A Contractor’s Guide to Surviving 2025

Good afternoon, everyone, and welcome to today's webinar, A Contractor's Guide to Surviving twenty twenty five, with Maria Panicelli and hosted by GovSpan. My name is Artisha Meehan, and I am the founder of FedConsult, a federal market intelligence consulting firm that helps companies navigate the complexities of the federal landscapes. Our agenda is fairly simple. Maria, if I could ask you to go to the next slide. I'm gonna do a quick introduction, get into the presentation. I wanna make sure everyone knows that we are gonna be sharing the presentation to everyone who's attended or registered. It'll also be posted on GovSpan's website in a couple of days, so, feel free to do that too. And then, the other thing that I wanted to make sure, if you have any questions, please go ahead and ask it in the q and a. The icon should be in the bottom of your screen, so please go ahead and ask your questions in that. So as next slide, please, Maria. And, just a quick introduction about GovSpend. For those who do not know, GovSpan is, the only company that actually has not just data on the federal, the federal market intelligence platform that was AI, but also on the SLED, data. So, it is, the federal solution. The FedMIND platform basically integrates nineteen data datasets to provide unparalleled access to the federal spending data to help you guys make a smarter selling decision, just a smarter selling in the public sector decision. The SLED platform, that is the GovSpend platform, basically has access to not just the meetings that are held at the state local, levels, but also, quotes and, bids, RFPs, and the historical data. With that, next slide, please, Maria. I think it's about Fed Consult. You all can read it later, and then I'll get into, I'm thinking, Maria, next slide, and, we can get into the presentation. So, it is my pleasure to really welcome Maria Panicelli, a nationally recognized expert in federal government contracting. I've had the pleasure of knowing her and hosting many webinars for her, when I was at FedMine, and we are so excited that Gauspan's doing the same. She is a partner at, MacArthur in English. Maria brings deep expertise in bid protests, claims litigation, small business procurement, and federal compliance. She represents contractors of all sizes across a wide range of industries, helping them navigate every stage of the government contracting process with a strategic business focused approach. Maria is known for her practical and holistic legal counseling, empowering clients not only to resolve disputes, but to grow and succeed in the federal marketplace. She is a sought after speaker, prolific author, and a trusted AI to companies in the industry, many industry organizations, Apex accelerators, and so much more. I have known Maria for many years and value her expertise and knowledge. Maria, thanks for being here, and I think I'm gonna give it to you so you could get straight into the presentation. AI thank you so much for that lovely introduction. Thank you to GovSpend for hosting. Always pleasure working with you AI. And thanks to the very large crowd of folks that we've got signed up. Thank you for your time today. I'm I'm happy to have you here, and I hope you find the webinar useful and informative. So we do have a lot to cover today. We're gonna be going through a a lot, and I might be moving fairly quickly. That being said, you know, the the goal for you guys, for the those of you out there listening today, should not be that you leave understanding or or remembering every single little piece of everything I said, but that you kind of understand that the structural framework of the various things AI suspension and termination that we're going to be talking about. Understand kind of what the catalyst or or create catalyst points or or key moments are so that you know when there's kind of an an important, you know, event occurring, and understand when you need to to seek help, whether that means it's someone within your organization or, outside counsel, someone like me, or outside accounting help, which in in some of the circumstances that we're gonna be talking about is going to be necessary. That really should be the goal. The idea you know, I've got a general understanding of how this works. I understand when the key moments are, and I understand when I need to pick up the phone or walk down the hall to get the help I need and make sure that I'm, you know, maximizing my recovery and not prejudicing any of my rights to recover, you know, certain monies or or get certain extensions of time, etcetera. So with that, welcome to a contractor's guide to surviving twenty twenty AI, how to handle terminations for convenience, suspension, stop work orders, unpaid invoices, claims, and more. And we're gonna be taking those things a little bit out of order. I think every day AI I've edited this webinar slightly to deal with whatever fallout we're experiencing. I guess it's good I didn't have to update it for, for stock prices. So my name is Maria Panacelli. As you heard, my I'm a partner with the law firm of McCarter and English, which is a full service law firm. We've got, about four hundred attorneys spread across twelve offices, and we have folks that help with basically any legal need that you come up with from, you know, intellectual property, to general commercial litigation, to labor and employment, to health care. But my group is specifically, you know, kind of centered in the procurement space. We are the government contracts and global trade group. I am on the government contract side of things, which means that all I do all day every day is is federal procurement and the small business programs, which means, as you heard our our teacher say, I do a lot of claims work. I do a lot of bid protest work. I do a lot of subcontracting work both on the prime and on the subside when we're talking about work on on federal jobs. I do a lot with the small business programs, so teaming, mentor protege, joint venture, size and status protests, eligibility analyses. And then finally, I do what I I generally refer to as compliance and performance counseling, which is really just a a fancy way of saying everything under the sun that comes up when you're a federal government contractor. As you guys out there know, you know, there's a lot of things that can come up in connection with a particular project or or contract, where maybe you need to, you know, get an answer and and go back and forth with something with your contracting officer in in relatively short order, or maybe you've got something that comes up just by virtue of being a government contractor, like several years ago with the the COVID, vaccination stuff or or with certain of the the kind of back office compliance issues you need to deal with. And whatever those issues are kind of is is cyclical. Right? So I I help clients with a a variety of issues kind of under that umbrella, OCI issues, suspension and debarment, AI American compliance, cost principles compliance, various different issues that come up relating to the FAR or or federal statutes. But, obviously, a lot of what we're dealing with right now that kind of falls into that bucket are the the list of items that I just outlined. So suspensions, stop work orders, terminations for convenience, obviously, I also determinations for default, but we're not seeing as many of those right now. Fingers crossed we won't. And then, of course, the the unpaid invoice issue, which actually AI dovetails into the the claims work stuff. But we're gonna talk about all of those issues. As you heard, if you've got some questions, you can pop them up on the screen as we're going. I'll try to answer them if I if I can. I'll also try to leave some room at the end, but we have a lot to get through and we have a lot of people on. So if we don't get to all of the questions or if we don't get to your question or if you don't think about your question until after we're done or if you just don't like asking questions in a public forum, all of those options are acceptable. You can feel free to reach out to me at the information you've got on on the screen there. You've got my my social information, but also my email and my phone number, and I'd be happy to talk to you offline if you're going through any of these things or anything else. Alright. So the first thing we're gonna dive into is the the unpaid invoices. Let's just get that addressed up front. And by this, I specifically mean the government not paying invoices that are kind of undisputedly due in owing. So there's there's no question that you, you know, did the work, that you did the work satisfactorily, that you did it timely, that there's there's no problems in terms of deficiencies or anything like that. And you've gone ahead and you submitted an invoice, and you're you're not being paid within the terms that you're supposed to be paid. Now there's a couple different things that could be impacting that at this point. And AI guess that those are just the ones that we can think of. Who who who fully knows what's going on behind the scenes at any given agency right now? But, obviously, one thing is that there's been a ton of employee layoffs. A lot of the agencies are understaffed. A lot of the agencies are reorganizing. A lot of the agencies, are a little bit confused or or have people who have been put in new roles that are less familiar with those roles who are confused. So, you know, all of that can lead to delays and kind of confusion and things slipping through the cracks. So, you know, what we're seeing is because of some of that, people aren't getting paid. Invoices aren't being processed as quickly as they could be. Obviously, there have also been a lot of, impacts to funding with certain funding being cut off or certain funding being threatened to be cut off and then being challenged in court and then, you know, court saying that the funding needs to be restored, and then people, perhaps not acting on that funding being restored. So, again, stuff that is, even when funding has been restored or even when funding has not been cut in the first place, a lot of uncertainty, a lot of actors within the government that don't know if they still have funding even if they do, which again is is leading to confusion and delays. Overall, you know, we're all navigating uncharted waters. That means on both sides here, you know, there are folks within the government, contracting officers, contracting officer technical representatives, you know, small business liaisons, to the extent that they haven't been laid off, are are are also kind of operating in, you know, trying to navigate these unprecedented AI, to use a cliched phrase at this point. So don't presume that it's bad faith. Don't presume that anyone's out to get you. There's just a lot going on right now, and and things are not working like a well oiled machine if they ever did. The biggest kind of, I guess, update or or legal potential cause of these invoices not being paid is an executive order, that was issued on February twenty six called implementing the dep president's department of government efficiency cost efficiency initiative. This applies to all covered contracts and grants, which does have some exclusions, specifically, most importantly for for those of you who do work with the defense, it does exclude military contracts. But, what we've seen is that, even military agencies and the Department of Defense itself have kind of issued memos or are taking positions that are consistent with this executive