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Not exercising options...what documentation is needed?


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The FAR, and contract clause 52-217-9 (as well as Professor Edwards' blog post of Jan 26, 2014), give adequate instruction on what must be done to exercise an option. My question is: if the Government decides NOT to exercise an option, what level of documentation is needed? What recourse does the contractor have, if any? We had a interesting case here, that has sparked some debate (at least from me).

We had a contract to provide Operation and Maintenance services for a federal building. To make a long story (kinda) short, the Chief Mechanic and the Building Manager did not get along, to point they were no longer speaking. The CO issued a notice to have the Chief Mechanic removed from working on the property, under language in the contract that allowed the Government to make this request (another long story, that I plan to start another post about). There was some back and forth at the local level, then a series of meetings with the company president, his attorney, the government's higher management and its attorney. A deal was agreed to that allowed the contract to continue with the Chief Engineer in place, but it was reasonably clear that the two parties could not work together (the Building Manger was re-assigned to another property). At that point, the contract had about 4 months to go on the current performance period. The CO sent the contractor a courtesy notice that the Government was not exercising the option, more than 60 days before the end of the contract.

A couple of relevant points to make in the particular case: The contractor's performance in providing services was, in all other respects, satisfactory, as far as was documented. This was a case of an extreme personality conflict between the principals, with allegations of the Chief Engineer being "intimidating", "bullying" and not taking direction from the Building Manager. These allegations were not adequately documented in a meaningful way, but were being conveyed from the Building Manager to the CO verbally over a period of many months, in an escalating fashion. There are some other details in this case that are important in how this ultimately played out, but they aren't important for my basic question.

After a series of internal meetings with our top management, our attorney and our Regional Procurement Officer (top procurement official), the consensus was that the CO should have had "proper" documentation from the Building Manager to not exercise the option, especially since performance otherwise was satisfactory. Our RPO went on to say that the Government could not decline to exercise the option, and then re-solicit the same requirement without a significant change in scope. (Totally disagree with this; I think he's confusing this with T4C.).

So anyway, my general questions are these: what level of documentation is needed for the Government to make a determination to not exercise an option? In the case above, where performance is otherwise satisfactory, there is a undocumented personality conflict (but acknowledged as an actual fact by both sides), is this sufficient reason to not exercise an option (whether there is documentation or not)? Is there case law/precedent on this issue that you can point me to in this regard?

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Guest Vern Edwards

So anyway, my general questions are these: what level of documentation is needed for the Government to make a determination to not exercise an option? In the case above, where performance is otherwise satisfactory, there is a undocumented personality conflict (but acknowledged as an actual fact by both sides), is this sufficient reason to not exercise an option (whether there is documentation or not)? Is there case law/precedent on this issue that you can point me to in this regard?

Legally, the Government is not obligated to exercise the option in FAR 52.217-9. However, a discretionary decision may not be made in bad faith, arbitrarily, or capriciously. So if the Government decides not to exercise the option, the CO should be able to state a reason that is not suggestive of bad faith, arbitrariness, or capriciousness. See Sword & Shield Enterprise Security, Inc. v. General Services Administration, CBCA 2118, 12-1 BCA ¶ 34922 (Aug. 22, 2011):

