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I have an unusual question that I hope one of you may be able to answer.  My company has several contracts with the Naval System Warfare  Center (NSWC) and the contracts have a clause restricting telework to 10% of the total contract hours.  I have never seen this clause in any other contract I had with the DoD and assume it is a local command requirement.  I can find no referent to telework in the FAR or DFAR, so that seems to strengthen the idea that is a local command requirement. Failure to meet this requirement would mean we cannot bill for the telework hours in excess of the 10% limit and the hours cannot be used to account for the required LOE hours.  So, the penalty would be not being able to bill for hours worked and a loss of some profit. 

The restrictions were waived during the COVID-19 crisis, but now the Government is going back to the original 10% limit effective March 31, 2022.  We have asked for a contract modification to allow for more telework, as we are getting push back from some of our employees about coming back to the office full time.  We are waiting for responses from our Contracting Officers.  We have also heard that other companies are having this same effect.

My question is what happens if we do not do not meet the current, or the new, telework requirements.  Is there a penalty besides not being able to bill for the hours and having the fee reduced since we will have delivered less LOE hours than in the contract?    I understand that if we do not meet the telework requirements we would technically be in default of the contract, but has anyone any experience with telework requirements and how the Government has handled it in the past?  The interesting part is that we have proved we can do 100% telework and still meet our contractual obligations and have actually been praised by the Government for our efforts in fulfilling our contractual duties.  But now, telework seems to have gone back to being a bad thing and inefficient. We are exploring all our options at this time, but I would be grateful to the brain trust here if you could provide some of your experience and wisdom on this subject.

I thank you in advance for your help.

,

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I'm trying to understand...

The Facts:  Your contract limits telework to 10%.  The agency waived the requirement during the pandemic, but now is returning to normal operations.  You asked the contracting officer to raise the 10% to something higher, and have not heard back yet.

Your Fear:  Your company may be unable to meet the contract requirements because your employees are resisting your instructions to return to the office. 

  • Have you considered replacing those employees with employees who will follow instructions?

Default:  You speak of being technically in default, but I don't know what "technically" means -- does technically mean this is not a substantive matter, and that the agency cannot treat your non-compliance as a default with the default remedies provided in the contract?

37 minutes ago, Loul said:

The interesting part is that we have proved we can do 100% telework and still meet our contractual obligations and have actually been praised by the Government for our efforts in fulfilling our contractual duties.

Isn't this is wholly irrelevant?  You have been meeting relaxed contractual obligations, not real contractual obligations.

My advice is to be careful not to give the agency a cause to declare anticipatory repudiation on your part -- if it does, this may serve as a basis for a default termination sooner rather than later.  But you have to be honest.  It sounds like you are siding with your employees and against the agency.  If the contracting officer asks your company to declare whether or not you intend to meet the contract terms of maximum 10% telework, how will you answer?

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ji208974 thank you for your response.  I agree that my contract limits us to 10% telework and when the new agency directive to return to contractual telework requirements and cancel the previous waiver, we will obey.  We have considered hiring new employees and are looking into that now. But hiring any new employee means you will lose the history and knowledge of your current employees and introduce a learning curve for new employees.  We want to avoid that if possible.

Technical default is, I agree, not a real term.  If we break the 10% we will be in default, but the fact that we may be still delivering our contractual obligations is the iffy part.  If we deliver and don't meet the telework requirements will the Contraction Officer issue us a notice of default.  We do not want that to happen. But I know there are failures to meet contractual requirements that are overlooked and others that are rigidly adhered to.  I am trying to gather information from others who may have more experience or knowledge in this area than I do so we can understand where we stand and how to negotiate with the Contracting Officer should it come to that.

You say we accepted a contract with the restriction it the contract.  I agree with you 100%.  Unfortunately, the Government mandated COVD-19 lock-down gave employees a new perspective on work/life tradeoffs.  We have had several employees already submit notices of resignation citing back to work rules, and we are trying to not lose our experienced workforce.  I am not sure what area you work in, but it is the experience of your employees that give you a leg up on winning proposals and re-competes.  We want to keep our employees.  When you say 100% telework worked during the lock-down is irrelevant, I do not agree.  I believe (and I could be wrong) in that telework requirements were put into place because people believed that networking employees would not putting in a full day's worth or work.  The Navy DFAR Clause implementing telework requirements was put into place in 2010 and never changed.  These part two years has shown that people can telework and still be productive.  The "normal" has changed and companies must change with the times, and so should the Government.

