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Minimizing Risks and Maximizing Success in Government Contracting


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Minimizing Risks and Maximizing Success in Government Contracting

  1. 1. Minimizing Risks and Maximizing Success inGovernment Contracting Leonard R. Ruzicka, Jr. Stinson Morrison Hecker LLP © Stinson Morrison Hecker LLP, 2010
  2. 2. Introduction Your Companys long and profitable record inprivate construction does not translate intosuccess in the government sector even for thesame type of work There are already too many stories aboutsuccessful contractors jumping from the privateinto the government sector to keep their staff intactand their employees busy with disastrous financialconsequences © Stinson Morrison Hecker LLP, 2010
  3. 3. This presentation will focus on what youneed to do to minimize your risks/maximizeyour success in performing government work © Stinson Morrison Hecker LLP, 2010
  4. 4. I. Golden Rules of Government Contracting Rule Number One: The contract is your client. A governmental representative should not/cannot give you anything that is not provided for in the contract. Stated simply horse trading is not allowed. © Stinson Morrison Hecker LLP, 2010
  5. 5. Rule Number Two. Know yourcontract. The natural follow on to RuleNumber One is to understand yourcontract. A project manager who is notfamiliar with all the commercial andtechnical requirements of his contract isheaded for trouble. © Stinson Morrison Hecker LLP, 2010
  6. 6. Rule Number Three. Provide timely andcomplete notices. Failure to provide timelyand complete notices in governmentcontracting is fatal to otherwise valid claims.Submit your notices, follow the requirementsof the Contract Disputes Act, and do notexpect anything other than treatmentconsistent with the contract. © Stinson Morrison Hecker LLP, 2010
  7. 7. Rule Number Four. Provide Complete,Open and Truthful information. If youintend to deviate in any manner from theplans and specifications, such deviationmust be documented and approved by anauthorized representative of thegovernment agency. © Stinson Morrison Hecker LLP, 2010
  8. 8. II. Laws and Regulations Applicable to Government Contracting FederalMost federal contracts for construction areawarded as a result of a competitive bidprocess. In the Request for Proposals(“RFP”), the Federal AcquisitionRegulations (FAR) Provisions that governthe performance of the work are eitherincluded or referenced in the contract thatthe bidder is expected to execute if thecontract is awarded to that bidder. © Stinson Morrison Hecker LLP, 2010
  9. 9. The relevant provisions applying to acontract for construction are found inSection 52 of the FAR. Every contractwith a federal agency for constructioncontains a number of FAR provisions. © Stinson Morrison Hecker LLP, 2010
  10. 10. The following are some of the key provisions infixed price construction contracts: – Variation in Estimated Quantities (52.212-11) – Suspension of Work (52.212-12) – Differing Site Conditions (52.236-2) – Site Investigation (52.236-3) – Changes (52.243-1) – Default (52.249-10) – Liquidated Damages (52.212-5) – Disputes (52.233-1) © Stinson Morrison Hecker LLP, 2010
  11. 11. There is a substantial body of federal case lawinterpreting the FAR provisions as well as cases that areinstructive as to the mutual obligations of the partiesduring the construction process, i.e. implied obligationswhich include: – Plans and specs are complete and accurate (Spearin Doctrine) – Cooperation/coordination of government in contractor’s efforts – Reasonable Access © Stinson Morrison Hecker LLP, 2010
  12. 12. The following FAR provisions are also important to thecontracting process:– Contracting Officer’s Authority (33.210)– Contracting Officer’s Decision (33.211)– Truth in Negotiations 10 U.S.C. 2304 Civil liability for knowingly submitting false data in conjunction with a submission of certified cost or pricing data for a contract change or modification or a non-fixed price contract solicitation. © Stinson Morrison Hecker LLP, 2010
  13. 13. – False Claims Act 31 U.S.C. Section 3729 et seq. Civil liability for knowingly presenting a false claim to the U.S. Government ($10,000 plus treble the damages sustained by Government)– Prompt Payment Act U.S.C. Section 3901 et seq.– Miller Act 40 U.S.C. Section 270 © Stinson Morrison Hecker LLP, 2010
  14. 14. When do the FARS apply / some general rules:• FARS apply if you enter into a direct contract with a federal agency.• FARS apply to subcontractors/vendors at any level if there is some performance on the project site that is covered by a contract with a federal agency. © Stinson Morrison Hecker LLP, 2010
  15. 15. • FARS apply even if there is no performance on the project site if the contract with the government agency is incorporated by reference in your contract except for the Davis-Bacon requirements. There are some exceptions if working on a contiguous site/certain transportation activities.• When in doubt assume the FARS apply. © Stinson Morrison Hecker LLP, 2010
  16. 16. STATEMost States agencies that regularly do construction,e.g., state transportation departments, have standardspecifications governing the performance ofconstruction within that state for that agency. TheseState-standard specifications typically mirror thefederal FAR provisions with some minor variations.However, there are a number of States that havedeviated substantially from the FAR and have veryharsh and risk shifting provisions. Some States havevery little case law to interpret these provisions andtherefore interpretations under federal or other statecase law is necessary. © Stinson Morrison Hecker LLP, 2010
  17. 17. • In addition to these standard specifications, most States have enacted statutes that govern the construction process:• Prompt Pay 34.057 RSMo./Little Miller Acts 107.170 RSMo.• Prohibition on “no damage for delay” clauses 34.058 RSMo.• False Claims. See Cal. Govt. Code Section 12650 et seq. (similar to Federal FCA) © Stinson Morrison Hecker LLP, 2010