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Vern Edwards

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Posts posted by Vern Edwards

  1. 32 minutes ago, joel hoffman said:

    The Statute requires the United States to pay interest on prospective costs, too.

    That's how the Alberici board and court interpreted the statute in light of the arguments that were made. Boards and courts, as a rule, address only the arguments that are presented to them.

  2. 43 minutes ago, joel hoffman said:

    Vern, my examples involve claims that the contract has been changed,   the contractors cited sums certain in their claims. The claims were settled or adjudicated before some or all the costs were incurred.  I don’t see any legal distinction between that and the case law in my last post.

    No. The claim was not that the contract had been changed. The assertion that the contract had been changed was support for the claim, which, I assume (you did not say) was for an adjustment to a contract term---namely, price. My argument is that there are three kinds of claims and only one kind earns interest---claims for payment of money. The government did not make that argument and the court did not address it. Boards and courts respond to the arguments they get. Only rarely do they make an argument of their own, sua sponte.

    Sorry, Joel. But you just aren't getting it.

  3. 12 minutes ago, joel hoffman said:

    Vern,  I am confused by your two posts above. Are you saying that if the claim is settled or resolved through litigation for a specific amount before the costs (or all of the costs) are incurred,  then there is a distinction between that scenario and the case law below?


    I'm saying what I said, which I think is clear. I'm sorry that you're confused, but that's not my fault. If you think that what I said is inconsistent with the case law, then instead of quoting the case law, say in your own words where and how the conflict lies. I will add this: Too bad for the government if its COs and lawyers do not know how to distinguish between claims for the payment of money, which are the ones that bear interest, and claims for the equitable adjustment of contract terms, which I argue do not.



  4. 20 minutes ago, joel hoffman said:

    An example might be rejection of a technical submittal that required what the contractor considered to be a change in order to be approved.  Government has one interpretation and contractor has another. Government remains firm and contractor submits a claim for additional costs that it will incur to comply either during installation or during procurement of an item. KO determines merit and settles the claim before contractor pays or incurs the additional cost. 

    A claim for 'costs" that have not been incurred cannot be considered a claim for the payment of money. It is a claim for the adjustment of a contract term---the price or the estimated cost of performance. Payment won't be due until the contractor has completed the work or incurred the cost. A contractor cannot demand the payment of money because it is entitled to payment. (Such a demand would be for advance payment.) Thus, there is no interest.

  5. 28 minutes ago, joel hoffman said:

    Vern, I was referring to claims concerning disputes over contract requirements or government directives  that would involve additional costs but the additional costs had yet to be incurred. The CDA says that interest is payable from the date the KO receives the claim until it is paid. 

    Interest accrues on amounts of money "found due." A contractor cannot make a claim for the payment of money until it can assert in good faith that payment is due, and payment is not due on a price adjustment until the contractor is contractually entitled to payment.

  6. @joel hoffman

    2 hours ago, joel hoffman said:

     If a claim is settled prior to any performance of the disputed effort, does the government pay CDA interest on the amount of the settlement upon payment, necessarily have to occur much later?  Or would the government perhaps separately pay the claim settlement earlier, which might be prior to performance, to avoid interest costs?

    What kind of claim was settled? Let's look at the definition of claim in FAR 2.101:


    “Claim” means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, [1] the payment of money in a sum certain, [2] the adjustment or interpretation of contract terms, or [3] other relief arising under or relating to the contract.

    So there are three kinds of claims: (1) a claim for the payment of money, (2) a claim for contract adjustment or interpretation, and (3) a claim for other relief--i.e., something other than the payment of money or contract adjustment or interpretation.

    Now look at the CDA section on interest:


    Interest on an amount found due a contractor on a claim shall be paid to the contractor for the period beginning with the date the contracting officer receives the contractor’s claim, pursuant to section 7103(a) of this title, until the date of payment of the claim.

    You must distinguish between claims for the payment of money and claims for the adjustment of a contract term such as the price.

    In your case, you say the parties settled a claim. What kind of claim? It cannot have been a claim for the payment of money, because at the time of settlement the contractor had not completed any work (fixed-price contract) or incurred any cost (cost-reimbursement contract) on the claim for which it was entitled to payment. It must have been a claim for the adjustment of a contract term. Probably the price.

    Interest accrues only on claims for an amount "found due." Since the contractor did not submit a claim for the payment of money, the amount of the contract adjustment was not an amount "found due." Interest accrues from the time the CO receives a claim for payment that the contractor asserts it is owed, and it continues to accrue until the government pays the amount ultimately found due. There was no claim for payment.

