Category Archives: Litigation

Strategies for Responding to Bid Protests in Government Contracting

By: Coleman Jackson, Attorney & CPA
October 20, 2021

Strategies for Responding to Bid Protests in Government Contracting

Suppose your company is an unsuccessful bidder for a government contract or has won an award, and an unsuccessful bidder is protesting your prize. In that case, it is essential to defend your rights vigorously. In the federal market, bid protests are an integral oversight mechanism, ensuring that procurement statutes and regulations carry out federal acquisitions policy goals. Or Suppose a company believes the federal government failed to comply with the terms of a solicitation (i.e. IFB, RFP, RFQ, etc.) or applicable laws or regulations in a procurement transaction. In such instances as these, the company (bidder) must follow strict rules or face losing the right to protest. What is a bid protest?  A bid protest is a legal challenge to the government’s actions during the procurement phase, including evaluating bids/proposals and the award of a government contract.  The how, when, and where of bid protests are controlled by various laws and regulations.

Bid protests can be brought in different forums and are subject to strict timelines that must be followed appropriately. Whether defending a protest as a successful awardee, or prosecuting a protest as a disappointed bidder, all government contractors must understand the bid protest process to defend their contract awards from protest successfully or vindicate their rights to full and open competition as a protester. First of all, let’s clear up some confusion and doubts about the bid protest process.

 

Bid Protest Overview

Bid Protest Overview

Bid protests are legal challenges brought by bidders against the way the Government has conducted a procurement transaction.

An interested party may protest to the agency, the Government Accountability Office (GAO), or the United States Court of Federal Claims (COFC).

Which venue is best to bring a bid protest will depend upon various facts. Primary considerations include the value of the procurement to your company, the cost of pursuing a protest in the particular venue, whether the protest would be timely in the venue (i.e. a protest that is untimely in the GAO may be timely in the COFC), and whether the protest will involve information that requires a protective order (i.e., competitive communication is limited to the attorneys, and not disclosed to the companies involved). In recent years, most bid protests are filed with the GAO, so in our blog, we will focus on the GAO bid protest process.

GAO has defined the basic standard of its review of a bid protest as follows:“ The evaluation of an offeror’s proposal is a matter within the agency’s discretion. A protester’s mere disagreement with the agency’s judgment in its determination of the relative merit of competing proposals does not establish that the evaluation was unreasonable. While we will not substitute our judgment for that of the agency, we will question the agency’s conclusions where they are inconsistent with the solicitation criteria and applicable procurement statutes and regulations, undocumented, or not reasonably based.”

 

How many days you have to file a protest will depend the basis for the protest to begin with

How many days you have to file a protest will depend the basis for the protest to begin with. In general, if a protest is based on an obvious problem with the solicitation documents, the protest must be filed before the date the bid or proposal must be submitted. The purpose of this rule is to prevent a contractor from sitting on their rights to challenge what they believe to be an unfair solicitation, rolling the dice to see if they win, and then, if unsuccessful, filing a protest.

The time requirements for other protests, such as a challenge to the government’s decision to award the project to another company, will depend on the protest venue. At the GAO, a protest must be filed within ten days after the basis for the protest is known or should have been known. If a debriefing is requested, and the government is required to provide the debriefing (i.e., negotiated procurement under FAR Part 15), then the protest may be filed within ten days after the debriefing.

However, there are benefits to filing the protest even earlier because of automatic stay rule. An automatic stay (i.e., the government is required to withhold award and suspend contract performance) if the protest is filed with the GAO within five days of the offered mandatory debrief date or within ten days of contract award. A stay of performance can be very consequential since it can impact your remedy or ultimate relief. Without auto stay, the contract will continue to be performed, and there may not be any contract requirement left to award to you even if your protest is successful.

 

GAO attorney assigned to the protest

Once your protest is filed with the GAO, the agency has 30 days to provide the agency report (AR). The AR will include documents responsive to your protest arguments, including documents requested explicitly in your protest. The AR will consist of a statement by the contracting officer regarding the grounds of the protest and a legal memorandum from the agency’s lawyer. In addition, the AR will show what the agency did during the procurement process, which may bolster the initial protest or provide additional grounds for protest. Sometimes the agency refuses to provide certain requested documents, and the dispute has to be settled by the GAO attorney assigned to the protest.

The agency or an intervening awardee may request that all or part of your protest be dismissed. Such requests by the agency or intervenor are often based upon arguments of timeliness, standing, ripeness, and lack of prejudice. If a request for dismissal is filed, the protestor will have to file a response opposing the bid. If a dismissal request is submitted, it is often before the 30-day deadline for filing the AR.  This AR should be reviewed carefully and with skill because it often is a source of very helpful historical information pertaining to the government officials actions in award of government contracts under open and fair competition laws.

Once the AR is provided, the protestor has ten days to file comments responding to the agency’s arguments. If the protestor fails to address any ground of protest in its words, the GAO will deem the omitted environment as abandoned by the protestor.  The protestor must be meticulous when marshaling the facts; and the bid protestor must cogently and  thoroughly apply relevant government contracting legal principles when challenging government contract awards at the GAO or any other legal forum.

In addition to comments, as I mentioned in pasting before, a protestor often discovers additional grounds of protest upon reviewing the AR. Review the AR right away; because time is of the essence These different protest grounds have to be filed within ten days of receiving the AR (i.e., within ten days of knowing the basis for the protest ground). The agency will be required to file a supplemental AR in response, and the protestor will have to file additional comments. The process for supplemental protests is truncated (e.g., the GAO may require the supplemental AR to be filed within ten days instead of the 30 days allotted for the initial AR).

The agency may take corrective action at any point in the process. Remedial action by the agency is a recognition that they failed to comply with some part of the procurement process, and they are therefore correcting that mistake. The agency has broad discretion in corrective action, and it often includes a reevaluation of proposals or amendments to the solicitation. If the agency takes corrective action, the GAO will dismiss the portion of the protest related to the corrective action.

The GAO will issue its decision within 100 days of the filing of the protest. The GAO may deny or sustain the protest, in whole or part. If the protest is supported, the GAO will direct the agency to remedy the problem. If the GAO denies a protest, the protestor may refile the protest with the Court of Federal Claims.

 

Strategies for Responding to Bid Protests in Government Contracting

Understandably, clients often want to know the likelihood that their protest will be successful. However, the possibility of success or failure is fact-specific to each protest. Moreover, many successful protests are based upon the supplemental protest, which is not available to the protestor until the AR is filed. Statistically, however, the GAO has reported that the effectiveness rate of protests in the last several years is between 42% to 45%. That means nearly half of the protests filed result in the GAO sustaining the protest or the agency taking corrective action to remedy the mistakes cited in the protest.

You should promptly speak with an attorney and counselor if you believe the government has not abided by the terms of a solicitation or applicable government contracting laws and regulations. Timely guidance and evaluation of your potential bid protest are essential to meeting the stringent requirements for protesting government contract awards.  This is merely an overview of Strategies for Responding to Bid Protests in Government Contracting; knowledge and skill in government contract law, and proper evaluation of all the facts and circumstances are extremely important when pursuing legal strategies.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 | Portuguese (214) 272-3100

Choice of Entity and Public Contracting

By: Coleman Jackson, Attorney and Certified Public Accountant
July 01, 2021

Choice of Entity and Public Contracting

As you set out to begin your next public contract, one of your first tasks will be to evaluate the choices in structuring your business.   Entity selection is important, as each type of entity carries its own set of legal and tax attributes. Before you consult with your CPA firm and legal counsel, you will need to give some thought to the following questions:

  • How many owners will we have?
  • Who will our owners be?
  • What type of potential liability will exist for the ownership team?
  • How will the business be financed?
  • How do we want our business profits to be taxed?
  • What is our exit strategy?

These are just a few of the questions that should be addressed before you begin to acquire startup capital, initial loan funding or seek teaming opportunities. Choosing the right entity structure for your construction company, for example, depends on many aspects and factors of your business. One of the main concerns for any business is personal liability. Although no entity structure can guarantee exemption from all liabilities, there are ways to protect yourself and your business, based on your company’s needs. In other words, your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, and your personal liability.

Choice of Entity and Public Contracting

You’ll need to choose a business structure before you register your business with the state. Most businesses will also need to get a tax ID number and file for the appropriate licenses and permits.

