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Quick question that I hope someone can answer. I have a Firm Fixed Contract that I want to do a no funding mod to add additional months (up to 6 months) to the POP so the vendor can finish the work. The delay was due to our department in a way, but either way, what clause would you use for the mod? 52.212-4 is in the contract and I was planning to use that one. It's a severable services contract. Thanks

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See FAR 52.212-4 paragraphs (c) and (f). Based on the common law of contracts, you breached the contract if you inexcusably delayed the contractor through act or omission. In order to settle you can offer to extend the period of performance due to the government-caused delay. If your settlement offer is accepted by the contractor, then write and sign an agreement to  that effect.

It seems odd that you could delay the contractor for six months on a severable services contract, but I won't ask any questions. I'll just chalk it up to another inexplicable Wifcon Forum story and not put myself through the hassle of seeking an explanation.

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7 hours ago, Vern Edwards said:

It seems odd that you could delay the contractor for six months on a severable services contract, but I won't ask any questions. I'll just chalk it up to another inexplicable Wifcon Forum story and not put myself through the hassle of seeking an explanation.

Does it seem odd because you’re thinking it should be a partial termination for convenience, constrained by fiscal years, or something else?

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5 hours ago, Jamaal Valentine said:

Does it seem odd because you’re thinking it should be a partial termination for convenience, constrained by fiscal years, or something else?

See, for example:

“DoD 7000.14-R Financial Management Regulation Volume 11A, Chapter 18 * January 2020

180506. Deobligation

Funding under non-Economy Act orders must be deobligated as outlined in this paragraph.

...B. Severable Services. An agreement for severable services that are continuing and recurring in nature and provide DoD a benefit each time the service is performed (e.g., maintenance and repair services, scientific, engineering, and technical services) is based on statutory authority other than the Economy Act. The provisions of 10 U.S.C. § 2410(a) permit the performance of severable services to begin in one fiscal year and end in the next provided the period of performance does not exceed one year. A non-DoD Federal agency may rely on this authority to fill a DoD order funded with fiscal year appropriations to issue a contract for severable services that crosses fiscal years as long as the contract period commences during the period of availability of the DoD customer appropriation. Obligating funds for placing a non-Economy act order with a non-DoD Federal agency, where the resultant fixed-length severable services contract awarded by the non-DoD Federal agency will exceed the one-year limit set forth in 10 U.S.C. § 2410(a), or which is not to commence until a subsequent fiscal year, may result in an Antideficiency violation under 31 U.S.C. § 1341.

1. The performance of severable services must begin during funds period of availability and may not exceed one year.

2. Annual appropriations provided to a performing agency that have expired must be deobligated unless the performance of the services requested began during the funds period of availability and the period of performance does not exceed one year.

3. The annual appropriation from the earlier fiscal year may be used to fund the entire cost of the one-year period of performance; however, annual appropriations may not be used to enter into a severable services agreement where the period of performance for services requested is entirely in the following fiscal year.

4. In no instance may the period of performance extend beyond September 30 of the subsequent year for services funded with annual appropriations.“

See, for DoD, 10 U.S.C. § 2410(a) at:

https://www.law.cornell.edu/uscode/text/10/2410a

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@Jamaal ValentineThe concept of severable services is associated with the funding of government contracts and the "bona fide needs" rule. It appears to be a creation of the GAO. The term does not appear in Black's Law Dictionary. It is not the same as the legal concept of a "divisible" or "severable" contract. The first description of it by the GAO that I have found was in 60 Comp. Gen. 219, Feb. 2, 1981.

Severable services are not a "job" in the ordinary sense of work that must be "completed" or "finished." Severable services have no "natural" beginning or end, so you can't really "delay" them in the ordinary sense. But you can turn them on or off, interrupt, or suspend them if you don't need them. Think of water running through a hose. Classic examples include janitorial and help desk services.

Contracts for severable services are typically awarded and funded annually (for 12 months) and divided into 12 monthly increments for payment purposes. If the contract about which Patrick inquired is a typical annually-funded contract for a severable service, a six-month suspension ("delay") would be tantamount to a partial termination for convenience due to lack of need. A six-month extension would seem to violate the bona fide need rule. Effectively, it would be a new acquisition.

But there could be a different analysis, and I suppose I could be wrong.

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50 minutes ago, Vern Edwards said:

@Jamaal ValentineThe concept of severable services is associated with the funding of government contracts and the "bona fide needs" rule. It appears to be a creation of the GAO. The term does not appear in Black's Law Dictionary. It is not the same as the legal concept of a "divisible" or "severable" contract. The first description of it by the GAO that I have found was in 60 Comp. Gen. 219, Feb. 2, 1981.

Severable services are not a "job" in the ordinary sense of work that must be "completed" or "finished." Severable services have no "natural" beginning or end, so you can't really "delay" them in the ordinary sense. But you can turn them on or off, interrupt, or suspend them if you don't need them. Think of water running through a hose. Classic examples include janitorial and help desk services.

