If any of the following conditions apply to your government contract, you may be experiencing lost funds and may be entitled to additional monies.
- Defective Specifications
Specifications are classified as FUNCTIONAL, DESIGN, or PERFORMANCE. Each specification manifests the description, drawings, and requirements to satisfy a contract.
When the Government issues drawings and specifications for use on a Contract, the Government implies a warranty that the drawings and specifications are suitable for their intended purpose.
A Contractor, is entitled to assert a Constructive Change Claim for defective drawings and specifications, and therefore is also entitled to be compensated for the costs and delays incurred as a result of working in accordance with the defective drawings and specifications, such as costs incurred while resolving the defects, implementing the corrections, labor, materials, overhead, and profit.
Most Contractors are not aware that the Government holds a 25% to 30% buffer for such events.
- Ambiguous Specifications
If your specifications fail to define the task in detail, if additional information is needed to clarify the meaning of the specifications, or if the Government/Prime fails to communicate the proper revisions, etc., the Contractor may capture additional dollars, time, material and labor used to clarify the ambiguous specifications.
When a Contractor accepts a contract, the RIGHT of INTERPRETATION IS SOLELY THAT OF THE CONTRACTOR. Neither the Government, nor the Prime can change the intent of the specifications by interpreting the specifications on behalf of the Contractor or by clarifying the specifications after the award.
If a change in the intent of the specifications occurs either orally, by unsigned modifications, changed inspection standards, or some other official or unofficial means, than the Contractor would then have a claim to be compensated monetarily.
- Differing Site Conditions
Federal Acquisition Regulation (FAR) 52.236-2 shifts the risk of unknown site conditions onto the Government. When the Government provides contract information to the Contractor regarding site conditions, it assumes a liability for conditions encountered that differ materially (Type l) or physically (Type ll) from that information.
If the conditions differ from what was indicated in the contract or from what would be apparent to a Contractor making pre-bid inspections, and result in a change of the work or impossibility of performance, the Contractor is entitled to additional compensation to capture all of these costs, via an EQUITABLE ADJUSTMENT.
- Misleading Information
The Government/Prime Contractor is obligated to disclose material information relevant to solicitations that materially effect an offeror's intent as to the scope of work to be performed on the contract.
A failure to disclose results in the Government/Prime assuming the responsibility for the Contractor's increased costs.
- Contract Delays
The Government/Prime may not interfere with the Contractors performance to the extent that it limits or hinders the Contractor from completing the contract as anticipated.
The following are instances of Excusable and Compensable Delays which will entitle the Contractor to additional monies.
- Excessive meeting
- Performing research & development on a firmed fixed price contract
- Impossibility of performance
- Micro-managing your facility
- Oral directives
- Change in the production
- Improper rejection
- Increased inspection standards
Eichleay Formula is a proven Government method of capturing the unabsorbed overhead costs associated with contract delays.
- Impossibility of Performance
"Impossibility and/or Impracticability" is a Contractor's defense to a BREACH OF CONTRACT action.
A Contractor experiencing unreasonable difficulty, expenses, injury, interference with other contracts, degradation in profits, is , by rights, allowed to collect the additional costs over and above the contract price.
Restatement (second) of Contracts § 261 (1981) give examples as: severe shortages of raw materials, war, unforeseen circumstances, and others. This includes information such as, performance specifications, and research & development contracts that fail to yield a definitive result.
- Acceleration of Work Performance
The Contractor is entitled to a CONSTRUCTIVE CHANGE CLAIM for additional money when ordered by the Government to meet the current contract schedule despite the fact that the Contractor is EXCUSED or not at fault for the delay.
Contract schedule delays that preclude Acceleration can be caused by:
- Over inspection
- Changed specifications
- Extensive meetings & reviews
- Clarification of specifications & Documents
- Oral directives
- Stop work orders
- Failure to inspect in a timely manner
- Excessive documentation
- Subcontractor difficulties
- Rejection of first article
- Change of inspection methodology
- Quality system changes
- Improper Rejection/Inspection
Every contract states the specific requirements and/or methods used in determining whether or not the end item meets contract requirements.
Any change in this methodology, not covered by a modification, is a delay to the contract and in many cases, is considered added scope work entitling the Contractor to be monetarily compensated.
The Contractor must be aware that a rejection, not supported by a specific contract citation is improper, and that a Contractor is not obligated to perform the work until a citation is given or a modification is made to the contract.
- Economic Duress
The Contracting Officer has a DUTY TO ACT IN GOOD FAITH and cannot act as a sovereign and commit UNCONSCIONABLE ACTS, such as:
- Threats to coerce a Contractor into complying with added scope work requirements
- Changed conditions
- Relinquish proprietary rights in data
- Promise to give consideration on future procurements
- Withhold payments
- Refusal to process DD250s
- Failure to correct contract deficiencies
- Refusing to accept conforming parts
These are all grounds for the Contractor to capture additional dollars.
- Fraudulent Activity
The intentional misrepresentation of material facts inducing reliance is an actionable offense under the FALSE CLAIM ACT and FALSE STATEMENTS ACT.
These actions require a showing of specific intent, of which the moving party carries the burden of proof.
- Termination for Convenience
FAR Clause 52.249-1 through -5 gives the Contracting Officer the right to terminate a contract if it is in the best interest of the Government.
This right is not unabated and it is the responsibility of the Contractor to review these rights and challenge the Contracting Officer's determination.
It is critical that the Contractor capture all the TERMINATION COSTS which include termination settlement expenses, subcontractor claims, profit on work preformed, proposal costs, etc.
More often than not the Contractor leaves valuable money on the table that rightfully belongs to them.
- Termination for Default
FAR Clause 49.401 establishes the Government's right to partially, or completely terminate a contract due to the Contractor's actual or anticipated failure to perform.
This right is included in FAR Clause 52.249-8 through -10.
A default termination has a substantial impact upon a Contractor, in that the EXCESSIVE COSTS and RE-PROCUREMENT COSTS are to be paid back to the Government. The Contractor, in the majority of cases is disbarred and precluded from bidding on future Government contracts.
It is for this reason that the Contractor MUST challenge the default determination, if there is a hint of evidence showing that the Government was at fault, IT MUST BE REVERSED.