Jennifer Schaus & Associates SERVICES FOR US FEDERAL GOVERNMENT CONTRACTORS
WEBINAR WEDNESDAYS – 2018 WASHINGTON, DC OFFICE PHONE: 2 0 2 – 3 6 5 – 0 5 9 8
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Join Us for Our 2018 Series of Complimentary Webinars on various US Federal Government Contracting Topics. Presenters are industry experts sharing knowledge about the competitive government contracting sector. Find all of our Govt Contracting webinars (free download) at www.JenniferSchaus.com
Contact Us @ 2 0 2 – 3 6 5 – 0 5 9 8
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
REMINDERS: All webinars are complimentary. All webinars are recorded. They are found on our website and on YouTube. Please send your questions to the speaker directly. Thank you for participating.
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
ABOUT JENNIFER SCHAUS & ASSOCIATES: - Based in downtown Washington, DC; -
A la carte services for Federal Contractors;
- Proposal Writing to GSA Schedules, 8a Cert, Contract Admin & more!; Educational webinars; -
Networking events and seminars;
WEBSITE: http://www.JenniferSchaus.com
3 Annual Doing Business rd
With
DOD & The Intel Community November, 27 2018
https://dodintel112718.Eventbrite.com
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
ABOUT OUR SPEAKER: MARIA PANICHELLI - 8 Years In GOV CON - Education: Temple University Beasley School of Law, J.D., cum laude; Lehigh University, B.A. - Certifications: Licensed to practice law in DC, PA, DE - Company Name: Cohen Seglias Pallas Greenhall & Furman PC
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Key Concepts in Federal Subcontracting Wednesday, November 14, 2018
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Flow-Down Clauses • In the Unique World of Federal Government Contracting, Flow Downs Can Be Critical • What are “Flow-Down” (aka “Flow-Through” or “Pass- Down”) Clauses? • Flow-down clauses are clauses included in a contractor’s prime contract with the Government, which the prime contractor is required to, or sometimes chooses to, flow-down, or incorporate into, the subcontract • Other risk-shifting or protectionary clauses
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Why Flow-Downs Matter • Communication breakdown can cause notice failures • Prime contractor is ultimately responsible for satisfactory performance of the contract and Prime contractors can be held responsible for the actions of their subcontractors; subcontractor can force a default • Prime contractors can be stuck in the middle, or fighting a battle on both sides. That is always a difficult position; it is even more difficult when the owner is the Federal government
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Why Flow-Downs Matter Terminations for Convenience Example FAR § 52.249-1 The Contracting Officer, by written notice, may terminate this contract, in whole or in part, when it is in the Government’s interest. If this contract is terminated, the rights, duties, and obligations of the parties, including compensation to the Contractor, shall be in accordance with Part 49 of the Federal Acquisition Regulation in effect on the date of this contract
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Take-Away Lesson for Primes • It is critical to think about what obligations you will have to the Owner/Gov’t, and how the sub could impact your ability to fulfill that obligation or assert your own • Protect yourself by flowing down obligations, making sure that obligations are consistent, or accounting for potential risk in other ways • Want to avoid being caught in the middle/battling on two fronts • Carefully craft your subcontract to accomplish these goals
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
What Does This Mean for Subcontractors? • Subcontractors need to know what their obligations are, and what procedures they are bound by • In order to do so, they need to know which clauses have been flowed down, what obligations those clauses impose • What other risks have been shifted?
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Most Common Sub Mistake!! Specific Clauses v. General “Catch All” Flow-Down Clauses “…the Subcontractor shall assume toward the Contractor all obligations and responsibilities which the Contractor, under the Prime Contract, assumes toward the Owner. The Contractor shall have the benefit of all rights, remedies and redress against the Subcontractor that the Owner, under the Prime Contractor, has against the Contractor...”
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Why Flow-Downs Matter Differing Site Conditions Notice Example FAR § 52.236-2 a) The Contractor shall promptly, and before the conditions are disturbed, give a written notice to the Contracting Officer of . . . (1) Subsurface or latent physical conditions at the site which differ materially from those indicated in this contract; or (2) Unknown physical conditions at the site, of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract.
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Why Flow-Downs Matter Differing Site Conditions Notice Example FAR § 52.236-2 No request by the Contractor for an equitable adjustment to the contract under this clause shall be allowed, unless the Contractor has given the written notice required . . .
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Take-Away Lesson For Subs • As a subcontractor, make sure you understand your obligations and the procedures you are bound by; never simply accept a vague flow down clause • It is critical to obtain a copy of ALL the Prime contract documents, and to explicitly discuss what is incorporated • Flip side: Advocate that the Prime’s obligations to you mirror the Gov’t obligations to the Prime • Carefully craft subcontract to address these concerns or at least make sure you are clear on what your responsibilities are under the contract
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
How To Determine What To “Flow Down”? • Often, the FAR itself will state whether a clause must be floweddown to a prime’s subcontractors • Some clauses are mandatory, some are suggested, some should always be considered. No such thing as automatic!! • Should you flow down a clause, or the substance of clause?
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Critical Flow-Down Issues •Changes •Differing Site Conditions •Changes •NOTICE •Dispute Resolution/Claims (and Certification) •Payment Timing - Pay if Paid/Pay When Paid •Terminations (For Convenience) •Suspension
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Subcontractor’s “Pass Through” Claims
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Subcontractor’s “Pass Through” Claims • Sovereign Immunity – General rule is that lawsuits against the Federal Government are prohibited • Tucker Act creates an exception to sovereign immunity: suits may arise out of express or implied contracts to which the government was a party • Thus, to take advantage of this exception, there must be an express or implied contract • Because subcontractors have no “privity of contract” they can not file claims against the government on their own behalf
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Asserting A Claim To assert a claim, subcontractors’ claims must be “sponsored” by their prime contractors • Commonly called a “pass-through” claim because the prime is “passing” the subcontractor’s claims through, upstream, to the owner • Claims ruled by Contract Disputes Act (“CDA”) • Prime must agree to sponsor the claim – sometimes, they refuse • Can be a huge source of Prime/Sub conflict
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Anticipate Differences of Opinion Prime’s Concern: Consequences of Passing Through Problematic Claims • Conditions on Passing Through Claims Sub’s Concern: Recourse if Prime Refuses to Pass Through a Claim • Dispute/Case v. Prime • Remember, still no privity: Appeal of Binghamton Simulator Company, ASBCA No. 59117 (2014)
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
How Pass-Through Claims Should Be Dealt With Subcontracts should address how pass-through claims will be dealt with: • Disputes clause – Should draw a distinction between how to handle sub’s claims between subcontractor and prime, and disputes against owner • Should delineate each party’s responsibility with regard to pass-through claims, i.e.: • Prime agrees to sponsor • Subcontractor agrees to cooperate fully, etc.
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
Subcontractor Claims Against Primes
Jennifer Schaus & Associates – GOV CON WEBINAR SERIES - 2018 - WASHINGTON DC www.JenniferSchaus.com
What If A Prime Breaches The Subcontract? • Many disputes center around primes’ refusal to pass-through claims, or subs’ impatience in awaiting resolution of those claims • If prime refuses to honor subcontract, subcontractor can bring suit against the prime in the appropriate U.S. District Court
THANK YOU FOR ATTENDING!! WWW.JENNIFERSCHAUS.COM QUESTIONS? CONTACT OUR SPEAKER MARIA PANICHELLI AT (215) 564-1700 AND AT MPANICHELLI@COHENSEGLIAS.COM
SERVICES FOR US FEDERAL CONTRACTORS OFFICE: 2 0 2 – 3 6 5 – 0 5 9 8