    Since the contractor in your scenario cannot, in good faith, have submitted a claim for any amount of payment that it believed it was due, because no payment would be due until the contractor completed the work, and no work had been done, the claim settlement in your scenario presumably included only a price adjustment. Thus, the contractor will not be entitled to any interest on the amount of the settlement, because it was not an amount "found due." Nothing will be due to the contractor until it has completed the work and the government has found the work to be acceptable. Presumably, when the contractor seeks payment for the amount due it will submit a routine invoice, which is not a claim. No claim, no interest.

  7. 3 hours ago, Retreadfed said:

    However, the basis for the government's appeal was the interest provision in the Disputes clause and FAR 33.208.  Unfortunately, the Court did not consider it necessary to address the government's position except in a footnote where it said

    "The government argues in its brief that particular regulations prohibit 'claims' for future costs, but that begs the question. Statutes trump conflicting regulations. Thus, this case turns on the meaning of section 611. The government's statement of issues in its brief essentially limits this case to 'a straightforward question of statutory interpretation' involving section 611. See Rule 28(a)(3) of the Federal Rules of Appellate Procedure, which requires an appellant to state the issues presented for review."

    To me, this is a statement that the regulations are in conflict with the statute to some degree. 

    The problem is that the court never confirmed that the government's interpretation of FAR 33.208 in Alberici was correct and that the regulation therefore violates statute. It did not rule on what FAR 33.208 means. It simply ruled on what it could not mean. Here is what FAR 33.208(a) says:


    (a) The Government shall pay interest on a contractor’s claim on the amount found due and unpaid from the date that—

    (1) The contracting officer receives the claim (certified if required by 33.207(a)); or

    (2) Payment otherwise would be due, if that date is later, until the date of payment.

    Now what, exactly, does subparagraph (2) mean? What does "otherwise would be due" mean? "Otherwise"how? "Otherwise" on what basis? That language has always struck me as strange and obscure. There was no explanation of it when it first appeared in the regulations before the FAR was issued.

    Alberici was first tried before the Corps of Engineers Board of Contract Appeals, which rejected the government's interpretation of the regulation. I discussed this in the 2009 article that Joel cited:


    In its original Alberici decision, 97-1 BCA ¶ 28639, the ENGBCA speculated that the language “the date that payment would otherwise be due, if that date is later,” doesn't mean what the Government took it to mean:

    "The phrase “otherwise would be due” sometimes arises in litigation involving a contractor's attempt to convert a Government claim against the contractor into a claim by the contractor against the Government. This may occur where a contractor seeks remission of monies alleged to have been improperly withheld by the Government. See Martin Marietta Corp., ASBCA No. 25828, 84-1 BCA ¶ 17,119 at p. 85,256. A contractor cannot, without more, recover interest upon the disputed amount of a Government claim even if it succeeds in overturning the Government's action. Section 12 of the Contract Disputes Act provides only for interest due upon claims by a contractor pursuant to 41 U.S.C. § 605(a). The contractor is not entitled to interest under a literal reading of the statute unless it files a separate claim of its own, “converting” the Government claim into a contractor claim. See Ruhnau-Evans-Ruhnau Assoc. v. United States, 3 Cl. Ct. 217, 218 (1983). Examples include improper assessments of liquidated damages (J.E.M. Development Corp., ASBCA No. 42872, 92-1 BCA ¶ 25,709), and offsets for alleged violations of labor laws (Delfour, Inc, VABCA Nos. 3803, 3832, 3897, 3901, 94-1 BCA ¶ 26,385). Other than the factually inapposite Neal [& Co., DOTBCA 2084, 90-1 BCA ¶ 22,586], no precedent suggested by the Government supports its unreasonable interpretation."

    The board was apparently loathe to find that the FAR is inconsistent with the statute and tried to find an interpretation of “otherwise would be due” that would eliminate any conflict.

    I don't think that any tribunal has ruled that FAR 33.208(a)(2) violates statute. In Alberici, the Federal Circuit ruled on the government's interpretation of the statute itself. It did not rule on the meaning of FAR 33.208(a)(2). Thus, we don't know for sure that FAR 33.208(a) violates statute. At least, I don't.

    Similarly, while FAR 15.403-1(a) might seem to be inconsistent with statute on its face, a CO cannot know the truth until he or she queries the FAR councils. In light of the statutes and FAR 15.403-4, why does it say what it does?

