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lnlhutz23

Protection for Small Business Sub against Prime T for C

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Hello all, was hoping to get some guidance from those more experienced on an issue I'm facing with my prime.

We were recently notified of significant performance issues by the client. This caught us by surprise as we felt we were delivering as required under the contract and received no notice from our prime regarding any concerns regarding performance. After further investigations and conversations with our team and the prime, we discovered that the prime had in fact been advised of issues with work but never passed that information along. We were also not apprised of modifications to the contract directly related to deliverables we are responsible for, were instructed not to attend certain meetings (which lead to a lack of communication with the client), and had certain deliverables we submitted to the prime altered before it was sent to the client.

Our subcontract has a blanket termination for convenience right for the prime. Given the situation, what protection if any would we have to guard against at T for C? If we were terminated what recourse would we have available?

Thanks in advance!

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We dont know what your contract Termination For Convenience terms are. It would seem that such terms would allow the prime to terminate you for its convenience without breaching the subcontract. You would seemingly be entitled to whatever compensation that the subcontract TFC provisions provide for. We don't know what monetary impacts to the work you have performed that you could attribute to the actions of the Prime.

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Thanks Joel.

The TforC terms are fairly standard and favorable to the prime - right to terminate for any reason with 60 days notice. We would be compensated for work performed through the date of termination.

I guess my real question is would there be anythign in the FAR that would offer some protection to prevent a large prime from terminating a small business sub where it can be demonstrated that the prime has impeded the sub's ability to perform and has not communicated any performance issues prior to termination?

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Not to my knowledge, Inelhutz. That is an internal teaming issue.

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The "right" to terminate for convenience is one granted to the Government as its right. It is NOT something that is required to be in a subcontract agreement and is not a required flowdown. Most prime contractors include the clause saying that they need this right in case the Prime Contract is Terminated.

I never accept the clause and ususll add that the Tfor C can only be exercised if the Prime Contract is likewise terminated for convenience and then only to the extent my work is affected. In 95 out of 100 cases, the prime accepts this change. I sometimes hae to push back a couple of times, but most primes realize this is not a fair clause. If the prime will not budge, I ask for the same right to terminate my obligations without cause with notice.

Having said this, I always put a TforC clause in my subcontracts, but I am willing to modify it if the sub requests.

Remember that not all rights due to the Government are due to the Prime.

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Remember that not all rights due to the Government are due to the Prime.

Yup. I just ripped apart a boilerplate Subk from a mega-large company that put: "...reference to the Government or Contracting Officer shall mean [large Prime contractor]..." in before the list of Government contract clauses.

I never let this fly.

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