EXTENDING EQUITY IN GOVERNMENT CONTRACTING

 

Just how far should the concept of equity extend in government contracting? The regulation dealing with terminations for convenience makes it clear that when the government enters the marketplace and contracts with a private party it must exercise equity when it decides to terminate the contract for its own convenience. Read FAR 49.201. The concept of equity is discussed in practical terms. From that regulation is quite clear the government owes a special duty to a contractor when the government exercises the unique to its system unilateral termination of an existing contract.

The concept of equity expressed in the termination for convenience regulation should be extended to other aspects of government procurement. It makes sense that the rules be relaxed for convenience terminations. However, when it comes to the allocation of risk relating to changes and disputes, equity should be extended to permit avoidance by standards familiar in the private commercial world. The government should extend the same consideration to its contractors as in the private contracting sector when it shuts down and refuses to pay its bills. Public contracting should allocate risk to the government in any situation where to act otherwise would unduly punish the contractor or unjustly enrich the government.

bill@spriggslawgroup.com