Enforcing Electronic Contracts in Texas When the Other Party Denies SigningAs an ever-increasing amount of contract negotiation and execution is done online, new legal issues have arisen from such transactions. Consider the following scenario:

You are a general/prime contractor. You have a subcontractor’s electronic signature on an arbitration agreement. When a dispute arises with the subcontractor, you raise the arbitration agreement and attempt to submit the dispute to arbitration. However, the subcontractor says that it never signed, reviewed, or has even seen the arbitration agreement and refuses to submit the dispute to arbitration.

Thankfully, the Texas Supreme Court’s recent opinion in Aerotek, Inc. v. Boyd, et al. provides helpful insight to those seeking to enforce electronic contracts in Texas and bind signatories that otherwise deny signing the contract.

Case Background

Aerotek utilized an online-only hiring application process. At the outset of the process, applicants were required to access an invite email from Aerotek that sent the applicant to a registration page. At the registration page, the applicant created a unique user ID, password, and selected security questions. Each time the applicant logged into the application system, the applicant was required to enter his or her unique user ID, password, and security question combination. As part of the online hiring application process, the applicant signed various contracts electronically, including an Electronic Disclosure Agreement (where the party agreed to be bound by the electronic contracts as though signed in writing) and a Mutual Arbitration Agreement.

The online hiring application was designed such that the online application process could not be completed until the applicant signed all the contracts electronically. Aerotek’s system was designed so that each time the applicant electronically signed a document, the hiring application registered that action with an electronic record showing the applicant’s unique identifier, the type of document, and a timestamp showing the date and time the document was signed. The Aerotek system was designed so that the foregoing information could not be altered by Aerotek.

Four candidates completed Aerotek’s online application system, including electronically signing the Mutual Arbitration Agreement, and began working for an Aerotek client as contractors. Shortly after starting work, however, the four contractors were terminated and sued Aerotek (amongst other parties). When Aerotek moved to compel that the contractors’ claims be submitted to arbitration, the four contractors opposed that motion based upon sworn denials that they had “ever seen, signed, or been presented” with the Mutual Arbitration Agreement.

The Key Question: Were the Electronic Signatures Attributable to the Four Contractors?

In answering the question of whether the signatures were attributable to the four contractors, the court analyzed the Texas Uniform Electronic Transactions Act, which provides that an electronic signature is attributable to a person by showing the effectiveness of security procedures that determine the person to whom the electronic signature is connected. The other issue the court considered is whether the alleged signatory’s denial that he signed the contract is alone sufficient to prevent attribution of the electronic signature to him.

As part of its analysis, the court acknowledged that there are several different security procedures that a company can use to “determine the person to which the electronic record or electronic signature was attributable,” including:

  • Requiring personal identifying information – such as a Social Security number or an address – to register for an account;
  • Assigning a unique identifier to a user and then tying that identifier to the user’s    actions;
  • Maintaining a single, secure system for tracking user activities that prevents unauthorized access to electronic records;
  • Requiring users to complete all steps in a program before moving on or completing it; and
  • Using timestamps to show when users completed certain actions.

The court noted that each of these security procedures provides the link between the electronic record stored in a computer or database and the person to whom the record is attributed. On the basis of testimony from Aerotek’s program manager, the court determined that Aerotek demonstrated that its security procedures, which included all of the items in the bulleted list above, were sufficient to demonstrate that the electronic signatures on the Mutual Arbitration Agreements could be attributed to the four contractors, despite the contractors’ sworn denials that they had not  “ever seen, signed, or been presented” with the Mutual Arbitration Agreement.

Takeaways

  • Those in Texas seeking to use electronic contracts should ensure that those contracts include an explicit agreement that the transaction can be conducted by electronic means.
  • To address any potential concerns regarding attribution of electronic signatures, one should develop security procedures such as those identified in the Aerotek case that would demonstrate how an electronic signature can be attributed to a particular signatory.
  • Be prepared to explain those security procedures if a party denies that it signed an electronic contract.

DoD to Expand Enhanced Debriefings RightsThe Department of Defense (DoD) recently proposed to amend the Federal Acquisition Regulation Supplement (DFARS) to codify and expand on the rules set forth in DoD’s March 2018 Class Deviation on Enhanced Postaward Debriefing Rights. The proposed rule addresses separately post-award debriefing rights for contract awards and task/delivery order awards.

Contract Awards

Regarding contract awards, the key provisions of DoD’s proposed rule include:

  • Upon request from the contractor within three days of notification of the contract award, DoD will provide a written or oral post-award debriefing for contracts valued at $10 million or higher.
  • When required, the minimum post-award debriefing will include:
    • For contracts in excess of $10 million and not in excess of $100 million with a small business or “nontraditional defense contractor” to request disclosure of the agency’s written source selection document, redacted to protect the confidential and proprietary information of other offerors for the contract award.
    • For contracts in excess of $100 million, disclosure of the agency’s written source selection decision document, redacted to protect the confidential and proprietary information of other offerors for the contract award.
  • If a post-award debriefing is provided:
    • The debriefed offeror may submit additional written questions related to the required and provided debriefing within two business days after receiving the debriefing, and the agency will respond in writing to timely submitted additional questions within five business days after receipt; and
    • The post-award debriefing will not be considered to be concluded until (a) after the second business day after the agency delivered the debriefing, if no additional written questions were submitted by the debriefed offeror, or (b) the agency delivers its written responses to timely submitted additional questions.
  • The government may suspend performance of or terminate the awarded contract upon notice from the Government Accountability Office (GAO) of a protest filed within the following time periods, whichever is later:
    • Within 10 days after the date of the contract award;
    • Within five days after the offered date for a debriefing to an unsuccessful offeror that is timely requested, and when requested is required, if the unsuccessful offeror submits no additional questions related to the debriefing;
    • Within five days after the offered date for a debriefing to an unsuccessful offeror that is timely requested, and when requested is required, if the debriefing date offered is not accepted; or
    • Within five days after the government delivers its written response to additional questions timely submitted by the unsuccessful offeror, when a requested and required debriefing is held on the date offered.

