Avoiding Performance Pitfalls Under Government Contracts

During the competition phase, it’s easy for a contractor to assume that the contract will be successful and profitable, despite concessions and aggressive assumptions. But much of contract performance is outside the control of the contractor. Among developments to note: There are several provisions of the National Defense Authorization Acts for 2013 and 2014 that are designed to ensure that subcontractors whom primary contractors claim to use are in fact used in performance of the contract.

To reduce the risks, pay as much attention to subcontract management as you do to management of the prime contract. Ensure that proposal teams and business development personnel are aware of the most recent requirements for small business subcontracting. Review purchasing systems with respect to counterfeit electronic parts requirements. Take care to flow down schedule and other performance requirements that apply to subcontractors, as well as key tailored provisions of the prime contract such as those regarding security requirements or organizational conflicts of interest. Establish clear dispute resolution and limitation-of-liability provisions, and ensure that subcontractors are required to continue performance during the pendency of any disputes.

Contractors receiving any type of show-cause notice – or any inquiry from a debarring official – should take that notice seriously. This is the contractor’s opportunity, perhaps its only one, to convince the agency that more extreme action is not required. Recognize the warning signs that emerge from program metrics, performance metrics, performance evaluations and program reviews.