Mmm boy! You’ve come across a great state or federal contract opportunity. But the RFP solicitation requires that you agree to ALL of the government’s terms and conditions as part of your RFP response. A yellow flag pops up in your head. But the opportunity sizzles before you- like a Ruth Chris Cowboy Ribeye. And you want it!
Sometimes small businesses are so eager to receive a contract from a government agency, or a prime contractor, that they are willing to agree to the offered terms and conditions. This attitude, however, may lead to unreasonable risks for your business.
William Curry, author of “Contracting for Services in State and Local Government Agencies,”(click here for more information about the book) cautions us to not give in so quickly. Consider indemnification clauses. Government agencies oftentimes have two versions of indemnification clauses. But they only present the indemnification clause version that requires you to indemnify the government, but does not require the government to indemnify your business.
Businesses with good legal representation are likely to balk at such one-sided clauses wherein they assume considerable risk while the government avoids that particular risk. Curry tells us that it is not unusual, however, for a government agency to have a back-up provision that does provide for mutual indemnification and they are usually willing to use that version if challenged.
Bottom line is this- when faced with contract terms and conditions with such one-sided indemnification provisions, small businesses should consider asking the government to substitute an indemnification clause that pertains equally to both parties in the contract. There is a caveat. Not all government agencies have multiple indemnification clause versions and there is no guarantee they will agree to your request. But it doesn’t hurt to ask. Above all, it is best to secure legal advice on these matters because we are not lawyers.