Government not approving change order

Read the Disputes clause of your contract.  You can also read FAR Subpart 33.2 to see the contracting officer’s instructions.  If you submit a claim amenable to that clause, and the contracting officer denies it, you may appeal to the board of contract appeals or a federal court — the denial letter should include the appeal instructions.

But first, read all of your contract.  Did the Government warrant or guarantee the weights in the contract, or were the weights provided as estimates and as a courtesy?

Did you comply with any contract terms that mandate prompt reporting of differing conditions to the contracting officer?  If not, you may have forfeited your right to a contract adjustment.

Best wishes!

ji20874 said:

Read the Disputes clause of your contract.  You can also read FAR Subpart 33.2 to see the contracting officer’s instructions.  If you submit a claim amenable to that clause, and the contracting officer denies it, you may appeal to the board of contract appeals or a federal court — the denial letter should include the appeal instructions.

But first, read all of your contract.  Did the Government warrant or guarantee the weights in the contract, or were the weights provided as estimates and as a courtesy?

Did you comply with any contract terms that mandate prompt reporting of differing conditions to the contracting officer?  If not, you may have forfeited your right to a contract adjustment.

Best wishes!

I will go through those clauses and the contract.  As you might imagine, this issue and the project itself has consumed all of my time so far.  I reported this to the government as soon as I could verify it was accurate.  Within 2 days of finding out.

The weight of the unit in question was provided in a pre-bid Q&A, in response to a question specifically about its weight.  There was no site visit available nor could you inspect this unit up close, if you chose to do so independently, since it is within a restricted area.

1. Hire a knowledgeable attorney to advise you.

2. If the government does not give you a formal accept/reject decision within 60 days, file a claim.

I am assuming that this is a fixed price dismantling, demolition and removal contract for some real property equipment or other improvement. 

How was the actual work to be performed described in the solicitation and Q&A so that you could determine the scope and extent of the work in order to plan and price it? 

Does the contract include a differing site conditions clause (52.236-2) or some other similar clause?

The basic issue is that the government identified a certain component as weighing X and it actually weighs Z (about 6 times the stated weight.  This requires us to bring in a large crane at an added cost of about 30 k.  They incorrectly identified this weight via a specific question about that in the pre-bid  Q&A.The other issue is that it is causing an extra week of work between the work involved in discovering the mistake, working to get the right equipment lined up... and then the work to process the much larger piece.  We could have originally disposed of it by setting it on one truck and hauling away... now we will have to manually reduce it into at least four pieces to do the same.

The government did finally approve the extra equipment cost but refuses to add any cost for the extra week, stating that the POP was 4 weeks so I am not over the POP.  Although I would have clearly been done in 3 weeks if not for their mistake. 

I suppose it's better than nothing but I still don't think it was fair.

@PD216ohioAlready posed but not yet identified by you  is with regard to what clauses are in your contract.  It may or may not matter considering where you are in the matter of the weight but I providing thoughts anyways.

It has been suggested that clauses relating to disputes and differing site conditions are a place to look.  There is another place as well and that is FAR Part 43 clauses where I note in the limited facts that you have provided the type of work and a hint of the value of the total contract.  As such there is a possibility that FAR 52.243-4 or -5 might be in the contract.  They may be of assist in furthering your request for extension noting that each discuss time as a remedy.

If the government sticks to their guns on the time matter the h2h advice coupled with ji's in both getting counsel and pursuing through the disputes clause is the avenue.

With regard to "better than nothing" and again keying in on the matter of time if the contract has a value by which the government will do a CPARS evaluation of your performance in may be an avenue for you to accept the "better than nothing"  yet state your case.  By example if the POP remains and the government evaluates your timeliness of performance at less than what you expect you will have the ability to state your case in response to the evaluation.   That case by my read is that  your failed timeliness was due to the governments acknowledgement of  the item weighing more that what they stated and agreed to a change in price but in this acknowledgement they did not provide an extension of time.  Solace of sorts for your view that the acknowledged weight matter was not handled completely.

Perhaps the contracting officer has already been generous, maybe even overly generous?  After all, Christmas is approaching.

We don’t have the contract in front of us, but it appears from the comment thread that the government did not warrant the size or weight of anything.  If so, the contractor may be entitled to nothing, and thus should be very happy for the contracting officer’s generous agreement to pay for crane costs.

But regardless, if the contractor wants more money, it is the old question of who owns the schedule float?  Unless the contract specifically specifies, there generally is no single right answer.  That’s where lawyers and judges get involved.

I appreciate all of the advice and pointers in the right directions.  I will research the clauses and see what I can do with any of it if needed.

