The White House has directed Agency heads to “terminate or modify . . . covered contracts.” With some exceptions, there are numerous potential contracts on the chopping block. What should contractors do?
Upon receipt of a unilateral modification, assess whether the cost or time will increase in unchanged areas. For example, deductive changes for certain work could increase costs for other work that must still be performed. If costs were increased because of deductive changes, then carefully consider submitting a request for equitable adjustment.
Upon receipt of a notice of complete termination for convenience, promptly stop incurring further costs and, within one year of the termination, present a reasonable and well-supported termination settlement proposal to the Government under FAR 52.249-2(e). Recoverable costs include:
1. Costs actually incurred;
2. Profit on the work actually done; and
3. Costs of preparing a termination settlement proposal.
Upon receipt of a notice of partial termination for convenience, promptly stop incurring costs related to the terminated portion of the work and present a request for equitable adjustment within 90 days of the notice under FAR 52.249-2(l).
HEADER PHOTO: Termination by Nick Youngson CC BY-SA 3.0 Alpha Stock Images
Pirates and Arbitration
How does a pirate solve a dispute (besides walking the plank)?
Bases Covered?
Contractors, will your current insurance policy cover “your work” as a joint venture partner? The typical answer is NO.
Two Paths at the Same Time to the Same Place
“Two roads diverged in a wood, and . . .” the Prime Contractor had to take both roads at the same time to the same place.
Rules, Which Rules?
Good Idea: Include a choice of law clause in your contract to promote consistency and predictability (while reducing potential costs and risk).
Government Liability for Third-Party Delays
Generally, the Government is not responsible for delays caused by third parties, even other contractors at its own project site, unless the Government affirmatively indicates the site will be ready and available.
Keep a Pass-Thru Claim Burning, Don’t Extinguish Liability
Prime contractors, have you ever submitted a subcontractor’s claim to a public owner? Subcontractors, have you ever wanted to submit a claim against the government, but you had no contract with government?
When You Can’t Recover from a Third-Party (The Economic Loss Doctrine)
Suppose that you (the Contractor) had extra costs and want payment for those extra costs from the designer.
Barbecue and Construction Contracts
While barbecue recipes can be short and simple, contracts can be long and complicated. Fundamentally, though, recipes are very much like contracts: what’s required, how much of each part/ingredient, in what order should they be assembled/added, when, and for how long?
Show Your Work
A mentor of mine once said that process and procedures can be more important than substance and results. Like solving a math problem, how you solve it is often more important than the answer itself. The same is true in resolving construction contract disputes with public owners.
