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ji20874

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Posts posted by ji20874

  1. 1 hour ago, California2012 said:

    It's a Negotiation Solicitation and my understanding is that as long as the government accepts your offer within 90 days, a contract has formed. 

    I don’t know where 90 days comes from, unless it is in a specific solicitation — I am not aware of a general 90-day rule.  Both FAR 52.212-1 and 52.215-1 indicate different periods (30 and 60 days, respectively).

  2. 1 hour ago, California2012 said:

    How or where can I find out the applicable law of the solicitation - common law or offer-specific?

    Both.  If the solicitation contains the offer acceptance terms, then there you go (such as FAR 52.212-1 or 52.215-1).  If the solicitation does not contain the terms, then common law principles may apply if the matter has to be adjudicated.  

  3. 4 hours ago, joel hoffman said:

    let me clarify, reiterate, state or whatever that upfront contractor bond premium reimbursement by the government isn’t considered “progress”. Incurred costs are NOT progress. Thus it can’t be paid as “progress” or included as a percentage of progress.

    I disagree.

    I recommend that you read the clause at FAR 52.232-5, Payments Under Fixed-Price Construction Contracts.  In para. (g), the paragraph that allows for reimbursement of bond premiums, the text says, "In making these progress payments..."  In my reading, bond premium reimbursements are part of the progress payments process.

    Again, I recommend that you read the clause.  That's what I do in my practice -- I read the clause, and then I do what the clause says.  It's simple, and it is fair because that is the bargain both parties agreed to in forming the contract.  It has worked successfully for me for many years.

    I'm going to bow out now.  Best wishes to you.

    To all WIFCON readers who are still paying attention, here's my simple advice:  Read the clause, and then do what the clause says.

  4. 1 hour ago, joel hoffman said:

    so, in your experience, ji, how do you (insert your preferred term here) so that you aren’t double paying for stored materials, bonds, mobilization and predatory work, etc.?  As far as I know, one cannot administratively revise the CLIN amounts in payment estimated to separate bond premiums, stored materials, mobilization and prep work  from the rest of the contract amounts. One would have to establish separate line items, unless you (insert your preferred term here to avoid double payment and to accurately measure earned progress of in-place work. 

    It seems to me that your focus is on costs incurred by the contractor.  Your question here is based on that premise, which I see as faulty.  Another seemingly faulty premise:  that progress payments under the clause at FAR 52.232-5 must be liquidated against later payments.

    In a fixed-price construction contract using the clause at FAR 52.232-5, progress payments are not based on incurred costs; rather, they are based on "estimates of work accomplished which meets the standards of quality established under the contract, as approved by the Contracting Officer."  See para. (b) of the clause.  Sometimes I shorthand this as percent complete, or estimate complete, and so forth.

    As long as a contracting officer approves progress payments based on estimate complete, there is zero possibility of so-called double payments.

    In my practice, and amendable to the clause at FAR 52.232-5, Payments Under Fixed-Price Construction Contracts, incurred costs are not dispositive as a basis for progress payments, except as allowed by para. (g) of the clause.  Even there, I tend to treat bond costs under para. (g) as contributing to completion under para. (b).  Indeed, incurred costs are largely irrelevant and will never persuade me to approve a progress payment that goes beyond the work complete -- however, I note that sometimes, incurred costs and work complete may coincidentally (even serendipitously?) align.

    Regarding separate line items, a construction contract may have one CLIN and several progress payment pay item lines.

    p.s.  I know my practice differs from yours, but it is wholly consistent with the clause at FAR 52.232-5, Payments Under Fixed-Price Construction Contracts.  I didn't learn in USACE (an acknowledged expert in construction contracting) -- most of my learning was from FHWA (an acknowledged expert in construction contracting).

  5. Joel,

    LIQUIDATING PROGRESS PAYMENTS

    So, I'm understanding that there is no USACE manual that teaches USACE contracting officers why and how to liquidate progress payments on fixed-price construction contracts.

    And, I'm understanding that there is no USACE or home-made clause that provides liquidation instructions, including, most importantly, a liquidation rate.  One might think that establishing the liquidation rate would be very important in forming the contract.  I'm glad you don't apply 52.232-16 principles, but I'm still in the blind as to where your procedures are written, if not in the contract and if not in USACE manuals.

