Termination

[faroutgeek]

Type of contract: CPFF Task Order
In Option Year 2 of 5

$ Value: $400,000,000

Scope: Professional Services

History: Since the base year there have been continual relationship issues between the contractor and some government customers. The continual back and forth has caused some government mid level leadership to even falsely accuse the contractor of wrong doing, theft and repeated attempts to calm each side down. Now, some of the mid level government leadership is ramping up efforts to convince leadership to either terminate the contract or not extend Option Year 3 (about 2 months away) and re-compete the contract. Some government users feel like that is the only to "get rid of this contractor" because of the constant arguments. 

By the way: The contractor has had some minor growing pains like expected for a 400 Million contract with complicated environment of the government. However, there is no documented evidence of non performance what so ever. I have been tasked to prepare a detailed business decision document to show ways to terminate the contract so the government can get a "new shiny contract with a new contractor" (their words). 

Obviously I do not recommend a new contract. Are there any case laws or references I can provide to the customer that this is a very bad idea? This is based on just personality conflicts from both sides. 

 

 

[ji20874]

9 minutes ago, faroutgeek said:

Obviously I do not recommend a new contract.

Why?  If the relationship isn't working, why not do a re-competition?

The Government's ability to not exercise an option and to do a re-competition instead is almost unfettered.  The Government's ability to terminate a contract for its convenience is almost unfettered. 

Based on what you wrote, I recommend not exercising the option instead of doing a termination for convenience.  Maybe you can not exercise the next option but instead invoke the FAR 52.217-8 option for six months if needed to cover your re-competition time period.

[Don Mansfield]

I agree with ji's recommendation.

[faroutgeek]

13 minutes ago, ji20874 said:

Based on what you wrote, I recommend not exercising the option instead of doing a termination for convenience.  Maybe you can not exercise the next option but instead invoke the FAR 52.217-8 option for six months if needed to cover your re-competition time period.

Out of 10 clients within the same organization only 2 have personality conflicts. They cannot support it with non performance issues. The high level leadership for the client does not support it either. 

So, if I re-compete with absolutely no documented performance issues, what is preventing the incumbent from bidding on the re-compete? Why would the incumbent just walk away? Considering there are multiple customers and on-going efforts, this would cause major disruption of services.

What I am seeking is case law or any previous cases that show the Government does not exercise the option for no apparent reason and turns around and re-competes the exact same requirement 

[faroutgeek]

1 hour ago, Don Mansfield said:

I agree with ji's recommendation.

You would take that action as the Contracting Officer absent any cure notices and no failure in performance and turn around and re-compete the exact same requirement? 

Out of 10 clients within the same organization only 2 have personality conflicts. They cannot support it with non performance issues. The high level leadership for the client does not support it either. 

So, if I re-compete with absolutely no documented performance issues, what is preventing the incumbent from bidding on the re-compete? Why would the incumbent just walk away? Considering there are multiple customers and on-going efforts, this would cause major disruption of services.

What I am seeking is case law or any previous cases that show the Government does not exercise the option for no apparent reason and turns around and re-competes the exact same requirement 

[Retreadfed]

1 hour ago, faroutgeek said:

You would take that action as the Contracting Officer absent any cure notices and no failure in performance and turn around and re-compete the exact same requirement? 

Yes.  This happens sometimes in government contracting.  Failure to exercise an option is not a termination.  You do not need a cure notice for a termination for convenience and a  T4C can be made for almost any reason that does not amount to an effort to intentionally harm the contractor.

[ji20874]

If only two out of ten clients are unhappy at low levels, and their own leadership does not support a re-competition, then don't do it.

You won't find case law to prove that you cannot do a re-competition.  You can choose to not exercise an option and do a re-competition any day of the week.

[Don Mansfield]

2 hours ago, faroutgeek said:

You would take that action as the Contracting Officer absent any cure notices and no failure in performance and turn around and re-compete the exact same requirement?

Yes, if the two choices were T4C or decline the option.

 

2 hours ago, faroutgeek said:

So, if I re-compete with absolutely no documented performance issues, what is preventing the incumbent from bidding on the re-compete?

Nothing.

