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mrsbadexample

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Everything posted by mrsbadexample

  1. We may have to agree to disagree. While I agree that FAR clauses only apply once they are incorporated into executed contracts, I disagree that FAR clauses never apply to a contractor's conduct outside the performance of that contract. For example, under 52.222-50 Combating Trafficking in Persons, a contractor is prohibited from engaging "in severe forms of trafficking in persons during the period of performance of the contract". Note, the restriction is not solely in the performance of the contract itself, but during the period of performance of the contract. I believe 52.203-6, once incorporated into a contract, also applies to a contractor's actions outside the performance of the contract. After all, if this clause only applied to potential direct sales by the subcontractor to the government under that particular contract, when would it ever apply? A subcontractor cannot sell directly to the government under a different party's (the prime's) contract. However, you may be onto something. Perhaps the intent of this clause is only to prohibit the prime from placing such restrictions on a sub as a condition of subcontracting work to that sub under the applicable contract. If that is the case, then an exclusive teaming agreement for a new contract would be acceptable as long as it wasn't a precondition of awarding the subcontractor work under the preexisting contract...
  2. Another good point that addresses many/most teaming agreements. However, (for a variety of reasons) my company frequently participates as a subcontractor on solicitations for which it would be technically capable of satisfying the entire requirement. Sometimes (if there is no exclusive teaming agreement in place) we even submit proposals as both a prime and a subcontractor. We occasionally also submit proposals as the prime with a subcontractor who would technically be capable of responding to the entire RFP. I'm sure our situation is not completely unique. The teaming agreement language I quoted did prohibit the sub from responding "independently or in conjunction with any other Party" to the solicitation. No, I'm not talking about orders under an ID/IQ. I'm not sure I see your logic. The clause has to apply to restricting a subcontractor's sales to the government on other contracts; the subcontractor couldn't sell directly to the government under the contract held by the prime...
  3. Good point, and I had considered this, but in many cases the proposed prime contractor already has other contracts in place, often with the same proposed subcontractor providing the same type of subcontracted products/services. So this FAR clause would be in effect under those other contracts. Wouldn't that then prohibit the prime from entering into a teaming agreement with the sub on a new RFP for similar work? It doesn't make sense that teaming agreements would be so restricted, since as Vern pointed out they are acknowledged as being acceptable under FAR Subpart 9.6, but the language of this clause perplexes me. Is it only meant to prohibit contractors from restricting subcontractors from bidding as a prime on the recompete of that exact contract? Or are teaming agreements an exception under 52.203-6( b )? There seems to be general agreement that this is okay, but my OCD makes me want to know why it is okay. Vern - agree that there are antitrust considerations as well. That's a whole different set of issues...
  4. Teaming agreements (between a proposed prime and subcontractor) often include exclusivity language such as the following: Since this Agreement requires the full cooperation of the Parties, both Parties agree that they will not in any manner participate in or undertake efforts that are competitive to this Agreement, nor will they compete for the Procurement or respond to the Solicitation, independently or in conjunction with any other Party, during the term of this Agreement. 52.203-6(a) prohibits contractors from entering into any agreement with an actual or prospective subcontractor "which has or may have the effect of restricting sales by such subcontractors directly to the Government of any item or process (including computer software) made or furnished by the subcontractor under this contract or under any follow-on production contract." 52.203-6( b ) then states that this prohibition "does not preclude the Contractor from asserting rights that are otherwise authorized by law or regulation". I guess I have two questions, which may be related. First, why aren't teaming agreements containing the above language prohibited by 52.203-6(a)? (Or are they?) Second, what is the intent of 52.203-6( b )? Is this a convoluted way of saying that 52.203-6(a) doesn't apply as long as the agreement is otherwise legal, or is this referring to some other unnamed rights of the contractor? (Okay, maybe I really had four questions...)
