Federal government contractors are living in a climate of uncertainty. Executive orders affecting government contracts are being issued at a rapid pace. The executive orders tend to be broad and high-level with regulatory guidance to follow. This is not abnormal. However, the sheer number of executive orders and the magnitude of the regulatory changes they seek to impose is a new phenomenon. Contractors are left to determine what they should be doing, if anything, and when. Set forth below are practical suggestions for contractors to consider during this unsettling time.[1]
- Communicate with your Contracting Officer
During the chaos, it is important to communicate with your contracting officer. Only contracting officers are authorized to modify contracts. Do not blindly accept direction from contract specialists or others who purport to be speaking on behalf of the government. Direction received from anyone other than a contracting officer should be immediately relayed to your contracting officer with a request for clarification or guidance.
Also, be prepared for unclear responses from your contracting officer. Like you, contracting officers also are living through this chaos. They may not have received clear direction to pass on to contractors. Aim to keep your communications with your contracting officer respectful.
- Executive Orders are not Contract Modifications
Remember that executive orders are not contract modifications. Contractors should not change their contract performance or their compliance with, for example, socioeconomic programs unless or until a contract modification signed by a contracting officer. This may be difficult for contractors when they think they can see the writing on the wall. But regulatory and policy changes can occur and, thus, even well-intentioned contractors might make changes they did not need to make or that are different from what is required from a formal contract modification.
- Continue Contract Performance
Along the same lines, contractors need to continue contract performance in accordance with the four corners of the contract unless or until a contract is modified. Failure to do so could be considered breach of contract. With the plethora of contract terminations being reported, contractors should not put themselves in the crosshairs by failing to comply with the terms and conditions of their contract, thereby giving the government a basis to terminate for default. And remember, if you believe the government has breached or improperly changed a contract, a contractor is required to continue performance and seek relief in accordance with the FAR Disputes clause.
- Communicate with your Subcontractors
Just as a prime contractor craves concrete guidance from a contracting officer regarding what to do, subcontractors also need guidance and oftentimes more so, because they are unable to communicate directly with the government. Thus, a good practice for prime contractors is to pass along any guidance received from a contracting officer to its subcontractors. Prime contractors also should remind their subcontractors about their obligations to continue contract performance.
- Prepare to Defend Your Contract
Contractors also should be prepared to explain the importance of their contracts to the government. To be proactive, contractors should draft narratives explaining the importance of their work and how their performance exceeds contract requirements. Contracts that are considered to “add value” are less likely to be found on the so-called “chopping block.” If appropriate, a contractor should consider including recommendations, for example, regarding how its work can be performed more effectively or efficiently.
We hope this practical advice will help you navigate the government contracting chaos until the dust settles.
[1] See our previous related blog posts: Understanding President Trump’s Executive Orders on DEI: Implications for Federal Contractors; What Contractors Facing Terminations, Stop-Work Orders, and Suspension of Work Orders Directed by the Trump Administration Need to Know; Fixed Price Contracts: Government Contractors Beware; What GSA Contractors Need to Know About the New FAR Deviation for Revoked Executive Order 11246, Equal Employment Opportunity; Preliminary Injunction Granted Related to DEI-Related Executive Orders—Takeaways for Government Contractors; President Trump Signs New Executive Order: “Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative”—What Federal Contractors Need to Know.