Bradley attorney Aron Beezley was quoted in the Washington Business Journal on different ways contractors can think about recovering shutdown costs. Beezley outlines Federal Acquisition Regulation clauses that could provide an avenue for salvaging costs caused by the 35-day government shutdown.
The ability to do that “certainly is not a given,” Beezley explained. “It’s also not [a] foregone conclusion that you automatically cannot recover those costs.”
A big obstacle, Beezley said, is that a shutdown is considered a sovereign act of the U.S. government. As a result, the Sovereign Acts Doctrine is a well-established government defense for a possible contractual breach. There are, however, some limited exceptions to the doctrine. One well-known case from the 1995-1996 shutdown involving Raytheon STX Corp. saw the contractor recover costs because the government had promised facilities access to do the work.
Such REAs, Beezley explained, could hinge on one or more of these seven FAR clauses:
* FAR 52.242-14 (Suspension of Work)
* FAR 52.242-15 (Stop Work Order)
* FAR 52.242-17 (Government Delay of Work)
* FAR 52.243-1 (Changes – Fixed-Price)
* FAR 52.243-2 (Changes – Cost-Reimbursement)
* FAR 52.243-3 (Changes – Time-and-Materials or Labor-Hours)
* FAR 52.243-4 (Changes)
One key, Beezley said, is to be aware of the short time frames given to contractors to assert a right to an adjustment. Another is to make the necessary changes in accounting systems to identify and segregate any costs incurred as a result of shutdown-related delays or work stoppages.
“If you’re not planning now you’re only hurting your ultimate chances of being able to recover those costs in the long run,” he added.
The complete article, “7 Ways Contractors Can Think about Recovering Shutdown Costs,” first appeared in the Washington Business Journal on January 28, 2019.