Minimizing Risks and Maximizing Success in Government Contracting

Minimizing Risks and
Maximizing Success in
Government Contracting

Leonard R. Ruzicka, Jr.
Stinson Morrison Hecker LLP

© Stinson Morrison Hecker LLP, 2010

Introduction
Your Company's long and profitable record in
private construction does not translate into
success in the government sector even for the
same type of work

There are already too many stories about
successful contractors jumping from the private
into the government sector to keep their staff intact
and their employees busy with disastrous financial
consequences


This presentation will focus on what you
need to do to minimize your risks/maximize
your success in performing government work


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.


Rule Number Two. Know your
contract. The natural follow on to Rule
Number One is to understand your
contract. A project manager who is not
familiar with all the commercial and
technical requirements of his contract is
headed for trouble.


Rule Number Three. Provide timely and
complete notices. Failure to provide timely
and complete notices in government
contracting is fatal to otherwise valid claims.
Submit your notices, follow the requirements
of the Contract Disputes Act, and do not
expect anything other than treatment
consistent with the contract.


Rule Number Four. Provide Complete,
Open and Truthful information. If you
intend to deviate in any manner from the
plans and specifications, such deviation
must be documented and approved by an
authorized representative of the
government agency.


II. Laws and Regulations Applicable to
Government Contracting

Federal
Most federal contracts for construction are
awarded as a result of a competitive bid
process. In the Request for Proposals
(“RFP”), the Federal Acquisition
Regulations (FAR) Provisions that govern
the performance of the work are either
included or referenced in the contract that
the bidder is expected to execute if the
contract is awarded to that bidder.


The relevant provisions applying to a
contract for construction are found in
Section 52 of the FAR. Every contract
with a federal agency for construction
contains a number of FAR provisions.


The following are some of the key provisions in
fixed 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)


There is a substantial body of federal case law
interpreting the FAR provisions as well as cases that are
instructive as to the mutual obligations of the parties
during the construction process, i.e. implied obligations
which include:
– Plans and specs are complete and accurate (Spearin
Doctrine)
– Cooperation/coordination of government in
contractor’s efforts
– Reasonable Access


The following FAR provisions are also important to the
contracting 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.


– 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


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.


• 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.


STATE
Most States agencies that regularly do construction,
e.g., state transportation departments, have standard
specifications governing the performance of
construction within that state for that agency. These
State-standard specifications typically mirror the
federal FAR provisions with some minor variations.
However, there are a number of States that have
deviated substantially from the FAR and have very
harsh and risk shifting provisions. Some States have
very little case law to interpret these provisions and
therefore interpretations under federal or other state
case law is necessary.


• 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)


Minimizing Risks and Maximizing Success in Government Contracting

More Related Content

What's hot

Viewers also liked

Similar to Minimizing Risks and Maximizing Success in Government Contracting

Minimizing Risks and Maximizing Success in Government Contracting