Delivery Order extended after the PoP

Hi @Birdsong,

 Before you start fielding questions on this new post, I encourage you to reread Rule 17. I anticipate you’ll receive more questions than answers, initially. Be prepared to respond.

Absolutely . Please provide context to the situation.

Birdsong said:

Can an extension be done after the PoP of the delivery order has ended?

Yes.

Jamaal Valentine said:

Yes.

On what authority? 52.216-22(d)

Birdsong, Are you the contracting officer?  If YES, your options include:

- refuse late delivery and make no payment;

- terminate the delivery order for cause or default;

- negotiate a new delivery date with consideration from the contractor;

- unilaterally establish a new delivery date;

- accept late delivery without a modification extending the delivery date.

- something else.

What do you want to do?

Birdsong said:

On what authority?

It depends. Let’s start by identifying what termination for default (including cause) clause applies to the delivery order. Also, is there an excusable delay under the clause? Absent an excusable delay, you’ll be looking for a general authority to change the delivery date. Here, the parties may agree to change the delivery date - generally, with consideration.

Birdsong said:

52.216-22(d)

No.

Keep in mind, changes may be made to a contract at anytime before final payment on the contract. Also, doing nothing or delaying taking action could be problematic. Under the waiver doctrine, the government’s right to terminate for default may be waived if the government fails to terminate within a reasonable period of time after the default. See Administration of Government Contracts, 5th ed., pp. 843-57, Waiver of Right to Terminate.

Birdsong said:

My concern is that the request for extension was made May 1, 2024, which is after the delivery date. Can an extension be done after the PoP of the delivery order has ended?

Yes.

Absolutely yes, it can be done -- it isn't mandatory, but certainly, it can be done -- and it often is.

No one would ever imagine otherwise.

Jamaal Valentine said:

Keep in mind, changes may be made to a contract at anytime before final payment on the contract.

Do you have authority for this statement?  I have always contended that the government cannot issue a change order after final acceptance and delivery/performance of the contract.

@Retreadfed

Jamaal's statement contains an assertion and an implication.

The assertion is that the parties may change a contract at anytime before final payment.

The implication is that the parties may not change a contract after final payment.

Do you want "authority" for the assertion, the implication, or both?

What will you accept as "authority"--statute, regulation, policy, case law, expert opinion? Any of those? Some of those?

Retreadfed said:

I have always contended that the government cannot issue a change order after final acceptance and delivery/performance of the contract.

How do you handle a final rate determination on a physically complete OTFFP contract?

Vern Edwards said:

What will you accept as "authority"--statute, regulation, policy, case law, expert opinion? Any of those? Some of those?

Ideally, case law.  I learned a long time ago that statutes, regulations and contracts mean what the courts say they mean.  Absent case, law, a statute or regulation.

REA'n Maker said:

How do you handle a final rate determination on a physically complete OTFFP contract

What do you mean by OTFFP contract?  That is a new one on me.

Retreadfed said:

What do you mean by OTFFP contract?  That is a new one on me.

Other Than Firm Fixed Price (CPFF, etc.).  Also see FAR 42.705.

REA'n Maker said:

Other Than Firm Fixed Price (CPFF, etc.).  Also see FAR 42.705.

Can you be more specific?  There are several contract types that are not FFP that do not require the establishment of final indirect cost rates.  However, in regard to cost reimbursement contracts, I don't see anything that ties the establishment of final rates to the government's ability to issue a change order to a contract.  FAR 52.216-7 doesn't mention change orders.  Similarly, 52.243-2, the cost reimbursement Changes clause doesn't mention final indirect cost rates, although it does state that any request for an equitable adjustment resulting from a change order must be submitted before final payment on the contract.  Further, the Changes clause does not specifically address when a change order can be issued.  It uses the phrase "at any time" which implies until infinity which I hope no one would argue for.

Retreadfed said:

I have always contended that the government cannot issue a change order after final acceptance and delivery/performance of the contract.

Are you talking about modifications citing the Changes clause as the authority, or any modification?    My point is that cost-type contracts are modified all the time after they are physically complete (not necessarily under the Changes clause).

Retreadfed said:

Ideally, case law.  I learned a long time ago that statutes, regulations and contracts mean what the courts say they mean.  Absent case, law, a statute or regulation.

Without research I am not willing to do--right now--I cannot cite a specific case that clearly spells out support for my assertion (NOTE: this law firm and the 2023 Contract Attorneys Deskbook, p. 21-7, say the same thing I did).

