Voyager said:

[W]hat are the differences and similarities between the act of forbearance and the act of issuing a change order?

[I]s the former always passive and the latter active, or can/should forbearance be active, e.g, in writing?

Well, for one thing, a change order orders a change to certain terms of a contract.

Forbearance is not an order to do anything or refrain from doing anything. Black's Law Dictionary, 11th ed., defines it as follows:

Quote

forbearance n. (16c) 1. The act of tolerating or abstaining. 2. The act of refraining from enforcing a right, obligation, or debt. • Strictly speaking, forbearance denotes an intentional negative act, while omission or neglect is an unintentional negative act.

I think the differences are readily apparent.

Voyager said:

How can one act or the other cause issues later during contract administration?

That question is asking too much. You could write thousands of words in answer. So I'm not going to answer it. But I'll bet someone else will.

Vern Edwards said:

Well, for one thing, a change order orders a change to certain terms of a contract.

Forbearance is not an order to do anything or refrain from doing anything. Black's Law Dictionary, 11th ed., defines it as follows:

I think the differences are readily apparent.

That question is asking too much. You could write thousands of words in answer. So I'm not going to answer it. But I'll bet someone else will.

I agree. Suggest Voyager research various related topics in the Book: Administration of Government Contracts.

Voyager said:

is the former always passive and the latter active…?

No.

Voyager said:

…can/should forbearance be active, e.g, in writing?

Yes. If for no other reason than for effective contract administration, document the action for the record.

Voyager, Have you recently read the definition of "change order" in FAR 2.101, and looked at the Changes clause in your contract?  To quote from the movie, "You Keep Using That Word, I Do Not Think It Means What You Think It Means."

Voyager said:

In effect, what are the differences and similarities between the act of forbearance and the act of issuing a change order?

In the context of which the question is raised, that context being related to a Federal contract, in a Federal contract formed pursuant to the FAR the act of issuing the change order is allowed by the contract or in other words explicit authority.   The act of forbearance is an act not explicitly allowed by the contract but for which a CO may or may not have explicit authority pursuant to their CO/COR delegation. 

Voyager said:

is the former always passive and the latter active, or can/should forbearance be active, e.g, in writing?

@joel hoffmanhas responded and I believe the response is appropriate.

Voyager said:

How can one act or the other cause issues later during contract administration?

Failure to act with regard to the  explicit authority properly (FAR 1.602-2 as the 30,000foot view) and/or failure to act within ones explicit authority (FAR 1.602-3).  For either the act could lead to a dispute.

(As this is the Beginners Forum and if my esteemed counterparts that have replied to the OP believe I am off base I will delete my post.)

Voyager said:

How can one act or the other cause issues later during contract administration?

Chapter 10 of Administration of Government Contracts discusses the implications of forbearance on later actions or circumstances.

In addition, the government generally should not issue a unilateral modification under the Changes clause to extend a deliverable period pursuant to forbearance due to what would otherwise amount to an unexcusable delay (contractor caused) . It should be a bilateral, noncompensable mod. The government may well need to reserve its rights concerning known or unknown cost or time impacts to the other work. These types of delays are described in detail in other sections in Administration of Government Contracts.

If the delays are excusable (e.g., not the fault of and beyond the control of the prime and its subs or suppliers or the delays are concurrent with government caused delays) and are non compensable, a mod for time extension or change in a deliverable date would be appropriate under the Defaults clause. Forbearance wouldn’t be applicable in that situation. These types of delays are also described in detail in Administration of Government Contracts.

I mention this because Voyager appears to be a beginner,  plus did not describe the causes or reasons for extending the deliverable schedule.

The above general comments depend upon the specific causes and circumstances.

Vern & Joel probably have better feedback, so I'll defer to them for the "right" answer, but this my personal experience:

My office has a forbearance letter template in which we state we will abstain from terminating the contract (as is our right at this point since the POP has ended), but we do not forfeit that right.  If we were to issue a modification extending the period of performance, the contractor would technically not be breach of contract, so we would forfeit the Government's right to terminate at a later date.

We forbear our right to terminate, allow the contractor to continue performance, but we will terminate the contract if the contractor is unable to complete the work.  We rarely allow a contractor to perform in forbearance unless the work is nearly complete, or we have some kind of assurance that the work will be completed within a reasonable amount of time beyond the original completion date.

@KrimzI don't have better feedback than that. That's excellent feedback.

Krimz said:

Vern & Joel probably have better feedback, so I'll defer to them for the "right" answer, but this my personal experience:

My office has a forbearance letter template in which we state we will abstain from terminating the contract (as is our right at this point since the POP has ended), but we do not forfeit that right.  If we were to issue a modification extending the period of performance, the contractor would technically not be breach of contract, so we would forfeit the Government's right to terminate at a later date.

We forbear our right to terminate, allow the contractor to continue performance, but we will terminate the contract if the contractor is unable to complete the work.  We rarely allow a contractor to perform in forbearance unless the work is nearly complete, or we have some kind of assurance that the work will be completed within a reasonable amount of time beyond the original completion date.

Letter?   I am just wondering about unilateral versus bilateral.   Would not it need to be bilateral where the contractor promises to complete in light of the forbearance?    

Turner Construction Co. v. General Services Administration, GSBCA 15502, et al “[n]either the benefit nor detriment need be actual; it is a sufficient legal detriment if the promisee agrees to perform any act, no matter how slight, and so long as he does so at the request of the promisor and in exchange for the promise. The term ‘benefit’ means the receipt as the exchange for a promise some performance or forbearance which the promisor was not previously entitled to receive.”

@Krimz

Krimz said:

We rarely allow a contractor to perform in forbearance unless the work is nearly complete, or we have some kind of assurance that the work will be completed within a reasonable amount of time beyond the original completion date.

I am a beginner to many contract law concepts, forbearance being one of them.  From your post, it sounds like you wouldn’t issue this letter to forbear your right to a single missed deliverable, let’s say for one of 50 deliverables each with due dates stated in the contract.  What action would you take instead?

@C Culham

After browsing a bit on the following thread:

I am wondering if someone in this thread can confirm or correct my following lessons learned:

1. In a forbearance occurrence, the Government party that was harmed becomes the offeror, and the offending Contractor party accepts the “offer” of a revised due date.

2. Consideration is gained by the offeror (the Government) when the offending party promises to actually perform.

3. Because the act of forbearance is extra-contractual in that the Changes clause is not quite applicable, and use of the Termination for Default/Cause clause is only being threatened, the CO’s written letter providing the offer of a revised due date should include a signature block for the Contractor’s authorized signatory to accept it bilaterally.

C Culham said:

Letter?   I am just wondering about unilateral versus bilateral.   Would not it need to be bilateral where the contractor promises to complete in light of the forbearance?    

Turner Construction Co. v. General Services Administration, GSBCA 15502, et al “[n]either the benefit nor detriment need be actual; it is a sufficient legal detriment if the promisee agrees to perform any act, no matter how slight, and so long as he does so at the request of the promisor and in exchange for the promise. The term ‘benefit’ means the receipt as the exchange for a promise some performance or forbearance which the promisor was not previously entitled to receive.”

Turner involved five separate decisions, all bearing the docket number GSBCA 15502. The one that includes the above quote is 05-1 BCA ¶ 32924, GSBCA No. 15502, March 18, 2005.

Instead of attending to what's starting to happen here, why not go to a library and read a treatise like Williston on Contracts, 4th, § 7.44, Forbearance or promise of forbearance:

Quote

Just as a promisor may make an agreement for acts or promises to act, so too may it bargain for forbearances or promises to forbear. Forbearance from exercising a right or doing an act which one has a right to do is legal consideration. As the New York Court of Appeals pointed out more than a century ago in a leading case, “Consideration means not so much that one party is profiting as that the other abandons some legal right in the present or limits his legal freedom of action in the future as an inducement for the promise of the first.” While forbearance as consideration often takes the form of forbearance from litigation, there are many other circumstances which give rise to a relinquishment of rights constituting legal consideration.

