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JHKim

Modification Limits?

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Is there a monetary threshold (limit) when a new requirement relating to a current contract cannot be modified into the contract, and when a new contract should be issued for the requirement? Is there a relevant FAR clause? For example the government procures phone services, which also requires the phone devices. The RFP mentions the device but offers no place to quote on the devices that are necessary, a contract is awarded for one base and four option years. A few months after the award the government uses that statement in the original solicitation (RFP) devices will be purchased separately, but adds the phone device purchase to the already contracted. The cost of the devices exceeds the award amount of the contract.

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I’ll give you a general answer without resorting to specifics.  CICA placed some rules that impacts the answer.  The scope of the contract, whether competitive or non competitive, is based upon what was competed by offerors or approved in a justification.  In addition optional items that are not part of the competitive or non competitive approval, must be priced and part of the selection or approval.  So in your case,  phone devises weren’t part of the competition process (assuming it was a competitive action) and can’t be ordered under the contract, especially in the dollar value you indicated.  The exception requires a modification action to the contract that must be justified and approved in advance.

So if you’re looking for some monetary threshold or percentage, there really isn’t one.  From you you said, it sounds like a new contract action of some sort is needed to buy the phones.

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An agency may modify a contract without running afoul of the Competition in Contracting Act, so long as the the modification is deemed “in scope.” An “out of scope” modification, on the other hand, is improper–and may be protested at GAO.

GAO states that the Competition in Contracting Act ordinarily requires “the use of competitive procedures” to award government work. However, “[o]nce a contract is awarded…[it] will generally not review modifications to the contract because such matters are related to contract administration and are beyond the scope of [its] bid protest function.”

While a modification that changes the contract’s scope of work is an exception to this rule, such a modification is only objectionable where there is a “material difference” between the modified contract and the original contract. A material difference exists when “a contract is so substantially changed by the modification that the original and modified contracts are essentially and materially different.” A material difference typically arises when an agency enlarges a contract’s scope of work, the relaxation of contract requirements post-award can also be a material difference.

In assessing whether there is a material difference, GAO will look to:

“[T]he 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 materially changed the field of competition for the requirement.”

One GAO decision that you can read more about this is  Zodiac of North America, Inc., B-414260 (Mar. 28, 2017).

You should probably check with your Legal Office for assistance on whether a contract modification or a new contract action is the way forward.

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On ‎9‎/‎17‎/‎2019 at 8:55 PM, JHKim said:

Is there a monetary threshold (limit) when a new requirement relating to a current contract cannot be modified into the contract, and when a new contract should be issued for the requirement? Is there a relevant FAR clause? For example the government procures phone services, which also requires the phone devices. The RFP mentions the device but offers no place to quote on the devices that are necessary, a contract is awarded for one base and four option years. A few months after the award the government uses that statement in the original solicitation (RFP) devices will be purchased separately, but adds the phone device purchase to the already contracted. The cost of the devices exceeds the award amount of the contract.

No need to focus on $ value for a contract modification.

Instead focus on "in-scope" and "out of scope." The wording in the solicitation you are describing makes this modification out-off scope and therefore cannot be modified into the contract, bi-passing CICA. "Will be purchased separately" means by a separate contract action. It is the same as purchasing 50 engines from Ford and stating you would be the cars separately and then months later modifying in 50 GT Mustangs to the same contract. 

Good way to have a Warrant terminated. 

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I agree with the last posting -- if it is out-of-scope, then it is out-of-scope, period.  If it is out-of-scope of the contract, but the agency still wants to buy it from that contractor, then a J&A/LSJ/JEFO/SSJ (depending on what type of "contract" we are talking about) needs to be done.  Once that is done, the out-of-scope work can be purchased as (1) a modification to the contract; or (2) a new contract.

But we're talking academically, so to speak.

JHKim, It sounds like it is all said and done, and the water is already under the bridge -- the modification to buy the devices has already been formalized.  What is the problem? 

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JHKim - The advice provided to date is good in general but noting a few of the facts you provided in your original post brings a thought to my mind.   That is every situation with regard to a contract and its scope depend entirely on the facts of that contract.  While the best advice is checking with your legal counsel I did wonder if you utilized all the tools in WIFCON to assist in your research when I read your original post.   With this wonderment in mind did you by example review GAO protests regarding scope of contract found here.....

http://www.wifcon.com/pd6_001.htm

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