Contract Advice for Federal ContractorsIf you are a small to mid-size contractor, the assistance of a highly trained Government Contract Attorney is recommended. Recently with sequestration (automatic Government spending cuts) taking full effect, many Contractors and Subcontractors are in situations never before seen with regards to funding, Period of Performance, Contract issues and gray areas. In many instances, the Government Customer has informed the Prime Contractor that funding is limited for their project. The Contractor realize that they are working at risk (unfunded work) however make the conscious business decision to working on the project with no guarntees of payment. Close communication is key in these instances. All communication should be official and formal for claim purposes. It is most favorable to ask for a formal ‘authorization to proceed’ work. In other words, “we will guarntee payment not to exceed this amount – details currently unknown”. Often, large companies policies prevent them from issuing a formal Authorization to Proceed (ATP), however, the Subcontractor should make every attempt to gather enough documentation to support a possible claim later. Preparation of those documents is an area where an attorney can be helpful. Funding contingency language is also always preferred. An example of a FCL is ‘Subcontractor will be funded, if and when funding becomes available.”
Other problems that Contractors may face are Period of Performance (POP) lapse dates. This could mean that the period of performance (timeframe for work) for the Prime Contract does not cover enough day or ends prior to the needed timeframe to complete the project. In rare instances, there may be funding for the entire project on contract, however, the timeframe or time period (or POP) to complete the job is shorter. It is the responsibility of the Subcontractor to ensure that he will be paid or not, or whether to continue working on an unguarnteed or ‘unpermitted’ task. Customer relations are an important factor when considering these things.
In Government Procurement, the FAR guidelines generally govern the transaction. Many of the provisions of the FAR are given power or enacted into the Contract by reference or incorporation. Many clauses become the subject of litigation and interpretation. It is important to carefully read the entirety of the agreement and understand all of the nuances. Remember, unless explicitly specified (absent Strict Compliance/ Performance Language), courts may grant damages when present material breaches. Difference in material breach or minor breach will be explained in another blog.
The Uniform Commercial Code is another governing guideline enacted into Contracts. In short, the UCC is a compilation of laws on how business dealings via contract can be implemented, applied, and carried out. Some states abide by the UCC or have adopted it by its entirety. A contractor should be cognizant of the affects of the UCC.
Under UCC, Past performance reads that the past history dealings between the parties may have bearing on how matters and disputes are resolved and additionally, all evidence of past dealings can be admitted into evidence. Assume the Contract reads that the Contractor will arrive at work at 8:30am every morning, however, the Contractor shows up at 7am, assuming the other parties has knowledge of this minor deviation, this peice of information may be admitted into court as evidence and may effect the dealings between the parties (even though not in formal writing). The impact of the Past Performance is up for a judge to decide, but the conveying of this rule and its effect are the responsibility of the lawyer.
Not all attorneys are versed in Government Contracts. We are. Be picky when hiring an attorney.