Protection of Contractor Rights

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The Armed Services Board of Contract Appeals (ASBCA) recently issued a decision regarding a contractor’s claim for increased performance costs due to the economic impact of the COVID-19 pandemic. Notable about this case is the contractor’s invocation of a July 2, 2020 Department of Defense (DoD) memorandum concerning the financial consequences on contractors with firm-fixed-price contracts lacking an economic price adjustment clause during “historic and unprecedented challenges” in the wake of the pandemic’s onset. …
Continue Reading ASBCA Says “Not So Fast” to Contractors Seeking Relief from Pandemic Impacts

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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

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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

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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

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?

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The Armed Services Board of Contract Appeals’ (ASBCA) recent decision in Odyssey International, Inc. provides contractors with yet another cautionary tale when executing modifications with the government: make sure you fully understand the consequences of what you are gaining (and possibly losing).

In Odyssey, the U.S. Army Corps of Engineers (the government) contracted for the construction of a building at an Army depot in Pennsylvania. A micropile system, which involves drilling small-diameter holes into bedrock and inserting grout into any voids before inserting a metal pole and casing, was to be used in the building’s foundation. Although potential offerors were to assume the need for 60 micropiles, the solicitation also noted that the contractor bore responsibility for the micropile foundation system’s design. After a series of discussions on the topic, the government informed Odyssey to submit its micropile design independent of the bidding criteria. As a result, Odyssey’s design, which the government approved, proposed using 80 micropiles instead of 60. …
Continue Reading Bilateral Modifications: Read, Re-Read, and Read Again Before You Sign

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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.
Continue Reading No Bonding Requirements? Think Again, Instructs the Federal Circuit

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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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Continue Reading The Impact of Government Indecision on Government Contractors

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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. …
Continue Reading An Important Reminder for Federal Contractors: Act Fast on Termination for Convenience Claims!

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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. …
Continue Reading Federal Circuit Clarifies Requirements for Government-Furnished Estimated Quantities