Choose carefully. While you may convert to a different business structure in the future, there may be restrictions based on your location. This could also result in tax consequences and unintended dissolution, among other complications.

Consulting with business counselors, attorneys, and accountants can prove helpful.

Generally, there are five main entity types: sole proprietorships, limited liability companies (LLCs), partnerships, S corporations, and C corporations. The most common of these for construction contractors are LLCs, partnerships, S corporations, and C corporations. Below are brief descriptions of these four main types as well as some advantages and disadvantages of each.

Partnerships

In order to have a partnership, you must have more than one owner.  Unlike proprietorships, they are separate legal entities apart from their owners.  There is no tax rate schedule for partnerships, as they typically do not pay any tax at the entity level, and in a general partnership the income or loss is passed through to the owners on a Schedule K-1.  Each general partner has responsibility for the debts of the partnership.  Of course you may have both general and limited partnership interests.

Partnerships have a lot of flexibility when it comes to income allocation.  Income or loss allocation does not always follow the ownership of the business, as partnership taxation provides some opportunities for special allocations of income, provided the allocation carries ‘economic substance’ within the terms of the tax code.   Partners overseeing specific divisions, contracts or tasks could be rewarded with specific allocations of their department’s financial performance.

A partnership is a pass-through entity owned by two or more persons. Partnerships offer the ability to grow the company with each partner assuming less risk than they would as the sole owner of the business. However, there is a loss of control for partners in a partnership since all partners must approve each business decision. A few things to consider before electing the partnership status are:

Advantages:

  • Flexibility in ownership structure
  • Collaboration on contracts and moral support from additional owners
  • Increased ability to raise capital
  • No double taxation
  • Reduced financial burden on partners
  • New 20% deduction for qualified business income possible (owner tax return)

Disadvantages:

  • Potential disagreements amongst partners
  • Sharing profits with others
  • Applicability of self-employment tax
  • Taxed on the individual level (potential highest rate = 37%)
  • Lack of limited liability (unless operating as a LLC)

 

C-corporation

A C-corporation is an independent legal entity that exists separately from the company’s owners. Shareholders (the owners), a board of directors, and officers have control over the corporation, although one person in a C-corp can fulfill all of these roles, so it is possible to create a corporation where you’re in charge of everything.

This being said, with this type of business entity, there are many more regulations and tax laws that the company must comply with. Methods for incorporating, fees, and required forms vary by state.

Advantages:

  • Owners (shareholders) don’t have personal liability for the business’s debts and liabilities.
  • C-corporations are eligible for more tax deductions than any other type of business.
  • C-corporation owners pay lower self-employment taxes.
  • You have the ability to offer stock options, which can help you raise money in the future.
  • No restriction on ownership
  • Separate legal entity from owners
  • 2018 flat tax rate of 21%

Disadvantages:

  • Income faces double taxation
  • Tax burden is potentially greater than pass-through entities
  • No personal tax credits
  • More expensive to create than sole proprietorships and partnerships (the filing fees required to incorporate a business range from $100 to $500 based on which state you’re in).
  • C-corporations face double taxation: The company pays taxes on the corporate tax return, and then shareholders pay taxes on dividends on their personal tax returns.
  • Owners cannot deduct business losses on their personal tax returns.
  • There are a lot of formalities that corporations have to meet, such as holding board and shareholder meetings, keeping meeting minutes, and creating by laws.

Most small businesses pass over C-corps when deciding how to structure their business, but they can be a good choice as your business grows and you find yourself needing more legal protections. The biggest benefit of a C-corp is limited liability. If someone sues the business, they are limited to taking business assets to cover the judgment—they can’t come after your home, car, or other personal assets.

This being said, corporations are a mixed bag from a tax perspective — there are more tax deductions and fewer self-employment taxes, but there’s the possibility of double taxation if you plan to offer dividends. Owners who invest profits back into the business as opposed to taking dividends are more likely to benefit under a corporate structure.

S-corporation

An S-corporation preserves the limited liability that comes with a C-corporation but is a pass-through entity for tax purposes. This means that, similar to a sole prop or partnership, an S-corp’s profits and losses pass through to the owners’ personal tax returns. There’s no corporate-level taxation for an S-corp.

Advantages:

  • Owners (shareholders) don’t have personal liability for the business’s debts and liabilities.
  • No corporate taxation and no double taxation: An S-corp is a pass-through entity, so the government taxes it much like a sole proprietorship or partnership.
  • Limited liability
  • No double taxation
  • New 20% deduction for qualified business income possible (owner tax return)

Disadvantages:

  • Like C-corporations, S-corporations are more expensive to create than both sole proprietorships and partnerships (requires registration with the state).
  • There are more limits on issuing stock with S-corps vs. C-corps.
  • Taxed on the individual level (potential highest rate = 37%)
  • Limits long-term growth plan

You still need to comply with corporate formalities, like creating bylaws and holding board and shareholder meetings.

In order to organize as an S-corporation or convert your business to an S-corporation, you have to file IRS form 2553. S-corporations can be a good choice for businesses that want a corporate structure but like the tax flexibility of a sole proprietorship or partnership.

LLCs

LLCs have grown in popularity over the recent years because they generally afford the owners with many of the positive attributes of the both the partnership and corporate structures.  They are generally flow through entities taxed as partnerships, however, they may make elections moving forward to be taxed as a C Corporation or an S Corporation.  The ability to ‘morph’ the LLC into whatever you desire it be for tax purposes had made this an increasing entity selection for business owners.

Regardless of your entity selection, please be sure to consult your professional advisors to insure that your business is protected in case any of its owners desire to exit the business, sell their interest, retire, or die unexpectedly.  Think of your teaming opportunities with that next prime or subcontractor and how structure could play an important role in your organization’s success.

Limited liability companies are a popular choice among construction contractors because they provide protection to an owner’s personal assets. All customer or creditor claims against the company are limited to the assets owned by the business. Additional advantages and disadvantages of the LLC structure are:

Advantages:

  • No restriction on who may own an LLC (dependent on tax structure chosen)
  • Flexibility to choose between a partnership or S corporation tax structure
  • LLCs may also be considered single-member LLCs

Disadvantages:

  • Taxed on the individual level (potential highest rate = 37%)
  • Not all states recognize LLCs
  • LLC statutes are not uniform in every state

As you can see, sole props and GPs are light on liability protections, so they expose you to greater legal risk if someone sues your business. But, taxation is simple when you have a sole prop or GP, and you don’t have nearly as many government regulations to comply with. That means more time to do what you love—running your business.

This being said, the simplicity of a sole prop or a partnership makes either of these business entity structures a good starting point for freelancers and consultants, particularly if the industry they’re in brings little legal risk with it.

If your business is in a more litigious industry, on the other hand, such as food service, child care, or professional services, that’s a strong reason to create an LLC or corporation right off the bat. And regardless of industry, as your business grows and more dollars are at stake, that can be the ideal time to “graduate” to an LLC or corporation. What works for a freelancer or hobbyist likely won’t work for someone who is trying to hire employees, bring on additional owners, or expand.

Although it’s certainly possible to change business structures at any point in your business’s journey, some changes are easier to make than others. For instance, it’s relatively simple to convert from a sole prop or partnership to an LLC by filing the right paperwork with your state.

Converting to a corporation, however, is more difficult, particularly if you plan to issue stock. Additionally, converting from a C-corp to an S-corp can bring unexpected taxes. Therefore, before changing your business structure, you’ll want to think through the possible advantages and potential problems associated with doing so and consult a business attorney for professional advice.

Moreover, you’ll want to keep in mind that the IRS places certain limits and deadlines on how often you can change your business’s entity type. Plus, it’s also worth remembering that different government tax plans can change how business entity types are taxed, and this may contribute to how taxes factor into your ultimate decision.

There is a lot of literature available to assist you with this decision, but the experience and guidance of your professional advisors is most helpful in avoiding unforeseen outcomes

All in all, you’ll want to keep the following in mind when deciding among the different types of business entities:

Sole proprietorships and general partnerships are good “starter” entities.

As your business grows and generates more income, you might consider registering as an LLC or corporation.

Think through the pros and cons of each business entity type in terms of legal protection, tax treatment, and government requirements.

