Tuesday, February 21, 2012

Constructive Changes - Verify Critical Information

A decision that was recently handed down by the Armed Services Board of Contract Appeals (ASBCA) illustrates the importance of both contracting parties, the Government and the prospective contractor, to verify critical information in a solicitation (Appeal of BECO Construction Co., Inc., ASBCA No 57483).

The Government issued a Request for Quotation (RFQ) that called for reclamation work on approximately 2.7 acres. The appellant submitted its bid based on that estimate. After contract award, the contractor discovered that the site to be reclaimed was more than 4 acres and asked the Government for an increase in contract price. The Government refused, the contractor completed the work, and filed a claim for additional compensation. The Government again refused so the contractor appealed.

The appellant argued that there was a constructive change that entitled it to a price adjustment. The ASBCA agreed that the appellant was misled and ordered the Government to pay for the extra work. In its decision, the ASBCA cited the well-established rule that where the government makes positive statements in the specifications or drawings for the guidance of bidders, a contractor has the right to rely on them regardless of contractual provisions requiring the contractor to make investigations. Additionally, the Government knew that the reclamation project was greater than that specified in the solicitation. It had information in its files that it did not disclose estimating the site to be about 5 acres. The Government should have known that the description of the area in the contract was misleading and that potential contractors would rely on it.

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