Before any act or forbearance, or promise to act or forbear, can constitute consideration, it must be bargained for and given in exchange for the promise. Mere forbearance to exercise a legal right, without any request to forbear or circumstances from which an agreement to forbear may be implied, is not consideration such as which will support a promise. However, where there is a request to forbear, mere forbearance without a counterpromise is usually sufficient, since a unilateral agreement will result and is as binding as a bilateral agreement.

Where an agreement to forbear is deemed necessary, according to some authority the agreement may be implied. Actual forbearance is generally evidence of an agreement to forbear, and when viewed in connection with other facts and circumstances relating to the promise, an implied promise to forbear may be established which will be deemed to supply the necessary consideration.

Williston includes an extended discussion of forbearance.

Vern Edwards said:

why not go to a library

Thanks I will.   @VoyagerI am passing the suggestion on to you as well.   

Vern Edwards said:

mere forbearance without a counterpromise is usually sufficient, since a unilateral agreement will result and is as binding as a bilateral agreement.

As I read the reference and beyond I will be most interested in how the  "usually" is applied to Federal government contracts written pursuant to the FAR.   Contracts that have FAR 52.212-4 especially.

Carl, where did I say that? I don't see it in this thread. What's the context? Were they my own words or was I quoting something?

Assuming I did say it, are you saying it's wrong?

Voyager said:

I am a beginner to many contract law concepts, forbearance being one of them.

I get Vern's point about "attending to whats starting to happen" I will say no more.  Before I close here some case law references I found that are specific to Federal contracting.   Like me maybe they will lead you to reading more....

https://casetext.com/case/devito-v-united-states

https://www.asbca.mil/Decisions/2018/59089 REDACTED Bulova Technologies Ordnance DECISION 11.9.18_Redacted.pdf

Just now, Vern Edwards said:

Carl, where did I say that? I don't see it in this thread. What's the context?

You quoted it from the treatise in part.  I created the confusion by not capturing it correctly so the quote via the Forum tool was attributed to you so to speak.   I apologize.

C Culham said:

You quoted it from the treatise in part.  I created the confusion by not capturing it correctly so the quote via the Forum tool was attributed to you so to speak.   I apologize.

Carl, No problem.

But would you mind telling us what we are supposed to learn from that 57-page Bulova decision to which you just provided a link. The word forbearance appears only once, on page 51, in a quote from a different decision.

I'm not sure what point you are trying to make. If I understood I might agree with it.

Carl, I have checked both of the cases you cited, DeVito and Bulova. In both cases the word forbearance appears only once.

In Devito:

Quote

The necessary elements of an election by the non-defaulting party to waive default in delivery under a contract are (1) failure to terminate within a reasonable time after the default under circumstances indicating forbearance, and (2) reliance by the contractor on the failure to terminate and continued performance by him under the contract, with the Government's knowledge and implied or express consent.

In Bulova:

Quote

(1) [F]ailure to terminate within a reasonable time after the default under circumstances indicating forbearance, and 52 (2) reliance by the contractor on the failure to terminate and continued performance by him under the contract, with the Government’s knowledge and implied or express consent.

I don't understand the point you are making by citing those cases.

Vern Edwards said:

But would you mind telling us what we are supposed to learn

Just now, Vern Edwards said:

I don't understand the point you are making by citing those cases.

All present a position of the courts (a term I am using in general) as to what constitutes forbearance with regard to Federal contracts awarded pursuant to the FAR.

All pointing to things like express or implied, unilateral or bilateral in hopes that a read of them by Voyager will enhance an understanding of the similarities and differences between forbearance and a change order.  Like every thing connected to Federal contracting there is a general view and then there are the facts of a instant procurement.

Thanks, Carl.

Thanks to you both.  I will continue my education personally, as suggested.

Voyager said:

I am a beginner to many contract law concepts...

Go to Amazon.com, buy a copy of Contracts (2014), by Perillo, and read in it.

On 11/2/2022 at 8:56 PM, Voyager said:

@Krimz

I am a beginner to many contract law concepts, forbearance being one of them.  From your post, it sounds like you wouldn’t issue this letter to forbear your right to a single missed deliverable, let’s say for one of 50 deliverables each with due dates stated in the contract.  What action would you take instead?

@C Culham

Hi @Voyager,

No clue how I missed these replies, but apologies for the delay.  I've never been in the situation you're describing, but whether it's a missed 1/1 delivery or 1/50 delivery, the contractor is in breach of contract and therefore at risk of being terminated.  Whether it's in your best interest to offer to allow contractor to proceed in forbearance is up to CO & the circumstances.  Forbearance is both the carrot & the stick.

On 11/2/2022 at 12:48 PM, C Culham said:

Letter?   I am just wondering about unilateral versus bilateral.   Would not it need to be bilateral where the contractor promises to complete in light of the forbearance?    

Turner Construction Co. v. General Services Administration, GSBCA 15502, et al “[n]either the benefit nor detriment need be actual; it is a sufficient legal detriment if the promisee agrees to perform any act, no matter how slight, and so long as he does so at the request of the promisor and in exchange for the promise. The term ‘benefit’ means the receipt as the exchange for a promise some performance or forbearance which the promisor was not previously entitled to receive.”

Hi @C Culham We issue the letter, sans mod.  We do not modify the contract since the only reason to modify the contract would be to extend the POP, which would effectively excuse the contractor of their late performance and defeat the purpose of forbearance.  I guess the contractor need not perform in forbearance, but the only other option is termination.  We're not in this situation very often, but we discuss w/ the contractor when we are.  They're typically happy to receive a second chance vice a termination for ktr breach.

Krimz said:

We issue the letter, sans mod.

Letter or mod, which I did not state it needed to be,  I still think bilateral.  A letter can be bilateral.  Contractor you agree to perform without extension to the POP, we agree not to terminate if you do so.  I could see more meat to it but that is my thought.  If a letter, with a place for the contractor to sign and return.

C Culham said:

Letter or mod, which I did not state it needed to be,  I still think bilateral.  A letter can be bilateral.  Contractor you agree to perform without extension to the POP, we agree not to terminate if you do so.  I could see more meat to it but that is my thought.  If a letter, with a place for the contractor to sign and return.

I see what you're saying.  There is a place for contractor sig, but we've never had one refuse.

I am okay with a contracting officer's being done bilaterally as a reasonable (and maybe even preferred) practice.  However, we need to remember that a contracting officer's forbearance can also be done unilaterally.

Forbearance is neither a matter of agreement nor a bilateral act to be documented in a mod. Cibinic, Nash, and Nagle describe it as follows in Administration of Government Contracts, 5th, page 848. I have omitted case citations:

"Failure to terminate immediately when the the right accrues does not constitute a waiver. The contracting officer has a reasonable period to investigate the facts and determine what course of action will be in the best interests of the government."

Forbearance is inaction pending a decision.

Wisdom dictates that when the CO thinks the contractor has defaulted and plans to forbear, he or she should notify the contractor that the government will forbear taking action pending a decision about what it will do. According to Cibinic, Nash, and Nagle:

"If the contractor is incurring costs  in continuing to perform the government has an obligation to act expeditiously in making a decision."

Here's an example of a portion of a CO's letter notifying a contractor that the government would forbear, copied from the Court of Claims decision in the matter of K-Con Building Systems, Inc., v. U.S., 114 Fed. Cl. 595, 600 (2015):

Quote

Despite your failure to complete the contract in the allotted time, I have determined it is in the Government's best interest to forbear from terminating your contract for default and permit you to continue work under the contract. Continuation of performance is solely to mitigate damages and impacts to the Government and is not to be construed as a waiver of the Government['s] rights and remedies under the terms of the contract. You will be assessed liquidated damages in the amount of $589.00 per day until all work is complete and beneficial occupancy has occurred.

