Incurred Costs on Cost Reimbursement

[doc4243]

I'm working on a modification to one of my IDIQ Task Orders (CPFF) to add work and in the process of negotiation the increased labor costs. Right now, we're at a stalemate. We cannot come to an agreement on the production hours. They're labor is about double the IGE. Since it's end of the FY, we need to obligate the funds (estimated), so I've decided to issue a unilateral modification (change order) IAW FAR 52.243-2 and definitize with a supplemental agreement later.

This is the response from the contractor when I notified them of our intentions:

"I am a bit confused on where we are going on this. My sense is on a contract action involving changes in cost, schedule and scope that a unilateral mod is inappropriate and needs agreement from both parties. Also, I would like to remind you this work is cost reimbursable in nature and therefore, if the costs are allowable by definition and we have provided our best effort to complete the work, then all costs are allowable. Please let me know how you would like to proceed. If you have any questions, feel free to contact me anytime at your convenience."

First of all, I should have not even notified the contractor of my intentions and just issued the change order. Before I respond, I just wanted to get any input from any other 1102s who've run accross this situation?

[ji20874]

If the proposed change is for something that falls within the Changes clause of your contract ( FAR 52.243-2 Changes -- Cost-Reimbursement ? ), you can issue a change order and increase the funds obligated on the contract. The contractor will perform and will give you notice when its costs approach the obligated amount.

If the proposed change is somethine else, the Changes clause doesn't give you unilateral modification authority.

Based on your posting, I cannot discern which of the above applies.

[doc4243]

If the proposed change is for something that falls within the Changes clause of your contract ( FAR 52.243-2 Changes -- Cost-Reimbursement ? ), you can issue a change order and increase the funds obligated on the contract. The contractor will perform and will give you notice when its costs approach the obligated amount.

If the proposed change is somethine else, the Changes clause doesn't give you unilateral modification authority.

Based on your posting, I cannot discern which of the above applies.

It's a within scope change IAW FAR 52.243-2

[Don Mansfield]

It's a within scope change IAW FAR 52.243-2

Did you tell the contractor to read the clause?

[doc4243]

Did you tell the contractor to read the clause?

Sorry, here's another twist to the scenario. The Contractor has completed the work. They state that a Government employee (not the C.O.) authorized the work.

[Don Mansfield]

Sorry, here's another twist to the scenario. The Contractor has completed the work. They state that a Government employee (not the C.O.) authorized the work.

So it was an unauthorized commitment?

[Guest Vern Edwards]

Sorry, here's another twist to the scenario. The Contractor has completed the work. They state that a Government employee (not the C.O.) authorized the work.

That's more than a "twist." That's a critical fact.

Why would you issue a change order for something that has already been done, especially since the work was not required by the contract and its cost is not allocable to the contract? It sounds to me like the change order would be a ratification of an unauthorized commitment, which the average CO does not have authority to do, since ratifications must be approved at a level no lower than the chief of the contracting office. See FAR 1.602-3((3).

[here_2_help]

I don't have the contract in front of me (obviously), but I would be interested in knowing the answers to the following questions--

1. Is the contractor currently overrun, or projecting an overrun, against estimated costs or incremental funding?

2. Did the contractor comply with Limitation of Cost/Funds reporting requirements?

3. Did the contractor comply with the requirement(s) to notify the Contracting Officer regarding changed work, within the timeframe required by the contract clause?

I would think the answers to those questions might impact how one treated the situation.

Hope this helps.