I have two questions regarding FAR 52.242-15 (Stop-Work Order) in the context of a Time-and-Materials (T&M) order under a GSA schedule:

1. I saw a prior discussion where FAR 52.242-15 was not included in a T&M order under a GSA schedule, yet a Contracting Officer (CO) issued a Stop-Work Order (SWO) under that clause.

   • Can the Government order a stop-work under a commercial services T&M contract if the clause is not included (or even if it is included but does not apply)?

2. If a T&M contract is terminated 60 days after the issuance of an SWO, what would be the recovery under the contract?

   • FAR 52.242-15(c) states that if the SWO is not canceled and the work is terminated for convenience, the CO must allow reasonable costs resulting from the SWO in the termination settlement.
   • This is different from an equitable adjustment, which applies when the SWO is lifted, suggesting different cost treatments.
   • Does this mean that only direct and indirect costs of idle labor during the SWO are recoverable, or would it allow for loaded daily rates (including fee) times the hours of justifiable idle time for example?

14 hours ago, Tzarina of Compliance said:

Can the Government order a stop-work under a commercial services T&M contract if the clause is not included (or even if it is included but does not apply)?

Generally no as no unlilateral right is passed to the Government to issue a stop work order in a commercial contract.  I think the Government if anything might use their unilateral right under termination for convenience (partial).   I could see stopping the work under a bilateral agreement with the contractor.    See this reference to a previous discussion that may be of an assist.  It may be the one you referred to or it may not and add additional information for you to consider. 

14 hours ago, Tzarina of Compliance said:

If a T&M contract is terminated 60 days after the issuance of an SWO, what would be the recovery under the contract?

I would not be looking to 52.242-15 if in the contract with regard to recovery. I would hope that 52.212-4 Alt 1 is in the contract and I would be looking at paragraph (l) as to what is allowed or not.  And if 52.242-15 is not in the contract I would still be lookinig at the same paragraph of 52.212-4 Alt 1.  Or posed another way, why are you looking at 52.242-15 with regard to a T4C, does not a T4C clause or term/condition come into play as the guiding reference when the contract is T4C'd?  

1 hour ago, C Culham said:

Generally no as no unlilateral right is passed to the Government to issue a stop work order in a commercial contract.  I think the Government if anything might use their unilateral right under termination for convenience (partial).   I could see stopping the work under a bilateral agreement with the contractor.    See this reference to a previous discussion that may be of an assist.  It may be the one you referred to or it may not and add additional information for you to consider. 

I would not be looking to 52.242-15 if in the contract with regard to recovery. I would hope that 52.212-4 Alt 1 is in the contract and I would be looking at paragraph (l) as to what is allowed or not.  And if 52.242-15 is not in the contract I would still be lookinig at the same paragraph of 52.212-4 Alt 1.  Or posed another way, why are you looking at 52.242-15 with regard to a T4C, does not a T4C clause or term/condition come into play as the guiding reference when the contract is T4C'd?  

I think the termination costs are clear, but since the SWO was for 60 days and now the Government is terminating, I am looking at FAR 52.242-15 to see what happens and if an "equitable adjustment" for the SWO time (60 days) is still valid.   FAR 52.242-15 under (c) says that if the SWO is not cancelled and the work is terminated, "the CO must allow reasonable costs resulting from the SWO in the termination settlement.".  This is different than "equitable adjustment" in the previous para which is recoverable if the SWO is lifted.   I am reading that equitable adjustment means costs and profit during the SWO period and "reasonable costs" are only costs.  

1 hour ago, Tzarina of Compliance said:

I am looking at FAR 52.242-15 to see what happens and if an "equitable adjustment" for the SWO time (60 days) is still valid. 

Why would it be?  Does not the wording provide that (b) and (c) are different?  Work stopped, work restarted equitable adjustment.   Work stopped, contract terminated, settlement at reasonable costs.   

Further there is 52.212-4, Alt 1 at paragraph (l) that provides the guidance as to what to pay in settlement which includes the possiblity of "reasonable charges".  Now without combing case law my thinking would be that the contractor would have to make a case that idle time and the idle time "rate" is supported by their record keeping system.  In saying this isn't the profit for a T&M tied up in the "rate"?

