Final Exam: PROC 5890

1. You recently retired from government contracting work and established a consulting company (fully consistent with government ethics laws and rules, of course) with the primary focus of advising potential government contractors and subcontractors. Mr. Johnny Jones, of The Johnny Jones Flooring and Construction Company has approached you with a question. Jones and his company are potential subcontractors (they, obviously, specialize in flooring) on a federal construction contract worth a little over two million dollars ($ 2,000,000.00) recently awarded to the Jimmy Smith Construction Company (Jimmy Smith, the prime contractor). Neither Johnny nor his company have ever been part of a government contract before. He wants to know the ramifications associated with being a subcontractor on such a contract. His specific concerns are with protecting his ability to directly protest issues and concerns through the various courts and agencies able to handle such protests. He is specifically concerned that he may be left with only the option of suing Jimmy Smith if anything goes wrong on the contract. He would also like to have some assurance that he will get paid if the prime contractor becomes insolvent. You have agreed to steer Johnny in the right direction. What do you tell him? Include the rationale for your advice.
I would explain that he does have the right to sue the prime contractors under the Miller Act and they also would be able to take action against the government if the prime contractor will agree to sure for them. The rationale is this; due to lack of privity of contract between the government and subcontractor, the courts have consistently barred subcontractors from direct access to the various Boards of Contracts Appeals and the federal courts in actions against the government. Only a very limited exception occurs when