    As for complying with FAR 1.602-1(b)--that's easy. If a CO thinks FAR violates statute he or she should not act on his or her own interpretation, but seek guidance and direction from higher authority. Based on that thinking, I say that the correct answer to Don's poll is No, because I think that a CO cannot say Yes on the basis of his or her own interpretation of statute and FAR. He or she cannot violate FAR 15.403-1(a) by requiring certified cost or pricing data at or below the SAT without having approval to deviate from FAR in hand. No, on the other hand, might mean (a) No, don't demand certified cost or pricing data, or it might mean (b) No, don't do anything until you get guidance and direction. Unfortunately, Don's yes or no poll did not allow a respondent to make a choice in that regard.

  8. 19 hours ago, ContractSpecialistTJohn said:

    Would anybody happen to recall or know, how to determine which clauses in a MAS contract flow down to the order level?

    Yes, I know. Read the contract.

    I'm not being sarcastic. That's the only way to determine which clauses flow to the order level, especially if the contract provides for issuance of orders with different pricing schemes.

    Sorry. There is no easy answer. FAR 52.216-18 has to be interpreted an applied in context.

  9. Although Don did not reveal it in his original post, his problem, in the abstract, poses this issue:

    What should a CO do if the FAR commands that something be done, or not be done, and the CO thinks that to obey the command would entail a violation of statute?

    Thus, in the particular case, if the acquisition would be valued at or below the SAT, but the CO thinks that obeying the absolute prohibition at FAR 15.403-1(a) by not requiring the submission of certified cost or pricing would violate FAR 15.403-4 and the statutes that command the CO to require submission of certified cost or pricing data, should the CO go ahead and require the submission of certified cost or pricing data? Yes or no?

    I do not think that a CO is empowered to interpret a statute and violate FAR if he or she thinks that FAR violates the statute. I think that violating FAR 15.403-1(a), a long-standing regulation promulgated in accordance with 41 USC § 1707, and which has not been invalidated by any tribunal, would be a FAR deviation . The CO would have to obtain approval to deviate before requiring the submission of certified cost or pricing data at or below the SAT. And keep in mind that the definition of the SAT is statutory.

    Don's poll asked for a yes or no answer. It was not multiple choice, and it did not provide for conditional answers. I think the only proper answer is No.

    By the way, to the best of my recollection, Alberici did not declare the Disputes clause or FAR 33.208 to be invalid. It interpreted the statute with no discussion of the clause or the FAR rule.

  10. Why do I have to explain? :lol: Don brought it up! I knew this would happen if I answered his question.

    Okay, Retread has quoted the statute. Now, here's FAR 33.208:


    (a) The Government shall pay interest on a contractor’s claim on the amount found due and unpaid from the date that—

    (1) The contracting officer receives the claim (certified if required by 33.207(a)); or

    (2) Payment otherwise would be due, if that date is later, until the date of payment.

    See the issue? If a CO complies with that, has she complied with the statute?

  11. Thoughta about construction clauses. They were mainly developed by the military, which was doing construction contracting before most civilian agencies were created. Especially at the outset of the two world wars--camp construction. The FAR construction clauses are very similar to the ones used in the private sector, and I'm not sure which came first. Did the military model their clauses on the commercial sector or vice versa? The good news is that there is a massive amount of info about construction clauses, and a large amount of litigation of construction contracts, so reviews of court and board decisions might show how the clauses changed over time. You might want to focus on differences between AGC boilerplate and FAR boilerplate.

    However, the UCF does not apply to construction contracts. So I don't know how your interest in construction clauses meshes with your interest in the UCF.

  12. 4 hours ago, pracademic said:

    I'm also interested in the historical development of federal boilerplate language in general (and in the Uniform Contract Format in particular), among other topics.

    A very big topic.

    You would do well to narrow your focus to a particular contract clause or class of clauses (such as changes or inspection). Much of your research will be in the historical Federal Register and historical volumes of the Code of Federal Regulations. You may have to go to the National Archives and look at old military procurement regulations and contracts. I suggest that you contact the office of Defense Procurement and Acquisition Policy and ask about access to the archives of the Armed Services Procurement Regulation (ASPR)  Committee. (They published what might have been the first version of the Uniform Contract Format in the Federal Register on January 3, 1970.) You might also contact the library of the Defense Acquisition University about access and the Law Library of The George Washington University. A review of old GAO protest decisions and reports and decisions of the old Court of Claims might be in order, as well as 19th Century memoranda of the U.S. Attorney General. Keep in mind that practice usually precedes regulation. Regulation usually formalizes practice.

