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pricelesspearl

Out of Scope Period of Performance Extension

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Can anyone point me to some case law to support that a unilateral POP extension, made as an administrative change and without any extra money is an out of scope, cardinal change?

 

Background:  Gov't is claiming design errors and wants us to fix things that were not part of the performance specifications.  The POP expired , so they just unilaterally issued an extension as an administrative change and expecting us to "fix" the "errors" for free.  They have not offered any sort of proof or support for claiming an E&O.  Basically, they just don't like the way something looks but it was designed, built and performs to specs.

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Was it a supply contract?  Service?  Construction?  Architect-Engineer?  Something else?

Did the Government reject your deliverable, and issue a modification to set the time for you to correct the deficiency?

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46 minutes ago, pricelesspearl said:

Can anyone point me to some case law to support that a unilateral POP extension, made as an administrative change and without any extra money is an out of scope, cardinal change?

Take a look here: http://www.wifcon.com/discussion/index.php?/topic/2121-out-of-scope-unilateral-modification/

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We are the design sub to the prime on a design-build.  The design is for a system which functions according to specs, but it doesn't perform "pretty" .  It is purely an aesthetic issue that was never mentioned anywhere in the specs. They have implemented a temporary fix without our concurrence or input, making significant changes to our original design (which raises a whole other bunch of issues) and extended the period of performance  to allow us to come up with a permanent fix, based on their "redesign". 

 

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So, this is a design-build construction contract.

Okay.  Is the argument/discussion/misunderstanding between (A) the Government and your prime contractor, or (B) your prime contractor and you (the subcontractor)?

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Technically it is between the prime contractor and the Gov't because the unilateral mod was issued to them.  But our prime fully supports our position that there is no design error and wants to push back on that issue as well as the POP extension being out of scope.  Our POP with the prime has expired and they have not flowed the extension down, so we believe that we are within our rights to just refuse the work, but we don't want to put our prime in a spot. They are a small business (we are very large).

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Putting the unilateral mod aside, it seems like you and your customer believe that your customer fulfilled the contract requirements and it is over. On the other hand, it seems like the Government believes otherwise. There seems to be a factual dispute. It could be that the Government approach to issue a POP mod is the wrong approach to communicate design error. Nevertheless, the Government may consider default proceedings against the prime for non-performance. Suggest your customer contact an attorney so that all the facts can be established and advice given. I would be surprised if someone found a case that when there is an apparent factual dispute about performance fulfillment, the Government may not issue a unilateral PO extension mod as a way of requesting fulfillment of contract terms even if that is not the best way to assert design errors. Perhaps there is a contract clause that controls what to do when design errors are asserted.  Even if there was such a POP case, that should not preclude the Government from initiating a default proceeding. Your company may wish to stay out of this fray.

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So who has the burden of proof on the design error?  They have not offered anything to support their claim, not even a formal letter stating what they think the error is.  Literally all they have said is in emails is " the optics are bad and you need to fix it".  Shouldn't they have to offer something legally or contractually to support the need for a POP extension  and their right to issue it unilaterally?  

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Forget the prime's POP extension -- that is irrelevant.

It seems the Government has rejected the work, or is requiring some re-work (correction of deficiencies) before acceptance -- in lieu of terminating the prime contractor for default, it seems the Government has given more time to allow the prime contractor to correct the deficiencies -- that is gracious on the Government's part.  The prime contractor and the Government need to communicate with each other -- that should be a two-party conversation (prime contractor and Government, with no subcontractors).

If the prime contractor disagrees that any re-work is needed to correct deficiencies, or believes the requested work is outside the scope of the contract, it may say so and may file a claim demanding Government acceptance of the work and final payment under the contract's Disputes clause.

If the prime contractor agrees that re-work is needed to correct deficiencies, it may get the work done.  Re-work of deficiencies is usually done at the contractor's expense.  Whether your company will bear any of the expense depends on your subcontract with the prime contractor.

If the prime contractor believes the requested work is really a constructive change, it may say so and may submit its request for equitable adjustment under the contract's Changes clause.

Hopefully, the prime contractor has an attorney who has read the contract and can provide fact-based advice to the prime contractor.  No one here has read the contract or knows whether the work is deficient.

 

 

 

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In addition to not knowing the details, if the project is “substantially complete” and turned over for use, but the government has discovered a “deficiency” which doesn’t affect full use of the facility, there is no need for a time extension. 

You said that there is an “aesthetic” issue. That doesn’t look like it would prevent full usage of the facility, thus should not involve a time extension.  It should probably be a punch list item. 

Did the alleged deficiency prevent the prime from turning over the project for the governments beneficial use and occupancy?  

I am a design-build specialist  but would need a lot more info to provide sound advice.  I do agree that the government should explain its position though. 

I am going to be out of country for a period after today, so may not be able to follow this thread  from a sailboat in the Caribbean Sea. 

 

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I am going to be out of country after today so may not be able to follow this thread  from the Caribbean Sea on a sailboat. 

Now your just bragging.  :D

I know I am being a bit vague, but I am not comfortable giving too many details because it is a fairly high profile project.  Frankly, the $ amounts aren't that large but it is the visibility of the project and being unfairly blamed for poor design that concerns us. This is more than a punch list type item as resolving the issue would require reengineering components.  The system meets (and even exceeds) performance standards, but while operating produces a  visual effect that most people wouldn't even notice or care about. Basically, it doesn't look as pretty as they want it to look while operating. There was nothing in the specs about meeting visual standards. In the meantime, the Gov't has taken possession, commenced the start up, completed performance and endurance testing and the system is in full operation.  As I mentioned before, they have implemented (without our input or concurrence) a temporary fix but now want us to come up with a permanent fix.  We don't have a problem with doing that as long as we get paid.  It is not a simple fix. 

