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Out-of-scope unilateral modification


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A Contracting Officer issues a modification to unilaterally extend the period of performance without contractual authority to do so (e.g., no Option clause). (1) What would the result be? (2) Is this legal? (3) Would the answer be the same for a FAR Part 13 acquisition as it would for a Part 15 acquisition? (4) Is there any other fallout the CO should be concerned about?

My answers:

(1) Contractor performs = Modification accepted at the terms and conditions already in existence. Same legal effect as if a bilateral modification had been signed.

Contractor does not perform = No harm no foul. Contract ends at its originally defined POP.

(2) Yes

(3) Yes

(4) No

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Guest Vern Edwards

If the modification was in violation of law or regulation, or if the CO had no authority to make it pursuant to the terms of the contract, then it would not be legally binding on the contractor.

If the modification was in violation of law or regulation, it would not be binding on the contractor even if the contractor performed. It would be an unauthorized commitment by the CO as defined in FAR 1.602-3(a).

If the modification was not in violation of law or regulation, but the CO had no authority to make it pursuant to the terms of the contract, then if the contractor performed without objection it might be bound by the terms of the modification. However, it is hard to be entirely certain about that without more particulars.

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A bit more on the particulars –

Labor hour contract. Estimated hours. Estimated hours remain unchanged (no money is being added). Contractor is not at fault. POP extension due to government delay.

The underlying reason for the unilateral mod would be because the contractor won’t respond timely to a bilateral mod. Basically looking for an alternative solution that would be legally binding upon performance. Under FAR Part 13, I recognize that issuing a new PO could be another solution.

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If under FAR Part 13 for a non-commerical item and using FAR 52.213-4 or for a commercial item and using FAR 52.212-4 would not "exucusable delay" cover the instance and not even require a modification? Simply the delay is excusable and the Contractor is not on the hook to be defaulted due to the "government delay" during performance nor evaluated adversly (after performance) for the delay. The POP will simply be what it is. If it is felt a modification is needed then why wouldn't the "excusable delay' wording give authority for the modification, noting that if for a commercial item then it would need to be bilateral.

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jwomack - I understand why you may not be convinced but let me offer this. Seems like the CO is really tied to having a new POP stated because of the excusable delay so just say so to the contractor. There are options to communcate this fact, the CO could call the contractor, send an email, write a letter, or otherwise document the fact that the Government agrees the delay is excusable so why not just issue a modification as the communication.

Otherwise I am back to repeating essentially what I posted first, do nothing. Based on the Government concluding the delay is excusable there is nothing to do to make the new POP legally binding - the excuable delay portion of the Terms and Conditions clause has already done that for you.

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There are a couple of considerations that I would apply to the original question, but maybe not with the subsequent information.

1. Can the period of performance be unilaterally extended because, among other potential reasons, there is no option clause? Extending the period of performance may well be a new action that requires competition. What would be the authority to do this unilaterally?

2. Excusable delay. This is a term that should be used to excuse the contractor's failure to complete the work, i.e., the contractor is not in default because the work was not completed within the time required by the contract. It is a contractor remedy, not a Government remedy.

3. I am not very familiar with labor hour contracts, but my understanding is that they do not require delivery of an end product, nor do they require the contractor to provide a specific number of hours within the period of performance. If that is the case, the contractor has fulfilled its obligations; we cannot unilaterally require the contractor to continue working (among other things, we are forcing the same labor rates beyond the period for which they were negotiated).

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wvanpup, LH contracts usually call for the contractor to do a job, i.e., repair a vehicle or perform a service task. If your contract does this, but the contractor has not completed the job, why do you say it has fulfilled its contractual obligation?

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Guest Vern Edwards

If the contract calls for the contractor to do a job, and if the contractor did everything it was supposed to do, but was prevented from completing the job by an improper act or omission of the government, then the contractor has fulfilled its contractual obligation, even though the job is not completed.

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Vern, can you explain your last post in greater detail? My understanding is that if an improper act or omission of the government amounts to a breach of contract, the contractor is excused from further performance. On the other hand, if the improper act or omission is not a breach, the contractor is not excused from further performance but still must perform the contract. In this latter case, the contractor could be entitled to a schedule adjustment and/or a price adjustment under various clauses such as the Changes clause or Government Delay of Work.

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Guest Vern Edwards

You wrote:

wvanpup, LH contracts usually call for the contractor to do a job, i.e., repair a vehicle or perform a service task. If your contract does this, but the contractor has not completed the job, why do you say it has fulfilled its contractual obligation?

An improper act or omission by the government is a breach. If the government breaches then the contractor is freed of its obligation. What kind of improper act or omission would not be a breach? A constructive change? Okay, then If an improper act or omission is not a breach, the contractor is entitled to a redefinition of its obligation, i.e., an equitable adjustment. In that case the contractor has fulfilled its original obligation, but perhaps not its new obligation.

In any case, under a L-H contract the contractor's obligation is not to finish the job, but to work until it reaches the ceiling price.

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Going back to jwomack's problem. From what you have written, it does not appear that the contractor has completed what the contract calls for, nor has it reached the ceiling price of the contract. If that is the case, have you considered the possible impact of the Disputes clause, including Alt I, if it is included in the contract, on the contractor's obligation to continue performance?

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Guest Vern Edwards

I'm not sure who that was addressed to, but the result is obvious. If the parties are in dispute over the contractor's obligation to perform, and if Alt. I of the Disputes clause is in the contract, then the contractor is obligated to perform pending final resolution.

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