Contractor Obligation to Point out Errors to Government

X is under no legal obligation that I know of. Whether there is a moral obligation is a matter of opinion.

Based on this set of facts, what, if any, obligation does X have to bring this error to the government's attention? If X does have an obligation to tell the government of the error, what is the source of the obligation, e.g., a FAR provision?

[uS flag waving slowly in the background...]

[soft patriotic music starts playing...]

The obligation to bring this error to the government's attention comes from the noble cause that the contractor is privileged to support. The government will thank the contractor for its integrity and desire to serve the public's best interest. Contractor management will sleep better at night knowing that because of their actions, more taxpayer dollars will be available to support the noble cause elsewhere.

X is under no legal obligation that I know of. Whether there is a moral obligation is a matter of opinion.

The above statement itself appears to be an opinion. If moral obligations are simply matters of opinion, it is difficult to understand how legality is anything more than the opinion of the majority via the government. But, maybe opinions are all that people are really wanting anyway.

Considering moral obligations, would the failure to disclose the error be a legitimate basis for determining X non-responsible for future awards on the ground that X does not have a satisfactory history of business ethics?

I don't think so. As long as X is not planning to cheat the government and intends to do what the contract requires of it, it has fulfilled its responsibilities. Besides -- why think that the government does not know what it needs? Maybe X thought it might have missed something and decided to go along with the program despite its suspicions..

As a business matter, I would tell the government that I think it has missed something. That course might prevent trouble later, like T for C. But that's me.

What if X KNOWS, absolutely KNOWS that the solicitation is wrong, tells the government, and the government tells X to get lost -- would X have an obligation to protest to save the government from itself? Would the government be morally obligated to stand by the deal, given that it was warned that the deal was a bad one for it and rejected the information?

As I read this thread my mind turned to the blog found on Wifcon authored by Ralph Nash about fair dealings.....hmmmmmmm

The above statement itself appears to be an opinion. If moral obligations are simply matters of opinion, it is difficult to understand how legality is anything more than the opinion of the majority via the government. But, maybe opinions are all that people are really wanting anyway.

Would it need to be anything more?

Would it need to be anything more?

What's your opinion?

That you're in need of wisdom.

That you're in need of wisdom.

You beat me to it. I agree.

That you're in need of wisdom.

I agree. I am persuaded (convinced) that there is something more that people's opinions. I hope you were really saying that any moral obligation is a matter for another discussion (rather than a matter of opinion). Without absolute truth (wisdom) your argument (and mine) is circular.

This is what I said that prompted your comment in Post #4:

X is under no legal obligation that I know of. Whether there is a moral obligation is a matter of opinion.

Those two sentences do not constitute an argument, much less a circular argument. The first is a statement of fact about what I know about the law. The second is a statement of my opinion, which is that the existence of a moral obligation in this case is a matter of opinion -- something to be argued about. The two sentences are not related. The closest I have come to making an argument is what I said in Post #6.

Your statement that you think that there is more to the world than opinion is banal. Of course there is more. Your statement

Without absolute truth (wisdom) your argument (and mine) is circular.

is nonsense. I mean that literally: it makes no sense.

I know that you admit to being in need of wisdom, but that does not mean that you have to post meaningless junk. If you want to take issue with my statements in Posts #2 and 6, I'd be happy to read what you have to say, but only if you try to be intelligent. If all you want to do is punch in with silly statements that you think are pithy and amusing bon mots and moral theory, then you are wasting our time. They aren't pithy, they aren't bon mots, and as moral theory they're not even half-baked.

This is what I said that prompted your comment in Post #4:

Those two sentences do not constitute an argument, much less a circular argument. The first is a statement about what I know about the law. The second is statement of my opinion, which is that the existence of a moral obligation is a matter of opinion -- something to be argued about. The two sentences are not related. The closest I have come to making an argument is what I said in Post #6.

Your statement that you think that there is more to the world than opinion is banal. Of course there is more. Your statement

is nonsense. I mean that literally: it makes no sense.

I know that you admit to being in need of wisdom, but that does not mean that you have to post meaningless junk. If you want to take issue with my statements in Posts #2 and 6, I'd be happy to read what you have to say, if you intend to be intelligent. But if all you want to do is punch in with silly statements that you think are pithy and amusing bon mots and moral theory, then you are wasting our time. They aren't pithy, they aren't bon mots, and as moral theory they're not even half-baked.

Without an explicit argument on your part, I don't think there is very much more to discuss about your original statement. I disagree with your implicit argument and your opinion about moral obligation. You made an absolute statement about moral obligation in the last part of Post #2 without qualification. However, your most recent post makes it clear that you meant all of your original statement to be qualified as simply your opinion. Thank you for the clarification. I agree with you that there is no legal obligation for the contractor to disclose the government's error back to the government.

