joel hoffman

Are you simply asking if you are entitled to a credit on units that were modified per the VECP after it was authorized or put on contract (by what means, I don't know) but before the unit price adjustment was determined?

I would think the answer is yes, unless the modification containing the price adjustment somehow closed the action without considering the undefinitized units. In that case, the incomeptence of the contracting officer or administrator would amaze me.

"Question #1 - If it has been determined that the delay is both excusable (Defaults clause) and compensable (Suspension of Work clause), what is the best way to isolate the costs that should be considered for providing relief of actual costs for FOOH, Design and/or HOOH as a result of the delay? Typically contractors try to load up a cost pool to come up with a daily rate and then multiply times the number of days of delay. However, if there is no idle equipment and only very limited labor costs as a result of suspension, is there anything due the contractor?"

For a delay period where little or no work is performed, the contractor could recover the fixed portion (those costs which are time dependant) of field office overhead as a daily rate. The trick is to isolate the fixed costs from other, variable costs (costs which vary based upon amount of work).

Unless the contractor can establish the conditions precedent for "unabsorbed home office overhead, the additional home overhead costs would be payable as a percentage of other direct and indirect costs.

Here is some discussion from P.J. Dick, Inc. v. Department of Veterans Affairs, 324 F.3d 1364 (Fed. Cir. 2003). Note, this may have been superseded by later decisions but was good guidance at the time. The Federal Circuit listed the questions a court should ask when evaluating a contractor?s claim for Eichleay (daily, unabsorbed overhead) damages:

"1. Was there a government-caused delay that was not concurrent with another delay caused by some other source?

2. Did the contractor demonstrate that it incurred additional overhead costs?

3. Did the government CO issue a suspension or other order expressly putting the contractor on standby?

4. If not, can the contractor prove there was a substantial delay of indefinite duration during which it could not bill substantial amounts of work on the contract and at the end of which it was required to be able to return to work on the contract at full speed and immediately?

5. Can the government show that it was not impractical for the contractor to take on replacement work (i.e., a new contract) and thereby mitigate its damages?

6. If the government meets its burden of production as set out in Question No. 5, can the contractor satisfy its burden of persuasion that it was impractical for it to obtain sufficient replacement work?

The court held: ?Only where the above exacting requirements can be satisfied will a contractor be entitled to Eichleay damages.?

The Federal Circuit took a particularly close look at the fourth question in an effort to clarify what it called the ?multi-faceted? inquiry of standby. In the absence of an express order from the CO putting the contractor on standby, the court said, the contractor must prove standby by the following indirect means:

1. The contractor must show that the government delay was not only substantial but was of indefinite duration. (For example, when the government suspends all work on the contract but tells the contractor that the work will begin again on a certain date, the contractor cannot be on standby.)

2. The contractor must show that during that delay it was required to be ready to resume full work immediately. (Thus, when the government gives the contractor a reasonable amount of time to remobilize its workforce once the suspension is lifted, the contractor cannot be on standby.)

3. The contractor must show effective suspension on much, if not all, of the work on the contract."

Source: "Construction Weblinks" by Howrey LLP at:

http://www.constructionweblinks.com/Resour...03/eichleay.htm

Regarding "design costs", what are you referring to? Not enough information to formulate any opinion or advice.

"Question #2 - What would be the reasons to NOT issue a suspension of work, if you know there is going to be a delay in giving NTP or allowing some part of critical path works to commence? Isn't the contractor already on notice about suspension at the convenience of the Gov't, by virtue of the clause being in the contract?"

From the clause and the above discussion, you should be able to see that:

1) You don't have to direct a suspension of work for the contractor to request an adjustment as a constructive suspension of work and:

2) It is potentially worse if you allow the contractor to be constructively suspended from performance of work for an indeterminate period than if you issue a formal suspension for a determinate period.

If the period is indeterminate and the contractor is in limbo, it will more than likely be entitled to unabsorbed daily home office overhead, calculated using the Eichleay formula. If you issue a suspension for a determinate period, you might only be liable for any increased cost impacts, such as inflation or the like. If the period is indeterminate, you might be liable for both that and unabsorbed OH costs. You can issue a definite delay notice and if it needs to be extended, extend it. If the delay will certainly be resolved early, you can contact the contractor and ask if it could mobilize or remobilize earlier than the original suspended delay period.

It is a "utility contract", containing terms, conditions and rate schedules. The rates are set, subject to 52.241-7 or -8, which is supposed to be in the contract (along with certain other clauses). You pay for actual usage at the set tarriff rates, I presume.

I suppose you could consider it to be an indefinite quantity contract.

Then I don't understand your question.

Have you looked at FAR Part 41 and are you authorized to contract for utility services?