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One Mod - Two Authorities


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Guest PepeTheFrog
22 hours ago, coolarmydude said:

why not 10? Where does it end?

It ends when you have adequately described what you're doing and why. Citing only one modification reason ("authority") for several different changes, each of which relies on a different reason ("authority") is not adequate. 

You might cite 10 authorities if you have an especially complicated modification that draws on the processes or rights or procedures outlined in 10 different FAR clauses. That would be an extreme example, but in such a case, wouldn't it be helpful to explain how those 10 different FAR clauses relate to each of the 10 changes in the modification?

22 hours ago, coolarmydude said:

You assume that it is an inherent limitation. That is a mistake. 

But I used that as a guide as a hint on how to treat a modification.

Like PepeTheFrog said before, using the (inherent, systemic, design) limitations of FPDS (e.g. forcing you to input only one modification authority) as a "guide" or a "hint" on how to document or explain the modification is not a good idea. Do you understand why?

Here is another translation: 

FPDS is not as important as the contract or modification itself. FPDS does not (cannot) record all aspects of the contract or modification. It has limitations. It asks for certain data, and does not ask for other data. It asks for certain data in a predefined format, in many cases.

By all means, continue to use a poorly designed system that is considered to be absolute garbage in terms of user interface and accuracy of data. Just don't expect intelligent colleagues to criticize you for it. This kind of thing is why some people view contracting professionals as administrative assistants, clerical flunkies, paper-pushers, and glorified secretaries. 

PepeTheFrog encourages you to think this through, again. 

Sure, follow FPDS procedure. Pick one modification for FPDS. Who cares? FPDS is "garbage in, garbage out." But forget about FPDS. What about the contract modification itself?

PepeTheFrog finds it difficult to understand how someone could prefer "picking one" explanation ("authority") for a multi-prong modification with several different changes from several different clauses. It saves some typing time. It saves you the trouble of thinking. Best of all, it complies with FPDS! 

@coolarmydude and anyone else who thinks you should only cite one modification reason ("authority"), please tell PepeTheFrog which single authority to cite for this modification (forget about FPDS, forget about even Block 13, just tell PepeTheFrog how you would explain this modification in the document itself, or in an accompanying memo using a single authority):

Incrementally fund $500,000. Exercise option period 3. Change the security classification form. Change the statement of work.

Hint: There are four changes. Each of the four changes corresponds to a well-known FAR clause. Each of the four changes can be accomplished unilaterally. 

 

(PepeTheFrog would cite FAR 52.232-22 (Limitation of Funds), FAR 52.217-9 (Option to Extend the Term of the Contract), FAR 52.204-2 (Security Requirements), FAR 52.243-X (Changes), respectively.)

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Lionel said, "relinquishing legal rights serves as adequate consideration."  Legal rights are a property interest vested in the government.  Do contracting officers have the authority to divest the government of its property rights without such authority being granted in a contract clause?

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21 minutes ago, Retreadfed said:

Lionel said, "relinquishing legal rights serves as adequate consideration."  Legal rights are a property interest vested in the government.  Do contracting officers have the authority to divest the government of its property rights without such authority being granted in a contract clause?

As I said earlier, generally  - not without some specific authority to waive all or partial rights. 

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1 hour ago, Retreadfed said:

Lionel said, "relinquishing legal rights serves as adequate consideration."  Legal rights are a property interest vested in the government.  Do contracting officers have the authority to divest the government of its property rights without such authority being granted in a contract clause?

Yes, provided they obtain consideration.

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13 minutes ago, Don Mansfield said:

Yes, provided they obtain consideration.

For example...? Me thinks you speak too generally.  

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3 minutes ago, joel hoffman said:

For example...? Me thinks you speak too generally.  

Take ji's example from earlier in the thread:

Quote

As an example, in a contract for commercial items, the contract calls for 100 EA white items for delivery in 60 days.  Shortly after award, the parties agree to 33 white, 33 red, and 34 blue in 45 days.

The Government has given up its right to the delivery of 100 white items delivered in 60 days in exchange for 33 white, 33 red and 34 blue delivered in 45 days.

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34 minutes ago, Don Mansfield said:

Take ji's example from earlier in the thread:

The Government has given up its right to the delivery of 100 white items delivered in 60 days in exchange for 33 white, 33 red and 34 blue delivered in 45 days.