An option contract customarily binds the option giver, but not the option holder, who retains both the power to exercise it and the privilege not to. See Green Management Corp. v. United States, 42 Fed. Cl. 411, 434 (1998) (citing Dynamics Corp. of America v. United States, 389 F.2d 424, 431 (Ct. Cl. 1968)). When a contract contains an option to extend its term, unless the contract provides otherwise, the Government enjoys broad discretion and is under no obligation to exercise it. Government Systems Advisors, Inc. v. United States, 847 F.2d 811, 813 (Fed. Cir. 1988); AFR & Associates, Inc. v. Department of Housing & Urban Development, CBCA 946, 09-2 BCA ¶ 34,226, at 169,168-69; Innovative (PBX) Telephone Services, Inc. v. Department of Veterans Affairs, CBCA 44, et al., 08-1 BCA ¶ 33,854, at 167,584; Integral Systems, Inc. v. Department of Commerce, GSBCA 16321-COM, 05-2 BCA ¶ 32,984, at 163,472. The Government's decision not to exercise an option can thus provide a vehicle for relief only if the contractor proves that the decision was made in bad faith or was so arbitrary or capricious as to constitute an abuse of discretion. Blackstone Consulting, Inc. v. General Services Administration, CBCA 718, 09-1 BCA ¶ 34,103, at 168,636; Greenlee Construction, Inc. v. General Services Administration, CBCA 416, 07-1 BCA ¶ 33,514, at 166,062; Aspen Helicopters, Inc. v. Department of Commerce, GSBCA 13258-COM, 99-2 BCA ¶ 30,581, at 151,024.

There are any number of legitimate reasons not to exercise an option. Poor performance would be one them. Others might be lackluster (though not necessarily poor) performance or insufficient respect for government officials or for their concerns. Personal animosity probably would not be one of them, but it might depend on how it's described and explained.

FAR does not require any specific documentation of a decision not to exercise an option, but see FAR 4.801( b ). I would prepare a short memo to file explaining why the option was not exercised.

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I suggest a read of FAR 17.207 it might help. While the noted reference is with regard to exercising an option meeting the same standard for the memo that Vern suggests could be helpful with regard to any challenges that might occur to the "not" decision.

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Excellent! Thanks the replies and case law cites; they are extremely helpful. This particular case had a lot of layers to it, that will probably lead to other discussion topics. I'll mention another, one that I alluded to earlier.

As I stated before, when the relationship became so toxic between the Building Manager and Chief Engineer, at the request of the Building Manager, the CO issued a notice to have the Chief Mechanic removed from working on the property, under language in the contract:

H.8. Removal from Contract Work

(a) As provided in the clause entitled "Qualifications of Employees", the contracting officer or a designated representative may require the Contractor to remove any employee(s) from GSA controlled buildings or other real property should it be determined that the individual(s) is either unsuitable for security reasons or otherwise unfit to work on GSA controlled property. This shall include, but not be limited to, instances where an employee is determined, in the Government's sole discretion, to be incompetent, careless, insubordinate, unsuitable or otherwise objectionable.

( b ) A contractor employee may also be removed where the continued employment of the contractor employee in connection with the Government work is deemed, in the Government's sole discretion, contrary to the public interest, inconsistent with the best interests of security, or a potential threat to the health, safety, security, general well being or operational mission of the facility and its population.

The reason for the removal was the Chief Mechanic was "insubordinate", therefore "unsuitable". Again, numerous instance were verbally cited to the CO over a period of months, and they seemed to be escalating with the passing of time, to point it was just not working. (The Chief Engineer was a middle-aged man; the Building Manager was a twenty-something young woman; one of the the overall contentions from the Government being that the Chief Engineer did not like "taking orders" from a young woman").

The "insubordination" claim stemmed from the Chief Mechanic not taking direction from the Building Manager; he would only perform if he received direction from her supervisor. There where also claims that he tried to intimidate her, bully her (he's much larger physically than she), etc. Again, the dates and times of these incidents were not documented.

I should add briefly, that the CO issued this notice without consulting Legal counsel. After the fact (the contractor vehemently protested by hiring a lawyer) the Government's Legal counsel and upper management stated that the removal should not have been issued, under this provision. Not sure if this was a legal decision, a contracting decision, or a practical decision, but the CO is being proposed for disciplinary action because of her decision to issue this notice of removal under this contract language, for this purpose.

My followup question being, given the circumstances as presented, and considering the contract language cited above, did the CO have authority to demand removal of the Chief Engineer from the contract? (Not fire the employee; just have him removed from working under this particular contract.)

