establishing abuse of discretion

March 2, 2006

Presented by:Richard L. HansonMark G. Jackson

Establishing Abuse of Discretion

www.GovContractsLitigation.com

Introduction

Claim frequently made, infrequently won

Frequency of claim likely to increase

Court, board decisions are inconsistent and misleading


Why so little success?


Keco Industries, Inc. v. United States,

203 Ct. Cl. 566 (1974)

Why so little success?


Keco Industries—Background

Post-award bid protest alleging arbitrary and capricious decision


Post-award bid protest alleging arbitrary and capricious decision

The “Keco factors” Subjective bad faith depriving bidders of fair

consideration No reasonable basis for the decision Degree of proof necessary is related to the amount of

discretion available on the issue Violation of statute or regulation may provide a basis

for recovery

Keco Industries—Background


Keco Industries—The Problems

Injects “bad faith” into the discussion



“The burden of proving bad faith by the Government is a very onerous one and for an action or an inaction of the Government to constitute bad faith or abuse of discretion, some specific intent to injure the other party or actions motivated by malice alone must be proven to overcome the presumption that public officials act in good faith in the discharge of their duties.”

Coates Indus. Piping, Inc., VABCA No. 5412, 99-2 B.C.A. ¶ 30, 479

“Not far removed from the bad faith test is the second factor, proof that there was "no reasonable basis" for the administrative decision. Action by the Government which has no reasonable basis, the court noted, is often equated with conduct motivated by subjective bad faith.”

Burroughs Corp. v. US, 617 F.2d 590 (Ct. Cl. 1980)




Not a helpful analytical tool





“Under [the implied contract] theory, the standard of review was far narrower than district court review under the APA….”

Impressa Construzioni Geom. Domenico Garufi v. US, 238 F.3d 1324 (Fed. Cir. 2001)





Doesn’t apply





Doesn’t apply

“In any event, cases such as Keco and Trilon are based on the implied contract theory of recovery and do not govern APA review of contracting officer decisions.”

Impresa Construzioni, 238 F.3d 1324 (Fed. Cir. 2001)



No Longer Applicable Even for CoFC Bid Protests

ADRA Change to More Liberal APA Standards

Arbitrary, Capricious, Abuse of Discretion

5 U.S.C. § 706

Information Technology v. U.S., 316 F.3d 1312

AFGE v. U.S., 258 F.3d 1294





Doesn’t apply—but see“In deciding the abuse of discretion issue, the Board properly considered (1) evidence of whether the government official acted with subjective bad faith; (2) whether the official had a reasonable, contract-related basis for his decision; (3) the amount of discretion given to the official; and (4) whether the official violated a statute or regulation.”

Campbell Plastics Eng’g & Mfg., Inc. v. US, 389 F.3d 1243 (Fed. Cir. 2004)



Discretionary Decision Analysis

Did the CO have authority to exercise discretion?

Did the CO make a decision?

Did the CO consider the relevant factors?

Is the decision irrational or does it involve the violation of a statute or regulation?


Discretionary Decision Analysis—Authority

Authority to decide ≠ authority to exercise discretion

Mandatory vs. precatory vs. permissive

Cole’s Constr., Inc., ENG BCA No. 6074, 94-3 B.C.A. ¶ 26,995


Discretionary Decision Analysis—Decision by CO

“Government” vs. “Contracting Officer”

Abdication theory

Recently revisited by COFC

Impresa Construzioni, 52 Fed. Cl. 421 (2002)

CEMS, Inc. v. US, 65 Fed. Cl. 473 (2005)

OTI America, Inc. v. US, 68 Fed. Cl. 646 (2005)


Discretionary Decision Analysis—Relevant Factors

Depends on subject matter

Required by regulation, e.g. FAR 49.402-3

Provided by decision, e.g. Balboa Ins. Co. v. US, 775 F.2d 1158 (Fed. Cir. 1985)


Discretionary Decision Analysis— Reasonableness

Not a “difference of opinion”

Objective analysis

The more discretion afforded, the greater the range of “reasonable” outcomes


Conclusion

Don’t assume discretion exists

Ensure decision is made

Be creative in the search for and identification of relevant factors

Identify limitations on range of discretion

Questions?

Next Webcast Presentation:Beyond Mediation and Arbitration: How to Effectively Use ADR in Government Contracts DisputesConducting ADR with the federal government presents its own unique challenges and opportunities, including the opportunity to use the full range of ADR techniques. This webcast will cover the wide variety of ADR tools available and help you select and apply the right one to resolve contract disputes with the federal government.

April 5, 200612:00 p.m. - 1:30 p.m. Eastern9:00 a.m. - 10:30 a.m. Pacific

Visit www.govcontractslitigation.com to register.

Thank you! Please contact us anytime with additional questions.

Richard [email protected]

Mark [email protected]

establishing abuse of discretion

Documents

bad faith test

good faith

industriesthe problemsno

helpful analytical toolwww

capricious decisionwww

standard of review

abuse of discretion5

district court review