Conditions: You are assigned as a Contingency Contracting Officer (CCO) and have access to current acquisition regulations, local procedures, and required automation and office supplies. You have been tasked to explain the construction contract modification process.
Standards: Identified the common construction contract clauses from which modifications arise. Given a modification scenario, correctly determined whether the modification is in-scope or out-of-scope and provided sound rationale for determination.
Performance Steps:
1. Identify the common construction contract clauses from which modifications arise (see attached matrix).
a. Changes, FAR 52.243-4
b. Differing Site Conditions, FAR 52.236-2 c. Value Engineering-Construction, FAR 52.248-3 d. Variations in Estimated Quantities, FAR 52.211-18
e. Default (Fixed-Price Construction), FAR 52.249-10 f. Suspension of Work, FAR 52.242-14
NOTE: See also Time Extensions for Unusually Severe Weather, ER 415-1-15 (31 OCT 2009). The authority for the modification is the Default (Fixed-Price Construction) clause, FAR 52.249-10.
2. Identify the sources of contract modifications.
a. User Requests b. Field Conditions
c. Engineering/Design Requirements
NOTE: User changes result from a desired design change by the customer.
NOTE: Most modifications arise from field conditions. Examples include design errors, differing site conditions, quantity over-runs, and delays created by unusually severe weather.
NOTE: Design Errors in design-bid-build (D-B-B) contracts, where the government or Architect-Engineer (A-E) firm is responsible for the design, and disconnects or ambiguities between plans and specifications are examples of Engineering/Design Requirement sources of contract modifications.
3. Determine if the change is within or outside the scope of the contract (referred to as “In Scope”
or “Out of Scope” modifications).
NOTE: A modification is within scope if it falls within the parameters of FAR 52.243-4, Changes, or other construction clauses within the contract. The end result is still the project outcome envisioned by both
parties at time of award. A modification may be outside the scope of the contract for additional new work or if the change significantly increases the contract amount (>25%). There is no “bright line” to
determine whether a change is outside the scope of the contract. When in doubt, always consult Counsel. It is the KO’s responsibility to make the determination as to whether or not a change is within scope or out of scope. This determination is key, as it may affect the type and year of funding for the modification. Generally speaking, in-scope changes must be funded with the same type and year of funds as the original contract. Alternatively, out-of-scope changes must be funded with current year funds.
NOTE: The tests used by the GAO, the Boards of Contract Appeals and the courts is (1) whether the change so materially alters the contract that the field of competition for the contract as modified would be significantly different from that obtained for the original contract (scope of competition) [AT&T
Communications, Inc. v Wiltel, Inc., 1 F.3d 1201, 1205 (Fed. Cir. 1993)] and (2) whether the contract as modified, “should be regarded as having been fairly and reasonably within the contemplation of the parties when the contract was entered into” [Freund v. United States, 260 U.S. 60 (1922)].
4. Describe a Basic Change Document (BCD), its origination, purpose, and processing.
a. The Resident Management System (RMS) process generates what is known as a BCD.
b. The BCD describes the scope of the change, changes to plans and specs, necessity and reason for change; the initial estimated cost and time impact and may also be used to evaluate A-E liability if Design Errors or Omissions cause the change.
NOTE: Unpriced Change Orders follow procedures required by EFARS 43.102. An unpriced change order is not an “Undefinitized Contract Action (UCA)” as defined in DFARS Subpart 217.7401(d).
USACE, however, has elected to apply the DFARS procedures for processing UCA’s to unpriced change orders.
5. Describe the Contract Modification Processes in accordance with the Army Contracting Command (ACC) 51C Level One Proficiency Guide, Task 3-7, Modify Contracts.
Evaluation Preparation and Guidance: Setup: Brief the Soldier on the construction mission of USACE and provide them sufficient information that they would be able to explain construction contract
modifications.
Performance Measures: GO NO-GO
1. Identify the common construction contract clauses used for modifications. _____ ______
2. Identify the sources of contract modifications _____ ______
3. Given a modification scenario, identify whether a modification is “
within-the-scope” or “outside-the scope” of a contract _____ ______
4. Identify what a Basic Change Document is, purpose and processing _____ ______
References: (See DVD for References)
Open the NCO Contracting website at https://kme.usace.army.mil/CoPs/Contracting/default.aspx.
Accessing this site first will allow the hyperlinks to open.
Chapter 2, p 111 1. ACC 51C Level One Proficiency Guide
2. CENAB-CO-CN Policy Contract Clauses for Contract Modifications
3. Clauses that Modify Construction Contracts (included in full text after these references) 4. Contract Management Article, “Equitable Adjustment or Certified Claim?” JUN 04
5. CRC Guide, Section 19, Contractor Claims
6. Criteria for Adequate Contract Pricing Proposals Policy
7. ECB 2002-27 Construction Modification Reason Codes in RMS (Resident Management System) -- Applicability: Guidance
8. EFARS Appendix A Part 3, Contractor Requests for Claims and Appeals 9. ER 415-1-15 Construction Time Extensions for Weather
10. ES 18030, Construction Contract Modifications
11. FAR 43/ DFARS 243/ AFARS 5143/ EFARS 43, Contract Modifications
12. FY11 PROSPECT Course 366, Construction Contract Administration Student Manual 13. GRD 09-16 SPS with Labeling and Naming Convention Attachments
14. Guidelines for Pricing Modifications 15. Modification Checklist for Inspections 16. Modification Procedures
17. Mod Markup Meeting Procedures 18. Mod Routing Checklist
19. SAD Construction Administration Manual, SADDM 1110-1-1 April 2010 20. Sample DF Exercising an Option
CONTRACT CLAUSES THAT MODIFY CONSTRUCTION CONTRACTS:
Inspection of Construction (3) 08/96 52.246-12 x x x E & T
E = EQUITABLE ADJUSTMENT to mean a Reasonable and Customary Allowance for Profit;
C= COSTS ONLY;
T= TIME ONLY;
P= PROFIT INCLUDED;
I= IMPACT NOTES:
(1) Changes clause revision to reflect new Government Property clause (2) Subdivided items < 85% equitable adjustment & time >115% time only
(3) If the work was installed correctly, the contract will be modified with an equitable adjustment and time.
(4) The work not terminated, if disturbed, is subject to an equitable adjustment plus time.
(5) Interest may be collected on costs
(6) The total terminated settlement can not exceed the contract price with modifications included.
(7) The terminated work is priced at costs plus profit
(8) Clause invoked only when costs exceed $250.00 for an add or deduct
(9) Deductive modification for contractor non-performance. Cost for the government to remove and/or restore
(10) Government can accept defective work with an appropriate adjustment (11) Time given under the "default" clause
10/04/10
Chapter 2, p 113 Task 3-9