ji20874

I agree with the Government position, based on the information in this thread. But good luck — if Joel can help you, more power to you. Isn’t this a prime-sub problem? If the prime contractor has breached its subcontract with the subcontractor (not shown here), the subcontractor can seek relief in the civil courts of the state under which the subcontract is controlled. After all this discussion, we still don’t know the payment terms of the subcontract — so we don’t know what amount, if any, the prime contractor owes to the subcontractor. I have to suppose that the subcontract’s payment terms were acceptable to the subcontractor; otherwise, it would have negotiated different terms when the subcontract was awarded.

This is not evident to me. But, Joel, are you trying to find a way to justify a payment (A) by the Government to the prime contractor, or (B) by the prime contractor to the subcontractor?

Where are you reading that a small business enterprise subcontractor is entitled to payment for ordered material under a federal fixed-price construction contract? Are you seeking payment from the prime contractor or from the Government? Here’s my understanding... The contract clause at FAR 52.232-5 governs progress payments to the prime contractor. The clause allows for the Government to make progress payments to the prime contractor based on estimates of work accomplished, and further allows for material delivered to the site to be considered in the estimates of work accomplished under certain conditions. But we’re not talking about material delivered to the site. Your situation: The clause we’re discussing provides that other material not delivered to the site but delivered to the prime contractor may be considered in the estimates of work accomplished ONLY if (1) this is specifically addressed in the contract; and (2) the prime contractor has title. According to your posting, neither of these conditions exist. Therefore, the prime contractor has no basis of entitlement for payment from the Government for the material that you (a subcontractor) have ordered and placed in storage. Your entitlement to payment from the prime contractor will be described in your subcontract with the prime contractor, and we don’t know what your subcontract says. But regardless of your subcontract’s terms, and based on your posting, it seems your prime contractor has no entitlement to payment from the Government. I hope this is helpful.

retreadfed, I did not write that contractors do not need consent for modifications to subcontracts. Please re-read my comment. I think you read it too hastily the first time.

Do your agency BIC vehicles have a exemption or waiver process? Well, there you go. Since can’t award this under a BIC vehicle, a sole-source 8(a) seems to be a reasonable approach. What is your procurement office recommending? How about a sole-source single-award BPA against an 8(a) schedule contract?

The original poster needs to read the clause at FAR 52.244-2. The paragraphs that discuss when consent is needed are (b), (c)(1), (c)(2), and (d). Para. (b) and para. (d) are inapplicable here. We can’t tell whether (c)(1) or (c)(2) applies because we don’t the answer to the questions that retreaded asked. But I think the answer to the question that was asked is NO, because consent to subcontract is never required for a modification that merely takes an existing subcontract from below the SAT to above the SAT. If consent is required, it will be because— (A) the modification is bilateral*; and (B) the modification itself is reached by para. (c)(1) or (c)(2) of the clause. *A bilateral modification is a contract, as contract is defined in FAR subpart 2.1 and used in 52.244-2.

Maybe. That will require heavier moderation than in the past. If so, the time period should probably be measured in days rather than hours. Sometimes, someone will make a very useful comment on a thread that has been inactive for weeks or months — I would hate to lose that. I think original posters don’t respond to questions for several reasons, including— 1. They already have an answer; 2. They don’t understand or see the relevance of the question; 3. They might perceive the question as a challenge or a trap; 4. They want to keep things vague because they don’t want the thread being identified with them; 5. They don’t want to take sides or get involved in a spat; 6. They’re afraid to show a lack of knowledge; or 7. The questioner is coming on too strongly.

