A company’s intellectual property is often its most valuable asset. Companies that are not vigilant may unknowingly lose rights in their intellectual property when entering into a contract with an agency of the U.S. Government. What intellectual property rights are granted to the Government will depend upon various factors, including whether the item qualifies as a “commercial item”, was developed at Government or private expense, which regulations apply to the procurement and whether the company complied with those regulations to limit the Government’s rights to the intellectual property.

It is often beneficial for government contractors to use consultants. The expertise of a consultant may be very specific and of limited use to a contractor, so that hiring a full-time or part-time employee to perform the same task is not justified. A consultant may assist with identifying and responding to procurement opportunities. Many consultants propose to receive commissions if the contractor receives a contract based on the consultant’s services.

The termination provision of many contracts contains the right to terminate upon the other party entering bankruptcy or having a trustee appointed under the U.S. bankruptcy code. Companies are often surprised to find out the right to terminate is unenforceable once the other party has entered bankruptcy. Therefore, it is of utmost importance that companies remain vigilant regarding the creditworthiness of their partners – especially in teaming, subcontract and supply agreements that involve exclusivity provisions.

The U.S. Government typically requires companies to identify whether the products offered by a company are compliant with Section 508 of the Rehabilitation Act. Section 508 requires that federal agencies make electronic and information technology (EIT) accessible to people with disabilities. The law applies to all federal agencies when they develop, procure, maintain, or use EIT. The Architectural and Transportation Barriers Compliance Board established the EIT standards published at 36 C.F.R. Part 1194.

Employee handbooks are key to standardizing and communicating company policies. It is vital that a handbook is carefully drafted to meet the needs and realities of the particular company. Poorly drafted handbooks can have unintended and unexpected legal consequences. There are several issues that all companies should be aware of when creating and maintaining their handbook.

Teaming agreements are a key part of putting together a winning team. Unfortunately, once a prime contract is awarded, team members often learn that the prime contractor wants concessions in exchange for a subcontract or the prime contractor makes the terms of the subcontract untenable. Although teaming agreements are ubiquitous in the government contracts arena, their enforceability should be considered each time from both a practical and legal standpoint.

Many contracts today include clauses for liquidated damages, especially in construction contracts. A company should make sure it understands the purpose and limits on enforceability of such clauses prior to signing a contract. Failure to properly draft a liquidated damages clause may result in increased liability or a court determining the clause to be unenforceable.

Companies face the constant risk that customers will be unable to pay their invoices or may file for bankruptcy protection. Adequately assessing and managing these risks is fundamental in today’s business world. With planning and vigilance, companies can minimize the impact of customer credit problems.

Many companies favor the use of arbitration to settle disputes with their current and former employees. Arbitration is viewed as a quicker and cheaper dispute resolution process. The requirement to arbitrate disputes is often included in company handbooks. Company handbooks, however, often include language that nullifies the requirement to arbitrate.
In Cheek v. United Healthcare of the Mid-Atlantic, Inc., 378 Md. 139 (2003), a company’s handbook required employee disputes to be arbitrated. However, the handbook included the following language: