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490

Fixed Price Services Extending Beyond PoP

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Am I misunderstanding when I say this confusion could have been avoided by structuring the price schedule differently? 

Our ability to help the OP is pretty close to nil, but perhaps the lesson to take away is the unit could have been "months" rather than "each", and made clear that the implementation was included in the monthly charges, there would be no issue here?

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490,

Submit an invoice for a reduced price to reflect your failure to provide a full year of service.  Problem solved, right?

Oh, you don't want to admit failure?  Either you declare that you performed as required by the contract (invoice the full price) or you declare that you didn't (invoice partial price).  Take your pick.  

If you pick the latter, the Government might refuse payment.  This is a 1 EA item -- you either did it or you didn't.  

Apsofacto,

Yes, this would have been cleaner if the contract was 12 MO instead of 1 EA.  But even then, would 490 know the intent of the parties when the contract was formed?

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Culham,

The payment provisions are defined as monthly, in arrears, after acceptance.  Something tells me that may not fully answer your question though.

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35 minutes ago, ji20874 said:

490,

Submit an invoice for a reduced price to reflect your failure to provide a full year of service.  Problem solved, right?

Oh, you don't want to admit failure?  Either you declare that you performed as required by the contract (invoice the full price) or you declare that you didn't (invoice partial price).  Take your pick.  

If you pick the latter, the Government might refuse payment.  This is a 1 EA item -- you either did it or you didn't.  

Apsofacto,

Yes, this would have been cleaner if the contract was 12 MO instead of 1 EA.  But even then, would 490 know the intent of the parties when the contract was formed?

The decision to submit a reduced invoice has always been an option, but admission of failure is not the sticking point.  Since this is a fixed price contract, it can be argued that we are entitled to full payment under the FAR.  We get into an interpretation issue from there, which is the reason for starting this thread.

Under 16.202-1, it states "A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract." 

As to the parties intent, we have delivered these same services to this customer for nearly a decade, and they are aware of the delay when installing circuits into these regions.  No reasonable person or party could or would assume the service would start on the PoP start date.  This brings me back to the issue, that if the contract is written one way, but the intent was the other.  Which one wins?  My experience is the written contract wins.  In this case, the written contract is ambiguous, which generally favors the party that did not write the contract.  However, that is not always the case.

The forum seems to have gravitated to a partial invoice being the right decision, pending a read from the CO.  What we want to be certain of is that we are paid what we are owed under the provisions of the contract-regardless of the final amount.

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490:

You have misunderstood the meaning of FAR 16.202-1, largely because you have not read the sentence carefully and in context. That sentence does not, in any way, even remotely support the proposition your employer is entitled to the entire contract price in the circumstances that you have described. Moreover, that subsection of FAR is not contractual in nature. It does not describe any right of any of the parties under a firm-fixed-price contract. I won't take time to explain that to you, because I do not think that you know enough to understand without a lengthy explanation, which I am not about to write. (Maybe one of the others will explain, if they can.) The fact that you keep coming back to 16.202-1 shows me that you are clueless about Government contracts. I don't mean that to be an insult, just a simple statement of obvious fact.

Since no one here has a copy of the contract before them, and since your description of the situation has been unclear (at least to me), I doubt that anyone here can say anything meaningful to you that you would find helpful. (I'm surprised that some of them are still messing around with you. They must be bored at work.) I can see, however, that you are enjoying the back and forth. (I won't call it a "discussion.")

Your best bet at this point is to wait for the CO's response to your employer. When you get it, please come back and let us know the outcome.

 

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Vern,

I'm on leave today, sitting in a dentist's office.  :-)  I agree that no one here can say anything meaningful that our interlocutor will find helpful.  

490,

You err in suggesting the forum is saying that "a partial invoice seems to be the right decision."  Someone mentions full invoice, and you demur.  Someone mentions partial invoice, and you demur. 

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58 minutes ago, Vern Edwards said:

You have misunderstood the meaning of FAR 16.202-1, largely because you have not read the sentence carefully and in context. That sentence does not, in any way, even remotely support the proposition your employer is entitled to the entire contract price in the circumstances that you have described.

Vern,

This sentence is very informative, and puts my question to bed.  My position, internally, has always been submitting a full invoice was incorrect.  Internally, others interpreted 16.202-1 as full payment being justified. 

