Is it Permissible to Unilaterally Re-Establish Delivery Schedule on Commercial Contracts?

rios0311 said:

The agency knows that the contractor will not sign a bilateral modification agreeing to a 30-day extension to reset the delivery schedule.

If it has been 10 months since contract award, why would you only be extending the contract by 30 days?  Assuming you have the right to reset the delivery date, it has to be a reasonable amount of time beginning with the date the new delivery is set.

As to your basic question, I have done only limited research on this issue and cannot find where it has been addressed by an appeals board or the courts (maybe some one else knows of a case addressing this).  Thus, it appears to be an open question.  If you feel adventurous, try it and see what happens.  I think it is worth trying.  Who knows, maybe the contractor will not contest it.

Retreadfed, thank you for commending. 30 days because they have already received 7 months worth of implied or constructive extensions and each time they promise to deliever something, it is only a couple of days or weeks away.

Of course you can unilaterally re-establish a delivery date.  The day after, you can terminate for cause.

Is the Government’s contracting officer talking to his or her counsel?    

Is the contractor planning on submitting a claim to the Government for the costs of all the work beyond the initial 60-90 days?

Please tell us that the Government has made no payments under the contract.

rios0311 said:

30 days because they have already received 7 months worth of implied or constructive extensions

You have not said what the contract says about a delivery date. If it says 90 days after award and you extend the delivery date by 30 days that results in 120 days after award.  However, it does not appear that that is what you mean.

ji20874, yes, the CO has conferred with legal counsel, but the attorney had not encountered this situation in the past. Despite this, the attorney agreed that we should be able to do this unilaterally. I cannot respond to the remainder of your questions without starting a new thread, since it opens up an entirely new topic. More to come!

Retreadfed, the intent is to re-establish a delivery schedule that is 30-days from the date of the notice. In other words, 30 days from today. They've had their 90 days, plus another 7 months worth of delays. We have notified them that we've moved the delivery date 30 days from today and may terminate for cause if they don't deliver.

This sounds like EOFY, IT CHESS every year kind of issues. Vendors take more than what they can provide, then Government sits on false delivery hopes. Shame on the entire acquisition team for waiting that long. 

Issued unilateral MOD to add all the time plus one day. After that day, Terminate for Cause (T4C) then turn around and make a real difference by completing an honest Contractor Performance Report (CPR). 

ROD

On 11/26/2019 at 7:30 PM, rios0311 said:

yes, the CO has conferred with legal counsel, but the attorney had not encountered this situation in the past. Despite this, the attorney agreed that we should be able to do this unilaterally.

Of course you can unilaterally re-establish a delivery date -- it isn't a change and it isn't barred by 52.212-4(c).  Let me say that again for emphasis -- it isn't a change.

ROD said:

make a real difference by completing an honest Contractor Performance Report (CPR).

Yes!  Please record the fact of the contractor's failure in CPARS.

ji20874 said:

it isn't a change.

Why?  Period of performance is one of the 3 prongs of consideration of scope.  Also if the contract was for instance noncommercial the changes clause at 52.243-1 Alt vests a unilateral right to change delivery period to the government.  52.212-4 does not.  So what is the reference that provides it is not a change?

It isn’t a change, in these circumstances.

It is an administrative action in lieu of termination for default (or cause).  We’re outside the FAR and in the realm of common law.

If this were a non-commercial contract that included the 52.243-1 clause, that clause would not be cited for a re-establishment or the delivery date in lieu of termination for default (or cause).

So, common law and common sense.

On 11/26/2019 at 4:30 PM, rios0311 said:

the attorney agreed that we should be able to do this unilaterally.

Are you looking for an excuse to ignore your legal counsels advice? Why don't you just do what legal counsel advised you could do?

On 12/7/2019 at 8:48 AM, ji20874 said:

It isn’t a change, in these circumstances.

It is an administrative action in lieu of termination for default (or cause).  We’re outside the FAR and in the realm of common law.

