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chase

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About chase

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  1. This has been a great discussion and has assisted me tramendously! Thank you. I look forward to our next discussion.
  2. The change occured due to the Bid schedule requiring 3 units (valves), but the drawings indicate only 2 to be installed. The actual scenario is that the contractor was to furnish and install these valves in an existing piece of equipment. There was nothing that prevented the instalation of 3 valves, but only 2 were required for function so that was the route taken. I would consider these "severable". Under the changes clause (52.243-4), would this be considered a deductive change? In reviewing one refernece: Contracting with the Federal Government 4d (Margaret M. Worthington, Louis P. Goldsman), they cite Nager Electric Co., Inc. and Keystone Engineering Corp v. United States, 194 Ct. C. 835, May 14, 1971, 442 F. 2d 936. ; where the boards of contract appeals and the courts have taken the position that the proper measure of of a deductive change is the reasonable cost that would have been incurred for the deleted item, plus a profit on that cost. The remaining balance would be to the benefit of the contractor. Although this seems to be more geared toward a complete deletion of a CLIN and not a partial deletion of one unit, wouldn't that still be a deductive change. Nash and Feldman also cover this in Government Contract Changes 3d. If you have this reference, it is covered in Volume 2, Chapter 18:24. where this could be handled as a Deductive Change or a Convenience Termination. Both have slightly different ways of calculating the deduction, but both would result in a deduction less than the original unit price. Change Pricing: (Deduct direct cost +overhead + profit) where this is driven by the cost of the deleted unit. Termination Pricing: (Price out completed work + profit + settlement expenses) where this is driven by the units installed. Thank you Joel and ji20874 for your comments.
  3. The contractor has cited 52.211-18 among the items 1-3 listed on my initial post. Sorry for the confusion... (d) should read " The contractor has shown the cost plus profit for one unit to be $40,000.00" Basically, there is a $60,000.00 balance on the CLIN representing the value for the single unit not installed. The contractor has shown its actual cost plus profit would have been $40,000.00 for a single unit, and the remaining $20,000 is considered overhead and windfall. Inversly, if the cost would have been more the contractor would have asumed that liability. The contract does not inforporate FP-03.
  4. 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.
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