Government Contracts Monitor
Stay Tuned: We May Soon Know More about a Contracting Officer’s Duty to Provide CBA Information to Offerors under the Service Contract Act
June 14, 2013
By: Eric Whytsell
While it failed to fully resolve the matter at hand, the recent decision in CAE USA, Inc., ASBCA No. 58006 (May 23, 2013), promises a future answer to the question as to whether a Contracting Officer must supply not only the predecessor contractor’s collective bargaining agreement (CBA), but also full information as to the application and accrual of wages and fringe benefits.
The case involved an appeal from the Contracting Officer’s denial of a claim for fringe benefits, the actual cost of which exceeded the amount that the contractor included in its fixed-price bid. The contractor sought an Equitable Adjustment claiming the Government failed to provide complete information during the RFP phase regarding the fringe benefits under existing CBAs. In its complaint, the contractor based its entitlement on three theories: (i) Failure to Disclose Superior Knowledge; (ii) Unilateral Mistake; and (iii) Breach of the Implied Duty to Cooperate and the Duty of Good Faith and Fair Dealing. The Government responded by moving for summary judgment, first asserting that the references to benefits in the supplied CBAs created a patent ambiguity that required the contractor to inquire further, and, since it failed to do so, the contractor cannot recover. The Government went on to argue that the contractor cannot prove the elements of the theories on which it relied.
The Board made short shrift of the various theories asserted in the contractor’s original complaint. The unilateral mistake claim failed because the contractor’s error was deemed one of business judgment, and not a clear-cut clerical or mathematical mistake or misreading of specifications. Similarly, with respect to the superior knowledge claim, the Board noted that the contractor knew that the necessary benefits information was missing and chose to do nothing to obtain it. The Board next noted that the implied covenants on which the contractor relied do not arise until contract award and, therefore, had no application to the contractor’s fixed-priced bid here. It next sided with the Government – at least for now – on the patent ambiguity issue, relying on the line of cases involving known missing information in specifications and drawing, and the associated duty to inquire.
However, despite all this, the Government won only partial summary judgment because of an argument that the contractor raised in its final reply brief based on the assertion that the Contracting Officer failed to fulfill its duty under the Service Contract Act (SCA) to actively seek out the missing benefits information and provide such information to offerors. According to the contractor, the SCA requires Contracting Officers to obtain and provide offerors not only a copy of the predecessor contractor’s CBA describing wages and fringe benefits, but also “the full information as to the application and accrual of such wages and fringe benefits, including any prospective increases, to service employees engaged in work on the contract.”
Rather than dismissing this argument outright, the Board identified this issue as one to be decided during the appeal, and noted that, if the contractor is correct, the patent ambiguity would have been caused by the Contracting Officer’s failure to comply with the SCA, which would likely relieve the contractor from the duty to inquire. The Board remanded the case to the parties to deal with whether the facts relating to this new raised legal issue are both undisputed and complete, which would mean the appeal turns on a question of law.
The ultimate decision of this case may, therefore, represent a significant development in our understanding of the Contracting Officer’s duties under the SCA – and potentially an important improvement in the service contract procurement process. Having more information at the time of proposal preparation would constitute a major improvement, and result in not only better-informed, more realistic, pricing, but also more meaningful competition and fewer complications after contract award.
We will monitor and report on future developments. Until then, keep your fingers crossed.
Eric Whytsell is the attorney responsible for the content of this article.