|
By
scott G on Thursday, February 27,
2003 - 09:38 am:
I am a contractor who was issued an unpriced
modification for $130,000 on a project and we were directed to
continue performance by the corps and negotiate at a later date.
At this later date negotiation, 4 weeks later, while we are now
in the middle of the changed work we are told that they do not
want to negotiate a reasonable price for the work that has
already been performed just "show us your costs to date" and we
will negotiate the remaining work with you. Is it appropriate
for this type of negotiation technique to be used by the corps?
By
Anonymous on Thursday, February 27,
2003 - 11:30 am:
My guess is that the "unpriced modification" was
issued by the ACO in the field? If this is the case, I'd contact
the district contracting office division chief and see if the
way the mod was issued was appropriate. I just ended my time
with the Corps and from what I saw while I worked with them the
engineers in the field with ACO warrants tend to have an "ends
justify the means" mentality. I know they just want their
project completed on time, but sometimes it gets the Corps into
trouble. And nine times out of ten the contracting office who
has perview over the ACOs doesn't know what the field ACOs are
doing until things go bad.
By
ji20874 on Thursday, February 27,
2003 - 12:17 pm:
Or, you could presume that the contracting officer has
decided to accept the costs for work already performed as de
facto reasonable, and wants to focus the negotiation only on the
remaining work. This sounds reasonable to me. There is no need
to negotiate $100 for work already performed, when the facts
show the actual costs were $75. Here, the contractor will get
its $75, and a reasonable price will be negotiated for the
remaining work. However, the contractor might make a case for
using industry standard prices for work if these standards exist
and if the contractor routinely uses these standards. NOTE: The
foregoing only discusses cost, not profit -- negotiations can
also be done on a price (cost + profit) basis.
By
Anonymous on Thursday, February 27,
2003 - 12:36 pm:
I'm sure, though, that the contracting officer would
consider that this is (probably) a fixed price contract where
the risk is supposed to be on the contractor, and negotiating
the total effort is the most reasonable approach for the
contractor and the government. Doing things the way it sounds
like they're trying to do them puts the contract (at least this
effort) in a de facto cost reimbursement arrangement, and for a
construction contract you cannot have both types of contract on
one contract without HCA approval. And if I hadn't spent the
last 4 years as a contracting officer for the Corps of
Engineers, I might give this situation the benefit of the doubt
like you suggest, but this is SOP to the Corps, at least in the
field.
By
Vern Edwards on Thursday, February
27, 2003 - 04:37 pm:
Three questions:
1. How can you have an "unpriced" modification "for $130,000"?
2. What is the contract type? Fixed-price or cost-reimbursement?
3. What did the modification do? Add work? Delete work?
Substitute some work for other work?
By
scottG on Thursday, February 27,
2003 - 06:58 pm:
Vern - what the corps did was direct us to proceed
with added work for concrete foundations and increased the
funding of the governments contract by $130,000 to be negotiated
downward.
This was a Fixed price construction contract.
I liked JI2074's suggestion of standard industry pricing since
this is work we do all the time and lots of industry data for
the work.
By
Vern Edwards on Thursday, February
27, 2003 - 07:46 pm:
scott G:
I cannot tell exactly what the Corps is trying to do based on
your description, but ji20874 might be right.
Your fixed-price construction contract should contain the clause
at FAR § 52,243-4, Changes. That clause says that when the
government changes a fixed-price construction contract the
contracting officer must make an "equitable adjustment." See
paragraph (d) of the clause. The amount of the equitable
adjustment should be equal to the amount by which the cost of
performance was increased or decreased by the change, plus a
reasonable allowance for profit.
Technically, the standard way to calculate the amount of an
equitable adjustment is to: (1) estimate the cost of all the
work deleted by the change and then (2) delete from that amount
the estimated cost of the deleted work that you have already
done, which gives you the net cost of the deleted work. Next,
(3) estimate the cost of any work added by the change and then
(4) deduct the net cost of the deleted work from the cost of the
added work.
See FAR § 15.408, Table 15-1, Section III.B.
I cannot say whether the Corps' approach is "appropriate" in
your situation, but it doesn't sound illegal or anything like
that. Is there something about it which raises a question in
your mind?
