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PD216ohio

Government not approving change order

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Hi guys and gals,

I am on a project that I won for 85k.  A dismantling project in which the government stated the weights of various elements.  Problem is that the farthest item was stated as weighing 15k lbs but we discovered during the course of work, that it actually weighs a whopping 81k lbs!!

It was only by a stroke of luck that we came into contact with a subcontractor that was involved in the original build and found this info out, during the course of the project.  Not only has this error led to a significant delay but also in greatly increased cost as any options to remove this fixture have been reduced to only one option, a large crane that costs 4 times as much as our intended method of a smaller crane.

The government seems to be resistant to approving the change order even though the mistake is egregious and clearly theirs.  The increase in cost is over half the value of the contract at about 50k.

If the government ultimately denies my claim, what are my options?  I can pay out of pocket for the extra costs but can I recover them after the fact?  If I accept regular payment at the end of the contract, can I still pursue the additional cost?  This has become a major snag in a project that was running smoothly and right on schedule.  I'm sick about it.

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Read the Disputes clause of your contract.  You can also read FAR Subpart 33.2 to see the contracting officer’s instructions.  If you submit a claim amenable to that clause, and the contracting officer denies it, you may appeal to the board of contract appeals or a federal court — the denial letter should include the appeal instructions.

But first, read all of your contract.  Did the Government warrant or guarantee the weights in the contract, or were the weights provided as estimates and as a courtesy?

Did you comply with any contract terms that mandate prompt reporting of differing conditions to the contracting officer?  If not, you may have forfeited your right to a contract adjustment.

Best wishes!
 

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5 minutes ago, ji20874 said:

Read the Disputes clause of your contract.  You can also read FAR Subpart 33.2 to see the contracting officer’s instructions.  If you submit a claim amenable to that clause, and the contracting officer denies it, you may appeal to the board of contract appeals or a federal court — the denial letter should include the appeal instructions.

But first, read all of your contract.  Did the Government warrant or guarantee the weights in the contract, or were the weights provided as estimates and as a courtesy?

Did you comply with any contract terms that mandate prompt reporting of differing conditions to the contracting officer?  If not, you may have forfeited your right to a contract adjustment.

Best wishes!
 

I will go through those clauses and the contract.  As you might imagine, this issue and the project itself has consumed all of my time so far.  I reported this to the government as soon as I could verify it was accurate.  Within 2 days of finding out.

The weight of the unit in question was provided in a pre-bid Q&A, in response to a question specifically about its weight.  There was no site visit available nor could you inspect this unit up close, if you chose to do so independently, since it is within a restricted area.

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1. Hire a knowledgeable attorney to advise you.

2. If the government does not give you a formal accept/reject decision within 60 days, file a claim.

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I am assuming that this is a fixed price dismantling, demolition and removal contract for some real property equipment or other improvement. 

How was the actual work to be performed described in the solicitation and Q&A so that you could determine the scope and extent of the work in order to plan and price it? 

Does the contract include a differing site conditions clause (52.236-2) or some other similar clause? 

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The basic issue is that the government identified a certain component as weighing X and it actually weighs Z (about 6 times the stated weight.  This requires us to bring in a large crane at an added cost of about 30 k.  They incorrectly identified this weight via a specific question about that in the pre-bid  Q&A.The other issue is that it is causing an extra week of work between the work involved in discovering the mistake, working to get the right equipment lined up... and then the work to process the much larger piece.  We could have originally disposed of it by setting it on one truck and hauling away... now we will have to manually reduce it into at least four pieces to do the same.

The government did finally approve the extra equipment cost but refuses to add any cost for the extra week, stating that the POP was 4 weeks so I am not over the POP.  Although I would have clearly been done in 3 weeks if not for their mistake. 

I suppose it's better than nothing but I still don't think it was fair.

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@PD216ohioAlready posed but not yet identified by you  is with regard to what clauses are in your contract.  It may or may not matter considering where you are in the matter of the weight but I providing thoughts anyways.

It has been suggested that clauses relating to disputes and differing site conditions are a place to look.  There is another place as well and that is FAR Part 43 clauses where I note in the limited facts that you have provided the type of work and a hint of the value of the total contract.  As such there is a possibility that FAR 52.243-4 or -5 might be in the contract.  They may be of assist in furthering your request for extension noting that each discuss time as a remedy.

