Contractor Can’t Use Pandemic as Excuse for not Delivering Gloves Needed for Pandemic; ORSA Technologies, LLC v. Department of Veterans Affairs, CBCA No. 7141

Appeal challenging termination for default is denied. The contract was for the delivery of nitrile gloves. The contractor did not deliver the gloves by the specified delivery date, so the government terminated. The contractor argued that its delay should be excused due to complications created by the COVID-19 pandemic. An excusable delay only arises from unforeseen events. In this case, the board reasoned, the COVID-19 pandemic was not unforeseen. Indeed, the contract itself stated that the gloves were needed due to a shortage caused by pandemic. Thus the contract required the contractor to have the gloves “on hand.” The contractor didn’t have the gloves “on hand and could not use the pandemic as an excuse.

Background

The Department of Veterans Affairs issued a solicitation for nitrile gloves for hospital staff due to increased usage caused by the COVID-19 pandemic. The solicitation specifically stated that the VA was looking for a supplier who already had nitrile gloves on hand, rather than a supplier who would need to have the gloves manufactured. The solicitation requested brand name or equivalent gloves.

ORSA Technologies submitted a quote to the VA stating that it had  millions of the required gloves on hand from an authorized manufacturer. The VA awarded the contract to ORSA. 

But shortly after receiving the contract, ORSA informed the VA that the glove manufacturer had terminated its relationship with ORSA. Nevertheless, ORSA maintained it was attempting to locate another source. 

ORSA, however, did not deliver gloves by the deadline specified in the contract. The VA terminated for cause. ORSA appealed the termination to the CBCA.

Legal Analysis

• Termination Was Prima Facie Valid – The government had the initial burden of proving that a termination for cause was valid. Here, the government had satisfied that burden. The gloves had to be delivered by a specific date. ORSA had not delivered the gloves by that date.
• Cure Notice Was Not Required – ORSA contended the termination was defective because the VA was required to provide the company with a cure notice before terminating. ORSA acknowledged that cure notices are not required for commercial contracts, but the company reasoned that while the contract had a delivery date, that date was not valid because of excusable delays. Because the date was not valid, the government had to provide a cure notice. The board rejected that argument, reasoning that the mere allegation of excusable delay does not create an obligation for the government to provide a cure notice.
• ORSA Did Not Have Gloves “On Hand” – Under the contract, ORSA was not supposed to secure gloves from a supplier but was supposed to have them on hand. It appeared that ORSA never had the gloves on hand; rather, it was obtaining them from elsewhere. ORSA could not claim excusable delay when it misstated its compliance with contract requirements and was unprepared to meet them.
• Pandemic Was Not an Excuse – ORSA argued that its failure to deliver the gloves was excusable by delay caused by the COVID-19 pandemic. But the board reasoned that the purpose of the contract was to purchase gloves because of the shortage caused by the pandemic. An excusable delay must be unforeseeable. Here, the pandemic was not unforeseeable. In fact, the contract mentioned the pandemic. Indeed, it stated that the gloves were needed because of the pandemic.

ORSA is represented by John Manfredonia of Manfredonia Law Offices, LLC. The government is represented by David G. Fagan of the Department of Veterans Affairs.