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Casey J. McKinnon is an Associate in the Firm's Federal Contracting Group. Casey focuses his practice on government contracts and litigation, representing clients in all stages of litigation related to federal contracting, including case strategy, discovery, trials, and appeals. He counsels clients throughout the procurement process including solicitation review, proposal preparation, and pre and post-award bid protests. Casey also assists with day-to-day contracting issues including drafting, reviewing, and negotiating contracts and other matters of contract administration.

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.
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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.
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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.

The FAR Addresses Delays Resulting from Epidemics

Against this dire backdrop, the issue of how this will affect federal contracting seems rather mundane. Nevertheless, in the hope that this crisis will pass sooner rather than later, contractors need to be aware of their contractual obligations and the risks they face. One thing is certain, federal contracts do not contain clauses that anticipate a crisis of this magnitude. The most likely effect of the crisis is that contract performance will be delayed. The concept of excusable delay is recognized in the Federal Acquisition Regulation and FAR 52.249-14, “Excusable Delays,” which provides the following:

(a) Except for defaults of subcontractors at any tier, the Contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of these causes are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Contractor. Default includes failure to make progress in the work so as to endanger performance.

While the clause specifically lists “epidemics” as an excusable cause of delay, it simply means that a contractor will be given a time extension. It does not, however, provide compensation for the cost of maintaining a workforce, the cost of materials and equipment that will not be used, or the ongoing home and field overhead expenses. The contractor, while not at risk for default, is at risk for the cost of the resulting delay. (It should be noted that it is highly unlikely that the government would threaten to terminate a contractor impacted by the virus for default, and, in fact, the language quoted above from the Excusable Delay provision in the FAR is repeated in the Termination for Default clause at FAR 52.249-10). As a result, while FAR 52.249-14 does provide some relief for delayed projects, that relief is likely to be insufficient and will leave contractors searching for alternative theories of recovery.
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In a recent opinion issued by the United States Court of Federal Claims, Meridian Engineering Company vs. The United States, a case argued by our firm, the Court ruled that a contract modification containing a release did not prevent the contractor from recovering further damages. The dispute involved a contract between Meridian and the U.S. Army Corps of Engineers for a flood-control project in Nogales, AZ. After entering into the contract, the Contracting Officer issued two contract modifications that compensated Meridian for government-caused delays related to an access ramp and surveys. As a result of the underlying delays, Meridian’s work was pushed into the yearly rainy season in southern Arizona, referred to as the “monsoon” season, and completion of the critical channel invert work was impacted by numerous flood events. Had it not been for the earlier access ramp and survey delays, the work would have been completed before the onset of the “monsoon” season.

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On November 27, 2018, the U.S. General Services Administration (GSA) announced that it will consolidate the GSA’s 24 Multiple Award Schedules (MAS) into a single schedule for products and services. The GSA stated that the changes were intended to “modernize federal acquisition” and “make the government buying and selling experience easy, efficient, and modern.”

Through the MAS, also referred to as the GSA Schedules and Federal Supply Schedules, the GSA establishes long-term, government-wide contracts with commercial firms. Approximately $31 billion is spent through MAS each year on a wide variety of supplies and services. Prior to the announced changes, the GSA maintained 24 separate MAS organized by industry or service ranging from IT Procurement (Schedule 70) to Sports Equipment, Signs and Trophies (Schedule 78). Under that preexisting framework, a vendor selling a variety of supplies and/or services to the government was often required to participate in multiple schedules that each included their own terms and conditions. As a result of the announced changes, and the corresponding consolidation of all MAS into a single schedule, all contractors will be able to sell their products and services through a single program with a uniform set of terms and conditions.


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Effective May 25, 2018, the Small Business Administration (“SBA”) amended its regulations regarding a contractor’s size and/or socio-economic status following a novation, merger, or acquisition. Specifically, through a “technical correction,” the SBA revised its regulations to dictate that when a company becomes “other than small” or no longer has a certain socio-economic status (veteran-owned, woman-owned, HUBZone, etc.) as a result of a novation, merger, or acquisition, the business is no longer eligible to compete for set-aside task orders on multiple-award contracts held by the company. This change in eligibility is applicable even where the contracting officer does not specifically request a recertification. 
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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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