Did the FAR Plan For COVID-19? Yes, Sort of

There are not many people or organizations that can say they anticipated the spread of this pandemic disease that is confining million to their homes as part of stay in place orders and self quarantines.

Though the FAR Council did not foresee that the coronavirus and COVID-19 would trap contractors in their homes, it did anticipate that from time to time events completely out of the control of contractors may conspire to affect the performance of contracts—though perhaps not to this magnitude.

For example, the FAR anticipates what might happen to contractors in the event of a quarantine. FAR 52.249-14 protects prime contractors from default when the failure to perform “arises from causes beyond the control and without the fault or negligence of the Contractor.”

It lists several examples—but not an exhaustive list—of what might be a cause not in the contractor’s control. They include: acts of God or of the public enemy, acts of the government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather. Thus, quarantine restrictions and an epidemic are both express examples of such causes listed by the FAR.

This language is echoed is several similar clauses. For example, FAR 52.212-4, which provides the terms and conditions of a commercial item contract, and FAR 52.213-4, which provides the terms and conditions of a simplified acquisition, both include similar language about delays. So does the clause for fixed-price research and development contracts (FAR 52.249-9) and fixed-price supply and services (FAR 52.249-8).

Meanwhile, the default clause that goes in fixed-price construction contracts (FAR 52.249-10) protects contractors from default in the event of a delay that is unforeseeable and of no fault of the contractor, including epidemics and/or quarantine. This particular clause does require the contractor to notify the contracting officer within 10 days of the delay, however.

The Department of Defense FAR supplement (DFARS) provides similar protections. For example DFARS 252.217-7009 protects contractors from excess costs in the event of an epidemic or quarantine.

Until now, all the clauses we’ve reference protect the contractor, but what protects the government? Well, for example, DFARS 252.237-7003 allows the government to obtain services from other vendors in the event of “an epidemic or other emergency.”

These clauses take pains to point out subcontractor caused delays are not out of the control of the prime contractor with language such as “except for defaults of subcontractors at any tier” which is found in FAR 52.249-14. But that is not to say that subcontractors are not given the same understanding as prime contractors when dealing with issues like the coronavirus. That same clause goes on to say that if the subcontractor default “was beyond the control of both the Contractor and subcontractor, and without the fault or negligence of either,” then default is excused unless the prime could have gotten the work from another subcontractor.

Contractors facing possible delay or default might want to review their contracts to see what clauses are included and what protections they provide. Another good practice is to stay in communication with the contracting officer and other governmental officials to see if you might have to engage the services of an additional or alternate subcontractor.