The only thing clear right now about the Coronavirus COVID-19 and impacts on government contracts is that circumstances are fluid and changing daily. As resources are being identified and made available to businesses, it is still uncertain how this current situation will affect owners, contractors, subcontractors, and employees. However, there are some practical steps you can take that our colleagues at the Washington PTAC have outlined.
What steps can you as a government contractor take to protect your business during this uncertain time?
(1) Read your contract!! I know its been on the shelf, but now is the time to pull it out and review all those clauses that you hoped you would never have to deal with. Here are a few of the clauses to review:
- FAR52.249-8 Fixed Price Supply and Service Contract Defaults
- FAR 52.249.10 Fixed Price Construction Contracts Defaults
- FAR 52.249-14 Cost Reimbursement Contract Excusable Delays
- FAR 52.212-4(f) Commercial Contract Excusable Delays
All the FAR Clauses above excuse a contractor’s failure to perform if the performance failure is not the fault of the contractor and beyond the contractor’s control. A great example is when the supply chains are at a standstill due to the virus. Understand your rights and remedies and which clauses cover time and which ones cover costs. Default clauses allow for an extension of time but do not cover costs. Check your contract for the clauses on
- Termination for Convenience of the Government
- Suspensions (covers cost – without profit – but not time
Agencies and contracts vary immensely with the clauses and contract wording. Remember one of your resources on the list below is the PTAC. We would be happy to help you review your contract and discuss the impact of the clauses.
(2) Review your recordkeeping processes. You will need a process to track any additional impacts that result from government action from the coronavirus. You will need to tell your story and it’s so much easier to do in a real time situation rather than months after the situation takes place.
- Keep track of, and detail, impacts to your contract schedule.
- Contact your Contracting Officer in writing immediately if your scope of work changes or if you are given verbal direction the differs from your scope of work.
- Establish separate cost codes or records to support changes in prices, labor, etc.
- Establish procedures for your suppliers and subcontractors how to track and report their impacts.
(3) Notify the owner as soon as practical. The Government knows impacts are coming. We know the impacts are coming. The world knows the impacts are coming. But timely, formal communication is the key to getting through this time. Until this issue is no longer a threat, things will change. Just don’t wait until the end to provide notice of the impact.
(4) Be prepared. Given the measures being directed by the Government, your shipment or even access to the base could be suspended with little or no warning. You could be locked out. Develop a plan to make sure your material or site is safe and secure. Be prepared to not have access to the site. Identify what activities will have to be identified to the owner (tag outs, outages, etc.). How will you provide notice to your subcontractors and vendors? Who is available for recall or notices?