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Hi all,

I have a very odd situation that I've not seen before and wanted some feedback.  Pardon my ignorance!

The CO has issued a bilateral mod to update the billing clause on the contract.  We do not wish to accept this clause and have rejected it.  The CO persisted, so we then offered an alternate billing clause and then finally, offered to accept the clause with language revisions.  

The CO responded to our last attempt to reach agreement as follows, "Unfortunately, I do not have the authority to deviate the clause. However, if you send me a formal request which captures the spirit of your revisions, I can send back a CO-signed authorization on NASA letterhead."

In short, the CO has offered that we accept the new billing clause and then receive "consideration" in terms of a CO letter authorizing deviation to the clause, but that letter would not be an attachment to or part of the contract.  The part we have a concern about is a "shall".

If we accept the letter, and invoice according to the "letter" not the clause and are subsequently not paid due to a deficiency in backup documentation required by the clause, do we have any contractual leg to stand on?  

This situation feels like one where the CO is not acting in good faith, but I may be missing the part of the FAR that allows this?

The clause is 1852.232-80 Submission of Vouchers/Invoices for Payment. (Apr 2018).

Many thanks in advance!

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Yes I did and it says the NASA CO is required to bilateral modify...how that can be achieved without consideration is beyond me.  We do not want to provide a progress report (which is applicable for our contract) with the voucher.

 

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Guest Vern Edwards
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The requirement for consideration is met when the contractor accepts the new clause in their contract in exchange for deleting the existing contracts payment clause.

The Government wants the old clause out and the new clause in and wants the contractor to agree. Contractor agrees. Government removes the old clause and inserts the new clause.

And that's consideration---an exchange? In exchange for its agreement to do what the government wants the contractor agrees to do what the government wants.

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The government tries to pull this trick all the time. The trick is to impose additional burdens by updating or changing clauses but not pay the contractor for the change.

During such tricks, make a business decision. Does this new clause increase your cost or time or impose any additional burdens?

If so, you're owed consideration to compensate you for the cost, time, or burdens. 

Think of it this way. If the government issued this change order unilaterally, you would be entitled to submit a request for equitable adjustment or a claim. Yet the government is supposed to make this change bilaterally, with your consent. They just want to pull a fast one and get you to say you'll eat the cost of the change. Don't fall for it. 

Maybe in this case, NASA is assuming that the new payment clause is a benefit for contractors, not an additional burden, so contractors will happily accept the new clause. Is this assumption accurate? 

 

 

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Is your only problem that you don’t want to provide progress reports? Do you want additional compensation for the cost to submit progress reports?  

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Mtclymer, you said "We do not want to provide a progress report (which is applicable for our contract) with the voucher."  I am confused by this.  Are you saying that your are already required to submit progress reports?  If so, what does the contract say about when these reports are to be submitted?  Do the existing terms of the contract create a conflict with the new payments clause?

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Guest Vern Edwards

The original clause, NASA FAR Supp. 1852.232-80. did not require progress reports. The new clause that would be applicable to the OP's company will. It does not describe the content of the reports. It merely says: "Progress reports, as required."

That could be a lot of work, depending on what is "required."

There is not much to talk about here. The bottom line is that NASA cannot order the contractor to accept the clause. It could terminate the contract for convenience or decline to exercise an option. Whether NASA would agree to a price adjustment for acceptance of the clause is unknown to us, but I doubt it.

The OP did not ask a question, just for feedback. Well, my feedback is: Accept the clause or don't and the consequences of your decision.

NASA's take on consideration is pure bull****. They know it, and they don't care. They don't expect litigation. They expect every contractor to go along with the program. My guess is that most, including mtclymer's company, will do just that, which is probably the right decision from a business point of view.

Don't expect respect for contracts when dealing with the government. Know government, all forms of it, for what it is: INTIMIDATION and FORCE.

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On 5/14/2018 at 11:25 AM, mtclymer said:

If we accept the letter, and invoice according to the "letter" not the clause and are subsequently not paid due to a deficiency in backup documentation required by the clause, do we have any contractual leg to stand on?  