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1 hour ago, Vern Edwards said:

You have misunderstood the meaning of FAR 16.202-1, largely because you have not read the sentence carefully and in context. That sentence does not, in any way, even remotely support the proposition your employer is entitled to the entire contract price in the circumstances that you have described.

Vern,

This sentence is very informative, and puts my question to bed.  My position, internally, has always been submitting a full invoice was incorrect.  Despite musings of others, I was never supportive of a full invoice.  Internally, others interpreted 16.202-1 as full payment being justified.

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490, if you have an FFP contract, I assume that FAR 52.232-1 is in the contract.  If it is, have you read it?  That tells you generally what you are entitled to be paid under an FFP contract.  In the absence of another clause in the contract that is a deviation from 52.232-1, I think that clause is pretty clear about your payment rights.

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If the contract is 1 EA, and FAR 52.232-1 applies, then the contractor is entitled to zero payment if it is true that the contract requires 12 months of provided service.  

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ji20874 / Retreadfed,

52.232-1 is in the contract, and the Qty is 1 EA (from 0 to 1, by 1).  It was asked earlier what was the intent of the parties.  No one expected the service on day one.  If the contract was for delivering 10 widgets, and I delivered 5 widgets, determining payment would be easy.  

Under ji20874's point, I would not be able to submit a partial invoice if my contract is for Qty is 1.  I think it is unreasonable to believe I could not bill for partial services.  It is our belief that the CO will allow partial payment, but the language supports zero payment.  Has anyone come across partial payment for a Qty 1 item before?

 

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490,

If you have been doing these contracts for a decade, as you say, and if it is unreasonable to have full service early on, as you say, then why are you making this so hard?  Just do as you have already done for a decade and invoice the full amount 1EA.  You have a decade of precedent to support you.  You are imagining and creating fears, and acting irrationally, it seems to me.  Or, if you think your fears are valid and your company has overcharged on all your contracts over the decade (the Government doesn't say so, but you do, and you're afraid of an audit with no apparent reason), then do a partial invoice.  Good luck!

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ji201874,

The primary reason why we cannot carry on as we did before is that the work was previously on concurrent, multi-year TOs on an IDIQ with a 10 year PoP.  It would be easy if we could rely on the precedent of the previous contract, but since the contract changed we do not have that precedence to fallback on.  This question pertains specifically to this one year, single source bridge contract.  The old work and new work are separate contracts.  Before of the PoPs on the old contract, this never came up, we could always align the subcontracts with the TOs.

You may be right that I am acting irrationally, but not intentionally.  Initially, the answer to my question was unclear to me, but through your responses, and the responses of others, I see with more clarity that the best action may be the partial invoice. (pending CO determination of course).  When someone provides their thoughts, guidance, or an answer, I want to make sure I understand why that is the answer.  I do not mean to pander you or anyone, your time to respond is appreciated and helpful.  Learning the why is just as important as the what to me.  The dollar amount is not inconsequential to my company, and on top of that, I am risk adverse.  Under the old contract, the services were active longer than a year, so we able arrange for co-terminus expiration of the circuits and the TO.  The difficulty on this one is that the Government added new work on this one year contract. 

The IDIQ, and subsequent TOs had more attention paid to them when drafted and did not have this ambiguity.  This bridge was put together hastily as the Government did not get the competitive follow-on released on time.   Furthermore, the CO that issued and awarded this contracted is no longer affiliated with this Government organization, so their intent cannot be determined.  

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On ‎5‎/‎26‎/‎2016 at 9:29 AM, 490 said:

The payment provisions are defined as monthly, in arrears, after acceptance

 

22 hours ago, 490 said:

52.232-1 is in the contract

Holy Moly times 2!!!!!!

"52.232-1 Payments. The Government shall pay the Contractor, upon the submission of proper invoices or vouchers, the prices stipulated in this contract for supplies delivered and accepted or services rendered and accepted, less any deductions provided in this contract. Unless otherwise specified in this contract, payment shall be made on partial deliveries accepted by the Government if—

(a) The amount due on the deliveries warrants it; or

(b) The Contractor requests it and the amount due on the deliveries is at least $1,000 or 50 percent of the total contract price."

Which is an interesting comparison to the 52.232-6 in the context of this thread....

