Ten Things You Should Know About Federal Contracting

By James F. Nagle Oles Morrison Rinker & Baker LLC

Editor’s Note: The following info was part of the recent Winning Federal Stimulus Contracts seminar presented for AGC members by Oles Morrison.

1. Know the rules.

The Federal Acquisition Regulation is at Title 48 of the Code of Federal Regulations Chapter 1. It is also available at www.acqnet.gov/far/ Actually Title 48 in its entirety is often referred to as the FARS – the Federal Acquisition Regulatory System because while the FAR itself is Chapter 1 many agencies have issued their supplements to the FAR and these are scattered throughout the rest of Title 48. Chapter 2 of Title 48 for example contains the Defense Federal Acquisition Regulatory Supplement – the DFARS. Chapter 9 contains the Department of Energy Acquisition Regulatory Supplement – the DEARS.

The FAR was an attempt by the federal government to make uniform the contracting practices of the federal agencies so that the contract procedures and the contract itself for the Agriculture Department would be virtually the same for a contract for the Department of the Army.

The FAR is comprised of 53 different parts that are chronologically designed to walk the reader through the contracting process from initial planning to termination. Its 53 parts are grouped into 8 subchapters.

For example Subchapter D is Socio-Economic Programs. Part 19 focuses on small business programs including small business subcontracting small disadvantaged contracting and HUBZone (Historically Underutilized Business Zone) contracting. Part 22 is Application of Labor Laws to Government Acquisitions. The Subparts here that are most important are those dealing with the Davis-Bacon Act Subpart 22.4 and the subpart dealing with equal employment opportunities Subpart 22.8.

Part 36 dealing with Construction and Architect-Engineer Contracts only about 20 pages should be carefully reviewed by anyone engaged in construction contracting with the federal government. It discusses particular requirements for forming the construction contract then explains in detail the two-phase design-build procedures for the federal government in Subpart 36.3. In Subpart 36.5 it describes the unique clauses that are required or suggested in government construction contracts. Many of these will be familiar to contractors such as the Differing Site Conditions clause or the Site Investigation and Conditions Affecting the Work clause. Others however may require special scrutiny such as the Material and Workmanship clause or the Permits and Responsibilities clause.

Subpart 36.6 specifically deals with architect-engineer services and contains a variety of unique clauses that require review. Subpart 36.7 deals with standard and optional forms for contracting for construction architect-engineer services and dismantling demolition or removal of improvements.

Subchapter H is Clauses and Forms. Part 52 is Solicitation Provisions and Contract Clauses. Provisions essentially apply only before the contract is awarded; clauses may apply both before and after the contract is awarded. The FAR is logically set out. All the provisions and clauses are in FAR 52.2. The next two digits will refer back to the part dealing with the substance of the clause. For example since FAR 49 deals with termination all of the government’s termination clauses will be in Section 52.249. That number will then be followed by a dash and another number which will identify the specific applicable clause. For example 52.249-10 is the default clause for fixed price construction contracts.

Section 52.301 is the matrix. This lists all the solicitation provisions and contract clauses that will be required (R) required when applicable (A) or optional (O) in all the various types of contracts the government awards. Readers should specifically reference those clauses that are required under FP CON (Fixed-Price Construction contracts) or CR CON (Cost Reimbursement Construction contracts). They may also want to review the clauses under T&M (Time and Material) or LH (Labor Hour) contracts or IND DEL (Indefinite Delivery contracts).

This matrix has particular importance because of a doctrine in federal contracting known as the Christian Doctrine. The Christian Doctrine came out of the case G.L. Christian & Associates v. United States in which the government awarded a construction contract but neglected to include a termination for convenience clause even though it was required by the applicable regulation at the time – a forerunner of the FAR. The court ruled that if a clause was required to be in the contract by regulation having the force and effect of law and represented a fundamental procurement policy it would be incorporated into the contract by operation of law despite its physical omission from the contract.

2. It’s a level playing field.

In its contracts the United States must be fair and must provide a level playing field when dealing with contractors. So the government typically will engage in full and open competition and will announce new bidding opportunities in www.FedBizOpps.

3. Use every advantage that you have.

The government often does not contract on the basis of the lowest bid price or take the most well known contractor in a particular subject matter. Because the government is interested in achieving varied socio-economic goals it will have special procurements that are set aside for certain groups or in which these groups are given extra evaluation points. So if you are a small business small disadvantaged business woman owned small business service connected disabled veteran owned small business a small business that is an area of high unemployment (this is a called an Historically Underutilized Business Zone Hubzone) be prepared to tout this as a vehicle to help you get government contracts.

You should work with the Small Business Administration to deal with this. Also you should work with the Small and Disadvantaged Business Utilization Specialists of the particular agencies that you are interested in contracting with so they can help you get on the Central Contractor Registration (CCR) to get much of the paper work done in advance.

4. Think sub as well as prime.

When you are thinking of government contracting don’t just think of competing to be the general or prime contractor. Think of serving as a subcontractor. The government has a very extensive subcontracting program and very often will require the prime or general contractor to promise that it will subcontract large portions of the work to small businesses and other socio-economic groups.

Also think of joint venturing or teaming with other companies to be a participant as the prime contractor even though the contract itself might be too large for your capacity (workforce schedule bonding capacity etc.).

5. Don’t ignore rules.

Recognize that when you are dealing with the United States government there are some certain rules that you ignore at your peril. Matters that are normal in some aspects of private contracting can be criminal in federal contracting such as gratuities and inflating a claim just for negotiation purposes.

6. Understand that in contracting the government has a split personality.

Very often during performance there will be no doubt that the United States government has made your performance more difficult more expensive or has delayed it. For example the EPA or OSHA may come out with new rules which cause your costs to go up substantially. However that is not a contractual act of the government. So if you have a contract with the Army Corps of Engineers you would not be able to put in a claim under the Changes clause because a differing federal agency has issued general rules which cause your costs to go up.

7. Understand government’s limited flexibility.

Understand that the government officials that you deal with do not have the flexibility of a private owner to give and take. The United States government is entitled to get exactly what it contracts for when it contracts for it at the price it contracted for. Government officials cannot give up those rights without getting something i.e. consideration in some form in return.

8. Get to know your Contracting Officer.

Recognize that the main person you will be dealing with on the contract is the Contracting Officer (CO). That is the person who has been delegated the authority to bind the government contractually.

You will come across a variety of other people in your contracts the Contracting Officer’s Representative (COR) the Contracting Officer’s Technical Representative (COTR) the Inspector the Quality Assurance Representative (QAR) the Resident Officer in Charge of Construction (ROIC). All of these will have communications with the contractor and all of whom may tell the contractor what to do. However if that direction has any impact on the contractor’s costs or schedule the contractor should immediately contact the Contracting Officer describe what has happened and ask for direction from the Contracting Officer.

There are numerous cases in which a contractor has done something at the direction of a government engineer or other government official only to find that the bill for that work is rejected by the government because it was never issued by someone with contractual authority to bind the government.

9. Oral communications are risky.

You need to have everything confirmed in writing. Emails will typically suffice but if the appropriate official tells you to do something immediately confirm it in writing so there is clear auditable trail.

10. The United States is good for the money.

It is required to pay its contractors promptly under the Federal Prompt Payment Act and interest will accrue under that Act and the Contract Disputes Act regarding claims.

James F. Nagle of Oles Morrison Rinker & Baker LLC can be reached at 206.623.3427