ji20874

ALAL,

Interesting observation.  So, in your contracting officer practice, would you refuse to reimburse a prime contractor for subcontractor performance and payment bond premiums under FAR 52.232-5(g) based on that argument?

The 2005 GSBCA is not persuasive to me.  Footnote 1 on page one says that the case has no value as precedent, because it was decided in the summary process.

I appreciate this discussion.  It is okay for different practitioners to practice differently.  If a contracting officer errs, there are remedy procedures.

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).

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.

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. 

Meaning:  The 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.  

Well, I allowed that it might be higher today -- I left DoD many years ago.  What is important is using the right terms, such as statutory cost limitation, and providing the citation, such as 10 USC 2805 (but I don't know the DoD implementing regulation citation), to help the original poster do her own research and ask the right questions, so she can get the right answers, rather than talking around the issue.

Kristin3, since you're using O&M funds for a construction project in DoD, is there any possibility that your proposed modification might violate the statutory cost limitation in 10 USC 2805?

For the original poster's benefit, it might be good to say that there is a concern regarding the statutory cost limitation on funding construction projects with O&M funds -- let's say the limit is $300K (it used to be that amount) -- a contract for minor construction for $250K using O&M money is fine, but an additional $100K modification using O&M money would bust the limitation in violation of statute.  I think the limit today is higher.  See 10 USC 2805.

buonomma,

You are at the negotiating table -- if you come to agreement on the bottom-line firm-fixed price (one way or the other), that's good.  If you don't come to agreement, then end the negotiations and ask the SBA for another source with whom to commence new negotiations.

But your focus should be on the bottom-line price, not the individual cost elements.  See FAR 15.405(a).

Sometimes, a signing by the Government isn't needed -- a paper or electronic notice of award may be sufficient to form a contract.

There is no simple answer as there are many permutations and combinations, so to speak.  Sealed bid?  Negotiated procurement?  Simplified acquisition?  Did negotiations occur?  Other variables?

Sometimes, a prospective contractor makes an offer, and a contract is formed when the Government accepts.

Sometimes, the Government makes an offer, and a contract is formed when the contractor accepts.

Sometimes, an offer will include text specifying what constitutes acceptance as well as any notice requirements (for example, see para. (f)(10) of the solicitation provision at FAR 52.215-1).  If not, common law principles apply.

If an offeror wants out, it should withdraw its offer before Government acceptance occurs.  However, even this is not always possible (such as when the firm-bid rule applies).

It depends on whether the contract has been formed, using common law principles or offer-specific instructions.  

If a firm makes an offer (and does not withdraw the offer before acceptance), and the Government properly accepts the offer, then a contract is formed.  The firm's repudiation of the contract would be a basis for a default termination and/or other remedies.  

If the firm provides a quote, and the Government issues a purchase order (which really is an offer), then the firm generally has a choice of whether to accept the purchase order -- if it accepts, a contract is formed.

3 hours ago, Don Mansfield said:

Wouldn't you have to order in the fiscal year that the funds were available for obligation to avoid a bona fide need rule violation?

The comptroller recorded the obligation on the books of the agency in the year the contract was awarded.  If the minimum was not ordered during that fiscal year, the liability was carried over to the next fiscal year. 

When I worked for the Air Force, we were able to issue the first order (to cover the minimum) anytime during the life of the IDIQ contract.  But Brig.Gen. Anderson, when he was SAF/AQC, changed the AFFARS to require simultaneous issuance of the contract and the first order.  I don't know what the AFFARS says now.

The AFFARS and MPs probably won't discuss recording of the obligation -- that is a finance thing done by the comptroller people -- so you will want to look to see if the AFFARS requires simultaneous issuance of the contract and the first order.  Look at AFFARS 5316.504(a)(1).

Right.  In many agencies, contracting officers are allowed to issue the first order (to satisfy the minimum) at any time during the life of the contract, rather than simultaneous with the award of the contract.  The agency comptroller has already recorded the obligation for the minimum amount on the books of the agency.

But we don't know your agency or your agency's rules.  Other agencies require simultaneous award of IDIQ contracts and issuance of orders satisfying the minimum obligation.

You have to follow the rules of your agency.

You have multiple contracts, and each contract has a minimum.

Neither the FAR nor the GAO require issuance of orders satisfying the minimum simultaneous with award of IDIQ contracts.  The recordings for the contract minimums can be administratively done by the finance office on the books of the agency

However, some agencies do require issuance of orders satisfying the minimum simultaneous with award of IDIQ contracts. 

You have to follow the rules of your agency.

There are no codified time limitations.  

If you aren’t relying on the Excusable Delays clause (it seems you are not, even though you introduced excusable delays as the reason), two questions come to mind—

     -What clause (or principle) are you relying on?

     -Are you going to obtain consideration from the contractor?

I hope you aren’t simply giving a gift to the contractor, with mutual agreement.

There had been a lot of talk about FBO, but we don’t know if the procurement requires FBO synopsis.  The original posting spoke of quotations, so maybe we’re below the synopsis threshold for a FAR part 13 simplified acquisition, or maybe we’re under FAR subpart 8.4 for a schedule order?  If so, or possibly for other reasons, advice to post on FBO may not fit.

