There was a task order awarded in FY12 to an 8a Contractor to build a clearspan at a particular building. In FY11 there was a contract to renovate that same building and as part of the renovation a crane was bought and has to be installed.
Well the FY11 project is way behind schedule and causing problems for the FY12 project. The FY12 project cant be constructed until the FY11 project actually installs the cranes as part of its scope. This is now anticipated to occur in about 13 months.
What should I do? We still need the clearspan. I am concerned because the project was awarded in FY12, but now can't be constructed until FY14 (assuming it stays on schedule it could very well be FY15). I can terminate for convenience, but that will take a while. I am not sure I want to descope because the need is still there. I could suspend, but that is a long time.
Should I suspend while working on the termination for convenience?
1. The FAR clauses contained in fixed-price construction contracts quoted below in pertinent part are applicable to this response.
Open full Question Details
FAR 52.242-14 -- Suspension of Work
(a) The Contracting Officer may order the Contractor, in writing, to suspend, delay, or interrupt all or any part of the work of this contract for the period of time that the Contracting Officer determines appropriate for the convenience of the Government.
(b) If the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or interrupted
(1) by an act of the Contracting Officer in the administration of this contract,
an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by the unreasonable suspension, delay, or interruption, and the contract modified in writing accordingly. However, no adjustment shall be made under this clause for any suspension, delay, or interruption to the extent that performance would have been so suspended, delayed, or interrupted by any other cause, including the fault or negligence of the Contractor, or for which an equitable adjustment is provided for or excluded under any other term or condition of this contract.
FAR 52.249-2 -- Termination for Convenience of the Government (Fixed-Price); Alternate I
(a) The Government may terminate performance of work under this contract in whole or, from time to time, in part if the Contracting Officer determines that a termination is in the Government’s interest. The Contracting Officer shall terminate by delivering to the Contractor a Notice of Termination specifying the extent of termination and the effective date.
(f) Subject to paragraph (e) of this clause, the Contractor and the Contracting Officer may agree upon the whole or any part of the amount to be paid or remaining to be paid because of the termination. The amount may include a reasonable allowance for profit on work done. However, the agreed amount, whether under this paragraph (f) or paragraph (g) of this clause, exclusive of costs shown in subparagraph (g)(3) of this clause, may not exceed the total contract price as reduced by
(1) the amount of payments previously made and
(2) the contract price of work not terminated.
The contract shall be modified, and the Contractor paid the agreed amount. Paragraph (g) of this clause shall not limit, restrict, or affect the amount that may be agreed upon to be paid under this paragraph.
(g) If the Contractor and Contracting Officer fail to agree on the whole amount to be paid the Contractor because of the termination of work, the Contracting Officer shall pay the Contractor the amounts determined as follows, but without duplication of any amounts agreed upon under paragraph (f) of this clause:
(1) For contract work performed before the effective date of termination, the total (without duplication of any items) of --
(i) The cost of this work;
(ii) The cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract if not included in subdivision (g)(1)(i) of this clause; and
(iii) A sum, as profit on subdivision (g)(1)(i) of this clause, determined by the Contracting Officer under 49.202 of the Federal Acquisition Regulation, in effect on the date of this contract, to be fair and reasonable; however, if it appears that the Contractor would have sustained a loss on the entire contract had it been completed, the Contracting Officer shall allow no profit under this subdivision (g)(1)(iii) and shall reduce the settlement to reflect the indicated rate of loss.
(2) The reasonable costs of settlement of the work terminated, including --
(i) Accounting, legal, clerical, and other expenses reasonably necessary for the preparation of termination settlement proposals and supporting data;
(ii) The termination and settlement of subcontracts (excluding the amounts of such settlements); and
(iii) Storage, transportation, and other costs incurred, reasonably necessary for the preservation, protection, or disposition of the termination inventory.
2. As we understand the facts as presented in this inquiry, and the application of the standard contract terms applicable to fixed-price construction contracts, we believe that the best approach would be to immediately issue a “Termination for Convenience” notice as described in FAR 49.601 to the clearspan contractor pursuant to paragraph (a) of clause FAR 52.249-2 in order conserve Government funds until the other Government “behind schedule” contractor completes their work in the estimated 13 months’ time, and then a new clearspan contract can be awarded. Under the terms of clause FAR 52.249-2(f) & (g) as described above, the contractor would be entitled to the costs for the work they have already completed, as well as any other reasonable expenses as part of the termination settlement that would be executed by a subsequent bilateral modification. Please note that this normal process for convenience terminations is tantamount to a “de-scope” of the existing task order.
3. However, if for some reason a Termination for Convenience notice cannot be issued immediately, then we recommend that the Contracting Officer issue a letter as permitted by clause FAR 52.242-14(a) directing the contractor to immediately suspend performance, followed as soon as practicable by the formal Termination for Convenience notice. Pursuant to the terms of FAR 52.242-14(b) as emphasized above, the any equitable adjustment due to the contractor as a result of this suspension notice would be provided for under the clause FAR 52.249-2, Alternate I.