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Compliance with new federal laws


govt2310

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If a contract was awarded using FAR Part 12 (with FAR 8, 13, or 15), the contractor has to comply with all applicable Federal laws, even new ones that did not exist at the time of contract award, in accordance with FAR 52.212-4(q).  Is there an equivalent clause for non-commercial contracts, say in FAR 52.215 or elsewhere?  One that says "the contractor shall comply with all applicable Federal laws," including new Federal laws passed by Congress during the period of performance of the Contract, which the Contractor could not have anticipated would happen?  And that the Contractor must do this at no extra cost to the agency?

 

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@C Culham Typically, one sees some language to the effect of "the contractor shall comply with all applicable Federal laws, including new Federal laws passed by Congress during the contract performance," written into the SOW.  What if the SOW is missing this language?  While there are court decisions that stand for the principle that the United States cannot be held liable for its Sovereign Acts (and Congress passing a new law counts as a sovereign act), it is always best to cite the contract itself.  I'm surprised to find that the FAR only has clauses for this for commercial products/services under FAR Part 12 and for construction under FAR Part 36.  What about when an agency buys other types of stuff or services?  Why is important enough to say this expressly for commercial products/services and for construction, but nothing else?  If the contractor has to do it anyways, no matter what, then why say this at all in any contract for any type of product/service?  I'm trying to understand why the FAR Council did what it did.

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Often, legislation pertaining to government contracts will include language concerning applicability. The legislation will generally state an effective date for contracts awarded on or after a specific date and/or will direct the FAR Council to develop regulations and clauses to implement the new requirements.

If the new requirement WILL apply to all contracts or MAY also be applied existing contracts,  the legislation and implementing regulations will state that. The implementing guidance usually provides for adjustments or equitable adjustments for time and/or cost impacts on existing contracts.

This is a generalized statement but govt2310 also used the generalized statement (emphasis added):

10 hours ago, govt2310 said:

Typically, one sees some language to the effect of "the contractor shall comply with all applicable Federal laws, including new Federal laws passed by Congress during the contract performance," written into the SOW. 


For example, the Prompt Payment Act Amendments of 1989 were effective for all contracts awarded after March 31, 1990.

However, many Corps of Engineers (USACE) construction contracts were awarded after that date without the amended clauses because USACE issued the implementation directives later in April or May 1990. HQTRS USACE directed all Districts to administratively modify those contracts.

I had to prepare the admin mods and develop and issue standard operating procedures and standard forms to our field offices to explain and implement the new progress payment procedures. 

The changes significantly accelerated progress payments to primes and provided automatic interest penalties for late payments.

But the changes also accelerated prime progress payments to their subs and importantly, forbade the prime from physically holding any retainage or withholdings from subs earnings. Instead the government deducts and withholds such retainsge or withholdings from the primes’ progress payments.

This meant that primes were not allowed to finance their contract costs at the expense of their subs and suppliers. This was a significant and huge impact for primes and their subs and suppliers.

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9 hours ago, govt2310 said:

Why is important enough to say this expressly for commercial products/services and for construction, but nothing else?  If the contractor has to do it anyways, no matter what, then why say this at all in any contract for any type of product/service?

I don't know. Perhaps because there are state and Federal consumer protection and product safety laws and regulations that apply to commercial products and services but that would not apply to acquisitions of products and services by federal agencies, and the government wants those same laws and regulations to apply to its own purchases of commercial products and services.

 

 

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On 3/11/2023 at 11:37 PM, govt2310 said:

the contractor has to comply with all applicable Federal laws, even new ones that did not exist at the time of contract award, in accordance with FAR 52.212-4(q).

Why do you think this requires the contractor to comply with laws that are passed after contract award?  Has there been a court or board decision saying so?  Are you saying the contractor has to comply with laws requiring the FAR Council to do something before the Council acts?  See FAR 1.108(d).

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Generally, when Congress enacts a law that specifically pertains to acquisition, it directs the FAR Council or other agency (e.g., the DOL or the SBA) to promulgate implementing regulations within some period of time following enactment. Until then, the law is on hold. As for applicability to existing and future contracts, see the law, the Federal Register, and FAR 1.108(d).

Other laws take effect as of the date set by Congress.

The Sovereign Acts doctrine will apply as appropriate.

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Congress passed the No TikTok on Government Devices Act a few months ago, see https://www.congress.gov/bill/117th-congress/house-bill/2617/text.  It directed OMB to issue rules about this.  OMB issued such rules, see https://www.whitehouse.gov/wp-content/uploads/2023/02/M-23-13-No-TikTok-on-Government-Devices-Implementation-Guidance_final.pdf.  Well, it sounds like this "No TikTok" rule has to be put into existing contracts by a Contract Modification, per FAR 1.108(d).  Can this be done as a Unilateral Modification, or does it have to be Bilateral?  If the latter, doesn't that require legal "consideration," meaning the agency would have to pay the Contractor for this?  I'm inclined to think this is supposed to be done as a Unilateral Modification.  I don't think it changes the Scope of work.  I don't think it affects the contract price.  Thoughts?

