Incomplete Service and Demand for Full Payment

[cdhames]

Scenario:  Commercial, FFP Purchase Order under the SAT, for delivery and installation (service with SCLS WD).  The service/installation portion is over 50% of the PO.  The vendor has already made delivery and attempted to execute the installation but due to factors outside of their control, could not initiate or complete it.  Due to those factors, we would like to descope the services portion of the PO, settle for the delivery and attempted installation and call it done.  

The vendor disagrees, will not settle, and invoices for full payment of the FFP PO.  (Assume they will not settle and will demand full payment no matter the type of communication or inquiry).

Looking for suggestions on how to handle this scenario.

[C Culham]

How many CLINS?

[Neil Roberts]

2 hours ago, cdhames said:

due to factors outside of their control, could not initiate or complete it.

What are these factors? Why do you think the government should not pay the entire FFP?

[cdhames]

24 minutes ago, C Culham said:

How many CLINS?

4 CLINS.  Delivery 1, Delivery 2, Remove/Install, Disposal.

[Retreadfed]

Is FAR 52.212-4 in the PO?

[cdhames]

16 minutes ago, Neil Roberts said:

What are these factors? Why do you think the government should not pay the entire FFP?

Schedule delay by the Gov.  Half of the PO is delivery.  Half of the PO is removal/installation and disposal.  Delivery completed, an initial attempt at install, call it mobilization and they arrived at the site before being turned away.  Think it goes without saying why we would think they should not be paid for the removal/install and instead negotiate a settlement and descope.

[cdhames]

1 minute ago, Retreadfed said:

Is FAR 52.212-4 in the PO?

Yes

[C Culham]

Have you considered partial termination for convenience (52.212-4(l)?  It is the governments unilateral right to do so.

[Neil Roberts]

7 hours ago, cdhames said:

Schedule delay by the Gov.  Half of the PO is delivery.  Half of the PO is removal/installation and disposal.  Delivery completed, an initial attempt at install, call it mobilization and they arrived at the site before being turned away.  Think it goes without saying why we would think they should not be paid for the removal/install and instead negotiate a settlement and descope.

 

sounds to me that they were ready, willing and able and the Government caused the failure to install.

[Jamaal Valentine]

23 hours ago, cdhames said:

Think it goes without saying why we would think they should not be paid for the removal/install and instead negotiate a settlement and descope.

Assumptions are not as helpful as a clear explanation of your rationale. Why not just provide your reasoning? I presume there is more involved because I would assume if you didn’t want the services on the removal/installation and disposal CLINs, you would have simply terminated them for convenience; negotiated an amount due in the settlement of the termination (or make a final decision they could dispute).

[joel hoffman]

21 hours ago, C Culham said:

Have you considered partial termination for convenience (52.212-4(l)?  It is the governments unilateral right to do so.

Yes, if you don’t want the contractor to complete the rest of the contract, terminate for convenience and pay them for the attempted delivery.

[cdhames]

On 10/14/2023 at 11:55 AM, joel hoffman said:

Yes, if you don’t want the contractor to complete the rest of the contract, terminate for convenience and pay them for the attempted delivery.

This ends up in the same place, with the vendor still demanding full payment.  He will not settle for a partial payment.  The problem is that the vendor irrationally insists that, because this is a FFP, he is due 100% of the payment.  The schedule delay was not his fault, therefore; his argument demands that he is due the full FFP amount.  

On 10/14/2023 at 8:28 AM, Jamaal Valentine said:

Assumptions are not as helpful as a clear explanation of your rationale. Why not just provide your reasoning? I presume there is more involved because I would assume if you didn’t want the services on the removal/installation and disposal CLINs, you would have simply terminated them for convenience; negotiated an amount due in the settlement of the termination (or make a final decision they could dispute).

Jamaal, presumptions are assumptions as well..  yes there is more to it.  This is a public forum so we get the sanitized version here, less the drama.  The issue here is that the vendor refuses anything less than 100% of the FFP amount.  The contract mechanism isn't the issue.  We can descope, and settle up.  Or yes, we can T4C, and then settle up.  It doesn't change the issue.  The vendor will not invoice for anything less than 100% of the contract amount.  I'm not hiding any relevant details in an attempt to emotionally mollify or justify actions or outcomes.  All of the relevant details are present.  There was a schedule delay, at the Gov's behest that removes the ability of the contractor to remove/install said delivery this annually appropriated year.  The contractor came out and identified it.  He is at minimum, due partial settlement for that.  With most vendors, we would negotiate it, and call it done.  Let me add that this vendor is going through extraordinary lengths to make a lot of noise to receive full payment.  That is it.  

[cdhames]

On 10/13/2023 at 9:35 PM, Neil Roberts said:

 

sounds to me that they were ready, willing and able and the Government caused the failure to install.

That's correct.  Does that imply in your mind that he is due 100% of the FFP amount?  I'm just curious and asking for professional opinions, and an explanation of why.  I'm not unwilling, I've just never been in an encounter like this and had to consider full payment for a partially serviced contract.  

[Retreadfed]

2 minutes ago, cdhames said:

The vendor will not invoice for anything less than 100% of the contract amount.

