IN ADDITION TO OTHER CITED REFERENCES ONE MAY CONSIDER THE REMEDIES UNDER FAR 50-302-3
WHAT DID CATCH MY ATTENTION WERE THE PRACTICES MENTIONED IN MR HOFFMANS 8/23 2:32 MESSAGE. DIRECTING CONTRACTORS TO PERFORM,UNDER ANY PRETEXT,WHICH HAS THE EFFECT OF INCREASING COSTS,AND DOING SO WITHOUT FUNDS IS PROHIBITED UNDER THE ANTI DEFTCENCY ACT. AND DOING SO WITH THE HOPE THE JUDGEMENT FUND WILL PICK UP THE TAB IS A FALSE ECONOMY. IF THE FUND IS USED THE TREASURY BILLS THE BENEFITING DEPARTMENT WHO MUST REIMBURSE USING CURRENT YEAR FUNDS. THIS MAY NOT ONLY HURT THE AGENCY SPENDING PLAN FOR THE CURRENT YEAR BUT MAY ALSO LIMIT THE ABILITY TO HAVE USED PRIOR YEAR FUNDS UNDER THE THEORY OF ANTECEDENT LIABILITY. I WOULD CERTAINLY NOT ENCOURAGE THIS PRACTICE.

COMMENTS OF 8/23 2:32

By Kennedy How on Monday, August 28, 2000 - 12:39 pm:

I wasn't able to find RMTC online, but from the quickie synopsis that Joel posted, I can say that our activity worried about this a lot, especially when it came to getting IT equipment. I remember 4-5 years ago, there was only one person authorized to order this stuff on an IMPAC card, and while we (the requirer) called around locally to find what we needed, there wasn't a 100% guarantee that the cardholder would go there to actually buy it (sometimes, they had a source that was cheaper). Things got a little better when we had more cardholders available, and it was relatively simple to call the Big Few computer stores and find something locally available RIGHT NOW.

As far as Vern's post regarding ratification and disputes as alternative actions, I have a tendency to agree with this. It has been my experience that most contractors we deal with, they are somewhat wary of "No CO authorization", and they tend to not go off on the say-so of somebody not normally in a position to make some kind of decision. Certainly, there are those who ARE in a position to decide, and be in a position to request that the CO initiate the appropriate contractual action. Normally speaking, it is rare that a CO WILL NOT effect some kind of contractual action; inasmuch as he would normally do so if the direction came down IAW established procedure. I can't think of any reason why the CO would not, in the course of normal business conduct.

From that standpoint, it would seem to me that for those occasions that have a problem with timing, it would be only a matter of time before contract coverage would be accomplished. Thus, it would never get to the disputes stage.

I've been in many program-level meetings with the contractor, at the Contractor's facility, as a representative of the CO's shop. Our working relation with the PM was very good, and while the PM's made the decisions affecting hardware, there were those times where there needed to be CO authorization. I did not have CO authority, but the business relationship was such that I knew what the CO wanted, and didn't want, and I was entrusted by the CO to make good business decisions, inasmuch as the CO would eventually have to sign off on a PCO letter. Furthermore, if I had reservations, I said so, and I knew the CO may also have them; at that point, the contractor would not be as eager to get going until a CO position was provided. Maybe that's implied authority, but the CO entrusted some of his Contract Administrators to do this. And, the Contractor certainly picked up on that, in that we were good for what we said.

By joel hoffman on Monday, August 28, 2000 - 04:25 pm:

C Mercy - Agree with your August 28, 2000 - 10:50 am, concerns about the ignorant - or worse - philosophy of a certain Agency, that the Contractor could be directed to perform work, not in the contract, then the KO should simply deny the claim or REA, forcing a claim. The "judgement fund" would alledgedly be used to fund settlement of the denied claim, after a Board or Court would find merit in the Contractor's claim.

To clarify, most of their requested actions dealt with requests for equitable adjustments by contractors, due to errors and ommissions in the existing scope of work. However, in many cases, the work had not yet been done, prior to the issues being raised. It had the same effect as telling a contractor to perform "new work."

And - to reiterate - we never honored such harebrained requests. Happy Sails!

By Ramon on Monday, August 28, 2000 - 10:29 pm:

Joel, would you have been able to resist such pressure if exerted strongly from within your agency? I noticed that much earlier you mentioned an independence that "is sometimes good, in that it reduces abuse" in relation to forestalling such manipulations.

That is why I think separation of powers, at least for the larger more complex acquisitions, is a good idea. It helps ease the undue pressures and subject actions to more impartial examination. It does not have to be extremely time consuming when designed well. We are just used to seeing poor examples. Though no system can eliminate these things entirely, that independence from undue internal influence tends to keep everyone honest.

By joel on Tuesday, August 29, 2000 - 08:52 am:

Ramon - to answer your question - yes, I would have been able to resist the pressure, even if it came from within my own agency - but I may not be typical of most people. I will say that my Chief's of Contracting have usually stood up to do the "right thing" to our Generals, as well as local Commanders within our agency, when necessary - but that, too is rare. Since we don't have any major weapons systems procurements and resulting pressures, I suppose we can blow our own horns concerning integrity. Regardless of what you may hear out of the Washington Post, the COE still maintains very high ethical standards.

