joel hoffman

There was an offer by the government and an acceptance by contractor A. Contractor A didn’t perform in accordance with the contract (a purchase order).

Gabe, the order is an offer. It may be the award document but only if the firm accepts the offer. Edit: I don’t think we can answer your initial question. There could be a mutual error if there was “an oversight by the KO “ and a misunderstanding by company A of what it agreed to supply.. But that hasn’t been established by the facts. The fact that Firm A supplied what it quoted its price for may be an indication that it thought the government agreed with its quote…

Gabe, are you the “firm A”? If so, you don’t know that. If so, why did Firm A sign the order? Or do you work for the contracting office? I’m not going to discuss “mutual error”unless it is clear who is which party and what each side thought they were issuing and agreeing to.

Really, Gabe? From 13.004(a):” The order is an offer by the Government to the supplier to buy certain supplies or services upon specified terms and conditions. A contract is established when the supplier accepts the offer.” People are posting faster than I can type. Gabe, why did you say that when the government issued an order at the quoted price but not for the item that company A quoted, it was “[n]ot an offer” ?

Gabe edited the original post again to clarify that the government offered to buy the originally required item for the price that the firm quoted for the alternate item and Firm A signed the purchase order, signifying acceptance of the governments offer. Then Firm A supplied what it originally quoted and won’t accept a return. Gabe originally stated that the governments purchase order clearly stated clearly that the order was for what the government originally specified. Gabes revised, original post no longer states this. Hmmmm. It appears that Firm A was either misled or misunderstand the government’s offer. I see that there are at least two posts submitted while I write this. I haven’t seen them yet.

By the way, I’m not a lawyer. Check with your attorney. M Sorry - I worked contract claims for many years. Here, my opinion is only an opinion, based upon limited information, herein.

Deleted.

I either didn’t read the OP clearly or it has been clarified while I was posting and editing my post. If the supplier didn’t accept the governments order and didn’t perform in accordance with the terms of the order, I don’t think that there is a contract. As for who is responsible for the cost of the return of the shipment, I don’t know. Edit: Apparently, the government ignored the terms of the quote, (except the price?). I wonder what the intent of contracting officer or their specialist was…

“13.004 Legal effect of quotations. (a) A quotation is not an offer and, consequently, cannot be accepted by the Government to form a binding contract. Therefore, issuance by the Government of an order in response to a supplier’s quotation does not establish a contract. The order is an offer by the Government to the supplier to buy certain supplies or services upon specified terms and conditions. A contract is established when the supplier accepts the offer. (b) When appropriate, the contracting officer may ask the supplier to indicate acceptance of an order by notification to the Government, preferably in writing, as defined at 2.101. In other circumstances, the supplier mayindicate acceptance by furnishing the supplies or services ordered or by proceeding with the work to the point where substantial performance has occurred. (c) If the Government issues an order resulting from a quotation, the Government may (by written notice to the supplier, at any time before acceptance occurs) withdraw, amend, or cancel its offer. (See 13.302-4 for procedures on termination or cancellation of purchase orders.)” ——————————————- The quoted price was clearly for something other than the government requested specification. Did the supplier initially accept the order? What does this mean? “Company A is not accepting a return.” If the contractor initially accepted the order, was the order clearly worded to reflect the originally requested specification so that the supplier would reasonably know that the order was for the original specification? If the supplier didn’t accept the order or otherwise perform the work in accordance with the terms of the order, in my opinion there is no contract. It is apparent to me that there was no meeting of the minds…

The author hasn’t signed in since the time of the original post, last Saturday night. He/she may have found an answer to the question in the OP, here or elsewhere: At any rate, the OP has disengaged.

In that event, the government would have other obligations for tasks underway when the contract was terminated. Unfortunately, the Decision didn’t explain the context of the contract termination. Not explained was whether all awarded task orders were completed or were there still active task orders.

