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Is Your Company a Federal Government Contractor?

Many automotive suppliers do not consider themselves federal government contractors because they only sell goods and services to the major OEMs and not directly to the federal government. However, purchase orders with OEMs or other customers that incorporate by reference Federal Acquisition Regulation (“FAR”) clauses, FAR agency supplemental clauses, or other federal government contracting laws and regulations will obligate your company to comply with the government-unique requirements incorporated by reference therein. These FAR and FAR agency supplemental clauses are often found in a customer’s terms and conditions incorporated by reference in the subcontract or purchase order and available on the customer’s website.

Below please find some tips on how to identify if your company has federal government subcontracts:

• References in subcontracts and purchase orders to any FAR clauses, which start with 52.2XX-XX (e.g., FAR 52.333-26, “Equal Opportunity”).

• References in subcontracts and purchase orders to any Department of Defense FAR Supplement (DFARS) clauses, which start with 252.2XX-XXXX, or other agency supplemental clauses (e.g., clauses from the FDIC Acquisition Policy Manual, General Services Administration (GSA) Acquisition Manual, United States Postal Service (USPS) Supplying Principles and Practices, etc.).

• Reference to a Defense Priorities & Allocations System Program (DPAS) rating. These are DX or DO ratings, usually followed by a combination of letters and numbers and accompanied by a statement along the following lines: “This is a rated order certified for national defense, emergency preparedness, and energy program use, and the Contractor shall follow all the requirements of the Defense Priorities and Allocations System regulation (15 CFR 700).

• Requirements to comply with the International Traffic in Arms Regulations (ITAR). There may also be references in drawings belonging to the customer or specifications the company receives from its customers that the documents are export-controlled or subject to an ITAR classification.

• Requirements to comply with Executive Order 11246, contained in 41 C.F.R. §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a), which may be accompanied by the following statement: “These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, national origin, protected veteran status or disability.”

• References in a subcontract or purchase order to a customer’s U.S. Government prime contract or an express statement that your company’s subcontract or purchase order is issued in support of a U.S. Government prime contract or higher-tiered subcontract.

The federal government imposes a set of complex requirements upon all federal government prime contractors and subcontractors. These include compliance with various equal employment opportunity and affirmative action requirements; rules to protect intellectual property; obligations under the Truth in Negotiation Act to disclose certified cost or pricing data; adherence to Cost Accounting Standards; laws regulating the extent to which contractors may acquire materials, products, and services abroad; compliance with U.S. export controls laws and regulations; and detailed procedures governing contract changes, terminations, and warranties. It is essential to identify whether your company is a federal government contractor to determine the extent of its obligations and ensure compliance with these requirements.

© 2020 Foley & Lardner LLPNational Law Review, Volume V, Number 138


About this Author

Vanessa L. Miller, Foley Lardner, Manufacturing Litigation Lawyer,

Vanessa L. Miller is a partner and litigation lawyer with Foley & Lardner LLP. Ms. Miller’s practice focuses on a wide array of bet-the-company litigation, such as general manufacturing breach of contract and warranty disputes, automotive supply chain disputes, product liability lawsuits, trade secret claims, and railroad and rail transloading facility disputes. Ms. Miller also counsels clients on various commercial contract and product liability issues. She is a member of the firm’s Business Litigation & Dispute Resolution Practice.

Anna S. Ross, Foley Lardner, Public Policy Lawyer, Government Matters

Anna S. Ross is an associate and business lawyer with Foley and Lardner LLP. She is a member of the Government & Public Policy Practice. Ms. Ross was a summer associate with Foley in 2013. She completed a judicial internship for the Honorable Todd E. Edelman, Superior Court of the District of Columbia. She also served as a research assistant at Georgetown University’s O’Neill Institute for National and Global Health Law, providing research and editorial support for the Institute’s publications.

Erin L. Toomey, Foley Lardner, Government Contracts Attorney

Erin L. Toomey is a partner and government contracts attorney at Foley & Lardner LLP, where she assists companies to reduce their risk and maximize their recovery when contracting with the government. Ms. Toomey represents clients in a range of industries, including automotive, aerospace, construction, and health care, and counsels such clients in all areas of government procurement, employing innovative and effective legal strategies to protect and promote her clients’ objectives. In recognition of Ms. Toomey’s and her colleagues’ work in this area, Foley’s...