Agency Properly Rejected Bidder for Listing COVID-19 as a “Force Majeure” Event

For government contractors, trying to predict how COVID-19 might affect a government project can be extraordinarily challenging task. One bidder recently attempted to provide some clarity by stating, in its bid, that COVID-19 was a “force majeure event” and that the bidder would be entitled to extra time if COVID-19 affected the project.

Unfortunately for the bidder, its effort failed: the agency rejected the bid for improperly exceeding the scope of a relevant FAR clause. The GAO then confirmed that the agency had acted properly.

The GAO’s decision in American Mine Services, LLC, B-420138 (Dec. 3, 2021) involved an Army Invitation for Bids seeking a contractor to furnish and install two new service gates at the Surry Mountain Dam in New Hampshire. The IFB was set aside for small businesses.

Among other clauses, the IFB incorporated FAR 52.249-10 (Default – Rixed Price Construction). FAR 52.249-10 allows the government to terminate the contractor for default, but also specifies, in paragraph (b), that a contractor shall not be terminated for default due to a delay that arises from “unforeseeable causes beyond the control and without the fault or negligence of the Contractor.” The clause lists “Epidemics” and “Quarantine restrictions” as examples of such excusable delays, but does not directly address COVID-19.

American Mine Services, LLC submitted a bid. In its bid, AMS made the following statement:

For purposes of this bid, COVID-19 is considered a Force-Majeure Event along with any other similar disease, epidemic or pandemic event. If any of the aforementioned events occur and affect the project, AMS reserves its rights for additional time.

The Army rejected the bid, deciding that AMS’s statement was a material change to the terms of FAR 52.249-10. AMS then filed a protest challenging the Army’s decision. AMS argued that its statement merely confirmed the pre-existing protections of FAR 52.249-10(b), rather than expanding upon or otherwise varying from those protections.

The GAO wrote that all bids must be “responsive.” The GAO explained that “the test for responsiveness is whether a bid offers to perform the exact thing called for in an IFB, so that acceptance of the bid will bind a bidder to perform in accordance with all of the terms and conditions of a solicitation without exception.” If a bidder “attempts to impose conditions that would modify material requirements of an IRF, limit its liability to the government, or limit the rights of the government under any contract clause, then the bid must be rejected.”

In this case, the GAO wrote, while FAR 52.249-10(b) “lists epidemics and quarantine restrictions as possible causes of excusable delay, the language of the provision inserted in the protester’s bid specifically lists “COVID-19” and “any other similar disease, epidemic, or pandemic event.” The GAO wrote that the FAR clause clearly does not include these specific terms as examples of an unforeseeable cause of delay.

The GAO continued:

Additionally, while the FAR clause lists epidemics and quarantine restrictions as examples, the clause, however, does not deem these events to be per se “unforeseeable causes beyond the control and without the fault or negligence of the [c]ontractor.” FAR 52.249-10(b)(1). That determination is left to the judgment of the contracting officer once the facts surrounding the delay are ascertained. FAR 52.249‑10(b)(2). In contrast, the provision added by AMS unilaterally declares, without qualification, that “COVID-19 . . . along with any other similar disease, epidemic, or pandemic event” is a “force-majeure event,” i.e., an uncontrollable and unexpected event that prevents the contractor from performing the contract. 

The GAO held that “because AMS’s added provision attempts to impose conditions that limits the rights of the government under FAR clause 52.249-10, on this record, we conclude that the agency reasonably found AMS’s bid to be nonresponsive and rejected it.” The GAO denied the protest.

For contractors, operating in a pandemic environment–and trying to predict how future COVID variations or other diseases might affect their work–can be extraordinarily challenging. But as the American Mine Services case demonstrates, bidders must be careful when trying to guard against such risks in their bids so that those bids remain responsive.

Questions about this post? Email us or give us a call at 785-200-8919.

Looking for the latest government contracting legal news? Sign up here for our free monthly newsletter, and follow us on LinkedInTwitter and Facebook.