Federal Contract Law Firm Guides Clients Through Subcontractor Disputes
Government Contract Attorneys Concentrate on Avoiding Subcontractor Disputes
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When doing business with the U.S. government, whether at the prime contractor or subcontractor level, companies must comply with a myriad of laws and regulations in addition to the standard contract terms found in the commercial market. Disputes between prime contractors and their subcontractors on federal contracts are relatively common, but may nevertheless contain some issues unfamiliar even to the experienced government contractor.
Flow-Down Clauses
Because a subcontractor lacks a direct relationship with the government, the laws and regulations applicable to subcontracts are much less than those applicable to a prime contractor. Prime contractors, however, often attempt to “flow-down” virtually all of the terms of their prime contract. Subcontractors should carefully review proposed subcontracts and attempt to limit flow-down terms to those required by law or otherwise needed to address the government’s right to modify the prime contract.
A subcontract for commercial items is typically subject to fewer required flow-down clauses than one for non-commercial items. But nothing prevents a prime contractor from trying to flow-down additional provisions from its prime contract. Even if a prime insists on including a non-required flow-down clause, the clause may be modified to make it more acceptable to the subcontractor.
A subcontractor should consider modifying any flow-down of a Termination for Convenience clause so that the prime contractor’s right to terminate for convenience is exercisable only to the extent the government exercises its right to terminate. This avoids the ability of the prime contractor to terminate or threaten termination, even though the government has not terminated the prime contract.
Contact Our Federal Contract Dispute Law Firm Today
If you need legal representation regarding subcontractor disputes as they apply to government contracts, contact the Whay Law Firm online or call (202) 448-9677 to schedule your initial consultation today.