Wifcon threads are like water cooler discussions -- someone shares something, and someone else offers a thought -- it's called conversation. Sometimes the thoughts are right on, and sometimes they aren't but they cause the original poster to think. OP: I have a headache. R: It's probably the new fluorescent lighting. OP: No, I don't think so. I was on vacation last week in the outdoors, and had it then, too. R: Oh, maybe you have allergies. OP: Maybe. If I still have the headache tomorrow, I'll go to the clinic. R: Best wishes. "R" shared some thoughts, and maybe those thoughts caused "OP" to reflect and explore. If another respondent "R2" wants to get involved and share some thoughts that support or differ from "R", that's also welcome -- maybe "R2" offers a similar or a different opinion. Either way, "OP" can take what he hears from all respondents and make a better informed decision, or at least be a little better prepared for further discussions within his or her own office. It would be sad if "R2" hollered at "R," castigated "R" for providing a diagnosis without a medical degree, and tried to bully "R" out of the discussion thread.

Well, you could do both (attach to invoice and put in the shipping box), or you could ask the contracting officer. Or, you could read the appropriate clause of the contract and do what it says. For example, if your contract includes the clause at FAR 52.246-15, Certificate of Conformance, paragraphs (a) and (b) provide instructions.

I would also question any presumption that the boxes are government property under the Government Property clause.

Record the facts in CPARS. Did the contract constitute a bailment? Reduce the contract price to reflect the value of the lost property. Reduce the contract price to reflect the contractor's unsuccessful performance. You don't need a pre-determined calculation method. The contracting officer can pick what he or she thinks is a reasonable reduction -- if the contractor doesn't like the reduction, it can file a claim to get a different reduction. Send a cure notice and be ready to terminate for default or cause. Start a suspension or debarment action. These are just some possibilities in no particular order for you to consider. For sure, read the contract.

Retreadfed, Are you thinking that the original poster should not close out the contract files, but should keep them open? Or that he should continue trying to get a release of claims?

I like to hope for professionalism here at wifcon, but we get bullies, too.

Well, I stirred his ire...

I think ibn battuta (pbuh) is making this too hard. I don't want to stir his ire, but I really don't think a discussion of voluntary versus gratuitous services is needed for this situation. I haven't read the contract and I haven't read the offeror's notice under para. (i)(2) of the contract clause at FAR 52.214-1 with its Alt. I, but the submitter said the contractor intended to complete its contract obligations within the ceiling price. If that's what the contractor said in its notice, and its promise was unambiguous, I think we can rely on it. The contractor is not being asked to do any additional services -- the services it will do are already promised under the contract. The contractor wants to complete rather than letting the contract die or face a termination for convenience (a real possibility if it insisted on more money). The contract does not say the contractor must stop work when it reaches the ceiling price; rather, it says the contractor "...shall not be obligated to continue performance..." I think the offeror can choose to continue performance, if it wants to. So I see the notice (if it unambiguously makes the promise) as the contractor's pledge that it will complete its contract obligations without charging the Government beyond the ceiling price, and a waiver of its privilege of stopping work. If the contractor incurs costs in excess of the ceiling price, the clause does not say the Government must stop the work; rather, it simply says that the Government will not be obligated to pay any amount in excess of the ceiling price. I am in favor or reading the contract, and doing what the contract says. The submitter said the ceiling price is in the low 10 digits and the overrun might be in the six digits -- an overrun of $100,000 (six digits) on a a ceiling price of $10,000,000 (ten digits) is one percent. Big deal. I would not call these gratuitous services. There is no anti-deficiency act problem. There is no freebie. The contractor is simply fulfilling its contractual duties. If the contractor's notice is wishy-washy, you might want to ask for its firm promise to perform all of its contract obligations within the ceiling price. At least, that's my perspective, offered to the original submitter.

Just do what FAR 4.804 says. It does not require a release of claims. If your local practice calls for obtaining a release of claims, put a memo in the file saying you tried to get one (even though the FAR doesn’t require it and it will do no good), but the contractor did not provide one.

I wouldn’t. Ideally, you would have obligated only funds for the option quantities you exercised, and not for any option quantities you didn’t exercise. In such a case, your question would be moot. Based only on what I read in the original posting, I would think that your deobligation mod should be a unilateral administrative mod.