order even if the executive order itself doesn't strictly apply to them. So what does the executive order say? Well, amongst other things, because it covered a a number of different topics, amongst other things, it basically calls on every agency, the head of every agency to work with their Doge team liaison, and come up with a a, quote, unquote, centralized technological system, basically a database or or some sort of information repository where they're going to record every single payment being made, and there needs to be a justification statement put in to to justify every single payment being made. For those of you who are thinking, yeah, that that that already happens. That that's how, you know, USA spending gets all their information, and we already have obligations to report that stuff. This is a different separate individual, you know, additional supplemental, whatever you wanna call it, obligation. This is this is separate and apart from what has already been in place for for years. Presumably being the idea being that there wasn't enough information actually making it out to the public, as a result of the systems that were already in place. One of the the things that the executive order says is basically that there aren't supposed to be any new contracts issued until these databases are set up. And moreover, there's kind of the implication or at least certain agencies are kind of interpreting this as an instruction not to issue any more payments until this centralized technological system is up and running. So, I know of at least three agencies that Chagoa named in this presentation, but that have taken the position that they are not paying a single invoice until they get this centralized technological system up and running, and they feel that they're being compliant with what the president or or Doge wants them to do. So if you are facing that scenario, you're in a little bit of a different position. Right? So the key thing is if you're not being paid, you need to check your contract, review the clauses relating to your payment, and when and the timing relating to your payment. You're gonna also wanna review the invoicing requirements. Just make sure that your invoices are meeting all applicable criteria that you have submitted, quote, unquote, a proper invoice. If you have questions about that, you should, you know, check with your internal, you know, accounting or or bills team depending on how you have your company set up, or seek accounting and and legal help from your, you know, outside experts. But those are gonna be governed by FAR part thirty two as well as the prompt payment act and the prompt payment act implementing regulations. And if you have, you know, checked your contract, you know that you did your invoice correct, you know that you're overdue, you know, reach out to the contracting officer politely and nonadvisarily. Like I said, they're dealing with a lot too. They're not necessarily out to get you. They might just not know what's going on or might have instruction from their bosses, from their bosses, from their bosses, that, you know, they're just being forced to comply with. So reach out politely, noncombatively, nonadversarily just to figure out what's going on. It might be that they say something like, look. We're just swamped here. We're gonna pay your invoices. We just you know, we can't process them quickly enough. We've lost half our workforce. Or it might be that, hey. Your your invoices were getting routed to a building where we've given up the lease, and we're not there anymore. And we're trying to get the invoices moved over to someone else who actually sits in this other building now. Or it might be that you're you get a response that's more in line with what I I said those three agencies that I know of have have taken the position of, which is we're not paying any invoices even if they're doing owing until we get this, you know, centralized system up and running. Now the way that you're gonna deal with things is obviously gonna depend a little bit on the the answer that you get. But let's say you get an answer that basically says we're not paying you for the foreseeable future. You know? Put it on my tab for lack of a a better term. You've got options, and, specifically, those options are that you can file a CDA claim, a contract dispute sack claim, the same way you could with any other type of, you know, REA or or claim on a a federal project. You would submit a claim to the agency. You would wait to get the contracting officer's final decision, which you should get in in sixty days, or they should indicate they need more time within sixty days. I would argue that if the issue is simply we're not paying undisputedly due and owing invoices, they're not gonna you know, more than sixty days is not a reasonable time to ask for. And then in either way, they deny or or wait too long to answer your claim. You can take that to to court. You can go to the boards of contract appeals, or you can go to the court of federal claims. If you have to go that route, most AI, and this is something that you should talk about with an attorney, but most likely, you'd be entitled not only to the invoice amount, but to contract disputes act interest and also likely prompt payment interest. In other words, if, you know, there's a lot of unpaid invoices out there and a lot of contractors are forced to seek remedy through the the claims litigation process, there's gonna be a lot of additional costs tacked on that the government is responsible for that they wouldn't be responsible for if they were just timely paying invoices. Now if it's not an issue where they're just refusing to pay, it's just a delay, you still might be entitled to to prompt payment act interest. It really depends on the circumstances. You're gonna wanna consult with a lawyer and figure out kind of, you know, where you want to go from there. But one of the most important things is obviously to to kind of track what's going on to to try to have a rapport established with the contracting officer and to figure out what's going on so that you can then come up with a plan on on where to go from there. Alright. So now we're gonna dive into what is probably the the biggest part of our our agenda today, which is terminations for convenience because this is obviously and and for those of you who are in the industry, you'll be aware. This is obviously where we've seen the biggest in, you know, uptake of activity and and, you know, something a lot of contractors are are dealing with, in the the current climate. Alright. So first and foremost, what is a termination for for default? Terminate I'm sorry. Termination for convenience. Unlike a termination for default I'm getting ahead of myself. It's not a black mark against your record. It's not an indication that you've done anything wrong. It's not, you know, oh, now you're getting kicked off the job, and we're not gonna pay you anything, and we're gonna go out and find another contractor, reprocurement costs. Those are all, you know, consequences and pretty negative consequences of that of a termination for default. You know, goes in CPARS, can can stop you from getting work in the future. You might even have to report it to to state and local agencies if you do business with them as well. Terminations for convenience is when the government terminates you, as the name would imply because it's in the government's best interest. The idea is, you know, that it it it's just no longer something the government needs. Now in the past, where you see that happen the the most is when kind of priorities change with the government, or maybe when funding issues come up. And that's not an exclusive list, but I'm talking about situations AI, you know, say it's a construction project and the contractor gets on-site and they, you know, dig into the ground and there's a big, what we call differing site condition where, you know, things are just materially different on-site, than everybody thought they would be. And in order to kind of fix that or or work around the problem, the the government would need to come up with a lot of additional funding to pay the contractor to do a a very different job than it was originally contemplated. You know, sometimes in in that scenario, we'll see the government say, you know, we're washing our hands of this. We're just not going ahead with the project. Other times, you might see it, you know, if, you know, perhaps we pull out of Afghanistan, and, we don't need contractors doing certain things in Afghanistan anymore. Or, you know, COVID lets up, and we don't need all the personal protective gear that we needed in the the VA hospitals or in, you know, certain office settings that we needed before. Or, you know, maybe the administration changes and, you know, the border wall is no longer a priority or the administration changes back and and certain other things are not a priority. But why we're seeing it kind of uptick so much now is that there are a number of executive orders and a number of kind of Doge initiatives or or agency actions that are being taken that are resulting in terminations for convenience. This I wouldn't say it was rare prior to, you know, the this this administration coming into power a couple months ago, but it was certainly comparatively rare. You didn't generally see hundreds upon hundreds of you know, or thousands of contracts being terminated in the course of of three months. It happened. I think most of us who practice law in this area have gone through terminations for convenience working with clients, but probably never, you know, like, forty five in in one week. So that's the difference. It's the magnitude, the frequency, the types of contracts that are being terminated, and, of course, the why why they're being terminated. So circling back to, you know, what what exactly are these you know, why are these contracts being terminated? There is the executive order implementing the departments I'm AI, the president's department of government efficiency, cost efficiency initiative. That's the one I mentioned before that says you gotta set up that centralized technological system, but it also says remember I said it does a bunch of things, that the each agency's gotta review all of their contracts with consideration of terminating those contracts for efficiency. There is also, an executive order. Obviously, you guys have probably heard about it relating to DEI. It has resulted in termination of contracts for DEI consulting or or training services or in some cases that I've seen, contracts that, you know, mention DEI in, you know, presuming what was considered to be too much or or too strong of a way even if the main thrust of the contract wasn't DEI. We've also seen a lot of terminations for green energy initiative contracts, not necessarily stemming out of one executive order, but, you know, that's something else we've seen. Another executive order reevaluating and realigning United States foreign aid. Obviously, you know, I think probably one of the best covered or or most covered things in the news has been what's going on with USAID or USAID. You know, the fact that the the agencies has kind of been wrapped up and, obviously, a lot of their contracts and grants have been terminated. I think we're looking at this point at more than ten thousand contracts and grants that, are reported as being terminated. Although, again, reports are not necessarily verifiable or or accurate. There's a lot going around that can't necessarily be proven at this point. There's a DOD memo from from February directing