In 2015, security company SecTek sought to bid on a security contract at the National Archives and Records Administration. Under the terms of the solicitation, the winning bidder could hire employees from the previous contractor, but the company was required to pay the government employees’ vacation and other accrued benefits.
The previous contractor offered government employees vacation for two weeks for employees with one to four years of service; three weeks for employees with five to 14 years of service and five weeks for employees with 15 or more years of service. Prior to submitting a bid, SecTek inquired about the benefits on the books for current employees, but the government refused to provide the information.
SecTek submitted a fixed-price bid and was awarded the contract. However, it soon learned that it was responsible for $170,000 in outstanding wages and benefits. The company sought a contract adjustment when it learned about the amount, but National Archives and Records Administration denied the claim. SecTek later sought a certified claim. When the agency did not respond in a timely manner, SecTek filled an appeal with the Civilian Board of Contract, claiming the agency should have alerted it about the potential liability from wages and benefits.
The Civilian Board of Contract denied the appeals, and it said that the agency followed the law when it did not provide the information.
“Although information about the seniority of the predecessor contractor’s employees may have been helpful in estimating the level of benefits extended to those employees, this does not mean that the information must be, or even could have been, provided in advance of the contract award,” the ruling states, adding “The Government is not permitted to release the seniority list to the successor contractor until after contract award.”
SecTek now has to absorb the cost of the outstanding wages and benefits. The contract was valued at $40.9 million.
KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company.