Don Mansfield

@Virgil Sollozzo,

Have you read Chapter 7 of the GAO Redbook? That should answer your questions.

Why don't you and McCluskey meet me at Louis's Italian American Restaurant in The Bronx? We can discuss further.

In addition to what Jamaal wrote, it's not correct to say the Government closes out contracts. The Government closes out its contract files. FAR subpart 4.8 covers "Government Contract Files" and FAR 4.804 covers closeout of Government contract files. A contract may or may not exist after the closeout of a Government contract file.

Also, the amount that must be legally recorded as an obligation is not affected by payments made or the passage of time since the obligation was recorded. The introduction of risk management into such a scenario is misplaced, unless the risk that's being managed is the risk of being caught under-recording obligations.

4 minutes ago, Retreadfed said:

Don, was Whittaker a CDA case or was it brought under the previous regulatory authority that governed disputes prior to the CDA?

It was pre-CDA--contract was awarded in 1968.

On ‎3‎/‎15‎/‎2019 at 1:07 PM, Retreadfed said:

Lionel said, "relinquishing legal rights serves as adequate consideration."  Legal rights are a property interest vested in the government.  Do contracting officers have the authority to divest the government of its property rights without such authority being granted in a contract clause?

In Whittaker Corp., ASBCA 18422, 81-1 BCA ¶ 15,055, the contracting officer did just that. The contracting officer granted an appeal right that a mandatory contract clause precluded. The Board found that the CO's action was "well within the ambit of the contracting officer's authority to administer the contract."

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IN ANY EVENT, WE THINK THE CONTRACTING OFFICER’S AGREEMENT, AS EVIDENCED BY CONTRACT MODIFICATION NO. 16, TO GRANT AN APPEAL RIGHT UNDER THE DISPUTES CLAUSE FOR CONSIDERATION CONSTITUTED A WAIVER OF THE RIGHT CONFERRED ON THE GOVERNMENT BY THE CLAUSE IN QUESTION. ADEQUATE CONSIDERATION FOR THIS WAIVER WAS GIVEN AND THE GRANTING OF SUCH A WAIVER WAS WELL WITHIN THE AMBIT OF THE CONTRACTING OFFICER’S AUTHORITY TO ADMINISTER THE CONTRACT. WE PERCEIVE NO DISTINCTION BETWEEN THIS WAIVER AND OTHERS A CONTRACTING OFFICER MAY CONFER FOR CONSIDERATION SUCH AS DELIVERY FAILURES, TERMINATIONS FOR DEFAULT AND THE ACCEPTANCE OF LESS THAN A SPECIFIED PERFORMANCE. ACCORDINGLY, WE DO NOT CONSIDER THE GOVERNMENT’S ARGUMENT THAT THE CONTRACTING OFFICER ACTED ULTRA VIRES IN VIEW OF ASPR 1-109 AND THE CHRISTIAN DOCTRINE APPLICABLE THERETO TO BE MATERIAL TO THE QUESTION OF THE BOARD’S JURISDICTION IN THIS CASE. IT IS THE GOVERNMENT’S CONTENTION THAT SINCE THE REFERENCED ASPR SECTION WAS A PART OF THE CONTRACT PURSUANT TO THE CHRISTIAN DOCTRINE THE CONTRACTING OFFICER HAD NO AUTHORITY TO DEVIATE THEREFROM WITHOUT FOLLOWING THE PRESCRIBED PROCEDURE. THIS CONTENTION IS IMMATERIAL SINCE WE DO NOT CONSIDER THE ACT OF THE CONTRACTING OFFICER TO BE A DEVIATION FROM ASPR.

A contracting officer does not need authority from a contract clause to relinquish a legal right.

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If an agency can waive (deviate from) a statute, I think the statute has to give the agency explicit authority to do so.

I agree in general. However, from Formation of Government Contracts:

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A judicially forged exception to the requirement for specific statutory authority for a government official to waive a statute has been applied to the Assignment of Claims Act, 41 U.S.C. § 6305(b). This statute states that any prohibited assignment "shall cause the annulment of the contract." In Tuftco Corp. v. United States, 222 Ct. Cl. 277, 614 F.2d 740 (1980), the court held that a contracting officer possessed the necessary authority to waive the statute. This seemingly controverts not only conventional concepts of sources of authority, but also the specific policies inherent in the Act.

