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rios0311

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About rios0311

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  1. There is a debate in my office regarding whether acceptance of services occurs as the contractor performs the services or after the Government has taken some additional action, such as inspecting the services and executing a receiving report. Some individuals believe that because someone allowed (by inaction) a contractor show up to perform the work required by the contract on a daily basis (ongoing support service), that we’ve automatically accepted those services at the end of the day. The underlying issue that created this argument is whether one of our customers without authority, and through no action of their own, accepted a contractor's services while there was a lapse in funding on the contract on an incrementally funded contract. Our (civilian) agency receives different types of services. Some services occur offsite, where we do not see the services as they are performed, and some occur onsite (e.g., acquisition support services), where contractor employees work side-by-side with government personnel. The onsite contractor employees usually show up for work, much like feds do, and perform the work required by the contract. On occasion we run into the situation where additional funds were not added quickly enough to an incrementally funded contract and the contractor continued to work at risk. The question then becomes whether someone accepted those services and whether an unauthorized commitment has occurred. I don't believe that there is an unauthorized commitment, but the issue here is whether the services were accepted. FAR 46.5 discusses acceptance of supplies and services. This part states that acceptance may take place before delivery, at the time of delivery, or after delivery. If performance is given the same treatment as delivery, with the exception of acceptance before performance, I think that this statement applies equally to performance; i.e., acceptance may take place at the time of performance or after performance. The part states further that Acceptance shall ordinarily be evidenced by execution of an acceptance certificate on an inspection or receiving report form or commercial shipping document/packing list, which seems to imply that in order to denote acceptance, the Government must take some administrative action, such as executing a receiving report. Lastly, the part states that Supplies or services shall ordinarily not be accepted before completion of Government contract quality assurance actions, which seems to imply that a service cannot be accepted and should not be considered accepted until the Government performs some type of inspection process. I’d like to know at what point after a contractor has performed its services are the services considered accepted by the agency. Are services considered accepted only after a service has been inspected and accepted by executing a receiving report or through one of the other means specified in 46.5? Or does the fact that the contractor showed up for work and performed a task in accordance with the contract constitute acceptance at the end of the day? Regarding receiving reports, we provide them only to our payment center to authorize payment of services invoiced by contractors. We do not provide the receiving report to contractors. This isn’t a matter of policy, but simply a matter of practice that no one on either side has questioned. Must the receiving report be provided to the contractor? If not, how does the contractor know we accepted the service? I do not have access to chapter 9 of Administration of Government Contracts (Inspection, Acceptance and Warranties)
  2. Funding for options

    The Background section of the cited GAO decision is pretty specific on the matter (see emboldened): “Background According to the Air Force, in an effort to minimize the surge in workload at the end of the fiscal year, it has staggered contract periods for certain support service contracts, including this one, so that the contracts do not all expire simultaneously. The Air Force awarded the vehicle maintenance contract here, a fixed price contract with K&M Maintenance Services, Inc., in 1990 for fiscal year 1991, with four 1-year option periods. During the third option year, the Air Force modified the contract period, cutting it short by 1 month for that year, so that the contract would expire on August 31 instead of September 30.The Air Force correspondingly changed the fourth option period to run from September 1, 1994 to August 31, 1995. At the time of exercise of the fourth 1-year option, the Air Force only had fiscal year 1994 budget authority available to finance the first 4 months of the new contract (September through December 1994).” I interpreted this as the AF modifying both periods of performance; the then current option year 3 (in progress at the time), and the soon to be exercised option year 4. Whether GAO considered the AF's actions to be a modification or partial termination strikes me as irrelevant because that issue was not the basis for the case, and ultimately, GAO did not object to the Air Force's financing of its fourth option period, beginning September 1, 1994. My reasoning may be faulty, but I reasoned that if GAO did not object to the Air Force's financing of its fourth option period, then it did not object to the method by which the Air Force accomplished the action. I was only attempting to point out that from an appropriations standpoint, the circumstances of the K&M Maintenance Services case are more similar to the OP's circumstances than those of the NLRB case. As a CO, if faced with the OP's circumstances, I would rely on the K&M Maintenance Services case for decision making purposes, and not on the NLRB case.
