Retreadfed

Joel, I have interpreted the issue as being one of profit at the prime contractor level. CM has not been clear on exactly what the issue is. Maybe we can get some clarification.

If this is a Navy contract, they usually contain a clause disclaiming any potential liability on the part of the government for costs caused by directions or contract changes issued by someone other than the contracting officer. Is there such a clause in your contract?

Is the "Proj Manager" a contracting officer? If not, what authority did (s)he have to issue such directions? If (s)he did not have the authority to issue such directions, maybe you do not have a claim at all.

Maybe you should look into that and see how that might impact what you have in mind concerning the IDIQ contract.

CF, look at 13 CFR 124.106(e)(3). It might provide you with a way out.

Why would you want to classify university research as a commercial item? Such contracts would normally have to be a type of fixed price contract. In my experience working at ONR, research contracts at universities are generally not susceptible of being priced on a fixed price basis unless the contract is a fixed price LOE contract as described in FAR 16.207.

Subcontractor profit is a cost to the prime. However, the OP did not mention subcontractor profit. On the other hand, prime profit is not a cost to the prime.

The simple answer to the question is profit is not a cost. When negotiating a contract, profit is the difference between the anticipated cost of performance and the price negotiated.

The term Vern used was dictum.

Funny that the clause does not apply to contracts for commercial items, but is to be included in subcontracts for commercial items.

Don, I do not see anything in the DFARS that says do not include the clause in contracts for commercial items. Confusingly, the introductory language to the clause says it generally does not apply to contracts that are not subject to the CAS, which would mean that (a)-(e) of the clause do not apply to contracts for commercial items. However, (e) requires the clause minus the introductory language to be included in subcontracts for commercial items. However, I am confused by the introductory language. It says that (e) does not apply unless the contract is subject to the CAS. If the contract is for commercial items, and not subject to the CAS, (e) would not apply to the contractor. In that case, it could be argued that the prime is not required to include the clause in subcontracts, unless the prime contract is subject to the CAS.

You did not quote all of Subsection (e). Note that it requires prime contractors to delete the introductory language when including the clause in subcontracts. Thus, the language limiting application to contracts subject to the CAS does not apply at the subcontract level. Therefore, it is required to be in your subcontract and you are bound to comply with it just as you would with any other term of your subcontract otherwise you will be in breach of your subcontract.

Is this clause in your subcontract?

Neil, here is the pertinent language from 10 U.S.C. 2324 which, with the companion statute in title 41, is the source of the relevant part of 31.205-47 "Except as provided in subparagraph (C), costs incurred by a contractor or subcontractor, or personal services contractor in connection with a criminal, civil, or administrative proceeding commenced by the United States or a State in connection with a covered contract, subcontract, or personal services contract may be allowed as reimbursable costs under the contract, subcontract, or personal services contract." It goes on to state that "The term “covered contract” means a contract for an amount in excess of $500,000 that is entered into by the head of an agency, except that such term does not include a fixed-price contract without cost incentives or any firm fixed-price contract for the purchase of commercial items."

It depends to a large degree on what clauses are in the contract and whether they survive contract closeout. A prime example is the ability to revoke acceptance due to a latent defect under the fixed price supply Inspection clause. This right is open ended.

Neil, I had similar thoughts. In addition, FAR 31.102 states the application of the cost principles when pricing a contract. It only applies to the government when evaluating proposals and does not prevent a contractor from proposing any cost it pleases. Further, it does not say anything about determining what costs a contractor can recover after a contract is awarded. Finally, there are several clauses that incorporate the cost principles from FAR 31.2. However, I am unaware of any clause that incorporates what is in 31.1.

Do you charge other agencies for doing work for them under the Economy Act?

Pepe, my point is that you stated "when you "agree bilaterally to a modification to re-establish" - What contract are you modifying? There is no contract. As stated, "the contract expired in January." There is no modification possible. It's a legal fiction. You need a new contract, not a modification to something that doesn't exist. Isn't this "modification" effectively a new contract?" What is your authority for saying that an expired contract, as you define it, is not capable of being modified?

Is there anything in the FAR, GAO, appeals board or court case that says such a contract cannot be modified to extend its performance period?

Does the FAR define or state when a contract has expired? What does it mean when you say that a contract has expired?

In addition to what ji said, does your agency have authority to do work for other agencies under the Economy Act?

I would like to get the views of the learned members of this forum on the judge's discussion of the Christian doctrine in this case. https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2017cv1763-32-0

Joel, are you contending that the time for exercising the option could be changed after the period for exercise of the option had passed (expired)?

Not unless your prime contract requires it.

The GAO report on VA monitoring of limitations on subcontracting posted on the WIFCON home page today is interesting reading . It shows how agencies can address the disconnect between the FAR and SBA regulations.