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Locke

Time Extensions for Inexcusable Delays

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Why do you think you have to "use" a clause to make a bilateral contract modification? Let me guess, you're fretting over what to put in Block 13C of the SF 30.

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Why do you think you have to "use" a clause to make a bilateral contract modification? Let me guess, you're fretting over what to put in Block 13C of the SF 30.

Here we go...

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I'm assuming that you are, in effect, changing the date or period for prosecution and completion of the work in FAR clause 52.211-10 in lieu of termination for default under clause 52.249-10 or charging liquidated damages under clause 52.211-12. The delay is apparently inexcusable, therefore not the result of a change order under the Changes clause at 52.243-4 or other Government caused delays .

I don't think that the Changes clause is applicable here, so don't cite it. It's not a change order under any of the reasons cited. It is not an equitable price adjustment under the generally understood definition of that term. It's a mutually agreed change to the delivery schedule with consideration by the Contractor offered and accepted by the Government pursuant to both parties' best interests. See below**

However, FAR 49.402-4 -- Procedure in Lieu of Termination for Default provides "The following course of action, among others, [is] available to the contracting officer in lieu of termination for default when in the Government’s interest::

"(a) Permit the contractor, the surety, or the guarantor, to continue performance of the contract under a revised delivery schedule."

The Government apparently thinks that monetary consideration in lieu of default or charging L.D's is in its best interest. The Contractor apparently thinks that buying a time extension is in its best interest in lieu of being charged damages for delay and having this past performance on its record. I certainly hope that the consideration would at least match any L.D's that would have been assessed or that there is some valid reason for accepting less...

I would suggest citing "FAR 49.402-4 (a)" under Block 13 C or D on the SF 30.

In Block 14, simply state something to the effect "It is mutually agreed to be in the best interest of both parties, that in consideration of payment of $XXXXX by the Contractor, the date [or period?] specified in Clause 52.211-10 Commencement, Prosecution, and Completion of Work is changed from YYYY to ZZZZZ. This payment and time extension constitutes full agreement, consideration and settlement for this action and both parties hereby release each other from any and all liability under this contract for further adjustments attributable to such facts or circumstances giving rise to the time extension.

**In my opinion, this should not be a credit modification. Simply state where and how to make out the check. Liquidated damages or other damages paid to the Government are to be treated as miscellaneous receipts to be deposited in the Treasury and not used to augment appropriations used for the contract work. I believe that you will find that in the Redbook and in the DOD Financial Management regulations or in the appropriate agency financial regulations. I tried to return damages a few times to the appropriation or to our supervision and administration account or to the user to cover their damages. I was told by the office of counsel and our Finance and accounting office that this is considered augmentation. So, I accepted checks from the Contractors and turned them over to the F&A Officer.

The above is based upon my construction contract administration experience over many years. We always consulted and/or coordinated such actions with Office of Counsel, F&A and - of course, the KO. I was an ACO, a designated COR, a contract administrator and Chief of Contract Administration Division, among other jobs/duties during my 32 year USACE career.

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I have used FAR 49.402-4( a ) before in this sort of circumstance. Maybe very few on the contractor side will ever looks up 49.402-4( a ), but one time a surety did after gettig its copy of the modification from the construction contractor -- the surety called me to inquire about the circumstances -- I told the surety the contractor was late -- the surety pressed on the contractor and we didn't have any more late issues.

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And I don't think the above advice by ji and me is overkill.

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I know that my topic felt like déjà vu with a few eye rolls to go along, but I don’t recall anyone discussing the equitable adjustment side and the inclusion of the Contractor’s Statement of Release for every supplemental agreement.

Locke, It isn't deja vu. Don't be concerned about that. And yes, I think that something ought to be cited somewhere in Block 13. Makes one think about the basis for the modification.

There are many claims and appeals based upon the impacts of mods that did or didn't make it clear that the modification constituted complete accord and satisfaction for the time and/or cost-price impacts of the modification. Even though Part 43 only requires the release language for bilateral settlement mods under the Changes clause, I would generally recommend using it or something to the same effect for (most?) bilateral settlement mods to close that uncertainty door. And - yes - make it clear during negotiations that you will be including it in the mod. With those wary contractor's, If you can't negotiate complete closure, negotiate the most closure you can achieve and carefully word any exclusions.

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A construction contractor has requested and offered consideration for a time extension resulting from contractor delays in a firm fixed contract.

1. Why would you use the 52.243-4 as authorization? Where's the logic in that? Nothing in that clause authorizes the CO to extend the completion date. Try reading the clause.

