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FAR 52.232-5 Payments for Preparatory Work


bodenlok

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2 hours ago, ji20874 said:

I'm not so sure.  Regardless, the burden of proof is on the contractor rather than the Government, right?

 

No.  Proof is the contract that was mutually agreed to.  And if the contract is not definitive to matter then what then ?  I think you know with hope as has already been stated the conflict is settled at the level of the CO based on appropriate standards of contract interpretation inclusive of the standard of good faith and fair dealing.  The scaffolds up afterall.

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1 hour ago, C Culham said:
No.

In an invoicing situation, the burden of proof is generally on the contractor.  If the contracting officer can't find it, the contractor should point to something in the contract that specifies its entitlement to immediate reimbursement of its incurred costs for scaffolding erection.

1 hour ago, C Culham said:
Proof is the contract that was mutually agreed to. 

If the contract specified exactly how scaffolding costs would be paid, then there would be no discussion here.  But it seems the contract does not so specify.  The agency's position seems to be reasonable -- other practitioners might approach the situation differently, but that doesn't mean the agency's position is unreasonable.

1 hour ago, C Culham said:
...settled at the level of the CO based on appropriate standards of contract interpretation inclusive of the standard of good faith and fair dealing.  The scaffolds up afterall...

Right.  Ideally, the contractor will point to something in the contract that clearly specifies its entitlement to immediate payment for its incurred costs for the scaffolding.  If not, it can still get a progress payment based on the estimate of work complete represented by the erection of the scaffolding (but not reimbursement for incurred costs) -- although, it will be serendipitous if the percent complete and incurred cost numbers coincide, right ;-).  At least, this applies if the clause at FAR 52.232-5 is the basis for the desired payment.

All this being said, if the contractor is unable to persuade the agency, it may (1) drop the matter; or (2) pursue remedy under the contract's Disputes clause.

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1 hour ago, ji20874 said:

In an invoicing situation, the burden of proof is generally on the contractor.  If the contracting officer can't find it, the contractor should point to something in the contract that specifies its entitlement to immediate reimbursement of its incurred costs for scaffolding erection.

If the contract specified exactly how scaffolding costs would be paid, then there would be no discussion here.  But it seems the contract does not so specify.  The agency's position seems to be reasonable -- other practitioners might approach the situation differently, but that doesn't mean the agency's position is unreasonable.

Right.  Ideally, the contractor will point to something in the contract that clearly specifies its entitlement to immediate payment for its incurred costs for the scaffolding.  If not, it can still get a progress payment based on the estimate of work complete represented by the erection of the scaffolding (but not reimbursement for incurred costs) -- although, it will be serendipitous if the percent complete and incurred cost numbers coincide, right ;-).  At least, this applies if the clause at FAR 52.232-5 is the basis for the desired payment.

All this being said, if the contractor is unable to persuade the agency, it may (1) drop the matter; or (2) pursue remedy under the contract's Disputes clause.

Scaffold erection is typically a work activity. It’s like forming for concrete. The forms aren’t part of the installed work either. Construction contracts don’t generally discuss such because they don’t need to. 

The government’s position isn’t reasonable The OP said that the government justified its position based on an  assumption that in the event of a default the government wouldn’t be able to use it to complete the project.  WRONG!

The government should secure the job site and or have the surety secure the job site. The contractor must indemnify the surety for its costs in excess of remaining contract funds. If it removes the scaffolding, it will end up being liable for replacement scaffold anyway. But don’t let that happen. Secure the job site!  

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2 hours ago, ji20874 said:

Joel,

Does forming for concrete fall under preparatory work for purposes of FAR 52.232-5?

No. There are typically activities for concrete form work: E.g., .  Forming.   Stripping of forms.

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21 minutes ago, ji20874 said:

Then, comparing scaffolding erection to concrete forms is inapt and irrelevant in a discussion on treating scaffolding erection as preparatory work, right?

It isn’t prepatory work. It’s a work activity or multiple activities, similar to concrete forming operations (the forms aren’t incorporated into the work either).

Edited by joel hoffman
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Unless specifically identified under a mobilization and prep work line item. In the instant case there isn’t one.

either way, contractor should be paid for the work when performed.

 

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The ACO/staff is telling him not to cost load the activity but to spread it over all applicable trade activities. If that was a requirement, it should have been stated in the contract. That isn’t logical or standard practice for general/multiple use scaffolding, typically prime contractor provided. Single use scaffold is typically subcontractor provided. 

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51 minutes ago, joel hoffman said:

...contractor should be paid for the work when performed...

Really?  I didn't think we reimbursed contractors based on their incurred costs under the clause at FAR 52.232-5, which is the subject of this discussion back to the original posting.  FAR 52.232-5 says we'll make progress payments based on estimates of work complete.  

55 minutes ago, joel hoffman said:

It isn’t prepatory work...

If scaffolding erection is not preparatory work, then the answer to the original poster's question in the original posting is that it is not entitled to reimbursement of costs (or any payment at all) for scaffolding erection under para. (b)(2) of the clause at FAR 52.232-5.  It might be entitled to some payment under para. (b) and (b)(1), but not (b)(2).

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4 hours ago, ji20874 said:

the burden of proof is generally on the contractor

 

4 hours ago, ji20874 said:

Ideally, the contractor will point to something in the contract that clearly specifies its entitlement to immediate payment for its incurred costs for the scaffolding.

