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Coronavirus Impact  

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  1. 1. What Impact has the Coronavirus outbreak made to your work environment?

    • No Impact - Conduct business as usual
      6
    • Some Impact - Conducting business but with some limitations
      10
    • Significant Impact - Conducting business has been degraded or shut down
      1
    • My office is allowing the option to work from home
      12


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I think joel's point was that contractors shouldn't expect relief for increased costs under their fixed-price contracts. Relief will have to come from elsewhere. Maybe extraordinary contractual relief or an act of Congress.

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43 minutes ago, Don Mansfield said:

I think joel's point was that contractors shouldn't expect relief for increased costs under their fixed-price contracts. Relief will have to come from elsewhere. Maybe extraordinary contractual relief or an act of Congress.

I understand Joel's point. My original point was that I would expect contractors to enter into discussions with PCOs on this topic, based on individual circumstances. Regardless of contract type.

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25 minutes ago, here_2_help said:

I understand Joel's point. My original point was that I would expect contractors to enter into discussions with PCOs on this topic, based on individual circumstances. Regardless of contract type.

I don’t know what government policy will be but normally it would be that Sovereign Acts of the Government would apply in such circumstances. If individual KO’s provide relief under some “equity” justification and then the government enacts legislation for relief, then what happens. I think KO’s need to wait for some uniform policy government wide or agency direction. 

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3 hours ago, joel hoffman said:

I don’t know what government policy will be but normally it would be that Sovereign Acts of the Government would apply in such circumstances. If individual KO’s provide relief under some “equity” justification and then the government enacts legislation for relief, then what happens. I think KO’s need to wait for some uniform policy government wide or agency direction. 

Exactly.  This is what you’ll see in most cases - KOs waiting for guidance and uniform policy.  Some may show initiative and take actions for relief on their own but most won’t.  Since anything significant likely requires legal review, any experienced attorney will say wait.

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8 hours ago, formerfed said:

... Some may show initiative and take actions for relief on their own but most won’t.

 Since anything significant likely requires legal review, any experienced attorney will say wait.

Individual KO’s should not “show initiative” here by taking actions for relief on their own. Such actions would likely conflict or deviate from overall Government policy, organizational goals, established legal precedents in caselaw, etc. Thus, such individual initiatives would likely exceed the legal authority of those KOs’ warrants.

There should be a consistent,  government-wide approach to determine and devise consistently applied levels of support for industry and labor due to this world-wide health crisis. It is “above the pay-grade” of a KO to individually devise and provide for such relief.

 

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Here is a link to an article where the GSA and the SBA tried to answer some general questions in new contracting-focused fact sheets. The Defense Department said March 17 it will hold daily calls with industry associations to discuss the impact of the virus on industry.

https://federalnewsnetwork.com/industry-associations/2020/03/new-guidance-defense-production-act-and-other-coronavirus-challenges-vendors-should-know-about/

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10 hours ago, joel hoffman said:

Individual KO’s should not “show initiative” here by taking actions for relief on their own. Such actions would likely conflict or deviate from overall Government policy, organizational goals, established legal precedents in caselaw, etc. Thus, such individual initiatives would likely exceed the legal authority of those KOs’ warrants.

There should be a consistent,  government-wide approach to determine and devise consistently applied levels of support for industry and labor due to this world-wide health crisis. It is “above the pay-grade” of a KO to individually devise and provide for such relief.

 

One thought is the bias this unique experience will have on individual COs.  My hope would be as they deal with matters related to each contract matter that often forgotten guidance of the FAR at 1.602-2(b) is brought to the forefront as the whole of the same FAR subpart is put into practice.

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FAR 1.602-2)b) is not a source of authorization for individual KO’s to act like cowboys coming to the rescue for impacts caused by Fed Government directed responses to shut down or limit access to installations , 

Possible exception to this thought might include additional or decreased cost to switch from on-site or home office to teleworking, etc. E.G., where work can continue with some adjustments. 

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Maybe my bias is showing but I'm really not thinking too much about PCOs. I'm thinking more about COCOM commanders and base commanders. In my experience, they tend to act a bit more quickly than the support functions, especially where the health of their troops may be involved.

