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Modifying Contracts to Reflect New or Updated FAR & DFARS Clauses
By Contract Kid on Tuesday, December 18, 2001 - 10:59 am:

I would like to know if and when it is appropriate to modify contracts to reflect new or updated clauses in FAR and DFARS. Should a contract be modified to reflect a new mandatory clause, or one that becomes mandatory when updated? Or is this unnecessary because the clause did not exist or did not apply to the contract when it was awarded?

I realize this would be impractical for low-dollar contracts of short duration, but what about about high-dollar contracts of long duration?

Is there a dollar or time-frame threshold for this? Does it depend on the situation at hand? Is it up to the contracting agency to decide this matter?


By Dave Barnett on Tuesday, December 18, 2001 - 01:28 pm:

My experience has been that clauses which are updated after an award do not apply to such in-place contracts. Go back to your contract law courses, one of the six elements of a contract is "certainty of terms", if the government could keep changing the clauses of a contract, then how could one determine the intent of the parties?


By Dave Barnett on Tuesday, December 18, 2001 - 01:32 pm:

Of course, a supplemental agreement subject to negotiation (including price, delivery) could always be considered.

But would you want to do that from the government's position?


By joel hoffman on Wednesday, December 19, 2001 - 10:21 am:

We generally don't modify existing contracts to incorporate updated or new clauses, unless the Legislation and FAC include such a directive to apply to exisiting contracts. Most of the time, there is some description of which contracts are affected by the new or revised clause. happy sails! joel hoffman


By Kennedy How on Wednesday, December 19, 2001 - 12:28 pm:

It's been my experience that we only modify existing contracts if the clause prescription requires it. There may have been times where a new clause may be desireable (by either party), but those are case-by-case decisions. I don't think I've ever done the latter.

Kennedy


By Tom Dickinson on Wednesday, December 19, 2001 - 12:34 pm:

A "contract" is an agreement that occurs at a particular point in time. Clauses included in a contract are agreed to as they exist at that time. Putting in a change to a clause in a contract is the same as modifying any other term of the contract, and invokes the same rights of equitable adjustment to the other party.


By Vern Edwards on Wednesday, December 19, 2001 - 01:08 pm:

Tom:

I disagree with you about the need for an "equitable adjustment." What is needed is new consideration, not an equitable adjustment.

Equitable adjustment is a term of art that refers to an adjustment based upon the effect of a change upon the contractor's cost or time of performance, plus an allowance for profit. See: General Builders Supply Co., Inc. v. U.S., 187 Ct.Cl. 477, 409 F.2d 246 (1969):

"The concept of an 'equitable adjustment' has had a long history in federal procurement, going back for about fifty years. See United States v. Callahan Walker Constr. Co., 317 U.S. 56, 63 S.Ct. 113, 87 L.Ed. 49 (1942); United States v. Rice, 317 U.S. 61, 63 S.Ct. 120, 87 L.Ed. 53 (1942); Ribakoff, Equitable Adjustments Under Government Contracts, in Government Contracts Program, The George Washington University, Changes and Changed Conditions 26, 27 (Gov't Contracts Monograph No. 3, 1962). First used in the standard 'changes' and 'changed conditions' articles, the term has been taken over for other clauses, such as the 'suspension of work' and 'government-furnished property' provisions. See J. Paul, United States Government Contracts and Subcontracts 430 (1964). The consistent practice appears to have been that an 'equitable adjustment', as that phrase is used in these articles, can cover an allowance for a profit on work actually done, but does not encompass unearned but anticipated profits. See United States v. Callahan Walker Constr. Co., supra, 317 U.S. at 61, 63 S.Ct. 113; Bennett v. United States, 371 F.2d 859, 864, 178 Ct.Cl. 61, 69--70 (1967); cf. Bruce Constr. Corp. v. United States, 324 F.2d 516, 163 Ct.Cl. 97 (1963). This is far from an unnatural interpretation since, in these clauses, the 'equitable adjustment' is usually tied by express words to an increase or decrease in the contractor's costs."

What is required is consideration, which is a different concept than equitable adjustment. Consideration is something bargained for in exchange for something else. It must be adequate, but it need not be equitable. See Restatement, Second, Contracts 79.