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I think I found it.  What I was initially overlooking (and others as well), was that the modification to extend the POP was retroactive.   The original POP had already expired. That is what is most relevant.  I found this.  Retroactively extending a POP is violation of CICA.

THE CONTRACTUAL RELATIONSHIP WHICH EXISTED IS TERMINATED AND THE ISSUANCE OF AN AMENDMENT 4 MONTHS AFTER THE EXPIRATION DATE TO RETROACTIVELY EXTEND AND MODIFY THE CONTRACT AS IF IT HAD NOT EXPIRED AMOUNTS TO A CONTRACT AWARD WITHOUT COMPETITION

 

https://www.gao.gov/products/461444#mt=e-report

 

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Edit:  posted before reading your last post above . Still have a signal today.  There is no need for an extension to the “period of performance”. The project is substantially complete and turned over, tested and in full operation.  

Liquidated damages shouldn’t be applicable.  This appears to be, from the government perspective, either a warranty issue or a latent defect. Otherwise (generally), acceptance is full and complete. 

The government must, as a minimum, tell the contractor and the contractor must tell you, as it’s sub, exactly how the system doesn’t meet the contract requirements.  

It might be simply something that is objectionable but meets the contract requirements. In that case, I’d venture to say that the contractor will have to pay you to redesign it.  

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The PoP extension for a future requirement is unnecessary unless the govt and prime are adding an out of scope or in scope change to the original requirement after acceptance...

If so, then it should be compensable...

Otherwise, it would appear to me to simply be a retroactive time extension to extend the contract completion date before the project was considered substantially complete.

But without all the facts, I can only speculate how it is supposed to work.

And I don’t guarantee that the government’s KO and contract administrators know what they are doing. 

As a sub, I wouldn’t perform any uncompensated redesign without knowing how my original design doesn’t comply with the D-B design requirements.

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26 minutes ago, pricelesspearl said:

I think I found it.  What I was initially overlooking (and others as well), was that the modification to extend the POP was retroactive.   The original POP had already expired. That is what is most relevant.  I found this.  Retroactively extending a POP is violation of CICA.

THE CONTRACTUAL RELATIONSHIP WHICH EXISTED IS TERMINATED AND THE ISSUANCE OF AN AMENDMENT 4 MONTHS AFTER THE EXPIRATION DATE TO RETROACTIVELY EXTEND AND MODIFY THE CONTRACT AS IF IT HAD NOT EXPIRED AMOUNTS TO A CONTRACT AWARD WITHOUT COMPETITION

 

https://www.gao.gov/products/461444#mt=e-report

 

That GAO decision is for a service contract, not for a D-B construction contract.  In that case, additional, compensable services were added after the original end of performance.  Different animal. Another firm protested the action. 

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On 2/20/2019 at 6:15 PM, pricelesspearl said:

We are the design sub to the prime on a design-build.

... They have implemented a temporary fix without our concurrence or input, making significant changes to our original design (which raises a whole other bunch of issues) and extended the period of performance  to allow us to come up with a permanent fix, based on their "redesign". 

 

“They” have no contractual right to make you, as the designer of record, legally responsible for their “redesign”. They may have voided certain aspects of legal warranties.  

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On 2/22/2019 at 8:35 AM, pricelesspearl said:

I think I found it.  What I was initially overlooking (and others as well), was that the modification to extend the POP was retroactive.   The original POP had already expired. That is what is most relevant.  I found this.  Retroactively extending a POP is violation of CICA.

THE CONTRACTUAL RELATIONSHIP WHICH EXISTED IS TERMINATED AND THE ISSUANCE OF AN AMENDMENT 4 MONTHS AFTER THE EXPIRATION DATE TO RETROACTIVELY EXTEND AND MODIFY THE CONTRACT AS IF IT HAD NOT EXPIRED AMOUNTS TO A CONTRACT AWARD WITHOUT COMPETITION

 

https://www.gao.gov/products/461444#mt=e-report

 

This is a great example of confirmation bias - when you go searching for the answer you want, rather than the answer that is right, you're bound to find it...

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On 2/20/2019 at 4:28 PM, pricelesspearl said:

The POP expired , so they just unilaterally issued an extension as an administrative change and expecting us to "fix" the "errors" for free.  They have not offered any sort of proof or support for claiming an E&O.

Part of the problem here is that you are relating this story from the perspective of a subcontractor.

Have you seen the prime contract modification?  How do you know the Government "just unilaterally issued an extension as an administrative change and [is] expecting us to "fix" the "errors" for free?"

Get a copy of the prime contract mod,  verify the authority under which it was issued, and read what it says. Until then you are just guessing.

On 2/20/2019 at 8:46 PM, pricelesspearl said:

" the optics are bad and you need to fix it"

If I were you, I would be concerned that you may have become unfairly caught up in an issue that was in fact the fault of the prime, and the prime is using you as an excuse.  It's extremely hard to believe that a prime contractor would just accept an unfunded extension solely for the reasons you stated; it's far more likely that the prime provided the PoP extension as consideration for some acknowledged deficiency on their part.  As Joel points out, PoP extensions aren't usually part of remedying a defect anyway.

$100 says the prime screwed up and is trying to minimize their losses by directing you to take on some of the costs of fixing that screw-up  (e.g., maybe the prime's failure to communicate that optics were important resulted in the deficiency).  It seems clear that the prime's extraordinary request to provide work for free more than justifies a peek at the mod that supposedly compels that free work.

 

 

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