Justification for Consideration

Is this a service contract?

Seeking2Award said:

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

Have read through this thread?

This one, too...

joel hoffman said:

Is this a service contract?

It is a supplies contract. Thanks for the inquiry.

C Culham said:

Have read through this thread?

I have. It did not answer my specific question, which is why I posted this.

@Seeking2Award, what didn’t you understand in reading this earlier thread at 

You said that the schedule extension would not benefit the government. This implies that there may be some. Additional cost, undesirable delays or other damages to the government. Does the KO simply want to waive the default and establish a new delivery date? Or does the KO want to obtain some consideration for extending the delivery date due to damages or other impact to the government for the delay?

EDIT: The OP posted the following  comment while I was posting this comment. Original. Post is resolved.

Don Mansfield said:

This one, too...

Thank you for this! It was really helpful. I was hoping for a FAR reference or a specific statute... for instance the Department of State has (or had) the following language in the Foreign Affairs Manual (FAM):

14 FAH-2 H-530 CONTRACT MODIFICATIONS : 14 FAH-2 H-531  GENERAL -

a. During the life of a contract, it may become necessary to alter the terms to incorporate new requirements or resolve problems that develop after contract award.  The contracting officer must prepare and issue a contract modification to modify the agreement.

b. The Code of Federal Regulations (CFR) Federal Acquisition Regulation (FAR) 48 CFR 43.102 provides that the only person authorized to modify a contract on behalf of the U.S. Government is a contracting officer acting within the scope of the contracting officer's authority.  The contracting officer’s representative (COR) has no authority to execute any contract modifications.  The COR may not obligate in any way the incurring of additional cost or change in scope by the U.S. Government, or terminate for any cause the contractor's right to proceed.

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

d. Modifications to a contract affect the interests, rights, and obligations of two independent parties, the U.S. Government and the contractor.  The responsibility of the contracting officer is to preserve the integrity of the relationship between these two parties.  The contracting officer reviews the action to determine whether it is consistent with the existing contract and to ensure that the equities of the existing relationship are preserved, and will be continued, when a modification is issued and negotiated.

The thread you offered provided me the reasoning/discussion I was looking for… and I can use it as a compass to work through the issue. Appreciate everyone for the responses!

joel hoffman said:

@Seeking2Award, what didn’t you understand in reading this earlier thread at 

You said that the schedule extension would not benefit the government. This implies that there may be some. Additional cost, undesirable delays or other damages to the government. Does the KO simply want to waive the default and establish a new delivery date or obtain some consideration for extending the delivery date due to damages or other impact to the government for the delay?

Thanks for the response. I provided a response to this thread as feedback to @Don Mansfield. To answer your question directly, we will see how things play out (there may be political implications at play that are yet to be discovered), but this thread will certainly become a part of the discussion with the KO.

Deleted seems the OP has found a way forward.

Seeking2Award said:

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

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

It shouldn’t be hard to verify that parties that enter into a contract are generally entitled to change it (e.g., mutual agreement). FAR 43.103(a)(3); See also, 2023 Contract Attorneys Deskbook, p. 21-6.

Regarding consideration and given your responses within this thread, you might want to submit an inquiry to your legal counsel. Consideration is a legal doctrine (contract law and common law). It’s engrained in FAR-based acquisitions and emphasized in various places (e.g., FAR 1.108(d)(3)). During my research, I learned that the consideration doctrine doesn’t act in isolation and is not always necessary. Again, coordination with legal counsel—based on your facts—is wise.

Jamaal Valentine said:

It shouldn’t be hard to verify that parties that enter into a contract are generally entitled to change it (e.g., mutual agreement). FAR 43.103(a)(3); See also, 2023 Contract Attorneys Deskbook, p. 21-6.

Regarding consideration and given your responses within this thread, you might want to submit an inquiry to your legal counsel. Consideration is a legal doctrine (contract law and common law). It’s engrained in FAR-based acquisitions and emphasized in various places (e.g., FAR 1.108(d)(3)). During my research, I learned that the consideration doctrine doesn’t act in isolation and is not always necessary. Again, coordination with legal counsel—based on your facts—is wise.

Thanks for the response. I appreciate the reference to FAR 1.108. You state that the consideration doctrine is "engrained" in FAR-based acquisitions in various places. Outside of the FAR reference you provided can you point to any other specific places? It feels like the authority for this doctrine with regards to Federal Contracts is hazy. As far as it being "engrained" I would agree with this as far as culture and what people say in classes and debates... but in my lived experience it seems it is completely at the discretion of the KO involved... with many (most I've worked with) KOs electing to ignore consideration for the government altogether in most instances ... preferring to push forward on contract performance and not make waves.

Seeking2Award said:

Outside of the FAR reference you provided can you point to any other specific places?

How about FAR 45.301 and 3.705(e).   I will not go further other than to remind you that you can easily search the FAR these days.

Seeking2Award said:

Outside of the FAR reference you provided can you point to any other specific places?

Sure, see FAR 42.202-2(a)(10). Now, you could easily use the FAR search function at acquisition.gov and go through the 389 results to find anything interesting or useful to you.

C Culham said:

How about FAR 45.301 and 3.705(e).   I will not go further other than to remind you that you can easily search the FAR these days.