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Guest Jason Lent

The TAR, HSAR, and, and DEARS feature clauses with that exact language (TAR 1252.237-70, HSAR 3052.204-71, and DEARS 970.5203-3), so removal of a contractor employee for the reasons of incompetence, carelessness, or insubordination is clearly within the Government's realm. Did management and legal give any specific reasons as to why the CO couldn't direct the contractor employee to be pulled or is the hassle over the CO violating some internal policy that states the CO must get legal review prior to enforcing the terms of the contract?

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No, no violation of some internal rule to consult Legal; more of a "why didn't you consult Legal?" before taking this action. I'm a bit removed from the actual meeting in which the CO was told this, but my understanding is they thought this was untenable because:

1. There was no formal documention of the Chief Engineer's behavior (dates, times, description of actions)

2. The contract language doesn't apply to this type of behavior. It clearly states other reasons (i.e. security), but this action could not be taken under this language.

3. The contract was otherwise being performed satisfactorily (as far as I know).

Interestingly enough, this case is leading to an internal "unoffcial" policy that all adverse contract actions be reviewed by Legal before being executed.

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Excellent! Thanks the replies and case law cites; they are extremely helpful. This particular case had a lot of layers to it, that will probably lead to other discussion topics. I'll mention another, one that I alluded to earlier.

As I stated before, when the relationship became so toxic between the Building Manager and Chief Engineer, at the request of the Building Manager, the CO issued a notice to have the Chief Mechanic removed from working on the property, under language in the contract:

H.8. Removal from Contract Work

(a) As provided in the clause entitled "Qualifications of Employees", the contracting officer or a designated representative may require the Contractor to remove any employee(s) from GSA controlled buildings or other real property should it be determined that the individual(s) is either unsuitable for security reasons or otherwise unfit to work on GSA controlled property. This shall include, but not be limited to, instances where an employee is detgermined, in the Government's sole discretion, to be incompetent, careless, insubordinate, unsuitable or otherwise objectionable.

( b ) A contractor employee may also be removed where the continued employment of the contractor employee in connection with the Government work is deemed, in the Government's sole discretion, contrary to the public interest, inconsistent with the best interests of security, or a potential threat to the health, safety, security, general well being or operational mission of the facility and its population.

The reason for the removal was the Chief Mechanic was "insubordinate", therefore "unsuitable". Again, numerous instance were verbally cited to the CO over a period of months, and they seemed to be escalating with the passing of time, to point it was just not working. (The Chief Engineer was a middle-aged man; the Building Manager was a twenty-something young woman; one of the the overall contentions from the Government being that the Chief Engineer did not like "taking orders" from a young woman").

The "insubordination" claim stemmed from the Chief Mechanic not taking direction from the Building Manager; he would only perform if he received direction from her supervisor. There where also claims that he tried to intimidate her, bully her (he's much larger physically than she), etc. Again, the dates and times of these incidents were not documented.

I should add briefly, that the CO issued this notice without consulting Legal counsel. After the fact (the contractor vehemently protested by hiring a lawyer) the Government's Legal counsel and upper management stated that the removal should not have been issued, under this provision. Not sure if this was a legal decision, a contracting decision, or a practical decision, but the CO is being proposed for disciplinary action because of her decision to issue this notice of removal under this contract language, for this purpose.

My followup question being, given the circumstances as presented, and considering the contract language cited above, did the CO have authority to demand removal of the Chief Engineer from the contract? (Not fire the employee; just have him removed from working under this particular contract.)

Were the allegations true and did the building engineer have the authority and duty to provide direction to the contractor? I am assuming that her supervisor was not the KO. If the answers were yes and yes, I believe that the KO had the right to remove the employee as objectionable as well as for being insubordinate in accordance with the clause. And if the government lawyer and the KO's superiors berated or otherwise belittled the KO in for presence of the contractor, they should be reprimanded. Of course this opinion is based upon the info provided. I'm sure that there must be more context to the story.
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Guest Jason Lent

No, no violation of some internal rule to consult Legal; more of a "why didn't you consult Legal?" before taking this action. I'm a bit removed from the actual meeting in which the CO was told this, but my understanding is they thought this was untenable because:

1. There was no formal documention of the Chief Engineer's behavior (dates, times, description of actions)

2. The contract language doesn't apply to this type of behavior. It clearly states other reasons (i.e. security), but this action could not be taken under this language.

