Sole-Source Options for Agencies During the COVID-19 Pandemic

The current COVID-19 pandemic has prompted the federal government to take drastic measures. It has altered many aspects of federal contracting for contractors and agencies alike. During these trying times, agencies also have the authority to streamline some contracting procedures. Let’s take a look.

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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.

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COFC Rejects Agency’s Basis for Default Termination

The Court of Federal Claims recently reversed an agency’s default termination of a contractor that had experienced numerous performance issues and delays. The agency claimed that performance was “incurably behind schedule,” despite the contractor’s proposed recovery schedule. The court held that the agency lacked a reasonable belief that the contract could not be timely completed.

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OMB Pushes Prompt Payment To Small Subcontractors

Small subcontractors sometimes find themselves facing a cash flow crunch when they take on new work.  Under some subcontract payment clauses, a small subcontractor might not be entitled to payment until 30 days or more after the prime contractor receives payment from the government for the subcontractor’s work.  Even subcontracts with more generous payment terms often require small subcontractors to make significant up-front investments in terms of employee salaries, materials, and the like before receiving payment.

The Office of Management and Budget apparently recognizes that there is a problem, because yesterday OMB issued a memorandum entitled “Providing Prompt Payment to Small Business Subcontractors,” setting forth three steps the government is taking to address the matter.  One of these steps–if it comes to fruition–may even have some “teeth.”

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