Government Contracts Monitor

The Contractor’s Burden to Establish Responsibility – Do It Early and Do It Right

October 14, 2014

A pre-award protest filed by Bailey Tool & Manufacturing Company (BTM) in the Court of Federal Claims – challenging BTM’s elimination from the competition as “nonresponsible” because its financial resources were found inadequate to perform the contract – did not succeed. Why? The burden was on BTM to prove it was responsible and it simply waited too long to make the required showing of financial capability. The Court agreed with the agency, holding that the Army “was under no legal obligation to reconsider its nonresponsibility determination in this matter up until the contract award date.” COFC No. 14-216C.

Under FAR 9.103 the government awards contracts to “responsible prospective contractors only.” Responsibility refers to “an offeror’s apparent ability and capacity to perform all contract requirements” measured against seven specific elements in the FAR. In this case, the key factor was “adequate financial resources to perform the contract, or the ability to obtain them."

The burden of establishing responsibility in a bid or proposal is on the offeror – it must affirmatively establish its responsibility. And, while a contracting officer (CO) may accept new evidence and allow a contractor to cure problems related to its responsibility, a CO is not required to give a contractor the opportunity to cure, explain and/or defend its responsibility. In other words, the CO has the discretion to consider additional responsibility information from a prospective contractor, but not the obligation to do so.

Here, at the time the CO made the decision that BTM was nonresponsible, she had in hand not only BTM’s proposal, but also the results of two independent audits of BTM’s books – one by the Defense Contract Management Agency (DCMA) and another by the Small Business Administration (SBA). Both clearly indicated that BTM did not possess adequate financial resources to perform the contract. BTM argued that the CO should have considered any and all financial information it submitted to cure the deficiencies found by the CO, DCMA and the SBA, right up until the time the CO made the award. The Court disagreed. Under these circumstances, the CO’s decision not to reopen the matter was found to be “clearly reasonable” and one that “must be upheld.”

The lesson: Demonstrate that you meet the seven required elements for an affirmative responsibility determination right at the beginning. And, if there is any indication of a weakness in this regard, immediately follow-up with additional evidence that will cure any perceived problems. Contractors, not the government, shoulder the burden of proof regarding responsibility.

Attorneys

Lindsay Simmons