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My office deals primarily in FFP environmental remediation service contracts. Environmental remediation typically involves a lot of unknown factors, and unforeseen delays. So we routinely execute a lot of modifications for POP extensions. Lately, I've been requiring a more rigorous analysis from my PMs for the reasons for the delay, and finding out that frequently the delay is due to contractor rework on documents (Work Plans, etc.) necessary for the project. Recently, I recommended to my KO that a POP extension request be denied since there was no excusable delay. She said we couldn't just let the POP expire. When I asked her why not, she couldn't give me an inteligible answer or citation that I could look up. I've asked other KOs on the team, but none of them has a real answer. They just say we can't let the POP expire. The most knowledgeable of them told me "a lawyer told me once, that if the Government lets the POP expire, it effectively waives all of its rights in the contract." I had too much respect for him to tell him how silly that sounded, but it sounded pretty silly. Btw, I've never seen a contract in this office that carried Liquidated Damages, to that's not an issue. So what is the effect of letting the POP expire on a contract when there is no excusable delay?

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CSalt – You ask “So what is the effect of letting the POP expire on a contract when there is no excusable delay?” The answer is, it depends.

As noted one “effect” could that the Government uses the remedy of Termination for Default but usually this action is used to address the contractor’s material breach of contract.

If the failure to meet POP is because you exercised your rights under an inspection clause like 52.246-4 and its paragraphs (e) & (f) the “effect” is that performance goes beyond its required completion date. In this case you would reflect in a performance evaluation the facts on why the contractor did not perform on time.

Also an “effect” that I have seen used is to extend the contract’s POP through a bilateral modification, but this should not be done without consideration. This fits in, in part, with FAR 49.402-4.

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CSalt,

Why in the world would you award FFP environmental remediation contracts where the scope is not fully known and consequently "we routinely execute a lot of modifications for POP extensions." (I bet you also execute a lot of Mods for cost growth as well, stemming from unknown/unforeseen issues not the least of which will be schedule impacts from the regulators.)

Not knowing all your circumstances, but having been involved in that industry for a decade, I can only think you have awarded the wrong contract type, and are paying for it through processing Mod after Mod.

H2H

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  • 2 months later...

CSalt,

So what is the effect of letting the POP expire on a contract when there is no excusable delay? More work for the government is my answer.

Unfortunately, I believe there are a lot of individuals that share similar views with your office. In particular, statements such as “we can’t let the POP expire” and “it effectively waives all of [the governments] rights in the contract” seem to be the most common arguments for why we can’t allow the POP to “expire.”

The first point of contention is understanding that contracts do not expire. I know your question refers to the POP expiring, and not the contract. However, if the POP expired, it would follow that the contract would expire.

As previously posted by Mr. Vern Edwards on 6 November 2012, Contracts don't have expiration dates. Contracts have (1) a delivery date, (2) a completion date, or (3) a period of performance. (In addition, an IDIQ contract has an ordering period.) Contracts do not "expire" until all obligations of both parties have been fulfilled.

If the contractor is not able to perform within the time specified in the contract, the contractor would be in default. Assuming of course that the delays were not excusable. Most, if not all, contracts will contain some form of a Default clause. For example, for supply and service contracts, FAR 52.249-8 & FAR 52.249-10 for construction contracts.

If the POP “expires,” then the government has the right to terminate the contract. In such cases, the contractor will be liable to the government for any excess cost for those services being terminated. Or, IAW FAR 49.402-4, the CO can permit the contractor to continue performance under a revised delivery schedule. If this route is taken, the government must receive consideration for the extension. In both cases the POP has “expired” and the government has not lost its contractual rights.

There is more involved than the few items I mentioned above. Steps must be taken before the government can terminate for default, not taking action once the POP has passed changes a few things, strict compliance may be a factor, substantially completed is a factor when considering LDs, etc….

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  • 1 year later...

The reason this question comes about about contracts expiring is the wording of 52.217-9 OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 2000)
(a) The Government may extend the term of this contract by written notice to the Contractor within yy days; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least zz days before the contract expires [my bolding].

For example, let's say the contact has four PoP lines

3001 POP 26-SEP-2014 TO N/A 25-SEP-2015

3002 POP 26-SEP-2014 TO N/A 25-SEP-2015
3003 POP 26-SEP-2014 TO N/A 25-SEP-2015

3004 POP 01-OCT-2015 TO N/A 15-OCT-2015 <--- this is for contract manpower reporting

CLIN 3001 through 3003 are for 3 days of services as defined in the Contract Statement of Work.

