Government contractors are facing a significant compliance burden thanks to three new FAR provisions that impose restrictions on contractors who supply or use Chinese telecommunications equipment or services.

Generally speaking, the new FAR provisions, 52.204-24, 52.204-25, and 52.204-26, are designed to ensure that contractors do not supply any covered equipment or services to the government (the “supply restriction”) or use any covered equipment or services in their business (the “use restriction”). Covered equipment or services include any telecommunications equipment or services from companies linked to the Chinese government, such as Huawei (the world’s largest telecom manufacturing company) and ZTE, as well as any subsidiaries or affiliates of such companies. Continue Reading Complying with the Government’s Restrictions on Foreign Telecommunications Equipment

The Buy American Act includes a preference for “domestic end products” and “domestic construction materials” on federal projects absent a waiver. Prior to recent revisions, domestic end products and domestic construction materials were those that were: 1) manufactured in the U.S.; and 2) made up of at least 50% domestic components or, alternatively, were Commercially Available Off-The-Shelf (COTS) items.

The FAR Council recently issued a final rule that makes substantial changes to the FAR’s Buy American requirements (FAR 52.225-1, 52.225-3, 52.225-9 and 52.225-11) in accordance with Executive Order 13881, “Maximizing Use of American-Made Goods, Products, and Materials.” The revised FAR clauses became effective January 21, 2021, and are to be inserted in all new contracts beginning February 22, 2021. The final rule made three key changes to the FAR’s Buy American requirements: Continue Reading Important Changes to the Buy American Act – Key Updates for Contractors

The Biden administration seems to be doubling down on the application and enforcement of the Buy American Act with the president’s January 25 executive order. While former President Trump’s order focused on increasing domestic material percentages, President Biden’s order focuses on oversight, enforcement, and access to information.

The first part of President Biden’s order establishes a Made in America Office (MAO) to increase oversight of Buy America and Buy American waivers. Buy America gives preference to the use of domestic materials on federal contracts that relate to transportation, and Buy American generally requires the use of domestic construction materials on any federal construction project. MAO will oversee both Buy America and Buy American and will be responsible for several new changes, including: Continue Reading Biden’s Buy American: More Oversight and More Information

Late last year, the U.S. Small Business Administration (SBA) issued a lengthy final rule that made changes to various SBA regulations. While the SBA highlighted its changes to the Mentor-Protégé program, the rule will have wide-ranging impacts on small business contracting, including the treatment of a small business offeror’s capabilities, past performance, and experience.

Prior to the issuance of the SBA’s new rule, FAR 15.305(a)(2)(iii) stated that an agency “should” consider the past performance of key subcontractors, but the use of “should” left agencies with broad discretion to consider (or not consider) subcontractor past performance. In many cases, agencies still issued solicitations that explicitly precluded consideration of subcontractor experience. Such limitations prevented small business offerors from using key subcontractors or a teaming arrangement to establish the required experience and past performance. Continue Reading SBA Changes Ensure Small Businesses Can Utilize Teaming Arrangements and Subcontractor Experience

The Coronavirus Aid, Relief, and Economic Surety (CARES) Act was enacted on March 27 to provide relief from the effects of the COVID-19 pandemic. Section 3610 of the CARES Act authorizes agencies to reimburse federal contractors for leave provided to employees who cannot work as a result of the COVID-19 public health emergency. As we explained in a previous blog post, there are many questions as to how Section 3610 will be implemented. Those questions are being answered on a rolling basis as agencies continue to release information. Since our last post, the Department of Defense (DOD) issued a class deviation as well as a FAQ document.

Continue Reading DOD Releases Class Deviation and Related Guidance Implementing Section 3610 of the CARES Act

As the economic crisis caused by COVID-19 evolves and worsens, there are many novel questions that government contractors and government agencies face. Certain FAR clauses that limit a contractor’s right to recover damages need to be revisited, including the clause entitled “Default (Fixed-Price Construction)” found at FAR 52.249-10. Under this clause, delay resulting from an Act of God, such as an epidemic, is excusable, but it is also non-compensable. This holds out the very real possibility of significant financial harm to construction contractors and seems to run counter to the government’s objective of preserving companies so that there will be an economic recovery once the crisis is over.