And here is the CO's notice of termination for default of the same contract, from K-Con Building Systems, Inc. v. U.S., 131 Fed.Cl. 276, 307 (2017):

Quote

We have determined that it is no longer in the best interest of the Government to forbear termination for default for your failure to complete within the established completion date.... [Y]our performance in the forbearance period continually fell well behind any completion schedule you had submitted. Your continued failure to make progress has made it clear that it is no longer in the best interest of the Government to forbear termination for default. In accordance with contract clause FAR 52.249–10, Termination for Default (Fixed–Price Construction) (APR 1984), you are hereby notified that this contract is terminated for default for failure to make progress and failure to prosecute the work with the diligence that will insure its completion within the time specified in the contract including any extensions. Therefore, your right to proceed with work under this contract is terminated AS OF THIS DATE. The Government may cause the contract to be completed by others in accordance with the above clause and you will be held liable for any increased costs occasioned thereby. These costs will include liquidated damages in the amount specified in the contract that will accrue from the current contract completion date to actual completion of work. The Government reserves all rights and remedies provided by law or under the contract in addition to charging excess costs occasioned by completion of the defaulted contract.

You do not need and should not write a modification if all you're doing is exercising forbearance. Forbearance does not change a contract.

The notices of forbearance were not an issue in the complicated case. I quote them only as examples. The case is very complicated and produced several decisions, but the court ultimately ruled in favor of the government.

See also "Waiver of the Right to Terminate for Default: The Impact of No-Waiver Language," The Nash & Cibinic Report, December 1999:

Quote

A recent case, Abcon Associates, Inc. v. U.S., 44 Fed. Cl. 625 (1999), 18 FPD ¶ 142, 41 GC ¶ 452, permits the Government to avoid a waiver of its right to terminate a construction contract for default by formally notifying the contractor, after there has been a failure of performance, that nothing the Government does may be construed as a waiver of its rights because it is exercising its right of forbearance in perpetuity. This holding adds to a line of cases that we identified as imposing significant risks on construction contractors in "Waiver of the Right to Terminate for Default: Can It Happen in Construction Contracts?," 2 N&CR ¶ 71.

And "Waiver of the Right to Termination for Default: Can It Happen In Construction Contracts," The Nash & Cibinic Report, November 1988:

Quote

Generally, the election to permit continued performance is found in the Government's course of conduct after the contractor has failed to perform in accordance with the contract requirements. There are two things that the Government may do during this period. First, it may take a reasonable time to make the decision to terminate, Frank A. Pelliccia v. U.S., 208 Ct. Cl. 278, 525 F.2d 1035 (1975). The period is usually called the “forbearance period.” Second, the Government may continue to perform the normal acts of contract administration for a reasonable period of time, H. N. Bailey & Associates v. U.S., 196 Ct. Cl. 166, 449 F.2d 376 (1971). What is a reasonable time in both of these circumstances is highly judgmental depending on all of the circumstance of each case.

I have never said that a Mod is required.   I in fact stated or otherwise implied that either a letter or a SF-30 could be used to document the agreement of forbearance.   As has been mentioned in this thread forbearance as neither a remedy or term of the guiding principles of the FAR.   This leaves it to us all to debate.  As such my read of references made in this thread and most especially that provided by " Williston on Contracts, 4th, § 7.44, Forbearance or promise of forbearance " the matter of forbearance is best documented in writing to ensure what the the promise is/was that prompted the forbearance.    

The above said does not the FAR actually handle the matter of forbearance through the guiding principles of the FAR regarding Termination?  The contractor must request forbearance, is an oral request okay?    Does the government respond orally or in writing?  Seems the FAR supports everything shall be writing but my read could be wrong.  Where it goes haywire based on all the cases that I have found supports that due diligence was not performed in documenting, communicating and solidifying the act of forbearance and the promises made for such forbearance. 

Just for jollies - with emphasis added

43.301(a) The Standard Form 30 ( SF 30), Amendment of Solicitation/Modification of Contract, shall (except for the options stated in 43.301(a)(2) or actions processed under part  15) be used for- ...Supplemental agreements (see 43.103)

43.103 (a) Bilateral. A bilateral modification (supplemental agreement) is a contract modification that is signed by the contractor and the contracting officer. Bilateral modifications are used to-... (3) Reflect other agreements of the parties modifying the terms of contracts.

All references I have read here or otherwise require consideration for forbearance, that consideration need not be (in my words) something tangible but the mere agreement to forbear based on whatever promise the contractor places in the request for forbearance.  As forbearance as a promise is hinged on consideration even if the mere agreement to forbear it would seem that it is an act of modifying the terms of the contract.   A unilateral forbearance does not seem possible in my book as you need a request with a promise.

I will leave you all to wring your hands regarding letter, SF-30, "modification" but in my book all would work as a way to document and the documentation done bilaterally would undoubtedly be strong support to the governments forbearance should what the government agreed to in allowing forbearance is in conflict later.

Simple view - Document, document, document!

C Culham said:

I in fact stated or otherwise implied that either a letter or a SF-30 could be used to document the agreement of forbearance.

An agreement is not necessary as a precursor to forbearance.  The contracting officer can do it unilaterally and without any agreement.

C Culham said:

The contractor must request forbearance, is an oral request okay?

It is not necessary for the contractor to request forbearance -- the contracting officer can forbear termination without any request from the contractor.

C Culham said:

Seems the FAR supports everything shall be writing but my read could be wrong.

Forbearance need not be in writing, at least not early on.

C Culham said:

As forbearance as a promise is hinged on consideration even if the mere agreement to forbear it would seem that it is an act of modifying the terms of the contract.

Forbearance need not be a promise hinged on consideration.

C Culham said:

A unilateral forbearance does not seem possible in my book as you need a request with a promise.

In my book, a unilateral forbearance most certainly is possible.  There is no need to "request with a promise."

I guess we have different understandings of forbearance.

ji20874 said:

I guess we have different understandings of forbearance.

Yep and we will never change each others.  That's how it goes - que sera sera.   But with hope that beginner practitioners will seriously think about it rather than reading rehashed posts or those that lack reference..    Forbearance is widely used in the financial markets.   Occurs in other contract settings as well but within the guiding principles of the FAR?  That fact has been answered.

For thought!

https://www.law.cornell.edu/wex/forbearance

forbearance  Forbearance is the intentional action of abstaining from doing something. In the context of the law, it refers to the act of delaying from enforcing a right, obligation, or debt. For example, a creditor may forbear legal action against the debtor if they settle the debt payment with new payment conditions. Another example is a mortgage forbearance agreement under which the lender agrees to forbear its right to foreclose the mortgage, and the borrower accepts a new payment plan that provides temporary payment relief.

https://www.law.cornell.edu/wex/consideration 

consideration -  

consideration

Consideration is a promise, performance, or forbearance bargained by a promisor in exchange for their promise. Consideration is the main element of a contract. Without consideration by both parties, a contract cannot be enforceable. For instance, if a person used the money to purchase an apple, the apple is the merchant’s consideration, and the money is the person’s consideration.

Types:

• Consideration could be a promise, performance, forbearance, or property with legal value, but the economic benefit is not required.
• A gift or gratuitous promise cannot be a consideration for they have no bargaining. The past performance also cannot be a consideration as there is no exchange.