This situation feels like one where the CO is not acting in good faith, but I may be missing the part of the FAR that allows this?

The clause is 1852.232-80 Submission of Vouchers/Invoices for Payment. (Apr 2018).

Many thanks in advance!

 If the KO says that he or she does not have the authority to modify the clause, then the answer to your question is no —You do not have a contractual leg to stand on. KO already told you that he or she cannot modify the clause .

 This  is a task order contract . We don’t know whether this is a  technical or cost issue, whether it is only an issue on this task order, whether future task orders can provide a means to reimburse you for any extra effort and cost involved, etc. etc. From the information provided, the need seems to stem from a requirement to use electronic invoicing. We don’t know whether your contract requires progress reporting in some other form. If it is a cost reimbursable type of contract, I’d be very surprised if there were no progress reporting requirement similar to what this clause is asking for.

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9 hours ago, joel hoffman said:

Is your only problem that you don’t want to provide progress reports? Do you want additional compensation for the cost to submit progress reports?  

No, that is one of our concerns as progress reports are required on our contract.  The other is the labor hours.  I work for a non-profit Institution of Higher Education (which is a state entity).  Our cost accounting standards are under Title 2 - Uniform Guidance (FAR 31.3 vs FAR 31.2) and therefore we have effort reporting.  So providing labor hours is always difficult.

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4 hours ago, Retreadfed said:

Mtclymer, you said "We do not want to provide a progress report (which is applicable for our contract) with the voucher."  I am confused by this.  Are you saying that your are already required to submit progress reports?  If so, what does the contract say about when these reports are to be submitted?  Do the existing terms of the contract create a conflict with the new payments clause?

Yes, our contract requires progress reports to be submitted to the program office, not through billing.  So I envision we now have to deliver the progress reports twice.  Our billing group does not have easy access to the progress reports, so it requires additional coordination with the program to obtain a copy of what has already been provided.

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@Vern Edwards - thank you!  I took your class many years ago and I appreciate your comments.  The CO eventually pulled back the clause, but what I was concerned about was whether I had made a dumb mistake and should have accepted their offer even though it didn't sit right.  Thank you!

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1 hour ago, joel hoffman said:

This  is a task order contract . We don’t know whether this is a  technical or cost issue, whether it is only an issue on this task order, whether future task orders can provide a means to reimburse you for any extra effort and cost involved, etc. etc. From the information provided, the need seems to stem from a requirement to use electronic invoicing. We don’t know whether your contract requires progress reporting in some other form. If it is a cost reimbursable type of contract, I’d be very surprised if there were no progress reporting requirement similar to what this clause is asking for.

@joel hoffman - how do you know it is a task order contract?  It actually isn't...but it is cost reimbursable.  NASA CO quoted that this clause is applicable to ALL cost reimbursable (not task order cost reimbursable).

You're thinking all the same things - we tried to get a different advance payment clause.  As we are a University - we tried to get draw down on Letter of Credit which falls under Contract Financing and not Progress Payments, but CO rejected.  We tried to comply with the electronic invoicing part but remove the required backup (hours and progress report) and that's when the CO offered me to take the clause and a letter outside the contract authorizing deviation...I hate that I can be right but still not get what should be a no brainer.

Thank you for your help!!

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Sorry I confused the 216.80 with the 232.80 clause. 🤠

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@mtclymer. I read this entire thread several times trying to figure out your exact concern with accepting this updated clause. It appears you are concerned with the clause's revised requirement for submitting a progress report with the voucher. Yet, you are already required in the contract to submit a progress report. So, your only concern in this entire matter is having to send the already created progress report to your billing folks so they can simply attach it to the voucher? Or, even more simply copying your billing folks on the email when you submit the progress report to the Government? Sorry if this sounds brash, but if that is the only concern, I'd venture to say you likely spent more time on this discussion thread (not to mention the back and forth with the CO) than you would have spent over the life of the contract by copying your billing folks on an already required and generated report.

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19 hours ago, mtclymer said:

So I envision we now have to deliver the progress reports twice.  Our billing group does not have easy access to the progress reports, so it requires additional coordination with the program to obtain a copy of what has already been provided.