  3. Funding for options

    I stumbled upon this thread while looking for something else and it caught my attention, so I wanted to provide some information that differs from the advice provided by those who responded originally. I believe that the OP's question was: "The jest of the question is can we exercise the option and obligate the funding in this fiscal year while we have funding as opposed to waiting until next fiscal to do so once this years funding has expired.", and I believe that the answer is yes, but to do so, the OP would have needed to modify the period of performance of the then current period of performance before it ended and before it exercised the option in question. Napolik cited GAO's decision B-308026, Sept. 14, 2006 regarding NLRB's use of FY'05 funds to exercise and fund an option for which performance began in FY'06. In that decision, the NLRB's Inspector General correctly concluded that NLRB had improperly obligated its fiscal year 2005 appropriation because obligating the fiscal year 2005 appropriation for the performance of severable services that would occur entirely in fiscal year 2006 was a violation of the bona fide needs rule. Although the NLRB had already exercised the option (the action that creates the recordable obligation), recorded the obligation, and performance had begun, the NLRB suggested it could correct its ministerial error by modifying the [exercised] period of performance to reach the expired funds; i.e., modify the [exercised] option so that it began - at least on paper - on September 30, 2005. Essentially, the NLRB thought it could travel back in time to change the date on which it had incurred a recordable obligation. In its decision, the GAO opined that “it is quite another thing, however, for an agency to alter executed (emphasis added to “executed”) contracts in order to reach expired funds— funds that Congress appropriated for agency programs and activities of the previous fiscal year. That is what NLRB proposes to do. Were NLRB to adjust the fourth option’s performance period, its sole reason for doing so would be to reach fiscal year 2005 appropriations because, in September 2005, that is what NLRB had intended to do. However, NLRB’s fiscal year 2005 appropriation has expired.” Although very educational and informative, I do not think that the NLRB decision would have applied to the OP’s question because the OP’s situation was fundamentally different from the NLRB’s obligational circumstances. Unlike with NLRB, in the OP’s scenario, the agency had not yet exercised (executed) the following option year. Since the agency had not yet exercised the following option, there wasn’t a recordable obligation to record. That point is fundamental. In NLRB, the agency was attempting to make the correction after the fact. The OP posted his/her question on June 13, 2013, so presumably, the agency had not yet exercised the option that began on December 21, 2013. Under these circumstances, the agency could have modified its existing period of performance by shortening it by approximately three months so that it ended near the end of September, such as September 20, 2013, and then realign the POPs on the unexercised options so that they begin on September 21, 2013. This would have allowed the agency to obligate FY’05 funds for the following option and it would not be considered an attempt to “reach expired funds”, because the funds would not have been expired at that time. In fact, the Air Force did this very same thing in the Matter of Funding of Maintenance Contract Extending Beyond Fiscal Year File: B-259274, May 22, 1996. In that decision, the Air Force had awarded a contract in 1990 for fiscal year 1991, with four 1-year option periods. During the third option year of the fixed price contract for vehicle maintenance services, Kelly Air Force Base modified the contract period so that it ended one month early on August 31, 1994, instead of September 30, 1994. The Air Force then exercised the fourth option to extend performance from September 1, 1994 to August 31, 1995 in order to use its FY’94 appropriation. Although this was not the crux of the case, the GAO did not object to the Air Force's financing of its fourth option period, beginning September 1, 1994. Hope this helps.
  4. Summerlady, I wanted to add one more thing. Vern stated the following: Then you asked: "but can you explain what the purpose is in officially giving him time to correct the problems especially if they are small?" I believe that Radiation Technology, Inc. v. United States (366 F.2d 1008 (1966)) addresses the issue of nonconforming items that substantially comply (or do not comply) with the contract specifications. In the cited case, the Court of Claims defined the term "delivery" as the equivalent of a shipment which is in substantial compliance with contract specifications. Under the view that the court espoused, a contractor is entitled to a reasonable period in which to cure a nonconformity provided that the supplies (or system) shipped are in substantial conformity with contract specifications. The reasonable period consists of an automatic 10-day extension after a written notice of nonconformity (cure notice). I think 10 days is the minimum number of days the government is required to provide. The court case provides that "In order to meet this requirement, it is incumbent at the outset that the contractor demonstrate that he had reasonable grounds to believe that his delivery would conform to contract requirements. Shipment alone is not an adequate badge of proof. Further, the right to cure assumes that the defects complained of are minor in nature and extent and are susceptible to correction within a reasonable time. Where extensive repair or readjustment is necessary in order to produce a fully operable product, substantial performance cannot be found and summary termination would be warranted." If you do not give the contractor at least 10 days to cure the nonconformities and you terminated the contract, then the contractor is likely to prevail in court in a wrongful termination suit. The answer to your question depends on what you meant by "...officially giving him time to correct the problems..." I think that the purpose of giving him additional time to correct the nonconformity is to deal fairly and in good faith with the contractor. I believe that the purpose of officially giving him time to correct the nonconformance, even if small, is to document the extension so the contractor can't prevail in court under a wrongful termination suit.
