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joel hoffman

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About joel hoffman

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    Following God, Family, Sailing, Motorcycling, Hunting, Volleyball; Acquisition, Source Selections, Contract Administration, Construction, Design-Build Construction, mods, claims, TFD, TFC, project controls,

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  1. Would this happen to be a situation where are you were essentially to the point of substantial completion but the user of the facility refused to accept pt it, without user requested modifications? in other words, the KO would not take acceptance because the user demanded design changes?
  2. There are numerous cases that concern the finality of an agreement and release statement In a supplemental agreement, bilateral contract modification. Perhaps you misunderstood at the time when the warranty would begin. From your original post, it may be that you thought the warranty starts at the contract completion date. That would’ve been a unilateral mistake. In addition, the standard form 30 for the contract modification will indicate that , except for any modifications herein, the rest of the contract term conditions remain unchanged. In actuality, the warranty has not been extended. The beginning of the warranty may have been moved outward but the length of the warranty will remain the same.
  3. “52.236-7 Permits and Responsibilities. As prescribed in 36.507, insert the following clause: Permits and Responsibilities (NOV 1991) The Contractor shall, without additional expense to the Government, be responsible for obtaining any necessary licenses and permits, and for complying with any Federal, State, and municipal laws, codes, and regulations applicable to the performance of the work. The Contractor shall also be responsible for all damages to persons or property that occur as a result of the Contractor's fault or negligence. The Contractor shall also be responsible for all materials delivered and work performed until completion and acceptance of the entire work, except for any completed unit of work which may have been accepted under the contract.”
  4. As ji indicated, the warranty of construction starts upon acceptance of the project; or if the government takes partial acceptance or takes beneficial occupancy of all or any part of the work then the warranty would start on that work which was been accepted or beneficially occupied for use. If you, as the contractor, have maintained possession of the unfinished work, then you are responsible for the condition of the unfinished work. I would certainly think that paint would last more than two or three years. Especially so for interior paint. It would seem that the only personnel occupying the building are your people. Yes there is case law concerning when the warranty would start with respect to beneficial occupancy by the government.
  5. MIL SPECs are for DoD standardization purposes. Try MIL STD 961. I wasn’t able to download it . One can’t simply develop a standardized MIL SPEC on their own. DEPARTMENT OF DEFENSE STANDARD PRACTICE: DEFENSE AND PROGRAM-UNIQUE SPECIFICATIONS FORMAT AND CONTENT (27-OCT-2015)., This standard establishes the format and content requirements for the preparation of defense specifications and program-unique specifications prepared either by DoD activities or by contractors for the DoD. It also covers the format and content requirements for specification sheets, supplements, revisions, amendments, and notices.
  6. Sorry about the formatting. The above quote is from FAR Case 2018-016: Lowest Price Technically Acceptable Source Selection Process. (October 2, 2019) See the WIFCON Home Page or https://www.federalregister.gov/documents/2019/10/02/2019-20798/federal-acquisition-regulation-lowest-price-technically-acceptable-source-selection-process It would seem that current policy, at least for DoD would generally not prohibit the government from purchasing more than minimum (quality) requirements. And - of course, trade-off methods are allowed by FAR for source selections, task order contracting, simplified acquisitions, FSS, etc. Not to say that one cant use Part 14 IFB methods, either (for any of those different acquisition types, if goods and services meeting minimum specified requirements would satisfy your needs. As for quantity - as Frog says - see the Bonafide Needs rules.
  7. Carl, please don’t put words in my mouth. I did not agree that the prime can submit an invoice for upfront payment of subcontractor bonds. Fact . Fact. That’s the only point I made. It’s been that way for 30 1/2 years! The prompt payment clause was updated effective, April 1, 1989 for all contracts awarded after March 31, 1989. This was to implement the prompt payment act amendments of 1988. The PPA Amendments of 1988 preclude the prime contractor from asking for payment of any amounts that will be retained or withheld from payments to subcontractors or suppliers. That was one of the major changes to progress payments for FP construction contracts.
  8. https://www.esd.whs.mil/Portals/54/Documents/DD/forms/dd/dd1547.pdf
  9. One of the features of the Prompt Payment Act Amendments of 1988 which industry hated was the prohibition on contractor using retainage or withholding from its subs for financing purposes. The contractor can’t ask for payment of any money that it will retain or withhold from payments to subcontractor. See paragraph 52.232-27-(h). “h) Subcontractor payment entitlement. The Contractor may not request payment from the Government of any amount withheld or retained in accordance with paragraph (d) of this clause until such time as the Contractor has determined and certified to the Contracting Officer that the subcontractor is entitled to the payment of such amount.” In addition, 52.232-5 requires the contractor to certify with each request for progress payments, among other things, the following: ”(c) (2) All payments due to subcontractors and suppliers from previous payments received under the contract have been made, and timely payments will be made from the proceeds of the payment covered by this certification, in accordance with subcontract agreements and the requirements of chapter 39 of Title 31, United States Code; (3) This request for progress payments does not include any amounts which the prime contractor intends to withhold or retain from a subcontractor or supplier in accordance with the terms and conditions of the subcontract; and...” I’m through arguing with you about your other beliefs but I need to correct your assertion that the contractor can withhold or retain money from a government progress payment made to it. It’s been that way since April 1989, Carl. In 1988, Congress listened to the complaints of the subcontracting community that contractors were using Retainage and withholdings from the subs’ earnings to help finance the project.
