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Reduction in Requirements Contracts


Kelly

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I have a firm fixed price contract that is a requirements contract.  Each year we issue a task order for services.  The SOW states estimated quantities, and I need to de-obligate some of the services because of the unusual weather experienced in the midwest.  The contractor is refusing to sign the modification, what authority do I have to issue a unilateral de-obligation modification?

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Kelly, your situation is not clear.  You say you have a requirements contract and that you issue a task order to obtain services for a complete year.  You say the SOW states that the quantity of services is an estimate.  By this do you mean the SOW for the contract or the SOW for the task order?  If it is for the TO, what is the contractor's performance obligation under the TO and what is the basis for payment?

Also, I have heard of de-obligating funds, but never de-obligating services.  If what you want to do is the latter, can you explain how that works?

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If the estimate was reasonable and the de-ob mod is to revise the quantity accordingly, then you are not changing the terms or conditions of the order and bilateral concurrence isn’t required.  There are multiple “authorities” you could cite but I would cite FAR 1.602-1.  That was a recent topic of discussion on Wifcon not long ago.

 

If the estimate wasn’t reasonable, you could do a partial termination for the government’s convenience.  Your authority would be 52.212-4(l) or one of the 52.249-x clauses.

 

“Reasonable” depends on what you’re buying and how volatile that market normally is.

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