2024: The FAR - Federal Acquisition Regulations, Part 52

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18. 2024 Webinar Series THE FAR THE FAR – PART 52 J Schaus & Associates, WASHINGTON DC – [email protected]

19. FAR PART #52: Solicitation Provisions And Contract Clauses SPEAKER: Michelle D. Coleman FIRM: Crowell & Moring EMAIL: [email protected]

20. FAR PART #52: Solicitation Provisions And Contract Clauses SPEAKER: Skye Mathieson FIRM: Crowell & Moring EMAIL: SMathieson @crowell.com

21. 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?

22. 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)?

23. 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. WHAT IS FAR PART 52 (Cont’d)?

24. What is FAR Part 52? Remedy Granting Clauses Changes Delays & Stop Work Differing Site Conditions GFP/GFE Termination Business Ethics and Compliance Cost or Pricing Invoicing and Payments ROADMAP Ordering Clauses Labor & Employment Options Trade & International Limitations Data Rights & IP Inspection and Acceptance Subcontracting Disputes

25. 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) Common Remedy Granting Clauses: Changes

26. Permissible changes include but not limited to: method of shipping; place of delivery; drawings, designs, specifications; description of services; time of performance, etc. Unilateral vs. Bilateral Express vs. Constructive Changes Breach Notify CO of changes in writing in accordance with the notice provision in the clause (typically 30 days). Contractor entitled to equitable adjustment (cost of change + reasonable profit). Changes under the commercial items clause must be bilateral. No constructive change. Common Remedy Granting Clauses: Changes (cont’d)

27. 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. Common Remedy Granting Clauses: Delays & Stop Work

28. 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 Will Co., LLC, ASBCA No. 58154, 13 BCA ¶ 35,415 (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. Common Remedy Granting Clauses: Differing Site Condition

29. 52.245-1 Government Property 52.245-9 Use and Charges 52.247-55 F.o.b. Point for Delivery of Government-Furnished Property Government-Furnished Property (GFP) “means property in the possession of, or directly acquired by, the Government and subsequently furnished to the Contractor for performance of contract.” Government Property “means all property owned or leased by the Government.” Requires contractor to establish and implement property management plan/system. Allows equitable adjustments for delays and/or changes in GFP. Penalties, e.g., fines, imprisonment, or both for misuse of GFP. Common Remedy Granting Clauses: GFP

30. What is FAR Part 52? Remedy Granting Clauses Changes Delays & Stop Work Differing Site Conditions GFP/GFE Termination Business Ethics and Compliance Cost or Pricing Invoicing and Payments ROADMAP Ordering Clauses Labor & Employment Options Trade & International Limitations Data Rights & IP Inspection and Acceptance Subcontracting Disputes

31. 52.249-1 – 5 Termination for Convenience of the Government 52.249-6 – 7, 12 Termination 52.249-8 – 10 Default 52.212-4(L),(M) Contract Terms and Conditions-Commercial Items The Government can terminate for convenience or default. Termination for Convenience: Convenience termination gives the Government 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. Terminations

32. 52.249-1 – 5 Termination for Convenience of the Government 52.249-6 – 7, 12 Termination 52.249-8 – 10 Default 52.212-4(L),(M) Contract Terms and Conditions-Commercial Items The Government can terminate for convenience or default. 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 Terminations (cont’d)

33. 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. 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. Business Ethics and Compliance

34. 52.215-20 -21 Requirements for Certified Cost or Pricing Data and Data Other Than Cost or Pricing Data & Modifications 52.214-27 Price Reduction for Defective Certified Cost or Pricing Data – Modifications – Sealed Bidding 52.214-28 Subcontractor Certified Cost or Pricing Data-Modifications-Sealed Bidding 52.215-10-11 Price Reduction for Defective Certified Cost or Pricing Data 52.215-12-13 Subcontractor Certified Cost or Pricing Data & Modifications 52.320 Cost Accounting Standards 52.242-1 Notice of Intent to Disallow Costs 52.242-3 Penalties for Unallowable Costs 52.243-4 Certification of Final Indirect Costs Cost or Pricing

35. Costs must be reasonable, allocable, allowable, consistent, and substantiated. Common unallowable costs and penalties for charging expressly unallowable costs (double damages) or agreed to be unallowable costs (treble damages). Certified cost or pricing data required for contract awards that exceed $2 million (after July 1, 2018). Violations result in defective pricing claims. Cost or Pricing (Cont’d)

36. 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 Government is required to pay contractors for work performed upon submission of proper invoices or vouchers. Government can provide progress payments (payments based on progress). Contractors can offer and the Government can accept discounts on payments for prompt payment. Invoicing and Payments

37. 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. Ordering Clauses

38. 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. Government 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. Labor and Employment

39. What is FAR Part 52? Remedy Granting Clauses Changes Delays & Stop Work Differing Site Conditions GFP/GFE Termination Business Ethics and Compliance Cost or Pricing Invoicing and Payments ROADMAP Ordering Clauses Labor & Employment Options Trade & International Limitations Data Rights & IP Inspection and Acceptance Subcontracting Disputes

40. 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 Government to extend quantities, services, and the term of the contract for a period of time. Rule: Defective Exercise = Constructive Change (See Lockheed Martin IR Imaging Sys., Inc. v. West, 108 F.3d 319 (Fed. Cir. 1997)) 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) Options

41. 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 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! International and Trade

42. 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 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

43. 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 Data Rights & IP

44. 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, (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) Inspection and Acceptance

45. 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 Products and Commercial Services 52.203-6 Restriction on Subcontractor Sales to the Government 52.209-6 Protecting the Government’s Interest When Subcontracting with Contractor 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 Subcontracting

46. 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 Subcontracting (Cont’d)

47. 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 Government. 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 Six year statute of limitations (not jurisdictional) Disputes

48. FAR PART #52: Solicitation Provisions And Contract Clauses SPEAKER: Michelle D. Coleman FIRM: Crowell & Moring EMAIL: [email protected] THANK YOU FOR ATTENDING!

49. FAR PART #52: Solicitation Provisions And Contract Clauses SPEAKER: Skye Mathieson FIRM: Crowell & Moring EMAIL: SMathieson @crowell.com THANK YOU FOR ATTENDING!

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51. The FAR: Federal Acquisition Regulation s THANK YOU FOR JOINING US! 2024 Webinar Series 2024 Webinar Series