A Brief Note on the Government’s Duty of Good Faith and Fair Dealing: An In-House Counsel Update.

In their capacity as Jack-of-All-Trades, in-house counsel for federal government contractors (as well as government counsel and private practitioners) must be cognizant of the recent movements in the court system regarding the government’s implied duty of good faith and fair dealing. Such is necessary for in-house to properly advise contract capture teams, contract managers, and project operators on how the current standard impacts the contractual and legal risks of pending pursuits and ongoing projects, as well as how the standard impacts any requests for equitable adjustments (REA) and claims based thereon. This note will explore recent case law in this area and offer in-house counsel a few takeaways. Two of the primary responsibilities of in-house counsel of federal government contractors are to review solicitations for … Continue reading

A Brief Note on the Forum Selection Clause: It Is What It Is – At Least In Federal Courts

While the choice of forum in contract disputes between the government and its prime subcontractor is relatively straight forward under the Contract Disputes Act (either one of the Boards of Contract Appeals or the Court of Federal Claims), such clarity is lacking in contracts between a prime contractor and its subcontractors.  Forum selection clauses dictate the forum for disputes, litigation, and mediation, the result of which is that these clauses, particularly among contractors who work outside their respective states, are often subject to heated negotiations between the parties.  Each party wants forums partial to it, for such reasons as familiarity with the local law, advantageous precedent, simple location of the business and witnesses, or the location of its legal assets, to mention a few.   The … Continue reading

Adding Value to the Company: Moving to Dismiss Claims Under the Contract Disputes Act for Statute of Limitation Violations

To say that there is a crisis surrounding the closing of government contracts, especially large cost-type contracts held by large government contractors, would certainly not be an understatement. [i]  Closing a contract essentially requires verification that the goods or services have been provided and that final payment has been made to the contractor. Audits are the tools the government uses to support contract closeouts.  However, the government is seemingly taking forever to perform various audits of government contracts.  To illustrate, the Defense Contract Audit Agency, the audit arm of the Department of Defense, had a backlog of 25,000 incurred cost audits at the end of Fiscal Year 2011, some dating as far back as 1996. GAO, Defense Contracting:  DOD Initiative to Address Audit Backlog Shows … Continue reading

A Brief Note on the Pay-If-Paid Clause: An Occasional Thorn to US Government Construction Subcontractors

Subcontractors bidding US government construction projects often find themselves subject to both mandatory and non-mandatory FAR clauses and provisions flowed-down from the prime contractor’s RFP, as well as the prime’s particular special terms and conditions – and conflicts often exist between the two.  Contract payment is one area where discrepancies abound between the FAR clauses and the prime’s own subcontract terms and conditions.  It cannot be stressed enough that, prior to bidding work, subcontractors must be able to recognize and understand the various payment provisions contained in subcontract RFPs.  Quite simply, for subcontractors, it’s all about the money and how fast they get it. Thus, the type of payment provision is extremely important to subcontractors.  To be sure, a subcontract RFP for a government construction … Continue reading

FAR 52.236-1, Performance of Work by the Contractor (A Hard Clause for OCONUS Construction Contractors)

The US government, and in particular the DoD, has spent, and will continue to spend, millions of dollars on OCONUS construction projects.  Contracts have been awarded for building complete compounds in Djibouti, Africa, troop barracks in Afghanistan, and runways in Qatar.  Unsurprisingly, there’s no shortage of bidders for these projects – with their millions of dollars in revenue.  Many large US government contractors, as well as foreign construction firms, have competed over and over again for these projects.  Inasmuch as all of these construction projects are FAR based, the RFPs are substantially similar, containing identical clauses and provisions, even though, of course, the SOWs differ.  One clause consistently included in all of the respective RFPs, and which causes a great deal of angst for many … Continue reading

Implied-In-Fact Contracts in Federal Government Subcontracts: A Theory worth Considering.

Government contractors find themselves wearing many hats. [1]  They may serve as a prime contractor on one government contract and as a subcontractor to a prime contractor on another contract.  When bidding as a prime contractor on a government contract, government contractors are keenly aware of their, well, rights.  They know that government agencies must follow procurement regulations, statutes, and court precedent.  They know that the Government Accountability Office (GAO) and the Court of Federal Claims are available forums that will entertain a government contractor’s protest of the award or failure to receive award of a government contract.    But what about when a government contractor bids as a subcontractor on a Request for Proposals (RFP) issued by a prime contractor on a government contract? … Continue reading