Don - Ok, that’s a simple “change”. 

Im thinking of other risks or responsibilities allocated to the parties by various contract clauses or by operation of law. 

For example, can the KO wave their magic wand to assume the otherwise contractor allocated risk, responsibility or liability “if they obtain consideration”? 

Can a KO turn a known,  underground condition into a “differing site condition” for consideration, then pay for the additional costs to perform the work on a fixed price contract?

Can a KO indemnify a contractor for possible public health risks or future employee illnesses due to possible release of toxic chemicals for an environmental remediation of RCRA site if they obtain consideration?  

Can the KO relieve the contractor of any liability for injury to the contractor’s employees or to the public due to unsafe practices if they obtain consideration? 

Can the KO make the government responsible for the impact of future corporate income tax increases on a fixed price contract if they obtain consideration? 

Those are some examples of many, many responsibilities or risks typically allocated to contractors by law, public policy and/or by standard contract clauses. 

 

 

 

 

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Don - By the way, it wasn’t established or explained  that the color and delivery changes were for no cost or that the government “received consideration”.  May have been a credit change or a change involving increased cost. Might have paid for a shorter delivery schedule.

ji simply described the change...

 

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23 minutes ago, joel hoffman said:

For example, can the KO wave their magic wand to assume the otherwise contractor allocated risk, responsibility or liability “if they obtain consideration”? 

Yes. For example, FAR 46.407(f) permits this:

Quote

When supplies or services are accepted with critical or major nonconformances as authorized in paragraph (c) of this section, the contracting officer must modify the contract to provide for an equitable price reduction or other consideration.

 

23 minutes ago, joel hoffman said:

Can a KO turn a known,  underground condition into a “differing site condition” for consideration, then pay for the additional costs to perform the work on a fixed price contract?

I don't understand what the consideration would be in this scenario.

 

23 minutes ago, joel hoffman said:

Can a KO indemnify a contractor for possible public health risks or future employee illnesses due to possible release of toxic chemicals for an environmental remediation of RCRA site if they obtain consideration?  

Can the KO relieve the contractor of any liability for injury to the contractor’s employees or to the public due to unsafe practices if they obtain consideration? 

Can the KO make the government responsible for the impact of future corporate income tax increases on a fixed price contract if they obtain consideration? 

In the absence of some specific limitation on the contracting officer's authority in these circumstances, then yes. They would still have to comply with FAR 1.602-1(b) before exercising their authority.

BTW, FAR 1.102(d) places the burden on the naysayer when it comes to the exercise of authority. As such, please cite the law, executive order, or regulation that would prohibit the types of modifications that you described.

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On 3/15/2019 at 5:43 PM, Don Mansfield said:

I don't understand what the consideration would be in this scenario.

So, apparently , no. [contractor offers consideration if government will reimburse extra expense for a known site condition].

On 3/15/2019 at 5:43 PM, Don Mansfield said:

In the absence of some specific limitation on the contracting officer's authority in these circumstances, then yes. They would still have to comply with FAR 1.602-1(b) before exercising their authority.

I would advise you not to speak so broadly. That’s a dangerous answer. It implies that if a KO isn’t aware of a specific limitation of their authority they are free to modify any contract requirement. 

KO’s can not idemnify contractor’s from certain legal liabilities or responsibilities per various laws, including those examples that I cited.

For example, it ought to be obvious that  income taxes aren’t allowable expenses for reimbursement. If not obvious, read 31.205-41 (b) (1).

FAR 2.101 Definitions: “Unallowable cost means any cost that, under the provisions of any pertinent law, regulation, or contract, cannot be included in prices, cost-reimbursements, or settlements under a Government contract to which it is allocable.”

FAR 31.201-6   Accounting for unallowable costs.

“(a) Costs that are expressly unallowable or mutually agreed to be unallowable, including mutually agreed to be unallowable directly associated costs, shall be identified and excluded from any billing, claim, or proposal applicable to a Government contract. A directly associated cost is any cost that is generated solely as a result of incurring another cost, and that would not have been incurred had the other cost not been incurred. When an unallowable cost is incurred, its directly associated costs are also unallowable.”