There may be two thoughts that need to be balanced.  One is that anyone who wants whatever benefit that might come from participating in the phone call may participate in the phone call — a simple notice of the phone call in the RFQ, if a RFQ is being used, will cover that thought. The other is to stay fair, such as by not purposefully favoring one prospective contractor over another — this can be covered by ensuring that any real change that arises during the phone call exchange is captured in a RFQ amendment, if a RFQ is being used.

We don’t want to over-proceduralize this.

Are you relying on the contract clause at FAR 52.249-14, Excusable Delays?

If so, and if the contractor proves that its failure to perform is attributable to an excusable delay and proves the time impact, that is the amount of time you grant in the revised period of performance. 

If not, what contract clause are you relying on?

An excusable delay is a bar for termination for default.  The Government can provide additional time only as necessary to recover from the excusable delay.  There is no codified limit on the time adjustment.

3 hours ago, joel hoffman said:

We don’t have enough information to assume that a T4D is warranted or would be legally sufficient on this particular cost reimbursement contract.

Right, and no one in this thread has made that assumption.  But based on what has been shared, a T4D is possibly an appropriate action (whether it is a completion form or a term form cost-reimbursement contract).  More information, more facts, will help to narrow the range of possibilities.  It is too soon for us to disallow T4D as a possibility.

3 hours ago, joel hoffman said:

How can the government terminate the cost plus contractor for default? It is likely that all the contractor agreed to was a best effort to complete the work within schedule and within budget.

A cost-reimbursement contract can be established on a completion basis or a term basis.  I supposed it was likely on a completion basis.  The original poster didn't share very much.  

Sure, negotiating a period of performance extension for an exchange of consideration is a possibility.  That will make sense in some cases.

But a T4D is also a possibility if the contractor failed to complete the task it promised to complete or failed to apply a promised level of effort. A contractor should keep its promises, and a contracting officer should manage the contract to get the deal that both parties bargained for.  If it is a term contract, and the contractor failed to provide the promised level of effort during the established period, well, that's default.  But as I wrote, even if the contractor didn't keep its promises, the contracting officer could forbear a T4D as a business decision.

The contractor wants more time.  I assume there is no reason for an adjustment (equitable or otherwise) in performance time because of any clause in the contract — if there was, you would have said so already.  So, there is no Government delay, no excusable delay, no change under the Changes clause, and so forth...

The contracting officer may terminate the contract for the contractor’s default; or if he or she is still hopeful that the work by be completed reasonably soon, and the work still has value to the Government, he or she may forbear termination and unilaterally establish a new period of performance end date.  The contracting officer should consider reducing the fee because of the lowered value of the contractor’s services, and should make note of the schedule failing in CPARS.

There is no limit on the amount of time the contracting officer may grant.  This is a business decision.  If contract funds evaporate before they are paid, the contracting officer can replace them with other funds.

Fixed-price, cost-reimbursement, or time-and-materials?

In my opinion, a requirement to re-type FAR 52.212-4 in full text in an order is stupid.

If it is necessary to re-state FAR 52.212-4 in the task order at all, it can be incorporated by reference -- see the matrix at FAR 52.301.

BTW, I don't think the NITAAC contract that Carl referenced (or the contract quoted by the original poster) requires that FAR 52.212-4 be re-typed in the order in full text.  I think the mere fact that the order is for a commercial item activates the text in the parent IDIQ contracts, and the clause is automatically applicable to (incorporated into) the resulting order with no specific action by the contracting officer.  But even if I am wrong in this, I still have to believe that the clause can be incorporated by reference -- it doesn't have to be re-typed in full text (72 paragraphs, 185 lines, 2,325 words, and 15,081 characters) -- see the matrix at FAR 52.301, where there is a "YES" in the "IBR" column.

If the parent multiple-award IDIQ contracts were for commercial items, then the contracting officer for those contracts already used FAR part 12 for the parent multiple-award IDIQ contracts (in conjunction with part 13, 14, or 15).  For placing an order, you use §16.505 and the ordering instructions included in the parent multiple-award IDIQ contracts.

If you re-type FAR 52.212-4 in full text into the order, it is because the parent IDIQ multiple-award contracts say so, not because FAR part 12 says so.  It should simply flow down from the parent contracts without having to be mentioned in the order, but you have to follow the ordering instructions for the parent contracts, even if they are stupid.  A requirement to re-type FAR 52.212-4 in full text in an order is stupid.  BTW, I don’t read the text you quoted as requiring you to re-type FAR 52.212-4 in full text into your order — to me, as long as it is clear that the item is a commercial item, the clause is automatically incorporated into the order.  The statement is inartfully written, but that seems to me as the only reasonable way to read it.  

Guardian,

I recommend caution and diplomacy, rather than being bull-headed.

You are not using FAR part 12 in conjunction with §16.505.  When you use part 12, it is in conjunction with part 13, 14, or 15 (see FAR 12.102(b)).  When you use §16.505, you use it by itself.  You are working under §16.505 and the already-awarded multiple-award IDIQ contracts (note: those contracts may have been awarded using FAR part 12 in conjunction with part 13, 14, or 15, but orders are awarded using §16.505).

You speak of the technical evaluation team making the selection and documenting it.  But they should only do the evaluation (and document the evaluation) — the selecting official (you, it seems) should make the selection (and document it).

FAR 16.505(b)(1)(ii) clearly says that FAR subpart 15.3 procedures do not apply to your procurement, so you should not quote from 15.303(b) to make any point.

I think you should try to be peaceable.  As you said, you’re here to build a team and relationships.  Best wishes!