If I hadn't been assigned to my present program, which will remain nameless, I'd definitely agree with you that separation of powers can be a good idea (previous experience). In our case, it is a disaster. The PCO is in one Command, the PM in another, and we are the ACO's for the FFP construction portion of several near billion dollar systems contracts and are COR's on CPAF design-construction portions of a couple of others. The Systems Contractors, and the PM have zero clue about the differences between FFP and CPAF and the PCO's seem to have little FFP experience and NO construction experience.

I just erased two paragraphs, so will now shut up!
Happy Sails!

By Kennedy How on Tuesday, August 29, 2000 - 12:11 pm:

Ramon,

To interject here, that's been a topic of discussion amongst some of us long-timers here at my activity. I know that some of those contracts types were resistent to the "teaming" concepts put forth by those who believe that a cohesive unit consisting of PMs, Acquisition, Engineering, etc. promotes streamlining and less bureaucracy. Rather, they tend to be skeptical about just what the ramifications are of a GS-13 CO who reports to a Bird Colonel, or One Star in the ratings chain. While some here decry the continued independence of the acquisition community (citing the same as, perhaps, "not being a team player" or "a law unto themselves"), much can be said about maintaining an independence, in order to forestall exactly what Joel alludes to.

By Anonymous on Friday, September 01, 2000 - 12:59 pm:

This is a humbling experience for me and I hesitated to post this message. However, this seems like a great forum.

I am working on a claim for additional charges resulting from expedited shipping. The contractor filed the claim timely and I have requested and obtained additional information since the claim was filed.

Here is the situation: The Government awarded a lease of computer equipment for multiple locations in September 1999. The computers were required to be installed and operational by 11/19/99 to comply with Y2K specifications. A protest stopped performance of the lease. The stop work was lifted approximately one month after award, but the delivery date could not be changed. The contractor has claimed the difference between its regular shipping costs and expedited costs. The contractor did not consult with me prior to incurring these additional costs. The contractor's position is that I was aware of the need for expedited shipment.

I have consulted with other contracting officers internally and there is no consensus among us. I know this may be elementary to some of you, but I have been wrestling with this claim and would really appreciate any assistance.

By joel hoffman on Friday, September 01, 2000 - 04:28 pm:

Dear Anon, First, you need to consult your legal advisor. The following is only requesting more info, since you asked for advice in this forum.

What clause is the Contractor "claiming" the adjustment under? (e.g., 52-242.17 "Government Delay of Work", 52-233.3 "Protest after Award"?)

The Protest After Award Clause provides an adjustment where the protest delay causes an increase in costs to complete the project, provided that the Contractor notifies the Government within 30 days of the end of the protest delay - The CO can extend that period, if the Government was not prejudiced by the Contractor's failure to notify sooner. When did the Contractor notify the Government of the extra cost needed to meet the inflexible completion date? If more than 30 days, were you prejudiced? What would you have done, if notified sooner? Happy Sails!

By Vern Edwards on Friday, September 01, 2000 - 04:35 pm:

Unless you know something that you haven't told us, you owe the contractor the money. Pay up.

I'm assuming that the contract was a fixed-price supply contract. You awarded the contract, then stopped the work for one month, then cancelled the stop order without changing the delivery date. By definition, you accelerated the work when you did not change the delivery date after you cancelled the stop work order. If the stop work order increased the cost or time required to perform the contract work, then the contractor is entitled to an equitable adjustment to the contract price, the delivery schedule, or both, assuming that it notified you within 30 days after you cancelled the stop work order or it expired.

See FAR 52.233-3, Protest After Award, which is required in all fixed-price supply contracts.

The fact that the contractor didn't notify you in advance of the increase in costs does not take you off the hook.

Don't wait too long to pay. The contractor is earning interest on the claim.

By joel hoffman on Friday, September 01, 2000 - 04:35 pm:

Dear Anon, you already said the "claim was timely filed" - but what did you mean by this? Also, when were you constructively or actually aware that the units would have to be shipped, using more expensive, expedited procedures? Before or after the cost was incurred? Happy Sails!

By Joel on Friday, September 01, 2000 - 04:40 pm:

Agree with Vern that there is no requirement to notify you before incurring the costs, per the clause, if you are the reason for the acceleration due to a protest - and the cost was necessary and reasonable. Happy Sails!

By joel on Friday, September 01, 2000 - 04:55 pm:

Vern - I was too quick to express unequivocal agreement with you. The Clause does require the Contractor to notify the Gov't within 30 days of the end of the protest delay. If they waited until the stuff was already shipped - after that period, they might have prejudiced Anon's ability to do something else - though I doubt it - if there was no relief available.

By Vern Edwards on Friday, September 01, 2000 - 05:07 pm:

Joel:

We still agree. I mentioned the 30 day notice requirement in my post. Note that the clause allows the CO to consider the claim even if filed late, as long as its filed before final payment.

I assume that the decision not to change the delivery date was made after the cancellation or expiration of the stop work order.

By joel hoffman on Friday, September 01, 2000 - 05:14 pm:

Anon, did we help you or confuse you? Happy Sails! Joel

By Vern Edwards on Friday, September 01, 2000 - 05:59 pm:

Joel:

Let's have some fun with this.

Suppose that the stop work order issued after the protest expires on September 15. On September 30, the contractor requests an equitable adjustment in the form of a change in the delivery date from November 19 to December 19, but does not request an adjustment to the contract price. The CO informs the contractor that the requirement is such that he cannot change the delivery date. The contractor says nothing more, delivers on November 19, and submits a claim for more money due to acceleration of the schedule.