Currently, Department of Defense agencies are making every effort to treat projects as essential to the national defense and contractors are permitted, and in some cases directed, to continue performance. Since the government wants projects to continue, and government contractors want to keep working, there appears to be a commonality of interest. Contractor employees, however, are increasingly concerned about their personal health and safety and, in some cases, are refusing to report for work. This is compounded by the Permits and Responsibilities clause (FAR 52.236.7), which requires contractors to comply with “State, and municipal laws, codes, and regulations applicable to the performance of the work.” Accordingly, even though the federal government requires work to continue, state and local governments may be requiring people to maintain social distancing and stay at home. Even if exemptions are granted for government contractors working on essential projects, that does not lessen the legitimate concern of workers who are fearful of health risks. Continue Reading Delays Resulting From Coronavirus May Be Both Excusable and Compensable

The coronavirus crisis has made life difficult for Americans on both a personal and work-related level. While concern about personal health is paramount, the health of the economy cannot be ignored. The recently enacted stimulus package brings vital short-term relief, but the long-term health of the economy will be driven by how quickly people can get back to work.

The construction industry has, in some cases, been exempted from “stay at home” rules because construction projects are frequently regarded as essential activities. That being said, many state and local projects are being delayed as reported by the Associated General Contractors of America (AGC) as shown on its excellent interactive map. In federal construction, however, the government seems to be doing its best to keep projects moving, although that could become impossible if the pandemic worsens. Continue Reading Virtual Counsel for Federal Construction Contractors Impacted by the Coronavirus Pandemic

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), in Section 3610, offers discretionary relief to federal contractors whose employees cannot perform work on a site that has been approved by the federal government during the COVID-19 public health emergency. The following is provided:

Section 3610. Federal Contractor Authority
Notwithstanding any other provision of law, and subject to the availability of appropriations, funds made available to an agency by this Act or any other Act may be used by such agency to modify the terms and conditions of a contract, or other agreement, without consideration, to reimburse at the minimum applicable contract billing rates not to exceed an average of 40 hours per week any paid leave, including sick leave, a contractor provides to keep its employees or subcontractors in a ready state, including to protect the life and safety of Government and contractor personnel, but in no event beyond September 30, 2020. Such authority shall apply only to a contractor whose employees or subcontractors cannot perform work on a site that has been approved by the Federal Government, including a federally-owned or leased facility or site, due to facility closures or other restrictions, and who can not telework because their job duties cannot be performed remotely during the public health emergency declared on January 31, 2020 for COVID–19: Provided, That the maximum reimbursement authorized by this section shall be reduced by the amount of credit a contractor is allowed pursuant to division G of Public Law 116–127 and any applicable credits a contractor is allowed under this Act. Continue Reading The CARES Act Provides Potential Reimbursement for Paid Leave on Federal Projects

The coronavirus epidemic has disrupted our world in ways we could not have imagined a few weeks ago. In the midst of the crisis, the federal government is trying to do everything possible to keep businesses afloat, and that includes the continuation of current federal projects. We recently published a blog post addressing steps contractors should consider in order to protect their rights under contracts they are currently performing, but there is also a question about whether contractors should bid new projects. That is the focus of this article.

Almost all federal construction and supply contracts are solicited on a firm fixed-price basis. This type of contract is designed to provide the greatest opportunity for reward, coupled with the attendant risk of bidding incorrectly and incurring additional costs. The cost estimates that contractors must prepare before submitting a bid or proposal require a reasonable degree of foreseeability and certainty in the marketplace. In times of significant inflation or a shortage of resources as occurred during the energy crisis of the 1970s, it is difficult to predict the cost of materials for the life of a project. What we now face is far more disruptive. We are in the midst of a pandemic that is making it impossible to predict the availability, at any price, of labor, equipment, and materials in the weeks and months ahead. Predicting prices under those circumstances has nothing to do with sound business judgment – it requires a crystal ball. Continue Reading Bidding Federal Work During the Coronavirus Crisis

We are navigating in uncharted waters when it comes to the effect of coronavirus on federal contracting. There have been economic crises before—The Great Depression of 1929-1939, the oil crises of 1973 and 1979, Black Monday in 1987, the subprime mortgage crisis of 2007-2010, the ongoing European sovereign debt crisis, among many others. Even as far back as AD 33, there was a financial panic that was the result of the mass issuance of unsecured loans by Roman banking houses. What these economic disasters all have in common is that not one of them was the result of a virus outbreak. On the contrary, they all resulted from economic chaos brought about by poor financial policy, over-spending, and greed.

The current pandemic is affecting our lives and the lives of everyone in the world in ways that we did not and could not predict. There is no doubt that life will return to normal one day, but we do not know when. We also do not yet know how severe the impact will be on our economy. The federal government is discussing the payment of hundreds of billions of dollars in bailouts for businesses and direct payments to American citizens. This is happening in what is just the first week of what almost amounts to a national quarantine that is effectively requiring almost everyone to stay at home and practice “social distancing.” The President recently stated that this situation could last until July or August. If this is the case, it will have a crippling effect on the personal health of many people and the economic health of almost everyone. Continue Reading A Government Contractor’s Roadmap for Navigating the Coronavirus Pandemic