Government Contracting - FAR Part 52 - Solicitation Provisions and Contract Clauses

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FAR PART 52
Solicitation Provisions And Contract
Clauses
Link:
https://acquisition.gov/content/part-52-solicitation-provisions-and-contract-clauses
December 18, 2020

AGENDA
• What is FAR Part 52?
• Remedy Granting Clauses
• Termination
• Business Ethics and Compliance
• Cost or Pricing
• Invoicing and Payments
• Ordering Clauses
• Labor & Employment
• Options
• International & Trade
• Limitations
• Data Rights & IP
• Inspection and Acceptance
• Subcontracting
• Disputes

WHAT IS FAR PART 52?
• FAR Part 52 is an instruction manual for COs and provides the contract clauses that apply
to solicitations and contracts.
• It is organized by subject matter and in the same order as the other parts of the FAR.
See Figure 1 in FAR 52.101.

WHAT IS FAR PART 52? (Cont’d)
• The FAR Matrix contained in FAR 52.3 is helpful to see which clauses are required,
required-when-applicable, and optional for a particular contract type (e.g., cost
reimbursement research and development, commercial).

WHAT IS FAR PART 52? (Cont’d)
Can the CO modify clauses in FAR Part 52?
• Yes but only if the FAR authorizes the modification.
• The CO can also include “Alternate” FAR clauses.
• Some agencies may include agency specific clauses and special contract clauses.
Where would you find FAR Part 52 clauses in a contract?
• Typically in Section I – Contract Clauses. Sometimes tailored/full text in Section H.
• Be sure to review the clauses that are applicable, abide by them, and flow down required
and applicable clauses to subcontractors.

ROADMAP
• Changes
• Delays & Stop Work
• Differing Site Conditions
• GFP / GFE
• Termination
• Cost or Pricing
• Options
• Limitations
• Subcontracting
• Disputes

Common Remedy Granting Clauses: Changes
• 52.243-1 Changes-Fixed-Price
• 52.243-2 Changes-Cost-Reimbursement
• 52.243-3 Changes-Time-and-Materials or Labor-Hours
• 52.243-4 Changes
• 52.243-5 Changes and Changed Conditions
• 52.243-6 Change Order Accounting
• 52.243-7 Notification of Changes
• 52.212-4(c) Commercial Items (Changes)
• Permissible changes include but not limited to: method of shipping; place of delivery; drawings, designs, specifications;
description of services; time of performance, etc.
• Express vs. Constructive Changes
• Breach
• Notify CO of changes in writing in accordance with the notice provision in the clause (typically 30 days).
• Contractor’s entitled to equitable adjustment (cost of change + reasonable profit).
• Changes under the commercial items clause are bilateral.

Remedy Granting Clauses: Delays & Stop Work
• 52.242-14 Suspension of Work
• 52.242-15 Stop-Work Order
• 52.242-17 Government Delay of Work
• 52.249-14 Excusable Delay
• 52.249-8, -9, -10 Default
• 52.212-4(f) Excusable Delay
• Delays/stop-work can be actual (written order) or constructive (actions/words).
• Clauses allow time extensions or time extensions + costs.
• May be entitled to acceleration costs if CO refuses to grant an extension for valid delays.
• Timely notify CO of delays in writing.

Remedy Granting Clauses: Differing Site Conditions
• 52.236-2 Differing Site Conditions
• Two types:
• RFP representations differed materially from actual conditions encountered.
• Actual conditions differed materially from ordinary industry expectations.
• Notification: “Promptly” & before disturbing site
• Commercial Items: No clause, but common law breach claim (See Mylene (2013)
• Entitles contractor to equitable adjustment (cost & schedule) unless contractor fails to
notify CO in writing of the differing condition or if request is made after final payment.

Remedy Granting Clauses: Government Property
• 52.245-1 Government Property
• 52.245-9 Use and Charges
• 52.247-55 F.o.b. Point for Delivery of Government-Furnished Property
• Gov’t furnished property includes property, equipment, information, or any item that the
Gov’t gives to the contractor or arranges for the contractor to acquire on the Govt’s
behalf.
• Allows equitable adjustments for delays and/or changes in GFP.
• Penalties, e.g., fines, imprisonment, or both for misuse of GFP.

ROADMAP
• Termination
• Cost or Pricing
• Options
• Limitations
• Subcontracting
• Disputes

Terminations
• 52.249-1 – 5 Termination for Convenience (T4C)
• 52.249-6 – 12 Termination for Default
• 52.212-4(L),(M) Commercial Items (T4C, T4D)
• The Gov’t can terminate for convenience or default.
• Termination for Convenience:
• Convenience termination gives the Gov’t the broad right to terminate without cause.
• Contractor must stop terminated work.
• Contractor must settle liabilities in connection with termination.
• Contractors may be able to recover termination costs.
• Commercial termination for convenience recovery is different.
• Termination for Default:
• Contractor must stop terminated work.
• Show Cause and Cure notices
• Contractor must settle liabilities in connection with termination.
• Consequences: Liquidated damages, government is not required to pay for unaccepted work, return of progress partial, or advance payments,
excess reprocurement costs, reputation damage

