Government Contracting During Phase Yellow: Be Proactive.
Despite our recent shift to a less restrictive business posture, the global COVID-19 pandemic continues to impact our business community. If your business is or wants to be a federal, state, or municipal contractor, you should be aware of how COVID-19 shapes both your current contractual obligations and how, post-outbreak, you should approach new contract negotiations with your government customers.
Epidemics and quarantine restrictions have long been force majeure (or "act of God") bases for excused performance under government contracts. However, be mindful of equally longstanding requirements that you likely must meet to avail yourself of such protection, such as:
- Demonstrating that a delay in performance was, in fact, caused by the coronavirus or quarantine.
- Showing that no fault or negligence by you--or your subcontractor--contributed to the delay.
- Taking commercially reasonable steps to mitigate disruptions in performance, such as setting up alternative supply chain arrangements or staffing plans.
- Getting ahead of and staying in compliance with all other applicable laws, such as social distancing and Phase Yellow business requirements.
Being proactive today will help you in the event you need to make the requisite showing that you took reasonable precautions to meet performance deadlines despite COVID-19.
You should also take an active role in ensuring new contracts adequately protect you going forward. Preparing proposals or negotiating new contracts (or modifications to existing contracts) remains fraught with uncertainties, especially the very real possibility of a return to Phase Red or even more drastic measures. As a government contractor, you should prepare for certain contingencies by:
- Understanding the COVID-related risk tradeoffs associated with different types of pricing, e.g., cost-type contracts versus fixed-price contracts.
- Anticipating how your government customer may enforce force majeure or "excusable delay" provisions now that COVID-19 is a known fact.
- Considering COVID-related contingencies when determining your proposed pricing.
- Preparing your business to navigate a post-outbreak landscape that incentives rapid procurement timelines (including sole-source contracts) and limits bid protests.
If your business engages (or is interested) in federal, state, or municipal government contracts and you want to protect yourself properly in our current environment, please contact Bill Speros or another attorney in the Business Transactions or Government Services group at our Firm.