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General.Zhukov

Stop Work Authority

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What's going on with stop-work orders for commercial contracts that do not have 52.242-15?  

FAR 52.212-4 & -5 do not appear to have anything allowing issuance of unilateral stop-work orders.  Does that matter?   My intuition is that it doesn't, I can go ahead and issue a unilateral stop-work order for any commercial contract and that stop work order will be legally binding.

FAR 42.1303 Stop-work orders -  this part of the FAR indicates to me I can issue a stop work for a commercial contract, regardless of clauses, so long as the contract meets those weird critieria.

Why does FAR 42.1303 have these weird, seemingly arbitrary criteria?  Implying no stop work order for simplified,  sealed bid, 16.5 orders, incentive contracts, time & material, etc.  This makes no sense to me. 

  • negotiated fixed-price or cost-reimbursement supply, research and development, or service contract  

Why doesn't the FAR say the government can issue a stop work order, always - the end?

 

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1 hour ago, General.Zhukov said:

My intuition is that it doesn't, I can go ahead and issue a unilateral stop-work order for any commercial contract and that stop work order will be legally binding.

What is your rationale for saying this?  Why would such an order be legally binding if there is no clause in the contract authorizing you to issue such an order?

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I assume you are talking about commercial items? If so, see FAR 12.301(e) and 12.302 for discretionary use of FAR provisions and clauses.

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1 hour ago, General.Zhukov said:

Why doesn't the FAR say the government can issue a stop work order, always - the end?

One reason being that stop work concept is generally not a commercial market practice. See 12.301(d) and 12.302.

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3 hours ago, General.Zhukov said:

FAR 52.212-4 & -5 do not appear to have anything allowing issuance of unilateral stop-work orders.  Does that matter?   My intuition is that it doesn't, I can go ahead and issue a unilateral stop-work order for any commercial contract and that stop work order will be legally binding.

Doesn't it depend (at least in part) on the reason you want to stop work?  Consider Robert A. & Sandra B. Moura, PSBCA 3460, 96-1 BCA ¶ 27,956:

Quote

Although no specific contractual provision provides for suspension of the operation of the contract station, the right to default on one-day’s notice which then existed certainly encompassed the lesser right to suspend performance temporarily.  The extremely serious monetary shortage discovery and breach of security required at least some temporary remedial action by Respondent pending resolution of the problem and determination of whether to exercise its right to terminate the contract.  Under the circumstances then present, it was reasonable to temporarily suspend operation of the contract unit immediately.  Appellants suffered no monetary loss due to the temporary suspension as they were paid in full for operation of the station during the suspension period.

There were circumstances that made the decision to suspend work reasonable, and the suspension didn't result in the Government being the first to materially breach the contract, since the contractor wasn't prejudiced.

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4 hours ago, General.Zhukov said:

FAR 42.1303 Stop-work orders -  this part of the FAR indicates to me I can issue a stop work for a commercial contract, regardless of clauses, so long as the contract meets those weird critieria.

I think it is improper to read FAR 42.1303 for the proposition you can issue a stop work order in the absence of the clause anytime you want.  I think FAR 42.1303 is written with the understanding the clause is in the contract. You need to read FAR 42.1303 in the context of FAR 42.1301.  The FAR isn’t binding on contractors. 

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4 hours ago, Retreadfed said:

What is your rationale for saying this?  Why would such an order be legally binding if there is no clause in the contract authorizing you to issue such an order?

I don't have a real rationale, nor argument.  I can terminate a commercial contract unilaterally, which is far more drastic a measure than a stop-work, but conceptually very similar, so if I can take a full-measure, why not a half-measure?  Again, not going to argue this point.  This is kinda sorta like the rationale in  Robert A. & Sandra B. Moura, PSBCA 3460, 96-1 BCA ¶ 27,956:

Excellent feedback, thank you all.  Much appreciated.  I take the point that the clauses in the contract, not the FAR, is what's binding.  

In my particular case, a contractor is performing work under a commercial services contract.  By all accounts, doing a very good job.  However, there are several major issues with the contract.  One being we (GVT) are considering terminating it due to change in our business strategy, but haven't yet made that decision. .  Second, the contractor seems to have been receiving interim payments, not delivery payments as intended.  And at this point has been paid in full, but the work is incomplete.  Given these circumstances, the grown-ups have decided we are in a hole, and need to stop digging immediately.  I feel like there is some basis for issuing a stop work in this case, although I cannot find on in the texts.

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Assuming FAR 52.212-4 is included in the contract, there is an overpayment remedy (refund of money) if interim payments were not included in the terms and conditions. Potentially there is also a termination for cause remedy related to any overpayment not repaid by the Contractor. If Alternate I was included in the contract in lieu of the basic clause, you can review it and see if that provides some remedies. Just saying, read the entire contract an see if there is something other than stop work.

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5 hours ago, Neil Roberts said:

One reason being that stop work concept is generally not a commercial market practice. See 12.301(d) and 12.302.