Bottom line is that we will abide by the terms of our contract.  If the Government will not give us relief on the 10%^ telework requirement, we will abide by it and hire accordingly.  We are not siding with our employees over our customer as you suggest.  We have a contractual requirement and we will abide by it.  However, with any commercial company , when numerous people quit because of a specific reason or policy, any prudent company will try to rectify that situation. That is what we are looking into.  We are working with our KOs and CORs to increase the telework percentage and all indicators are that they will ease them. So, we are not abrogating our responsibilities and we never intended to.  I am trying to find out if anyone has had any such experience in the past so we can learn from it and perhaps relay that information to our customer to help them make a decision.

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4 hours ago, Loul said:

I can find no referent to telework in the FAR or DFAR...

Just saying, in Jan 2022, 7.108 was added to FAR regarding telecommuting. Maybe you can make something of it in discussions even though it post dates your contract.

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6 hours ago, Loul said:

The restrictions were waived during the COVID-19 crisis, but now the Government is going back to the original 10% limit effective March 31, 2022. 

I would ask for a meeting, right away, disclose my problems, and seek to negotiate a better way for both parties to manage the return to prior conditions rather than to arbitrarily declare March 31 as THE date. When did they notify you?

I would definitely seek the advice of counsel, because I doubt that the Armed Services Board of Contract Appeals or the Court of Federal Claims would let them get away with it, unless they notified you of the March 31 return some time ago.

Covid was a historically earthshaking event. It was beyond anyone's fault or negligence, except perhaps the president's and the Center for Disease Control's. After two years of massive disruption, it may well be arbitrary and capricious of the government to unilaterally set a date for the return to normalcy. You are not without recourse.

Having said that, you will eventually have to solve the problem within a reasonable time and to your customer's satisfaction.

Call a lawyer.

And get off Wifcon. Your company needs professional advice. March 31 is right around the corner.

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Neil Roberts, thank you for the response.  I appreciate it.

Don.  I don't know f it was published in the Federal Register.  It was implemented 21 years ago,

Vern, for your information, we did receive notice from the Government about the March 31 deadline.  We have discussed the situation with our contracting officers and we are waiting for their responses.  However, as a result of the notice, we have begun top receive resignations from some of our employees. The president of my comp-any asked that I look into the issue and see what penalties may be assessed if we did not meet the requirements.  It is always better to be armed with all the facts before making a decision.  As to your last comment, I always thought I was a professional, but in my mind, no one knows everything, perhaps except you.  A true professional knows his limitations and seeks advice and information from others in the field.  I thought that is what I was doing.  But perhaps I should take your advice and get off WIFCON so I don't annoy know-it-ails.

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1 hour ago, Loul said:

But perhaps I should take your advice and get off WIFCON so I don't annoy know-it-ails.

As to your last comment, read the motto at the bottom of this post. I believe that.

What I wrote was what I thought was good advice. I still think it's good advice. I was on your side, and you didn't annoy me. I just felt it was urgent, given the deadline, that you seek legal advice instead of chat room advice.

But touché. 

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@loul, wonder whether or how the contract defines "telework" or the location where work is required to be performed.

I say this because The Office of Personnel Management FAQ indicates that "The official definition of "telework" can be found in the Telework Enhancement Act of 2010: "[t]he term 'telework' or 'teleworking' refers to a work flexibility arrangement under which an employee performs the duties and responsibilities of such employee's position, and other authorized activities, from an approved worksite other than the location from which the employee would otherwise work."  https://www.opm.gov/FAQs/QA.aspx?fid=b48bf83b-440c-4f1e-a88c-3cdc9d802ac8&pid=75346675-3b92-4aec-831d-58cf5b0e86d2

Seems to me, depending on the contract language, that you may be able to internally indicate that certain employees should normally perform all their work at home, and therefore take the position that such work is not telework.

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Neil -  Thanks for your comment.  This is one of the issues we are dealing with.  Our contract defines an alternate worksite as "A telecommuting center is a
geographically convenient office setting as an alternative to an employee’s main office."  We have field personnel working at remote locations from their homes, and we do not could those hours in the "telework" category since this is their permanent location and there is no other location.  Quite frankly, I would prefer the wording from the Telework Enhancement Act but our contract seem to define it a bit differently.  We are trying to get some agreement from the Government on the definition, but they have turned to the legal staff and I guess they are waiting on a ruling from that part of the staff.  But your information is helpful and I thank you.

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Vern -

Thank you for your reply, I guess I misunderstood your comment.  We have contacted legal representation, but I was given the task by my CEO to see if anyone has ever had a fine imposed by not meeting the telework requirements.  We are trying to cover all our bases as we have received two different interpretations, one from a legal point of view and one from an accounting point of view.  Both put up great arguments for their points of view and at this time, the Contracting Officers are putting off a direct meeting until they get a response from their legal counsels. We are just trying to gather information to be prepared.

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On 3/18/2022 at 11:19 AM, Loul said:

The restrictions were waived during the COVID-19 crisis, but now the Government is going back to the original 10% limit effective March 31, 2022. 

