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Sunstrider

Tailoring clause 52.212-4 for unilateral modifications

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13 hours ago, Sunstrider said:

With that in mind, assuming my personal assertion made in the OP is correct, then we are talking about negotiating/incorporating initially agreed upon circumstances in which the Government can unilaterally change commercial T&Cs, and only when such unilateral changes are already consistent with commercial industry practices within a particular market.

Well I think you almost get it but the above statement is confusing.  I do not believe you are discussing unilaterally changing "T&C's" a right not even contained in any FAR 52.243-XX clauses by my read.    I believe you are wanting some limited unilateral rights.  Or, in other words you do not want the right to say unilaterally remove any thing from the contract you want to but rather you want to right to deobligate excess funds due to unutilized work or forward-priced "change orders" for the commercial item already procured under the contract?  And if yes, am I reading correctly that if such a unilateral right is placed in the contract  you would also provide the right of the contractor to "close the deal" later or in other words that the contractor would retain rights like the ability of requesting a equitable adjustment?

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11 hours ago, C Culham said:

Well I think you almost get it but the above statement is confusing.  I do not believe you are discussing unilaterally changing "T&C's" a right not even contained in any FAR 52.243-XX clauses by my read.    I believe you are wanting some limited unilateral rights.  Or, in other words you do not want the right to say unilaterally remove any thing from the contract you want to but rather you want to right to deobligate excess funds due to unutilized work or forward-priced "change orders" for the commercial item already procured under the contract?  And if yes, am I reading correctly that if such a unilateral right is placed in the contract  you would also provide the right of the contractor to "close the deal" later or in other words that the contractor would retain rights like the ability of requesting a equitable adjustment?

Yes to both questions. I do think that, considering an intended benefit of commercial contracting is increased efficiency in administration, inflexibly requiring supplemental agreement on every single contract modification is a bit impractical. I am definitely looking to learn of ways to responsibly issue unilateral mods to commercial contracts (for such circumstances I originally stated) and thereby expand my toolbox.

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11 hours ago, Sunstrider said:

Yes to both questions. I do think that, considering an intended benefit of commercial contracting is increased efficiency in administration, inflexibly requiring supplemental agreement on every single contract modification is a bit impractical. I am definitely looking to learn of ways to responsibly issue unilateral mods to commercial contracts (for such circumstances I originally stated) and thereby expand my toolbox.

As I explained above, it is a relatively simple process to COMMUNICATE with your contractor (orally or by simple written methods)  your intent to de-obligate excess funding for severable unit-priced work/products with estimated quantities not to be provided. Follow up in writing and transmitting  your confirmation that they understand that it doesn't impact them. Then issue the admin mod.

i would find it problematic to write into such a contract a term that would allow you to issue unilateral modifications for change orders to commercial items being purchased.  I apparently don't understand exactly what you mean by "or forward-priced change orders for the commercial item already procured under the contract." Were you referring to admin funding mods or to the change order mod itself?

EDIT: To my knowledge, according to DoD's Standard Procurement System or the Army's predecessor  system , one cant actually adjust the contract price to reflect actual quantities of unit-priced quantities purchased via an admin mod,  where the line item price was based upon estimated quantities. Our organization used to adjust quantities and associated contract price administratively before then.

We were told to issue those mods, citing the VEQ clause, which was flat out wrong.  The VEQ clause doesn't authorize any adjustment in the estimated quantity or in the contract price to reflect actual quantities.  That clause merely provided for an equitable adjustment of prices if an overrun or underrun affected the contractor's cost per unit and/or authorized a time adjustment if it affected the contract period. 

Technically, the Changes clause would have probably been the operative clause.to adjust line item quantities and resulting contract price/funding. Technically, that could have been done unilaterally as a definitized change order in a non-commercial item contract format.

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Question -

 1. If a buyer has tailored the language in 52.212-4(c ) so that unilateral changes are permitted and they have a minor address change which necessitates doing an administrative mod should they: a) Fill out Block 13(B) on the SF 30 which is an administrative mod? This block sites 43.103(b) as the authority. This reference defines unilateral mods. OR b) Fill out Block 13(D) and site 52.212-4( c), the Changes Clause for commercial contracts, as the authority? 2. I had been advised that FAR 43 does not cover commercial contracts. Is this correct? It seems to me that FAR 43 does not differentiate between commercial and non-commercial acquisitons and, thus commercial contracts can be covered by FAR 43. That being said, is it incorrect to check block 13(B) or is checking 13(D) and zeroing in on the appropriate authority for the commercial contract just more accurate? Is either choice acceptable?

 Scenario - I am trying to obtain the proper modification authority for an administration mod to a commercial contract. I have been advised that FAR 43 does not cover FAR 12 acquisitions, but I question the accuracy of this. This led me to the below questions.

