Practices  |  Government Contracts

Crisis Management for Government Contractors

Overview

Sometimes a “perfect storm” turns what might be an albeit serious contract dispute or investigation into a highly visible public crisis that threatens to overwhelm a company and cause it serious, if not irreparable, financial and reputational harm.  These types of matters can combust, seemingly spontaneously, given the right mix of high stakes and customer, congressional, and public (i.e., media) interest, and they usually very quickly generate a narrative that puts the company in a very bad light.

Such matters often require a form of crisis management that will usually involve a multiple disciplinary, legal/PR/government relations, team.  Wiley Rein is experienced in participating on such teams and providing the legal/contractual analysis required to navigate the situation successfully.  In that regard, we have developed an “Inventory/Investigate/Integrate (I-Cubed)” approach to such matters.  At a summary level, this requires (usually in real time, while the company is simultaneously trying to put out daily media/customer/congressional/PR “fires”):

  • An inventory of legal/contractual issues, players, and affected constituencies (e.g., customer(s), regulators, contracting partners, employees, congressional investigative committees);
  • An internal investigation to master the relevant facts and get ahead of the story; and
  • An integration of what is learned from the inventory and investigation to assess the risks the company is facing and the message(s) it needs to deliver to the affected constituencies.  In the typical matter involving a government contractor, the risks will include contract termination (convenience vs. default), contract claims (contractor and government), potential criminal/civil fraud liability, suspension/debarment, and congressional investigations.

Given the importance of fact development and accuracy in ongoing communications and responses to questions in these matters, counsel often serves as the principal focal point for a company’s response to such crises.  In this regard, regular trade-offs will be required to balance the need to protect the company’s legal/contractual position and the need for the company to “take responsibility” publically for whatever mistakes may have been made.  These trade-offs will not always be resolved in favor of protecting fully the company’s legal position, but it is critical that the company have a disciplined process to ensure that management makes any such trade-offs on as fully informed a basis as possible.

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