52.217-8 Option to Extend Services and the meaning of "at the rates specified in the contract"

[joel hoffman]

As a corollary, if the government clarifies that it doesn’t intend to pay for any unilaterally ordered services under the altered  -8 clause, if it would require a line item and/or total contract price increase, the proposer can choose not to submit a bid, proposal, quote, etc.

It might then alternately protest the terms of the altered  -8 clause as not being “substantially the same as” the FAR wording and FAR stated intent of the -8 clause, because that would be an unreasonable expectation. I don’t know if that would be upheld but it may worth a try if the proposer really wants to continue to compete.

[joel hoffman]

As a second corollary, I would recommend that a potential sub advise a prime that it reasonably interprets such revised wording to mean that it would be paid for any additional services ordered pursuant to the -8 clause.

You may rightfully feel that I am unnecessarily rambling on here.

However, I dealt with contract claims, Disputes, REA’s,  solicitation, contract administration and contract interpretation issues, including contractor sponsored subcontractor issues for many years with the Corps of Engineers and prior to that, some with the Air Force.

I also wrote and/or reviewed solicitations and contracts and negotiated, conducted source selections and/or bid competitions inside and outside the Fed. Government.

[C Culham]

I have probably gotten lost in twists of this discussion yet these thoughts come to my mind....

52.217-8 actually says "at the rates specified in the contract."   The OP has stated that "and price" has been added.   Now I could be all wet but are "rates" and "price" "substantially the same" ?   Many say yes and this aligns with the basic tenants of FAR part 15 but but as it goes it may get confused in a specific contract.

Consider........the IDIQ shows rates but does the TO show rates or does it show a FFP in a lump sum that is based on the rates?   I wonder when there is mention of "milestones"?  Now if the TO as a stand alone contract  is lump sum, I really wonder how 52.217-8 could apply even if USACE says it does.  It is not substantially the same to add price in my view in a full read of FAR part 17, specifically, 17.200, 17.202, and 37.111.  A TO for "engineering support" based on the assumption of milestones  is not a continued and necessary service.   From a contractors point of view to be put the position of continuing to do something that has an end date ( a TO) puts them in the position of taking on undue risks.

Water under the bridge at this point with it as noted that  contractors, and subcontractors should pay close attention to the pricing scheme of an IDIQs intent on TO's and  clarify how the terminology of the 52.217-8 clause applies and negotiate appropriately.  it is easy for everyone to say, even the Government, that 52.217-8 does not apply to a specific TO when said clause is in the parent IDIQ.

 

[joel hoffman]

23 minutes ago, C Culham said:

I have probably gotten lost in twists of this discussion yet these thoughts come to my mind....

52.217-8 actually says "at the rates specified in the contract."   The OP has stated that "and price" has been added.   Now I could be all wet but are "rates" and "price" "substantially the same" ?   Many say yes and this aligns with the basic tenants of FAR part 15 but but as it goes it may get confused in a specific contract.

Consider........the IDIQ shows rates but does the TO show rates or does it show a FFP in a lump sum that is based on the rates?   I wonder when there is mention of "milestones"?  Now if the TO as a stand alone contract  is lump sum, I really wonder how 52.217-8 could apply even if USACE says it does.  It is not substantially the same to add price in my view in a full read of FAR part 17, specifically, 17.200, 17.202, and 37.111.  A TO for "engineering support" based on the assumption of milestones  is not a continued and necessary service.   From a contractors point of view to be put the position of continuing to do something that has an end date ( a TO) puts them in the position of taking on undue risks.

Water under the bridge at this point with it as noted that  contractors, and subcontractors should pay close attention to the pricing scheme of an IDIQs intent on TO's and  clarify how the terminology of the 52.217-8 clause applies and negotiate appropriately.  it is easy for everyone to say, even the Government, that 52.217-8 does not apply to a specific TO when said clause is in the parent IDIQ.

 

Agree, Carl. We don’t know whether or not -8 applies or is applicable to a specific incidence. The original post was a hypothetical and, as several of us have mentioned, doesn’t appear to be something that would be covered.  We don’t know what the OP’s specific contracts or subcontracts were for.

And adding the wording “...and prices” might or might not be “substantially the same as” the FAR wording (and the purpose of the clause as you quoted in your first post - thanks by the way!), depending upon the circumstances - e.g., the CLIN structure, type of services, etc. - and particularly the clause drafting party’s intent (to pay or not to pay for extended services). The OP’s primary concern apparently deals with whether or not the prime or government can unilaterally order an extension of services and use the added wording to avoid any additional payment.

The hypothetical scenario caused some confusion.

[Retreadfed]

On 12/3/2020 at 3:02 PM, ji20874 said:

I hope the contractor filed a timely claim under the Disputes clause of the contract -- that's what the clause is for.  Such a contractor could also contact the agency head or a Congressman or the organization's OSDBU. 

The contractor had previously filed a claim for failure to adjust contract prices in accordance with 52.222-41.  The claim was denied and appealed to the ASBCA where it was ultimately settled.  All this was an affront to the CO who was very sensitive about anyone questioning her authority or actions.  She then began building a case against the contractor based on half truths and situations she had manufactured.  The CO was also poisoning the well against the contractor with higher ups so that the contractor was viewed as a trouble maker.  Because of timing, filing a claim would take too long to resolve as the contractor was already teetering on the edge of bankruptcy due to the previous non-payment by the CO, and going outside the contracting officer was useless because of the bad mouthing the CO had done in regard to the contractor, which was distorted and largely untrue.  As Tyrian Lanister said  "we have had stupid kings and we have had cruel kings, rarely have we had stupid and cruel kings."  This CO was one of the latter.

[ji20874]

Well, the 52.217-7 clause and the Disputes clause provide a way for reasonable parties to do business.  If either party corrupts the relationship, the bad is on that party, not on the clauses.

[C Culham]

I apologize but this topic has haunted me and I have done some further reading.  In no way is the following a conclusive opinion on my part but I do think the further thoughts are important to add.  Not sure the OP is listening (reading) any longer, all the same here you go......

As applicable to the government and the prime relationship.   As to a prime/sub relationship I would hate be involved in any adjudication of interpretation as I suspect the guidance of the FAR would not have much use. 

By FAR guidance the agency, in this case USACE, is to insert a period in the blank of 52.217-8.   I wonder how the period correlates with the TO period?

If the clause is in the parent IDIQ as suggested but not answered was as an option was it evaluated?  And if evaluated only on the basis of award of the parent IDIQ or the ensuing TOs?

As follow on to the above thought if not evaluated for TO's was the inclusion of the option in the TO evaluated.  Here I do not think it matters whether it a single award or multiple award IDIQ as by the very nature a IDIQ does not have to be used as the procurement vehicle.  As such it stands to reason that a TO against a IDIQ where an option is not evaluated pursuant to the FAR at TO award must be evaluated pursuant to the FAR when the option exercise is contemplated to adhere to either CICA or Fair Opportunity.

Some interesting reads that are short that got my brain churning.....and all said I guess it depends on more facts than the OP has provided.

 

 

 

 

https://www.gao.gov/assets/700/699831.pdf