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Question: Is it legally permissible for the Government to re-establish a delivery schedule unilaterally on a contract for commercial services that includes FAR 52-212-4(c), when the Government, through its inaction, previously waived timely delivery (DeVito waiver?)

Scenario: Agency enters into a contract for a critical IT system. The contract specifies that the contractor must fully implement the system within 60-90 days after the contract award date.  The contractor misses the required completion date. However, because the agency needs this system, the program office continues, informally; i.e., without contract modifications, to allow the contractor to continue working on the system. The contractor continues to promise delivery and continues to miss delivery. Now the parties are 10 months into the contract, the contractor is still working, and the agency still does not have a working system.

The agency knows that the contractor will not sign a bilateral modification agreeing to a 30-day extension to reset the delivery schedule. Can the Government re-establish the delivery schedule by written notice to the contract; i.e., through a letter from the CO, or can the CO issue a unilateral modification to re-establish the delivery schedule; despite the language of 52.212-4(c), which requires that all changes to T&Cs be made bilaterally?

The purpose of re-establishing the delivery schedule is to re-establish the government's right to terminate the contract for cause for late delivery because it waived its right when it did not terminate the contract the first time the contractor missed the delivery date.

If such a unilateral action were impermissible, by forbearing termination for cause within a reasonable time after the breach (late or missed delivery), agencies later would be incapable of re-establishing a delivery schedule when a contractor does not agree to a new deadline. Is this the case?

Editing to add: We can terminate for failure to make progress or provide adequate assurance of performance. But can we re-establish the delivery schedule unilaterally?

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22 minutes ago, rios0311 said:

The agency knows that the contractor will not sign a bilateral modification agreeing to a 30-day extension to reset the delivery schedule.

If it has been 10 months since contract award, why would you only be extending the contract by 30 days?  Assuming you have the right to reset the delivery date, it has to be a reasonable amount of time beginning with the date the new delivery is set.

As to your basic question, I have done only limited research on this issue and cannot find where it has been addressed by an appeals board or the courts (maybe some one else knows of a case addressing this).  Thus, it appears to be an open question.  If you feel adventurous, try it and see what happens.  I think it is worth trying.  Who knows, maybe the contractor will not contest it.

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Of course you can unilaterally re-establish a delivery date.  The day after, you can terminate for cause.

Is the Government’s contracting officer talking to his or her counsel?  
 

Is the contractor planning on submitting a claim to the Government for the costs of all the work beyond the initial 60-90 days?

Please tell us that the Government has made no payments under the contract.

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17 hours ago, rios0311 said:

30 days because they have already received 7 months worth of implied or constructive extensions

You have not said what the contract says about a delivery date. If it says 90 days after award and you extend the delivery date by 30 days that results in 120 days after award.  However, it does not appear that that is what you mean. 

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ji20874, yes, the CO has conferred with legal counsel, but the attorney had not encountered this situation in the past. Despite this, the attorney agreed that we should be able to do this unilaterally. I cannot respond to the remainder of your questions without starting a new thread, since it opens up an entirely new topic. More to come!

Retreadfed, the intent is to re-establish a delivery schedule that is 30-days from the date of the notice. In other words, 30 days from today. They've had their 90 days, plus another 7 months worth of delays. We have notified them that we've moved the delivery date 30 days from today and may terminate for cause if they don't deliver.

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  • 2 weeks later...

This sounds like EOFY, IT CHESS every year kind of issues. Vendors take more than what they can provide, then Government sits on false delivery hopes. Shame on the entire acquisition team for waiting that long. 

Issued unilateral MOD to add all the time plus one day. After that day, Terminate for Cause (T4C) then turn around and make a real difference by completing an honest Contractor Performance Report (CPR). 

ROD 

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On 11/26/2019 at 7:30 PM, rios0311 said:

yes, the CO has conferred with legal counsel, but the attorney had not encountered this situation in the past. Despite this, the attorney agreed that we should be able to do this unilaterally.

Of course you can unilaterally re-establish a delivery date -- it isn't a change and it isn't barred by 52.212-4(c).  Let me say that again for emphasis -- it isn't a change.

