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Appropriate Consideration?


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I noticed in the new (interim) rule on contractor sick leave the following:

(1) Contracting officers shall include the clause in bilateral modifications extending the contract when such modifications are individually or cumulatively longer than six months.

(2) In accordance with FAR 1.108(d)(3), contracting officers are strongly encouraged to include the clause in existing indefinite-delivery indefinite-quantity contracts, if the remaining ordering period extends at least six months and the amount of remaining work or number of orders expected is substantial.

I read the 1.108(d)(3) and it says:

Contracting officers may, at their discretion, include the changes in any existing contract with appropriate consideration.

So I was wondering what would be considered "appropriate consideration"? I know "it depends" but I was looking for thoughts as applied to this specific situation. In order to comply with the new rule, presumably a contractor will incur more costs than originally planned. Those additional costs may or may not be allocated to the contract as a direct cost; more likely the change will result in an increase to contractor fringe benefits.

I'm fairly confident that, to accept a bilateral change, the contractor will want to be made whole from it. Is that the essence of "appropriate consideration" or am I missing something?

Thanks for your thoughts

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Guest Vern Edwards

There is no entry in Black's Law Dictionary 10th for "appropriate consideration." The closest thing might be "adequate consideration." Black's defines "adequate consideration" as "consideration that is fair and reasonable under the circumstances of the agreement." A cursory scan of Federal court decisions did not discover the term "appropriate consideration" used in the context of contract formation. I did find the term used in a few board of contract appeals decisions, but do not have time to investigate further.

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Some might argue "a mere peppercorn will suffice" though I think appropriate/adequate consideration is a matter of business judgment. You might enjoy the following literature on the subject and for further research look up terms such as "peppercorn theory of consideration":


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