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We issued numerous stop work orders on FFP service contracts that require the contractor to perform work onsite. The stop work orders we issued require that contractors cease incurring costs related to the contract.The contracts provide "bodies" in support of specific functions within the agency. We issued stop work orders to these contracts because there are no government personnel to provide oversight for the contracted activities, and because there is no benefit derived from their services during the shutdown.

I'm trying to understand how to settle up with our contractors to make them whole once the shutdown has ended and we've received our appropriation, but I don't want to be taken for a ride. How do we deal with stopped FFP contracts in this scenario? Should we expect the contractor to layoff the personnel provided by their contract or do they keep those persons in suspended animation, continue to pay them and then bill us for that time through a request for equitable adjustment? Or Do we simply "pay the man" for time they couldn't work because the contract is a FFP contract and also entertain their request for an equitable adjustment to the contract's schedule and/or (doubtfully) for the contractors' costs?


Finally, what if the contract did not include 52.242-15 Stop Work Order? Is the contractor still bound by its terms under the Christian doctrine, or must the contractor submit a claim under 52.242-17 Government Delay of Work because in the absence of 52.242-15, the stop work order was not expressly or impliedly authorized by the contract? Which leads to yet another question, what if the contract included neither 52.242-15 or 52.242-17? I will recap the questions I asked in this topic:

  1. How do we deal with stopped FFP contracts in this scenario?
  2. Should we expect the contractor to layoff the personnel provided by their contract?
  3. Should we expect the contractor to keep their contractor employees in suspended animation, continue to pay them and then bill us for that time through a request for equitable adjustment?
  4. Do we simply "pay the man" for time they couldn't work because the contract is a FFP contract and also entertain their request for an equitable adjustment?
  5. Can we issue a stop work order if the contract did not include 52.242-15 Stop Work Order
  6. What if the contract included neither 52.242-15 or 52.242-17?

Is there any way to edit the topic title?

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Guest Vern Edwards

Hi Rios:

Once again you fire a voley of unclear guestions at us.

1. What do you mean by "how do we deal with stopped FFP contracts in this scenario?" What do you mean by "deal"? Vague question. It's not clear what you want to know.

2. How would we know whether you should expect the contractor to lay off its employees? There is no standard answer. It depends on the content of your stop work order and the contractor's situation and business inclinations. You should discuss such matters with the contractor and reach agreement on them either before or immediately after issuing the stop work order. Include the agreement in the terms of the stop work order or, if you have already issued the order, modify it to reflect your agreement.

3. Again, how would we know? There is no standard answer. You have to discuss that with the contractor, reach an agreement, and include the terms of the agreement in the order or modify the order to do so if it has already been issued.

4. Read the clause. You must either make an equitable adjustment to reflect the effect of the stop work order on costs or negotiate a termination settlement, depending on what you ultimately do.

5. The answer is no. Without the Stop Work Order clause a stop work order would be a breach of contract. The Christian Doctrine does not apply to the Stop Work Order clause, because the clause is optional, not mandatory.

6. What do you mean "What if....?" What what if? If the contract includes neither clause then the terms of neither clause apply to the contract. However, the Government Delay of Work clause, 52.242-17, is mandatory for supply contracts, so the Christian Doctrine might apply if it was omitted. But you said your contracts were for services, so.... See 5, above.

Finally, you wrote that you ordered the contractor to "cease incurring costs." You cannot do that. You can order the contractor to stop working, but such an order might cause the contractor to incur some costs it otherwise would not have incurred. Stop work orders slow the incurrence of cost, but generally do not stop it.

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rios,

I don't understand why you issued stop work orders for work that the contractor couldn't do because of the shutdown. You issue a stop work order if the contractor would have worked and you didn't want them to. When you issue a stop-work order under FAR 52.242-15, the contractor would potentially be entitled to an equitable adjustment in price and/or schedule. If the contractor can't work because of an act of the Government in its sovereign capacity (like a shutdown), the most the contractor would be entitled to is a schedule extension. There's something called the Sovereign Acts doctrine (Google it), which bars claims for increased costs caused by sovereign acts.

Why did you think you had to issue stop-work orders?

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Guest Vern Edwards

Gee, Don, you'd better read this from Ask A Professor, https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=19&cgiQuestionID=109055.

And you might want to read this from the Department of the Interior, http://www.doi.gov/shutdown/fy2014/upload/Contracting-and-Grants-FY2014.pdf.

Or this, from DOD's Washington Headquarters Services, http://www.whs.mil/Furlough/FAQs-unplanned/.

Or this, from the Department of the Treasury's Special Inspector General for the Troubled Asset Relief Program, page 7, http://www.treasury.gov/connect/blog/Documents/SIGTARP%20Shutdown%20Plan%20Sept%201,%202013%20FINAL_Web%20Version.pdf.

Or this, from GSA, page 7, http://www.fema.gov/media-library-data/82d4e2765f31fccb24d2b1c172d67fcd/GSA+Order+on+Operations+in+Absence+of+Appropriations+-+Sept+2013.pdf.

Read this master's thesis from The George Washington University Law School, available from the Defense Technical Information Center, http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=37&ved=0CF0QFjAGOB4&url=http%3A%2F%2Fwww.dtic.mil%2Fcgi-bin%2FGetTRDoc%3FAD%3DADA328358&ei=yS9OUvSZIaL7iwLa8oHAAw&usg=AFQjCNFLScXQoIUkqJEbpveSoimHlYGvyw&sig2=m6UUTOidu4FE72TFjtqE4g.

