01/29/2021
DO YOU YOU HOLD A CONTRACT TO BUILD THE WALL TO PROTECT OUR SOUTHERN BORDERS
HAVE YOU RECEIVED A NOTICE TO STOP WORK UNDER FAR 52.242-15?
The new Administration appears to be altering contracts entered into by contractors and the initial manner of addressing its new approach is to issue 90-day stop work orders under the authority of the Federal Acquisition Regulation found at FAR 52.242-15.
If your company has been the victim or target of a stop work order, you need to begin taking steps immediately. Some are required by regulation; others are simply prudent. In this article, we will attempt to provide some suggestions on how to manage this sucker punch to your gut, and hopefully, survive this economic loss.
Upon receipt, you are required to take the following steps: stop all work on the affected contract and reduce or preferably eliminate incurring costs to the contract the maximum extent possible. As a caveat to all this – document everything you do!
If you have subcontractors working for you on this effort, notify them and share this information to assist them in minimizing their costs.
In many instances there will be costs created by the stop work order, and costs that will not be able to be completely curtailed. Be sure to document and write up justifications for each of these. Examples might be unexpired leases where the cost to cancel the lease outweighs keeping it in place. You have a duty to preserve the assets at the worksite so you will need to discuss with the Contracting Officer what they wish you to do in that regard. Is it cheaper to rent a portable storage building or keep a worker on site to watch over the site? Do you need to secure partial structures, finish a roof to prevent further degradation of in-place partial construction, etc.? Again, some of these should be placed in RFIs in writing to the contracting officer for clarification and documentation. If you ask for guidance on an issue like these, and there is a danger of damage to the project, if you are acting in good faith, perhaps send an email to the contracting officer, copying the COR and PM and say if you do not receive a response you will move forward with taking the minimum steps to preserve the government’s asset which includes …. and describe the steps you are taking.
Assuming, as it what is currently occurring with the border wall, the stop work orders are for the maximum – (90 days) – prior to the expiration or upon the expiration of the 90 days, the government has to lift the stop work order, extend it or terminate the contract. If they do nothing, on day 90, it automatically lifts. Rather than take chances; however, communicate with the contracting officer.
Another important point – when the stop work order either is terminated, or work is restarted, you only have 30 days to submit a Request for Equitable Adjustment to the contract performance schedule and submission of any costs incurred as a result of the stop work order to the contracting officer. Do not miss this deadline.
The following is a list that is not all inclusive of costs that may be incurred to consider throughout the stop work and remobilization period:
Management Costs
Severance costs as well as any increased unemployment taxation costs incurred during the stop work period
Idle time and facilities (ask the contracting officer if they will allow time for remobilization – in writing – or if they expect you to be ready as soon as the order is lifted)
Additional or alternate personnel required
Unabsorbed Overhead – this claim is actually recognized by DCAA as a claim for unabsorbed overhead to recoup overhead costs that had to be reallocated against other work because this project was no longer available to absorb them as part of the indirect labor and overhead stream
Cost of bonding that was frozen during the period (arguable lost opportunity)
Remember the costs of preparing the REA are included in the REA (attorney fees)
Cost of facilities sitting idle
Recruitment fees if personnel are lost and need to be rehired
Remobilization costs
If inflation occurs account for that cost at start up
Profit on any additional costs
Any claimed additional subcontractor costs
Other consultant costs such as accountants and business advisers