And in the end I think this.  In a read of FAR part 49 a settlement agreement is to be fair compensation to the conractor for the T4C.  While FAR Part 49 does not address T4C for time and materials, and if I was the CO, I would be applying the general approaches of Part 49 in an attempt to settle promptly with the hoped for goal of reaching a mutual agreement on what is fair.   If I could not I would do a settlement by determination and let the chips fall as they may.   

19 hours ago, Tzarina of Compliance said:

even if it is included but does not apply)?

What do you mean by this?  Is there some regulation that prohibits the government from including this clause in a T&M order under an FSS contract?  Do you see a conflict between FAR 52.242-15(c) and 52.212-4(l)?  What do you make of the phrase "Subject to the terms of this contract, " in 52.212-4(l)?

I am not asking about termination costs.  I am clear on what can be recovered under termination.   I am asking about a SWO under a GSA MAS T&M order.  After some research, I found that GSA MAS includes FAR 52.212-15.   The Government issued a SWO for this T&M order and after 60 days of SW, the order was terminated for convenience.   My question is what can be recovered during the 60 day period of SWO before termination costs.   FAR 52.242-15 (c) says that if the SWO is not canceled and the work is terminated for convenience, the CO must allow reasonable costs resulting from the SWO in the termination settlement.   This is different than the language in (b) which addresses what can be recovered if SWO IS canceled and work resumes and allows for "equitable adjustment".  I am asking if there is a difference between "equitable adjustment" and "reasonable SWO costs"?   If not, then I am assuming reasonable SWO costs for a T&M contract would mean the loaded rates for labor which could not be minimized during the SWO. 

FAR 52.242-15 doesn't answer your question. It does not allow or exclude profit related to the costs incurred due to a stop-work order--it is silent. I think it's a matter of negotiation, not entitlement. 

This is a good question. An equitable adjustment, per the Government Contracts Reference Book, is essentially a price adjustment, based upon a change in costs, (whether an increase or decrease) plus a reasonable allowance for profit. The Supreme Court has ruled on the question of including a profit allowance in the term “equitable adjustment”. I don’t have the reference.

This is distinguished from an adjustment to the contract price that is strictly based on a change in cost, without any reference in the basis of entitlement that would provide for an equitable adjustment of the contract price.

It appears to me that there is a distinction in  the paragraphs in 52.242-15 to the basis for entitlement between an equitable adjustment and a price adjustment for change in costs. 

Sorry that I don’t have time to review the discussion of the term “equitable adjustment” and the distinction between clauses that do or don’t specifically provide for an equitable adjustment of the contract price in the seminal reference book Administration of Government Contracts. I don’t have direct access to it where I am right now.

On 2/21/2025 at 1:33 PM, Tzarina of Compliance said:

I am asking if there is a difference between "equitable adjustment" and "reasonable SWO costs"?   If not, then I am assuming reasonable SWO costs for a T&M contract would mean the loaded rates for labor which could not be minimized during the SWO. 

As Joel has indicated, there are several CDA decisions that state that an equitable adjustment includes profit.  On the other hand, an adjustment based on costs means just that costs, not profit.  I have not researched this issue for T&M contracts, but I can see the government taking the position that the hourly rate specified in a T&M contract is not a cost but a price.  Consequently, the adjustment called for by 52.242-15(c) is based on the contractor's actual costs, direct and indirect, but excludes profit.  Further, the contractor would have to show that the costs claimed were caused by the SWO.

So what would be the answer in a CPFF scenario? If you had an SWO and then were terminated for convenience, can you recover SWO costs and profit in termination given FAR 52.242-15 (c) which is different than (b) - i.e. equitable adjustment if SWO is lifted vs "reasonable costs" if you are T4C-ed.

See FAR 52.249-6(h)(4)(i). Fee is paid based on percentage of completion of work.