Substitute for consideration:

• A contract without consideration could be enforceable if it has a substitute. Substitutes are promissory estoppel or detrimental reliance under Restatement (Second) of Contracts, or good faith modification under UCC.
  • Promissory estoppel/detrimental reliance: A contract without consideration is enforceable if the nonperformance of the promisor will cause injustice. Elements of promissory estoppel are (i) the promise has reasonable, foreseeable, and detrimental reliance on the promisor, and (ii) the enforcement of the promise is necessary to avoid injustice.
  • Good faith modification: A modified contract is a kind of new agreement, which changes parties’ obligations and then requires new consideration. But contract modification made in good faith under UCC is enforceable even without consideration.

@ji20874You are on the verge of a wormhole into Carl's universe.

Turn back. At maximum warp. To go on is futile.

For what it's worth, I agree with every word of your last post.

On 11/2/2022 at 9:32 AM, Krimz said:

We rarely allow a contractor to perform in forbearance unless the work is nearly complete, or we have some kind of assurance that the work will be completed within a reasonable amount of time beyond the original completion date.

On 11/2/2022 at 9:50 AM, Vern Edwards said:

I don't have better feedback than that. That's excellent feedback.

So now I am confused.   

On 11/2/2022 at 8:19 PM, Vern Edwards said:

Actual forbearance is generally evidence of an agreement to forbear, and when viewed in connection with other facts and circumstances relating to the promise, an implied promise to forbear may be established which will be deemed to supply the necessary consideration.

Even more!

Really?   Just give forbearance non-action, no request, no discussion, no negotiation, no documentation just give it unilaterally?   Very slippery slope in my view but if that is your advice to a  beginner practitioner so be it.    I for one believe in the transparency, fair dealing and good communication in my practice of contractual relationships.

For the good of the order....

My struggle I clearly understand.   Here is my dilemma.

Throughout my career and into today it has been my understanding that a CO may not alter a contract to the prejudice of the government unless the government receives corresponding contractual benefit.  If the CO forbears performance beyond a contractually stated PoP the guiding principles of the FAR put forth the ideal that the contractor provide consideration to the government for giving up the right to PoP by a certain date.   As I read responses from both Vern and ji they believe that they can provide forbearance unilaterally to the contractor without mutual agreement as to what the contractual benefit will be.  Nothing can be assumed, not that contractor will perform etc.  Without mutual agreement of the parties of what that benefit to the government will be I do not understand how a unilateral forbearance becomes a right under a contract.    

In the world outside the FAR my read is a contract that is forbeared needs the mutual agreement.   My thinking is that the government via its various acquisition statutes and applicable regulation (FAR) and the FAR clauses have attempted to solve the matter of forbearance with regard to acquisition.  Its called rights under inspection clauses, or rights under the termination clauses.  While not conclusive support of my idea I do find interesting that the term "forbearance" can be found in various places throughout the CFR but no place in 48 CFR 1-99!  As for case law and its sometimes use in cases, as exemplified by those offered in this thread, it is a legal concept applied to a specific matter in dispute.

@C CulhamThe last quote that you attributed to me in your next to the last post is your edit of a passage that I quoted from Williston, which you quoted out of context. I attribute that not to any ill will on your part, but to your confusion, as you called it.

All:

Forbearance comes up in many legal contexts. In contract law, forbearance in response to a breach is an option of the injured party. The breaching (defaulting) party can, of course, ask for forbearance, in which case the injured party can demand something in return (consideration), which, if given, would create a binding forbearance agreement. But that's not the issue in this thread. The issue in this thread is whether an agreement, a mod, and consideration are necessary in order for a CO to forbear T for D if the contractor breaches. THEY ARE NOT NECESSARY!

Forbearance is not a concept unique to government contracting. The FAR System does not mention forbearance. And the guiding principles that you so love are of no use in understanding the concept of forbearance as applied in government contracting or the procedures for exercising forbearance in government contracting. Forbearance usually comes up as a defense against contractor assertions that the government has waived a breach.

Forbearance does not deprive the government of its entitlement to damages for a breach. it is simply a decision to hold off on T for D while deciding what to do. BTW, a CO clearly has the authority to forbear or to seek compensation for breach. But he or she might not have the authority to waive a breach.

See Carberry and Johnstone, Waiver of the Government's Right to Terminate for Default in Government Defense Contracts, 17 PubConLJ 470 (1988):

Quote

Under the waiver test set forth in DeVito the contractor must establish initially that the government's conduct during the period following the delivery date specified in the contract showed an intention not to terminate the contract. The courts, however, do permit the government to take certain actions without encouraging performance. For example, the government is entitled to investigate the circumstances surrounding the default to determine whether the contractor's failure to deliver was excusable, to consider whether termination is in the best interests of the government, and to process the termination documents.

During this investigatory interval, known as the forbearance period, the government may also issue show cause letters, inquire as to the contractor's present status and completion plans, conduct demonstrations and minor inspections of the contractor to apprise itself of the contractor's progress or capabilities, or confer with the contractor regarding an extension of the delivery date in exchange for consideration, without the risk of waiving the original delivery schedule.

The doctrine of forbearance cannot be read, however, as permitting the government to refrain from issuing a notice of termination over an extended period of time, while simultaneously allowing the contractor to continue with performance. If the government delays too long, or if its conduct encourages continuation of performance, the inference is that time is no longer of the essence and the delivery schedule has been waived.

There is no hard and fast judicial standard to distinguish between situations in which the government has merely displayed a benevolent attitude toward a delinquent contractor, and circumstances where its actions may reasonably be construed as encouraging continued performance. Nevertheless, the numerous decisions of the Armed Services Board of Contract Appeals (ASBCA) invoking the waiver doctrine in particular cases are illustrative of the distinction.

There is a plentiful literature on forbearance in response to breach (default). The concept is essentially very easy to understand. I have provided several references in this thread, including, in addition to the article I quoted above, Williston, Perillo, and Cibinic, Nash & Nagle.

I urge "beginner practitioners" who want to understand the concept of forbearance to seek out and read those references and others and ignore the confusing back and forth in this thread.

In short, don't take my word for it. READ!

Vern Edwards said:

The last quote that you attributed to me in your next to the last post is your edit of a passage that I quoted from Williston,

Agreed due my ability to (not)manage the tools of Forum but not out of context.  It was your offering to support your premise stated in the particular post.

Vern Edwards said:

In short, don't take my word for it. READ!

Agreed and what I now find interesting  is this.

Vern Edwards said:

The issue in this thread is whether an agreement, a mod, and consideration are necessary in order for a CO to forbear T for D if the contractor breaches. THEY ARE NOT NECESSARY

You marry T4D with forbearance which causes me to conclude that forbearance is like the Christian Doctrine a legal concept that can only be applied to a contract matter by a court not something the CO does.  The CO does what the FAR and the termination clause provides.  Example the notices of FAR 49.607 are in the context of this discussion the forbearance that you now want to make the matter of discussion but per FAR they are Cure and Show Cause. 

But don't take my word for it, I just continue reading with an open mind.

Forbearance is not like the Christian Doctrine.

Cure notices and show cause notices are not agreements, mods, or consideration. They are, let's see... notices. And they are not required in all cases.

Warp five, Mr. Sulu.

C Culham said:

You marry T4D with forbearance which causes me to conclude that forbearance is like the Christian Doctrine a legal concept that can only be applied to a contract matter by a court not something the CO does.

The contracting officer is the one who forbears, not the judge.

ji20874 said:

The contracting officer is the one who forbears, not the judge.

Nope.  The CO takes an action that the judge determines to be forbearance.  There is absolutely no allowance in a FAR contract that provides for "forbearance".  At least by my read.  I would like to see the clause that unilaterally allows "forbearance" please.

C Culham said:

Nope.  The CO takes an action that the judge determines to be forbearance.  There is absolutely no allowance in a FAR contract that provides for "forbearance".  At least by my read.  I would like to see the clause that unilaterally allows "forbearance" please.

Read the Defaults clauses.

