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VipinOwl

What authority to cite for a mod for the addition of in-scope work?

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Hello everyone,

The program office is contemplating the addition of in-scope work to a non-severable R&D contract for services (cost-reimbursement).  According to my understanding, the changes clause, under a cost-reimbursement contract can be used for unilateral changes, in designated areas, for work within scope.  I have several questions:

 

  • per FAR Part 52.243-2, Alternate I, " (a) 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) Description of services to be performed."  Would the addition of in-scope work to a contract, constitute changes to the description of services to be performed?  To me the addition of work is not a change to the description, but an introduction of additional, new work and as such not covered by the authority of the changes clause.  I therefore believe that this should not be issued as a unilateral mod under the changes clause.
  • Could this mod still be issued under the authority of the changes clause, but be bi-lateral?  Since the addition of new work will result in an equitable adjustment to the contract, could the mod be issued as a bi-lateral modification pursuant to 52.243-2, Alternate I?  I'm a bit confused because per FAR 43.201(a), a change order is a unilateral change.  Therefor a bilateral change order with an equitable adjustment is no longer a change order and rather a bilateral mod issued as a "supplemental agreement to work within scope" on the SF-30, is that correct?

I have a hard time reconciling the perceived discrepancy in my mind between the FAR stating that a change order is by definition a unilateral mod and also that a change order can involve an equitable adjustment, which would need to be negotiated and is therefore bilateral.  How would a bilateral change order (if even appropriate) with an equitable adjustment be addressed on the SF-30?

Thanks in advance.

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Are you the contracting officer?

If you believe the new work is not reached by the Changes clause, then you don’t cite the Changes clause.  You have two choices:

(1) Is the new work amount less than the SAT?  Then maybe you write a sole source justification under FAR part 13 and say the incumbent contractor is the only source reasonably available.  You add the work by bilateral modification citing the FAR citation for the sole-source procurement.

(2) If the new work is over the SAT, then maybe you write a J&A under FAR part 6 and do the same thing.

If you change your mind about the reach of your contract’s Changes clause to this effort, then you have two choices:

(1) Issue the unilateral notice to order the change and settle up later with the contractor by bilateral modification citing the Changes clause.

(2) Negotiate the change and the cost without ordering the work, and issue a bilateral modification citing the Changes clause to authorize the work and adjust the contract.

If none of the above will work, you can do a new acquisition for the new work.

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@ji20874

I believe the OP is (1) unclear on what constitutes 'changes' and (2) is worried about the FAR's use of change order (unilateral) and supplemental agreement (bi-lateral).

Seems the OP wants help in determining if the new work (changes) should be issued pursuant to a clause -or- agreement of the parties modifying the terms of the contract.

The OP stated that the new work is in-scope and doesn't provide any reasons for me to think this wouldn't fall under the changes clause.

Regarding the use of a change order or supplemental agreement FAR 2.101 defines “change order” as:

"a written order, signed by the contracting officer, directing the contractor to make a change that the Changes clause authorizes the contracting officer to order without the contractor’s consent."

A forward priced/bilateral change order with a contractor's signature provides evidence of agreement, but seemingly remains a change order under the FAR-wide definition. FAR 43.103(a) & ( b )'s explanation regarding types of mods as bilateral or unilateral is descriptive rather than prescriptive. There is plenty of literature on bilateral change orders including Government Contract Guidebook by Steven W. Feldman or this online post (click here).

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The nature of Changes (including determination of whether the proposed work is in-scope vs out-of-scope) are  discussed in Detail in Administration of Government Contracts  by Nash and Cibinic. They also discuss the fact that the Changes clauses specifically address directed changes but not mods to issue bilaterally agreed in-scope changes. 

The book discusses both changes to the existing services and whether or not additional services could have been anticipated by the language of the solicitation during competition for award (the scope of the competition and the scope of the contract).

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25 minutes ago, Jamaal Valentine said:

The OP stated that the new work is in-scope and doesn't provide any reasons for me to think this wouldn't fall under the changes clause.

 

The original poster wrote, "To me the addition of work is not a change to the description, but an introduction of additional, new work and as such not covered by the authority of the changes clause."  

I have no basis for disagreeing with the original poster's assessment that the new work is beyond the reach of the Changes clause, so I offered supportive advice to the original poster accordingly.

But you feel the new work is within the reach of the Changes clause?  Did you and the original poster have a private discussion that gave you more insight than is available from the original posting?

The Changes clause does not cover all possible "in-scope" changes.  It only covers those "in-scope" changes which are listed in the clause's first paragraph.

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The OP was clear that the new work is in-scope, which means the OP presumably looked at the extent of any changes in the type of work, performance period, and costs between the modification and the original contract, as well as whether the original solicitation adequately advised offerors of the potential for the change or whether the change was the type that reasonably could have been anticipated, and whether the modification would materially change the field of competition for the requirement.

Their concern appears to be their belief that adding work is not a change to the description of the services to be performed.

17 hours ago, VipinOwl said:

 Would the addition of in-scope work to a contract, constitute changes to the description of services to be performed?  To me the addition of work is not a change to the description, but an introduction of additional, new work and as such not covered by the authority of the changes clause.  I therefore believe that this should not be issued as a unilateral mod under the changes clause.