If the government sticks to their guns on the time matter the h2h advice coupled with ji's in both getting counsel and pursuing through the disputes clause is the avenue.

With regard to "better than nothing" and again keying in on the matter of time if the contract has a value by which the government will do a CPARS evaluation of your performance in may be an avenue for you to accept the "better than nothing"  yet state your case.  By example if the POP remains and the government evaluates your timeliness of performance at less than what you expect you will have the ability to state your case in response to the evaluation.   That case by my read is that  your failed timeliness was due to the governments acknowledgement of  the item weighing more that what they stated and agreed to a change in price but in this acknowledgement they did not provide an extension of time.  Solace of sorts for your view that the acknowledged weight matter was not handled completely.

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Perhaps the contracting officer has already been generous, maybe even overly generous?  After all, Christmas is approaching.

We don’t have the contract in front of us, but it appears from the comment thread that the government did not warrant the size or weight of anything.  If so, the contractor may be entitled to nothing, and thus should be very happy for the contracting officer’s generous agreement to pay for crane costs.

But regardless, if the contractor wants more money, it is the old question of who owns the schedule float?  Unless the contract specifically specifies, there generally is no single right answer.  That’s where lawyers and judges get involved.

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I appreciate all of the advice and pointers in the right directions.  I will research the clauses and see what I can do with any of it if needed.

I know it is never as simple as this... but in essence this is the same (to me) as if the government asked for bids to remove a pile of dirt and in the Q&A it was asked "how much dort is there in that pile"..... the government replies "there are 15 tons of dirt in that pile" and their turns out to be 81 tons of dirt, I can't imagine any circumstance where there would be no added value consideration.

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Ohio, you didn’t answer any of my questions or comment on what type of contract it is.

Since then, I have more questions. Did the contract require or prohibit you from disassembling components and were they to be salvaged? In other words did you have to remove it in one piece which required a large crane? Without knowing what the specific scope of work was or any specific information in the contract itself regarding the scope of work, it isn’t possible to answer your question.

Good luck. 

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7 hours ago, PD216ohio said:

I will research the clauses and see what I can do with any of it if needed.

 

On ‎11‎/‎13‎/‎2019 at 7:29 AM, PD216ohio said:

The weight of the unit in question was provided in a pre-bid Q&A, in response to a question specifically about its weight.  There was no site visit available nor could you inspect this unit up close, if you chose to do so independently, since it is within a restricted area.

 

On ‎11‎/‎13‎/‎2019 at 7:20 AM, ji20874 said:

But first, read all of your contract.  Did the Government warrant or guarantee the weights in the contract, or were the weights provided as estimates and as a courtesy?

Salient comments from the thread.  Noted only because we have directed you to clauses most of the time.  ji's comment was lost in the mix but is one that could lead you to something  in  the statement of work, specifications, performance based work statement or whatever directed the actual work. A final conclusion of weight may come from other than a clause.   By example, with acknowledgement that this example is not even close, but here is a Civilian Board of Contract Appeal Case that revolved around weight of a ship.  Considerations and conclusions in the case may help your thinking.    https://www.cbca.gov/files/decisions/2016/ZISCHKAU_06-03-16_4740__MARINE_METAL_INC.pdf

 

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Hi Everyone,

Apologies for the delayed response but, as you might imagine, I was immersed in the matter at hand and in a remote location.

On 11/13/2019 at 12:28 PM, joel hoffman said:

I am assuming that this is a fixed price dismantling, demolition and removal contract for some real property equipment or other improvement. 

How was the actual work to be performed described in the solicitation and Q&A so that you could determine the scope and extent of the work in order to plan and price it? 

Does the contract include a differing site conditions clause (52.236-2) or some other similar clause? 

Yes, this was a fixed price dismantling project of a floating station on an inland lake.  It was under the simplified acquisition threshold.

The work was described by stating 100% removal was required.  There was also a Q&A period in which weights of various items were asked, including the item of concern in my predicament.  Plans (which do not seem entirely complete and excluded any fine details of the subject section of equipment) were supplied along with photos.  In the Q&A period, the weight of the subject piece was specifically asked, and stated to be 15kips.  It was by luck and happenstance that we discovered it was actually 81k (calling crane companies and happened upon the a contractor from the original install).  Once that was discovered, I contacted the COR and simply asked him to verify the weight of the piece, at which time he now stated it was 35kips.  I then went on to gain verification (actual copies of his records) from the original contractor that it was indeed 81kips, which I did receive and at which point I presented the issue to the COR. According to the crane meter, it was over 81k with whatever additional equipment may have been mounted since the original build and some water retention.  There was no doubt that the weight of 81kips was accurate when it was newly installed.

