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    Does the Government have grounds to seek consideration? If so, what types? Or is there another type of remedy or penalty we can assess for the contractors non-performance?


    Answer

     The following response is based solely on the question and background information provided.  As we do not have all the facts particular to your situation, we highly recommend you consult, as applicable, your contracting officer and/or Legal Office for further guidance.
     
    In a CPFF contract, allowable costs will be paid.  In the classic sense, there would not be payment of consideration.  There is nothing that precludes the contracting officer from requesting service in kind for no additional cost, but a contractor is not required to give consideration under a CPFF contract.  See the excerpts from FAR 52.249-6.  Paragraph h addresses cost to be paid in a cost reimbursement termination.
     
    The background does not state the reason for the subcontractor delay.  If the delay is beyond the control of the contractor or subcontractor then they are not at fault and no penalties apply.  See the excerpts from FAR 52.249-14.  
     
    52.249-6 -- Termination (Cost-Reimbursement).
    ....
    (h) If the Contractor and the Contracting Officer fail to agree in whole or in part on the amount of costs and/or fee to be paid because of the termination of work, the Contracting Officer shall determine, on the basis of information available, the amount, if any, due the Contractor, and shall pay that amount, which shall include the following:
      (1) All costs reimbursable under this contract, not previously paid, for the performance of this contract before the effective date of the termination, and those costs that may continue for a reasonable time with the approval of or as directed by the Contracting Officer; however, the Contractor shall discontinue those costs as rapidly as practicable.
      (2) 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 subparagraph (h)(1) of this clause.
      (3) 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. If the termination is for default, no amounts for the preparation of the Contractor’s termination settlement proposal may be included.
      (4) A portion of the fee payable under the contract, determined as follows:
      (i) If the contract is terminated for the convenience of the Government, the settlement shall include a percentage of the fee equal to the percentage of completion of work contemplated under the contract, but excluding subcontract effort included in subcontractors’ termination proposals, less previous payments for fee.
      (ii) If the contract is terminated for default, the total fee payable shall be such proportionate part of the fee as the total number of articles (or amount of services) delivered to and accepted by the Government is to the total number of articles (or amount of services) of a like kind required by the contract.
      (5) If the settlement includes only fee, it will be determined under subparagraph (h)(4) of this clause.
      (i) The cost principles and procedures in Part 31 of the Federal Acquisition Regulation, in effect on the date of this contract, shall govern all costs claimed, agreed to, or determined under this clause.
    ....
    (k) In arriving at the amount due the Contractor under this clause, there shall be deducted --
      (1) All unliquidated advance or other payments to the Contractor, under the terminated portion of this contract;
      (2) Any claim which the Government has against the Contractor under this contract; and
      (3) The agreed price for, or the proceeds of sale of materials, supplies, or other things acquired by the Contractor or sold under this clause and not recovered by or credited to the Government. 
     
    52.249-14 -- Excusable Delays.
     
    As prescribed in 49.505(b), insert the following clause in solicitations and contracts for supplies, services, construction, and research and development on a fee basis whenever a cost-reimbursement contract is contemplated.....
    ...
    (b) If the failure to perform is caused by the failure of a subcontractor at any tier to perform or make progress, and if the cause of the failure was beyond the control of both the Contractor and subcontractor, and without the fault or negligence of either, the Contractor shall not be deemed to be in default, unless --
      (1) The subcontracted supplies or services were obtainable from other sources;
      (2) The Contracting Officer ordered the Contractor in writing to purchase these supplies or services from the other source; and
      (3) The Contractor failed to comply reasonably with this order.
     
    Based on the fact the subcontractor caused the delay and it was not something that could be foreseen, then again all costs are due. 
     
    But we can direct them to minimize costs if they are simply marking time while waiting for the assets to become available.

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