You know the drill—a large government contractor is looking for teammates to support its bid and proposal efforts in response to a Government RFP. That larger prime has its own paper (NDA, TA, Subcontract), written to meet its specific needs, prioritize its success, and reduce its risks. You do not have the time, expertise, or resources to make material changes that level the playing field. At the same time, you need the revenue. You make some changes to the best of your ability, and then execute the contract; but if, during subcontract performance, anything goes a bit astray, the prime contractor points to the terms and conditions of its paper to resolve the question, and that will usually be to its benefit and not yours.
It does not have to be that way. Liff, Walsh & Simmons has the experience and capacity to support you in expanding and protecting your business. We will help you leverage the products and/or services your company brings to the table to reach a balanced and fair subcontractor. We do so with efficient and cost-effective terms and conditions, as well as scope of work review, but, of course, with your best interests as our top priority. Always asking, how do the terms and scope of work as drafted support your needs, and what few but important edits in wording can ensure that they do, or at least, relatively do? Our attorneys understand that a wholesale re-write of a prime contractor’s paper will not go over well. Our lead government contracts attorney, Richard Vartain, has negotiated hundreds of contracts between government prime and subcontractors, and he knows how to strategically and tactically edit the prime contractor’s terms and scope so that a contract does not allocate all the major risks to you while doing so in a manner that the prime contractor will not see as heavy-handed.
The following are some ways large prime contractors often try to take advantage of their positions, and ways our firm can help. Often prime contractors’ papers impose unlimited liability on you for certain contract or other damages, while at same time capping its own liability at task order or total contract payments. Restricting indemnification and other potential damages to a reasonable amount given the contract’s value is the proper response.
Another typical imbalance is the intellectual property clause. Despite retaining the rights to any intellectual property that it creates in the performance of the prime contract, (the Government typically only obtains a license not ownership of such IP), many large prime contractors insist that their subcontractors sign over to it all the IP they create under the very same prime contract, in what is commonly called a “works-for-hire” clause. Granting the prime a license to your IP restricted to the performance of its prime contact is how you will want to protect your IP and meet your customer’s needs.
Prime contractors are required to flow down all mandatory FAR (Federal Acquisition Regulation) contract clauses to you; some however, also add to their paper the non-mandatory clauses as well, potentially shifting certain risks off themselves and on to you. The remedy here is to accept only those government clauses that by their explicit terms require your acceptance.
Other terms unfairly allocate risks in most large prime contractors’ terms and conditions. Contact us to discuss how we can help you negotiate agreements with your prime contractor buyers that do not leave you with the “short end of the stick.”
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Richard G. Vartain is Of Counsel at Liff, Walsh & Simmons and is the lead of firm’s Government Contracts practice area.
This alert provides general information and is not a full analysis of the matters discussed. It may not be relied on as legal advice. Richard Vartain, a Liff, Walsh & Simmons attorney licensed to practice law in Maryland, the District of Columbia, and Virginia contributed to the content of this article.
If you have questions on this article or another government contracts matter, our attorneys are here to help. Please contact Liff, Walsh & Simmons for assistance.
