Consider the following: For the first time in memory, the U.S. government is refusing to pay contractors for work already completed. One of the federal market’s core tenets is that compensation for work properly contracted and delivered is backed by the full faith and credit of the U.S. Government. That this is now even a question, as evidenced by the administration’s position vis a vis USAID contractors, is both unprecedented and raises serious questions about company access to credit and broader financial risk assessments. Fortunately, the courts have so far pushed back against the administration, but the battle is not over.
On a similar note, “termination for convenience” clauses are standard in most government contracts, but the breadth and scope of their use across government in just the last two months has been breathtaking. It has been especially breathtaking because there has been little or no mission or cost analyses underpinning the actions. Instead, they’ve been largely based on data scrubs and keywords which may or may not accurately describe the work being done.
The General Services Administration is demanding that major consulting contractors justify their value, identify cost savings and make pricing concessions. Contract reviews are important and should be routinely conducted. But it is not at all clear GSA has the authority to make this demand. Contracts and task orders are owned by the agencies that procured them, not by GSA. Reviewing and justifying them is the purview of the program managers, contracting officers and contracting officer technical representatives that set the requ ..
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