Justification for Consideration

[Don Mansfield]

4 hours ago, Seeking2Award said:

Generally, there must be "consideration" whenever a contract is modified. 

I think that's an overstatement. Some modifications require consideration, some don't. A lot of modifications that adjust contract terms pursuant to a clause don't require any new consideration.

[Seeking2Award]

7 minutes ago, Don Mansfield said:

I think that's an overstatement. Some modifications require consideration, some don't. A lot of modifications that adjust contract terms pursuant to a clause don't require any new consideration.

That makes sense and I would agree it is an overstatement if the statement is "whenever a contract is modified". I'm trying to find where I used the terms "whenever a contract is modified" but if I said that I didn't intend to and I apologize for misspeaking. My question was specifically about the following quote ""As a general rule, a CO does not need a contract clause in order to grant a request for a "no cost extension." But the CO must obtain consideration in return if the contractor is not contractually entitled to an extension." I was talking to when a contractor is late to delivery, and it is not in the interest of the government. The thread you provided earlier was really helpful and there were a few other comments from this thread I have added to my notes. I don't want to drag it out further or make anyone feel like I am being dismissive. I appreciate all the feedback provided. 

[Don Mansfield]

You didn't say that. It was from the guidance you quoted.

[Retreadfed]

29 minutes ago, Seeking2Award said:

I was talking to when a contractor is late to delivery, and it is not in the interest of the government.

What is not in the best interest of the government?

[Seeking2Award]

26 minutes ago, Don Mansfield said:

You didn't say that. It was from the guidance you quoted.

Thanks for the clarification.

[Seeking2Award]

9 minutes ago, Retreadfed said:

What is not in the best interest of the government?

"I am aware of FAR 50.103-2(a), however, is there something that can be cited when arguing in support of the government receiving considerations for a schedule change (proposed by the contractor that does not benefit the government)? The contractor insists consideration is not warranted, and short of terminating the contract, I am looking for ways to move the conversation forward." The government will likely need to mitigate impacts due to late deliveries which would cost the government. 

[Vern Edwards]

17 hours ago, Seeking2Award said:

I'm in search of documented authority (U.S.C. / FAR etc.) that would support the below statement:

"As a general rule, a CO does not need a contract clause in order to grant a request for a "no cost extension." But the CO must obtain consideration in return if the contractor is not contractually entitled to an extension." by @Vern Edwards

I am aware of FAR 50.103-2(a), however, is there something that can be cited when arguing in support of the government receiving considerations for a schedule change (proposed by the contractor that does not benefit the government)? The contractor insists consideration is not warranted, and short of terminating the contract, I am looking for ways to move the conversation forward. We do not want to simply ignore the request and leave dates on contract "as is" because we do not want to waive our right to pursue a termination if needed in the long run nor inadvertently render the contractual schedule of no effect.  Thank you in advance for your consideration in this matter!

Emphasis added.

See "Consideration for Time Extensions: Now You See It Now You Don't, The Nash & Cibinic Report (September 1990):

 

Quote

The Consideration Rule

COs ask for consideration for two reasons. First, they know about, or are advised of, the basic common law rule that consideration is required to make a contract modification binding on the parties. While this rule has been dropped in the Uniform Commercial Code (see Section 2-209), it is still alive in many other contractual situations and is generally believed to be applicable to Government contracts. Second, they know about the Government contracts rule that no officer or employee of the Government has the authority to give up “vested rights” of the Government without receiving consideration. See Simpson v. U.S., 172 U.S. 372 (1899); Joseph Pickard's Sons Co., ASBCA 13585, 73-1 BCA ¶10026. The major exception to this rule is the amendment of contracts without consideration permitted by P.L. 85-804, 50 U.S.C. App. 1431-35; but there is no mention of the use of this authority to negotiate schedule extensions in FAR Part 50 (governing use of the authority) and no reported instance of its having been used for this purpose.

Thus, the request for consideration is alive and well in most procuring agencies--even though the entire problem is ignored by the FAR. And such request is certainly in accord with accepted legal principles when the time extension is being negotiated before the time of delivery or completion has occurred. See Comp-Con Technology & Manufacturing, Inc., ASBCA 21150, 78-1 BCA ¶13152, recognizing this as the preferred course of action. However, after that time has passed, there may no longer be any need for monetary consideration because the Government may have waived its rights to terminate the contract for default. This is the best explanation for the course of action spelled out in FAR 49.402-4(a) above.