So in following the thread this first jumped out at me.   Never saw it really addressed so I wondered.  No need to respond if my questions are already addressed and the discussion is getting to the meat of your concern.  I am wondering as I saw "modification" mentioned only once in the discussion so far.

Were the restrictions waived by a modification to the contract?    If not was there contract language that allowed the government to waive and then reinstate unilaterally?    It just seems to me if there was not contract language for unilateral waiver and reinstatement and the waiver/reinstatement was by modification, presumably a bilateral modification(s), unless the waiver/reinstatement was ordered via a change clause in the contract, then it would seem the door is open for your proposed modification already.   This would seem true as well if the waiver/reinstatement was done under a changes clause.

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1 hour ago, Loul said:

We have contacted legal representation, but I was given the task by my CEO to see if anyone has ever had a fine imposed by not meeting the telework requirements.  We are trying to cover all our bases as we have received two different interpretations, one from a legal point of view and one from an accounting point of view.  Both put up great arguments for their points of view and at this time, the Contracting Officers are putting off a direct meeting until they get a response from their legal counsels. We are just trying to gather information to be prepared.

The government could not impose a "fine." But if you could not perform within the contract telework restrictions they might (1) withhold payment on grounds of nonperformance, (2) pay something, but with a deduction for nonperformance, (3) seek a no-cost termination of the contract for convenience, or in the extreme, (4) terminate your contract for default (breach).

Much depends on the type of service(s) you provide, the type(s) of employees involved, the types of contracts involved (firm-fixed-price, cost-reimbursement, time-and-materials, etc.), and the terms pertaining to the telework restriction.

An attorney will want to know the facts about the contracts, the history and terms of the telework restriction and waiver, their importance to performance, how long the waiver has been in place, the content and date of the notification that the waiver is being withdrawn, and the nature and circumstances of your employee losses and what it will take to replace them. The attorney will be concerned to assess the reasonableness of the government's withdrawal of the waiver in light of all the facts.

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C. Culham - There was no modification issued.  Instead the original waiver of the telework requirements was done by the issuance of a letter by the Chief of the Contracting Office for the facility we are supporting.  Likewise, the notice of us returning to the pre-pandemic telework restrictions was  done with a similar letter notifying us of the return to work policy.  No mods and I don't think I can invoke a changes clause because during the pandemic there were so many restrictions placed on workers and workplaces by the federal government as well as state and local governments that trying to make any claim for additional costs or a change in contract terms is not something that i believe would be accepted and quite frankly, we do not want to pursue such a course.

 

As to Vern, a agree that the Government cannot impose a fine, but not paying us for hours worked would be a de facto fine.  We are not looking for ways work with the Government to carve out a new normal that meets conditions as they are now.  Unfortunately, the pandemic has established a new  sense among employees of more flexible work schedules and locations that we never even considered before.  As was pointed out by Neil Roberts above, FAR 7.108 was issued saying that the Government should generally not discourage a contractor from allowing its employees to telecommute in the performance of Government contracts.  So the Government is, in my humble opinion, admitting that telework is becoming the new way of working.  I realize that ion some case, especially when you are on site supporting the Government, that a telework option is not viable.  We are trying to get a determination from the Government how to apply this philosophy to existing contracts.

As to Retreadfed's question as to if the Contracting Officer will be working remotely, i have no idea.  And if they do, it will be a situation of do as I say (and you are contractually obligated to do) and not as i do.  Yes, that would be ironic.

I do want to thank all who have provided some insight, this includes you too Vern.  It has been helpful to be in providing a response to by CEO.

Now we wait and try to further engage our Contracting Officers and try to retain our employees!

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26 minutes ago, Loul said:

There was no modification issued.

I will echo that the issue is one best addressed with the assist of legal counsel.   I believe "no mod"  is a very important fact as you discuss with legal counsel.   Acts of the sovereign, FAR Part 50, case law on constructive change, the EO, COVID legislation etc. etc. all rattle around in my head as to having an impact on you specific situation.  

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Loul,

I don't think you will serve yourself well if your focus is on how the Government should be nicer and should let people telework.  

You came here looking for historical examples, and you haven't gotten any.  You might be at the front of the line, and you might be making the historical examples that others will rely on in the future.

You want a contract change -- have you made a value proposition to your agency?  In exchange for the agency's relaxing of the telework requirement, are you offering some consideration for the change?  If you merely wait for the contracting officer to respond to a legal question, you might get a legal answer back -- but I don't think you want a legal answer.

