Government Employment Rules Violated?

What would you do if the government granted your company a contract and you put your best employee on the task who does such a good job the government hires that employee away from you? Now, the government has promised a replacement, but they drag their feet to replace the employee and refuse to pay for the time for the unstaffed position, even though the contract was fixed-price. According to the Civilian Board of Contract Appeals (CBCA), this was the situation for Financial & Realty Services (FRS). So were any government employment rules violated?

In this case, Financial & Realty Services, LLC, CBCA No. 5354, 16-1 BCP 36472 (Aug. 18, 2016), FRS was awarded and held a GSA Schedule contract for facilities maintenance and management services. As part of the contract, GSA awarded FRS a task order to include the management of federal buildings in the Dallas/FortWorth Service Center. The task was simply to provide a property manager. As part of the task order requirement, the property manager must obtain a National Agency Check with Inquiries (NACI) clearance within three months of award and maintain it through the life of the contract. FRS had an employee serve in the property manager position for about a year. Then, in the fall of 2014, the government interviewed and hired the employee away; basically to do the same job they was doing for FRS.

The FRS submitted a request to the GSA for replacement employee. After several months, the third replacement candidate became the property manager. Seeking payment for the months the position was vacant, FRS submitted invoices for $49,280 to the GSA who refused to pay. The FRS filed a claim seeking payment.

Consequently, the GSA moved for the case to be dismissed, arguing there was no facts indicating the GSA acted improperly. Conceding to the fact that it did not provide a property manager during the mentioned timeframe, FRS agreed that the task order was fixed-priced and the government was preventing FRS to actively perform the contract criteria.

After all things considered, the Board ruled the contract was not breached by the GSA by failing to approve a replacement property manager so no government employment rules were violated. It was mentioned the contract didn’t include a specified time frame, noted by the CBCA, but found the delays in the clearance to be reasonable under the circumstances. The appeal was dismissed by the CBCA.

Generally speaking, the government is not likely to pay a contractor for something it doesn’t receive, fixed-price or not. However, as the case of Financial & Realty Services demonstrates, policy applies even when the government actions keep the contractor from delivering the contract as intended.

Are you dealing with fixed-price contracts or have questions about government employment rules? Get the facts and be on top of your game; contact KDuncan and Company for more information.


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.

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