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Michael H. Payne

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As Chair of the firm’s growing Government Contracting Group, Michael represents contractors, subcontractors, and suppliers on a wide range of federal contracting issues, including the interpretation of solicitation and contract provisions, the filing of bid protests, resolution of disputes, and the preparation of contract claims and the litigation of appeals. Michael has vast experience in federal government contracting, stemming from his time as Chief Trial Attorney for the North Atlantic Division of the Army Corps of Engineers, and is recognized in the federal construction contracting industry as an attorney who enjoys a good working relationship with government agencies.

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On October 3, 2023, the FAR Council released two proposed rules for federal contractor cybersecurity requirements that relate to cyber threat and incident reporting and information sharing (case 2021-017) and standardizing cybersecurity requirements for unclassified federal information systems (case 2021-019). Both proposed rules not only provide new requirements for federal contractors to follow but also provide new definitions and contract provisions for information and contract technology and federal information systems contracts. Continue Reading New Proposed Cybersecurity Rules Mean Big Changes for Federal Contractors

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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

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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?

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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

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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

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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

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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

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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.
Continue Reading Bidding Federal Work During the Coronavirus Crisis

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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.
Continue Reading A Government Contractor’s Roadmap for Navigating the Coronavirus Pandemic