Assume today is August 13 (because it is). And assume the contract has the clause above in it, and zz is 46 days. When does the notice of intent have to be sent to meet the contract clause's requirement for 46 days preliminary notice?

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Jane,

The options clauses (both -8 and -9) protect unilateral rights of the government to extend the contract. We maintain that right so long as we comply with the terms laid out in the clause(s). You may want to note that "yy days" does not require that step occur before the POP expires. FAR 17.204 provides specific reference. Anyone trying to borrow logic from options contracts and apply elsewhere are mistaken.

CSalt's original post reminds me of colleagues who have argued that once the POP expires, the contract is 'dead' and we have no legal authority to modify for extension. Sadly, such statements have come from those in positions of authority. Hogwash!

The most likely effect of letting the POP lapse will be oversight within your organization. Either the contractor is failing to perform or contracting staff is failing to properly administer.

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Guest Vern Edwards

The reason this question comes about about contracts expiring is the wording of 52.217-9 OPTION TO EXTEND THE TERM OF THE CONTRACT (MAR 2000)

(a) The Government may extend the term of this contract by written notice to the Contractor within yy days; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least zz days before the contract expires [my bolding].

For example, let's say the contact has four PoP lines

3001 POP 26-SEP-2014 TO N/A 25-SEP-2015

3002 POP 26-SEP-2014 TO N/A 25-SEP-2015

3003 POP 26-SEP-2014 TO N/A 25-SEP-2015

3004 POP 01-OCT-2015 TO N/A 15-OCT-2015 <--- this is for contract manpower reporting

* * *

Assume today is August 13 (because it is). And assume the contract has the clause above in it, and zz is 46 days. When does the notice of intent have to be sent to meet the contract clause's requirement for 46 days preliminary notice?

You have four CLINs. I read that as being four separate obligations with four separate expiration dates. Thus, the notice must be sent 46 calendar days before the last day of performance of any CLIN for which the option is being exercised. Start counting on the day before the last day of each CLIN and count back 46 days, counting every single day, including weekend and holidays.

If you're exercising the option for all four CLINs in one action, then in order to avoid a disagreement I would send the notice 46 days before 25 Sep 2015. Otherwise, if you send it 46 days before 15 Oct 2015 you might get into a fight about CLINs 3001 - 3003.

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Thank you Vern for your response!

By my count, August 11 would be 46 days (25 Days thru Sept midight plus 21 days of August: 11 thru 31). So if the notice of intent wasn't sent by midnight on that date: August 11th (assume email is used, rather than mail by post...let's not discuss different time zones for now), what happens? What happens if the government tries to extend later than the zz (in our case 46) days required by contract?

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Guest Vern Edwards
What happens if the government tries to extend later than the zz (in our case 46) days required by contract?

Well, Jane, I can't answer that. If you can't reach an agreement I presume that you'll end up with a dispute that will have to be settled under the Disputes clause.

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  • 2 months later...

CSalt's original post reminds me of colleagues who have argued that once the POP expires, the contract is 'dead' and we have no legal authority to modify for extension. Sadly, such statements have come from those in positions of authority. Hogwash!

illzoni,

Please clarify, are you saying that contract modification may be processed after POP expires to extend POP retroactively?

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Good day, illzoni.

Considering that the FAR 17.204 discusses establishment of options on a base contract, you offer interesting interpretation.

Could you pin-point the exact location in 17.204 allowing for unilateral retroactive extension of options' POP?

Also, do you think that situations where sufficient actions to extend a period of performance (or to prevent a delay) were not timely taken before POP expiration may signify the lack of proper contract administration on governments’ side?

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11-O-2,

FAR 17.204 (d) describes how the period during which an option may be exercised "may extend beyond the contract completion date for service contracts." This speaks to the concept that a contract is not 'dead' after the current POP passes.

My reference is meant only to give a concrete example in the FAR of rights and responsibilities existing beyond the POP. It's not an example of being able to modify an existing POP to extend (and not that I'm saying that can't be done, because I'm not of that opinion).

I tend to agree that many instances when a POP extension is needed may be due to lack of adequate administration. But just because something hasn't been administered well doesn't mean we're without recourse.

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