There are a lot of blogs by respected law firms that discuss the problem. You can Google to find them. You could hardly miss them. See this one, http://www.pillsburylaw.com/siteFiles/Publications/AlertOct2013GovtContracts_DisputesIntheEventofaGovernmentShutdown.pdf.

I could go on at length. I think you're right in some ways about the Sovereign Acts doctrine, but it's not entirely clear what the government's liability would be on any particular contract. In any case, the government has somehow got to notify the contractor that it will not be able to fulfill its obligations at this time, if ever, due to the shutdown of government facilities and the absence of government personnel, and in some cases it will have to instruct the contractor as to how to proceed. But based on the information in the links I provided above, there does not seem to be general agreement among agencies as to the best way to to do that. Many agencies seem to think that a stop work order is necessary, and most lawyers appear to be advising contractors not to stop work without a stop work order.

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Vern - What do you think about a partial termination for the convenience regardless of whether stop work is or is not in the contract? I ask this noting that per the FAR reinstatement of a terminated contract is allowed (ref.49.102(d)). As every action has its liability to the Government just wondering if a partial T4C and then reinstating is more or less risky?

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rios,

I don't understand why you issued stop work orders for work that the contractor couldn't do because of the shutdown. You issue a stop work order if the contractor would have worked and you didn't want them to. When you issue a stop-work order under FAR 52.242-15, the contractor would potentially be entitled to an equitable adjustment in price and/or schedule. If the contractor can't work because of an act of the Government in its sovereign capacity (like a shutdown), the most the contractor would be entitled to is a schedule extension. There's something called the Sovereign Acts doctrine (Google it), which bars claims for increased costs caused by sovereign acts.

Why did you think you had to issue stop-work orders?

Thanks Don,

We issued the stop work orders because our CAO told us we had to. Had he not told us to, I probably would have issued them anyway because I thought that is what was required. This is one of those things that I learned from others and not from conducting my own research.

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Hi Rios:

Once again you fire a voley of unclear guestions at us.

1. What do you mean by "how do we deal with stopped FFP contracts in this scenario?" What do you mean by "deal"? Vague question. It's not clear what you want to know.

2. How would we know whether you should expect the contractor to lay off its employees? There is no standard answer. It depends on the content of your stop work order and the contractor's situation and business inclinations. You should discuss such matters with the contractor and reach agreement on them either before or immediately after issuing the stop work order. Include the agreement in the terms of the stop work order or, if you have already issued the order, modify it to reflect your agreement.

3. Again, how would we know? There is no standard answer. You have to discuss that with the contractor, reach an agreement, and include the terms of the agreement in the order or modify the order to do so if it has already been issued.

4. Read the clause. You must either make an equitable adjustment to reflect the effect of the stop work order on costs or negotiate a termination settlement, depending on what you ultimately do.

5. The answer is no. Without the Stop Work Order clause a stop work order would be a breach of contract. The Christian Doctrine does not apply to the Stop Work Order clause, because the clause is optional, not mandatory.

6. What do you mean "What if....?" What what if? If the contract includes neither clause then the terms of neither clause apply to the contract. However, the Government Delay of Work clause, 52.242-17, is mandatory for supply contracts, so the Christian Doctrine might apply if it was omitted. But you said your contracts were for services, so.... See 5, above.

Finally, you wrote that you ordered the contractor to "cease incurring costs." You cannot do that. You can order the contractor to stop working, but such an order might cause the contractor to incur some costs it otherwise would not have incurred. Stop work orders slow the incurrence of cost, but generally do not stop it.

Thanks for providing this information, Vern. As for my volley of questions, it is because one question usually leads to several others. I thought it might be more practical to include them all in the same post. Although I agree that my first question was very vague and unnecessary.

And thanks to Don's reference to the Sovereign Acts Doctrine and the numerous references you provided regarding the subject, I have now learned something new.

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Vern,

In some cases, a stop-work order may be necessary. That's why I asked rios if the contractors would have been able to work even if the Government shut down. He said that some work could continue, some couldn't. If he wanted to stop the work that could have continued despite the shutdown, then a stop-work order would be necessary. For the work that couldn't continue, the Government doesn't have to issue a stop-work order or suspension of work.

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Guest Vern Edwards

Hi Don,

I was responding to this comment:

I don't understand why you issued stop work orders for work that the contractor couldn't do because of the shutdown. You issue a stop work order if the contractor would have worked and you didn't want them to. When you issue a stop-work order under FAR 52.242-15, the contractor would potentially be entitled to an equitable adjustment in price and/or schedule. If the contractor can't work because of an act of the Government in its sovereign capacity (like a shutdown), the most the contractor would be entitled to is a schedule extension. There's something called the Sovereign Acts doctrine (Google it), which bars claims for increased costs caused by sovereign acts.

I interpreted that to suggest that it is not necessary and might be a bad idea to issue a stop work order to a contractor who could not work because of the shutdown. Thanks for clearing things up.

As a CO, I would not issue a stop work order, for the reasons that you said. I think such an order would give rise to entitlement that otherwise might not be there under the sovereign acts doctrine. See, e.g., Raytheon STX Corp. v. Department of Commerce, GSBCA No. 14296-COM, 00-1 BCA para. 30632. I would send the contractor a letter saying that it will not be able to work due to the shutdown, a sovereign act of the government. I would say that my agency is not ordering it to stop work and will not compensate them for any costs it incurred as a result of the shutdown. I would say that we will not be able to fulfill our obligations under the contract so as to allow it to work until the shutdown is ended and that we do not know how long the situation will last. The contractor could still submit a claim, but not based on a stop work order or the changes clause. It would have to base its assertion of entitlement on something else. I don't know what it would be.

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