Name: Smart Subcontracting: Drafting a Subcontract that Expects the Unexpected
Uploaded: 2026-11-10T17:30:45.537Z
Duration: 1 h 5 min 52 s
Description: Smart Subcontracting: Drafting a Subcontract that Expects the Unexpected

Transcript for "Smart Subcontracting: Drafting a Subcontract that Expects the Unexpected": Hello, everyone, and thank you for joining us for today's webinar, smart subcontracting, drafting a subcontract that expects the unexpected. Before we get underway, a few administrative items to note. For the best experience today, please use Google Chrome. The audio is being streamed through your computer, so there is no dial in. Just ensure that your volume is turned up. If you do have any questions to that... Today's presentation, you can go ahead and submit them at any time during the presentation. On the right hand side, you'll see our q and a tab. Our speaker will be taking questions throughout today's presentation. We will try to get through all of them, but if for some reason we do not, we will be following up, post webinar, and we will contact you using the contact information you provided at registration. Documents, including today's presentation slides, are available for you to download. I wanna, bring your attention to the right hand side of your screen under our docs tab. That is where you will find today's presentation slides. We are also making, a number of free resources available to you today that I just wanna point out because while you're grabbing those slides, you might wanna go ahead and download those as well. First, we have our twenty twenty six GovCon clarity report. If you are new to Deltek or even if you have been with Deltek for quite some time, you may be familiar with our clarity report. In 2026, we surveyed nearly 1,000 government contractors for their feedback on a wide range of topics related to the GovCon industry. Great opportunity for benchmarking, kind of understanding where folks are making investments, where they have challenges, what they're kinda seeing in the market. So you are free to grab that. It is very robust. I highly recommend that. I'm, also wanna point out we are making available a relatively new guide that we've just recently, rolled out, and that is the GovCon AI gap, very relevant to the conversations happening in the industry today. Really focusing on, AI adoption versus AI maturity, what maturity looks like, in a GovCon organization, where AI is now showing up through all stages of the project life cycle. So if you'd like to grab that, you can. And then lastly, we have our GovCon clarity scorecard. This is a great companion piece to our report and also allows you to, benchmark yourself against, other organizations and really get a deeper understanding of some of the findings within the report. So we hope that you'll be able to take advantage of some of those resources. And now with that, I would like to go ahead and introduce our speaker for today because we are thrilled to have her here for the last time in 2026. We are thrilled to, welcome Maria Panicelli. Maria is a, principal at Miles and Stockbridge. She is, has been advising clients nationwide and abroad. She is a frequent speaker, on our GovCon webinars here at Deltek. She's active in multiple industry related professional associations. She's a frequent lecturer and author on government contracting and small business procurement topics. So we are really happy to have her, with us again. So, Maria, I will turn it over to you at this point. We just need you to join us on stage, Maria. Thank you so much for that lovely introduction, Leslie, and thanks to everyone out there for joining us today. As you heard today, we're gonna be talking about smart subcontracting, and in particular, how to draft a subcontract that in this ever changing world and very chaotic industry this year at least and last year that we, are all working in, how to draft a subcontract that kind of accounts for that and expects the unexpected. The idea being that there are so many things up in the air right now that you've gotta kind of figure out where you think they're gonna land, but you not need to also give yourself some flexibility, because nobody knows for sure where all of these things are going to land. As you heard, my name is Maria Panicelli. I am a government contract attorney, and a principal at Miles and Stockbridge. Miles and Stockbridge is a full service law firm. We've got about 250 attorneys across a variety of, you know, focus areas from labor and employment to intellectual property to general commercial litigation to corporate. But I am one of about 15 people that are in the government contracts group and focus exclusively on federal procurement, which means that we see clients through every stage of the procurement cycle, helping with things like subcontracting, of course, what we're gonna talk about today, but also things like bid protests, claims, various compliance issues, the small business programs, size and status protests, teaming, mentor protege, OCIs, terminations. You know, you you see, it kind of runs the gamut of all things that can pop up just by virtue of being a government contractor or, you know, in connection with a specific government contractor or or government contracts. You've got my contact information there on the screen. So as you heard from Leslie, we're gonna try to take questions during the presentation today. But given that there are several 100 of you out there, to the extent that there's any questions we don't get to or any questions that you don't think of until we're done, or if you just don't like asking questions in a public forum, you can feel free to reach out to me separately offline, or connect with me on social media. Although I will be honest, I'm not very active on x anymore. I am on LinkedIn. And I also post when I'm doing webinars like this or when I've written a blog or a client alert or, you know, interesting case studies and and things like that. Alright. So with that, I want to kind of dive into the substantive chunk of our our presentation today. What we're gonna do is we're gonna just talk upfront about some of the the things that are going on right now, and then we're gonna dive into talking about kind of how to implement or, I guess, I should say how to account for those things in your thinking. You know, how you wanna approach subcontracting, what's the appropriate mental framework, how you can be prepared, and also just kind of some of the the fundamental building blocks. We're then gonna put those two things together and talk about how to deal with certain, you know, types of clauses or certain ideas in your subcontract given that today's landscape is is changing. We're gonna wrap up with a perennial favorite, which obviously, you know, in this changing world is important but has always been important, And that is the disputes clause and and how to deal with, you know, kind of moderating between the sub and the prime interests in in dealing with disputes because the disputes clause can be one of the most important clauses in your subcontract. And then, again, we're gonna try to leave a little bit of time for for extra questions depending on how many we get during the presentation. Alright. So with that, if you have been, you know, living in this industry in in recent times, you will know that there are a lot of different things going on. Right? So first and foremost, we've got the revolutionary FAR overhaul or the RFO, you might have heard it referred to, and kind of the related regulations being overhauled. So, like, the DFAR and the GSAR and the VAR and things like that. But we also have things like the executive orders, which, you know, this administration has put out a lot of. But there are administrations in the past that have put out a lot too. You know, for example, Biden had exempt, executive orders dealing with COVID vaccinations that applied to government contractors and, you know, the the same kind of ideas applied there where there were certain modifications that had to be made and certain plans that had to go into place in between primes and subs in order for there to be compliance. So everything, you know, everything