Furthermore, the section was not able to be sectioned or reduced in size prior to removal as it was suspended upon and in the center of the floating station and mostly submerged in water.  We were unable and disallowed to work in or under the water due to the nearby water inlet and the suction it generates.  Further proof that the unit was not reducible might be that it was also installed as one assembly.

The Contracting Officer did authorize a change order that did not allow for our full costs associated with the change.  There was an estimated cost (since we would not know until the work was complete) of which the CO authorized about 60%.  He disallowed any labor costs under the reasoning that the POP was 30 days and that we were still under 30 days, even though we were on schedule to be complete in 3 weeks if not for the change.

I was issued ample time to complete the project, and the deadline was met.  Extending the period by 10 days, including a full weekend of work.  We completed the project 100% on the last day.

Here is the full list of incorporated clauses.  They do not include 52.236-2. :

FAR 52.203-19 Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (Jan 2017)
FAR 52.204-7 System for Award Management (Oct 2016)
FAR 52.204-13 System for Award Management Maintenance (Oct 2016)
FAR 52.204-16 Commercial and Government Entity Code Reporting (Jul 2016)
FAR 52.204-18 Commercial and Government Entity Code Maintenance (Jul 2016)
FAR 52.204-19 Incorporation by Reference of Representations and Certifications (Dec 2019)
FAR 52.204-22 Alternative Line Item Proposal (Jan 2017)
FAR 52.209-11 Representation by Corporations Regarding Delinquent Tax Liability or a Felony Conviction under any Federal Law.
FAR 52.212-1 Instructions to Offerors- Commercial Items (Jan 2017)
FAR 52.212-4 Contract Terms and Conditions-Commercial Items (Jan 2017)
FAR 52.219-1 Small Business Program Representations
FAR 52.219-6 (Dev) Notice of Total Small Business Set-Aside (Deviation 2019-O0003)
FAR 52.232-18 Availability of Funds (Apr 1984)
FAR 52.232-39 Unenforceability of Unauthorized Obligations (Jun 2013)
FAR 52.232-40 Providing Accelerated Payments to Small Business Subcontractors (Dec 2013)
FAR 52.237-1 Site Visit
FAR 52.237-2 Protection of Government Buildings, Equipment, and Vegetation
FAR 52.253-1 Computer Generated Forms
DFARS 252.201-7000 Contracting Officer’s Representative
DFARS 252.203-7000 Requirements Relating to Compensation of Former DoD Officials (SEP 2011) (Section 847 of Pub. L. 110-181).
DFARS 252.203-7002 Requirement to Inform Employees of Whistleblower Rights (Sep 2013)
DFARS 252.203-7005 Representation Relating to Compensation of Former DoD Officials (Nov 2011)
DFARS 252.204-7003 Control of Government Personnel Work Product (Apr 1992)
DFARS 252.204-7004 Alternate A, System for Award Management (Feb 2014)
DFARS 252.204-7008 Compliance with Safeguarding Covered Defense Information Controls
DFARS 252.204-7012 Safeguarding Covered Defense Information and Cyber Incident Reporting (Oct 2016)
DFARS 252.204-7015 Notice of Authorized Disclosure of Information for Litigation Support
DFARS 252.209-7004 Subcontracting with Firms that are Owned or Controlled by the Government of a Country that is a State Sponsor of Terrorism
DFARS 252.223-7008 Prohibition of Hexavalent Chromium (Jun 2013)
DFARS 252.225-7048 Export-Controlled Items
DFARS 252.232-7003 Electronic Submission of Payment Requests and Receiving Reports (Jun 2012)
DFARS 252.232-7006 Wide Area WorkFlow Payment Instructions
DFARS 252.232-7010 Levies on Contract Payments (Dec 2006)
DFARS 252.237-7010 Prohibition on Interrogation of Detainees by Contractor Personnel
DFARS 252.243-7001 Pricing of Contract Modifications (Dec 1991)
DFARS 252.244-7000 Subcontracts for Commercial Items
DFARS 252.247-7023 Transportation of Supplies by Sea (Apr 2014)

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When did you find out that the weight of the item as represented by the government was inaccurate?  I'm not interested in when you found out the actual weight, just when you found out that the weight the government old you was inaccurate.  Was it before you submitted your proposal, after proposal submission but before award, or after award?

