Government Contracts Monitor
The Army Corps Wrongly Rejected A Timely Proposal, But Was Not “Wrong Enough” To Have To Pay The Contractor’s Attorneys’ Fees
August 15, 2012
A recent U.S. Court of Federal Claims decision highlights the perils and absurdity associated with submitting proposals via e-mail. Watterson Construction Company responded to an RFP by the Army Corps of Engineers (“Army Corps”) to design and build “a standard barracks to house 294 persons in Fort Wainwright, Alaska.” The RFP required final, second-phase proposals to be submitted by March 16, 2010 at 12:00 p.m.
On March 16, 2010 at 11:01 a.m., Watterson sent its final proposal by e-mail to the Contracting Officer’s (“CO”) e-mail address. At 11:29 a.m., Watterson got a “received” receipt from the Army Corp’s e-mail server. Watterson’s proposal, however, did not arrive in the CO’s e-mail inbox until 12:04 p.m. – four minutes late. This delay was caused by an alleged “mail storm” at the Army Corps’ e-mail servers. As a result of arriving four minutes late to the CO’s inbox, despite timely arriving at the Army Corps’ e-mail servers, Watterson’s proposal was considered “late” and eliminated from consideration.
Watterson filed a complaint with the U.S. Court of Federal Claims asserting that the Army Corps had improperly rejected its proposal. Watterson won, and the Court awarded it $343,490.09 in bid preparation costs.
Where the story gets strange is when Watterson, after its initial victory, sought to recover its attorneys’ fees under the Equal Access to Justice Act (“EAJA”). In order to award EAJA attorneys’ fees, a court must find a petitioner to be a “prevailing party” and the government’s litigation position not “substantially justified.” Despite finding for Watterson on the merits of its claim and wavering on the “prevailing party” determination, the U.S. Court of Federal Claims in Watterson Construction Co. v. United States, No. 10-587C (July 31, 2012) flatly denied its EAJA attorneys’ fees petition on the grounds that the Army Corps’ litigation position was “substantially justified.” In particular, the Court’s concluded that even though the Army Corps lost on the merits, its litigation positions (e.g., Watterson’s proposal was considered late under FAR 52.215-(c)(3)(i), (ii), the Army Corps did not have to excuse the lateness under the “Government control” exception (FAR 52.215-(c)(3)(ii)(A)(2)), and, the Army Corps did not have to extend the submission deadline (FAR 52.215-1(c)(3)(iv)) even after acknowledging the basic facts and the “mail storm” that prevented delivery of the otherwise timely submitted proposal) were “substantially justified” – warranting a denial of attorneys’ fees.
There are two takeaways from this case. First, a contractor can never be too sure that timely submitted proposals sent by e-mail will be “received” on time so care should be taken to submit proposals as early as possible and implement other risk mitigation actions to avoid problems like the ones faced by Watterson . Second, even when the Government is wrong and has committed indefensible server and equipment errors, it likely will not have to pay a contractor’s attorneys’ fees incurred while proving the Government was wrong.
Michael J. Schrier is the attorney responsible for the content of this article.