Month: June 2011

NLRB Proposes Change to Voting

On June 22, 2011, the National Labor Relations Board published a Notice of Proposed Rulemaking in the Federal Register to propose amendments to its existing rules and regulations governing certain procedures. Among other things, the proposed rule would, if adopted, according to the NRLB:

  • Allow for electronic filing of election petitions and other documents.
  • Ensure that employees, employers and unions receive and exchange timely information they need to understand and participate in the representation case process.
  • Standardize timeframes for parties to resolve or litigate issues before and after elections.
  • Require parties to identify issues and describe evidence soon after an election petition is filed to facilitate resolution and eliminate unnecessary litigation.
  • Defer litigation of most voter eligibility issues until after the election.
  • Require employers to provide a final voter list in electronic form soon after the scheduling of an election, including voters’ telephone numbers and email addresses when available.
  • Consolidate all election-related appeals to the Board into a single post-election appeals process and thereby eliminate delay in holding elections currently attributable to the possibility of pre-election appeals.
  • Make Board review of post-election decisions discretionary rather than mandatory.

According to the NLRB majority, the proposed rule changes are intended to “reduce unnecessary litigation, streamline pre- and post-election procedures, and facilitate the use of electronic communications and document filing.” Board member Brian Hayes dissented to the proposed rule, noting among other concerns what he believed was its heavy tilt against employers’ rights. Of note, he is the only Republican appointee to the Board; but, indeed, if one were to evaluate initial impact, it certainly appears the rule changes are intended to benefit union organizers and to hinder employer response time and ability.

Regardless of your union views, this is a proposed rule that should be of interest to you.

A public hearing is currently schedule for July 18 / 19. Comments are due to the proposed rule within 60 days of their publication in the Federal Register, so time is important if you want to comment upon them.

GAO Bid Protests: How long do I have to file again?

In the current construction client, bid protests seem on the rise. For Federal projects, the most common protest venue is the General Accountability Office (GAO). But how long do you have to protest?

If the protest relates to something within the solicitation itself, the bid protest must be filed before bid opening, or such alleged defect is waived. If the protest relates to something post-opening, the basic rule is 10 calendar days from when the basis of protest is known or should have been known; which is generally from date of award or notice of intent to award. If you request a debrief, though, the protest can be filed 10 calendar days from the debrief.

But those dates do not account for the automatic stay provisions, if you intend to request a stay of the award pending your protest. If so, that requires the GAO to provide notice to the agency of the award at least 10 calendar days after contract award or 5 calendar days after a debriefing. This in turn means that GAO has to have the protest at least 1 calendar day prior to that so that the GAO can provide that notice to the agency.

Where it further gets tricky is the calendar days themselves since while the GAO can receive protests by email even on weekends that does not allow time for GAO to notify the agency. So, depending upon the calendar days in question your time to protest and obtain the stay can be shorter (much shorter) than the general rule of 10 days.

So, the takeaway: if you intend to file a GAO protest, pull out your calendar and count the days you need, while accounting for the notice requirement is you want to request the automatic stay.

Government Contractor? – Your sophistication may be presumed

Most everyone would like to be considered “sophisticated,” but those performing federal contracts might feel otherwise. The GAOCAB recently noted in Grunley Constr. Co., Inc. v. Architect of the Capital, GAOCAB No. 2009-1, 2010 WL 2561431 (June 16, 2010) that “[u]like private contractors, government contractors who perform large contracts for the government are ‘neither unsophisticated nor careless’ . . . .”

As a result, the Board concluded the contractor in that case should have anticipated possible project delays and charged a higher price for the work because of that. In that case, the included “no damages for delay” clause was at issue, and whether it should be enforced so as to prohibit delay claims by the contractor. The GAOCAB concluded yes, those claims were precluded because it was a reasonable limitation on the contractor’s recovery. The GAOCAB also rejected the contractor’s argument that the Sovereign Acts Doctrine prohibited enforcement of the no damages for delay clause.

The sophistication presumption could be applied in any number of similar instance to other contract issues, so government contractors beware!

Federal Project PLAs: House’s Military Construction Bill Doesn’t Preclude

Project Labor Agreements are becoming increasingly used for state and local project throughout the Country, and there’s been an increasing usage for Federal projects too; particularly with the current administration. One’s view of PLAs depends upon one’s view of a right to work vs. union approach to business.