The CO says: Hey! The stop work order expired on September 15, so you had until October 15 to make your claim for any increase in time or costs resulting from the stop work order. I won't pay.

The contractor's lawyer then says, Hey! The increase didn't result from the stop work order; it resulted from your refusal to give my client more time. The stop work order didn't accelerate the work. Your refusal to extend the schedule accelerated the work. If you had extended the delivery date my client would not have asked you for more money. The 30 day deadline in the Protest After Award clause does not apply to this claim. Pay up!

What would you do?

By joel hoffman on Friday, September 01, 2000 - 11:21 pm:

Vern,
Sorry, I'm at a disadvantage, having left work for the weekend. I will have to re-read Nash and Cibinic on the all necessary conditions for a successful "acceleration" claim (changes clause). Also, I noted a difference between the construction contract and supply contract changes clauses, earlier when checking out FAR clauses. I believe the Supply contract clause didn't specifically mention constructive changes, whereas the clause for construction contracts does. If this was a construction contract, I'd say there was acceleration under the changes clause. We also recognize impacts from delays in starting the project due to Protests. Let me read up on it.

By Linda Koone on Tuesday, September 05, 2000 - 09:53 am:

I believe the CO has to pay up!

Assuming from the stated scenario that the contractor's request for a delivery extension in order to perform at the contract price was legitimate, the CO's denial seems to be a breach of contract. The Protest after Award clause appears to 'guarantee' such an adjustment.

The contractor asserted its right to an adjustment under the clause within the prescribed timeframe. It may have been wiser to request either a delivery extension or a price adjustment but failure to do so, in my opinion, doesn't negate the inital assertion to a contract adjustment.

But, I could be wrong and there's always the Disputes clause!

By Kennedy How on Tuesday, September 05, 2000 - 10:07 am:

Let me throw out another little twist here. Are we saying, by the 30 day notice provision, that a contractor is allowed to submit a notice of possible increase in cost to perform? Perhaps the contractor thought he COULD perform without incurring additional cost, but as time came closer, he discovered that expedited shipment is the only way to meet the contractual delivery schedule.

I'm not certain what a CO would do when he gets this kind of notice; it's more of a "heads up" of a claim of sorts, once the time actually arrives. Certainly, a contractor can't submit a claim of increased costs to perform until he actually incurs those costs, and that usually happens after the fact. In a borderline case, we might well put it aside, telling the contractor to try to perform without using expedited delivery, and revisit it later.

To reply to Vern's situation, my gut feeling is that I would be inclined to pay up. There is no reason to ask for more money as well as ask for a contract extension at the same time. I also believe that we might well have put the contractor in an impossibility of performance situation, if we did not provide him with an adequate period of time to perform as the terms of the contract specifies.

Kennedy

By Anonymous on Tuesday, September 05, 2000 - 10:51 am:

I appreciate both of you taking the time to offer your advice and opinions concerning my dilemma.

You have posed these questions:

"What clause is the Contractor claiming adjustment under?"

In filing its claim, the contractor cited "41 U.S.C. 605(c), as amended by Section 907 of the Federal Courts Administration Act of 1992, PL 102-572 (October 1992), the Federal Acquisition Regulation (FAR) 33.207 ... "

The contractor had VERBALLY stated that it would do "whatever it takes" to get the equipment to its destinations on time to meet the November 19 deadline. There was no written commitment by the contractor to meet the deadlines at the original price. The contractor did not request an extension, either. The contractor did not notify the Contracting Officer, either verbally or in writing, of the expectation of additional costs associated with the delay of performance prior to incurring those costs.

"When did the contractor notify the Government of the extra cost needed to meet the inflexible completion date?

I was not aware of the additional costs until January, 2000. The units had been shipped in October and November, 1999.

If more than 30 days, were you prejudiced?

Delivery date could not be changed because the Government required new computers in order to be Y2K compliant. If I had been prejudiced, it would have been in favor of the contractor.

What would you have done, if notified sooner?"

If I had been notified sooner, I might have been able to obtain additional funds from the end user to finance the costs of expedited shipping.

"I'm assuming that the contract was a fixed-price supply contract."

The "contract" is a competed lease under a Federal Supply Schedule.

"First, you need to consult your legal advisor."

I have consulted my Legal Counsel. Counsel's opinion is that the Government DOES NOT owe money to the contractor because the contractor failed to obtain approval for the additional costs in advance.

It is my position that we do owe the contractor money. I understand it is the Contracting Officer's decision, but, as usual, there are unique circumstances. The Government would have to pay out of the agency's funds, then collect from another agency, its customer, which does not agree with the additional costs. I have personally audited the documents submitted for the claim and can substantiate a portion of the amount. The bottom line as far as I'm concerned is that the GOVERNMENT owes the money to the contractor.

Again, I thank you for the time you are taking to offer your advice and opinions.

By joel hoffman on Tuesday, September 05, 2000 - 11:48 am:

The situation is somewhat different than I understood from previous posts.

Nash and Cibinic's "Administration of Government Contracts", 3rd Edition, discuss the requirements for "Acceleration" under "Constructive Changes" (Chapter 4, Section IV, 3. "Acceleration").