Would your answers be different if the solicitation had identified a specific quantity of vehicles, but the Contractor, in its role of maintaining those vehicles, knew or should have known that the quantity was grossly incorrect?

Would then the Contractor have "a duty to seek clarification from the Government" of the patent ambiguity (Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007))?

I disagree with your implicit argument and your opinion about moral obligation. You made an absolute statement about moral obligation in the last part of Post #2 without qualification.

I expressed an opinion about whether a particular task is a moral obligation. I didn't express an opinion about moral obligation per se. You don't know what I think about the nature and sources of moral obligation, and thus you don't know anything about any implicit argument by me about moral obligation. What you're calling an implicit argument is nothing but an unjustified assumption on your part.

I expressed an opinion about whether a particular task is a moral obligation. I didn't express an opinion about moral obligation per se. You don't know what I think about the nature and sources of moral obligation, and thus you don't know anything about any implicit argument by me about moral obligation. What you're calling an implicit argument is nothing but an unjustified assumption on your part.

I think metteec is getting the conversation back on track after my detour. Vern, I agree with you that my statement about your opinion on moral obligation was broad. I assumed that if you made an absolute statement about moral obligation for one scenario, that statement would apply absolutely to all moral obligations. Again, thank you for the clarification and additional opinion.

Would the answer be different if the solicitation had identified a specific quantity of vehicles, but the Contractor, in its role of maintaining those vehicles, knew or should have known that the quantity was grossly incorrect?

Would then the Contractor have "a duty to seek clarification from the Government" of the patent ambiguity (Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007)?

If all that is happening is that X thinks it knows something and that the something it thinks it knows is not reflected in the solicitation, then there is no patent ambiguity in the solicitation. A patent ambiguity in the solicitation would arise out of statements in the solicitation, not a difference between what the solicitation says and what X thinks it knows to be the truth. A patent ambiguity arises from language that is subject to more than one reasonable interpretation. See ITT Federal Services Corp. v. U.S., 45 Fed. Cl. 174, 189:

Basic contract construction principles require that when parties to a contract dispute the meaning of their agreement, the court must examine the contract language to determine whether it is ambiguous. Id. Contract language is ambiguous if it is susceptible to two different and reasonable interpretations, each of which is consistent with the language of the contract. See Community Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1579 (Fed.Cir.1993). When an ambiguity is found within a contract, the court must inquire whether that ambiguity is patent. See Fort Vancouver, 860 F.2d at 414.

The issue here is not whether there is a defect in the solicitation, but whether the solicitation reflects the government's actual requirement.

As described by Retread:

Based on X's knowledge of the number of vehicles in the government inventory, X recognizes that the number of vehicles covered by the second contract is substantially overstated.

If the government states its requirement to be a certain number of vehicles, and if its requirement is in fact for less, that might be a mistake on the government's part, but it is not a defect in the solicitation per se, since the government can contract for any quantity as long as it is clear and unambiguous about that quantity. Once the government contracts, both parties are bound by their agreement. The Government may have to T for C and compensate the contractor accordingly.

Depending on how it is worded in the solicitation, I think that this could end up to be a False Claims issue. For example, the contract line item stated:

0001 - FFP: Install Kits into 450 vehicles - QTY: 1 LOT $400,000

Yet, the Contractor could only install kits into 350 vehicles because of the gross mistake. The Contractor knew or should have known at time of the order that the quantity was incorrect, but failed to notify the agency of the gross mistake. If the Contractor submitted an invoice for the entire $400,000, don't you think it would be a false claim because he did not meet the terms and conditions of the contract and knew that the quantity was incorrect?

metteec:

I don't think what you have described would be a false claim. How much do you know about the False Claims Act? What have you read?

In any case. what do you mean when you say that the quantity is "incorrect"? In what way is it "incorrect"? The government says it wants a contractor to install x number of kits. How would that statement be "incorrect"? The government is not making a statement of fact that it has only x. It is simply stating its desire for x. How can a wish be "incorrect"?

If the Contractor submitted an invoice for the entire $400,000, don't you think it would be a false claim because he did not meet the terms and conditions of the contract and knew that the quantity was incorrect?

I think it would be a false claim if the contractor somehow claimed on its invoice that it had actually repaired 450 vehicles (when really it was only 350 vehicles). But if the contractor disclosed that it had only needed to repair 350 vehicles and still submitted an invoice for $400,000, I do not see how (at least yet) that would legally be a false claim. If the contractor submitted an invoice for $400,000 without disclosing the number of vehicles repaired, the government might try to prove some kind of wrong-doing under those circumstances. All these scenarios would arise after contract award.

metteec:

I don't think what you have described would be a false claim. How much do you know about the False Claims Act? What have you read?