A contracting officer cannot issue a unilateral order to add a new clause to a contract or update an existing clause. A supplemental agreement is required. In order for the supplemental agreement to be binding there must be an exchange of consideration. Consideration need not reflect the impact of the addition or update on the contractor's cost or time of performance; it need not be equitable; it need only be adequate to bind the parties.


By Ron Vogt on Wednesday, December 19, 2001 - 03:28 pm:

Actually, that brings up an interesting point. The UCC (2-209) does not require modifications to be supported by consideration. Of course, there still needs to be agreement, so a unilateral modification without consideration would not work (and of course, a unilateral change is limited to those changes permitted by the FAR; anything else requires a bilateral modification or supplemental agreement).
Therefore, if the government and contractor agree, and the contract is one for the sale of goods, the contractor could accept a change adding a new clause and do so without consideration.
Note also that I am taking as a 'given' that the UCC applies to government contracts. How and when is a matter of much debate. Nevertheless, the courts and boards have applied the UCC to government contracts, so for purposes of this discussion, it applies.


By Vern Edwards on Wednesday, December 19, 2001 - 03:53 pm:

Ron:

I'm confused. Are you saying that the Uniform Commercial Code governs Federal contracts? If you are, would you please cite some reference?

I know that the boards and courts have looked to the U.C.C. for guidance, but the U.C.C. is a model code for adoption by state governments. It has been adopted in some form by most states, I think with the exception of Lousiana. It has not been adopted by Congress for application to Federal contracts.

The modification of Federal contracts must be supported by consideration. Do you have solid information to the contrary?


By Ron Vogt on Wednesday, December 19, 2001 - 06:00 pm:

I don't think I said anything like that. I simply said that the courts and boards have applied the UCC to government contracts in certain situations. For example:

Northern Helex Co., v. United States, 197 Ct.Cl. 118, 455 F.2d 546 (1972): "As always, the federal contract law we apply should take account of the best in modern decision and discussion." Padbloc Co. v. United States, 161 Ct.Cl. 369, 377 (1963). This court has explicitly recognized the authority and relevance of the Uniform Commercial Code in the field of public contracts, Everett Plywood & Door Corp. v. United States, 190 Ct.Cl. 80, 89, 419 F.2d 425, 430 (1969), as has the Second Circuit, United States v. Wegematic Corp., 360 F.2d 674, 676 (C.A.2, 1966) (Friendly, J.). See, also, Harry Thuresson, Inc. v. United States, Ct.Cl. 453 F.2d 1278, decided this day.

ABM/Ainsley Business Materials v. GSA, GSBCA 9367, 93-1 BCA 25,246 (applies UCC regarding revocation of acceptance).

As I said, the application of the UCC to government contracts is complicated, so I just took it as a given rather than opening up a whole new debate.

Let me turn your question around: does the FAR prohibit a bilateral modification without consideration? I did a quick scan of Part 43, and did not see any mandatory requirement for consideration, although I admit it was a quick scan. In fact, COs are permitted to add FASA and FARA modifications without consideration (see 43.102(c)).

If there is a mandatory requirement in the FAR to get consideration for all modifications, then I agree that the application of the UCC cannot overcome a mandatory requirement, and I retract my earlier post. If not, then my point is simply that a contractor can agree to no consideration.


By Vern Edwards on Wednesday, December 19, 2001 - 08:05 pm:

Ron:

The FAR does not prohibit a bilateral modification without consideration. The FAR does not prohibit a contract award without consideration. The FAR barely mentions consideration at all. Do you thus conclude that consideration is not required for the formation or modification of Federal government contracts? I hope not.

Consideration is a requirement of the common law of contracts as applied to Federal contracting. See Cibinic and Nash, Formation of Government Contracts, 3d ed. (1998), pp.247-258.

Evidence that consideration is normally essential to contract formation and modification are the facts that: (1) FAR 43.102(c) mentions that FASA and the Clinger-Cohen Act "authorize but do not require" contracting officers to modify contracts without consideration in order to incorporate changes authorized by FASA or Clinger-Cohen Act amendments into existing contracts, and (2) FAR 50.302-1 prescribes special procedures for modifying contracts without consideration as authorized by the Defense Production Act. It clear from these passages that Congress believes that modifications without consideration require express statutory authority.