Thats why a KO better damned well be able to cite their legal authority and justify why they are modifying a contract.  

 

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On 3/15/2019 at 5:43 PM, Don Mansfield said:

BTW, FAR 1.102(d) places the burden on the naysayer when it comes to the exercise of authority. As such, please cite the law, executive order, or regulation that would prohibit the types of modifications that you described.

Your added edit is incorrect.

FAR 1.102 (d) places the burden upon the KO and the government members of the acquisition team to determine “if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR nor prohibited by law (statute or case law), Executive order or other regulation”  before assuming that the strategy, practice, policy or procedure is permissible.

I mentioned examples of standard contractually established allocations of responsibilities or liabilities and asked if a KO could reverse those if, as you say, the KO “obtains consideration”. 

It is B.S. to say that the burden is on someone questioning the KO’s authority. It is the K.O.’s responsibility to determine if they are not prohibited from waiving or reversing contractually established roles, responsibilities or liabilities. The KO and their advisory team must be able to justify why they are modifying a contract.

See, for instance 1.602-2 (c) and agency supplements thereto.  I would also certainly hope that DAU teaches on the topic of legal sufficiency reviews - especially if a KO decides to modify the terms of FAR Clauses or other contractually defined. allocations of liability or risks. 

Perhaps you are a David Drabkin fan. I remember some of the differing opinions of Deidre Lee and Drabkin in one of our DAU Contracting classes in D.C. in the 1990’s. 

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2 hours ago, joel hoffman said:

It is B.S. to say that the burden is on someone questioning the KO’s authority. It is the K.O.’s responsibility to determine if they are not prohibited from waiving or reversing contractually established roles, responsibilities or liabilities.

How would a KO prove a negative? The burden of proof, in law and logic, is well established. 

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How would they prove a positive? First, check to see if it is specifically allowed or required.

The burden is on the one proposing to modify the contract to determine whether or not it is prohibited if it isn’t specifically allowed. 

By the way:

“Generally, GAO and courts have ruled that ?open-ended?indemnification provisions in contracts violate 31 U.S.C. ? 1341. See e.g., Union Pacific Railroad Corp. v. United States, 52 Fed. Cl. 730 (2002); United States Park Police Indemnification Agreement, B-242146, 1991 US Comp. Gen. LEXIS 1070, Aug. 16, 1991 (stating that absent specific statutory authority, indemnification provisions which subject the government to indefinite or potentially unlimited liability violate the ADA); Project Stormfury, B-198206, 59 Comp. Gen. 369 (1980). To Howard Metzenbaum, B-174839.2, 63 Comp. Gen. 145 (1984); Assumption by Gov?t of Contractor Liability to Third Persons, B-201072, 62 Comp. Gen. 361 (1983); Reimbursement of the State of New York Under Support Contract, B-202518, Jan. 8, 1982, 82-2 CPD ? 2; cf. E.I. DuPont De Nemours v. United States, 365 F.3d 1367 (2004) (holding that the Contract Settlement Act of 1944 exempted certain contracts with indemnification provisions from operation of the Antideficiency Act).”

http://www.wifcon.com/discussion/index.php?/topic/1041-federal-government-indemnification-of-contractors/

 

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On 3/17/2019 at 2:19 AM, joel hoffman said:

How would they prove a positive? First, check to see if it is specifically allowed or required.

The burden is on the one proposing to modify the contract to determine whether or not it is prohibited if it isn’t specifically allowed.

That doesn't answer my question.

Let's say a KO is drafting a modification for your review and you believe it's prohibit. The KO couldn't find such a prohibition and politely asks you to prove it while also reminding you of this FAR statement:

"If a policy or procedure, or a particular strategy or practice, is in the best interest of the Government and is not specifically addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, Government members of the Team should not assume it is prohibited. Rather, absence of direction should be interpreted as permitting the Team to innovate and use sound business judgment that is otherwise consistent with law and within the limits of their authority."

Who has the burden of proof in this scenario (you are a reviewer, but not a clearance approval authority)?

If the KO is correct and the rules are silent (e.g., absent) how could they prove a negative?

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Jamaal, please lay out an example  for me. 

