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LorenaCC

Did GAO start using "10% rule of thumb" for Scope Determinations??!

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My Procurement Exec and one Attorney believe GAO recently used the so-called "10%" rule to determine a contract modification was within scope and therefore denied a protest. Neither has been able to produce anything other than their own recollection. Everything I have found in my previous and recent research indicates they are seriously mistaken. So if anyone out there has seen anything from GAO to support their statements, please post a link.

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Lorena, rather than ask the WIFCON community to research their argument, how about challenging the attorney and procurement executive to provide the citation to support it? Your attorney should have the ability and resources to research and find the applicable decision to support his/her belief. Don't let them off the hook too easily.

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Re: Lorena, rather than ask the WIFCON community to research their argument, how about challenging the attorney and procurement executive to provide the citation to support it? Your attorney should have the ability and resources to research and find the applicable decision to support his/her belief. Don't let them off the hook too easily.

Joel, I've done that. The Attoreny has retracted her statement based on her own research. The Procurement Exec hasn't been known to think he's wrong or admit he's wrong. The Procurement Exec feels its the Policy shop's function to find support for his "well in my mind..." statements. Thanks for the link.

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Reminds me of some SES's and like several contractor execs and VP's for Contracts I've dealt with, especially those in some of the biggest Defense firms. I recommend that you buy either the "Changes" or "Administration of Government Contracts" books if you need more support than your newly enlightened attorney can provide.

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Our attorney is pushing "more than 30%" is out of scope based on Liberty Corp.,B-232234.5

I tried to explain I use the test for CICA applicability to determine whether there is a material difference between the original contract and modification (type of work performance period, cost (which is not alone a determining factor) whether the original contract advised offerors of the potential for change and whether the modification would have reasonably anticipated at the time of award). I have a de-scope with an approximate 33% decrease in price, but my determination with all other factors considered is that the de-scope is not out of scope!!

I word searched and could not find reference to 30% in the decision. I asked the attorney to show me specifically......dead silence.

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Lorena like you our "policy" people have adopted our attorney's 30% threshold which is a roadblock even with my analysis.

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SSKO:

I suspect that you have misunderstood your attorney. Either that, or your attorney should turn in his law degree.

First, the decision is Liebert, not "Liberty." The full cite is Liebert Corp., 70 Comp. Gen. 448, B-232234, B-232234.5, 91-1 CPD ¶ 413, April 29, 1991.

Second, I don't know how your attorney would get a "30%" standard from Liebert. The procurement in Liebert was out of scope because it was in excess of the maximum quantity of a requirements contract:

An order in excess of the maximum quantity stated in the contract would be outside the scope of the contract. Such an order would result in a contract materially different from that for which the original competition was held and, absent a valid sole-source determination, would be subject to CICA requirements for competition. See Neal R. Gross & Co., Inc., 69 Comp. Gen. 292 (1990), 90-1 CPD ¶ 212; Clean Giant, Inc., B-229885, supra. We therefore sustain the protest to the extent that the quantities to be ordered are in excess of the stated maximum quantities in the Exide contract.

Even one percent in excess of the maximum quantity would be out of scope.

Third, why are you talking about "descope" instead of partial termination for convenience?

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Mr. Edwards asks a good question, "Third, why are you talking about "descope" instead of partial termination for convenience?"

Recently, the VA awarded a construction contract which included the base item(s) and option item 2. Now that construction is underway, the VA has determined it really cannot afford option item 2 and wants to remove it from the contract. Of course, there is a small portion of option item 2 SOW that must still be performed, so it is not a completely clean de-scoping mod. The contract specialist asked me if this is a "reduction in scope" under the Changes clause or a partial termination for convenience. My recommendation was to process a T4C. A different CO recommended processing it under the Changes clause as it is a bilateral change, it is more palatable to the contractor and not such a heavy handed approach.

In my mind, a T4C is bilateral in that the final agreement is signed by both parties. And a T4C is not a negative to the contractor. Further, if there is any idea it might be, this can be laid to rest in CPARS.