Numerous board and court decisions have taken note of the requirement for consideration in support of modifications. In 1999 the Department of Agriculture Board of Contract Appeals (AGBCA) held as follows:

"The authority of COs to enter into modifications or amendments to contracts is limited to agreements based on new consideration or benefit to the Government. See Beavers Construction Co., AGBCA No. 83-125-1, 84-1 BCA P 17,067, holding that there is no authority to enter into modifications unsupported by the framework of the contract or by any new consideration, and that performance of pre-existing duty is not sufficient consideration for a supplemental agreement."

See: Thomas B. Prescott, AGBCA No. 98-151-1, 00-1 BCA 30,583.

The Armed Services Board of Contract Appeals has found promises to be unenforceable due to lack of consideration. See: Voices R Us, ASBCA No. 51,026, 51,070, 98-1 BCA 29,660, in which the board said: "Moreover, even if Mr. Patty's alleged promise of payment were deemed to be admitted and ratified by the contracting officer's failure to reply to VRU's letter of 2 December 1996, the promise is unenforceable for lack of consideration."

In Shipco General, Inc., ASBCA No. 32830, 90-1 BCA 22,363, the ASBCA made this point:

"The contractor fails to recognize that but for two instances of poor contract drafting by the Government, the termination for default of that contract would never have been converted to a termination for convenience. The first was failure to provide for the incremental return of refurbished houses--the method frequently used for renovation of housing--so that all of the houses could have been delivered the last day of the contract... . The second was failure to include any consideration for the contract modification which established a completion schedule for houses on a periodic basis."

I think that we can safely say that a modification of a Federal contract must be supported by consideration to be enforceable.


By Anonymous on Thursday, December 20, 2001 - 08:03 am:

Back to the original question, I agree that generally a FAR clause promulgated after award will not apply to (or be incorporated into) the contract unless the FAR or underlying statute permits/requires incorporation or the parties mutually agree to do so (supported by consideration from the party/parties benefitting from the incorporation). I would just add that in some cases the exercise of an option is viewed as tantamount to the award of a new contract (e.g., where the option work would normally be competed but is added to the contract IAW a sole-source justification). In such cases, a mandatory FAR clause which is issued after the original award but before the option exercise must be incorporated into the contract when the option is exercised. Indeed, if the CO fails to do this the clause will be read into the post-option contract under the Christian Doctrine. There is case law on this, albeit not very much.


By Vern Edwards on Thursday, December 20, 2001 - 09:22 am:

Anonymous 08:03:

What's the case law?


By joel hoffman on Thursday, December 20, 2001 - 10:48 am:

I have an example:

The Prompt Payment Act revisions of 1988 were made applicable by operation of law "to all contracts awarded, contracts renewed, and options exercised on or after April 1,1989." However, the revised contract clauses were only published in the Federal Register on March 31, 1989. We received implementing guidance from Headquarters on July 2 of that year to unilaterally incorporate the new clauses into the affected contracts by administrative modification. We did. Talk about wailing and gnashing of teeth by the affected contractors!!!! A couple gave notice of intent to claim, but eventually withdrew them , after the Christian Doctrine was explained to them. Of course, that didn't make them any less mad.

I don't remember any contracts awarded prior to April 1, 1989 with subsequent options that were affected, so I don't know what would have happened in that case - would we have had to re-negotiate or provide consideration? I don't know. All I know is we weren't provided any guidance other than "the operation of law" directive.

happy sails! joel


By Ron Vogt on Thursday, December 20, 2001 - 10:50 am:

Vern, you have done a thorough job of finding cases that address consideration, but they are not particularly relevant to our scenario. In my original post, there were two key elements: agreement, and Article 2 of the UCC, which means the sale of goods.

In the AGBCA case you cited, there was neither. That case involved a truck rental, and the claimant wanted (and the government denied) a higher compensation than was in his contract. In Voices R Us, the claimant alleged that the CO had promised a partial payment before a line item was accepted, which the government disputed; hardly a scenario demonstrating agreement. As for the other cases, I don't have access to them.