3. The contract was otherwise being performed satisfactorily (as far as I know).

Interestingly enough, this case is leading to an internal "unoffcial" policy that all adverse contract actions be reviewed by Legal before being executed.

That seems unduly invasive to the CO's ability to make decisions regarding contractor's poor performance.

1. That's understandable; a simple e-mail documenting the behavior would suffice (I imagine).

2. The inclusion of language to the extend of "where an employee is determined, in the Government's sole discretion, to be incompetent, careless, insubordinate, unsuitable or otherwise objectionable" seems to make it pretty clear that the objectionable unprofessional behavior and insubordination make this decision to pull the employee valid.

3. So except for the thing where the contractor employee is an intimidating bully and refusing to perform according to the contract (the "twenty-something" being "in charge", personal service status notwithstanding), the contractor is hitting the Service Requirements, and therefore shouldn't be accountable for the contractor employee being an intimidating bully and refusing to perform?

If there is any policy I can't stand, it is "internal unofficial policy". I imagine your legal office will be bombarded with Letters of Concern.

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Guest Vern Edwards

As I stated before, when the relationship became so toxic between the Building Manager and Chief Engineer, at the request of the Building Manager, the CO issued a notice to have the Chief Mechanic removed from working on the property, under language in the contract:

***

I should add briefly, that the CO issued this notice without consulting Legal counsel. After the fact (the contractor vehemently protested by hiring a lawyer) the Government's Legal counsel and upper management stated that the removal should not have been issued, under this provision. Not sure if this was a legal decision, a contracting decision, or a practical decision, but the CO is being proposed for disciplinary action because of her decision to issue this notice of removal under this contract language, for this purpose.

My followup question being, given the circumstances as presented, and considering the contract language cited above, did the CO have authority to demand removal of the Chief Engineer from the contract? (Not fire the employee; just have him removed from working under this particular contract.)

I hesitate to post to this thread again, because I think the followup question is dumb and I'm almost certain that the original poster (OP) is going to come back to tell us that there is more to the story than he has told so far. But I'm going to stick my neck out.

The issue is not whether the CO had authority to do what she did. Maybe she did; maybe she didn't. The issue is whether, authorized or not, she should have issued the a "notice" (actually, a demand) without first giving her boss a head's up and seeking advice of counsel. Clearly, her boss thinks he should not have.

A real businessperson would have quietly discussed the problem with the company's management and asked that they solve the problem either by modifying the Chief Engineer's behavior or by reassigning him. A cordial, informal discussion might have solved the problem without the formality of a removal demand. A competent CO could have communicated the government's concerns without resorting to formal contractual means and might have avoided the ensuing crisis. I did that several times as a CO administering Air Force service contracts. I even did it as a consultant for GSA when it was having a problem with a contractor's manager at a Federal courthouse. It took all of a couple of hours.

Too many COs are devoted to what I call the "command style" of contractual relations. Sometimes, it's necessary, but a cordial businessperson to businessperson conversation can often accomplish a lot. If the problem had continued even after the informal discussion, the CO could then have pursued a more formal course of action.

But even if the CO had actually done this (and I won't be surprised if the OP comes back to tell us that he didn't tell us the whole story), and even if she had the authority to do what she did, she should not have done it without first giving her boss a heads-up and seeking the advice of counsel. Demanding that a contractor remove an employee from a position is a serious matter, with possibly serious labor relations and legal consequences for the contractor.

Assuming that there is not more to the story that would shed a different light on the CO's actions, I think that the CO in this case used poor judgment.

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Interesting answers...and I appreciate the dialogue.

Perhaps I had given too much detail, which I'd only provided to lend some context, so rather than give more detail, I'll give less.

