With the coronavirus now severely impacting the United States, many government contractors are now forced to deal with unforeseen contractual, legal, and business challenges. Here are some recommendations to help government contractors prepare for the potential impacts on their business.
Issue No. 1: Disruptions in Contract Performance
Worksite closures, unavailability of government contracting and program personnel, disruption of the global and domestic supply chain, and labor shortages are likely. You should let your government customers know about these issues early, and document how these service disruptions and delays impact contract performance, as well as any resulting increased costs.
Your contract likely contains an excusable delay clause or other clauses that address unforeseen issues, which can provide relief for performance disruptions. However, you must provide timely notice and describe the likely impacts to take advantage of those clauses. Check your contracts for the name of the person who must receive the notice and required method of delivery. You should also communicate with your subcontractors on these issues and report subcontractor delays up to the government once you are aware of them.
Issue No. 2: Workforce Availability
Social distancing. Quarantine. Isolation. Shelter-in-place. School closures. All will certainly have an impact on workforce availability. Again, you should coordinate with the government customer as early as possible to determine mutually agreeable ways to handle these issues and memorialize any agreements with the contracting officer in writing.
More and more contractors will need to rely on telework and flex schedules. If your contract does not currently allow for these measures, you should request a modification to the contract.
If telework is an option, you should provide your employees with the necessary equipment and technology, and remind them to bring laptops home each day. You and your employees must also be mindful of cybersecurity obligations.
You should also review your existing sick leave policy and consider how you will handle sick employees who do not have remaining sick leave, sick employees who show up at the worksite, and employees who must take leave to care for school-aged children. You should also stay informed regarding new emergency federal family and sick leave laws and whether they apply to your business.
Issue No. 3: Contract Changes and Increased Costs
Your customer may also be dealing with increased and changing needs in responding to the coronavirus pandemic. The government may need to make changes to their existing contracts to acquire additional equipment or modify services. Make sure you get directions from the contracting officer and not the COR, document all changes in writing, and keep increased costs in a separate account. FAR 52.243–6 Change Order Accounting is a good guide.
Restricted access to worksite and unavailability of government personnel may frustrate contract performance as you and the government originally intended. You must inform the contracting officer in writing if this has resulted in changed contract performance.
Issue No. 4: Stop Work Orders, Suspensions, and Terminations
The government may need to issue a suspension or stop work order, particularly if the worksite must be closed or government personnel are unavailable to interact directly with your employees. The government also has the right to terminate the contract for convenience. You should review contract terms and understand what rights you have to recover costs if a stop work order or termination is issued.
- Communicate early and often – with your government customer, subcontractors, suppliers, and employees.
- Review contract terms.
- Document, document, document – changes, discussions, impacts of delays, and costs.
As this is a developing situation, Berenzweig Leonard’s government contracts, business, employment, and cybersecurity attorneys are closely monitoring legal developments impacting government contractors and other businesses during this time. Please do not hesitate to reach out to us if we can be of assistance.