If this were a non-commercial contract that included the 52.243-1 clause, that clause would not be cited for a re-establishment or the delivery date in lieu of termination for default (or cause).

So, common law and common sense.

How so "outside the FAR"?

Where in the contract does it say the government has a "in lieu" right for an administrative action other than the T4Cause?

As to "common law" consider....

"Unilateral Modifications in General Contract Law

The principle is that a contract is agreed by both parties for the terms that are provided for at the time of its conclusion; therefore it is not possible for one party to unilaterally modify the terms of a contract."

https://www.acc.com/resource-library/when-one-party-entitled-unilaterally-modify-contract

Now the matter at hand.  Issue a show cause stipulating the contract will be terminated on such and such date and wait and see what the contractor does.  If delivers then there you go, if not terminate.  Or in other words an action within the contract and essentially pursuant to the FAR.  It has nothing to do with common law.  If a dispute and claim arise out of the government's actions the the courts will decide if "common law" applies.  Any action otherwise puts the government at risk of a possible conversion to T4C by the courts.

C Culham said:

Issue a show cause stipulating the contract will be terminated on such and such date and wait and see what the contractor does.  If delivers then there you go, if not terminate.

In other words, the contracting officer should unilaterally re-establish a delivery date.

Yes, the contracting officer can unilaterally re-establish a delivery date after the delivery date has passed in lieu of terminating for default (or cause, for a contract for commercial items).  Doing so is called forbearing, and is allowed under our common law.

If the contracting officer wants to unilaterally re-establish a delivery date by letter, I would recommend calling it a cure notice rather than a show cause notice -- if the contractor doesn't cure the deficiency (delivery by the re-established delivery date), the Government may terminate for cause.

ji20874 said:

In other words, the contracting officer should unilaterally re-establish a delivery date.

Yes, the contracting officer can unilaterally re-establish a delivery date after the delivery date has passed in lieu of terminating for default (or cause, for a contract for commercial items).  Doing so is called forbearing, and is allowed under our common law.

If the contracting officer wants to unilaterally re-establish a delivery date by letter, I would recommend calling it a cure notice rather than a show cause notice -- if the contractor doesn't cure the deficiency (delivery by the re-established delivery date), the Government may terminate for cause.

It is not reestablishing a delivery date it is terminating for cause for failure to perform after drawing a line in the sand.

By example delivery is Sept 30.  Contractor hasn't delivered by Oct 15.  Issue a show cause not a mod and demand delivery by Oct 16 and terminate on Oct 17 if contractor hasn't delivered.  Delivery date still Sept 30 per the contract.

Doing so is not outside the FAR it's not common law it is not an administrative action  it's what the contract allows as remedy.

Well, Carl, maybe this is a matter of semantics.  To me, drawing a line in the sand = unilaterally re-establishing a delivery date: deliver by a certain new date (unilaterally set by the contracting officer) or face termination.

ji20874 said:

Well, Carl, maybe this is a matter of semantics.  To me, drawing a line in the sand = unilaterally re-establishing a delivery date: deliver by a certain new date (unilaterally set by the contracting officer) or face termination.

My concern is to suggest that one can unilaterally change a delivery date of a contract awarded pursuant to the FAR absent a contract clause to do so.  You can not.  With regard to the instant matter there is authority to address a failure to perform timely.

C Culham said:

My concern is to suggest that one can unilaterally change a delivery date of a contract awarded pursuant to the FAR absent a contract clause to do so.

Carl, I don't know where you are coming from on this.  The case law on this point is clear.  If a contractor inexcusably fails to perform by the delivery date, the government has an absolute right to terminate for default (cause) at that moment.  However, the government is given a reasonable amount of time within which to decide whether to terminate.  This is called the period of forbearance.  What is a reasonable amount of time is determined from all the facts present.  If the government does not terminate within a reasonable amount of time, particularly if the contractor has continued to perform on the contract, as a matter of fairness (equity), the government cannot terminate the contract without establishing a new delivery date.  This can be done bilaterally with the contractor's agreement or unilaterally if the contractor will not agree.  In any case, the new delivery date must be reasonable in light of the contractor's current ability to complete the contract.  This right to unilaterally reestablish the delivery date is not based on any Changes clause but is a matter of equity.

