Government Contracts, American Style

October 04, 1999

Despite the worldwide trend towards privatization, maintaining the ship of state still requires an extensive arsenal of contracts with private enterprise. In fact, the trend towards farming out jobs to the private sector is expected to accelerate as governments shed their own inefficient operations. Generally, the ability of contractors to pursue claims, disputes, and other forms of action against any government is circumscribed, if not totally frustrated, by the barrier of sovereign immunity. It is often said that contractors must "turn square corners" when dealing with a government as a contracting party, carefully following an often bewildering array of statutes and regulations.

In the United States, complex but transparent procedures exist to promote the fair resolution of disputes, while attempting to maintain impartiality and minimize corruption. A brief discussion of the American system of contract claims and remedies may provide a useful standard in assessing the need for reform in Korea and other major powers. These remedies fall into two categories: (1) bid protests, where disappointed bidders or offerors seek relief from adverse government actions leading to the award of a contract; and (2) contract disputes, where contractors seek relief from government actions and events that occur during contract performance. The same forums are sometimes available for protests and disputes, but the jurisdiction, remedies, and procedures for the two often differ.

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