Government Contracts Brief – Week Of January 20, 2020

Subcontractors Suing the Government

Subcontractors generally may not protest or sue the government on a government contract due to lack of privity. However, it’s possible to make a third-party beneficiary argument in federal procurements provided the contract demonstrates an express or implied intent to directly benefit the subcontractor, either specifically or as part of a class (i.e. subcontractors).

Size Status on Multiple Award Contracts

For orders issued against multiple award contracts, the size status for the order is the size of the business at the time of the initial offer. Meaning, if an entity was classified as a small business at the time of offer for the multiple award contract, then the contractor is considered small for each order issued against the multiple award contract (unless the contracting officer requests a new size certification). Look for this rule to change, though. The SBA has recently proposed a change to its regulations to require contractors to re-certify their size status for all set-aside orders.

Data Rights Fast Reference

Unlimited Rights (government can basically do what it wants with the data; applicable to technical data and computer software). Government Purpose Rights (government can utilize the data within government if there is a government purpose; applicable to technical data and computer software). Limited Rights (government can use only within government; applicable to technical data). Restricted Rights (government can use only within government on one computer at a time; applicable to noncommercial computer software).

No Novation if Transfer By Operation of Law

In the merger or acquisition of a government contractor, novation of the contract is generally not required if the transaction is structured a stock purchase (as opposed to an asset transfer, which will likely generate the need for a novation). Additionally, a judicially doctrine allows for the transfer of a government contract without a novation if the transfer is by operation of law (i.e. bankruptcy or merger of a sub into a parent).


Attorney Kristi Morgan AronicaOur government contracts briefs, reports, and articles are published by Attorney Kristi Morgan Aronica. She serves as counsel to government contractors and subcontractors throughout Texas and nationally.