On 11/25/2019 at 1:19 PM, Retreadfed said:

reset the delivery date

Retreadfed said:

Carl, I don't know where you are coming from on this

On 11/25/2019 at 7:27 PM, ji20874 said:

Of course you can unilaterally re-establish a delivery date.  The day after, you can terminate for cause.

Is the

Here is where I am coming from. 

Resetting the delivery date or unilaterally establishing a delivery date is not forbearance.  Rather forbearance is to refrain from taking an action one is legally entitled to.  It is not "resetting a delivery date" or "unilaterally establishing a delivery date" it is telling the contractor I could default you today but I am not going to until X.

The Government can unilaterally reestablish a delivery schedule in a commercial item contract by giving the contractor notice of the new delivery schedule, so long as that schedule is reasonable under the circumstances.  See Thunderstruck Signs, ASBCA No. 61027, 2017-1 BCA ¶ 36,835, at 179503.

Jacques said:

The Government can unilaterally reestablish a delivery schedule in a commercial item contract by giving the contractor notice of the new delivery schedule, so long as that schedule is reasonable under the circumstances.  See Thunderstruck Signs, ASBCA No. 61027, 2017-1 BCA ¶ 36,835, at 179503.

I attempted to locate this decision and my internet search engine did not locate.  Can you provide a link?

C Culham said:

I attempted to locate this decision and my internet search engine did not locate.  Can you provide a link?

The page numbering is different from CCH, but if you go to http://www.asbca.mil/Decisions/2017/61027 Thunderstruck Signs 8.16.17.pdf you'll see the appeal involves a commercial item at page 1 and you'll see the reference to International Telephone & Telegraph Corp., ITT Defense Communications Division v. United States, 509 F.2d 541 (1975) at page 10.

C Culham said:

Resetting the delivery date or unilaterally establishing a delivery date is not forbearance.  Rather forbearance is to refrain from taking an action one is legally entitled to.  It is not "resetting a delivery date" or "unilaterally establishing a delivery date" it is telling the contractor I could default you today but I am not going to until X.

Carl, I still do not understand what you are saying.  As you said, forbearance is refraining from from doing something you are legally entitled to do.  In the context of a default termination, after a contractor goes into default, the government has a reasonable amount of time within which to decide whether to exercise its right to terminate the contract for default.  This is known as the period of forbearance.  If the government waits to long to make this decision, it will have waived the right to terminate for default and must reestablish the delivery date.  This can be done bilaterally or unilaterally.  Thus, resetting the delivery date is a requirement if the government forbears from terminating the contract for an unreasonable period of time.

Retreadfed said:

If the government does not terminate within a reasonable amount of time, particularly if the contractor has continued to perform on the contract, as a matter of fairness (equity), the government cannot terminate the contract without establishing a new delivery date.

Any unilateral change to the POP would be considered a government offer.  If the KTR rejected the offer then T4D based on the contractually established POP would be appropriate and allowable.

On ‎12‎/‎7‎/‎2019 at 11:48 AM, ji20874 said:

It isn’t a change, in these circumstances.

It is an administrative action in lieu of termination for default (or cause).  We’re outside the FAR and in the realm of common law.

Outside the FAR and in the realm of common law?  How is this possible?  Aren't FAR-bound executive agencies bound by the FAR?  Is there some exemption from this?

Retreadfed said:

Carl, I still do not understand what you are saying

@RetreadfedIn this thread the OP posed the following summary – “Is it Permissible to Unilaterally Re-Establish Delivery Schedule on Commercial Contracts?”

