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Posted on Thursday, November 05, 2015

Poorly Drafted Subcontract “Work Share” Clauses Can Be Costly

Work share – how much work a prime contractor is guaranteeing a subcontractor — is perhaps one of the most important clauses in a subcontract. It is a mistake, therefore, to draft this critical clause without considering the language of the other subcontract clauses. Language in a subcontract’s “Definitions” section can severely limit a subcontractor’s work share.After winning an Army contract for interpreter and translation services, a prime contractor in a recent case signed subcontracts with various linguist providers. One linguist subcontract established a work share of “15% of the services to be provided under the Prime Contract.”  That subcontractor believed that it was entitled to 15% of all prime contract revenue. However, the prime contractor pointed out that the Definitions clause defined “services” in a more severely limited way — to mean “all linguist services” to be provided under the Prime Contract. The court concluded that the prime’s interpretation had merit.

As this case shows, it is not wise to focus solely on any one subcontract provision– here the work share provision. Nor is it wise to routinely rely on “model” or template subcontracts. Time spent thinking more clearly about subcontract clauses, especially critical clauses like work share clauses, is time well spent.

Terrence O’Connor is the Director of Government Contracts for Berenzweig Leonard, LLP, a DC regional business law firm. Terry can be reached at toconnor@berenzweiglaw.com

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