old is new again. Nothing new under the sun. The executive orders are coming fast and furious, but that doesn't necessarily mean that we're dealing with concepts relating to the executive orders that we haven't dealt with with previous administrations. There are also just kind of general administrative initiatives. And by that, I mean, things that in some cases have resulted in executive orders. But in some cases, they've either resulted in executive orders that have then been pulled back or have not quite made it to the executive order stage, but are just kind of directions or pry... Kind of messages about prioritization that have been delivered to the various agencies. Obviously, last year was a big year for Doge and not only the terminations that came along with Doge, which have slowed, you know, towards the end of last year and and through this year. But also this idea of really double checking, triple checking, quadruple checking, before you pay any contractors. That's not necessarily a separate executive order that's in place anymore, but, that doesn't mean that the message isn't still being delivered that, you know, everything's gotta be second, third, fourth quadruple check before contractors are getting paid. There are also some big proposed changes to the small business rules. I'm sure many of you are aware of those. The idea being that certain size standards were going to be greatly increased. Certain size standards that were dollars based were gonna be switched to being employee based, and certain size standards were gonna be... Or, you know, certain ways of dealing with size standards were gonna be consolidated. There's also proposed changes out there for the CBR or SBIR rules, for those of you who are in that world. And, of course, there have been a lot of changes and ups and downs relating to cybersecurity, CMMC, you know, NIST, CUI, which is class... Or classified uncontrolled information. I'm sorry. Confidential and controlled information. And when you are talking about these various trade... Chases... Oh my god. These various issues. Sorry. I'm having tongue tied issues today. You know, they are all things that impact what should and and should not go into your subcontracts. On the controlled unclassified information front and on the cybersecurity front, obviously, some of you will be aware that there were certain stuff pushed into place and then pulled back. CUI has been dealt with now as part of the proposed rules, in connection with the revolutionary far overhaul as opposed to being dealt with, in the the other avenues that had been dealt with before. There was kind of a a conflation or a a smooshing together of those issues. So overall, when you are talking about all of these things, they are all kind of up in the air at once. And for the revolutionary far overhaul, one of the most important things to keep in mind going along with this theme of unpredictability and and trying to plan for what various things might happen. For those of you who don't know, the revolutionary far overhaul is changing the FAR in a somewhat unusual or nontraditional way. Historically and and kind of under the the statutes, the way that the FAR has always been changed is through something called a a rule and comment period, which means... And you guys have probably seen this, and this is the same for the small business rules. You'll see something published in the federal register where basically there's a proposed change or a proposed rule, which basically just is the terminology used for their proposing a change to the regulations. Then industry and, you know, experts are are kinda given the chance to comment on it. Maybe there's an interim rule with more comments, but then there is a final rule put in place that says, alright. This is what we're changing the FAR or the small business regs or or whatever else in the code of federal regulations too. If it takes a while for that to actually be implemented in to the FAR itself, agencies will issue deviations basically to align themselves and to make sure that what's going into their contract is consistent with with the new final rule, and not the the FAR that just hasn't been updated yet. Because sometimes the the wheels of bureaucracy move slow, and it takes a while to actually get it codified into the FAR itself. What's going on with the revolutionary FAR overhaul is instead that they issued model deviation text on the government website. The agencies were then told to adopt that through deviations, which they did. So agency by agency, far part by far part, they adopted these deviations, and then they started using them in their contracts. But, technically, that hadn't gone through the rule process yet. Now they're starting to push or they have started to push certain sections through the rule process. So we have certain ones that have been proposed, and there have been comments, and now we're waiting to see what happens with the final rule. There are certain ones that have not been proposed yet. So we're kind of in limbo and in different levels of limbo depending on what section of the far you're talking about. So it's really important from a prime's point of view to figure out, you know, like, what versions of the... These clauses apply, and to have conversations with your contracting officer and with your attorney about those things because depending on what versions apply, and it might be that you've got some old far clauses and some revolutionary far deviations and some stuff that, you know, you know is gonna change and be even different from that. You need to kinda keep all of those various moving pieces in mind. Talk to your CO. Talk to your your attorney and figure out what that means for what needs to go into your subcontract. So kind of along the same lines, preparation, planning, you wanna scope out what changes are out there that might affect you, kind of where those changes are, you know, or have they been proposed? Have they been affected? Have they been proposed, but now there are changes to what was proposed? There's a lot of research and reconnaissance that's kind of involved in this, and that's gonna mean that especially if you wanna be careful, and I know that this is, lawyerly advice and that sometimes there is some tension between entrepreneurial spirit and, you know, legal caution. I get that. For those of you out there running companies, you are gonna be more, you know, apt to wanna take those entrepreneurial risks. But from a legal standpoint, I'm gonna give you the warnings that I need to give you, and, we gotta try to reach a a middle ground there. But you're gonna wanna leave yourself more lead time than you normally have done in the past. While everything is kinda up in the air, there are more issues that need to be worked out as part of the subcontracting plan. You've got to leave more room for negotiation and more room for kind of education, especially if you're dealing with subcontractors that don't deal in the federal space or, you know, perhaps are not big enough to have people dedicated to compliance and and keeping track of all these legal developments. This, you know, the the the rest of this slide is is not new. This is stuff that I would tell you even if all of these changes weren't afoot, and that is that you've gotta have, whether you're the prime or the sub, honest conversations about what your goals are, what your, you know, prime or or sub depending on who you are, you know, your potential partner's goals are, you know, who's got what strengths and weaknesses, how to kind of even out your capabilities leveraging each other's strengths. And you're gonna wanna do that and figure it out, you know, how's the best way to do that, whether it's a team, whether it's a joint venture. You know, no matter whether you're doing a team or a joint venture, how are you divvying up the scopes of work? And, obviously, the goals, you're gonna be looking at trying to get this done in a successful way to to please the government, to get good CPARS, to, you know, obviously, build your revenue streams, to build your reputation, and all of that together to kind of open the doorway to new opportunities and new contract awards and