Limited Sources Justification Required?

[faroutgeek]

Hello, 

I have a FFP task order awarded against GSA contract vehicle. When the contractor conducted the initial site survey they noticed some additional items not captured in the PWS. The customer agrees that the work needs to be performed and are willing to fund the additional work. Internal debate is: can the modification be issued as long as pricing is determined fair and reasonable or is any additional documentation such as Limited Sources Justification required since this is "additional / new work" not originally anticipated?

[joel hoffman]

What is the nature of the original work and what is the nature of the additional work? 

[faroutgeek]

On 1/12/2021 at 6:21 AM, joel hoffman said:

What is the nature of the original work and what is the nature of the additional work? 

Original work was to install IT equipment and furniture. As part of the site survey, it came to light that the area to be updated contained asbestos and some other minor issues that need to be corrected in order to install the furniture and equipment. Additionally now we have been informed that the building also potentially has mold

[ji20874]

If it really is an order against a GWAC, then the question is JEFO rather than LSJ.  Think LSJ if you are in FAR 8.4 and think JEFO if you are in 16.505.

A. Is this a service or is it construction?  This will make a difference in the authority you cite for the modification.  Or, if the modification will change the nature of the work from service to construction, then the additional work might be outside the scope of the parent GWAC and impossible to accomplish on the order (by definition, GWACs are for IT, not construction).

B. If the nature of the work is not changed, then you ask if the scope of the order before and after is unchanged, viz., update/modernize the interior of a building to include new IT equipment.  If the scope is still the same, then the additional work may likely be treated as a within-scope change with no JEFO.  However, if the scope of the order has changed (such as from updating/modernizing the interior of a building to include new IT equipment to making the facility functional), then the additional work may likely be seen as outside the scope of the order and a JEFO will be required (or a new competition conducted).

You haven't shared the dollar amounts of the original and additional work.  Dollar amounts are not dispositive in any way, but can be helpful for context.

When you respond with additional information, perhaps you can explain your opinion in the debate and the "why" for your opinion.  Doing so will be allow us to be more helpful to you, and will maximize your learning.

[joel hoffman]

I’m not sure of the current policy  of the US Army Corps of Engineers regarding whether adding abatement or removal of hazardous material, such as asbestos, discovered during demolition and construction, is outside the scope of the contract.

However, it has been the USACE legal policy that, if similar work was not in the original contract, the government cannot treat it as a change under the changes clause or in-scope for directed remediation or removal when discovered as a differing site condition.

Thus, the government cannot unilaterally direct a contractor to perform or be responsible for hazardous material removal/remediation when it is not of the type of work included in the original work.

Such work is not covered under standard contractor insurance policies, which would require a rider or separate insurance coverage due to possible liabilities or long term liabilities for asbestos exposure health issues, workmans compensation, etc. (“If you were ever exposed to asbestos as part of your work experience and have contracted lung cancer or other asbestos related illnesses, call the law firm of [So, So, and So and So]. You may be entitled to compensation for your illness.”).

Standard Performance and Payment Bonds don’t cover this risk either. The bonding company would have to consent to cover such work. 

The USACE policy was and probably still is that such work could only be added as an out-of-scope supplemental agreement, including compliance with all the special OSHA and COE safety and health regulations, special remediation requirements and Resource Conservation and Recovery Act (RECRA) requirements, additional insurance and bonds, etc.

[joel hoffman]

DoD policies and procedures provide that a Military Installation is required to perform or have performed investigations or studies to determine if there are any hazardous materials in buildings that will be altered, renovated or demolished.

The installation would normally be responsible to fund (separately, not from Military Construction Program (MCP) funding for the actual construction project) and remediate the hazardous materials prior to award of the MCP construction contract.

The work could be included in the original award of the overall construction contract if the Installation separately funded it but that would be very rare, due to the factors that I discussed above. Even if a construction contractor hires a qualified subcontractor, it would affect the prime’s insurance and bonding as well as possibly pose a long term liability risk.  

[joel hoffman]

There are possibly MCP projects that include remediation in the DD1391 scope of work and MCP funding but I’m not certain of that.