I know it is never as simple as this... but in essence this is the same (to me) as if the government asked for bids to remove a pile of dirt and in the Q&A it was asked "how much dort is there in that pile"..... the government replies "there are 15 tons of dirt in that pile" and their turns out to be 81 tons of dirt, I can't imagine any circumstance where there would be no added value consideration.

Ohio, you didn’t answer any of my questions or comment on what type of contract it is.

Since then, I have more questions. Did the contract require or prohibit you from disassembling components and were they to be salvaged? In other words did you have to remove it in one piece which required a large crane? Without knowing what the specific scope of work was or any specific information in the contract itself regarding the scope of work, it isn’t possible to answer your question.

Good luck.

PD216ohio said:

I will research the clauses and see what I can do with any of it if needed.

On ‎11‎/‎13‎/‎2019 at 7:29 AM, PD216ohio said:

The weight of the unit in question was provided in a pre-bid Q&A, in response to a question specifically about its weight.  There was no site visit available nor could you inspect this unit up close, if you chose to do so independently, since it is within a restricted area.

On ‎11‎/‎13‎/‎2019 at 7:20 AM, ji20874 said:

But first, read all of your contract.  Did the Government warrant or guarantee the weights in the contract, or were the weights provided as estimates and as a courtesy?

Salient comments from the thread.  Noted only because we have directed you to clauses most of the time.  ji's comment was lost in the mix but is one that could lead you to something  in  the statement of work, specifications, performance based work statement or whatever directed the actual work. A final conclusion of weight may come from other than a clause.   By example, with acknowledgement that this example is not even close, but here is a Civilian Board of Contract Appeal Case that revolved around weight of a ship.  Considerations and conclusions in the case may help your thinking.    https://www.cbca.gov/files/decisions/2016/ZISCHKAU_06-03-16_4740__MARINE_METAL_INC.pdf

Hi Everyone,

Apologies for the delayed response but, as you might imagine, I was immersed in the matter at hand and in a remote location.

On 11/13/2019 at 12:28 PM, joel hoffman said:

I am assuming that this is a fixed price dismantling, demolition and removal contract for some real property equipment or other improvement. 

How was the actual work to be performed described in the solicitation and Q&A so that you could determine the scope and extent of the work in order to plan and price it? 

Does the contract include a differing site conditions clause (52.236-2) or some other similar clause?

Yes, this was a fixed price dismantling project of a floating station on an inland lake.  It was under the simplified acquisition threshold.

The work was described by stating 100% removal was required.  There was also a Q&A period in which weights of various items were asked, including the item of concern in my predicament.  Plans (which do not seem entirely complete and excluded any fine details of the subject section of equipment) were supplied along with photos.  In the Q&A period, the weight of the subject piece was specifically asked, and stated to be 15kips.  It was by luck and happenstance that we discovered it was actually 81k (calling crane companies and happened upon the a contractor from the original install).  Once that was discovered, I contacted the COR and simply asked him to verify the weight of the piece, at which time he now stated it was 35kips.  I then went on to gain verification (actual copies of his records) from the original contractor that it was indeed 81kips, which I did receive and at which point I presented the issue to the COR. According to the crane meter, it was over 81k with whatever additional equipment may have been mounted since the original build and some water retention.  There was no doubt that the weight of 81kips was accurate when it was newly installed.

Furthermore, the section was not able to be sectioned or reduced in size prior to removal as it was suspended upon and in the center of the floating station and mostly submerged in water.  We were unable and disallowed to work in or under the water due to the nearby water inlet and the suction it generates.  Further proof that the unit was not reducible might be that it was also installed as one assembly.

The Contracting Officer did authorize a change order that did not allow for our full costs associated with the change.  There was an estimated cost (since we would not know until the work was complete) of which the CO authorized about 60%.  He disallowed any labor costs under the reasoning that the POP was 30 days and that we were still under 30 days, even though we were on schedule to be complete in 3 weeks if not for the change.

I was issued ample time to complete the project, and the deadline was met.  Extending the period by 10 days, including a full weekend of work.  We completed the project 100% on the last day.