    I understand you do it based on 1977 and 1980 practices and other understandings you have picked up along the way.  I'm okay with that.  For my own practice, this discussion has not convinced me to start liquidating progress payments on fixed-price construction contracts, and I'm certainly within FAR 1.102-4(d).

    SUBCONTRACTOR BONDS

    I note that the USACE manual I referenced earlier expressly prohibits USACE contracting officers from reimbursing subcontractor bond premiums under para. (g) of the clause, and I agree that USACE contracting officers should follow USACE instructions.  However, it doesn't prohibit considering subcontractor bond premiums for progress payments under para. (b) of the clause, and in any case it isn't dispositive on non-USACE contracting officers.

    I can give my own answer to the question you asked Carl.

    I would handle each subsequent progress payment request exactly as stated in the 52.232-5 clause (I'm big on staying in my lane).  For me, any progress payment has to be based on my agreement with the contractor's estimate of work complete.  Based on the clause (I'm big on staying in my lane), I never make progress payments based on incurred costs (except for bond premiums as allowed by para. (g), where I see delivered bonds as contributing towards completion); rather, I make progress payments based on either on (1) percent estimate complete; or (2) agreed-to pay items specified in the contract, which is a construct of work complete. So, regarding subcontractor bonds and para. (b) of the clause--

    • (1) If the contract did not have agreed-to pay items, then I might (not definitely would, but might) take the fact of subcontractor bond delivery (not the incurred cost of the bonds) into consideration when coming to my percent estimate of completion.
    • (2) If the contract did have agreed-to pay items, then a progress payment for subcontractor bonds would be appropriate only if one of those pay items reached that far.

     

  6. Carl,

    I agree that progress payments made under FAR 52.232-5 are not contract financing payments, and I appreciate your raising this fact.  This is another reason why I am not ready to agree that those progress payments require liquidation.  Joel has been trying to convince me, but this is another hurdle I will have to overcome before I can agree.

    We're a long way from the original posting.

  7. Joel,

    Here are the facts as I understand them:

    1. Liquidate means to decrease a payment for an accepted supply item or service under a contract for the purpose of recouping financing payments previously paid to the contractor."  See FAR 32.001 (emphasis added).  
    2. The clause at FAR 52.232-5, Payments Under Fixed-Price Construction Contracts, neither requires nor contemplates liquidation of construction progress payments.  See FAR 52.232-5.
    3. In contrast, the clause at FAR 52.232-16, Progress Payments, does require liquidation of progress payments where progress payments are based on incurred costs.  However, that clause is not applicable to fixed-price construction contracts.  See FAR 32.500.

    For 1, I'm understanding that you want to read fixed-price construction into the definition of "liquidate."  I prefer not to.

    For 2, I'm understanding that your point is that liquidation is not prohibited, and is therefore allowable if it is seen as a sound business practice.  I wholly agree with FAR 1.102-4(d), but I'm not convinced it is a sound business practice, so I have two questions-- 

    • In your practice, do you have a USACE or home-made clause that provides liquidation instructions, including, most importantly, a liquidation rate?  
    • I found the USACE CONTRACT ADMINISTRATION MANUAL FOR CONSTRUCTION CONTRACTS, SOUTH ATLANTIC DIVISION, SADDM 1110-1-1, on the internet.  The entire Chapter 4 is about administering progress payments for construction contracts -- Chapter 4 has 20 pages of text on administering progress payments and additional many pages of very detailed how-to exhibits for administering and computing and making progress payments, but there is zero discussion, not a single word, about liquidating progress payments.  Does USACE have another manual that teaches why and how to liquidate progress payments on fixed-price construction contracts? 

    For 3, I am hopeful that we agree, inasmuch as you already said we do.  However, I am concerned that you might be using 52.232-16 procedures in your practice of liquidating progress payments payable under 52.232-5, as I do not know where else the procedures for that process come from. 

  8. So, am I right in thinking that you don't agree with the three facts?

    30 minutes ago, joel hoffman said:

    What is so hard to understand about that?

    I'm not the problem.

