Representations and certifications are an integral part of the requirements for any solicitation. While each solicitation may require different representations and certifications, what precisely is required for a given representation or certification is generally governed by the FAR. One of the more common requirements is that an offeror provide information to the Federal Awardee Performance and Integrity Information System (FAPIIS) regarding its current federal awards and recent judgments against it concerning federal procurements that result in payment by the offeror, and this is governed by FAR 52.209-7. Recently, GAO addressed the question of just what recent judgments must be disclosed under that FAR rule. In this post, we will explore their decision.
GAO issued the decision in question on May 26, 2022, for The Logistics Company, Inc., B-419932.3. On January 8, 2020, the Army issued a request for proposals (RFP) for logistics readiness center maintenance, supply, and transportation requirements. This RFP included FAR 52.209-7. 14 offerors submitted proposals for the award on July 30, 2020 seeking award. The Army eventually awarded Vanquish Worldwide, LLC (Vanquish) the contract. The Logistics Company, Inc. (TLC), another offeror, protested this award and alleged that Vanquish had made false certifications by failing to disclose multiple outstanding civil judgments. The Army initially took corrective action, reviewed the matter more fully, and concluded Vanquish did not make false certifications. The Army then re-awarded the contract to Vanquish, and TLC again filed a protest on the same grounds as before.
GAO first recounted FAR 52.209-7, pointing out that “this FAR provision requires offerors to disclose when they (or their principals) have been the subject of a civil proceeding in the last five years in connection with a federal contract or grant in which there was a finding of fault or liability that resulted in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more. FAR provision 52.209-7(c)(1). Additionally, the FAR requires offerors to disclose dispositions of civil or administrative proceedings by consent or compromise that include an acknowledgement of fault.” TLC claimed in its protest that Vanquish failed to disclose three separate judgments: the Barton judgment, the Sadat arbitration award, and the Koshani judgment.
GAO looked first at the Barton judgment. The Barton judgment was the result of divorce proceedings involving one of Vanquish’s principals issued July 6, 2018. After reviewing that judgment, GAO concluded that Vanquish did not need to disclose this judgment under FAR 52.209-7. The judgment involved one of Vanquish’s principals, yes. But GAO explained that FAR 52.209-7 “does not require offerors to disclose any finding of fault or liability, but rather only requires offerors to disclose certain findings of fault or liability ‘in connection with the award to or performance by the offeror of a Federal contract or grant.’” Just because it was a divorce proceeding involving a principal of Vanquish does not mean that the proceeding concerned federal contracts or grants. This was an easy issue for GAO to dispose of.
The Sadat arbitration award, GAO noted, did involve a finding that Vanquish was liable for a matter related to a federal contract. However, that original judgment was made in May 2015. Vanquish made its certification for the RFP on July 30, 2020. FAR 52.209-7 only requires the disclosure of judgments or findings of fault or liability made within five years prior to the certification date and the Sadat award was entered about two months before that period began on July 30, 2015. GAO did observe there was subsequent litigation stemming from the arbitration award, but it was unclear if it had anything to do with federal contracts themselves and in any event ended in a settlement without a finding of fault or liability. Settlements without a finding of fault or liability “do not generally meet [FAR 52.209-7’s] disclosure requirements.”
At last, GAO turned to the Koshani judgment. Here, the matter involved a federal contract or grant, and a judgment was made against Vanquish in 2019 that found fault and liability. While normally FAR 52.209-7 requires disclosure of such judgments, there was a catch here: The case was later settled without an admission of fault, and so the judgment was vacated. TLC argued that it did not matter, as a judgment had been made against Vanquish finding fault and liability. GAO noted that while, yes, a judgment had been made against Vanquish,
the FAR is explicit that offerors must disclose a civil finding of fault or liability that “results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more.” FAR provision 52.209-7(c)(1)(ii). A payment made pursuant to an out-of-court settlement admitting no fault is not a payment of a fine, penalty, reimbursement, restitution, or damages, and also cannot be said to clearly result from a civil finding of fault or liability. This is the case regardless of when such a settlement occurs.
In other words, it’s not the judgment itself that matters, but if the offeror has made payment under that judgment. Here, the wording of FAR 52.209-7 is crucial. If the language was “results in the award” rather than “results in the payment,” the result could be different, as an award of damages is not the same as the payment of those damages. The award is the court ordering the liable party to pay, the payment is the party actually paying. This was the crucial part of the regulation that this case hinged on. As Vanquish never made payment under the judgment before it was vacated as a result of the no-fault settlement, the Koshani judgment was not a finding of fault and liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more.
Further rejecting TLC’s argument that there were garnishments made against Vanquish that would suffice as “payments” of the Koshani judgment as they did not go into effect due to settlement negotiations, as well as rejecting an argument by TLC that the Army should have still taken the above judgments and awards into consideration for making responsibility determinations on the basis that the Army exercised its reasonable discretion in finding Vanquish a responsible party, GAO dismissed the protest.
Two things are worth noting here: First, as always, the precise language of the FAR matters. Do not simply assume that because you see a few words like “disclose” and “judgment” that you, as an offeror, need to disclose every judgment against you in your proposal. Look at the language to determine exactly what is required. In this case, Vanquish enjoyed the good fortune of having not made any payments on its judgment before it was vacated, which meant it did not need to disclose it. As noted above, simply changing the word “payment” to “award” in “results in the payment” would change this completely.
Second, this is worthwhile information for the contractor that is worried about some past judgments that never actually resulted in any payment. Per this decision, if FAR 52.209-7 applies, those judgments do not need to be disclosed. Now, whether or not voluntary disclosure may be prudent is a different story, as sometimes going above and beyond on disclosure can prevent other headaches. But, as a matter of actual requirements, this is good news for contractors who have had some rough times recently.
Questions about this post? Email us.