 

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@joel hoffman

I provided the scenario. Please answer the two questions as you see fit based on the info provided. (I am trying to find out how you prove a negative - the rules are silent on the matter)

*I think most everyone agrees what to do when the rules are not silent

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I  proved the negative on the very simple examples in my earlier posts that I asked about.  That was in response to the simplitistic idea that the KO can do whatever they want to if “they obtain consideration” and the burden is on any objectors to prove that something isnt allowable.

The KO needs to obtain legal or other team member advice when they want to do something out of the ordinary and they don’t know if it is allowed or prohibited.  Note that the FAR specifically mentions the government acquisition team members. The KO should not operate in a vacuum in their own little “kingdom”.

Im not talking about changes in the work description or means and methods, e.g., changing colors and delivery time or accepting non-conforming work at a reduced price. Every KO ought to know those routine things. 

 

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6 hours ago, joel hoffman said:

I  proved the negative on the very simple examples in my earlier posts that I asked about.

I believe we have different opinions on what proving a negative, as used here, means.

In my mind, where the burden of proof isn't defined, it rest with the party who's argument will lose by default absent compelling evidence. For example, a KO relying on a negative claim (e.g., the rules are silent) and a reviewer making a positive claim (e.g., the rules prohibit) do not share the same burden. In this case, the reviewers claims should be backed by evidence (i.e., cite a rule), otherwise the KO is free to execute their delegated authority.

Thanks for the dialogue. 

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You’re going to have to give me an example of something that a KO would modify and the rules are silent on the matter and where it is in the governments best interest. 

My point has been that the Acquisition team needs to determine if something out of the  ordinary that somebody wants to be modified is 1) in the government’s best interest 2) allowed or 3) not allowed. 

If the action is being pursuant to a contract clause or other guidance that provides for an adjustment, then it ought to be easy to cite that “authority” on the Mod. 

I didn’t mention a modification action that has no guidance,  policy, rules, Statutes or case law, etc. in that event, the KO needs to document, for the record, why they are modifying the contract, not simply state that the parties agreed and “Here’s my warrant. “ If one is spending the taxpayers’ money (borrowed by the way and adding to the National Debt) to modify a contract, then they should be able to justify why. 

Thanks for the dialog and have a good week. 

Edit: Say there is some situation where the acquisition team knows of no guidance, policy, FAR or other regulations, no law, no case law, etc.  and/or the action is not in the government’s interest or do not use sound business direction.

 If the reviewer or subsequent examination provides the information concerning guidance, policy, FAR or other regulations, law, case law, etc., or can otherwise justify why the action is not in the government’s interest, then it would seem that the acquisition team doesn’t have the backing of the FAR at 1.6 to rely upon.

I don’t remember any contract admin situations regarding  contract modifications where there was nothing to guide the contract admin team (including the KO) . We’ve had to dig to find some guidance or precedent, occasionally. 

As for the “FAR statement”,  I’ve used it for acquisition planning and formulating acquisition  approaches and for developing contract clauses for design-build contracts, where there is no FAR or statutory coverage of the revised and unique roles and responsibilities of the parties. 

 

 

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On ‎3‎/‎15‎/‎2019 at 3:51 PM, joel hoffman said:

For example, it ought to be obvious that  income taxes aren’t allowable expenses for reimbursement. If not obvious, read 31.205-41 (b) (1).

Are you claiming that the CO would be prohibited from deviating from the cost principles, even if they complied with FAR 1.602-1(b)?

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“1.602-1 (b) No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met.”

Are you referring to the original contract or to the modification?

 The KO and it’s acquisition team would not be complying with 1.602-1(b), if they decide to reimburse a contractor for paid income taxes in a contract mod.

Income taxes are not an allowable expense and are to be excluded from proposal and contract prices, if specifically identified. 

We both are wasting our time here with constant circular references. 

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1 hour ago, joel hoffman said:

“1.602-1 (b) No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met.”

Are you referring to the original contract or to the modification?

 The KO and it’s acquisition team would not be complying with 1.602-1(b), if they decide to reimburse a contractor for paid income taxes in a contract mod.

Income taxes are not an allowable expense and are to be excluded from proposal and contract prices, if specifically identified. 

We both are wasting our time here with constant circular references. 

I'm asking if the CO would be prohibited from deviating from the cost principles, provided they complied with FAR 1.602-1(b). Yes or no?

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