This is a FIRM FIXED PRICE CONSTRUCTION CONTRACT with the VEQ clause (52.211-18) included with no limitation to a specified CLIN(s).
I have a situation where the estimated quantity of a CLIN per contract was three, due to an error in the specification. Ultimately, two were installed as actually required for construction. Therefore, %66.66 percent of the CLIN was installed. Since the variation in quantity exceeded +/- 15% of the estimated quantity, upon demand of the contractor as prescribed in FAR 52.211-18, is the contractor due an adjustment in the unit price for the two remaining units?
If the Contractor provided invoices that substantiated their actual cost plus a resonable profit to be less than the price of the deleted unit, should the government retain only the actual cost plus profit and NOT the entire unit price of the deleted unit?
The Contractor contends that the entire price of the deleted unit should not be retained by the goverment for the following reasons:
1. The actual cost was less than estimated and they should only offer credit for that cost plus reasonable profit only.
2. Since the proposal preparation costs, overhead, etc... are distributed througout the CLINS the unit price of the deleted unit is not reflective of its value only.
3. Variation in Estimated Quanity was in excess of 15%, thus there was an increase in the unit price.
Example:
The contract unit price for 3 items is $60,000.00 each ($180,000.00), of which 2 were actually furnished and installed due to error in the spefications.
The contractor has invoiced for 2 items at $60,000.00 each ($120,000)
The contractor has provided actual invoices that indicate the cost of the CLIN plus profit only to be $40,000.00.
The contractor contends that the government owes the contractor the balance of $20,000.00, citing due to the decrease of quantity above the 15% threashold caused and increase in the unit price of the 2 remaining units.
Is the contractor due the remaining $20,000.00 per the example above and how should this be addressed with the contractor? Should the price of the remaining two units be increased ($80,000.00 each unit) to balance the Total price to equal $160.000.00 ($180,000.00 minus $40,000)?
Thank you in advance for your knowledge and insight on this subject.