Furthermore, these cases involve a lack of consideration to the government, for an alleged modification that would have benefitted the contractor. Therefore, they could stand for the proposition that the government cannot be held to an implied modification (remember, there was no agreement) unless some benefit flowed to the government.

In looking over my question to you (does the FAR prohibit...), I realize that I should have asked a different question. You are correct, there are lots of things that the FAR does not prohibit, so that gets us nowhere. The question should have been: does the FAR expressly require consideration for all modifications? Again, my quick scan did not find anything, and I suspect that someone would have cited it by now if it was there. (As before, if there is such a statutory or regulatory requirement, I will retract my comments and the debate is over.)

That leaves us with the case law. As you have pointed out, there are cases that say consideration is required, but I don't find those to be exactly on point. In fact, there may not be a case on point, because it would require a scenario in which the government and the contractor agree on a written modification, and then one party tries to back out of it, claiming no consideration. This is an unlikely scenario.

So how do you add a new or updated clause? I say go for it by written, bilateral modification, making it clear that there was agreement to the modification. If there is a later dispute, the court should do as the Claims Court did: "As always, the federal contract law we apply should take account of the best in modern decision and discussion."


By Vern Edwards on Thursday, December 20, 2001 - 11:07 am:

Ron:

I frankly find it amazing that anyone would suggest that a modification of a Federal contract without consideration would be binding in the absence of statutory authorization, a la the Defense Production Act, FASA, or Clinger-Cohen. You have provided absolutely no support for your contention other than the fact that you have not been able to find a case which strikes you as being on point. The cases that I cited to you were on point; the fact that their factual backgrounds are dissimilar to the problem at hand do not distinguish them in this regard.

It is clear to me that a CO has no authority to modify a contract without consideration in the absence of express statutory authorization to do so. I find your attempt to argue to the contrary on the basis of the fact that you have not been able to find what strikes you as a case on point to be entirely without merit. Show me a case in which a board or a court has said that consideration is not necessary to bind the parties to a modification. Show me an authoritative statement to that effect.

As far as I am concerned, the need for consideration to support a modification is such a fundamental principle of Federal procurement law that I am content to let you believe what you like, and to act on your belief, without spending another moment of my time trying to change your mind.


By Ron on Thursday, December 20, 2001 - 06:30 pm:

Vern,
I won't try to change your mind. In fact, I have always respected your contributions to this forum. But I do have to comment on a couple of your points.

First of all, the facts are exactly what make one case distinguishable from another. Much of oral argument consists of pointing out factual differences between cases so as to distinguish why a rule of law should or should not apply to your case. So when you say that your cases are on point - the facts are just different, that's like saying your name is Vern - you just pronounce it Eric (sorry, couldn't resist).

The cases you cited stand for the proposition that the CO has no authority to modify a contract if there is no benefit to the government. That's not quite the same thing as saying "a modification must be supported by consideration." Under traditional contract law, there must be consideration on both sides. The UCC changed this by eliminating the requirement for consideration in modifications. Since the cases say nothing about requiring benefit to the contractor, I see no reason why the UCC rule can't be applied.

Therefore, in response to the original question, if the new or updated clauses benefit the government, and the contract is for goods, I would say they can be added by mutual agreement and nothing more. If the clauses benefit the contractor, the cases you cite would require a benefit to the government as well (which FASA and FARA waived for those changes). For non-goods contracts, I would say that the common law requirement of mutual consideration for mods would apply.


By Vern Edwards on Thursday, December 20, 2001 - 08:39 pm:

Ron:

Well, I don't like to think that my mind can't be changed, so I'm going to give you the chance to change it. As far as I can tell, your argument boils down to this:

Since the U.C.C. does not require consideration in support of a modification of a contract for the sale of goods, and since the FAR does not state that consideration to the contractor is required in support of a bilateral modification of a Federal government contract for goods, it follows that no consideration to the contractor is required to support the bilateral modification of a Federal government contract for goods. Thus, as long as the government receives consideration the parties will be bound by the terms of the modification.

