly and at the lowest level.
This chapter discusses actions that a CCO should take when notified of a possible protest, claim, dispute, or appeal.
- A solicitation or other request by an agency for offers of a contract for the procurement of property or services
- Cancellation of the solicitation or other request
- An award or proposed award of a contract
- Termination or cancellation of an award of a contract if the written objection contains an allegation that the termination or cancellation is based in whole or in part on improprieties concerning contract award
- Delivery orders and task orders under multiple award contracts that exceed $10 million, as specified in FAR 16.505 (a)(10)(B).
An interested party must have a direct economic impact from the award of the contract.
Protests to the agency. Executive Order 12979, “Agency Procurement Protests,” and FAR 33.103 establish policy and guidance on agency procurement protests. Before submission of an agency protest, all parties should make their best effort to resolve concerns raised by an interested party at the CCO level by undertaking open and frank discussions.
Protests to the agency must include the following (FAR 33.103(d)(2)):
- Name, address, fax, and telephone numbers of the protester
- Solicitation or contract number
- Detailed statement of legal and factual grounds for the protest, including a description of resulting prejudice to the protester
- Copies of relevant documents
- Request for a ruling by the agency
- Statement about the form of relief requested
- All information establishing the protester as an interested party
- All information establishing the timeliness of the protest.
Failure to substantially comply with these requirements may be grounds for dismissal of the protest.
Timelines. If a contractor decides to protest an alleged impropriety in the solicitation, it must do so before bid opening or the time designated for the receipt of initial proposals. In all other cases, the time limit for filing a protest is 10 calendar days after the grounds for protest were known or should have been known, whichever is earlier.
If an award is withheld pending agency resolution of the protest, the CCO must inform the offerors whose proposals or bids may become eligible for the contract award. If appropriate, the CCO should ask the offerors to extend the time for acceptance to avoid the need for resolicitation.
Pursuing an agency protest does not extend the time for obtaining a stay at GAO. Agencies may include, as part of the agency protest process, a voluntary suspension period when agency protests are denied and the protester subsequently files at GAO.
Agency actions after receipt of protest. After receipt of a protest, the CCO must immediately suspend performance pending resolution of the protest by the agency. This resolution includes any review by an independent, high-level official unless continued performance is justified. One exception to suspending performance is if the procurement is urgent and compelling, in which case the agency is permitted to continue with the procurement. Additional information on receipt of protests is available in FAR 15.505 and 15.506.
Agencies must make their best effort to resolve protests within 35 days after the protest is filed. Agency protest decisions must be well reasoned and clearly explain the agency position. The protest decision must be provided to the protester using a method that furnishes evidence of receipt.
Receipt of protest. As described in 4 Code of Federal Regulations (CFR) 21, this guidance focuses on protests before GAO, where the vast majority of protests are filed. After receipt of a protest, the CCO should immediately contact the supporting legal counsel. GAO protests are fast-moving actions: a government report is due to GAO within 30 days (or within 20 days under the express option), and GAO issues a decision within 100 days (or within 65 days under the express option).
Reachback. Reachback is a highly effective tool during a protest. A CCO’s legal counsel for working on bid protests may be a remote reachback asset. If the CCO has local legal counsel available, the local counsel is likely to work with a reachback legal office for support. Such reachback offices frequently work on bid protests and can respond rapidly to protest issues.
Protest before award. As described in FAR 33.104(b), when the agency receives notice from GAO of a protest filed directly with GAO, a contract may not be awarded unless authorized, in accordance with agency procedures, by the head of the contracting activity (HCA) on a non-delegable basis, after a written finding of the following:
- Urgent and compelling circumstances that significantly affect the interest of the United States will not permit awaiting the GAO decision.
- Award is likely to occur within 30 days of the written finding.
A contract award will not be authorized until the agency has notified GAO of the finding (FAR 33.104(b)(2)). When a protest against an award is received and the award will be withheld pending disposition of the protest, the contracting officer should inform the offerors whose proposals or bids might become eligible for award after the protest.
Protest after award. As discussed in FAR 33.104(c)(1), when the agency receives notice of a protest from GAO within 10 days after contract award, or within 5 days after a debriefing date offered to the protester for any debriefing required by FAR 15.505 or FAR 15.506), whichever is later, the contracting officer must immediately suspend performance or terminate the awarded contract. In accordance with agency procedures, the HCA, on a non-delegable basis, may authorize contract performance, notwithstanding the protest, upon a written finding of the following:
- Contract performance is in the best interests of the United States.
- Urgent and compelling circumstances that significantly affect the interests of the United States do not permit waiting for the GAO decision.