each component to assess the essential nature of of contracts, especially for consulting services. There's the instruction that agencies look at, you know, quote, unquote, the big ten, which has resulted in a lot of terminations. I think the the latest number I just saw is Deloitte is up to, like, one thirty, a hundred and thirty contracts being terminated or or something like that. A lot of the other biggies are are also getting contracts terminated, but at least the last I AI, Deloitte was at the top of the tally. There's a GSA memo in dated February twenty sixth directing all agencies' senior procurement executives to review, all contracts. Oh, that's the one I was just mentioning. Excuse me. The one with the the ten highest paid consulting firms. There's a defense secretary memo, saying that, basically, they need to do an eight percent reduction in the DOD's budget. So funding needs to be reprioritized, and that contracts need to be reviewed with an eye towards that, which might result in impartial terminations or perhaps whole terminations of certain contracts if they they feel the funding could be better used elsewhere. And, obviously, generally, there's this culture and this push right now towards, you know, terminating as many contracts as as possible for quote, unquote efficiency sake, and for for quote, unquote saving taxpayer dollars sake. So for those reasons, we are seeing a giant uptake in these terminations. Now there are different clauses in different contracts. Like most things with federal government contracting, the answer is always gonna be it depends. Right? Because it's so contractual, it's a lot based on what's in your contract, and terminations for convenience are no different. The general concept or kind of the framework for terminations for conveniences are laid out in part four excuse me, part part forty nine of the FAR. That also deals with terminations for default, but, obviously, we're focused on on convenience today. But then there are specific clauses, and you can see the different clauses relate to different types of contract. You know, if you have a firm fixed price construction contract, you're probably gonna have fifty two two forty nine dash two in your contract. If you've got a, you know, services contract, you're probably gonna see termination for convenience clause fifty two two forty nine dash four. Commercial items, you're gonna see fifty two two twelve dash four, which is actually not a a separate, quote, unquote, termination clause, but rather the termination provision under the commercial products and services clause. And weirdly enough, even if you don't see any of these clauses in your contract, there was some sort of cut and paste error where the government didn't, you know, remember to add one. There's something called the Christian doctrine, which means that it's going to be read in there even if it wasn't in there. It's this concept in federal government contracting that the most important clauses are presumed to be in there even if some sort of government error meant that they didn't actually make it into the draft contract. So a a lot of what we're gonna be talking about today, we're gonna be talking about kind of general concepts relating to certain of these clauses, but you're always gonna have to go back to your contract and see what you've got there to figure out, you know, what your next steps are and what your rights and and obligations are. Alright. I've got one question AI saw come in. If you seek legal means to get paid, does that reflect badly on you as a a contractor? I mean, obviously, from my point of view, I represent contractors all the the AI, both in a protest context where you're arguing about who should have gotten the award and in the claims context where you've you've got a contract and there are issues that arise, where you're asking the government for more time or more money or or both or perhaps some other sort of of relief in limited circumstances. I mean, generally speaking, you know, availing yourself of the legal opportunities that are given to you under the law, that's that's what you're supposed to be doing. Right? I mean, if you're bringing frivolous claims, if you are saying, you know, hey. I'm entitled to a million extra dollars because it rained one day on my project, that's not gonna go over well. But if you have a legitimate claim to the money, then you should be pursuing that. That's what our legal system is here for. Now can I speak towards, again, the the unprecedented, unchartered waters that we're all navigating through right now? You know, what is going to happen with the the continued, you know, various targeting of of certain law firms and certain contractors that work with certain law firms. No. I can't. Because like I said, it's it's kind of the AI west compared to to what our our our everyday normal has been for for decades. But I will say thus far, you know, what I've seen is the courts reacting appropriately to to certain challenges, and, you know, so far, the the rule of law has continued. So I think you need to continue to trust the legal system. And but I don't even necessarily mean by that lawyers. I mean, the the system itself, our system of laws, and trust that if you follow the law, and the law gives you a right to recover in a certain scenario, that you availing yourself of the opportunities given to you under the law is not gonna be a black mark against you, and it certainly shouldn't be a black mark against you. Using the law to to file frivolous lawsuits, using the law to try and, you know, get over on the government in a time of, confusion? Certainly not. But using the law to to seek monies that you are entitled to under the terms of those laws? Yes. Absolutely. You should be doing that, and it shouldn't reflect badly on you as a contractor. Alright. So let's get into kind of the the specifics. When you get a termination notice, there are certain things that it has to include based on, the the provisions of the FAR itself. The contract needs to or I'm sorry. The notice needs to tell you that the contract is being terminated and specifically that it's being terminated for the convenience of the government. It should, cite the contract clause authorizing the termination. We're gonna talk about that a little bit more in just a second, so to put a pin in that. It should also have the effective date of the termination. Most of the time, that's gonna be the date that you get the letter. But, again, with so many letters going out, especially some of the USAID letters that went out, they were a little bit vague, and perhaps ambiguous about what the effective date of the termination would be. So if you have questions about that, you should ask, or you should take a position. Again, talk to your attorney about that. It's gonna tell you the notice is gonna tell you whether it's a full termination, you know, your whole contract is terminated, or whether it's partial. You know, we're just eliminating these scopes of work or we're just eliminating these CLINs, etcetera. To the extent that there's any special instructions needed, it's gonna include that. And then it's going to give you, the contractor, kind of instruction on the steps you should take to minimize the impact on personnel, to to minimize certain other costs. We're gonna talk about AI your duties and the the checklist of things you need to do as a contractor in just a little bit. And then if the termination notices by telegram, you should include those steps in confirming the letter of modification, but I don't think anyone communicates by telegram anymore. Those can also include more detail on termination inventory, might have more info on on how to deal with subs, which we'll talk about in in just a little bit in more detail. If the effective date of the termination and the date that work should be stopped, usually, they're gonna be the same day. But if there's any question about that or if there's, for some reason, two different days, you know, the notice might include that, or it might be something that, you know, you need to to ask for clarification on. And the notice might also include the settlement forms. FAR part forty nine has certain forms for certain types of settlements under certain types of clauses, which again relate to certain types of contracts. So you'll see, again, it's a highly individualized fact specific or or case by case basis how you go through this process, governed by the the clauses in your contract, which are in turn governed by the type of contract you have. Contract or I'm sorry. Termination notices can be amended or rescinded. They can be amended to kind of correct what are called non substantive mistakes in the notice. You know, what we were seeing, obviously, and I'm I'm sure you guys heard stories about this, you know, with everything going on. A lot of quick action, a lot of them realizing that maybe certain terminations were not a great idea, kind of backing out of those terminations, resending them, trying to get people to come back to work the same way that they did with with certain AI of of certain government officials. So or employees, I guess, I should say. You can see that to a certain extent, whether or not that was strictly FAR compliant probably remains to be seen. And then, of course, you can also have a a rescission of the the notice if especially if if you're dealing with something where it's it's goods and the goods have already been shipped and, basically, the government would would incur those costs anyway. But these are all, again, fact specific questions. When you or you know, if you get a notice, you should consult with your, you know, insider or outside or or both legal teams as soon as possible to kinda see what you need to do. And we will, in in just a few minutes, cover the, like I said, the checklist of of actions you need to take when you receive a notice. But first, couple things I I wanna point out. Unlike in the default scenario where the government has to jump through, you know, a few more hoops, to say that it's worth it and, it's in the government's best interest to terminate a contractor for default. Termination for convenience, again, it's whenever they deem it's in the government's best interest. It's been applied in numerous types of of situations and categories. And generally speaking, the agency has a huge amount of discretion concerning, you know, how contracts should be terminated and for what reasons they can be terminated. But it's not unfettered discretion. So courts have generally deferred to agencies' judgment. But over the years, there have been cases where the government says, hey. Look. You you've got wide discretion. It can be in the government's interest, but you don't have unfettered discretion. There are some situations where a termination for convenience is just not appropriate, and therefore, it is basically, you know, quote, unquote, illegal. It's a violation of the FAR. For the most part, the times that the the court have found, you know, that the termination was improper, specifically termination for convenience was improper, is if the agency, is acting arbitrarily or capriciously, or specifically if they're asking acting in bad faith, if they've terminated a contractor because they made a bad deal, you know, like, they they didn't do enough price research or they messed up their independent government estimate, or, you know, there's some other sort of mistake that they made. And rather than go to their supervisor and and say, hey. I made a mistake, and this project can end up costing us a lot of money