 A:  To answer both Qs 1 and 2, since you are talking about modifying a commercial contract then you will be referencing 52.212-4.  This clause calls for all modifications to be bilateral (as stated in the clause part (c) Changes. Changes in the terms and conditions of this contract may be made only by written agreement of the parties). You make mention in your question that you tailored the language in your contract to allow for administrative modifications to be unilateral.  If this is the case, then proceed.  

https://www.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=3&cgiQuestionID=109722

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Perhaps the professor errs?  It is a very common mistake to aver that para. (c) of FAR 52.212-4 requires all modifications of a commercial item contract to be bilateral.  But those who will read the actual clause text, and accept the text as written, will discern that the clause only requires that changes to the contract’s terms and conditions have the agreement of both parties.  But don’t just take my word for it, please look for yourself!

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As Don and maybe others have asked, what is meant by "terms and conditions"?  No one has attempted to answer that fundamental question.  For example, are blocks 15, 16, 17a and 18a of the SF 1449 terms or conditions of the contract?

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2 hours ago, ji20874 said:

Perhaps the professor errs?  It is a very common mistake to aver that para. (c) of FAR 52.212-4 requires all modifications of a commercial item contract to be bilateral.  But those who will read the actual clause text, and accept the text as written, will discern that the clause only requires that changes to the contract’s terms and conditions have the agreement of both parties.  But don’t just take my word for it, please look for yourself!

Other than administrative changes and unilateral changes expressly permitted by a contract clause, what do you think a CO can unilaterally modify in a commercial contract? 

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1 hour ago, Retreadfed said:

As Don and maybe others have asked, what is meant by "terms and conditions"?  No one has attempted to answer that fundamental question.  For example, are blocks 15, 16, 17a and 18a of the SF 1449 terms or conditions of the contract?

From the Fourth Edition of the Government Contracts Reference Book: 

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TERMS AND CONDITIONS  All the provisions of a contract. FAR 14.201-1 and FAR 15.204-1 require that the terms and conditions follow the UNIFORM CONTRACT FORMAT, with exceptions listed in FAR 14.201-1(a) and FAR 15.204. Standard terms and conditions are set forth in FAR Part 52. 

 

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43 minutes ago, napolik said:

All the provisions of a contract

Does that mean that every word, number and symbol in a contract is a term or condition of the contract?

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Per Black's Law Dictionary: provision. 1. A clause in a statute, contract, or other legal instrument. 2. A stipulation made beforehand. See PROVISO.

proviso: 1. A limitation, condition or stipulation upon whose compliance a legal or formal document's validity or application may depend. 

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@Retreadfed, I don't think so. Black's Law Dictionary contains the following entry for "term":

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A contractual stipulation <the delivery term provided for shipment within 30 days>.

And the following entry for "condition":

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Loosely, a term, provision, or clause in a contract.

“This term condition is generally used to describe any fact, subsequent to the formation of a contract, which operates to make the duty of a promisor immediately active and compelling. Such a fact may be described as such in a term of the contract or it may not. In either event, the term of the contract should not itself be called the condition. … It is not uncommon, popularly, to speak of a condition of the contract as synonymous with term or provision of the contract. This should be avoided.” William R. Anson, Principles of the Law of Contract 226 n.1 (Arthur L. Corbin ed., 3d Am. ed. 1919).
 
“The word ‘condition’ is used in the law of property as well as in the law of contract and it is sometimes used in a very loose sense as synonymous with ‘term,’ ‘provision,’ or ‘clause.’ In such a sense it performs no useful service.” Id. at 409.

 

 

So, if I understand correctly, the following sentence includes both a term and a condition:

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If any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, the Contracting Officer shall make an equitable adjustment in the contract price, the delivery schedule, or both, and shall modify the contract.

The condition is the increase or decrease in the cost of, or time required for, performance of the contract. The term is the requirement to equitably adjust the contract. Perhaps a lawyer can check my understanding.

I don't think that everything in a contract would be a "term" or "condition". For example, page numbers, requisition numbers, instructions to the payment office, are informational in my view.

I don't think the dollar figure cited at the end of a line of accounting is a term. I think the purpose of that number is to communicate the amount of the obligation created to the agency accounting office. Unless the figure were erroneous, I don't know how a change in the amount of the obligation would not also be accompanied by a change in the contract terms. 

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6 hours ago, Don Mansfield said:

Other than administrative changes and unilateral changes expressly permitted by a contract clause, what do you think a CO can unilaterally modify in a commercial contract? 

Don,

If you will agree that a contracting officer may make “administrative changes and unilateral changes expressly permitted by a contract clause” in a contract for commercial items, then we are in agreement because this belies the common error that all modifications must be bilateral.

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2 hours ago, ji20874 said:

If you will agree that a contracting officer may make “administrative changes and unilateral changes expressly permitted by a contract clause” in a contract for commercial items, then we are in agreement because this belies the common error that all modifications must be bilateral.

 A:  To answer both Qs 1 and 2, since you are talking about modifying a commercial contract then you will be referencing 52.212-4.  This clause calls for all modifications to be bilateral (as stated in the clause part (c) Changes. Changes in the terms and conditions of this contract may be made only by written agreement of the parties). You make mention in your question that you tailored the language in your contract to allow for administrative modifications to be unilateral.  If this is the case, then proceed.  

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