Executive Orders, Government Contracts, and Changing Times—Oh My—Writing Contracts for this Environment
A few tips to help in the turbulent times of Executive Orders, federal contracting, and court injunctions. Not legal advice—just some general thoughts from an experienced national practioner in this arena.
The large number of Executive Orders have certainly affected contract and subcontracts being put in place by federal contractors as well as federal contractors having to revise proposals and submissions to the government in short order. It’s clearly time for prime submissions and subcontract review. Cautions:
Be aware that some Executive Orders are being enjoined—halted—by the courts.
These injunctions can stop—halt—the enforcement of the Executive Order in whole or in part. We saw this in the funding freeze and the revocation of part of the EO.
Folks in the Administrative Branch are challenging the traditional establishment of the courts to enjoin the executive branch.
It catches many federal contractors in the middle but many agencies will not enforce the EOs while enjoined or will appeal the injunction—as we saw with the CTA and BOI reporting—and the appealing of the injunction.
It is critical to keep up with the current state of EOs and the court as many actions affect government contracting and trending to do more.
Be wary of trending lines.
DEI elimination has been a target for the last few weeks of the new Administration.
It is looking at prime and then flow downs to subcontracts (“encouraging private subcontractors”) that contain now unacceptable practices. The agencies are sorting it out while personnel are undergoing changes.
Agencies are actively pulling and pausing and reviewing contracts. Stop work orders under this type of situation generally last for 90 days. Keep track of everything—type of contract, impact, agency, and ultimate outcome.
There is no doubt when an agency moves quickly it may also make mistakes—keep track of the financial and time consequences.
Eliminating and Including Provisions from Templates.
Many prime contracts and subcontracts will be eliminating provisions previously contained—by executive order either directly or through “encouragement.”
That means that the contracts at issue need to flow down appropriate provisions and eliminate others.
Some subcontracts are simply overbuilt already. Attorneys will often write for other attorneys and in the process lose the effectiveness of the basic understanding for clients and/or field personnel in charge of implementing the contract.
The one I had to recently review and correct was an overbuilt contract with 56 or 58 pages. It had the prime negotiating laws in a state they knew nothing about, and other iffy clauses followed. Even for someone who corrects others work, this made me catch my breath.
While templates need to be revisited constantly to tailor for a contract, and if someone gets ahold of an old one and uses it as an example good for all or in practice—shame on them—but be wary of overbuilt subcontracts that subcontractors will run from religiously and operations may not understand in the field.
Overbuilt Subcontracts—And the Real Deal.
There is a saying in law, that if you do not know it well—write a lot. If you know it well, you have the ability to be concise.
Templates that attorneys use should be tailored by the person that designed them or explained to the company so they can use them appropriately and not assume they are up to date.—assume they will not be up to date—especially in this atmosphere.
There are approximately 16 types of government contracts. Knowing the type is the first step in tailoring a contact. Knowing there are only 16 helps. Most folks practice in the areas of 5-6 types of specialty.
Here are some of the most basic of elements of a subcontract in layman’s terms: (1) clear scope of work with detailed specs, as applicable; (2) compliance with government regulations—key in this environment to have these roll to current standards at all times; (3) flow down clauses from the prime and government as applicable to that subcontract—quality control, payment terms, rights on termination or stop work/cease until corrected; (4) prime’s responsibility on management; (5) dispute resolution—WATCH jurisdiction and choice of law and make it favorable—(6) monitoring subcontractor’s performance—often to report to the government; (7) subcontractor capability; and (8) DON’T forgive yourself of the FAR or DFAR or SBA Regulations, as applicable—FAR 52.442.-2 Subcontracts—Know what the government expects at a minimum. https://www.acquisition.gov/far/52.244-2
Contract and Subcontracts are tricky, and they change. The key is to meet the needs of the contract and protect yourself while doing so without designing a subcontract so overbuilt it becomes unintelligible, you do not know your rights, or is downright dangerous. Understand old templates should be updated with current laws and EOs—now moving at breakneck speed. A good contract is essential in any deal and a good contract should be an understandable one as well.