There was a move in Congress to outlaw PLAs for federal projects as part of Congress’ funding for those projects, but that effort failed and on June 13 the House passed the Military Construction and Veterans Affairs and Related Agencies Appropriations Act of 2012 (H.R. 2055) without such prohibitory language.

Inducing statements: fraud or mere opinion?

In his February 22, 2011 letter opinion in Environmental Staffing Acquisition Corp. v. Beamon Enterprises, Inc., CL09-2688, 3 Cir. CL092688, Judge Melvin of Portsmouth Circuit Court concluded that a subcontractor’s statement during the proposal process that the subcontractor “had exactly what you are looking for” was a matter of opinion, and not a fraudulent statement giving rise to a claim of fraud in the inducement.

This case includes a detailed analysis of Virginia law on fraud, and also deals with the foundation question of the prima facie elements of fraud in the inducement, including the present intention to not act as one is representing, as opposed to just not later following through in breach of one’s contract. Drafters seeking to establish a fraud in the inducement count, or defeat one, should find the opinion of interest.

Qui Tam Plaintiff Awarded $2.2M in Attorneys’ Fees

After winning a $7.6M jury award, the realtor plaintiff in a Qui Tam action (U.S. ex rel. Maxwell v. Kerr-McGee Oil & Gas Corp. D. Colo., No. 04-cv-01224, 6/2/11) against the company he alleged falsely reported royalties with the government, the judge trebled the damages, and after adding statutory penalties the total award was $22.9M.

The realtor plaintiff was then awarded $2.2M is attorneys’ fees, plus expenses, under the False Claims Act, rejecting the defendant’s arguments that the fees were disproportionate to the amount he would recover or unfairly compensated him. Of note, the court did not reduce the fee because of the reduced risk associated with the partial contingency aspect of the plaintiff’s fee agreement, nor was the court troubled by the awarded fees being almost 29% of the original award (but only 9.5% of the total award as noted by the court).

Lawyers will enjoy the fee calculation discussions; however, those in the industry should note the verdict amount, as well as the fee awarded, as further evidence of the teeth available through the False Claims Act.

Government Not Required to Certify Claims under CDA

In trying to avoid the government’s claim against it, a contractor recently tried to argue to the Civilian Board of Contract Appeals in Navigant SatoTravel v. General Services Administration, CBCA, No. 449, 5/26/11, that the Board lacked jurisdiction because the government did not certify its claim against Navigant.

The Board rejected the argument, holding that the Contract Disputes Act does not require such certification by the government.While not a surprising result, one has to like the attempted creativity to avoid obligation by the contractor. The decision has some other interesting aspects regarding burden of proof for those finding that of interest.

Proactive management: staying ahead of the curve

Most projects sail smoothly. Generally, that is the result of good business practices, cost controls, staff management, etc. Typically though the focus is on the nuts and bolts of construction, and making things go together smoothly from technological standpoints. Often overlooked is contract administration: making sure contracts are signed, insurance certificates received, and other “i”s dotted and “t”s crossed. But those little things can make or break projects.

Proactive management on those little things can help avoid later contract disputes, or identify them before they fester. Like other aspects of construction, regular “lunch box” programs, check sheets, and the like are great first steps, to be followed by regular compliance and compliance checks. As they say, an ounce of prevention is worth a pound of cure.

Prejudgment interest against a surety: recoverable but from when?

Neither the Miller Act nor the Little Miller Act have specific provisions for the recovery of prejudgment interest if a claimant prevails on a bond claim. Absent contractual language in a commercial bond, it’s the same result. However, case law generally holds that in such actions state law on prejudgment interest applies.

Virginia statute allows for prejudment interest in the discretion of the fact finder. Considering that, the recent opinion of Judge Trenga in Attard Industr., Inc. v. United States Fire Insur. Co., No. 1:10cv121 (EDVA, Alex. Div. Nov. 9, 2010) concluded that prejudgment interest may only run against a surety from the date of demand made against the surety by the claimant.

Judge Trenga concluded that date sufficiently compensates the claimant without unfairly penalizing the surety. As a result, if you are a claimant, the lesson learned is to promptly make demand upon the surety to start the prejudgment interest clock.

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