Department of Defense Unveils Plan to Address Effects of Inflation on Contracts

Inflation. A word no one likes, but it is something that is currently impacting nearly every facet of our lives. Gas prices continue to rise, grocery costs are through the roof, and everyday living expenses are taking more hard-earned money from our country’s workers than ever before. However, consumers are not the only ones feeling the effects. Costs and expenses of running a business have increased dramatically as well, and those in the federal contracting world are no exception. Questions from both contractors and contracting officers (CO) prompted the Department of Defense (DOD) release new guidance on May 25, 2022, conveying how it plans to handle inflation through economic price adjustments (EPA) as well as when the use of EPAs is appropriate. However, the guidance also discourages flexibility for increased costs based on inflation.

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Dealing with Contract Alterations and Modifications Due to COVID-19

There are many questions facing contractors during this time of upheaval from the coronavirus and the impact on the federal government’s role buying from federal contractors. We’ll try to address as many of them as we can through our COVID-19 Contractors’ Toolkit.

One of the biggest questions is what can be done if the government modifies a contract, cancels work, or reschedules the performance of work. In that situation, it’s important to understand both the impacts on the prime contractor and any subcontractors.

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OMB Offers Guidance to Agencies about Managing Contractors during COVID-19

Late last week, the Office of Management and Budget issued a memo providing direction to agencies on how to best coordinate with and manage contractors as the nation presses through the disruption caused by COVID-19.

Below are some of the salient points.

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GAO Denies Protest to LPTA Solicitation Ridden with Cost Uncertainty and Local Zoning Code Conflicts

Federal agencies have long been afforded wide discretion in defining solicitation requirements to meet their contracting needs. But are a solicitation’s requirements acceptable even where they’re likely to conflict with local zoning codes? What about where the solicitation documents conflict with one another on whether certain requirements are considered “requirements” at all? And finally, is an LPTA procurement acceptable where such conflicts have undoubtedly led to price uncertainty among the bidders?

GAO says, “yes” to all of these, so long as the requirements meet the agency’s needs.

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5 Things You Should Know: Contract Claims (The Basics)

As a contractor, you strive to do the best job for the fairest price and to develop a good working relationship with the government. But in government contracts—like in any other—disputes sometimes arise. So what’s the best way to protect your interests under the contract?

Here are five things you should know about the basics of claims:

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Release of Claims Can’t Be Undone by Refusing Government Payment

I recall sitting in a mediation one day when the mediator, a judge, told me and my client that we all have lightning in our fingers. He went on to explain that this means, once you sign a contract, it’s like magic in the sense that you can’t get out of the contract and are bound by it, absent certain exceptional circumstances.

I was reminded of this concept while reading a recent opinion from the Armed Services Board of Contract Appeals that dealt with the effect of a contractor signing a release with the government and then trying to back out of that release by refusing payment from the government.

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Government Liable For Negligent Estimate, Court Rules

The government’s use of specifications within a contract carries an implied warranty that the specifications are free from errors. When a contractor is misled by the erroneous specifications, the contractor may seek recovery through an equitable adjustment to the contract. But what happens when the government seeks services through a requirements contract and is simply negligent in estimating its needs?

A recent Federal Circuit decision, Agility Defense & Government Services, Inc., v. United States, No. 16-1068 (Fed. Cir. 2017)  finds that a contractor may be able to recover damages in such instances under a negligent estimate theory.

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