The OP then went on and posed a specific question  - _“_Is it legally permissible for the Government to re-establish a delivery schedule unilaterally on a contract for commercial services that includes FAR 52-212-4(c), when the Government, through its inaction, previously waived timely delivery (DeVito waiver?) “

As follow up to the question the OP posed  “The agency knows that the contractor will not sign a bilateral modification agreeing to a 30-day extension to reset the delivery schedule. Can the Government re-establish the delivery schedule by written notice to the contract; i.e., through a letter from the CO, or can the CO issue a unilateral modification to re-establish the delivery schedule; despite the language of 52.212-4(c), which requires that all changes to T&Cs be made bilaterally?”

And – “If such a unilateral action were impermissible, by forbearing termination for cause within a reasonable time after the breach (late or missed delivery), agencies later would be incapable of re-establishing a delivery schedule when a contractor does not agree to a new deadline. Is this the case?”  

And  “Editing to add: We can terminate for failure to make progress or provide adequate assurance of performance. But can we re-establish the delivery schedule unilaterally?”  

To this you then stated  _“_Thus, it appears to be an open question.  If you feel adventurous, try it and see what happens.  I think it is worth trying.  Who knows, maybe the contractor will not contest it.” 

ji said – “Of course you can unilaterally re-establish a delivery date.  The day after, you can terminate for cause.” ji repeated in a subsequent post  that “Of course you can unilaterally re-establish a delivery date -- it isn't a change and it isn't barred by 52.212-4(c).  Let me say that again for emphasis -- it isn't a change__.”

In all the discussion to this point not one responder clarified their position by reference that such an action under termination. was appropriate and the how to of making it happen.  I was left with the impression of my read that you all were saying sure you can unilaterally change the delivery date of a contract even if uncharted territory try it!

Concerned about what was being implied in direct question to ji I posed  - Why isn’t it a change? to  change the delivery date based on  my read that ji had not provided any other reference. ji’s response was that it is an administrative action based on common sense and common law. ji responded with further dialog that I took exception to noting that the action was related to a termination for cause and my position can best be summarized by my statement that “My concern is to suggest that one can unilaterally change a delivery date of a contract awarded pursuant to the FAR absent a contract clause to do so.  You can not.  With regard to the instant matter there is authority to address a failure to perform timely”

You and Jacques then turned to discussion on the termination issue by further discussion and a ASBCA case that spins on termination for cause.  Jwomack enters the discussion at this point to further point to termination of cause clarity.

Now to hopefully clarify where I am coming from is that you admitted that what the OP wanted to do was uncharted territory and ji said it wasn’t a change but not once did you offer advice on how pursuant to the unilateral right of the government contained in the contract pursuant to the termination for cause that in a termination for cause action the delivery date matter can be addressed as jwomack has pointed out better than I.

So let me restate my position - In a commercial item contract you cannot unilaterally change the performance period of the contract unless such action is taken pursuant to a specific clause of the contract.  In this instant case it is not paragraph (c) of FAR 52.212-4 as ji has stated but paragraph (m).  Further it is not uncharted territory, administrative action, common law but is taking action pursuant to the contract and the guiding principles of the FAR related to termination.

C Culham said:

So let me restate my position - In a commercial item contract you cannot unilaterally change the performance period of the contract unless such action is taken pursuant to a specific clause of the contract.

I guess it depends on what you mean by "pursuant."  If a clause in a commercial contract is cited as recognizing the availability of rights and remedies under common law, is the action taken under common law, or under the clause?

The Government's right to reestablish a delivery schedule where the Government may have waived the delivery schedule need not be based on the Changes clause.

Quote

Appellant's argument is apparently based on there being no delivery date agreed to by the parties. However, valid delivery dates can be established by means other than a bilateral agreement. The binding effect of the schedule is not abrogated because it was never the subject of a formal contract modification. When the contract delivery date has not been met and the contract is not default terminated, the Government's subsequent exercise of its rights under the Default clause requires the establishment of a new delivery date that must be reasonable and specific. The new schedule may be established by various means short of a contract modification.

