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HelloFrank

Stop Work Order issued month before contract expiration

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What happens when the government issues a stop work order one month before a contract expires?  Can the government avoid a termination for convenience and all related settlement costs by allowing the stop-work order to run out the clock on the contract?

 

i imagine this may have happened during the government shutdown(s) but I don’t think the FAR directly addresses this issue so I’m looking for specific direction or examples of this happening and what solutions there might be 

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The rights and obligations of the parties for a stop-work order are found in the clause at FAR 52.242-15, Stop-Work Order (assuming your contract contains this clause and this clause is the basis for your stop-work order).  Generally, a stop-work order may provide an entitlement to an extension in the contract's delivery date or end of period of performance.  After issuing a stop-work order, the Government has two choices:  (1) cancel the stop-work order; or (2) terminate the work covered by the order (see FAR 52.242-15(a)(1) and (2)).  If the Government chooses (1), the contractor may ask for an extension in the contract's delivery date or end of period of performance (see FAR 52.242-15(b)).

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7 minutes ago, ji20874 said:

After issuing a stop-work order, the Government has two choices:  (1) cancel the stop-work order; or (2) terminate the work covered by the order (see FAR 52.242-15(a)(1) and (2)).  

Note that under subsections (b)-(d) of the clause, the contractor is also entitled to a price adjustment if the SWT results in increased cost to the contractor.  This generally includes a profit adjustment.

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Do you know what would happen though if the government did not cancel the SWO or terminate the contract?  If the contract simply expires during the time period when the SWO is in effect, can the government avoid T4C? What would happen if Gov just let the contract expire by its terms while the SWO was still in effect?  

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Who knows what would happen?  That would depend on circumstances and personalities.  If it is happening to you, please share some facts, and others here might be able to share insights.  Services, supplies, or construction?  What contract clause was used to issue the stop-work order (the clause already mentioned in this thread is just one clause that authorizes stop-work orders)?  And so forth...

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I am working for a contractor and the government has just issued a stop work order with about a month left on the contract.  I suspect the SWO will remain in effect once the contract expires by its terms.  So I’m unclear what can happen at that point.  I realize the rules say the SWO must either be canceled or T4C, but it doesn’t address what happens if contract expires while SWO is still in effect.  Has anyone encountered this issue?  I would have thought it came up during the shutdown last year but I can’t seem to find anything.  Truly it cannot be the first time this has ever happened 

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The contractor will be able to ask for an equitable adjustment when the stop-work order is canceled or when the government declares the contract to be finished.

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I think we would be entitled to more money if the Gov T4C in this case b/c we’re so close to the end of the kt.  But if the SWO is in effect when the KT expires by its terms then we’re only able to ask for equitable adjustment.  Are they allowed to let the contract intentionally lapse while the SWO is in effect? 

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1 hour ago, HelloFrank said:

Are they allowed to let the contract intentionally lapse while the SWO is in effect? 

There really is no such thing as "Are they allowed...?"  Whatever happens is what happens, and that is based on circumstances and personalities -- whatever happens may or may not be "allowable" under the contract or contract principles, but it still happens.  Then, the parties deal with it, one way or the other.  

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Did anyone run into this problem during the shutdown?

 

i know the gov does whatever it wants but there has to be some rule somewhere that either lets them or doesn’t.  It’s so frustrating.  Where do you think I can look for the answer.  I mean I’m familiar with the FAR clauses dealing with SWO and T4C but didn’t know if there was something else I could turn to

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13 hours ago, HelloFrank said:

Did anyone run into this problem during the shutdown?

 

i know the gov does whatever it wants but there has to be some rule somewhere that either lets them or doesn’t.  It’s so frustrating.  Where do you think I can look for the answer.  I mean I’m familiar with the FAR clauses dealing with SWO and T4C but didn’t know if there was something else I could turn to

A reference not provided in this thread is FAR 42.1303 which is guidance to the government on use and action regarding stop work orders.   While the actual clause in the contract will govern knowing guidance on use may be of help with your frustration.  By example asking the agency CO what action in (e) he/she plans to take.   Note - the direction to the CO is clear that he/she "shall" take one of the actions.

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I read 52.242-15 (b) (if that is in your contract) to require that you resume work.

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But what happens once the contract expires?  If it’s expired, are we still to resume working?  (Particularly since I suspect the gov doesn’t want us to keep going)

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Does the contract include an expiration date? Probably not, right? Does your company wish to continue? Did the government express in writing that it didn't want the work to ever continue? Check with your attorney to weigh in on the business risk, but first get familiar with the subject matter. See https://www.dykema.com/media/publication/134_Sayre-Clayborn.pdf.

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Kt expires at the end of the fiscal year- sept 30.  We want to work but gov seems to be running out of money and doesn’t want to pay.  I think their goal is to just let the clock run out on this kt while the SWO is in effect so that they don’t have to keep paying.  I can’t figure out what allows them to do this but it seems unfair - although everyone seems to think the gov can do whatever it wants.  But I feel like they must have some basis in the law for holding out on us and I’m trying to figure out what that is so we can file some claim against them

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I think Neil has given you some good advice.  I would add that I suggest you send notice to the contracting officer that you intend to resume work once the SWO has expired and that you plan to submit an equitable adjustment to account for the increased time needed to perform the contract and for any additional costs that have been incurred as a result of the SWO and see what his/her reaction is.

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47 minutes ago, HelloFrank said:

everyone seems to think the gov can do whatever it wants

This isn't true.  But sometimes, in a contract, the contractor allows the Government to get away with things (just as sometimes, the Government allows the contractor to get away with things).  It depends on circumstances and personalities.

47 minutes ago, HelloFrank said:

I’m trying to figure out what that is so we can file some claim against them

Then please, hire an attorney and let the attorney look at the paper copy of the contract and the stop-work order and everything else.  WIFCON is a place to learn, not a place to prepare for litigation.  Let your attorney figure out the basis for the future claim (or better, future request for equitable adjustment), and recommend actions you can take between now and Sep. 30 to protect your interests.  You aren't even certain which clause in your contract is the basis for the stop-work order -- are you ready to be looking for a basis for a claim?

You've already read here (repeatedly) that your company may file a request for equitable adjustment when the stop-work order is canceled or if a termination occurs (assuming the stop-work order was issued under a contract clause that allows for equitable adjustments, such as FAR 52.242-15).  Your attorney can help you with that, and the cost for the attorney will be an allowable charge.  Your attorney might point out that if you aren't allowed to resume performance, the stop-work order may be seen as a de facto termination order.

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I understand your point.  I just thought maybe someone had gone thru this before.  Just looking for some advice - and trying to avoid paying an attorney thousands of dollars (particularly if someone already knew the answer)

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