Oh come on uc2004.   In an echo of Vern's post of sorts, when the Federal government realizes and respects that everything costs money with regard to their forced requirements that are based on false assumptions of compliance with their own view of what a OMB circular requires then Federal government contracting would be a whole lot easier and cost effective.  Think about it NASA has a class deviation to enforce an OMB Circular?   Really the FAR Council couldn't get it right so NASA has to deviate...oh my goodness NASA's take on the whole effort is as Vern has pointed out!

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I don't disagree with your assertion C Culham, but my response is not in regards to the overall Government procurement system, rather to this instant post wherein work is already being done (necessary or not is not the point; its in the contract) and the apparent false assumption that there is more work to do because of this revised clause.

Funny thing is, no one has to do business with the Government, yet there is rarely a lack of competition for Government contracts!

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22 hours ago, uc2004 said:

Funny thing is, no one has to do business with the Government, yet there is rarely a lack of competition for Government contracts!

No reason to keep up in ways that are contradictory to what a contract is suppose to represent.   If you want to speak to specifics "consideration" is a doctrine of reciprocity.  

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Guest Vern Edwards
23 hours ago, uc2004 said:

Funny thing is, no one has to do business with the Government, yet there is rarely a lack of competition for Government contracts!

True. But who is competing?

Many firms that the government would like to do business with won't do business with the government. The reasons are complex, but for one insight, see: "What are the real reasons small firms won't sell to the government?"

 https://fcw.com/blogs/lectern/2017/04/kelman-small-biz.aspx

And see this: "Government contracts: Do the rewards justify the risks?"

https://corporate.findlaw.com/law-library/government-contracts-do-the-rewards-justify-the-risks.html 

And this: "Government Contracting: Terms, Risks & Sanctions"

https://www.crowell.com/files/Government-Contracting-Terms-Risks-Sanctions-San-Fernando-Valley-Bar-Association-April-2012.pdf

And those articles don't address the problem of dealing with government personnel who don't know what they're doing or who act unethically.

Business people tend to be optimists. You have to be in order to succeed in business. So they often compete hoping for the best. Or, they know that they won't get the best and plan (and price) accordingly.

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Guest Vern Edwards

For one perception, here's a quote from https://www.americaninno.com/dc/5-pros-and-cons-of-being-a-government-contractor/

Quote

Cons:

Dealing with Government Employees – There seems to be a civil war between government employees and contractors.  Govies look down on contractors as subhuman scum and treat contractors with derision– at best.  What makes it worse is that usually all it takes to get a contractor fired is for a govie to make a complaint about them.

Fired on a Whim – Unlike government employees, who seem to be able to get away with murder and not get fired, contractors are fair game. You can be out on the street in a day with no explanation– so be sure and put something in the bank.

Can’t Milk the System – Lets face it, some government employees work their butts off.  Quite a few others, however, don’t seem to do much of anything at all.  It’s incredibly frustrating to perform the same duties as a govie, but not being able to milk the system like they do.  You’ll be slaving away while your govie co-worker is taking offsite ‘training’ courses for 2 weeks a year. Govie coworker decided to take a 3 hour lunch– boss won’t say a word.  Your lunch runs one minute too long and you’re liable to get a talking to from all three of your bosses.

No Rewards – Even though contractors seem to work way harder than a lot of govies, they are ineligible for most of official rewards.  It can be more than a little demoralizing to watch your much lazier and ineffectual govie co-workers getting awards while you’re not even invited to the ceremony.

Bosses – Bosses are bosses and they all kinda suck.  But as a contractor you usually have multiple bosses of varying degrees of influence.  When I was contracting I had two ‘Team Leaders’ who I was supposed to listen to, then a ‘Branch Chief’ who would tell me to do stuff, and then on top of all that I had a ‘Programs Manager’ that I had to report to.  Don’t get along with all of them and your life can get real miserable really quickly.

Not necessarily reality, but perceptions matter.

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"There seems to be a civil war between government employees and contractors."

Not so civil.

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