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mtclymer

Would a contractor find the Government Delay of Work clause preferable?

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I've been looking at 52.242-17, Government Delay of Work. The prescription states that the clause is optional when a fixed-price contract is contemplated for services, or for supplies that are commercial or modified-commercial items.

It also states that the clause is not applicable if the contract otherwise specifically provides for an equitable adjustment because of the delay or interruption; e.g when the changes clause is applicable.

However, the changes clause (52.243-1) doesn't address delay or interruption, only changes in 1) drawings, designs, or specs (when supplies are to specially manufactured for gov in accordance with drawings, designs or specs), 2) method of shipment or packing and 3) place of delivery. So, this leads me to believe if we don't have 52.242-17 on contract, then the disputes clause (52.233-1) applies with regard to any government delays.

Which got me to thinking, if a fixed-price contract is contemplated for services (or supplies that are commercial or modified commercial), would 52.242-17 be preferable in the contract to address any government delays as opposed to being left with only the disputes clause?

Assuming I've made the right connections here, there seem to pluses and minuses with each clause. What do you all think?

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I've been looking at 52.242-17, Government Delay of Work. The prescription states that the clause is optional when a fixed-price contract is contemplated for services, or for supplies that are commercial or modified-commercial items.

It also states that the clause is not applicable if the contract otherwise specifically provides for an equitable adjustment because of the delay or interruption; e.g when the changes clause is applicable.

However, the changes clause (52.243-1) doesn't address delay or interruption, only changes in 1) drawings, designs, or specs (when supplies are to specially manufactured for gov in accordance with drawings, designs or specs), 2) method of shipment or packing and 3) place of delivery. So, this leads me to believe if we don't have 52.242-17 on contract, then the disputes clause (52.233-1) applies with regard to any government delays.

Which got me to thinking, if a fixed-price contract is contemplated for services (or supplies that are commercial or modified commercial), would 52.242-17 be preferable in the contract to address any government delays as opposed to being left with only the disputes clause?

Assuming I've made the right connections here, there seem to pluses and minuses with each clause. What do you all think?

If this were a ccmmercial item contract, the changes clause at 243-1 wouldn't be in the contract, would it?

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Did you look at any of the alternates to 52.243-1? If it's a services contract, Alternates I and II also allow for changes to "the description of work to be performed." Could a change in the period of performance, from a Contracting Officer-caused delay, count as a change in the description of work to be performed?

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If this were a ccmmercial item contract, the changes clause at 243-1 wouldn't be in the contract, would it?

This has thrown me for a loop...I've been thinking on how I can miss your point. Or maybe your point is that there's no point to whether the changes clause is in the contract or not...

Anyway, so the question is whether I would prefer to accept 52.242-17 or not. Does it aid me more in the situation where the government has caused delays than the disputes clause.

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Did you look at any of the alternates to 52.243-1? If it's a services contract, Alternates I and II also allow for changes to "the description of work to be performed." Could a change in the period of performance, from a Contracting Officer-caused delay, count as a change in the description of work to be performed?

No, I didn't until you mentioned it. I can see where some of those alternatives might broaden the changes clause to make 52.242-17 less important.

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"This has thrown me for a loop...I've been thinking on how I can miss your point. Or maybe your point is that there's not point to whether the changes clause is in the contract or not..."

mtclymer,

I certainly don't mean to speak for Joel, and I'm sure he'll answer you himself, but I think he was pointing out that in commercial contracts, the authority for changes is in 52.212-4. 52.243-1 is only applicable to non-commercial contracts.

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I certainly don't mean to speak for Joel, and I'm sure he'll answer you himself, but I think he was pointing out that in commercial contracts, the authority for changes is in 52.212-4. 52.243-1 is only applicable to non-commercial contracts.

onliberty,

What do you mean by "authority for changes"? FAR 52.212-4( c ) says "Changes in the terms and conditions of this contract may be made only by written agreement of the parties." If that statement were removed from the contract, would the CO no longer have the authority to modify the contract bilaterally?

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Don,

That clause is a "significant or deeply ingrained strand of public procurement policy," so I would say even if it were left out, it would be read-in via the Christian Doctrine.

And obviously if both parties agree to change the terms and conditions, there is nothing preventing them from doing so.

But, it's just good contracting practice to cite your authority from the contract itself, so if changes need to be made, the CO should cite the appropriate clause, in this case 52.212-4 if it's a commercial contract.

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Which got me to thinking, if a fixed-price contract is contemplated for services (or supplies that are commercial or modified commercial), would 52.242-17 be preferable in the contract to address any government delays as opposed to being left with only the disputes clause?

Assuming I've made the right connections here, there seem to pluses and minuses with each clause. What do you all think?

If you have the delay clause in the contract, a claim would "arise under the contract." Otherwise, it would "relate to the contract." See FAR 33.213(a).

Under the delay clause the contractor is entitled to an adjustment "excluding profit" and to some procedural safeguards. If there is no delay clause and the contractor pursues a claim relating to the contract, it would seek damages, which would likely include profit. Also, the government might not have the procedural safeguards of paragraph ( b ) of the delay clause.