because we hired a contractor that that's that's charging us a lot more or something like that. You know, those are the types of things that have been found to be inappropriate. Now whether you might be able to challenge some of the terminations that are going on right now remains to be seen, but my guess is that some of the more aggressive contractors and some of the the more, contractors who will stand on on principle of practicality, might be going after, you know, trying to challenge some of these terminations. I don't know how successful they'll be, but my guess would be, you know, you'll you'll see some people doing it. And, frankly, you should talk with your lawyer about whether there's any basis to do it in your particular case, especially if you have a particularly egregious situation. Another thing that you should talk about, which again is is rare, in in, you know, the before AI, I actually don't think I've ever seen it happen, but it does the the law does technically allow for it. In far forty nine one zero two, specifically section d, it does give the option for the contracting officer, you know, with the consent of the contractor to reinstate a a contract either in whole or in part if, one, circumstances indicate that the the government still has the requirement for the terminated items, goods or services, And if reinstatement is deemed advantageous to the government, there's not a lot of case law on this. Like I said, it was really, really rare, for for this to be enacted. But, again, might be something worth talking about with your your lawyer and and seeing if there's any room to budge on the government AI. You know, any port in the storm, and, obviously, we're we're all in a little bit of a storm here if you're you're getting termination notices. So two things to to think about. Like I said, managing expectation wise, I would not put all your eggs in this basket. I would not assume that either of these are are necessarily gonna work, but they are options that are something you should explore with your your legal team. The other thing that you should be aware of right up front is that when you get that notice, we've seen AI seen, my pharmacy and then other industry professionals that I've talked to, are seeing the same thing. A lot of termination letters going out with an indication that, like, hey. This is, this is a no cost settlement, you know, which is not necessarily appropriate. This is something that is governed by FAR forty nine one zero nine four. And, specifically, a no cost settlement is only appropriate when the contractor has not incurred costs for the terminated portion of the contract. Contractor is willing to waive the costs, and there's no amounts to the government. A a lot of you guys aren't necessarily gonna be in that situation if you get a a termination notice. So if you see something in the termination notice that says, you know, unless we you you object within twenty four hours, we're considering that this is gonna be a no cost settlement. You need to object. You need to push back. Again, you you wanna do it in a noncombative, nonadversarial professional way, but don't acquiesce or or stay silent if you get something saying, that, you know, you you've got an an issue, and and they're gonna do a no cost settlement on you. Also, keep in mind, and we're gonna talk about this a little bit more, we're seeing other stuff in termination notices where they're not citing the right clause. I mentioned up front, you know, it's important to understand what what clause is in your contract. It's important for the government to also understand what clause is in the contract that they gave you. So if you get a termination notice that's citing the termination clause for, you know, AI, the short form services clause and you actually have a firm fixed price construction contract or is citing the firm fixed price construction or, you know, firm fixed price construction contract type termination clause, and you actually have a cost reimbursable contract for for research and development, you know, you need to push back on that. You need to make sure that everyone's on the same page and you're using the same clause because those clauses govern your rights and your obligations. And if the government's looking at the wrong clause, you're gonna end up with problems down the road. So, you know, you wanna make sure that you're you're following up on that. Alright. So I've I've mentioned before, you've got certain duties as the the prime contractor when you receive the termination notice. Here's where they're laid out. Here's where they're laid out. FAR forty nine one zero four, duties of the AI contractor after receipt of notice of termination. And what this clause says is, you know, here are all the things you need to do and you need to jump on very quickly when you get this notice. Most obviously, you need to stop work immediately on the terminated portion of the contract. And, obviously, if you had any subcontracts that were kind of in progress or that were pending, you need to to to get rid of those. Those are dead now. You need to make sure you understand if it's a a total termination or if there's still some work that you need to keep doing. If there's anything that might preclude you from stopping work, AI, if it would be a safety concern, or if, you know, you're in the middle of doing something where, like, if you stop, basically, like, things slide back or would be unprotected or, you know, if you have to basically get to the next threshold before you can take a break. Otherwise, there'll be damage caused or injury caused or, you know, loss of of money or or things like that. You're gonna wanna talk about that with the the termination contracting officer. You're going to need to continue if it it's if it's a a partial termination, you need to continue the the rest of the contract. You can't refuse to perform. And if the the fact that part of the contract was terminated changes your ability to perform the remaining part or makes it more expensive or delays it or makes it less efficient, anything like that, you need to talk to the termination contracting officer, but you also need to start segregating and tracking your costs. And by that, I mean, perhaps even a separate cost code, to make sure that you're you're kind of tracking those costs appropriately because that is something that you can AI wrap up into your termination settlement proposal, later, which we will talk about. That's your mechanism for getting paid after you get terminated for convenience. Other things you need to do, take necessary or directed actions to protect and preserve property in the contractor's possession in which the government has or may acquire an interest. So this is basically the the inventory, the termination inventory, but it also sometimes can be interpreted to mean, you know, if you're in the middle of building things, do you need interim protection and and things like that? You need to promptly notify the TCO in writing of any legal proceedings growing out of any subcontract or other commitment related to a termination portion of the sub contract because the bullet point I skipped on the first AI was terminate all subcontracts immediately. Hopefully, when you were drafting your subcontract, you thought ahead and you had a termination for convenience clause in there, if you're a prime. Hopefully, that went into enough detail to allow you to figure out, you know, what costs your your subcontractor would be entitled to and then put your subcontractor on notice of what kind of costs they would be entitled to. But the idea here is, you know, as soon as you're terminated, you need to terminate your subs so that you're not incurring any more costs and they're not incurring any more costs. And if there's any sort of, you know, hiccup there or got any subs pushing back or any subs saying, hey. I still am owed this whole amount. You know, you need to to, again, make sure you're all on the same page, talk to your TCO. Settle outstanding liabilities and proposals arising out of termination subcontracts, obtaining any approvals or ratifications required by the TCO, promptly submit your own termination settlement proposal, and see you know, the language in this in the reg is supported by appropriate all appropriate documentation. And then dispose of termination inventory, which is gonna be something you need to kind of work through with your your TCO. So the key takeaways looking at this list are you need to make sure you understand what's being terminated, what's not. You know, if, like I said before, partial termination means that what you continue to perform is being done inefficiently and it's gonna take you more time or is gonna cost you more money, you need to bring that up immediately. With regard to the the termination itself, you need to, from there on out, from the effective date forward, eliminate as many costs or all costs that you can. Avoid any incursion of costs that aren't strictly necessary. So, again, that means that if you've gotta have, you know, five people on-site doing x AI z until whatever date to wrap this up, you need to make sure the contracting officer, the TCO, termination contracting officer is aware of that as soon as possible so they don't later say, hey. We're not paying you for those five people that were on-site for those days. We didn't think that they were necessary. You're gonna wanna mitigate any costs you can. You know, if you're gonna have those people on-site, you need to have a bare bones crew. You need to knock them down to part time or lowest price you can if possible, etcetera. And, obviously, a big part of mitigating your costs or avoiding costs is gonna be terminating your subcontractors and getting them out, and, you know, not incurring costs as as soon as possible. You're gonna need to protect the project, protect the inventory, come up with a plan for the handoff or the disposal of the inventory. That's something you should plan with the TCO. It needs to be a coordinated effort. You can't just be like, hey. We're dropping off all this stuff on Tuesday and then, like, you know, do the the Uber Eats thing where they just take a picture of it, like, knocked over in the lobby. That's generally not gonna get you anywhere. You need to make sure it's it's it's a plan that everyone's on on board with. And throughout this whole process, you need to be segregating and tracking costs, new cost codes, etcetera, and working diligently whether that means, you know, internally or whether it means internally and with outside folks like me or accountants or both working to get your termination settlement proposal together. Now I'm not gonna go through these in, like, excruciating detail, but I just wanna make you aware the same way that you have duties when you get a termination notice, so does the termination contracting officer, the the TCO. They've got a number of things they need to do, perhaps the most important of which is to hold a conference. So if you think you need a conference in order to to get a plan going forward on some of this stuff, like the disposal of inventory, trying to work through what, you know, what special circumstances require you to keep working and and who needs to keep working and for how long and at what cost. Those are all things that you can talk about and, you know, especially if you're having problems with subcontractors. So request a meeting. If you've been terminated and you're AI of floating out there with with no guidance, one of the things you can do, you know, pursuant to this is is to talk to the