Nonresponsive Contractor

[khuggart]

I have a contractor who was awarded an SBA 8(a) small business contract to support telecommunication services, awarded on a "per port" monitoring count basis, with FFP Monthly rates based on quantity of ports as described in the solicitation.  Post Award we recognized that the "per port" monitoring count included inactive ports, which the Government cannot pay for  since there is nothing to monitor.  Being a telecommunication services contract, the intent of the solicitation was to remove all ports by May 2020.  The per port count was provided by the PMO, who counted all ports rather than only "active" ports, an error.   I have contacted the contractor and explained the error.  The contractor is refusing to correct this stating their pricing was based on quantities as described in the solicitation, even knowing that the port count would decrease rapidly.  We have staggered transition dates and many agencies have chosen not to transition.  We are allowing them to adjust their "per port" rate to allow for the government error.  In conversations they have been angry about this correction stating they have to monitor all ports, not only active ports, because they need to replace port cards if they fail.  The Government has offered to allow them to re-use any existing inventory rather than replace, unless there is no inventory available... the government is allowing them to replace failed cards with refurbished cards since they are very outdated and there are no new cards to procure.  I have reminded the contractor that the government can no longer pay for inactive ports and issued a pricing schedule to them over a week ago and requested they submit their adjusted pricing to me by Wednesday of this week.   It's Friday and I haven't heard from them. I sent a reminder to them this morning, requesting "read receipt", and have received two notices that the email was read, but still no response.  I know I'm a little early on this but need something to come back with to them.  I've never had this happen before and am uncertain as how to handle it.   Any kind suggestions would be welcome.

Thank you

[Retreadfed]

Are you planning to issue a modification to the contract, such as a partial termination, to correct the port count?  If not, what is your basis for requesting a repricing of the contract?  From what you have written, it seems you are asking the contractor to do something they don't have to do.

[khuggart]

I hadn't considered a partial termination ... that might be helpful as long as it doesn't cost the Government more money - I'm a steward to the taxpayer and am working hard to ensure the government isn't paying for something they don't need to pay for.  My basis for repricing is just that - we are paying for ports that are inactive, and we shouldn't be paying for them.  I understand we entered into this contract and an error was made in the port counts.   It just needs to be corrected and I'm trying to find a way to correct it.  It's a $3M contract with the intent to be $0 at the end of 3 years or sooner.  Even though our telecom contracts end May 2020, this contract expires April 2021, but will likely end sooner.  Seeking options from WIFCON...  thanks!

[C Culham]

If a non-commercial item services contract have you considered the Changes clause that would be in the contract (52.243-XX series clause)?  

Whether using a changes clause or T4C you need to really do some thinking as to whether the reduction of work really equates to a reduction in contract price.    While not always true economy of scale could suggest that "Monthly rates based on quantity of ports" might actually go up if there are less ports than anticipated. 

With regard to response from the contractor to work this out, and noting 8(a), have you referred to your agency partnership agreement with SBA regarding the 8(a) Program?   Usually there is a phone number for the SBA at the DC level.   I would call them and let them know you have a uncooperative 8(a) contractor that needs assistance on negotiating a modification to their contract and see if that will kick something in to action to at least have the contractor be responsive (with SBA's assistance) to talk through the matter.  After all they really are a subcontractor to the SBA. 

[Retreadfed]

3 minutes ago, C Culham said:

let them know you have a uncooperative 8(a) contractor that needs assistance on negotiating a modification to their contract

Carl, no mod has been proposed yet.  It seems like the contractor is simply being asked to reduce the price of the contract without a contract change.  If I were the contractor, I would not do it until a mod is proposed so I can know the impact of the change on my pricing.  As you indicated, there may be no impact or the price may go up.

[C Culham]

19 minutes ago, Retreadfed said:

24 minutes ago, C Culham said:

them know you have a uncooperative 8(a) contractor that needs assistance on negotiating a modification to their contract

Carl, no mod has been proposed yet.

Semantics in my view.   Seems the government has contacted the contractor to attempt to talk pricing.  While neither one has proposed a "modification" it sure seems the government is attempting to negotiate the reduction in ports that can be placed into a "modification".   Where does it say the government must propose the modification, you already mentioned T4C, and under that scenario the contractor has a hand in stating what costs they think they are entitled to under the T4C.   It sounds to me that the contractor is stone walling and in the true sense of a contract both parties have a responsibility to attempt to work out the matter at each of their levels.

[ji20874]

Your contract calls for, let's say, 1,000 ports -- and your contract is set up to pay a fixed price per port, so your QTY is 1,000.  Now, you realize you only need 400.

Partial T4C from 1,000 to 400.  If you can do it bilaterally, with agreement on re-pricing, that's fine.  But if not, do it unilaterally and save the re-pricing for later.

Do it.

If the contractor takes you to the cleaners on the re-pricing, that is because of the weakness of the Government personnel involved.