Best antidote to conflict: give and take

Robert J. Sherry

When it comes to conflicts in contracting, you'll find as many intra-governmental issues as government-vendor ones. In this column, I want to address both: striking an appropriate balance between the government's needs and the reasonable expectations of vendors, and reaching a balance between the expectations of government users and those of the contract shop for uniformity.

Two recent examples come to mind. Both involve indefinite-delivery, indefinite-quantity contracts for information technology products and services.

One story involves intellectual property rights. An agency's IDIQ contract contained a standard provision giving the agency exclusive rights to any applications developed by a vendor using its proprietary software. This was contrary to the vendor's standard commercial practices, and the agency was unwilling to compromise.

The result was predictable. The agency was deprived of the vendor's services, and the vendor developed an aversion to public-sector contracts.

In the second example, instead of using the standard labor categories, qualifications and task descriptions set forth in the underlying IDIQ contract, the agency created its own for the task order it issued. These categories, and the associated qualifications and task descriptions, varied substantially from those in the underlying contract. Yet the parties agreed to pricing'also at a variance from the underlying contract'that reflected these differences.

The vendor performed the work satisfactorily.

Enter the auditors. After examining agency and vendor documentation relating to the task order, the auditors recommended a refund. They reasoned that the deal varied substantially from the pricing, terms and conditions contained in the underlying IDIQ contract. The agency, embarrassed by the report, sought to take corrective action, including recovery.

But the agency had made the deal. No law, regulation or contract language prohibited the agreement, even if the contract did not specifically permit modifications of this nature. The parties could have avoided this conflict by using a standard contract provision allowing task order prices, terms and conditions to be flexibly negotiated so long as they were consistent with laws and regulations.

The moral: There is no killer app in procurement and no one-size-fits-all approach. Vendors, customers and especially government contract officers must heed the need for flexibility if public-sector customers are to meet their needs at appropriate prices and under fair terms and conditions.

Robert J. Sherry is a partner in the San Francisco office of Kirkpatrick & Lockhart LLP, representing information technology clients in dealings with government agencies.


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