FAR 12 vs. FAR 8

[Don Mansfield]

FAR 52.212-4© provides express authority to modify the contract.

metteec,

I don't know why you think that. All FAR 52.212-4( c ) says is:

Changes. Changes in the terms and conditions of this contract may be made only by written agreement of the parties.

This paragraph just specifies that changes to terms and conditions must be bilateral and be in written form. This is not a grant of authority. If the paragraph were not in a contract, it would have no effect on the parties' ability to modify the contract bilaterally.

I don't think it makes sense to cite a contract clause as an authority for executing a bilateral modification, unless the bilateral modification makes a negotiated adjustment pursuant to a contract clause. In that case, the citation of the clause communicates that new consideration is not required. I have also seen the applicable exception to CICA cited as an authority when a bilateral modification adds new work, which is consistent with other forms used for awarding contracts. In all other cases, it doesn't really make sense to cite an authority. Some modifications cite "mutual agreement of the parties", which is perfectly fine.

People spend a lot of time worrying about what to cite in block 13 of the SF 30, but it is of little consequence. I know of no case where a bilateral modification was deemed invalid because the contracting officer cited the wrong "authority" in block 13C.

[Guest Vern Edwards]

A person who would spend a lot of time fretting over what to put in block 13 of SF 30 or posting a question about it at Wifcon should not be given anything else to think about. It would overload their circuits.

[napolik]

Starting at post 15 in this thread, there is discussion of a COFC case regarding the applicability of FAR Part 12 to orders placed under FAR Subpart 8.4. The Court of Appeals for the Federal Circuit just reversed the COFC decision: http://www.wifcon.com/fedcir/14-5143.PDF.

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B. Whether the 2014 RFQ Payment Terms Violate FAR Part 12.

The 2014 RFQs being challenged here were issued pursuant to the Financial and Business Solutions Schedule, an underlying FSS contract. The Court of Federal Claims found, and neither party disputes, that the services solicited in the 2014 RFQs are commercial items and that the revised payment terms therein are inconsistent with customary commercial practice. Opinion and Order at 9, 19; see Oral Argument 37:45-41:45. We affirm these undisputed fact findings.⁵ Thus, the only issue is whether FAR Part 12’s proscription against terms that are inconsistent with customary commercial practice applies to the 2014 RFQs. If it applies, the payment terms are in violation.

Before the Court of Federal Claims, the government does not appear to have disputed that FAR Part 12’s proscription against terms inconsistent with customary commercial practice applies to solicitations for the underlying FSS contracts themselves. Opinion and Order at 12. However, the government argued that FAR Part 12’s proscription does not apply to orders made pursuant to the existing FSS contracts. The Court of Federal Claims agreed. Opinion and Order at 19-22. It reasoned that FAR Subpart 8.4, which governs the FSS program, does not expressly state that FAR Part 12 applies to orders made pursuant to an existing FSS contract. Opinion and Order at 20. It similarly found that FAR Part 12 does not expressly state that its provisions apply to such orders. Opinion and Order at 20-21. We review the Court of Federal Claims interpretation of the applicable regulations de novo. Abbott Labs. v. United States, 573 F.3d 1327, 1330 (Fed. Cir. 2009).

We conclude that FAR Part 12’s proscription against terms inconsistent with customary commercial practice applies to the 2014 RFQs and therefore that the RFQs violate that proscription.⁶ On a general level, FAR Part 12 applies to the 2014 RFQs because it makes clear that it “shall be used for the acquisition of [commercial items].” 48 C.F.R. § 12.102(a). The 2014 RFQs meet the broad definition of an “acquisition” under FAR:

Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, solicitation and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions directly related to the process of fulfilling agency needs by contract.

Id. § 2.101. More specifically, FAR § 12.302( c)’s proscription against any “solicitations or contracts” including terms “inconsistent with customary commercial practice”⁷ applies to the 2014 RFQs because the RFQs are a “solicitation” and the resulting order is a “contract” as those terms are defined by FAR. FAR expressly defines a solicitation to include requests for proposals: “Solicitation means any request to submit offers or quotations to the Government. . . . Solicitations under negotiated procedures are called ‘requests for proposals.’” Id. § 2.101 (emphasis added). Similarly, FAR defines a “contract” as including orders: “[C]ontracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders . . . .” Id. (emphasis added). FAR § 12.302( c) thus applies, on its face, to the 2014 RFQs.

The government and the Court of Federal Claims are correct that FAR Subpart 8.4 does not explicitly state that FAR Part 12 applies to orders made pursuant to existing FSS contracts. We conclude, however, that FAR Part 12 applies to this situation expressly by its terms. To the extent there is any perceived inconsistency between FAR Subpart 8.4 and FAR Part 12, FAR Part 12 controls. 48 C.F.R. § 12.102( c) (“When a policy in another part of this chapter is inconsistent with a policy in this part, this part 12 shall take precedence.”).

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