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Robert G. Ruggieri is a Partner of the Firm's Federal Contracting Group. He practices law in the areas of government contracts, procurement, and construction. Bob’s clients, which include prime contractors, subcontractors, and suppliers, routinely seek out his advice in protesting government procurement decisions, size and NAICS code protests, interpreting the Federal Acquisition Regulation (FAR), preparing Requests for Equitable Adjustment, (REAs), prosecuting claims under the Contract Disputes Act (CDA), and responding to government investigations, suspensions, and debarment proceedings.

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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On January 30, 2020, the Department of Defense (DOD) released Version 1.0 of its Cybersecurity Maturity Model Certification (CMMC). Under the CMMC program, every contractor who works for the DOD, including subcontractors, will need to be certified at one of five levels. All DOD solicitations will specify which certification level is required for the contract, and contractors who do not have that certification will be ineligible for the contract. In order to obtain the certification, contractors will undergo an assessment by an independent third-party organization. 
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My partner Tim Furin and I attended the FY2020 DOD & Federal Agency Program Briefings this week on March 12 in Herndon, Virginia. The Briefings are part of the Society of American Military Engineers (SAME) Capital Week. The program provides SAME members a chance to hear about the projected upcoming fiscal year’s engineering, construction, and environmental programs from contracting representatives, and Senior Executive Service leaders from the engineering components of the military services and select federal agencies. Representatives from the United States Army Corps of Engineers (USACE), Army, Navy, Air Force, General Services Administration (GSA), Departments of State and Energy, as well as the U.S. Customs and Border Protection and U.S. Forest Service all made presentations. The presentations are available on SAME’s Capital Week website.

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Earlier this month, my colleague, Michael Payne, and I attended Israel Industry Day sponsored by the Army Corps of Engineers (“USACE”) and the Israeli Ministry of Defense (“MOD”) in New York City. The purpose of the program was to present the Israel Foreign Military Sales (FMS) Construction Program and to introduce American and Israeli construction contractors and A/E firms to the upcoming construction opportunities in Israel. Information was provided on the general scope of USACE design build and design bid build projects within Israel; typical infrastructure and facilities being procured; potential repair, maintenance, and construction opportunities to support MOD facilities in Israel; as well as information on the solicitation and proposal process and various legal issues that apply to the Projects.
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Business People Meeting Discussion Communication ConceptAs we blogged Wednesday, this week the Small Business Administration (“SBA”) published a lengthy final rule that implements the long-awaited small business regulation changes mandated by the National Defense Authorization Act (“NDAA”) of 2013. The rule makes a number of very important changes affecting Federal contractors.  One of the more important changes makes it easier for small businesses to form joint ventures (JVs) to compete for government procurements and removes prior, and often confusing, restrictions.


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Effective today, a new Anti-Trafficking rule will substantially change and increase federal contractors’ compliance and certification requirements.  The Anti-Trafficking rule requires that all federal contractors take certain actions related to combating human trafficking and slavery in their supply and contracting chains.  Human trafficking has been a high-profile issue in government contracting in recent years, drawing

In a bid protest argued by our firm before the United States Court of Federal Claims on September 23, 2014, the Court ruled in favor of our client, RLB Contracting, Inc., (RLB) in a matter involving the designation of the dredging exception to NAICS code 237990, which is for “Other Heavy and Civil Engineering Construction.”