Lessons from an Army contract: Be clear in your communications (and check supplier inventory before submitting a bid)
The ASBCA's recent decision in Gilbert Solutions, LLC, ASBCA No. 63508, involved a relatively small and straightforward solicitation by the Army to purchase four portable restroom trailers for delivery to Guantanamo Bay, Cuba. The RFQ in question listed a total target price of $227,000 with a delivery date of 60 days from the contractor's receipt of the Army order to purchase. The RFQ also included a suggested product sold under the trade name "Comforts of Home" and included specific dimensions and related service requirements.
Gilbert Solutions was one among several bidders that submitted a response to the RFQ. Gilbert's February 1, 2022, bid was for $329,600 with a 60-day delivery, and directly referenced the suggested Comforts of Home trailer. The next day, the Government requested confirmation of the bid, which apparently prompted Gilbert to check with its supplier. Gilbert learned from its supplier that the Comforts of Home trailer would not be available until mid-August 2022. The supplier then suggested to Gilbert an alternative trailer manufactured by "Ultra-Lav," which was smaller than specified in the RFQ.
On February 4, the Government (through Contracting Officer Jeremy Zelbst) requested confirmation from Gilbert that the offered latrines would contain paper towel dispensers and a lift system. Gilbert responded that it was getting confirmation and emailed the Government a product description of the Ultra-Lav trailers. Three days later (February 7), Gilbert confirmed to the Government that the trailer would come with the hydraulic lift system and that "they had just talked to our vendor to confirm all specifications and we are good to go." On February 9, the Government requested a confirmation of Gilbert's updated SAM registration. Gilbert provided it through a screen shot, as well as a copy of the manufacturer's specification for the Ultra-Lav trailers (more on this below).
The Army awarded the contract to Gilbert on February 14. Gilbert executed a bill of sale with its supplier for the Ultra-Lav trailers the same day.
Issues Arise
Months passed – and in May 2022, the Army's Office of Military Commissions ("OMC") requested information from the Army Contracting Office regarding the trailers' "salient characteristics." The Army (this time through SFC Shanaye Davis) reached out to Gilbert. Gilbert provided the specification sheet for the Ultra-Lav unit.
To what likely came as a surprise to Gilbert, the Army responded that the parties have "an issue" with the Ultra-Lav units, because the contract was awarded based upon the Comforts of Home trailer identified in Gilbert's bid and not upon the Ultra-Lav units, which the Army deemed "not acceptable." Discussions between the parties followed during which the Government continued to request the salient characteristics from Gilbert. On May 19, Gilbert provided the Government additional documentation showing the Ultra-Lav trailer.
Again, months passed – and on August 9, Gilbert delivered the first two trailers. OMC rejected these trailers because they did not meet contract specifications. The Government then sent Gilbert a show cause notice. Gilbert responded that the trailer did meet contract requirements (based on what it understood to be the contract requirements), and that Gilbert had told both SFC Zelbst and SFC Davis that it was providing the shorter Ultra-Lav trailer. On September 9, the Government terminated Gilbert for cause for failing to meet contract specifications, and Gilbert appealed to the Board.
Gilbert's Appeal and the Government's Response
On appeal, the Government argued that the contract was void ab initio ("void from the beginning") due to Gilbert's misrepresentations in its bid. A contract is void or voidable when its award results from misrepresentations in the contractor's bid.
The Board agreed, finding that "Gilbert misrepresented the trailers it intended to provide to the Government at the time it entered the contract." Significantly, the Board's opinion is quite clear that it found Gilbert's witnesses to lack credibility, including with respect to an alleged telephone conversation that Gilbert said it had with SFC Zelbst, during which Gilbert allegedly discussed providing the Ultra-Lav trailers, which SFC Zelbst denied having occurred. The Board also did not afford much if any significance to the fact that SFC Zelbst admitted he did not open the attachment for the specifications for the Ultra-Lav trailer, which was attached to the email that Gilbert sent to SFC Zelbst on February 9. Gilbert believed that this email notified the Contracting Officer of its intent to provide a product different from its bid, and the Contracting Officer's failure to respond to the email constituted the CO's acceptance of the amended offer. The Board found otherwise, explaining that Gilbert's email nowhere indicated this product description was for a trailer different from its bid and that "Gilbert did not sufficiently notify the contracting officer that it intended to change its bid when it provided SFC Zelbst with a screen shot of its SAM registration and the UltraLav manufacturer's trailer specifications."
Based on the findings, the Board held Gilbert's "material misrepresentations resulted in the contract being void ab initio and that, although a "severe remedy," this remedy was warranted based upon the "potential for injury to the public interest by actions which compromise the integrity of the Federal contracting process."
Severe indeed. The Board judge hearing the case was undoubtedly in the best position to weigh the credibility of the evidence and witnesses. That said (and this is based only on my reading of the written decision), one can appreciate the possibility that:
- Gilbert sincerely and genuinely believed it sufficiently notified the Government that it would be providing Ultra-Lav trailers;
- the Government would accept those trailers, and;
- Gilbert would not have expended the time, cost, and energy to ship these trailers to Cuba if it had any concern that the Government would not only reject them but also terminate Gilbert for cause.
Worthy of note, the Board stated in a footnote that "[a] material misrepresentation does not require a finding to mislead. We make no such finding in this case." This struck me as somewhat odd, because the severity of the remedy imposed by the Board seemed to make sense only if the Board felt that Gilbert had intentionally sought to (mis)represent the product it would eventually deliver to the Government.
Takeaways for Contractors
Nevertheless, there are several takeaways from this case of which of any responsible Government contractor should be aware.
- First and foremost among them, contractors must be clear in their communications with the Contracting Officer, especially when it comes to matters such as proposing changes or amendments to required specifications. If Gilbert had typed just a sentence or two in its various emails to the Contracting Officer stating that it would be providing the Ultra-Lav units instead of just attaching spec sheets, there would not have been a need to weigh the credibility of competing statements from witnesses, and this case may well have had a very different outcome. Suffice it to say, a Government contractor is not "covering its bases" and does itself no favors if it attaches a spec sheet or information for a different or substitute product with the hope that the Government comes away with the understanding that this is in fact an enforceable amendment to a proposal. Best to be explicit and clear and ensure that, with any proposed change, there is an undeniable meeting of the minds.
- Second, check your vendor/supplier timelines prior to submitting your bid or offer. Had Gilbert done this, it would have known that the Comforts of Home trailers could not be delivered within the RFQ's required 60 days and would not have put itself in a position of offering a substitute and noncompliant product.
- Third, appreciate and understand the consequences of communications that may be less than fully transparent. These communications can and will be regarded as representations to the Government for which contractors will be held accountable. Here, what could be fairly described as a miscommunication – taking into account Gilbert's allegations – resulted in a termination for cause and Gilbert very likely assuming the full cost for the acquisition, delivery, and retrieval of the noncompliant trailers. What is more, Gilbert potentially opened itself up to further contractual or administrative action by the Government (e.g., cost of reprocurement, suspension or debarment) given the tone of the Board's opinion regarding the misrepresentation. Again, this could have been avoided with just a sentence or two regarding the product it intended to deliver.
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