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Payment Under Firm Fixed Price Contract


S. Brown

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A firm fixed price contract was issued for Database and Cloud Services. Because of onboarding issues on the government side, the was not able to start work until a month and half after the contract was issued.  Is the contractor entitled to the full 12 months or should they only get paid for 10 and half months

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20 hours ago, S. Brown said:

A firm fixed price contract was issued for Database and Cloud Services. Because of onboarding issues on the government side, the was not able to start work until a month and half after the contract was issued.  Is the contractor entitled to the full 12 months or should they only get paid for 10 and half months

One example FAR 52.212-4 paragraph (i)  Payment, noting the wording what do you think?  Now consider the clause you have in your contract.

(i) Payment.- 

(1) Items accepted. Payment shall be made for items accepted by the Government that have been delivered to the delivery destinations set forth in this contract.

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If clause 52.52.212-4 is in your contract, the delay in beginning work should be excusable from the contractor’s perspective  per paragraph (f) .

In that case, the government could offer to extend the contract to provide full 12 month performance period, under paragraph (c) with the contractor’s agreement on both terms and price (including impact costs if any during the delay.

Or it could terminate the period of delay from the overall performance period pursuant to paragraph (l). Then the contractor should be able to be able to recover costs incurred during the delay.

Edit: I was going to add another option for the government to simply offer to change the period to 10 1/2 months pursuant to paragraph (c) but Voyager has noted that below.

Edit: Any changes to the length of performance would require mutual agreement 

Edit: It appeared to me that the OP is the contractor.

Edited by joel hoffman
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If this is a commercial service/product, the CO can modify the period of performance (PoP)/delivery date(s) citing FAR 52.212-4(c) and (f) in the SF 30 Block 13.C.  See my citations and emphasis below in that clause.

Quote

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

* * * *

(f) Excusable delays. The Contractor shall be liable for default unless nonperformance is caused by an occurrence beyond the reasonable control of the Contractor and without its fault or negligence such as, acts of God or the public enemy, acts of the Government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, unusually severe weather, and delays of common carriers. The Contractor shall notify the Contracting Officer in writing as soon as it is reasonably possible after the commencement of any excusable delay, setting forth the full particulars in connection therewith, shall remedy such occurrence with all reasonable dispatch, and shall promptly give written notice to the Contracting Officer of the cessation of such occurrence.

If this is a noncommercial service/product, the CO can modify the PoP/delivery date(s) citing the contract's applicable FAR 52.243-X changes clause, applicable FAR 52.249-X termination (excusable delay) clause, and FAR 43.103(a) in the SF 30 Block 13.C.

In either case, the CO should put a release of claims in the modification to resolve the matter once and for all.  Use the one in FAR Part 43.  Obviously, this is done bilaterally.

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23 hours ago, S. Brown said:

Is the contractor entitled to the full 12 months or should they only get paid for 10 and half months

How is the price of the contract stated?  Are the services priced as a lump sum basis or are the services priced on a monthly or other basis?

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23 hours ago, S. Brown said:

Is the contractor entitled to the full 12 months or should they only get paid for 10 and half months

If the contractor was promised 12 months, then it may be that the government breached the contract by not being ready to receive performance as scheduled.

If so, was the contractor injured by the breach?

If so, what remedies are available to the contractor? Anticipatory profits?

Can the government unilaterally change the period of performance?

If so, can it do so after the fact?

Can the government T for C after the fact?

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3 hours ago, Vern Edwards said:

Can the government unilaterally change the period of performance?

If a commercial service contract, I don’t think it can make a unilateral “change” to shorten the length or dates for performance.

 The government can unilaterally terminate the last 1 1/2 months of services for convenience, whether commercial or non-commercial, right?

If it were a non-commercial services contract, if the “description of services to be performed” would encompass “the quantity of services to be performed”, could the government unilaterally delete the last 1 1/2 months of services? I think that the price adjustment might have to account for costs incurred during or as a result of a government delay to the start of the services  (impact costs). 

3 hours ago, Vern Edwards said:

If so, can it do so after the fact?

3 hours ago, Vern Edwards said:

Can the government T for C after the fact?

Technically, It wouldn’t be “after the fact” if it involves deleting or terminating the last 1 1/2 month of services…

Also if the optional clause 52.242-17 Government Delay of Work is in a non-commercial services contract, in lieu of partial termination, the government shall  extend the existing dates of delivery or performance of services. If the contractor experiences increased costs, the government shall adjust the contract price, less profit and any other contractual terms or conditions affected by the delay or interruption. 

Potentially many considerations…

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24 minutes ago, joel hoffman said:

The government can unilaterally terminate the last 1 1/2 months of services for convenience, whether commercial or non-commercial, right?

The OP said that the contractor was unable to perform the first 1-½ months of services because the government wasn't ready. The OP wanted to know if the contractor was entitled to be paid for those months. Why are you asking about the last 1-½ months of services? I don't understand.

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49 minutes ago, Vern Edwards said:

The OP said that the contractor was unable to perform the first 1-½ months of services because the government wasn't ready. The OP wanted to know if the contractor was entitled to be paid for those months. Why are you asking about the last 1-½ months of services? I don't understand.

You asked six questions.

I attempted to answer the last three. I didn’t think they were tied to the first one or the second and third  “if so” questions regarding a contract breach.

There was a delay in providing the services. The contractor apparently didn’t provide the services for the first 1 1/2 months, through the fault of the government. 

If the contractor didn’t provide the services, it might only be paid for the months of services it provides plus costs incurred during the delay in starting performance. 

The government could decide to extend the contract for the full 12 months of service plus pay impact costs for the delay. If it is a commercial contract, any “change” would have to be bilaterally agreed to.

If the contractor only gets paid for services provided and if the government can’t extend the period for providing full 12 months service for some reason, it might be able to pay the delay costs and delete or terminate 1 1/2 months of the service. Depends upon the type of contract and the contract terms and conditions, which the OP didn’t describe. 

if the optional 52.242-17 clause is in a non-commercial service  contract, the government would be required to extend the dates of performance for the 12 months service and adjust the contract price for additional costs incurred during or due to the delay. If the government can’t extend the period for some reason, it could alternately  partially terminate the 12 months by 1 1/2 months .  But would probably still be liable for impact costs pursuant to the -17 clause.

Much speculation by everyone without more information. 

 

 

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9 hours ago, Vern Edwards said:

If so, can it do so after the fact?

Can the government T for C after the fact?

What do you mean by “after the fact” The fact is that the start of the 12 months of service hadn’t started. It was delayed for 1 1/2 months.

The OP didn’t specifically say that the 12 months of services had been contractually reduced.

[Edit: The original post is actually ambiguous, lacking much context. And it is posted under the Topic Area for “Government Contracting Personnel” issues. It has nothing to do with government contracting personnel issues. 

The government would have to do something if it can’t extend the dates or period to provide full 12 month's of service.

Plus, if the contractor was injured by a delay, the contract should provide for a cost or equitable adjustment. 

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54 minutes ago, joel hoffman said:

If the contractor didn’t provide the services, it might only be paid for the months of services it provides plus costs incurred during the delay in starting performance.

According to the OP, the contractor could not provide the services because the government couldn't get its act together in time. If so, and if the government's behavior constituted a breach of the FFP contract for 12 months, then the contractor might be entitled to a settlement, one not limited to an "equitable adjustment." There is case law against retroactive T for C. If I were the contractor I'd be talking to a lawyer about costs plus anticipatory profit.

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