 

2 hours ago, faroutgeek said:

Why would the incumbent just walk away?

Probably wouldn't.

 

2 hours ago, faroutgeek said:

What I am seeking is case law or any previous cases that show the Government does not exercise the option for no apparent reason and turns around and re-competes the exact same requirement 

From Formation of Government Contracts:

Quote

GAO will no longer consider contractor contentions that their options should be exercised, C.G. Ashe Enters., 56 Comp. Gen. 387 (B-188043), 77-1 CPD ¶ 166; Lanson Indus., Inc., 60 Comp. Gen. 661 (B-202942), 81-2 CPD ¶ 176; Digital Sys. Group, Inc., Comp. Gen. Dec. B-252080.2, 93-1 CPD ¶ 228.

 

[awhinton]

faroutgeek:  Can you continue on with the existing contract/contractor to satisfy the 80 percent of your clients that have not expressed any issues, and award a new shiny contract (or contracts) to satisfy the 20 percent that do have issues?

[C Culham]

 

 

17 hours ago, faroutgeek said:

What I am seeking is case law or any previous cases that show the Government does not exercise the option for no apparent reason and turns around and re-competes the exact same requirement 

GAO - "Our Office will not consider an incumbent contractor's protest of an agency's refusal to exercise an option under an existing contract since this decision is a matter of contract administration outside the scope of our bid protest function. American Consulting Servs., Inc., B-276149.2, B-276537.2, July 31, 1997, 97-2 CPD para. 37 at 9. We will not consider the matter even where, as here, the protester alleges that the agency's decision to not exercise an option in its contract was made in bad faith. [5] Walmac, Inc., B-244741, Oct. 22, 1991, 91-2 CPD para. 358 at 2.  (Jones, Russotto & Walker, B-283288.2, December 17, 1999)"

CBCA -https://www.govinfo. gov/app/details/USCOURTS-ca13-14-01834  

[here_2_help]

I'm happy to see that my government contracting officers and program managers have so much free time on their hands that they can comfortably let go an existing contractor that's adequately performing the work, in order to replace that contractor with another contractor whose performance is currently unknown and not guaranteed to be adequate. I mean, what with market research and competition and evaluation and award, it probably isn't costing the taxpayers much money at all, even in opportunity costs. It's probably super easy to do; barely an inconvenience.

Having said all that, there is of course nothing prohibiting the course of action. Since there are no performance concerns, I would try to confirm that any "personality conflicts" are not rooted in characteristics that are protected under Federal law, before taking action.

[joel hoffman]

Not sure what the actual “problems” are but isn’t there a way for you to determine the actual problems and root causes and “speak” with higher level contractor management if their personnel assigned to work with the two dissatisfied clients are acting unreasonably (or not performing or whatever...). Similarly how about  “speaking” with higher level government management if their personnel are unreasonable, etc.?

Are you, as the KO, the government’s lead for the contract ? You should be able to “speak” with the upper level contractor management to try to resolve the divisive issues.

I realize that there seems to be a great reluctance for many government employees to orally communicate on the phone or, God forbid,  face to face with contractors these days.  It’s getting bad enough trying to orally communicate with fellow government or fellow non-government personnel. Even USAA Insurance is evolving to pushing electronic communications over telephonic means.

But if 80% of the clients are satisfied, maybe something can be done to resolve the problems with the 20%. 

[formerfed]

My response isn’t contractually related except I agree to not exercise the option.  If the incumbent responds on a reconpete, surely past performance will eliminate them from consideration.

Any good company performing professional services should make customer satisfaction a priority.  Lots of ways exist to gauge that but as soon as corporate management senses something going wrong, they should react.  If the government considers not exercising an option or termination, the contractor has screwed up bad.

The elements to measure a good company are communication, collaboration, quality, and customer satisfaction.  There are many good contractors out there for most services so why put up with satisfactory?  A good contractor should have many government people saying a company exceeds expectations by talking, listening, and doing things to excel. 

[joel hoffman]

1 hour ago, formerfed said:

My response isn’t contractually related except I agree to not exercise the option.  If the incumbent responds on a recon Pete, surely past performance will eliminate them from consideration.

