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#1 traipse

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Posted 01 September 2010 - 05:32 AM

Our agency was ordered by our superiors to suspend work on a construction contract awarded in FY 2008 pending a review by departmental officials in DC (work was subsequently suspended). But a decision on continuing the work hasn't been made yet. The agency?s choices seemed to be (1) allowing the suspension to continue on a day-by-day basis, with the contractor waiting to return to the worksite at any moment and continuing to accrue standby costs, or (2) terminating the contract for the Government's convenience and doing another acquisition later if the go-ahead ever did come. But neither option (1) nor (2) seemed to be the best choice given the circumstances. Citing FAR 1.102 discretion, the agency and the contractor agreed by contract modification to put the contract into long-term suspension, or abeyance, for the remainder of 2010, with a projected decision date of January 2011 for resumption of work or termination for convenience.

What are the bona fide needs, anti-deficiency, improper augmentation, and competition in contracting concerns?

#2 Vern Edwards

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Posted 01 September 2010 - 06:08 AM

I presume that you are going to suspend pursuant to the Suspension of Work clause.

I can't think of any bona fide needs, augmentation, or competition in contracting issues. However, I would have negotiated some kind of not-to-exceed agreement on the contractor's costs attributable to the suspension--demobilization, site protection, storage, remobilization, etc., in order to limit any adjustment claim. I would also have asked for a termination liability estimate, in case it were ultimately decided to terminate for convenience. I would then have gotten written confirmation of availability of funds to cover those amounts. If you didn't do those things, you might have Anti-deficiency Act issues.

#3 traipse

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Posted 01 September 2010 - 12:21 PM

Do you think this is still a bonda fide need of FY 2008?

#4 traipse

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Posted 01 September 2010 - 01:52 PM

I am amazed at the seeming lack of legal representation available to contracting personnel from the questions asked here and at DOD's "Ask A Professor".


I don't see how you can get that from someone asking a question. I don't think anyone comes here to get legal advice, they come here to discuss things. Most of what's posted here is useless, but every so often someone with some knowledge logs in and posts something that we hadn't thought of or has some value.

Trust me, we're not documenting our files with the mindless comments that get posted to wifcon.

#5 Vern Edwards

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Posted 01 September 2010 - 09:15 PM

Do you think this is still a bonda fide need of FY 2008?

If the project was a bona fide need of 2008 when the contract was awarded it will still be a bona fide need of 2008. The suspension of a contract already awarded pursuant to a term of that contract would not affect the project's status as a bona fide need.

#6 charles

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Posted 01 September 2010 - 11:15 PM

What type of money is being used for your construction project? A purpose violation may occur if the wrong pot of money is used. Costs for delays may exceed thresholds for certain types of money. If this construction project is a milcon then those delay costs may bust the project's appropriation. Delay cost issues may trigger an ADA. Why does your department officials want to suspend work? Are there more serious issues requiring suspension of work?

#7 Vern Edwards

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Posted 01 September 2010 - 11:22 PM

traipse:

The people here are going to drive you crazy.

Vern

#8 ji20874

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Posted 02 September 2010 - 02:00 PM

I did an abeyance agreement (or a long-term suspension agreement) that is VERY similar to the one described above ? very, very similar. In response to the original posting, Vern suggested the contracting officer should ( 1 ) negotiate a not-to-exceed agreement on the contractor?s costs attributable to the suspension, ( 2 ) negotiate a termination liability in case of a T4C, and ( 3 ) obtain written confirmation of the availability of funds to cover both. In my abeyance agreement, I did all three. He saw no bona fide need, augmentation, or competition issues. I didn?t, either.

Here?s the text of my abeyance agreement below. It might be helpful to some other contracting officer in Wifcon-land.

