Jump to content

CO and Prime Contractor Responsibilities


LorenaCC

Recommended Posts

My CO was just informed the program office directed the prime contractor to subcontract for high tech equipment under our maintenance/logistics contract on behalf of another program office who couldn't get the purchase done before the end of FY. Turns out this equipment started to fail, causing major program delays to full program deployment. The requesting PMO worked directly with the subcontractor (CO, COTR and Prime unaware until now), the component identified as the cause of failure was replaced in all units, now the new units are not properly connecting to the network.

Now the other prime contractor has filed an REA due to the schedule delays caused by our subcontractor. Remember the subcontract was out of scope for the maintenance contract and its issuance was without the CO's knowledge. Now that CO is requesting my CO and our prime contractor force the subcontractor to provide further on-site support. My question is has the other CO and PMO tied our hands by their actions? Since my prime contractor knew the subcontract was out of scope and did it anyway, what are their responsibilities now?

I have been researching but haven't found much. We plan to consult Legal but the CO likes to have some info/ideas beforehand. Just wondering if any one has faced anything similar, how you handled it and what was the final outcome?

Link to comment
Share on other sites

Guest Vern Edwards
My CO was just informed the program office directed the prime contractor to subcontract for high tech equipment under our maintenance/logistics contract on behalf of another program office who couldn't get the purchase done before the end of FY. Turns out this equipment started to fail, causing major program delays to full program deployment. The requesting PMO worked directly with the subcontractor (CO, COTR and Prime unaware until now), the component identified as the cause of failure was replaced in all units, now the new units are not properly connecting to the network.

Now the other prime contractor has filed an REA due to the schedule delays caused by our subcontractor. Remember the subcontract was out of scope for the maintenance contract and its issuance was without the CO's knowledge. Now that CO is requesting my CO and our prime contractor force the subcontractor to provide further on-site support. My question is has the other CO and PMO tied our hands by their actions? Since my prime contractor knew the subcontract was out of scope and did it anyway, what are their responsibilities now?

I have been researching but haven't found much. We plan to consult Legal but the CO likes to have some info/ideas beforehand. Just wondering if any one has faced anything similar, how you handled it and what was the final outcome?

Your have written a very confusing post. Here is what I think you meant:

Your CO has learned that someone in the program office that you support arranged for a firm that has a contract with your program office to buy some equipment needed by a different program office. The equipment was to be government-furnished to the other program office's contractor. The equipment turned out to be faulty, which has delayed the performance of the other program office's contractor. The other program office worked directly with the supplier of the equipment to replace it, and now the replacement equipment has turned out to be faulty. Now the other program office's contractor is seeking compensation for the delay caused by the faulty government-furnished equipment. The other program office's CO has asked that your CO make your contractor make the supplier fix the problem. You want to know what if any liability the Government bears for this fiasco under your contract.

The answer is: none. The transactions that you have described do not fall under your contract just because someone in your program office made the initial request for the purchase. They cannot fall under your contract, because they were not within the scope of your contract and the person who made the purchase request is not the CO. Your contractor agreed to go along with what was essentially an entirely separate purchase request. That was its own decision. It has no grounds to charge any of this to your contract or to make a claim under your contract. What you have described is nothing more than a series of unauthorized commitments by personnel in your program office and in the other program office. (If your contractor invoiced for the equipment under your contract, then it may have made a false claim and might be in trouble. If it invoiced and was paid, it might be in a lot of trouble. I would make sure that they know that.)

The other CO wants you to think of those transactions as being "under" your contract, but they weren't. He or she just wants to put the monkey on your backs, and it's working. But if you do as the other program office's CO has asked, then the Government might end up bearing some liability under your contract. Whether your program office wants to do that or not is up to you. (More likely, its up to your program manager.) If your program office does want to help out the other program office, your CO had better advise your program manager about the potential for financial liability and official criticism.

Link to comment
Share on other sites

Vern,

Thanks, since the post my CO found out the other program office provided funding (my COTR buried the line item in an incremental funding requisition) for purchase, standard warranty and quality check only, no technical support services. My prime contractor has invoiced and was paid. My prime conducted a competition for this techology and both program offices conducted technical evaluations and recommended the same vendor. My prime contractor has now stated their responsibilites ended after the quality check and delivery to the other prime contractor. My CO agrees, has previously given the prime and the COTR strong warnings about proceeding with out of scope work.

Link to comment
Share on other sites

Guest Vern Edwards
Vern,

Thanks, since the post my CO found out the other program office provided funding (my COTR buried the line item in an incremental funding requisition) for purchase, standard warranty and quality check only, no technical support services. My prime contractor has invoiced and was paid. My prime conducted a competition for this techology and both program offices conducted technical evaluations and recommended the same vendor. My prime contractor has now stated their responsibilites ended after the quality check and delivery to the other prime contractor. My CO agrees, has previously given the prime and the COTR strong warnings about proceeding with out of scope work.

LorenaCC:

Pay very close attention to what I'm going to say.