"52.232-6 Payment under Communication Service Contracts with Common Carriers.

As prescribed in 32.111(a)(6), insert the following clause, appropriately modified with respect to payment due dates in accordance with agency regulations, in solicitations and contracts for regulated communication services by common carriers:

Payment under Communication Service Contracts with Common Carriers (Apr 1984)

The Government shall pay the Contractor, in arrears, upon submission of invoices for services and facilities furnished in accordance with the terms of CSAs issued under this contract, the rates and charges for the services and facilities as set forth in the clause entitled “Rates, Charges and Services.”"

22 hours ago, 490 said:

Has anyone come across partial payment for a Qty 1 item before?

No, but my read of 52.232-1 one could conclude that there would be portions of 1 each such as a half of one each or even 1/12th of one each it all depends on which to base a partial payment pursuant to 52.232-1 if partial payments are allowed by the contract.   Hmm at my house I have one each cell phone (circuit) with service for 2 years.  I pay monthly.

But again I digress and will just wait for what your firm and the CO conclude to be the best approach.

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Carl,

I see 52.232-1 as allowing for partial delivery, and payment for partial delivery.  For example, if the contract calls for 12 EA and the contractor delivers 8, the Government may pay for 8 at the unit price.  But if the contract calls for 1 EA, well, if the contract called for 1 EA car and the contractor delivered 3 wheels and a seat cushion, I would not call that a partial delivery warranting payment of a reduced price.  

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ji - Probably a stale thread but I have been away and wanted to acknowledge your post.   And at the expense of beating the horse your example is that of a supply and not a service.  

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Today, the CO determined that we are entitled only partial payment for the service provided within the PoP. Thank you to everyone that chimed in and offered their opinions.

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I do agree with the CO.  It was always my opinion that we would only be entitled to partial payment.  Since this is a fair amount of money, I was hoping I was wrong and was looking for an alternate interpretation.

 

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It is always interesting and a bit unnerving to me when someone indicates something like "the CO that issued and awarded this contracted is no longer affiliated with this Government organization, so their intent cannot be determined.".   I worked construction contract claims and requests for equitable adjustment for many years.  In doing so, when I needed to learn something from them, I tracked down and communicated with the former official(s)..  I called and/or wrote and/or travelled to meet with them, depending upon the circumstances.  So, I don't believe at face value, such statements as quoted above. Its nothing personal, 490.  If you were told that, I don't believe it.

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8 hours ago, joel hoffman said:

It is always interesting and a bit unnerving to me when someone indicates something like "the CO that issued and awarded this contracted is no longer affiliated with this Government organization, so their intent cannot be determined.".   I worked construction contract claims and requests for equitable adjustment for many years.  In doing so, when I needed to learn something from them, I tracked down and communicated with the former official(s)..  I called and/or wrote and/or travelled to meet with them, depending upon the circumstances.  So, I don't believe at face value, such statements as quoted above. Its nothing personal, 490.  If you were told that, I don't believe it.

Joel,

The CO is no longer affiliated this organization, but we could probably track them down if necessary.  The decision was the expected one, and one that I feel is correct given the circumstances.  While never working construction contracts, my experience with claims and REAs have always been after the PoP.  It may be different under construction contracts if it is a multi-year project.  Pursuing any and all measures in those case makes sense. Since this work continued on another contract, and there is new work in the hopper that could go to another contractor, we do not want to ask "Mom" when "Dad" already said no.  Additionally, we do not feel wronged by the decision, rocking the boat would not be fruitful or beneficial.

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53 minutes ago, 490 said:

Joel,

The CO is no longer affiliated this organization, but we could probably track them down if necessary.  The decision was the expected one, and one that I feel is correct given the circumstances.  While never working construction contracts, my experience with claims and REAs have always been after the PoP.  It may be different under construction contracts if it is a multi-year project.  Pursuing any and all measures in those case makes sense. Since this work continued on another contract, and there is new work in the hopper that could go to another contractor, we do not want to ask "Mom" when "Dad" already said no.  Additionally, we do not feel wronged by the decision, rocking the boat would not be fruitful or beneficial.

Got it, thanks I was just responding to the comment that the previous CO is no longer available, which seems to be a frequent excuse given in this Forum by government employees or by contractors based upon what they have been told. 

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