Three of the required elements for an acceleration claim (increased shipping costs in order to meet the schedule)are an excusable delay ; Contractor notice to the Government of the excusable delay , and request for extension of time together with supporting information sufficient to allow the Government to make a reasonable determination .

From what Anon said, it appears that the Contractor never requested an extension but merely "stated that it would do 'whatever it takes' to get the equipment to its destinations on time to meet the November 19 deadline."

It also appears to me that everyone was clearly aware that no time extension would be granted. From the Contractor's statement, there probably was an understanding on the part of the Government that the Contractor had to "accelerate" performance to meet the deadline, otherwise it could not.

Was there no indication from the Contractor that it would cost the Government additional funds to meet the delivery date AND did the Government not understand or assume that there would be additional cost passed on to the Government?

Of course, if there were no cheaper alternatives available to meet the schedule and the Government feels that the costs were necessary and reasonable, what else could Anon or the customer have done? - Could they have gone somewhere else to meet the deadline?

Apparently, the customer is simply upset that their providing agency couldn't meet their delivery dates, without incurring additional costs.

I think Anon ought to pay the additional cost as a legitimate constructive acceleration, unless there is something more to this. Happy Sails! Joel

By Linda Koone on Tuesday, September 05, 2000 - 01:27 pm:

Joel:

I'm guessing that most would agree (although apparently Anon's lawyer doesn't) that the contractor is entitled to some relief here and it appears that he is seeking it under the Disputes clause of the contract. If a contractor tells me that it will do 'whatever it takes' to meet an accelerated delivery, I'm going to ask the obvious question-- 'What do you expect it will take and is it going to cost me anything?' If you respond in silence to a statement of that nature, it will certainly be viewed as agreement by the other party.

I think Anon's difficulty arises from the fact that he can't get the money to pay the claim and that his/her problem more closely resembles a violation of the Anti-Deficiency Act.

It's not his/her agency's requirement, why should they fund the claim? Regulated contracting procedures were followed. Authorizing the contractor to perform in the face of a protest is risky business, especially if the protestor prevails (although, personally, in this case, with a critical, short-term delivery I probably would have risked it-but then maybe I'm being a Monday morning quarterback on a Tuesday afternoon!)

On the other hand, the customer isn't going to shell out additional money simply because of a protest. Are you going to get that customer's business the next time around? Doubtful.

I think Anon needs to come up with money to pay for the accelerated delivery or risk additional costs if the issue is elevated beyond the contracting activity.

By Anonymous on Tuesday, September 05, 2000 - 01:39 pm:

Joel,

Regarding your earlier message - I had written an e-mail dated 3/30/00 to the contract administrator for the claimant. I had said that Legal Counsel advised me that it was incumbent upon (the contractor) to contact the Contracting Officer and obtain assurance that the Government would reimburse (the contractor) for such a large sum prior to performing.

The contractor replied in a letter dated 5/5/00 that the Government knew that (the contractor) had to accelerate performance and the government, including the Contracting Officer, was opposed to schedule slippage, notwithstanding the knowledge that (the contractor) was accelerating performance.

The contractor also stated that, " ... further delay was caused by the Government's missteps in issuing a proper delivery order to (the contractor); ..." That statement arose from the time lag between the J&A to proceed pending resolution of the protest and the actual lifting of the stop work order.

In another paragraph, the contractor says, " ... winning proposal offered a firm fixed price predicated on a much longer period of performance than (the Government) ultimately provided due to factors completely beyond (the contractor's) control and largely within the Government's control (e.g., the Government could have issued the suspension override weeks earlier, thereafter the Government could have immediately lifted the stop work order, the Government could have then quickly issued to (the contractor) a proper delivery order; ..."

The next paragraph says, "The Government knew all the pertinent circumstances that required (the contractor) to perform this contract in a fraction of the time upon which (the contractor) had based its firm fixed price. Equally important is the indisputable fact that the government, despite knowing about (the contractor's) accelerated performance, refused to extend the time for performance."

Later in the same letter, the contractor says, " ... delays contributed to the accelerated schedule and to (the contractor's) added costs of performance."

There is more of the same, but you get the drift. I agree with the contractor in this case. As I said before, Legal Counsel does not agree with me. I know the decision rests with the CO, but I would like to obtain more secure support from Counsel. Do you have any case law references I might cite?

Again, I appreciate everyone's participation in this discussion.

By Linda Koone on Tuesday, September 05, 2000 - 01:58 pm:

Anon:

I'd ask the same question you are asking of Joel from your own Counsel. Ask for cases supporting their position that the contractor is not entitled to any relief.

We're just speculating based on the information you've provided. There may be critical elements that haven't been addressed in this discussion that causes your Counsel to disagree with us.

By Ramon Jackson on Tuesday, September 05, 2000 - 02:12 pm:

Linda raises an interesting side issue:

On the other hand, the customer isn't going to shell out additional money simply because of a protest. Are you going to get that customer's business the next time around? Doubtful.

A customer victim of incompetence in the contracting organization would be justified in such attitudes. Protest is not an unusual risk and often not the result of poor execution on the contracting organization's part. Customer's responsibility to fund contract costs, including unforseen glitches not resulting from negligence in the contracting organization, should be covered in an interagency agreement.