Contracts for severable services are typically awarded and funded annually (for 12 months) and divided into 12 monthly increments for payment purposes. If the contract about which Patrick inquired is a typical annually-funded contract for a severable service, a six-month suspension ("delay") would be tantamount to a partial termination for convenience due to lack of need. A six-month extension would seem to violate the bona fide need rule. Effectively, it would be a new acquisition.

But there could be a different analysis, and I suppose I could be wrong.

Thanks, Vern 

Patrick3 didn’t elaborate on why the work was interrupted. But your explanation makes sense. 

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@Vern Edwards @joel hoffman

I apologize for the late response, but I totally agree about the severable contract piece. The issue happened during the election times and was the agencies fault. That's the only reason why the extension was even considered. I don't know further details, because it's not my contract, but I definitely appreciate the help!

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I do have another question that I'm actually dealing with and could really use your knowledge on @Vern Edwards @joel hoffman or anyone else. 

It's actually similar to the previous situation which is crazy, but a little different. This one is for IT software maintenance, which is just a cloud sorta database system, so this is definitely a severable contract. Under the current contract, it's a FFP base plus 4 options. Were in the base year now, which ends September 30th and the 1st option picks up on 10/1/2021. Due to the delay from our agency, we're requesting the vendor to perform a specific type of work that should've been done in the middle of the contract (Base Year is 10/1/2020-9/30/2021), but is now projected to begin in late September. The issue is, the vendor states that they're fine with doing a no-cost mod to extend the POP from the end of September to December, in order to accommodate the contract and follow through on that task. I know this is a severable contract and extending it beyond 12 months might be an issue, but I wanted to throw some ideas out there to see what you think. 

1. De-ob the exact amount of money from the CLIN that has this specific task and add another CLIN to the base year with those funds which will start from September 2021-December 2022. My thinking is, if I de-ob the exact amount of money in say beginning of June 2021, I still have 4 months to use that money. Technically, those exact funds will cross fiscal years, but still be within the 12 month rule for severable contracts. Never done this before, but that's just an idea. Another issue is extending the Option Years POP. Would that be an issue, because funds haven't been applied yet? 

2. Adding a new CLIN to Option Year 1 which starts on October 1st, but use 2022 funds to do so. 

3. Or use 52.212-4(c) and just do the POP extension. Lol. Also, extending the Option Year dates.

 

Any help you can provide would be great! Thanks

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9 hours ago, PATRICK3 said:

1. De-ob the exact amount of money from the CLIN that has this specific task and add another CLIN to the base year with those funds which will start from September 2021-December 2022. My thinking is, if I de-ob the exact amount of money in say beginning of June 2021, I still have 4 months to use that money.

Patrick, apparently you are the government side, correct?  And you’d use that money for another award or other purposes this FY, correct?

I don’t know if you can modify the award of the option to include the work deleted from this FY but it seems to make practical sense by justifying why it can’t be done this year by the same contractor.

Gosh, doesn’t anyone in this forum have agency attorneys or Finance Officers who can answer these type questions for them?

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@joel hoffman Thanks for the response. Yes, I work on the government side. The money that'll be de-obligated, will be used for this year fiscal year. Just starting in this fiscal year and going into 2022 fiscal year. My issue is, given that the funds that I'm planning to de-ob wouldn't have be used technically for 12 months, can't I de-ob the exact amount needed in say June 2021 and extend the POP an additional 3-4 months for the contractor to finish the work. What do you think about that? Also the issue is the POP for the Option Years, as that would cut into that. Thanks

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Patrick, To me, your 1. and 2. are too hard.  I would do 3.  Note: I write this based on the information available to me, which is nothing except what you shared, and assuming honest intent all the way around. 

But if I knew more, I might have a different opinion.  Here is a possibility:  Maybe the contractor sees there is money still left on the table at the end of the period of performance, and they want the money, so they agree to an allegedly "no-cost" extension so they can take all the money even though they didn't earn it during the POP -- is this what is happening?  Or, the Government likes the contractor and wants to give the contractor another chance to make its revenue projections?

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@ji20874 actually it's the governments fault. Our agency informed the contractor that a specific task under this FFP contract would get done earlier in the fiscal year, but due to an issue on our end, this work would need to be completed in September 2021, (which is not enough time to finish the work because the Option Year #1 would start in October) and finish in November or December. That's the issue. Even if I extend the POP for the base, do I make those same changes to all 4 Option Years too? 

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@FAR-flung 1102 Very Interesting! So in my specific case, you would just extend it under the clause I mentioned and change the Option Year dates as well? So as long as the contract price isn't increased, regardless of the POP extension, it would still be ok under severable work which is for 12 months? I don't work for DOD just in case that helps. Thanks

 

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@PATRICK3 So you have a one-year, annually-funded contract for severable services. The contractor was supposed start and complete a specific maintenance task within the period of performance, but was unable to do so through no fault of its own. You want the contractor to start anyway, but if it does it cannot complete the work within the period of performance.

Is that your scenario?