I keep a copy of the False Claims Act in my nightstand, next to the Bible and the FAR.

Seriously though, the last time I read the whole thing was probably two years ago (it is only a couple of sections). I have also read Nash, Cibinic, and Nagle's Administration of Government Contracts which includes several pages that speak to it. I enjoy reading the FCA cases identified on Wifcon. The last big one I can think of was the CA qui tam case. Further, I have assisted agency IGs on two FCA cases brought on by the agency, both which were settled. I have not been involved in a qui tam lawsuit.

Back to the topic, I said "incorrect quantities" because the Contractor was aware of the number of vehicles in the Government's inventory, and the number of kits requested exceeded the number of vehicles in that inventory. A reasonable person would have questioned why there was a difference. Not questioning shows either ignorance or moral ineptness. In order to receive payment, the Contractor's invoice would need to reference the contract line item number and description per FAR Clause 52.212-4. If the Contractor included that information, but actually installed less than the stated number of kits, then it would violate 31 U.S.C 3729(a)(1)(A).

Based upon the contractor not notifying the Government of the apparent incorrect quantities, and then submitting an invoice when it installed less quantities, I think a judge would rule the contractor had the intent to make a fraudulent claim. I wish that I could give you a case law reference to prove my point but so many FCA cases are settled in the government's favor.

The quantities in the solicitation are not incorrect just because they don't match the quantity of vehicles in the government's inventory. Who knows why the government specified the quantity that it did. Maybe it's expecting to get more vehicles.

There would be no false claim case based on what we've been told. The contractor has every right to rely on the government's statement of its own requirement.

If the contract specifies 300 kits and the contractor finds it only has to install 200, it will have to ask the government about the other kits. The contractor would be stupid to invoice for 300 when it's only done 200. That would be a false claim.

If the government says "There are no other kits," then the contractor will presumably say, "Okay, well, the contract says I have to do 300. So what do you want me to do now?" And the government will have to decide.

Go have a beer. You're overheated. If you don't drink, start now.

Go have a beer. You're overheated. If you don't drink, start now.

Have a good week-end, Vern. I hope you enjoy putting up with people like me as much as I enjoy learning from you and other posters on WIFCON. Thank You.

Two observations.

1. The firm may know how many vehicles that the government currently has but that doesn't necessarily mean that there won't be the quantity that has been described in the solicitation. PerhAps there are more vehicles due in.

2. Why would the government use the language for the CLIN described in Metteec's post 19 for a fleet of vehicles, mixing numbers of units then lump sum pricing it? Apparently the requirements writer doesn't know the exact number of vehicles. Why not use a unit priced CLIN to account for likely variations in actual quantities. Someone will have to verify that each vehicle gets the installed kit anyway.

Joel, in regard to your point 2, the RFP for the second contract appears to have been a cut and paste version of the RFP for the first contract. Each RFP had instructions on how to prepare the cost portion of the proposal. The instructions contained the number of installs that would be required. When preparing the second RFP, the agency apparently copied the instructions from the earlier RFP without changing the numbers which were obviously wrong for the second contract.

The contract did not list a specific number of installs. It merely said install kits for a lump sum price of $X. The contract instructed the contractor to bill the government a fixed amount each month.

Then it isn't a "mistake". From your description it is incompetence. So other than the instructions, there is no place in the solicitation to determine the magnitude of the scope?

I would contact the govt and ask them what they are trying to convey and that it appears to be in error. But that is me

The instructions contained the number of installs that would be required. When preparing the second RFP, the agency apparently copied the instructions from the earlier RFP without changing the numbers which were obviously wrong for the second contract.

The contract did not list a specific number of installs. It merely said install kits for a lump sum price of $X. The contract instructed the contractor to bill the government a fixed amount each month.

"Obviously wrong." Obvious to all or apparent to X based on its "inside" knowledge.

In one sentence you say "the numbers were obviously wrong for the second contract," but in the next sentence you say that the "contract" (solicitation?) did not list a specific number of installs. You appear to contradict yourself, and I don't understand. If the "contract" (solicitation?) does not specify a number of installs, then what numbers are wrong?

Do you mean that the model contract in the solicitation does not specify a number of installs, but that the proposal preparation instructions specify a number, which X thinks is wrong?

I must apologize because I read Metteec's post number 19 into Retreadfed's hypothetical scenario in posts 1 and 26. That was the basis for my observation number 2 in post number 27.

