Category: Claims and Disputes

COVID-19 Disruptions and Work Stoppages: A Q&A for Federal Contractors

Justin A. Chiarodo and Stephanie M. Harden

Stephanie Harden's Headshot Photo

Coronavirus COVID-19 is rapidly disrupting the performance of federal government contracts across all sectors, leaving contractors and subcontractors with more questions than answers on how to structure their operations. In the following Q&A, we address some of the top issues contractors are currently facing.

      1. The Government has closed my work site, precluding my employees from performing their work. If I continue to pay the employees, can I recover those costs?

If your employees cannot perform their work because the work site is closed (and telework is not an option due to the nature of the work), this may be construed as an actual or constructive stop work order. As with a government shutdown, contractors facing this scenario may be entitled to an equitable adjustment to account for idle employee time because they are expected to be ready to perform as soon as the Government reopens facilities.

A March 20 Memorandum from Office of Management and Budget Deputy Director for Management Margaret Weichert (“Weichert Memorandum”) confirms that equitable adjustments may be appropriate if the requested costs are reasonable. Specifically, the Weichert Memorandum advises that such requests “should be considered on a case-by-case basis” and that agencies may consider such factors as “whether it is beneficial to keep skilled professionals or key personnel in a mobile ready state for activities the agency deems critical to national security or other high priorities (e.g., national security professionals, skilled scientists).” Continue reading “COVID-19 Disruptions and Work Stoppages: A Q&A for Federal Contractors”

Three Vital Steps to Prepare For COVID-19 Impacts to Contract Performance

Albert B. Krachman, Scott Arnold, and Michael J. Slattery

As the coronavirus (“COVID-19”) pandemic continues its mass global disruption, federal contractors should take or accelerate steps to protect themselves. Three steps stand out in our view:

    1. review contracts;
    2. identify and document cost disruptions; and
    3. communicate, communicate, communicate—in writing—with your Contracting Officers.

How You May Be Impacted

How might your business be impacted? Supply chain disruptions may deprive contractors of materials required to stay on schedule and complete performance. COVID-19 exposure for employees and key personnel may deprive the contractor of needed labor. Spread of the disease among government employees may lead to a delay in approvals, or could lead to a quarantine of government facilities, which could impact the ability of service contractors to timely perform their contractual obligations—not unlike a government shutdown. (See Government Contractor Shutdown Advisory for steps to be taken if government facilities are quarantined or shut down due to the virus). Continue reading “Three Vital Steps to Prepare For COVID-19 Impacts to Contract Performance”

Evaluations That Prompt Corrective Action Must Be Documented

Michael J. Slattery

We discussed in a previous blog post how the current state of the law at the U.S Government Accountability Office (“GAO”) and within the Federal Circuit limits offerors’ ability to effectively challenge agency corrective action. See Is There No Balm in Gilead? The Federal Circuit’s Decision in Dell Federal Systems L.P. v. United States Reinforces Contractors’ Dwindling Options to Effectively Challenge Agency Corrective Action. Specifically, we demonstrated that GAO has adopted a highly deferential, “hands off” position with regard to agency corrective action, holding that “the details of a corrective action are within the sound discretion and judgment of the contracting agency.” Northrop Grumman Tech. Servs., Inc., B-404636.11, June 15, 2011, 2011 CPD ¶ 121 at 3. Under governing GAO case law, agencies have discretion to decide the scope of corrective action, including whether discussions will be held, the breadth of such discussions, which offerors shall be included in the corrective action, and the scope of permitted revisions to proposals. Deloitte Consulting, LLP, B-412125.6, Nov. 28, 2016, 2016 U.S. Comp. Gen. LEXIS 348 at *1, *11 (citing Computer Assocs. Int’l., B-292077.2, Sept. 4, 2003, 2003 CPD ¶ 157 at 5). Indeed, GAO will not disturb an agency’s proposed corrective action so long as the corrective action is deemed reasonable—that is, so long as the corrective action is “appropriate to remedy the flaw which the agency believes exists in its procurement process.” Onésimus Def., LLC, B-41123.3, B-41123.4, July 24, 2015, 2015 CPD ¶ 224 at 5. Continue reading “Evaluations That Prompt Corrective Action Must Be Documented”

Spring Cleaning for Government Contractors? Think Compliance.

