Incomplete Service and Demand for Full Payment

How many CLINS?

cdhames said:

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

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

C Culham said:

How many CLINS?

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

Is FAR 52.212-4 in the PO?

Neil Roberts said:

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

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

Retreadfed said:

Is FAR 52.212-4 in the PO?

Yes

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

cdhames said:

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

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

cdhames said:

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

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

C Culham said:

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

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

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

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

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

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

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

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

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

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

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

cdhames said:

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

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

Just now, Retreadfed said:

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

Thank you.

cdhames said:

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

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

Retreadfed said:

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

What contractual cause has been identified for a T4C?

joel hoffman said:

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

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

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

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

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

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

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

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

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

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

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

Neil Roberts said:

What contractual cause has been identified for a T4C?

FAR 52.212-4

joel hoffman said:

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

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

Jamaal Valentine said:

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

...

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

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

cdhames said:

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

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

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

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

cdhames said:

I think I would disagree that descoping requirements are nonstandard.

‘Descoping’ implies imprecise language and understanding of Government contracting. The terms of art for deletions are categorized as deductive changes or terminations. See Administration of Government Contracts, 4th ed., Chapter 4, Changes; See also 2023 Contract Attorneys Deskbook, p. 24-7.

That’s all I meant by my previous statement.

There are things to consider when determining if an action is a termination rather than a change. The colloquial use of the term ‘descope’ doesn’t help frame the situation. It’s not a good signpost.

Jamaal Valentine said:

‘Descoping’ implies imprecise language and understanding of Government contracting.  The standard terms of art for deletions are categorized as deductive changes or terminations. See Administration of Government Contracts, 4th ed., Chapter 4, Changes.

That’s all I meant by my previous statement.

There are things to consider when determining if an action is termination rather than a change.

As I don't currently have $158 to spend on Administration of Government Contracts, I cannot currently see your Chapter 4 on Changes, and raise you a counter.   But to your point, I don't see how a reduction in scope implies imprecise language or understanding.  Things happen that sometimes just demand change.  

On Deductive Changes..  As stated in my original post, this was a commercial contract.

On 10/13/2023 at 11:08 AM, cdhames said:

Looking for suggestions on how to handle this scenario.

If I were you I would send the supplier a written communication asking (per contract clause FAR 52.212-4, Termination for the Government's Convenience clause), for a written description and dollar total for the percentage of the work actually performed, plus reasonable charges per its standard record keeping system that have resulted from not being able to complete some of the work.

Neil Roberts said:

If I were you I would send the supplier a written communication asking (per contract clause FAR 52.212-4, Termination for the Government's Convenience clause), for a written description and dollar total for the percentage of the work actually performed, plus reasonable charges per its standard record keeping system that have resulted from not being able to complete some of the work.

No!  This would create a bigger  mess of a mess.  The OP should of, and should now, issue a written partial T4C of the order and then follow guidance of FAR part 49 to determine settlement.  I fear, on the premise expressed by Joel and a pure read of paragraph l of 52.212-4 that the government is now at a disadvantage yet regardless partial T4C is the route to take.

To Jamaal's point it is not a reduction in scope it a partial T4C as there are CLINs to deal with or in other words segregal elements of the work to be terminated.

C Culham said:

I fear, on the premise expressed by Joel and a pure read of paragraph l of 52.212-4 that the government is now at a disadvantage...

I hope your advice is not that the contract clause language should be ignored. FAR part 49 can not override the contract provision. It can fill in details not at odds with the clause language.

Neil Roberts said:

I hope your advice is not that the contract clause language should be ignored. FAR part 49 can not override the contract provision. It can fill in details not at odds with the clause language.

I am not.  Sorry I was not clear.  Do what the clause paragraph says and use Part 49 as guidance to do so.  What I am at odds with is the OP should I have done so a long time ago!

cdhames said:

As I don't currently have $158 to spend on Administration of Government Contracts, I cannot currently see your Chapter 4 on Changes, and raise you a counter.   But to your point, I don't see how a reduction in scope implies imprecise language or understanding.  Things happen that sometimes just demand change.  

On Deductive Changes..  As stated in my original post, this was a commercial contract.

See also 2023 Contract Attorneys Deskbook, p. 24-7. (Hyperlinked)

I think of changes as substantive changes (e.g., additive changes, deductive changes, terminations), or administrative changes. This could help you in viewing and categorizing changes with specificity rather than as general increases or reductions in scope. Specificity becomes even more important when making scope determinations. (For example, an increase in scope, by definition, is not a change within the general scope of a contract, but widespread misuse shows this is not universally understood)

In a practical sense, the goals are  identifying the type of change so that you can (1) identify the rules that govern it; and (2) understand how the type of change can be used to successfully administer the contract. Using terms of art leads to better research, interpretation, application, and communication.

Take a look at the free resource I’ve linked above and see if it matches your current understanding of changes. I think you’ll come away with a richer appreciation and understanding of contract changes.

For a commercial contract, a deductive change requires mutual agreement. Under these circumstances, that’s not possible unless you just pay the full contract price. If you aren’t willing to accept that, then take other actions. 

Since the remaining efforts can’t be completed for whatever reasons, terminate the remaining work for convenience pursuant to the contract terms and conditions and advise the contractor how to prepare a settlement proposal.

If it won’t do that, you can estimate the amount of work not completed and the estimated costs expended toward it, yourself and offer the resulting price as a Termination settlement. If the contractor won’t budge, you can and should issue the termination settlement unilaterally.

I don’t know the dollar magnitude of the issue. However, costs to pursue a claim are generally unallowable. That may or may not deter the firm from initiating a claim.

As I said before, if the government dilly dallies around and does nothing - under a commercial contract, the contractor might be able to claim a breach of contract action. That would be quite serious and probably costly. 

You must have a lawyer in your agency or organization who can confirm all of this or point out deficiencies in my reasoning. Recommend consulting with them.

Im sorry that you can’t afford a copy of Administration of Government Contracts. I personally bought two editions myself during my active career. The price for one of the books 30 years ago was about $80. I considered it to be personal professional development.

I also was able to get the office to purchase two other editions as well as other books in the Nash and Cibinic, Government Contracts series.

These resources helped me save the government and taxpayers millions of dollars in entitlements and in settlement costs for mods and claims. I was able to be much more effective in mutually benefiting both contractors and the government in other contract admin actions. 

It also helped me to get promotions and attractive assignments…

$158 is a good investment for a beginner in contracting.

joel hoffman said:

However, costs to pursue a claim are not allowable.

But might be recoverable under the Equal Access to Justice Act.

Retreadfed said:

But might be recoverable under the Equal Access to Justice Act.

For a Court Decision.

@cdhames

Since this is the beginners forum, I encourage you to read Sticks and stones: How words and terms of art can hurt the contracting profession.

”Misuse of terms of art in the contracting profession leads to confusion, misunderstanding, and pernicious misconceptions.  Clarity in contracting language improves professionalism and avoids inefficient or wasteful procedures.”