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 …show more content…

§270 requires the prime contractor to obtain performance and payment bonds on all contracts for the construction, alteration, or repair of any public building or public work of the United States exceeding $100,000. A contractor’s failure to obtain the required performance and payments bonds is considered a breach of contract and grounds for a default termination of the prime contractor by the government. In addition to the statutory rights granted to the subcontractors to precede against sureties on Miler Act payment bonds, the subcontractor has the right to file a breach of contract action against the prime contractor when payment for goods or labor is not made. (Government Contract Law, pp. 439- 440)

2. The Western Federal Land Highway Division (WFLHD) has awarded the prime contract for a highway construction project in California to Pacific Gravel and Construction Company (Pacific Gravel). Pacific Gravel then solicited bids from subcontractors for the road grading portion of the contract. Joe Bob’s Construction Company (Joe Bob), based in Arizona and owned and managed by non-minorities, submitted the lower of two bids received. The higher bid for sub-contracting the road grading portion of the contract was submitted by Wong Foo’s Construction Company (Wong Foo) based in San Francisco. Wong Foo is owned and operated by a woman from a recently immigrated ethnic Chinese family and the business was recently certified as a small disadvantaged business under the