This apparently refers to “Termination Expenses After The Guaranteed Minimum Was Satisfied” as it is discussed under that heading. These expenses weren’t identified in this appeal decision. “…We therefore deny appellant’s claim for $3,149,926 in termination for convenience costs.” Those were described earlier in the decision as “its proposed termination for convenience settlement costs ($3,149,926)”. What those costs consisted of was not identified in the decision. That amount was included in an initial claim/appeal that was denied or dismissed for failure to stated a sum certain of some estimated damages. The same settlement cost expenses were repeated in this appeal decision without explaining what it encompassed.

“2. Termination Expenses After The Guaranteed Minimum Was Satisfied The Government was obligated under each of the contracts to purchase the guaranteed minimum but had no legal obligation to purchase services beyond that. See Travel Centre, 236 F.3d at 1319. The guaranteed minimum under each was $1,000,000. None of the options in the AM contracts contained additional guaranteed minimums nor were they required to include a minimum. See Varilease Technology Group, Inc. v. United States, 289 F.3d 795, 800 (“Minimum quantities are not required to be associated with each option period.”). It is undisputed that the guaranteed minimums were met for each area based on monthly payments alone. Specifically, Sage received $1,823,347.96 in monthly payments for the area 7A contract, $2,225,087.49 in monthly payments for the area 1D contract, and $3,924,285.64 in monthly payments for the area 5P contract. The risk of any losses incurred by the contractor as a result of start-up costs that exceeded this minimum lies squarely with the contractor. Additionally, any projected costs for terminated work are not recoverable because, when the contracts were terminated, the Government had no further legal obligation under the contracts because the guaranteed minimums had already been met. 8 TravelCentre, 236 F.3d at 1319; see CAE USA, Inc. v. Department of Homeland Security, CBCA 4776, 16-1 BCA 36,377, at 177,353 (“Even if an IDIQ contract is terminated for convenience, a contractor cannot recover convenience termination settlement costs if the Government has satisfied the minimum order requirements of an IDIQ contract.” (citing International Data Products Corp. v. United States, 492 F.3d 1317, 1324 (Fed. Cir. 2007))).” “The solicitation also stated as follows: In accordance with FAR 16.504(a)(4)(ii) and incorporated HUDAR [HUD Acquisition Regulations] clause 2452.216-76 [48 CFR 2452.216-76], the Government has established both minimum and maximum quantities and amounts for orders placed under the subject contract. The minimum guarantee shall serve as full consideration for the Government’s liability under this contract, and the Government will be under no obligation to conduct further ordering of services from the named contractor beyond the guaranteed contract minimum.”

Actually FAR 52.222-41 says “…(c) Compensation. (1) Each service employee employed in the performance of this contract by the Contractor or any subcontractor shall be paid not less than the minimum monetary wages and shall be furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor, or authorized representative, as specified in any wage determination attached to this contract.” The contractor can decide without the government’s direction to pay more than the minimum specified rates at any point in an option year. However, it’s not entitled to a price increase during the option year. Price adjustments due to contract incorporated updates to wage decisions are determined pursuant to paragraphs (d) and (e) of 52.222-43, which discuss situations where the contractor pays more than the minimum specified wage rates. The contractor might have paid more than the contract rates to replace employees or to retain employees who might otherwise go elsewhere for higher wages.

All good questions.

This is from the prescription for the clause. CFR 22.1006 Solicitation provisions and contract clauses. (c) (1) …Contracting officers shall ensure that contract prices or contract unit price labor rates are adjusted only to the extent that a contractor's increases or decreases in applicable wages and fringe benefits are made to comply with the requirements set forth in the clauses at 52.222-43(subparagraphs (d) (1), (2) and (3)…” If the contractor mistakenly paid increased wages on its own, without government action or direction, then there is no entitlement to price increase.

Based upon the facts presented by the protestor and determined by the OHA, this appears to be yet another SB “front” arrangement like the ones I used to encounter 25 years ago. I can understand the Agency’s clueless ignorance or indifference concerning: the late submission and non-compliant JVA and late, unsigned addendum to the JVA and the fact that the Responsible Manager was an employee of the mentor. But also the SBA(!!!)?? Are they toothless? Sheesh!