On 1/19/2023 at 7:33 AM, C Culham said:

Letter or mod, which I did not state it needed to be,  I still think bilateral.  A letter can be bilateral.  Contractor you agree to perform without extension to the POP, we agree not to terminate if you do so.  I could see more meat to it but that is my thought.  If a letter, with a place for the contractor to sign and return.

For construction or A/E contracts, the contractor is already required to complete the contract. No agreement by the contractor is necessary to require it to complete the contract.

Depending upon the specific circumstances, the contractor is required to provide the required services or supplies. No agreement by the contractor is necessary to require it to complete the contract.

The defaults clauses state that the government MAY terminate the contractor’s right to proceed.

We don’t need to go into the weeds about excusable vs Non-excusable delays, impossibility of performance, damages for breach of contract, other damages, etc. LD’s when applicable, etc.   Whole books and chapters are written about that.

joel hoffman said:

Read the Defaults clauses.

I have please quote where it says "forbearance".

The default clauses are a part a contract (promises agreed to mutually).  The contractor agreed by signing the contract that they could be defaulted inclusive of allowance for a cure.  As such it is not forbearance.  All seem to be forgetting the the FAR has terms of art specific to government contracting.

Forbearance - Oxford Dictionary

noun

noun: forbearance

patient self-control; restraint and tolerance."forbearance from taking action"

LAW

the action of refraining from exercising a legal right, especially enforcing the payment of a debt.

We are talking about the Government’s legal right to terminate or to decide not to terminate for failure or refusal to timely proceed , if such delays are inexcusable.

“If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.”

Carl, I learned a log time ago that laws, regulations and contracts mean what the courts say they mean.  In this regard,  here is an extract from FAR 52.249-8, which covers defaults of fixed price supply or service contracts "The Government may, . . . by written notice of default to the Contractor, terminate this contract in whole or in part if the Contractor fails to-(i) Deliver the supplies or to perform the services within the time specified in this contract or any extension."   Notice that the clause says the government "may" terminate the contract for default.  This indicates that the CO is permitted discretion in whether to T4D the contract.  FAR 49.402-3 sets forth the procedures for a T4D.  Compliance with those procedures takes time and does not occur immediately.  Essentially, the time it takes for the CO to follow 49.402-3 is the period of forbearance.  Significantly, nothing in 49.402-3 requires the CO to notify the contractor that (s)he is following 49.402-3 and thus is forbearing from terminating the contract or get the contractor's agreement that the CO is following 49.402-3.  The courts and appeal boards have held that the CO is entitled to a reasonable amount of time to comply with 49.402-3, i.e., forbear from terminating the contract.  However, if the CO takes too long to make a decision on the T4D and other factors are present, 49.402-3(c) comes into play and the CO can unilaterally establish a new delivery date.

On another point, do not confuse the concept of forbearance being consideration and the need for consideration for the CO to forbear from terminating a contract for default.

It is too bad that so many of you do not have access to literature that could be of help in understanding obscure concepts like forbearance.

The following is quoted from a very interesting 39-page article by Sean J. Young that appeared in the Fall 2007 issue of Florida Coastal Law Review. The title of the article is Reaping the Benefits of "Forbearance" in Contract Through the Doctrine of Election, 9 FLCLR 65. I could not find a website that provides free access. I have omitted footnotes.

Quote

When a contract is breached, the injured party can respond in many ways. This Part will briefly discuss four general types of responses to breach based on traditional conceptions of contract law, introduce the response of “forbearance,” and present its benefits.

A. Four Possible Responses to Breach

When a breach occurs, the injured party has several options available that can be generally summarized as follows.

First, the injured party may exercise her “formal remedies,” a term this article uses to encompass the injured party's statutory and contractual rights to sue or cancel the contract. The injured party may seek monetary damages or specific performance, and she may obtain this from a court, through settlement, or through alternative dispute resolution. Separate from her right to sue is her right to cancel the contract, which simply releases either party from any obligation to perform any part of the contract.

Second, the injured party may object to the breaching party, recognizing that a breach has occurred and implicitly or explicitly threaten to invoke formal remedies the next time a similar breach occurs. Objection may consist of a simple letter. The injured party objects not only to encourage the breaching party to conform next time, but also to avoid legally relinquishing her right to cancel on the basis of similar breaches in the future. In other words, she does not want a court to later construe her silence as indicating that the injured party will allow such breaches to occur.

Third, the injured party may acquiesce, which does allow the breaching party to commit similar breaches in the future without formal consequences. In effect, acquiescence changes the terms of the contract such that the breaching party is no longer held to a specific contractual requirement. Not surprisingly, injured parties tend not to want to acquiesce, but sometimes, the injured party may no longer care about that underlying provision or has become too dependent on the continuation of the contract. Acquiescence usually occurs through mere inaction, but it can also be a declaration that the injured party is thereafter permitting such breaches.

Fourth, the injured party may seek to negotiate a new contract with the breaching party. A breach may indicate to the injured party that the breaching party simply cannot or will not conform to the contract anymore. If suing is too costly, the injured party may seek to renegotiate the contract to salvage some of its benefits.

B. "Forbearance" As A Fifth Response

A fifth option is “forbearance,” which is less discussed in contract literature. Black's Law Dictionary essentially defines forbearance as inaction—not invoking any formal remedies following breach. However, inaction can lead to two different legal results, which the traditional definition fails to distinguish—inaction that results in the contractual terms changing to accommodate similar breaches in the future, and inaction that maintains the terms of the contract. The former type of inaction is “acquiescence,” as defined earlier, since it results in a change in the contract. However, scenarios where the injured party does not want a change in the contract following breach deserve separate analytical treatment. Therefore, in this article, “forbearance” will be limited to the latter type of inaction—inaction that still maintains the terms of the contract.

Forbearance has many benefits. It increases the potential for future lucrative contracts between the parties and encourages conformity to concurrent contracts. It avoids the trust-destroying consequences of objection. It maximizes the utility gained from idiosyncratic investments. Furthermore, it maximizes non-economic benefits gained from the social relationships that surround and reinforce the contract.

Yet, forbearance is discouraged, if not outright prevented, under current contractual regimes. Specifically, this article will explore how the doctrine of “waiver,” which currently governs when a contractual party has relinquished her rights, discourages forbearance. Furthermore, this article will explore how even the suspension of the doctrine of waiver can discourage forbearance.

Note that the author has described forbearance as an "option," i.e., a choice. A contracting officer may choose to forbear T for D for any of a number of reasons. A CO's authority to do so is provided by FAR 1.602-1(a) and 1.602-2. See also FAR 49.101 and Subpart 49.4.

Alternatively, if a contractor raises waiver (inaction) as a defense against T for D, the government might argue forbearance as a defense and a judge might rule that a reasonable delay in taking action was forbearance, not a waiver of the government's rights.

Unless someone has something informative to add, or a substantive new question, I suggest that we consider this thread to be closed. It's descending into pointless commentary.

Vern Edwards said:

substantive new question

If the "Fifth Response" of forbearance as an option is the option that is taken how does the full article distinguish how forbearance as the selected response of the five is communicated between the parties?    In writing or?

Wow, this topic’s resurrection leading to Vern’s last post has really helped answer the OP!  Thank you all, but especially @Krimzand @Vern Edwards.

I fear many COs use the third option, acquiescence, instead of the fifth, forbearance.  Beginners and others alike should resolve to change that (see Krimz’s posts to learn how to forbear).  My OP asked for the difference between the fourth option, new contract (or change order to be followed by supplemental agreement), and the fifth option.  I’m glad I asked, because the fourth is a lot of hassle (and changes clause is probably the wrong authority).

C Culham said:

If the "Fifth Response" of forbearance as an option is the option that is taken how does the full article distinguish how forbearance as the selected response of the five is communicated between the parties?    In writing or?

The article does not describe, prescribe, or suggest a procedure.

