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Has anyone added a "construction contingency CLIN to their contract before?  The CLIN would be funded by the gov to help expedite the processing of any change orders, the funds are not guaranteed to the contractor and it is not priced by the contractor in their proposal.  

Scenario: A firm fixed price, Design-bid-build contract for a building, funding for the project comes from two different customers. The process of merging funds could be lengthy and could potentially cause a delay when funding change orders, hence the idea of "front loading" the funds for immediate use.

 

This is a domestic contract, contingency in this sense means unexpected modification. 

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I have used a funded over-and-above CLIN before, maybe for something similar to your need.  I use the clause at DFARS 252.217-7028, Over and Above Work, as the template for my own hand-crafted clauses.  But in such a case, the over-and-above work IS NOT a change and an over-and-above work authorization IS NOT a change order. 

If you really want change orders, the contracting officer can issue a change order under FAR 52.243-1 through -5 any day of the week, and without adding additional funding.  The -1 clause, for example, requires the contractor's proposal within 30 days, and at that point you will have an idea of whether you need to (1) add additional funding; (2) do a partial convenience termination somewhere in the contract; or (3) do something else to keep the books balanced.  There is a time and place for change orders, but for your construction project, I recommend trying to negotiate the pricing of changes as part of a bilateral process.

 

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ji, I think that they are merely parking the funds and will negotiate and/or re-allocate to change orders or bilateral mods.

I am curious though - is this a “design-build” construction contract or a construction contract for a government provided design?

“Design-bid-build” is an acquisition approach here for the latter situation, but is not a contract type.

It really doesn’t make any difference for the question asked whether it is a design-build construction contract or straight construction contract. Just curious.

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Joel,

You are probably right that the original poster wants to park money for future changes rather than do over-and-above work.  I can't help him or her with that.

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Quick thoughts that come to mind.....bona fide needs rule, the recording statute, contingent liability and more - that reach to issues of Federal fiscal law and policy.  From this view the question seems more appropriate for agency fiscal folks than for this forum as I suspect that creating the CLIN is one thing but actually funding such a CLIN is a very slippery slope.

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Carl, I agree with you. The fiscal experts and appropriations law attorneys are the ones to consult with on this particular question.

Come to think of it,  there is seldom any legal or fiscal input/participation in this forum. From my experience, lawyers are hesitant to give any general advice or advice on a specific issue without having ALL the facts presented to them. I try to advise to consult with competent legal and fiscal experts. I don’t know if every agency has such, competent resources available - but they should. The Army Corps of Engineers had some pretty competent legal and fiscal resources in those areas. 

 

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I’ve heard one IG saying parking money in similar situations as this is one of the most frequent issues of wrongdoing they find.  They go  against many of the items Carl points out.  But the IG says it’s a low priority for reviews.  He commented when audit reports get done on this, no one cares.  In fact managers get rewarded for saving FY money.  So he doesn’t waste resources going after those things.

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For the Army’s Chemical Weapons Demilitarization Program at nine US Chemical Weapons Depots, we funded the design and construction of the Demil Plants with both MILCON (5 year) and Procurement (3 year) appropriations. The PROC funds were obligated for all GFE Process equipment, process lines and installation of the process related equipment.

After initial FFP contract award on several Incineration Plants that were based on an initial design at Johnston Island,  we made some major changes to the pollution abatement system (PAS), including a huge (~$35 million) “known change” that was identified in the initial solicitations for three follow on Incineration Plant sites

Plus there were numerous conflicts and interferences in the PAS due to maturation of the process design, lessons learned, ECP’s,  as well as differences in actual GFE process equipment from different manufacturers.

Due to Chemical Weapons Treaty deadlines and to minimize time and cost impacts, we added a lump sum PROC funded CLIN, essentially on a cost reimbursement/time and materials basis.

This was necessary to quickly handle those numerous, individual small changes encountered in the PAS due to interferences/conflicts.

We issued individual job orders under the CLIN on an “as encountered“ basis. We avoided many time impacts associated with developing and issuing individual changes/mods/change orders that would have cost hundreds of thousand dollars per day as well as tear out costs, loss of productivity, etc.

Since we knew that we would encounter problems, we knew that many small change orders would be otherwise needed, which would cause time and cost impacts, RCRA regulatory and Configuration Management delays etc.,  

Funds were obligated for unknown but fully anticipated changes for a very narrow purpose. The program avoided millions of dollars of delays and other impacts. Nobody objected to that methodology.

For that particular situation, in my opinion, the money was obligated for bonafide needs, not to “park” or  “save” expiring funds.

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