Here is the full list of incorporated clauses.  They do not include 52.236-2. :

FAR 52.203-19 Prohibition on Requiring Certain Internal Confidentiality Agreements or Statements (Jan 2017)
FAR 52.204-7 System for Award Management (Oct 2016)
FAR 52.204-13 System for Award Management Maintenance (Oct 2016)
FAR 52.204-16 Commercial and Government Entity Code Reporting (Jul 2016)
FAR 52.204-18 Commercial and Government Entity Code Maintenance (Jul 2016)
FAR 52.204-19 Incorporation by Reference of Representations and Certifications (Dec 2019)
FAR 52.204-22 Alternative Line Item Proposal (Jan 2017)
FAR 52.209-11 Representation by Corporations Regarding Delinquent Tax Liability or a Felony Conviction under any Federal Law.
FAR 52.212-1 Instructions to Offerors- Commercial Items (Jan 2017)
FAR 52.212-4 Contract Terms and Conditions-Commercial Items (Jan 2017)
FAR 52.219-1 Small Business Program Representations
FAR 52.219-6 (Dev) Notice of Total Small Business Set-Aside (Deviation 2019-O0003)
FAR 52.232-18 Availability of Funds (Apr 1984)
FAR 52.232-39 Unenforceability of Unauthorized Obligations (Jun 2013)
FAR 52.232-40 Providing Accelerated Payments to Small Business Subcontractors (Dec 2013)
FAR 52.237-1 Site Visit
FAR 52.237-2 Protection of Government Buildings, Equipment, and Vegetation
FAR 52.253-1 Computer Generated Forms
DFARS 252.201-7000 Contracting Officer’s Representative
DFARS 252.203-7000 Requirements Relating to Compensation of Former DoD Officials (SEP 2011) (Section 847 of Pub. L. 110-181).
DFARS 252.203-7002 Requirement to Inform Employees of Whistleblower Rights (Sep 2013)
DFARS 252.203-7005 Representation Relating to Compensation of Former DoD Officials (Nov 2011)
DFARS 252.204-7003 Control of Government Personnel Work Product (Apr 1992)
DFARS 252.204-7004 Alternate A, System for Award Management (Feb 2014)
DFARS 252.204-7008 Compliance with Safeguarding Covered Defense Information Controls
DFARS 252.204-7012 Safeguarding Covered Defense Information and Cyber Incident Reporting (Oct 2016)
DFARS 252.204-7015 Notice of Authorized Disclosure of Information for Litigation Support
DFARS 252.209-7004 Subcontracting with Firms that are Owned or Controlled by the Government of a Country that is a State Sponsor of Terrorism
DFARS 252.223-7008 Prohibition of Hexavalent Chromium (Jun 2013)
DFARS 252.225-7048 Export-Controlled Items
DFARS 252.232-7003 Electronic Submission of Payment Requests and Receiving Reports (Jun 2012)
DFARS 252.232-7006 Wide Area WorkFlow Payment Instructions
DFARS 252.232-7010 Levies on Contract Payments (Dec 2006)
DFARS 252.237-7010 Prohibition on Interrogation of Detainees by Contractor Personnel
DFARS 252.243-7001 Pricing of Contract Modifications (Dec 1991)
DFARS 252.244-7000 Subcontracts for Commercial Items
DFARS 252.247-7023 Transportation of Supplies by Sea (Apr 2014)

When did you find out that the weight of the item as represented by the government was inaccurate?  I'm not interested in when you found out the actual weight, just when you found out that the weight the government old you was inaccurate.  Was it before you submitted your proposal, after proposal submission but before award, or after award?

Commercial services contract then.  I wonder how this contract qualifies as pricing as a commercial services contract.

I’m assuming that you priced the contract based upon the description of dismantling and removing a “commercial item” (a floating station)  and pics provided as well as answers to the pre-bid questions and answers provided. 

if it is a service for “a commercial item” there should have been a way to determine what was in the floating station and their weights. 

Regardless, if this is considered a “change”,  then 52.212-4 (c) Changes clause requires bilateral, written agreement...

“(c) Changes in the terms and conditions of this contract may be made only by written agreement of the parties.“

joel hoffman said:

Commercial services contract then.  I wonder how this contract qualifies as pricing as a commercial services contract.

I’m assuming that you priced the contract based upon the description of dismantling and removing a “commercial item” (a floating station)  and pics provided as well as answers to the pre-bid questions and answers provided. 

if it is a service for “a commercial item” there should have been a way to determine what was in the floating station and their weights. 

Regardless, if this is considered a “change”,  then 52.212-“(c) Changes clause requires bilateral, written agreement...

“(c) Changes in the terms and conditions of this contract may be made only by written agreement of the parties.“

Joel, my point of view is that the government unilaterally changed the contract when it required the contractor to do more than was stipulated in the contract.

here_2_help said:

Joel, my point of view is that the government unilaterally changed the contract when it required the contractor to do more than was stipulated in the contract.

H, the Government didn’t have the right to “change the contract” without bilateral agreement.  52.212-4 (c).  We likely agree on that point. 

“(d) Disputes. This contract is subject to 41 U.S.C. chapter 71, Contract Disputes. Failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the clause at FAR 52.233-1, Disputes, which is incorporated herein by reference. The Contractor shall proceed diligently with performance of this contract, pending final resolution of any dispute arising under the contract.“

joel hoffman said:

the Government didn’t have the right to “change the contract” without bilateral agreement.  52.212-4 (c).