  5. I figured as much, but I was hoping to hear from folks in the profession who may have had a similar experience. Thank you.
  6. Scenario: Contractor developed at Government expense a system to assist law enforcement investigators (not defense related). Contract included FAR 52.227-14 Rights in Data - General (2007), and the following clause: SYSTEM AND DATA OWNERSHIP During the performance of this contract, the contractor will create and maintain databases, business process workflows, call and data flow diagrams, IVR scripts, webpage content, customer service records, training materials, preformatted responses, and other materials that are used to support the various activities. The (agency name) retains ownership of all such support materials and all other information resources, including stored data, database structure, web page design and content , and other materials developed by the contractor in support of this contract, including customizations, documentation, configurations, and specifications. The contractor shall retain ownership of the system infrastructure (except for any items that may be furnished by the (agency name)), including all hardware and COTS software. At the end of the performance period, all information resources developed in support of the contract shall be turned over to the (agency name) in its entirety. The contractor wants to pursue an opportunity to develop a similar system for a foreign government and has asked permission to repurpose the system design & configurations, database schema, database design, and computer software code for the foreign effort. The agency likes the idea of this particular foreign law enforcement agency having a similar system, because it might lead to enhanced collaboration and system enhancements that the agency itself has not considered. There are two facts that I'd like to point out: 1. The contractor stands to profit substantially from the foreign opportunity; and 2. The contractor continues to provide the agency with services related to the operation and maintenenace of the current system, under the same contract through which it developed the system. I have 4 questions: 1. Does the System and Data Ownership clause conflict with 52.227-14, or was such a clause contemplated by the exception provided by 52.227-14(d)(3)? 2. Does inclusion of the System and Data Ownership clause give the agency exclusive ownership/copyright to the system source code that the contractor developed under contract? 3. If the agency does in fact own the system code, is it appropriate for the agency to license the system code to the contractor at some cost in the form of credits (price reductions) to the current contract? 4. Is there a better or more appropriate method of approaching the contractor's request?
  7. When discussing predecessor contracts and successor contracts in terms of the Service Contract Act, could the base period of performance of an existing contract be considered the predecessor contract? Or does the term specifically apply only to a previous contract award? I'm attempting to make sense of FAR 22.1010 and 22.1012-2( b ) and ( c ). I'm interpreting the requirement to honor a CBA as follows: The contractor's employees did not have a CBA when we awarded the contract, so I don't think we were required to honor the rates when they presented the CBA contract several months after award (which the previous CO did). However, since there was a CBA in effect at the time we exercised the first option, then there may be a statutory requirement to honor the new CBA rates at the time we exercise the option. Can someone weigh in?
  8. Now that's helpful! I got the runaround today with the Department of Labor. I got nowhere. I'll try that tomorrow.
  9. Thanks for the information. I learned something new today.
  10. Thanks for the advice. Reaching out to DOL this morning.
  11. I've incorporated into contracts revised DOL wage determinations when exercising an option. This has resulted in a slight increase to the hourly labor rates. However, I'm required to exercise an option (option 3) on a contract, but the contractor has provided a revised collective bargaining agreement (CBA) with new rates. Am I allowed (or required) to increase the new option's labor rates as a result of a collective bargaining agreement? To provide some background, there was no CBA when the agency awarded the contract. The contractor presented to the agency its first CBA about 1 1/2 years after the contract had been awarded (midway through option 1 of the contract). A revised CBA was used to revise the labor rates when the agency exercised option 2. I'll be exercising option 3 this month, but I'm not sure about the CBA. Are we required to honor it? FAR 22.1008-2 discusses CBAs in the context of predecessor and successor contractors, but we're not ready to compete the requirement yet. We still have two options left on it. The option price is worth close to $500k, and the CBA revision adds nearly $30k to that price (for the option year). Seems like a lot.
  12. It becomes a problem when all the CLINs get out of synch when one or more (nonseverable) CLINs need to be extended, but the remaining CLINs continue as scheduled, including the exercise of their options. So I end up with a contract with several CLINs that are in their base POP, but I have other CLINs that are in their Option 1. If this happens enough times, I can have different CLINs, all within the same contract, but operating under 3 different periods of performance. If these have options, keeping track of them becomes an administrative burden. I didn't know one could structure a contract with multiple CLINs, each with its own period of performance and each with options.
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