  10. Nope. It discusses retainage from the amount due a sub from the contractor’s progress payment. As you know, the government doesn’t hold retainage on reimbursement for prime contractor bond payments per paragraph (g). “52.232-17 ...“d) Subcontract clause interpretation. The clauses required by paragraph (c) of this clause shall not be construed to impair the right of the Contractor or a subcontractor at any tier to negotiate, and to include in their subcontract, provisions that -- (1) Retainage permitted. Permit the Contractor or a subcontractor to retain (without cause) a specified percentage of each progress payment otherwise due to a subcontractor for satisfactory performance under the subcontract without incurring any obligation to pay a late payment interest penalty, in accordance with terms and conditions agreed to by the parties to the subcontract, giving such recognition as the parties deem appropriate to the ability of a subcontractor to furnish a performance bond and a payment bond;” Im not 100% certain what it means. However it appears to mean that the contractor should take into account a subcontractor performance and/or payment bonds, if any, befote deciding whether or not to withhold** retainsge from the subs Share of a progress payment. If a sub is bondable and furnishes a bond, then there is less need to withhold retainage to protect the (primes) interests. You are likely aware that the government isn’t supposed to withhold retainage from reimbursement for the prime’s performance and payment bonds (52.232-5 (g)). **Per the PPA Amendments of 1988, the Government actually physically holds the retainage from the progress payments. The contractor notifies the government of its intent to retain some if the sub’s payment. There is no government requirement for a prime to pay for or to reimburse a sub upfront for a subcontract bond.
  11. By the way, with respect to the questions in the original post, if you are negotiating a sole source construction contract and the prospective contractor includes costs for subcontract bonds, in particular for ALL subs and/or suppliers, that isn’t standard industry practice, per my conversation with a friend who is a long time Surety Bonding Agency co-owner. I suggest that you have the prospective contractor identify the bonding agency and point of contact, then call them to verify what they are requiring and why. When the bonding companies and their sureties require subcontract bonds before selling bonds to contractors, they are pre-qualifying the contractor and will use various criteria on how extensive their requirement will be, based on the strength of the contractor, the size of the subcontracts, the type and complexity of the subcontract work, etc. In addition, if it is not a sole source acquisition, the nature of competition will require judicious selection of subcontract bond coverage.
  12. I would add that, If a contracting officer agrees to include subcontractor bonds under para. (g) of FAR 52.232-5, then the contract should state that. Life goes on and everyone is happy (or “fat, happy and dumb” 😋).
  13. I still agree. No “law” prevents it from “seeking payment” for such bonds when submitting a request for invoice payment on a firm fixed construction contract. Unless the law has changed, according to the GAO: ”31 U.S.C. § 529 (1970), which provides, in pertinent part, as follows: "No advance of public money shall be made in any,case unless authorized by the appropriation concerned or other,'law. And in' all cases of contracts for the performance of any service, or the delivery of articles of any description, for the use of the'United States, payment shall not exceed the value of the service rendered, or of the articles delivered previously to such payment.” “Reimbursement' to Government contractors of the total armouint of paid performance and payment bond premiums in the first progress payment can be authorieid by amending the relevant ASPR and FPR clauses to specifically so provide. Such reimbursements are not payments for future performance, but are reimbursements to the contractor for his costs in providing a surety satisfactory to the Government as required by'law, end therefore. are not prohibited by 31 U.S.C. § 529. Prior Comptroller General decision clarified. “ The payment clauses were subsequently amended to allow reimbursement of premiums for Miller Act required performance and payment bonds. Actually the first version required upfront payment for those bonds and did not allow pro-rated payment for those bonds through progress earnings. Please note that most of the Boards of Contract Appeals cases that concerned separate bid items for bonds were the result of either the contractor or government being unhappy with the results due to the way the line items were written, producing results unexpected by one party or the other. I mentioned earlier that the separate bid items were a pain in the butt. If a KO is bound and determined to pay for discretionary bonds upfront, the contract should clearly state that. However, since such bonds aren’t required nor do they protect the government or other subcontractors, it serves little if any public interest and flirts with the GAO’s reasoning why that would be prohibited by the above law. indeed, the ASPR and FPR were NOT amended to allow upfront reimbursement for such discretionary bonds. Thus they would be paid for on a pro-rated basis as part of earned progress under paragraph (b). The clause was revised to eliminate the restriction to upfront only reimbursements for the Miller Act bonds. According to several subsequent Decisions, the (g) clause is interpreted to apply to whatever performance and payments bonds are required by the contract.
  14. Let’s not confuse the allowability of costs in a fixed price contract with when or how they are payable. Unless the contract limits the amount of money the contractor can include in the contract price, the contractor can receive the contract price (allowability issue). Yep. Contract clauses and terms must comply with the law. Before the original amendments to the payment clauses for fixed price construction contracts, no upfront bond costs were legally allowable as per per several GAO decisions. In 1977, the GAO clarified that the clauses could be modified to allow upfront payments of premiums for bonds and made it clear in that Decision that it was because the payments would be for bonds that were required in the contract (by law). The clauses were modified to require upfront payments of required bonds in 1979. This thread is essentially a circular debate with no end. We are all in an echo chamber. 🤪
  15. ji, is it legal on a firm fixed price construction contract to reimburse a contractor upfront for discretionary performance and payment bonds that aren’t a contract requirement, that it requires for its own protection ? If the answer is yes, why can it do that and what legally authorizes it? ——————————————— Actually, I agree with the statement at FAR 1.108(a) that [as applied to the term performance and payment bonds in FAR 52.232-5] retains its common dictionary meaning - except that it is only applicable to bonds that are required to be furnished by the contract. One must interpret contract terms in harmony with each other. A simple “yes” leads to arguments that ANY type of performance or payment bonds can and must be reimbursed upfront upon demand, when the term is read by itself, outside the context of the contract REQUIREMENTS. I feel that the yes or no question asked hereinbefore was baited.
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