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Change in Scope: Qty and Delivery Schedule Change

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Greetings,

My situation: A customer for a contract I am administering is requesting a change in quantity (increase) and add an additional month on the POP. There has been a debate as to whether the change is within scope or not, and whether a change clause would be plausible to make the change, bilateral mod would be executed...

The procurement: A FFP type contract for a supply (competitive acquisition), initial award quantity = 50,000 an additional 10,000 is requested by the customer with an additional month on delivery.

I do understand the bona fide need rule on this situation; however, I wanted to get the contracting community's opinion on the matter.

Please expound and provide reference so that I can help my fellow peers at my organization on this matter.

Your Feedback is greatly appreciated :D

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Read the changes clause in your contract. If you have FAR 52.243-1, these are the only permissible changes you can make with a change order:

The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following:

(1) Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Government in accordance with the drawings, designs, or specifications.

(2) Method of shipment or packing.

(3) Place of delivery.

Since you are contemplating an increase in quantity and a longer period of performance than what was included in the orginal contract, they are outside the scope. You will have to justify and obtain approval as a non-competitive add on.

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Based on your description, this seems like a text book example of an out-of-scope change. The GAO has held that, in supply contracts, changes in the quantity of end items to be delivered must be made outside the Changes clause. See Magnavox--Use of Contract Underrun Funds, Comp. Gen. Dec. B-207433 and Mil-Tech Systems, Inc. & Department of the Army--Request for Reconsideration, Comp. Gen. Dec. B-212385.4.

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Based on your description, this seems like a text book example of an out-of-scope change. The GAO has held that, in supply contracts, changes in the quantity of end items to be delivered must be made outside the Changes clause. See Magnavox--Use of Contract Underrun Funds, Comp. Gen. Dec. B-207433 and Mil-Tech Systems, Inc. & Department of the Army--Request for Reconsideration, Comp. Gen. Dec. B-212385.4.

Thanks Don for providing these references!

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The two decisions cited by Don are not particularly good ones. The issue is "scope of the competition," a variation of "scope of the contract." New procurements must be competed. The question is whether the additional quantities were contemplated by the competition for the original contract. If they were, as when a solicitation provides for priced options for additional quantities, then the additional quantities are within the scope of the competition, and their purchase would not constitute a ?new procurement.? If they were not, then the purchase is a new procurement and is subject to the requirement for competition.

Don?s first cite, Magnavox, is not a scope of the competition case. Although the GAO used the term ?scope of the contract? and said that an increase in quantity would exceed the scope of the contract, it did not explain why an increase in quantity would be outside the scope of a contract. GAO said:

WE HAVE RECOGNIZED THAT CERTAIN CONTRACT MODIFICATIONS WITHIN THE SCOPE OF THE ORIGINAL CONTRACT MAY BE CHARGEABLE TO THE APPROPRIATION USED TO FUND THE ORIGINAL CONTRACT. E.G., 61 COMP.GEN. 609 (1982). HERE, HOWEVER, WE ARE NOT DEALING WITH A CONTRACTUAL RIGHT ENFORCEABLE BY THE CONTRACTOR. THE MAGNAVOX PROPOSAL IS FOR AN ADDITIONAL QUANTITY IN EXCESS OF THE QUANTITY FIXED IN THE ORIGINAL CONTRACT. AS SUCH, IT IS NOT WITHIN THE SCOPE OF THE ORIGINAL CONTRACT AND WOULD HAVE TO BE TREATED AS A NEW OBLIGATION CHARGEABLE TO CURRENT FUNDS. SEE 44 COMP.GEN. 399 (1965).

Capitalization in original. Neither decision cited in that passage, 61 Comp. Gen. 609 or 44 Comp. Gen. 399, involved an increase in quantity under a supply contract.

In the second decision cited by Don, Mil-Tech, the GAO makes the following idiotic statement:

THE TELEX CONTRACT IS A SUPPLY CONTRACT. SINCE THE CHANGES CLAUSE REQUIRED BY DAR SEC. 7-103.2 TO BE INSERTED INTO SUPPLY CONTRACTS DOES NOT CONTEMPLATE CHANGES IN THE QUANTITY OF ITEMS TO BE PROCURED, THE MODIFICATION TO TELEX'S EXISTING CONTRACT IS NOT WITHIN THE SCOPE OF THAT CONTRACT. THUS, THE ARMY ONLY MAY MODIFY TELEX'S CONTRACT TO INCREASE THE REQUIRED QUANTITY BY 30,000 ANTENNAS IF THE ARMY HAS A PROPER BASIS TO JUSTIFY A SOLE-SOURCE AWARD TO TELEX. SEE DEPARTMENT OF THE INTERIOR - REQUEST FOR AN ADVANCE DECISION, B-207389, JUNE 15, 1982, 82-1 CPD 589.

Capitalization in original. Emphasis added.

That is a classic example of a non sequitur. It is true that inceases in the quantity of items to be delivered is not among the enumerated things a CO may change unilaterally pursuant to the Changes clause under a supply contract, but it does not follow that an increase in quantity is outside the scope of the contract. There are many changes that parties can make to a contract that are not covered by the Changes clause and that would not be outside the scope of the contract and require a new procurement, e.g., a modification of language in a contract clause, depending on its effect, or an extension of the performance period in exchange for new consideration. So Mil-Tech does not explain why an increase in quantity is outside the scope.