Vern Edwards said:

The article does not describe, prescribe, or suggest a procedure.

Thank you. 

 It leaves the question as to how the inaction of forbearance becomes enforceable. 

My personal conclusion - Leaving forbearance expectations to the imaginations of both parties own minds seems less acceptable than documenting the the expectations of forbearance in writing when both parties subscribe to forbearance as the option selected.

C Culham said:

Thank you. 

 It leaves the question as to how the inaction of forbearance becomes enforceable. 

My personal conclusion - Leaving forbearance expectations to the imaginations of both parties own minds seems less acceptable than documenting the the expectations of forbearance in writing when both parties subscribe to forbearance as the option selected.

Both parties don’t necessarily have to subscribe to the option selected. The contractor is required to perform the contract. The owner has the option.m to defer a decision to TFD, for instance.

joel hoffman said:

Both parties don’t necessarily have to subscribe to the option selected. The contractor is required to perform the contract. The owner has the option.m to defer a decision to TFD, for instance.

At the risk of everyone taking me to task for extending the discussion I do question your response. 

In the context of my question/response/conclusion as it relates to the article that Vern posted just a very small portion of  there are five options for "Responses" to a breach.  If the option of Forbearance is chosen it is refraining from the legal right of T4D.  The consideration for refraining is the the promise that the work will be done.  But by when? 

It would seem in the context of the article snippet provided by Vern that one must define what forbearance is, the promise for a promise, for the instant procurement or the inaction could be reasoned by others (and ultimately a court?) to be acquiescence  or waiver?  

Simply stated how would a contractor that you have forbeared know what you want for that forbearance, and that the contractor agrees to it over the other four options?   It would seem that a contractor would evaluate what of the five options is best for them.

As I have maintained in raising the question of whether a forbearance should be documented bilaterally (both parties agreeing to forbearance) how is it known that forbearance is what is happening and what must be done for the forbearance to be accomplished?

C Culham said:

My personal conclusion - Leaving forbearance expectations to the imaginations of both parties own minds seems less acceptable than documenting the the expectations of forbearance in writing when both parties subscribe to forbearance as the option selected.

What expectations of forbearance? Whose expectations?

I cannot understand why the injured party would make any new agreement with the breaching party concerning its right to forbear in the face of breach. The whole point of the period of forbearance is to give the injured party time to think things over. That doesn't mean that the parties cannot communicate with one another. But why agree to anything about forbearance while forbearing?  The injured party is holding all the marbles.

I think this thread is exhausted. I encourage everyone interested in this topic to do as much reading as you can with the resources available to you.

Vern Edwards said:

What expectations of forbearance? Whose expectations?

Vern Edwards said:

I think this thread is exhausted.

Then why pose more questions?

You may know by actual experience or study of the topic but do others? A thought you have already expressed.

To your questions as quoted above.

Forbearance is by the reference you posted an option of a "Response".  So as a "response" how does one "communicate" it.  Or is silence the response?

Both the promissee and promisoer have expectations do they not?  Completion of work and not T4D being primary.  As such completion by when as I am assuming if T4D is the option to forbearance PoP has passed.  Is the government going to forbear forever?

C Culham said:

You may know by actual experience or study of the topic but do others?

I do, both by experience and study.

As for experience, in 1987, as a consultant contractor, I received a letter notice of forbearance from the head of the contracting activity of an office of the Department of Energy concerning a study I was doing for them. I was late submitting my report by two weeks. The report turned out to be influential. Nothing more was said or done, probably because I went above and beyond the requirements. You know me.

As for study, I have read a lot about forbearance. And what I have done in that regard others can do, including you, and I have recommended some readings. In addition to what I have already recommended𑁋

Forbearance has been discussed to a greater or lesser extent in 322 board of contract appeals decisions, most recently in SUPPLYCORE, INC., ASBCA 63057, 22-1 BCA ¶ 38,195, September 6, 2022, and for the first time in El-Tronics, Inc., ASBCA 2173, Aug. 19, 1954.

It has been discussed in 160 Court of Federal Claims decisions, most recently in connection with a government contract in Gilead Sciences, Inc. v. U.S., 163 Fed.Cl. 104, Nov. 21, 2022, and for the first time in Atlantic Fish & Oyster Co. v. U.S., 126 Ct. Cl. 892, Dec. 1, 1953.

I don't know what point you are trying to make. Still clinging to the need for bilateral agreement?

Study is rewarding. Enjoy! I don't recommend experience. I found it unnerving.

C Culham said:

Forbearance is by the reference you posted an option of a "Response".  So as a "response" how does one "communicate" it.  Or is silence the response?

Forbearance is a response to breach. It consists of taking no legal action while taking time to think. There is no requirement to communicate forbearance. All the CO need do is nothing. To forbear is to do nothing when you have the right to do something. However, as I think I said earlier, I think it's wise for a CO to notify a contractor that it has defaulted, that the government is taking time to think things over, and that the government reserves its rights under the contract as written pending a decision.

C Culham said:

Both the promissee and promisoer have expectations do they not?

 I don't know. Maybe. The injured party might expect the contractor to fulfill its obligations or not, depending on what has gone before. The breaching party might expect the injured party to let it go or sue for damages, depending what has gone before.

On 1/21/2023 at 1:55 PM, C Culham said:

Both the promissee and promisoer have expectations do they not?

Carl, I'm confused by this question.  Are you implying that an exchange of promises is necessary for forbearance to be permissible?

On 1/21/2023 at 1:55 PM, C Culham said:

Is the government going to forbear forever?

Maybe.  What chance does the government have of getting performance or excess reprocurement costs from some Afghan contractors?

Retreadfed said:

Maybe.  What chance does the government have of getting performance or excess reprocurement costs from some Afghan contractors?

None, now (tongue in cheek)...

Retreadfed said:

Are you implying that an exchange of promises is necessary for forbearance to be permissible?

Part of my dilemma.  Forbearance is consideration in some cases, at least by my read over the last week.  So if consideration it implies a promise for a promise?    

I am being respectful of answering your question with no intention of posting further on the subject.

On 1/19/2023 at 4:52 PM, Vern Edwards said:

The issue in this thread is whether an agreement, a mod, and consideration are necessary in order for a CO to forbear T for D if the contractor breaches. THEY ARE NOT NECESSARY!

The answer is still the same.

A bargain𑁋an agreement, a contract mod, and consideration𑁋are not necessary in order for a CO to exercise forbearance prior to deciding whether to T for D. If a bargain is made it might be interpreted as a waiver of the government's rights under the default clause.

But can forbearance serve as consideration in a bargain? Yes. See the quote I posted from Williston.

C Culham said:

Forbearance is consideration in some cases, at least by my read over the last week.  So if consideration it implies a promise for a promise?

Carl, I know you stated you have no intention of posting further to this thread, however, to try to minimize your dilemma, I agree with your statement that forbearance can be consideration for a contract action such as the award of a contract or a modification to an existing contract.  However, that is a different context than forbearance in the T4D situation where the CO is determining what the facts are surrounding a default and determining what action the CO should take.  As a result of that deliberative process, the CO may determine that it is in the government's interest to T4D the contract.  No consideration would be due from the contractor in this situation because a T4D is a unilateral power given to the government.  However, if the CO determines that it is not in the government's interest to issue a T4D, but to have the contractor continue to perform, the CO would have to get some consideration from the contractor in exchange for the CO forbearing.  That is because prior consideration is no consideration for a future promise.   In this case, the CO may promise (forbear from) T4Ding the contract if the contractor agrees, for example, to complete the contract at a reduced price and with an extended warranty.

Retreadfed said:

However, if the CO determines that it is not in the government's interest to issue a T4D, but to have the contractor continue to perform, the CO would have to get some consideration from the contractor in exchange for the CO forbearing.

Continue to perform? What does that mean? What was the nature of the default? In what way is the CO forbearing?

