Government Contracting - DFARS Part 250 - Extraordinary Contractual Actions - Win Federal Contracts
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Government Contracting - DFARS Part 250 - Extraordinary Contractual Actions - Win Federal Contracts
- 1. DFARS - 2021 Defense Federal Acquisition Regulations Complimentary Webinar Series JSchaus & Associates – Washington DC – hello@JenniferSchaus.com
- 2. DFARS – 2021 - Defense Federal Acquisition Regulations JSchaus & Associates – Washington DC – hello@JenniferSchaus.com About Us Professional services for federal contractors Market Analysis Proposal Writing / Pricing Contract Compliance & Administration
- 3. DFARS – 2021 - Defense Federal Acquisition Regulations JSchaus & Associates – Washington DC – hello@JenniferSchaus.com About The Series Complimentary Webinar Series Every Wednesday at 12pm eastern Recorded and posted on our website and YouTube Channel PPTs are on SlideShare.net Speakers are attorneys, consultants, subject matter experts in defense contracting
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- 12. DFARS – 2021 - Defense Federal Acquisition Regulations JSchaus & Associates – Washington DC – hello@JenniferSchaus.com About Our Speaker Fernand (“Fern”) A. Lavallee Jones Day flavallee@jonesday.com O: 202-879-3486 C: 202-445-1458
- 13. DFARS – 2021 - Defense Federal Acquisition Regulations JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 Extraordinary Contractual Actions Wednesday, 10 November 2021
- 14. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 WHAT WE WILL DISCUSS TODAY: • What is Pub.L. 85-804 and Extraordinary Contractual Actions (AKA Extraordinary Contractual Relief)? • Background of Pub.L. 85-804 and Extraordinary Contractual Actions • What situations are Extraordinary Contractual Actions intended and NOT intended for? • What types of relief are available under as Extraordinary Contractual Actions under Pub.L. 85-804? • When and how does a contractor request Extraordinary Contractual Actions? • Mechanics for handling a request for Extraordinary Contractual Action at DoD
- 15. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 … and then a miracle happened! What is Pub.L. 85-804 (codified at 50 U.S.C. §§ 1431-35) and Extraordinary Contractual Action? It is the authority of any Federal department or agency of the Government which exercises functions in connection with the national defense [such as DoD]… to enter into contracts or into amendments or modifications of contracts heretofore or hereafter made and to make advance payments thereon, without regard to other provisions of law relating to the making, performance, amendment, or modification of contracts, whenever such action would facilitate the national defense.
- 16. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 Pub.L. 85-804 does not (and Extraordinary Contractual Actions cannot) authorize: (a) the use of the cost-plus-a-percentage-of-cost system of contracting ; (b) any contract in violation of existing law relating to limitation of profits; (c) the negotiation of purchases of or contracts for property or services required by law to be procured by formal advertising and competitive bidding; (d) the waiver of any bid, payment, performance, or other bond required by law; (e) the amendment of a contract negotiated under section 2304 (a) (15), title 10, United States Code, or under section 302 (c) (13) of the Federal Property and Administrative Services Act of 1949, as amended (63 Stat. 377, 394), to increase the contract price to an amount higher than the lowest rejected bid of any responsible bidder; or (f) the formalization of an informal commitment, unless it is found that at the time the commitment was made it was impracticable to use normal procurement procedures.