By
joel hoffman on Friday, February
28, 2003 - 12:18 am:
KO's and ACO's alike issue undefinitized modifications
when the delays in pre-pricing a change will impact the cost and
schedule. It's a fact of life. Not to defend what they did,
because I don't know.
For work that has been done, if the matter became a claim, the
most appropriate measure (according to the Boards) is the actual
cost if it can be reasonably ascertained plus a reasonable
allowance for profit. For unperformed work, the estimated cost
plus a profit allownce is the preferred measure. The boards
generally accept this method over a "should cost" estimate for
completed work. See Nash and Cibinic's Administration of
Government Contracts or any of the other N&C books for pricing
of changes.
That and the likelihood that your proposal probably exceeds what
the Corps office thinks it really cost for the portion of the
work already performed may be why the ACO told you they want to
definitize the partial scope of the change using your actual
cost. Yes, I'm aware of the cost plus percentage of cost
prohibition and that's why the change is supposed to be
definitized before all or most of the work (any work, if
possible)is complete. happy sails! joel hoffman
By
scott G on Monday, March 03, 2003 -
10:37 am:
Joel -
The governments method of negotiations puts us in a position of
now tracking our actual cost to date and pricing the work as it
is being performed simultaniously, which is like hitting a
moving target.
To definitize the work to date I would need to wait until next
month to provide actual invoices which they are requesting. Then
the rest of the work would have been completed and we are in the
same situation.
The only good thing for us as the contractor is that we know we
will be reimbursed for the actual cost of the work plus a
reasonable mark-up. The bad thing for the government is it does
not provide any motivation to support the changed effort
expeditiously.
Unfortunately this issue has happened in the past were they keep
stringing us along in negotiations until the work is completed
and then request us to provide actual cost data which makes our
efforts at negotiating a fair and reasonable price futile. One
of the last modifications took 9 months to complete due to this
corps tactic and our initial proposal of a $600K modification
became an accepted $700K modification due to this issue.
Your help is appreciated.
Another question is if out of all the modifications we have had
the only issue we have is the negotiator that is doing this one
and the nine month one last time is the same.
Not that he acts inappropriately but he seems unreasonable on
every issue typically only offering 50% of every submission. Our
experience has been more reasonable with other negotiators and
led to win - win outcomes.
Is it possible to request another negotiator? or would this be
out of line.
By
joel hoffman on Monday, March 03,
2003 - 11:25 am:
Scott, I understand and appreciate your your point of
view. Unfortunately, there are good and "not-so-good"
negotiators.
I recommend that you speak with the ACO (who probably is the
Area or Resident Engineer) about your concerns. Perhaps the ACO
can re-assign the change to someone else or at least discuss
your concerns with the negotiator. It shouldn't hurt to talk to
the chief of the office about the situation. You could complain
to the KO, as a last resort, if you can't improve the situation
with the Resident Office. However, for political reasons, it
would be better if you try working with the Resident or Area
Engineer/ACO, first. If I were the ACO, I'd be listening and
trying to correct valid problems. GOOD LUCK! happy sails! joel
By
joel hoffman on Monday, March 03,
2003 - 11:43 am:
Scott, as a practical matter, if the change is just
underway, I normally wouldn't force the issue of splitting the
settlement into actual and forward pricing, unless there was
some valid reason, like a huge difference in our negotiating
positions. That's how I'd instruct my negotiators to proceed,
also. happy sails! joel
By
Vern Edwards on Monday, March 03,
2003 - 12:01 pm:
Scott:
Think long and hard before you ask the government to replace its
negotiator. If the government refuses to do it and the
negotiator learns that you complained about him it may make
things worse. I would not ask the government to replace a
negotiator unless I thought the negotiator was dishonest and I
could back up my complaint with evidence.
My advice: just deal with it.