[joel hoffman]

Of course, the project in the OP may well be non-DoD. However, the same in-scope/out of scope concerns for insurance and bonding should be applicable industry wide. 

[faroutgeek]

On 1/12/2021 at 7:05 AM, ji20874 said:

If it really is an order against a GWAC, then the question is JEFO rather than LSJ.  Think LSJ if you are in FAR 8.4 and think JEFO if you are in 16.505.

A. Is this a service or is it construction?  This will make a difference in the authority you cite for the modification.  Or, if the modification will change the nature of the work from service to construction, then the additional work might be outside the scope of the parent GWAC and impossible to accomplish on the order (by definition, GWACs are for IT, not construction).

B. If the nature of the work is not changed, then you ask if the scope of the order before and after is unchanged, viz., update/modernize the interior of a building to include new IT equipment.  If the scope is still the same, then the additional work may likely be treated as a within-scope change with no JEFO.  However, if the scope of the order has changed (such as from updating/modernizing the interior of a building to include new IT equipment to making the facility functional), then the additional work may likely be seen as outside the scope of the order and a JEFO will be required (or a new competition conducted).

You haven't shared the dollar amounts of the original and additional work.  Dollar amounts are not dispositive in any way, but can be helpful for context.

When you respond with additional information, perhaps you can explain your opinion in the debate and the "why" for your opinion.  Doing so will be allow us to be more helpful to you, and will maximize your learning.

Hello, 

Thank you for your response and additional information. Maybe this is JEFO. To answer your questions: 

1) This is service 

2) As far as $ amounts go....$ amount of FFP services = Approx $14M and the "additional work" discovered as part of the survey = Approx $100k

I appreciate your time and guidance

[formerfed]

Just based on the limited information provided and the dollar values of the added work in light of the overall order value, I would just consider this as a within-scope change and just do it.

ji20874 said

Quote

If the nature of the work is not changed, then you ask if the scope of the order before and after is unchanged, viz., update/modernize the interior of a building to include new IT equipment.  If the scope is still the same, then the additional work may likely be treated as a within-scope change with no JEFO

You mentioned a PWS and the contractor noted some missing items from a site survey.  It sounds like the work probably would be part of the overall PWS and just overlooked.   
 

I would just write it up that way, make the change, and move on
 

 

[joel hoffman]

Is the work similar in nature to that required by the contract? Is that difficult to explain? Thanks 

[faroutgeek]

Hello All, 

While the furniture contractor was on site today they also discovered what looks like potential mold. So this adds a layer of complexity as well. The contractor is stating they will do some testing at no cost for the Government but the Government's immediate response was that they do not have any additional funding but need the project completed regardless

[joel hoffman]

18 hours ago, faroutgeek said:

Hello All, 

While the furniture contractor was on site today they also discovered what looks like potential mold. So this adds a layer of complexity as well. The contractor is stating they will do some testing at no cost for the Government but the Government's immediate response was that they do not have any additional funding but need the project completed regardless

 

On 1/12/2021 at 4:32 AM, faroutgeek said:

The customer agrees that the work needs to be performed and are willing to fund the additional work.

So, "the [service] contractor" (..."the furniture contractor"? ...furniture subcontractor to "the [service] contractor"?) has discovered asbestos and now mold, too. The [service] contractor said that they will do some testing at no cost to the government. The customer agrees (with somebody - who - ...the contractor? ...your office?) that the work is necessary and are willing to fund the extra work.  Now, the government says that there is no additional funding.  The government says that the project needs to be completed regardless [of whether or not there is additional funding to pay for the remediation].

Do you have a way to complete the project? Can the contractually required work be performed and the remediation be separately performed before or after the project is completed? Not sure if you are looking for any further advice here. 

Hazardous material abatement, such as asbestos removal, requires compliance with entirely different OSHA and RCRA regulations and introduces potential liabilities for health and safety than general construction or furniture and IT installation.  I still suspect it is out of scope.  Killing Mold  is typically a service but might also involve tear out and minor or major repair or reconstruction. 

Good luck.