Compare the general traits of these business structures, but remember that ownership rules, liability, taxes, and filing requirements for each business structure can vary by state.

business structure

https://www.sba.gov/business-guide/launch-your-business/choose-business-structure

Work with a business lawyer and accountant to get specific help for your business.

Ultimately, although there’s not a single best business entity choice for all small businesses, by referring to this guide and consulting legal or financial professionals, you’ll be able to determine which type is right for your business.

If you have any questions on setting up your entity or considerations to make for switching from one entity type to another, please contact us.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432| Portuguese (214) 272-3100

Best Practices for Managing Government Contracts Disputes – Claims Avoidance Techniques

By:  Coleman Jackson, Attorney & Counselor at Law
April 27, 2021

Government Contracts Disputes

For many businesses, landing a government contract can become a much-welcomed source of steady income. Often snagging a public contract is a big deal; big break and big win!  But proper and timely performance of the public contract will be of utmost importance since government agencies and entities will not tolerate any lapses, delays and crummy work. Obviously, all contracts should be handled in a professional manner, but the consequences of breaching a government contract can be even more dire than is the case with private party-to private party contracts.  The issue is managing risk, such that a party receives the benefit of its bargain; which is, the essence of contracting. How is a public contractor to manage government contract risk?  The ideal strategy is by claims avoidance but that is not always possible.  In this blog we review five best practices for managing government contracts. 

 

Public Contracts

1. Know the Government: Public Contracts are Complex in terms of scope, requirements, specifications and regulatory rules and policies:

Before entering into a contract with any local, state, or federal governmental agency, a company must first ensure that it truly has the capability to meet the outlined requirements. Oftentimes, a government procurement contract is large, complex and multifaceted.  Depending on the scope and complexity of the governmental agency’s demands, some companies simply may not have the physical resources, technological resources, or personnel to perform with precision, core competencies and with the punctuality required. Many companies, although they have years of experience in the private sector, simply do not have the accounting systems and internal controls in place to meet the exacting regulatory accounting standards and audit standards required by the highly regulatory environment of public contract law.  In light of the importance of maintaining good relationships with government personnel and the agencies they oversee; it would be unwise to take on more than the company can really handle.  Count the costs before bidding on the public contract because a government contract breach can lead to shame, allegations of false claims and other serious financial and even criminal consequences.

One of the trickiest aspects of engaging in government contracting is that there are often quite a few stringent rules and regulations governing the arrangement. These rules usually entail fairly strict compliance mandates, which cannot be taken lightly. Thus, in addition to examining your company’s own strengths and potential shortcomings, it is critical to ensure a full understanding of the legal constraints that will be at play. In many cases, it is a good idea to run some of the more nuanced aspects by legal counsel to ensure there is sufficient understanding and preparation.

As mentioned at the top, governmental agencies will not tolerate delays or disruptions to the contracting process. There could clearly be financial ramifications in the event of a breach, such as fines or penalties. But there is also a good chance that the contract will be rescinded at the time of the mishap or perhaps not renewed for another cycle. And, if either scenario happens, it is quite likely that a company will have a hard time winning another government contract down the line.

Thousands of businesses contract with local, state and federal governmental agencies every single day to help the government to serve its citizenry and carry out very important public functions; such as, building and maintaining roads, bridges, water systems, schools, colleges, broadband internet, libraries and shopping and leisure districts, correctional facilities and camps, parks and entertainment venues and everything in between..

 

 It is critical that your company know its capabilities before entering into the public contract environment.

2. Know yourself! Is your company up to the task?  That indeed is the first question that any aspiring public contractor should ask of themselves! It is critical that your company know its capabilities before entering into the public contract environment.  Sometimes it is easier to see the shortcomings of others than to see our own weaknesses.  Your company might want to compensate for these blind tendencies by: 

  • Considering teaming agreements with more experienced players in the government contract market place;
  • Considering counseling with government contract attorneys;
  • Considering counseling with accountants and others experienced in government accounting and auditing standards;
  • Considering business structures with other small, middle size and larger companies that could bring in additional expertise, skills, talents and intelligence.
  • Once you have examined your organization and structure from top to bottom, you must now turn and take an exacting look at the specific government contract’s scope, specifications and requirements. As I said before, government contracts are not quite like private contracts.  First of all, the government is a sovereign.  That means, the government writes the laws, enforce the laws and interpret the laws of public contracts.  So, the question is this one:  How can a public contractor protect itself when contracting with the government?  Contract claims avoidance; that’s how!  Contract disputes avoidance begins in the contract’s negotiations process and continues throughout contract performance and ends with successful public project completion and file closing.  Therefore, make sure you have skilled public contract counsel and advisors on your company’s team from the first salvo of reviewing a request for proposals throughout the performance process through successful completion of the public project.  You want to know and appreciate the contract terms, conditions and risk before you sign the contract, while you perform the contract and when you close the contract file.  You want to sign the contract before you begin the work.  Know what you are getting into before you get into the contract.  Watch for blowing sand and government changes throughout the performance stage and be ready to respond within the four corners of the contract with cogent public contract legal principals.  These practices alone could minimize the potential of protracted and expensive government procurement disputes.  But not all government contract disputes are avoidable.

Know when an actionable contract dispute arises

3. Know when an actionable contract dispute arises. Obvious, not all disputes can be avoided in life; and that is true in the public contract law environment as well.  Government contracts, unlike private contracts, can be terminated for the convenience of the government.  That simply means that the government can terminate the contract for its convenience, even though, your performance has been perfect.  Furthermore, sometimes local, state and federal governmental agencies breach public contracts and doesn’t pay for goods and services provided by individuals and businesses. Federal, State and local public contract laws permit private parties to sue local, state and federal governmental agencies when they breach their contracts or fail to perform.  Public contact disputes and claims are an exception to the rule of sovereign immunity.  But in order to preserve your rights and pursue your rights against the government, you must be able to recognize that a breach of contract has occurred since every disagreement that might develop during the course of performance of a contract does not satisfy the legal definition of a breach of contract.  The breach must diminish your bargain; it must somehow dampen or poor shade on the bargained for benefit.  Knowing the various types of breach of contract cognizable or actionable in public contract law could be helpful to you:

The four main categories of public contract breach are as follows:

a. Material Breach of Contract

A material breach occurs when one party receives significantly less benefit or a significantly different result than what was specified in the contract. Material breaches can include a failure to perform the obligations and conditions within the four corners of the contract or a failure to perform contracted obligations timely. When a material breach occurs, the other party may pursue damages related to the breach and both its direct and indirect consequences.

b. Minor Breach of Contract

The minor breach of contract is also sometimes called a Partial Breach of Contract or an Immaterial Breach of Contract, a Minor Breach of Contract refers to situations where the deliverable of the contract was ultimately received by the other party, but the party in breach failed to fulfill some part of their obligation. In such cases, the party that suffered the breach may only be able to pursue a legal remedy if they can prove that the breach resulted in financial losses. A late delivery, for example, may not have a remedy if the breached party cannot show that the delay resulted in financial consequences.

c. Anticipatory Breach of Contract

A breach need not actually occur for the responsible party to be liable. In the case of an Anticipatory Breach, an actual breach has not yet occurred, but one of the parties has indicated that they will not fulfill their obligations under the contract. This can occur if the breaching party explicitly notifies the other party that they will not fulfill their obligations, but such a claim could also be based on actions that indicate the parties does not intend to or will not be able to deliver.  I remind you again that in public contract law, the government can terminate a contract for the convenience of the government.  Its extremely important that government contractors study this public contract clause, the changes order clause and scope clause of public contracts very carefully.

d. Actual Breach of Contract

An Actual Breach of Contract refers to a breach that has already occurred, meaning the breaching party has either refused to fulfill their obligations by the due date or they have performed their duties incompletely or improperly.