A better GAO decision to cite would be Liebert Corp., 70 Comp. Gen. 448 (1991), 91-1 CPD ? 413:

In determining whether a modification is beyond the scope of the contract, we look to whether the contract as modified is materially different from the contract for which the competition was held. Clean Giant, Inc., B-229885, Mar. 17, 1988, 88-1 CPD ? 281. We also consider whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred. CAD Language Sys., Inc., B-233709, Apr. 3, 1989, 89-1 CPD ? 342.

An argument based on that principle might go like this:

  • A change is outside the scope of the competition and is a new procurement subject to competition requirements if the competitors were not advised of the potential for that type of change.
  • The competitors were not advised of the potential for the purchase of additional quantities.
  • Therefore, the purchase of additional quantities would be outside the scope of the competition and would be subject to competition requirements.

In Administration of Government Contracts, 4th, the authors discuss the concept of scope of the competition in pages 385 ? 389, under the heading ?Third-Party Protests.? They say, ?Major changes in the quantity of the work have been held to be outside the scope of the competition.? This suggests that minor changes in quantity might not be outside the scope.

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Vern,

The original poster wanted to know if the Changes clause could be used to order an additional quantity. The following is from Government Contract Changes, Third Edition, by Ralph C. Nash and Steven W. Feldman:

Sec. 4:4 Changes in Quantity

Increases or decreases in the quantity of major end items under the contract are generally considered to be outside the scope of the contract (except where authorized under another contract clause, such as an option clause or the standard Variation in Estimated Quantities clause (FAR 52.211-18). For example, the Court of Claims held that the deletion of one building in a 17-building complex was not permissible under the Changes clause. Decisions of the GAO have followed the same reasoning with regard to the addition of buildings to a project. This rule is also followed in supply contracts--changes in the quantity of end items to be delivered must be made outside the Changes clause.

The footnote supporting the bolded statement cites Magnavox and Mil-Tech. If you think that those are crummy references, then you should probably let the authors know.

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Don:

I don't bother telling authors of books that their references are crummy, unless I know they are working on a new edition. What would be the point? If you read enough horn books on contracting and do some checking, you'll find that it is not unheard of for the authors to cite crummy decisions. I could point out several examples. Experts make mistakes, too. That's why I generally don't rely on decisions cited by other authors without first reading the decisions carefully.

I don't know if you relied on those authors when making your post or if you found their footnote after you read my post, but there is nothing to stop you from notifying them if you like. Of course, you may disagree with me that Magnavox and Mil-Tech are crummy references.

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Good information so far from both Don and Vern.

Vern: You cited Administration of Government Contracts, 4th, "Major changes in the quantity of the work have been held to be outside the scope of the competition." - This suggests that minor changes in quantity might not be outside the scope.

To what degree/percentage from the original number do we consider minor vs. major change, as far as contracts are concern. If I recall from my previous CON course a prof. stated that in the past the organization would determine the % change from the original contract provided that the change does not exceed > 50% - more so applies to dollar figures.

Let me know if this assumption is now void or has some validity. B)

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I do not know of any rule of thumb. If you add a quantity valued in excess of the simplified aquisition threshold without an approved J&A for other than full and open competition and a protest is filed with the GAO, I think that it would be sustained. I think a protest would be sustained if you add a qauntity valued at or below the SAT without a reasonable written justification, unless the value is at or below the micropurchase threshold.

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Good information so far from both Don and Vern.

Vern: You cited Administration of Government Contracts, 4th, "Major changes in the quantity of the work have been held to be outside the scope of the competition." - This suggests that minor changes in quantity might not be outside the scope.

To what degree/percentage from the original number do we consider minor vs. major change, as far as contracts are concern. If I recall from my previous CON course a prof. stated that in the past the organization would determine the % change from the original contract provided that the change does not exceed > 50% - more so applies to dollar figures.

Let me know if this assumption is now void or has some validity. B)

You might want to check this thread: http://www.wifcon.com/discussion/index.php?showtopic=801.

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Don:

I don't bother telling authors of books that their references are crummy, unless I know they are working on a new edition. What would be the point? If you read enough horn books on contracting and do some checking, you'll find that it is not unheard of for the authors to cite crummy decisions. I could point out several examples. Experts make mistakes, too. That's why I generally don't rely on decisions cited by other authors without first reading the decisions carefully.

I don't know if you relied on those authors when making your post or if you found their footnote after you read my post, but there is nothing to stop you from notifying them if you like. Of course, you may disagree with me that Magnavox and Mil-Tech are crummy references.

Vern,

You may still think they are poor, but the referenced decisions were provided in support of the proposition that the Government cannot unilaterally increase the contract quantity in a supply contract by operation of the Changes clause. This was one of the questions posed by the original poster. They were not provided to illustrate the "scope of the competition" test. Government Contract Changes deals with the "scope of the competition" test seperately.

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Vern,

You may still think they are poor, but the referenced decisions were provided in support of the proposition that the Government cannot unilaterally increase the contract quantity in a supply contract by operation of the Changes clause. This was one of the questions posed by the original poster. They were not provided to illustrate the "scope of the competition" test. Government Contract Changes deals with the "scope of the competition" test seperately.

Don:

I don't understand what you said above.

Don't take it personally. I was criticizing the cases, not you. The cases are lousy for the reasons I stated. GAO decisions are not sacrosanct. If I am going to cite a decision in support of a proposition, I want to cite a decision that makes sense and that conveys some kind of decent reasoning to the person to whom I am providing it. Neither of those decisions meets my standard and I pointed it out. You are free to cite what you like. I am free to say what I like about what you cite. In any event, you don't need to cite a GAO decision in support of the proposition that you cannot increase the contract quantity via the Changes clause. All you need to cite to prove that proposition is the text of the Changes clause, in which it is obvious.

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