November 01, 2018

Law360 quotes Dismas Locaria on disaster contractors being warned to mind unique circumstances

2 min

On November 1, 2018, Dismas Locaria was quoted in Law360 on how contractors and prospective contractors need to be aware of the unique circumstances around government disaster response work contracts, which can simultaneously draw in business and aid the public good.

According to the article, government contracts, which can come with unique circumstances and aid in cleaning and rebuilding communities after major disasters, can run into tens of billions of dollars, a part of which goes to private companies.

This means a cost analysis, rather than a price analysis, and potential disaster response contractors need to thoroughly document both their incurred costs and their work, and be prepared to justify those costs – and, in what can be an uncomfortable process, their profit margins – to government auditors down the line, even in difficult circumstances, Mr. Locaria noted.

"In the event of a true emergency, tracking those costs is sometimes challenging – you might have loss of power; you might have people doing things on the back of a napkin in order to get things done, so the contract paperwork has to play catch-up," Locaria said.

Locaria noted that audits can come years after the fact – he pointed to a particularly extreme example of a client that helped respond to Hurricane Katrina in 2005. The client did not get audited until 2012, and the process took about six more years to wrap up, he said.