You mean that is what the vendor is telling you.  If you do a T4C and issue a final decision determining the amount due, the vendor then has to put up or shut up.  Being faced with the possibility of incurring significant litigation costs, he might change his mind.  Don't be afraid of threatened litigation.  That's part of the game.

[cdhames]

Just now, Retreadfed said:

You mean that is what the vendor is telling you.  If you do a T4C and issue a final decision determining the amount due, the vendor then has to put up or shut up.  Being faced with the possibility of incurring significant litigation costs, he might change his mind.  Don't be afraid of threatened litigation.  That's part of the game.

Thank you.

[joel hoffman]

8 hours ago, cdhames said:

This ends up in the same place, with the vendor still demanding full payment.  He will not settle for a partial payment.  The problem is that the vendor irrationally insists that, because this is a FFP, he is due 100% of the payment.  The schedule delay was not his fault, therefore; his argument demands that he is due the full FFP amount.  

I’m not aware, absent a government breach of contract,  where the government would pay for FFP services that weren’t rendered, other than paying for the effort expended in a termination settlement. 

[Neil Roberts]

9 hours ago, Retreadfed said:

If you do a T4C and issue a final decision determining the amount due, the vendor then has to put up or shut up. 

What contractual cause has been identified for a T4C?

[Neil Roberts]

3 hours ago, joel hoffman said:

I’m not aware, absent a government breach of contract,  where the government would pay for FFP services that weren’t rendered, other than paying for the effort expended in a termination settlement. 

Looks like a termination for convenience should have been issued by the Government awhile back when  there was a schedule delay, at the Gov's behest that removes the ability of the contractor to remove/install said delivery this annually appropriated year.

[joel hoffman]

Shouldnt a delay in furnishing services under a fully funded FFP contract still provide for completing the services under the same appropriation? It was a bonafide need of the year of the original funding.

Beyond that, it appears that the OP simply wants to avoid a dispute if the contractor won’t agree with the governments terms of a TFC settlement.

Not sure why the OP is asking for advice here if the contractor won’t agree to anything other than full payment even though the entire services weren’t provided.

[joel hoffman]

If the government won’t TFC the remaining services but doesn’t want the full services, it would appear to me that the government breached the contract, preventing performance and the contractor could demand, at the least, full payment. Government has to do SOMETHING.

[Jamaal Valentine]

You posted some information about a scenario and expressed a desire to ‘descope’ (to use your term). This was the first clue that things were going to be nonstandard.

Here, you  were looking for suggestions on how to handle the situation. Since this seems like a pretty routine scenario, I felt there was more to it. Thus, I asked why wouldn’t you just provide your reasoning.

I asked this question, in part, because someone asking such a basic question may not understand what the relevant details are. (If they did, this question would not have been posted. At least not in this way.) Also, this was posted in the beginners section. Understanding your rationale would help readers in crafting helpful responses.

Now, you seem to be concerned that the contractor will not settle for less than the contract amount. However, you don’t seem to be willing to accept their request for full payment. If that’s the case, a termination for convenience and final decision is the answer. Contracting 101. The contractor can submit a claim under the contract’s dispute clause.

If you can’t reach an agreement, what else can you do?

[Retreadfed]

14 hours ago, Neil Roberts said:

What contractual cause has been identified for a T4C?

FAR 52.212-4

[cdhames]

6 hours ago, joel hoffman said:

If the government won’t TFC the remaining services but doesn’t want the full services, it would appear to me that the government breached the contract, preventing performance and the contractor could demand, at the least, full payment. Government has to do SOMETHING.

The original intent was to descope the removal/installation CLINs, and negotiate a final settlement up front.  We could have just jumped to a unilateral T4C and settlement offer --that may seem obvious in hindsight but I think most contracting professional prefer a bilateral agreement if possible.  But the descope or a unilateral T4C wasn't ever the issue.  Like I said, the issue was the vendor adamantly rebuffing and refusing anything less than 100% payment.  My original question was that I was looking for suggestions on how to handle that.  Hope that clarifies.

[cdhames]

5 hours ago, Jamaal Valentine said:

You posted some information about a scenario and expressed a desire to ‘descope’ (to use your term). This was the first clue that things were going to be nonstandard.

...

If you can’t reach an agreement, what else can you do?

I think I would disagree that descoping requirements are nonstandard.  That implies that removing requirements in a bilateral fashion from a contract isn't somehow a normal procedure or thing to do.  I guess it strikes me as an inflexible mindset.  But otherwise, I think you're correct, there is nothing else to do.  I wanted to ask the question anyway, and explore the scenario.  But thank you for your advice.

[Jamaal Valentine]

29 minutes ago, cdhames said:

…the issue was the vendor adamantly rebuffing and refusing anything less than 100% payment.  My original question was that I was looking for suggestions on how to handle that.

Now, we know you “[t]hink it goes without saying why [you] would think they should not be paid for the removal/install and instead negotiate a settlement and descope,” but have you considered explaining your reason to the contractor? Have you made them aware of your right to partially terminate the contract? 

Would it help if you candidly explained what you are willing to pay if unable to reach an agreement? Heck, maybe you are willing to pay more for an agreement and release of claims than if you have to issue a decision that can be disputed.

 Read FAR 33.204 and go negotiate a deal. This is a chance to be an office hero and generate a lunch topic.