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IAD

FFP SCA Change in contract hours

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We won a SCA FFP contract for the maintenance of some sensitive equipment where the RFP stated that the hours of operation where going to be from 8:00am to 4:30pm.  We have been performing for the past 2 years without issues.  As a matter of convenience - at contract start up- we agreed with the COR (I KNOW) to establish two shifts one from 6:00am to 2:00pm and another one from 2:00pm to 10:00pm.  Now the customer wants to change the hours of the contract from 10:00pm to 6:00am.  We notify the CO that we will comply but that we will request equitable adjustment.  The CO came back saying that DOL notify them that since there is no differentials on price in the SCA rates whether the work is performed on day or night we were not entitled to adjustment.  Is this correct? I believe that the DOL argument would have be true if the RFP initially stated that the hours of the contract may vary according to customer needs.  However since this was not the case I believe that this would be a material change on the contract terms requiring an equitable adjustment.  

We have already contacted our lawyers how ever I would like to hear different opinions.

 

Thanks 

    

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Does the contract specify the working hours?

Will the change be a verbal agreement, or will it be an official contract modification on a SF-30?  If the latter, what authority will be cited in block 13?

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2 hours ago, IAD said:

We won a SCA FFP contract for the maintenance of some sensitive equipment where the RFP stated that the hours of operation where going to be from 8:00am to 4:30pm.  We have been performing for the past 2 years without issues.  As a matter of convenience - at contract start up- we agreed with the COR (I KNOW) to establish two shifts one from 6:00am to 2:00pm and another one from 2:00pm to 10:00pm.  Now the customer wants to change the hours of the contract from 10:00pm to 6:00am.  We notify the CO that we will comply but that we will request equitable adjustment.  The CO came back saying that DOL notify them that since there is no differentials on price in the SCA rates whether the work is performed on day or night we were not entitled to adjustment.  Is this correct? I believe that the DOL argument would have be true if the RFP initially stated that the hours of the contract may vary according to customer needs.  However since this was not the case I believe that this would be a material change on the contract terms requiring an equitable adjustment.  

We have already contacted our lawyers how ever I would like to hear different opinions.

 

Thanks 

    

Assuming that contract clause 52.243-1, with Alt 1, is in your contract, if the change in hours of operation causes an increase in your costs, then you would be due an equitable adjustment under the Changes clause. You will have to show that your costs have increased due to the change. The SCA rates are not maximums, if you have to pay a premium to the workforce. If there are other cost impacts, those should be considered, too.

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I agree with Joel.  The adjustment you would be asking for would be pursuant to the Changes clause, not 52.222-43.  The wages and fringe benefits in a wage determination are minimums that you must pay.  They are not what you must base your price on.  Further, the minimums in the WD would not act as a limitation on your right to an equitable adjustment pursuant to a change order under the Changes clause.  FAR 52.222-43 and the Changes clauses provide independent bases for a price adjustment to a contract.

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Just to make sure is there a collective bargining agreement in place?

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On 7/4/2017 at 4:57 AM, IAD said:

We notify the CO that we will comply but that we will request equitable adjustment.  The CO came back saying that DOL notify them that since there is no differentials on price in the SCA rates whether the work is performed on day or night we were not entitled to adjustment.  Is this correct?

IAD:

Has the agency given you a written change order, or have they only said that they wish to change, or notified you that they intend to change?

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IAD – You seem to have disappeared.  Following is a general response to your question that clarifies my vague question I posed.  

There are several considerations to make with regard to the situation you have stated but lots of additional details would help.  Noting this the following is general thoughts regarding the situation.

First, you have stated that your original contract had one shift of 8 hours, it was changed to 2 shifts of 8 hours and now another shift of 8 hours is being requested.  If the new shift is just a change in hours to an existing shift is one possibility (still only 2 shifts) or the addition of a completely new shift is another (now three shifts).   You have not clarified but either way if the change results in additional costs in performance to your company you may be entitled to an equitable adjustment in contract price.