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10 hours ago, joel hoffman said:

f the new requirement WILL apply to all contracts or MAY also be applied existing contracts,  the legislation and implementing regulations will state that. The implementing guidance usually provides for adjustments or equitable adjustments for time and/or cost impacts on existing contracts.

Since Congress and OMB both did not mention an equitable adjustment for time and/or cost impacts on existing contracts, this is evidence that the TikTok Ban is supposed to be done as a Unilateral Modification, right?  And what about contracts that contain FAR 52.212-4(q)?  Can the agency take the position that this clause already requires the contractor to comply with this new TikTok ban?  Or would such contracts still require a Unilateral Modification?

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57 minutes ago, govt2310 said:

Well, it sounds like this "No TikTok" rule has to be put into existing contracts by a Contract Modification, per FAR 1.108(d).  Can this be done as a Unilateral Modification, or does it have to be Bilateral? 

Both.  My read of the memo.   If a contract may require use of the application then the contract is to be ceased, so T4D.  Or, modified, so T4C (partial) that does away with the possible use of the application.  Maybe even a change order depending on the contract.  If commercial item contract if qa change the Changes paragraph would require the change be done by written agreement of both parties.   It just depends.

 

1 hour ago, govt2310 said:

If the latter, doesn't that require legal "consideration," meaning the agency would have to pay the Contractor for this? 

Consideration yes, pay maybe.  Generally a change requires consideration.  But,what if the contract required use of Tik Tok, no exception applied (like a social media contract), removing a specific requirement to use the application might result in "pay".  

49 minutes ago, govt2310 said:

Since Congress and OMB both did not mention an equitable adjustment for time and/or cost impacts on existing contracts, this is evidence that the TikTok Ban is supposed to be done as a Unilateral Modification, right? 

Nope, left an open door for agencies to figure out the best avenue contract by contract.

 

50 minutes ago, govt2310 said:

And what about contracts that contain FAR 52.212-4(q)?  Can the agency take the position that this clause already requires the contractor to comply with this new TikTok ban?  Or would such contracts still require a Unilateral Modification?

I defer to my initial thought.   The plain read of "(q) does not cover applicable laws that are "new".  In some limited research it would be my guess that OMB memo has it right.   If it is not in the contract either cease the contract or modify it using the appropriate course to do so.  

Most likely a poor analogy but if Congress passed a law tomorrow that all freeway speeds were to be 45 miles an hour immediately would not the contractor doing Federal contracts think it would be in their best interest to comply?   Impacts to the contractor then becomes something that becomes a discussion and possibly a claim by the contractor and then leave it to the courts to decide.

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17 hours ago, govt2310 said:

Congress passed the No TikTok on Government Devices Act a few months ago, see https://www.congress.gov/bill/117th-congress/house-bill/2617/text.  It directed OMB to issue rules about this.  OMB issued such rules, see https://www.whitehouse.gov/wp-content/uploads/2023/02/M-23-13-No-TikTok-on-Government-Devices-Implementation-Guidance_final.pdf.  Well, it sounds like this "No TikTok" rule has to be put into existing contracts by a Contract Modification, per FAR 1.108(d).  Can this be done as a Unilateral Modification, or does it have to be Bilateral?  If the latter, doesn't that require legal "consideration," meaning the agency would have to pay the Contractor for this?  I'm inclined to think this is supposed to be done as a Unilateral Modification.  I don't think it changes the Scope of work.  I don't think it affects the contract price.  Thoughts?

This policy will have to go through the rulemaking process before it takes effect (see 41 U.S.C. 1707). The OMB memo shouldn't be interpreted as a direction to contracting officers to start drafting and including implementing clauses in their contracts. Agencies may issue class deviations to implement the policy in the interim, or the FAR Councils could issue an interim rule.

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@Don Mansfield The OMB Memo M-23-13 says "agencies shall . . . Cease use of contracts that contain requirements that may include use of a covered application [TikTok] in performance of the contract or modify those contracts to conform with the prohibition on covered applications, except in cases of approved exceptions."  Then at the end, it says "Agencies shall notify OMB that they have completed all actions delineated . . . no later than 90 days after the date of this memorandum."  Are you interpreting this language to mean that agencies only have to cease using or must modify "those contracts" where the SOW contains requirements that require the use of TikTok "in performance of the contract"?  If that is what OMB meant, then agencies don't have to modify contracts where the SOW doesn't involve TikTok at all, is that your take on this?  And so, for contracts that do involve using TikTok, are you saying the agencies don't have to modify them, even though OMB seems to be saying the opposite?  I do think this OMB phrasing is not as clear as it could have been. 

 

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13 hours ago, Don Mansfield said:

This policy will have to go through the rulemaking process before it takes effect (see 41 U.S.C. 1707).

@Don MansfieldI disagree. Congress has enacted a law and the president has signed it. CONGRESS! THE PRESIDENT!

The law requires OMB to issue direction. It does not require the FAR councils to publish a regulation.

OMB has issued the direction:

Quote

No later than 90 days following the issuance of this memorandum, agencies shall... Cease use of contracts that contain requirements that may include use of a covered application in performance of the contract or modify those contracts to conform with the prohibition on covered applications, except in cases of approved exceptions.

