Vern Edwards

See FAR 15.406-2(c ):

It appears to be an undefinitized modification of an undefinitized letter contract (i.e., the delivery order) issued under a requirements contract. Might be an unpriced spares order. No biggie in the DOD world.

I’ve been away and am not sure whether this question has been answered. The answer is: If the contract is written in the Uniform Contract Format, then Part I. Fee must be stated in Section B, the contract line item(s). See FAR 4.1005-1(a)(5)(ii). As a general matter , there is no “overall contract amount” in a cost reimbursement contract. As a general rule, payments of fixed fee should be based on percentage of work completed, not on percentage of estimated cost incurred.

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@Retreadfed Actually, I think you have shown me that I am wrong to think that the release is consideration for the mod. I'm beginning to think that since no clause requires a release, and since making an equitable adjustment after issuance of a change order is a pre-existing duty of the government and something to which the contractor is already entitled, the government's request for a release is what requires consideration. 🤔😳😵‍💫

The CO could just do it. What's to prevent? It would not be binding on the contractor, because without a release of claims the contractor could submit a supplemental claim for more money. An upward unilateral EA would give the contractor some money pending resolution of supplemental claim(s).

The parties have not settled the issue until both have signed the mod. Prior to that they only have a tentative agreement, which may be subject to approval by higher authority on both sides.

I think only two contract clauses in the FAR System expressly permit a CO to unilaterally adjust a contract price: FAR 52.230–6 Administration of Cost (June 2010) Accounting Standards and GSA FAR Supp. 552.216-71, Economic Price Adjustment—Special Order Program Contracts (August 2010). However, it has been done in the past. See Paragon Energy Copr., 88-3 ENGBCA ¶ 20959 (Eng. B.C.A.), ENGBCA No. 5302 (1988): Such an adjustment may be disputed. Note that such a unilateral mod is not conditioned on receipt of a release of claims. But it could save the government some interest on a later claim for more money.

It's worked longer than that. It appeared at 32 CFR 22-304(b) in 1975: It probably appeared in regulations long before that. The issued is not whether it "worked". The issue is, as raised by the OP, how does one interpret "In consideration of..." I say it refers to consideration flowing from the contractor to the Government in return for it's agreement to modify the contract. But I could be wrong.

Why not?

I did. He said he wasn't sure. We both laughed. 😁 I don't know, either.

When a CO sends the contractor a mod to be signed as a supplemental agreement, isn't that an offer to settle?

On what basis do you say that?

@joel hoffman Based on the text of the Changes clause, isn't agreeing to an equitable adjustment a pre-exiting legal duty of the government? Didn't it promise to do that and to modify the contract when it signed the contract?

@joel hoffman So you think the mod is consideration for the release, not the other way round?

The text at issue is: That's one sentence. Let's rewrite it. The subject of the sentence is the Contractor. Let's put the subject first, where it belongs: The Contractor... The predicate of the sentence is hereby releases the Government from any and all liability under this contract for further equitable adjustments attributable to such facts or circumstances giving rise to the “proposal(s) for adjustment... Let's put the predicate after the subject, where it belongs: The Contractor hereby releases the Government from any and all liability under this contract for further equitable adjustments attributable to such facts or circumstances giving rise to the “proposal(s) for adjustment (except for___________)... Now, where should we put In consideration of the modification(s) agreed to herein as complete equitable adjustments for the Contractor's ________________ (describe) __________________ “proposal(s) for adjustment..."? How do we complete the rewrite? What say you?

I agree with this part: "In person, required reading..." Add: and discussion among other readers of the same material. Delete the part about "consequences for not grasping the subject matter". That's too high school.

Where is that guidance?

Is the modification consideration for the promise to release, or is the promise to release consideration for the modification? That is the question. Or is "In consideration of" being used as nothing more than ordinary English phrasing, as in "in view of" or "in light of", with no legalistic intent? What say ye, Forum?

One of the problems is that 19th Century thinking underlies our acquisition policies, with its emphasis on full and open competition to produce "fair and reasonable prices" and prevent corruption, using the bid protest system to encourage protesters acting as "whistleblowers". In complex relational acquisitions, as opposed to comparatively simple transactional acquisitions, "price" (see FAR 15.401) is really nothing more than an agreed upon budget. It is not a "price" in any formal economic or legal sense. And full and open competition policy is implemented by a complex and costly process of contractor selection and contract formation that usually involves little in the way of communications entailing joint specification, planning, and budgeting. It's madness, really. Instead of having to entertain proposals from all comers, we should choose competitors wisely and in manageable numbers, choose a prospective contractor based on qualifications, not dollar amount, and then engage in joint planning and budgeting (i.e., "pricing") prior to contract formation. Our competitive "negotiation" process is still grounded in the "formal advertising" (now sealed bidding) process of pre-CICA The result is that the rules of our competitive contractor selection/contract formation processes effective preclude meaningful communication prior to contract award, which is the defect at the heart of many of our most pressing contracting problems.

I agree in the general sense of the word commercial. But then we have to ask whether the policies in FAR Part 12 are suitable. Good question. What if you were the CO for the construction of missile silos for the new Sentinel ICBM? See Association of General Contractors: https://www.agc.org/construction-not-commodity

I'll answer that this way: I think it depends on (1) the purpose of the incentive, (2) the design of the incentive, (3) the conditions of contract performance, and (4) the relationship between the parties. Generally, I don't believe that government contract incentives have been widely successful. As a CO, I would not willingly use any of the standard incentives described in the FAR. In my experience, the government's use of incentives has largely been based on politics and habit rather than sincere belief in their effectiveness. The historical record is not good.

I'm not so sure about that. I think the price of a carpet installation job depends on more than just the number of square feet. I think configuration and installation conditions matter, as well. But, admittedly, it's been awhile. Of course, what all of this points out is the absurdity of trying to establish standard rules for work that can vary in many, many ways from job to job. Look 𑁋 the government's notion about what is and is not "commercial" is dubious. We're talking about words defined and applied by bureaucrats trying to write one set of rules that will apply to widely various transactions and relationships in a wide variety of industry specialties. Is hiring someone to paint a room construction? No.The painter is not constructing anything. It's painting. It's only construction to a labor statistician and to someone trying to decide whether the Davis-Bacon Act should apply. Blah, blah, blah. Critical thinking, please.

That's from OFPP: MEMORANDUM FOR AGENCY SENIOR PROCUREMENT EXECUTIVES FROM: Angela B. Styles (signed), OFPP Administrator SUBJECT: Applicability of FAR Part 12 to Construction Acquisitions, July 3, 2003 https://georgewbush-whitehouse.archives.gov/omb/procurement/far/far_part12.pdf

The FAR clauses for fixed-price construction contracts are similar, but identical to, to the AGC's terms and conditions. Where is Joel Hoffman when we need him? Construction is a very tough business done by very tough people. Don't mess around.