2. Don't confuse an equitable adjustment with consideration. They are not the same thing.

3. If the contractor is proposing the change and offering consideration, why are you worried about a contractor's statement of release?

4. Before you cite 49.402-4 -- Is the contractor already late, i.e., in breach? If not, has it said that it absolutely cannot complete on time? Anticipatory breach? If not, why would you cite T for D provisions? Would citing 49.402-4 have an effect on your past performance evaluation? Would a file reviewer think it should? Does the contractor know that?

Look -- unless the company is already in breach or has said that it is definitely going to breach, it has done nothing more than come to you and asked for more time. Are you willing to give it? If so, then accept the offer, mod the contract, cite "mutual agreement" on SF 30, and go on with your lives.

Criminy.

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1. It's worse than a reach, and you can't stand on it. In Government construction you have forms, clauses, specifications, and drawings. Specifications and drawings describe the construction to be done. See FAR 36.202 and 52.236-21. In my experience, the completion date is on a form or in the clauses, not in the specifications or the drawings. Is that the way it is in your contract? If so, then don't cite the Changes clause.

2. If your command tells you to do something dumb, do it, and document the file. (I assume that someone else will sign the mod.) Just don't be dumb yourself. There are a lot of ignorant, incompetent GS-12s, 13s, and 14s in contracting. But don't try to talk them out of one stupid thing by suggesting an alternative stupid thing.

All of us have worked for ignorant, incompetent people at one time or another. Each of us must deal with it in his or her own way. But preserve your personal professional integrity.

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Locke, when your supervisors tell you to do something that you do not think is right, have you ever asked for "mentoring" or "guidance" on the subject, in light of your few years of experience and their many? Learning their reasoning, if any, for doing something may help you deal with them in a more constructive way. I can identify with your apparent frustration with having to deal with "the way its always been done" instead of "why its done that way."

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Retreadfed,

Yes. Unfortuately, I believe that their reasoning is based on a flawed foundation. For example, once I received my warrant there was talk on the limit of my warrant. Is it the total amount of the contract or the action taken? It seems clear as day to me that my limit is based on the action and not the total contract amount. If I've been given a mod to issue and the action is lower than my warrant but the contract is above it seems obvious that a previous CO has already committed the government and my action is a separate binding agreement. Depending on which person I ask, I'll get a different answer.

There reasoning is based on stuff like the word "authority" on the SF 30. They equate authority as being something a clause and only a clause gives us.

I was told that a Release of Claims is the same as the Contractor's Statement of Release. Is it? My understanding is one is required before final payment and the other is associated with equitable adjustments.

Why do we issue an NTP? Response is to ensure that the contractor has submitted all the material submittals in the design phase before commencing. OK, that's what we use the NTP for but why is there a need for an NTP? My understanding of the the NTP letter is to ensure that the government is protected (bonds) before the contractor begins work.

Their reasoning is that's how they were taught (told) to do it. They never took the time to understand the why of it.

I know it sounds crazy but we deal with MACC contracts and task orders. You know what that means, they cannot protest. Which means that horrible procedures thrive because there isn't a "check and balance" like in other places. It's easy to think that the current system is correct when there hasn't been any issue that would prove otherwise.

I am frustrated. But it's beacuse their reasoning has more holes than swiss cheese.

Last thing. I disagree with Vern on one thing: But don't try to talk them out of one stupid thing by suggesting an alternative stupid thing.

Why? If all my options are stupid, should you not try to find the least stupidest one of them? It's logic and reasoning like this that I truly don't understand.

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Locke:

You are not making a lot of sense and you're starting to sound sorry for yourself.

Are you the one who must sign the mod? If so, then no one can make you sign what you think is wrong and all of your options are not stupid. Explain yourself, and if they don't accept your reasoning tell them to find someone else to sign the mod. If you are not the one who must sign, then the options are not yours, they're someone else's, and you are just doing the paperwork.

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Locke:

Let's have some fun. You wrote:

[A]n equitable adjustment is something the government gives the contractor and it is not interchangeable in the sense that the contractor doesn’t give the government an equitable adjustment.

That's wrong. Some thoughts:

Nobody "gives" anybody an equitable adjustment. The Changes clause directs the CO, and only the CO, to "make" an equitable adjustment and modify the contract if a change increases or decreases the cost or time of performance. It doesn't say make one if asked. If says that if the facts are X, then the CO must do Y. Period. It does not say anything about a supplemental agreement. The equitable adjustment might raise the price or lower the price, extend the time or reduce the time.