The heart of my question was this: Given the contract language for removal of an employee from contract work, which is rather vague "...unsuitable or otherwise objectionable...". Is a CO acting within the limits of their authority and in IAW the contract, in asking for removal of an employee when there clearly is a problem with a contract employee, unrelated to overall contract performance (per se)? What constitutes an employee being "unsuitable" and "otherwise objectionable" (constant use of foul language? bad personal hygiene? overt religious, or anti-religious, displays? an abrupt uncooperative personality?) The contract language says that type of determination is at the sole descretion of the Government, but that is as vague as it gets.

When I was a "working CO", I've asked for removal of a contract employee several times under this language, without a problem (the contractor willingly complied). Without consulting Legal counsel, I might add. And just recently, one of my CO's asked for removal of a contract employee, without a problem (and without consulting counsel). Addmittedly, the circumstances were a little bit more clear cut, and fairly well documented, in these cases (stealing, sleeping on the job, etc.). (BTW, it's not the CO's boss, or even her boss' boss, that is recommending disciplinary action; it's someone four levels above the CO, for what its worth. The three levels above the CO don't feel that this merits formal disciplinary action.)

"A real businessperson would have quietly discussed the problem with the company's management and asked that they solve the problem ... A cordial, informal discussion might have solved the problem without the formality of a removal demand. "

I agree that the practical solution would be to negotiate some type of settlelment, which in fact did happen. GSA rescinded the removal request, allowed the Chief Engineer to remain in place, re-assigned the Building Manager to another property for the remainder of the contract performance period, allowed the contract run to conclusion, and did not exercise the option. (Remember, this current topic is the prologue to the original subject of this conversation, "what documentation is needed when not exercising options".)

I'm less concerned with what the CO should or should not have done with respect to practical business relations, and the management-Legal dynamic, and more concerned with the broader question of what are the limits of the Government's authority under this contract language, and if there is case law in this regard. So far, taking away from what was said in one the earlier responses, I'm left with the Government shouldn't be "arbitrary and capricious" in these matters - that seems to be the best advice from the land of the Legal Beagles when confronted with this type of language.

Thoughts?

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I do agree with what Vern suggested. If you are asking if satisfactory performance by the contractor limits the KO's right to remove an objectionable employee, the answer is no. But the KO must not act in bad faith or act in an arbitrary and capricious manner. If contract performance was the only consideration then the clause would state that.

Regarding not exercising the option, if the contractor's site supervisor made life a living Hell for the government's staff, would you willingly subject them to that for another year if you had the option not to? Again, we don't know both sides of the story and as Vern described, good contract management and communications might have resolved this situation for mutual benefit.

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Guest Vern Edwards

I'm less concerned with what the CO should or should not have done with respect to practical business relations, and the management-Legal dynamic, and more concerned with the broader question of what are the limits of the Government's authority under this contract language, and if there is case law in this regard.

Thoughts?

Jonesey:

The clause you quoted is rather broadly written, so I assume that the Government's rights under the clause would be broad, though short of arbitrariness, capriciousness, or bad faith. The clause does not say that the Government can demand a person's removal without cause or explanation, so whoever wrote it probably felt that the Government would have to have a legitimate reason, and you should expect that a CO who invokes the clause will be asked to give reasons, especially if the removal would hamper the contractor's ability to perform, even if only temporarily. I am unwilling to reach any conclusion about whether the clause in your case would cover the CO's action. The fact that someone in the Government decided to remove the Government employee rather than the contractor employee suggests that someone in the Government did not think the CO's action was justifiable.