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You aren't giving enough information to get good advice.

Do you have a five-year contract where you pay for a level of service by month?  

Do you have a contract where you pay for accomplishment of specific tasks? 

Do you really have a Government delay of work situation?  

I would try to avoid extending the base year for three months and then shifting the POPs for all four option years accordingly.  If your services really are severable services, you should exercise the year 2 option on time and life goes on. 

If you need more money in year 2 because of this shifted work, I see two choices: 

  • (1) Declare a Government delay of work under the year 1 CLIN and do an adjustment such as contemplated by the clause at FAR 52.242-17, Government Delay of Work -- the unfinished work can be completed under the year 1 CLIN and paid for under the year 1 CLIN.  Exercise the year 2 CLIN as scheduled.  It is okay if the year 1 CLIN's adjustment time and payments overlap with the year 2 CLIN's period of performance. 
  • (2) Shift the work to year 2 and get new year 2 money to pay for the work.

You seem to be eager to extend the base period and reschedule all the options.  I caution against that approach, but I acknowledge that I know very little about your facts.

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@ji20874 It's a base plus 4 for services that's paid out monthly. Yes, the delay was an issue within our department and has nothing to do with the contractor at all. The issue with just exercising Option 2 and moving on is, there's funds allocated to the base that won't get used. If not, then we would need to de-ob money from that specific task all together. The other thing is, we really need that specific task to get completed, but the main issue is the work will not start until September and the work needs at least 3-4 months to be completed. The contractor is asking for an extension for the base POP date to accomplish this work. Again, this is the governments fault. 

 

In your scenario..

 

1. You would extend the POP from September to December 2021 and still continue with Option Period #1 starting on October 1st? I thought the issue with severable work couldn't extend longer than a year. That's always been my understanding. 

 

2. This isn't really an option, as the program office doesn't have any extra funds to do so. 

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11 minutes ago, PATRICK3 said:

Exactly! @Vern Edwards Thanks

Okay. Let's remind everyone of the scenario:

30 minutes ago, Vern Edwards said:

So you have a one-year, annually-funded contract for severable services. The contractor was supposed start and complete a specific maintenance task within the period of performance, but was unable to do so through no fault of its own. You want the contractor to start anyway, but if it does it cannot complete the work within the period of performance.

I suspect that what is really up is that you want to pay for the task with current year funds, rather than using next year's funds.

You have the right to remain silent in that regard.

If I were in that situation, my inclination would be to mod the contract to extend the period of performance just for the completion of that specific task. I would argue that performance in the next fiscal year is an unavoidable continuation of work that is a bona fide need of the current fiscal year, and that the work was delayed because of something the government did. I think that would be permissible under the bona fide needs rule.

However, there is some risk that by waiting until September to get the contractor started on the task, which is what you said was going to happen in your first post on this topic, "someone" might assert that the task was not really a bona fide need of the year in which the work started. I don't know if that is a realistic possibility, but it bears consideration. If that were to be the case, then you would have to fund the work done in the successive fiscal year with funds of that year.

EDIT: I didn't see your response to ji20874 before I posted the above. But I'll let it stand.

Edited by Vern Edwards
Clarification
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Lol @Vern Edwards. Don't need to be silent, because that's not what I'm trying to do. Don't have an issue either way. The scenario of using next years funds and adding it to Option #1 was discussed, but the program office doesn't have enough funding for that. My only thinking was de-ob that specific task which has a few months remaining (June 2021-end of September 2021), and basically making a new CLIN with a new POP under it which would technically start under this fiscal year and would only be funded for 3 additional months (September- December). That's a lot to do, but I was thinking out the box. Technically this could be done right, given that all the funds haven't been used for a full 12 months?

1. If I do the extension of POP under the base from September end date and change it to December, wouldn't that interfere with the Option #1 which starts in October? Also, would you just use 52.212-4(c) and change the POP? Thanks Vern!

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4 minutes ago, PATRICK3 said:

If I do the extension of POP under the base from September end date and change it to December, wouldn't that interfere with the Option #1 which starts in October? Also, would you just use 52.212-4(c) and change the POP? Thanks Vern!

I can't think how it would "interfere".

Sure, use 52.212-4(c). Why not?

But now that i think of it, it's more complicated than my last post makes it sound. You would need to agree on the price and billing schedule for the task and break that amount out of the price of the current contract. A new CLIN would be appropriate.

How do people get themselves into these situations?!

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@Vern Edwards I have absolutely no idea, but it just came across my desk. 

 

1. Yes, that's exactly what I was thinking too. So basically, take the funds needed for those specific task out the remaining funds (June- September) and make a new CLIN under the base and make that POP from September to December. Obviously agree to a breakdown of exact pricing first. Still pickup the Option #1 which starts in October. Move along with everything else. So basically, I can use this years funding as long as it hasn't been used for the full 12 months for a severable contract and extend that work? This is exactly what you're saying to do, right? @Vern Edwards Thanks again for the help! This is go to know if this ever happens again too. Hopefully not!

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