Final Proc 5890 Essays

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Final Exam: PROC 5890

1. You recently retired from government contracting work and established a consulting company (fully consistent with government ethics laws and rules, of course) with the primary focus of advising potential government contractors and subcontractors. Mr. Johnny Jones, of The Johnny Jones Flooring and Construction Company has approached you with a question. Jones and his company are potential subcontractors (they, obviously, specialize in flooring) on a federal construction contract worth a little over two million dollars ($ 2,000,000.00) recently awarded to the Jimmy Smith Construction Company (Jimmy Smith, the prime contractor). Neither Johnny nor his company have ever been part of a government contract
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Law 95-563, by which only contractors, not subcontractors, may pursue claims against the government, and the term “contractor” is clearly defined as “a party to a Government contract other that the Government.” 41 U.S. C. §601 (4). To make the even clearer, the FAR prohibits a government contracting officer from consenting to a subcontract that obligates the contracting officer to deal directly with a subcontractor or that makes the results of arbitration, judicial determination or voluntary settlement between the prime contractor ad subcontractor binding on the government. FAR 44.203 (b). Lack of privities and the resulting barrier to direct claims does not, however, mean that no way whatsoever exists for a subcontractor’s claim to be heard. The regulations permit and the astute government contractor will ensure that its subcontract with the federal prime contractor will provide for “sponsorship of a subcontractor’s claim. Sponsorship is the practice whereby the prime contractor nominally prosecutes what in fact is the subcontractor’s claim against the government. The appeal of the claim is brought in the name of prime contractor even though the subcontractor is the real party in interest. FAR 44.203 (c) (Government Contract Law, pp. 419-420). Performance and payment bonds are an available tool to be mandated by the government for the protection of itself and of subcontractors.

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