As for case law, several agencies use "employee removal" clauses, and there has been a fair amount of litigation over CO demands for removal, perhaps as many as 50 cases, from 2012 going back as far as the 1960s. At least one such case went to the Supreme Court, see CAFETERIA WORKERS v. McELROY, 367 U.S. 886 (1961) (Navy base commander could order concessionaire employee removed for security reasons). For a brief discussion of that decision, see Old Hickory Services, GSBCA 6258, 82-2 ¶ 15972 (August 12, 1982), which had to do with a removal order by a GSA CO based on the following contract terms and an investigation into charges of sexual harrassment:

Part 8, Contractor Employees, paragraph 5. Clearance of Personnel

A. . . . f the Field Office Manager finds a prospective employee to be unsuitable or unfit for his assigned duties, the contractor shall be advised immediately that such employee cannot continue to work or be assigned to work under the contract . . ..

paragraph 5. B.

B. The Government shall have and exercise full and complete control over granting, denying, withholding or terminating clearances for employees.

paragraph 5. C.

Any employee's name found on the GSA contracting officer's list of unsuitable contractor employees shall not be permitted to enter on duty, and the contractor will be so notified.

paragraph 8. Access to Government Premises

The contractor shall not permit any individual to have access to the building(s) or ground designated herein until it has been determined that permiting such person(s) to have such access will not be contrary to the public interest, and that the individual(s) is authorized to be admitted in accordance with applicable orders, rules, regulations and instructions.

The GSBCA concluded:

On the basis of the record before us, the contracting officer clearly had every reason to conclude Mr. Doe was acting in a manner inimical to the orderly conduct of business at the Federal Office Building. His decision in ordering Mr. Doe removed was within the Government's contractual rights... He also acted with due regard for Mr. Doe's reputation and future prospects of employment elsewhere by making no mention of the real reasons for refusing to reverse his decision on ‘unsuitability.’ The contracting officer acted reasonably, discreetly, in good faith, and within his authority.

There are too many cases for me to read or analyze in a short time, and I cannot make any summary statement about them. Obviously, the interpretation of any such clause depends on its specific language.

DOD uses this clause, 48 CFR 252.247-7006:

Removal of Contractor's Employees (DEC 1991)

The Contractor agrees to use only experienced, responsible, and capable people to perform the work. The Contracting Officer may require that the Contractor remove from the job, employees who endanger persons or property, or whose continued employment under this contract is inconsistent with the interest of military security.

GSA uses this clause, 48 CFR 552.237-71:

Qualifications of Employees (MAY 1989)

(a) The contracting officer or a designated representative may require the Contractor to remove any employee(s) from GSA controlled buildings or other real property should it be determined that the individual(s) is either unsuitable for security reasons or otherwise unfit to work on GSA controlled property.

( b )The Contractor shall fill out and cause all of its employees performing work on the contract work to fill out, for submission to the Government, such forms as may be necessary for security or other reasons. Upon request of the Contracting Officer, the Contractor and its employees shall be fingerprinted.

( c) Each employee of the Contractor shall be a citizen of the United States of America, or an alien who has been lawfully admitted for permanent residence as evidenced by Alien Registration Receipt Card Form I–151, or, who presents other evidence from the Immigration and Naturalization Service that employment will not affect his immigration status.

The Department of Energy uses this clause, 48 CFR 970.5203-3:

Contractor's Organization (DEC 2000)

(a) Organization chart. As promptly as possible after the execution of this contract, the Contractor shall furnish to the Contracting Officer a chart showing the names, duties, and organization of key personnel (see 48 CFR 952.215–70) to be employed in connection with the work, and shall furnish supplemental information to reflect any changes as they occur.

( b ) Supervisory representative of Contractor. Unless otherwise directed by the Contracting Officer, a competent full-time resident supervisory representative of the Contractor satisfactory to the Contracting Officer shall be in charge of the work at the site, and any work off-site, at all times.

( c) Control of employees. The Contractor shall be responsible for maintaining satisfactory standards of employee competency, conduct, and integrity and shall be responsible for taking such disciplinary action with respect to its employees as may be necessary. In the event the Contractor fails to remove any employee from the contract work whom DOE deems incompetent, careless, or insubordinate, or whose continued employment on the work is deemed by DOE to be inimical to the Department's mission, the Contracting Officer may require, with the approval of the Secretary of Energy, the Contractor to remove the employee from work under the contract. This includes the right to direct the Contractor to remove its most senior key person from work under the contract for serious contract performance deficiencies.