 

What can a public contractor do when a breach occurs

4. What can a public contractor do when a breach occurs? When a breach of public contract does occur, there are several types of remedies available to either party. These include compensatory damages to address direct economic losses stemming from the breach, and consequential losses, which are indirect losses that go beyond the value of the contract itself but are the result of the breach.  Although below I am mentioning only process and remedy for breach of federal contracts, similar processes and rules apply to State and local public contracts:

a. Contractor Must Pursue Administrative Remedies

The CDA requires that a private contractor follow specific steps. The first is to seek a decision on the contract dispute from an official — called the contracting officer – -in charge of administering the contract. The claims of both the private contractor and the government agency that is the party to the contract are subject to the contracting officer’s decision. If the private contractor is not satisfied with the decision, she moves to the next step and has two choices.

b. Appeal to the Board of Appeals

The contractor can continue to seek administrative relief or can file a lawsuit against the government. The first of these options is accomplished by appealing the contracting officer’s decision to the agency board of appeals, where it is reviewed de novo; that means the board will decide the issue without reference to the conclusions or assumptions made by the hearing officer. If the private contractor is unsatisfied with the decision of the appeals board, he can appeal to the United States Court of Appeals for the Federal Circuit.

c. United States Court of Federal Claims

The second avenue for a private contractor unsatisfied with the contracting officer’s decision is to seek competent counsel and file lawsuit directly in the United States Court of Federal Claims. This will begin the civil litigation process, which requires attorney representation. An adverse decision by the court can be appealed by the contractor to the United States Court of Appeals for the Federal Circuit. The appellate court will review the trial court’s rulings de novo.

 

Business Decisions

5. Business Decisions: Don’t forget pursuing government contracts is a business decision.  The decision as to whether to pursue a government contracts claims when claims avoidance fail is also an important business decision.  Cost considerations and other business impacts must be considered before deciding whether to pursuelegal remedies in breach of public contract claims. The contractor must weigh the probability of success, the probable amount of the damages awarded and the expenses involved in pursuing the claim when deciding to sue the government for breach of contract. Generally, pursuing relief through administrative remedies is significantly cheaper than litigation in court. On the other hand, a case before a court involves an impartial judicial process separate and independent from the agency, which may be worth the extra expense to some contractors.

As I have said before the government is not quite like a private party.  Whenever a contractor is dealing with the government, this fact should be front of mind.  For example, in Texas, direct and indirect limitations insuing and obtaining remedies and judgments against the State of Texas and local governmental agencies in Texas must always be considered in government contracts litigation matters against Texas and its agencies and local governmental entities in Texas.

The ability to bring a claim against a governmental entity in Texas, the scope of the public contract claim and extent of recovery could be drastically impacted by various well-established legal principles in Texas law. Examples of these legal principles and legal limitations are as follows:

  • a right of action for a county, incorporated city or town is not limited by most statutes of limitation under Texas law (TEX. CIV. PRAC. & REM. CODE §16.061)
  • damages recoverable from a governmental entity may be limited to exclude damages other than direct actual damages ( Gov’t Code Ann. §2260-001)
  • any action against a county must be brought in that county, and
  • Court of jurisdiction may be limited to the Courts situs in Austin, Texas.

However, the most important, and most litigated, restriction on enforcing claims against the State of Texas, its agencies and local governmental entities is that of sovereign immunity.

A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right against the authority that makes the law on which the right depends.

The Texas Constitution contains waivers of immunity that are effective irrespective of any statutory waivers. These constitutional waivers are self-executing if they provide “a sufficient rule by means of which the right given may be enjoyed and protected, or the duty imposed may be enforced; and it is not self-executing when it merely indicates principles, without laying down rules by means of which these principles may be given the force of law.” Examples of these self-executing waivers are the waivers that relate to the Texas Constitution’s Takings Clause and that relating to the Bill of Rights for claims alleging a taking, these claims will not be permitted if they are breach of contract claims disguised as takings claims in order to avoid immunity. For claims alleging a violation of the Bill of Rights, this waiver exists only for the purpose of holding acts contrary to the Bill of Rights to be void, thereby permitting equitable relief but providing no private right of action for damages.

Contractors must perform the due diligence to make sure the government officials with whom they are dealing with have the authority to bind the government.  This fact is true whether the public contract is a federal, state or local contract.  Again, claims avoidance begins with the request for proposal, continues all through the performance stage and ends with successful contract completion and successful project file closing.

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 | Portuguese (214) 272-3100

A GOVERNMENT CONTRACTS LAWYER’S OVERVIEW OF BID PROTEST

By:  Coleman Jackson, Attorney & CPA
March 12, 2021

What is a bid protest in Government Contract

What is a bid protest?

A bid protest is a challenge to the award or proposed award of a contract for the procurement of goods and services or a challenge to the terms of a solicitation for such a contract.

What kinds of bid protests can be filed at GAO?

Protests may be filed against procurement actions by federal government agencies.

What kinds of protests cannot be filed at GAO?

Protests may not be filed against procurement actions by non federal government agencies, such as state, local, or foreign governments, or actions by certain exempted federal agencies, such as the Postal Service. For more information, see Bid Protest Regulations (4 C.F.R. § 21.5) and Bid Protests at GAO: A Descriptive Guide.

Who can file a bid protest at GAO?

Only “interested parties” may file protests. In the case of a solicitation challenge, an interested party is generally a potential bidder for the contract. In the case of a contract award challenge, an interested party is generally an actual bidder that did not win the contract. In addition, other factors, such as the bidder’s standing in the competition and the nature of the issues raised may affect whether it qualifies as an interested party. For more information, see Bid Protest Regulations (4 C.F.R. § 21.0(a)) and Bid Protests at GAO: A Descriptive Guide.

When must a protest be filed?

In general, a protest challenging the terms of a solicitation must be filed before the time for receipt of initial proposals. A protest challenging the award of a contract must be filed within 10 days of when a protester knows or should have known of the basis of the protest (a special case applies where, under certain circumstances, the protester receives a required debriefing). Please be aware that the regulations regarding the timely filing of protests depend on all facts and circumstances of each case and are strictly enforced. For more information, see Protest Regulations (4 C.F.R. § 21.2) and Bid Protests at GAO: A Descriptive Guide.

How is time calculated for filing deadlines?

“Days,” under GAO’s regulations, means “calendar days.” In the event a deadline falls on a weekend, federal holiday, or other day when GAO is closed, the deadline is extended to the next business day. For more information, see Bid Protest Regulations (4 C.F.R. § 21.0(e)) and Bid Protests at GAO: A Descriptive Guide.

I was awarded a contract and was told that the award has been protested – what must I do, and what am I allowed to do?

Parties that have been awarded a contract are permitted to participate in a protest as an intervenor. They are not required to do so, however, as it is the agency’s responsibility to respond to the protest and defend the award of the contract.

Are employee unions or representatives allowed to file protests or participate as intervenors?

Government employees and their representatives may participate as protesters and intervenors in protests involving competitions conducted under Office of Management and Budget Circular A-76. For more information, see Bid Protest Regulations (4 C.F.R. § 21.0(a)(2), (button) (2)) and Bid Protests at GAO: A Descriptive Guide.

Do I need an attorney to file a protest or participate as an intervenor?

No. Parties may file a protest or participate as an intervenor without being represented by an attorney. However, only attorneys are permitted to have access to material subject to a protective order.  Bid protest rules, procedures and practices are governed by the rule of law(The Federal Acquisition Regulations (FAR) for federal contracts); therefore, an understanding of relevant statutes, regulations and case law would be extremely helpful for framing and presenting a credible bid protest.

 

Federal Bid Protest Jurisdiction and Filing Deadlines

 Federal Bid Protest Jurisdiction and Filing Deadlines:

This reference lays out the filing deadlines, jurisdictional requirements, stay rules, and appeal processes for each place a bid protest can be filed: the Government Accountability Office,the U.S. Court of Federal Claims, and the procuring agency.

The rules differ by type of procurement. Chart 1 lists the rules for protesting contracts awarded under FAR Parts 13, 14, and 15. Chart 2 lists the rules for protesting task and delivery orders issued under most IDIQ contracts. Chart 3 lists the special rules that apply to protests of task orders issued under the General Service Administration’s Federal Supply Schedule contracts.

GAO Procedures:

Over the years, GAO’s decisions on federal contract awards have created a uniform body of law applicable to the federal procurement process upon which the Congress, the courts, agencies, and the public all rely.

Automatic Stay?

