POLICY & OVERSIGHT DIVISION (POD)

February 2014

PROCESSING CONTRACT MODIFICATIONS TRAINING

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TABLE OF CONTENTS• Overview…………………………………………………………….3• Objective…………………………………….………………………4• Contracting Officer’s Role & Responsibility………….5• Definitions………………………………………..…………………6• Modification Types………………………………………………7-9• Standard Form 30……………………………………………….10-12• Commonly-Used Modification Authorities………….13-16• Consideration……………………………………………………..17-18• Points To Remember…………………………………………..19

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OVERVIEW

This training outlines the contract modification process in accordance with FAR Part 43/NOAA policies and procedures.

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OBJECTIVE

Discuss the Contracting Officer’s role & responsibility when executing modifications

Provide definitions Define/discuss modification types Discuss preparation/usage of the Standard Form 30 Provide commonly-used modification authorities Define/discuss consideration Provide points to remember

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CONTRACTING OFFICER’S ROLE & RESPONSIBILITY Only Contracting Officers acting within the scope of their authority

are empowered to execute modifications.

Contracting Officers shall not execute a modification that causes or will cause an increase in funds without first obtaining a certification of funds availability. (See FAR 43.105 for exceptions.)

Contracting Officers shall ensure that modifications, including changes that could be issued unilaterally, are priced before their execution if this can be done without adversely affecting the interest of the government. (See FAR 43.102 re: negotiating ceiling price. )

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DEFINITIONS Administrative change -- unilateral contract change, in writing, that

does not affect the substantive rights of the parties (e.g., a change in the paying office or the appropriation data).

Change order -- a written order, signed by the Contracting Officer, directing the contractor to make a change that the Changes clause authorizes the Contracting Officer to order without the contractor's consent.

Supplemental agreement -- a contract modification that is accomplished by the mutual action of the parties.

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MODIFICATION TYPES

There are two types of modifications --

1) Bilateral - supplemental agreement signed by the contractor and the Contracting Officer

2) Unilateral - signed only by the Contracting Officer

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BILATERAL MODIFICATIONS

Bilateral modifications are used to --

Make negotiated equitable adjustments resulting from the issuance of a change order

Definitize letter contracts

Reflect other agreements of the parties modifying the terms of the contract

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UNILATERAL MODIFICATIONS

Unilateral modifications are used to –

Make administrative changes Issue change orders

Make changes authorized by clauses other than a changes clause (e.g., Property clause, Options clause, Suspension of Work clause, etc.)

Issue termination notices

STANDARD FORM 30 (SF 30)Amendment of Solicitation/Modification of Contract

The SF 30 is a self-explanatory form and when properly executed by the Contracting Officer, constitutes a legal modification.

The SF 30 is a stand alone document which must accurately reflect any and all changes to the contract terms, conditions, scope of work, and/or specifications.

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PREPARATION & USE OF SF 30Block 13 identifies –1)The type of change being processed, i.e., change order, administrative change, supplemental agreement, other specified changes.

2)The authority selected by the Contracting Officer (CO) to execute a specified contract change.

NOTE: The CO must select and complete one of the four fields (13A-13D to identify the proper modification type and authority.

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PREPARATION & USE OF SF 30(Block 13)

13A – Select when issuing an undefinitized contract action pursuant to the Changes clause that permits changes within the general scope of the contract, i.e., a change order. The change order directs the contractor to perform the change with execution of a bilateral modification at a later date incorporating all final negotiated changes.

 

13B – Select when issuing an administrative change to the contract, e.g., a change in the paying office or the appropriation data.

13C – Select when issuing a supplemental agreement, e.g., a negotiated equitable adjustment resulting from the issuance of a change order or other agreements of the parties modifying the terms of the contract.

 

13D – Select for all other changes that are not included in 13A – 13C. These changes may be bilateral or unilateral, and the Contracting Officer must indicate appropriate modification type and authority, e.g., Unilateral pursuant to FAR 52.217-8 Option to Extend Services.

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Commonly-Used Modification Authorities A proper authority is mandatory for both unilateral and bilateral

modifications, but is not necessary for administrative modifications.

General rule--cite an explicit authority that already exists in the contract, i.e., appropriate FAR/other clause.

Cite “mutual agreement of the parties” ONLY when no other authority exists.

