30-Day Window Closing For Contractors Looking To Recover Costs Incurred During The Shutdown Under A Stop-Work Order
On January 25, 2019, President Donald Trump signed legislation to temporarily end the record long government shutdown, which resulted in a 35-day closure and a disruption of services at various federal agencies. Due to the lapse in appropriated funding at these agencies, various contractors received stop-work orders from their Contracting Officers precluding continued performance during the shutdown. Under the Stop-Work Order Clause, see FAR 52.242-15, contractors are instructed to immediately comply with stop-work terms and take “all reasonable steps to minimize the incurrence of costs allocable to work covered by the order during the period of work stoppage.” Contractors are also required to enforce stop-work orders with their related vendors and subcontractors.
Now that the shutdown is over, it is imperative for contractors to understand their rights under the Stop-Work Order Clause and their ability to receive equitable adjustment for costs and delays incurred as a result of the stoppage. Pursuant to FAR 52.242-15, once a stop-work order is canceled or the period of the order or any extension thereof expires, the contractor must resume work. If a contractor determines the stop-work order resulted in an increase in time or cost properly allocable to the contract, the contractor can assert its right for an equitable adjustment with the Contracting Officer. While a request for equitable adjustment can be submitted prior to final payment on the contract, it is strongly recommended, and indeed it has been treated as a requirement, that the request be submitted within 30 days after the end of the work stoppage to ensure appropriate review of the request.
Since the shutdown was lifted just last month; contractors would be wise to seek recovery of expenses from the Contracting Officer as soon as possible. Before filing a request for equitable adjustment, contractors should first take an inventory of their contracts and personnel, as well as document all: (1) delay costs, (2) wind-down and start-up costs, and (3) communications with all parties involved in the work stoppage. A successful request for equitable adjustment includes facts supported by a detailed description of the additional costs, and an explanation of why the delay impacted certain critical activities and completion of the contract. If negotiations after the filing of a request for equitable adjustment are unsuccessful, then a contractor may convert the request for equitable adjustment into a claim.
Lauren Brier is an Associate Attorney with The Federal Practice Group and focuses her practice on federal government contracting.
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