Responsibility Determinations

Introduction

In order to be given a government contract, a contractor must be found to be responsible. FAR 9.104-1 defines the general standards that determine a prospective contractor to be determined responsible. Responsibility is a term that indicates that, among other things, that a contractor has ample financial resources to execute the contract and has a satisfactory record of integrity and business ethics. A contracting officer must make an affirmative determination of responsibility in connection with each contract award. Responsibility determinations, therefore, can be subjective. There are some exceptions. A contractor can successfully reverse a nonresponsibility determination if it reveals that the information on which the contracting officer relied was erroneous. Challenges to nonresponsibility determinations have also succeeded where the information supplied to the contracting officer was not the most current available. Information regarding a contractor's responsibility may be provided or changed any time up to contract award.

FAR 9.402 states that agencies can only offer and award to responsible contractors. Discretionary actions such as debarment and suspension shall be imposed to protect the Government's interest. Unlike suspension and debarment proceedings where the contractor can vigorously defend against the government's allegations of improper conduct, however, a contractor may only be able to object to a nonresponsibility determination after the fact. And in most cases, the contracting officer's judgment in the matter will be given the benefit of the doubt.

The FAR Part 2, Subpart 2.1, Definitions, provides "... 'Contracting officer' means a person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings." Included in this definition are certain authorized representatives of the contracting officer (KO). KO's have a myriad of duties to include acquisition planning, market research, preparing and reviewing solicitations, proposal evaluations, cost comparisons, and contract awards. Subsection 414(4) of title 41, U.S.C. requires agency heads to select, appoint and terminate the appointment of a KO. They are issued a warrant that identifies the scope and limits of their authority.

This paper will refer to several types of cases where KO's had to make responsibility determinations. I will discuss their standard of review for challenges, basis for these challenges and the elements that went into making the determinations.

Background

Chapter 1 of Title 48 of the Code of Federal Regulations contains the current government contracts regulations that became effective on April 1, 1984 called the Federal Acquisitions Regulations (FAR). The FAR applies to all federal executive agencies and each agency can circulate its own set of regulations, called supplements. Supplements govern the procurement activities specific to that agency and they cannot oppose or re-state the FAR. Amendments to the FAR are issued as proposed and final regulations are published in the Federal Register. The FAR is periodically updated by Federal Acquisition Circulars (FACs).

Before the FAR, federal government procurement was regulated by the following regulations:

* Armed Services Procurement Regulations (ASPR) for Department of Defense agencies.

* National Aeronautics and Space Administration Procurement Regulations (NPR) for the National Aeronautics and Space Administration.

* The Federal Procurement Regulations (FPR) for civilian non-military agencies.

* The Federal Information Resources Management Regulations (FIRMR) for the procurement of automated data processing equipment (ADPE) or federal information processing (FIP) resources by federal agencies.

It is important for KO's to use the applicable regulations in effect at the time of a dispute.

Only KO's may sign Government contracts. 48 CFR § 1.601. There is no doctrine of apparent authority applicable to the Government. Any action taken by a KO that exceeds their actual delegated authority is not binding on the Government, even if both the KO and the contractor want the action and the action benefits the Government. Contractors are assumed to know the scope of the KO's authority and cannot depend on any action of KO's that exceeds their authority.

Comparison of Cases and Decisions

For the entirety of this paper, I will discuss the legal implications of several types of responsibility determinations in contracting using examples of decided cases. The first case I will discuss is Stapp Towing, Inc. v. United States, 34 Fed. Cl. 300 (1995).

Stapp Towing, Inc. v. United States

This particular case addresses the propriety of an SBA certificate of competency. Stamp Towing Company, Inc. submitted a bid in response to a solicitation released by the Military Traffic Management Command, Eastern Area (MTMC-EA). In the past, Stamp Towing had been awarded similar contracts providing the same services as requested in the solicitation. They were the lowest bidder and were subjected to a pre-award survey to establish whether they had the technical, administrative, and financial capabilities to execute the contract. The prospective contractor has the burden of "affirmatively demonstrating" its responsibility. 48 C.F.R. "(FAR") § 9.103 (1994).

DCMAO recommended that an award not be made and the KO, relying on this recommendation agreed. Using the results of the survey, the KO informed Stamp Towing that they "lacked an effective EPA compliance and safety program," didn't have a satisfactory performance record, didn't have the necessary technical skills and were deficient in their environmental/safety record. Of main concern, was the frequency of spills by Stamp Towing and its subcontractors. Stamp Towing disagreed with the KO's determination claiming the KO required "perfection" as a past performance standard.

Stamp Towing was rejected on the basis of a nonresponsibility and asked for an SBA determination of the company's responsibility under its Certificate of Competency (COC) program. 13 C.F.R. § 125.5(a)(1) (1995). The COC program allows the SBA to make a determination of a small business' responsibility to execute a contract by taking into consideration all aspects of a business' responsibility. Once a COC is issued by the SBA, the responsibility