    19 minutes ago, joel hoffman said:

    We don’t need to debate any longer.. 

    Okay.  But if you do want to continue, please, let's limit it to whether I have presented the facts correctly in 1, 2, and 3 above.  I will be unable to see any merit in your position so long as those three facts stand in the way.

  9. 2 hours ago, joel hoffman said:

    It’s good contract administration. 

    I'll accept that as your opinion.  

    I cannot speak to USACE practices in 1977 and 1980, but I will accept your assertions that USACE had a practice of liquidating progress payments on fixed-price construction contracts in those days.

    I hope you will accept the following as facts--

    1. Liquidate means to decrease a payment for an accepted supply item or service under a contract for the purpose of recouping financing payments previously paid to the contractor."  See FAR 32.001 (emphasis added).  
    2. The clause at FAR 52.232-5, Payments Under Fixed-Price Construction Contracts, neither requires nor contemplates liquidation of construction progress payments.  See FAR 52.232-5.
    3. In contrast, the clause at FAR 52.232-16, Progress Payments, does require liquidation of progress payments where progress payments are based on incurred costs.  However, that clause is not applicable to fixed-price construction contracts.  See FAR 32.500.

    Because on these facts, and consistent with my understanding that progress payments based on percent complete are wholly different from progress payments based on incurred costs (notwithstanding the similar use of "progress payments" as a term), I do not liquidate progress payments in fixed-price construction contracts in my contracting officer practice.  I simply administer the clause at FAR 52.232-5 as it is written. I see this as good contract administration.

    You aren't going to persuade me to change my practice.  If you want to continue the exchange, can we limit it to whether I have presented the facts correctly in 1, 2, and 3 above?

  10. Well, I think you are making it too hard.  Liquidation is required for "normal" progress payments in contracts for supplies and services using the Progress Payments clause, but applying that approach to construction progress payments seems to me to be unnecessary and is neither required nor contemplated by the FAR or the Payments Under Fixed-Price Construction Contracts clause.  

  11. As I shared earlier,

    On ‎9‎/‎18‎/‎2019 at 10:02 AM, ji20874 said:

    If I were again in a construction setting, in my contracting officer practice I might be willing to reimburse subcontractor bond premiums under FAR 52.232-5(g) if subcontractor bonds were required--

    1. by the prime contract; or 
    2. by the prime contractor's surety as common practice in the industry (in contrast to elective self-protection choices made by the prime contractor).

    I'm comfortable with that approach.  I've done a lot of construction contracting, but I have not yet seen 1. or 2. in real life.

    As I understand things, bond premium reimbursements don't need to be liquidated, for either or both of two reasons:  First, the contractor is required to deliver performance and payment bonds, and does so, so it is entitled to full payment.  Second, I would not want to impose the liquidation philosophy for other progress payments (such as in the clause of FAR 52.232-16, Progress Payments) on payments for construction contracts under FAR 52.232-5, Payments Under Fixed-Price Construction Contracts.  A construction progress payment is not a progress payment that has to be liquidated; rather, it is a progress payment that reflects the percent complete.  The concept of liquidating progress payments applies to services and supplies, not construction (see the definition of liquidate in FAR 32.001).  At least, that's how I understand things.

    I hate it when our automated systems dictate to us, rather than helping us.  I hate it when automated systems take away flexibility we would otherwise have under the law.  I hate it when our automated systems impose requirements that aren't real (such as your automated system trying to liquidate construction progress payments).

  12. 14 minutes ago, joel hoffman said:

    Not necessarily. 

    But maybe?  Partly?  If you're dismissing me from the conversation for an assumed lack of experience or credentials, I'd like to know. 

    14 minutes ago, joel hoffman said:

    I am puzzled why nobody here seems to understand what the GAO decided would be the legal basis for amending the ASPR and FPR in order to allow the government to make upfront payments.

    Maybe because the GAO decision was made in the pre-FAR days, and presumably, the FAR drafters gave appropriate consideration to the matter.  Thus, we work with the FAR text today.  Today, it is common knowledge that performance and payment bond premium reimbursements are not advance payments. so we no longer need to refer back to the 1977 case to support that understanding.