For pre-award protests, the agency must suspend award of the contract once it receives notice from GAO that a protest has been filed. FAR 33.104(b).For post-award protests, the agency must suspend performance if it receives notice of the protest from GAO within 10 days after contract award or within 5 days after the debriefing date offered to the protester for requested and required debriefings under FAR 15.505 or 15.506, whichever is later.  FAR 33.104(c).  (Note: Debriefings are not “required” for procurements under FAR Part 13 (FAR 13.106-3(d)), or Part 14 (except 14.5 (two-step sealed bidding) FAR 14.503-1(g))).In DoD procurements, for debriefings requested and required under FAR 15.506(d), contracting officers must provide an opportunity for unsuccessful offer or to submit additional questions within 2 business days of receiving a debriefing. The agency then has 5 business days to respond in writing. See10 U.S.C. § 2305(b)(5). The 5-day filing period to trigger an automatic stay does not start until after the agency delivers the written responses. See31 U.S.C. § 3553(d)(4). 

 Jurisdictional Timelines

Jurisdictional Timelines:

  • A pre-award protest based on alleged improprieties in the RFP that are apparent prior to receipt of proposals must be filed prior to the time set for receipt of proposals. Improprieties subsequently incorporated into the solicitation must be protested by the next closing time for receipt of proposals following incorporation. See 4 C.F.R. § 21.2(a)(1). Where a basis for challenging the terms of a solicitation does not arise until after proposal submission, a protest is due 10 days after the basis of protest is known or should have been known. See 4 C.F.R. § 21.2(a).
  • An offer or excluded from the competitive range before award must request a debriefing in writing within 3 days after receipt of notice of exclusion to obtain a “required” debriefing. See FAR 15.505(a)(1). The offer or then must file its protest not later than 10 days after the date on which the debriefing is held. See 4 C.F.R. § 21.2(a)(2).
  • For competitions where a debriefing is requested and required, post-award protests must be filed not later than 10 days after the debriefing is held, but not before the offered debriefing date. See 4 C.F.R. § 21.2(a)(2), for DoD, 10 days run from when DoD answers timely “additional questions.”
  • For all other protests not covered above, the protester must file its protest within 10 days after the basis of protest is known or should have been known, whichever is earlier. See 4 C.F.R. § 21.2(a)(2).

Subject Matter Jurisdiction Limits:

  • Only an “interested party” may protest improprieties in an RFP or award or termination of a federal contract. See 4 C.F.R. § 21.1(a). An “interested party” is an actual or prospective offer or whose direct economic interest would be affected by the award of a contract or the failure to award a contract. See 4 C.F.R. § 21.0(a)(1).

Note: An alleged Procurement Integrity Act violation must be brought to the Agency’s attention within 14 days of discovery, or it cannot be raised in a GAO protest. See FAR 33.102(f); 41 U.S.C. § 2106. 

 Process for Appealing Unsuccessful Decision

Process for Appealing Unsuccessful Decision:

A Request for Reconsideration may be filed at GAO not later than 10 days after the basis for reconsideration is known or should have been known, whichever is earlier. See 4 C.F.R. § 21.14.

A protester may “appeal” a GAO decision to the Court of Federal Claims by filing suit alleging that the agency’s procurement was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law” in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). 28 U.S.C. § 1491. There is no strict timeline for filing such an “appeal.”

A contractor may also file suit in the Court of Federal Claims alleging that an Agency’s proposed or actual corrective action, even if recommended or approved by GAO, is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

 

Readers interested in following our blogs on government contract law, such as, relevant federal, state and local public contract decisions should visit our website at www.cjacksonlaw.com where we post our most recent blogs.  Our blogs in government contracting covers relevant decisions issued by the GOA, case decisions issued by the Court of Federal Claims and various state court decisions on public contract law.  Readers can also subscribe to our taxation, government contract litigation and immigration law Legal Thoughts Podcast where ever they listen to their podcast.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 | Portuguese (214) 272-3100

A LAWYER’S OVERVIEW OF GOVERNMENT PROCUREMENT CONTRACTS

By:  Coleman Jackson, Attorney & Certified Public Accountant
March 06, 2021

NOTE:  This is merely and overview of government procurement contracts and just scratch the surface of this complex and intricate area of contract law.  This area of law is also known as Public Contract Law.OVERVIEW OF  GOVERNMENT PROCUREMENT CONTRACTS

General Concepts: Each year, the U.S. federal government and its various agencies procure more than $300 billion of everything in more than 4,000 categories, ranging from airplanes to zippers. For many products and services, the U.S. government is the biggest buyer on the planet.

In 2020, the federal government spent more than $6.5 trillion, that is, spending exceeded collections by about $3.3 trillion resulting in a deficit. If broken out in terms of minutes, it would mean that the government spent more than $9 million every minute. However, a more accurate realization is that Covid-19 impacted the 2020 budget; also, budgets and government spending is spread out throughout the year, and high spending periods will fluctuate between agencies and will be impacted by health factors and other unknowns. Typically speaking, one of the biggest spending periods is in the months of August and September, as government agencies that have extra funds available (through the allocation from Congress) need to spend the money or risk losing it. Any money not spent goes back to the U.S. Treasury. Note: The 2020 fiscal year ended on September 30, 2020, and the new fiscal year started on October 1, 2020.

Another important thing to consider is that the federal government is not just one buyer. It is a collection of tens of thousands of buyers that purchase everything from nuts and bolts, and paperclips, to aircraft carriers.

With so many needs – from the simple, to the complex, to the classified – government buyers will order things in bulk or small, one-offs. Other times buyers will say they know they need certain products or services, but they do not know how much, how often, or when their next order will come. This creates a unique feature within government contracting that is not present in the private sector resulting in the use of different contract types or contract vehicles to accomplish the governments requirement needs.

Contract vehicles are ways in which a government agency or department can buy what it needs. They all have different rules. Government agencies are often looking for contract vehicles that will get them what they need, as quickly as possible and at the best cost point as possible. One of the most commonly known to businesses is the General Services Administration (GSA) Schedule. The GSA Schedule is a listing of products and services with pricing. Government buyers use the GSA to buy a wide variety of things, and businesses work hard to get on the GSA Schedule to make sure their products and services are readily available at the fingertips of government buyers.

 

U.S. government contracts

U.S. government is also an attractive customer for a few other reasons:

  • The government makes its needs publicly known through such media as the Commerce Business Daily, a publication listing numerous public contracting opportunities. (You can find this publication at many large public libraries.) This is quite different from most markets, wheresuppliers have to thoroughly research to identify the purchasers needs.
  • Government sales are conducted in an open environment where there are many rules to ensure that the process is fair.
  • The government frequently buys in very large volumes and overlong periods of time. That kind of customer can provide a solid foundation for growing your company.
  • Laws set aside all or part of many contracts for women-owned businesses, small businesses, minority-owned businesses, and other firms the government identifies as disadvantaged historically and that the government desires to equalize, support and include in the economic growth of the country.

Having the U.S. government as a customer can give a business a stamp of approval. If you can meet the government’s standards for quality, price and service, odds are good you can meet other customers’ requirements as well.

But there are downsides to selling to the government. It can be hard to find the proper purchasing agent among the thousands employed by various branches and agencies of the federal government. In addition, the rules and paperwork are daunting. The good news is that there are many sources of help. The SBA’s website is one good place to start looking for help selling to the government. Agencies like the U.S. Postal Service, the Department of Interior and the Army, as well as many others, send out solicitations to businesses that are on their mailing lists. To find out how to get on the lists, contact the agency you’re interested in.

And don’t restrict yourself to selling to the federal government. State and local governmental entities, including cities, counties, school districts and others, actually purchase more goods and services than the federal government. There are more of them and they are smaller, but these government customers can provide alternative tracks to growth that are just as viable as the opportunities in Washington, DC.

You can sidestep many of the hassles of winning a government contract if you subcontract with the main or prime contractor. Prime contractors, ranging from large defense contractors to companies that may be smaller than yours, do most of the work to land the government job. Then they may hire you to fulfill all or part of it. Find prime contractors by perusing many of the same resources you would to sell directly to the government.  Many government contracts require small disadvantaged businesses based on race, gender, disabilities, veteran set-asides.

Definition: Agreements that outline business transactions between companies and government entities. Government contracting is the process where businesses provide products or services to federal, state, and local governmental agencies and entities.

 

An Overview of Government Contract Law

 An Overview of Government Contract Law:

The government of the United States buys more products and services than any other entity worldwide. The United States Department of Defense (DOD) makes up a large portion of the country’s purchases.

