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What happens if a contractor loses government property (boxes of documents?)


govt2310

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Say there is a contract requiring the  contractor to provide storage space for an agency's government file boxes, like in a warehouse.  It is a fixed-price contract task order off of the GSA Schedule.  With only a few weeks to go until the contract expires, it comes to light that the contractor has lost a bunch of the file boxes.  The contractor admits it cannot locate them and has given up.  The contractor has submitted invoices for full payment.  What is the appropriate way for the agency to handle such a situation?  Obviously, the agency shouldn't pay the invoices where the contractor didn't perform, but how would one calculate that here?  

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Record the facts in CPARS.

Did the contract constitute a bailment?  Reduce the contract price to reflect the value of the lost property.  

Reduce the contract price to reflect the contractor's unsuccessful performance.  

You don't need a pre-determined calculation method.  The contracting officer can pick what he or she thinks is a reasonable reduction -- if the contractor doesn't like the reduction, it can file a claim to get a different reduction.

Send a cure notice and be ready to terminate for default or cause.

Start a suspension or debarment action.

These are just some possibilities in no particular order for you to consider.  For sure, read the contract.

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20 hours ago, Ibn Battuta said:

The government might have rented storage space, but the contractor might not be liable for any property stored in its space. Before you do or decide anything, read the contract and determine whether the contractor was to provide only space, or space, accountability, safeguarding, and record keeping. Read the contract and see what if anything it says about contractor responsibility and liability for any government property stored in the space it provided. See if you have any record of when the property was placed in the space, who put the property in the space, who had access to the space, and what was in the file boxes. You'll have a better idea about what to do after you've learned more. You may have to contact Federal law enforcement.

This is outstanding advice.

My first thought when reading the OP was "more information needed." Although the contractor cannot locate the boxes, it is far from clear that the boxes were lost by contractor negligence or other compensable means. For example, are you sure that government personnel who provided the boxes to the storage facility properly marked them? Can you provide evidence that they did so? The contractor may have used standard commercial good practices and the boxes were lost despite those practices. We don't know and (apparently) you don't know either.

I have lots of experience with trying to retrieve stuff from document storage and, unfortunately, from time to time stuff is lost. The primary cause (in my experience) is that the boxes were already retrieved by somebody else in my organization and then (a) not returned, or (b) returned improperly. The secondary cause is improper marking upon the initial shipment. We evolved a practice where the person/function shipping boxes to storage must create a list of all boxes and the identification and the description of what is going, and that list must be checked and signed-off by somebody else independent to the person/function doing the storage, and that list must be acknowledged by the storage facility receiving the boxes. Then the list(s) are retained and separately stored. We also created a single POC who was responsible for retrieving all documents that had been sent to storage to make sure they were returned timely and properly. It helped, but it did not completely eliminate the problem of lost stuff.

For one sad example, my (past) employer lost out on a multi-million-dollar patent infringement suit because the documents that would have supported the case had been sent to storage 20 years before, had been subsequently retrieved by somebody who had since retired 10 years before, and then presumably lost or destroyed--or so we assumed because they had never been returned. Nobody knew and it drove our attorneys crazy.

So: stuff happens, unfortunately. Before you blame the storage contractor, make sure you understand the contractual duties/responsibilities (on both sides) and have a good idea as to causation. Make sure your own house is in order first.

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Not sure that you are reading what is being said. We don’t know who has access  to and configuration of the storage area, procedures for entry/exit/access to files/checkout of files, etc. 

  

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@Ibn Battuta  If the Government owns something and puts it in a contractor facility, the Government still owns it.  FAR 52.245-1 says:

 “Government property” means all property owned or leased by the Government. Government property includes both Government- furnished and Contractor-acquired property. Government property includes material, equipment, special tooling, special test equipment, and real property. Government property does not include intellectual property and software.

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A problem with this thread is that the OP hasn't explained what the contract requirements actually are other than the government rented storage space "like in a warehouse" for agency file boxes from an unknown GSA schedule.

The contractor "has lost a bunch of the file boxes ".

There has been much speculation of how the files may have disappeared and that unknown government officials may have had access to the files and may have removed them.

