President Donald Trump's tariff plans could raise costs for federal contractors who won't be exempt from the duties. However, contractors may have options for reimbursement if they comply with specific regulatory requirements. Haynes Boone Government Contracts Partner Dan Ramish discussed these options with Law360.
Read an excerpt below:
Companies in the middle of the contracting process when a tariff goes into effect could ask the contracting officer to amend the solicitation, or seek revised proposals, but the contracting officer is not obligated to do so, and a prospective contractor might ultimately have to pull out of consideration, according to Haynes Boone Partner Dan Ramish.
"Worst case scenario, if the effects of the tariffs change whether they would still be willing to perform, they could withdraw their proposal if the contract has not been awarded yet," Ramish said. …
Another alternative for cost recovery is to invoke an economic price adjustment clause, which allows for contract prices to be adjusted if certain specified contingencies take place. But economic price adjustment clauses are not a standard part of federal contracts, and, even when included, may not cover items affected by tariffs, according to Ramish.
"EPA clauses are still relatively uncommon, and they're generally geared toward a particular type of risk that's contemplated at the time of the contract," he said.