Any good company performing professional services should make customer satisfaction a priority.  Lots of ways exist to gauge that but as soon as corporate management senses something going wrong, they should react.  If the government considers not exercising an option or termination, the contractor has screwed up bad.

The elements to measure a good company are communication, collaboration, quality, and customer satisfaction.  There are many good contractors out there for most services so why put up with satisfactory?  A good contractor should have many government people saying a company exceeds expectations by talking, listening, and doing things to excel. 

I agree completely. It isn’t clear here whether the government has been communicating with contractor management about the 20% dissatisfaction rate so that the parties can look to see if it can be resolved.

The Corps of Engineers corporately developed and promoted a process called “Partnering” with its contractors as well as with as many  project stakeholders as practicable, including the project team, clients, community , regulators, etc., depending upon the magnitude and complexity of the project. The partnering process could be very successful or not, depending upon the level of commitment and buy in by the various organizations and the organizational senior leadership.

The parties conduct  initial facilitated partnering sessions to introduce the people involved and their roles, define individual entities expectations, goals and objectives, then define and capture mutual goals and objectives. The intent is to build synergy through teamwork. Regularly scheduled facilitated follow up sessions are conducted at senior and working levels to determine what is working well, what could work better, challenges, problems, etc. and seek to resolve the challenges. That’s a very high level general outline of the USACE Partnering initiative.

Partnering is voluntary but USACE policy is that it be offered on every contract of appropriate size and duration 

 

 

 

[C Culham]

10 hours ago, formerfed said:

My response isn’t contractually related except I agree to not exercise the option.  If the incumbent responds on a recon Pete, surely past performance will eliminate them from consideration.

Any good company performing professional services should make customer satisfaction a priority.  Lots of ways exist to gauge that but as soon as corporate management senses something going wrong, they should react.  If the government considers not exercising an option or termination, the contractor has screwed up bad.

The elements to measure a good company are communication, collaboration, quality, and customer satisfaction.  There are many good contractors out there for most services so why put up with satisfactory?  A good contractor should have many government people saying a company exceeds expectations by talking, listening, and doing things to excel. 

Seems like we have strayed from the OP's intent of the post.  I provided info on how cases may not support his/her hope for an "out" on furthering a contract with the contractor via the option clause. 

Beyond my first post  I am like @here_2_help in my view.  Having been a CO for the bulk of my career and still wrestling with these types of issues today, the infusion of pure measurement of contract success through personality issues rather than the metrics of contract is disturbing.   Past performance "surely....will eliminate them".   What past performance?  The OP has already indicated that an adverse rating at any degree has not been done.

My advice to the OP.   Put all the project folks and the leadership in a room and let them duke it out to where they provide an "official" rating for the firm per SAM, CPARS or whatever the right venue now is.  In other words they write the business decision (if they can) as to why the contractor has not performed and should not be considered for an option.  In fact along with the evaluation have "them" write a response to FAR 17.207 as to why they do not want the option awarded.

As to my above advice a truthful evaluation seems absolutely demanded by the value of the contract, but is not necessary unless the option is planned to be exercised.  As noted by others an honest evaluation is possibly not needed to simply avoid the unilateral decision to not award the option but what about in the context of the covenant of good faith and fair dealing?  Noting this especially where T4C has been mentioned where in the government could follow this alternative to the option route  but I would find it very  interesting if one were to calculate the T4C potential costs to the government for a $400 million contract how sincere the project/leadership folks would be with regard to the personality conflicts to pay to get rid of the contractor.

Said another way - Why is a contracting person tasked with writing the business decision?  Put it on the project folks to write it.  And after delivery of the decision to the contracting folks, the contracting folks can implicate the risks of not continuing the use of the contractor (if any) back to the project folks and move along.

[formerfed]

Quote

Said another way - Why is a contracting person tasked with writing the business decision?  Put it on the project folks to write it.  And after delivery of the decision to the contracting folks, the contracting folks can implicate the risks of not continuing the use of the contractor (if any) back to the project folks and move along.