3 hours ago, Retreadfed said:

However, in some instances the contracting officer cannot.  For example, if a cost is made unallowable by statute such as 10 U.S.C. 2324, I don't see how a contracting officer could agree to make such a cost allowable.

I suppose that's true, but I can't find any stated limits on an agency's authority to deviate from the FAR. FAR 1.402 begins with "Unless precluded by law, executive order, or regulation..." So would a statute have to expressly say that deviations are precluded?

4 hours ago, Retreadfed said:

Since C corps. can claim state income taxes they pay as an allowable cost, would it be permissible and maybe not so far fetched for a contracting officer to seek a deviation to allow an S corp to claim state taxes paid by the owner on income of the S corp as an allowable cost?

 Good question. I know that I don't know the answer.

3 minutes ago, PepeTheFrog said:

PepeTheFrog was not asked the question, but is willing to answer Don Mansfield.

No, a contracting officer is not prohibited from deviating from the cost principles, provided they complied with FAR 1.602-1(b).

Yes, it is possible for a contracting officer to deviate from the cost principles while also complying with FAR 1.602-1(b).

Thank you, @PepeTheFrog. I agree.

Now, do you know of anything specifically prohibiting the contracting officer from deviating from FAR 31.205-41(b)(1), assuming they complied with FAR 1.602-1(b)?

58 minutes ago, joel hoffman said:

I am not going to answer you with a one answer fits every circumstance, when you won’t answer any question.

Just to review the order of events, you made the following claim:

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For example, it ought to be obvious that  income taxes aren’t allowable expenses for reimbursement. If not obvious, read 31.205-41 (b) (1).

I then asked:

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Are you claiming that the CO would be prohibited from deviating from the cost principles, even if they complied with FAR 1.602-1(b)?

You said you answered that question, but you didn't. So, I asked:

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Are you saying that a contracting officer cannot deviate from the cost principles AND comply with FAR 1.602-1(b)?

The ball is in your court.

2 minutes ago, joel hoffman said:

I answered you.  You keep asking a circular question. 

Tell me how they comply with 1.602-1(b) if they reimburse a company for the unallowable cost of income tax. 

Actually, you didn't answer me. I specifically asked whether a contracting officer was prohibited from deviating from the cost principles, provided they complied with FAR 1.602-1(b).

Are you saying that a contracting officer cannot deviate from the cost principles AND comply with FAR 1.602-1(b)?

1 hour ago, joel hoffman said:

“1.602-1 (b) No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met.”

Are you referring to the original contract or to the modification?

 The KO and it’s acquisition team would not be complying with 1.602-1(b), if they decide to reimburse a contractor for paid income taxes in a contract mod.

Income taxes are not an allowable expense and are to be excluded from proposal and contract prices, if specifically identified. 

We both are wasting our time here with constant circular references. 

I'm asking if the CO would be prohibited from deviating from the cost principles, provided they complied with FAR 1.602-1(b). Yes or no?

If the Government complied with the Paperwork Reduction Act (PRA) when drafting solicitations, I think there would be a reduction in bid and proposal costs.

Delany,

ji gave you good advice:

On ‎3‎/‎15‎/‎2019 at 7:55 PM, ji20874 said:

So don’t evaluate past performance as pass/fail — stop it!  Instead, deal with past performance as part of a tradeoff, and assign the offeror a low confidence (or high risk) rating for past performance — low confidence is not the same as unacceptable.  The low confidence rating does not disqualify the offeror, but it will likely be a disadvantage in the tradeoff.  In the tradeoff, select the best value offeror, even if you have to pay a price premium to another offeror for higher confidence.  In this approach, the unsuccessful small business offeror is not referred to the SBA for s COC.

Don’t use LPTA if LPTA will not give you the best value.  Use s tradeoff.  Problem solved.

I would add that the same goes for any responsibility-type criteria at FAR 9.104-1. You shouldn't evaluate any of those on a pass/fail basis to determine technical acceptability when using LPTA.

On ‎3‎/‎15‎/‎2019 at 3:51 PM, joel hoffman said:

For example, it ought to be obvious that  income taxes aren’t allowable expenses for reimbursement. If not obvious, read 31.205-41 (b) (1).