TCO and say, hey. Look. I want us to have that conference that the the FAR says we should have. Alright. Now moving on to what is arguably, from your point of view, I'm sure, the most important piece of this, which is your termination settlement proposal. This is the mechanism through which you can seek payment from the government for your t for c costs. The the way that the FAR is set up, there are a number of different ways that basically the the agency can agree to pay you. The first is through a negotiated agreement, you know, settlement, and this is your first foray. This is AI, okay. I put my costs together. This is how much I want. This is my my demand. Negotiations follow from there. You will not necessarily AI know you hate to hear this, but you will not necessarily get, you know, a hundred percent. You know, you might get ninety cents on the dollar. Your your offer might be ninety cents on the dollar of what you put in from your termination settlement proposal. There AI, instead of a negotiated agreement, be costing out under vouchers if you're a cost reimbursable or cost, plus fixed fee, contract. There might also be a unilateral determination by the TCO if you can't reach an agreement. The preference here is from some sort for some sort of agreement where the TCO settles the settlement proposal by determination only when it can't be settled by agreement, you know, coming out of the negotiations after you submit your TCP. So you really wanna try to get that TCP in and get the negotiations going so that everyone can be on the same page and you you settle this as soon as possible. The overarching principle in the FAR is this idea of fair compensation, the idea that the contractor should really be made whole and fairly compensated for the work performed. But as I've said a couple times, you know, what goes into it and what's fair for you, Gonna depend on your contract, the clauses in your contract, what type of contract you have, what kind of costs you incurred, why you incurred them, the amount that you incurred. It's a highly individualized analysis. But generally speaking, there are some kind of broad brushstroke rules we can go after. Now how these are applied, you're probably gonna have to talk to your lawyer and and talk to your accountant and make sure you know that you're doing all this correctly. But, generally speaking, you know, using a couple different clauses as examples, let's look at the firm fixed price clause at at two forty nine two. In this situation, contractor can recover the contract price for the completed supplies or services that haven't been paid for. They can also seek the cost incurred in the performance of the work terminated, things like initial costs, preparatory expenses. That's not going to include or, AI guess, I should say, it it excludes any cost attributable to the supplies or services that are already kind of lumped in in that first bucket and the bullet point above. But anything else you can put in in here. The cost of settling and paying your proposals with your terminated subcontracts, fair and reasonable profits on costs incurred in connection with the completed supplies or services, unless it's determined that you would have sustained a loss on the contract. And then here's the one that a lot of people aren't aware of, the reasonable costs of settlement of the work terminated, that can include things like someone like me or an accountant. The external, you know, or internal. Legal, accounting, clerical costs incurred with the preparation of the TSP itself, costs associated with the termination of settlement proposals, and also to the extent you gotta store and and move and transport that that termination inventory, that can be lumped into here as well. Generally speaking, you know, all of this should be governed by FAR part thirty one, which which talks about kind of cost principles and allowability. There might be a little bit more wiggle room, but, you know, you want to to have your stuff be as airtight as possible, especially in the environment we're we're living in right now. There are some limitations. You know, exclusive of the settlement costs themselves, recovery is gonna be capped at your total contract price, you know, minus any payments that were already made and minus the contract purse of of the work that wasn't terminate terminated. It should take into account pending REAs, but, obviously, that can be somewhat of a point of contention depending on if the the REA is in dispute or not, especially if it's not related to the termination and it was something that was pending earlier in the project. Although, I don't know how many of you guys are are gonna have that situation here. That's obviously a lot more common, in the old world when when terminations happened, for more specific reasons than they're happening right now. There's not gonna be any anticipatory profits or consequential damages. And like I mentioned before, if it's determined that you would have sustained a loss on the entire contract, there's no profit, and the settlement itself might even be reduced to reflect the indicated rate of loss, which is a whole mathematical formula that we can get into if, you you want to talk offline. Take a look, you know, similar to to the one that we just looked at, the the termination clause for cost reimbursement, which is two forty nine dash six, has some similarities. You're gonna see, again, all costs reimbursable under the contract that weren't paid for the performance before the effective date of the termination and those costs that may continue for a reasonable time with the approval of or directed by the contracting officer. But, again, the idea is that you you stop incurring those, though you mitigate them as soon as possible. Cost of settling and paying termination settlements, for your subs. And then, again, that that settlement cost including things like me or an accountant, etcetera. Now if you're dealing with a cost, plus fixed fee, a portion of the fee payable under the contract, specifically a percentage of the fee equal to the percentage that, the the work that's been performed. So if you were, like, sixty five percent done when the the contract was terminated, that would be allowed under the contract, but excluding subcontract effort included in the subcontractor's terminate termination excuse me, termination proposals less the previous, payments for fee. Again, the cost principles and procedures for FAR thirty one should be followed. That's gonna make it airtight here. In both of these cases, you've got the the TCO deducting all unliquidated advance or other payments to the contractor under the terminated portion of the contract, any claim which the government thinks it's got against the contractor, and then the agreed price for or the proceeds of the sale of materials, supplies, and other things acquired by the contractor or sold under the provisions of this clause that are not recovered by or accredited to the government. Now remember how I said you wanna make sure that, you know, the government's thinking about the right clause and that you're thinking about the right clause? It's because of things like this. You know, we just went through two clauses where your rights are are are fairly similar, especially depending on the the way that you get paid under the regular contract. But look at this in in contrast. You know, the the clause that's for for services and specifically short form clause for services at two forty nine dash four. This clause is designed to be used for service contracts when, basically, the contracting officer at the time that they put the contract together says, hey. You know, I don't think the successful offer here would incur substantial charges in preparing for or carrying out the contract, and there really wouldn't be, you know, an enormous amount of cost if this was terminated for for convenience. So if this clause is in your contract, your recovery is a lot more limited than it might be under the clauses that we just talked about. Specifically, it's gonna be limited to payment for services rendered before the effective date of termination only. The the commercial items clause that I mentioned before where you don't have a separate termination clause, but you have a a termination provision under the the commercial items clause, that's gonna be a little bit different too. That's that's two twelve dash four section l. If you've got this clause, you are entitled to recover a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination and reasonable charges, which is obviously very, very squishy, that have resulted from the termination. But you need to be able to demonstrate them using your standard record keeping system. So, again, goes back to kind of the concept of segregating and tracking costs. Now notice that one of the things I I was kind of weaving through is that you need to terminate your your subcontract. Again, your rights there are going to be highly dependent on what you put in your settlement or I'm sorry. What you put in your subcontract agreements. If you didn't put termination for convenience clauses in there, you might have a bit of a problem. But you're gonna need to go through in the FAR lays out in the section forty nine one zero eight, the the principles and the processes you should follow, trying to settle your your, you know, your subcontractor's termination proposals. Generally speaking, the way you're gonna do this is settle with them, you know, hopefully getting approval from the contracting officer, and then you're gonna wrap it up into your costs. So most likely, yes, you are gonna be out of pocket for what you pay your subs until you get paid. Unfortunately, that's the reality of being a prime contractor for the federal government. That's AI what you signed on for. But, you know, you're gonna need to work through these concepts with your contract clauses in mind, which is why it's a little bit harder to to go into more detail here because it's so fact dependent, on, you know, what clauses you've got in your subcontract. So if you've got questions about this, something that you should reach out to a a legal professional to talk through. Now in terms of the timing, remember I've talked, a little bit about the fact that we're seeing termination notices where we're citing where the government's citing the wrong clauses. We're seeing termination notices where they are saying, hey. There's, you know, there's there's a no cost settlement coming here. One of the other things we're seeing is termination notices that are saying, you've got ten days to get all of your costs, and then you're not gonna be able to to edit it later. That's just simply not consistent with the rules. The rules give you a year from the effective date of the termination to submit your termination settlement proposal. You know, there are kind of interim deadlines before then that you wanna keep an eye on. Specifically, you've got a hundred and twenty days to submit, complete termination inventory schedules, and you've got ninety days. Remember, I I I stressed a couple AI. If it's a partial termination and the work that you have to continue to perform is is negatively affected and you'd be, you know, spending more money or spending more time because of, you know, the the other work being terminated, you've got ninety days. So not a lot of time. Three months to get in any, you know, claim or or REA arising out of a partial termination. So if you get a notice saying you've gotta have your TSP in within ten days or fifteen days or thirty days, that is your time to politely