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Scenario Challenge: What remedies are available?


The1102

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The1102 wrote:

I'm confused about your rationale here...you think that because the Government accepted something late, they are waiving their right to timely delivery? I don't agree. If 20 helmets arrive at the shipping department late, does the Government need to leave them outside of the warehouse to preserve their right to timely delivery? Can't they open the boxes and use them, and negotiate consideration on the side with the contractor?

Sure the contracting officer can open the boxes, use the helmets, and negotiate consideration. The real question is what does the contracting officer do when the other side is unwilling to negotiate. In that case, the contracting officer either determines how much the Government has actually been damaged by the late delivery and makes a claim for that amount or pays in full. I am not aware of any authority that gives the contracting officer the ability to unilaterally determine a fair consideration for the late delivery and reduce the contract price by that amount.

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Sorry for the multiple posts, but I thought making comments separately was better than one long post.

I agree with those who have said the best the contracting officer can do is an adverse CPARS evaluation. While the contracting officer may be able to withhold fee pending completion of the contract, that fee must be paid in full when the contract is completed. I believe that any effort to waive the default and unilaterally establish consideration for that waiver (which will be a reduction in the total fee paid) will not be upheld on appeal (and the Government will be on the hook for EAJA fees if the contractor is a small business because the Government's position will not be substantially justified).

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If I were advising the contractor, I would negotiate back using the points I raised. That's all.

I stand by my point that the goal of the program is to get a successful demo. The parties need to negotiate a PoP extension -- nothing more -- to achieve that goal. It has to be a bilateral agreement. I stand by my suggestion that it appears (from my admittedly biased point of view) to be penny wise and pound foolish to scuttle the potential bilateral agreement over an insistence that financial consideration must be paid in order to compensate the customer for reports it has already received and used, albeit late. Especially when the program has CPARS recourse. That's my point of view. Others are free to disagree.

I appreciate your view and your input, thanks for playing the role of the contractor (and his attorney) on this one.

Retreadfed, thank you for your breakdown by contract clause. I found it helpful.

Your original post asked what contractual remedies are available. Posts 2 and 3 gave you two good options. Pick one.

I'm sorry if you felt I was asking too many questions. I try to poke and prod until I really understand something; that's just the way I learn. We are hear to learn, right?

Good discussion overall, thank you all for participating.

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One last post concerning the ability to assert a claim for late delivery. See Federal Boiler Co., 94-1 BCA P 26381, September 23, 1993:

However, with respect to its reduction in the contract price of about $1,300 which it attributes to ‘late delivery,‘ some questions do arise. The Government has pointed to no provision in the contract for liquidated damages. Likewise, it has asserted no basis for a finding of actual damages by reason of the late delivery (such as, for example, rental of temporary boilers pending delivery).

Accordingly, the Government has not shown that it is entitled to a price reduction by virtue of the late delivery.

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Let's assume the Contracting Officer wants a reduction in fee, but he/she is open to other forms. The contractor was given the opportunity to propose the type/amount of consideration but absolutely refuses to provide consideration in any form. In this case, would you still support the "final decision" approach?

I don't necessarily "support" Initiating a claim against the contractor (which, in light of wvanpup's post, would be limited to actual damages). I just offered it as a contractual remedy. On the scale of contractual remedies, it probably ranks below termination for default and above "negotiate an extension without consideration" in terms of aggressiveness.

My MO would be to start at the bottom of the scale and, if that didn't improve things, work my way up. Documenting the late delivery in CPARS may be enough to remedy the situation.

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