Joel, this brings up a point that has been danced around in many discussions at this forum and that is whether a constructive change can occur under a contract for commercial items?  I don't want to put words in your mouth, but it seems you do not think so.  If the doctrine of constructive changes does not apply to a contract for commercial items, it seems like the only remedy available to a contractor for a classic constructive change, such as defective specs, is a breach of contract claim.  If the breach is material, the contractor can stop work.  I don't think that result is desirable.  That is one of the reasons that the constructive change doctrine evolved in the first place.  Having said that, I am not aware of any appeals board or court case that addresses this issue.

Retreadfed said:

Having said that, I am not aware of any appeals board or court case that addresses this issue.

Retreadfed, you mentioned cases.

Quote

In a commercial item contract, arguably, the concept of “constructive change” does not exist. According to FAR 52.212-4(a), a change to a commercial item contract may only be made through the written agreement of the parties. At least two boards, however, have allowed recovery for extra work under a commercial item contract without a written agreement. See Hawaii Cyberspace, ASBCA No. 54065, 2004-2 BCA 32,744 (holding that the CO’s unilateral specification changes constituted constructive changes; the court avoided addressing whether the contractor’s claims “should be analyzed as claims for constructive changes or claims for breach of contract”); Bradford F Englander, Liquidating Trustee for Dulles Networking Assocs, Inc, VABCA No 6473, 2001-2 BCA 31,466 (denying government’s motion to dismiss the contractor’s extra-work claims on commercial item firm-fixed price, ID/IQ contract); SAWADI Corp., ASBCA No 53073, 2001-1 BCA 31,357. See also Nash & Cibinic, “Commercial Item Disputes: Using New Contract Language,” 17 No 1 Nash & Cibinic Rep 2 (Jan 2003) (discussing recent case holdings allowing contractors to recover for extra work under commercial item contracts even where such changes were not made through mutual agreement of the parties).

Darrell J. Oyer, 1 Accounting for Government Contracts - Federal Acquisition Regulation § 17.03, at note 4.  I haven't looked at any, but thought the list of citations might be a useful starting point.

Thanks, Jacques, however, none of these cases answer the question as to whether the constructive change doctrine applies to contracts for commercial items although there is a hint that it might in Agility Pub. Warehousing Co. KSCP v. Mattis, 852 F.3d 1370, 1385 (Fed. Cir. 2017).

Sorry, didn't mean to send you on a wild goose chase.

You don't need a bilateral agreement for a constructive change to occur -- indeed, by definition, EVERY constructive change happens without a bilateral agreement -- if there was a bilateral agreement under the changes clause, then the change would not be characterized as a constructive change.

So FAR 52.212-4(c) is not a bar to or prohibition on constructive changes in contracts for commercial items.  Nothing in the contract gives permission for constructive changes. 

Neither FAR 52.212-4(c) nor the Changes clauses at FAR 52.243-x allow, authorize, or otherwise countenance constructive changes.  Constructive changes arise wholly outside the Changes clause.

Constructive changes arise under the Disputes clause, not the Changes clause.  The Disputes clause is incorporated into FAR 52.212-5 for contracts for commercial items.

So, YES, you can have a constructive change under a commercial item contract (if you have sloppy contract administration) and you can use the Disputes clause to formalize that change.  This is not giving permission for constructive changes (officially, there should never be any constructive changes), but merely providing for after-the-fact formalization and remedy in lieu of a breach argument.

Thanks for your earlier remarks, Retread and Jacques. I honestly don’t or at least didn’t know whether or not there could be a constructive - directed - change in a commercial services contract. It wouldn’t seem so under paragraph (c).

However paragraph (d) addresses claims when parties don’t agree on a request for equitable adjustment, claim, appeal “or other action arising under the contract”. It further directs the contractor to proceed diligently in performance of the contract pending resolution of a claim.  That would indicate to me that there could be issues arising that might involve constructive changes, Government delays or other actions. If there was ever a situation where a differing site condition could be encountered, this might be one. Government couldn’t allow site inspection, grossly misrepresented actual conditions and the scope of work. 

There have been cases where a contractor has recovered for interference with early completion but for a change, when actual completion was achieved within the completion period. However, recovery is usually achieved under standard change, differing site conditions and similar clauses for impacts.

