Jack Horan Speaks with The Arizona Republic About Federal Government Contract Opt-Out Clauses

The Arizona Republic reports on how immigration and security policies could change under President-Elect Biden’s administration. The publication turned to government contracts partner Jack Horan for his insight on how the Biden administration could cancel or modify existing federal contracts.

While the administration will have to follow the procurement laws regulating federal government contracts, Horan highlighted that he will still have a lot of leeway.

Horan explained that all government contracts come with two standard clauses that allow the government to terminate or change contracts for any reason. “Generally, the clauses treat the government more favorably, much more favorably, than if it was in the commercial world where in the absence of such a clause ... one party would be effectively breaching the existing contract by telling the other party to stop performing,” Horan said.

Horan noted that decisions to cancel contracts can come directly from Biden or from his appointed Cabinet members.

Horan added that legally the timeline to make changes can move quickly but contractors can appeal and bring a claim against the U.S. government, which would then need to be settled and could delay changes.

In the example of the U.S.-Mexico border construction, Horan said “there is an established regulatory process to stop these contracts, if the president should so decide, in an efficient and orderly manner that will also fairly compensate the contractors for the work that has been performed.”