Now, I don't think you dispute that, generally, parties that may enter into a contract may also change said contract by agreement. If you agree, perhaps the easiest way to think about this is to consider that contracts may be changed by the parties that enter them. The parties may do so until the parties are discharged from the obligations under them. Remember, a lapse in completion or delivery dates doesn't terminate a contract or cause it to 'expire' so the parties are free to make changes (e.g., supplemental agreements).

Remember too, the contracting officer may receive and act upon a proposal for an equitable adjustment under the changes clause if it is submitted before final payment of the contract. E.g., FAR 52.243-1(c). Are you familiar with the doctrine of final payment?

REA'n Maker said:

Are you talking about modifications citing the Changes clause as the authority, or any modification?

Change orders under the Changes clause.

Jamaal, lets back up a little.  Birdsong asked "Can an extension be done after the PoP of the delivery order has ended?" to which you replied "yes."  I have no problem with that answer.  Later you stated "Keep in mind, changes may be made to a contract at anytime before final payment on the contract."  I then asked about the timing of issuing "change orders."  Thus, we may be talking past each other.  Your statement is rather broad and could include changes that are not change orders under the Changes clause.  My question relates specifically to change orders under the Changes clause although I did not mention the Changes clause in my earlier post.

@Retreadfed

I guess I missed your intent. I was only responding to your question. (And my answer does include changes outside of the changes clause)

Retreadfed said:

Do you have authority for this statement?

I believe you and REA were addressing your contention that followed your question. I wasn’t interesting in that part other than reading your response to REA’s question. (Only you introduced change orders…that’s not in the OP nor my response).

On 5/2/2024 at 8:17 AM, Retreadfed said:

Do you have authority for this statement?  I have always contended that the government cannot issue a change order after final acceptance and delivery/performance of the contract.

A counterquestion:  what prohibits a CO from modifying a contract after final acceptance and delivery/performance of a contract?  As long as the change is within scope, I'm not sure it's prohibited.

Krimz said:

A counterquestion:  what prohibits a CO from modifying a contract after final acceptance and delivery/performance of a contract?  As long as the change is within scope, I'm not sure it's prohibited.

Are you asking about modifying a contract or issuing a change order under the Changes clause?  These are not necessarily the same thing.

Retreadfed said:

Are you asking about modifying a contract or issuing a change order under the Changes clause?  These are not necessarily the same thing.

You mentioned change order, so that's what I was replying to, but the same goes for general contract modification.

Krimz said:

You mentioned change order, so that's what I was replying to, but the same goes for general contract modification.

You conditioned your assertion on the change being within the general scope of the contract.  So let's explore that.  For both fixed price and cost reimbursement supply contracts, the respective clauses allow for the following changes  

(1) Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Government in accordance with the drawings, designs, or specifications.

(2) Method of shipment or packing.

(3) Place of delivery.

Under (1) the government is permitted to change the specs for supplies if the supplies "are to be" produced in accordance with those specs.  This language is prospective.  This is significant because acceptance of supplies transfers title to the government.  Thus, once the government has title to the supplies, w are no longer talking about manufacturing those supplies.  Instead, if something is to be done to those supplies, it seems the government would want to be modifying its property.  This would be a new requirement, i.e., modification vice manufacture, that needs to be accomplished under a new contract. 

 On the other hand, if the supplies are not to be manufactured in accordance with specified specs, those specs cannot be changed.  What can be changed is the item to be delivered.  Again, if you are substituting one item for another, i.e., a Ford for a Chevy, it seems this would be a new procurement.

Turning to (2) and (3) once the accepted supplies have been delivered, how is the government going to make the changes described there?  Again, if the government wants to move its property from point A to point B, it seems this is a new procurement.

In regard to services, similar considerations apply.  Once the services have all been performed satisfactorily, it seems if the government wants more or different services from the contractor, a new contract or order would have to be issued.  In other words, the government could not use a change order to a completed contract to acquire new services.

As regards, mods in general, I would say there is no absolute answer.  Some mods, such as final cost determinations under cost reimbursement contracts could be permissible, but others such as a T4C may not be.

Retreadfed said:

You conditioned your assertion on the change being within the general scope of the contract.  So let's explore that.  For both fixed price and cost reimbursement supply contracts, the respective clauses allow for the following changes  

(1) Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Government in accordance with the drawings, designs, or specifications.

(2) Method of shipment or packing.

(3) Place of delivery.