Merle M. DeLancey Jr.

If you’re like me, it’s the time of year when you clean out your garage and closets and do all those outside projects you delayed until the weather warmed up. If you are a government contractor, you should consider this to be the season to do some spring cleaning in terms of your government contract compliance programs and procedures. Not to be an alarmist, but there are numerous areas you can review now and, if you should find some compliance deficiencies, you still have ample time to get your house in order before an agency audit or the deadline for submission of certain government reports.

Set forth below is a list of areas you may want to clean up: Continue reading “Spring Cleaning for Government Contractors? Think Compliance.”

Who Is a Subcontractor under a Federal Government Contract?

Merle M. DeLancey Jr.

Recently, clients have asked if they or a vendor or supplier are a “subcontractor” under a federal government contract. Sometimes the answer is easy—e.g., you are a subcontractor when a prime contractor contracts directly with a vendor or supplier (hereinafter “vendor”) to perform a federal contract. But the lines become less clear when a prime contractor does not inform the vendor that the subcontract is being entered into in furtherance of a federal government contract or where the vendor supplies goods that the prime contractor uses to perform commercial and government contracts.

Why Is Subcontractor Status Important?

Subcontractor status is important to prime and subcontractors. A federal prime contractor is required to flow-down multiple Federal Acquisition Regulation (“FAR”) clauses to its subcontractors. See FAR 52.212-5(e). The required flowdown clauses that receive the most attention implement three antidiscrimination laws: Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, as amended; 29 U.S.C. § 793; and Section 402 of the Vietnam Era Veterans’ Readjustment Assistance Act, 38 U.S.C. § 4212. A prime contractor’s failure to flow down these clauses to its subcontractors could result in the prime contractor being held responsible and/or liable for its subcontractor’s noncompliance. Continue reading “Who Is a Subcontractor under a Federal Government Contract?”

What Is the Christian Doctrine and Why Should You Care?

Merle M. DeLancey Jr.

The Christian Doctrine

The Christian doctrine provides that a mandatory statute or regulation that expresses a significant or deeply ingrained strand of public procurement policy shall be read into a federal contract by operation of law, even if the clause is not in the contract. G. L. Christian & Associates v. United States, 312 F.2d 418 (Ct. Cl. 1963). The doctrine is an exception to the general rule that the government must put vendors on notice of contract requirements, whether expressly or through incorporation by reference. It also is an exception to standard commercial contracting practices and contract interpretation principles. The rationale for the doctrine is that procurement policies set by higher authority cannot be avoided or evaded (deliberately or negligently) by lower government officials. Continue reading “What Is the Christian Doctrine and Why Should You Care?”

Government Contractor Shutdown Advisory

Justin A. Chiarodo and Albert B. Krachman

With yet another government shutdown looming, contractors face a number of uncertainties and challenges that warrant close attention—regardless of whether a shutdown takes place or how long it lasts. Among other challenges, contractors may face a lack of incremental funding; the inability to enter into new contracts or contract modifications; closed government facilities; furloughed government employees; delayed payments; increased indirect costs; and unexercised and deferred contract options. Below we offer six suggestions to help address key areas impacted by a shutdown, including contract funding, internal and external communications, recordkeeping, and deadlines.

Continue reading “Government Contractor Shutdown Advisory”

Litigants Lose Extra Three Days to Respond under the Federal Rules of Civil Procedure When Filing Electronically

Lyndsay A. Gorton

Lyndsay A. GortonOn December 1, 2016, the Federal Rules of Civil Procedure (the “Rules”) were amended to make the “three-day rule” inapplicable to electronic filers and litigants who agree to receive filings electronically. The “three-day rule” provided an additional three days to respond if a filing was not served personally, i.e., if it is mailed or electronically filed. Although we do not normally alert our contacts to these types of procedural changes, this one could have significant impacts on federal government contractors, particularly those who are involved in lawsuits in the Eastern District of Virginia’s “Rocket Docket.” Continue reading “Litigants Lose Extra Three Days to Respond under the Federal Rules of Civil Procedure When Filing Electronically”