new revenue stream opportunities and expansion of your business. And that's gonna be true whether you're in the sub or the prime space. It's just a question of kind of what kind of opportunities you're looking for, what kind of past performance record you're trying to to build. One of the most important things is to choose your partner wisely. When you are talking about government contracting and subcontracting, yeah, they are business relationships, but they're business relationships between people. Right? So interpersonal things still count. And like with any other interpersonal relationship, having someone on the other side that's a decent person to deal with, that you can get along with, that you respect, that respects you is important. And, again, as you navigate all of these uncertainties, it's important to have someone that's gonna be a team player, who's going to be willing to roll with some punches and, in advance, willing to talk about things honestly in terms of what is and what isn't a deal breaker and what storms they might be willing to weather and are not willing to weather because there's going to be things that come up that are unexpected. You can only plan for so much in this changing world. So you wanna find a partner who wants to look ahead and plan and think about all of the contingencies based on kind of the unknowns that we know, all of the things that I talked about that are up in the air. But you also need to make sure that that person isn't so rigid that they can't account for the unknown unknowns. You want someone who monitors kinda what's going on, can talk about it with you, can pivot, can be flexible, can embrace change to the extent that there are unknowable unknowns. All throughout this process, communication and coordination are critical. You want someone who's going to be, you know, diligent, who is willing to work, who is hardworking, who's got that integrity, who's gonna cooperate with you, be proactive, take ownership of issues, is not just gonna sit back and wait to be delegated to or wait to be assigned work, you know, wait to be told exactly, you know, how to handle an issue. You want to make sure that there's honesty and transparency. And one of the things that I talk about whenever I do a webinar or a presentation on subcontracting, and it always surprises people because they think it's kind of antithetical for a lawyer to say this. But you wanna have empathy and understanding for the other side. Partially, again, going back to that idea of interpersonal relationships, and they just work better when you are mutually respectful and try to figure out where the other person is coming from. But also... And I guess here's where the the lawyer comes back in because it gives you more power in your negotiating relationship if you understand where the other side is coming from and you know what they're trying to do and can suggest an alternate way of doing that, that is nonetheless better for you than the way they are suggesting of addressing it. Throughout the whole process, it's also just really important to understand your roles, understand both, I mean, in terms of leadership and, I mean, in terms of actual scopes of work. So what you wanna do upfront is identify areas of agreement and disagreement, try to really narrow the gap. And this is, again, where both sides really knowing the the rules and the regulations, knowing all of the things that are in flux right now is really gonna help you have a a, you know, a detailed conversation where the devil is in the detail on a lot of these things, and you're gonna wanna get down into it. And understanding the rules and regulations is gonna allow you to understand where the other side is coming from, what their concerns might be, and then you're gonna be able to narrow that gap and address the narrow issues as opposed to, you know, not being able to reach consensus because you're too far apart. It's really, really critical in the regulatory scheme that we've got and all of the changes that are happening right now to understand where each party might have some wiggle room and, therefore, things that you can push back effectively and potentially negotiate and change the terms as you're trying to draft the subcontract and where the other party is not gonna have very much wiggle room because they just can't, you know, run the the risks of of changing certain things in a certain way. One thing I wanna cover just before we we continue is also some of the lingo here. People tend, no matter how long they've been in the industry, no matter how sophisticated they are, to misuse some of the terminology. And it might seem like I'm just being a lawyer and this is a a semantic splitting hairs thing, but it is actually really important to recognize the difference in these terms if only because if you have one understanding and your potential sub or your potential prime has a different understanding, you're going to have a misunderstanding of what you were talking about and and what agreements you're working on. So subcontracting and teaming are not the same thing. A subcontract agreement is not the same thing as a teaming agreement and vice versa. A subcontract is an agreement by which, you know, you as the prime give some of the scope of work you have under your prime contract to a subcontractor, and you work out... And we're gonna talk about kind of the anatomy of a subcontract in just a little bit. You work out, you know, what the scope of work is, how much they're getting paid, and kind of all of the ancillary ways that they're going to do the work. A teaming agreement comes earlier, and it's basically an agreement to enter into a subcontract later. The idea is that you're coming together and saying, here's an agreement that we're drafting, and the purpose of this agreement is to talk about how we're gonna cooperate to draft a proposal or bid or quotation, whatever the case may be. Oh, and by the way, if that effort is successful and we ultimately get an award, here's how we're gonna enter into a subcontract and who's gonna do what. So it's an agreement to get to the part where you get an award and now you've got a subcontract. Don't stop at the teaming stage and not ever enter into a subcontract. The subcontract is where you're gonna get into a lot more details about how the work is going to be done, how payment is going to be effective, all of kind of the ancillary rules and regulations and a lot of the compliance stuff. You don't have to team before you subcontract, but you you can't really only team and then not enter into a subcontract. I mean, you can. People enter into arrangements all the time where there's no written agreement, but then you've got a lot of trouble headed your way when there's any dispute or any issue that pops up. And as I've kind of already beat the dead horse on, with all of the uncertainty with the RFO and the executive orders and the changing small business regs, you really don't want to have nothing in writing if something goes down and if you need to kind of, you know, try to work out a dispute. Having nothing in writing is not helpful. Other thing that subcontracting is not, it's it's not a joint venture. It's not a GSA CTA. It's not mentor protege. It is, again, an agreement where you're passing down, you know, from prime to sub a portion of the scope of the work of the prime contract. It's, you know, it's a different thing than all of these other terms, and it's really important to understand when to use what kind of agreement and what legal effect each type of agreement has. Alright. So we're now moving, although we're still kinda talking about the fundamentals here, we're now moving from the section with kind of general framework and approach and and mindset and the building blocks into, alright. Now what are the fundamentals looking at a document that you call a subcontract itself? And they're generally broken into, you know, certain categories. Right? The most important thing... And I think when I first graduated law school and and started doing this kind of work, the thing that surprised me the most was, and you guys will be familiar with this if you've done this work a lot, is that