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20 hours ago, Fara Fasat said:

The larger point is that an established firm accepted the court's poor wording and warned clients that services might not be commercial items.

I wonder if this established firm you speak of is aware of the change in definitions - "commercial item" was bifurcated to "commercial products" and "commercial services" in Dec 2021

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Look, it is not true that you cannot have a commercial items contract for services. It was never true that you cannot have a commercial items contract for services. The courts screwed up their decisions because they were ignorant of the statute and of the regulations and because the lawyers who argued the case were not experts and argued poorly. Either that, or they, the judges and lawyers, couldn't write worth a darn—as is true of so many who post here—and thus miscommunicated their meaning.

This will get sorted out. I haven't seen the "alert" from the law firm and I don't know what law firm issued it, but if they think there is a chance that a Federal Circuit holding to the effect that there cannot be a commercial item contract for services will stand further legal tests, they are wrong.

Then again, it's possible that Fara has misunderstood the alert.

As for the new definitions of commercial product and commercial service, they have nothing to do with it, other than to say that if they had been in place before the JKB case went to court there may have been less chance of confusion.

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It was definitely a screwed up contract.

The services intended and provided don’t meet the current FAR Part 2 definition of “commercial services”. The government didn’t contest that.

The cases mention that the government’s intent was to contract with a firm to provide “up to 14 classes per year” and the vehicle was an indefinite delivery/indefinite quantity (ID/IQ) contract with task orders (DFARs clause). Maybe someone here knows whether or not the intended purpose was stated in either the base contract or in the task orders.

The COFC case that I could access referred to an earlier COFC ruling which discussed the details of the contract and task order. But the COFC and the Appeals Circuit Cases didn’t discuss why the task orders or task order language are ambiguous. 

I’m  obviously behind the times. The unit of measure here for the yearly task order was “lot”. I generally know what “lot” refers to in supplies. It refers to the amount supplies in a shipment or acceptance. I know that “lump sum” (LS) units of measure were used to price undivided items, in contrast to unit priced units of measure,  e.g., “each” (ea.). So, has “lot” replaced “lump sum” now  for services?

I think that the contract or task order stated that individual classes would be “ordered”. I don’t know if those were subsequent actions under the “task order”. 

 

 

 

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Here is what happened:

  1. The government awarded an IDIQ contract for "commercial item" instructor services to teach up to a certain number of courses that it also taught using in-house instructors. The government's assertion that the services were commercial was almost certainly valid, but subject to argument. The contract included the standard FAR 52.212-4 and -5 contract clauses. No competitor objected to the commercial item determination.
  2. Upon contract award the government issued a fully funded task order for the maximum number of courses, to be scheduled in the future as needed. Why the government did that has not been explained. No one has referred to any contract clause that provided for such a procedure.
  3. But the government did not schedule all of the ordered classes, teaching some using in-house instructors instead. Why the government did that has not been explained. No one has referred to any contract clause that provided for such a procedure.
  4. At the end of the contract the government paid for the classes the contractor actually taught and deobligated the funds for the ordered-but-never-scheduled classes. Why the government did that has not been explained. No one has referred to any contract clause that provided for such a procedure.
  5. The contractor objected to the deobligation and filed a claim demanding payment for all of the classes that had been ordered, even though not scheduled. The government denied the claim.
  6. Upon appeal to the COFC, the contractor argued that the government should pay for the services it has ordered, even though it had not used them. The government argued that it had "constructively" terminated the contract for convenience and did not have to pay for the classes that had been ordered but not scheduled, even thought it had ordered them.
  7. A finding that a contract has been constructively terminated must be grounded in a contract T for C clause. The COFC decided that since the contract had included the commercial item T for C clause the government had, indeed, constructively terminated the contract for convenience and did not have to pay for the classes it did not schedule.
  8. On appeal to the Federal Circuit, the contractor argued that the service was not commercial and that the commercial T for C provision had been improperly included in the contract and did not apply, so there could not be a constructive termination for convenience.
  9. Instead of defending the government's assertion of commerciality, which was almost certainly valid, the DoJ stupidly argued that since the commercial T for C provision was in the contract and the contractor had assented to it, the clause did apply.
  10. The Federal Circuit decided that the commercial T for C clause did not apply to contracts for services, because services are not "items" and thus could not be "commercial items." They decided that constructive termination did not occur, and remanded the case to the COFC.

Government incompetence is the plague of our time. Think about what that means for all of us as we expect government to procure more and more things needed to solve more and more problems and the rules get more and more complicated.

 

 

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On 2/25/2022 at 6:19 AM, joel hoffman said:

The services intended and provided don’t meet the current FAR Part 2 definition of “commercial services”. The government didn’t contest that.

Nonsense. The fact that the DoJ did not contest the contractor's assertion does not mean that it assented to that assertion. It didn't think it needed to contest it, because, as it pointed out in court, the contractor had assented to commercial item terms.

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36 minutes ago, Vern Edwards said:
  1. The government awarded an IDIQ contract for "commercial item" instructor services to teach up to a certain number of courses that it also taught using in-house instructors. The government's assertion that the services were commercial was almost certainly valid, but subject to argument. The contract included the standard FAR 52.212-4 and -5 contract clauses. No competitor had objected to the commercial item determination.
  2. Upon contract award the government issued a fully funded task order for the maximum number of courses, to be scheduled in the future as needed. Why the government did that has not been explained. No one has referred to any contract clause that provided for such a procedure.
  3. But the government did not schedule all of the ordered classes, teaching some using in-house instructors instead. Why the government did that has not been explained. No one has referred to any contract clause that provided for such a procedure.
  4. At the end of the contract the government paid for the classes the contractor actually taught and deobligated the funds for the ordered-but-never-scheduled classes. Why the government did that has not been explained. No one has referred to any contract clause that provided for such a procedure.
  5. The contractor objected to the deobligation and filed a claim demanding payment for all of the classes that had been ordered, even though not scheduled. The government denied the claim.
  6. Upon appeal to the COFC, the contractor argued that the government should pay for the services it has ordered, even though it had not used them. The government argued that it had "constructively" terminated the contract for convenience and did not have to pay for the classes that had been ordered but not scheduled.
  7. In order for a contract to be constructively terminated it must include a T for C clause.
  8. The COFC decided that since the contract had included the commercial item T for C clause the government had, indeed, constructively terminated the contract for convenience and did not have to pay for the classed it did not schedule.
  9. On appeal to the Federal Circuit, the contractor argued that the service was not commercial and that the T for C provision had been improperly included in the contract and did not apply, so there could not be a constructive termination for convenience.
  10. Instead of defending the government's assertion of commerciality, which was almost certainly valid, the DoJ stupidly argued that since the commercial T for C provision was in the contract and the contractor had assented to it, the clause did apply.
  11. The Federal Circuit decided that the commercial T for C clause did not apply to contracts for services, because services are not "items" and thus could not be "commercial items." They decided that constructive termination did not occur, and remanded the case to the COFC.

Incompetence is the plague of our time.

 

 

I agree about the apparent general incompetence here. 

I also wonder why the government waited until after the third year to de-obligate the remaining balances of the task order line item funding for the first two years?

And why didnt the contractor invoice for or demand the balances on the two earlier years if they believed that those lot prices were for what it was due until after the government de-obligated all three year excess funding? 

 

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I don't know the answers to your questions.

I think neither the CO nor the contractor knew what they were doing. Since the government's policymakers say they want to bring new companies into the fold, they  should expect that those companies won't know. That's why they should make sure that COs know.

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