- 17. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 • The authority for Extraordinary Contractual Actions was originally created shortly after the Korean War as a temporary wartime expediency to guarantee uninterrupted performance of defense contracts. • The statutory basis for Extraordinary Contractual Actions technically only authorizes use in a “national emergency declared by Congress or the President, and for six months after the termination thereof.” • However, Pub.L. 85-804 continues to remain in effect since its invocation in 1958 by Executive Order 10,789. • When the state of national emergency was officially terminated in 1978, Congress exempted Public Law 85-804.8
- 18. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 • Extraordinary Contractual Actions under Pub.L. 85-804 is a means by which a contractor can receive additional compensation, or other forms of relief, in instances where the government has no legal obligation, and where relief may otherwise be prohibited by law. • Part 250 of the Defense Federal Acquisition Regulation Supplement (DFARS Subpart 250) governs DoD administration of Pub.L. 85 – 804 requests for relief. See https://www.acquisition.gov/dfars/part-250-extraordinary-contractual-actions • 10 U.S.C. 2410(b) sets forth limitations on Congressionally directed payment of a request for equitable adjustment to contract terms or a request for relief under Pub. L. 85-804. • For R&D contracts, Pub. L. 85-804 will apply only to work to which 10 U.S.C. 2354 does not apply. • Procedures, Guidance and Information (PGI) 250.1 —EXTRAORDINARY CONTRACTUAL ACTIONS contains detailed guidance and instructions. See https://login.acquisition.gov/dfarspgi/pgi-part-250-extraordinary-contractual-actions
- 19. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 • Extraordinary Contractual Actions generally can be used to obtain three types of relief: (1) amendments without consideration; (2) correction of mistakes; and, (3) formalization of informal commitments. • The bases for relief are broad, and the Contract Adjustment Boards (“CAB”) enjoy broad discretion to determine that circumstances warrant action and the appropriate relief.
- 20. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 Amendments without consideration • Usually predicated upon “essentiality”. • To establish essentiality, a contractor must demonstrate: (1) the contractor is essential to the national defense; (2) there is an actual loss under the contract; and, (3) the loss impairs “productive ability.”
- 21. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 Amendments without consideration (Cont’d) • An amendment without consideration can also be used to compensate a contractor for a situation where the Government hinders or otherwise interferes with the contractor’s performance (usually coincidental to the Government’s exercise of a sovereign right or action). • To prevail in a request for Extraordinary Contractual Action based on hindrance/interference, a contractor usually typically must demonstrate: (1) it suffered an actual loss; (2) the loss resulted from some Government action; and, (3) the Government action had an unreasonable or “unfair” impact on the contractor.
- 22. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 Correction of mistakes • Extraordinary Contractual Action can be used to provide monetary relief for mistakes. • Generally Extraordinary Contractual Action can be used to rectify three types of mistakes: (1) a mistake or ambiguity in a contract resulting in the failure of the express terms of the contract to clearly state or reflect the intention of the parties; (2) an obvious unilateral mistake by the contractor; or, (3) a mutual mistake as to a material fact.
- 23. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 Formalization of informal commitments • Can provide for compensation to a contractor in instances where a contractor is prejudiced by a Government’s “apparent authority” where “actual authority” was lacking. • For example, when a contractor takes action in response to a Government official’s instructions or direction where the official did not have the authority to direct the contractor’s action in a manner that legally binds the government.
- 24. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 When Does a Contractor Obtain Extraordinary Contractual Action? • Requests for Extraordinary Contractual Action must be submitted before the Government discharges all of its obligations under the contract, i.e., before the Government makes final payment. • Generally a contractor must first exhaust all administrative remedies which may be available before pursuing Extraordinary Contractual Action. • In cases where the relief requested arises from or is related to a constructive change, the contractor must pursue relief under the Disputes clause, including an appeal to the agency’s Board of Contract Appeals, before requesting Extraordinary Contractual Action.
- 25. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 How Does a Contractor Obtain Extraordinary Contractual Action? • Requests for Extraordinary Contractual Action must be submitted to the Procuring Contracting Officer (“PCO”). • The PCO will prepare the record described at PGI 250.101-3(1)(i) and forward it to the appropriate official within 30 days after the close of the month in which the record is prepared. • The case is then forwarded to the Contract Adjustment Board (“CAB”) through departmental channels, with the documentation described at PGI 250.103-5. • CABs will render decisions as expeditiously as practicable.