In my opinion the "contract" between agencies needs as much care as the contract being considered. Was this perhaps neglected in this case? Will this interagency aspect encourage action resulting in added taxpayer expense of litigated, directed payment?

I wonder anew if the enterprise model for contracting organizations is sound and in the best interest of taxpayers.

By Linda Koone on Tuesday, September 05, 2000 - 02:15 pm:

By the way, I wouldn't use that old 'my lawyer says' ploy in responding to contractor claims/REAs...

If you are using your Counsel's advice in formulating an opinion in a contractual matter, then call it your opinion.

If you don't agree with Counsel's advice, discuss it with them and if it's truly just their opinion and not a reflection of the regs or case law, then thank them for their opinion, formulate your decision, and advise the contractor of your decision.

By Vern Edwards on Tuesday, September 05, 2000 - 02:45 pm:

Anonymous:

At this point I am confused about your facts, but I'm not inclined to re-read everything in order to try to straighten myself out. It's tough to discuss these things intelligently when you dribble out new information after each round of discussion.

I'll sum up my thinking this way: You awarded a contract and then told the contractor to stop work because you got a protest. Then, either (a) you lifted the stop work or (b) it expired. Either way, the contractor had 30 days to request an equitable adjustment to the price, schedule, or both. As I understand it, he asked for more time but, for whatever reason, you wouldn't give it to him. So the contractor delivered as required and then sent you a large bill for the "acceleration."

As I understand it, your lawyer doesn't want you to pay the bill because the contractor did not tell you in advance that it would cost a lot more to deliver in accordance with the original schedule. I have not heard you say that you dispute the amount of the bill. The only argument that I have heard you make against paying the bill is that the contractor did not tell you in advance that it would cost more.

The contractor was foolish not to have warned you in advance. But even if it had, what would you have done? Would you have then granted the extension, even though you told us earlier that you couldn't? Would you have terminated the contract for the convenience of the Government, which would have not only delayed delivery, but would have required you to pay termination settlement costs and then reprocure?

Pay up, unless you think that the additional amount requested is not allowable, as provided in FAR 31.201-2. If you want, fuss at the contractor for failing to warn you in advance and bargain for a lower amount on "moral" grounds.

By joel hoffman on Tuesday, September 05, 2000 - 02:48 pm:

Anon, there is some discussion in Nash and Cibinic's "Administration of Government Contracts" - the cases go both ways. That would be a good starting point to begin a search. Linda is right. We don't have enough facts or benfit of the evidence or contemporaneous knowledge of the circumstances to provide a full opinion - sorry. Happy Sails! Joel

By Anonymous on Tuesday, September 05, 2000 - 03:17 pm:

Thanks to all for your advice and opinions. I will take the information and proceed to argue my case that the contractor should be paid.

By Kennedy How on Wednesday, September 06, 2000 - 12:21 pm:

Vern,

I think Anon was looking for what might be termed "an easy answer", from the standpoint that we here have a tendency to cite experiences or case facts in our other replies. Personally, I think that was what he was looking for, in the hopes of gaining some insight as to where he can look for backup to his position.

It sounds to me that in order to effect a settlement with the contractor on his "claim", he needs his Legal's concurrance, which he doesn't have at this time. Our activity is the same way, while the CO has the ultimate decision authority, we really would like to have Legal buy-in. I've gone around and around on things like this in the past, we don't get much done if Legal is not willing to go along; for whatever the reason. I would be curious to know exactly what legal precedent Anon's counsel is citing to support their position. It might be something technical or procedural, which puts the Government in a superior position. But, depending on the quantum, or fairness of that position, the a court may not agree. We've been in a case where the Government position was thought to be very, very solid, but the ASBCA ruled on "equity", and found for the contractor.

Linda, I don't think it's an Anti-Deficiency issue at all. No contracting activity goes in with a fund to cover litigation. I've settled litigation where no funding existed, we had to petition Army to get settlement money, based on the facts, and JAG opinion. We did get the money, and we did settle. I would expect Anon's agency or customer to do the same.

Kennedy

By Linda Koone on Wednesday, September 06, 2000 - 01:02 pm:

Kennedy:

I didn't mean to imply that you have to have funds available to cover litigation costs.

The situation that was finally described in this thread doesn't really involve a ratification of an unauthorized commitment. In my opinion, it is more closely tied to the Anti-Deficiency Act because I think it was incumbent upon the CO to find out what the contractor meant when he said he would 'do whatever it takes' to meet the original delivery schedule after he was denied an equitable time extension.

My experience tells me that if I can't give a contractor time, I'm going to have to give him money. I'd better have that money available or I'm in violation of the Anti-Deficiency Act.

Hope that clears it up for you - and again, it's just my opinion. Maybe my experience is unique.

Ramon:

I agree that the cost of litigation should be addressed in any interagency agreement, and really can't say whether that is a common practice. I would think it would be a difficult issue on which to reach agreement. As a customer in this case, there's an argument to be made as to whether there was some 'negligence' on behalf of the contracting office (e.g., a month to lift the stop-work order? Denial of an adjustment due to the stop-work order?)

Who would you put in charge of determining whether the requirement or the contracting office is responsible for the litigation costs?

By Vern Edwards on Wednesday, September 06, 2000 - 02:05 pm:

Kennedy:

It is interesting that conflict between the contracting officer and the program/project manager is so frequently discussed, but not conflict between the legal office and the contracting officer, which has always been of more concern to me.

