Federal Contracts and Construction Law: The Basics

Federal contracting has become a particularly lucrative field, though navigating the complexities of the Federal system remains a barrier for many individuals. This article serves as a brief overview of the complex area of Federal contracting in the construction context, highlighting how a governmental agency requests and receives bids for a project, how the contract is awarded, and remedies available for disputes pertaining to an Award. This article does not constitute legal advice nor does it create an attorney client relationship. Contact an attorney at Etter, McMahon, Lamberson, Clary & Oreskovich, P.C. to find out more about the Federal procurement process. 

 

Federal construction projects are unique, being governed by their own regulations and jurisdictional bodies. The Federal Acquisition Regulations System is a uniform set of policies and procedures that govern procurement by executive agencies; it consists of the Federal Acquisition Regulations (FAR) and any agency specific regulations that implement or supplement the FAR.

 

Procurement Process

After conducting research, exchanging information and drafting the Request for Proposal, the government agency may publish a presolicitation notice generally describing the scope of the acquisition and inviting potential offerors to submit information that allows the Government to advise the offerors about their potential to be viable competitors. Once the solicitation has been finalized, the agency posts the opportunity on the Federal Business Opportunities webpage – FBO.gov.

 

With certain exceptions, Federal contracts must be awarded pursuant to a full and open bid procedure. The terms of the solicitation published by the agency will indicate how the contract is awarded and the proposal deadline. The solicitation also contains a list of FARs that apply to both the bid process and which are ultimately incorporated into the awarded contract. By way of example, the solicitation may either specify that the contract will be awarded to the lowest bidder or that the contractor’s proposal will be judged based on factors such as price, design, and past performance.

 

Bid Protests and Contract Disputes

Bid protests procedures can be technical and complicated depending on a variety of factors which are beyond the scope of this article. Generally, a bid protest can be lodged by an interested party (e.g., a bidder) with the agency or the U.S. Government Accountability Office (GAO), with appeals heard by the agency board of contract appeals or the U.S. Court of Federal Claims. An interested party may file a written protest objecting to the bid solicitation, cancellation of a solicitation, the award of a contract or the cancellation of an award. A protest based on an irregularity in the solicitation process must be filed before the bid review date (often the deadline is posted in solicitation). In all other cases involving pre-award contests, a protest must be filed within ten days of when the grounds for the protest are or should have been known, whichever is earlier. A post-award protest, such as a challenge to the methods used to award the contract, must be issued within ten days after the award. In the alternative, an aggrieved party may request a debriefing with the agency within three days of the award where the agency furnishes the basis for its selection. A protest may then be filed within five days after the debriefing. Given that many Federal contracts are highly lucrative, often worth millions or tens of millions of dollars, it is unsurprising that bid protests have become a regular occurrence in the Federal procurement world in recent years.

 

Note that certain agencies or departments may have varying processes or additional requirements. Be sure to confirm which entity is soliciting bids and what, if any, special procedures apply.

 

Award and Bonding Requirements

Under the Federal Miller Act, before any contract of more than $100,000 is awarded for the “construction, alteration, or repair of any public building or public work of the Federal Government” the contractor must furnish to the government two bonds, one for performance and one for payment. These bonds are sort of an insurance policy, serving to guarantee satisfactory performance by the contractor. A performance bond, in an amount the contracting officer determines adequate, is issued for the protection of the Government. A payment bond, which generally must be equal to the total contract price of the job, serves as protection of subcontractors and other persons supplying labor and materials to the project. This payment bond requirement is especially important as, unlike private construction projects, a lien cannot attach to government property. Thus, the payment bond provides the only security that material and labor suppliers to the job will be compensated. To bring a suit upon a bond, a second tier subcontractor or their supplier must provide the prime contractor written notice of its claim within ninety days of the last day labor or materials were furnished to the job. After notice is provided, a subcontractor has one year from the last day materials or labor were provided to instigate a suit in U.S. District Court where the contract was performed or else their bond claim is barred. First tier subcontractors and suppliers are not subject to the notice provision above, but are still subject to the one year limitation period.

 

Conclusion

Federal government contracting can be difficult to navigate.  Etter, McMahon, Lamberson, Clary & Oreskovich, P.C., attorneys advise clients in a variety of complex areas, including business law, contracts and construction law. Navigate to the Contact page to speak with an attorney today. 

 

Originally published in 101/201 Practice Series - Business Law, a publication of the American Bar Association Young Lawyers Division, © 2013 by the American Bar Association.