Implied-In-Fact Contracts in Federal Government Subcontracts: A Theory worth Considering.

Government contractors find themselves wearing many hats. [1]  They may serve as a prime contractor on one government contract and as a subcontractor to a prime contractor on another contract.  When bidding as a prime contractor on a government contract, government contractors are keenly aware of their, well, rights.  They know that government agencies must follow procurement regulations, statutes, and court precedent.  They know that the Government Accountability Office (GAO) and the Court of Federal Claims are available forums that will entertain a government contractor’s protest of the award or failure to receive award of a government contract.    But what about when a government contractor bids as a subcontractor on a Request for Proposals (RFP) issued by a prime contractor on a government contract? … Continue reading

Preparing for Sequestration – Driven Contract Terminations and Restructures

Guest Author: Elizabeth A. Ferrell, McKenna Long & Aldridge. Originally posted at http://www.mckennalong.com/publications-advisories-3160.html   With the looming threat of sequestration, there is significant uncertainty regarding the budgetary resources that will be available for the reminder of the fiscal year. Unless Congress acts to prevent sequestration, beginning March 1, 2013, approximately $85 billion in budgetary resources across the Federal Government will be cancelled. On January 10, DoD issued initial planning guidance on sequestration. See “The Department of Defense Issues Initial Planning Guidance on Sequestration”. This week, on January 14, 2013, OMB issued a Memorandum for the Heads of Executive Departments and Agencies providing guidance on planning for the impact of a sequestration order. While the OMB guidance is fairly limited, OMB has tasked agencies with indentifying means to reduce … Continue reading

FY 2013, NDAA Authorizes Mentor Protege Program for All Small Businesses Among Significant Small Business Contracting Changes

Guest Authors: Richard B. Oliver, John W. Heath, & J. Matthew Carter, McKenna Long & Aldridge.  Originally posted at http://www.mckennalong.com/publications-advisories-3153.html   The Fiscal Year 2013 National Defense Authorization Act (“NDAA”), signed by President Obama on January 2, 2013, makes numerous significant changes in the federal government’s small business contracting programs. Most importantly, the NDAA authorizes the Small Business Administration (“SBA”) to establish a mentor-protégé program for all small business concerns. Among other changes, the NDAA revises the rules for limits on subcontracting for small business set-asides, eliminates the dollar limitations for set-aside contracts for women-owned small businesses, and creates a small business Ombudsman to serve at DCAA. By authorizing the use of the mentor-protégé program for all small business concerns, NDAA section 1641 effectively alters the … Continue reading

FAR 52.219-14 Limitations on Subcontracting *

Applicability: This FAR solicitation provision, which is incorporated into the contract and thus becomes a clause, specifies the percentage of work that must be performed by a small business concern when it receives a set aside reserved for small businesses.  The provision is included in solicitations and contracts for supplies, services, and construction, if any portion of the requirement is to be set aside or reserved for small business and the contract amount is expected to exceed $150,000. This includes all contracts awarded under FAR Subpart 19.8, “Contracting with the Small Business Administration (the 8(a) Program)”.  The clause applies to parts of a multiple-award contract that have been set aside for small business concerns or 8(a) concerns; and orders set aside for small business or 8(a) concerns … Continue reading

Counterfeit Parts Redux

The issue of counterfeit parts in the U.S. supply chain is becoming  more of a “front burner” issue. We told you recently about the formal rulemaking procedures which resulted from several years of investigation, followed by legislation last December, which is now being implemented through various rulemaking proceedings. The Defense Authorization Act, signed  last December 31, mandates action by individual company suppliers. By way of background, it has been verified that many counterfeit components, mostly electronic (but now others) are being sold in substantial amounts into the U.S. government supply chain. This can lead, in the case of basic chips and other components, to failures, but, with more sophisticated implants, it can lead to loss of control at calculated intervals, or even taking over control … Continue reading

FAR 52.212-4 Contract Terms and Conditions—Commercial Items: Alternate I Payments Under Time-and-Materials and Labor-Hour Contracts for Commercial Items

Applicability: FAR 52.212-4 applies to acquisitions for commercial items.  Alternate I of that clause is included when the acquisition of commercial items will be awarded using a time-and-materials (T&M) or labor-hour contract (LH).   Key Requirements:  Alternate I specifies how payments will be made for both the Time and the Materials elements of a T&M contract awarded under FAR Part 12, i.e., the acquisition of commercial items.  Some of these requirements are the same as the requirements in the T&M payments clause for the acquisition of noncommercial items at FAR 52.232-7.  However, there are also some significant differences, particularly in the area of materials.  These key differences are highlighted below.  Alternate I also includes requirements that address Inspection/Acceptance. Ceiling Price, Underpayments/Overpayments, and Terminations.  While these … Continue reading

FAR 52.232-7: Payments Under Time-and-Materials and Labor-Hour Contracts

Applicability: This FAR clause specifies the payment terms for Time-and-Materials (T&M) and Labor-Hour (LH) contracts that were not acquired using FAR Part 12 (commercial items).  The clause is included in solicitations and contracts when a time-and-materials or labor-hour contract is contemplated (other than a FAR Part 12 acquisition).   Key Requirements:  A T&M contract is comprised of two key elements:  (1) Time, and (2) Materials (note that a labor hour contract is a T&M contract without the materials).  The T&M/LH payments clause specifies how payments will be made for both the Time and the Materials elements of the contract.The clause at FAR 52.215-7 also includes key elements related to other areas, including assignment and release of claims; ceiling price; and the timing of interim payments. While … Continue reading

FAR 52.215-22 and FAR 52.215-23: Limitations on Pass-Through Charges

Applicability: These two FAR provisions work together to enforce the FAR limitations on pass-through charges.  Both the solicitation provision (FAR 52.215-22) and the contract clause (FAR 52.215-22) are included in civilian and DoD contracts when the estimated contract value or order value exceeds the simplified acquisition threshold and the contemplated contract type is expected to be a cost-reimbursement type.  In addition, for DoD contracts, they are included when the total estimated contract or order value exceeds the threshold for obtaining certified cost or pricing data unless (a) the contract is fixed price (firm fixed price, fixed-price with economic price adjustment, or fixed-price incentive) awarded on the basis of adequate price competition, or (b) the contract is fixed price for the acquisition of commercial items.   … Continue reading