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onliberty,

The CO has the authority to tailor FAR 52.212-4 to remove paragraph ( c ) pursuant to FAR 12.302. If a CO did purposely remove paragraph ( c ), why would a board or court apply to read it in via the Christian Doctrine?

So, back to my original question. Would a CO have the authority to make a bilateral change to a commercial contract if FAR 52.212-4( c ) were removed?

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Don,

I thought you meant if the clause itself wasn't included. I didn't realize you were getting into weird hypotheticals.

Why would a CO take that provision out? FAR 12.302(c ) states, "The contracting officer shall not tailor any clause or otherwise include any additional terms or conditions in a solicitation or contract for commercial items in a manner that is inconsistent with customary commercial practice [except by waiver]."

It's customary commercial practice that if both parties agree on the changes, they can make changes.

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onliberty:

Why not just answer the question without all the sparring? The answer is that the parties to a government contract do not require express authority, contractual or otherwise, to bilaterally modify a contract they have made. It is a well-established legal principle that any two parties that can make a contract can agree to modify it. So if FAR 52.212-4( c ) were omitted for some reason, the parties could still modify the contract through bilateral agreement.

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Vern,

I'm not sparring. Why would a CO take that paragraph out? Whether it's in or out, the responsibilities of the parties remain the same.

And I answered the question the first time he asked it. I said, "And obviously if both parties agree to change the terms and conditions, there is nothing preventing them from doing so."

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What Don is trying to get at is whether you need the paragraph in order to modify a contract by mutual agreement. He's reacting to your statement:

"I certainly don't mean to speak for Joel, and I'm sure he'll answer you himself, but I think he was pointing out that in commercial contracts, the authority for changes is in 52.212-4."

What he's getting at is whether express contractual authority is needed. For purposes of his question it doesn't matter why the paragraph would have been taken out or whether it would have been. The issue is the consequence of it having been taken out. He's trying to get you to agree that no express contractual authority is needed.

I take it that your answer is that none is needed.

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If you have the delay clause in the contract, a claim would "arise under the contract." Otherwise, it would "relate to the contract." See FAR 33.213(a).

Under the delay clause the contractor is entitled to an adjustment "excluding profit" and to some procedural safeguards. If there is no delay clause and the contractor pursues a claim relating to the contract, it would seek damages, which would likely include profit. Also, the government might not have the procedural safeguards of paragraph ( b ) of the delay clause.

Thank you Vern, this is very helpful - I learned something new - "arise under the contract" vs "relate to the contract"!

So on the downside, 52.242-17 would exclude profit on the adjustment, where 52.233-1 may include profit.

On the plus side 52.242-17 has some procedural safeguards for the contractor and I gather does not preclude the contractor for pursing additional remedy through 52.233-1...?

I guess it's an opinion, but sounds like 52.242-17 would be desirable in situations where the prescription is optional.

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mtclymer:

FAR 52.233-1 does not allow profit. It allows a contractor to submit a claim, get a decision, collect interest, and appeal a decision. The key is that the legal principles government claims based on breach of contract (which would be claims relating to a contract) and compensatory damages would likely allow profit, which would be otherwise be barred by the clause.

As for the desirability of the clause, that depends entirely on your point of view in light of what we've discussed. I would expect that the government would consider the clause desirable. The procedural safeguards in paragraph ( b ) of 52.242-17 favor the government, not the contractor.

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Vern,

Thanks, and yes I get that. I fully understand that in the commercial world, mutual agreement of the parties is all that is needed to modify a contract.

The only point I was trying to make, in relation to mtclymer's question, is that if it's a commercial contract, 52.243-1 shouldn't be in there. Instead, 52.212-4 should be.

Then, if he wanted to execute a formal mod, in block 13 of the SF30, instead of just stating "mutual agreement of the parties"(which he could do), it's best practice to cite the specific authority from the contract itself, that is, 52.212-4.

I'm a firm believer that specific is always better than general. If the contract itself gives you specific authority to do an action, use it!

----------------------

*steps onto soapbox*

And the why does matter. It's a valid question. Why would a CO ever take out that paragraph, especially since the FAR says not to do it? Why would a CO take out that paragraph if it's a completely neutral change?

The reason that paragraph is in there, is because the FAR is designed (I use that term loosely) so that contracting officers should cite the contract itself (to the extent possible) as their authority for changes. This keeps things clear-cut (to the extent possible).

Entering bizarro-world and speculating about weird "what-ifs" that would never happen only muddles the issue and confuses everybody. (See how many qualifications I have to put in front of every single thing I say?)

*steps off of soapbox*

-------------------------------------

All that said, I totally see the value in clearly delineating the difference between changes to commercial contracts and non-commercial contracts (but is there a way we can do it without entering bizarro-world?).

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Here's an example of how to make the same point without entering bizarro-world.

Imagine I'm Don (*puts on fake scruffy beard and looks really angry*)

(as Don) "onliberty said. 'the authority for changes is in 52.212-4.' While this is true, I think there is an important distinction to be made that can be valuable in teaching us all the differences between commercial and non-commercial contracts. In the commercial world, mutual agreement of the parties is all that is needed to modify the contract. No express contractual authority is required. Oh, and I love onliberty's avatar."

