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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. Thanks and Happy Easter! P.S. I realize that you don’t wanna open Pandora’s box but I would ask the contractor how he would handle the Permits and Responsibilities clause. 🤠
  2. Multiple agency guidance I Googled say to use Block 13 C , supplemental agreement for the modification providing for the bilaterally agreed equitable adjustment of a change order, citing the Changes Clause. The change order was issued under the Changes clause. The clause allows for bilateral settlement of the Change. most of the guidance, including DAU, says to issue supplemental agreements for types of changes enumerated in the Changes clause listing that clause, regardless of whether or not it was initially unilaterally ordered under the clause. Block 13 C is used for supplemental agreements within the scope of the contract. Block 13 D is for out of scope supplemental agreements and for unilateral mods under other various clauses. Several sources say to cite “bilateral agreement of the parties” in Block 13c only as a last resort when no other clause is applicable.
  3. Kathilou, Will the contractor accept the task order without reimbursement for Builders Risk insurance? If not, is your your organization authorized to accept those risks now covered by the (required) Permits and Responsibility clause? Do you have enough funding to cover the cost of replacement of up to the entire cost of the work in the event of fire, tornado, etc. the day before project acceptance? To cover replacement of materials in the event of a break-in and theft? Those might be good questions to ask the boss. 😃 good luck.
  4. The nature of Changes (including determination of whether the proposed work is in-scope vs out-of-scope) are discussed in Detail in Administration of Government Contracts by Nash and Cibinic. They also discuss the fact that the Changes clauses specifically address directed changes but not mods to issue bilaterally agreed in-scope changes. The book discusses both changes to the existing services and whether or not additional services could have been anticipated by the language of the solicitation during competition for award (the scope of the competition and the scope of the contract). .
  5. The following is also not a defense : “(C) the contract was based on an agreement between the contractor and the United States about the total cost of the contract and there was no agreement about the cost of each item procured under such contract; “ I’m guessing that this would also apply to agreed total cost without agreement on individual cost elements.
  6. Good question. I am speculating here that the government could have relied on the identified cost of the bond in the proposal, which was based upon the incorrect data that they didn’t read. 10 USC 2306a e) Price Reductions for Defective or Pricing Data.— “...(3)It is not a defense to an adjustment of the price of a contract under a contract provision required by paragraph (1) that— ...B. ) the contracting officer should have known that the cost and pricing data in issue were defective even though the contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the contracting officer;” Im speculating here that the government didn’t know what the bond should cost,. Thus, they may have simply accepted at face value what the contractor indicated the cost would be. From the above Statutory language, I don’t think government ignorance of what a bond should cost would be a defense for a price reduction due to defective cost or pricing data. If the contractor mistakenly said the bond cost would be 4% of the marked up subtotal contract cost or if the contractor said it would cost 0.4% but the amount of the bond cost was mistakenly ten times that much in the cost proposal, it was defective cost or pricing data.
  7. ji, you are correct. Of the contract clauses prescribed in FAR 36.5, the Permits and Responsibility clause at 52.236-7 is the only one that is prescribed for both FFP or CR construction contracts. See the prescription at 36.507. It then makes perfect sense that the cost for Builders Risk insurance policies is an allowable cost for both FFP and cost reimbursement contracts. You learn something almost every day here at WIFCON! EDIT: The clause at 52.236-5 Material and Workmanship (See prescription at 36.505) is also applicable to both FFP and cost reimbursement construction contracts.
  8. My builders risk argument covers FFP contracts. The government would normally assume the risk in a cost reimbursement contract or direct the contractor to purchase the appropriate insurance .
  9. How much is the insurance premium? Compare the cost to additional loss prevention costs, such as full time security (night watchmen, fire watch at night or overtime to make end of every day full site inspections), a standby fire truck and crew, etc. If it can’t be paid for the cost of Builders Risk Insurance, how would a contractor cover itself for the possibility of severe weather or other damage? Increase the profit factor by several percent?
  10. That’s Nonsense. The government is making the contractor assume the risk of any loss due to theft, fire, severe weather, etc. - things that are mostly beyond the contractor’s control. To me, an unallowable “contingency” would be where the contractor includes the cost to cover actual losses or damages for each possible risk in its proposal. If builders risk insurance is a “contingency”, why does the government require liability and automobile insurance if the government doesn’t cover ANY “contingency” at all? Why does the government require and pay for performance and payment bonds if the government doesn’t cover ANY “contingency” at all? The government estimates (peer reviewed at Army, DoD and outside Oversight groups) for a program that I worked on to build plants to deconstruct our nation’s stockpile of chemical weapons at numerous Arsenals included allowances for certain “risks”. The risks were identified with possible costs and severity and likelihood of occurrence in a Monte Carlo Simulation**. The result was that some “risk” costs were added to the estimates. They did not total all risk costs but rather a percentage factor for the chance or likelihood of some of them occurring . The factor was applied to the labor productivity for various activities. They were also applied to the overall programmatic schedules and time related costs required to permit, design and build each plant. **See Monte Carlo Simulation: https://www.investopedia.com/terms/m/montecarlosimulation.asp Government estimates and contractor cost proposals also include factors for such things as expected labor productivity adjustments for complexity of the job, material wastage, small tools loss/breakage, etc. Builders risk insurance is both necessary and reasonable when the government allocates to the contractor the risks of damage or loss to the materials and work prior to government acceptance of the work. Insurance premiums are based on risk shared over all policies and policy holders. Purchase of Builders Risk Insurance l, when the government allocates such risk to the contractor, should clearly be reasonable and allowable under FAR 31.205-19.
  11. I agree with that. Why add more to the deficit. The government didn’t say they would use it after your r&d efforts.
  12. Bob, I suggest moving this thread to the Contract Pricing category.
  13. https://www.irmi.com/articles/expert-commentary/is-builders-risk-insurance-necessary you may want to discuss the coverage to make sure that it is appropriate...
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