Protection of Contractor Rights

For federal construction contractors, payment and performance bond obligations in construction contracts with the federal government that exceed $150,000 should, typically, come as no surprise. However, what requirements should contractors expect from a contract that is ambiguous as to whether it is a construction contract, yet calls for construction-related services, but lacks explicit bonding requirement terms? Can bonding requirements be “read-in” to the contract? When should contractors raise such questions? This past November, the Federal Circuit addressed those questions in K-Con, Inc. v. Secretary of the Army, 908 F.3d 719 (Fed. Cir. 2018). This decision provides instrumental lessons contractors should keep in mind before submitting offers for projects that include construction-related services.
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Disputes frequently arise because the government refuses to agree that a contractor is entitled to additional money or time resulting from constructive changes, differing site conditions, government-caused delays, or countless other reasons. These disagreements typically are dealt with through the submission of Requests for Equitable Adjustment (REAs) or certified claims and are ultimately resolved through the disputes process. They focus on the rights of the parties under the specific terms of the contract. The problem, however, is that contractors also incur costs because of government indecisiveness that has not yet generated an REA or claim under a particular contract clause. This places the contractor in a state of limbo, not knowing whether there will be a significant impact to the project.

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Federal contractors generally don’t need to worry too much about statute of limitations issues on federal contract claims because the Contract Disputes Act (“CDA”) includes a generous six-year window to file. However, it is vital to remember that there are exceptions to this rule, the most important of which is the one year deadline for filing any claim relating to a termination for convenience settlement proposal.
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Agility Defense & Government Services, Inc. v. United States provides hope to contractors that incur higher than anticipated costs on a requirements contract or, alternatively, on construction contracts where line item prices are based on estimated quantities. 
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Last month, we outlined Congress’ plan to block the implementation of President Obama’s Fair Play and Safe Workplaces executive order. Today, we report that the prognosis has grown even more grim for the former President’s initiative, as both the House of Representatives and Senate have passed measures blocking the order from taking effect – now, the only remaining hurdle to a full repeal of the Fair Play and Safe Workplaces order is the signature of the President. 
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For the last few months, we have been following the troubled rollout of the “Fair Play and Safe Workplaces” rules, an Obama-era Executive Order that placed new requirements on contractors prohibiting certain labor practices. It is now becoming increasingly clear that the controversial act is likely to be a casualty of the new administration’s deregulatory agenda.
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Government contractors know that an unfavorable performance review posted to the Contractor Performance Assessment Reporting System (“CPARS”) can be extremely costly. Many negotiated solicitations include past performance as an important or even primary evaluation factor for contract award. An unfavorable review on a past contract can impose significant costs on the contractor to address the unfavorable review with contracting officers on future solicitations. However, the contractor saddled with an unfair and inaccurate CPARS review may now have a means to challenge the review and recover some of these costs. 
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Several months ago, we summarized the issuance and implications of Executive Order 13673, known as the “Fair Play and Safe Workplaces” order. In short, the order requires federal contractors to:

  • Report labor law “violations” of itself or any of its subcontractors (where the estimated value of the subcontract exceeds $500,000) under various federal employment and labor laws;
  • Restrict the use of binding, pre-dispute arbitration provisions in non-collectively bargained employment contracts; and
  • Establish “paycheck transparency” through the issuance of wage statements to all individuals performing work under a covered contract.


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fraudIn United States v. Nagle, the Third Circuit provided instruction on how to calculate the amount of “loss” defendants are attributed when being sentenced in a Disadvantaged Business Enterprise (“DBE”) fraud case.  Going forward, in a DBE fraud case, the loss calculation must include consideration of the fair market value of the services rendered to the government under the affected contract, or contracts. 
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It is not uncommon, in the litigation of a federal construction claim, for the Government to produce gigabytes of electronic data, amounting to thousands and thousands of documents, in response to a motion for the production of documents.  Frequently, these “electronic” documents are simply the scanned versions of paper files in the Government’s offices.  In the scanning process, extensive duplication occurs and documents that are clearly separate in paper file folders are scanned together in a manner that often combines multiple documents.  Once combining occurs, it is very difficult for the recipient of the electronic information to tell where one document ends and the next one begins.  Documents and their attachments become confused, are re-arranged, and difficult to follow. 
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