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
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.
Substandard is Not Defective
The government need not follow the industry standard. It can do less or more.
Hide, Seek, & Seek
Have you ever played hide and seek? If you are the seeker, do you win the game when you find the hidden person? Yes, of course! Unless, you’re a government contractor.
Contractor Schooled School
Have you ever done exactly what you were supposed to do, but it didn’t work and you were blamed anyway? Nevertheless, if contractors follow the owner’s plans and it still doesn’t work, the contractor may be without fault – this is as it should be.
Walk It Off, Keep Going
During a recent soccer game, my seven-year-old son took the ball squarely in the face. But, he walked it off and continued playing. Contractors must do the same with changes.
Are We There Yet?
Next time you close a deal, get the essential terms on paper and signed by all parties before it’s Miller Time.