Forbearance allows a CO to deliberate without waiving the government's rights. It is a defense against waiver. If the CO decides to let the contractor continue despite a default, he or she is no longer forbearing during deliberation, he or she is waiving.

I think it's important to use the proper terminology.

Retreadfed said:

However, if the CO determines that it is not in the government's interest to issue a T4D, but to have the contractor continue to perform, the CO would have to get some consideration from the contractor in exchange for the CO forbearing.  That is because prior consideration is no consideration for a future promise.   In this case, the CO may promise (forbear from) T4Ding the contract if the contractor agrees, for example, to complete the contract at a reduced price and with an extended warranty.

From 52.249-10 Default-Fixed Price Construction

(a)  “…The Contractor and its sureties shall be liable for any damage to the Government resulting from the Contractor’s refusal or failure to complete the work within the specified time, whether or not the Contractor’s right to proceed with the work is terminated. This liability includes any increased costs incurred by the Government in completing the- work” .

When the liquidated damages clause is in the contract, damages would be the LD’s for any inexcusable delays in completing the contract, plus any increased costs incurred by the Government in completing the work (if applicable).

This may be consideration in the initial contract bargain.  It is already part of the contract.

There is no additional “consideration” required. The contract provides the unilaterally applied damages solutions when the government doesn’t terminate.

This is a distinction between the Default clause for FP Construction and the defaults Clause for Supplies and Services contracts at 52.249-8. The latter clause doesn’t specifically mention payments for damages if the contract isn’t terminated..

Vern Edwards said:

In what way is the CO forbearing?

Forbearance can be consideration if a party agrees to refrain from taking an act that the party is legally entitled to take.  If the contractor is in default, the government may terminate the contract for default.  Thus, a default termination is an act the government is legally entitled to take when the contractor is in default.  The contracting officer may promise not to T4D the contract in exchange for some consideration from the contractor such as a price reduction.   This is not a waiver of the contractor's default but a new bargain supported by adequate consideration between the parties.

On 1/23/2023 at 4:14 PM, Retreadfed said:

Forbearance can be consideration if a party agrees to refrain from taking an act that the party is legally entitled to take.  If the contractor is in default, the government may terminate the contract for default.  Thus, a default termination is an act the government is legally entitled to take when the contractor is in default.  The contracting officer may promise not to T4D the contract in exchange for some consideration from the contractor such as a price reduction.   This is not a waiver of the contractor's default but a new bargain supported by adequate consideration between the parties.

Perhaps for services and supply contracts but not for construction contracts, where no new bargain or additional consideration is required . See my post above.

EDIT: One must be careful, especially in a For Beginners Only discussion Topic area,  not to over generalize about available government actions concerning performance failures, inexcusable delays, etc.

EDIT: The default clauses, which cover failure to perform a contract within a required period, progress failures, etc. and the government’s available remedies,  distinctly differ between FP construction and service or supply contracts or the Termination clause for A/E contracts. Specifically, when the government does not terminate the contractors right to proceed.

Retreadfed said:

Forbearance can be consideration if a party agrees to refrain from taking an act that the party is legally entitled to take.  If the contractor is in default, the government may terminate the contract for default.  Thus, a default termination is an act the government is legally entitled to take when the contractor is in default.  The contracting officer may promise not to T4D the contract in exchange for some consideration from the contractor such as a price reduction.   This is not a waiver of the contractor's default but a new bargain supported by adequate consideration between the parties.

The making of a new bargain in lieu of T for D is not forbearance as that term is used in government contracting. The making of a new bargain is the making of a new bargain𑁋a settlement.

Here is a definition of forbearance from The Government Contracts Reference Book, 5th ed. p. 226:

Quote

FORBEARANCE The postponement of the decision to terminate for default while the contracting officer is investigating the reasons for the contractor's failure to  meet the contract requirements. With regard to the government's WAIVER of its right to terminate a contract for late delivery, the contracting officer has a reasonable period of forbearance to investigate facts and determine what course of action best serves the government's interests. During the forbearance period, the government may terminate at any time, without prior notice. The facts and circumstances of each case determine the length of time constituting a reasonable forbearance period; no clear demarcation exists between reasonable forbearance and waiver. Once the forbearance period expires, the government waives its right to terminate for default and must reestablish a delivery schedule if it wishes to terminate for default.

I think that once the CO decides upon a course of action he or she is no longer forbearing in the sense in which that term as used in contracting𑁋postponement of a decision. If the government promises not to T for D in return for a negotiated settlement, that act is not forbearance. It is not a mere postponement pending a decision. It is settlement. It is more like forbearance in the sense in which the word is used in the financial fields of mortgage and lending, where it refers to a bargain struck with the lender, such as a new payment schedule that will bring the borrower current.

See: https://www.zeislaw.com/Commercial-Loan-Forbearance-Agreements-Striking-a-Fair-Balance-from-the-Borrower-s-Perspective

https://www.contractscounsel.com/t/us/forbearance-agreement

The concepts are similar, but not the same.

Vern Edwards said:

The making of a new bargain in lieu of T for D is not forbearance as that term is used in government contracting.

Forbearance is used in two different contexts in government contracting.  One is the act of forbearing from terminating a contract while the government is deciding what to do about the contractor's default.  The other is forbearance (refraining from doing an act that the government is legally entitled to do) can act as consideration (the government's promise) for a new bargain or settlement as you called it.  I know that forbearance and settlement are not the same thing.    That is a point I have been trying to make with Carl.

Just now, Retreadfed said:

Forbearance is used in two different contexts in government contracting.  One is the act of forbearing from terminating a contract while the government is deciding what to do about the contractor's default.  The other is forbearance (refraining from doing an act that the government is legally entitled to do) can act as consideration (the government's promise) for a new bargain or settlement as you called it.

@RetreadfedWhat you describe in the second sentence above quote from your last post is the kind of forbearance usually referred to as mortgage or lending forbearance, i.e., a "forbearance agreement." I know of only one government contract case, from 1960, in which the term forbearance was used in that way, Bronze Marker Corp., ASBCA 5650, 60-2 BCA ¶ 2811, and it was used by the parties, not by the board. As far as I have been able to determine, the word forbearance was not been used in that way before and has not been used in that way since.

The government had entered into a requirements contract for grave markers. The contractor fell behind on deliveries and the parties entered into a supplemental agreement to convert the contract from a requirements contract to an indefinite quantity contract. The supplemental agreement included the following language:

Quote

Now, therefore, It Is Hereby Mutually Agreed By And Between The Government And The Contractor, as follows:

‘1. The contractor agrees that the Government may cancel, without the Government being liable to the contractor, and place with other manufacturers any or all orders sent to the contractor at any time the contractor is delinquent.

‘2. The contractor agrees that at any time the contractor is delinquent in filling the government orders placed with the contractor, the government may order any or all further requirements from any other manufacturer until such time as the contractor has completed the orders placed with it.

‘3. The contractor further agrees that it will pay to the government any excess costs above the contract price (as determined by the contract between the contractor and the government) resulting from the purchase of Bronze markers from other manufacturers as allowed by paragraphs 1 and 2 above. Any increased postal costs due to shipments to consignees from manufacturers other than the Bronze Marker Corporation will be included in determining excess costs.

‘4. The contractor agrees that the Government may invite bids and award contracts to obtain bronze markers in accordance with this agreement on such terms as it may determine to be in the best interests of the Government.

‘5. The contractor agrees to the above amendments in consideration of the government's forbearance to terminate the contract at this time and for the present default of the contractor.

‘6. Nothing contained herein is to be interpreted or considered as being a termination for the convenience of the government.

‘7. That except as hereby amended all terms and conditions of contract DA 49–056 QM 248 shall remain unmodified and in full force and effect and shall also apply in carrying out the provisions of this Agreement.’