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Commercial services contract then.  I wonder how this contract qualifies as pricing as a commercial services contract.

I’m assuming that you priced the contract based upon the description of dismantling and removing a “commercial item” (a floating station)  and pics provided as well as answers to the pre-bid questions and answers provided. 

if it is a service for “a commercial item” there should have been a way to determine what was in the floating station and their weights. 

Regardless, if this is considered a “change”,  then 52.212-4 (c) Changes clause requires bilateral, written agreement...

“(c) Changes in the terms and conditions of this contract may be made only by written agreement of the parties.“

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5 hours ago, joel hoffman said:

Commercial services contract then.  I wonder how this contract qualifies as pricing as a commercial services contract.

I’m assuming that you priced the contract based upon the description of dismantling and removing a “commercial item” (a floating station)  and pics provided as well as answers to the pre-bid questions and answers provided. 

if it is a service for “a commercial item” there should have been a way to determine what was in the floating station and their weights. 

Regardless, if this is considered a “change”,  then 52.212-“(c) Changes clause requires bilateral, written agreement...

“(c) Changes in the terms and conditions of this contract may be made only by written agreement of the parties.“

Joel, my point of view is that the government unilaterally changed the contract when it required the contractor to do more than was stipulated in the contract.

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10 hours ago, here_2_help said:

Joel, my point of view is that the government unilaterally changed the contract when it required the contractor to do more than was stipulated in the contract.

H, the Government didn’t have the right to “change the contract” without bilateral agreement.  52.212-4 (c).  We likely agree on that point. 

“(d) Disputes. This contract is subject to 41 U.S.C. chapter 71, Contract Disputes. Failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the clause at FAR 52.233-1, Disputes, which is incorporated herein by reference. The Contractor shall proceed diligently with performance of this contract, pending final resolution of any dispute arising under the contract.“

 

Edited by joel hoffman

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13 hours ago, joel hoffman said:

the Government didn’t have the right to “change the contract” without bilateral agreement.  52.212-4 (c).  

Joel, this brings up a point that has been danced around in many discussions at this forum and that is whether a constructive change can occur under a contract for commercial items?  I don't want to put words in your mouth, but it seems you do not think so.  If the doctrine of constructive changes does not apply to a contract for commercial items, it seems like the only remedy available to a contractor for a classic constructive change, such as defective specs, is a breach of contract claim.  If the breach is material, the contractor can stop work.  I don't think that result is desirable.  That is one of the reasons that the constructive change doctrine evolved in the first place.  Having said that, I am not aware of any appeals board or court case that addresses this issue.

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2 hours ago, Retreadfed said:

Having said that, I am not aware of any appeals board or court case that addresses this issue.

Retreadfed, you mentioned cases.

Quote

In a commercial item contract, arguably, the concept of “constructive change” does not exist. According to FAR 52.212-4(a), a change to a commercial item contract may only be made through the written agreement of the parties. At least two boards, however, have allowed recovery for extra work under a commercial item contract without a written agreement. See Hawaii Cyberspace, ASBCA No. 54065, 2004-2 BCA 32,744 (holding that the CO’s unilateral specification changes constituted constructive changes; the court avoided addressing whether the contractor’s claims “should be analyzed as claims for constructive changes or claims for breach of contract”); Bradford F Englander, Liquidating Trustee for Dulles Networking Assocs, Inc, VABCA No 6473, 2001-2 BCA 31,466 (denying government’s motion to dismiss the contractor’s extra-work claims on commercial item firm-fixed price, ID/IQ contract); SAWADI Corp., ASBCA No 53073, 2001-1 BCA 31,357. See also Nash & Cibinic, “Commercial Item Disputes: Using New Contract Language,” 17 No 1 Nash & Cibinic Rep 2 (Jan 2003) (discussing recent case holdings allowing contractors to recover for extra work under commercial item contracts even where such changes were not made through mutual agreement of the parties).

Darrell J. Oyer, 1 Accounting for Government Contracts - Federal Acquisition Regulation § 17.03, at note 4.  I haven't looked at any, but thought the list of citations might be a useful starting point.

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Thanks, Jacques, however, none of these cases answer the question as to whether the constructive change doctrine applies to contracts for commercial items although there is a hint that it might in Agility Pub. Warehousing Co. KSCP v. Mattis, 852 F.3d 1370, 1385 (Fed. Cir. 2017).

