Q&A: Harry Clark, Orrick
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Q&A: Harry Clark, Orrick

Harry Clark has spent more than two decades working on government contracting. He started out at Dewey & LeBoeuf and is currently a partner with law firm Orrick in Washington, D.C., which he joined in 2012. Renewable energy has become a big part of his workload and he’s acknowledged as one of the go-to advisors on the U.S. Army’s multiple award task order contract (MATOC), which prequalifies developers to bid on projects. He sat down with Senior Reporter Holly Fletcher.

Harry Clark

Harry Clark

PI: What is your experience working with the government and what have you gleaned that is helpful to the private sector looking to work with the public sector? I’ve been working on government contacting matters involving U.S. government segments such as the U.S. Department of Defense, U.S. Department of Energy and the U.S. General Services Administration now for, sad to say, about 24 years. The renewable energy element has expanded substantially in the last three or four years. The renewable element has become a much more pronounced part of the practice as the U.S. Department of Defense has commenced its effort to greatly expand its use of renewable energy a few years agoRenewable energy government contracting has emerged as a very specialized area. On top of the normal complexities of renewable energy development is layered a complex body of regulation that impacts every aspect of the contracting relationship between the government and the private party.

PI: So far in the application process for the U.S. Army’s MATOC what sets apart companies that are sailing through communications versus those that are struggling?

Some of the attributes that tend to contribute to success in this area are: a) devotion of the time and effort needed to develop a solid proposal; b), obtaining the expertise needed to be effective in dealing with the Defense Department as a customer; and, c) focusing intently on the challenges that are involved in application of the standard government contracting legal requirements in the context of renewable energy projects.

To expand on that a bit, the phenomenon we’re witnessing is a coming together, you might say, of two very different cultures. On the one side you’ve got the contracting function in the government—the government and its perspective on acquiring goods and services. And on the other side you’ve got the renewable energy community and what is typically a project finance approach to renewable energy projects. There’s nothing good and bad on either side, they are just very different. Folks who tend to succeed are thoughtful about understanding and acknowledging the differences and incongruities and taking those challenges on in a thoughtful, realistic way.

PI: Have you ever seen a private company struggle with how to adapt to working with the government? How do you recommend a company prepare itself?

I’ve certainly seen instances in which investors and companies were not taking this as seriously as it needs to be taken and really struggling with it. At the end of the day problems are almost always solvable but they require attention and devotion of time and effort.

It is advisable to be sensitive to differences between the private sector and the government and rather than hoping that at the end of the day the government is going to act like a private sector contractor. It’s not going to do so. It can’t, given the legal environment in which it operates as a customer. With that in mind, put some thought into coming up with the most competitive proposal that can be submitted.

My experience over the past 20 years is ordinarily that acquisition officials in the government—they want to get it right. They want to get the best deal for the government. They want to accommodate, within reason, private sector competitors to enable the government to secure the best value. There’s only so much they can do. There are some legal restrictions that they generally cannot waive. If the private sector is working on an informed good faith basis then normally, challenges can get resolved.

PI: One issue that cropped up when the U.S. Department of Energy established its loan guarantee program was the department was understaffed, which slowed the process and frustrated developers and lenders. Do you expect there to be a similar learning curve in the Army process?

My experience is that the people involved within DOD are thoughtful, intelligent, well meaning. But there is a learning curve and there are real challenges. If I was in the shoes of some of these folks in the government I would have the same challenge of making the square peg of renewable energy procurement fit in the round hole of government contracting regulations. Government acquisition functions face categorical legal requirements in many areas. They can’t just wish them a way. They have to deal with them.

They’ve learned an awful lot about this business area and they are learning a lot more. That’s crucial. At the same time, folks in the business community should be realistic about the challenge of negotiating the federal procurement legal structure and the need for creative thinking. It’s not as easy as saying ‘you the government should behave exactly like a private party.’ They can’t act like a private party. They are subject to special legal requirements that don’t apply to private parties.

It takes concerted, thoughtful effort on both sides. I’ve been impressed by government. I’ve been impressed by business in general. It would be wrong on the government side to just sort of blame the business community for the challenge. It would be wrong on the business side to blame the government challenges. The fact is there are challenges here and often they are not easy.

PI: How is the MATOC program moving along?

The DOD received the MATOC proposals in October and those are all under review. It’s not clear exactly when MATOC awards will occur. My sense is that awards should begin to emerge in the third calendar quarter. Many would view the timeline as slow. It’s no doubt disappointing to some but it’s not surprising.

PI: What happens after the companies receive their MATOC eligibility awards?

MATOC awards are expected to result in a more streamlined process to bid on projects in the future. At the same time the Army is pursuing renewable energy products outside the MATOC framework. An example is the Fort Detrick request for proposals here in Maryland [for a solar photovoltaic power purchase agreement]. And the MATOC program is limited to the Army. The U.S. Navy and U.S. Marines are pressing ahead with their programs.

PI: What’s the one element of working with the government that most takes the private sector by surprise?

I think the most notorious is what’s called “termination for convenience.” It’s an area that is shrouded in mystery and is viewed as being a bit more frightening than it actually needs to be. The notion is that the government always has to be in a position to cancel projects for reasons related to the government funding process. It is a legal imperative. In any government project, including a renewable energy project, the government is going to have termination for convenience rights where they can simply terminate the projects. The big question is ‘okay what are the implications of that?’

Understandably this is a topic that has gotten the attention of the folks in the business and investment communities and understandably so. I actually think that the more one looks into termination of convenience the more the business and investment community can become comfortable with it. There are generally well understood approaches to compensating the private sector contractor on termination. To be sure, that needs to be understood by the contractor.

While termination for convenience is disconcerting, there is a flipside. There are aspects of the government contracting process that are more favorable aspects of purely private deals. Perhaps most importantly, the U.S. government doesn’t default. The full faith and credit of the U.S. government stands behind compensating the contractor in accordance with the contract. You might have questions about exactly what those compensation numbers are and what they are going to be. But what you can count on is that if you’ve got a fully authorized contract—as long as there’s no legal defect establishment of the contract—the government is, in fact, going to make the payments that are contemplated by the contract. Of course you cannot count on that in the private sector world.

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