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Hi, I am fairly new to contracting and I hope someone can answer this question.

One of the work sections I support submitted paperwork for me to do a Purchase Order for a one-year commercial software license renewal. The paperwork provided to me gave the new period of performance as 15 Sept 2015 to 14 Sept 2016.

But when researching, I found the previous purchase order for the software license had a period of performance of 15 Aug 2014 to 14 Aug 2015. Today is 27 Aug 2015, so due to this honest 'oversight' the software license actually expired 13 days ago.

What is the best way to handle an oversight like this? Does the period of performance start date have to be the same as the contract date? Can A Purchase Order be done on 27 Aug 2015, but have a period of performance of 15 Aug 2015 to 14 Aug 2016? The work section did receive 'value' as this software was used during the short expired period.

Thanks in advance, Ken

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Maybe a comparison to another situation will be helpful?

SITUATION: Your automobile insurance contract expired on Aug. 1, and you didn't renew it with a timely payment. However, you make a decision to renew on Aug. 6 and send a payment on that date.

QUESTION: If you insurance company accepts your payment as renewal, will it ( a ) backdate the renewal to Aug. 1; or ( b ) issue a new policy effective date of Aug. 6?

ANSWER: ( a ). If you have an accident between Aug. 1 and Aug. 6, you have no coverage -- but if the insurance company accepts your renewal and payment on Aug. 6, it will show you as having continuous and uninterrupted coverage.

Is there any real difference between your software license renewal and the sample insurance situation?

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Ken,

You write the work section used the software beyond the period of the license. I find ji's analogy to insurance less compelling than an analogy to rental equipment. If your work section rented a piece of equipment for a year, refused to return it at the end of the year and continued to use it beyond that year, I doubt there would be any doubt as to the contractor's entitlement. That entitlement wouldn't be grounded entirely on the fact that the company could have rented the equipment to a third party--it would be based at least in part on the unjust enrichment to the Government in using something it was not entitled to use. That fact that we're dealing with intellectual property shouldn't change the result.

I recommend seeking a bilateral modification of the original contract extending the expiration of the license from 14 Aug 2015 to 14 Sep 2015 (to include a standard FAR Part 43 release), as it seems to me the contractor's entitlement arose under or relates to the original contract. What I wouldn't do is have your new contract compensate the contractor for the work section's unauthorized use.

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Guest Vern Edwards

Does the period of performance start date have to be the same as the contract date?

Can A Purchase Order be done on 27 Aug 2015, but have a period of performance of 15 Aug 2015 to 14 Aug 2016?

Answer to the first: No. I know of no rule or principle of American contract law or government contract law that would prohibit the parties from entering into a contract today that reflects that fact that performance actually began two weeks earlier, as long as there are no other facts that would make the contract improper, such as debarment, some term of the agreement, etc.

Answer to the second: Yes, based on the same reasoning.

There was a simple mistake. Fix it and move on.

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Ken, before following Vern's advice in Post #4, I recommend checking to see whether your contracting activity has any policies or restrictions in place relating to early effective dates. I continue to believe a mod to the original contract is the approach that better reflects the reality of the situation. As the "work section" is accepting the benefit of the software, it is unreasonable to suggest the contractor is performing at risk.

I suspect Vern's advice is based on his reasonable assumption that you know for a fact that you have proper and adequate funds available, so that your situation is NOT like that in PCL Constr. Servs., Inc. v. U.S., 41 Fed. Cl. 242 (1998), described in the Red Book (3d Ed.) at 6-109. Given that the period from 15 August 2015 to 15 September 2015 is all part of the same fiscal year, this seems like a reasonable assumption on his part. If you have a PR in hand, great; otherwise, make sure you KNOW you have funding.

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Jacques -- respectfully --

We've run into this situation before in my office. Most software licenses cannot be written for a period of less than one year, so to echo Vern's sentiment, the best way to handle this is to write a contract with the actual start date of performance (i.e. the day after the previous contract expired); sign it; and move on. And of course, the lesson learned, is to figure out a way for the contracting office and the customer to track end dates better.

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Guest Vern Edwards

Actually, I did not advise a new contract. I just answered the questions that were asked without resorting to analogies. And yes, they will need funds if they decide to award a new contract.

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Software is a little different than other procurements. Most likley the software license that expired allowed for maintenance, i.e. updates, for the 12-month period. It does not usually mean that you can't use the software after the license is expired. For example, if you purchase anti-virus software for your home computer it will expire in 12-months, you can still use it, but you don't get any updates.

If your customer did not receive any updates after it expired, there most likely isn't any cause for concern. However, some softwware companies will charge a re-activation fee or something similar. You may want to consider including a line item for a re-activation fee to bring the license current from the expired date to the new award date. You may also want to conduct some market research and discuss with the software provider.

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Guest Vern Edwards

Well, I don't know what kind of speculation Jacques is worried about, but GS1102's post makes a lot of sense to me, and I can't help but wonder if he is right. I wonder if Ken9455 knows.

Is that speculating?

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Well, I don't know what kind of speculation Jacques is worried about, but GS1102's post makes a lot of sense to me, and I can't help but wonder if he is right. I wonder if Ken9455 knows.

Is that speculating?

If you’re wondering, it probably is.

We could speculate that the software was delivered under a contract that contains the Rights in Special Works clause and then debate what the impact of that would have any any advice anyone may have given up to that point in the thread. That sounds just as productive as doing the same thing with GS1102’s speculation of what the facts may be. Fortunately, Ken9455 can tell us what the facts actually are. Hopefully he has. If not, hopefully he will.

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Guest Vern Edwards

We could speculate that the software was delivered under a contract that contains the Rights in Special Works clause and then debate what the impact of that would have any any advice anyone may have given up to that point in the thread. That sounds just as productive as doing the same thing with GS1102’s speculation of what the facts may be. Fortunately, Ken9455 can tell us what the facts actually are. Hopefully he has. If not, hopefully he will.

Now, why would you speculate in that way, seeing as the opening post said that the expired license was for commercial software? Why would FAR 52.227-17, "Rights in Data -- Special Works" apply to a commercial software license?

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Now, why would you speculate in that way, seeing as the opening post said that the expired license was for commercial software? Why would FAR 52.227-17, "Rights in Data -- Special Works" apply to a commercial software license?

It seems we both agree such speculation that would not be a productive use of time.

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Guest Vern Edwards

THAT speculation would be a waste of time. Not all speculations.

I think that GS1102's post is very interesting and that speculating about it might be very productive for Ken9455.

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