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You don't need a bilateral agreement for a constructive change to occur -- indeed, by definition, EVERY constructive change happens without a bilateral agreement -- if there was a bilateral agreement under the changes clause, then the change would not be characterized as a constructive change.

So FAR 52.212-4(c) is not a bar to or prohibition on constructive changes in contracts for commercial items.  Nothing in the contract gives permission for constructive changes. 

Neither FAR 52.212-4(c) nor the Changes clauses at FAR 52.243-x allow, authorize, or otherwise countenance constructive changes.  Constructive changes arise wholly outside the Changes clause.

Constructive changes arise under the Disputes clause, not the Changes clause.  The Disputes clause is incorporated into FAR 52.212-5 for contracts for commercial items.

So, YES, you can have a constructive change under a commercial item contract (if you have sloppy contract administration) and you can use the Disputes clause to formalize that change.  This is not giving permission for constructive changes (officially, there should never be any constructive changes), but merely providing for after-the-fact formalization and remedy in lieu of a breach argument.

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Thanks for your earlier remarks, Retread and Jacques. I honestly don’t or at least didn’t know whether or not there could be a constructive - directed - change in a commercial services contract. It wouldn’t seem so under paragraph (c).

However paragraph (d) addresses claims when parties don’t agree on a request for equitable adjustment, claim, appeal “or other action arising under the contract”. It further directs the contractor to proceed diligently in performance of the contract pending resolution of a claim.  That would indicate to me that there could be issues arising that might involve constructive changes, Government delays or other actions. If there was ever a situation where a differing site condition could be encountered, this might be one. Government couldn’t allow site inspection, grossly misrepresented actual conditions and the scope of work. 

There have been cases where a contractor has recovered for interference with early completion but for a change, when actual completion was achieved within the completion period. However, recovery is usually achieved under standard change, differing site conditions and similar clauses for impacts.

And here, I would advise the contractor that it would have to show that it would have finished early but for the changed conditions - which it appears that it could substantiate such. 

edit: thanks, too, ji. You posted while I was drafting this post. 

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4 minutes ago, ji20874 said:

You don't need a bilateral agreement for a constructive change to occur -- indeed, by definition, EVERY constructive change happens without a bilateral agreement -- if there was a bilateral agreement under the changes clause, then the change would not be characterized as a constructive change.

So FAR 52.212-4(c) is not a bar to constructive changes. 

The Changes clauses do not allow, authorize, or otherwise countenance constructive changes.

Constructive changes arise under the Disputes clause, not the Changes clause.  The Disputes clause is incorporated into FAR 52.212-5 for contracts for commercial items.

So, YES, you can have a constructive change under a commercial item contract (if you have sloppy contract administration) and you can use the Disputes clause to formalize that change.  This is not giving permission for constructive changes (officially, there should never be any constructive changes), but merely providing for after-the-fact formalization and remedy.

That isn't very satisfying, since the contractor's duty to "proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action ARISING UNDER THIS CONTRACT, and comply with any decision of the Contracting Officer," under paragraph (i) of the Disputes clause wouldn't apply to a Government breach of the contract, would it?

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20 minutes ago, Jacques said:

That isn't very satisfying, since the contractor's duty to "proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action ARISING UNDER THIS CONTRACT, and comply with any decision of the Contracting Officer," under paragraph (i) of the Disputes clause wouldn't apply to a Government breach of the contract, would it?

I think that the -4 clause is poorly written, if the contract likely may have to be administered and adjudicated outside the simplified language of the contract. 

Fortifies my personal opinion that this particular effort required more due diligence on the government’s part of it wanted to use a commercial services contract format for convenience.

Seemingly a poor fit, considering the dangerous nearby intake conditions and also poorly implemented. If the contractor could find out who installed the equipment, the government might also have been able to determine what was there. 

 

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1 hour ago, Jacques said:

That isn't very satisfying...

Only if you are looking for prior permission to do a constructive change.  There is no such permission.

The Disputes clause (not the Changes clause) provides perfectly for after-the-fact formalization and remedy for a constructive change.

57 minutes ago, joel hoffman said:

I think that the -4 clause is poorly written...

The -4 clause here was likely mis-applied — this service almost certainly does not meet the FAR definition for a commercial item.  As you noted, “Seemingly a poor fit...

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