  5. You can go and be What you want to be And it'll be alright If we disagree I'm the one who cares And I hope you'll see... -mrsbad
  6. Happy belated birthday. Hope you live long enough to make it to the end of this post. Exactly. Although "worry" might be a strong term. Perhaps "problem" is too strong as well, though it depends on which definition you choose. Alas, the FAR doesn't define "problem"; Merriam-Webster offers the following definitions: a question raised for inquiry, consideration, or solution an intricate unsettled question a source of perplexity, distress, or vexation I would say the first two fit, and it is a source of perplexity for me. Not so much distress. So as not to go off on another tangent, I'm refraining from commenting on the assumption that all Contractors and Contracting Officers are reasonably intelligent and on speaking terms... Agreed. But it does seem to me that this problem is likely to occur in the vast majority of incrementally funded contracts, so I am perplexed as to why the clause is written the way it is, and why there wouldn't be any guidance about it (or at least anyone complaining about it). There are lots of unique situations where the only option is to improvise and adapt, but it seems to me that FAR clauses should adequately address the majority of contracts in which they are included. True, and most of the time improvising works just fine. I think your first possible solution addresses the requirements of the clause but provides no useful information to the CO. Something else that makes sense might be to agree with the CO that instead of providing notice at the 75% level, we'll just let them know when there are a few months of funding remaining and they should start thinking about adding some. That usually works just fine, with no problems. One of the bullet points in my job description involves anticipating problems and mitigating them before they occur. As such, this clause has always made me think about the following possible scenario: Contractor: Hey, Mr. CO. Did you see the Green Bay game the other night? I can't believe they lost! They were robbed! CO: No, I didn't see the game. I hate Wisconsin, and I hate football. Contractor: So anyway, I wanted to let you know that we think the current funding levels on our contract will last another 6 months or so. Depending on how XYZ goes, we may end up exceeding our estimate by a few thousand dollars. Once I get guidance from the COTR as to how he wants us to handle XYZ, we'll send you a revised estimate to complete. [Note: XYZ is some unanticipated problem which does not constitute a change in the scope of work.] CO: Silence. Contractor: Hi Mr. CO. Here's that revised estimate to complete we mentioned. Sure enough, because of XYZ it looks like we're going to end the contract about $10K over budget. CO: Silence. ... and so on until... Contractor: Dear Mr. CO, our costs have now exceeded the level of funding and contract value on this contract. As we know this is an important project that may save all of mankind, we are continuing to perform the work for its completion. We would appreciate it if you could expedite a modification to the contract adding $10K of funding and contract value. Thank you in advance. CO (once contract is complete): Sorry, you aren't entitled to the additional $10K that you incurred, because you didn't provide the proper notice in accordance with 52.232-22. Contractor: What do you mean? We had an agreement that since notice in strict compliance with 52.232-22 would be impossible, we would just keep you updated in a timely manner? Co: I don't have any recollection of that. Anyway, it doesn't matter. 52.232-22 is very clear on when notice should be provided. And I hate Wisconsin. Perhaps an unlikely scenario (after all, who hates Wisconsin?) but I have seen many references to excess costs being denied due to lack of proper notice per 52.232-22. Huge fan. I'm proud to be a glutton, and I don't have time for sloth I'm greedy, and I'm angry, and I don't care who I cross Thanks for getting the reference. And you can just call me mrsbad.
  7. I'm not determined to see a "problem"; I'm determined to find guidance on how the Government expects contractors to deal with a problem. I've been following this forum for awhile, and I have always appreciated the insight and information provided by its members (you in particular). I'm not sure why I am having so much trouble explaining this problem in a way that can be understood. Agreed The problem is that it is impossible to provide the notice as I understand it to be required. Please refer to my continuation of the example as you began. "Now suppose that the government adds another $1,000,000 during the 36th month. The total funds allotted would then be $4,000,000 and are supposed to last through the 48th month of performance. The contractor would exceed 75% ($3,000,000) at some time during the 36th month of performance, at which time it would have enough funds remaining ($1,000,000) to continue working for about 12 more months ($1,000,000/$83,333 = 12) -- through the end of the fourth incremental funding period. It would have to give the 75% notice in about the 34th month and it would say that it needs no additional funds to carry it through to the end of the funding period. " In this example, the current funding brings the total allotted amount to $4M. 75% of $4M is $3M. So the contractor would need to provide notice 60 days prior to reaching $3M in costs. However, in this example, $3M in costs have already been exhausted at the time of the funding action. So the contractor would need to provide notice 60 days before the funding action actually happens. As stated above, the funding action happens in month 36, but the notice would be required in month 34. The contractor would have to go back in time once they knew the amount of the new funding action in order to provide the advance notice as required. Now suppose that the government adds another $1,000,000 during the 48th month. The total funds allotted would then be $5,000,000 and are supposed to last through the 60th month of performance. The contractor would exceed 75% ($3,750,000) at some time during the 45th month of performance, at which time it would have enough funds remaining ($1,250,000) to continue working for about 15 more months ($1,250,000/$83,333 = 15) -- through the end of the fifth incremental funding period. It would have to give the 75% notice in about the 43rd month and it would say that it needs no additional funds to carry it through to the end of the funding period. The contractor would need to provide notice 60 days prior to reaching $3,750,000 in costs. Again, in this example, $3,750,000 in costs have already been exhausted long before the time of the funding action. So the contractor would need to provide notice 5 months before the funding action actually happens. The funding action happens in month 48, but the notice would be required in month 43. Once again, the contractor would have to go back in time once they knew the amount of the new funding action in order to provide the advance notice as required. You are correct. My division of the contract into yearly periods was entirely artificial and was done entirely to make the problem obvious and more easily discussed. (This was clearly unsuccessful.) A real contract would not typically be funded in this manner, and the costs would not be expended so regularly. This is a hypothetical contract meant to illustrate an issue that I have seen on multiple real contracts. Because in the later parts of the contract, 75% of the newest ("current") total amount allotted has already been reached before the time of the funding action. The contractor would need to know how much additional funding was coming in order to provide the notice, or it would need to have a time machine to go back and give the notice at the time required. We could scrap this entire example, and look at a new one. Forget what's happened for the first 4.5 years of a contract - funding actions have been made and costs have been incurred, with no particular regularity. You're 4.5 years into a contract. The previously allotted amount is $900,000. You've incurred costs of $850,000 so far. The CO funds another $100K, bringing the total allotted amount to $1,000,000. 75% of $1,000,000 is $750,000, which you exceeded two years ago. How can you provide notice 60 days in advance that 75% of the new total allotted amount of $1,000,000 will be reached?
