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Hi,

I am new here and  learning a lot from this blog. I would like to thank you all in advance for all of your very helpfull comments.

I highly appreciate any assitance in this matter:

In short, the question is: “When the original contract completion date is extended via owner-directed Change Orders including time extensions, does the original warranty period is extended as well although this is NOT stated within the Change Orders’ statements?”

The Bid-contract documents contain the FAR 52.246-21 regarding the oner-year warranty of the construction.

Our contract is extended for about 2 years than its original completion date. Normally, the original contract completion date was December 2017, thus the end of the 1-year warranty period was December 2018. However, the Government extended the contract to January 2020 beyond our fault.

The most confusing part of our situation is that we completed most of the unchanged installations (approx. %92 of the installations) by the end of 2017 or early 2018, however, the final acceptance of the entire Project will not take in place until January 2020.

Our installations which had been installed as per the original contract completion date are now getting aged.

Besides the main question above, is there any similar case in ABSCA that would help to explain our situation?

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The Warranty of Construction (FAR 52.246-21) lasts for one year after final acceptance for the entire work; or for any part of the work, one year after the Government takes possession of that part.

You might consider requiring the Government to accept any portion of the work that can be accepted separately.  This will start your warranty clock sooner rather than later for that portion of the work.  See the last paragraph of FAR 52.246-12.  

Or, in your negotiation of equitable adjustments for change orders, you might consider insisting on a statement addressing your warranty liability.  Change orders don't give time extensions (see para. (a) of FAR 52.243-5) -- the contractor doesn't get a time extension unless it asks for one (see para. (c) of that clause).  

When you voluntarily bargained for the period of performance end date from DEC 2017 to JAN 2020, you willingly accepted any additional liability associated with the Warranty of Construction.  Your equitable adjustment proposal should have addressed this matter, and it should have been part of the negotiations.    

Of course, your equitable adjustment proposal and agreement fully compensated you for this liability, so all is well, right?  After all, you wouldn't have agreed to it unless it provided everything you needed.  I don't think you will find many ASBCA cases in your favor. 

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33 minutes ago, ji20874 said:

Of course, your equitable adjustment proposal and agreement fully compensated you for this liability, so all is well, right?  After all, you wouldn't have agreed to it unless it provided everything you needed.

Thank you for your quick response ji20874. Unfortunately, we forgot to include such costs of the extended warranty in the equitable adjustments. So you say if the contract completion date is extended via Time Extension, the warranty period extended automatically as well.

For instance, we have painted the walls in late 2017 which was the end of the original contract completion date. Today, as we close to the end of 2019, two years elapsed from the date of the paint installation. The paint is on the wall for almost 2 years with no major issue. I am talking about 130000 square feet of paint. This example applies to many other installations (%92 of the Project installation) including but not limited to all the flooring, acoustical and GWB ceilings, electric and mechanical equipment, etc. However, the Government was and still not willing to take possession of the facilities partially until the facilities are %100 completed as the Government seems is not need the facilities at the moment.  

I understand the fact that the warranty starts after the substantial completion, however, I believe we have a unique case which I think is not well addressed within the FAR 52.246-21.

After the contract completion in 2020, we will provide one-year warranty which will end up by 2021. Almost 4 years will be elapsing from the date of the completion of the paint. Every additional year is a risk for the contractors. I am sure this is happening for other contractors as well. It might be helpful for all of us to address such unique case.

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As ji indicated, the warranty of construction starts upon acceptance of the project;  or if the government takes partial acceptance or takes beneficial occupancy of all or any part of the work then the warranty would start on that work which was been accepted or beneficially occupied for use. If you, as the contractor, have maintained possession of the unfinished work, then you are responsible for the condition of the unfinished work. I would certainly think that paint would last more than two or three years. Especially so for interior paint. It would seem that the only personnel occupying the building are your people. 
 Yes there is case law concerning when the warranty would start with respect to beneficial occupancy by the government. 

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“52.236-7   Permits and Responsibilities.

