(Editor’s Note.  You would expect that since they have such a vital role in performing government contracts, subcontractors could file claims against the government.  Generally, however, the only way a subcontractor can sue the government is if the prime contractor sponsors the claim.  The only exception are direct subcontractor claims of two types: (1) the prime acts as a purchasing agent for the government and therefore the sub can sue the principle, the government or (2) the contract itself expressly allows direct contractor suits which is rare.  The following tests whether a subcontractor can bring a claim if either the prime contract was terminated by default or the prime defrauded the subcontractor.)

The Army Corps of Engineers awarded a contract to the prime contractor for a new dock front in Pennsylvania which was eventually terminated for default by the government.  The subcontractor filed a $380,000 claim directly with the Corps. arguing it could sue the government directly because of the default termination and the prime contractor had defrauded it and another subcontractor of several thousand dollars of which the government knew but failed to adequately exercise its contract administration duties.  The Board ruled against the subcontractor and dismissed its claim holding that even if its allegations were true, “this case didn’t fit into any of the exceptions to the general rule.” (Coastal Drilling Inc., ASBCA No. 54023).   

{TAG_FORM_TITLE}