push back and say we will work on this as as quickly as understanding that we have up to a year under the regulations, and we will take the time that is required. You know, happy to discuss this at your convenience. You know, you don't you don't wanna be a jerk about it, but you also don't wanna be AI, and you definitely don't wanna accept a quicker tenth timeline. That being said, practically speaking, you've got a year. I would not take a year here if you could avoid it. As soon as you can kind of finalize with your subcontractors, as soon as you have a good idea of your costs, I think you wanna move sooner rather than later. I think you don't wanna be at the end of the AI with your handout, in these very uncertain times. I think the sooner you gotta walk a fine line. You know, thread thread thread a needle here, But the sooner that you can be in front of the government with your costs and you know that your costs are not shortchanging yourself, get get in front of the government and and get your money. Alright. Once you get your your termination settlement proposal in, remember, that's that's as the name proposal would indicate, even though that's the end of you figuring out what your costs were and wrapping it up into a proposal, it's the first step now of negotiating what you're gonna get paid. Negotiations then follow. And under FAR forty nine one one one, each agency is required to establish procedures for the review of your proposed termination settlement, and AI of through the negotiation process. Again, the idea here is that they they really want to incentivize and and, you know, have contractors believe I'm sorry. Contracting officers believe that the the settlement of this mutual agreement is the best way to do this, as opposed to them just making a unilateral decision, which means that this is your chance. You know, make your voice heard, negotiate, ask for what you want. You know, I I don't know that it would benefit you to to dig in and die on a mountain top over small amounts, when you could just get this done. But, you know, this is your chance. See what you can do. Once a termination settlement agreement has been negotiation or excuse me, negotiated and everyone's kinda on the same page, then you're gonna sign a settlement agreement on a standard form thirty. Settlement's gonna cover set offs, and settlement proposals of of subcontractors that are specifically accepted from the agreement. TCO is gonna reserve the settlement agreement any rights or demands of the parties that are accepted from the settlement, ensure the wording of the reservation doesn't create any rights for the parties beyond those in existence before the execution of the settlement agreement, Make each applicable settlement agreement with or AI sorry. Mark each applicable settlement agreement with, quote, unquote, this settlement agreement contains a reservation and retain the contract file until the reservation is removed. Ensure that sufficient funds are retained to cover complete settlement of the reserved items. And at the appropriate time, prepare a settlement, a separate settlement of reserved items and include it in a separate settlement agreement. Now if you cannot agree on a termination settlement or if you fail to submit your proposal within the year, the TCO is gonna go ahead and they can issue a determination of what they think is due. Now they might have to give you notice, and you might then, you know, have a quick time to respond to try to push back on the number that they're determining. But, you know, those are the situations where you might start entering into a or you might start seeing, I should say, the the contracting officer just issue a unilateral decision AI, here. This is what we're giving you. We can't agree, so it is what it is. Now if you are fine with the unilateral decision of the government, they say, like, we're giving you five hundred thousand, and you're like, yeah. That's fine. You can submit a voucher invoice for that amount due, less any portion previously paid. But if you don't agree, you are not without remedy. So here we go back to the fact that you have a right under the disputes clause and under the contract disputes act to challenge this. Pursuant to far forty nine one zero nine seven f, you can appeal under the disputes clause any settlement by determination unless you fail to file your TSP in a timely manner. But as long as you AI, within a year, filed your TSP, you can push back, if the the agency is not giving you enough money. So what are the takeaways talking about terminations for convenience? Obviously, it's a very fast moving process, and, you know, there's a lot happening right now. So you really need to check your emails and alerts, you know, several times a day. You know, you don't wanna get a termination notice on Friday and be like, oh, I check my emails once a week. I have, I know contractors that do that. Don't do that right now. It's very important you're checking your email multiple times a day at a at a minimum at least once a day, weekend included right now. Act immediately if you receive a notice of termination. If you've GovSpend and you've got an internal legal team that that has a really good handle on, you know, what needs to be done, great. If you don't, you need to reach out to a lawyer as soon as you get that notice to make sure that you're doing everything correctly. Assess with that lawyer if you've got any argument for reinstatement. Although, like I said, that's that's pretty rare. You know, see if you think you've got any basis to push back as an unjustified termination. Although, again, that's pretty rare. Agency has pretty wide discretion, although not unfettered discretion. Double check that the clause cited in your, you know, termination notice is correct. Double check that there's not anything in there where, you know, you object within the next three days or we're giving you a no cost settlement. Make sure that they're not demanding you get your TSP in with, you know, ten days when you have a year. Push back on those things AI, professionally, not assuming that the agency is acting in bad faith and is out to get you, assuming that and I think this is true. A lot of those clauses are being handed to them, and they're being told to cut and paste. And even if they know that they don't have a basis to enforce it, they're just putting it in there knowing that you can push back. So push back. Do it politely. Do it professionally, but push back. If you're a prime, you need to manage your subcontractors and terminate them as appropriate. You need to work out those settlement proposals to wrap it up into your own settlement proposal. If you're a sub, you wanna work cooperatively with your prime, understand what your rights are in terms of what costs you can seek, which, you know, again, depending on what's in your subcontract or depending on how much just the the far procedures are incorporated, might include things like your own legal representation or accounting representation. Make sure you understand that. Make sure you're you're maximizing your recovery as allowable. For everyone involved, track, segregate, document all the costs associated with terminations in different categories with different cost codes if need be. You wanna be able to say, look. I can easily pull this number off a report and tell you what we spent on just the termination costs or on just, you know, the time we spent for, for subcontractor, settlements, things like that. Be proactive throughout this whole process. Stay informed. This is obviously an ever developing story with all the executive orders and court decisions challenging the executive, orders and and going back and forth. This is going to continue to be a hot topic, and things are gonna change. You know, if you're listening to this three weeks from now, there might be another development that renders part of this. Not I wouldn't say inaccurate, but, you know, they're they're rewriting the FAR right now or at least that's the rumor. So we'll see what that does to the the provisions relating to termination for convenience. Things could change. So, you know, stay on top of all of this and seek legal assistance when you need it. And I say this not from a point of self interest, but from a point of I I've just seen so many contractors wait until too late. And by the time they get a lawyer on board, they've unfortunately taken steps or done things that have prejudiced their rights. They've blown a deadline or they've failed to track costs, which are gonna make it harder for them to recover later, or they haven't acted appropriately with regard to their subcontractors and they've incurred unrecoverable costs. You really need to have someone on board early who knows how to navigate this process. Not even saying it needs to be me, although I'd be happy to help you. But but call your lawyer. Make make sure that they're involved early in the process. This isn't something where you wanna, you know let me try three times with myself, and if that doesn't work out, I'll I'll get my lawyer involved. Get the lawyer involved upfront. Alright. So moving from terminations to stop work orders and suspensions. These are obviously situations where you're not kicked off the job. You're not done. The contract isn't terminated, but there's a big old red pause button. Basically, the government is saying, hey. We we can't go forward, right now, so we gotta AI regroup. Everybody everybody freeze. There's two different clauses, generally, when you're talking about this. One, the suspension of work clause, which applies to firm fixed price construction or or architect engineer contracts. The other is the stop work order clause, which you're gonna find in solicitations and contracts for supplies, services, or r and d. And, again, like with terminations, like with everything in government contracting, your rights, your obligations, how this process plays out is going to depend on what clause you've got in your contract. So I would say the vast majority of you, you're probably gonna see the the stop work order, clause in your contract, which says that the contracting officer made any time by written order to the contractor AI the work of excuse me. The contractor to stop all or any part of the work under a contract for a period of ninety days, and ninety days can technically be extended or, you know, a different period agreed upon. After the order is delivered to the contractor, blah blah blah blah, order shall be specifically identified as a stop work order. And then similar to kind of the list you saw under terminations, contractors got a duty after they received the notice to basically button everything up as much as they can to to be on to be on hold. They need to take all reasonable steps to minimize the incurrence of costs. That might include things like suspending your subcontractors. If you didn't put a suspension clause in your subcontract, it might mean terminating your subcontractors. You need to, again, kind of assess where you're at and and what the best path forward is, and that's gonna involve kind of moving pieces with your subcontractors as well. Within a period of ninety days after start work is delivered or with any extension of that period, basically, what's gonna happen is either the the works the stop work order is canceled, or the work is is terminated. Now, again, it could be extended, but I I think in a lot of these cases right now, unfortunately, for for contractors, they're AI pausing things until they figure out the right way to terminate them. I don't think that's true of everyone who's getting stop work orders, but I think that is true in a in a lot of circumstances. And, again, it's important to keep track of your costs. You are entitled to to certain costs during a suspension, and you wanna like I was saying with termination, you wanna track and segregate your costs. Now if you've got the those stop work order is canceled or if it expires because the ninety days runs up or whatever other period you've agreed to runs up, you've gotta go back to work. And that means that the contracting officer needs to make an equitable adjustment if it increased the time or cost property excuse me, properly a lock a lock allocable to performance of the contract. Always have problems with that word. And if you kind of assert your not kind of. If you assert your right to adjustment within thirty days, within a month of the end of the period of work stoppage. So, again, you've got AI you really need to be keeping your your eye on. If there's a t for c that follows afterwards, the the AI the the TCO supposed to allow reasonable costs relating to the stop work order and arriving at the termination settlement. Basically, it's the equivalent of an REA that gets wrapped up into your termination settlement. If you're terminated for default, arguably, the the contracting officer is supposed to allow reasonable costs resulting from it as well. I I think that's probably happening a lot less, like, often right now, so we don't need to get into it, but that doesn't always happen when something is terminated for default. Alright. So similar to the stop work clause, we've got the suspension of work clause or stop work order clause, excuse me, we've got the suspension of work clause. Like I said, this applies in in firm fixed price construction and architect engineering, and it kind of follows a a similar pattern. Contracting officer can order the contractor to suspend or delay or interrupt any part of the work, if that's appropriate for the convenience of the government. So worded a little bit differently, but, basically, if the delay is considered an unreasonable period of time, then it can result in an adjustment of the contract in terms of time or money or both. There are damages you can get in in these circumstances, including AI damages, but excluding profit. And, again, it it kind of follows a similar process to what we were just talking about. And if you've got a situation where you are suspended or terminated I'm sorry, suspended, AI gonna wanna talk to your lawyer about how to to figure out what costs you'd be incurring and and how to track and segregate those and what you'd be able to recover. And then AI, you've got to work with, you know, someone to to figure out if you are terminated after suspension, what to do. But the best practices in this world, always know what clauses are in your contract, understand if it's a full or a partial cessation or or termination or stop work, Figure out what the period is. You know, you've got that ninety day period under the stop work, but it could be something else. Suspension is a little bit more amorphous. You need to minimize your costs, avoid costs, manage your subcontractors. Again, this is a a good idea. Review your subcontract templates right now to make sure you've got not only the c for c clauses, but suspension clauses that you can flow down. Because the the key here is that you might need to ramp back up as well. Right? You have to walk a fine line between not incurring costs but being ready to go again if the suspension of the stop work order is is lifted. You need to figure out what costs you might be able to recur, track those, keep on top of the deadlines in terms of, you know, getting your your right to adjustment expressed within thirty days so you're not blowing that deadline and and prejudicing your right to recover later. And if, unfortunately, you're a sub, you are largely beholden to your primes, for for them to AI work through this process on your behalf. But you've got some leverage depending what's on your subcontract. You know, they've they've gotta pay you the same way they've gotta get paid. So, you know, make sure you understand what the contract says about your rights and that you are also seeking your own representation and and trying to figure out what you're entitled to. Alright. So with our last fifteen minutes, I wanna talk briefly about, you know, kind of a catchall, category. We're seeing a lot of different circumstances here, you know, some of which I talked about way upfront talking about the, the unpaid invoice issue that could lead to a claim. You know, employees being laid off, a lot of uncertainty, a lot of people, being moved to positions where they don't have experience, a lot of different things that could lead to REAs or claims. You know, let's say you show up at a facility ready to get to work and there's nobody there because all of those federal employees were laid off. Or let's say that, you know, you were scheduled to begin work at a facility, but now they're talking about, you know, potentially canceling that contract, but they don't know yet. They're trying to figure out if they're gonna terminate the lease, so you're suspended in the meantime. And then, you know, while you're suspended, that there's a there's a delay. I'm sorry. Well, you're while you're suspended, you would incur, you know, certain delay or suspension costs. Or maybe, you've got a situation where because so many people were fired at the VA, they're not processing your RFIs, and you've got RFIs that are sitting out there and submittals that are sitting out there for, you know, six months instead of the thirty days that they're supposed to be, and that's delaying the project. I I could go through a million different theoretical, and a lot of them are real that we've seen in the last few weeks. You know, situations where, you know, in any other project, this stuff would lead to a delay too. Even if we weren't in the the world that we're operating in right now, when stuff goes wrong and, you know, problems arise during performance of a contract, sometimes the government is required to give you money or time on your contract because of those issues. So, you know, you need to be keeping an eye out for those things the same way you would on any other project. You need to be giving the appropriate notices if it's constructive suspension or if it's constructive changes or if it's differing site conditions or, you know, whatever issues might be occurring. If you're getting, you know, responses back that don't make any sense and there's government caused delays or if the government's just not getting back to you on submittals and there's government caused delays, any number of circumstances that could lead to potential REAs or claims right now. Keep track of those. Understand what your rights and obligations are, specifically what notice you need to give. If you've got questions about that, talk to a lawyer. You also want to make sure if the government gives you a modification, you know, a lot of the stuff we're seeing right now are deductive mods. They're removing clauses. But, you know, maybe they're removing a clause, that gives you a right to adjust your contract based on, you know, a wage determination. Maybe that would impact your ability to get more money on on certain things. So track what the modifications are doing carefully. If they're deductive and they're not really gonna cost you more money, probably less of a concern. But if there's any sort of change or anything that's additive or, you know, make something substantially different that could result in in change or I'm sorry, could result in in current costs or delay, you're gonna wanna make sure you push back on, you know, a mod being no cost or or, you know, if they're not gonna give you any money for it, you need to at least make sure you're not waiving your right to it. Be very, very careful of the language put in the closing statement saying that, you know, this is the full compensation for whatever change. You know, don't sign that. See if they'll issue it unilaterally. See if you can remove that waiver language. See if you can modify the waiver language. And then, you know, if you can't do any of those things, you're gonna need to assess your options. But you don't wanna basically sign away your right to seek money in connection with a mod if you think that mod is going to result in in you suffering a delay or or increased cost. If not, then not not as much of a big deal. Make sure that when there are you know, again, we've got people who are you know, the contracting officers have been terminated, have have been riffed, and you've got contracting officer representatives giving you instructions, that's a tricky place to be, because they don't technically have the authority to do certain things that could impact your ability to make certain chain or certain claims later, especially if they relate to constructive changes. So you're going to want to make sure that you talk to an attorney about how best to protect your rights there, you know, who to give notice to, how to run that up the flagpole so that, hopefully, you can say later that there was no authority issue. Finally, tariffs. Obviously, especially the last three days on everybody's mind. But for government contractors, in addition to just, you know, being consumers and people living in the country, there's a a lot of other things that that can come out of this. You know, it's almost certain that these tariffs, if they stay in place, will impact federal government contractors. Likely impacts include things like increased cost of performance, but they also might mean, you know, limited AI, supply shortages, or supply delays. Might also mean that certain folks just say it's not worth it anymore to to do business, and and we're not gonna supply anything to the United States. There's a lot of different things that could come out of this. So you should review your contracts now, to determine whether the documents include any provisions that could assist with these issues if they come up. You should be looking for the clauses that would allow you to recover unanticipated costs incurred as a result of tariffs, as well as any provisions that might extend the contract period of performance to account for things like supply shortage delays, you know, anything that would allow you to characterize delays as excusable. Now I will say, this is a tricky area. Most of the time, you're not gonna get adjustments on on tariff related stuff. So you've gotta try to protect yourself looking forward for new contracts. Existing contracts can be a little tricky, but gonna walk you through a couple clauses that that you can be looking for. I will say a constructive change theory, very unlikely, if not impossible, to get recovery on here, because it's generally not considered a change that the government made. You know, yes, the president did the tariffs, but it's not the the government wasn't wearing its contracting hat. It was wearing its sovereign hat. So you're not gonna get, you know, a constructive change remedy for a tariff related impact. Things that might give you a a basis to to get additional money on the contract, if you've got an economic price adjustment or otherwise known as an EPA clause, that is, to a certain extent, a little bit of a golden ticket. These clauses provide for upward and downward, but here it would be upward revision of the stated contract price, upon occurrence of specified contingencies. There's three different types, adjustments based on established prices, adjustments