The world of government contracting can be complex, especially when understanding and adhering to the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS). These regulations are the bedrock of government procurement, dictating how contractors interact with federal agencies. This guide provides contractors with essential information to navigate these regulations successfully.
Understanding “Force Majeure” Clauses
Standard clauses under the FAR allow adjustments to delivery schedules when performance is disrupted due to causes beyond a contractor’s control. These “force majeure” clauses can be found in FAR 52.249-14 (for cost reimbursement and time and materials contracts), FAR 52.249-8 (for fixed-price contracts), and FAR 52.212-4 (for commercial item contracts). These clauses provide relief for disruptions at both the prime and subcontract levels, including events like epidemics and quarantine restrictions.
Subcontractors should review their subcontracts to ensure they contain identical or similar clauses, either directly or incorporated by reference.
Equitable Adjustments and Stop-Work Orders
While “force majeure” clauses excuse performance, they don’t automatically entitle a contractor to additional compensation or damages. Relief may be available through a stop-work order under FAR 52.242-15, which can lead to additional compensation. Contractors facing delays and disruptions and incurring additional costs should consult with counsel about whether an equitable adjustment to the price or cost ceiling is warranted due to a “constructive change” to the contract. Proper documentation tying delays to government action is critical for obtaining relief.
The Defense Production Act and Rated Orders
The President’s invocation of the Defense Production Act and the Federal Priorities and Allocations System (FPAS) allows agencies like the Department of Defense (DoD), the Department of Health and Human Services (HHS), and the Department of Homeland Security (DHS) to issue “rated orders.” These orders compel businesses to accept them and prioritize them over commercial orders. Contractors need to understand the conditions under which federal agencies may exercise these powers and when they can resist such orders.
Flexibility in Contract Performance
Contracting officers, in consultation with program managers and technical personnel, have the authority to make adjustments to contract performance requirements and key personnel requirements. Agencies encourage contractors to engage with their employees about concerns impacting their workforce or contract performance. Contractors should consult their subcontractors and be transparent with contracting officers about the need for flexibility in contract performance.
Embracing Telework
Telework is a reality for federal contractors. FAR 7.108 states that agencies shall neither discourage a contractor from allowing its employees to telecommute nor unfavorably evaluate an offer because it includes telecommuting. Department heads within military agencies are advising contractors that any specifications limiting the ability to telework are suspended. Contractors should follow their company policies for telework and utilize alternate locations to perform government work.
Cost Tracking and Allowability
Keep detailed records of additional costs associated with responding to mandates such as IT expenditures for telework, protective equipment, hazard pay, additional time off, and repatriation. Work with counsel on defending the allowability of such expenditures as direct or indirect costs. For pending solicitations, ask the contracting agency about the allowability of such costs and acknowledge that prices proposed will be higher.
Maintaining Essential Services
If a local or state mandate shuts down your business, and your business provides essential services or products necessary for essential functions to support the U.S. Government, consult with counsel in adopting a strategy for getting appropriate support to maintain business operations.
Navigating Domestic Preference Statutes
If your only source of supply is now foreign due to closures or delays in the domestic supply chain, explore with counsel getting waivers from domestic preference statutes and clauses such as the Trade Agreements Act, the Berry Amendment, and the DFARS “Specialty Metals” clause.
Streamlined Acquisition Processes
Take advantage of and encourage agencies to use streamlined acquisition processes such as Commercial Solutions Openings (CSOs) permitted under both the Other Transaction Authority statutes and regulations and under the GSA Pilot Program. Contracts can be awarded in less than 30 to 60 days using the CSO process.
Utilizing Downtime Effectively
Use any downtime to:
- Analyze the likelihood of success, staffing requirements, and profitability for future solicitations.
- Examine past performance ratings and adopt measures to improve or correct them.
- Conduct a thorough compliance review by updating critical documents such as your Code of Business Ethics and Conduct, key policies, forms, and training regimes.
- Establish protocols and procedures for tracking and reporting inventions and other IP.
- Prepare for Cybersecurity Maturity Model Certification (CMMC).
Conclusion
Navigating the FARs and DFARS is crucial for success in government contracting. By understanding these regulations, contractors can protect their interests, ensure compliance, and maximize opportunities. Proactive measures, thorough documentation, and clear communication with contracting officers are essential for navigating the complexities of government contracts. Staying informed and seeking expert counsel will help contractors thrive in this competitive landscape.