Contract performance (or continued performance) will not be authorized until the agency has notified GAO of the aforementioned finding. When a decision is made to suspend performance or terminate the awarded contract, the contracting officer should attempt to negotiate a mutual agreement on a no-cost basis. When the agency receives notice of a protest filed with GAO after the dates in FAR 33.104(c)(1), the contracting officer need not suspend contract performance or terminate the awarded contract unless the contracting officer believes that an award might be invalidated and a delay in receiving the supplies or services is not prejudicial to the government’s interests.
Most Prevalent Grounds for Sustaining Protests. In FY13, Congress added a new provision for GAO’s Annual Report on Bid Protests. This provision requires the report to “include a summary of the most prevalent grounds for sustaining protests” during the preceding year (31 United States Code (U.S.C.) 3554(e)(2)). During Fiscal Year (FY) 14, GAO sustained 13 percent of the decisions resolved on the merits. The most prevalent reasons for sustaining the protests in FY14 were (1) failure to follow evaluation criteria, (2) flawed selection decision, (3) unreasonable technical evaluation, and (4) unequal treatment.
The Bottom Line:
Planning for a source selection; communicating source-selection team requirements, roles, and responsibilities; and adherence to source-selection plans and evaluation criteria are all critical components of successful contracting and protecting the government’s interests if and when a protest occurs. Contracting officers must ensure documentation is completed pursuant to agency procedures and filed accordingly.
Response to a protest, the first 24 hours. The CCO should take the following actions within 24 hours of receipt of a written protest:
- Transmit a copy of the protest package to the supporting legal office. Do not release copies of the protest to other parties (such as the awardee or offerors) until you discuss the release with the legal office, as the protest may contain proprietary or source-selection-sensitive information.
- Confirm the identity of the attorney assigned to work on the protest, and exchange contact information (e-mail addresses and telephone numbers).
- Discuss the allegations with the attorney, and explain the impact on mission operations if a delay of award or performance is triggered by a protest.
- If a delay is triggered, the award cannot be made (pre-award protests) and contract performance may not begin (post-award protests).
- Following coordination with the assigned attorney, inform offerors and the awardee that a protest has been filed and that contract award or contract performance has been stayed. Ensure the assigned attorney informs GAO of the status of the delay.
- If the HCA authorizes contract performance, discuss this development with the attorney (FAR 33.104).
- Identify the key personnel who know the allegations in the protest, obtain their contact information, and provide it to the legal office. They may include technicians, evaluators, or personnel at the requiring activity. Inform them of the protest, and confirm their availability for the next 100 days (the protest time frame) to support the government’s response. Determine whether declarations, affidavits, or other statements of fact from key personnel will be necessary.
Response to a protest, the first 30 days. The first 30 days of any GAO protest are key. The government must submit its agency report to GAO and the protester within 30 days. This period gives the CCO and legal counsel an opportunity to assess the merits of the case and develop an appropriate response. Items to consider or accomplish are as follows:
- GAO protests typically are document intensive. The CCO and supporting legal counsel should decide on the best way to fulfill the requirements and assemble the agency report.
- The CCO should immediately coordinate with, and begin transmitting key contract documents to, the supporting legal counsel. This approach enables the counsel to understand the relevant facts and issues and to assess the merits of the protest early in the process. Such an approach also allows the legal office to begin assembling the agency report to GAO.
- CCO statement of relevant facts
- Bid or proposal submitted by protester
- Bid or proposal of the awardee
- All evaluation documents
- Other relevant contract and source-selection documents (such as debriefing slides).
CCOs should be aware of the classifications of the supporting documentation and follow agency security procedures before releasing sensitive or classified material. Given the short timeline involved, the CCO should communicate daily with counsel regarding the status of the protest.
Corrective action before day 30 (day 20 under the express option). GAO has held that the government is not liable for a protestor’s legal fees and costs if the government takes corrective action in response to a protest within the first 30 days (20 days under the express option). Timely review and assessment of the merits of a protest, however, help the acquisition get back on schedule and avoid potentially significant legal expenses.
Actions after day 30 (day 20 under the express option). A protester has 10 days to file a written response to the government’s agency report, usually in the form of a legal brief. GAO issues its decision by day 100 (day 65 under the express option). On occasion, to clarify the record or the issues involved, GAO requests a hearing and requires testimony from government officials.
A “claim,” as defined in FAR 2.101, 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 the contract. CCOs should understand and prepare for resolution of claims given the challenges of working in high-operational-tempo contingency environments.
The administrative burden that contractor claims can place on the CCO and the mission can be mitigated by an understanding of FAR and Defense Federal Acquisition Regulation Supplement (DFARS) requirements and flexibilities, an understanding of what is (and is not) a contract claim, continual communications with the contracting officer’s representative (COR), the existence and quality of contract file documentation, and the application of ADR techniques (DFARS Appendix A, Addendum II).