The majority of program people across the government don’t know how to write a solid business decision along these lines. Contracting people need to provide lots of guidance and assistance.  In many cases, contracting people are better equipped to do it with program office input.  So I can see why faroutgeek has that job.  

Another approach is arrange a meeting with the contractor and program people and get everything out on the table.  The contracting officer should take the lead on surfacing all the issues and facilitating a resolution.

I’ve seen many 1102’s advance in their careers by taking ownership of issues like preparing business cases and resolving contractor/government conflicts. This is opposed to “it’s not my job”
 

 

[joel hoffman]

10 hours ago, formerfed said:

Another approach is arrange a meeting with the contractor and program people and get everything out on the table.  The contracting officer should take the lead on surfacing all the issues and facilitating a resolution.

I’ve seen many 1102’s advance in their careers by taking ownership of issues like preparing business cases and resolving contractor/government conflicts. This is opposed to “it’s not my job”

 

On 1/25/2021 at 8:44 PM, formerfed said:

Any good company performing professional services should make customer satisfaction a priority.  Lots of ways exist to gauge that but as soon as corporate management senses something going wrong, they should react.  If the government considers not exercising an option or termination, the contractor has screwed up bad.

The elements to measure a good company are communication, collaboration, quality, and customer satisfaction.  There are many good contractors out there for most services so why put up with satisfactory?  A good contractor should have many government people saying a company exceeds expectations by talking, listening, and doing things to excel. 

 

On 1/25/2021 at 10:04 PM, joel hoffman said:

I agree completely. It isn’t clear here whether the government has been communicating with contractor management about the 20% dissatisfaction rate so that the parties can look to see if it can be resolved.

 

On 1/23/2021 at 4:07 PM, joel hoffman said:

But if 80% of the clients are satisfied, maybe something can be done to resolve the problems with the 20%. 

 

On 1/22/2021 at 1:55 PM, faroutgeek said:

I have been tasked to prepare a detailed business decision document to show ways to terminate the contract so the government can get a "new shiny contract with a new contractor" (their words). 

Obviously I do not recommend a new contract. Are there any case laws or references I can provide to the customer that this is a very bad idea? This is based on just personality conflicts from both sides. 

 

If it isnt your decision - i.e., you arent the KO, then I believe that your question was answered.

If it IS your decision, i.e., you ARE the KO, at least two of us (plus I suspect here_2_help might agree) would recommend trying to resolve the conflict before deciding not to continue the relationship.

[C Culham]

11 hours ago, formerfed said:

The majority of program people across the government don’t know how to write a solid business decision along these lines.

I find this statement incongruent with the thread to the point that the program people are the ones driving the whole matter to a "business decision" in the first place.   If in fact the statement is 100% correct, and I personally do not as I have worked with some great project manager and even higher ups that absolutely "get it" then why wouldn't every agency do exactly as a contracting officer wants them to do.   Likewise, while the CO is a part of the team that supports agency mission it would seem that project people hold the majority of the bag to track the course.   You are throwing a lot of responsibility on a CO who isn't even the one that had to support the need, request dollars for it, manage the dollars for it and in the end answers to management as to whether the agency has accomplished its mission as related to the instant procurement.

 

1 hour ago, joel hoffman said:

If it isnt your decision - i.e., you arent the KO, then I believe that your question was answered.

If it IS your decision, i.e., you ARE the KO, at least two of us (plus I suspect here_2_help might agree) would recommend trying to resolve the conflict before deciding not to continue the relationship.

Not in disagreement but "your" needs to get advice, counsel and agreement at all levels that are pressuring for the cancellation to attempt it.  Maybe that could be the intent of a developed "business decision" that promotes the discussion first before going to the next step, whatever it may be.   I still maintain the final outcome is not the CO's call.  It is project's call as the CO is just one person on the "team".  For instance advocating for the contractor to be a part of the team for a decision on an existing contract is good but in the context of such a decision ( $400 million seems like an important contract) where is "legal", where is "finance and budget",   Simply stated seems like the concept of the guiding principles of FAR part 1 on acquisition team has been lost on this one.

[here_2_help]

1 hour ago, joel hoffman said:

 

 

 

 

If it isnt your decision - i.e., you arent the KO, then I believe that your question was answered.