I've personally not found a good analysis of when or if one should proceed with a reduction in scope under the Changes clause or a partial termination for convenience.

I'd be interested in finding a good analysis of this and/or hearing people's thoughts on the matter.

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If you have an edition, the Cibinic and Nash, Administration of Government Contracts books may provide what you are searching for.

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Whether to do a partial T4C or a deductive change might become a matter of dispute if there is a significant difference in the cost impact on the contractor. The matter is discussed in Government Contract Changes 3d ed., by Nash and Feldman, § 4:15, "Deductive changes vs. convenience terminations."

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Guest Jason Lent

The issue came up in fairly recent history; the idea of de-scoping (colloquially called such, but Vern's terminology is what I saw in the materials I read, to include a GAO Chapter 4 of The Administration of Government Contracts and a report by the Congressional Research Service at https://www.fas.org/sgp/crs/misc/R43055.pdf) seemed to hinge on whether or not it was in the terms of the contract to reduce the amount of work performed. As an example, a service contract for custodial services where the amount of buildings were expected to be reduced throughout the life of the contract (and this expectation was described in the terms of the solicitation and subsequent contract) would be appropriately identified as a deductive change.

In a contract for providing custodial services where the shrinking requirement was not identified, you might not be able to appeal to the reduction being in the general scope of the contract ("scope of the competition").

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"De-scoping"or "descoping" -- which I take to mean narrowing or reducing the scope, i.e., making it smaller -- cannot be done under the Changes clause. That clause authorizes the contracting officer to make changes "within" the scope of the contract. It does not authorize the CO to change the scope. The only way to alter the scope of a contract is to enlarge it by conducting a new procurement and making a supplemental agreement or to reduce it by partially terminating the contract for convenience.

The concept of "scope" of a contract is one of the most elusive, if not the most elusive, in all of government contracting.

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Guest Jason Lent

I've understood that a pet peeve of yours is misuse of professional language (or use of unprofessional language), and I think the overuse of "de-scope" (again, colloquially) to mean "reduce the quantity delivered or work to be performed" is an example of such a thing, right up there with "no-bid contract" as reported in popular media.

For my real-life (albeit second hand) example where you have custodial service for a base that is shrinking at an unknown rate, the Changes clause (FAR 52.243-3) would then be the appropriate authority? Considering what you said, my example of "de-scope versus termination" seems invalid, since the shrinking base would be identified in the solicitation & contract, and hence the reduction would still be in scope.

Thank you for the invaluable insight. I have a feeling I will be referring to this exchange countless times in the future to respond to the misuse of the term "de-scope".

You discerned scope being elusive in government contracting. Is there a reason the issue of scope wouldn't come up in other forms of contracts?

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Jason:

Just remember most custodial contracts would be commercial and would include Changes clause 52.212-4[c], which does not allow unilateral deductive changes.

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There is no question that COs can issue deductive change orders that reduce the amount of work. But not all deductive change orders affect scope.

Assume for the sake of discussion that a service contract includes the noncommercial changes clause. Let's say that the contract calls for custodial services to be performed five nights per week and the CO wants to reduce the rate of service to three nights. I think the CO could do that by change order. I don't think that such a change alters the scope of the contract (although I could make an argument that it does).

Now let's say you have a custodial contract that calls for nightly custodial services in five separate buildings. Suppose that you plan to cut the number of buildings from five to three. I think that there is an argument that such a change would be a reduction in scope and that you could not do it by change order. That seems almost certainly to be true if each building is a separate line item. But I think it would also be true if the buildings were covered under a single line item.

But please don't ask me for an argument as to why one is a change in scope and the other is not. That's what I believe, but I'm not entirely sure why.

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Hi Vern,

Perhaps the hours reduction could fit under the changes clause becuase it is affecting the time of performance, whereas cutting the buildings from five to three will affect the number of crews working the job? Not requesting an arguement :)

Shifting two of the five crews to other, new buildings would be a change . . . right? It's just affecting where they show up in the evening?