Sermor, Inc., ASBCA Nos. 30576, 33176, 33179, 94-1 BCA ¶ 26,302, at 130829, citing Simplex Manufacturing Corp., ASBCA No. 13897, 14380, 71-1 BCA ¶ 8814 & Max M. Goldhaber, ASBCA Nos. 8277, 8370, 65-2 BCA ¶ 5083 (emphasis added).

Jacques said:

The Government's right to reestablish a delivery schedule where the Government may have waived the delivery schedule need not be based on the Changes clause.

Sermor, Inc., ASBCA Nos. 30576, 33176, 33179, 94-1 BCA ¶ 26,302, at 130829, citing Simplex Manufacturing Corp., ASBCA No. 13897, 14380, 71-1 BCA ¶ 8814 & Max M. Goldhaber, ASBCA Nos. 8277, 8370, 65-2 BCA ¶ 5083 (emphasis added).

Look I read it.  Did you.....

It's because of a default.  The government may not change the date otherwise OR IN OTHER WORDS ABSENT A DEFAULT.  Your arguement that this decision applies in general to any change to a commercial item contract is misplaced.  There MUST be a contract term/condition that allows exercise of either parties unilateral right otherwise it is not allowed.

And I quote what you quote

"the Government's subsequent exercise of its rights under the Default clause requires the establishment of a new delivery date that must be reasonable and specific. The new schedule may be established by various means short of a contract modification."

C Culham said:

Look I read it.  Did you.....

Yes, I did.  I'm not sure there is anything I've said in this thread with which you disagree.  Likewise, I don't think I've said that anything you have said (or a reader could reasonably infer from what you've said, because, to be honest, I have a hard time following you) is incorrect.  We may just be emphasizing different things.

C Culham said:

The government may not change the date otherwise OR IN OTHER WORDS ABSENT A DEFAULT.

Carl, we have only been talking about unilaterally establishing a new delivery date in the context of a contractor's potential default.  In this regard, if a contractor goes into default, and the government does not terminate in a reasonable amount of time so that the government waives the original delivery date, technically the contractor is not in default since the delivery date has been waived.  In this case, the government has also waived its right to terminate for non-performance because the delivery date has been waived.  In order to reinstate its right to terminate for default due to non-performance, the government must establish a new delivery date.  There is no FAR clause, either for commercial item contracts or non-commercial item contracts that specifically addresses the government's right to unilaterally establish a new delivery date.  However, it is an accepted practice, and one that has been sanctioned by the appeals boards and courts, that the government has such a unilateral right.  This is a matter of equity, not a contract clause.  Simply put, the government does not need a contract clause to reestablish a delivery date when the contractor goes into default.  There is no logical reason why this equitable principle should not apply to contracts for commercial items as well as contracts for non-commercial items.

jwomack said:

Any unilateral change to the POP would be considered a government offer.  If the KTR rejected the offer then T4D based on the contractually established POP would be appropriate and allowable

In the context of a contractor's default, the unilateral establishment of a new delivery date is not an offer for the contractor to accept.  Once the government sets a new date, the contractor is bound to comply or face a default termination.  The government cannot terminate a contract based on the original delivery date, because that date has been waived.  Waiver is a precondition to the government being able to set a new delivery date.

Please just MOD the madness....Thank you.

ROD

Retreadfed said:

Once the government sets a new date, the contractor is bound to comply or face a default termination.  The government cannot terminate a contract based on the original delivery date, because that date has been waived.

The Government can unilaterally establish a new delivery date, and the contractor is bound to that date, even when the contract doesn't allow for such changes?  That's a new one.  Good luck with enforcement.

The contractor is actually bound to provide the service or product and contractually agreed to do it by a certain date - which has passed. It doesn’t have the right to decide when or if it wants to complete the contract. The wording in the changes clause doesn’t grant it that right.