7 hours ago, ROD said:

make a real difference by completing an honest Contractor Performance Report (CPR). 

Yes!  Please record the fact of the contractor's failure in CPARS.

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39 minutes ago, ji20874 said:

it isn't a change.

Why?  Period of performance is one of the 3 prongs of consideration of scope.  Also if the contract was for instance noncommercial the changes clause at 52.243-1 Alt vests a unilateral right to change delivery period to the government.  52.212-4 does not.  So what is the reference that provides it is not a change?

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It isn’t a change, in these circumstances.

It is an administrative action in lieu of termination for default (or cause).  We’re outside the FAR and in the realm of common law.

If this were a non-commercial contract that included the 52.243-1 clause, that clause would not be cited for a re-establishment or the delivery date in lieu of termination for default (or cause).

So, common law and common sense.

 

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On 11/26/2019 at 4:30 PM, rios0311 said:

the attorney agreed that we should be able to do this unilaterally.

Are you looking for an excuse to ignore your legal counsels advice? Why don't you just do what legal counsel advised you could do?

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On 12/7/2019 at 8:48 AM, ji20874 said:

It isn’t a change, in these circumstances.

It is an administrative action in lieu of termination for default (or cause).  We’re outside the FAR and in the realm of common law.

If this were a non-commercial contract that included the 52.243-1 clause, that clause would not be cited for a re-establishment or the delivery date in lieu of termination for default (or cause).

So, common law and common sense.

 

How so "outside the FAR"?

Where in the contract does it say the government has a "in lieu" right for an administrative action other than the T4Cause?

As to "common law" consider....

"Unilateral Modifications in General Contract Law

The principle is that a contract is agreed by both parties for the terms that are provided for at the time of its conclusion; therefore it is not possible for one party to unilaterally modify the terms of a contract."

https://www.acc.com/resource-library/when-one-party-entitled-unilaterally-modify-contract

 

Now the matter at hand.  Issue a show cause stipulating the contract will be terminated on such and such date and wait and see what the contractor does.  If delivers then there you go, if not terminate.  Or in other words an action within the contract and essentially pursuant to the FAR.  It has nothing to do with common law.  If a dispute and claim arise out of the government's actions the the courts will decide if "common law" applies.  Any action otherwise puts the government at risk of a possible conversion to T4C by the courts.

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5 hours ago, C Culham said:

Issue a show cause stipulating the contract will be terminated on such and such date and wait and see what the contractor does.  If delivers then there you go, if not terminate.  

In other words, the contracting officer should unilaterally re-establish a delivery date.

Yes, the contracting officer can unilaterally re-establish a delivery date after the delivery date has passed in lieu of terminating for default (or cause, for a contract for commercial items).  Doing so is called forbearing, and is allowed under our common law.

If the contracting officer wants to unilaterally re-establish a delivery date by letter, I would recommend calling it a cure notice rather than a show cause notice -- if the contractor doesn't cure the deficiency (delivery by the re-established delivery date), the Government may terminate for cause.

 

 

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6 minutes ago, ji20874 said:

In other words, the contracting officer should unilaterally re-establish a delivery date.

Yes, the contracting officer can unilaterally re-establish a delivery date after the delivery date has passed in lieu of terminating for default (or cause, for a contract for commercial items).  Doing so is called forbearing, and is allowed under our common law.

If the contracting officer wants to unilaterally re-establish a delivery date by letter, I would recommend calling it a cure notice rather than a show cause notice -- if the contractor doesn't cure the deficiency (delivery by the re-established delivery date), the Government may terminate for cause.

 

 

It is not reestablishing a delivery date it is terminating for cause for failure to perform after drawing a line in the sand.

By example delivery is Sept 30.  Contractor hasn't delivered by Oct 15.  Issue a show cause not a mod and demand delivery by Oct 16 and terminate on Oct 17 if contractor hasn't delivered.  Delivery date still Sept 30 per the contract.

Doing so is not outside the FAR it's not common law it is not an administrative action  it's what the contract allows as remedy.

