{
  "id": "R45322",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R45322",
  "active": true,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 585700,
      "date": "2018-09-26",
      "retrieved": "2019-04-18T13:41:50.984944",
      "title": "Selected Legal Tools for Maintaining Government Contractor Accountability",
      "summary": "Federal procurement statutes and the Federal Acquisition Regulation (FAR) establish largely uniform policies and procedures applicable to government contracts \u201cto deliver on a timely basis the best value product or service to the [government], while maintaining the public\u2019s trust and fulfilling public policy objectives.\u201d To meet these ends, federal agencies have a number of legal tools at their disposal to help ensure a contractor adequately performs a contract or, if warranted, to hold a contractor accountable for performance failures or misconduct:\nCorrective Actions. In many instances, the FAR requires procurement contracts to include \u201cinspection clauses\u201d that explicitly authorize procuring agencies to require contractors to remove, correct, or replace rejected goods, or reperform services (together, to take \u201ccorrective actions\u201d) for failing to conform to contract specifications and requirements. Relatedly, inspection clauses often authorize agencies to make equitable cost reductions or seek repayment to account for all of the costs associated with deficient services that cannot be reperformed or goods the agency received and accepted despite the deficiencies.\nIncentive Fees. Under certain circumstances, procuring agencies are permitted to incentivize contractors with performance-based payments. These \u201cincentive fees\u201d can be an effective contractor accountability measure because they can be paid to reward contractors for meeting or exceeding goals or standards contemplated in the contract or withheld or reduced when contractors fail to meet or exceed those goals or standards.\nPerformance and Payment Surety Bonds. Under certain circumstances, government contractors are required to acquire a surety bond, through which a third-party surety promises to assume a contractor\u2019s responsibilities in the event that the contractor fails to meet specified contractual obligations. A bond can serve as a contractor accountability measure because it subjects a contractor to potential additional costs, which could include liability expenses under indemnity agreements with the surety and increased costs of acquiring a bond for future contracts. \nLiquidated Damages. Liquidated damages are predetermined sums a contractor must pay the procuring agency for specified contract breaches or performance failures. By predetermining the costs associated with a breach or failure to perform, liquidated damages clauses hold contractors accountable for noncompliance, while saving time and litigation costs. \nContract Termination for Default. Termination of a contract because of a contractor\u2019s default is arguably the most consequential and dramatic contract-based contractor accountability tool at the government\u2019s disposal. A default termination \u201cdischarges government duties under the contract while exposing the contractor to potential liability for the consequences of its breach.\u201d In addition to other potential repercussions, the cause of the default could serve as grounds for suspending or debarring a contractor from future contracts.\nContractor Performance Evaluations. When selecting contractors, procuring agencies often consider various contractor accountability issues, notably including the contractor\u2019s performance under other contracts, through (1) responsibility determinations and (2) source selections under negotiated contracting. To facilitate agency evaluations of a prospective contractor\u2019s likelihood of success on future contracts, the FAR generally requires procuring agencies to conduct and document performance evaluations of contractors in federal databases and to review these databases before awarding contracts.\nSuspension and Debarment. The FAR requires agencies to have policies and procedures in place to \u201csuspend\u201d and \u201cdebar\u201d contractors\u2014i.e., to exclude, except under limited circumstances\u2014from being eligible to receive new federal contracts for some length of time due to various criminal convictions, civil judgments, serious contract performance failures, or other specified grounds. These policies and procedures are designed to ensure that agencies award contracts to responsible contractors that are capable of successful performance.\nCivil Fraud Enforcement. Procuring agencies may hold contractors liable for acquiring contracts by fraud pursuant to the False Claims Act, the anti-fraud provision of the Contracts Dispute Act (CDA), and the Program Fraud Civil Remedies Act.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": true,
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      "topics": [
        {
          "source": "IBCList",
          "id": 4752,
          "name": "Government Contracts"
        }
      ]
    }
  ],
  "topics": [
    "National Defense"
  ]
}