And here, I would advise the contractor that it would have to show that it would have finished early but for the changed conditions - which it appears that it could substantiate such. 

edit: thanks, too, ji. You posted while I was drafting this post.

ji20874 said:

You don't need a bilateral agreement for a constructive change to occur -- indeed, by definition, EVERY constructive change happens without a bilateral agreement -- if there was a bilateral agreement under the changes clause, then the change would not be characterized as a constructive change.

So FAR 52.212-4(c) is not a bar to constructive changes. 

The Changes clauses do not allow, authorize, or otherwise countenance constructive changes.

Constructive changes arise under the Disputes clause, not the Changes clause.  The Disputes clause is incorporated into FAR 52.212-5 for contracts for commercial items.

So, YES, you can have a constructive change under a commercial item contract (if you have sloppy contract administration) and you can use the Disputes clause to formalize that change.  This is not giving permission for constructive changes (officially, there should never be any constructive changes), but merely providing for after-the-fact formalization and remedy.

That isn't very satisfying, since the contractor's duty to "proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action ARISING UNDER THIS CONTRACT, and comply with any decision of the Contracting Officer," under paragraph (i) of the Disputes clause wouldn't apply to a Government breach of the contract, would it?

Jacques said:

That isn't very satisfying, since the contractor's duty to "proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action ARISING UNDER THIS CONTRACT, and comply with any decision of the Contracting Officer," under paragraph (i) of the Disputes clause wouldn't apply to a Government breach of the contract, would it?

I think that the -4 clause is poorly written, if the contract likely may have to be administered and adjudicated outside the simplified language of the contract. 

Fortifies my personal opinion that this particular effort required more due diligence on the government’s part of it wanted to use a commercial services contract format for convenience.

Seemingly a poor fit, considering the dangerous nearby intake conditions and also poorly implemented. If the contractor could find out who installed the equipment, the government might also have been able to determine what was there.

Jacques said:

That isn't very satisfying...

Only if you are looking for prior permission to do a constructive change.  There is no such permission.

The Disputes clause (not the Changes clause) provides perfectly for after-the-fact formalization and remedy for a constructive change.

joel hoffman said:

I think that the -4 clause is poorly written...

The -4 clause here was likely mis-applied — this service almost certainly does not meet the FAR definition for a commercial item.  As you noted, “Seemingly a poor fit...”

ji20874 said:

Neither FAR 52.212-4(c) nor the Changes clauses at FAR 52.243-x allow, authorize, or otherwise countenance constructive changes.  Constructive changes arise wholly outside the Changes clause.

The second sentence does not follow from the first.  Consider the following from Irwin Newman, "Constructive Changes," 9 National Contract Management Journal 44, 45 (Winter 1975-76), citing J. Bell v. United States, 404 F.2d 975 (Ct. Cl. 1968):

Quote

Its [the constructive change doctrine's] effect is to give greater credence to substance than to form.  It embodies the equitable theory that treats "what should have been done as done"; it transmutes an informal directive into a formal order.

In the context of the above quote, what "should have been done" was a change under the Changes clause  If the Government cannot issue a "formal order" why should the court or boards give effect to an "informal directive"?  Surely there is a point where the Government's breach requires that the Contractor refuse to perform.

You’re still looking for something in the contract that gives permission for a constructive change.  There is none.  

The Changes clause neither gives permission for a constructive change nor provides a remedy for a constructive change.  In a contract for commercial items, the Government cannot make a unilateral change under FAR 52.212-4(c).  Neither can the Government order a constructive change nor provide an equitable adjustment for such order under FAR 52.212-4(c).

A constructive change, if allowed to occur through sloppy contract administration, is formalized and remedied under the Disputes clause.  At least, that’s how I approach it.

ji20874 said:

The Changes clause neither gives permission for a constructive change nor provides a remedy for a constructive change.

Outside of the context of commercial item acquisition, the Changes clause is PRECISELY where courts and boards look in determining the remedy for constructive changes.  The doctrine, which has it origin before the Contract Disputes Act, allowed the boards to retain jurisdiction.  To quote again from the Newman article referenced above, "By treating the constructive change claim as arising under the Changes clause, the Boards can ignore the breach and settle the claim administratively, an approach that had been approved by the courts."

I understand where you’re coming from.  But the only way the matter gets to the Boards (or the courts) is through the Disputes clause.    

ji20874 said:

The Changes clause neither gives permission for a constructive change nor provides a remedy for a constructive change.

This remains a true statement.  If a Dispute is raised, the Boards may reasonably look to the Changes clause to help fashion a remedy (although they need not be limited by the Changes clause) — but I cannot allow myself to declare that the Changes clause gives the Government permission to unilaterally order a constructive change and that it gives the contractor a right to equitable adjustment for a constructive change.