There is no need whatsoever to wait for rulemaking. CONGRESS!!! has decided that this is a matter of national security, and the PRESIDENT!!! has signed the bill into law. LAW!!! And OMB has issued direction. That's the Executive Office of the President talking.

If I were a contracting officer I would be working this out RIGHT BLEEPING NOW! I would not be on Wifcon asking questions. I would not be in my boss's office asking questions. I would not be acting like an incompetent know-nothing. I would comply with FAR 1.602-1(b).

I would initiate contact with the requiring activities and the contractors and work out how we're going to get this done, how long it will take, and what, if anything, it will cost in terms of time and money. I would report my findings to the Chief of the Contracting Office and state my plan. If, upon approval of my plan, I would have to terminate (cease using) a contract, I would do so pursuant to the contract T for C clause. If I would have to modify the contract, I would do so pursuant to the Changes clause or negotiate a supplemental agreement. If there is a question about monetary compensation and the sovereign acts doctrine, I would request a legal opinion. 

In short, I would be working on getting TikTok out of our devices and our contracts within 90 days, as ordered.

And @govt2310, FAR 1.108(d) has nothing to do with this.

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1 hour ago, Vern Edwards said:

I disagree. Congress has enacted a law and the president has signed it. CONGRESS! THE PRESIDENT!

So what? The FAR Councils are working on dozens of cases that will implement laws enacted by Congress and signed by the President. 

 

1 hour ago, Vern Edwards said:

The law requires OMB to issue direction. It does not require the FAR councils to publish a regulation.

So what? 41 U.S.C. 1707 requires the publication of regulations. Specific laws don't have to require the FAR Councils to publish a regulation.

 

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3 hours ago, govt2310 said:

@Don Mansfield The OMB Memo M-23-13 says "agencies shall . . . Cease use of contracts that contain requirements that may include use of a covered application [TikTok] in performance of the contract or modify those contracts to conform with the prohibition on covered applications, except in cases of approved exceptions."  Then at the end, it says "Agencies shall notify OMB that they have completed all actions delineated . . . no later than 90 days after the date of this memorandum."  Are you interpreting this language to mean that agencies only have to cease using or must modify "those contracts" where the SOW contains requirements that require the use of TikTok "in performance of the contract"?  If that is what OMB meant, then agencies don't have to modify contracts where the SOW doesn't involve TikTok at all, is that your take on this?  And so, for contracts that do involve using TikTok, are you saying the agencies don't have to modify them, even though OMB seems to be saying the opposite?  I do think this OMB phrasing is not as clear as it could have been. 

 

I'm not sure what OMB meant. The memo was sent to heads of executive departments and agencies. It wasn't sent to contracting officers. Heads of executive departments and agencies are most likely working out how to implement the policy within their agency in a coordinated manner. I don't think they are expecting individual contracting officers to implement the OMB memo on their own with no further guidance. 

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6 hours ago, Don Mansfield said:

I'm not sure what OMB meant. The memo was sent to heads of executive departments and agencies. It wasn't sent to contracting officers. Heads of executive departments and agencies are most likely working out how to implement the policy within their agency in a coordinated manner. I don't think they are expecting individual contracting officers to implement the OMB memo on their own with no further guidance. 

@Don MansfieldWhat's not to be sure about? It's the plainest direction imaginable.

You are suffering from FAR paralysis. By your take, a CO cannot implement law and executive direction until the FAR addresses it. That is utter nonsense. It has no basis in statute or regulation. FAR 1.602 speaks plainly.

In my post I said I would develop a plan and then proceed when and if the plan is approved. Let me quote myself:

7 hours ago, Vern Edwards said:

I would initiate contact with the requiring activities and the contractors and work out how we're going to get this done, how long it will take, and what, if anything, it will cost in terms of time and money. I would report my findings to the Chief of the Contracting Office and state my plan. If, upon approval of my plan, I would have to terminate (cease using) a contract, I would do so pursuant to the contract T for C clause. If I would have to modify the contract, I would do so pursuant to the Changes clause or negotiate a supplemental agreement. If there is a question about monetary compensation and the sovereign acts doctrine, I would request a legal opinion. 

That, Don, is my idea of CO-manship.

6 hours ago, Don Mansfield said:

Heads of executive departments and agencies are most likely working out how to implement the policy within their agency in a coordinated manner. I don't think they are expecting individual contracting officers to implement the OMB memo on their own with no further guidance. 

I would adjust to "guidance" when and if it shows up within the 90-day deadline.

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6 hours ago, Don Mansfield said:

The FAR Councils are working on dozens of cases that will implement laws enacted by Congress and signed by the President. 

@Don MansfieldYes. They have been working on some of them for five years or more.

The No TikTok law reflects the growing tension with China over Taiwan, the prospect of war, and concern for national security. Waiting for the FAR councils would be like postponing treatment for cancer.

Let's just agree to disagree.

 

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Of course, Vern is correct.

And it should be clear that the directive applies to any contractor using TikTok in performance of a contract - regardless of whether or not the contract  specifically requires its use.

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