  8. Yes, this is consistent with my example. And up until this point there is no real problem (although it seems that 25 months into the contract is a bit early to be sending the required notice to be of much value, since funds would have just been added one month earlier and at the time of notice there are still enough funds to last another 11 months). Continuing with this example, though, is when the problems occur: Now suppose that the government adds another $1,000,000 during the 36th month. The total funds allotted would then be $4,000,000 and are supposed to last through the 48th month of performance. The contractor would exceed 75% ($3,000,000) at some time during the 36th month of performance, at which time it would have enough funds remaining ($1,000,000) to continue working for about 12 more months ($1,000,000/$83,333 = 12) -- through the end of the fourth incremental funding period. It would have to give the 75% notice in about the 34th month and it would say that it needs no additional funds to carry it through to the end of the funding period. Here's the problem. The Contractor would be required to give the 75% notice two months before the new funding is added. Note that they would have already given the notice (11 months earlier) required for 75% of the $3M funding level. Now they would be expected to give the notice for 75% of the $4M funding level two months prior to that funding being added. In the fifth year, the problem is even greater, as notice would have to be given in the 43rd month. I see the confusion with this statement. You're right; funds wouldn't normally be added until more than 75% of the previously allotted funds are expended. But what I meant was that 75% of the NEW total funding would already have been exceeded at the time those new funds are added. How is a contractor to provide notice before they know when or how much new funding is going to be allotted?
  9. I am talking about a contract with a five year period of performance that is incrementally funded. There are no option years. The contract is for five years, but the entire contract value is not funded at the time of award. Funding is periodically added to the contract. Each time the Contractor's costs approach 75% of "the total amount so far allotted to the contract", notice must be given. Perhaps someone can enlighten me on why Vern believes the issue goes away under these circumstances. Maybe I haven't had enough coffee today...
  10. Thanks to both of you for your comments. I?m afraid I have muddied the waters by including the option years in my example. This was intended to be a simple hypothetical contract that illustrated the general issue. However, as seems to often be the case on this forum, my inadvertent inclusion of this complicating factor has raised some interesting additional areas for discussion. To address questions raised thus far and provide some clarity around my initial question: My experience has actually been more similar to that of Retreadfed; typically when an option has been exercised in our contracts, the modification adds the estimated cost of the option period to the previous total estimated cost of the contract to arrive at a new total estimated cost. Each option period is not listed on a separate CLIN. The funding of our contracts does not always match up with the exercise of the option years, either; an option year might be exercised but then funded in multiple increments. These are generalities, and I didn't have a specific contract in mind when I asked this question, so one would obviously need to review the way the schedule and contract are written as a whole, as Vern mentions above. Getting back to my original question, can we eliminate all references to option years and assume the contract is a five year $5,000,000 contract that is incrementally funded? Let?s just say that the CO funds the contract in accordance with the same schedule, although this is not required by any inclusion of option years. Thanks again for your perspectives.
  11. Under 52.232-22 (Limitation of Funds), a Contractor is required to notify the Contracting Officer whenever it has reason to believe that the costs it expects to incur in the next 60 days, when added to all costs previously incurred, will exceed 75 percent of the total amount so far allotted to the contract by the Government. This makes sense the first time this occurs. The Contractor provides notice, and typically the Contracting Officer allots additional funding to the contract to cover continued performance before the funding is exhausted. Presumably, the Contractor should then continue to notify the Contracting Officer each time this occurs based on the new total funded amount. As the contract nears completion, this often creates a situation where the Contractor has already exceeded 75 percent of the total funded dollars at the time additional funding is added. What are the Contractor?s obligations for notifications in this situation? As an example, let?s say there is a CPFF contract with a base year and four option years and a total potential contract value of $5,000,000. $1,000,000 is funded each year. For simplicity, let?s say that actual costs are also equal to $1,000,000 each year and that they are spread evenly throughout the year. The first year, notice should be provided when costs are approaching $750,000. Using this same formula the second year, notice should be provided when costs are approaching $1,500,000, which would be early in the year. The third year, notice would be provided when costs are within 60 days of reaching $2,250,000, which would be only a month after the most recent funding was allotted. By the beginning of the fifth year, the actual costs would already total $4,000,000, but 75% of the new total funded dollars would be $3,750,000 so notice would already be past due. The table below illustrates this example, although I can't seem to get the formatting to show properly. __________________________________Total Funding__75% of total amount so far allotted Initial contract funding for base year______$1,000,000___$750,000 Additional funding mod for option year 1___$2,000,000___$1,500,000 Additional funding mod for option year 2___$3,000,000___$2,250,000 Additional funding mod for option year 3___$4,000,000___$3,000,000 Additional funding mod for option year 4___$5,000,000___$3,750,000 Is anyone aware of any guidance on this issue?
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