Prime Subcontract Disputes

Prime Subcontractor disputes can be complex and confusing. With more than 40 years of experience, you can trust our knowledgeable attorneys at Malyszek & Malyszek to guide you through every step of the process.

The federal government spends over $500 billion a year on contracts. More than 50% of that total trickles down to subcontractors. Therefore, disputes between prime contractors and their subcontractors on federal contracts are common, but may contain issues unfamiliar to the experienced government contractor. The prime contractor will often want to be bound by the same set of rules to the government and to the subcontractor; the prime doesn’t want to be caught in the middle and face the potential danger of inconsistent results.

It is dire that the counsel for the subcontractor reviews the prime contract with the government; the subcontract says that the subcontractor will be bound by all terms and conditions in the prime contract. This clause is frequently unfitting, unless when the prime contract with the government is a cost-reimbursable construction contract and the subcontract in question is a fixed-price supply contract.

In the federal system, for claims more than $100,000, the contractor must certify that the claim has been made in good faith, the supporting data is accurate, the amount requested accurately reflects the amount for which the contractor believes the government is liable, and the signer is authorized to certify the claim. If the prime is judicious it will require certification from the subcontractor; the prime itself must certify the subcontractor’s claim.

Sponsored claims are only permitted if the prime contractor is liable to the subcontractor and can charge the cost of the subcontractor’s claim to the government. This is known as the Severin doctrine. If the government concludes that continued performance of a contract is no longer in its best interest, it has the right to terminate the contract. A subcontractor has no contractual rights against the government upon the termination of a prime contract.

At Malyszek & Malyszek, we focus on all aspects of contracting with the U.S. federal government for companies nationwide and even overseas. Malyszek & Malyszek can help with your government contract disputes and rulings. Call Malyszek & Malyszek today to learn more about our government contract law legal services.