AboutGerry Caskey Expertise Questions relating to all aspects of Federal Government Contracting, Small Business, Prime and Subcontracting issues. CCR Registrations and ORCA compliance. Definitions and interpretations of FARS, DFARS, DOSAR, DTAR, ITAR. Request For Proposal (RFP) outlines, writing and submission requirements.
Additional expertise in marketing to Federal, State and Local Government entities, with emphasis on least expensive modes to facilitate marketing efforts.
Experience 25 years as a Prime Contractor with the U.S. Department of Defense, Department of State, FEMA, DHS and additional Federal Agencies
Education/CredentialsPast/Present Clients Boeing Aerospace, Securitas GF4, Raytheon, U.S. Dept. of State, U.S. Army (Europe), CENTCOM, U.S. Army & Air National Guard, U.S. Navy, Department of Homeland Security, FEMA, Governments of Afghanistan, Jordan, Saudi Arabia, Kuwait, Republic of China (Taiwan).
Expert: Gerry Caskey Date: 7/10/2008 Subject: Prime contractor not paying
Question My company is a subcontractor to a prime that has taken on average 108 days to pay over the past 13 months. Nine of the invoices took over 90 days to be paid, 5 took over 120 days to be paid. I know they are in financial trouble and using the money from our contract to pay other bills. What alternatives, other than stopping work, do we have? From the information I've gleaned so far, the federal government is hands off in dealing with the prime/sub relationship. Is suing the only option? The option year on this contract expires in three months. The prime relies on our technology to execute the contract, and it would be virtually impossible for them to replace us, at least in the near-term.
Thanks for your insights.
Answer Hi Mary,
Sorry to hear of your troubles, and I know there is no consolation in the fact that yours is one of innumerable similar situations that subs find themselves in. First, I have to admit that I am not giving you a legal opinion or legal advise, that you will have to seek from a solicitor. That disclaimer out of the way, let me advance a scenario, it may or may not apply, but here's to hope.
You are correct, you cannot seek help from the gov. side, or better put the gov will not open that pandora's box and help you. What I have been able to accomplish in the past is such; I have had similar situations (many times unfortunately), my first approach was that the prime still had unfulfilled contract terms in order not to default. DEFAULT is a very big no-no with Uncle Sam, and thus can provide leverage to a sub.
My work was crucial to performance of the prime, so I crafted a "nice" (but not so nice) letter stating that I would no longer be able to perform and close out the contract unless and only unless the past due arrears were brought current, and 75% of the remainder of my payment was rendered before I supplied the work necessary for the prime to complete the contract, have a positive performance rating, and not go into DEFAULT with the gov. No matter they are robbing Mary to pay paul, with the right pressures and words to bear, any prime can get $$ from somewhere.
With the right letter, you will only be hung out for 25% as a worst case scenario initially, instead of the current predicament. I can offer assistance that this reply space does not offer, you can contact me directly at gcaskey@nfcusa.com.
There are items that you can refer to in a letter that can provide the proper inspiration for a prime to "do the right thing" and dispense with the B.S. As for suing, that takes time, costs $$, and the only winners are the lawyers and their fees. I hope you are not a lawyer, no offense intended, just my personal experience and I avoid lawyers as only the very, very last, 1 second before jumping off the cliff option.
Best of luck, contact me if I can assist further.
Gerry Caskey