While everyone here is arguing about it, I’d hope that you have some legal counsel familiar with contract law and would be using it.

Retreadfed said:

Once the government sets a new date, the contractor is bound to comply or face a default termination.

And the reference is Retreadfed said so?  Or is there more to this premise?

C Culham said:

And the reference is Retreadfed said so?  Or is there more to this premise?

I obviously can't speak for @Retreadfed but we're talking about some well-established ideas here.  If the Government sets a new date, and that date is reasonable in light of the contractor's abilities, the contractor is bound to comply or face a default termination.  Rowe, Inc., GSBCA No. 14211, 2001-2 BCA ¶ 31,630.

jwomack said:

The Government can unilaterally establish a new delivery date, and the contractor is bound to that date, even when the contract doesn't allow for such changes?  That's a new one.  Good luck with enforcement.

So much confidence from @jwomack despite being so wrong.  At the risk of beating a dead horse, the changes provision in FAR 52.212-4 has NOTHING to do with reestablishing a delivery schedule where the Government may have waived an earlier missed delivery date.

It appears that @C Culham would argue that, because the Government once had rights to terminate the contract for cause, somehow either the termination for cause provision or the Disputes clause provides a place to look within the four corners of the contract for a "hook" for the Government's right to reestablish a new delivery schedule.  I don't think about it in those terms, because the whole idea that the Government can WAIVE its rights and remedies under the termination for cause provision is ultimately grounded in largely equitable principles expressed in case law.  Not surprisingly, the downstream consequences of that waiver, and how to recover from that waiver, are likewise grounded in case law.

So, what are your recommendations...In unilaterally establishing the new delivery date what mod authority might the Government cite?

The clause at 52.212-4 discusses liability for default for non performance as well as termination for default . The owner (govt) can take other actions short of Default Termination. Not sure if the time extension is for excusable delays but the clause covers that as well.

A lawyer can provide advice on alternatives available to an owner short of termination for breach of contract - failure to perform with inexcusable delays.

At any rate, the contract doesn’t require and the contractor doesn’t necessarily have to “agree” with the owner’s actions that are short of a TFD. If the contractor disagrees it can submit a claim. 

Im guessing that the reason that the time extension is not covering the entire delay is that it covers what the government considers to be excusable.

On 12/14/2019 at 8:55 AM, FAR-flung 1102 said:

So, what are your recommendations...In unilaterally establishing the new delivery date what mod authority might the Government cite?

You can reestablish a delivery schedule with a notice. You don’t need to cite a clause.

On 11/25/2019 at 2:52 PM, rios0311 said:

Editing to add: We can terminate for failure to make progress or provide adequate assurance of performance. But can we re-establish the delivery schedule unilaterally?

Yes. You said that the government acknowledges 30 days extension excusable due to forbearance or neglect or whatever. Cite 52.212-4 (f), which is “Excusable delays”.

The contractor doesn’t have to agree with the 30 day time extension.

In my opinion, you need to do it formally by modification and issue it unilaterally, if necessary.  For goodness sakes, if you are going to do this or anything else at this point, use your lawyer.

Jacques said:

You can reestablish a delivery schedule with a notice. You don’t need to cite a clause.

Don’t do that in this situation. Clean up your contract administration and cite the clause Reference that discusses excusable delays. 52.212-4 (f). Unilateral if necessary.

I suppose citing the clause and using 30 day excusable delay works.  But it’s a real stretch considering the agency allowed seven months to go by without a justifiable reason.  Rather than get into that I would just follow Jacques advice and just send a notice.  By the way I don’t think the OPs lawyer is much help from what’s been said.

formerfed said:

I suppose citing the clause and using 30 day excusable delay works.  But it’s a real stretch considering the agency allowed seven months to go by without a justifiable reason.  Rather than get into that I would just follow Jacques advice and just send a notice.  By the way I don’t think the OPs lawyer is much help from what’s been said.

