Don't be easily wooed by all this lovely talk on commercial buying
The program manager for the Cyclical Modular Upgrade of All Things Digital has just
received an e-mail. Actually, she received it two years ago and is taking the month of
August to catch up on her reading. The e-mail is from the GS-2 contracting officer.
The function has become significantly less than clerical over the years because only
commercial items are being bought. The traditional elder has been replaced by a part-time
high school sophomore with a full-time job who really knows his way around shopping malls.
Among other things, the e-mail said, "We got this letter from Mega Computer,
Aerospace and Dry Wall Company (MCADWC). It says that the new delivery date is two years
after the current delivery date, which is 18 months after the original delivery date. I
called them up and asked, 'How come?' They said they had not anticipated the effect that
all of those merger celebrations would have on productivity and suggested that I have a
nice day. So I did."
The program manager was furious.
How dare MCADWC do this to the My Country Tis of Thee! She vowed to get to the bottom
Her first impulse was to read the contract and review the list of options the
government has when a contractor is late for no good reason. So she did. What she
discovered was the contract's delay clause.
The clause said, "Nonperformance by the seller is excused if the seller proves
that the nonperformance was due to an impediment either within or beyond the control of
seller, whether or not the impediment could have reasonably been foreseen and whether or
not the seller could have avoided or overcome the consequences."
The clause itself seemed to say was that MCADWC could deliver whenever MCADWC got
around to it. She called the GS-2 on the phone and asked, "How could this
happen?" The GS-2 replied, "I dunno. I was in the fourth grade when this deal
Not to be deterred, the PM dug further into the contract's supporting documents. She
found a memo from the agency's counsel that read, "MCADWC has proposed to modify the
Federal Acquisition Regulation delays clause in a manner that would effectively exempt it
from having to deliver on the original schedule if it becomes merely inconvenient. The
offerer has shifted virtually all of the delay risk to the government and required us to
prove the clause to be unconscionable. I would recommend that a thorough preaward survey
and past-performance analysis be done on the offerer to assure that it is likely to keep
its extremely promise to deliver the goods."
In the same file, the program manager discovered a letter from MCADWC that the company
apparently wrote in response to an inquiry by the government on the question of timely
delivery. It said, "The clause is our standard commercial clause that we have used in
countless contracts. We have a corporate policy of never deviating from this clause, ever.
We are merely protecting the profitability of the corporation in case anything at all
happens. You, in turn, are receiving the reduced commercial price associated with there
being no risk on us actually to deliver. "
The program manager asked why she had questioned the sincerity of this company? One
reason was that the company had a history of buying in at a firm-fixed price to upgrade
systems and later offering an upgrade outside the scope of the initial contract.
But the program manager was consoled.
It was, after all, a commercial contract.
Bob Little, an attorney who has worked for the General Accounting Office and a
Washington law firm, teaches federal contract law.