Contractors Must Maintain Accurate Records and Be Specific When Filing Legal and Other Claims

The legal panel at the Coalition for Government Procurement’s Fall Conference highlighted the risk to contractors of not keeping proper records, not being specific about the recovery sought in a dispute, and the danger of leaving ambiguous contract clauses undefined.  The bottom line for contractors is:  Be clear about what you want, make sure you leave no ambiguities, and, above all, keep good records.  Three separate contractors found these issues out the hard way and paid substantial legal fees along the way.  First, a company was found to not have an identifiable, appropriate cost tracking system that properly captured its losses on a contract that was terminated for convenience.  As such, the contractor was not able to recover any of its claimed losses.  Better, consistent recordkeeping, and using proper software tools is vital to protecting a company.  While investing in that software may come at a cost, it saves time and even greater expense later when problems develop.  Second, a company engaged in a multi-year contract dispute, on which it spent millions of dollars, had its claim denied because they never set a specific sum certain of how much they believed they believed they were entitled to.  Their case was dismissed as a result, costing the company both lost revenue and increased legal costs.  Lastly, a third company identified ambiguities in specific contract clauses, but did nothing to try and remove them by offering proposed definitions to their contracting officer.  Contract attorneys agree:  It is a best practice for a company to submit its interpretation of any ambiguous clause or contract term prior to contract execution and ask the contracting officer if they agree with it.  Keeping the ambiguity allows the government, or in this case a federal court, the ability to interpret the ambiguity in its own way.  The outcome for the company in this case was quite costly indeed.  Details such as these can be all too frequently lost in the shuffle as a company pursues business.  More than the devil lurks in the details.  Lost revenue and increased costs do, as well.

This post was originally a part of Larry Allen’s Week Ahead Newsletter.  Allen Federal Business Partners provides clients with the information, training, and representation services critical to accelerating their federal market success.

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