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Government Contracts: A Rush Job? Don’t Forget to Tell Your Vendors

Doing expedited work for the federal government empowers you to make subcontractors, vendors and others downstream attach similar priority to your orders, but only if you comply with the federal notice rules.

For national security reasons the federal government can rate certain projects as “DO” for priority, or “DX” for even higher priority, to move them by law to the front of the line for completion. Likewise, contractors performing such DO- or DX-rated work have the right to “flow down” that urgency to those working for them on the federal contract. The flow-down will only have the force of law, however, if the contractor includes the four elements of such rated work within its downstream order. Merely stating that the order must be filled “immediately” or “as soon as possible” is of no avail.

Rather, a legally effective rated order must include the following: (i) the appropriate priority rating, such as “DO” or “DX”, followed by a defense program category number; (ii) the required delivery date, though a requirements contract may provide for furnishing items from time to time within a stated period; (iii) the written or digital signature of the person authorized to place the order; and (iv)  a statement to the effect that “this is a rated order certified for national defense use, and you are required to follow all the provisions of the Defense Priorities and Allocation system regulation (15 CFR 700).”

In fact, if a vendor were to respond to an urgent request made outside the required format, placing the request ahead of properly rated orders, the vendor would be violation of the federal contracting laws giving precedence to the rated orders.

Vendors in government contracting are required to accept, and in some instances reject, rated orders according to their capacity. Generally speaking, acceptance of a rated order is mandatory, with some exceptions. Rejection of the rated order is mandatory if the vendor is unable to fulfill the order by the specified date; however, the vendor must inform the customer of the earliest date on which vendor can fulfill the order and offer to fulfill it on that date. Also, the vendor shall not accept a DO- or DX-rated order that would conflict with previously accepted rated orders.

A vendor unable to fill all rated orders of equal priority received on the same day must accept them based on the earliest delivery dates and reject the later ones. For example, a vendor receiving two DO-rated orders on the same day must fulfill the one due June 15 before accepting the one due June 30.

Vendor rejection of a rated order also is an option to the vendor under certain circumstances, including the unwillingness of the company placing the order to meet regularly established terms of payment or sale.

Whatever the vendor decides, the vendor must accept or reject by hard copy or electronic format within 15 working days after receipt of a DO-rated order.

If a federal contractor makes a mistake, failing to make proper placement of a rated order, it can correct what is essentially an unrated order by resubmitting the order in amended form with the four required elements. In that case, however, the vendor would be required to give preferential treatment only as of the date of the amendment. When a priority rating is added to an unrated order, all suppliers must be promptly notified in writing. Best to get it right the first time.

For more information please contact Jay Merwin at 410-583-2400 or merwin@bowie-jensen.com.

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