FAR says that the contracting officer should seek the advice of specialists in law (FAR 1.602-2(c)), but it does not give lawyers any authority. They have simply managed to TAKE it.

By Anonymous on Thursday, September 07, 2000 - 11:07 am:

In my case, agency regulations require concurrence of Legal Counsel on the Contracting Officer's decision document for a claim. Therefore, Counsel may hold the Contracting Officer hostage.

By Kennedy How on Thursday, September 07, 2000 - 11:53 am:

Vern,

I think it's because we tend to be more in sync with our legal advisors on many issues, and, as such, they tend to bolster our positions with respect to our "conflicts" with the PM types. From personal experience, the PM types I've worked closely with have tried to get the opinions of the legal staff as we go along; we usually don't have problems in that arena.

Having said that, I'm aware of the various battles we've fought with the same legal staff, certainly, some have been dumb, others are more murky in which way is the better way. Usually, this latter happens when you're on the cutting edge of something, when you aren't on solid, established precedent, those are where the philosophical battles are fought.

Kennedy

By Stan Livingstone on Thursday, September 07, 2000 - 01:48 pm:

My experiences and observations throughout the Government is that legal reviews/approvals/concurrences take on a much more powerful connotation than just providing advice chiefly due to a lack of uniformly competent 1102s in the workplace. Certainly there are very bright and qualified 1102's (for example those than read and participate in this forum). However, there are way too many people in the series without proper training, education, and experience. Those people over the years made outright dumb mistakes. Consequently agency management requires legal approvals on just about everything significant to avoid reoccurrences. I think the only solution is showing that we are educated and trained, exhibit solid business judgment, and can bring value to the acquisition process. Then, and only then, are we respected and legal guidance becomes guidance and not approval.

By bob antonio on Thursday, September 07, 2000 - 02:26 pm:

Stan:

From experience, I group legal counsel as--general (non-contracting) and contracting. The contracting counsel brings specialized knowledge to the table and it is the most important for our purposes. Unfortunately, a "general" counsel often attempts to deal with federal contracting matters.

Years ago, several Justice Department attorneys were representing the U. S. in a dispute. Prior to court, the attorneys were looking for someone to explain fixed-price type contracts. The government lost the case.

By Stan Livingstone on Friday, September 08, 2000 - 07:22 am:

Bob,

I agree. Having a good contracting counsel to work with is key to being effective and doing the job right. There are lots in the Government but sometimes not enough to go around. The unfortunate piece is that the legal advise role often has grown to a legal approver role. In many agencies and offices, you have to have "legal approval" before even rountine actions such as administrative mods are signed. It's a shame that our collective performance over the years allowed that situation to occur.

Stan

By bob antonio on Friday, September 08, 2000 - 09:23 am:

Stan:

I looked over the notes on "legal council" and feel that often contracting officers or heads of contracting activities are better qualified to render decisions on federal contracting matters than agencies' "general" counsel. I also feel that the generalist attorney makes a good advisor on general issues.

The court case I noted involved a legend from the Navy--Gordon Rule. If you worked in Crystal City during the 1970s and saw a fellow that looked like Winston Churchil walking around, that was him. If my memory is correct, he signed a contract modification, as a special contracting officer, adding $33 million to a FPIF shipbuilding contract. However, the government claimed that the modification was not valid, in part, due to a lack of Navy legal review. Prior to working for the Navy, Rule practiced law at a prestigious D. C. law firm. Additionally, he authored books on federal contracting. In the Navy he was the head civilian in the Naval Material Command's contract clearance office. I believe all Navy contracts over $1 million required his approval.

Sometimes a requirement for legal review can be absurd. In the case I noted, Rule was probably more competent than anyone in the Navy's legal office.

By Ramon Jackson on Friday, September 08, 2000 - 10:17 am:

Linda, I agree. Ignoring "we will do whatever it takes" in such context should set off alarm bells. Under these circumstances the statement demands a question and some fact finding -- fast! It this context it contains an implied threat.

I know of no solution where agencies get into serious finger pointing and unethical behavior about responsibility. I've heard a couple of horror stories about agencies being stuck with another's just debt on contracts and there seems to be little defense in such cases.

Written agreement between agencies, including details of cost allocation, is some defense against ignorance. "Customer" agencies, who are often involved with the contracting agency because the contracting scope is beyond their authority, experience, or ability, often seem to fit this category. The normal hazards of contracting, protests included, need to be covered. I recall a big issue one case -- the need for a government management reserve to cover such emergencies. Working and negotiating the issues in MOUs, MOAs, ISSAs, etc., before the "elephants" sign the agreement is itself worth the effort. It defines issues, understanding gaps and works as an educational tool at the lower levels. The final form should capture the real understanding of the staffs involved and formalizing it with signing.

Like all things worth while it will be work, even heated work. Doing it the "easy" way early on only makes it much harder in the long run. Disputes before the fact are generally easier on all than the wars that can be aftereffects of full blown interagency disputes. I'm under no illusion this will solve all problems. I do know leaving it undone or poorly done nearly assures greater problems.

By joel hoffman on Friday, September 08, 2000 - 11:16 am:

The FAR requires legal review, not legal "approval". The KO is required to ensure that all laws are followed, that the interests of the US are served and to seek legal opinion where necessary. I don't see how an Agency Supplement can add a requirement that Counsel "approve" an action. Of course, if the KO does something that Counsel says is not "legal", the KO has exceeded their authority.