CCOs can mitigate contract claims by
- being proactive with all aspects of the contracting process and establishing working professional relationships with both the customer and the contractor;
- establishing a strong communication network for contract parties to discuss and correct issues, especially when unforeseen;
- ensuring contract requirements, terms, and conditions are clear to both the government and the contractor and are followed; and
- providing customer training on the development of contract requirements and the claims process (which greatly reduces ambiguous specifications or requirements and mitigates unauthorized communications and commitments between non-contracting personnel and the contractor).
As appropriate, the CCO should strive to resolve contract performance issues by mutual agreement with the contractor, thereby avoiding distracting and frequently time-consuming litigation. Clarification and discussion of the contractor’s perception of the problem may be enough to resolve a disagreement. When a claim (or a potential claim) arises, the CCO should contact the supporting legal counsel and contracting leadership for assistance and advice. If an agreement cannot be reached with a contractor, the CCO must issue a final decision on the contractor claim. During a contingency, the CCO must strike a balance between expeditious settlement of contract claims and protection of government interests. Other recommended actions include clarification of contractor performance (to create a clear record of what the contractor did) and performing ongoing market research (to monitor fair and reasonable price data).
CCO actions for contractor claims received. Because of the high operational tempo of contingency contracting, responding to contractor claims and disputes can divert precious time from the mission. The CCO should consider or accomplish the following:
- A claim made by the contractor must be submitted in writing to the CCO.
- Not every contractor request for costs or other relief is a claim. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim. Another example is a contractor request for equitable adjustment (REA)—a request that is related to changed or increased contract requirements. The CCO should first determine the type of request the respective contractor is making.
- Unlike requests for adjustments, the submission of a contract claim begins accrual of interest on the claim.
- Seeking early and frequent counsel from the supporting legal office will greatly assist the response to contractor claims.
- After receiving a claim that exceeds $100,000, the CCO should ensure the claim is certified by the contractor, consistent with FAR 33.207.
- Any suspected fraudulent claim or other misrepresentation of fact should be reported to the supporting legal office and the chief of the contracting office (COCO).
Contingency contracting officer final decision. The CCO must consider the following points when making a final decision regarding a claim:
- The CCO should use the specialized skills of the functional representatives (such as the COR) when addressing the facts and issues in dispute.
- Final decisions for a claim of $100,000 or less must be issued within 60 days after receipt of the claim.
- For claims exceeding $100,000, within 60 days after receipt of a certified claim, the CCO must either issue a final decision or notify the contractor when a final decision will be issued.
- Final decisions are prepared in accordance with FAR 33.211. They must include notification to the contractor pursuant to the disputes clause in the contract.
- The CCO’s final decision to deny a contractor claim (either in part or in whole) can result in a dispute by the contractor under the applicable contract disputes clause.
Procedures and requirements for asserting and resolving claims subject to the Disputes Act (FAR 33.202) are contained in 41 U.S.C. 7101. The rules for handling contract disputes and appeals are the same in contingency environments as they are for routine operations at home base. As discussed, the CCO should work diligently to resolve disputes at the CCO level through mutual agreement of the parties. As with bid protests, the CCO should seek legal support, which may be provided by a reachback attorney. Experience shows that early involvement by legal counsel before the contracting officer’s final decision can help avoid a contractor appeal. If an appeal is received, legal counsel can support the CCO in assessing and orchestrating a government response to the contractor appeal. The underlying record of evidence related to any contract dispute is critical to crafting the government’s response. By applying a few simple practices, the CCO can greatly enhance the underlying contract record and the government’s position in a contract appeal. DoD contractors should send appeals to the following address:
Armed Services Board of Contract Appeals
Skyline 6, Room 703
5109 Leesburg Pike
Falls Church, VA 22041-3208
A few best practices. In general, contract disputes involve issues that develop over time and require a series of actions by the contractor and government personnel. In a contingency contracting environment, assembling an adequate contract record presents unique challenges.
To mitigate these challenges, the CCO should employ the following simple tools in the contingency contracting office:
- Digital and video images. As so often noted, a picture is worth a thousand words. Case law and experience demonstrate that evidence obtained concurrently with contract performance or a disputed event generally is given greater weight than evidence cobbled together after contract litigation begins. The CCO should ensure that inspectors, quality assurance personnel, CORs, and other representatives make it a standard practice to use digital cameras when able. This approach is particularly valuable for vehicle leases in the area of responsibility (AOR). Pictures and videos should be e-mailed immediately to the CCO for review and should be included as part of the contract file. Such pictures are especially useful for assessing, if not enhancing, the strength of the government’s case.
