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From: Henry Spencer <>
Subject: Re: government RLV funding (was Re: Shuttle Phase-Out Date)
Date: Mon, 22 Jul 1996 22:40:05 GMT

A little while back, I wrote:
> It's essentially impossible for the government to make promises
> which are binding on future administrations.

A friend tells me that there's been a recent development of considerable
significance to this...  (I hadn't heard about this myself.)  A recent
Supreme Court decision related to the S&L mess apparently said, in about
so many words, "Congress cannot weasel out of contractual obligations by
changing the law to declare them null and void".  In other words, it *is*
possible for one Congress to enter into deals which are legally binding on
a future one.

Now, mind you, that doesn't mean that Congress *likes* the idea :-), or is
likely to sign that kind of deal very often.  (Normal government contracts
contain explicit provisions for the government to terminate them at its
convenience.)  But now it is possible...
 ...the truly fundamental discoveries seldom       |       Henry Spencer
occur where we have decided to look.  --B. Forman  |

Subject: Re: Monday night Nightline on Russian Space
From: Henry Spencer <>
Date: Tue, 20 May 1997 14:08:19 GMT

I wrote:
>When I quote a client a price on a job, it's not unheard-of for me to jack
>up the price because the client is difficult to deal with...  You can
>bet your bottom dollar that *I'd* charge the US government a steep premium
>for being a difficult customer.

Robert G Kennedy III <>, whose news server is not working
well at the moment, has asked me to post the following as his comments on
this.  (While I'm here :-), I'll use the opportunity to say that I was
aware of some of the things he mentions but not all -- it's worse than I
thought.  No wonder some companies have a "no government business" policy.)

Actually, you can't legally do that. Federal acquisition statutes
*require* that you give the feds the best unit price you have ever
publicly offered to a customer in the recent past. No surcharges allowed
simply for being difficult.

Not only that, but if you have recently offered an early payment discount
to other customers, (say, -2% for net 10 days as typical case) the federal
accounts payable person will take the discount too, whether or not they
actually pay your invoice on time. Look it up in the FAR for yourself.

Worse than *that*, the privilege extends to private firms working on prime
contracts for the government, i.e., a Beltway Bandit gets to do that to
their subcontractors. A prime contractor is also allowed to unilaterally
terminate subcontracts "for the convenience of the government" simply when
it becomes inconvenient to pay its own debts. So be sure and get your
profit line item cashed in early--btw, "profit" is an allowable line
item--the situation is not completely hopeless.

And, of course, it's up to you to define the work and set an approriate
hourly rate. But before you promote yourself with a gold-plated title,
know that this situation is exactly what legal job descriptions are
for--the feds' buyer can point and say, no that's not the going rate for
this kind of work. You can call yourself a Sanitation Engineer, but you'll
still only be paid for taking out the trash. It's also up to you to say
how many hours the job will entail, but it's up to the buyer to decide if
the time is a reasonable estimate.

No likee? Well, if you can't stand the heat...

Congress wrote this law and justified it on the grounds that the federal
government was *entitled* to the best possible price and the most
favorable terms because, when a fed signs a contract, somehow it
automatically makes them the best possible customer whose money is
guaranteed. That's what "full faith and credit" means in principle (but
not always in practice). Actually, executive branch types are far more
trustworthy in this regard than some prime contractors.

And this is why, boys and girls, that the words "contract" and the word
"sovereign" don't mix.
Committees do harm merely by existing.             |       Henry Spencer
                           -- Freeman Dyson        |

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