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This has thrown me for a loop...I've been thinking on how I can miss your point. Or maybe your point is that there's no point to whether the changes clause is in the contract or not...

Anyway, so the question is whether I would prefer to accept 52.242-17 or not. Does it aid me more in the situation where the government has caused delays than the disputes clause.

I have been out in the field (literally) most of today. My point the other day was that the Changes clause isnt in a commercial service or commercial item contract. Your comparison with the Delay clause is moot.

As for Changes in a commercial contract with 52.212-4 in it, paragraph ( c ) doesn't "authorize" changes. It serves to limit the government to make only bilaterally agreed changes to the terms and conditions.

A government imposed delay wouldn't be an authorized change to the contract unless both parties agreed to it, including compensation for time and/or cost impacts. Oherwise, I'm guessing that it would be some type of government breach of contract, unless a delay clause were otherwise in the contract. A delay clause provides for an adjustment within the terms of the contracts without having to sue or be sued for a breach.

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Here's an example of how to make the same point without entering bizarro-world.

Imagine I'm Don (*puts on fake scruffy beard and looks really angry*)

(as Don) "onliberty said. 'the authority for changes is in 52.212-4.' While this is true, I think there is an important distinction to be made that can be valuable in teaching us all the differences between commercial and non-commercial contracts. In the commercial world, mutual agreement of the parties is all that is needed to modify the contract. No express contractual authority is required. Oh, and I love onliberty's avatar."

onliberty:

Go a little easy on Don. (Not too easy.) No one would actually delete the paragraph. He knows that. He was just trying to deal with the "authority" issue by removing the authority and seeing what you'd say.

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I have been out in the field (literally) most of today. My point the other day was that the Changes clause isnt in a commercial service or commercial item contract. Your comparison with the Delay clause is moot.

As for Changes in a commercial contract with 52.212-4 in it, paragraph ( c ) doesn't "authorize" changes. It serves to limit the government to make only bilaterally agreed changes to the terms and conditions.

A government imposed delay wouldn't be an authorized change to the contract unless both parties agreed to it, including compensation for time and/or cost impacts. Oherwise, I'm guessing that it would be some type of government breach of contract, unless a delay clause were otherwise in the contract. A delay clause provides for an adjustment within the terms of the contracts without having to sue or be sued for a breach.

I have seen commercial item contracts in which the CO has inserted the changes clause from FAR 52.243-1 or one of the others In fact, I've seen that done on several occasions.

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Here's an example of how to make the same point without entering bizarro-world.

Imagine I'm Don (*puts on fake scruffy beard and looks really angry*)

(as Don) "onliberty said. 'the authority for changes is in 52.212-4.' While this is true, I think there is an important distinction to be made that can be valuable in teaching us all the differences between commercial and non-commercial contracts. In the commercial world, mutual agreement of the parties is all that is needed to modify the contract. No express contractual authority is required. Oh, and I love onliberty's avatar."

onliberty,

I would not say that your statement--"the authority for changes is in FAR 52.212-4"--is true. What Vern, now joel, and I are trying to get you to understand is that FAR 52.212-4( c ) does not provide "authority" for a CO to bilaterally change a commercial contract. If a CO can remove that paragraph from the contract and still modify the contract bilaterally, then that paragraph must not have been the basis for the CO's authority.

The same is true for noncommercial contracts--express contractual authority is not required to bilaterally modify a contract.

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Don,

I completely understand your point (and Vern's and Joel's). I agree with you!

I'm making a separate point.

The point I was making is that authority comes not from the clause, but from the contract.

True or false: If 52.212-4 is in the contract, the CO has the authority to negotiate a bilateral change?

(I know what you're going to say - the CO has that authority regardless - I get it!)

If 52.212-4 is negotiated into the contract, then the contract itself gives the CO the authority to make the changes - yes, this in addition to the authority he has anyway just by the nature of a mutually-agreed to change.

If you're going to negotiate a change to a commercial contract, in the modification, cite the authority the contract itself gives you - in this case 52.212-4. This is much cleaner than saying, "because I can anyway."

And of course this principle is true of any clause. The clause itself never gives the CO authority to anything unless it's incorporated into the contract. And then the authority comes not from the clause, but from the contract.

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So, your point boils down to this: If 52.212-4( c ) is in the contract, then insert "52.212-4( c )" in SF 30, Block 13C, not "mutual agreement."

Why? Because it's "cleaner."

Is that right?

But 52.212-4( c ) does not say that the parties may make changes by mutual agreement. It says only that they may make changes "only by written agreement," as opposed to oral agreement. In other words, it does not authorize the parties to make changes by mutual agreement. It requires that if they make changes they do so by written agreement. So, if you want to be "clean," why would you cite 52.212-4( c ) in SF 30, Block 13C, as authority to make a change by mutual agreement? The authority must come from elsewhere. It comes from the same place as the authority to enter into the contract in the first place. There was no contract then, so the contract was not the authority to enter into it. If the parties did not need a contract in order to enter into one, why do they need to cite the contract as the authority to modify that contract?

Maybe the problem is that SF 30 is unclear and misleading.

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