Government Contracts Monitor

Task Order or Schedule Contracting Officer – Pick the Right One or Start Over!

May 2, 2017

The Civilian Board of Contract Appeals (CBCA or Board)’s recent decision in Consultis of San Antonio, Inc. v. Department of Veterans Affairs demonstrates the importance of selecting the right contracting officer to resolve a dispute under a Federal Supply Schedule (FSS) task order. If the dispute involves interpreting the schedule contract terms and conditions, the issue must be presented to and decided by the schedule contracting officer. However, if the dispute pertains solely to task order performance, and does not require interpretation of the schedule contract, then the dispute may be resolved by the task order contracting officer. This distinction is important, because failure to obtain a final decision, or deemed denial, from the right contracting officer, will deprive a Board or Court of jurisdiction, and require the contractor to go back and start the disputes process anew.

Consultis involved an issue as to the applicable Department of Labor (DOL) wage determinations under an IT services FSS contract task order. The schedule contract contained the standard Service Contract Act (SCA) (now the Service Contract Labor Standards (SCLS)) clauses, but no wage determinations. The task order similarly failed to include any wage determinations. Upon becoming aware of this situation several years into task order performance, a DOL Wage and Hour investigator approached both the GSA schedule contracting officer and the task order contracting officer, and asked them to add the appropriate wage determinations to the task order. Both initially declined. However, some six months after task order performance ended, the task order contracting officer issued a unilateral modification adding four wage determinations. Consultis subsequently submitted a letter and invoice to the task order agency, requesting payment for increased costs due to the belatedly-added wage determinations. The task order contracting officer eventually issued a final decision denying the requested payment, without addressing whether a valid claim existed. Consultis timely appealed this denial to the CBCA.

The CBCA sua sponte raised jurisdictional concerns and issued a show cause order to the parties, due to the appealed final decision having been issued by the task order contracting officer, rather than the schedule contracting officer. After considering the parties’ responses, the CBCA dismissed the appeal for lack of jurisdiction. The Board relied on FAR 8.406-6 and the Federal Circuit’s decision in Sharp Electronics Corp. v. McHugh, 707 F.3d 1367, 1374 (Fed. Cir. 2013), holding that “FAR 8.406-6 does not authorize an ordering [contracting officer] to decide a dispute requiring interpretation of schedule contract provisions, in whole or in part, regardless of whether the parties frame the dispute as pertaining to performance.”

While acknowledging that “the focus of [Consultis’] appeal is the applicability of the wage determinations to the task order,” the Board concluded that “resolution of that issue necessarily requires an examination and interpretation of the terms and conditions of the schedule contract.” (Emphasis in original.) The Board stated that “[t]he SCA applies by its own terms and conditions,” and that “[s]imply because the terms and conditions are not specified in the task order does not mean they do not apply or that none exist.” The Board further stated that “[t]he task order comes into existence under the schedule contract,” and was “not persuaded that clauses mandated by statute in the FSS contract, including those mandating compliance with the SCLS, cannot be enforced if they are not expressly incorporated into the task order.” The Board similarly found “unconvincing” “assertions amounting to waiver of SCLS compliance based on promises made between the parties or the [arguably improperly perceived] bounds of DOL’s enforcement authority”. The Board concluded that “[w]hether the [task order] contracting officer merely made explicit (by issuing the modification) what the contract already requires is an issue of contract interpretation that is appropriate for consideration by the GSA contracting officer. At the very least, it is a mixed issue, involving both performance of the order and interpretation of the schedule contract, which, under Sharp Electronics, also requires a decision from the GSA contracting officer.” The Board therefore dismissed Consultis’ appeal for lack of jurisdiction.

The bottom line is that schedule task order contractors need to carefully consider the appropriate contracting officer to whom to submit disputes arising under a task order. As pointed out by the CBCA in Consultis, “[t]he nature of the dispute will determine which contracting officer ultimately addresses it.” One therefore needs to carefully analyze the nature of the dispute, and specifically whether the dispute is limited strictly to performance under the task order and can be resolved without needing to interpret the underlying schedule contract terms and conditions. If not, then the dispute must be presented to the schedule contracting officer. As noted by the Federal Circuit in Sharp Electronics, this allocation of contracting officer authority “is less than perfect,” and many aspects of a dispute may involve matters on which the ordering contracting officer has a better command of the facts. However, FAR 8.406-6 draws what the Federal Circuit termed “a bright-line rule,” and “maintains a clear, predictable allocation of jurisdiction between agency contracting officers and GSA,” and promotes uniformity, consistency and fairness across all contracting agencies, by “[r]equiring that all schedule contracts must be construed by the GSA [contracting officer].”

Making the wrong choice will, as here, deprive the Board or Court of jurisdiction under the Contract Disputes Act (CDA), and result in dismissal of the contractor’s appeal, requiring the contractor to start all over again and resubmit its dispute to the proper contracting officer.