SUSPENSION AGREEMENT


( 1 ) Background.
. ( a ) The Forest Service awarded contract AG-0116-C-08-xxxx on September 18, 2008, to the Contractor for a price of $xxxxx for the base and option one. On December 9, 2008, the Forest Service awarded options two and three for a combined value of $xxxxx, bringing the total price of the contract to $xxxxx.
. ( b ) The Forest Service suspended all of the work of this contract on April 13, 2010, for the convenience of the Government, citing the contract clause at FAR 52.242-14. The period of time of the suspension was left undefined. Prior to that time, the Contractor had started work and one progress payment was made in the amount of $xxxxx.
. ( c ) The contract remains in a suspended status.
. ( d ) The Forest Service desires to keep open the possibility of having the Contractor complete the work under the contract. The Contractor desires to complete the work under the contract, but also wants the Forest Service to release its performance and payment bonds so that it can seek other work. Both the Forest Service and the Contractor want to agree now to the amount that might be payable to the Contractor because of the suspension, rather than waiting until after the suspension is ended. Accordingly, the parties agree to put the contract in abeyance for the remainder of this 2010 field season. The parties agree that a suspension period through January 15, 2011, is reasonable and appropriate.

( 2 ) Agreement of the Parties.
. ( a ) Rather than reserving the right to end the suspension at any time and without prior notice to the Contractor, the Forest Service agrees that it will release the Contractor's performance and payment bonds and that it will not require the Contractor to resume work before March 1, 2011. The Forest Service intends to decide by January 15, 2011, either to ( i ) end the suspension; or ( ii ) terminate the contract for the Government's convenience. This decision is solely the Forest Service's. Seeking to have its bonds for this suspended contract released so that it may seek other work and being hopeful that the Forest Service will end the suspension on this contract, the Contractor agrees that the price for the contract work will not change and that, if the Forest Service ends the suspension, the Contractor will provide replacement performance and payment bonds by February 15, 2011, and will diligently prosecute the work.
. ( b ) The parties agree that the amount due to the Contractor as a result of or relating to the Forest Service's suspension of work order and representing the complete equitable adjustment contemplated by the contract clause at FAR 52.242-14, Suspension of Work, is $xxxxx. The Contractor may invoice for and the Forest Service will pay the suspension equitable adjustment upon the acceptance of this Suspension Agreement by both parties.
. ( c ) If the Forest Service decides to end the suspension, the Forest Service and the Contractor agree as follows:
. . ( i ) The period of performance for the contract work will be from March 1, 2011, to November 30, 2011.
. . ( ii ) The price for the contract work is unchanged (except for the re-mobilization price, if any, described immediately below).
. . ( iii ) The re-mobilization price is $xxxxx.
. ( d ) If the Forest Service decides to terminate performance of work under this contract for its convenience, the Forest Service and the Contractor agree as follows:
. . ( i ) The amount to be claimed by the Contractor under the contract clause at FAR 52.249-2, Termination for Convenience of the Government (Fixed-Price) (with Alternate I), shall not exceed $xxxxx for contract work performed before the effective date of termination but not already paid to the Contractor and $xxxxx for costs of settlement of the terminated work.
. . ( ii ) Even if the contract work is terminated for the Government's convenience in whole, the parties may mutually agree to add additional work to the contract as may be necessary to stabilize or protect existing works or natural systems.
. ( e ) If by January 15, 2011, the Forest Service has not made a decision to end the suspension or to terminate performance of work for its convenience, the suspension will continue. Disagreement on the appropriateness or reasonableness of continuing the suspension period beyond January 15, 2011, shall be a dispute under the contract clause at FAR 52.233-1, Disputes.

(end of agreement)



#9 traipse

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Posted 02 September 2010 - 03:04 PM

Let me ask another way (if it doesn't change your answer, I understand...it didn't change mine).

If you can suspend a contract, for an extended period of time, pushing its work many years into the future, how could you have a bona fide need of the original year? If you legitimately don't need the work done (vis a vis, the acceptability of the extended suspension to the Government), does that not otherwise prove that it is not a legitimate need of the original fiscal year?