Is that a fair statement of your position? If not, please correct me. If so, prove it. Show me a case in which a board or a court has said that there need not be a mutual exchange of consideration to support a modification and that cites the U.C.C. or the lack of a FAR (or ASPR, FPR, or DAR) requirement as the basis for its holding. If you can show me such a case, and the more recent the better, I am prepared to change my thinking on the matter.

As an aside, if the modification benefits both parties, then there has been a mutual exchange of consideration. We are thus talking about a situation in which the modification benefits the government but not the contractor.

I actually hope that you can change my mind, because then I will have learned something new and very useful.

I want to advise you that I discussed this with Prof. Nash today and he said that consideration is required. But he's only human and maybe you can teach him something too.

Standing by.


By Anonymous on Friday, December 21, 2001 - 08:58 am:

Vern - I am the Anon 8:03.

Case law in support of the proposition I cited includes Southeast Consortium for Int'l Devpt, ASBCA No. 35064, 88-2 BCA 20,735; Honeywell Federal Systems Inc., ASBCA No. 36227, 89-1 BCA 21,258; and Telesec Library Svcs, ASBCA No. 42968, 92-1 BCA 24,650. The Telesec decision includes the following language:

"Under 29 CFR sec. 4.143(b) and 4.145(a), when the Government exercised the second option, it created a 'new contract' with respect to the Service Contract Act and regulations relating thereto. This new contract was effective 21 December 1989. Prior to that date, new FAR regulations applicable to the Service Contract Act had been implemented by FAC 84-46. We conclude that, under FAR 22.1006, the contracting officer was required to insert the new Price Adjustment clause, FAR 52.222-43, into the third year option contract. Because the contracting officer failed to do so, we further conclude that, under the Christian doctrine, FAR 52.222-43 must be read into the contract by operation of law. See Centel Communications, supra."

There is, however, case law to the contrary. SEe, e.g., IBM v. US, 21 Cl. Ct. 743 (1990)(where obtaining an option is not the primary purpose of the original contract, an option should be treated as a continuation of the original contract).

By the way, although as noted in my originam message I agree with your position on consideration, there is some authority to the contrary. When the FAR replaced the DAR/FPR, the CAAC issued guidance on what to do for contracts awarded under the FPR but administered after the FAR was issued. The CAAC Chairman issued guidance (Oct. 17, 1983) saying that, where post-4/1/84 options were exercised in such contracts, the CO was supposed to apply the FPR unless either (a) a new procurement or unpriced option was involved (i.e., the situation I addressed in my earlier message), or (b) the parties mutually agree to convert to the FAR system. Alternative (b) would not appear to expressly require consideration. Of course, a court or board might hold that the consideration requirement is implicit, but that doesn't look like what the CAAC guidance was trying to say. I'm not aware of any cases on this.


By Vern Edwards on Friday, December 21, 2001 - 09:34 am:

Anonymous:

Thanks for the cites. I'll check them out. They look interesting.

With regard to the consideration issue, I would say that when the parties agree to add or update a clause (or convert to the FAR system), and when each party considers the addition or update to be for its benefit, then there has been a bargained-for exchange, and thus the requirement for consideration has been satisfied.

The more I think about it, the more it seems that the provision in FAR 43.102(c), which authorizes COs to modify contracts without consideration in order to incorporate FASA or Clinger-Cohen changes, seems unnecessary. If the parties agree that the changes are mutually beneficial, then haven't they exchanged consideration? Haven't they exchanged promises?

The Restatement, Second, Contracts 71, says, in part:

"Requirement of Exchange; Types of Exchange

(1) To constitute consideration, a performance or a return promise must be bargained for.

(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

(3) The performance may consist of

(a) an act other than a promise, or

(b) a forbearance, or

(c) the creation, modification, or destruction of a legal relation."

If both parties promise to comply with the new or updated clause, then haven't they made an exchange? I think so. That's all the consideration they need.

Vern


By Anonymous on Friday, December 21, 2001 - 10:38 am:

Anon 8:03 again - I hate to be the fly in the ointment, but I'm not sure I agree with your last statement. There are a number of cases where boards have struck down mods for lack of consideration.

