Going to Buy Local? Plan Ahead, Check if On Spec

Buy Fresh, Buy Local (lomo)
Image by stevegarfield via Flickr

A common problem for USG contractors is running into delays due to local suppliers’ goods being worse than anticipated, or even non-existent.

This post describes (1) planning to avoid such delays due to local problems; or (2) if it’s too late, effectively dealing with such delays.

Bidding Stage, and Failure to Research the Local Supply Market

At the bidding stage, a USG contractor obviously has a lot to think about. Among the issues, you of course will consider include what types of supplies you’d need to do the contractual work, how much such supplies typically cost, etc.

One issue, while simple however, may go unexamined by USG contractors during bidding: whether the local market can actually supply the goods you assume it can.

Many USG contractors assume they can procure necessary supplies locally, but in mid-contract, it turns out the items on the local market are inferior, do not comply with the specifications, or are not available.

This leaves the contractor with the sudden realization they have to procure goods outside the local country, and suddenly their work gets a lot more expensive.  Such a contractor may try to recoup the excess cost from USG, with varying results.  All too often, the USG says it’s the contractor’s problem, and the contractor’s cost to bear.

Bid-Stage Planning and Checking of the Local Market/Goods

The best solution is prevention.  That is, at the point of bidding, make sure you’ve thoroughly researched your local market, and double-checked your specs.  Make sure the local market can supply the materials, supplies, and equipment you need.

Make sure that the quality of those goods meet the specs, and that the costs of those goods are affordable in light of the contractual terms the USG is proposing.  If not, then you should see what the fallback options are, and what are the costs for obtaining goods from a different source.

If you have lingering questions or concerns about these issues at the bid stage, be sure to address them before submitting your bid.  An attorney versed in USG contracting can help your business understand the proposed contract’s specs, which in turn can help you undertake a better review of the local market and the sufficiency of its goods.  If the goods do not exist locally, or the local goods do not meet the proposed contract’s specs, you can raise the issue with USG and request its input.

When It’s Too Late for Prevention: Dealing With Extra Delays and Costs

Perhaps it’s too late and you already have the contract, but just learned that local suppliers can’t provide the materials,supplies, and equipment you need.  You may be forced to go to a market elsewhere (e.g. overseas) to obtain the goods, which may increase your costs far more than you anticipated.

This situation is more difficult to address than the bid-stage planning and prevention above, but there are options you could pursue.

For one, a contractor in this position could seek an Request for Eqiutable Adjustment (REA).  If the USG refuses, and insists the contractor bear the full costs attributable to inadequate local goods, it may take intervention by attorneys and/or the legal process to mediate or otherwise resolve the issues without the contractual relationship falling apart.

Attorneys can often be of assistance by reviewing and interpreting the specs, which sometimes have vague or ambiguous terms which contributed to ghd problem in the first place.  In some instances, an attorney can identify legal bases to request an REA, and help the contractor improve its financial situation in procuring goods when the local market doesn’t suffice and an alternative plan is needed.

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