CON 244 Pre-Course Assignment: Government Business Relations Report

This report examines government business relations in the context of construction contracting, focusing on the complexities of fixed-price contracts and payment procedures. The analysis centers on the FAR 52.232-5 clause, which governs payments under these contracts, and explores related issu...Read More

Running head: GOVERNMENT BUSINESS RELATIONS
Government Business Relations
Name of the Student
Name of the University
Author Note

1GOVERNMENT BUSINESS RELATIONS
Fact: There is a special clause for Payments under Fixed Price Construction Contracts.
Assumption: Under the FAR 52.232-5 clause, Payments Under Fixed-Price Construction
Contracts is incorporated and it deals with how clauses under the Progress Payment Procedures
is dealt with. The clause is important as it deals with specific provisions and they are maintained
in proper language and every clause shall have pay requests and each pay request shall be in
accordance with the mandates of the clause. The contractual obligations warrant that pay
requests should be done in accordance with the requirements of the contract. The requests for the
payment should be done once a month and not more than that (Marsh, 2017). The requests made
should be in sync with the network analysis activities and they should correspond in total terms
with the contractual lines. In the United States, the government imposes certain mandatory as
well as non mandatory clauses that needs to be abided and there are relations between these
provisions that bind these two clauses. In such cases, there are also some discrepancies that are
found that are imposed by the RFP clauses.
The construction projects as well as the sub-contractors deal with FAR 52.232-5, which
in essence, is a Fixed-Price Construction Contract. The main purpose of the clause is to submit
the invoices to the government and these contractual obligations are the prime contractor
(Hughes, Champion & Murdoch, 2015). Therefore, under these clause are mentioned some items
that make a proper invoice that is used for the prime contractor. As a result of this clause, the
subcontractors and the contractors list the works that have been performed which is performed
by all the subcontractors and the subcontract amount is also mentioned by the contract. The work
of the prime is to certify and then also has to bill the total amount which needs to be withheld
from a subcontractor (Dixit & Skeath, 2015). The Government has to also check the progress and

2GOVERNMENT BUSINESS RELATIONS
then have to make a progress report based on that. The progress report will be made on a
monthly basis by the Government to keep a track.
Issue: The Fair provisions are not applicable in cases of commercial contracts which deal
specifically with constructions. In cases of construction contracts, the payment methods that are
applied are either PWP or PIP. The Pay when paid clause applied in cases when the prime pays
the subcontractors after he has received payment from the owner. In cases when the prime does
not receive any payment form the owner, then the rule applies that the prime will not have to pay
the subcontractors.
Result: This rule is made keeping in mind that in cases when the prime becomes bankrupt due to
the non-payment, he shall be in no position to pay the subcontractor. The pay when paid clause is
a timing provision and the prime has to pay the subcontractor within a stipulated time and
therefore it is considered a timing provision (Decarolis, 2014). The pay when paid clause was
considered draconian by many owners and therefore the State has tried all its best to ameliorate
the condition of subcontractors and therefore the rights of the subcontractors shall be restored in
its position. The Subcontractors are saved and protected with the amendment which has rendered
the clause as void keeping in mind the public policy. The most important basis for the
implementation of the fixed price contract is that the construction company as well as the client
shall agree on a set price and shall keep themselves bound on the set price for the contracted
services. The construction company as well as the buyer shall fix the budget and then work
towards the fixed contract. This is a more preferred contract because it looks at the interests of
the buyer as it is a very transparent pricing process because it is a two pay billing method. The
whole process works in anticipation and therefore the risk that is attached with this method is
that the buyer as well as the contractor need to estimate the total hours and also the costs

3GOVERNMENT BUSINESS RELATIONS
beforehand before making any declarations and therefore, the process also helps in estimating the
profit. Therefore, the time invested as well as the money that is being invested (Cameron, 2018).
The buyers have to invest time and money to the contract and that is why it is called a time
intensive process as a long time is required to complete the project. There is also some flexibility
that is applied on the whole process. Due to the flexibility and the benefit that is enjoyed by the
contractors, a separate and exclusive clause was formulated.

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References
Cameron Jr, J. G. (2018). The Wonderful World of Construction. Prac. Real Est. Law., 34, 50.
Decarolis, F. (2014). Awarding price, contract performance, and bids screening: Evidence from
procurement auctions. American Economic Journal: Applied Economics, 6(1), 108-32.
Dixit, A. K., & Skeath, S. (2015). Games of Strategy: Fourth International Student Edition. WW
Norton & Company.
Hughes, W., Champion, R., & Murdoch, J. (2015). Construction contracts: law and
management. Routledge.
Marsh, P. (2017). Contracting for engineering and construction projects. Routledge.