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?
COVID-19
New Guidance on the Vaccination Mandate for Federal Contractors
In our last post, we detailed President Biden’s Executive Order 14042 regarding vaccination requirements for government contractors. The order made clear that a new clause requiring vaccinations would be included in new contracts in the near future, but questions remained about which employees would ultimately be subject to the requirements. On September 24, 2021, the Safer Federal Workforce Task Force (Task Force) issued guidance that answered many of those questions.
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New COVID-19 Vaccination Requirements for Government Contractors
Government contractors and subcontractors will need to learn—quickly–how to navigate new COVID-19 requirements. On September 9, 2021, President Biden issued an executive order (the order) imposing COVID-19 vaccine and testing requirements on government contractors and subcontractors. The new requirements will start appearing in contracts in a matter of weeks. Below are the key points that federal contractors need to know.
How will the vaccine requirement be implemented?
The order directs all executive departments and agencies to begin including a new and yet unwritten clause in solicitations, contracts, and contract-like instruments. The clause must state that the contractor will comply with all guidance issued by the Safer Federal Workforce Task Force (Task Force) that pertains to a contractor or subcontractor’s workplace locations.Continue Reading New COVID-19 Vaccination Requirements for Government Contractors
DOD Releases Class Deviation and Related Guidance Implementing Section 3610 of the CARES Act
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.
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Delays Resulting From Coronavirus May Be Both Excusable and Compensable
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
Virtual Counsel for Federal Construction Contractors Impacted by the Coronavirus Pandemic
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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Bidding Federal Work During the Coronavirus Crisis
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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A Government Contractor’s Roadmap for Navigating the Coronavirus Pandemic
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