[Emphasis added.]

The case was about excess costs incurred by the government after the contractor defaulted under the new contract. That's the only appearance of the word forbearance in the board decision. Forbearance was not an issue. It was a term used by the parties in connection with their settlement, under which the government agreed not to terminate for default in return for the contractor's agreement to new contract terms.

I think that's the kind of thing that you are talking about, in which the government agrees to forego T for D in exchange for new terms. But that is not the way the word forbearance has been used in government contracting. I have not found any other case in which the word forbearance was used in that way, and the phrase "forbearance agreement" does not appear in any BCA decision, ever.

The first use of forbearance in a board decision was in 1954, El-Tronics, Inc., ASBCA 2173, Aug. 19, 1954. The government terminated the contract for default and the contractor argued that the government has waived the breach. The board disagreed, saying:

Quote

Upon due consideration of appellant's allegations of excusable causes of delay and upon perusal of all the available evidence the Board finds no justification for deciding that the contracting officer erred in his action terminating the contract for default. In our opinion the Government's letter of 17 February 1954 advising appellant of its delinquency and its telegram of 23 February 1954 requesting the withholding of further shipments, did not constitute a waiver of the delivery schedule. The Government's right to terminate the contract existed upon failure of appellant to deliver the required nine items by 15 February 1954 as unequivocally set forth in the contract terms. The delay of nine days from 15 February to 24 February 1954 is considered as mere Government forbearance.

As far as I have been able to determine, that's the way the boards have used the term ever since. The FAR System does not use the word forbearance, and the word is not in the DAU Glossary.

I know I'm being a pain about this, but I'm doing so for a reason. The reason is to avoid the kind of confusion we have seen in this thread concerning forbearance, bilateral agreement, and consideration. I think we should use the word in accord with documented long-standing government contracting usage, and distinguish forbearance (postponement of decision) from settlement (agreement as to new terms). It is in settlement that bilateral agreement and consideration are required.

Vern Edwards said:

distinguish forbearance (postponement of decision) from settlement (agreement as to new terms). It is in settlement that bilateral agreement and consideration are required.

Agreed.  That is the point I have been trying to make with Carl, but, perhaps inartfully.

Dang it my name keeps cropping up so I am compelled to respond.

I appreciate all responses as added to my own research they have made me comfortable with my expanded view of forbearance.

The extended discussion was a result of @Krimz posting about a letter they use with additional details about the use of the letter etc.

I do appreciate all the posts to educate me.  In the end what has been most helpful to me is this document and its various discussions of forbearance - 2022 CONTRACT ATTORNEYS DESKBOOK.  Find it here https://tjaglcs.army.mil/publications

Thanks again

Thanks, Carl. See Chapter 25 [EDIT (add):] of the Contract Attorneys Deskbook (2022 edition): “CONTRACT TERMINATIONS FOR DEFAULT (T4D)”

Great reference material.

EDIT(add):  https://tjaglcs.army.mil/documents/35956/56922/2022+Contract+Attorney+Deskbook.pdf/9a2d2125-61b4-7dbe-8e1c-5ccf1339d9dd?t=1657901660444

Chapter 25 contains 45 pages, although not all of it is directly relevant to the questions in the original post. Nevertheless, it provides a good general reference for TFD issues and procedures, including contracts for commercial supplies and services.

C Culham said:

In the end what has been most helpful to me is this document and its various discussions of forbearance - 2022 CONTRACT ATTORNEYS DESKBOOK.  Find it here https://tjaglcs.army.mil/publications

The link didn't work for me, but if you are interested in forbearance, save yourselves the trip. Here's what is helpful about our topic in that 1,521-page pdf publication, which mentions the word forbearance all of six times:

Quote

1. Waiver of the right to terminate for default occurs if: a. The government fails to terminate a contract within a reasonable period of time after the default under circumstances indicating forbearance, and b. Detrimental reliance by the contractor on the failure to terminate and continued performance by him under the contract, with the government's knowledge and implied or express consent.

2. As a consequence, detrimental reliance usually cannot be found merely from government forbearance and continued contractor performance.

3. Forbearance = Reasonable Time Period... General Rule. The government may “forbear” for a reasonable period after the default occurs before taking some action... 

4. (although forbearance for 42 days after show cause notice was “somewhat long”... )

5. Government actions inconsistent with forbearance may waive a delivery date.

6. Contracting officers should use show cause notices to avoid waiver arguments. Show cause notice is inconsistent with waiver. See Charles H. Siever Co., ASBCA No. 24814, 83-1 BCA ¶ 16,242 (using timely show cause notice preserved right to terminate despite four month forbearance period).

That's all I found via an Adobe Acrobat search of the document. 😐 You'll learn more from Cibinic, Nash, and Nagle's one-page discussion. 

The issue in this thread was whether an agreement, a mod, and consideration are necessary in order for a CO to forbear T for D if the contractor breaches. THEY ARE NOT NECESSARY!

Carl does have a penchant for often requiring readers to make an effort to find and read his information resources. Unfortunately, every reader must duplicate that effort…

It is time consuming for one, let alone every reader to do that.

Once again I am compelled to respond.

On 1/24/2023 at 9:16 PM, Vern Edwards said:

The issue in this thread was whether an agreement, a mod, and consideration are necessary in order for a CO to forbear T for D if the contractor breaches. THEY ARE NOT NECESSARY!

An agreement CAN BE but is not necessary  in every case.  Consideration CAN BE determined to confirm the forbearance but is not in every case.  By my read each and every instance of intentional forbearance is determined on its merits.

The real issue is what I would  do in each and every specific case where forbearing was an intentional act that I might take.  That is a future decision and a future discussion when the need arises and then you can debate it with me if you want.  But until then you use your research and I will use mine.   THATS IT!

On 1/25/2023 at 5:02 AM, joel hoffman said:

Unfortunately, every reader must duplicate that effort…

It is time consuming for one, let alone every reader to do that.

 WHAT!  So I as a practitioner should take every comment in Forum at face value, not question it, not do in depth reading and research about it.  READING, in my view is neither time consuming or duplicative it is a MUST.  A MUST that includes not just reading one source but many.

C Culham said:

WHAT!  So I as a practitioner should take every comment in Forum at face value, not question it, not do in depth reading and research about it.  READING, in my view is neither time consuming or duplicative it is a MUST.  A MUST that includes not just reading one source but many.

Carl, I don’t mind reading it. Edit: Sorry - I didn’t mean that in my earlier post. Poor choice of words.

I don’t like searching for it, when no link is provided or when a general link is provided and I have to go two or three links deep to find the desk book on my iPhone. And there are no links within the online Deskbook index to reach a chapter. I had to scroll through 24 chapters to reach Chapter 25. Fortunately the chapter 25 index had links.

Joel, Joel, Joel.

Haven't you already made that point?

Blessed be the peacemakers.

Vern Edwards said:

Joel, Joel, Joel.

Haven't you already made that point?

Blessed be the peacemakers.

Actually, after reading my earlier post, I had referred to having to “read “ the reference. Poor choice of words. Finding the general reference and then finding the relevant points within the document ( here, the 45 page chapter on defaults)  is often time consuming.

joel hoffman said:

Carl, I don’t mind reading it. Edit: Sorry - I didn’t mean that in my earlier post. Poor choice of words.

I don’t like searching for it, when no link is provided or when a general link is provided and I have to go two or three links deep to find the desk book on my iPhone. And there are no links within the online Deskbook index to reach a chapter. I had to scroll through 24 chapters to reach Chapter 25. Fortunately the chapter 25 index had links.

Thanks Joel.   If I went overboard on my emphasis no ill intent meant.   It was actually like a emphasized head scratch, like it did not equate to what we have all attempted to emphasize with regard to the subject acquisition - read.  I appreciate your comment to me.