40 minutes ago, Don Mansfield said:

See FAR 52.249-6(h)(4)(i). Fee is paid based on percentage of completion of work.

So would the stop work order work carry an additional fee?   If your contract was CPFF completion and you completed 50% of the fee schedule, before stop work order, then you were in stop work order for 60 days before temrination, would you recover the fee on top of stop work order costs, perhaps calculated as a % based on the orginal % fee proposed for the original contract?

No, the fee paid has nothing to do with incurred costs. All that matters is the percentage of work completed.

On 3/7/2025 at 4:10 PM, Tzarina of Compliance said:

So what would be the answer in a CPFF scenario?

Presumably, if the contract is a CPFF contract, it would not be for commercial products/services.  Therefore, 52.212-4 would not be in the contract.  Which termination clause would be in your hypo contract?

On 3/7/2025 at 1:10 PM, Tzarina of Compliance said:

So what would be the answer in a CPFF scenario?

I still wonder why the SWO matter would not be settled in the overall Settlement Proposal effort?   All references are to clause language yet it would seem that the guidance of FAR 49 regarding T4C settlement proposals would be applicable for other than commercial contracts and FAR Subpart 12.403 for commercial service/product.  

20 hours ago, Retreadfed said:

Presumably, if the contract is a CPFF contract, it would not be for commercial products/services.  Therefore, 52.212-4 would not be in the contract.  Which termination clause would be in your hypo contract?

 

28 minutes ago, C Culham said:

I still wonder why the SWO matter would not be settled in the overall Settlement Proposal effort?   All references are to clause language yet it would seem that the guidance of FAR 49 regarding T4C settlement proposals would be applicable for other than commercial contracts and FAR Subpart 12.403 for commercial service/product.  

The termination clause is FAR 52.249-6.  We are settling the SWO in the termination settlement since SWO was never lifted and the contract was terminated.  The question remains whether or not the SWO costs could include an additional fee in the calculation of the final settlement for termination since FAR 52.242-15 (c) says that if SWO is not lifted and the contract is terminated - only "reasonable costs" would be allowed vs if SWO is lifted, an "equitable adjustment" will be made.

28 minutes ago, Tzarina of Compliance said:

 

The termination clause is FAR 52.249-6.  We are settling the SWO in the termination settlement since SWO was never lifted and the contract was terminated.  The question remains whether or not the SWO costs could include an additional fee in the calculation of the final settlement for termination since FAR 52.242-15 (c) says that if SWO is not lifted and the contract is terminated - only "reasonable costs" would be allowed vs if SWO is lifted, an "equitable adjustment" will be made.

Okay but does not this apply with regardng to calculating Fee in the settlement - 

 

From FAR Part 49 

49.304-2 Submission of settlement proposal (fee only).

The contractor shall limit the settlement proposal to a proposed reduction in the amount of fee. The final settlement proposal shall be submitted to the TCO within oneyear from the effective date of termination, unless the period is extended by the TCO. The proposal may be submitted in the form prescribed in 49.602-1 or by letter appropriately certified. The contractor shall substantiate the amount of fee claimed (see 49.305).

49.305 Adjustment of fee.

49.305-1 General.

(a) The TCO shall determine the adjusted fee to be paid, if any, in the manner provided by the contract. The determination is generally based on a percentage of completion of the contract or of the terminated portion. When this basis is used, factors such as the extent and difficulty of the work performed by the contractor (e.g., planning, scheduling, technical study, engineering work, production and supervision, placing and supervising subcontracts, and work performed by the contractor in (1) stopping performance, (2) settling terminated subcontracts, and (3) disposing of termination inventory) shall be compared with the total work required by the contract or by the terminated portion. The contractor’s adjusted fee shall not include an allowance for fee for subcontract effort included in subcontractors’ settlement proposals.

(b) The ratio of costs incurred to the total estimated cost of performing the contract or the terminated portion is only one factor in computing the percentage of completion. This percentage may be either greater or less than that indicated by the ratio of costs incurred, depending upon the evaluation by the TCO of other pertinent factors.

