Federal Contract Law - Let me put contract lingo into plain English for you

The Clinton administration has attacked a sacred cow here in the nation’s capital.

I’m not referring to sanctity of the Lincoln bedroom or even the ever-widening
scope of grand jury subpoenas. I’m talking about something more fundamental. I mean
bureaucratese, the English-like language in which government regulations and contracts are

On June 1, Clinton directed federal agencies to use plain English. Maybe he meant along
the lines of, “I did not have … ” Well, I won’t go there.

Of course, agencies will comply promptly, and we should expect, for instance, a
complete rewrite of the Federal Acquisition Regulation.

To keep readers of GCN ahead of the pack, let me present a look at how the reworded
contract clauses and regulations might read.

Current version: “The
contractor agrees to begin promptly negotiating with the contracting officer the terms of
a definitive contract …

“The contractor agrees to submit a proposal and cost or pricing data supporting
its proposal …

“If agreement on a definitive contract to supersede this letter contract is not
reached, … the contracting officer may, with the approval of the head of the
contracting activity, determine a reasonable price or fee … subject to contractor
appeal as provided in the disputes clause. “In any event, the contractor shall
proceed with the completion of the contract …”

Plain English version: Start
work now, and we’ll tell you later what we are going to pay you.

We’ll look at what it’s really costing so you don’t make too much money.
If you don’t like the price we name, you can always sue us. But keep working anyhow.

Current version: “The
parties estimate that performance of this contract … will not cost the government
more than the estimated cost …

“The contractor shall notify the contracting officer in writing whenever it has
reason to believe that … the total cost of performance … will be … greater
than had been estimated.”

Plain English version: Keep working until you run out of money.

Current version: “The
government may terminate performance of work under this contract … if the contracting
officer determines that a termination is in the government’s interest … [The
government shall pay the contractor] … the costs incurred … and profit on [those
costs] … however, if it appears that the contractor would have sustained a loss on
the entire contract had it been completed, the contracting officer shall allow no profit
under this subdivision and shall reduce the settlement to reflect the indicated rate of

Plain English version: Any
time it wants, the government can walk away from this deal, and the contractor will have
to kiss the profit he would have made goodbye.

On the other hand if the contractor will lose money by the end of the contract,
we’ll make sure he still loses some.

Current version: “The
cost principles and procedures of Part 31 of the Federal Acquisition Regulation, in effect
on the date of this contract, shall govern all costs claimed, agreed to, or determined
under this clause.”

Plain English version: You
thought this was a fixed-price contract? It was until the government terminated it for

Now, it is a cost-reimbursement contract. So get out the FAR, look up the cost
principles and call your accountant and your lawyer.

Current version: “The
ultimate conclusion on the [past] performance evaluation [if contested by the contractor]
is a decision of the contracting agency.”

Plain English version: The
slogan, “The customer is always right,” is no longer just a marketing
philosophy. It is now a statement of fact.

Current Version: “Year
2000-compliant, as used in this part, means, with respect to information technology, that
the information technology accurately processes date and time data (including but not
limited to, calculating, comparing and sequencing) from, into and between the 20th and
21st centuries, and the years 1999 and 2000 and leap year calculations, to the extent that
other information technology, used in combination with the information technology being
acquired, properly exchanges date and time data with it.”

Plain English version: If
our computer system doesn’t handle 21st century dates, or crashes after Jan. 1, 2000,
you are in deep, deep trouble unless you can show that someone else’s hardware or
software is to blame.

Joseph J. Petrillo is an attorney with the Washington law firm of Petrillo &
Powell, PLLC. E-mail him at jpetrillo@counsel.com.

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Reader Comments

Thu, Sep 2, 2010

I'd love to know of a resource to help contractors better understand these terms. When I'm browsing Federal jobs,I feel like it's in code sometimes. We've only done one Federal contract at this point, but would sure like to do more, but the terminolgy can be difficult at times even before getting to the point of a contract. pjcarvalho@caltel.com

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