- 26. DFARS – 2021 - Defense Federal Acquisition Regulation Supplement JSchaus & Associates – Washington DC – hello@JenniferSchaus.com DFARS Part #250 WHAT WE DISCUSSED TODAY: • What is Pub.L. 85-804 and Extraordinary Contractual Actions (AKA Extraordinary Contractual Relief)? • Background of Pub.L. 85-804 and Extraordinary Contractual Actions • What situations are Extraordinary Contractual Actions intended and NOT intended for? • What types of relief are available under as Extraordinary Contractual Actions under Pub.L. 85-804? • When and how does a contractor request Extraordinary Contractual Actions? • Mechanics for handling a request for Extraordinary Contractual Action at DoD
- 27. DFARS – 2021 - Defense Federal Acquisition Regulations JSchaus & Associates – Washington DC – hello@JenniferSchaus.com THANK YOU To Our Speaker Fernand A. Lavallee Jones Day flavallee@jonesday.com O: 202-879-3486 C: 202-445-1458
- 28. Thank You For Attending! DFARS - 2021 Defense Federal Acquisition Regulations Complimentary Webinar Series JSchaus & Associates – Washington DC – hello@JenniferSchaus.com
Editor's Notes
- What is Pub.L. 85-804
- What situations are Extraordinary Contractual Actions NOT used for?
- Background of Pub.L. 85-804: Fourteen (14) agencies are authorized to use Extraordinary Contractual Actions: the Department of Defense, Department of the Treasury, Department of the Interior, Department of Agriculture, Department of Commerce, Department of Health and Human Services, Department of Transportation, Atomic Energy Commission, General Services Administration, National Aeronautics and Space Administration (NASA), Tennessee Valley Authority, Government Printing Office [Government Publishing Office], Department of Homeland Security; and United States Agency for International Development (USAID). All the agencies except for USAID were added by presidential amendments to Executive Order 10,789; USAID was added by presidential memorandum. 68 Fed. Reg. 19705 (April 17, 2003).
- What situations are Extraordinary Contractual Actions used for? Under 10 U.S.C. 2354, and if authorized by the Secretary concerned, contracts for research and/or development may provide for indemnification of the contractor or subcontractors for— (1) Claims by third persons (including employees) for death, bodily injury, or loss of or damage to property; and (2) Loss of or damage to the contractor's property to the extent that the liability, loss, or damage— (i) Results from a risk that the contract defines as “unusually hazardous;” (ii) Arises from the direct performance of the contract; and (iii) Is not compensated by insurance or other means.
- Types of Relief Under Extraordinary Contractual Actions:
- Types of Relief Under Extraordinary Contractual Actions:
- Types of Relief Under Extraordinary Contractual Actions:
- Types of Relief Under Extraordinary Contractual Actions:
- Types of Relief Under Extraordinary Action: In this type of situation the contractor is often considered to have acted as a “volunteer.” To formalize informal commitements typically the contractor must (1) make the request promptly (the FAR provides within six months), and 2) demonstrate that, at the time the contractor acted that it was “impractical” to use normal procurement procedures.
- Types of Relief Under Extraordinary Action: In this type of situation the contractor is often considered to have acted as a “volunteer.” To formalize informal commitements typically the contractor must (1) make the request promptly (the FAR provides within six months), and 2) demonstrate that, at the time the contractor acted that it was “impractical” to use normal procurement procedures.
- If filing with the PCO is impractical, requests may be filed with an authorized representative, an administrative contracting officer, or the Office of General Counsel of the applicable department or agency, for forwarding to the cognizant PCO. Docs required by PGI 250.101-3(1)(i) is a preliminary record when a request for a contract adjustment under FAR 50.103 is filed PGI 250.103-5: (i) A letter stating— (A) The nature of the case; (B) The basis for the board's authority to act; (C) The findings of fact essential to the case (see FAR 50.103-4). Arrange the findings chronologically with cross-references to supporting enclosures; (D) The conclusions drawn; (E) The recommended disposition; and (F) If contractual action is recommended, a statement by the signer that the action will facilitate the national defense. (ii) The contractor's request. (iii) All evidentiary materials. (iv) All endorsements, reports and comments of cognizant Government officials. (2) A letter to the Board recommending an amendment without consideration where essentiality is a factor (see FAR 50.103-2(a)(1)) should also provide— (i) The information required by FAR 50.103-4(a) and (b), and (ii) Findings as to— (A) The contractor's performance record, including the quality of product, rate of production, and promptness of deliveries; (B) The importance to the Government, particularly to the active duty military, of the performance of the contract and the importance of the contractor to the national defense; (C) The forecast of future contracts with the contractor; and (D) Other available sources of supply for the supplies or services covered by the contract, and the time and cost of having contract performance completed by such other sources.