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    My questions are: 1. Do we need to demand a reimbursement from Contractor for the overpayment done considering it was the contracting office mistake when issuing the contract and paying the contractor? 2. does it matter if it is an old contract that was completed 4 to 5 years ago? 3. Do we have to request reimbursement for difference of bonds paid from estimated even though the contract was issued under one single CLIN? 4. If yes to number 3, can we request reimbursement from contractor without the Executed amount paid receipt? (applicable to some contracts, not all) 5. Is it worth the time to fight for a reimbursement of excess funds paid that clearly, the KO and CS failed to identify and it happened long time ago. 6. Can we type an MFR instead of fighting for funds? any questions please let me know. I been searching the FAR and I have not been able to find any concrete answers. I am desperate to solve these issues. Phone 785-806-7187. Fully teleworking right now.


    Answer

    Answer:

    We spoke to the customer to get clarity on several issues (A - G) and provided answers to her questions (1-4):

    A.          Contract was awarded for $73,000 when the lowest price technically acceptable offer was $72,892. There is no documentation on how or why this happened.

    B.          The contractor never told the KO of discrepancy when contract was issued.

    C.          The government estimate was $66,000. The government’s prenegotiation memorandum was for $73,000.

    D.          The contract was completed in 2018 with no outstanding modifications or claims. However, the contractor did not execute a release of claims until April 21, 2021, after a discussion with the contract specialist assigned to close out the contract.

    E.           The contract did not have a cost breakdown of CLINs. The cost of project and estimated bond was on the same CLIN. The contract specialist said that bonding is usually a separate CLIN for Air Force Reserve construction contracts.

    F.           The total amount of the contractor’s invoices was $72,100. This was $900 less than the contract price. All invoices were fully paid.

    G.          Executed amount paid to the surety was less than estimated amount. Difference was not deobligated.

    1.           Do we need to demand a reimbursement from Contractor for the overpayment done considering it was the contracting office mistake when issuing the contract and paying the contractor?

    The assertion that the contracting officer made a mistake when issuing the contract and paying the contract may not be correct. There is a clear difference between a proposal and a contract award.

    The proposal is an offer (a.k.a. a bid) to do work within a period of time for a specified price. There are a number of different reasons why the proposal may be different from the actual contract price. Were there terms and conditions not known at the time and an estimate provided to add to the proposal in the event work was performed in a particular location for example? Were there negotiations that took place that resulted in a change in the terms and conditions, which resulted in an adjustment to a proposed amount?

    Nevertheless, the contract contains the binding terms and conditions between the parties. The awarded contract price is based on a proposal but the proposal is not the contract. The contract is considered binding when it has been:

    Attained by mutual assent and with a certainty of terms; with adequate consideration; executed by an official with proper authority (a.k.a. by a contracting officer having the proper warrant amount) and entered into for a legal purpose.

    It is stated that the contractor invoice amounts were more than the proposal amount but it does not follow that the invoices paid were based on amounts greater than the contract amount. Payment of an invoice occurs after an acknowledgment that supplies, services or construction were received and accepted. It is likely that the invoices were accepted by someone other than the contracting officer (e.g. a COR). Therefore, it cannot be said that there was an “overpayment”. Particularly if the payment made on the invoice reflects the amounts authorized by the contract for services or supplies that were likewise authorized according to the contract.

    Since this is a FFP contract, FAR 52.232-5 Payments Under Fixed-Price Construction Contracts would be included. See paragraph (a) Payment of price. The Government shall pay the Contractor the contract price as provided in this contract. Also see paragraph (g) Reimbursement for bond premiums. Note that nothing in this clause prohibits profit to be included on bond premiums; which could account for the difference in payment of the bond(s).

    Since this is a construction contract, the applicable bond subsection is FAR 28.102-2 Amount Required. Again, paragraph (a) provides a definition for contract price, which is: “Original contract price means the award price of the contract; or, for requirements contracts, the price payable for the estimated total quantity; or, for indefinite-quantity contracts, the price payable for the specified minimum quantity. Original contract price does not include the price of any options, except those options exercised at the time of contract award.” Again, nothing in this clause limits reimbursement of bond premiums to their cost only.

    2.           Does it matter if this contract was completed in 2018?

    If, for some reason, there were a belief that the contractor was overpaid then you would reach out to the Contracting Officer and legal and determine whether there should be a claim made against the contractor. There is a statute of limitations for claims and this time period is six years from the date of the basis of the claim. 28 U.S.C. sec. 2501. When were these payments made? In other words, reach out to your legal and have them help you determine if there is a claim and if so for how much and whether the action brought would be timely.

    3.           Do we have to request reimbursement for difference of bonds paid from estimated even though the contract was issued under one single CLIN?

    An estimate is a guess. It is a rough calculation. This was a firm-fixed-price contract so the amount that would be paid is the FFP CLIN price. What went into the contract price should have been documented somewhere in the contract file. It sounds like what went into that FFP CLIN price is the actual bond payment amount and the price for the work performed.

    Typically, with competitive FFP construction contracts bonds are their own separate CLIN and most offerors propose reimbursement of bond premiums at cost only in order to be more competitive. But nothing (any other provision or clause or other contract term and condition) limits offerors to only be reimbursed for bond premium costs.

    4.           A determination of whether there were any excess amounts paid to the contractor would need to be made first before it can be determined if the amount is worth the hassle of pursuing reimbursement. This determination would involve your contracting officer and legal. Any decision would be followed up in writing and your file should be adequately documented.

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