Upon being awarded federal contracts, contractors sometimes find that they made a mistake in their bid or proposal regarding the level of effort required for performance. In such situations, contractors may seek relief in the form of a pricing adjustment or change in performance requirements under the theory of unilateral mistake. To obtain recovery for a unilateral mistake, contractors must present evidence establishing that: (1) a mistake in fact occurred prior to contract award; (2) the mistake was a clear-cut, clerical or mathematical error or a misreading of the specifications and not a judgmental error; (3) prior to award the government knew, or should have known, that a mistake had been made and, therefore, should have requested bid verification; (4) the government did not request bid verification or its request for bid verification was inadequate; and (5) proof of the intended bid is established. Contractors must meet all five elements with clear and convincing evidence. If contractors can satisfy these elements with the required burden of proof, the contract may be reformed to reflect the correction, and relief may be obtained either through a pricing adjustment or a change in performance requirements.

In sealed bidding procurements, an invitation for bid (IFB) provides all non-price terms and conditions of the prospective contract. Bidders responding to IFBs must acknowledge its terms, including all amendments. Failure to acknowledge an amendment may result in the bid being found nonresponsive if the amendment is deemed material to the IFB. An amendment is considered material if it imposes legal obligations on the bidders that were not contained in the original solicitation. Furthermore, an amendment is material if it has more than a negligible impact on price, quality, or delivery. If a bidder fails to acknowledge a non-material amendment, the procuring agency may waive the lack of acknowledgment as a minor informality. Alternatively, if it is more advantageous to the agency, the bidder may be given an opportunity to cure the deficiency and acknowledge the non-material amendment. However, a lack of acknowledgment of a material amendment is not waivable because, without the acknowledgment, the bidder is not legally obligated to meet the government’s needs even after the government accepts its bid. Thus, an awardee’s failure to acknowledge a material amendment is a protestable issue post-award. Notably, whether an amendment is material is a fact-specific inquiry resolved based on the circumstances of each case.

The primary method of interpreting a government contract is to determine the “plain meaning” of the disputed language. The plain meaning method is applied when the contractual language is clear and unambiguous. Under this method, contract terms are interpreted according to the plain and ordinary meaning of the disputed words, and extrinsic evidence may not be relied on for interpretation. In determining the plain meaning of the disputed language, adjudicative forums may look to the dictionary definitions of the relevant words. In doing so, the words are assigned the meaning they had at the time of contract formation. In situations where the disputed words have more than one dictionary definition, the definition that is most appropriate within the context of the whole contract prevails. However, even when the plain meaning interpretation is applied, the contract must be construed as a whole and interpreted to harmonize and give reasonable meaning to all its parts without rendering terms superfluous or meaningless.

In Armed Services Board of Contract Appeals (ASBCA) No. 62461, issued on August 17, 2021, the Army Contracting Command, Rock Island Arsenal, awarded a task order under the awardee’s General Services Administration (GSA) IT Schedule 70 for Network and Communications, Engineering and Installation Support for the Army in Afghanistan and Kuwait. The task order contained the clause at Federal Acquisition Regulation (FAR) 52.217-8, Option to Extend Services (Nov 1999), which stated in pertinent part that “[t]he Contracting Officer may exercise the option by written notice to the Contractor within 90 days before the expiration of the contract.” Following the award, the contractor encountered difficulties retaining staff at the proposed labor rates under the primarily firm-fixed-price task order, leading the contractor to discuss with the government the possibility of terminating the contract. Despite the contractor’s staffing difficulties, the Army notified the contractor four days before the base period ended that it would exercise its option to extend the task order.

At the time of issuance of a federal contract solicitation, the contracting officer (CO) must designate the single North American Industry Classification System (NAICS) code that best describes the principal purpose of the solicitation and specify the corresponding size standard. The Small Business Administration (SBA) establishes the size standard for various NAICS codes. To participate in small business set-aside procurements, contractors must qualify under the relevant size standard based on maximum annual receipts or employee count. The Small Business Act gives the SBA conclusive authority to resolve protests and other matters related to the small-business size status of contractors for federal procurements. Similarly, the SBA Office of Hearings and Appeals (OHA) has the exclusive authority to resolve NAICS code appeals. Accordingly, the Government Accountability Office (GAO), in its bid protest function, does not review protests challenging a contractor’s size status, SBA decisions on whether a contractor is a small business, or whether the procuring agency selected the appropriate NAICS code for a particular procurement.

In B-405417.2, the GAO declined to review a post-award challenge based on the awardee’s size status, along with the SBA’s determination regarding the same. The Army issued a small business set-aside invitation for bid (IFB) for solid waste services at Fort Lee, Virginia. The IFB contemplated an award to the lowest-priced, responsible, and responsive bidder. The awardee had the low bid of roughly $4.5 million, while the incumbent-protester had the second-lowest bid of roughly $4.6 million. The protester filed a size protest with the SBA, which was denied. Next, the incumbent contractor appealed the denial of the size protest to the SBA OHA, which remanded the matter for a new size determination. On remand, almost a year and a half later, the SBA again determined that the awardee qualified as a small business for the subject procurement. The protester again appealed to the OHA, but this time its appeal was denied, and the contract was awarded.