If I were administering a contract for commercial items and a constructive change occurred, and I later came to terms with the contractor for settlement, my settlement modification would cite the Disputes clause as the authority for the agreement.  That’s my practice.

@ji20874, the history of the doctrine shows it is underpinned by the Changes clause.  Consider Nash & Feldman, Government Contract Changes (3d Ed.), at § 10:6:

Quote

Nonetheless, although the appeals boards and the courts may now employ common law breach of contract theories to provide the contractor a remedy under the Disputes Act, they continue to employ the constructive change doctrine.

One explanation for this outcome is a belief that it is more appropriate to grant a remedy called for by the contract terms than to look for a remedy outside of the contract (such as breach of contract).  As the ASBCA has remarked, "The constructive change doctrine is, perhaps, the foremost example of our commitment to providing reflief under the contract whenever it is possible to do so." ...

However, the constructive change doctrine will not be applied if the contract is not required to and does not include a Changes clause.  In Robert W. Patterson, [ASBCA 36823, 89-3 BCA ¶ 22101] the ASBCA denied compensation for extra work at least partially on the basis that there could be no constructive change because the contract lacked a Changes clause. ...

The above passage from Robert W. Patterson also raises questions on whether the constructive change doctrine applies to commercial item contracts under FAR Part 12.  As explained in § 2:14, commercial item contracts have a standard Changes clause, with the distinction that the Government has no right to issue a unilateral change order.  The parties must agree to the change.  Because the constructive change doctrine is premised on the existence of a contract clause reflecting a unilateral Government right to issue change orders, as stated in Robert W. Patterson, and no commercial item contract clause explicitly gives the contractor the right to assert this theory, it could easily be concluded that a contractor may not assert a constructive change (or constructive delay) claim on a commercial item contract.

A 2001 ASBCA case has allowed the contractor to assert such claims under a commercial item contract, although the board did not explain the basis for its decision.  Apparently, the rationale for the decision is the Disputes paragraph of the FAR 52.212-4...clause. …  Thus, if one is willing to assume that constructive changes are the equivalent of breaches of contract--and the ASBCA evidently made this assumption--then the "Disputes" paragraph provides the same relief that would have been provided under the standard clauses providing for price adjustments.

The "2001 ASBCA case" is SAWADI Corp., ASBCA 53073, 01-1 BCA ¶ 31357.

Re:  The 2001 ASBCA case (SAWADI).

Good.  The ASBCA and I are taking the same stand.

ji20874 said:

Re:  The 2001 ASBCA case (SAWADI).

Good.  The ASBCA and I are taking the same stand.

There is a surprising similarity in the depth of analysis.

Entirely coincidental...

Outside of commercial item contracting, the Government has the flexibility to include the "Notification of Changes" clause at FAR 52.243-7, which, I suspect even @ji20874 would admit is written with constructive changes in mind.  If a commercial item solicitation contained this clause, a potential offeror could easily object that it is inconsistent with customary market practices for the commercial item being acquired AND THAT OBJECTION WOULD LIKELY BE FACTUALLY CORRECT.  Yet that same contractor likely wouldn't hesitate to take advantage of the apparent willingness of at least one panel of the ASBCA to ignore that commercial item procedures are INTENTIONALLY different from traditional Government contracting procedures, and submit a claim and appeal grounded on constructive change.

Yes, I am a big fan of the notification of changes clause!  It is written to avoid constructive changes.  I have even used it in some contracts for commercial items under FAR 12.301(e).

But, dropping that clause for a moment, when a constructive change seems to be arising in a contract for commercial items, the contractor can

• (1) assert that no changes are allowed by insisting on fidelity to 52.212-4(c) and not starting the work;
• (2) insist on a written change as required by 52.212-4(c) before starting the work; or
• (3) keep quiet, start the work, and make its claim for more money later (after the opportunity for a timely mutually-beneficial negotiation has passed).

We seem to be talking about (3), where a Government official erred in making what the contractor saw as a change, and the contractor did not elect (1) or (2).  We would be better served if more contractors would choose (1) or (2).  But, when (3) is the reality, the Disputes clause is there to facilitate the contractor's remedy (if the facts call for a remedy).

ji20874 said:

Yes, I am a big fan of the notification of changes clause!  It is written to avoid constructive changes.  I have even used it in some contracts for commercial items under FAR 12.301(e).

But, dropping that clause for a moment, when a constructive change seems to be arising in a contract for commercial items, the contractor can

• (1) assert that no changes are allowed by insisting on fidelity to 52.212-4(c) and not starting the work;
• (2) insist on a written change as required by 52.212-4(c) before starting the work; or
• (3) keep quiet, start the work, and make its claim for more money later (after the opportunity for a timely mutually-beneficial negotiation has passed).