Are you claiming that the CO would be prohibited from deviating from the cost principles, even if they complied with FAR 1.602-1(b)?

23 minutes ago, joel hoffman said:

For example, can the KO wave their magic wand to assume the otherwise contractor allocated risk, responsibility or liability “if they obtain consideration”? 

Yes. For example, FAR 46.407(f) permits this:

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When supplies or services are accepted with critical or major nonconformances as authorized in paragraph (c) of this section, the contracting officer must modify the contract to provide for an equitable price reduction or other consideration.

23 minutes ago, joel hoffman said:

Can a KO turn a known,  underground condition into a “differing site condition” for consideration, then pay for the additional costs to perform the work on a fixed price contract?

I don't understand what the consideration would be in this scenario.

23 minutes ago, joel hoffman said:

Can a KO indemnify a contractor for possible public health risks or future employee illnesses due to possible release of toxic chemicals for an environmental remediation of RCRA site if they obtain consideration?  

Can the KO relieve the contractor of any liability for injury to the contractor’s employees or to the public due to unsafe practices if they obtain consideration? 

Can the KO make the government responsible for the impact of future corporate income tax increases on a fixed price contract if they obtain consideration? 

In the absence of some specific limitation on the contracting officer's authority in these circumstances, then yes. They would still have to comply with FAR 1.602-1(b) before exercising their authority.

BTW, FAR 1.102(d) places the burden on the naysayer when it comes to the exercise of authority. As such, please cite the law, executive order, or regulation that would prohibit the types of modifications that you described.

3 minutes ago, joel hoffman said:

For example...? Me thinks you speak too generally.  

Take ji's example from earlier in the thread:

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As an example, in a contract for commercial items, the contract calls for 100 EA white items for delivery in 60 days.  Shortly after award, the parties agree to 33 white, 33 red, and 34 blue in 45 days.

The Government has given up its right to the delivery of 100 white items delivered in 60 days in exchange for 33 white, 33 red and 34 blue delivered in 45 days.

1 hour ago, Retreadfed said:

Lionel said, "relinquishing legal rights serves as adequate consideration."  Legal rights are a property interest vested in the government.  Do contracting officers have the authority to divest the government of its property rights without such authority being granted in a contract clause?

Yes, provided they obtain consideration.

@Lionel Hutz,

Great explanation. Thanks.

1 hour ago, napolik said:

Which are the other tiebreaker methods?

Trivia contest, arm wrestling, staring contest, to name a few.

17 hours ago, ji20874 said:

I don’t like wholesale incorporation of technical proposals into contracts — it is a bad practice.  It is far better to carefully select the important parts of the technical proposal (especially the promises, and especially when the selecting official relied on those promises in the selection decision) and incorporate only those parts.

Hear, hear!

5 hours ago, Desparado said:

I actually think the opposite.  I think it is underused.  There's no reason why past performance cannot be part of an LPTA competition.  Part of the TA could be that the contractor must have acceptable past performance based on XX. It would be a pass/fail criteria as with the technical factors. 

Assuming that whoever you award to will meet the responsibility standard at FAR 9.104-1(c), what's the point of making past performance "part of the TA"?

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To be determined responsible, a prospective contractor must-[...]

(c) Have a satisfactory performance record (see 9.104-3(b) and subpart 42.15).

 

@Lionel Hutz,

I agree with almost everything that you wrote and you wrote very well. However, I don't agree that all bilateral modifications must have consideration. Some bilateral modifications are negotiated adjustments pursuant to contract terms--the consideration is already in the original deal. For example, the contractor experiences an excusable delay and the parties negotiate a schedule extension. The CO need not seek consideration for the schedule extension. For these types of bilateral modifications, I think there is value in citing the clause providing for the adjustment because the CO wouldn't otherwise have the authority to modify the contract without consideration. It tells the reviewing/approving official, who should be looking for the consideration, why consideration isn't necessary. For bilateral modifications that require consideration, I see no value in citing anything for the reasons you explained. I think the request for authority in block 13C has led to some of the dogmatic responses we've seen in this thread (e.g., "mutual agreement of the parties", "FAR 52.212-4(c)", etc.).   