There are three main differences between government purchases and those of the private consumer:

  • Government contracts are highly regulated to ensure the most competition, guarantee proper use of government funds, and promote a healthy economy.
  • Government contracts include clauses, like the “changes” or “default” clauses, that allow the government to enact special rights within the contract like being able to change the terms of the contract or even end it.
  • Government contracts follow the procedures laid out in the Contract Disputes Act should there be any claims or legal action, because the government is a sovereign entity.

The Competition in Contracting Act and Federal Acquisition Streamlining Act are both important laws that regulate government contracts.

The Federal Acquisition Regulation (FAR) controls acquisitions made by the United States Executive Branch, and it is outlined in title 48 of chapter one in the Code of Federal Regulations parts 1 through 53.

Agencies like the DOD, NASA, and the General Services Administration (GSA) can create supplements to the Federal Acquisition Regulation. Those three specific agencies actually amended the FAR in pursuant to the Administrative Procedure Act.

The United States Government can only be contract-bound by an authorized contracting officer (or CO) who has been issued a warrant by the executive agency. These contract warrants (or certificates of appointment) can be held to a specific amount or allowed an unlimited amount of money.

A contract officer is authorized to grant, manage, or terminate a government contract.  CO’s play a pivoted and major role in government procurement law.

The Contract Disputes Act (CAS)govern legal issues regarding government procurement contract issues and disputes which must first be submitted to a contract officer for resolution.

Once the contract officer makes a decision regarding the legal claim, the complaining entity represented in the contract can appeal the decision with the United States Court of Federal Claims (CFC) or a board of contract appeals.  Note there must be privity of contract in government contract disputes.  Typically, subcontractors cannot file a complaint under CAS.

The claim can then move on to be appealed before the Court of Appeals of the United States for the Federal Circuit, and even eventually to the Supreme Court.

Any company that sells its products or services to other business entities or nonprofits could probably also sell to the government.

The United States Government can make a great customer or client because of the following:

  • Government needs are easy to see through publications like Commerce Business Daily.
  • Rules and regulations ensure fair trading practices.
  • Government purchases are usually large and long term, providing a reliable income for the business.
  • As I mentioned before, contracts are set aside for businesses owned by minorities and women, as well as small businesses.
  • Government business will give your company a good reputation as it means that your products or services meet high standards.

 An Overview of Some Difficulties of Government Contracting

 An Overview of Some Difficulties of Government Contracting:

Conducting business with the government can also be very difficult as it can be tough to find the right channels for marketing your company with so many employees throughout different branches. They also require certain standards in terms of bookkeeping, record keeping, cost accounting and overall compliance cost accounting standards and government accounting principles.

Moreover, government contracts are typically subject to review and exacting audit compliance procedures and examination.

Bottom line is government contracts are subject to detailed paperwork where government contractors must comply withdetailed regulations from the bid process through completion of the contract.  Invoices for payment must often be certified under the penalty of perjury. These requirements can also be a bit overwhelming as a business owner new to the government procurement procedures. Thankfully, there are lots of options for assistance.

If you’re interested in working with a particular federal government agency, like the Postal Service or the DOD, you can contact that particular agency and get your business on their mailing list.

The federal government isn’t the only option, state agencies and local entities, like school districts, also make great customers.

Smaller, non-federal agencies have more opportunities for trading and, even though they are smaller, they can offer just as much potential for growing your company as working with the federal government would.

  Overview of Some Benefits of Government Contracting

Overview of Some Benefits of Government Contracting

Government contracts are a tremendous financial opportunity for small businesses.

The U.S. government is the largest customer in the world. It buys all types of products and services — in both large and small quantities — and it’s required by law to consider buying from small businesses.

The government wants to buy from small businesses for several reasons, including:

  • To ensure that large businesses don’t “muscle out” small businesses
  • To gain access to the new ideas that small businesses provide
  • To support small businesses as engines of economic development and job creation
  • To offer opportunities to disadvantaged socio-economic groups

 How it all works:

The process of requesting proposals, evaluating bids, and awarding contracts should take place on a level playing field. The government should consider a bid from any qualified business.

Set-aside and sole-source contracts:

Federal agencies must publicly list their contract opportunities. Some of these contracts are set aside exclusively for small businesses and historically disadvantaged businesses based on race, gender, disabilities or other factors.

In some cases, these so-called set-aside contracts might consist of certain types of tasks on larger contracts. In others, entire contracts may be reserved for small businesses or historically disadvantaged businesses. When a contract is set-aside for one specific small business, it’s called a sole-source contract.

 

The Small Business Administration (SBA’s) role in Government Contracting 

 The Small Business Administration (SBA’s) role in Government Contracting:

The SBA works with federal agencies in order to award approximately 23 percent of prime government contract dollars to eligible small businesses. It also offers counseling and help to small business contractors.

The United States Government is the single largest procurer of goods and services in the world, and the Department of Defense (DOD) accounts for the lion’s share of federal acquisitions.  Three major characteristics distinguish Government acquisitions from private sector contracts.  First, Government contracts are subject to a myriad of statutes, regulations, and policies which encourage competition to the maximum extent practicable, ensure proper spending of taxpayer money, and advance socioeconomic goals.  Second, Government contracts contain mandatory clauses which afford the Government special contractual rights, including the right to unilaterally change contract terms and conditions or terminate the contract.  The most important clauses are the “Scope Clause, “Changes” clause, the “Termination for Convenience” clause, and the “Default” clause.  Third, due to the Government’s special status as a sovereign entity, claims and litigation follow the unique procedures of the Contract Disputes Act.   It is critical that Contractors; especially small businesses who are new in government procurement, to be fully knowledgeable of how the “Payment” clause works because long delays in payment could cause budgetary difficulties and performance issues to the naïve.

Government contracts are subject to several statutes, including the Competition in Contracting Act and the Federal Acquisition Streamlining Act.  In addition to statutes, there are a multitude of regulations which govern acquisitions by executive branch agencies.  Foremost among these is the Federal Acquisition Regulation (FAR), which is codified in Parts 1 through 53 of Title 48, Chapter 1 of the Code of Federal Regulations.  Executive branch agencies may issue their own regulatory supplements to the FAR, such as the Defense Federal Acquisition Regulation Supplement (DFARS).  The FAR is amended pursuant to the Administrative Procedure Act, with proposed changes issued jointly by the DOD, the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA), in coordination with the FAR Council.

Only Contracting Officers have the authority to contractually bind the United States Government.  This authority is vested in the executive agency, which then delegates this authority by issuing a certificate of appointment or “warrant.”  The warrant provides signature authority up to a specified amount of money, or it can be an unlimited warrant.  Contracting Officers have the authority to award, administer, and terminate Government contracts.

Overview of Government Contract Dispute Resolution”

Government contract claims are subject to the Contract Disputes Act, which requires the claim to be presented first to the Contracting Officer (“CO”).  After the Contracting Officer’s Final Decision or deemed denial, the claim may be appealed to either the United States Court of Federal Claims (CFC) or to the appropriate Board of Contract Appeals.  The forum to file the law suit challenging the CO’s decision is chosen by the contractor. Note that the contractor does not have file suit within the administrative process; but the Board Judges are government procurement experts who deal exclusively with government procurement contract disputes; whereas, the Judges on the Court of Federal Claims may not have government procurement experience and may handle all kinds of complaints filed against the federal government.   Resolution of federal procurement disputes by the Board process could likely be quicker as well. Numerous issues are involved in the contractor’s decision of which forum to choose to litigate their CAS claim.  Whether CAS litigation occur in the Court of Federal Claims or in one of the Boards of Appeal, after trial on the merits in either venue, the tribunal decision may be appealed to the United States Court of Appeals for the Federal Circuit, and finally to the Supreme Court.  It is very important to note that the Court of Federal Claims has the exclusive authority to hear bid protests, which are challenges to an award, proposed award, or terms of a solicitation of a federal contract.  The Boards do not have any authority to hear bid protest or any other none-CAS matters.


What are Some of the Different Types of Government Procurement Contracts

What are Some of the Different Types of Government Procurement Contracts?