 

We seem to be talking about (3), where a Government official erred in making what the contractor saw as a change, and the contractor did not elect (1) or (2).  We would be better served if more contractors would choose (1) or (2).  But, when (3) is the reality, the Disputes clause is there to facilitate the contractor's remedy (if the facts call for a remedy).

Paragraph (d) of the clause at FAR 52.212-4 provides:

Quote

Disputes. This contract is subject to 41 U.S.C. chapter 71, Contract Disputes. Failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the clause at FAR 52.233-1, Disputes, which is incorporated herein by reference. The Contractor shall proceed diligently with performance of this contract, pending final resolution of any dispute arising under the contract.

I have been treating the contractor's obligation to "proceed diligently" as only applying to a dispute that 'arises under the contract,' not a dispute relating to the contract.  If the contractor has a duty to proceed even in the face of a dispute 'relating to this contract,' then I could see why your item 3 above is the correct course of conduct.  But, if that is true, and the contractor has a duty to proceed diligently regardless of whether the potential dispute is grounded on a relief-granting clause or something else, then I doubt your items 1 or 2 are truly available to the contractor, as the contractor's REFUSAL to start work would violate the terms of the contract (specifically, the last sentence of paragraph (d) of the clause at FAR 52.212-4).

On 12/1/2019 at 1:04 PM, Retreadfed said:

When did you find out that the weight of the item as represented by the government was inaccurate?  I'm not interested in when you found out the actual weight, just when you found out that the weight the government old you was inaccurate.  Was it before you submitted your proposal, after proposal submission but before award, or after award?

I found out that the weight was likely inaccurate about 2 weeks after the project began.  We were literally working on the project when the error was discovered.

On 12/1/2019 at 2:38 PM, joel hoffman said:

Commercial services contract then.  I wonder how this contract qualifies as pricing as a commercial services contract.

I’m assuming that you priced the contract based upon the description of dismantling and removing a “commercial item” (a floating station)  and pics provided as well as answers to the pre-bid questions and answers provided. 

if it is a service for “a commercial item” there should have been a way to determine what was in the floating station and their weights. 

Regardless, if this is considered a “change”,  then 52.212-4 (c) Changes clause requires bilateral, written agreement...

“(c) Changes in the terms and conditions of this contract may be made only by written agreement of the parties.“

The gov approved a change order for an amount that was roughly half of what we requested, based upon the estimate for crane and time.  However, the project is now complete and the crane time was slightly greater than anticipated and the amount of my company time (on site and administrative) has not been compensated at all.

On a related topic, are any of the participants of this thread an attorney who specializes in these matters?

PD216ohio said:

On a related topic, are any of the participants of this thread an attorney who specializes in these matters?

Every one of the participants is a certified Internet Expert.

PD216ohio said:

The gov approved a change order for an amount that was roughly half of what we requested, based upon the estimate for crane and time.  However, the project is now complete and the crane time was slightly greater than anticipated and the amount of my company time (on site and administrative) has not been compensated at all.

Did you agree with the “approved amount”?  Or was that amount an interim amount to allow you to proceed, subject to subsequent settlement and agreement?

joel hoffman said:

Did you agree with the “approved amount”?  Or was that amount an interim amount to allow you to proceed, subject to subsequent settlement and agreement?

It was an interim amount and was tied to the NTP and crane plan approval.  It states simply that it was for "mobilization of a crane to site".

As noted in the extract posted by Jacques, the ASBCA did not explain its reasoning for the decision reached in SAWADI.  There the contractor asserted several claims and prevailed on one.  Here is what the Board said in regard to that claim:

To recover for performance of changed work, appellant generally must prove liability, causation, and resultant injury. Servidone Const. Corp. v. United States, 931 F.2d 860, 861 (Fed. Cir. 1991).  The COR suggested that the appellant remove a fence and brush and trees that were located outside the area to be cleared under DO 5. That action by the COR caused appellant to incur extra labor hours and any resultant costs. The CO ratified the COR’s actions and the agreement with SAWADI to remove the six-foot fence and clear the entangled brush and trees. (Findings 9-11) SAWADI is entitled to recover at the contract rate for removing the fence and the entangled brush and trees.

While the Board cites Servidone, here is the actual language from that decision:  "To receive an equitable adjustment from the Government, a contractor must show three necessary elements--liability, causation, and resultant injury."

From the language the Board used in SAWADI, it is impossible to tell what its reasoning was in regard to the decision it reached.  Further, the SAWADI decision has not been cited in any other case.  Therefore, you would be skating on thin ice to base an argument one way or the other concerning constructive changes on contracts for commercial items on that decision.