There is little context provided. But it doesn't appear that the government rented an individual storage unit , in a storage complex with individual rollup doors where anyone with a key to that unit could access.

What does the contract require?  Did the government furnish the contractor the boxes and then the contractor officially received them (with inventory paperwork) and moved them into a storage warehouse? Did the contract require the contractor to maintain control of and security for the files? 

Or did the contractor merely provide storage space and the government moved them in and must remove them at the end of the storage period?

 

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@Ibn Battuta  Ok, I see your point.  Well yes, I have read the entirety of FAR Part 45 and FAR clause 52.245-1, and reading all of this as a whole, I still interpret "Government Property" to mean that file boxes held at a contractor's facility are Government Property.  That is the only explanation that I have for you.

Thanks everyone.  I would be fine with ending this discussion thread at this point.  

-----------------------------------------------------------

govt2310 excused himself at this point.  Don't direct any further responses to him.  If he chooses to reenter the discussion, then you may.  11:54 am

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1 hour ago, Ibn Battuta said:

@joel hoffman I suspect that you're right about that, but it does not "appear" one way or another based on anything said in any post in this thread. To say, "Yes- it is a breach of contract. Determine the damages," strikes me as an extremely hasty response based on the scant information provided by the OP.

Yes, but no more speculative than the other theories here. I took Govt2310’s initial post at face value. The government rented storage space, “like in a warehouse” for storage of government file boxes. It “has come to light that the contractor has lost a bunch of the file boxes.”   “The contractor admits it cannot locate them and has given up.” 

Based upon previous experience, it was probably unwise of me to take Govt2310’s initial post for granted. I’m not saying that I was correct or that anyone else is. I’m simply asking for the correct context in ? GSA schedule and an order under that schedule. Govt 2310 is interpreting the property clause with alternative1 but doesn’t say that it is actually in the unknown GSA schedule or the order.

IF the contractor is responsible to secure the “warehouse” and IF it has accepted the boxes for storage and is supposed to maintain control over the property, then it would appear that the contractor has not met the contract/task order requirements. But we don’t know what it’s actual obligation is.

I do know that the HHG storage contracts that DoD uses prescribe requirements for storage conditions, inventory and damage or loss to items in storage. We don’t know what, if any actual storage requirements are here. Provide space for storage ? Provide secured storage? Accept and store the items?

And the OP doesn’t appear to want to elaborate.  

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The OP should be consulting legal counsel. I took some Business Law classes 37 years ago , focusing on common law and the Uniform Commercial Code, including a couple of hours on Bailments. There are numerous types of Bailments  and they can be complicated. That’s why the OP should consult legal counsel, including a complete review of the order and the facts of the situation. I’m no expert on it It simply came to my recollection here. 

”Bailment describes a legal relationship in common law where physical possession of personal property, or a chattel, is transferred from one person (the "bailor") to another person (the "bailee") who subsequently has possession of the property“

For example, see: https://en.m.wikipedia.org/wiki/Bailment

Ibn, once upon a time here, a certain prominent and highly acclaimed Forum member here chastised nonlawyer members for providing legal advice. It was interesting to see that member’s input evolve over the years into frequent legal arguments and advice. I don’t know if he now has a law degree. I do know that he has the research resources as well as friends who are well known and highly respected attorneys. I don’t necessarily mind.

You probably know him and,  for all I know, he may be participating in the Forum under a new member identity these days. 

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I don’t understand how so many contracting officers and specialists here don’t seem to have any legal resources or  representation that they can ask these questions, when it involves specific contract admin legal issues.

However, when it comes to acquisition policy or procedural questions or issues, who should they turn to for advice or discussion? 

 

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1 hour ago, joel hoffman said:

However, when it comes to acquisition policy or procedural questions or issues, who should they turn to for advice or discussion? 

The WIFCON Forum as at least one place to turn to!

 

This thread provides a factual example of where once again a thread on a specific question has evolved in to a discussion not related to the original post.  A reality of fact that may be cause for some to question the value of the WIFCON Forum in it entirety.  I am not sure discussion at a legal conference is the best measure of the success of the Forum.  I would suggest the users are.   I would further suggest the owner of the site has the best access to factual data on use and users as well as anecdotal knowledge based on individual discussion with quite possibly many who post and do not post to the Forum.  With this in mind I will leave it to the administrator to determine the best route for the Forum on who should post, not post and have access to simply read.  