A mere promise to comply with a clause is, in my opinion, not necessarily enough to constitute consideration. For example, if I promise to give you $100 next Monday and you promise to accept the $100, we have both made "promises" but there is no consideration. If, however, your promise to accept the $100 is coupled with something that benefits me in some way -- even if only by constraining your action in a way I view as favorable to me -- that constitutes consideration.

In the context of substituting one clause for another, I agree that creative people can usually come up with some benefit to both parties. But where they cannot, black-letter law says the agreement fails for lack of consideration. A contractor's promise to "comply" with a clause that benefits only the contractor, and does not constrain the contractor's action in any way, does not, IMHO, constitute consideration.

Again, however, I agree that in the "real" world, there is almost always some benefit/constraint on both sides.


By Vern Edwards on Friday, December 21, 2001 - 11:11 am:

Anonymous:

I think that a promise to comply with a clause is adequate consideration as long as there is an exchange of some kind--a bargain.

Many clauses, probably most, require something of both parties. For example, under the Changes clause the contractor promises to comply with certain orders of the contracting officer and the government promises to give the contractor an equitable adjustment if the order increases the contractor's cost or time of performance. Doesn't that strike you as a bargain. Wouldn't you agree that if both parties found that clause to be beneficial then their exchange of promises would constitute adequate consideration?


By Ron on Friday, December 21, 2001 - 11:54 am:

Vern,
You have pretty much stated my position. I agree that the case law requires there to be some benefit to the government, so until the law changes, 2-209 will not replace consideration to the government. As for the contractor, however, I think it's an open question. There are no cases yet, but I think it could be done.

It appears you've answered your own challenge to me. I've said that a modification by mutual agreement could be sufficient. You've said it requires consideration, but that the mutual agreement could be the consideration. Need we go further? After all, my only point was that a simple modification adding new or updated FAR clauses could be done by mutual agreement without "the technicalities which at present hamper such adjustments." (Comment 1 to UCC 2-209). Although we take different paths to get there (me: no consideration; you: agreement = consideration), we both appear to be getting to the same point: a technical modification by mutual agreement.

Incidentally, modifications without mutual consideration probably are not uncommon. Anon gave some good examples. Mods to add clauses via the Christian Doctrine are not exactly a bargained-for benefit to the contractor. Think also of all of the no-cost or technical modifications that benefit one party and the other agrees simply because it has no impact.

By the way, did Prof. Nash also opine that the courts would not apply 2-209 in our situation?

This has been educational and fun. In case this is my last post on this topic, Happy Holidays.


By Anonymous on Friday, December 21, 2001 - 11:57 am:

I agree completely. My point was that for those (admittedly very few) clauses that benefit only one party, the party that benefits from incorportion must do something more than merely promise to comply with that clause. My apologies if it came out differently than what I intended.


By Vern Edwards on Friday, December 21, 2001 - 12:25 pm:

Ron:

I think you've postulated a very interesting idea--that a board or a court would require consideration to the government but not to the contractor, thus applying UCC 2-209 in a limited way. But that seems an odd position, that consideration must flow to one party but not to the other.

To the extent that you believe that a bilateral modification would be binding on the basis of mutual benefit, we agree. But I think that satisfies the requirement for consideration, which is different than saying that no consideration is required.

I think the Christian Doctrine is a different problem. The application of the Christian Doctrine to read a clause into a contract is not a modification of the contract. I think that in Christian Doctrine cases the boards and courts consider themselves to be reading the contract as it actually is, rather than modifying the contract. I do agree that many "no cost" modifications, such as "no cost" extensions of the delivery schedule, are probably modifications without consideration.

Prof. Nash did not say anything that I recall about the prospect that the boards or courts would apply UCC 2-209. He simply said that to the best of his knowledge none had done so. Nor did we discuss the notion that the boards or courts would require consideration to the government but not to the contractor.

In Formation of Government Contracts, he and Prof. Cibinic discuss one 1966 GAO decision in which the Comp. Gen. did not require consideration to a contractor and two Federal Court decisions, one from 1952 and one from 1942, but I have not read them yet. They do not seem applicable to our discussion. They also mention three 1980s decisions in which the GSBCA applied Restatement 89 to permit modifications without consideration to one party under certain common law circumstances, but those are not applicable to our discussion.