What you have described is a potentially very serious matter. As you described the events, your contractor billed the government under your contract for work that it undoubtedly knew was not covered by the contract. Such an act might be construed as a civil false claim under 31 USC ? 3729-3733 or even a criminal false claim under 18 USC ? 287, which could be a very, very serious matter for the contractor. Moreover, the person(s) in your program office who asked your contractor to provide the equipment and told it to invoice against your contract are also at risk. Even a mere suspicion and consequent investigation could be ruinous, despite ultimate exoneration.

I was personally involved as an expert witness in a similar such case. Some government engineers wanted to carry out an authorized project for which funds were available, but they couldn't get a contract awarded before the end of the fiscal year and they didn't want to lose the funding. So they asked a contractor who had a contract for other work to do the project and invoice against its contract, knowing that the work was not covered by that contract. The bill came to about $500,000. When the invoice came in, a suspicious contracting officer called the Army Criminal Investigation Division, which launched a CID and, subsequently, FBI investigation. Suspecting hanky-panky, the cognizant U.S. attorney began to investigate. This went on for a couple of years. I met for several hours with the U.S. attorney who had doggedly pursued the contractor and the government employees for several years. I explained that what was done had been stupid and wrong, but well-intentioned, and that it was not all that uncommon. He wouldn't hear it. He continued the investigation for another year and some months before he finally dropped it. The company was suspended under FAR Subpart 9.4 and ultimately bankrupted by legal fees and shut down. I understand that at least one of the government employees was financially ruined by legal fees. At one point, an FBI agent approached one of the government employees at his child's day care and warned him, in front of the child, that he might go to jail if he didn't turn state's evidence on the others.

The government does not have to actually prosecute you in order to punish you. You do not want to draw the attention of a U.S. attorney.

The idiots responsible for the transactions that you have described were undoubtedly well intentioned, but they deserve to have their asses kicked. Print out this post and show it to those people. Make sure they read it. And by the way, your contracting officer should not blindly accept what has happened as being in the past. He or she should take appropriate action and document the file. His or her failure to do so could make things worse if discovered by an IG or even some government or contractor employee who decides to call a hot line.

One last thing: You said that the "line item" was buried in an incremental funding requisition. I don't know what that means. If there was no contract line item for the equipment buy, then your CO should demand that the contractor refund the payment with interest. If there was a contract line item, then why have you raised this issue?

Stupid, stupid, stupid, stupid, stupid.

Link to comment
Share on other sites

Vern,

The CO has been thinking a lot about this mess and does see the seriousness.

This is a cost reimbursement contract that is incrementally funded by several end-user offices for maintenance on their equipment. The line item that funded this purchase didn't stand out to us because this type of equipment was already being maintained, and a previous CO had found the purchase of component spares to be within scope. The line item description used the term " bundle" which is commonly used on this contract to describe spares kits, so the line item did not stand out to us. Also the contract is scalable so as additional pieces of equipment are added, more spare bundles will be needed as well.

The prime contractor also now has a strong Contracts Manager (former AF KO) who has put a stop to the acceptance of out of scope work, but the purchase was before her time. She has explained the dangers to her company on another out of scope action they were eager to perform for the Govt including the fact that an auditor could spot these actions and disallow all costs associated with tem.

My CO and our 1st and 2nd level supervisors had similar converstations with our COTRs/the PM and their executives at the same time. We will keep telling them and refusing to ratify their actions but I can't help but think it also makes them sneakier

Link to comment
Share on other sites

Guest Vern Edwards
Vern,

The CO has been thinking a lot about this mess and does see the seriousness.

This is a cost reimbursement contract that is incrementally funded by several end-user offices for maintenance on their equipment. The line item that funded this purchase didn't stand out to us because this type of equipment was already being maintained, and a previous CO had found the purchase of component spares to be within scope. The line item description used the term " bundle" which is commonly used on this contract to describe spares kits, so the line item did not stand out to us. Also the contract is scalable so as additional pieces of equipment are added, more spare bundles will be needed as well.

The prime contractor also now has a strong Contracts Manager (former AF KO) who has put a stop to the acceptance of out of scope work, but the purchase was before her time. She has explained the dangers to her company on another out of scope action they were eager to perform for the Govt including the fact that an auditor could spot these actions and disallow all costs associated with tem.

My CO and our 1st and 2nd level supervisors had similar converstations with our COTRs/the PM and their executives at the same time. We will keep telling them and refusing to ratify their actions but I can't help but think it also makes them sneakier

The information that you've just provided significantly alters the story, but I still think the transactions are potentially quite serious. If I were your CO I would send a very strongly worded letter (not email), certified mail, return receipt requested, telling the contractor in no uncertain terms not to do any work without authorization by the CO. Depending on all of the facts, I might still demand repayment. After all, at minimum you have an unauthorized commitment, which a CO cannot ratify. The costs billed to the government were, in my opinion, unallowable.

What has happened is very, very bad in my view, no matter how common an occurrence it might be.

Link to comment
Share on other sites

If I were your CO I would send a very strongly worded letter (not email), certified mail, return receipt requested, telling the contractor in no uncertain terms not to do any work without authorization by the CO.

That's exactly what I would do as well for two reasons. One is it should put a stop to these kinds of actions. Second, it provides solid documentation that the CO is on top of things and took the proper action after being notified of the event. One of the worse things that can happen in this business is an auditor or IG uncovering something wrong and finding out the government knew but didn't act.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...