the scope of work, you know, what what work the prime is actually asking the the subcontractor to do, you know, what, you know, what they're building or or how many FTEs they're providing or, you know, what services they're doing or how many widgets they're they're they're giving us to to modify, whatever the case may be, is oftentimes an exhibit. Right? It's the scope of work or the performance work statement. And a lot of times, you'll actually see that attached as exhibit a. The idea being that the the body of the contract, you know, whether it's 20 pages, 40 pages, 60 pages depending on, you know, how complicated it is, and we'll talk about that in a little bit, is going to deal with all of what I've been calling the the ancillary stuff. A lot of rules about how the work is gonna be done, how the parties will be interacting to get it done, what to deal with if there's a change, and you need to negotiate that, you know, what insurance needs to be done, how you're gonna deal with disputes arising out of the work, you know, indemnification, all of that, you know, payment terms and and payment frequency and how invoices are submitted. But the scope of the work, you know, the the SOW statement of work or performance work statement, that a lot of times is really, really key, but it comes as an exhibit. And a lot of times, that's because people have templates that they use for that, you know, the body of the contract. And that way, they can just change the scope of work or the the p... The the statement of work... The the PWS at exhibit a every time, right, and then use the same template. That being said, what goes into your contract is necessarily governed by the scope of work. Because if you are a construction contractor and you're saying, okay. I'm, you know, I'm subcontracting all of the electrical work to you, electrical subcontractor, you're gonna have very different clauses in the the body of the contract and in your far flow down clauses, which we'll talk about in just a second, than you are if you're dealing with a subcontract... I'm sorry, you know, service... Subcontract as a service or software as a service. Excuse me. Or if you're dealing with, you know, a professional facility or facilities management type of contract and you're just talking about FTEs and and how many, you know, positions, which party is filling and, you know, how you're getting paid for those and how you're breaking down the percentages and things like that. Depending on what agency you're dealing with and what type of contract you have, the flow down clauses that go in and... And we're gonna talk about what flow down clauses are in just a little bit if you don't... If you're not familiar. But also this third bullet point, all of the, you know, what I've been calling ancillary stuff is going to be different. And and you're gonna have a changes clause no matter what, but, you know, what type of changes you anticipate happening and and how you're gonna deal with that is going to depend greatly on what that scope of work is, you know, what the subcontractor is doing. So even though a lot of times that's addressed in an exhibit, it's kind of the the tail that wags the whole rest of the dog. Right? That's where everything kind of goes back to, the scope of what the subcontractor is doing. Now we're gonna talk a little bit more in detail about flow down clauses in just a second, but you will often also see, you know, a list of clauses, these flow down clauses that we're gonna talk about. And oftentimes, they are included as an exhibit b or as, you know, another exhibit, and they are incorporated into the subcontract. And, again, the extent to which the subcontractor is gonna agree to incorporate all of those and the extent to which the prime is trying to push down, you know, a a big list because they don't spend the time to... They don't wanna spend the time to narrow it down is going to be a creature of negotiation when you get to that point. You're always gonna wanna have a disputes clause. And like I said, we're gonna spend some time on that exclusively towards the end of this session. And then you're gonna have the legal minutia. And by that, I mean, not all of the stuff we just talked about, which to a lot of nonlawyers itself seems like legal minutia. But I mean the clauses like, you know, certain people can exercise this in a different document and fax it, and that... That'll count. And, oh, you know, if one clause herein is deemed to be unenforceable, that doesn't mean that the rest of it is is waived. All of those, like, two sentence paragraphs that go at the end of the subcontract that you need in there to protect you from certain stuff, kind of like you need warning labels on things so that people don't do stupid stuff, but they're not necessarily the heart of the subcontractor or anything that you need to be worried about from a, you know, contractor point of view. That's stuff that your lawyers can deal with and just kind of put in the boilerplate stuff. In terms of... You know, this is the the same slide that we were just on, but I have highlighted certain language. Because these really are, as I said, the things that are going to be dependent on what type of work is at issue, you know, what the contractor is doing, what the scope is. That's gonna impact the far flow down clause. It's gonna impact kind of all of the provisions about how the work is done, how the obligations are are divvied up, how the risks are divvied up, how changes are dealt with, how, you know, what what the the parties need to do to be compliant. And because of that, these are also the areas that are going to be most affected by the potential changes that are out there. You know, the revolutionary far overhaul being the the biggest one, but any executive orders that might come down the pike as well. So, again, for example, I I use the example of of years ago, you know, in the the throes of COVID when president Biden issued an executive order saying that, you know, for government contractors, they had to make sure their workforce was, vaccinated, and they had to flow that down to their subcontractors. So, you know, that was an executive order that you needed to be paying attention to, and you needed to try as a prime to negotiate that into all of your subcontracts because sooner rather than later, your contracting officer came knocking on your door trying to modify your contract to add that clause in because the executive order had a clause that needed to be added in, and it was a clause that needed to be flowed down. So those are the types of things then that all of a sudden become an issue and need to be inserted into your contract so that you as the prime can ensure compliance, so that you as the sub will know what you need to do to be compliant, and so that everyone is happy go lucky and you're delivering what the the government needs while also being compliant. Because that's a really big thing in federal government contracting. Right? There's the scope of work and making sure you do what your contract says, but there's all of the other stuff that you need to do to be compliant just to be a government contractor. Right? If those of you who've been in the industry long enough, you know, even if you don't have any active contracts, even if you haven't gotten a contract yet because you're new to the industry, Once you're registered in SAM, once you're going after government contracts, there's a whole host of things that all of a sudden you need to be concerned with. And by that, I mean, you know, do you need an ethics plan in place? Are you segregating your costs appropriately? Are... Do you need to be cast compliant? And if so, are you? There are all sorts of things that have nothing to do with a specific contract or performance of that contract, but, basically, just things about how you set up and run your business that you need to be making sure you're doing correctly in order to be eligible to do business with the federal government. And if you're trying to do business with the federal government and you've made those reps and certs and SAM, it's a problem if you don't actually have the the stuff to back it up in the background. So