(d) Standards and procedures. The Contractor shall establish such standards and procedures as are necessary to implement the requirements set forth in 48 CFR 970.0371. Such standards and procedures shall be subject to the approval of the Contracting Officer.

Note that a CO can demand removal only with the approval of the Secretary of Energy. The Secretary of Energy, not just the CO's supervisor.

NASA uses this clause, 48 CFR 1852.246-70:

Mission Critical Space System Personnel Reliability Program (MAR 1997)

(a) In implementation of the Mission Critical Space System Personnel Reliability Program, described in 14 CFR 1214.5, the Government shall identify personnel positions that are mission critical. Some of the positions as identified may now or in the future be held by employees of the Contractor. Upon notification by the Contracting Officer that a mission-critical position is being or will be filled by one or more of the Contractor's employees, the Contractor shall (1) provide the affected employees with a clear understanding of the investigative and medical requirements and, (2) to the extent permitted by applicable law, assist the Government by furnishing personal data and medical records.

( b ) The standard that will be used in certifying individuals for a mission-critical position is that they must be determined to be suitable, competent, and reliable in the performance of their assigned duties in accordance with the screening requirements 14 CFR 1214.5. If the Government determines that a Contractor employee occupying or nominated to occupy a mission-critical position will not be certified for such duty, the Contracting Officer shall (1) furnish to the employee the specific reasons for its action; (2) advise the employee that he/she may avail himself/herself of the review procedures that are a part of the certification system; and (3) furnish him/her a copy of those procedures upon request.

( c) If a Contractor employee who has been nominated for (but has not yet filled) a mission-critical position is not certified, the Contractor agrees to defer the appointment to the position until the employee has had an opportunity to pursue the referenced procedures. If the employee is an incumbent to the position, the Contractor agrees, upon the request of the Government, to remove him/her from the position temporarily pending an appeal of the action under the review procedures. If any employee not certified elects not to take action under the procedures, or, if having taken action, is not successful in obtaining a reversal of the determination, the Contractor agrees not to appoint the employee to the position, or if already appointed, to promptly remove the employee.

Note the requirement for the CO to provide "specific reasons" and the employee's ability to appeal.

The Department of Commerce uses a lengthy clause that says the CO can demand removal of an employee based on the results of an investigation by the Department's Office of Security. See 48 CFR 1352.237-70. HUD uses a lengthy clause that allows it to deny access to a contractor employee if a background investigation finds the employee to be "unsuitable for access to a Government facility." See 48 CFR 2452.237-75.

In every case, the Government can demand that an employee be removed for cause. In almost every case the decision to demand removal must be based on something other than the CO's personal opinion. In some cases the causes for which the Government can demand removal are quite specific. A contractor can appeal a CO's decision to demand removal on grounds that the CO's demand was in violation of the clause or was made in bad faith. This suggests that CO's must be very careful about making formal demands.

Although I understand that you are not interested in "practical business relations," I will reiterate that the CO in your case should have given her boss a heads up and checked with legal before demanding the removal of a contractor employee, as should any CO thinking of ordering a contractor to remove an employee.

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For construction contracts see:

52.236-6 -- Superintendence by the Contractor.

"As prescribed in 36.506, insert the following clause:

Superintendence by the Contractor (Apr 1984)

At all times during performance of this contract and until the work is completed and accepted, the Contractor shall directly superintend the work or assign and have on the worksite a competent superintendent who is satisfactory to the Contracting Officer and has authority to act for the Contractor.

(End of Clause)"

And:

"52.236-5 -- Material and Workmanship.

As prescribed in 36.505, insert the following clause:

Material and Workmanship (Apr 1984)

...( c ) All work under this contract shall be performed in a skillful and workmanlike manner. The Contracting Officer may require, in writing, that the Contractor remove from the work any employee the Contracting Officer deems incompetent, careless, or otherwise objectionable.