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3 hours ago, ji20874 said:

Well, Carl, maybe this is a matter of semantics.  To me, drawing a line in the sand = unilaterally re-establishing a delivery date: deliver by a certain new date (unilaterally set by the contracting officer) or face termination.  

My concern is to suggest that one can unilaterally change a delivery date of a contract awarded pursuant to the FAR absent a contract clause to do so.  You can not.  With regard to the instant matter there is authority to address a failure to perform timely.

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11 hours ago, C Culham said:

My concern is to suggest that one can unilaterally change a delivery date of a contract awarded pursuant to the FAR absent a contract clause to do so. 

Carl, I don't know where you are coming from on this.  The case law on this point is clear.  If a contractor inexcusably fails to perform by the delivery date, the government has an absolute right to terminate for default (cause) at that moment.  However, the government is given a reasonable amount of time within which to decide whether to terminate.  This is called the period of forbearance.  What is a reasonable amount of time is determined from all the facts present.  If the government does not terminate within a reasonable amount of time, particularly if the contractor has continued to perform on the contract, as a matter of fairness (equity), the government cannot terminate the contract without establishing a new delivery date.  This can be done bilaterally with the contractor's agreement or unilaterally if the contractor will not agree.  In any case, the new delivery date must be reasonable in light of the contractor's current ability to complete the contract.  This right to unilaterally reestablish the delivery date is not based on any Changes clause but is a matter of equity.

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On 11/25/2019 at 1:19 PM, Retreadfed said:

reset the delivery date

 

3 hours ago, Retreadfed said:

Carl, I don't know where you are coming from on this

On 11/25/2019 at 7:27 PM, ji20874 said:

Of course you can unilaterally re-establish a delivery date.  The day after, you can terminate for cause.

Is the

Here is where I am coming from. 

Resetting the delivery date or unilaterally establishing a delivery date is not forbearance.  Rather forbearance is to refrain from taking an action one is legally entitled to.  It is not "resetting a delivery date" or "unilaterally establishing a delivery date" it is telling the contractor I could default you today but I am not going to until X.  

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The Government can unilaterally reestablish a delivery schedule in a commercial item contract by giving the contractor notice of the new delivery schedule, so long as that schedule is reasonable under the circumstances.  See Thunderstruck Signs, ASBCA No. 61027, 2017-1 BCA ¶ 36,835, at 179503.

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31 minutes ago, Jacques said:

The Government can unilaterally reestablish a delivery schedule in a commercial item contract by giving the contractor notice of the new delivery schedule, so long as that schedule is reasonable under the circumstances.  See Thunderstruck Signs, ASBCA No. 61027, 2017-1 BCA ¶ 36,835, at 179503.

I attempted to locate this decision and my internet search engine did not locate.  Can you provide a link?

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4 minutes ago, C Culham said:

I attempted to locate this decision and my internet search engine did not locate.  Can you provide a link?

The page numbering is different from CCH, but if you go to http://www.asbca.mil/Decisions/2017/61027 Thunderstruck Signs 8.16.17.pdf you'll see the appeal involves a commercial item at page 1 and you'll see the reference to International Telephone & Telegraph Corp., ITT Defense Communications Division v. United States, 509 F.2d 541 (1975) at page 10.

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2 hours ago, C Culham said:

Resetting the delivery date or unilaterally establishing a delivery date is not forbearance.  Rather forbearance is to refrain from taking an action one is legally entitled to.  It is not "resetting a delivery date" or "unilaterally establishing a delivery date" it is telling the contractor I could default you today but I am not going to until X.  

Carl, I still do not understand what you are saying.  As you said, forbearance is refraining from from doing something you are legally entitled to do.  In the context of a default termination, after a contractor goes into default, the government has a reasonable amount of time within which to decide whether to exercise its right to terminate the contract for default.  This is known as the period of forbearance.  If the government waits to long to make this decision, it will have waived the right to terminate for default and must reestablish the delivery date.  This can be done bilaterally or unilaterally.  Thus, resetting the delivery date is a requirement if the government forbears from terminating the contract for an unreasonable period of time.