Happy Sails! joel

By Kennedy How on Friday, September 08, 2000 - 02:05 pm:

Speaking to the specifics of Procurement Law lawyers (which we have here at my activity), I am lumping them into those lawyers who are trained as such.

I think that when a lawyer tells you it's not legal to do something, those types of opinions/concurrences are pretty cut and dry. It's where we don't have a law prohibiting something that's where we get into problems, or where the lawyer is familiar with past case law which sets a precedent; all because some contractor was able to hire a sharp lawyer to come up with some novel reason to find the Government liable.

A few years ago, I wanted to include Liquidated Damages in a solicitation for GFE. The PMs wanted to hold the contractor to a delivery schedule, so that the final end item will be equipped with said item. This item could be considered a safety item in that it COULD put somebody other than the end item operator in danger. Our legal advisor told us that we had to quantify the cost of that danger (human life) in order to make the liquidated damages provision stick. We could quantify the cost to retrofit, or to store the end item, but we couldn't quantify the price on a human life. And because we couldn't do that, we couldn't use the clause.

If I remember correctly, our legal advisor said that previous case history has ruled against the Government when this clause was applied.

Theoretically, we could have gone ahead and put that in anyway, but if push came to shove in litigation, we would have lost because our legal advisor will say "I didn't support this then, I don't support it now." And, the contractor's attorney will point that out before the ASBCA. When we get to this point, Joel, it becomes more clear as to why you have legal "approval"; you may not have violated any laws or regs, but the case you might end up in will be unsupportable.

I say all of this because it's evolved to where one wants the lawyers on your side from the get-go, because one is gun shy when you're on the cutting edge (or as Stan says, something being done by a competent and bright 1102), and there is a possibility of something blowing up in your face.

Kennedy

By John Ford on Monday, September 11, 2000 - 09:05 am:

Bob, I worked for the Navy at Crystal City in the 70's and I think I remember the case you are talking about with Gordon Rule. There are some details you forgot to mention in your post. As you said, Gordon was acting as a Special Contracting Officer to help NAVSEA clear its backlog of shipbuilding claims. He had a proposed settlement on a claim, but had no backup or support for the position he had negotiatied with the contractor. In essence, he put a rubber stamp on the contractor's claim. NAVMAT revoked his warrant, but he signed the SF 30 granting the contractor's claim and mailed it to the contractor anyway. Shortly thereafter Gordon went into forced retirement.

By bob antonio on Monday, September 11, 2000 - 09:59 am:

John:

The case was the CGN 41 and the Virginia class of CGNs--I believe--and there are a great many details that I left out. If I remember correctly, Gordon was working for the Deputy Secretary of Defense and he briefed the Deputy Secretary on the results of negotiations before signing the modification. However, he was part of the Navy and there were forces in the Navy that had their own agenda.

I have a moment by moment account of Gordon's actions at home and if I remember correctly he still had his special warrant for a few minutes after he signed the modification. Eventually, the Court--somewhere around Norfolk and maybe a district court--decided that the modification was valid. The real story of this case involves the original signing of the contract for the three ships with an option for two more ships.

The first time I met Gordon he was dressed in a three-piece black suit with a watch and chain and a big cigar. All I could think of was Winston Churchill. Years later, I spoke with one of his staff members and I told him how I though Gordon looked like Churchill. The staff member looked at me and said, "He thought he was Churchill."

The major and even minor players involved in this case were interesting.

By bob antonio on Friday, September 15, 2000 - 06:41 pm:

This is the second part of this popular thread. Several notes were added to this one from the first thread. Both this thread and the first thread will remain active until the last note in this thread is 30 days old. After that, both threads will be archived.

By Harley Hartley on Friday, September 15, 2000 - 02:47 pm:

At the top of this thread John Huckle said something along these lines: if a contractor continues to perform routine maintenance services on a contract that has expired, the additional services should be added to the expired contract rather than treated as an unauthorized action requiring ratification. Under the theory that a contract with a specific performance period is completed at the end of the performance period and, therefore, no contract exists on the next day, I've always treated services performed after the end of the performance period as unauthorized and put them through the ratification process which is no fun. I am prepared to re-think my position but would like to know whether the issue has been addressed by BCA or court. Does anyone know of cases addressing this point? By the way, this is my first time reading in this chat room. I haven't so much fun since I used to read letters to the editor in the Washington Post by and about people who drive at the speed limit in the left lane on the beltway.

By Eric Ottinger on Friday, September 15, 2000 - 03:20 pm:

Kennedy,

The fact that the courts will only support liquidated damages up to the amount of actual damages is basic knowledge which most 1102s should pick up fairly early. Your lawyer was passing along some information which your supervisor should have provided.

Here is an excerpt out of the Basic Contracting Course available in the Deskbook.

"The following are the limitations on its use:

(1) to be used only where time of delivery is important and actual damages would be difficult or impossible to determine;

(2) rate must be reasonable, i.e., decided on a case-by-case basis;

(3) rate must bear some reasonable relationship to anticipated or actual damages;

(4) government must attempt to mitigate its liquidated damages, making all reasonable effort so as not to delay contractor’s ultimate performance;

(5) only Comptroller General has power to remit liquidated damages (41 U.S.C.256a);

(6) mandatory in DoD construction contracts expected to exceed $500,000, except cost-plus-fixed-fee or where con-tractor cannot control pace of work (DFARS 211.504)."