  13. Stick to the topic that you chose, which is the requirement for certified cost or pricing data. In any case, we have relevant court decisions about interest on claims. I am not aware of any such decision(s) pertaining to requiring certified cost or pricing data for the kind of acquisition that you posed to us.

  14. 18 hours ago, Don Mansfield said:

    How would that be compliant with the statute?

    @Don Mansfield

    By being compliant with the regulation that implements the statute.

    The FAR councils are charged with interpreting and implementing statutes, not individual contracting officers. The FAR councils interpreted the statute and promulgated a regulation.

    In this case FAR 15.403-1(a)(1) strikes me as very clear. A CO has no authority, under any circumstances, to require the submission of certified cost or pricing data in acquisitions at or below the SAT. Since there is no requirement and no authority, one need not seek an exception to any requirement.

    Moreover, see FAR 15.403-4(a)(2), which says, in pertinent part:


    (2) Unless prohibited because an exception at 15.403-1(b) applies, the head of the contracting activity, without power of delegation, may authorize the contracting officer to obtain certified cost or pricing data for pricing actions below the pertinent threshold in paragraph (a)(1) of this subsection, provided the action exceeds the simplified acquisition threshold. 

    That sentence, to me, reinforces the absoluteness of the prohibition in FAR 15.403-1(a)(1).

    The prohibition against requiring certified cost or pricing data at or below the SAT dates to as least as far back as 1995 and the implementation of the Federal Acquisition Streamlining Act. The 2017 change to the statutory definition of the SAT to include a SAT for contingency operations outside the U.S. that is higher than the threshold for requiring certified cost or pricing data was not accompanied by any change to FAR 15.403-1(a)(1). As far as I am concerned, that puts an end to any debate. FAR says what it says.

    Should the FAR councils have changed FAR 15.403-1(a)(1) in light of the increase in the SAT for contingency ops? I don't know and I don't care. That was for them to have figured out. I'll work with the regulation that I have unless and until told to do differently.

    I believe that my interpretation of FAR 15.403-1(a)(1) is consistent with the plain language of the regulation. If a regulation that implements a statute is ambiguous, a CO might look to the statute as an aid to interpretation, but not to contradict plain language. In this case I see no ambiguity and no justification for saying that my interpretation conflicts with the statute. If a CO thinks a regulation conflicts with statute, or that his or her interpretation might conflict with statute, he or she should seek guidance through appropriate channels.

    As an aside, your interpretation would render the idea of a "simplified" acquisition procedure practically meaningless, since there is nothing simple about the procedures associated with the submission and consideration of certified cost or pricing data. Such procedures slow procurement, an especially important concern in the case of contingency ops, for which requests for certified cost or pricing data would potentially cancel out any benefits were undoubtedly expected from the increase in the SAT.

    So my answer to your problem and question is No.

    Let me know if I have missed something or you discover any official and authoritative interpretation to the contrary.

  15. I agree with H2H.

    FAR 15.403-1(a) is clear.


    (a) Certified cost or pricing data shall not be obtained for acquisitions at or below the simplified acquisition threshold.

    A CO must not to demand certified cost or pricing data "at or below" the SAT ("shall not"). That is an absolute prohibition, not an exception to the requirement for submission. At or below the SAT you don't need an exception to a requirement, because there is no requirement. You never get to FAR 15.403-4.

    According to FAR 2.101, the SAT in Don's case is $1.5 million.

    Here is Don's scenario:

    On 3/14/2018 at 3:12 PM, Don Mansfield said:

    Scenario: You are a contracting officer and you have a requirement for the purchase of an estimated $1 million worth of noncommercial supplies. The acquisition is in support of a contingency operation and the purchase is to be made outside the United States using simplified acquisition procedures (SAT=$1.5 million). None of the exceptions to requiring certified cost or pricing data at FAR 15.403-1(b) apply.  

    So Don's prospective acquisition is below the SAT.

    I see no conflict between 15.403-4 and 15.403-1(a). When reading the regulation in this case you stop after reading 15.403-1(a). Again, the prohibition in that paragraph is absolute. There is no reason to read on to 15.403-4. There is no reason to look for an exception. Why bother?  There is no requirement. You've been told that under no circumstance are you to require submission of certified cost or pricing data.

  16. In short, there is nothing in the U.S.C., and we at Wifcon don't know if there is anything currently applicable in uncodified legislation. Moreover, the language that has been quoted from past legislation is somewhat obscure as to its practical effect. It's doesn't seem to say that an agency cannot spend more than $5,000; it seems to say that it cannot do so until it has notified Congress. It doesn't say that the agency must wait for permission or approval.