So in the settlement you give up the additional fee you would otherwise collect for the SWO period if the SWO was lifted?

1 hour ago, Tzarina of Compliance said:

So in the settlement you give up the additional fee you would otherwise collect for the SWO period if the SWO was lifted?

Yes, assuming the percentage of completion was unchanged during the SWO.

4 minutes ago, Don Mansfield said:

Yes, assuming the percentage of completion was unchanged during the SWO.

Completion can not be affected during SWO since no work was performed.    If the SWO was lifted, you would get an additional fee added to the suspension costs for equitable adjustment, why not in a termination reconciliation?  Becuase of the para (c) in FAR 52.242-15?

1 hour ago, Tzarina of Compliance said:

So in the settlement you give up the additional fee you would otherwise collect for the SWO period if the SWO was lifted?

No.  In regard to CPFF contracts terminated for convenience, there are 2 clauses that need to be considered FAR 52.249-6 and 52.232-20.  In addition, you need to consider FAR 49.114.  Under 52.232-20, the contractor is not required to incur costs that exceed the estimated cost of the contract including actions under the termination clause.  This means that the estimated cost of the contract needs to be determined.  That is where 49.114 comes into play.  In your hypo, there is an SWO that may require an adjustment of the estimated cost of the contract.  In addition, depending on the circumstances, the fee may need to be adjusted.  In any event, you need to determine the impact of the SWO on the estimated cost and fixed fee before determining what the contractor will be paid in the termination settlement.  

IAW 52.249-6(g), the parties can agree on what the contractor is to be paid subject to 52.232-20.  This amount includes "an allowance for fee."  Note that under (g) there is no mention of how the allowance for fee is to be computed other than it is a negotiated amount.  However, if the parties cannot agree on what the contractor is due, the CO can make a unilateral determination of what the contractor is due.  That determination is to "include a percentage of the fee equal to the percentage of completion of work contemplated under the contract."  The percentage of fee contemplated here is a percentage of the fee determined after application of 49.114.

In you hypo, the SWO was not cancelled but the work covered by the SWO was terminated for convenience.  In that case, 52.242-15(c) applies and there would be no 49.114  adjustment for fee, however, there would be a cost adjustment that would determine the estimated cost of the contract which would be a ceiling on the amount of cost recovery under the contract.

25 minutes ago, Retreadfed said:

In you hypo, the SWO was not cancelled but the work covered by the SWO was terminated for convenience.  In that case, 52.242-15(c) applies and there would be no 49.114  adjustment for fee, however, there would be a cost adjustment that would determine the estimated cost of the contract which would be a ceiling on the amount of cost recovery under the contract.

What are you saying "no" to? Are you saying the contractor would be entitled to additional fee they would otherwise get if the SWO were lifted and performance continued? Or are you saying that the settlement of fee is negotiable?

44 minutes ago, Tzarina of Compliance said:

If the SWO was lifted, you would get an additional fee added to the suspension costs for equitable adjustment, why not in a termination reconciliation?

I can't explain the logic, but the Stop Work Order says to handle the increased costs in the termination settlement. The Termination clause says payment of fee is based on percentage of completion if the parties can't agree on a settlement. I don't see anything wrong with proposing additional fee and I don't think the contracting officer would be prohibited from including it in the settlement. However, I think you are asking about entitlement to the additional fee. If that's the case, I'm not seeing that entitlement.

Just now, Don Mansfield said:

Or are you saying that the settlement of fee is negotiable?

You guys are running and I am walking.   I was going to pose this.  By my read the T4C is partial.  I read this as a stop work order was issued which suggests work was going on.  As a partial T4C per the FAR citations I provided isn't the settlement proposal in total negotiated?   If true, am I off base to suggest that a contractor would make their best case as to what reduced fee they want which in part would be based on "extent and difficulty" the stop work order caused for them and how it effected their fee?   So in my thinking the fee is negotiable but in the end is it not the general view that overall it would be a reduced fee?

So as it relates to the OP's question fee is allowed in some manner on the SWO but then is thrown into the pot to figure fee for the totality of the partial T4C.