what that means is when you are a prime contractor, these are your risks and danger zones. Right? You don't want, in terms of the performance, the subcontractor to cause you a delay or force a default. You don't want the subcontractor to do anything that's gonna cost you money and either force you to have to go to your... You know, go to the government with your handout for something that the government wasn't really responsible for or just that you're gonna have to swallow because, you know, you're trying to to clean up something that the subcontractor did insufficiently or or badly. You're also, again, outside of the scope of work, outside the performance of the contract, both with regard to the performance of the contract and also just in general, you know, by nature of being, quote, unquote, a government contractor, there are things that you're gonna need to flow down, whether it is the flow down clauses from the contract itself or whether it is things like the the COVID vaccination example I just used or whether it's a change in the DEI or lack of DEI from the the, you know, the Trump administration executive orders. These are things that you also need to make sure you are worrying about or, you know, not worrying about, but that you're accounting for, that you're taking care of when you are drafting your subcontract. And because you never know what... You know, and this is, again, not unique to this administration, but you never know what could be happening, you know, next week with a new executive order. You need to build yourself some flexibility in terms of being able to add stuff into your contract for new changes that that come down. The other thing that a prime contractor is always gonna be worried about, and this is kind of foreshadowing for when we get into the disputes clause, is this idea of, okay. Let's say something goes wrong. Let's say it is the government's responsibility. There was, you know, a change that the government asked you to do that that cost a lot of extra money, or there was a defective specification, or the government delayed the project somehow. All of those things are things where, you know, if it's the government's fault, truly, you can go after the government with a request for equitable adjustment or a claim, and we're gonna talk about that as we get to the disputes clause. But what you don't want as a prime is your subcontractor suing you in the meantime because they just can't wait. So you're always going to, as a prime, kind of be trying to guard against this idea that you are fighting a battle on two fronts that you're stuck in the middle between trying to fight upstream to the government to to get what you're entitled to and having your sub nipping at your heels. You also, in the claim realm, could be worried about to the extent that your subcontractor has a a class... Has a claim that they've asked you to pass through, that they could implicate you in some sort of false claims act issue or fraud issue because you're the one that's gonna have to certify it. And, again, we'll talk about that a little bit more when we get to the the disputes clause issue. But that is why the disputes clause can be such a big thing. And you've gotta be thinking about all of these things when you're a prime and addressing your subcontract to to cover all of them. And, obviously, in this new world where so many things are up in the air, the key is to draft them all in a way that allows you flexibility. Because no matter what, you are going to be asked from the government to be flexible, to add in new clauses that executive orders require or take out clauses or adjust the way you're paying based on whatever executive orders come down the pike. As a subcontractor, you're gonna have limited ability to fight back or to push back on certain of those things because no prime worked their salt. No sophisticated prime is gonna leave themselves open to... You know, they've got a clause that they've got to comply with, but they can't flow it down to you. You know, they haven't drafted something in a way that allows them to make those changes. But what you can do, again, if you know the rules and you know the regulations, is to try to narrow those clauses so that they're still as good for you as they can be, and that's really the the key. Subcontractors, again, this is a a wide variety of companies subcontract from sometimes very large sophisticated companies that are actually larger than the primes that they work with, but, you know, they they work together to go after, set aside contracts, and you've got the, you know, the the the small business with the eligibility leveraging the the large businesses capabilities as a subcontractor. So it's certainly not always the case that that subcontractors are smaller or less sophisticated or less experienced. But to the extent that sometimes some contractors are contractors that are just breaking into the industry or maybe haven't ever been a prime before and maybe, therefore, they don't understand or they're not as familiar with the FAR, they need to be able to trust the prime. By that, I mean, they need to be able to rely on the fact that the prime is telling them, you know, teaching them, mentoring them, not in, like, the, you know, SBA mentor protege sense, just in the general sense of the word. You know, mentoring them and and showing them the ropes, but showing them the ropes in a way that's objectively, you know, equal where it's not, you know, teaching them something and having them rely on something that's better for the prime than it is for the sub. Obviously, that is also a good reason for the sub to have independent legal counsel, but especially if, you know, they can't always afford counsel to to help them on every single subcontract. It's really important again to go back to what I talked about upfront, which is to choose your partners wisely and to be able to trust. You always want your own legal counsel if possible, though. You also, as a subcontractor, might have, you know, less financial stability. You might not have the ability to float or self finance if certain changes or issues arise. So that might mean that you need to push back, or it might mean that you need to walk away from certain opportunities, although, certainly, you don't want to do that when you you, you know, when you don't have to. But in, again, this uncertain world, if a prime is pushing, you know, a a a contract that has certain clauses that says, hey. Look. We've gotta have the flexibility to flow down anything new to you. You've gotta understand what that could mean in terms of, you know, you paying for certain stuff upfront and only getting compensation after you go through the claims process. And if that's not something that you can handle right now, then you might need to take a step back, on the government contracting front until things are a little bit more certain or until you've built up a little bit more of a runway financially. The other thing you're gonna wanna keep in mind again is that if you have a claim against the government, you need to go through the prime and have them sponsor. So, again, that's gonna be a question of whether or not you have the money to kind of float while you wait for, you know, resolution under the claims process. You might also not, as a subcontractor, understand all of the compliance obligations. A lot of times, subcontractors are smaller. They don't have as many people working. The people that they have are pretty leanly staffed. They don't necessarily have a huge compliance department. They don't necessarily have the time to be monitoring all of the 95 executive orders that were issued last month or the the, you know, billions of pages of revolutionary fire overhaul text and and related changes that are going on. So, again, it's about, you know, that partnership with the prime and getting legal counsel, but being able to rely on each other to try to work together to a mutually acceptable solution. One of the clearest things or or most important things you need to do upfront is to define scope. And, again, remember I said a lot of times the scope of work is is dealt within an exhibit, but that doesn't mean that