(End of Clause)"

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Just back from vacation and late to the party.

Giving two instances where a CO, without consulting legal, was able to amicably work with the contractor to have an employee removed does not mean there is no need for the CO to consult with legal when acting without agreement of the contractor. Ask yourself which is better, consulting legal before taking action or consulting legal after you receive the claim? Perhaps (as a recently retired civilian attorney for the Air Force) I am biased, but I think legal should be consulted before taking almost any unilateral action that might result in a claim.

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Wvanpup, that's good advice in general.

BTW, in my first post ( #7), I didn't intend to give the impression that the KO should have acted without consultation in this situation. One point of my discourse was that any adverse feedback from legal or higher ups should be done within a government only audience.

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Joel said: "One point of my discourse was that any adverse feedback from legal or higher ups should be done within a government only audience."

I was amazed at the number of times meetings were scheduled with contractors, and legal was invited without any prior meetings with the contracting officer. Have contracting officers forgotten what attorney-client privilege is, or is it okay with them to have the contractors here the advice they receive from counsel? On a somewhat related matter, I was amazed at how many times contracting officers would negotiate a claim/REA with the contractor, reach agreement, and then request legal review. I remember one case from the late 1980s where we terminated for convenience a port-a-potty rental contract (perhaps we were not as full of .... whatever as we originally thought), and the CO negotiate a settlement which was presented for legal review. The problem was that the contract had the short form T4C clause, where we pay only the contract price for services rendered (perhap the strategy was to make legal the whipping boy for reneging on the agreement).

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Guest Vern Edwards

wvanpup:

The example you gave is of a fundamentally incompetent CO. No legal advice is going to save the government from such a person. The ultimate mistake was not the CO's failure to consult legal or bringing legal to a meeting without preparation, but the appointment of that person to be a CO in the first place.

Too many CO appointments are being made because an office needs people to sign documents and push the paper through. In your experience, does counsel (office symbol JA in USAF) ever march down to see the Chief of the Contracting Office (PK) and tell him or her to stop appointing idiots? In my experience, the answer is no. Does JA ever go to the commander and say that PK is appointing too many incompetents? In my experience, the answer is no.

A competent CO would not need the advice of JA for every REA, claim, or termination settlement. He or she would need the advice of JA mainly with respect to unusual issues (as in Jonesey's story) and unusual or complex REAs, termination settlements, or claims. He or she would never, ever, bring a lawyer to a meeting with a contractor unless litigation were likely or pending and the contractor was bringing his or her own attorney. If the attorneys are coming the deal has gone south. In that case, the attorneys should represent their clients and do all the talking. Ordinarily, If lawyers are at a business meeting their clients keep their mouths shut and let their respective "mouthpieces" talk. The client still retains the power of final decision.

Our principal problem in contracting is professional ignorance and incompetence, not failure to consult with counsel. The typical CO today won't go to the restroom without consulting with counsel.

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Just back from vacation and late to the party.

Giving two instances where a CO, without consulting legal, was able to amicably work with the contractor to have an employee removed does not mean there is no need for the CO to consult with legal when acting without agreement of the contractor. Ask yourself which is better, consulting legal before taking action or consulting legal after you receive the claim? Perhaps (as a recently retired civilian attorney for the Air Force) I am biased, but I think legal should be consulted before taking almost any unilateral action that might result in a claim.

wvanpup, I understand your point. I simply cited those two examples as cases where the contract language was clear that the Government had a right to ask for removal of a contract employee for a speciific infraction. A legal opinion wasn't needed, in my judgement. Do we need a legal opinion for every adverse action, when the language is clear, and the rights of the parties are clear (i.e. deductions?)

I've got the point, loud and clear, that we need to consult Legal for an unusual, nebulous and potentially "serious labor relations and legal consequences", and in those cases I've done so (the two examples notwithstanding). But not for every little thing.

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