Summer 2017

    Volume 52 Issue 4  

    National Security

    Limitations on Subcontracting: Regulatory Disconnect Leaves Small Businesses in an Untenable Situation

    by Zachary Prince & Kristin Tisdelle

    Small businesses competing for or performing set-aside contracts are caught in a difficult position because of delays in statutory implementation by the FAR Council, which follow delays in statutory implementation by the Small Business Administration (SBA). The Federal Acquisition Regulation (FAR) provides a specific formula, included in a mandatory clause for all small business set-aside solicitations and contracts, to be used in evaluating whether a small business complies with subcontracting limitations.1 The Court of Federal Claims has held that this clause is a material portion of the contract, which may mean that contractors that violate the clause can be terminated for default.2 Further, without weighing in on the validity of the charge, the Department of Justice has pursued contractors under the False Claims Act for violating this clause.3 The statute imposes hefty penalties for violations,4 and the SBA considers violation of the subcontracting limitations to be potential grounds for debarment.5

    In this Issue

    Federal Government

    Successful Protester Paid upon Receipt of Costs — If Only It Were So Easy

    by Candace Shields & Ian Patterson

    Small businesses competing for or performing set-aside contracts are caught in a difficult position because of delays in statutory implementation by the FAR Council, which follow delays in statutory implementation by the Small Business Administration (SBA). The Federal Acquisition Regulation (FAR) provides a specific formula, included in a mandatory clause for all small business set-aside solicitations and contracts, to be used in evaluating whether a small business complies with subcontracting limitations.1 The Court of Federal Claims has held that this clause is a material portion of the contract, which may mean that contractors that violate the clause can be terminated for default.= Further, without weighing in on the validity of the charge, the Department of Justice has pursued contractors under the False Claims Act for violating this clause.3 The statute imposes hefty penalties for violations,4 and the SBA considers violation of the subcontracting limitations to be potential grounds for debarment.5

    Federal Government

    Anchors Aweigh! U.S. District Court Jurisdiction over Maritime Contract Disputes Act Claims

    Maritime government contracting is a multi-billion-dollar industry involving multiple government agencies.1 Most contractors are familiar with the Federal Acquisition Regulation (FAR) 33.211 provision at the end of each contracting officer’s (CO’s) decision on a Contract Disputes Act (CDA) claim, but many do not understand the right to appeal a CO’s decision on a maritime contract claim to U.S. district court, under 41 U.S.C. § 7102(d):

    Federal Government

    Tear Down That Clause: The Inevitable Unworkability of the Commercial Items Termination for Convenience Clause

    by Ioana Cristei

    On its face, the commercial items termination for convenience clause at Federal Acquisition Regulation (FAR) 52.212-4(l) affords contractors a fair recovery that includes a percentage of the contract price for the work performed, plus reasonable costs incurred as a result of the termination. In reality, no one knows what that second part really means. The clause does not mention profit, start-up costs (such as financing), pretermination costs, or indirect costs, such as overhead. It also does not say how to determine what costs result from a termination. And it tells contracting officers they may use the cost principles of FAR Part 31 — unless they decide not to.