Considering their question, do you agree with their belief and rationale stated above?

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Hello everyone and thank your for your replies. 

Just to clear the air, the core of my question boiled down to this:

The FAR allows a CO to issue a unilateral mod under the authority of the changes clause and as a change order, in the designated areas referenced in the applicable clause. Yet, the FAR states that in the event of a resulting equitable adjustment the mod should be issued as a bilateral supplemental agreement. Is it at that point still considered a change order under the changes clause, if the equitable adjustment is negotiated and the mod is issued bilaterally? Or is it then a supplemental agreement for work within scope issued under "mutual agreement of the parties"?

Posters above seem to suggest that in fact you could have a bilateral change order (change order with an equitable adjustment). To me then, in a cost reimbursement world close to all change orders will be subject to negotiation and therefore doesn't grant me the freedom to issue the order unilaterally.  Unless of course, I issue the change order unilaterally under the changes clause to notify and then separately negotiate an equitable adjustment and execute a supplemental agreement.

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7 hours ago, VipinOwl said:

The FAR allows a CO to issue a unilateral mod under the authority of the changes clause and as a change order, in the designated areas referenced in the applicable clause. Yet, the FAR states that in the event of a resulting equitable adjustment the mod should be issued as a bilateral supplemental agreement. Is it at that point still considered a change order under the changes clause, if the equitable adjustment is negotiated and the mod is issued bilaterally? Or is it then a supplemental agreement for work within scope issued under "mutual agreement of the parties"?

The resulting bilateral equitable adjustment modification should cite the Changes clause as the authority for the modification -- I would use block 13.D. of the SF-30.  [Note:  Others would use block 13.C. while still citing the Changes clause -- that's okay.]

Edited by ji20874
To address SF-30 block 13.C.

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19 minutes ago, VipinOwl said:

The FAR allows a CO to issue a unilateral mod under the authority of the changes clause and as a change order, in the designated areas referenced in the applicable clause. Yet, the FAR states that in the event of a resulting equitable adjustment the mod should be issued as a bilateral supplemental agreement. Is it at that point still considered a change order under the changes clause, if the equitable adjustment is negotiated and the mod is issued bilaterally? Or is it then a supplemental agreement for work within scope issued under "mutual agreement of the parties"?

Posters above seem to suggest that in fact you could have a bilateral change order (change order with an equitable adjustment). To me then, in a cost reimbursement world close to all change orders will be subject to negotiation and therefore doesn't grant me the freedom to issue the order unilaterally.  Unless of course, I issue the change order unilaterally under the changes clause to notify and then separately negotiate an equitable adjustment and execute a supplemental agreement.

You're close, but no cigar. You have a unilateral right under the Changes clause to issue changes. The pricing or payoff for those changes is unknown and in the future. So, there is a process to determine the pricing or payoff. See below.

 

Standard process:

You can issue a unilateral modification under the Changes clause.

This entitles the contractor to an equitable adjustment. The contractor can request an equitable adjustment. This is called a "request for equitable adjustment" (REA).

When you issue the equitable adjustment to pay the contractor for the unilateral changes, you can do this via bilateral modification, to ensure the contractor agrees with the payoff and releases any further claims or requests for equitable adjustment.

That's how the process is planned.

 

Alternative:

Take care of the entire process (change, REA, and "settlement" or payoff of REA) using a single bilateral modification. *Edit: This usually requires negotiation and perhaps a proposal before the bilateral modification is issued and signed.

 

Alternative:

Issue a unilateral modification under the Changes clause.

Contractor send you the REA. You negotiate back and forth but cannot come to agreement.

You deny some or all of the REA and instead issue a unilateral modification for what you judge the contractor should get-- a unilateral equitable adjustment.

Contractor either takes it and gives up, or contractor submit a claim under the Contract Disputes Act.

 

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7 hours ago, ji20874 said:

The resulting bilateral equitable adjustment modification should cite the Changes clause as the authority for the modification -- I would use block 13.D. of the SF-30.

Multiple agency guidance I Googled say to use Block 13 C , supplemental agreement  for the modification providing for the bilaterally agreed equitable adjustment of a change order, citing the Changes Clause. 

The change order was issued under the Changes clause. The clause allows for bilateral settlement of the Change. 

 most of the guidance, including DAU,  says to issue supplemental agreements for types of changes enumerated in the Changes clause listing that clause, regardless of whether or not it was initially unilaterally ordered under the clause. Block 13 C is used for supplemental agreements within the scope of the contract.  

Block 13 D is for out of scope supplemental agreements and for unilateral mods under other various clauses. 

Several sources say to cite “bilateral agreement of the parties” in Block 13c only as a last resort when no other clause is applicable. 

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Joel,

Yeah, I've heard all that, but I don't do it that way.  If we take the FAR to a literal extreme in 43.103, then EVERY bilateral modification is a supplemental agreement (13.C), and 13.D. can only be used for unilateral mods that aren't already provided for in 13.A. and 13.B. (because EVERY bilateral modification is a supplemental agreement, according to 43.103).  But really, you will agree that it makes zero difference whether one uses 13.C. or 13.D. for a bilateral equitable adjustment after a change order as long as we cite the Changes clause.

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