By
joel hoffman on Monday, March 03,
2003 - 01:47 pm:
Vern and Scott, I don't think you will shoot yourself
in the foot in describing the problem to the chief of the RE/AE
office for some relief. It's not unusal for contractors to
complain about how the process is going. Vern is right that you
probably won't get far politically if you ask that the
negotiator be replaced, but something can be done about his/her
techniques, if done tactfully. The RE/AE can't always fully
assess a negotiator's performance without some feedback. Of
course, there are always two sides to the story. happy sails!
joel
By
Smokey on Monday, March 03, 2003 -
02:09 pm:
Boy Vern...give us a little bit of credit. You are
suggesting this negotiator may hold it against the contractor
for requesting a change.
Geeze, we are all professionals. If a change results in a
"win-win" for both parties, then my advice would be to ask for
it. I, for one, would certainly not take the request personally.
By
Eric Ottinger on Monday, March 03,
2003 - 02:20 pm:
Scott,
If this negotiator never reaches a handshake until all of the
work is done, I doubt this is unknown to his management.
Either of two cases apply. (1) They may be rating him as a poor
performer because he never completes his negotiations on time.
Or (2) they may consider him an outstanding performer because he
is super cautious and conservative and he can always justify the
price, right to the penny. In any case, I have never seen a
contracting office that didn’t carefully track the status of
overage negotiations. Either way, I doubt they are really
unaware.
If the contractor did this, we would call it “not bargaining in
good faith” and take some action. I see no particular harm in
going to higher management and asking what the parties can do to
get these negotiations wrapped up earlier.
I would treat this as an issue between the contractor and the
contracting office, be tactful and avoid personalizing it. In
short, I agree with Joel.
Eric
By
Vern Edwards on Monday, March 03,
2003 - 03:08 pm:
Smokey:
There are about 20,000 GS-1102s in government and I bet I've met
a lot more of them than you have. Can you claim to speak on the
basis of personal knowledge when you say "We are all
professionals"?
I know you personally and I know that you are a professional,
but I wouldn't be so quick to speak for "all" the others if I
were you.
Scott had better think twice. Life is long and full of
negotiations and he might have to work with that negotiator
again. What is being suggested to Scott is that he escalate the
negotiation. As someone who taught negotiation for many, many
years, I can tell you that escalation is a risky tactic and not
to be used without very good reason.
Scott's only complaint about that negotiator is that he has been
"unreasonable on every issue." One person's "unreasonable" is
another's tough and demanding.
A word to the wise...
By
Smokey on Monday, March 03, 2003 -
04:49 pm:
Vern...
Of course I don't speak for 20,000, and yes, you have met a lot
more of them than I.
I guess I just have more faith in my colleagues that you have. I
am very sensitive to comments about my profession and tend to
take them personally. Remember, I "grew-up" with the toilet
seat/hammer nightmares...
Still, if the Scott thought a change in the negotiator would
improve things, I would still advise him to pursue it.
But as Joel stated...there are always two sides to the story.
By
Vern Edwards on Monday, March 03,
2003 - 05:35 pm:
Smokey:
I understand and appreciate your feelings.
However, I don't consider this to be a matter of faith. I have
faith in particular persons, but not in "people" generally. I
don't know the negotiator that Scott is dealing with and I don't
know what he would do if Scott unsuccessfully complained about
him to his boss. But people being what they are, and they are
many things, Steve should ponder the possibilities. I personally
know and have known plenty of 1102s who would greet Scott with
steely-eyes and a grim smile the next time they met if he
escalated to their supervisor without success.
What I am saying is nothing more than Negotiating 101. Virtually
every book you will ever read on negotiation tactics will tell
you to be cautious about escalating. I consider it to be a last
resort, and I have negotiated with plenty of tough people.
And by the way, it is much riskier for the contractor's
negotiator to escalate than it is for the government negotiator
to do so. It is also riskier while the contract is still
underway than it is after completion of the work.
If Scott does decide to escalate, he should do it carefully,
keeping in mind the prospect that his attempt will fail. It
would be better for him to say, "Joe and I are not the best
mix," thereby shouldering some of the blame, than to say, "Joe
has been unreasonable." Also, if it has come to the point where
escalation seems to be the only course of action, then he should
tell the other negotiator what he is going to do. He can say,
"Joe, I don't think that you and I are getting anywhere and it
may be time let other people try to settle things." Then he can
step behind the scenes and let someone else in his company take
over as the front man. In this way he won't come across as a
weasel, going behind Joe's back and trying to make Joe out to be
the sole cause for the breakdown in negotiations.
