CLAIM DOES NOT ACCRUE UNTIL “SUM CERTAIN” IS KNOWN BY CONTRACTOR

The Federal Circuit recently clarified that a contractor’s claim does not accrue until the exact amount (“sum certain”) of the claim is known to the contractor. Kellogg Brown & Root Serv., Inc. v. Murphy, No. 2015-1148 (Fed. Cir. May 18, 2016), 2016 WL 2893218. This case is important because any dollar claim that fails to include a “sum certain” should be dismissed by the contracting officer and the courts. First, a brief discussion of accrual of claims, and definition of a claim. The Contract Disputes Act provides that a claim “shall be submitted within 6 years after the accrual of the claim.” 41 USC § 7103(a)(4)(A). The FAR defines accrual of a claim as follows: “the date when all events, that fix the alleged liability … Continue reading

Federal News Radio: Contracting Myth No. 5: My prime contractor will tell me what clauses should be in my subcontract

Federal News Radio is republishing our Ten Myths of Government Contracting series, accompanied by an interview with the author, Tim Sullivan, Partner, Thompson Coburn, LLP. Below is the audio from the interview on Myth No: 5, “My prime contractor will tell me what clauses should be in my subcontract.” If you’d like to listen directly on the Federal News Radio website, visit here.

Federal News Radio: Myth No. 4: It’s better to be a subcontractor because primes are too exposed

Federal News Radio is republishing our Ten Myths of Government Contracting series, accompanied by an interview with the author, Tim Sullivan, Partner, Thompson Coburn, LLP. Below is the audio from the interview on Myth No. 4, “It’s better to be a subcontractor because primes are too exposed” If you’d like to listen directly on the Federal News Radio website, visit here.

Myth No. 4: We Will Only Work as a Subcontractor Because We Don’t Want To Be Exposed the Way a Prime Is

*This post is the fourth in the ten part series, “Ten Myths of Government Contracting” and will be released weekly. Each week will introduce  a new myth and run for ten weeks.    How many times have you heard this?  My response is always the same:  Have you actually read any of your subcontracts?  I already know the answer to that question, of course, because no one who has read a properly drafted subcontract could ever utter the words above. If a prime contractor is doing its job, it is going to “flow down” many of the clauses from its prime contract to its subcontractors.  Primes go about this in a variety of ways.  Some will actually print each and every clause verbatim and include … Continue reading

A Brief Note on the Forum Selection Clause: It Is What It Is – At Least In Federal Courts

While the choice of forum in contract disputes between the government and its prime subcontractor is relatively straight forward under the Contract Disputes Act (either one of the Boards of Contract Appeals or the Court of Federal Claims), such clarity is lacking in contracts between a prime contractor and its subcontractors.  Forum selection clauses dictate the forum for disputes, litigation, and mediation, the result of which is that these clauses, particularly among contractors who work outside their respective states, are often subject to heated negotiations between the parties.  Each party wants forums partial to it, for such reasons as familiarity with the local law, advantageous precedent, simple location of the business and witnesses, or the location of its legal assets, to mention a few.   The … Continue reading

FAR 52.216-30 Time-and-Materials/Labor-Hour Proposal Requirements (Part 2)

Non-Commercial Item Acquisition with Adequate Price Competition NOTE: This is the second in a three-part series on Time-and-Materials/Labor-Hour Proposal Requirements.  Part 1 addressed non-commercial item acquisition with adequate price competition. This Part 2 addresses non-commercial item acquisitions where there is not adequate price competition (FAR 52.216-30).  Part 3 will address commercial item acquisitions at FAR 52.216-31 (which must, by law, be awarded based on adequate price competition).    Applicability: As stated at FAR 16.601(f)(2), the solicitation provision at FAR 52.216 30 applies to Time-and-Materials/Labor Hour (T&M./LH) solicitations for non-commercial item acquisitions, where the price is not expected to be based on adequate price competition.   Key Requirements: T&M/LH contracts provide for reimbursement to the contractor based on a fixed hourly rate for each labor category listed in the … Continue reading

Virginia Court Confirms “Agreements to Agree” in Teaming Agreements Are Generally Unenforceable

Guest Author: Kimberly Heifetz*, Counsel, Thompson Coburn LLP, writes: Teaming agreements (TA) are a standard part of many prime contractor/subcontractor relationships, but a recent decision should serve as a reminder that TAs are also a trap for the unwary.  In Cyberlock Consulting, Inc. v. Information Experts, Inc., — F. Supp.2d –, 2013 WL 1395742 (E.D. Va., April 3, 2013), a federal district court held that a TA’s terms regarding the parties’ “agreement to agree” to future “good faith” negotiations of a subcontract, did not constitute an enforceable contract.  Teammates’ pre-award agreements to negotiate subcontracts after the prime contract is awarded are very common, but the Cyberlock decision reinforces the dangers of such provisions when the prime and sub subsequently reach an impasse in their subcontract … Continue reading

FAR 52.216-29, Time-and-Materials/Labor-Hour Proposal Requirements

Non-Commercial Item Acquisition with Adequate Price Competition NOTE: This is the first in a three-part series on Time-and-Materials/Labor-Hour Proposal Requirements.  This Part 1 addresses non-commercial item acquisition with adequate price competition.  Part 2 will address non-commercial item acquisitions where there is not adequate price competition (FAR 52.216-30).  Part 3 will address commercial item acquisitions at FAR 52.216-31 (which must, by law, be awarded based on adequate price competition).    Applicability: As stated at FAR 16.601(f)(1), the solicitation provision at FAR 52.216 29 applies to Time-and-Materials/Labor Hour (T&M./LH) solicitations for non-commercial item acquisitions, where the price is expected to be based on adequate price competition.   Key Requirements: T&M/LH contracts provide for reimbursement to the contractor based on a fixed hourly rate for each labor category listed in the … Continue reading

Afterthoughts: Flowdown Clauses

What are the three most significant errors contractors make when dealing with flowdown clauses? 1) I think the first error is just having a blanket provision in the front;  a blanket clause that says wherever you see the term “Government” insert “prime contractor” and wherever you see the term “contractor” insert “subcontractor”  because a number of the clauses just don’t work well that way. 2) Incorrect drafting or not complete enough drafting of a disputes provision that gives both parties the opportunity to resolve disputes in a reasonably efficient way.   This entails drafting  two provisions.  One provision for when a subcontractor claims that the government has caused it to incur additional expenses and will need  the prime to sponsor the claim.  The other provision is for … Continue reading

A Brief Note on the Pay-If-Paid Clause: An Occasional Thorn to US Government Construction Subcontractors

Subcontractors bidding US government construction projects often find themselves subject to both mandatory and non-mandatory FAR clauses and provisions flowed-down from the prime contractor’s RFP, as well as the prime’s particular special terms and conditions – and conflicts often exist between the two.  Contract payment is one area where discrepancies abound between the FAR clauses and the prime’s own subcontract terms and conditions.  It cannot be stressed enough that, prior to bidding work, subcontractors must be able to recognize and understand the various payment provisions contained in subcontract RFPs.  Quite simply, for subcontractors, it’s all about the money and how fast they get it. Thus, the type of payment provision is extremely important to subcontractors.  To be sure, a subcontract RFP for a government construction … Continue reading