- Accounting for personnel turnover. The turnover of government personnel involved in contingency contracting actions impedes developing the government’s case in an appeal. The CCO should work with J1, Manpower and Personnel, to ensure that key witnesses, past and present, can be located. The CCO must employ a personnel locator process that permits the CCO and successors to identify and locate witnesses, including personnel who redeploy away from the contingency. At a minimum, the CCO should inform key personnel about the appeal and their associated roles and should ensure that the government can locate them if necessary.
- Contract files and related documentation. The key to success in prosecuting any contract dispute is the availability of contract documents. Without the necessary documents, a case is seriously weakened. Hence, the CCO should establish an administrative process for obtaining and filing the documentation that underlies a contract action.
- Storage and retrieval. The CCO should consider developing an electronic contract file where documents, digital pictures, charts, and other records can be readily stored and retrieved. CCOs also should make an electronic copy of all e-mails pertaining to claims and should include them with the contract file before leaving the AOR. This documentation might be needed later to assist with claims.
- Appeals. As appropriate, the CCO should use the reachback legal office to assemble the underlying record for any contract appeal, referred to as the “Rule 4 file” (DFARS Appendix A, Rules 19 and 20). At this point, the CCO practice of establishing an electronic contract file pays significant dividends.
If a dispute cannot be resolved between the parties, a protracted litigation process often results. To avoid distracting, time-consuming litigation, the CCO may consider negotiating a settlement with the contractor or using more formal ADR procedures (FAR 33.214). In either event, the CCO should always seek the assistance and support of legal counsel. As stated previously, CCOs should regard legal counsel as useful problem-solvers who can help negotiate settlements or pursue ADR measures, expediting the resolution of contractor disputes and reducing negative impacts on the mission. A timely agreement developed by the parties—rather than a decision resulting from litigation—is better in maintaining a continuing business relationship with the contractor and other industry partners during a contingency.
ADR elements. The essential ADR elements are (1) existence of an issue in controversy, (2) voluntary election by both parties to participate in the ADR process, (3) agreement on an alternative procedure and terms, and (4) participation in the process by officials of both parties who have the desire and authority to settle the dispute. If ADR is used, the CCO should consider the following tips before beginning:
- Know your facts.
- Avoid using words and body language that might produce a negative reaction.
- Be professional, and observe local customs at all times.
- Develop an appreciation for the other side’s viewpoint.
- Diffuse hostilities and conflict at the start. Facilitate an environment where direct communication can take place to allay confusion as to what the parties are working to achieve.
- If using a mediator or facilitator, talk to the other side, not the mediator, who is there to help, not to judge.
- Consider the time and cost when conducting dispute resolution efforts.
- Use simple, clear, and concise language, and recognize that most people want to settle a dispute.
Claims under ADR. If a claim has been submitted, ADR procedures may be applied to all or only part of the claim. If ADR is used subsequent to a CCO’s final decision, its use does not alter any of the time or procedural requirements for filing an appeal, nor does it constitute reconsideration by the CCO of the final decision.
Continued performance. If a determination is made under agency procedures that continued performance is necessary pending resolution of any claim arising under (or relating to) the contract, the CCO must use the disputes clause (FAR clause 52.233-1 and Alternate I when applicable).
Reminder. The CCO must remember to insert FAR clause 52.233-1, “Disputes,” in all solicitations and contracts unless the conditions in FAR 33.203(b) apply. Also, the CCO must insert FAR clause 52.233-4, “Applicable Law for Breach of Contract Claim”—which states that U.S. law applies during breach of a respective contract—into all solicitations and contracts.
Request for equitable adjustments. Government policy is to try to resolve all contractor REAs at the contracting officer level without litigation. If a mutual agreement regarding an appropriate equitable adjustment to the contract cannot be reached with the contractor, the contractor can submit a claim. The contracting officer must then issue a final decision on the contractor claim (see Chapter 7). The CCO should ensure the contract file is updated to include REA supporting documentation, correspondence and the CCO’s final decision.
A valid final decision by the contracting officer must meet the following conditions (FAR 33.211):
- Be recorded in writing.
- Be the decision of the contracting officer.
- Inform the contractor of the right to appeal.
- Adequately inform the contractor of the reasons for the contracting officer’s decision.
See your legal counsel for support as needed.
The following references were not mentioned in this chapter but offer additional information related to protests, claims, disputes, and appeals:
- 10 U.S.C. 2305, Contracts: Planning, Solicitation, Evaluation, and Award Procedures
- 5 U.S.C. 504, Costs and Fees of Parties
- 5 U.S.C. Chapter 5, Subchapter IV, Alternative Means of Dispute Resolution in the Administrative Process
- 10 U.S.C. 2324, Allowable Costs under Defense Contracts.