As prescribed in 36.507, insert the following clause:

Permits and Responsibilities (NOV 1991)

The Contractor shall, without additional expense to the Government, be responsible for obtaining any necessary licenses and permits, and for complying with any Federal, State, and municipal laws, codes, and regulations applicable to the performance of the work. The Contractor shall also be responsible for all damages to persons or property that occur as a result of the Contractor's fault or negligence. The Contractor shall also be responsible for all materials delivered and work performed until completion and acceptance of the entire work, except for any completed unit of work which may have been accepted under the contract.”

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There are numerous cases that concern the finality of an agreement and release statement In a supplemental agreement, bilateral contract modification. Perhaps you misunderstood at the time when the warranty would begin.

From your original post,  it may be that you thought the warranty starts at the contract completion date. That would’ve been a unilateral mistake.

In addition, the standard form 30 for the contract modification will indicate that , except for any modifications herein, the rest of the contract term conditions remain unchanged.

In actuality, the warranty has not been extended. The beginning of the warranty may have been moved outward but the length of the warranty will remain the same.

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47 minutes ago, Ali said:

So you say if the contract completion date is extended via Time Extension, the warranty period extended automatically as well.

No.  The Warranty of Construction (FAR 52.246-21) lasts for one year after final acceptance for the entire work; or for any part of the work, one year after the Government takes possession of that part.  The contract completion date is irrelevant.

47 minutes ago, Ali said:

I understand the fact that the warranty starts after the substantial completion

No.  The Warranty of Construction (FAR 52.246-21) starts with final acceptance of the entire work, or Government possession of a portion of the work.  The substantial completion date is irrelevant.

 

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6 minutes ago, joel hoffman said:

There are numerous cases that concern the finality of an agreement and release statement In a contract modification. Perhaps you misunderstood at the time when the warranty would begin.
From your original post,  it may be that you thought the warranty starts at the contract completion date. That would’ve been a unilateral mistake.

Joel, thank you for all of your comments above. They are all very helpful.

And yes we both (the Government too) forgot the warranty issues when we signed the bilateral modifications. None of us assumed the contract would be extended that much, therefore, we didn’t even think about the warranties when signed the modifications. We are now talking about the warranty issues with the Government and hopefully, we will find a mutual way to sort this out. Both sides are reasonable and we both want to find a way to work this out within the contract terms. Both contract documents and FAR do not help enough to explain our situation. We both want to protect the End User in terms of the warranties and deliver fully warranted facilities.

The paint was an example that I meant to express our case from one instance. There are many other specific installations that put more complications on our case. For example, there is some mechanical equipment (makeup air unit, fan coils, etc.) that were purchased back in 2016 and they only had 2 years standard MFR guarantees. In 2018, their MFR warranties are all expired. There are many other critical equipment that their mfr guarantees are expired or soon will expire. Together with the one-year construction warranty, these all equipment guarantees became a big issue at this stage of the project.

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5 minutes ago, ji20874 said:

substantial completion

you are right, I wrote it wrong but meant to say "final acceptance". 

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7 hours ago, Ali said:

Both sides are reasonable and we both want to find a way to work this out within the contract terms.

I think it would be perfectly reasonable to apply the contract terms as they were agreed to.  If you want to stay within the contract terms, you will have to be willing to honor your agreements under the FAR 52.246-21 and 52.236-7 clauses, and you'll honor the equitable adjustments you have already agreed to/signed.

7 hours ago, Ali said:

Both contract documents and FAR do not help enough to explain our situation.

I think the contract clauses we're talking about are perfectly on point and fully cover your situation.

=====

If you are dealing with an inexperienced contracting officer, you might get all the money or other relief you are seeking for your errors (not understanding the contract clauses) or failures (agreeing to/signing equitable adjustments for change orders, and agreeing to release statements, and then seeking even  more later, as you come to understand the contract that you bargained for).  But if you are dealing with an experienced contracting officer, you might not get the same result -- an experienced contracting officer might want to honor and respect the contract and treat you with fairness (fairness means honorably and respectfully administering the contract that both parties bargained for).  Best wishes in your negotiation.

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Would this happen to be a situation where are you were essentially to the point of substantial completion but the user of the facility refused to accept pt it, without user requested modifications?

in other words, the KO would not take acceptance because the user demanded design changes?

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