'Sovereign capacity,’ new sequester hammer?

An obscure part of federal contracting laws could give agencies unilateral power to cancel or change contracts, leaving contractors with little recourse if sequestration forces automatic budget cuts, Rueters is reporting

A recently released Congressional Research Service report states that the government can avoid liability for contract changes if it acts “in its sovereign capacity,” the news agency quotes the report as saying.

Industry has been vocal in warning the government that it would face billions of dollars in fees for changing contracts, but the research service report said the fees can be avoided.

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