FAR Part 43 does not require the CO to prepare a supplemental agreement when making an equitable adjustment. FAR 43.103(a) says that supplemental agreements are used to make equitable adjustments, but it does not say that they are they only way to make equitable adjustments. FAR 43.103( b ) says that unilateral mods are used "for example" to do certain things, but it does not say those are the only things a CO can do with a unilateral mod.

FAR Subpart 43.204(a) says that two documents are required when a change order is not forward priced, but it does not say that the CO "must" or "shall" prepare two documents. FAR 43.204( b ) states that the CO "shall" do several things when definitizing a mod, but does not say that the CO shall prepare a supplemental agreement. FAR 43.204( c ) says that a CO must do certain things if a supplemental agreement is entered into, but it does not say that the CO must enter into a supplemental agreement.

A CO could issue a change order, ask the contractor about the impact on cost and time, issue a unilateral order to make an equitable adjustment, and get the contractor to sign a release of claims before final payment. Worst case, the CO would have to negotiate the equitable adjustment at the end, which often happens anyway. Authority? The Changes clause.

I'm not saying that would necessarily be a good procedure, but if we're concerned about doing certain things in a certain way only because that's the way we've always done them, then we should read the regs and decide what procedural options we have. It's unorthodox, but it's not illegal. If a release is a big deal, send the contractor a letter containing the release and ask it to sign and return it. Put it in the file.

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Do the events leading to X matter?

The facts leading to X do matter!

I am now inclined to say that the clause (if it was a thinking thing) doesn't care who caused the change.

The clause does care who ordered the change! It says that the CO can issue a change order, not the contractor, and that the CO shall make an equitable adjustment if any "such" change causes an increase or decrease.

(i) During a site visit the CO notices that the Ktr using an unapproved method (or not the agreed method) and returns to the office to issue a unilateral change.

The CO should be fired for issuing a change order. The contractor did not comply with the contract terms. The government did not get the bargain it was promised. Why would the CO issue a change order? The CO should direct the contractor to perform as required. No change order, so no change-caused increase or decrease. The contractor must bear any increase in cost.

(ii) Same as above but the CO decides to change the method because they can and believe it's in the best interest of the government.

The CO should be fired for issuing a change order. The contractor did not comply with the contract terms. The government did not get the bargain it was promised. Why would the CO issue a change order? Since the nonconforming method used is acceptable, the CO can accept it in return for a price reduction, even if the method used was less costly than the one required.

After taking a step back, I realized that by mentioning "decrease" and the lack of language saying the CO shall make an EA to the contractor, seems to imply that the CO shall make an EA to the Ktr if there is an increase and an EA to the government if there is a decrease to the contract.

The CO does not make an EA "to" the government or "to" the contractor. The CO makes an EA to the contract. The purpose of the EA is to keep both parties in the position they were in before the change, as if the change had not been made. The government cannot benefit to the detriment of the contractor and the contractor cannot benefit to the detriment of the government. This rule has sometimes been stated as "leave them where you found them."

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Just out of curiosity, was the consideration offered in exchange for the time extension monetary, or some other form, maybe additional work desired but not originally specified? Everybody seems to have assumed it was monetary, but if that was written in any of these posts, I missed it. (It wouldn't be the first time.)

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Hmm, would the upgrade equipment be considered a change to the technical requirements or is it merely a "betterment" ? Assume here that a betterment is defined as: offered upgrade meets the contract requirements but is better than the minimum acceptable contract requirement without actually changing the specified requirement? I'm just trying to understand if the offered upgrades would be considered a change or merely a betterment.

Cutting to the chase - If any of the upgraded equipment involves a change to the specifications, I think you could cite the changes clause, even if it were Contractor initiated. I would still use some type of release language - if nothing else than to assure each party that the matter is closed with respect to further time impacts.

A separate warning. Make sure that the "upgrades" are technically compatible with the rest of the design and that they will meet the design intent. This is called maintaining the design integrity. In one instance in the past, in a government furnished design, our Contractor provided a modified design as part of a value engineering proposa. The resulting construction leaked and required major additional work and cost to remediate. The Contractor then claimed for the additional cost to correct their design defect (lack of caulking joints). The Spearin Doctrine (generally) holds that the party furnishing the design is responsible for the integrity and compatibility of its design. We denied the claim.

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Only the Government contracting officer can order a change -- the contractor cannot -- if a site visit reveals a contractor is using an unapproved method (or not the agreed method), then the contracting officer's step upon returning to the office IS NOT to order a change to accommodate the contractor's approach -- the right step is a notice of non-compliance (even while you're at the site), or maybe even a cure notice.

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