I think that the OP’s questions have been answered. Unilateral Mod or no mod, the answer is yes. And it isn’t based upon the “changes” provisions in 52.212-4. No bi-lateral agreement required. 

Based upon some of the stated circumstances, it appears that the program office is in control here and the KO and it’s counsel, if any(???) are observers.

Devito information: http://publiccontractinginstitute.com/was-your-delivery-date-waived-was-your-default-termination-improper/

Somebody better establish some deadline, considering whatever progress is being made to complete this contract. If the program office has changed any technical requirements during all this “working with” period, the government may have lost all control over possible ramifications.

I appreciate everyone's feedback and the discussion, and I regret that I did not check back here to contribute further before going on holiday. Here's what we did shortly after my last post:

1. Cure notice is not required for late delivery, but we issued what amounts to a cure notice, which specified the deficiencies, provided a new delivery date with 30-days to correct the deficiencies,  and advised of possible termination for cause.

2. Because we could not afford a gap in performance of the critical  IT system, we procured a replacement system as a backup in anticipation of needing to transition to it. Because we were unsure whether the current contractor would come through and deliver, we structured the replacement contract with a base period consisting only of the configuration and implementation phase. Exercising the first option would place the system into production (full operation).

3. When we did not receive the completed IT system on the new delivery date, we issued a show-cause notice, which informed the contractor that we planned to terminate the contract for cause, unless the contractor showed cause why we should not terminate on that basis.

3. The contractor did not show adequate cause for late delivery, so we decided to terminate the contract and will exercise the option on the replacement solution to bring it online while we transition off the deficient system. We will leave corresponding past performance and will pursue re-procurement costs.

rios0311 said:

will pursue re-procurement costs.

What entitles you to do this when procuring commercial items?

Retreadfed said:

What entitles you to do this when procuring commercial items?

I can't speak for rios, but I note that the termination for cause paragraph of the clause at FAR 52.212-4 includes, "the Contractor shall be liable to the Government for any and all rights and remedies provided by law."  And FAR 12.402(c)(2) says, "The Government's preferred remedy will be to acquire similar items from another contractor and to charge the defaulted contractor with any excess reprocurement costs together with any incidental or consequential damages incurred because of the termination."  These seem to provide entitlement.

They incurred the reprocurement costs prior to both the “show cause” and the termination, not “due to the termination”. A technicality but case law is full of loopholes due to technicalities.

ji20874 said:

all rights and remedies provided by law."

What rights and remedies are provided by law in the commercial market place?  Isn't this generally a matter of state law?  While 12.402 may say what the government's preferred remedy is, 12.402 is not a part of the contract and we don't know what provides for this remedy "by law" as required by 52.212-4.  Are you saying that 12.402 is the law in question?

Breach of contract damages would seem to be applicable to commercial contracts for failure to perform but that’s a matter for the lawyers to determine.

We did in fact re-procure a backup system anticipating the potential for needing to terminate the contract in order to have a seamless transition. Not having a seamless transition would subject us to significant liability from other parties. However, you are correct. No guarantee that we will recover that cost. At this point, we are just happy to be moving on. We will make as strong a case as possible.

rios0311 said:

We did in fact re-procure a backup system anticipating the potential for needing to terminate the contract in order to have a seamless transition. Not having a seamless transition would subject us to significant liability from other parties. However, you are correct. No guarantee that we will recover that cost. At this point, we are just happy to be moving on. We will make as strong a case as possible.

If you made partial payments but they defaulted/breached the contract by providing no final product or usable service , I think that they may well owe the government for those payments made but not delivered.

“all rights and remedies provided by law” refers to both statutory and common law redress.

ji20874 said:

“all rights and remedies provided by law” refers to both statutory and common law redress.

Yep

ji20874 said:

all rights and remedies provided by law” refers to both statutory and common law redress.