Close the contract file. The FAR never requires a release of claims for closeout. And you don’t need a release of claims, as what you style as the statutes of limitation have passed. A release of claims will give you zero benefit. So, it isn’t required in the first place, and it would do no good even if you had it. Close the contract file.

If the offeror invoices for the ceiling price, and can validate it that it has worked all the hours it charges, then that is what the Government pays. You accept the services because they are required by the contract. They are required services, not voluntary services. You did not contract for a certain number of hours — you contracted for a job with a ceiling price, and you agreed to pay contractor invoices monthly or bi-weekly provided the hours were actually worked up to the ceiling price. If the contractor charges 100 hours to your contract, you pay for 100 hours. If the contractor charges an additional 10 hours somewhere else or declares it a loss, what do you care? Pay the 100 hours and give the contractor an Exceptional CPARS rating. If the contractor invoices for 100 hours, you cannot pay for 110 hours.

A contractor exceeds the ceiling price at its own risk. A contractor who fails to give the Government the notice it promised to give before approaching the ceiling price robs the Government of the opportunity or space to make a decision on finding more money or curtailing the work — by keeping silent and continuing to incur costs, and then seeking reimbursement for those costs, the contractor robs the Government. The boards and courts have strictly enforced the notice requirement and refused payment to contractors for these reasons. You failed in your contractual commitment to give timely notice of the impending overrun. You have no entitlement. The Government’s CPARS report (if your contract is eligible for CPARS) should reflect your failure to comply with the contract and your cost overrun. This would be my starting point if I were the contracting officer.

Re: Rule of Two. Please remember that the rule of two is wholly inapplicable to procurements under FAR subpart 8.4 using federal supply schedules and FAR 16.505(b) ordering against multiple-award IDIQ contracts. So please do not push for set-asides based on the rule of two in these circumstances — in both circumstances, the FAR leaves it entirely to the contracting officer’s discretion and you will want to respect that discretion. [Note: This assumes the parent multiple-award contracts do not have rule of two language in their ordering instructions — this is permitted, but in my experience very few contracts contain such language.]

FACT ONE: The contract price is $100. FACT TWO: The contractor invoiced for $90. Fact Two does not change Fact One. Or, in other words, Fact One is not changed by Fact Two. You most assuredly do not have a supplemental agreement to change the price. There is no new agreement. You can simply close out the contract file and deobligate the excess funds IAW FAR subpart 4.8 (or let your agency’s <$1,000 automated process do the deobligation). The contract price was and still is $100. The contractor invoiced for less than that. Treat it like a discount. This has been happening for many years and was easily handled with human finance specialists. Do you do a supplemental agreement when your paying office takes a prompt payment discount? No. That said, your agency’s automated systems might be too dimwitted to recognize this reality. If your agency’s automated systems require a mod to change the price (so that the obligated amount = price = paid amount), you can do a unilateral administrative close-out modification with a note that the CLIN 001 price is changed from $100 to $90 to reflect the contractor’s invoiced amount, and that the likelihood of the contractor seeking the deobligated amount is essentially zero, so the modification (1) is done solely to make the automated systems happy; and (2) does not change any of the rights or obligations of the parties. I have done these mods. Since they are unilateral administrative close-out mods, the contractor never sees them. Think about this is a cost-reimbursement setting. If CLIN 001 has an estimated cost of $90 and a fixed fee of $10 (for a price of $100) and the contractor completes the work at $85 cost, do you do a mod to lower the estimated cost by supplemental agreement? No. The agreed estimated cost was and still is $90 — you pay the contractor $95 ($85 cost + $10 fixed fee) and you unilaterally and administratively deobligate the excess funds.

I am satisfied. I don’t have a special definition, but follow ordinary usage.

ibn battuta, I’m glad my illustration was helpful.

But I did explain what I meant -- I just did it through illustration...