On July 14, 2022, the Department of Labor (DOL) issued a proposed rule that would require contractors and subcontractors performing covered service contracts to offer, in good faith, service employees employed under the predecessor contract the right of first refusal of employment under the successor contract. The proposed rule implements President Biden’s November 18, 2021 Executive Order 14055, Nondisplacement of Qualified Workers Under Service Contracts (the order). In sum, the order establishes a general policy for the federal government that “service contracts which succeed contracts for the same or similar services, and solicitations for such contracts, shall include a non-displacement clause.” Continue Reading Don’t You Forget About Me: DOL’s Proposed Rule on the Right of First Refusal in Service Contracts
In a recent Armed Services Board of Contract Appeals (ASBCA) decision, Pave-Tech, Inc., the ASBCA found that the decisions a construction contractor makes, even from the very beginning of a project, have consequences. In another recent article, we warned about signing contract modifications that contain release language which could thereafter preclude recovery of costs to which a contractor thought it was entitled later in a project. The decision in Pave-Tech reinforces the importance of considering all aspects of a contract from the onset of a project.
One such decision a government contractor might be tempted to make is to accept additional field office (jobsite) overhead (FOOH) expenses for a change on a percentage markup basis, especially for a change that may not even have required an extension to the contract completion date. However, what might appear to be a windfall recovery—the government allowing the recovery of FOOH expenses (even when a change order does not require an extension to the contract’s period of performance)—could result in a contractor not being able to recover its actual FOOH when the contract completion date is extended. Continue Reading Recovering Field Overhead Expenses
As a follow-up to my earlier post about the need to develop a settlement strategy when a claim is headed for litigation, I reviewed the various decisions of the Armed Services Board of Contract Appeals (ASBCA) for the first five months of 2022. The Board entered 107 decisions, and 54 of those decisions were orders dismissing the appeals because the parties had reached a settlement. Some of those settlements resulted from Alternative Dispute Resolution (ADR), which the Board enthusiastically promotes, or simply reflected settlements achieved by the parties through negotiation. Interestingly, only two opinions sustained an appeal by a contractor, while most of the other appeals were denied on the merits or due to various pre-trial motions. These motions included Motions for Summary Judgment, Motions to Dismiss for lack of jurisdiction, or the failure to comply with the applicable Statute of Limitations. Continue Reading The Percentages Favor Settlement of Claims and Appeals
In its recent decision in T.H.R. Enterprises, Inc., the Court of Federal Claims reminds contractors to read claim release language carefully before executing any agreement or modification. T.H.R. Enterprises, Inc. involved an IDIQ contract for renovation work at Langley Air Force Base. The government issued various task orders (TOs) under the overarching IDIQ, and disputes arose between T.H.R. and the government under three of these orders: TOs 22, 25, and 26. Continue Reading Recent Decision Highlights the Potential Pitfalls in General Releases
Oftentimes, contractors find it difficult to differentiate between the government’s acts taken in its sovereign capacity as opposed to those taken in its contractual capacity. The government acts in its sovereign capacity when it takes actions that are general and public in nature and do not target any particular contractor; rather the impact of the government’s action on its contracts is merely incidental to the purpose of a broader governmental objective. As two recent Armed Services Board of Contract Appeals (the Board) decisions involving contractor claims for COVID-19-related costs illustrate, the distinction between these two roles can make or break a contractor’s claim. Continue Reading The Sovereign Acts Doctrine Strikes Back: COVID Costs Are Its Latest Victim
One of the most common issues subcontractors face is non-payment. Sometimes subcontractors have a positive relationship with the prime contractor and resolve the issue amicably. However, when the parties cannot reach an agreement, the subcontractor faces financial turmoil. Even worse, if a subcontractor fails to take prompt legal action, it can lose access to one of the most effective ways to recover the amounts due.
On a private project, a subcontractor may file a mechanic’s lien to secure its right to payment. However, when the owner is the federal government, a subcontractor has no lien rights. Instead, the subcontractor must pursue its claims via the Miller Act. For every government contract, the Miller Act requires that the prime contractor post a payment bond to guarantee that its subcontractors and suppliers will be paid in a timely manner. The Miller Act allows subcontractors to make claims against the bond when the prime contractor fails to satisfy its payment obligations. However, the right to make such a claim does not last forever. The deadlines for a payment bond claim differ depending on who the subcontractor or supplier has contracted with. Continue Reading Haven’t Been Paid? Preserve Your Rights Under the Miller Act
In the world of federal government contract disputes, a great deal of time is frequently spent drafting a request for equitable adjustment (REA) or a claim under the Contract Disputes Act. Both of these actions are often a prelude to litigation and, when the parties cannot agree to an amicable resolution, lead, inevitably, to a trial. Once this process is underway, contractors and their attorneys begin the tedious process of developing a litigation strategy that involves reviewing voluminous documents, identifying and interviewing potential witnesses, and everything that goes into pre-trial discovery. The process is time-consuming and expensive. This is unfortunate because there is little doubt that putting a dispute in the hands of a judge is the most hazardous and unpredictable way to resolve a dispute. The sad truth is that some judges have a government bias, but there are also some who are more willing to accept a contractor’s point of view. Ideally, the result of litigation should not depend on the luck of the draw when it comes to the appointment of a judge. Continue Reading Settlement Strategy Is More Important Than Litigation Strategy
When the COVID-19 pandemic took hold in March 2020, various lockdowns were ordered and Americans learned a new term—“social distancing.” Working remotely using videoconferencing platforms became commonplace and, in most cases, productivity did not suffer. Unfortunately, the construction industry could not employ the remote workplace, and projects continued to require hands-on personnel who could not socially distance as a practical matter and were at greater risk for contracting COVID. Workers were fearful for their families and understandably concerned about themselves. As a result, productivity suffered and the country saw shortages of construction workers. Despite this stark reality, the federal government sought to keep its construction projects on track and routinely granted exemptions from federally imposed restrictions by determining that projects were “mission critical.” Continue Reading Federal Construction Contractors Are Faced With the Double Whammy of the Pandemic and Price Escalation: What Can Be Done?
The GAO’s recent decision in K&K Industries, Inc. reinforces for disappointed offerors that once the government unequivocally states that a debriefing has concluded, the clock has started ticking on the time to file a protest. Notably, this can be true even if the parties continue discussing the offeror’s proposal.
On September 28, 2021, the U.S. Army Corps of Engineers (USACE) notified K&K Industries, Inc. (K&K) that it had awarded Blinderman Construction, Co. (Blinderman) a contract involving the design and renovation of a historic barracks building in Fort Riley, Kansas. This notice also informed K&K that the company had a right to request a debriefing. K&K timely requested the debriefing and asked that the debriefing include a redacted copy of the Source Selection Decision Document (SSDD). Continue Reading When Exactly Did My Debriefing End?
Last week, the Biden administration updated its position regarding enforcement of the COVID-19 vaccine mandate for federal contractors in response to the nationwide preliminary injunction issued by a U.S. District Court judge in Georgia. In our previous post on this topic, we questioned whether the administration would still attempt to enforce the vaccine mandate for contracts that already include the clauses mandating vaccinations. Thankfully, the administration resolved much of that uncertainty in its updated position by confirming that it will generally not enforce the mandate. However, it stopped short of a blanket policy of non-enforcement. Continue Reading Biden Administration Updates Contractor Vaccine Mandate Guidance in Response to Nationwide Preliminary Injunction