11 hours ago, ji20874 said:

Joel,

May I ask you to respond to my question?  You (and Don) and telling readers not to use agreement of the parties, but you aren't telling them what they should use instead.

In a contract for commercial items, the contract calls for 100 EA white items for delivery in 60 days.  Shortly after award, the parties agree to 33 white, 33 red, and 34 blue in 45 days.  That’s legal and honorable, right?  Everyone is happy.  What is the authority for block 13 of the SF-30?

I'm not telling readers not to use agreement of the parties, I just don't see that as an "authority" as that word is used in block 13 of the SF 30. It seems like a superfluous description of the modification. It's of no use. I would say the same of "FAR 1.602-1".

The only value I can see in providing a citation in block 13C is if there were no consideration. Normally, the contracting officer would have to ensure that there was consideration in a bilateral modification (i.e., the CO does not generally have the "authority" to bilaterally modify the contract without obtaining consideration). If, however, the modification was a negotiated adjustment pursuant to a contract clause that only made changes in one party's favor, then citing the clause communicates that the contracting officer is not required to obtain consideration. 

The modification in your scenario is legal, honorable, and brings joy. I would put "Not applicable--consideration required" in block 13C.    

What many folks don't understand is that incorporating a proposal into the contract doesn't necessarily bind the contractor to anything. A typical technical/management proposal doesn't contain promissory language--it contains descriptions of the intended approach, plans, expectations, etc. Such statements are not binding promises--they are illusory promises. The contractor would only be bound to promises made in the technical/management proposal.

9 hours ago, jwomack said:

 

No.  Two signatures don’t always indicate the mod required bilateral signatures to be binding.  Sometimes contractors sign when they don't need to or weren’t asked to…presumably as a gesture to show they received the mod and don't have a problem with it.  Also, selecting 13C requires completion of a fill-in.  “This supplemental agreement is entered into pursuant to authority of: ________”.  Leaving the fill-in blank wouldn't make sense.

 

On the other hand, if 13A-D were not selected and 13E "is required to sign" is selected then it would be self-evident that bilateral signatures were required.

Why can't you select block 13C and 13E?

5 hours ago, Matthew Fleharty said:

Because the form asks for one and due to poor workforce education programs, some reviewer is going to mark up the organization during an inspection for not citing an authority or citing the wrong authority (in his/her opinion).  That may seem silly, but it's the reality in many organizations which is why someone started this thread in the first place - they don't want to make a mistake.

Probably right. If people like @General.Zhukov do it for that reason, then I don't have a problem. I'm more concerned about the newbies who are being taught that a clause must be cited for a bilateral modification.

4 hours ago, jwomack said:

I don’t think 52.212-4(c) is an “authority” but see no harm in citing it as it helps demonstrate the mod was subject to bilateral approval.  If I felt it was necessary to cite a true authority it would be 1.602-1.

Wouldn't the two signatures on the modification and the check in block 13C make that obvious?

2 hours ago, joel hoffman said:

The mod is being executed as a “change” in accordance with .212-4:c).

True, but that doesn't answer my question. Why do people think that it's an "authority"?

2 hours ago, PepeTheFrog said:

Interesting question.

1. What would you cite instead in the situation?

2. What are your thoughts on contracting officers citing FAR 43.103(a) or 42.103(b)? That's related to your question. Those two FAR citations are descriptive. They describe unilateral and bilateral modification. Those two FAR citations should not even be found within the contract, and are usually not found within the contract. Yet PepeTheFrog sees them cited as the "authority" on many modifications. 

3. What do you think about citing "mutual agreement of the parties" as the "authority"? That also seems hollow or superfluous. Aren't the two parties memorializing their mutual agreement by their respective signatures? 

1. Why would I have to cite an authority at all?

2. I think contracting officers who cite FAR 43.103(a) or (b) as an "authority" do so because they are either not thinking about what they are doing or are placating somebody.

3. I think contracting officers who cite "mutual agreement of the parties" as an "authority" do so because they are either not thinking about what they are doing or are placating somebody.

Why do people think that FAR 52.212-4(c) is an "authority" to execute a bilateral contract modification? Do people think that if that paragraph were not in the contract, the contracting parties would not be able to bilaterally modify the contract?