Granted it was a legitimate need at the time that award was made, and contracts are routinely suspended owing to circumstances that arise during execution. It's the length of suspension that seems to alter the legitimacy of the bona fide need of the original fiscal year.

And that, given that the bona fide need of the original fiscal year is in question, and that the answer may be that it is not a bona fide need of that year, are you not augmenting the appropriation for the fiscal year during which the work is performed improperly?

#10 joel hoffman

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Posted 03 September 2010 - 06:31 AM

Let me ask another way (if it doesn't change your answer, I understand...it didn't change mine).

If you can suspend a contract, for an extended period of time, pushing its work many years into the future, how could you have a bona fide need of the original year? If you legitimately don't need the work done (vis a vis, the acceptability of the extended suspension to the Government), does that not otherwise prove that it is not a legitimate need of the original fiscal year?

Granted it was a legitimate need at the time that award was made, and contracts are routinely suspended owing to circumstances that arise during execution. It's the length of suspension that seems to alter the legitimacy of the bona fide need of the original fiscal year.

And that, given that the bona fide need of the original fiscal year is in question, and that the answer may be that it is not a bona fide need of that year, are you not augmenting the appropriation for the fiscal year during which the work is performed improperly?


Shot answer: Additional funding for in-scope modifications must use original year appropriation until they are exhausted. Such funds remain available for modifications until exhausted or until they are past the timeframe that they are available for for payment. See the Redbook for details.

#11 Vern Edwards

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Posted 03 September 2010 - 06:49 AM

If you can suspend a contract, for an extended period of time, pushing its work many years into the future, how could you have a bona fide need of the original year? If you legitimately don't need the work done (vis a vis, the acceptability of the extended suspension to the Government), does that not otherwise prove that it is not a legitimate need of the original fiscal year?

Granted it was a legitimate need at the time that award was made, and contracts are routinely suspended owing to circumstances that arise during execution. It's the length of suspension that seems to alter the legitimacy of the bona fide need of the original fiscal year.

And that, given that the bona fide need of the original fiscal year is in question, and that the answer may be that it is not a bona fide need of that year, are you not augmenting the appropriation for the fiscal year during which the work is performed improperly?

I hate it when people post long quotes, but I think the easiest way to answer the quoted question is to quote from the GAO Redbook's discussion of the Bona Fide Needs rule, pages 5-34 to 5-36:

Most government contracts contain provisions which, under certain conditions, render the government liable to make equitable adjustments in the contract price. Such liability may arise due to changes in specifications, government-caused delay, changed conditions, increased overhead rates, etc. These conditions are set out in standard contract clauses such as the ?Changes? clause, ?Government Property? clause, or ?Negotiated Overhead Rates? clause.

Because there is no way to know whether the government will actually incur liability under these provisions, and if so, the amount of such liability, until the occurrence of the specified conditions (cf. 50 Comp. Gen. 589, 591 (1971)), the appropriations charged with the cost of the contract are not firmly obligated to cover future price increases, which arise due to the operation of these clauses. Nevertheless, as noted, government contracts frequently contemplate that performance will extend into subsequent fiscal years. When an upward price adjustment is necessitated in a subsequent year, the general approach is to ask whether the adjustment is attributable to an ?antecedent liability??that is, whether the government?s liability arises and is enforceable under a provision in the original contract. If the answer to this question is yes, then a within-scope price adjustment, which is requested and approved in a subsequent fiscal year, for example, under the ?Changes? clause, will?with one important qualification to be noted later?be charged against the appropriation current at the time the contract was originally executed. Cases supporting this proposition in various contexts are 59 Comp. Gen. 518 (1980); 23 Comp. Gen. 943 (1944); 21 Comp. Gen. 574 (1941); 18 Comp. Gen. 363 (1938); A-15225, Sept. 24, 1926; B-146285-O.M., Sept. 28, 1976.21 See also B-197344, Aug. 21, 1980, where supplemental work was done without issuance of a formal contract modification. This principle is occasionally referred to as the doctrine of ?relation back.? E.g., 37 Comp. Gen. 861, 863 (1958).