If it IS your decision, i.e., you ARE the KO, at least two of us (plus I suspect here_2_help might agree) would recommend trying to resolve the conflict before deciding not to continue the relationship.

Yes, the issue isn't performance; it's the personality conflict ("animus") that two customers have with the contractor. And not the contractor: the contractor's people. There is some bad chemistry between a couple of people and it's getting in the way of efficient post-award administration and oversight. It needs to stop. In my view, finding another contractor is a really, really poor way of solving the personality conflict. At the very minimum, I find it to be wasteful of peoples' time and taxpayer dollars.

There was a time when a contracting officer was an impartial, quasi-judicial, arbiter between the government customer and the contractor. This seems like a great opportunity to reclaim that position (if supported by management) and solve this. The KO has an opportunity to be the adult in the room.

[formerfed]

Quote

 

There was a time when a contracting officer was an impartial, quasi-judicial, arbiter between the government customer and the contractor. This seems like a great opportunity to reclaim that position (if supported by management) and solve this. The KO has an opportunity to be the adult in the room.

True.  But that time maybe passed.  To resolve these kind of issues, the needed KO is experienced, confident, can effectively communicate, can facilitate, and fully understands all the technical issues.  In my exposure in acquisition consulting across the government and all agencies, maybe one quarter of KOs are capable of this.  When things get this bad, it’s usually senior contract management or HCA involvement several levels above the KO that takes place. 

Another issue overlooked in discussions is why hasn’t the contractor management intervened?  Why would an agency want a contractor with management that doesn’t know about problems like this and intervene a long time earlier?  The top performing companies constantly check with agency personnel to see how they are doing and what they need to do to improve.  A contractor isn’t doing a good job if contractor employees are accused of “wrong doing, theft” and the company is unaware. 

[joel hoffman]

9 hours ago, formerfed said:

True.  But that time maybe passed.  To resolve these kind of issues, the needed KO is experienced, confident, can effectively communicate, can facilitate, and fully understands all the technical issues.  In my exposure in acquisition consulting across the government and all agencies, maybe one quarter of KOs are capable of this.  When things get this bad, it’s usually senior contract management or HCA involvement several levels above the KO that takes place. 

That would be a sad state of affairs. My perspective is different, although it may not be the norm.

When I started with the USACE in 1980, the District Engineer (District Commander,  O-6) was the PCO/KO for the major program ($2 Billion Civil Works) in my first District and their Civil Works and Military Construction Deputies (all military Engineer officers, O-5’s) were the KO’s for the Military and other civil works construction programs. Same was true in my overseas assignment in Saudi Arabia (but civilian PCO in Germany as the Commander was a General Officer). Same was true for much of USACE as far as I know.

After the Defense Workforce Improvement Act of November 1990, the USACE transitioned to civilian, 1102 contracting officers. The Chiefs of Contracting and their Deputies were the KO’s with Area and Resident Engineers working for them as ACO’s.  It took a while for the 1102’s to get up to speed with their new Contract Administration roles but by and large they were in charge of the contract after award and the ones I directly worked with handled those duties well.

We, as the ACO’s and contract administrators worked well with both the Military and the Civilian KO’s. I never saw issues kicked up to higher levels outside my Districts or my two assignments in an Operating Division and a Division equivalent organization, both with primary Contracting roles. If there were personality or performance issues the PCO/KO’s were directly involved and took the lead when necessary.

For at least the past 12-15 years the District and Division level Chiefs of Contracting report directly to the PARCs and Directorate of Contracting at HQUSACE, not to the District or Division Engineers or to the Directors of Programs.

I experienced the same high level of competence with the Army Contracting Agency (it’s been renamed numerous times) at Rock Island IL that were the PCO’s for the Chemical Weapons Demilitarization Program, a $26 billion major Defense Program that my USACE Division equivalent level Chem Demil Directorate and Division equivalent level Engineering and Support Center worked with. 

[joel hoffman]

It would be ridiculous not to meet with the parties to attempt to resolve personality problems concerning 20% share of a $400 million contract.  The PCO should have the overall authority to administer the contract. That’s my perspective.