The Prof.s do cite some cases in which boards have held that a modification was not binding for lack of consideration. One of them is a supply contract case in which the contractor agreed to a $700 deduction for tendering nonconforming supplies and then repudiated the agreement because it turned out that the supplies were, in fact, conforming. The contractor claimed to have given up something without getting anything in return, since the government was already obligated to accept the supplies. The board agreed and held that the mod was not binding "for want of consideration." See: Hunt Building Marts, DOTCAB No. 69-6, 69-2 BCA 8042. I don't rely on it too much, though, because it is so old.

It has been fun. Happy holidays.

Vern


By Ron on Friday, December 21, 2001 - 02:47 pm:

I almost hate to do this, but I have to add one comment. You've said it's an odd position to take to say that consideration can flow to one party and not the other. Yet that's exactly what 2-209 (and therefore the law in 49 states) allows. It says that no consideration is required for a modification, yet realistically, it will only apply to one party. After all, why do a modification if there's no benefit to either party?
Happy Holidays.


By joel hoffman on Friday, December 21, 2001 - 03:00 pm:

Anon 8:03,

Can you please check your citation for IBM vs. U.S.? 21 Ct. Cl. 743 is a Stokely Van Camp Vs. U.S. case, beginning on page 731. I don't know "beans" about the IBM case and want to look it up. thanks.

happy sails! joel


By Vern Edwards on Friday, December 21, 2001 - 07:22 pm:

Ron:

No problem. That makes sense.

Vern


By joel hoffman on Friday, December 28, 2001 - 11:15 am:

To Anon 8:03:

On Friday December 21, you said ...

" There is, however, case law to the contrary. SEe, e.g., IBM v. US, 21 Cl. Ct. 743 (1990)(where obtaining an option is not the primary purpose of the original contract, an option should be treated as a continuation of the original contract)."

I tried to check that case out. The citation is wrong or the Case Title is wrong, because the cite refers to a "Stokely Van Camp Vs. U.S." case. Can you please check your citation, again. I want to review the IBM case concerning options for background on another thread, discussing options. Thanks. Happy Sails! joel hoffman


By Anonymous on Wednesday, January 02, 2002 - 07:58 am:

Anon 8:03 here -

Sorry for the mistaken cite; it should have been IBI v. US, 21 Cl. Ct. 79 (1990).


By joel hoffman on Wednesday, January 02, 2002 - 02:10 pm:

Thanks, Anon 8:03. Several other later cases agree with the IBI reconsideration. happy sails! joel


By Anonymous on Monday, April 01, 2002 - 03:50 pm:

Here's an interesting variant on this thread, specifically related to the Christian Doctrine.

I work for a federal contractor, and the FY2002 appropriation for our largest customer agency contains language prohibiting the agency from using FY2002-appropriated funds to pay salaries of any individuals "via grants or any other extramural mechanism" in excess of the Federal Executive Level I rate. The legislative text makes no mention of intended effects on existing contracts. No mention is made of whether the change is intended to be prospective or retroactive.

Our customer agency is now issuing *unilateral* modifications incorporating language into contracts signed prior to FY2002 that limit our employees' unloaded labor rates. Is this legal?

Has the Christian doctrine even been invoked to change the fundamental terms of a contract retroactively? Doesn't this violate the certainty of terms principle?

On a side note, would anyone make a case that procurement contracts fall outside the scope of "grants and other extramural mechanisms"?

Thanks for any advice anyone can offer!


By John Ford on Tuesday, April 02, 2002 - 01:46 pm:

Congress tried something similar to this with regard to executive compensation by placing a cap on the total compensation of certain executives that would be allowable on government contracts. This provision was retroactive by its terms. General Dynamics challenged the retroactive application of the statute based upon the Supreme Court's Winstar decision. The ASBCA upheld GD and although the government initially filed an appeal with the Federal Circuit, that appeal has been withdrawn.


By Dave Barnett on Tuesday, April 02, 2002 - 02:34 pm:

Assistance or acquisition? See chapter 10 of the "Red Book", page 10-6 (if I read the number right), Vol II for the distinctions between grants, cooperative agreements and procurement contracts.

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