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1 hour ago, joel hoffman said:

Agreed. And it depends upon the all the actual facts

Exactly.  I found this statement in the original post very interesting "There is unused money/quantities on the contract. (For this, let's not worry about why there is as I do not think the reason matters at this point.)."  Facts are what change the answers to procurement questions from "it depends" to a "yes" or "no".

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3 hours ago, joel hoffman said:

Hopefully, Voxx now understands that “why there is” DOES matter and that it and providing as much information as possible in initial and follow up posts makes ALL the difference.

 

13 minutes ago, Retreadfed said:

Exactly.  I found this statement in the original post very interesting "There is unused money/quantities on the contract. (For this, let's not worry about why there is as I do not think the reason matters at this point.)."  Facts are what change the answers to procurement questions from "it depends" to a "yes" or "no".

Agreed. 

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On 6/12/2020 at 2:05 PM, Voxx said:

Formerfed - you are hitting the nail on the head. IF the company responded, is no issue. It is when companies do not respond for whatever reason. HQ would like to have the money back to either spend on current year stuff (if current year funds) or to help resolve prior year shortages (versus using current year money). And then of course to eventually lead to closing out the contract. 

Several negative comments on my posts.  I responded to the basic issue and question about what happens if a contractor hasn’t responded to a close out mod.  Since a mod was sent, that assumes the contractor did everything expected.  Headquarters wants to use the excess money.

The discussion went to receiving nine units of something instead of ten or not all labor on the contract provided.  Again those are moot if a bilateral modification was prepared assuming the contractor requirements are satisfied.

As Joel said, if those are real issues, better contract administration needs performed.  

All sorts of scenarios arose.  But it seems OPs situation involves simply how does unused funding get removed from a contract when the contractor is no longer responding?  
 

 

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43 minutes ago, formerfed said:

Several negative comments on my posts.  I responded to the basic issue and question about what happens if a contractor hasn’t responded to a close out mod.  Since a mod was sent, that assumes the contractor did everything expected.  Headquarters wants to use the excess money.

The discussion went to receiving nine units of something instead of ten or not all labor on the contract provided.  Again those are moot if a bilateral modification was prepared assuming the contractor requirements are satisfied.

As Joel said, if those are real issues, better contract administration needs performed.  

All sorts of scenarios arose.  But it seems OPs situation involves simply how does unused funding get removed from a contract when the contractor is no longer responding?  
 

 

I think that, if one is going to modify a contract to release funds, one must first determine why the funds are excess and whether or not the contractor would have a contractual right to some or all of the remaining funds under the terms of the contract.  

If not (I.e., no changes to the contract’s terms and conditions for ordering, invoicing or being paid) , then no bilateral mod should be necessary.

The scenarios described in Voxx’s later clarifications would appear to support such a conclusion. Depends of course upon the specific contract language.   

Then Mod the contract with a description why it is being modified to deobligate the funds.

Do not cite 52.212-4 (c)  Instead, cite/describe the applicable paragraph or paragraphs, and/or any specific language in the statement of work, etc. as described hereinbefore.

You could state a period for the contractor to object if it disagrees before proceeding to closeout the contract. That might not block a subsequent claim but puts contractor on notice that you will close out the contract.

Be sure to coordinate with  your legal support on this approach. 

Send it to the unresponsive contractor. 

Proceed to closeout the contract.

If the contractor suddenly or later responds in disagreement, one can deal with it then.

P.S.: I suspect that any mod deobligating funding would require a corresponding adjustment to the contract price. I doubt that any automated contracting system would allow funding and final contract amount to not be the same. Am I correct? 

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On ‎6‎/‎11‎/‎2020 at 10:03 AM, Retreadfed said:

If you will only pay for what has been ordered, why are you obligating funds for items that have not been ordered? 

Earlier, I asked this question which has not been answered.  If Voxx is obligating funds for items that have not been ordered and for which the government has no obligation to pay the contractor, is there a valid obligation of funds?  If not, why would you need something in the contract to correct this error?  Why can this not be done unilaterally?

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3 hours ago, Retreadfed said:

Earlier, I asked this question which has not been answered.  If Voxx is obligating funds for items that have not been ordered and for which the government has no obligation to pay the contractor, is there a valid obligation of funds?  If not, why would you need something in the contract to correct this error?  Why can this not be done unilaterally?

No, and you do, either a termination clause or the implied in fact ability to do a supplemental agreement.  One could conclude if there is no obligation to pay Voxx's agency is in violation of the recording statute by obligating money in the first place.

The contract  is a promise for something for a promise to  pay the contractor then the obligation is rightful.  Stupid view many of you will argue but the contractor owns that obligation just a much as the government.  As such the promise needs to be modified or changed.  Continuing from my previous post that kept this thread going this is the reason that the FAR provides that to close out a contract file funds "must" be determined for deobligation (FAR 4.8054-5) and such deobligation "shall" be accomplished by a supplemental agreement (FAR 42.302(b)(4).

You all want to read that an administrative change that allows for a change in appropriation data is defined as one as the same as "deobligation".   I believe such a view and the premises you have made to support it are not consistent.  Likewise specific to the OP's comments this ain't a one time deal it happens all the time by my read.   Makes me wonder if what they are doing has another answer as I already tried to suggest like using variation in quantity, estimated quantities or services that they need to explore.  

For overall reference how about Volume 2, Chapter 7 of the GAO Redbook.

 

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10 minutes ago, C Culham said:

The contract  is a promise for something for a promise to  pay the contractor then the obligation is rightful.

Carl, I'm not sure we are reading what Voxx has written the same way.  Voxx says the contract says that the government is only obligated to pay the contractor for items that are ordered (I assume that this obligation to pay is also conditioned on the contractor delivering a satisfactory product within the required delivery date).  I'm still not sure what type of contract is involved, but lets assume the following hypothetical:

The contract permits the government to order the delivery of 100 widgets at a price of $1,000 each.  The government is under no obligation to place any orders and the contract states that the government will only be required to pay the contractor for items that are ordered.  At the time the contract is awarded, the government "obligates" the total possible contract amount of $10,000.  What is the consideration necessary to form a valid contract in this situation?  Also, what is the liability of the government that allows for the recording of an obligation?

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The latest version of the DCMA closeout manual has some useful information

https://www.dcma.mil/Portals/31/Documents/Policy/DCMA-MAN-2501-07.pdf?ver=2019-01-15-105034-927

I mentioned use of an administrative modification annotated with “For Internal Distribution Only” to allow excess funds to be used by the OPs headquarters for other purposes.  DCMA refers to this as “Q-final” and they just take the money and returns to the procuring agency.  It’s covered on page 31.  Page 28 says Q-final is used when all required performance is complete and paid for.  I assume this is what Voxx is asking about but we don’t know for sure.  DCMA also says a deobligation modification is used when the contract calls for delivery of 10 widgets but the contractor only delivers 8.  That modification explains why 2 weren’t delivered and why.

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On 6/16/2020 at 12:42 PM, Retreadfed said:

Earlier, I asked this question which has not been answered.  If Voxx is obligating funds for items that have not been ordered and for which the government has no obligation to pay the contractor, is there a valid obligation of funds?  If not, why would you need something in the contract to correct this error?  Why can this not be done unilaterally?

Exactly where I was going when I asked Voxx my question.

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