That's the answer to the highlighted question, but there is more to it, so read the whole article. Read the cited board decisions. Read other board decisiopns.

And do not ask me how to find it the article or the board decisions. If you don't know or do know how to find out you shouldn't be in the contracting business.

I only answered this because the  OP cited me.

Some of you guys said you'd take care of things after I "retired."

[Don Mansfield]

@Seeking2Award

Are you familiar with the concept of forbearance?

https://www.wifcon.com/discussion/index.php?/topic/16491-forbearance-vs-change-order/

[Vern Edwards]

17 hours ago, Seeking2Award said:

I'm in search of documented authority (U.S.C. / FAR etc.) that would support the below statement:

"As a general rule, a CO does not need a contract clause in order to grant a request for a "no cost extension." But the CO must obtain consideration in return if the contractor is not contractually entitled to an extension." by @Vern Edwards

I am aware of FAR 50.103-2(a), however, is there something that can be cited when arguing in support of the government receiving considerations for a schedule change (proposed by the contractor that does not benefit the government)? The contractor insists consideration is not warranted, and short of terminating the contract, I am looking for ways to move the conversation forward. We do not want to simply ignore the request and leave dates on contract "as is" because we do not want to waive our right to pursue a termination if needed in the long run nor inadvertently render the contractual schedule of no effect.  Thank you in advance for your consideration in this matter!

Emphasis added.

See "Consideration for Time Extensions: Now You See It Now You Don't, The Nash & Cibinic Report (September 1990):

 

Quote

The Consideration Rule

COs ask for consideration for two reasons. First, they know about, or are advised of, the basic common law rule that consideration is required to make a contract modification binding on the parties. While this rule has been dropped in the Uniform Commercial Code (see Section 2-209), it is still alive in many other contractual situations and is generally believed to be applicable to Government contracts. Second, they know about the Government contracts rule that no officer or employee of the Government has the authority to give up “vested rights” of the Government without receiving consideration. See Simpson v. U.S., 172 U.S. 372 (1899); Joseph Pickard's Sons Co., ASBCA 13585, 73-1 BCA ¶10026. The major exception to this rule is the amendment of contracts without consideration permitted by P.L. 85-804, 50 U.S.C. App. 1431-35; but there is no mention of the use of this authority to negotiate schedule extensions in FAR Part 50 (governing use of the authority) and no reported instance of its having been used for this purpose.

 

Thus, the request for consideration is alive and well in most procuring agencies--even though the entire problem is ignored by the FAR. And such request is certainly in accord with accepted legal principles when the time extension is being negotiated before the time of delivery or completion has occurred. See Comp-Con Technology & Manufacturing, Inc., ASBCA 21150, 78-1 BCA ¶13152, recognizing this as the preferred course of action. However, after that time has passed, there may no longer be any need for monetary consideration because the Government may have waived its rights to terminate the contract for default. This is the best explanation for the course of action spelled out in FAR 49.402-4(a) above.

That's the answer to the highlighted question, but there is more to it, so read the whole article. Read the cited board decisions. Read other board decisiopns.

And do not ask me how to find the article or the board decisions. If you don't know or do not know how to find out you shouldn't be in the contracting business.

I only answered this because the  OP cited me.

[Vern Edwards]

P.S. See also Administration of Government Contracts, 5th ed., pp. 10 - 12, Protection of Public Interest, Consideration Required.

Tell the stupid contractor that consideration is for its own protection, to ensure the extension is enforceable.

[Retreadfed]

50 minutes ago, Seeking2Award said:

is there something that can be cited when arguing in support of the government receiving considerations for a schedule change (proposed by the contractor that does not benefit the government)? The contractor insists consideration is not warranted, and short of terminating the contract, I am looking for ways to move the conversation forward."

What is your objective concerning the contract here?  You say the contractor is late in delivering supplies.  This gives the government the right to default terminate the contract immediately without a cure notice, unless the government has delayed in doing so so that it has waived the delivery date.  If the delivery date has been waived, a new delivery date needs to be established if the government still wants the supplies.  This is because a new delivery date needs to be established so the government can terminate for non-delivery by the new data or failure to make progress toward meeting the new delivery date.   The new delivery date can be established unilaterally by the government.  A quick search of ASBCA decisions has failed to show any decision where consideration was required for establishing a new delivery date after waiver, although a more in depth search may disclose such a decision.  If  the delivery date has not been waived, instead of issuing a T4D, the government and contractor can agree to a new delivery date.  This is where consideration comes in.  The government is providing consideration by giving up its right to terminate the contract for default.  For the extension to be valid, the contractor must provide the government with some consideration in exchange.