This is exactly the reason.  When the FAR was revised to include commercial contracting,  it just wasn’t for buying commercial supplies and services.  It also reflects commercial buying practices.  Stop work orders isn’t one of those.

FAR 42.103(a) says this about use.  None of the reasons for work stoppage involves commercial items. 

Quote

Stop-work orders may be used, when appropriate, in any negotiated fixed-price or cost-reimbursement supply, research and development, or service contract if work stoppage may be required for reasons such as advancement in the state-of-the-art, production or engineering breakthroughs, or realignment of programs.

 

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23 minutes ago, formerfed said:

This is exactly the reason.  When the FAR was revised to include commercial contracting,  it just wasn’t for buying commercial supplies and services.  It also reflects commercial buying practices.  Stop work orders isn’t one of those.

FAR 42.103(a) says this about use.  None of the reasons for work stoppage involves commercial items. 

 

 

23 minutes ago, formerfed said:

if work stoppage may be required for reasons such as advancement in the state-of-the-art, production or engineering breakthroughs, or realignment of programs.

Some of these could certainly be applicable to commercial item purchases.

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38 minutes ago, joel hoffman said:

 

Some of these could certainly be applicable to commercial item purchases.

Yes they could.  I was relying on the mindset going on when this part of the FAR was developed when I said that.   But it’s not the way it evolved.   I agree some could be applicable.

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I think that there could be situations where it would be advisable or smart to stop work while a government action to terminate for convenience or to change a product order or service was being considered or planned, as in the general’s situation. 

On 12/17/2019 at 1:29 PM, General.Zhukov said:

Why does FAR 42.1303 have these weird, seemingly arbitrary criteria?  Implying no stop work order for simplified,  sealed bid, 16.5 orders, incentive contracts, time & material, etc.  This makes no sense to me. 

  • negotiated fixed-price or cost-reimbursement supply, research and development, or service contract  

Why doesn't the FAR say the government can issue a stop work order, always - the end?

For construction (which is non-commercial), one would suspend work for the government’s convenience under the Suspension of Work clause or direct a stoppage of some or all activities for safety issues or non-compliance reasons (not for the government’s convenience)  under other clauses. Do not issue a “stop work order”on a construction contract.

The suspension of work clause allows a cost adjustment, but not an “equitable adjustment” (profit on costs). Time extensions may be applicable under the Defaults Clause for a government caused delay due to suspension of work for the government’s convenience.

Just want to make the above point in response to the general’s question. Never refer to an order or action as a “stop work order” on a construction contract. 

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Construction is never commercial (FAR Part 12), so a fixed-price construction contract will always include the Suspension of Work clause at FAR 52.242-14.

The Stop-Work Order clause at FAR 52.242-15 is inapplicable to contracts for commercial items.  The prescribing language for that clause is absolutely trumped by the text at FAR 12.301(d).  That's a fact, and we need to accept it -- no stop-work orders for contracts for commercial items.

However, in an exceptional case, if a contracting officer decides that a stop-work order privilege is necessary, he or she may add the clause in the solicitation and resulting contract under FAR 12.301(e) after determining that a stop-work order is consistent with commercial practice  or obtaining the waiver contemplated by FAR 12.302(c). 

14 hours ago, General.Zhukov said:

 

In my particular case, a contractor is performing work under a commercial services contract.  By all accounts, doing a very good job.  However, there are several major issues with the contract.  One being we (GVT) are considering terminating it due to change in our business strategy, but haven't yet made that decision. .  Second, the contractor seems to have been receiving interim payments, not delivery payments as intended.  And at this point has been paid in full, but the work is incomplete.  Given these circumstances, the grown-ups have decided we are in a hole, and need to stop digging immediately.  I feel like there is some basis for issuing a stop work in this case, although I cannot find on in the texts.

The Government has already screwed up the administration of your contract -- please don't screw up further by issuing an unauthorized stop-work order.

 

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55 minutes ago, ji20874 said:

The Government has already screwed up the administration of your contract -- please don't screw up further by issuing an unauthorized stop-work order.

I agree.  "How could doing so potentially make matters worse?" you might ask.  Well, a contractor's recovery under a contract terminated for convenience would generally be less than the contractor's recovery under a contract that the Government materially breached.  Don't get me wrong, I'm not saying that suspending work always automatically results in a material breach.  I'm just saying the analysis starts getting very fact-dependent from the suspension going forward.

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On 12/18/2019 at 7:49 AM, ji20874 said:

Construction is never commercial (FAR Part 12), so a fixed-price construction contract will always include the Suspension of Work clause at FAR 52.242-14.

The Stop-Work Order clause at FAR 52.242-15 is inapplicable to contracts for commercial items.  The prescribing language for that clause is absolutely trumped by the text at FAR 12.301(d).  That's a fact, and we need to accept it -- no stop-work orders for contracts for commercial items.

...

 

 

Ji20874, don't count on the status quo remaining...Congress has already enacted legislation calling upon DoD to implement a preference for acquisition of commercial construction services...What do you think can/will change?

See DFARS Open Case 2019-D034...https://www.acq.osd.mil/dpap/dars/case_status.html

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