Business Ethics and Compliance
• 52.203-13 Contractor Code of Business Ethics and Conduct
• 52.203-14 Display of Hotline Poster(s)
• Incorporated in contracts over $6 million / performance over 120 days. Certain subcontracts.
• Mandatory Disclosure: Requires contractors to disclose, in writing, to the agency Office of Inspector General if it has
“credible evidence” that a principal, employee, agent, or subcontractor has: (1) violated Federal criminal law involving
fraud, conflict of interest, bribery, or gratuity violations in Title 18 of the U.S. Code; or (2) violated the civil False Claims
Act in relation to an award, performance, or closeout.
• Requires contractors (except small businesses and contractors with commercial item contracts) to establish a business
ethics awareness and compliance program.
• For all contracts (except commercial contracts or contracts performed entirely outside U.S.), contractors must display
fraud hotline posters if the contract exceeds $6 million (or less as established by the agency), and the agency has a
fraud hotline poster or the contract is funded with disaster assistance funds.

Cost or Pricing
• 52.216-7 Allowable Cost & Payment
• 52.215-10 – 13 Price Reduction for Defective Certified Cost or Pricing Data/TINA
• 52.215-20 – 21 Requirements for Certified and Uncertified Cost or Pricing Data
• 52.230-1 – 7 Cost Accounting Standards (CAS)
• 52.242-1 Notice of Intent to Disallow Costs
• 52.242-3 Penalties for Unallowable Costs
• 52.243-4 Certification of Final Indirect Costs
• Costs must be reasonable, allocable, allowable, consistent, and substantiated.
• Common unallowable costs and penalties for proposing or charging expressly unallowable costs.
• TINA: Certified cost or pricing data required for certain contractual actions over $2 million (after July 1, 2018). Applies
to contracts, subcontracts, and modifications. Exceptions include commercial items and competitive acquisitions.
• Violations may result in defective pricing claims.
• For flexibly-priced contracts; 52.216-7 governs reimbursement, indirect rates, and “final payment.”

Invoicing and Payments
• 52.216-7 Allowable Cost & Payment
• 52.216-26 Payments of Allowable Costs Before Definitization
• 52.232-1 – 7, 10 Payments
• 52.232-8 Discounts of Prompt Payment
• 52.232-9 Limitation on Withholding of Payments
• 52.232-12 Advance Payments
• 52.232-13 – 16 Progress Payments
• 52.232-25 – 27 Prompt Payment
• 52.232-32 Performance-Based Payments
• Gov’t is required to pay contractors for work performed upon submission of proper invoices or vouchers.
• Gov’t can provide progress payments (payments based on progress).
• Contractors can offer and the Gov’t can accept discounts on payments for prompt payment.

Ordering Clauses
• 52.216-18 Ordering
• 52.216-19 Order Limitations
• 52.216-20 Definite Quantity
• 52.216-21 Requirements
• 52.216-22 Indefinite Quantity
• When contract quantities are not specified (e.g., IDIQs, requirements), Gov’t will issue “task orders” (for
services) or “delivery orders” (for supplies)
• These clauses specify: (1) procedures, (2) order of precedence, (3) guaranteed minimum quantities,
dollars, or amounts, (4) order limitations (min, max, aggregate)
• Consideration: IDIQ contracts are binding because of guaranteed minimum. Requirements contracts are
binding because of some form of exclusivity (regional, etc.)
• If no consideration, you may have a basic ordering agreement (BOA) rather than a contract.

Labor and Employment
• 52.222-8 Payrolls and Basic Records
• 52.222-14 Disputes Concerning Labor Standards
• 52.222-30 – 32 Construction Wage Rate Requirements Price Adjustment clauses
• 52.222-43 – 44 Fair Labor Standards Act and Service Contract Labor Standards – Price Adjustment clauses
• Labor standards for construction and service contracts.
• Employee must be paid prevailing wages as determined by the Secretary of Labor.
• Gov’t conducts compliance checks to ensure contractors are paying employees appropriate wages.
• Failure to properly pay wages will result in withholds or suspension of payments.
• Contractors are entitled to price adjustments for increased wages and government entitled to equitable adjustment for
decreased wages due to changes in wage determinations or collective bargaining agreements.
• Labor disputes handled by Department of Labor; the Boards and Courts can hear disputes related to labor when
deciding the parties’ contractual rights.