Government contracts generally fall under a few different categories, each of which involves different requirements and varying risk to the contractor.  Understanding the type of government contract, you’re competing for can help give you a better sense of what to expect, the risk involved and how to put together and negotiate a more compelling and competitive proposal. To give a brief overview, we’ve laid out the top four most common types of government procurement contracts and what they entail below:

1. Fixed-Price Contracts

Fixed-price contracts are just that — they ask contractors to submit a bid to complete a project under a predetermined price (and often within the bounds of a target price). They are not subject to any type of adjustment unless certain provisions (such as changes in the contract, pricing, or defective pricing) are included in the original agreement. Contract price can sometimes be renegotiated through different contract clauses (depending on the variety of fixed-price contract in question), but these bids will be low-risk if the government and contractor carefully communicate on a reasonable price. The risk inherent to fixed-price contracts will increase if deliverables, standards and other measures are unclear or if the contractor must execute custom development with a yet-to-be completed solution. All federal agencies use fixed-price contracts and they’re the most common type of contract requested at a state and local level.

In Fixed-Price contracts, the contractor is paid a set fee for their goods or services, regardless of incurred costs. Accurately planning and forecasting your expenditure (in terms of time, available personnel, expertise and capital) is absolutely vital to ensuring that you see a positive return on your investment once you’ve won a bid. While some degree of risk may be present, these contracts provide great profit opportunities for successful contracts that are well executed.  These contracts can also be dangerous for the naïve or businesses who are new or unfamiliar with government procurement contract procedures, policies, regulations and so forth.  Silent clauses and provisions could be applicable to the contract.

2. Cost-Reimbursement and Cost-Plus Contracts

These types of contracts allow a contractor to seek reimbursement for incurred costs up to a prescribed allowance. Usually, costs will be estimated upfront to establish a ceiling that a contractor cannot exceed without first gaining approval. As long as incurred costs do not exceed the stipulated maximum, then a contractor can seek reimbursement for any justified expenses as they fulfill the contract.

This kind of contracts are typically used when there are uncertainties or contingencies involved in a proposal that cannot be estimated upfront with complete accuracy. Examples of agencies that use these types of government contracts include the Federal Transit Administration, National Weather Services and US Department of Defense.

Cost-plus contracts are often more concerned with the final quality of a project rather than cost (an example of this type of project would be ones executed in support of United States space and satellite programs). Because there is less built-in incentive to be efficient, these types of contracts usually require closer oversight to ensure maximum efficiency and thrift. The contract itself can be supplemented with additional award or incentive fees to help encourage efficiency, but designing and implementing these programs also requires additional contract administration. While these contracts are often lower risk than Fixed-Price contracts, the profit margins may also be lower and bidding requires that you offer competitive pricing (i.e. low rates) in order to win.  Contractors must be very careful when bidding on cost-reimbursement and cost-plus contracts because the potential to bid too low can be damaging.  This is particularly a danger that the naïve or unsophisticated small business could face.

3. Time-and-Materials Contracts (T&M)

Time-and-materials contracts are a cross between fixed-price and cost-reimbursement contracts and often require the government to shoulder more risk than the contractor (making them a less popular option for government agencies). Like cost-reimbursement and cost-plus contracts, T&M contracts are only used when it’s not possible to nail down an accurate cost or timeline estimate for a project at the time when a proposal is submitted. The government is basically paying for your services by the hour, including your fees and profit, so competitive pricing is key to winning and net profits are often (but not always) lower.

4. Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts

IDIQ contracts are often used to supplement or amend fixed-price or cost-reimbursement contracts in order to provide flexibility with regard to specific supplies, services or aspects of a project required by the government. In contrast to other contract types, IDIQs allow the government contracting agency to “down select” multiple entities that will compete for future break-out contracts (often called “task orders”) under the umbrella of the main contract. This results in the contracting agency receiving bids from the pool of awardees for each follow-up task order, which theoretically provides them with the best possible value, flexibility and service. It also streamlines the process for issuing, awarding and executing task orders in the event of a national emergency.

The umbrella, or main contract, usually runs for a period of five to ten years, during which time the individual task orders are announced on an as-needed basis. Typical response times required for down selected entities range from a few days to a month or more, depending on the urgency of the requirement. In extreme cases, the government can ask for a response on the very same day a task order is issued. These responses are purely pricing requests for vendor equipment to aid first responders in a natural or man-made disaster, such as supplying temporary lighting and generators.

IDIQs often specify that a contractor supply a minimum quantity of suppliers and services and agree to a fixed timeline and maximum price ceiling for the contract tasks. They also ask contractors to identify a few different consultants and suppliers that they might leverage for a task and submit these names as part of the initial bid. This can help the government streamline the contracting process by limiting their decision process to a few pre-approved options for each task.

Awards are given out in base year period intervals for each task order (usually 1 to 5 years) and are eligible for renewal after the base period concludes. At the time of renewal, each task order can be “re-competed” for by the incumbent contractor and those previously down selected under the umbrella contract. For contract renewals, responding to specific task orders is not required.

This has been a general overview of government procurement procedures, practices and legal principles.  This is a complicated area of law and this brief presentation does not attempt to cover the breath of this legal area in any respect. Public Contract Law

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 | Portuguese (214) 272-3100

Some Things About Contracts While Sheltering from the Unknown Virus like Covid-19

By:  Coleman Jackson, Attorney & Counselor
April 29, 2020

Some Things About Contracts While Sheltering from the Unknown Virus like Covid-19

What is a Contract?  A contract is an enforceable promise under the law.  That means that if you agree to do something for consideration and the other party either performs or changes their position in any material way, the law will compel you to do what you promised to do or demand that you pay the performing party compensation of some kind.  Usually the compensation is going to tailor the party’s expectations at the time they agreed to do such-and-such.  In a nutshell, that is what the term contract means.

 

What about when Covid-19 says go home, stay there and I will let you know when you can come out again?

What about when Covid-19 says go home, stay there and I will let you know when you can come out again?  Contracts are based on expectations; or put another way, a contract is a bargained for outcome.  Sometimes parties insert a clause into their contracts that is called a ‘force majeure’ cause.  Don’t get lost in the foreign language… force majeure is French.  First thing you really need to know is that force majeure clauses in contracts are enforceable in Texas.  Texas will make the parties to contracts perform in accordance to what the force majeure clause says.  That is simply in keeping with the fundamental contract law in Texas; which is, consenting parties can pretty much agree to do or not do any lawful thing in the State of Texas.  So be careful about what you agree to do or not do in Texas.  What about enforcement of force majeure clauses in Texas:  first they are enforceable contract provisions; your contract must contain language that a court can construe as a force majeure event excusing your performance of your obligations under the contract.  Parties to contracts in Texas can define or describe situations, occurrences, or events that constitute a force majeure event and typically they are defined as some event or series of events that make it impossible to perform under the contract or impractical to perform under the contract.  But a mere difficulty in performance would not likely be reason for a party to fail to perform under the contract.  Parties to contracts in Texas must make all reasonable efforts to perform responsibly under their contracts.  What constitutes reasonable efforts depends upon the nature of the contract because the scope of a force majeure clause in a contract depends upon the benefit of the bargain the parties negotiated within the four corners of their contract.  Courts in Texas do not like to take the liberty of contract away from responsible contracting parties afforded to them by the Texas and United States Constitution.  So, it follows that if the parties did not bargain for force majeure, it is highly unlikely that Texas Courts will recognize an event or series of events out of its own clothe that would excuse or release parties of contracts without the possibility of paying damages.  In a nutshell, force majeure is a lawful bargained for excuse to not perform under the contract.

 

breach of contract

An unexcused failure to perform pursuant to the agreed upon bargain is called a breach of contract when a party’s failure to deliver what’s promised is material to the expectations of the parties from the start.  In a nutshell, breach of contract damages could be a reasonable option or perhaps even the only option for a party if it becomes impossible or impractical to perform obligations of contracts entered into before the Covid-19 Pandemic sent the global economy to the dog pound.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

 

EB-5 区域中心 地平线上有暴风雨吗?

