Indulging in Federal government construction contracts can be very lucrative in the federal procurement world. However, the risk of non-performance is definitely present and any federal construction contracting company must approach projects with caution.
- As a contractor, you should be aware that you are dealing with an extremely large client with a substantial amount resources which include lawyers and statutory support.
- As you become involved in federal government construction projects, you should also be aware that you are also dealing with a government contracting entity that has many loopholes and clauses for its benefit. The question becomes what rights do you have?
Critical Areas to Watch Out For In Federal Government Construction Contracts
Understanding the regulations: federal construction contracts are governed only by federal regulations. The Federal Acquisition Regulation governs a wide of issues such as construction changes, default terminations, pricing matters and more. When construction companies are litigating a bidding dispute you will more than likely argue before the Government Accountability Office or the U.S. Court of Federal Claims.
- The Contract Disputes Act governs your construction claims submission. This important statute often goes unheeded by federal construction companies.
- Other FAR regulations over requests for equitable adjustment and scope changes.
Make sure that you meet important schedules and deadlines: Federal government construction contracts almost always come with some level to deadlines to perform. Your company’s internal plan of action must consider meeting or exceed expressed schedules.
- Failure to meet any schedule could lead to a termination for default.
Understand how to prepare and submit a proper claim: submitting a claim on federal construction contracts can be tricky. The rule of thumb is to always communicate with the government’s contracting officer about potential scope changes and potential increases in the contract price. Construction companies who also be aware of the dangerous pitfalls in the Contract Disputes Act, and how failure to comply with this regulation can cost the company thousands in litigation or even get the case thrown out on appeal.
- The longer you wait to file a construction claim, the risk of approval is reduced.
Construction companies should know the difference between an equitable adjustment and a Contract Disputes Act claim
This is yet another tricky area in federal government construction projects. One major difference between a request for equitable adjustment and a federal construction claim is that only when you submit your claim does interest start to accrue. By contrast, a request for equitable adjustment typically only starts to accrue interest when there is an impasse (when neither the government nor you can agree upon the outcome.)
Do not take direction from someone other than the contracting officer
Many contractors performing government construction contracts find themselves in hot water when someone, other than the contracting officer directs them to perform additional work. When this happens, your company can experience the painful result of the contracting officer denies the claim for payment. Appeal courts cannot hear the case if the person causing the additional scope changes is not the contracting officer
- Remember that only the contracting officer can bind the federal government (Not the COR).
- Failure to comply with the rule can cost you millions in lost damages when you claim is denied.
Understanding Federal Construction Contracts and Claims
The Contract Disputes Act of 1978 (CDA) governs how you prepare and submit construction claims against the federal government. As a federal government construction contractor, you will more than likely run into a situation where you have to submit a claim for large amounts of money. Therefore, it is critical that you understand how the CDA applies to you on federal government construction projects.
- If you do not comply with CDA rules, the CO will deny your claim
- Appeal courts cannot hear your case if the original claim did not meet the Contract Disputes Act requirements.
The claims process can impact your ability to perform when situation arise that include differing site conditions, contract delays, requests for equitable adjustments or when the contracting officer denies your claim. It is somewhat prudent to seek the legal advice of a federal construction contracts attorney when you experience these situations.
Authority to Make Changes: The Changes Clause has a significant impact on federal construction contracts. Again, understanding the rules and regulations can impact performance. As a federal construction contractor, one of the first things that you must always be aware of is the authority of a contracting officer representative (COR).
- When it comes to federal construction claims and changes ALWAYS get the permission and commitment from the Contracting Officer.
- The COR does not have authority to bind the federal government.
Approaches to Equitable Adjustments: As applied to federal government construction contracts, the Court of Federal Claims defined an equitable adjustment as keeping a “contractor whole when the government modifies the contract.” The key to success is to always communicate with the contracting officer. Never wait until after you incur costs to then submit a request for equitable adjustment. The chances of an adverse reaction are a lot greater.
Construction Contract Terminations
Government contractors often face terminations for convenience or termination for default. This is also true for federal construction projects. The government has a right to unilaterally terminate your contract for convenience if it is in the government’s best interest. Assuming that the termination is legitimate, you have the right to statutory damages. You generally do not collect lost profits in this type of termination.
When it comes to issuing a termination for default on a federal construction contract, general contractors must be extremely careful what they do next. Not only can this severely impact the company’s ability to do future business with the federal government, it can also lead to suspension and debarment. Seeking the help of a qualified government contract termination attorney could prove beneficial.
Call Our Federal Government Construction Contract Lawyers
If you are a federal contractor and need help in dealing with a dispute, call our federal construction contracts law firm at 1-866-601-5518 for immediate help.