If Scott decides to escalate and doesn't do it right, it can
cost him and his company a lot, whether he succeeds or fails.
People have long memories.
Best to you,
Vern
By
FormerCO4AF on Monday, March 03,
2003 - 06:28 pm:
Scott,
A means for your firm to raise the issue without doing it
directly is to walk away from the negotiation.
Being a Government person, I would never walk into a negotiation
if my technical support could not show me evidence supporting
their position on prices.
If, as you say, this negotiator walks in with everything
basically halved, he has to be able to support his position. If
he can't, tell him to call you when he's ready and then leave.
He'll have to explain to his superiors why negotiations failed
and have to be rescheduled.
Just as the Government should not have to deal with an
unreasonable contractor, contractor's should not have to deal
with an unreasonable Government person.
Good luck and I hope it works out.
By
joel hoffman on Monday, March 03,
2003 - 08:01 pm:
Vern, it appears that there might be more problems
with the negotiator than being "unreasonable on every issue."
Nine months to negotiate a medium size modification looks
unreasonable to me, assuming that it doesn't include the time to
prepare and submit a proposal. No, we don't have both sides of
the story.
Scott, I work for the Corps. You don't have to simply "deal with
it", if a negotiator is been totally unreasonable and I disagree
with such advice. Perhaps that's the way it is with "1102's" in
"certain" organizations, as was suggested, but it isn't supposed
to work that way, from my experience in four different Corps
Divisions.
Up until recently, a dozen negotiators worked directly for me at
Corps Division level. I also oversaw contract administration at
3 large RE Offices until the projects were completed. The three
RE's and I were always willing to listen to a contractor who
says they were having problems. We'd also listen to the
negotiator. If he or she were in fact unreasonable, the R.E. or
the office's chief of contract administration worked out
solutions with the negotiator, while avoiding taking over or
taking the job away from him or her.
From 1989-1997, I oversaw the contract administration at 4 Area
Offices and about 25 RE offices in Mobile District. Before that,
I was an R.E. in Europe and a negotiator in Mobile District and
in Saudi Arabia. I can't speak for the entire Corps, but the
supervisory people I know in our field offices are willing to
listen to both sides. The people I work with don't "retaliate"
for tactfully discussing a problem with the negotiator's
supervisor or a peer. A negotiator wouldn't get away with such
tactics for very long.
I consider it "escalating" when the K.O. or a Colonel or someone
else higher in the chain than the negotiator decides to
personally intervene, taking over the negotiations. If that
happens, I have a bigger problem in-house than I do with the
contractor. My position is that the negotiator should fix the
problems and move on.
If tactfully discussing problems with the negotiator's
supervisor is considered risky "escalating", there is no
apparent relief for incompetence or worse and I feel sorry for
the contractors those organizations deal with.
If you want, we can discuss this off-line. happy sails! joel
hoffman
By
Vern Edwards on Monday, March 03,
2003 - 08:21 pm:
Joel:
You and Smokey are top-notch pros, but there are many 1102s who
are not. I agree that nine months is too long to definitize a
change order, but I'll bet that more than a few contractors have
waited nine months to definitize a $700K mod, especially under a
construction contract with a moderate to high volume of mod
activity.
All that Scott has accused this negotiator of being is
"unreasonable" in negotiating a price adjustment. We have very
few facts here.
Scott: Think hard and think twice. Once you pull that trigger
you can't get the bullet back.
Vern
By
Smokey on Tuesday, March 04, 2003 -
11:21 am:
As always, Vern gives great advice and should
definately be listened too. He knows this business better than
anyone I have ever met.
And yes, not all 1102's are equal, but we know who they are. My
experience has been management will not let the
less-than-top-notch 1102's strangle a contractor. Heck, reality
is..we end up doing the job for the less-than-top-notch 1102 to
ensure the mission is met. The real problem is...we can't get
rid of them, but that is another thread.
Scott...Vern is right, you can't get the bullet back. Your
call....
|