Coleman Jackson,律师,注册会计师
2017 年 4月 11日

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2017年3月20日,美国公民及移民服务局公布《EB-5区域中心合规审计计划》的启动。将实施E-B-5合规审计计划核实区域中心是根据《EB-5移民投资者区域中心计划》遵守适用法律和归类管理他们的区域中心资格的当局。

美国公民及移民服务局的声明说 EB-5 审计小组的任务将包括以下内容:

  • 审查申请、认证和相关记录;
  • 审查区域中心的公共记录和信息;
  • 核实信息,包括连同申请书和在年度认证里提交的支持文件;
  • 进行现场视察;
  • 审查和分析文件;
  • 面试人员以确认与申请及年度认证一起提供的信息。

2017年3月20日的公告也就EB-5区域中心合规审计他们的区域中心的准备程序向EB-5区域中心提供具体的指导。

EB-5区域中心合规审计结果将在审计报告中定稿,该报告会成为EB-5投资者区域中心记录的一部分。审计将用于衡量或确定EB-5区域中心是否遵守指导《EB-5移民投资者区域中心计划》的法律、法规和政策。欺诈迹象可能导致EB-5区域中心的额外调查和审查。

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区域中心的创始人、建议确定他们和与登记和归档区域中心申请相关的其他人的专业人士受许多法律的约束,包括但不限于联邦和州安全法、移民法、税法等等。请看美国诉奥康纳,158 F.附录2d 697 (E.D. 弗吉尼亚州 2001);在这起刑事案件中,一位EB-5移民投资者区域中心的创始人被判犯有移民欺诈、骗税和其他严重犯罪的同谋罪。州 法律也适用于EB-5投资者不受欢迎的投资,取决于投资、由区域中心向公众提供的产品、商品和服务的性质。一些法律实践纪律将可能牵涉到EB-5区域中心 -移民法只是区域中心创 始人和那些代表其向美国移民局提出申请的人可能出现法律危险的一个方面。即使区域中心能够完好无损地幸免于最近公布的E5-5区域中心合规审计,这种调查可能会发现其他由联邦和州当局提出的适用联邦和州法律出生要求的违反以及甚至由移民投资者基于违约、欺诈等等而提出的诉讼。这种州法律要求已经在德克萨斯州发生。

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《德克萨斯商业和商务法案》§27.01 实行投资者在进入房地产或股票交易时所依赖的事实的虚假陈述的民事责任。美国Quest公司诉基蒙斯,228 F 3rd 399, 406 (5th Cir. 2000)。近年来,普通法欺诈、违约、过失虚假陈述、引诱性的欺诈及其他有关索偿时而已经在德克萨斯联邦和州法院就EB-5投资成功地进行辩论。例如,Zhang诉Monroe,民事诉讼编号6:13-CV-811 于2017年1月11日在美国德克萨斯泰勒区东区区法院对Lihua Zhang(EB-5投资者)做出有利的决定。Zhang是本案的原告;她在联邦法院的本多样性诉讼中提出了许多州法院主张 – 而且她赢了- 涉及不受欢迎的“EB-5移民投资者计划”冒险行动。Lake诉 Cravens 488 S.W. 3rd 867(德克萨斯附录,- 沃斯堡2016,本人)中;原告没有恰当地提出联邦问题或宣称多样性,然后被扔出了法庭。在诉讼中陈述实质事实和适当辩护需要技巧。在与案情无关的程序上,诉讼可能和是迷失的。该诉讼Lake诉 Cravens关注了EB-5移民投资者区域中心投资。

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尽职调查可能拯救EB-5移民投资者的法院之旅;或当他们去法院时帮助他们。考虑投资EB-5区域中心的移民投资者必须在把他们的钱交给区域中心之前进行适当的尽职调查。重要的是要清楚地了解谁拥有和经营区域中心;他们的经济记录是怎样(不仅限于特定的推广中的区域中心,还有在大体上管理团队在业务上的整体商业头脑、声誉和成功率);和区域中心投资回报是什么,如果有的话。

本法律博客是由教育目的的专业公司Coleman Jackson 的税收|诉讼|移民法律公司撰写;它不在法律公司与读者之间创建律师客户关系。你应该在你的地理地点就任何影响你、你家人或企业的法律问题咨询法律顾问。

专业公司Coleman Jackson |税收、诉讼、移民法律公司| 英文 (214) 599-0431 |西班牙语(214) 599-0432 | http://www.cjacksonlaw.com.

 

EB-5 REGIONAL CENTERS Are there Storms on the Horizon?

By Coleman Jackson, Attorney, CPA
April 05, 2017

EB-5 REGIONAL CENTERS - Are there Storms on the Horizon?

On March 20, 2017, USCIS announced the launch of an EB-5 Regional Center Compliance Audit Program.  The E-B-5 Regional Center Compliance Audit will be conducted to verify that the regional center is in compliance with applicable laws and authorities governing their eligibility for classification as a regional center under the EB-5 Immigrant Investor Regional Center Program.

The USCIS announcement stated that the EB-5 Audit Team’s Tasks will include the following:

  • Review applications, certifications, and associated records;
  • Review public records and information on the regional center;
  • Verify the information, including supporting documents, submitted with the application(s) and in the annual certification(s);
  • Conduct site inspection;
  • Review and analyze documents;
  • Interview personnel to confirm the information provided with the application(s) and annual certification(s).

The March 20, 2017 announcement also provided specific guidance to EB-5 Regional Centers with respect to preparation procedures for an EB-5 Regional Center Compliance Audit of their regional center.

The results of the EB-5 Regional Center Compliance Audit will be finalized in an audit report that becomes part of the EB-5 Investor Regional Center’s record.  The audit will be used to gage or determine whether the EB-5 Regional Center is in compliance with the laws, regulations and policies governing the EB-5 Immigrant Investor Regional Center Program.  Indicia of fraud could lead to additional investigations and scrutiny of the EB-5 Regional Center.

EB-5 Regional Center Compliance Audit Program

Founders of Regional Centers, professionals advising in establishing them and others connected with registering and filing regional center applications are subject to a host of laws, including but not limited to, federal and state securities laws, immigration laws, tax laws and more.  See United States v. O’Connor, 158 F. Supp. 2d 697 (E.D. Va. 2001); in this criminal case, an EB-5 Immigrant Investor Regional Center’s founder was found guilty of conspiracy to commit immigration fraud, tax fraud and other serious crimes.    State laws could also apply to EB-5 investor ventures gone sour depending upon the nature of the investment, the products, goods and services provided to the public by the regional center.  A number of legal practice disciplines could be implicated with respect to EB-5 Regional Centers—immigration law is only one area where legal jeopardy could arise for regional center founders and those who file applications with USCIS on their behalf.  Even if a regional center can survive the recently announced E5-5 Regional Center Compliance Audit without-a-scratch, such investigations could uncover violations of other applicable federal and state laws birthing claims by federal and state authorities and even lawsuits by immigrant investors based on breach of contract, fraud and more.   Such state law claims are already occurring in Texas.

EB-5 Regional Center  are Subject to Civil Liability

Texas Business & Commerce Code §27.01 imposes civil liability for false representations of material facts that are relied on by an investor in entering into a real estate or stock transaction.  U.S. Quest Ltd. V. Kimmons, 228 F 3rd 399, 406 (5th Cir. 2000).  In recent years, common law fraud, breach of contract, negligent misrepresentation, fraud in the inducement and other related claims have been sometimes successfully argued in federal and state courts in Texas with respect to EB-5 investments.  For example, Zhang v. Monroe, Civil Action No. 6:13-CV-811 was decided in favor of Lihua Zhang an EB-5 Investor on January 11, 2017 in the United States District Court for the Eastern District of Texas, Tyler Division.    Zhang was the Plaintiff in this court case; she raised numerous state court claims in this diversity action in federal court -and she won- involving a soured EB-5 Immigrant Investor Program venture.  In Lake v. Cravens 488 S.W. 3rd 867 (Tex. App., – Fort Worth 2016, no pet); the Plaintiff did not properly plead a federal question or allege diversity and got thrown out of Court.  Alleging material facts and properly pleading in a lawsuit requires skill.  Lawsuits can and are lost on procedural grounds that has nothing to do with the merits of the case.  That case, Lake v. Cravens concerned a soured EB-5 Immigrant Investor Regional Center venture.

Due diligence could possibly save an EB-5 immigrant investor

Due diligence could possibly save an EB-5 immigrant investor a trip to the courthouse; or help them when they go to court.  Immigrant investors considering investing in an EB-5 Regional Center must engage in proper due diligence before turning their money over to a regional center.  It is important to have a clear understanding as to who owns and operates the regional center; what their economic track record is (not only with respect to the specific regional center being marketed, but, the management teams’ overall business acumen, reputation and success rate in business in general); and what are the return on the regional center investment, if any.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432