it's not one of the most critical things, if not the most critical thing that drives everything else. Be really careful if you started talking at the teaming stage about scopes of work. Be careful about what you lock yourself into, you know, making promises about certain types of percentages or or or, you know, guaranteed exclusivity on certain things and in in exchange guaranteed scopes of work because you need to make sure you have looked ahead and fully fleshed out what's gonna be in the subcontract before you promise that certain work share is gonna be divided a certain way. I cannot tell you how many times people have made blithe promises at the teaming stage that have really left them limited or left them in a really bad, you know, potentially violating the law situation in terms of limitations on subcontracting at a later stage. So you really wanna talk about that upfront. You wanna talk about it at the teaming stage. You wanna talk about it both in terms of narrative discussion, you know, narratively describing the scope of work, but also in terms of, you know, the number of FTEs but the positions of FTEs or the percentages of work that you're gonna give. If you're talking about working together on an IDIQ and all of the task orders they're under, you know, does that percentage apply across the board, or does it apply to only task orders that involve certain CLINs or or certain labor codes or certain scopes of work or certain types of FTEs? Again, it's really gonna be dependent on what type of contract you're dealing with and and what agency. But the the scope is going to impact everything else. A lot of times at the teaming level, exclusivity is exchanged for guaranteed scopes of work, but you need to think ahead and see how that guaranteed scope of work is going to fit into your subcontract and your overall subcontracting scheme, especially if you have a couple different subcontractors you're working with and you're entering into teaming agreements with. We've talked about the flow downs, but for those of you who are not familiar with the term or haven't heard it before, flow down clauses are far clauses or, you know, DFAR, VAR, GSAR, etcetera, clauses that are included in the contractor's prime contract, which they are required to flow down to their subcontractors. Now sometimes, you will hear the term flow downs referred to kind of colloquially or used colloquially as in a in a broader sense, kind of the way that people say Kleenex, even if it's not Kleenex brand or Q tip even if it's not Q tip brand. Flow down clauses have kind of come to mean colloquially anything that the prime either has to, chooses to, or kind of thinks about and then decides to flow down to the the subcontractors. But technically speaking, you know, the flow down clauses are the mandatory ones. This can be where a lot of the danger lies in terms of things changing because as the revolutionary far overhaul changes the far, you're gonna have clauses that have shifted, have new citations. You're gonna have clauses that have changed in terms of the substantive obligations that have changed whether they need to be slowed down or not. So, again, this is gonna be something that needs to be monitored very, very carefully in this period of change, and you're going to have to build in for some flexibility to be able to change your far flow down list probably more so than at any time in in recent history. Some more notes on the flow downs. I don't know why people make this, you know, mistake all the time, but people think that mandatory means automatic. It means the exact opposite. If you as a prime contractor have a clause that says you have to flow it down, does not... That's not mean it's automatically flowed down. It means that you have an obligation to flow it down. You need to be looking not just at the FAR, but at all the supplemental acquisition regulations. By that, I mean, like I just mentioned on the last slide, the DFAR, the GSAR, the VAR, you know, the HOODAR, whatever your... What agency you're dealing with, you need to look at those regulations as well. And it's gonna be a contract by contract analysis, and you're gonna need to talk to your lawyer about the easiest way to do it and how you feel comfortable doing it. A lot of times, it can also be part of a holistic conversation in terms of, hey. We need to create these three kinds of templates because these are the three agencies we do business with, and we wanna have kind of a a working starting point for a list of the flow down clauses. But, again, that's gonna be an individualized conversation with your attorney. And, again, as I said on the last page, this is gonna be an area to watch. This is gonna be something that changes a lot as the far flow downs, you know, incorporate the RFO as you have to change things because of the RFO, as executive orders might be issued and require certain clauses to be changed or certain clauses to be rolled back or certain clauses to be added. So it's really gonna be more of... Instead of kind of fix it and forget it, it's gonna be more of a constant evolution, especially if you're dealing with IDIQ contracts and master service agreement type subcontracts where you're working together for long periods of time or, you know, after option years or exercise or things like that. You're gonna be updating your templates in a much more consistent and constant way for the next few months or or years. The other thing you're gonna wanna think about is not just the mandatory flow down clauses, but what other clauses should be flowed down. And this again goes back to those primary concerns that we talked about upfront, This idea of why you flow things down to ensure that the work gets done the right way, to allocate risk, to make sure that the subcontractor can't force a default. You know, think about the purpose of what you're trying to do and whether there's a clause that, you know, you've got in your contract that requires you to do something and that the subcontractor could potentially interfere with your obligation or your your rights and what that means about, you know, what you need to to say to the subcontractor in your subcontract agreement. You you wanna make sure as a prime, and these are kind of things from cases that have... If impacted my clients or clients of, my colleagues in the past, you don't want to miss out on a clause that's really vital. And by that, I mean, for example, termination for convenience clause if you're a prime. Now that is not a mandatory flow down clause, but consider a situation in which you are terminated for convenience, and now you can't terminate your subcontractors for convenience because the only clause you had in your subcontract was a termination for default. That subcontractor, if they wanna be difficult, they're gonna be able to say, you can't terminate me. You can pay me the whole value of my contract, and I'll go away, but you don't have the right to terminate me for convenience whether or not you got terminated for convenience, mister or missus prime. You don't wanna be in that situation. That's one of those things where even though it's not a mandatory flow down clause, you need to be able to flow it down. You need to have flowed it down. Now as a subcontractor, you're not gonna be able to push back on that. Right? You're not gonna meet any prime that knows anything that's gonna agree to take a t for c clause, termination forgiveness clause, out of their subcontract. But what you can say is, hey. You don't have the right to sub... To to terminate me for convenience no matter what. You only have the right to terminate me for convenience if you're terminated for convenience. That should be enough to assuage your fears and to cover you, and it still gives me a better clause than what you would originally put in there. That's a great thing to do. That's again an example of knowing the rules and regulations, understanding where the other side is coming from, actually giving you a better negotiating position. The other thing that I... I've seen over and over again is that sometimes primes think that kinda hiding the ball from the subs and being vague about the subs' obligations is like