based on actual costs of labor and material, and adjustments based on cost indexes of labor or material. These clauses can provide a mechanism for recovery if tariffs cause a price hike, but there are some major limitations on on how these clauses can help. So first, there are strict notice requirements. You basically need to give notice within sixty days after the increase in the the rate of pay for labor or the increase in quote, unquote unit prices for material. Also, you're only gonna get the adjustment. It only applies to supplies or services that are delivered or performed after the adjustment. In other words, no retroactivity. That makes sense, though, because the CO is is meant to promptly negotiate an adjustment, so there shouldn't be a lot of of lag time. So it pays to get your notice in ASAP, get that negotiated ASAP so that, hopefully, you don't AI. And then, AI, there's a cap on it. The aggregate of the increases in any contract unit price made after this clause shall not exceed ten percent of the original unit price. Obviously, with the magnitude of the tariffs we're talking about, that might not help. Now if you're a DOD contractor, be aware that you might have additional rights under the DFARS, arguably, not necessarily. So, again, something that you might wanna explore with with your legal counsel. The biggest downside of this clause is just there's there's not a lot of contracts that that have it. Most of the time, the government doesn't include this clause in in contracts. Now one of the things that we've seen in recent years is that there's been guidance to contracting officers that they should be more willing to put this clause in. So if in if you're in a situation where, you know, you don't have it in a a future contract that you're currently negotiating or or, you know, trying to get signed, you might wanna see if you can ask or or ask during the q and a period. You know, can you put in an EPA and economic price adjustment clause? Technically speaking, again, they're supposed to be more amenable. It's not required that they put it in, though they still have an enormous amount of discretion. So it might depend on the the agency or what instruction they're getting or or, you know, what the exact news is that week when you're asking. Other clauses that can help, there is a a clause called the federal state and local tax clause that's at far fifty two two two excuse me, two twenty nine dash three. That clause can offer some relief to certain contractors. Generally, what that clause says is that a contract price can be increased to cover a, quote, unquote, after imposed federal tax, which is defined as any new or increased federal excise tax or duty that the contractor is required to pay or bear as a result of the administrative action taking effect after the contract date. So that basically means that the date set for bid opening or negotiated contract, or sorry. For for sealed buildings, the bid opening, if it's a negotiated contract under par fifteen, then talk about the effective date of the contract. So that would include tariffs imposed after the contract date. But, obviously, for those of you who are entering to new contracts now, you know, it's you're already past the contract or the the tariff date. So this would only apply to contracts that you entered into prior to all of these tariffs being handed down. In order to avail yourself of the benefits of this clause, you need to act promptly, like, super promptly to provide notice to the the CO, and you'll need to warrant in writing that, you know, no amount for such newly imposed federal excise tax or duty rate, was included in the contract price. So in other words, you need to make sure that, you know, you you didn't bake this in and you need to warrant as much, and you need to have done all this before the tariffs. Beware that taxes imposed after your bid or proposal submission, but before contract award, it's not gonna be considered newly opposed. So sorry. Bad news. If you guys had stuff where you've already submitted, with old prices and now you're waiting for award, you're not gonna be able once you get the contract, if you get the contract to say, hey. You need to up those prices because these huge tariffs went to effect in the the meantime, unfortunately. Keep that in mind if you're in a situation where they come back to you and ask you to, you know, reverify your prices or or to, you know, confirm that your prices have stayed the same. There is also, for those of you who are are doing work OCONUS, there's also a a taxes on foreign fixed price contracts. That's far fifty two two twenty nine dash dash six. Basically works the same as the the one I just said. It applies in lieu of the the federal state and local tax clause when the contract involves doing stuff OCONUS. The idea again being that it's an after imposed tax. But for the most part and I I hate to say it. I know it's not what you guys wanna hear, but for the most part, you need to just start baking in what you think your risks might be, because AI, you're gonna have problems trying to get, you know, adjustments to your contract for these tariffs unless and until the agencies recognize that every single contractor will either go out of business or stop doing business with them, if they're incurring these levels of costs. But I'll say, you know, a couple years ago, when we went through the issues with steel and and things like that, most agencies didn't budge or or didn't budge that much or only budged for contractors that were, you know, quote, unquote too big to fail for lack of a better analogy. You know, most of you are are not gonna be able to avail yourselves of that, so be careful. The other thing that you wanna take a look at, you know, there are certain excusable delay clauses. They're not gonna compensate you for the increased costs that you incur, But if there are delays relating to supply shortages or, you know, things like that, you're gonna be able to at least protect yourself from basically you being held at fault for the delay or having liquidated damages assessed against you or being terminated for a delay that's out of your control when it's, you know, related to, supply shortage demand and things like that. So those are the types of things you should be looking for, you should be talking about with your attorneys, and you should be talking about with your BD teams to figure out how to prepare for the future because I think, obviously, these tariffs, unless they are, in fact, AI, I guess, apparently, this morning, there's already been, like, two turns in the news cycle into the stock market with a report that there was gonna be a ninety day pause, and then the report was debunked. And then there was a report that there was gonna be a pause, and then that report was debunked. But I I think, at least for the near future, you gotta assume these tariffs are here to stay, and you gotta assume they're gonna have some pretty significant impacts on on costs, for contractors and, you know, supply shortages for contractors. And, obviously, those of you in the, you know, manufacturing and construction realms, this is going to impact you particular a a lot. So if you've got questions, you know, feel free to to reach out. Now, I saw a couple questions come in that AI got to, a couple questions come in that I haven't gotten to, so I'm gonna try with the the few minutes we have left to to go back and answer the questions that were left unanswered. But if you've got questions we don't get to, if you don't like asking your questions in a public forum or if you just don't think of your question until tomorrow or next week, feel free to reach out to me. You've got my contact information on the the screen. Yeah. So There were few questions, but Yeah. So much information, Marias. Thank you so much. So can a contractor file a case if their contract was terminated without a proper justification? Yes. The idea would be that you would challenge that, and arguably, you know, say, hey. This is improper. I should've should not have been terminated. Most of the time, what's gonna happen there is you're gonna get certain damages. They're they're not gonna be reinstatement of the contract. But, again, it really just depends on the the circumstances. Can an agency declare that an an invoice for pending services will not be paid without first providing prior official notice that the contract was terminated? So two questions there, whether they can properly do it and whether they can do it and are doing it. We're seeing a lot of cases where there's no termination. They're just not paying invoices for contracts that are not being terminated. There's contracts that are ongoing, and certain agencies in particular. And they're not being jerks about it. They're just like, look. Our interpretation of that executive order is we can't pay you until we set up the system and start running all the payments through the system so you're not getting paid for the foreseeable future. I would argue that's, you know, not consistent with the FAR, and is, again, like I said, offer an immediate claim. And the idea is that you would pursue a claim on that. If you have instead been terminated and they're not, you know, allowing you to invoice for costs after the termination date, that's that's appropriate. That's when you wrap up those remaining costs in your your TSP. And, yeah, you mentioned there are rumors of a far rewrite. Have you heard any specifics on what this may look like? So with the caveat that, none of this is official, there have been, at least to to my knowledge, no official, memos or or notices on this. It seems to be generally accepted rumor amongst, a critical mass of government contract industry experts. There's a far rewrite coming, being, colloquially referred to as far two point o, where it's going to happen, quote, unquote, in weeks, not months. And the idea is that it's removing anything that's not statutorily required. Some reports also include that anything that's removed is going to be included in a separate document of policy guidance, but not in the regs. Other reports do not mention that. But it seems to, I I think there was an announcement expected on April first that there was going to be an executive order, and then then it got delayed. But, again, none of this is official. None of us know for sure. But it's just something that I think at this point is being widely accepted as not just rumor. And I would say it's it's probably likely to to come down. And with that, I know you guys have some stuff, GovSpend. And Artisha, I know you guys have some stuff you wanna kind of close with, so I will turn it over to you. And for those of you who, you know, putting questions at the end, if we didn't get to them, feel free to reach out to me directly. And thanks again for everyone for attending. Thank you, Maria, for doing this webinar for GovSpan and us. It has been so, so, so informative and so many questions. And I know there are gonna be so many questions for the attendees. You know, Maria is an amazing resource. Do feel free to reach out to her. But one of the things that I think we always, always, always tell people is it's so important to have a good government contracting attorney, you know, and and legal advice is so important, especially in times like this. That's my personal opinion. But, again, thank you for being here. Thank you, everyone, for joining us for this webinar, and this presentations will be sent. Links to the presentation will be sent as also it will be posted on GovSpan's website, in a day or two. Thank you.