Is there a statute that allows the government to claim reprocurement costs?  Also, what common law principle allows for the recovery of reprocurement costs?

Retreadfed said:

Is there a statute that allows the government to claim reprocurement costs?  Also, what common law principle allows for the recovery of reprocurement costs?

That’s for the lawyers to work out with the KO.

KO’s shouldn’t be working in a vacuum. *

I was referring to pursuit of payments made for services or products not delivered due to failure to perform the contract. That would seem to amount to a breach of contract. 

Hope the KO isn’t teleworking...

Since my question was directed at rios, I wish he would chime in as to what theory he would use to recover reprocurement costs as he brought it up.

Joel, I'm not teleworking! Retreadfed, I will leave it at " all rights and remedies provided by law", which would include case law. Unfortunately, I did not select the most anonymous user name when I set up my account years ago, so I prefer not to go into much detail at this point, since anyone can be reading this and could use anything here to strengthen their own arguments.

We are confident in our position, but uncertain whether we will prevail in obtaining reprocurement costs. To clarify, we will only pursue reprocurement costs associated with the portion of the new contract attributable only to the implementation portion, which we would not have had to pay again if we remained with the current provider. However, the cost of the new solution will actually cost less on a yearly basis once it is in production (operational) mode, so we are aware that this will factor into any decision to award costs.

Again, I apologize if I don't stay on top of the conversation, but I am at work and constantly running to meetings. However, I am checking in every now and then. If a case gets published, I will update the thread (if the thread hasn't been locked) with a link to the decision.

Retreadfed said:

Since my question was directed at rios, I wish he would chime in as to what theory he would use to recover reprocurement costs as he brought it up.

Retreadfed, FAR 12.403(c)(2) states:

The Government’s rights after a termination for cause shall include all the remedies available to any buyer in the marketplace. The Government’s preferred remedy will be to acquire similar items from another contractor and to charge the defaulted contractor with any excess reprocurement costs together with any incidental or consequential damages incurred because of the termination.

Seems too simple. Is this what you were looking for, or did I misunderstand your question?

rios0311 said:

I will update the thread (if the thread hasn't been locked) with a link to the decision.

As an alternative you can always post it here.....

/forums/what-happened

Great! Will do. Thanks for the link.

rios0311 said:

The Government’s rights after a termination for cause shall include all the remedies available to any buyer in the marketplace

What marketplace, the marketplace of government contracting or the commercial marketplace?  52.212-4 says remedies available at law.  Thus, the question is what remedies are available at law for buyer to exercise against a contractor that is terminated for cause.  Therefore, my question is simply is what legal remedy allows a buyer to recover reprocurement costs from a seller that has been terminated for cause.

Retreadfed said:

What marketplace, the marketplace of government contracting or the commercial marketplace?  52.212-4 says remedies available at law.  Thus, the question is what remedies are available at law for buyer to exercise against a contractor that is terminated for cause.  Therefore, my question is simply is what legal remedy allows a buyer to recover reprocurement costs from a seller that has been terminated for cause.

Breach of contract damages.

Don Mansfield said:

Breach of contract damages.

Don, can you expand on this?  I think I know where you are going, but I want to make sure.

Retreadfed said:

What marketplace, the marketplace of government contracting or the commercial marketplace?

So, Article 2 of the Uniform Commercial Code is often looked to as representing federal common law for contracts for supplies, so the concept of "cover" under UCC 2-712 would include excess reprocurement costs.

Retreadfed said:

Don, can you expand on this?  I think I know where you are going, but I want to make sure.

As I'm sure you know, a breach of contract entitles the nonbreaching party to compensatory damages. Such damages could include excess reprocurement costs.

Don Mansfield said:

Such damages could include excess reprocurement costs.

I would add that the purpose of breach damages is to put the non-breaching party in as good a position as it would have been had the contract been completed as written.  Therefore, if the non-breaching party incurred additional costs to have the contract completed, it could recover those costs.