Under (1) the government is permitted to change the specs for supplies if the supplies "are to be" produced in accordance with those specs.  This language is prospective.  This is significant because acceptance of supplies transfers title to the government.  Thus, once the government has title to the supplies, w are no longer talking about manufacturing those supplies.  Instead, if something is to be done to those supplies, it seems the government would want to be modifying its property.  This would be a new requirement, i.e., modification vice manufacture, that needs to be accomplished under a new contract. 

 On the other hand, if the supplies are not to be manufactured in accordance with specified specs, those specs cannot be changed.  What can be changed is the item to be delivered.  Again, if you are substituting one item for another, i.e., a Ford for a Chevy, it seems this would be a new procurement.

Turning to (2) and (3) once the accepted supplies have been delivered, how is the government going to make the changes described there?  Again, if the government wants to move its property from point A to point B, it seems this is a new procurement.

In regard to services, similar considerations apply.  Once the services have all been performed satisfactorily, it seems if the government wants more or different services from the contractor, a new contract or order would have to be issued.  In other words, the government could not use a change order to a completed contract to acquire new services.

As regards, mods in general, I would say there is no absolute answer.  Some mods, such as final cost determinations under cost reimbursement contracts could be permissible, but others such as a T4C may not be.

The right answer is usually, "it depends," but I do not know of anything that explicitly prohibits changes (of any kind) after final payment/acceptance.  

To be more specific, there are plenty of things that might preclude a change, but I don't know of anything that prohibits it.

Krimz said:

I do not know of anything that explicitly prohibits changes (of any kind) after final payment/acceptance.

Maybe you need to take the issue of final payment up with Jamaal.

Krimz said:

To be more specific, there are plenty of things that might preclude a change, but I don't know of anything that prohibits it.

If you were the contracting officer and received an objection to a proposed change order, such as what I provided, what would your response be other than "I don't know of anything that specifically prohibits the change order"?

Retreadfed said:

Maybe you need to take the issue of final payment up with Jamaal.

If you were the contracting officer and received an objection to a proposed change order, such as what I provided, what would your response be other than "I don't know of anything that specifically prohibits the change order"?

It depends on the circumstances, but in the case of a construction contract, I would cite 52.243-4 Changes, which begins with, "(a) The Contracting Officer may, at any time, without notice to the sureties, if any, by written order designated or indicated to be a change order, make changes in the work within the general scope of the contract, including changes-" (emphases added).

What would you say if you were the contractor?

Btw, no issue w/ final payment.  I was ultimately replying to you.  We're just spitballing here, trying to learn.

Krimz said:

(a) The Contracting Officer may, at any time,

I would say that the FAR coverage  in this regard is poorly written and interpreting "at any time" literally produces an absurd result in that such an interpretation permits the government to issue change orders in regard to the work until infinity even after the work becomes government property.  Obviously, this is not what was intended.  Further, such an interpretation would allow the government to ignore statutes like CICA, by simply issuing change orders to a completed contract in perpetuity to obtain work that should be accomplished under a new contract.  Also, hanging your hat on these works ignores the effect acceptance has on the contract.  Once the work becomes government property, the contractor no longer has any responsibility for the work unless there is a clause in the contract, such as a warranty clause, specifically imposing such responsibility.

If I refuse to perform, what are you gong to do to me, issue a T4D?  A T4D is a government claim and you would have the burden of showing that the contractor was in default and the T4D is justified.  

Also, how would you defend a protest by a third party that the change order is an illegal sole source contract?

Retreadfed said:

Once the work becomes government property, the contractor no longer has any responsibility for the work unless there is a clause in the contract, such as a warranty clause, specifically imposing such responsibility.

I have not researched the "at any time" language but you have elluded to one one possible reason, warranty.   I would agree an implied "in perpetuity" could be a stretch.  On this my thoughts go to statute of limitations of the Disputes clause.   But then again, and  without research, I think about such things as the wording of bonding forms and the caveats they have about when oblibations under bonds are satisfied, and then there is fraud (like in FAR clause 52.212-4)and how one might excercise contractual rights regarding each.   Seems like there might be contract clauses and obligations that might have generated the "at any time" language.

Regarding warranties, it isn’t uncommon for the government to make warranty calls for damage or failures that turn out to be not covered by the warranty, such as lack of maintenance, user errors, breakage by other causes, etc. I’ve seen this numerous times.

In those cases, the government would generally mod the contract to reimburse the contractor for the warranty call and any remedial work performed.

During the warranty period, both parties have rights under the contract depending upon who is responsible for an action (risk allocation). These rights, duties and obligations survive inspection, acceptance and final payment.