You are conflicted.  It's the contract no matter who points to it.   Apply the contract and if the contract is not definitive then work it out.  Both the GOVERNMENT and the contractor have to do this.  Any other way is not good faith and fair dealing.  THE SCAFFOLD IS UP.

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10 minutes ago, C Culham said:

It's the contract no matter who points to it.  

I don't think the contract expressly addresses payment for scaffolding -- if it did, the original poster would not have started this discussion.

But it is okay -- the contract clause at FAR 52.232-5 still provides for progress payments (not reimbursement of incurred costs).  The contractor can make a payment request based on the estimate of work complete represented by the erection of the scaffolding (but not reimbursement for incurred costs for the erected scaffolding) -- although it will be serendipitous if the percent complete and incurred cost numbers coincide.  At least, this applies if the clause at FAR 52.232-5 is the basis for the desired payment, which I think is the case because that is what the original poster cited in starting this thread.  Yes, let's apply the contract by reading and following the contract clause at FAR 52.232-5.

And yes, work it out -- the contractor needs to persuade the agency (the agency does not need to persuade the contractor).  All this being said, if the contractor is unable to persuade the agency to make an immediate payment in the amount it seeks, it may (1) drop the matter; or (2) pursue remedy under the contract's Disputes clause.

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16 hours ago, ji20874 said:

But it is okay -- the contract clause at FAR 52.232-5 still provides for progress payments (not reimbursement of incurred costs).  The contractor can make a payment request based on the estimate of work complete represented by the erection of the scaffolding (but not reimbursement for incurred costs for the erected scaffolding) -- although it will be serendipitous if the percent complete and incurred cost numbers coincide. 

That’s what I have been saying. The method of making progress payments in a USACE construction contract is to establish “cost loaded* activity(ies) for scaffold erection in the progress schedule under the appropriate CLIN(s).

*cost loaded means that the activity is assigned a dollar value, which may or may not be based upon actual costs.

Subcontract costs are often the basis for activity costs, which then often include mark ups.

However, as an aside,  for DoD “prepatory work”, the DoD contract clause for a mobilization and prepatory work line item limits payment to not exceed actual incurred  costs in some cases. Thus , the -5 clause does, in effect, provide for reimbursement of incurred costs. It also provides for reimbursement of incurred cost for Prime contractor performance and payment bonds.

This isn’t “prepatory work” under DoD procedures. 

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This is essentially what the ACO office is telling our OP. (I’m assuming that it hasn’t been elevated to the KO. If it was, he or she would likely be depending upon the advice of the ACO office, because it involves technicalities relating to the USACE contract admin system requirements “Resident Management System” RMS and various Integrated project controls automation tools).

The ACO/COR office says: The scaffold activity should not be cost loaded. Instead spread the costs over all the subsequent applicable trade activities.

Note that the contractor must report all on-site subcontract scaffold labor in the periods which it occurs. However, the govt says that the contractor can’t show it as progress in its schedule or for payment until the trade activities occur.

The Contract UFGS specs for Progress Schedule do not allow successor activities to show a start or progress out of sequence (prior to completion of leading activities) on the critical path. As a standard practice you don’t load direct or subcontract labor costs in other activities than where and when the labor occurs. The UFGS also directs the contractor to cost load it’s activities. 

Is THAT interpretation of scaffolding as a spread cost “reasonable”?  No.  Is it ridiculous? Yes!

Is that interpretation stated in the contract that way? NO!

Is it standard industry practice for purposes of contract interpretation in the event that the government thinks its interpretation is also reasonable? No!  Plus, other USACE Districts treat it as a cost loaded activity, payable as progress. 

Is the contractor’s interpretation reasonable? YES!

I’ve already explained that the stated assumption that serves as the ACO office’s justification for its interpretation is incorrect. 

The Government’ case in defending a claim would be extremely weak in my opinion.

In my experience, this is an issue the contractor could immediately pursue in Partnering, if they are in the partnering process. This is early in the project if they are formulating the progress schedule now.

Good luck. (I might know the Chief of Construction for that District if the OP wants to privately share that info with me). 
 

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The prime contractor often erects scaffolding itself or by one subcontract for various reasons - chiefly because it’s to be used by multiple trades. Safety considerations and control of the integrated schedule are also factors.

If the scaffold was for a single trade, then the applicable trade subcontract might likely provide their own scaffold as part of its price. In that event, it would be reported as progress when it occurs - not spread over the entire subcontract effort. It would be paid as a percent of the subcontract (based upon its value or cost plus Sub and prime markups within the subcontract activities).

Other than who is providing the scaffolding, there is no difference in the fact that scaffold erection is a construction activity, not a spread cost.  If it is considered progress for subcontractor provided scaffolding, it is also progress for prime contractor provided scaffolding. There is no evident basis for inconsistent interpretation of the categorization of erecting scaffolding as progress in one case and a spread cost for the other case. 

And - the government is more directly protected in the event of a default if the prime has direct responsibility for scaffold on-site at the time of a termination. That is largely due to the prime contractor’s performance and payment bonds with the government as the obligee and the surety’s inherent interest in minimizing its cost to complete the project. Plus the government deals directly with the prime and its surety. Not so with subs.

Yet the government doesn’t bat an eyelid about paying for erection of scaffold as progress, if a trade sub provides it own scaffolding.

sheesh.

Bodenlok, I hope you have enough information to make a good case for resolving your dilemma.

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