Claims and Contract Disputes

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As most government contractors will readily admit, there are few pieces of mail more unwelcome than a cure notice from Uncle Sam. This letter, for those of you who may be blissfully unaccustomed, is a government-issued notification that is supposed to put the contractor on notice that the contract may be terminated for default in light of certain alleged performance failures, which the government is supposed to specify for the contractor. In addition, as its name would suggest, the purpose of the communication is to give the contractor an opportunity to explain how it will cure the issue(s) giving rise to the government’s concerns by a date certain—often established as a number of days from the contractor’s receipt of the notice (typically 10 days, but sometimes longer).Continue Reading When the Cure Is Worse Than the Disease: Recent CBCA Decision Regarding Improper Default Terminations Provides a Teachable Moment for Every Contractor

Scenario 1: A pharmacy chain hires a value consultant to review its Medicare and Medicaid billing practices for ways to optimize the coding of drug reimbursements to maximize profits. Drugs that had historically been charged for government reimbursement at $1/pill as the “usual and customary price” are now getting coded for reimbursement at $3/pill—a 200% markup that represents a pure profit windfall to the pharmacy chain. Is this a violation of the False Claims Act (FCA)?

Scenario 2: A construction company that has years of experience in federal procurement contracting had never charged the government for reimbursement of several cost items, because the company’s previous CFO did not feel such reimbursement would meet the “reasonableness” requirements of FAR Part 31 (e.g., FAR 31.201-2(a)(1) and 31.201-3). But the company’s new CFO, holding a different interpretation of the reasonableness standards and Cost Accounting Standards (CAS), instructs his program leads to start charging those items for reimbursement in all new and existing contracts. Is this a violation of the FCA?Continue Reading Knowing IS the Battle: Supreme Court to Address the FCA’s Scienter Standard

When issues arise during performance of a federal government contract, causing a contractor to experience delays and/or to incur additional, unanticipated costs, contractors have a choice of remedies. They can request the contract duration or price be adjusted by submitting either a request for equitable adjustment (REA), or a claim. Though REAs and claims largely…

Like most businesses, government contractors are in the customer service field and have been conditioned to operate by the old adage that the “The customer is always right.” After all, the customer pays the bills, right? As a general matter, this is true. Uncle Sam is responsible for paying the bills submitted by contractors and—most of the time—payment arrives without issue. That said, there are circumstances in which the government refuses to pay for work performed. One of the more common reasons for such nonpayment is the government’s contention that the work at issue was “not authorized” under the operative contract, notwithstanding the fact that the contracting officer’s representative (COR) was well aware of the work being performed. There are, in fact, many decades of decisional law emanating from courts and boards of contract appeals relating to the nuances of this precise issue. This means that an untold (but stratospherically high) number of frustrated contractors have suffered very expensive battle scars trying to litigate their way to payment by convincing judges that the work performed actually was authorized by the appropriate government personnel. A recent publication by the Department of Defense (DoD) provides contractors with an important reminder as to how to avoid this costly fate.
Continue Reading “Respect My Authority!”—An Important Reminder as DoD Issues an Updated Guidebook for Contracting Officer Representatives

Unless you’ve been living under a rock or on a self-sustaining deserted island, the chances are high that you have become quite familiar with the term “inflation” (i.e., the rising costs of goods and services) over the past few years. Indeed, everything (from gasoline to gumballs and milk to movie tickets) appears to be more expensive as of late. Unfortunately, government contractors are not immune from this current economic reality. As most of us know all too well, many contracts that were negotiated and priced over the past 18 to 24 months are simply more expensive to perform now than was reasonably anticipated when bids were prepared.

In recognition of these soaring prices, the Department of Defense (DoD) issued a May 25, 2022, Memorandum titled “Guidance on Inflation and Economic Price Adjustments,” the purpose of which is to assist contracting officers (COs) in (i) navigating the impacts of inflation on existing contracts and (ii) managing downstream inflation risks on prospective contracts. Here are the key takeaways and our suggested courses of action to best protect your company’s bottom line:Continue Reading DoD Braces for Inflation: Guidance for Contractors Battling Rising Costs

New FAR Rules and U.S. Department of Labor Guidance Implement the Long-Anticipated (and Much-Dreaded) Fair Pay and Safe Workplaces Executive Order

Burdensome disclosure obligations, pay transparency, and other affirmative requirements as a condition of doing business with the federal government continue. Sound familiar? The trend continues with new Federal Acquisition Regulation (“FAR”) rules and accompanying U.S. Department of Labor (“DOL”) guidance issued on August 25, 2016, implementing the Fair Pay and Safe Workplaces Executive Order. In a nutshell – boiling down over 800 pages of rulemaking materials – the rules will soon require:Continue Reading Federal Contractors and Subcontractors Subject to yet More Mandatory Disclosure Requirements