The reasoning is that a change order does not give rise to a new liability, but instead only renders fixed and certain the amount of the government?s preexisting liability to adjust the contract price. Since that liability arises at the time the original contract is executed, the subsequent price adjustment is viewed as reflecting a bona fide need of the same year in which funds were obligated for payment of the original contract price.

The "important qualification" has to do with cost-reimbursement contracts:

In cost reimbursement contracts, discretionary cost increases (i.e., increases that are not enforceable by the contractor), which exceed funding ceilings established by the contract, may be charged to funds currently available when the discretionary increase is granted by the contracting officer. 61 Comp. Gen. 609 (1982). It would be unreasonable, the decision pointed out, to require the contracting officer to reserve funds in anticipation of increases beyond the contract?s ceiling.

Of course, the answer assumes that the appropriation account has not closed. That generally happens five years after expiration of the obligation period.

#12 traipse

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Posted 03 September 2010 - 07:42 AM

Your references presume an active contract. We're talking about one in which no work is being performed. I'm not sure that relating the suspension to a change helps support the validity of using the original appropriation.

But Joel brings up an interesting issue. Is such an extension within scope or out-of-scope?

I know we're discussing this after the fact. ji20874, what did Forest Service counsel say? Did they raise any of these issues?

#13 ji20874

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Posted 03 September 2010 - 04:16 PM

Traipse,

Q.1. You ask if a contracting officer "can suspend a contract, for an extended period of time, pushing its work many years into the future" and still consider the work to be a bona fide need of the original year.

Q.2. You ask if a long-term suspension suggests the work "is not a legitimate need of the original fiscal year".

Q.3. You ask that if the work is not a bona fide need of the obligation year, is a long-term suspension an augmentation of the future year when the work will be performed.

Q.4. And you ask about legal counsel's opinion on these issues.

Here are my thoughts--

A.1. I won't address the question in general terms, but only in reference to my suspension agreement. The funds used on the contract are not one-year funds; rather, they are no-year "available until expended" funds. Therefore, the bona fide need rule as commonly framed does not apply.

A.2. In general terms: Not necessarily. In reference to my suspension agreement: The work was and still is a legitimate need of the year of contract obligation -- the suspension in 2010 into 2011 does not change the validity of the need in 2009.

A.3. The premise was disproved (see A.1. above), so the remainder of the question is moot. But for the sake of clarity, and in reference to my suspension agreement, there is no augmentation issue.

A.4. Because there were no difficult legal issues in my suspension agreement, such as bona fide need or augmentation issues, there was no need for legal counsel review.

I believe my suspension agreement is an excellent example of the flexibility allowed for by FAR 1.102-4 ( e ).

#14 traipse

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Posted 03 September 2010 - 04:51 PM

I believe my suspension agreement is an excellent example of the flexibility allowed for by FAR 1.102-4 ( e ).


No offense, but I think that posting it here for everyone to see made that fairly obvious.

You went off the page and did your own thing. I applaud that in a CO. Too many COs think that the FAR or the court or their in-house counsel can tell them how to do good contracting. But, again, no offense, it appears as though you did it without considering all of the variables. Considering them now doesn't really count, now does it? Even "no-year" funds have rules. Do you know what they are? I don't mean go look them up and post a quote from some rulebook somewhere now. I mean, did you know them when you signed your modification? I've been a CO for many, many years. I have a lot of experience and an unlimited warrant. I sign for many millions of dollars every month. Even I don't have it all memorized, and despite our profession's prediliction toward sanctimony and a little self-righteousness, I don't mind asking counsel for their opinion, even if I don't agree with it. CO's that break new ground? Good for them. CO's that do it without considering all the implications of their actions? They'll get theirs eventually. But those that make their decisions first and then think of reasons why it was OK. Well, you can form your own opinion about them.