[bosgood]

I think Retreadfed sums it up nicely, and I think you are where the gov't has NOT waived its rights, thus it is "not in the interests of the gov't" to make this change.  Consideration is a basic underlying premise of contracting, gov't or otherwise.

This quote from the Dept of State regs may help:

"Generally, there must be "consideration" whenever a contract is modified.  "Consideration" is the benefit each party confers upon the other for the modification.  No official of the U.S. Government may alter a contract to the prejudice of the U.S. Government unless the U.S. Government receives corresponding, tangible, contractual benefits.  There is no such thing as a "no-cost" extension to the contract period of performance unless the extension benefits the U.S. Government.  If the U.S. Government allows additional time for delivery, the "cost" to the U.S. Government is the right to delivery by the date originally agreed upon.  The law requires the contractor to provide consideration for the U.S. Government's giving up that right."

Essentially, if the contractor is not entitled to the requested benefit under the contract, the gov't needs to get something in order to approve it.  They are getting an advantage not prescribed under the current contract terms, so the gov't should also get a benefit.  This also ties into the fact we're using taxpayer $$$ ...

 

[Jamaal Valentine]

2 hours ago, Vern Edwards said:

Some of you guys said you'd take care of things after I "retired."

You’re right and I should have thought to cite the “rule that no officer or employee of the Government has the authority to give up “vested rights” of the Government without receiving consideration” since it’s been mentioned on Wifcon before.

[C Culham]

2 hours ago, Vern Edwards said:

Some of you guys said you'd take care of things after I "retired."

Yep, but I guess we do not get a "A" for effort.   Your wealth of recall and knowledge is a leg up, yet it is frustrating when, especially when not in the Beginners Forum,  references are provided that provide  "magic bullet"and if researched the references would lead to the "more to it" and why there is no magic bullet.

I do not know and will not explore but I wonder if the question posed to "AI" would generate an answer the OP would accept a face value without having to do future research?

[Seeking2Award]

32 minutes ago, C Culham said:

Yep, but I guess we do not get a "A" for effort.   Your wealth of recall and knowledge is a leg up, yet it is frustrating when, especially when not in the Beginners Forum,  references are provided that provide  "magic bullet"and if researched the references would lead to the "more to it" and why there is no magic bullet.

I do not know and will not explore but I wonder if the question posed to "AI" would generate an answer the OP would accept a face value without having to do future research?

I thanked you for your time already. Your attempt to belittle me just makes you seem bitter. I can and will handle my situation without your help/input. I promise. No need to tag team people in here with little jabs and insults towards me. You're super experienced and to get on your level I need to be better and stop being such a beginner. Got it. Feel free to move on like you said you would several posts back. I hope this is the magic bullet that stops you from posting your negative drivel on this thread 🙂

To everyone else providing information I can research and build a response with my team around... I sincerely appreciate you all. There are a lot of different sources that were provided and I am digging in. I'll return when I have a moment to digest it.  

[Seeking2Award]

2 hours ago, Don Mansfield said:

@Seeking2Award

Are you familiar with the concept of forbearance?

https://www.wifcon.com/discussion/index.php?/topic/16491-forbearance-vs-change-order/

I am not familiar, but I will look into this. Thank you for sharing! 

[Seeking2Award]

2 hours ago, Vern Edwards said:

Emphasis added.

See "Consideration for Time Extensions: Now You See It Now You Don't, The Nash & Cibinic Report (September 1990):

 

That's the answer to the highlighted question, but there is more to it, so read the whole article. Read the cited board decisions. Read other board decisiopns.

And do not ask me how to find the article or the board decisions. If you don't know or do not know how to find out you shouldn't be in the contracting business.

I only answered this because the  OP cited me.

I appreciate the feedback! I can find the article and board decisions on my own... you've done enough. Thank you! 

[Seeking2Award]

2 hours ago, Vern Edwards said:

P.S. See also Administration of Government Contracts, 5th ed., pp. 10 - 12, Protection of Public Interest, Consideration Required.

Tell the stupid contractor that consideration is for its own protection, to ensure the extension is enforceable.

LOL I will take this under advisement and once again the source is greatly appreciated. 

[C Culham]

1 hour ago, Seeking2Award said:

I thanked you for your time already.

No you did not.   I can't find it unless it was in your opening post where you gave a global thank you for anyone willing to offer thoughts.  As to the rest of your post, oh well!