You might do an incentive arrangement instead.

You might determine the value of your "human life" by determining what life insurance would cost under the circumstances.

If you wanted to be creative, you might get an advance agreement from the contractor on the value of the human life.

Eric

By Eric Ottinger on Friday, September 15, 2000 - 03:58 pm:

Kennedy,

I should have said "Contract Law" course. I just put "liquidated" into the Search then went down to the education hits.

Sorry for any confusion.

Eric

By Vern Edwards on Friday, September 15, 2000 - 04:33 pm:

Hartley:

You posed this question:

"At the top of this thread John Huckle said something along these lines: if a contractor continues to perform routine maintenance services on a contract that has expired, the additional services should be added to the expired contract rather than treated as an unauthorized action requiring ratification. Under the theory that a contract with a specific performance period is completed at the end of the performance period and, therefore, no contract exists on the next day, I've always treated services performed after the end of the performance period as unauthorized and put them through the ratification process which is no fun. I am prepared to re-think my position but would like to know whether the issue has been addressed by BCA or court. Does anyone know of cases addressing this point?"

Let me use an example to answer your question:

Suppose that the period of performance of a contract for services ends on July 31. The COR asks the contractor to perform for another week, saying that he will make sure that the contractor gets paid. Let us assume for the sake of discussion that the COR had no authority to make a commitment to the contractor, actual, apparent, or implied, and that the CO did not know about the COR's action and therefore cannot be said to have ratified it through acquiescence.

It does not matter whether you add the continued performance to the expired contract or treat is as a new procurement, it was done on the basis of an unauthorized commitment as defined in FAR 1.602-3(a), which must be ratified before the contractor can get paid.

If John Huckle believed that an unauthorized addition to an expired contract does not require ratification, then he was mistaken.

In a different scenario, suppose that the contractor performed for another week entirely on his own initiative. In that case there was no unauthorized commitment to be ratified. FAR makes no provision for making an after the fact award, except to ratify an unauthorized commitment.

I hope that I have understood your inquiry correctly.

By Kennedy How on Monday, September 18, 2000 - 12:21 pm:

Eric,

Yes, we were aware of how the liquidated damages worked, even though we never really used it. Our office was investigating the possibilities of using it in response to the PM's request to look into it as a way to hold the contractor accountable for his performance.

All of this was in the solicitation writing phase, so we hadn't gotten to the point of discussions with any offerors yet.

I don't recall what happened eventually; I was put onto a special assignment (not to exceed infinity) a short while after. I know we didn't use the LD clause.

Kennedy

By Anonymous on Tuesday, September 19, 2000 - 09:39 am:

Although I'm unfamiliar with the case law, I believe the FAR's plain language grants contracting offices authority to resolve unauthorized commitments, that arise under or relate to contracts, under the CDA without a FAR Part 1 ratification.

The content of FAR 1.602-3(b)(5) and its relationship with the rest of FAR 1.602-3(b) lead to this conclusion. FAR 1.602-3(b)(5) doesn't address whether the ratification described at FAR 1.602(b)(1) through (3) is required; the regulation merely provides that unauthorized commitments involving claims should be processed in accordance with FAR 33.2. FAR 1.602-3(b)(4) also addresses the relationship between the ratification process and another type of resolution (i.e., GAO claim process), but in this case there is express language requiring ratification.

The context of 1.602-3(b)(5) within 1.602-3(b) is also relevant. If ratification were required, the most logical place for the language at (b)(5)would within one of the provisions at 1.602-3(b)(1) through (b)(3), all of which describe the ratification process. Instead, (b)(5) is placed on equal footing with these provisions and following another provision, (b)(4), which also addresses the relationship between ratification and another resolution mechanism.

The most reasonable interpretation of 1.602-3(b) is (b)(1) - (3) describe the ratification process while (b)(4) and (5) address whether the ratification process should be used when another authority also exists. As stated at (b)(4), ratification trumps GAO process, but CDA trumps ratification per (b)(5).

FAR 33.2 further supports this conclusion. 1.602-3(b)(5) states "unauthorized commitments that would involve claims subject to resolution under CDA should be processed in accordance with FAR 33.2." If ratification was intended to be part of the process in such instances, FAR 33.2 would address it. However, there is no mention of ratification in 33.2. FAR 33.210 and 33.211, for instance, place limitations on the contracting officer's authority to act under the CDA and set forth the contracting officer's responsibilities under the CDA, but there is no mention of ratification.

I also believe my conclusion is the best from a policy or common sense perspective. Unauthorized commitments that arise under or are related to a contract are likely to be less egregious than those unauthorized commitments that are unrelated to performance under a legitimate contract (e.g., unauthorized commitments unrelated to a contract are more likely to be CICA violations). From an equity standpoint, vendors involved in unauthorized commitments unrelated to a contract are generally less deserving of payment than those who were confused into believing the unauthorized commitment was actually part of their legitimate contract. A conclusion contrary to mine results in a more difficult resolution process (i.e., both Part 1 ratification and Part 33.2 CDA) for those unauthorized commitments related to a contract than for those unauthorized commitments unrelated to a contract, which can be resolved entirely through Part 1 ratification.