I'll disagree with you. Since bringing this up I've thought of many things that should be considered before entering into an action like this. Forgive me for saying so, but it seems to me that in your case you had plenty of time to ask counsel at least for their opinion. Even posting a question to wifcon about it will at least give you some different perspectives. This one may come back to bite you, but it probably won't. One thing that is certain about the profession is that there are a lot of mistakes made out there and only a tiny fraction of a fraction ever become an issue.

#15 Jacques

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Posted 03 September 2010 - 05:02 PM

I love the level of abstraction in this thread. Certainly one could conceive of a situation where the agency once had a bona fide need but the need was either overcome by events or was filled another way, so there is no longer a continuing need. As you haven't shared any facts suggesting as much (unless I missed them), let's assume that from time of award until now, there has been a continuing and unfilled need.

#16 ji20874

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Posted 03 September 2010 - 05:47 PM

Traipse,

I do my job well. I try to consider everything that needs to be considered. I have responded to you and answered that I already considered and appropriately dealt with every issue you have raised.

Why are you scolding me? Shame on you. Let's use this forum to build up, rather than to tear down. If you see a flaw in my suspension agreement, please let me know. But conjecture and mudslinging is unprofessional.

Yes, I considered all the variables (at least, all the variables my experience and training could imagine).

Yes, I know the rules for no-year funds. Yes, I knew them when I signed the modification. No, you will not find any funding rules in any of your books to prove any error on my part.

While I might be willing to see honest intellectual inquiry in your earlier postings, your most recent posting is only professional slander. Please shut up.

#17 traipse

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Posted 03 September 2010 - 07:45 PM

Please shut up.


I'm sorry I offended you, ji20874. I don't mean to scold you, I'm just commenting on your action. We seem to approach our work differently. I know that if another CO like me showed up and said that they thought that I might have stepped in it, the last thing I would say to them would be to shut up. Your experience and training told you that you didn't need counsel's advice. In my opinion, that's a heck of a risk considering the responsibility you bear. If it goes badly for you, I doubt you'll be as convinced of your own infallibility. Your mod may very well be fine, but in my opinion your decision was not. You had 5 minutes for a chat with counsel and you chose to go it alone. You most certainly did not try to consider everything.

#18 ji20874

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Posted 07 September 2010 - 01:16 PM

Traipse,

You write, "Your mod may very well be fine, but in my opinion your decision was not."

Please tell me where my abeyance or long-term suspension agreement is flawed. I will be quiet and let you tell me where I erred in my decision. You have already raised matters such as bona fide need and augmentation, and I have already demonstrated where these are not relevant issues. But there must be something else, because you keep writing. Please, tell me where I erred -- I might learn something...

#19 Vern Edwards

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Posted 07 September 2010 - 01:20 PM

Your references presume an active contract. We're talking about one in which no work is being performed. I'm not sure that relating the suspension to a change helps support the validity of using the original appropriation.

But Joel brings up an interesting issue. Is such an extension within scope or out-of-scope?

I know we're discussing this after the fact. ji20874, what did Forest Service counsel say? Did they raise any of these issues?

A suspension does not affect the "active" status of the contract. It suspends work, not the contract itself, which remains in effect.

Don't try to find a problem when there is none. The suspension does not give rise to a bona fide need problem. If you think it does, show us the law. (Case law--the Bona Fide Needs rule is a case law doctrine.) Otherwise, all you're doing is casting doubts without any reason for them.

#20 Vern Edwards

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Posted 07 September 2010 - 01:23 PM

Traipse,

You write, "Your mod may very well be fine, but in my opinion your decision was not."

Please tell me where my abeyance or long-term suspension agreement is flawed. I will be quiet and let you tell me where I erred in my decision. You have already raised matters such as bona fide need and augmentation, and I have already demonstrated where these are not relevant issues. But there must be something else, because you keep writing. Please, tell me where I erred -- I might learn something...

Ji20874:

How long do you expect the suspension to last? A month? Two months? Six months? A year or more? What is it that the agency is pondering that requires a suspension?




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