However, Retreadfed said that the "contract" doesn't mention the number of installs required but the proposal preparation instructions do. I am assuming that Retreadfed means that the proposal instructions will not be in the resulting contract. Is that correct Retread?

The statement of work and/or line item schedule are incorrectly written if the quantity is not defined and the instructions are probably wrong regarding the quantity. There appears to be incompetence and lack of diligence on someone's part even if the instructions are somehow correct.

I must apologize because I read Metteec's post number 19 into Retreadfed's hypothetical scenario in posts 1 and 26. That was the basis for my observation number 2 in post number 27.

However, Retreadfed said that the "contract" doesn't mention the number of installs required but the proposal preparation instructions do. I am assuming that Retreadfed means that the proposal instructions will not be in the resulting contract. Is that correct Retread?

The statement of work and/or line item schedule are incorrectly written if the quantity is not defined and the instructions are probably wrong regarding the quantity. There appears to be incompetence and lack of diligence on someone's part even if the instructions are somehow correct.

Joel, you start by apologizing for misinterpreting some posts, then ask Retread for information about the solicitation, then make a conditional assertion about the SOW, the CLIN schedule, and the instructions before you know what they say and the rationale for the agency's approach. The agency's competence and diligence are not the issue in this thread and I, for one, don't care about your opinions in that regard. What I care about is pursuing Retread's very interesting inquiry about ethics and consequences. Focus, please.

Joel, you start by apologizing for misinterpreting some posts, then ask Retread for information about the solicitation, then make a conditional assertion about the SOW, the CLIN schedule, and the instructions before you know what they say and the rationale for the agency's approach. The agency's competence and diligence are not the issue in this thread and I, for one, don't care about your opinions in that regard. What I care about is pursuing Retread's very interesting inquiry about ethics and consequences. Focus, please.

Vern, you stated that a moral obligation to point out an error to the government is a matter of opinion. I believe that you also indicated that you would. Some have said that they would not in this hypothetical situation.

I said that I would contact the government. I don't disagree that there is no legal obligation or that a moral obligation is a matter of opinion.

The "hypothetical" example has been confusing. You asked Retreadfed what is meant by "the contract" doesn't indicate the quantity of installs. I expressed an opinion that Retreadfed was referring to what would constitute the contract documents after award. There isn't enough information to know whether or not the information in the instructions for proposal prep could be read into the requirement after award. At any rate, that could complicate matters after award. Also, from the information provided, we don't know if the number is actually wrong.

Since the solicitation seems to be poorly written, as I said earlier, I would contact the government, moral obligation or not.

Let me clarify the hypo. The instructions on how to price the proposal contained the number of installs that would be required in the follow-on contract. The instructions did not become part of the contract when the contract was awarded. The contract does not mention the number of installs that will be required. The incumbent contractor recognizes the mistake the government made in preparing the RFP. Apparently, the government was unaware of the mistake.

Anybody else flashing on the KBR Camp Anaconda dining facility dispute? The one where the subcontractor billed based on either planned personnel or actual personnel -- whichever was greater?

http://www.uscfc.uscourts.gov/sites/default/files/opinions/MILLERC.KELLOGG050212.pdf

Must be just me, then.

H2H

H2H,

I read the decision -- thanks for the link. War is messy, and contracting in an environment of war is messy. It seems to me the court's message is the Government must allow for that messiness in its contracting process, and pay for that messiness if it chooses to contract for services in an environment of war. Because the parties could not settle the matter themselves, they went to the court as an arbiter, and the court made its decision.

If the proposal preparation instructions state a number of installs and the model contract is silent in that regard, then I think there is a patent ambiguity in the solicitation itself. What is ambiguous is the relationship between the quantity in the instructions and the contractor's contractual obligation. Why isn't the quantity specified in the model contract? The ambiguity does not arise out of X's knowledge of the government's vehicle inventory. It should be apparent to any prospective offeror. In that case, X has a duty to inquire under the common law of contracts . If it does not inquire, and if the ambiguity is harmful to it, then it might have to live with the consequences.

Does the patent ambiguity give rise to a legal obligation to put the government on notice? None that I know of other than the common law of contracts. If the quantity in the instructions turns out to be greater than the government's actual requirement, then the government can T for C. But if the quantity turns out to be less than the actual requirement for some reason, then the contractor might well be bound to do more work than it planned at no additional cost to the government, although it might be able to make a case for a negligent government estimate.

To me, this isn't a case of legal or moral obligation, but good business sense. Who would submit a proposal to do an unspecified amount of work at a firm-fixed-price? If I were X, I would be worried that the government knows something that I don't and that it's not telling me.

Yes