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Following Vern's logic and apsofacto's question, I would suppose that reducing from daily to three-times-a-week is merely a matter of rate -- same work, same locations, different rate -- a change order would work. I would suppose that cutting out two buildings entirely is a partial termination.

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Let's say that the contract is on a government campus and requires the cleaning of three buildings. Each building is entirely independent of the others. Now let's say that the government wanted to add two buildings, each independent of the others. I think that the GAO would say that adding the two buildings is a new procurement that requires new competition. If adding two buildings would be out of scope, then I think deleting two such buildings would be out of scope and would require a partial termination rather than a deductive change order.

If the contract required cleaning each building three days a week and the government wanted to increase the frequency of cleaning to five days a week, conducting a new competition might result in two different contractors doing the same kind of work in the same spaces on different days. As a practical matter, that could lead to disagreements over blame for cleaning deficiencies, etc. I doubt that the GAO would consider that out of scope and require a new competition. it seems impractical. So I think you could change the frequency of cleaning by change order. If you could add two days a week by change order, I think you could deduct them by change order.

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Ah.

When faced with reducing a contract in some way, I should consider how it should be handled if that reduction were reversed into an addition.

change order : deductive change order ::

cardinal change : partial termination for convenience

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Maybe. Maybe not.

Maybe it depends on what "scope" and "within the general scope" means.

Draw a circle. Now draw a smaller circle within the first. The first circle represents the general scope of the contract at present. The smaller circle represents the requirement as reduced -- the general scope as "de-scoped."

Isn't the reduced requirement "within" the original general scope? That being the case, can't the reduction be done by change order? In fact, wouldn't any reduction of the requirement be "within" the general scope before the reduction? If so, then even if the reduction changed the scope of the contract, couldn't it be made by change order?

I'm just trying to think the thing through. That's what this discussion forum is about. Right? Isn't it okay to confuse ourselves if working through our confusion leads us to a better thought in the end?

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This is absolutely a discussion forum and an arena to socialize ideas.

Once the new circle is drawn, can you go back to the original circle within scope?

Seems that the financial impact on the contractor and consequently the government should go into the deductive analysis. It seems the contractor should be left in the same or similar position, financially, after the change in scope.

Equitable adjustments under the changes clause and terminations clause offer different methods of relief/recovery.

I found this to be a decent, easy to read starting point on post award deletions of work: http://read.nxtbook.com/ncma/contractmanagement/september2014/postawarddeletionsofwork_feat.html

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Once the new circle is drawn, can you go back to the original circle within scope?

Good question. Let me think about it. It might be something to be decided on a case-by-case basis.

The article to which you provided the link is quite good. I wonder where the author is now? I note that when he wrote the article he was a contracting officer and has with a law degree. I'm seeing more and more 1102s with law degrees. As a general rule, they know how to think and how to write.

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Metaphors are a great way to learn:

Draw a circle. Now draw a smaller circle within the first. The first circle represents the general scope of the contract at present. The smaller circle represents the requirement as reduced -- the general scope as "de-scoped."

Let me try one:

Bake a pie, and cut a slice from it. The pie represents the general scope of the contract. The sliceless pie is the requirement as reduced. One is no longer circular, but it is still a funtional pie of the same flavor.

Your wife yells at you for setting a bad example for the kids with your lack of impulse control.

Or another:

Build a lawn mower and then remove the motor. It isn't a functional lawn mower any more. But still the same shape.

Let's get back to shapes and abstraction:

Take a circle. Remove four arcs so it is now a square. The circle represents the original contract scope. The square the requirement as reduced. The shape is now different.

I'm not sure where I'm going with this either. Is the location of the new shape important? Are we fooled by the word "within", which is usually about a location? Can a scope have a location? Have you ever looked at hands? I mean . . . *really* looked at them? They talk to me sometimes.

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You might find it interesting to know that the word "scope" comes from an Italian word that meant "aim," which came from a Greek word that meant "target."

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