The most recent posts in this thread also seem to want to blur the already blurry line of legal advice versus that of legal information.  Simplistic view, I am sure some would argue, but it has been my view that most Forum discussion threads fall into the category of legal information as opposed to legal advice.    

My view is not to represent that I disagree with all the statements made in the last few posts of this thread.  I do not.   My view is that  Federal contracting is a unique world in and of itself and having experienced now 50+ years of discussions about Federal contracting I do not believe the Forum is much different than the every day conversations that have sought information about the contracting principles and guidelines of the Federal government.  Sometimes real examples are used in the Forum and sometimes they are examples to stimulate discussion on a topic by an individual seeking assistance.  By my measure the Forum has been successful at accomplishing the full intent and letter of its use.

 

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51 minutes ago, C Culham said:

 

2 hours ago, joel hoffman said:

However, when it comes to acquisition policy or procedural questions or issues, who should they turn to for advice or discussion? 

The WIFCON Forum as at least one place to turn to!

 

I agree, Carl. It was a rhetorical question.

And when I suggest that someone contact their legal counsel, it means that they need to confirm or refute whatever advice concerning legal matters others here or I provide, if any.

Or, if nobody has provided advice, it means contact their legal counsel for answers on legal issues.

i worked new acquisitions, claims, REA’s,  contracting and contract admin policy, and many other contract admin issues over several decades, always working regularly and closely with our legal office(s) and KO’s. 

Nobody at WIFCON responds, to my recollection, when I mention consulting counsel or when I ask why many people don’t or aren’t.

It would be extremely unwise to seek legal answers here, then act on many of them without at least coordinating with legal counsel.

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I'm not sure what the OP means when he/she uses the term government property.  However, if we set that aside for the moment, we are dealing with a 

Quote

contract requiring the contractor to provide storage space for an agency's government file boxes, like in a warehouse.

I Believe Ibn suggested the best way to go at this point

Quote

The government might have rented storage space, but the contractor might not be liable for any property stored in its space. Before you do or decide anything, read the contract and determine whether the contractor was to provide only space, or space, accountability, safeguarding, and record keeping. Read the contract and see what if anything it says about contractor responsibility and liability for any government property stored in the space it provided. See if you have any record of when the property was placed in the space, who put the property in the space, who had access to the space, and what was in the file boxes. You'll have a better idea about what to do after you've learned more. You may have to contact Federal law enforcement.

The H-T-H added

Quote

My first thought when reading the OP was "more information needed." Although the contractor cannot locate the boxes, it is far from clear that the boxes were lost by contractor negligence or other compensable means. For example, are you sure that government personnel who provided the boxes to the storage facility properly marked them? Can you provide evidence that they did so? The contractor may have used standard commercial good practices and the boxes were lost despite those practices. We don't know and (apparently) you don't know either.

I have lots of experience with trying to retrieve stuff from document storage and, unfortunately, from time to time stuff is lost. The primary cause (in my experience) is that the boxes were already retrieved by somebody else in my organization and then (a) not returned, or (b) returned improperly. The secondary cause is improper marking upon the initial shipment. We evolved a practice where the person/function shipping boxes to storage must create a list of all boxes and the identification and the description of what is going, and that list must be checked and signed-off by somebody else independent to the person/function doing the storage, and that list must be acknowledged by the storage facility receiving the boxes. Then the list(s) are retained and separately stored. We also created a single POC who was responsible for retrieving all documents that had been sent to storage to make sure they were returned timely and properly. It helped, but it did not completely eliminate the problem of lost stuff.

For one sad example, my (past) employer lost out on a multi-million-dollar patent infringement suit because the documents that would have supported the case had been sent to storage 20 years before, had been subsequently retrieved by somebody who had since retired 10 years before, and then presumably lost or destroyed--or so we assumed because they had never been returned. Nobody knew and it drove our attorneys crazy.

And then retreadfed added

Quote

What Schedule?

Everything else seems premature until there is more information.  However, the OP left and we will not get any further information.

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