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"The Government owes...."

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Hi,

What is your interpretation of the following wording included by the government in a contract mod (mod is defnitized and the values are a result of negotiation of a proposal submitted by Contractor ABC) to a contract being performed by Contractor ABC? The reason the wording is written the way it is is because the funding of $975,000.00 was to be provided by another service who has not provided it (the funding) to date. Does the wording commit the government to provide the $975,000.00 of funding?

Contractor ABC owes the government a refund of $25,000.00 for work deleted as a result of performance of Task XYZ. In contrast, the Government owes Contractor ABC $1,000,000.00 for work added as a result of performance of Task XYZ. In lieu of the $25,000.00 owed to the government by Contractor ABC, the government shall deduct the $25,000.00 that Contractor ABC owes the Government from the $1,000,000.00 that the Government owes Contractor ABC for performance of Task XYZ. Delivery Order No. 123 shall be modified incorporating the additional funds required for performance of Task XYZ.

Comment by Researching: "Delivery Order No. 123" is an order under an IDIQ contract.

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Was Delivery Order No. 123 issued as an undefinitized contract action? Did it include a ceiling, or not-to-exceed, amount? How much funding was obligated upon issuance of Delivery Order No. 123? What did the delivery order say about a limitation of government liability, if anything? Is this a fixed price action or is there another pricing arrangement?

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Researching:

Let me see if I've got your story straight. The government issued a delivery order. The government then decided to modify the delivery order by deleting some work and adding other work. The negotiated result is an equitable adjustment of the contract price, as follows:

The equitable adjustment for the deleted work is a price reduction of $25,000.

The equitable adjustment for the added work is a price increase of $1,000,000.

The net total equitable adjustment is a price increase of $975,000, from $X,XXX,XXX to $X,XXX,XXX.

That's how I interpret the awkward language written by the poor procurement scribe you're working with. Nobody "owes" anybody anything until the contractor completes the work and the government accepts it. At that point, upon receipt of a proper invoice, the government will owe the contractor the equitably adjusted price. (I'm assuming that the delivery order is fixed-price.)

Is that's right, then what's your question?

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Hi,

What is your interpretation of the following wording included by the government in a contract mod (mod is defnitized and the values are a result of negotiation of a proposal submitted by Contractor ABC) to a contract being performed by Contractor ABC? The reason the wording is written the way it is is because the funding of $975,000.00 was to be provided by another service who has not provided it (the funding) to date.

Does the wording commit the government to provide the $975,000.00 of funding?

Contractor ABC owes the government a refund of $25,000.00 for work deleted as a result of performance of Task XYZ. In contrast, the Government owes Contractor ABC $1,000,000.00 for work added as a result of performance of Task XYZ. In lieu of the $25,000.00 owed to the government by Contractor ABC, the government shall deduct the $25,000.00 that Contractor ABC owes the Government from the $1,000,000.00 that the Government owes Contractor ABC for performance of Task XYZ. Delivery Order No. 123 shall be modified incorporating the additional funds required for performance of Task XYZ.

Comment by Researching: "Delivery Order No. 123" is an order under an IDIQ contract.

The modification should have described the changes in the task order scope or statement of work, specifications, etc. If so, it appears to be an unfunded change order that would direct the work, as changed and commits the Government to pay the Contractor - at some point - an additional $975,000 for the work, as changed. It appears that the funds have to be added by a future modification, which would fully definitize the modification.

This appears to be a dangerous situation for the KO who appears to be committing the Government to pay additional amounts for a directed change without any additional funding being provided.

I hate to ask this but what does block 13 of the SF30 modification state (I am assuming that the modification was issued via an SF30) ?

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Thanks everyone.

The modification does describe the changes in the task order scope and yes, the added work is unfunded with the following wording included: "The Government owes Contractor ABC $1,000,000.00 for work added as a result of performance of Task XYZ. Delivery Order No. 123 shall be modified incorporating the additional funds required for performance of Task XYZ."

As Joel said: "This appears to be a dangerous situation for the KO who appears to be committing the Government to pay additional amounts for a directed change without any additional funding being provided." That is the reason for our question, i.e. how binding is the wording in quotes above on the government?

Block 13 of the SF30 modification has Block C. checked which states "This Supplemental Agreement is Entered into Pursuant to Authority of: 43.103(a).

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That is the reason for our question, i.e. how binding is the wording in quotes above on the government?

FAR 43.102(a) is merely explanatory. It is not authority for anything.

There are two answers to the question:

1. Yes, if the parties sign the mod.

2. No, if the CO did not have funds when s/he signed it and cannot get funds.

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That is the reason for our question, i.e. how binding is the wording in quotes above on the government?

FAR 43.102(a) is merely explanatory. It is not authority for anything.

There are two answers to the question:

1. Yes, if the parties sign the mod.

2. No, if the CO did not have funds when s/he signed it and cannot get funds.

See also 43.105 (a) to wit:

43.105 -- Availability of Funds.

(a) The contracting officer shall not execute a contract modification that causes or will cause an increase in funds without having first obtained a certification of fund availability, except for modifications to contracts that --

(1) Are conditioned on availability of funds (see 32.703-2); or

(2) Contain a limitation of cost or funds clause (see 32.704).

( b ) The certification required by paragraph (a) of this section shall be based on the negotiated price, except that modifications executed before agreement on price may be based on the best available estimate of cost.

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