Task/Delivery Order Awards

Regarding task/delivery order awards, the key provisions of DoD’s proposed rule are:

  • Upon request from the contractor within three days of notification of the order award, the government will provide a written or oral post-award debriefing for task orders or delivery orders valued at $10 million or higher to the contractor, regardless of whether the contractor’s offer for the order was successful or unsuccessful.
  • If a post-award debriefing is provided:
    • The debriefed contractor may submit additional written questions related to the required and provided debriefing within two business days after receiving the debriefing, and the agency will respond in writing to timely submitted additional questions within five business days after receipt; and
    • The post-award debriefing will not be considered to be concluded until (a) after the second business day after the agency delivered the debriefing, if no additional written questions were submitted by the debriefed contractor, or (b) the agency delivers its written responses to timely submitted additional questions.
  • The government may suspend performance of or terminate the awarded task order or delivery order, upon notice from the GAO of a protest filed within the following time periods, whichever is later:
    • Within 10 days after the date of issuance of a task order or delivery order, where the value of the order exceeds $25 million (10 U.S.C. §2304c(e));
    • Within five days after the offered date for a debriefing to an unsuccessful contractor that is timely requested, and when requested is required, if the unsuccessful contractor submits no additional questions related to the debriefing;
    • Within five days after the offered date for a debriefing to an unsuccessful contractor that is timely requested, and when requested is required, if the debriefing date offered is not accepted; or
    • Within five days after the government delivers its written response to additional questions timely submitted by the unsuccessful contractor, when a requested and required debriefing is held on the date offered (31 U.S.C. § 3553).

Conclusion

Defense contractors will be happy to see the Enhanced Debriefing Program codified after its successful initial years. The proposed rule also expands the scope of the class deviation in meaningful ways. The most notable expansion of the Enhanced Debriefing Rights is the required disclosure of a redacted source selection document for certain contracting actions. Small businesses and “nontraditional defense contractors” are entitled to a redacted source selection document for contracts in excess of $10 million, and all contractors are entitled to the same for contracts in excess of $100 million.

Also of note is the trend toward more post-award disclosure. In addition to the DoD’s codification of Enhanced Debriefing Rights, the General Services Administration (GSA) has been piloting an enhanced debriefing program since 2018 as well. With DoD and GSA leading the way, we would not be surprised if this trend continues and redefines government-wide minimum debriefing standards.

Comments on DoD’s proposed rule are due by July 19, 2021.

If you have any questions about this noteworthy development, please do not hesitate to contact Aron Beezley or Nathaniel Greeson.

National Construction Safety Week: Preventing Accidents on the JobsiteEven as the construction industry continues its recovery from the impact of the COVID-19 pandemic, it also continues to focus on worker safety. Consistent with this focus, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) scheduled the eighth annual “National Safety Stand-Down to Prevent Falls in Construction” event for May 3-7, 2021. OSHA encouraged construction employers and other stakeholders to join the event in order to promote awareness and training on how to better control fall-related hazards. If you did not participate last week, you can still hold a separate National Stand-Down event to emphasize employee safety on your work sites.

Initially, it does not take much effort for an employer to get ready to participate in an National Stand-Down event. Other than the time it takes to get the word out to worksites and to pull information about a fall prevention program together, there is little preparation necessary. An employer already has what it needs most: a fall prevention program. Helpfully, OSHA has also provided suggestions and additional resources on its website that an employer can use to prepare for a successful event. OSHA even provides links to resources, posters, handouts, and other potentially useful material.

During the National Stand-Down, an employer can focus communication on any of the many types of falls that can happen. These include falls:

  • From ladders
  • From a roof
  • From a scaffold
  • Down a set of stairs
  • From structural steel
  • Through a floor or roof opening
  • Through a fragile roof surface

Of course, the talk should include more than discussion of the risks associated with these types of falls. It should also include discussion on how these falls can be prevented, i.e., the employer’s fall protection program, and any improvements to the program that might be considered.

An employer can promote the National Stand-Down with as much or as little fanfare as it wishes. As long as an employer is using the time to promote awareness of the risks associated with a fall and training employees on fall prevention, the employer’s event is “on the mark.” In fact, something as basic as a short, focused “Toolbox Talk” at each worksite should suffice. One note of potential importance: An employer should remember that requiring employees to participate in a National Stand-Down event (which it should do) likely makes the time compensable, i.e., an employee likely must be paid for the time.

Finally, although there is little, if any, downside to an employer holding an independent event, employers should recognize that there is a potentially huge upside: The additional education/training may help improve the safety of employees on its worksite. Remember, as far as the “hurt factor” goes, the potential risk of injury associated with a fall from a height is very high. When an employee is injured from a fall, the injury can be catastrophic. Tragically, almost 40% of annual recorded construction fatalities happen as the result of a fall. If a National Stand-Down event prevents even one such incident, that would be a great return on a small investment.