Options
• 52.217-6 Option for Increased Quantity
• 52.217-7 Option for Increased Quantity-Separately Priced Line Item
• 52.217-8 Option to Extend Services
• 52.217-9 Option to Extend the Term of the Contract
• The Option clauses allows the Gov’t to extend quantities, services, and the term of the contract for a period
of time.
• Rule: Defective Exercise = Constructive Change
• Gov’ts attempt to unilaterally extend and modify an option is a defective exercise that amounts to a
cardinal change
• A defective exercise entitles contractor to “total cost” recovery
• For cardinal change contractor can: (1) stop performance (material breach claim); or (2) continue with
performance and try to reserve rights to material breach; or (3) perform (converted to partial breach 
equitable adjustment)

International & Trade
• 52.225-1 -4, -7, 9 – 12 Buy American Clauses
• 52.225-5 – 6 Trade Agreements Clauses
• 52.225-8 Duty-Free Entry
• 52.225-13 Restrictions on Certain Foreign Purchases
• 52.247-29 – 68 Air, Boat, and Ground Transportation & F.o.b. Clauses
• Clauses impose supply chain limitations on who you can subcontract with
• “Vendors” of supplies/materials are subcontractors
• BAA and TAA impose similar––but different––tests and restrictions. Check both!
• Certain countries subject to multilateral trade agreements qualify for exemptions – check
the list!

Limitations
• 52.216-24 Limitation of Government Liability
• 52.232-20 Limitation of Cost
• 52.232-22 Limitation of Funds
• 52.246-23 – 25 Limitation of Liability
• These clauses protect the Govt’s fiscal considerations (taxpayer funds).
• Allows Gov’t to set strict “fund ceilings” and control costs incrementally (LOF) and in the
aggregate (LOC)
• Ceilings apply at what “level”? (Contract/IDIQ, task order, CLIN, SLIN, Mod, other?)
• Notifying the CO is required and strictly enforced.
• Stopping work, rather than overrunning, is expressly authorized.

Data Rights & IP
• 52.227-3-5 Patent Indemnity clauses
• 52.227-11, -13 Patent Rights-Ownership clauses
• 52.227-14 – 18, -20 Data Rights clauses
• 52.227-19 Commercial Computer Software License
• 52.227-21 Technical data Declaration, Revision, and Withholding of Payment-Major Systems
• 52.227-22 Major System-Minimum Rights
• 52.227-23 Rights to Proposal Data (Technical)
• The Gov’t desires the right to use––not ownership (IP) of––contractor technology
• Types of Rights: Limited/Restricted, SBIR, Government Purpose, Unlimited
• Record-keeping is key to establish that technology was developed at private expense
• Markings: Know the proper legend and remember to always mark correctly
• Validation/Challenge Process: Timing, Contractor Requirements, and Gov’t Remedies

Inspection and Acceptance
• 52.246-1 Contractor Inspection Requirements
• 52.246-2 – 9, 12 – 14 Inspection clauses per K type
• 52.212-4(a) Commercial Items (inspection and acceptance)
• Flow: Delivery, Inspection, (Testing), Acceptance (prelim., final, constructive), Payment
• Govt’s Inspection Rights: Inspect contractor/subcontract facilities? Timing?
• Govt’s Rejection Rights: (1) repair, replace, re-perform at no cost, or (2) reject + price
reduction.
• How long is a “reasonable time” to make a rejection decision?
• Remedies for Gov’t “over-inspection” and improper rejection? (changes, delays)

Subcontracting
• 52.244-2 Subcontracts
• 52.244-4 Subcontractors and Outside Associates and Consultants (Architect-Engineer Services)
• 52.244-5 Competition in Subcontracting
• 52.244-6 Subcontracts for Commercial Items
• 52.203-6 Restriction on Subcontractor Sales to the Government
• 52.209-6 Protecting the Govt’s Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment
• 52.215-12 – 13 Subcontractor Certified Cost or Pricing Data & Modifications
• 52.219-14 Limitations on Subcontracting
• 52.222-11 Subcontracts (Labor Standards)
• 52.226-5 Restrictions on Subcontracting Outside Disaster or Emergency Area
• Subcontract is broadly defined to include “any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime
contractor or another subcontractor.” FAR 4.101.
• Many of the FAR Part 52 clauses state that the clause must be flowed down to subcontractors.
• Prime contractor is responsible for subcontractors performance, including ensuring compliance with clauses and contract standards,
paying the subcontractor for performance, and sponsoring equitable adjustment and claims.
• Gov’t consent to subcontract may be required.

Disputes
• 52.233-1 Disputes
• 52.233-2 Service of Protest
• 52.233-3 Protest after Award
• 52.233-4 Applicable Law for Breach of Contract Claim
• Protests:
• Contractors can protest solicitation improprieties and improper awards.
• Forum = Government Accountability Office (GAO) or Court of Federal Claims (COFC)
• Contract Claims:
• Submission of a claim initiates the “disputes” process (claims over $100k must be certified).
• Claims can be made by contractor or the Gov’t.
• Contracting Officer makes final decision on claim; contractor has the right to appeal the final decision
• Forum = Board of Contract Appeals or Court of Federal Claims

Thank You For Joining Us!
Michelle D. Coleman Skye Mathieson
MColeman@crowell.com SMathieson@crowell.com
202-654-6708 202-624-2606

Brought To You By:
JSchaus & Associates
Washington DC
PH: 202-365-0598
Hello@JenniferSchaus.com

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