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Here's an example I heard in a discussion with a colleague--

Imagine a military base commander's public health adviser recommends limiting access to the base to only military members assigned to the base, family members residing on the base, and federal employees working on the base.  The base commander might ask the contracting chief for advice.  The contracting chief might say that he or she will direct contracting officers to issue stop work orders, or change orders, or whatever -- but that would be a bad answer.  It would be better for the contracting chief to recommend that the commander issue a commander's order closing the base, and for that order to be publicized through public affairs and so forth.

The first approach (contracting officers issuing stop work orders and so forth) makes it a contracting matter, under contracting authorities, with contract equitable adjustment remedies.  Really, this is a bad idea.

The second approach (a base commander order to close the base) is a sovereign decision.  Really, this is the right approach.

However, I fear that many contracting chiefs don't have the sophistication to know the difference.  And I fear that many attorneys don't, either.  I'm glad to see this discussion.

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2 hours ago, joel hoffman said:

FAR 1.602-2)b) is not a source of authorization for individual KO’s to act like cowboys coming to the rescue for impacts caused by Fed Government directed responses to shut down or limit access to installations , 

Possible exception to this thought might include additional or decreased cost to switch from on-site or home office to teleworking, etc. E.G., where work can continue with some adjustments. 

Agree and for you to imply my post recommended cowboy actions it did not and I do not.

Yet the bias is present already.  I have a friend who is a VP for a national long haul trucking company.  He is dealing with complaints from drivers who are being refused access to restrooms of the clients the trucking company delivers to.

This mentality is not limited to the trucking world I know by first hand experience.

PEOPLE NEED TO THINK!

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3 hours ago, C Culham said:

One thought is the bias this unique experience will have on individual COs.  My hope would be as they deal with matters related to each contract matter that often forgotten guidance of the FAR at 1.602-2(b) is brought to the forefront as the whole of the same FAR subpart is put into practice.

Certainly.  Lots of things come to mind where COs are capable of and should handle items immediately.   Examples include delinquent performance for causes outside their control, suppliers/subcontractors unable to perform, lack of healthy employees, local lockdowns, etc.  Delays can result from tardy government actions.  The list goes on.  COs can negotiate new delivery dates, allow alternative sources of supply even with increased costs, waive certain testing, etc.  

 

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2 hours ago, formerfed said:

Certainly.  Lots of things come to mind where COs are capable of and should handle items immediately.   Examples include delinquent performance for causes outside their control, suppliers/subcontractors unable to perform, lack of healthy employees, local lockdowns, etc.  Delays can result from tardy government actions.  The list goes on.  COs can negotiate new delivery dates, allow alternative sources of supply even with increased costs, waive certain testing, etc.  

 

Yes.  Those are normal contract admin functions. 

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OMB issued Memo M-20-18 on “Managing Federal Contract Performance Issues associated with the Novel Coronavirus” a little while ago.  I just checked and couldn’t find it online yet.  Among other points it stresses use of telework by contractors, COs be flexible in providing extensions, retool contracts when possible for pandemic responses, leverage special emergency procurement authorities, and reminding the acquisition workforce they are fully empowered to use acquisition flexibility’s consistent with good business judgement.  
 

Edit:  just saw the memo posted  https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-18.pdf

I think the Q&A on equitable adjustments will be a big help to COs looking to see how to handle requests for relief and for contractors on need for talking with COs.

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Many COs now are faced with modifying contracts from changes.  It’s especially tough dealing with fixed priced contracts where assessing impacts are toughest.  In one instance, the agency directed a contractor to mirror a government server including all modeling software and database and communication nodes from worldwide sources.  COs are requesting detailed cost data but can’t receive them except from use of personal fax and other home equipment.  The problem starting yesterday is many agencies are finding IT processes can’t handle increased volumes of traffic from telework.   

The DoD Deputy CIO said much of the strain is coming from employees streaming videos, movies, and music.  DoD blocked those websites.

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The contractual remedy for performance difficulties caused by the coronavirus situation is additional time, not additional money.  I hope formerfed's observation is not universal, but only for a few cases where the Government has affirmatively changed the contract using the Changes or similar clauses.  However, I fear otherwise, and can easily imagine contracting officers broadly and generously increasing contract prices solely because of alleged increased contractor costs.

