The Clauses You Accept Are What You Get
As the former Senior Division Counsel to a Federal Government contractor, one of my jobs was to review every Solicitation or RFP upon which we were bidding. If we won, my job was to review the draft contract before signing. I heard repeatedly from others, “well you cannot really negotiate Federal contracts, so there is not that much to do.” This statement is incorrect, and approaching Federal contracting like that is a recipe for serious unintended consequences, one of which is highlighted in the case of the Appeal of Atlas Sahil Constr. Co., ASBCA No. 58951, 2017 WL 5633017 (Nov. 9, 2017).
In this case, the Armed Services Board of Contract Appeals sustained an appeal seeking termination settlement costs where the Army had terminated a base expansion contract for convenience, but denied the appeal to the extent the contractor’s quantum calculations were unreasonable or unsupported.
Atlas Sahil Construction Company appealed the denial of a certified claim seeking to recover costs resulting from the Army’s convenience termination of a contract to expand a forward operating base in Afghanistan. The government did not substantially contest Atlas’ entitlement to recover termination costs. The dispute arose over Atlas’ argument it was entitled to recover amounts based on the contract’s CLIN prices rather than on the cost of construction performed.
The contract incorporated the termination for convenience clause applicable to construction contracts, Federal Acquisition Regulation (FAR) 52.249-2, Alt. I. Atlas argued that the termination for convenience clause applicable to supply and service contracts, FAR 52.249-2 (which allows termination payments based on the contract price of goods rather than the cost of performance), should be read into the contract through the Christian doctrine, 375 U.S. 954, 84 S.Ct. 444, 11 L. Ed.2d 314 (1963).
The Board, however, found that the Christian doctrine did not require the insertion of a different termination clause, since the parties agreed to FAR 52.249-2, Alt. I, and the termination notice was issued under that clause.
Whether or not the Army or Atlas is correct about which termination clause is the correct one, Atlas accepted FAR 52.249-2 at the time it entered the contract. A careful review of the RFP or the Solicitation and raising the issue of inappropriate clauses for the kind of work to be performed before or even while responding could have allowed the Government to remove inappropriate clauses and replace them with an appropriate clause. Even if it was missed at the bidding/proposal phase the issue could have been raised before signing the contract with an inappropriate clause. The Atlas case highlights why careful review of government contracts before they are signed is so important.
The article, “The Clauses You Accept Are What You Get?” by Tamara M. McNulty was originally published in the Asmar, Schor & McKenna PLLC blog (November 2017).
Washington, DC Fellow Tamara M. McNulty is a Partner at the law firm of Asmar, Schor & McKenna, PLLC. Ms. McNulty was the Division Senior Counsel for Black & Veatch Special Projects Corp. (the Federal Corporation of Black & Veatch) reporting directly to the President of BVSPC. She served on the BVSPC Executive Leadership team and the BVSPC Board of Directors. In her role as the head attorney to BVSPC, she demonstrated the ability to work on multiple projects simultaneously to meet established deadlines , to be creative and solutions – focused, t o work with various teams in the organization, and to take a strategic view. As a former partner at Am Law 100 law firms, Tamara is an experienced trial attorney and has tried numerous cases in both state and federal courts. She teaches advanced trial skills each year for the National Institute of Trial Advocacy. Tamara has advised clients on construction claims for contract extras, delay damages, impact damages, assessment of liquidated damages and substantive law surrounding these issues and has tried cases on all of these issues. She has asserted numerous claims to various boards of contract appeals as well as the Court of Federal Claims, and she has defended bid protests at both the state and federal levels. She has also written two books on construction law, as well as numerous articles and book chapters on topics of construction law, government contracts law and surety law. Ms. McNulty has been listed in Chambers USA as a leading attorney in the area of construction law, and holds an AV Preeminent® rating with Martindale-Hubbell. She is past Chairman of the Board of the Washington Building Congress, which is the largest association of the construction industry in the Washington, DC, metropolitan area. She is also a Charter Fellow of the Construction Lawyers Society of America.