No. [Edited on April2, 2023: My answer was based upon the scenario presented in the initial post on April 1, 2023. Quote: “I have an FFP contract. No CBA. Contains 52.222-43 Period of Performance runs March - February Option Year 1 was exercised for March 2022 - February 2023 with a wage determination updated in December 2021 incorporated. During Option Year 1, in 01 July 2022, the wage determination was updated. The Option Year 2 was recently exercised and the contractor has requested a retroactive adjustment for the Option Year 1 based on the wage determination updated in July. Is the contractor entitled to adjustments after the "anniversary date of the multiple year contract, or at the beginning of the renewal option period?" See 52.222.43 “Fair Labor Standards Act and Service Contract Labor Standards - Price Adjustment (Multiple Year and Option Contracts) (AUG 2018) “…(c) The wage determination, issued under the Service Contract Labor Standards statute, (41 U.S.C. chapter 67), by the Administrator, Wage and Hour Division, U.S. Department of Labor, current on the anniversary date of a multiple year contract or the beginning of each renewal option period, shall apply to this contract.” What do you think this means? What contractual basis is there for a price adjustment? Did the contractor actually already pay the midterm increased wage rates? Doesn’t establish any entitlement but I’m just curious. If so, why didn’t the contractor mention this back in July 2022 if it wants to be reimbursed? Just because a firm pays higher wages than required by the contract doesn’t establish any entitlement to a price increase.

A reminder to check your agency and organization FAR supplements and SOP’s, if any.

Deleted - Oops. Wrong thread

“52.232-5 “…(e) Retainage. If the Contracting Officer finds that satisfactory progress was achieved during any period for which a progress payment is to be made, the Contracting Officer shall authorize payment to be made in full. However, if satisfactory progress has not been made, the Contracting Officer may retain a maximum of 10 percent of the amount of the payment until satisfactory progress is achieved. When the work is substantially complete, the Contracting Officer may retain from previously withheld funds and future progress payments that amount the Contracting Officer considers adequate for protection of the Government and shall release to the Contractor all the remaining withheld funds. Also, on completion and acceptance of each separate building, public work, or other division of the contract, for which the price is statedseparately in the contract, payment shall be made for the completed work without retention of a percentage.” If the contractor falls behind the critical path on the approved schedule (for reasons not caused by the government or other excusable delays), you can withhold retainage from the next progress payment. If the contractor makes up lost performance time, you should release that retainage.

Sorry I reread the OP this morning. Yes, you deduct the LD’s from the final payment. You don’t bill the contractor for them. We wouldn’t generally make the final payment without a release of claims, unless there had already been a disagreement about the issue or amount of LD’s and it had been finalized or adjudicated. “52.232-5… “(h) Final payment. The Government shall pay the amount due the Contractor under this contract after - (1) Completion and acceptance of all work; (2) Presentation of a properly executed voucher; and (3) Presentation of release of all claims against the Government arising by virtue of this contract, other than claims, in stated amounts, that the Contractor has specifically excepted from the operation of the release. A release may also be required of the assignee if the Contractor's claim to amounts payable under this contract has been assigned under the Assignment of Claims Act of 1940 (31 U.S.C. 3727 and 41 U.S.C. 6305).”

Depends upon what you’re buying. I tend to agree for services. I don’t agree for design-build construction when done right.

It seems ironic to me that Part 14 procedures are the default acquisition method unless another method can be justified but LPTA, which is a step above IFB is discouraged!!!! “14.103 Policy. 14.103-1 General. (a) Sealed bidding shall be used whenever the conditions in 6.401(a) are met. This requirement applies to any proposed contract action under part 6. (b) Sealed bidding may be used for classified acquisitions if its use does not violate agency security requirements. (c) The policy for pricing modifications of sealed bid contract appears in 15.403-4(a)(1)(iii).”

Won’t get into all the details but you can’t withhold liquidated damages from progress payments until the contractor exceeds the contract completion date. Retainage is another story but if you don’t know anything about LD’s , you may not be familiar with retainage and some other aspects of progress payment estimates. Don’t know what agency standard operating procedures you have.