FAR 45.301 is irrelevant to my inquiry as is 3.705 (e). I am aware that I can search the FAR. The reason I asked the question is that I was looking for specific information that I can utilize. The thread provided by Don did give me some of that. This does not, but I appreciate your efforts to help.

Seeking2Award said:

I'm in search of documented authority (U.S.C. / FAR etc.)

Check out a treatise on contracting such as Corbin or Williston.  That should give you ample authority to support that proposition.

Jamaal Valentine said:

Sure, see FAR 42.202-2(a)(10). Now, you could easily use the FAR search function at acquisition.gov and go through the 389 results to find anything interesting or useful to you.

I wasn't sure what you were referencing here "42.202 Assignment of contract administration" as I did not see anything discussed that was relevant to my inquiry. However, I do appreciate the time you took to engage. I am aware of the search function, but what I am looking for cannot be found that way... which is why I asked the question here. The earlier FAR reference you provided is useful so thank you for that!

Seeking2Award said:

Outside of the FAR reference you provided can you point to any other specific places? I

For a contract clause, see FAR 52.246-2(h).

Retreadfed said:

Check out a treatise on contracting such as Corbin or Williston.  That should give you ample authority to support that proposition.

I appreciate the information!

Retreadfed said:

For a contract clause, see FAR 52.246-2(h).

Thanks for this reference.

Seeking2Award said:

FAR 45.301 is irrelevant to my inquiry as is 3.705 (e).

Bluntly.  What?  You asked for "FAR References" that supported that the concept was ingrained in FAR.   It seems your want a magic bullet and you are not goingto get one in my view as it flat out depends in every instant case.   The magic of Federal contracting.  And I might add that is why in a general statement on my part, depending on case law as noted in the thread I provided earlier, does not get the matter of the concept of consideration.

Have a great day!

Seeking2Award said:

I wasn't sure what you were referencing here "42.202 Assignment of contract administration" as I did not see anything discussed that was relevant to my inquiry.

Seeking2Award said:

You state that the consideration doctrine is "engrained" in FAR-based acquisitions in various places. Outside of the FAR reference you provided can you point to any other specific places?

This was the inquiry I responded to. I thought it was responsive. Others providing similar responses confirms my thinking. Nonetheless, I think I’ve reached my usefulness here. Good luck.

C Culham said:

Bluntly.  What?  You asked for "FAR References" that supported that the concept was ingrained in FAR.   It seems your want a magic bullet and you are not goingto get one in my view as it flat out depends in every instant case.   The magic of Federal contracting.  And I might add that is why in a general statement on my part, depending on case law as noted in the thread I provided earlier, does not get the matter of the concept of consideration.

Have a great day!

My OP was looking for authority to support that "the CO must obtain consideration in return if the contractor is not contractually entitled to an extension." When it was said that the concept was engrained in the FAR, I asked for specific examples (all my questions on this thread are within the context of my original post). The further examples provided did not tie back to the original post which is why I stated they were not relevant to my inquiry. It was not personal nor meant to be a slight... and I am not fishing for a magic bullet. I was asking to see if there is a FAR reference or law I had missed along the way that would allow me to use the word "must" with confidence.  I appreciate what you all provided, and this thread has helped. Take care.

Jamaal Valentine said:

This was the inquiry I responded to. I thought it was responsive. Others providing similar responses confirms my thinking. Nonetheless, I think I’ve reached my usefulness here. Good luck.

I appreciate you chiming in, I was trying to tie back the additional FAR reference to the OP, but didn't see what made you cite it. If you can explain I would appreciate it, but if not I understand. Thank you for your time.

C Culham said:

Bluntly.  What?  You asked for "FAR References" that supported that the concept was ingrained in FAR.

I agree, Carl.

Also, it’s worth noting that the original inquiry was not asked in the beginners forum. Thus, I think it’s fair to make some assumptions when responding. Bob asked us to “be gentle with [our] responses” there.

Seeking2Award said:

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

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

Don Mansfield said:

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

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

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

Seeking2Award said:

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

What is not in the best interest of the government?

Don Mansfield said:

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

Thanks for the clarification.

Retreadfed said:

What is not in the best interest of the government?

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

Seeking2Award said:

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

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

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

Emphasis added.

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

Quote

The Consideration Rule

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

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

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

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

I only answered this because the  OP cited me.

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

@Seeking2Award

Are you familiar with the concept of forbearance?

/threads/965-forbearance-vs-change-order

Seeking2Award said:

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

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

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

Emphasis added.

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

Quote

The Consideration Rule

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

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

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

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

I only answered this because the  OP cited me.

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

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

Seeking2Award said:

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

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

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

This quote from the Dept of State regs may help:

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

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

Vern Edwards said:

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

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

Vern Edwards said:

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

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

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

C Culham said:

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

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

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

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

Don Mansfield said:

@Seeking2Award

Are you familiar with the concept of forbearance?

/threads/965-forbearance-vs-change-order

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

Vern Edwards said:

Emphasis added.

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

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

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

I only answered this because the  OP cited me.

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

Vern Edwards said:

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

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

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

Seeking2Award said:

I thanked you for your time already.

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

Years ago (I can't remember when) I read an article about a Judge who reprimanded a Contracting Officer who stated "consideration" was not necessary. Basically, the Judge stated the CO did not have that authority to make that decision for the Gov't. Does anyone remember that article or case? I have been looking for it and not able to locate.