getting one over on the subs, but it's... It it... It's the opposite. If your subcontractor doesn't know what they're supposed to do, doesn't know what they're supposed to do to be compliant, if they get in trouble, that's gonna be on you as the prime. So you don't want to have a situation where you failed to tell the subcontractors what the notice requirements are or, you know, the time frames for getting certain things done or how they have to be compliant because you're ultimately gonna be the one that gets faulted for that from the federal government. Alright. So we talked before about this list of things, and I, you know, put them here again just to refresh your recollection, but I won't read them all out. With all of these things kind of in the the zeitgeist right now, all of these things percolating, the most important thing is to draft your prime contract... Or I'm sorry, your subcontract in a way that allows for changes to be made to the prime contract. From a prime contractor point of view, it's gonna be flexibility, flexibility, flexibility. They want as much flexibility and as much, you know, wiggle room as possible. From a subcontractor's point of view, what you're gonna wanna be pushing back against is, hey, man. I gotta have some sense of predictability. I don't necessarily have the resources to swing wildly from one side to the other as the pendulum swings back and forth. We've got to limit the flexibility you've got to a certain extent, or I'm not gonna be able to to take this contract. Unfortunately, I will tell you there's not gonna be any one size fits all answer to this, the same with the disputes clause, which we'll talk about in just a minute or two. This is gonna be a creature of negotiation, and it's gonna depend on each sub and each prime and how willing they are to be flexible with each other and how willing, you know, the the sub is to be flexible about flexibility and how willing the prime is to lock themselves into certain things that might change, that might require them to, you know, eat certain costs. They're probably not gonna lock themselves into something that would make them noncompliant, but they might be willing to say, okay. Well, we can at least allocate the risk of the financial cost of that. The the biggest thing is that you really need to have, again, going back to the the open and honest and transparent conversations where everyone is accurate about assessing their own strengths and weaknesses and what that really could mean. And I will tell you, even though this is not something that all of you are gonna wanna hear, sometimes that means walking away from certain opportunities because you are putting yourself in a risky spot, you know, potentially a too risky spot. There is that tension between, you know, risk aversion and an entrepreneurial spirit, but this is a time right now where if you lock yourself into a contract, you could really end up with, you know, having to eat a lot of financial costs, having to deal with a lot of disputes, ending up in a lot of litigation. You need to really, really make sense... Make sure that you're not jumping into anything blind, that you're having really honest conversations even about the difficult topics, even about, you know, well, let's pile eight contingencies on top of each other. What if every possible thing goes wrong? What if every single possible change has been made? How are we gonna deal with that? And that's gonna help you assess your assess your risks and figure out what is and isn't a deal breaker for you and your potential prime or your potential sub. The other thing to keep in mind here is that no matter what, you're never gonna be able to account for every single potential change that's happening right now. You need to embrace this idea that sometimes you win, sometimes you learn, and learn from your mistakes. You know? Leave yourself enough cushion that you can learn from your mistakes that it's not gonna topple your business or, you know, force a default in a contract or anything like that. In addition to following all of the stuff going on with the law, you're also gonna wanna make sure you're following just kinda current events, you know, things like cyber scams and and how you can deal with those. I've I've had a bunch of clients that have had to deal with those, and now I have certain clauses that I build in to my client subcontracts dealing with, you know, protections to make sure that you don't have someone that diverts funds, and now you're arguing about who's responsible for eating the money that a scammer walked away with. You're gonna wanna update your templates accordingly for all of these real world life... Real life world... Real world? Real world experiences, real life experiences, as well as just the legal changes. And that's obviously something an attorney who unfortunately has seen kind of the worst case scenario in every scenario, can help you guard against. I want with our last few minutes to talk about the disputes clause because, again, like I said, this can be one of the most important clauses and can be a big source of tension. And this is maybe not as, like, you know, I guess I should say it's not a section that might change as much, but it's a section that's probably going to be utilized more as a lot of things change and result in disputes, if that makes sense. So when you've got a relationship with the federal government, it differs in many different respects from local, state, you know, education building or or government. It dish... It it... For... Or contracts, I should say. It differs from private or commercial contracts because it's governed by a complex web of laws and regulations, and the disputes are subject to a completely different dispute resolution procedure. They're heard in different courts and different adjudicatory forums. There's different theories of recovery, so you're not getting sued in, like, Alabama State Court or the Southern District of New York for breach of contract. When you ultimately end up in subprime disputes, that's where some of those go. But when you're talking about disputes against the federal government, a, because of sovereign immunity issues, only prime contractors can do that, which means they've got to sponsor their subcontractor's claims. But then, also, because the prime is limited in the ways in which they can then go after the government, they have to file a claim first. They have to wait for a response to the claim. Then they have to go to certain forums within certain periods of time, and they have to set their complaints up in certain ways. And this all becomes relevant for addressing disputes arising out of the subcontract because the prime and the sub are gonna have somewhat contradictory concerns. The prime is gonna be scared of this. You know, if I'm going upstream against the government, I don't want my sub nipping at my heels. I don't wanna be fighting a battle on two fronts. I don't wanna be stuck in the middle. And, also, if my prime has a a pass through claim and I pass it through and I certify it, I don't wanna be on the hook for anything fraudulent or inaccurate in there. Subcontractor, remember, has to rely on a prime to pass things through. So they're gonna be concerned about, well, if my prime won't pass things through for me, I don't really have another remedy. And this theme that we've talked about throughout, which is, well, you know, if I have to kind of self finance and float a certain amount of loss while I continue to do the work and, you know, the... Then we're taking this long roundabout specific way of dealing with the federal government to try to address it. I don't know that I can wait that long. So, again, this is gonna be one of those areas where it's gonna be from contractor to contractor negotiated in a different way. There's no one size fits all. But a good disputes clause, most important thing, is it's gonna differentiate between disputes between the prime and the sub and disputes that... You know, where they're kind of teaming up and going against the owner, against the government. They're going to specifically talk about the extent to which the the specific process for dealing with a