I am in general agreement with Jacques that a contractor's obligation to continue performance under 212-4(d) only applies to disputes arising under the contract.  As stated in FAR 33.213, "A claim arising under a contract is a claim that can be resolved under a contract clause, other than the clause at 52.233-1, Disputes, that provides for the relief sought by the claimant."  On the other hand, 33.213 states:  "A claim relating to a contract is a claim that cannot be resolved under a contract clause other than the clause at 52.233-1.) "  Thus, if a constructive change is not a change governed by a Changes clause, but is governed by the Disputes clause, (a point that I disagree with) a contractor has no obligation to continue performance until a dispute concerning that constructive change is resolved.

Constructive changes are a legal fiction designed to avoid contracting parties and the appeals boards and courts having to deal with potential material breaches of contracts.  Under this legal fiction, a constructive change is considered to be a within scope change to a contract entitling the contractor to an equitable adjustment as described in the various Changes clauses instead of breach of contract damages.

Im not at home but Nash and Cibinic covered the evolution of pricing government changes, constructive changes, impacts on uncharged work and the changes clause language very well in two books “Government Contract Changes” and “Administration of Government Contracts”. I don’t remember whether the caselaw developed before or after the clauses were modified to specifically address constructive changes and impact on the unchanged work. What was first - the Chicken or the egg?  The construction contract changes clause does now address those issues. The Commercial Items clause doesn’t.

On 12/3/2019 at 12:45 PM, PD216ohio said:

It was an interim amount and was tied to the NTP and crane plan approval.  It states simply that it was for "mobilization of a crane to site".

Sorry, Ohio. I missed your response to my question. So, it appears that this is an undefinitized change and that the government recognizes it as an in-scope “change” to the contracted work.

I think that, under the contract terms,  the Government needs to definitize the change through bilateral agreement, if that is possible.

The boards and courts have recognized merit in claims for delays to completion for work which extended the contractors time on site, even if it is within the completion. However, the cases that I have read are under construction contract changes clause or other clauses providing similar relief. Those clauses specifically provide for equitable adjustments or adjustments for increase or decrease to the contractor’s cost or time due to the change. The changes clause also covers  other impacts on the unchanged work.

I don’t know how a board would rule on a commercial services contract claim, that doesn’t contain the standard clauses for this type of work. 

Bottom line is what to do if the KO won’t agree that you were impacted and you can prove the “but for...we would have been done earlier...and this is specifically how I can show the cost impacts for additional labor and... “? 

 I think that you’d need some legal assistance. Such assistance isn’t an allowable cost in preparation or prosecution of a claim. Cost of Legal advice in the form of case law research to confirm that impact of the change on labor costs and the progress is compensable might be allowable for a pre-dispute effort to facilitate contract administration. It might not be in dispute yet.

On 12/6/2019 at 10:44 AM, joel hoffman said:

Sorry, Ohio. I missed your response to my question. So, it appears that this is an undefinitized change and that the government recognizes it as an in-scope “change” to the contracted work.

I think that, under the contract terms,  the Government needs to definitize the change through bilateral agreement, if that is possible.

The boards and courts have recognized merit in claims for delays to completion for work which extended the contractors time on site, even if it is within the completion. However, the cases that I have read are under construction contract changes clause or other clauses providing similar relief. Those clauses specifically provide for equitable adjustments or adjustments for increase or decrease to the contractor’s cost or time due to the change. The changes clause also covers  other impacts on the unchanged work.

I don’t know how a board would rule on a commercial services contract claim, that doesn’t contain the standard clauses for this type of work. 

Bottom line is what to do if the KO won’t agree that you were impacted and you can prove the “but for...we would have been done earlier...and this is specifically how I can show the cost impacts for additional labor and... “? 

 I think that you’d need some legal assistance. Such assistance isn’t an allowable cost in preparation or prosecution of a claim. Cost of Legal advice in the form of case law research to confirm that impact of the change on labor costs and the progress is compensable might be allowable for a pre-dispute effort to facilitate contract administration. It might not be in dispute yet.

I think I have a valid claim... but getting the CO to agree to that fact and authorize additional monies is an entirely different thing.  I did contact an experienced firm and they feel this is pretty cut and dry in my favor.  I suppose I have time to compose a well written and researched letter and request for equitable adjustment that might help me get to my goal here.  Thank you for your help along the way.

PD216ohio said:

I think I have a valid claim... but getting the CO to agree to that fact and authorize additional monies is an entirely different thing.  I did contact an experienced firm and they feel this is pretty cut and dry in my favor.  I suppose I have time to compose a well written and researched letter and request for equitable adjustment that might help me get to my goal here.  Thank you for your help along the way.

Good luck, Ohio.