As the US strives to contain the virus and flatten the pandemic’s curve, federal contractors must be prepared for delays and unforeseen circumstances resulting from COVID-19. There are clauses that can protect you if COVID-19 impacts your organization’s ability to meet your federal contractual agreements.
- Do you know which FAR clauses pertain to COVID-19?
- Do you know how many of your federal contracts include FAR 52.249.14, FAR 52.211.15, FAR 52.212-4, FAR 52.249-8, FAR 52.249-9, and FAR 52.249-10 clauses?
Here we review some of the key clauses that can protect you if COVID-19 impacts your ability to deliver on your contractual obligations:
The “Excusable Delay” Clause (FAR 52.249.14)
The “Excusable Delay” clause recognizes that contractors shall not be in default when extreme circumstances arise that are beyond their control:
“(a) Except for defaults of subcontractors at any tier, the Contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of these causes are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Contractor. Default includes failure to make progress in the work so as to endanger performance.”
FAR 52.249.14 is similar to “Force Majeure” (French for “superior force”), a provision commonly found in commercial contracts, that relieves the parties from performing their contractual obligations when certain circumstances beyond their control arise.
Performance delays or impacts resulting from pandemics similar to the coronavirus (COVID-19) are considered “acts of God” and should provide grounds for entitlement to an excusable delay. For delays due to the virus, government contractors should immediately notify their contracting officer to explain the facts and seek an extension of the delivery schedule or period of performance. If the Government does not respond or rejects such a request, contractors can file a claim to preserve the excusable delay as a defense against termination for default.
FAR Default Clauses for Fixed-Price Contracts (FAR 52.249-8, FAR 52.249-9, FAR 52.249-10)
Default clauses for fixed-price contracts state that the contractor shall not be liable for excess costs if the failure to perform the contract arises from causes beyond their control and without the fault or negligence of the contractor.
Similar to the “Excusable Delay” clause, circumstances beyond the contractor’s control include (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions(7) strikes, (8) freight embargoes, and (9) unusually severe weather.
Commercial Items Terms and Conditions Clause (FAR 52.212-4)
This clause applies to time-and-materials or labor-hour contracts and may be useful should you experience disruptions to the supply chain beyond your control. Similar to the FAR clauses that apply to fixed-price contracts, this clause protects contractors from fault, negligence, and additional costs when extreme circumstances arise outside of their control. FAR 52.212-4states that the contractor shall notify the contracting officer in writing as soon as it is reasonably possible to remedy the situation.
Suspension of Work or Stop Work Clauses (FAR 52.242-14, FAR 52.242-15)
To prevent the spread of the virus, the Government may suspend or stop performance of work. Suspension of Work (FAR 52.242-14) and Stop-Work (FAR 52.242-15) describe a contractor’s rights and obligations concerning these orders. These clauses are especially relevant to those who need access to government worksites or who may not have adequate security clearances and equipment to work from home. If you receive (or have received) any such order under your contract, you must comply promptly. Document and maintain good records of additional costs you incur due to compliance, and speak to your contracting officer about requirements and equitable adjustments to schedules and cost reimbursements.
We are still in the early stages and in unknown territory with COVID-19. As a federal contractor, it’s essential to be prepared and be aware of the clauses that can protect you should COVID-19 impact your organization’s ability to meet your federal contractual agreements.
TechnoMile GovCon Suite with Contract Lifecycle Management (CLM) enables you to track clauses and manage a vast library of FAR/DFAR clauses across multiple contracts and lines of business. To learn more about the capabilities of TechnoMile GovCon Suite and what it can do for your organization, visit our website and download the guide: “The 5 Pillars of Government Contracting Success.”