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19 hours ago, Retreadfed said:

If the government does not terminate within a reasonable amount of time, particularly if the contractor has continued to perform on the contract, as a matter of fairness (equity), the government cannot terminate the contract without establishing a new delivery date. 

Any unilateral change to the POP would be considered a government offer.  If the KTR rejected the offer then T4D based on the contractually established POP would be appropriate and allowable.

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On ‎12‎/‎7‎/‎2019 at 11:48 AM, ji20874 said:

It isn’t a change, in these circumstances.

It is an administrative action in lieu of termination for default (or cause).  We’re outside the FAR and in the realm of common law.

Outside the FAR and in the realm of common law?  How is this possible?  Aren't FAR-bound executive agencies bound by the FAR?  Is there some exemption from this?

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14 hours ago, Retreadfed said:

Carl, I still do not understand what you are saying

@RetreadfedIn this thread the OP posed the following summary – Is it Permissible to Unilaterally Re-Establish Delivery Schedule on Commercial Contracts?”

The OP then went on and posed a specific question  - Is it legally permissible for the Government to re-establish a delivery schedule unilaterally on a contract for commercial services that includes FAR 52-212-4(c), when the Government, through its inaction, previously waived timely delivery (DeVito waiver?) “

As follow up to the question the OP posed  “The agency knows that the contractor will not sign a bilateral modification agreeing to a 30-day extension to reset the delivery schedule. Can the Government re-establish the delivery schedule by written notice to the contract; i.e., through a letter from the CO, or can the CO issue a unilateral modification to re-establish the delivery schedule; despite the language of 52.212-4(c), which requires that all changes to T&Cs be made bilaterally?”

And – “If such a unilateral action were impermissible, by forbearing termination for cause within a reasonable time after the breach (late or missed delivery), agencies later would be incapable of re-establishing a delivery schedule when a contractor does not agree to a new deadline. Is this the case?”  

And  Editing to add: We can terminate for failure to make progress or provide adequate assurance of performance. But can we re-establish the delivery schedule unilaterally?”  

To this you then stated  Thus, it appears to be an open question.  If you feel adventurous, try it and see what happens.  I think it is worth trying.  Who knows, maybe the contractor will not contest it.” 

ji said – “Of course you can unilaterally re-establish a delivery date.  The day after, you can terminate for cause.” ji repeated in a subsequent post  that “Of course you can unilaterally re-establish a delivery date -- it isn't a change and it isn't barred by 52.212-4(c).  Let me say that again for emphasis -- it isn't a change.”

In all the discussion to this point not one responder clarified their position by reference that such an action under termination. was appropriate and the how to of making it happen.  I was left with the impression of my read that you all were saying sure you can unilaterally change the delivery date of a contract even if uncharted territory try it!

Concerned about what was being implied in direct question to ji I posed  - Why isn’t it a change? to  change the delivery date based on  my read that ji had not provided any other reference. ji’s response was that it is an administrative action based on common sense and common law. ji responded with further dialog that I took exception to noting that the action was related to a termination for cause and my position can best be summarized by my statement that “My concern is to suggest that one can unilaterally change a delivery date of a contract awarded pursuant to the FAR absent a contract clause to do so.  You can not.  With regard to the instant matter there is authority to address a failure to perform timely”

You and Jacques then turned to discussion on the termination issue by further discussion and a ASBCA case that spins on termination for cause.  Jwomack enters the discussion at this point to further point to termination of cause clarity.

Now to hopefully clarify where I am coming from is that you admitted that what the OP wanted to do was uncharted territory and ji said it wasn’t a change but not once did you offer advice on how pursuant to the unilateral right of the government contained in the contract pursuant to the termination for cause that in a termination for cause action the delivery date matter can be addressed as jwomack has pointed out better than I.

So let me restate my position - In a commercial item contract you cannot unilaterally change the performance period of the contract unless such action is taken pursuant to a specific clause of the contract.  In this instant case it is not paragraph (c) of FAR 52.212-4 as ji has stated but paragraph (m).  Further it is not uncharted territory, administrative action, common law but is taking action pursuant to the contract and the guiding principles of the FAR related to termination.  

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