Friday, January 9, 2015

Blame the Government - That'll Work, No?

Last fall, the ASBCA (Armed Services Board of Contract Appeals) issued a decision on a appeal filed by a contractor whose contract had been terminated for default. The initial solicitation required bidders to provide proof that electricians working on the construction project had a current and active U.S. State Certified Electrician License. This requirement was also listed as an evaluation factor in the selection process.

Vertex Construction and Engineering (VCE), the winning bidder, submitted a proposal listing an electrician out of New Mexico with a current license. Almost immediately, the project ran into technical problems and the Government demanded that the electrician show up at the job site. Turns out however, this guy from New Mexico had only been a journeyman electrician, not a master electrician as required. Moreover, his license had expired in 2006, seven years before VCE submitted its proposal. The Government terminated the contract for default. VCE appealed to the ASBCA.

The Government moved for summary judgment on the grounds of fraud asserting that VCE's misrepresentation rendered the contract void "ab inito" (from the beginning). VCE appealed the termination. VCE argued that it did not knowingly misrepresent the electrician and that it did not have access to US licensing facilities. But here's the interesting argument. VCE's primary defense is that the Government had an obligation to verify the certificate and had it done so, appellant's misrepresentation would have been discovered, and the Government could have disqualified VCE from the bidding process.

The ASBCA didn't buy that argument. It stated in its decision that the argument that bids can present misinformation, and the burden is on the Government to ferret it out, is not persuasive. The requirement for the Government to verify the certificate submitted by VCE was for the  benefit of the Government, not for VCE. The law is clear that when contractors try to shift responsibility for their deficiencies not discovered when the Government has conducted a pre-award survey, a contractor's obligation to verify information submitted in its bid remains. It is the contractor's responsibility, not the Government's, to determine its own capability to perform a contract and, thus, even if a Government pre-award survey is conducted negligently, that circumstance can be of no consequence or benefit to the contractor.

In this case, VCE presented no evidence contradicting the Government's facts, only unsupported arguments as to why its misrepresentations should be excused. In addition to blaming the Government for not discovering VCE's fraud by verifying the master electrician's certification, VCE tried to justify its failures by pointing to is small size, its status as a local company, and its lack of computer capability. However, even if those assertions were relevant, VCE provided no evidence upon which such statements were based.

You can read the entire ASBCA case here.

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