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In the face of evolving federal spending priorities and potential government contract changes, contractors must understand their rights and obligations. The Trump Administration’s review of federal spending may lead to contract suspensions or terminations, causing disruptions in federal contracting.
Understanding Potential Disruptions
- Delays in Contract Awards and Options: Monitor agency actions on pending proposals and delayed debriefings. Engage with agencies regarding contract options to avoid expiration.
- Suspension and Stop Work Orders: Agencies may issue suspension of work orders, allowing contractors to recover increased performance costs (excluding profit) if the work suspension is for an unreasonable period. Stop work orders require immediate compliance, and contractors should seek clarification from the contracting officer and notify subcontractors. Document costs to show they were reasonable and minimized.
- Termination for Convenience: The government can terminate a contract for its convenience, allowing contractors to recover payment for work performed, termination costs, and reasonable profit. Settlement proposals can be made through bilateral negotiations or unilateral determination.
De Facto Interruptions
Even without formal notices, disruptions can occur if contract administration is hindered. Document all efforts to comply with obligations and record cost and schedule impacts. Contractors may recover costs related to government delay. Submit invoices on time and track overdue payments, as you may be entitled to interest under the Prompt Payment Act.
Recommendations for Contractors
- Review contractual terms.
- Maintain thorough records of all expenses and progress.
- Evaluate subcontractor agreements.
- Engage with legal counsel.
- Communicate with agency contracting officers.
- Monitor policy developments.
- Engage with trade associations.