With regard to SCA.   It sounds like the CO has questioned the DOL regarding shift rates.  Generally speaking shift rates are not contained in SCA wage determinations.  So generally speaking when employees work the exact same position during  what I will call regular hours or work  the night shift the same hourly wage and fringe benefit stipulated in the wage determination for regular hours is paid for the night shift.  One exception is if there is a collective bargaining agreement applicable to the contract work, if so a shift rate might be in existence and the wage for a regular hour person might be different than that of a night shift worker.  Another exception could be contained in the specific wage determination itself, by example air traffic controllers get shift pay.   The overall caution here is that while the CO might advise on what DOL has said, you as the contractor has the ultimate responsibility for compliance with SCA.   Noting this if I were in your shoes I would contact the DOL to confirm their view of your specific situation.  You should also read the full SCA wage determination or collective bargaining agreement yourself to confirm if it does or does not address shift rates for the type of service you are providing.

Should there be a required shift rate that results in additional costs to your performance of the work you may be entitled to an adjustment in contract price if contract clause 52.222-44 is in your contract.  This clause covers how you are to request the adjustment if the additional costs in performance are directly related to a required shift rate payment.

The change.   If there is no required shift rate the change in hours could be “ordered” by the CO but only  if a FAR clause in the 52.243-XX “Changes” series is in your contract.   In such a case the clause covers how you are to request the equitable adjustment regarding any increase in costs you may have in complying with the change.

If your contract is a Commercial Item contract (See FAR Part 12) the allowance to change the contract hours is contained in clause 52.212-4 at the paragraph entitled “Changes”.   The FAR boilerplate version of this clause prevents the CO from “ordering” the change but rather requires written agreement of both the CO and the contractor before the change can take place.  Be aware the CO could have changed this clause and if so it would be so noted in the contract.   In this latter case and if the boilerplate clause and paragraph regarding “Changes” was used  is where you would support that the change in hours results in additional costs in performance to which you would seek an equitable adjustment for the change before agreeing to the change.

Overall the change in hours and possible increase in costs of performance and your allowance to claim either an “adjustment” or an “equitable adjustment” in contract price hinges both on what the FAR contract clause in your contract regarding SCA states  (specifically if FAR Clause 52.222-44 is in your contract) and  the change itself whether  requested for your agreement (commercial item contract) or demanded (change order for a non-commercial item contract) by the CO results in increase costs of performance.

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Good afternoon,

Im sorry for not replying earlier.  As you all mentioned it seems that we were entitled to the adjustment.  We took the situation to our lawyers and after further consultation with the CO she decided to talk to the agency's legal department (which I believe was the first thing to do) and they said that in fact we were entitle to adjustment.  My guess is that she wanted to please the customer (COR, engineers etc) and because of that didn't talked to legal in the first place.  

Thanks to all of you for your responses. Have a great weekend!

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By the way Culham,

When I talked to her I made reference to 52.243-1 Alt 1 but she said that the clause that apply to this contract was 52.212-4 because according to her 52.243-1 is for FFP Construction services.  I told her that 52.212-4 requires both parties to agree to a change and ask her what would happen if we didin't sign the change as not agreeing.  She responded that then the government can make an unilateral change and declare the contract in default if we don't comply with the new hours of operation.  This seemed to strong-armed to me but after further consultation and talking with her legal department she understood.  Again it sounds kind of harsh but she is a very nice CO and we have more contracts with her but in this specific case I think she just wanted to remain cool with the customer (COR and Engineers) at our expense.

 

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IAD:

FAR 52.243-1 is not for construction contracts, FFP or otherwise. The proper clause for FFP construction contracts is FAR 52.243-4. See FAR 43.205(d).

The discussion in this thread is pointless, because the resolution of the issues you have asked about rests on the terms of the contract, which we have not seen. If we cannot see the contract, then we cannot form intelligent opinions, and speculation is  futile.

You have consulted your lawyers. Rely on them.

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