Doke: Presumptions and evidence of good faith

This responds to Steve Kelman's column in the Nov. 20 issue of Federal Computer Week entitled "Kelman: A really bad idea."

Kelman improperly described the SARA panel's recommendation and misstated the law relating to the presumption of good faith. First, the panel, authorized under the Services Acquisition Reform Act of 2003, is recommending that the government and contractors should enjoy the same legal presumptions regarding good faith and regularity and rules of evidence in contract performance, i.e., equal treatment. This is hardly revolutionary inasmuch as the Supreme Court has held for more than 130 years that, when the government comes down from its position of sovereignty and enters the domain of commerce, it submits itself to the same laws that govern individuals there.

Second, Kelman misstated the law by saying that, if the government acts in bad faith under a contract, it can lose a case even if no one demonstrates the government's conduct was wrong. This is incorrect because the government, like contractors, is bound by the implied obligation of good faith and fair dealing. Therefore, if the government’s bad-faith conduct violated this implied contractual obligation, it would be a breach of contract, which all impartial observers would call wrong.

Kelman’s column claimed there were two problems with the panel's recommendation, but it was unclear why government employees should be presumed to act in good faith but contractors' employees should not. Do government officials act more ethically or in good faith so much more often than contractors’ employees so as to have earned a legal presumption recognizing this conduct? Kelman mentions no empirical evidence, or even a survey, to support such an argument. Or, is the conduct of government employees below the contractual standards of good faith and they, therefore, need the benefit of a legal presumption to support their behavior? No government official would make this argument, and it certainly would be offensive to most.

Kelman said the panel's recommendation would encourage more litigation but, again, he provided no reasons to support the opinion. Would it really encourage litigation to presume that contractors' employees, like those of the government, act in good faith?  The presumptions originally applied to both parties to a contract. Litigation should be the last resort for both parties, but it is sometimes the only way when they cannot resolve a dispute by agreement.

The second so-called problem was the signal it would send to our over-worked civil servants. But why should remedies provided under government contracts be denied to contractors because the acquisition workforce does not have time to participate in the disputes resolution process established by the government? We should fix the acquisition workforce problems.

Kelman's column suggests a retreat from his long-standing campaign for commercial practices. Has anyone ever read a commercial contract providing that the buyer's employees will be presumed to act in good faith but the seller's employees will not?

Doke is a lawyer in the Dallas office of Gardere Wynne Sewell LLP and was a member of the Acquisition Advisory Panel.


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