Effect of IDIQ/schedule contract termination/cancellation on Orders

[deloftin]

Recently it was discovered that a GSA FSS IT 70 Schedule contract was missing from the eLibrary while attempting to pull up the contract to review the approved list of clauses. Further investigation into FPDS revealed that GSA had issued a mod in Dec 2010, effective 2/17/11, as a "legal contract cancellation." Our understanding, based on GSA's Ordering Guidelines, is that no order may require performance that 'extend beyond the period of the Schedule contract.' Apparently GSA has a Cancellation clause, GSAM 552.238-73, mandated for all MAS contracts which permits cancellation of the "contract" upon written notice by either party. In talking with the GSA IT 70 Schedule Help Desk about our agency's plan to exercise an option soon, the representative emphatically stated that options could not be exercised against this IT Schedule 70 contract. However, FPDS indicates multiple agencies have, as recently as August 2011, been exercising numerous options on orders against this canceled/terminated schedule contract. So, below are our questions:

1. Are there any federal regulations that contain procedures for continuing Orders against GSA Schedule contracts that have been 'canceled', under GSAM's 552.238-73 clause, rather than under FAR's T4C/T4D clause? Or are we to assume that the Agency Head for each of the federal Ordering Activities (e.g. EPA, NPS, USCG) exercising options has made the 'written determination of compelling reasons for doing so" under FAR 9.405-1 (assuming the "cancellation" was for debarment/suspension absent any indication that the contractor is on the EPLS list or 'inactive' in CCR)? [As an aside, is there any FAR authority that allows "either party" to cancel a contract? FAR T4C clauses seem to indicate that only the Government can terminate a contract.]

2. Without any written notice by an ACO that a GWAC or Schedule contract has been terminated/canceled, how are Ordering Activities expected to know to proceed under FAR 9.405-1 (or other supplemental 'continuation of current contracts' clause)? [in 2003, GSA emailed all federal agencies when it announced to the media that it had suspended Worldcom pending debarment proceedings.] More importantly, are there other GWACs/Schedule contracts, like this one, that have been canceled or T4D'd/T4C'd over the years, without notice to Ordering Activities, resulting in numerous 'continuations' in non-compliance with FAR 9.405-1?

3. Also, without something official in writing, such as a formal modification, how can legal counsel "ensure the propriety of the proposed action" to either T4D or T4C an Order under FAR 9.405-1(a) simply on the basis that GSA's IT Customer Service Rep verbally stated that an option can not be exercised, or that the contract is not showing up in eLibrary, and/or on the description in an FPDS Report? In other words, is the fact the contract is not showing up on GSA's eLibrary sufficient supporting T4D/T4C documentation for federal Ordering Officials to use to make it official that the contract was canceled and assume 9.405-1( [or supplemental regulatory] procedures apply? Or will the FDPS modification Report, indicating the "Reason for the Modification" as "Legal Contract Cancellation," suffice as supporting documentation absent a copy of the mod itself or any formal announcement to that effect?

4. If an option can not be exercised on the contract, does that mean the FPDS data for the last mod, cancelling the contract, is inaccurate when it indicates that the 'Last Date to Order' is 07/09/2012? Isn't the 'Last Date to Order' the same as the period of performance? It should be, because a T4D/T4C should change the ending date of the period of performance to the effective date of the termination action. But then how does that impact the FAR 9.405-1 continuation of current contracts determinations made by federal Ordering Activities? In other words, will changing the date to align with the T4D/T4C action create a FPDS 'report validation error' for Ordering Activities when they try to execute mods against that contract after that date under the FAR 9.405-1 authority? Is there any date by which feds are required to cut off Ordering Activities from being able to award follow-on orders under 8.405-6(a)(1)(i)©, exercising options, or adding work via modification against a GWAC/IDIQ/Schedule contract that has been T4D'd/T4C'd? In other words, is there any time limit on how long Ordering Activities can 'continue' an existing Order against a GWAC/IDIQ/Schedule contract after it has been T4D'd/T4C'd?

Any guidance/insight would be greatly appreciated.

[napolik]

Here is the clause

552.238-73 Cancellation.

As prescribed in 538.273(a)(4), insert the following clause:

CANCELLATION (SEP 1999)

Either party may cancel this contract in whole or in part by providing written notice. The cancellation will take effect 30 calendar days after the other party receives the notice of cancellation. If the Contractor elects to cancel this contract, the Government will not reimburse the minimum guarantee.

(End of clause)

As you see, it is not a standard T4D or T4C clause.

If the contract no longer exists, you cannot exercise an option it had contained. The FPDS entries of other agencies cannot resurrect the contract and give it eternal life.

I do not know why GSA did not notify you that the contract is cancelled. As far as I know, it does not notify anyone when it awards a new contract. It adds the contract to its e-list of schedules, and it relies on the contractor to get out the word that a new schedule contract is in place.

Assuming that the contractor that held the cancelled contract has not been suspended or debarred, a contracting officer may be able to write a sole source contract to provide the supplies services provided under the cancelled contract.

[Desparado]

I work for a GSA Schedule contracting office, and I can attempt to address some of the issues here. Please note I do not work for the IT Schedule, so I cannot be specific as to the particular issue you raise.

There are several reasons we may cancel a contract, but the two most common I have ran into is because either the Contractor has requested it in accordance with this previously cited clause, or because they fail to meet the minimum sales criteria. In any event, when the modification is entered into our contracting system, an effective date is also entered. As our system automatically feeds into FPDS-NG, I do not know (and to be honest have never researched) what that feed looks like. However, it is our office's opinion that once that effective date has been reached, no orders could be placed against the Contract, or options exercised. In fact, if a contracting office were to attempt to place an order or exercise an option when they get into FPDS, they should receive an error message that the Schedule contract number is not valid.

Now, as far as your question regarding eLibrary goes, I would not automatically make the assumption that because a contract is not listed, it has been cancelled. Yes, in a perfect world, that would make sense, however there are a couple of other circumstances that can also cause a contract to not show up in eLibrary. The first is that if a Contractor has not updated their information in the last 2 years, their entry is deleted in the eLibrary system. This does not terminate or cancel their contract, but does stop their information from being displayed in eLibrary. The second is the standard "systems issues" which we encountered last January and could easily come again.

If you run into a situation, the best advice I would give is to call the GSA Contracting officer or Schedule Supervisor for information if you run into this again.