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Thanks in advance to anyone that is willing to read these questions.

Agency awarded Company an FFP contract with reimbursable ODCs. The contract is for ten months, all in the same FY. Two ODCs at issue:

1. A software license. The manufacturer does not sell the license for anything less than one year. Company has a reseller agreement with manufacturer. Company purchased the one-year license and resold it to Agency, transferring the license in accordance with the terms of the reseller agreement, (click wrap acceptance of manufacturer's terms of use is all that's required). The term of the license is stated in Company's proposal and contract. Agency has paid Company the full amount for the license and Company has paid manufacturer.

Contract expired 4/2015. Agency asserts to Company that Agency cannot use the license for May and June, because Agency did not pay manufacturer directly for the license. Agency asserts that Company owns the license for the remaining two months of the license and that Agency has no rights to it. Agency is NOT asking for a rebate for the last two months of the license.

Agency generally knows what it is talking about, why is it saying this? And is it consistent with the following?

2. Agency has also agreed to buy one year of monthly software maintenance services (again, the contract is only for ten months.) The product being sold, which integrates several softwares and other IT services, will not work without the monthly software maintenance. Because Agency has had lapses in funding and product has historically been unavailable during those lapses, Contractor proposed, and Agency agreed to purchase, 12 months of the service, supposedly so that Agency could keep the product running after Company's ten-month agreement expired. Company purchases the services from another manufacturer by the month. Contractor had offered to purchase the last two months of the service in the last month for Agency. In the two weeks preceding the end of the contract, Agency decided it did not want to keep the product and so doesn't want the last two months of the service. Manufacturer requires 30 days' notice to terminate the services so Company will have to pay for one month.

Is Agency's decision not to purchase the last two months of the service a T4C?

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Interesting questions. I'm reminded of the good ol' days when certain items had minimum buy quantities. You needed 50 but you had to buy 500. You proposed 500 with the notation "minumum buy" and it was accepted by everybody as being the way things worked. Seems to me that software license terms should work the same way. But I'm not a software wonk. I'm not sure if the analogy is solid.

My thought on #1 is the same as yours. The Agency acquired a license -- a right -- to use the product for 12 months because that was the minimum term offered. If it chooses not to use the final two months ... well shame on the Agency.

My thought on #2 is founded on your comment, "Contractor proposed, and Agency agreed to purchase, 12 months of the service..." Now the Agency says it only wants 10 months of service, and a late notification required you to pay for 11 months of service. I'm thinking the full 11 months of service is a reimbursable cost. Your auditors may give you some grief but I think a good CO would agree with your position--unless the notification was provided timely and it was your delay that led to the extra month's worth of charges.

Do I think it's a T4C? No. The PoP hasn't changed. The SOW hasn't changed. At most it's a "deductive change" but all it does is align the reimbursable costs with the contract's PoP.

Looking forward to other views on these questions.

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  • 4 weeks later...

Contractor had offered to purchase the last two months of the service in the last month for Agency.

Late reply to an old post, but I was wondering whether you received written direction/authorization, based on the offer mentioned above, to purchase those last two months and whether that written direction came from the KO.

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