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FAR clauses with dollar amount thresholds


jasonh

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There are several FAR clauses that apply only to contracts over a specific dollar amount, for instance, the simplified acquisiton threshold. Or, $650,000 is a frequently used amount. Is there anyone who has any guidance on these clauses if they are in a contract (or subcontract) which has a total dollar value below the threshold? Do the clauses become active if there is a modification or an option which later increases the amount over the threshold?

I would argue that they can't be applied to the aggregate amount, and thus, would never be applicable to the contract, unless a single option or modification added an amount over the threshold. For instance, if there is a contract in place for $75,000 and later a modification adds $30,000, this increase raises the total value over the simplified acquisition threshold. However, if you have already spent the first $75,000 with no regard for any clause that applies only to contract over $100,000, you obviously can't go back and spend the money in compliance with those clauses. So, does the clause apply to the additional $30,000, or not at all? On the other hand, if an option year added $150,000, I would think that the relevant clauses would apply to this amount. Is this an accurate interpretation?

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There are several FAR clauses that apply only to contracts over a specific dollar amount, for instance, the simplified acquisiton threshold. Or, $650,000 is a frequently used amount. Is there anyone who has any guidance on these clauses if they are in a contract (or subcontract) which has a total dollar value below the threshold? Do the clauses become active if there is a modification or an option which later increases the amount over the threshold?

I would argue that they can't be applied to the aggregate amount, and thus, would never be applicable to the contract, unless a single option or modification added an amount over the threshold. For instance, if there is a contract in place for $75,000 and later a modification adds $30,000, this increase raises the total value over the simplified acquisition threshold. However, if you have already spent the first $75,000 with no regard for any clause that applies only to contract over $100,000, you obviously can't go back and spend the money in compliance with those clauses. So, does the clause apply to the additional $30,000, or not at all? On the other hand, if an option year added $150,000, I would think that the relevant clauses would apply to this amount. Is this an accurate interpretation?

That is a very general question. Usually, the clause will describe its applicability with respect to modifications.

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Guest Vern Edwards

The question is poorly worded, but here is a general response:

First, if a clause is in a contract, even though the contract amount is less than the threshold for the clause's application, then the contractor should assume that the clause applies even so, and comply accordingly. It may be possible for the contractor to persuade the government that the clause does not apply, but the contractor should comply until the government agrees.

Second, a price increase that results from a within-scope mod, regardless of amount, does not require the addition of any clause to a contract.

Third, an out-of-scope (new work) mod may require new clauses, depending on its dollar value. The new clauses should apply only to the new work and not apply retroactively to the original contract, but that might not be clear. In order to ensure that is the case, the contractor should insist that the new work be added as a separate contract line item with its own clause set.

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