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

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

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

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

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. 
Continue Reading New Cybersecurity Requirements Will Impact All DOD Contractors and Their Subcontractors

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.
Continue Reading A Look Ahead: What to Expect in Federal Construction Contracting in FY2020

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.
Continue Reading Construction Opportunities in Israel for Federal Contractors

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.


Continue Reading SBA Makes It Easier for Small Businesses To Joint Venture for Federal Contracts

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.”