Federal Government has a Duty to Provide Accurate Cost Data

Nov 16, 2017

Contractors can rely upon quantity estimates provided by the government.

The federal government often supplies contractors with estimates on the quantity of work that will be performed by the successful bidder. Contractors base their cost estimates and bids on this information. Even if these estimates are not exact, they must be reasonable and provided in good faith.

This was reaffirmed in a recent U.S. Court of Appeals for the Federal Circuit case. Agility Defense & Government Services, (U.S. Ct. of Appeals, Fed. Ct. 2016-1068) Although this is not a construction case, it provides worthwhile precedent for contractors who rely upon information provided by the federal government when preparing their estimates.

An article by Michael H. Payne and Casey J. McKinnon in Federal Construction Contracting Blog explains the Courts ruling in this case.

Agility Defense was awarded a “contract for the disposal of surplus military property.” The contractor’s estimate was based upon the quantity of equipment it would have to handle pursuant to a “fixed-price requirements contract.”

It became apparent the amount of material the contractor was required to handle was considerably more than the amount shown in the historical data provided by the government.

The contractor filed a claim for additional compensation “based on a theory of negligent workload estimates.” This claim was denied by the Government and by the Court of Federal Claims which ruled that the “Government’s estimates were acceptable because it had provided offerors with historical data.”

Upon appeal in Federal Court, the lower Court’s ruling was overturned. “The Court held that the contractor had satisfied its burden to show that the Government’s estimates were negligent because the historical data provided was not the most current information available…[and] the Government was aware there would likely be a surge in workload after the contract award, but failed to disclose that information to the offerors.”

This ruling is a victory for government contractors.

Source—

Federal Circuit Clarifies Requirements for Government-Furnished Estimated Quantities, Michael H. Payne and Casey J. Mckinnon, Federal Construction Contracting Blog, Oct. 10, 2017.