    It is true that federal construction contract bonding is not an easy subject.  It is better when the discussion is narrow (namely, federal construction contract bonding).  There is no purpose of introducing little Miller Act or private bonding practices unless as a comparison, but really, these topics are not relevant to our discussion.

  13. Isn't that what your SABER contracts are for?

    When it is a real emergency (I've dealt with a landslide on a Friday evening and a tree over power lines to the base hospital on a Sunday afternoon, and so forth), and you simply don't have time to conduct a traditional competition, then you don't conduct a traditional competition. 

    Tree over power lines on a Sunday afternoon.  Agency:  Air Force.  I got the phone call at home from the base emergency action group -- it was a three-way call with the CE engineer.  I asked the CE engineer if one of our IDIQ companies could respond immediately.  He said yes, and he named the name.  I sent an e-mail to the contractor authorizing it to do the work on a T&M basis up to some ceiling amount (I don't remember what it was, but I purposefully set it a little higher than the CE official's estimate).  In the e-mail, I said I would issue the formalized task order on Monday, but that it must start work immediately and to respond immediately with YES or NO.  The contractor replied YES, mitigated the damage, and restored the power that evening.  The next day (Monday), the contractor gave me an invoice for its hours and equipment.  The same day, I signed a very simplified JEFO and asked for a funds document.  I got it, and I issued a paper task order for the work that was already competed.

    Landslide on a Friday evening.  Agency:  Forest Service.  I got the phone call at home from the district engineer saying a landslide had blocked a Forest Service road that was used by the public.  I asked him if he knew of companies that we had used before who could respond immediately.  He knew of some that probably could.  We agreed that he would find one contractor to start excavating from the south side, and another contractor to start excavating from the north side.  I told him to pick whatever companies he thought were reputable and that we had worked with before -- call one, and if it agreed for the south side, for example,  then verbally authorize it to start work on Saturday morning.  I told him that I was verbally issuing an unpriced purchase order with an NTE to each of the contractors he selected, if they would start work on Saturday morning, and that I would do the paper purchase orders on Monday at the office.  He found two good contractors on Friday night, and both started work on Saturday (one early, one about noon) -- they met in the middle on Sunday.  On Monday, they sent in their invoices, and I I got the funds citation.  I issued the paper purchase orders on Tuesday.  The SSJ I wrote might have been three or four sentences.

    I was able to do these things because I understood my craft and I was trusted by my leadership (both line and staff).  Some people, if they look hard enough, will find fault with something that I did (or didn't do) -- but I got the job done in an honorable and honest manner.  The last of these was eleven years ago, I think.  Our cultural climate is changing for the worse, and your ability to get the job done for your agency might be less than my ability back in those days.  If your organization wants to formalize everything, and require reviews for everything, and make everything slow, well, that's your organization's prerogative.

    Yes, you can use your SABER contracts for emergencies. 

    For a real emergency, you don't need a formalized, reviewed, multi-page requirements document -- the water main has burst and the breakage needs to be repaired is entirely adequate as the work description -- one sentence is adequate as the work statement.  Remember, the SABER order is just for the emergency (put out the fire) -- for the permanent repair solution (rebuild the building), you might have to use the traditional process.

    The contracting officer can do the JEFO if the work is less than $700,000 -- keep it less than $700,000, and use a simplified check-the-box JEFO template.  Does SABER allow for T&M orders?  If not, use the principle (and maybe even the clause) for unpriced purchase orders.

    You can issue task orders orally.  Yes, you can -- see FAR 16.504(a)(4)(vii).

    But here is the most important question:  Does your leadership really care about this matter?

  14. 14 hours ago, joel hoffman said:

    I wonder how much experience some people here actually have  in administering construction contracts, reviewing and processing consents of surety, dealing with sureties and their bonding agencies,, negotiating and dealing with Tender and Release agreements, Takeover agreements, etc., etc. , handling construction progress payments with numerous CLINs and SubCLINs, etc that are inclusive of bond premiums and which may involve multiple subcontractors. 

    Its a rhetorical question - some of the responses here make me wonder how many people have suddenly become experts in this area.

    Hmmm... I wonder if this comment was aimed at me?

    This isn't a rhetorical question.