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2 hours ago, ji20874 said:

The contractual remedy for performance difficulties caused by the coronavirus situation is additional time, not additional money.  I hope formerfed's observation is not universal, but only for a few cases where the Government has affirmatively changed the contract using the Changes or similar clauses.  However, I fear otherwise, and can easily imagine contracting officers broadly and generously increasing contract prices solely because of alleged increased contractor costs.

Reading the recent OMB and DOD press releases on the topic, I'm not sure your Senior Executive Leadership agrees with you.

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8 hours ago, here_2_help said:

Reading the recent OMB and DOD press releases on the topic, I'm not sure your Senior Executive Leadership agrees with you.

I’m certainly not advocating contracting officers should increase prices without supporting justification and documentation.  But these are grave times and government leadership seems to recognize the uniqueness of the situation.  If contractors are injured financially, contracting officers need to take action.

Here’s more DoD guidance

WHS%20Acquisition%20Directorate%20Questi

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Allowing for a change in place of performance is already contemplated by the Changes clause for services.  No problem if that is the extent of the change and price contract increase.

For other non-Change matters where a contractor's costs have gone up due to unforeseen (and unforeseeable) circumstances, performance the contract is threatened, the Changes (or similar) clause won't help, and the contracting officer wants to gratuitously provide more money to the contractor, the Congress has already provided a remedy that is codified in FAR subpart 50.1, Extraordinary Contractual Actions.  I hope contracting officers will available themselves of the appropriate process.

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1 hour ago, formerfed said:

If contractors are injured financially, contracting officers need to take action.

Is it the contracting officer's duty to make sure contractors are protected from financial injury?

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8 hours ago, formerfed said:

I’m certainly not advocating contracting officers should increase prices without supporting justification and documentation.  But these are grave times and government leadership seems to recognize the uniqueness of the situation.  If contractors are injured financially, contracting officers need to take action.

Here’s more DoD guidance

WHS%20Acquisition%20Directorate%20Questi

I want to caution any KO who might issue a Suspension of Work order to describe why it must be issued and also to include a definite end date to the suspension, if possible. It can be be extended or shortened by a subsequent order. However, try to avoid an indeterminate date for the end of the suspension.

Hopefully there will be some agency guidance policy and direction forthcoming due to the OMB and a DoD “Press Releases”.

Some of the elements necessary for recovery of expenses - in particular for Unabsorbed Home Office Overhead Expenses (Eichleay Method) are that the work is suspended for an unreasonable amount of time by an act or omission of the contracting officer and that the performance of the work is suspended for an indeterminate period of time.

if there is a government directive that would prevent performance or access to a government installation or facility, cite that in the Suspension of Work order.

Hooefully, the Federal government will have legislation, funding and programs in place to alleviate or help alleviate the financial impacts of the present epidemic.

My Congressman recently indicated that there should be no-interest loans to help businesses and that the government might forgive portions of the loans to firms who retain their employees during this period. The government policy hasn’t been finalized. Just a possible example of how some relief might be available for businesses and employees. 

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9 hours ago, formerfed said:

I’m certainly not advocating contracting officers should increase prices without supporting justification and documentation.  But these are grave times and government leadership seems to recognize the uniqueness of the situation.  If contractors are injured financially, contracting officers need to take action.

Here’s more DoD guidance

WHS%20Acquisition%20Directorate%20Questi

I need to mention that, if performance is delayed or disrupted by illness, quarantine  or other unavailability of labor as a result of this pandemic, such delays could likely be excusable under the Termination for Default clauses but wouldn’t be reimbursable under the terms of the contract.

There isn’t necessarily a blank check available to KO’s or Contractors within the four corners of the contract “if contractors are injured financially” for every aspect of  financial loss.

The Suspension of Work Clause doesn’t provide for an “equitable adjustment”; it excludes profit on costs or losses of profit due to delays beyond the Fault or control of the contractor.

Again, hopefully agencies will provide guidance to their KO’s on how to deal with the impacts of the evolving health and economic situation.

It is particularly important for relatively inexperienced KO’s to seek qualified guidance from their agency and their legal advisors in order to promote fair and legal response to problems caused by this epidemic. 

 

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