A participant at my recent Canberra seminar made me aware of “self-deleting” contract provisions. I gather that it’s a standard notion in government contracts.
Here’s an example:
CLAUSES MADE INAPPLICABLE BY THE TYPE OF ORDER OR CONTRACT ARE SELF-DELETING.
And another:
THE FOLLOWING CLAUSES ARE INCORPORATED BY REFERENCE AND ARE SELF-DELETING IF NOT APPLICABLE:
“Self-deleting” would seem to be something dreamed up by a bureaucrat as an alternative to “do not apply” or “are excluded”. Is the concept expressed in the Federal Acquisition Regulation (or the Australian equivalent) and therefore unavoidable? Or is there scope for using an alternative to “self-deleting”?
It sounds like a line from the original Mission: Impossible series. This message will self-destruct in 5 seconds.
No, no, THIS message won’t self-destruct! Don’t want to make a mess of your nice, clean blog :)
It’s a result of the FAR / DFAR.
Most US Defence companies will list 200 odd FAR / DFAR provisions in their standard T&Cs by ‘reference’, and rather than agree to amend the standard T&Cs (for example, deleting those references that clearly don’t apply), will instead claim that to the extent that they do not apply, they are ‘self deleting’.
Of course, not sure how that exactly works for a ‘meeting of the minds’ / mutual agreement in terms of contract formation. It’s a lazy way of trying to muscle T&Cs onto the other side, although appears to be widely accepted in the US.
Would love to see the meaning of such a provision fought out in an Australian court.
The US Federal Gov’t employs the concept of “self deleting” not because it’s expressly defined in a Federal Acquisition Regulation (or supplement to) but rather, because various regulations (statute/laws), by their express language, contain various exceptions that preclude the clauses very applicability in certain circumstances. The closest that you’ll come to the US Federal Gov’t officially recognizing this concept, and in a negative fashion only, is found in 52.230-6 Administration of Cost Accounting Standards, subsection (l)(1) “So state in the body of the subcontract, in the letter of award, or in both (do not use self-deleting clauses).”
In open competitions for negotiated contracts, for example, the Feds do not know what type of company (e.g., large business, small, etc.), monetary value of the award, among other, will eventually end up with the procurement. As a result, the Feds solicit open competitions on the broadest scenario by including those FAR/DFAR clauses (such as with the Department of Defense) that “could” apply, depending upon the awardee. The Feds refer to this concept as self-deleting.
Turn to a subcontract between a prime contractor and its’ sub-contractor in furtherance of a Federal contract. As Mr. Lopez accurately depicts here, prime contractors employ the same methodology that the Feds do with their subcontractors. The difference, however, is that the law / regulation that applies to a US Federal Gov’t and prime contractor relationship is governed by Federal legal principles, whereas a prime and its sub is governed by state law principles and can and does lead to different results.
I recall a US case not too long ago that highlighted the prime / subcontractor “self deleting” issue and it dealt with a cost accounting standards (CAS) clause being flown down / incorporated in a subcontract with a small business by a large business prime contractor in furtherance of a Federal contract. The small business claimed exemption from CAS, but the prime imposed the requirement upon
the small business which was objected to and thus led to the court case. The court said words to the effect that both parties are “commercial” and
as such, the parties are free to negotiate among themselves the terms of their own agreements. As a result, because the small business accepted the CAS clause, it therefore agreed to be bound by it and the sub did not enjoy exemption because that only applies at the US Federal Gov’t and prime contractor level, not at the subcontractor level. Because the prime contractor is not the US Federal Gov’t, the concept of self-deletion is therefore not recognized. I searched but could not find the case. I only have access to generic search engines and not West or Lexis.
The “self deleting” concept is universally accepted at the Federal / prime contractor level. It’s not universally accepted, however, at the prime / subcontractor level.