federal government claim, and that's the CDA or contract disputes act process, including the exhaustion of remedies and, you know, how we're gonna deal with all that, how you're gonna deal with the fighting a battle on two fronts issue, how you're gonna cooperate on pass through claims, how you're gonna try to make sure that the prime can feel comfortable certifying. And you're gonna wanna identify who gets to choose what type of dispute it is, identifies the governing law, jurisdiction. And, also, when you're talking about ADR possibilities, really gets down into detail about attorney's fees and how many arbiters or mediators and where that mediation is gonna be held and who's responsible for paying the mediator. And I know that seems like too much detail, but what ultimately ends up happening is that's leverage later for how much even settlement negotiations are going to cost, and it ends up getting tacked on or or taken away from settlement offers because it's gonna spend that much... You know, your client's gonna spend that much just to get to settlement. The other thing you're gonna wanna deal with is the continuation of work idea, the work... The idea that you can't walk away, you know, while you're in the middle of a dispute that you have to keep working. You might wanna also talk to an attorney if you're dealing with a pass through claim about a a liquidating agreement, which is, again, we talked about teaming agreements. We talked about subcontracting agreements. You might also end up with a liquidating agreement, which is a separate agreement governing how you're going to litigate a pass through claim. I know it sounds like overkill, but it can be really helpful in terms of figuring out who's gonna pay for a claim like that, especially if you've got prime and sub both, you know, trying to reach their hands to the pot to get certain money. How you're going to figure out who will be willing to accept a settlement and who wouldn't be, how you're gonna apportion the dollars if you get less than, you know, a 100% on the dollar. All of this, everything we've talked about today is about finding a balance. Right? Finding a balance between prime's concerns and subs concerns, and compromise is always going to be the key here, which is why I've said there's no one size fits all answer because no two people are gonna be the exact same on what they are willing to to compromise on and what they are willing to not... Or not willing to compromise on. It's going to be an individualized discussion, but the more educated each side is and the more each side can kind of understand where the other side is coming from. And, again, the best way to do that is to either have a lawyer advising you or be internally very, very facile with the rules, which as they are in a state of flux right now is pretty hard to do unless it's your job to do it, is gonna be the best way to find that balance. You're also going to want to try to find a balance between, you know, addressing everything and having a 400 page contract. So, again, talk to your attorney about what really is truly necessary. You know, data rights clauses are gonna be really important if you're dealing with a software as a service subcontract. They're not gonna be that important if you're dealing with a construction contract most likely. So you need to know kind of what matters when and, you know, legal help and be one of the the easiest ways to kinda track that and the easiest way to track all of these changes to try to predict what might happen, to try to figure out how to leave things flexible for those things where you don't know what's likely to happen. And, overall, it just makes sense in the GovCon world to, you know, understand that it takes a village. These are constantly changing as you can tell from how inform... How much information I packed into an hour. There is so much to know. No one person can know it all. You need to not be scared to, you know, ask questions or to, you know, ask for help. You've got my information here on the screen. I'm gonna turn it back to my lovely host now for the polling questions. And, you know, I'll stick around also for a couple of substantive questions you can get me, though I'm not seeing any in there. So with that, I will turn it back over to you, Leslie. Okay. Let me go ahead and just open our first poll in question. Okay. And, you should see a polling question. So as we talked about today, government contractors are facing increasing compliance requirements and operational complexities. So our question today is would you like to be contacted by a debt tax sales representative to learn how debt tax cost point can help organizations improve visibility, streamline operations, and support success across a project life cycle? So if you'd like to learn more about our ERP solution cost point, we'd be happy to have someone reach out to you. Obviously, a lot of, things to be thinking about these days. So we wanna make the opportunity for someone to get in touch with you and share a little bit how, Deltek solution might be able to help in some of these areas. And so while we're doing that, I don't know, Maria, if there's any, questions or, sort of key takeaways, that you wanted to mention here while we finish up with this question and before we head into the next polling question. Yeah. I think the key takeaway is just, you know, obviously, we're in a a very big period of flux right now. We have been for probably a couple years. But even after we come out of this period, which is seeing kind of a higher concentration of change, the FAR and the small business regs are something that are always changing. They change a couple times a year. The small business regs have been, you know, quote, unquote, overhauled probably five times in the last ten years, you know, many times during my career. So this flexibility is of increased importance right now, but it is always important. It is always important to to figure out, you know, how to build in flexibility and and change into your subcontract. Alright. And let's just quickly here open our next polling question. And that is, would you like to learn more about miles in Stockbridge? And, Maria, I don't know if you have any, addition to add to what folks can learn about you. Yeah. So like I said, we're a full service law firm, but I am in the government contracts group, which focuses exclusively on federal procurement. So we do things like these webinars. We do things like blogs and client alerts. So, you know, one of the things that clients and and contacts have have communicated they find useful is being kept up to date on, for example, many of the things we talked about today, as those things develop. So, you know, we'd love to to follow-up with you. And and if if you want, get you on our mailing list to get things like client alerts and invites to webinars and all of that fun stuff. Alright. So, yeah, we'll, wrap up here in just a minute here. Again, if you would like to learn more about Mars and Stockbridge, you can just select yes. I'm interested in learning more. We're also gonna be launching a brief survey for your feedback on today's session. But before we officially conclude, we wanna remind you that you will be receiving an on demand recording of today's webinar that will be sent via email within twenty four hours. If you did submit any questions and we did not get to them today, we will do our best to follow-up with you directly offline via the registration information that you, signed up for the webinar with. We'll, again, appreciate if you fill out the short survey that you will, be seeing here in just a minute. And with that, I'd like to thank everyone for joining us today. Our our speaker, Maria, thanks again and remind you that if you are interested in additional webinars like this or upcoming events, you can visit deltek.com where you can learn more about our webinars and all of our upcoming events and where Deltek will be attending. So thanks, everyone. We appreciate you taking your time out today and joining us, and have a great afternoon. And just don't forget, fill out that survey right before you, leave us. Thanks again, everyone. Have a great afternoon.