  15. Thanks.  You made an insightful observation -- but I'm not wholly convinced that the definition of bond in FAR Part 28 excludes subcontractor bonds -- I think the word contractor in the definition is illustrative, not prescriptive.  Many times in the FAR (many, many times), the term contractor also reaches to subcontractor depending on the context -- for example, FAR 31.001 gives a definition of Compensation for personal services -- that definition speaks of "services rendered by employees to the contractor" -- but surely, when the cost principles of FAR Part 31 are applied subcontracts, the word contractor reaches to mean subcontractor? 

    An important skill for a contracting officer is to call it, one way or the other -- like an umpire behind the plate.  Some people never develop that skill.  When a contracting officer makes a bad call (or even when the contracting officer makes a good call but someone doesn't like it), the process always allows for a remedy.  I have great respect for contracting officers who make the call on principled and well-thought-out reasons, even if I think I might have decided differently.  As you continue to read here, I hope you will start thinking along the lines of "What would I do in this case?" 

     

  16. 8 minutes ago, ALAL said:

    But since it is a clause about payments under construction contracts, and bonds primarily relate to construction contracts, the definition of "bond" that applies to construction contracts seems to me to be the logical definition to apply.

    ALAL,

    So, in your contracting officer practice, would you refuse to reimburse a prime contractor for subcontractor performance and payment bond premiums based on the thought that subcontractor bonds are not bonds under FAR 52.232-5(g)?

  17. I agree with the last posting.  The contractor failed (based on the original posting).  The Government has remedies.  In addition to reducing the contract price for the contractor's failure and the resulting lower quality of service it provided, please remember to record the contractor's failures in CPARS.

    The next time the key personnel position is vacant contrary to contract requirements, promptly send the contractor a cure notice.  The next time deliverables are not met contrary to contract requirements, promptly send the contractor a cure notice.  A cure notice does not inexorably lead to a termination, so don't be afraid to send it.

  18. I agree with the last posting -- if it is out-of-scope, then it is out-of-scope, period.  If it is out-of-scope of the contract, but the agency still wants to buy it from that contractor, then a J&A/LSJ/JEFO/SSJ (depending on what type of "contract" we are talking about) needs to be done.  Once that is done, the out-of-scope work can be purchased as (1) a modification to the contract; or (2) a new contract.

    But we're talking academically, so to speak.

    JHKim, It sounds like it is all said and done, and the water is already under the bridge -- the modification to buy the devices has already been formalized.  What is the problem? 

  19. If I were again in a construction setting, in my contracting officer practice I might be willing to reimburse subcontractor bond premiums under FAR 52.232-5(g) if subcontractor bonds were required--

    1. by the prime contract; or 
    2. by the prime contractor's surety as common practice in the industry (in contrast to elective self-protection choices made by the prime contractor).
  20. So, here is what I am understanding--

    1. In the old days, before 1977, the prevailing thought was that bond premiums were not reimbursable up front because of a fear of advance payment, so all bond premiums had to be pro rata reimbursed over the life of the contract.
    2. In 1977, the GSBCA decided in a particular cited case that this contractor could be reimbursed for bond premiums up front, and that such reimbursement was not an advance payment because the bond premium was required by law.
    3. The sole reason for the mention of "required by law" in the decision was to make the argument that the reimbursement was no longer to be seen as an advance payment.
    4. The 1977 case only addressed reimbursement of a prime contractor's bonds, because those were the facts of that case. 
    5. All of the above was before the FAR existed.
    6. FAR 52.252-5(g) allows for reimbursement up front for performance and payment bond premiums.
    7. FAR 52.232-5(g) does not expressly limit its applicability to bond premiums incurred by the prime contractor.  
    8. Joel thinks subcontractor bond premiums may not be reimbursed in a fixed-price construction contract; Carl thinks they may be.

     

     

  21. Important principle: The collective bargaining agreement is between the employer and the union. The government is not a party to the CBA. The CBA specifies what the employer must pay to its employees. It does not dictate what the government must pay to the employer. 

    MeaningThe employer must pay its employees what it promised in the CBA. The government must pay the contractor what it promised in the contract.  If there is a disconnect, the contractor eats it.  

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