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@LoulYou have not said what the contract pricing arrangement is, so I'll choose the most challenging—firm-fixed-price. Look at the Default clause, FAR 52.249-8. Read paragraph (a). It states three bases for T for D, which are failure to:

 (i) Deliver the supplies or to perform the services within the time specified in this contract or any extension;

(ii) Make progress, so as to endanger performance of this contract (but see paragraph (a)(2) of this clause); or

(iii) Perform any of the other provisions of this contract (but see paragraph (a)(2) of this clause).

Let's say that failure to comply with the telework restriction falls under (iii).

The courts and boards have excused a contractor's duty to proceed where it would be unfair or illogical to require it to do so. Having waived the telework restriction, and probably forbidden you to come in to work, I don't think the Government can dictate an arbitrary and unreasonable date for resumption of normal operations unless you agreed to some term to that effect. A knowledgeable and reasonable CO should know that, and should be willing to work with you to reach an agreement.

It is not a matter of you wanting the Government "to be nicer" to your company. And unless the contract requires you to resume normal operations within a specified period of time, you probably don't need a contract change or to provide consideration. It is a matter of the time that you are reasonably entitled to in light of the facts of your case, the terms of your contract, and the law of government contracts. That kind of response to you is why I told you to get off Wifcon and call a lawyer. Neither party need be "nice." Both must be reasonable. What is reasonable depends on the facts of your case and the law of contracts.

See paragraph (h) of the default clause:

Quote

The rights and remedies of the Government in this clause are in addition to any other rights and remedies provided by law or under this contract.

The issue before you and the government is what would be a reasonable time for you be able to resume normal operations. Meet with your lawyer, assemble your facts, and negotiate a reasonable resolution. You might need to phase-in resumption of normal operations and the performance of certain tasks while you reassemble and, perhaps, reconstitute your workforce.

May I suggest that your company buy a copy of Administration of Government Contracts, 5th edition, by Cibinic, Nash, and Nagle. See p.  828, "Exceptions to the Duty to Proceed," page 830, "Impractical to proceed."

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On 3/18/2022 at 3:40 PM, Neil Roberts said:

Just saying, in Jan 2022, 7.108 was added to FAR regarding telecommuting. Maybe you can make something of it in discussions even though it post dates your contract.

Telecommuting has been in the FAR long before Jan 2022. See 69 FR 58702, Oct. 5, 2004, as amended at 79 FR 24198, Apr. 29, 2014.

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Yes, the current language was effective Jan 2022. I should have said that it was revised in January 2022. It looks like the language may not have been significantly changed in January 2022 from prior language. Not sure whether that makes it a stronger, weaker or same effect for @Loul.  

Edited by Neil Roberts
clarify prior entry
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@LoulWhatever the reason(s) for your (presumably short-term) inability to comply with the telework restriction, you must demonstrate that the problem is beyond your fault or negligence. If your main problem is that some employees have quit rather than commute to the office, be sure to document, in detail, all of your efforts to find and recruit replacements.

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@Loul Continuing the theme of this discussion to simply provide resources I want to offer the following.     I found them in a shallow dive of the internet.  I suspect a deep dive may arm you with all kinds of information to aid in your discussion with the CO and legal counsel.

This overall - 

https://www.navy.mil/Portals/1/Strategic/DON COVID-19 FAQs_28JULY2020.pdf?ver=2020-07-29-173512-653

Where these were referenced -

https://www.secnav.navy.mil/donhr/Corona Virus Documents/DON COVID-19 Consolidated FAQs.pdf  

https://www.opm.gov/policy-data-oversight/covid-19/opm-frequently-asked-questions-regarding-the-resumption-of-normal-workforce-operations/

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Thanks to all for your replies.  Our contract is a CPFF/LOE contract.  I thank you all for your answers and realize this is a new area that may not have much history.  As a side note, we are not asking the Government to be "nicer" to us, but as we have let the Government know, we may lose some employees due to the telework requirements and that may mean loss of experienced workers that the Government customer loves and relies on. We will continue our work and believe we can eventually meet the telework requirements.  I read the contract as not requiring a constant percentage of telework but rather a percentage that must be met at the end of the contract year.  So, I=if I exceed the number in the first several months and then work less that the limit for the rest of the year so the total number at the end of the year is at or below the maximum per contract, we are covered.

 

We are engaging outside legal council at this time and are setting up meetings with the appropriate Government Contracting Officers.  I want to thank you all for your feedback, and once I receive an answer, I will let the group know so you may have one more arrow of knowledge in your quiver.

 

 

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CPFF/LOE (CPFF/Term?) might be the very best contract type to deal with your situation!  You're golden!  You pass your increased costs (such as costs to hire/retain good employees) to the government, and you have no outcome or completion mandate.  

If your contract includes the clause at FAR 52.232-20, Limitation of Cost, talk to your attorney about giving the notice contemplated by para. (b)(2) of that clause.

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