Contractors are entitled to recover consultant and attorney costs reasonably incurred in preparing, pricing, and negotiating a change order under federal government contracts, including U.S. Postal Service contracts. That’s the holding in Tip Top Constr., Inc. v. Donahoe, 695 F.3d 1276 (Fed. Cir. 2012). The court overturned a Postal Service Board of Contract Appeals decision that had erroneously limited the contractor’s recovery of these costs. End result: if an agency changes your contract (whether by unilateral direction or constructive change), your request for an equitable price adjustment may include reasonable consultant and attorney costs.

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On May 18, 2012, the United States House of Representatives voted 299-120 to approve HR 4310, the National Defense Authorization Act for Fiscal Year 2013 [pdf]. The House vote rejects two amendments that had been the topic of some discussion within the government contracts community. One would have restricted the definition of “commercial item”

The James Zadroga 9/11 Health and Compensation Act of 2010, Public Law No. 111-347 (Jan. 2, 2011) [pdf] establishes a program to provide health evaluations and medical treatment to emergency responders and other individuals directly impacted by the September 11, 2001 terrorist attacks on the World Trade Center. Funds for the program are to be generated by a two percent excise tax on any “specified Federal procurement payment” received by a “foreign person.” 26 U.S.C. § 5000C

In addition to imposing the tax, the Act requires federal agencies to make sure that taxes paid under this law are not “reimbursed.”

The FAR Councils published a proposed rule implementing this requirement on February 22, 2011. See 77 Fed. Reg. 10461 (Feb. 22, 2011). The proposed rule changes amend FAR 31.205-41 “to inform the Government and contractors that costs of the 2 percent tax are not allowable.” It also proposes changes to four FAR contract clauses “to provide that the costs for the 2 percent tax are not included in foreign fixed-price contracts . . . .”


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Final revisions to the new DFARS rules on Contractor Business Systems were published February 24, 2012. DoD’s summary of the comments on the interim rule and a list of the changes to the interim rule are available at 77 Fed. Reg. 11355 (Feb. 24, 2012) [pdf]. Here are six of the key points contractors need to know about the final rules.
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The FAR Cost Principles and federal cost reimbursement contracts provide that only reasonable allowable costs are recoverable, including costs for executive compensation. A January 18, 2012 decision of the Armed Services Board of Contract Appeals rejected a government challenge to the reasonableness of compensation one contractor paid to executives and rejected the DCAA’s methodology for determining the reasonableness of the compensation. See J.F. Taylor, Inc., ASBCA Nos. 56105, 56322 (Jan. 18, 2012) [pdf].


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Many of the new contracting policies imposed by the National Defense Authorization Act for Fiscal Year 2012 [pdf] are geared towards increasing oversight of defense contractors and reducing the federal government’s outlay of cash. Here are a few of the highlights.

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Contributed by Kyle J. Gilster, Esq. of Husch Blackwell’s Governmental Affairs Practice Group

The government contracting community is concerned about the repercussions of the failure of the Joint Select Committee on Deficit Reduction (aka “the Super Committee”) to reach an agreement before the November 23rd deadline. In light of this failure, the question of the day is what happens now on deficit reduction and what impact this will have on government contractors.


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An interim rule published by the Department of Defense authorizes DoD contracting officers to withhold payment from contractors whose business systems they deem deficient. Issued on May 18, 2011, the rule implements Section 893 of the Ike Skelton National Defense Authorization Act of 2011, which we discuss here. It authorizes COs to withhold up to ten percent of progress payments if the CO determines that the contractor’s business systems contain significant deficiencies. The new rule applies to solicitations issued on or after May 18, 2011. COs are encouraged to amend existing solicitations with the new requirements “to the extent feasible.”

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Contractors bidding on federal contracts must take the leap of faith that they have accounted for all of the various elements that will affect the cost of their performance. But there’s no need to do so completely blind. Asking key questions of the procuring agency can help shed light on ambiguities in the contract documents.


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Unless Congress takes action by March 4, 2011, most federal agencies will be required to cease operations, presenting significant challenges for contractors. Whether you’re optimistic or pessimistic about the prospects of a political solution that would avoid the looming government shutdown, preparing for it is a necessity. News reports on the issue are interesting, but they don’t do much in the way of developing a strategy for handling a shutdown. Here is a look at some of the key questions presented, with answers based on decisions that came out of the now infamous 1995 government shutdown.
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