The following tables (not all-inclusive) consist of commonly-used modification authorities that apply to specific contract changes.

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MODIFICATION SUBJECT AUTHORITY (Select one of the following)Change Orders (within general scope of contract) FAR 52.243-1 Changes—Fixed-Price

FAR 52.243-2 Changes--Cost Reimbursement

FAR 52.243-3 Changes--Time-and-Materials or Labor-HoursFAR 52.243-4 Changes

Changes, terms and conditions of commercial contract FAR 52.212-4/52.212-4( c) Changes

Data, changing or revising (within general scope of contract)

FAR 52.243-1 Changes—Fixed-PriceFAR 52.243-2 Changes--Cost ReimbursementFAR 52.243-3 Changes--Time-and-Materials or Labor-HoursFAR 52.243-4 Changes

Defects in supplies, correction of Warranty clause or Correction of Deficiency Clause in contract

Defective cost or pricing data, price reduction for FAR 52.215-10 Price Reduction for Defective Cost or Pricing Data FAR 52.215-11 Price Reduction for Defective Cost or Pricing Data--Modifications

Definitization of a Change Order FAR 52.243-1 Changes—Fixed-PriceFAR 52.243-2 Changes--Cost Reimbursement

FAR 52.243-3 Changes--Time-and- Materials or Labor-HoursFAR 52.243-4 Changes

Definitization of a Letter Contract FAR 52.216-25 Contract Definitization

Delivery, change in the place of FAR 52.243-1 Changes—Fixed-PriceFAR 52.243-2 Changes--Cost Reimbursement

FAR 52.243-3 Changes--Time-and-Materials or Labor-Hours

Delivery, schedule extension (cost reimbursement (CR)) FAR 52.249-14 Excusable Delays

Delivery, schedule extension (fixed-price) FAR 52.242-17 Government Delay of Work

52.249-8 Default (Fixed-Price Supply and Service)

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MODIFICATION SUBJECT AUTHORITY (Select one of the following)

Differing Site Conditions FAR 236-2 Differing Site Conditions

Drawings, designs, specifications, and SOW, change in FAR 52.243-1 Changes—Fixed-Price

FAR 52.243-2 Changes--Cost Reimbursement

FAR 52.243-3 Changes--Time-and- Materials or Labor-HoursFAR 52.243-4 Changes

Economic Price Adjustment (EPA) FAR 52.216-2 Economic Price Adjustment--Standard SuppliesFAR 52.216-3 Economic Price Adjustment—Semi-standard SuppliesFAR 52.216-4 Economic Price Adjustment--Labor and Material

Funding an overrun (fully funded cost CR contract) FAR 52.232-20 Limitation of Cost

Funding, increase of (incrementally funded CR contract) FAR 52.232-22 Limitation of Funds

Government furnished property, disposition of/increase or decrease of/replacement of/repair of

FAR 52.245-1 Government Property

Incentive price revision, final price revision or funding to ceiling for fixed-price incentive (firm target) contract

FAR 52.216-16 Incentive Price Revision--Firm Target

Incentive price revision, establishing a firm-fixed price or firm targets for fixed-price incentive (successive targets) contract

FAR 52.216-17 Incentive Price Revision--Successive Targets

Make or buy program, changes FAR 52.215-9 Changes or Additions to Make-or-Buy Program

New work, (outside of general scope of work requiring Justification for Other Than Full & Open Competition (JOFOC))

FAR 43.103(a)(3) mutual agreement of the parties

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MODIFICATION SUBJECT AUTHORITY (Select one of the following)

Option, exercise of (IAW contract, unilateral) FAR 52.217-6 Option for Increased Quantity52.217-7 Option for Increased Quantity--Separately-Priced Line Item52.217-8 Option to Extend Services52.217-9 Option to Extend the Term of the Contract

Packing or shipment, change in the method of FAR 52.243-1 Changes—Fixed-Price52.243-2 Changes--Cost Reimbursement52.243-3 Changes--Time-and-Materials or Labor-Hours

Prior possession or use by government, delays in work/additional expense to contractor

52.236-11 Use & Possession Prior to Completion

Progress payments, adding after award FAR 52.232-16 Progress Payments

Progress payments, increasing rate or liquidation rate FAR 52.232-16 Progress Payments

Reduction in % of total amount of work performed under contract FAR 52.236-1 Performance of Work by the Contractor

Scope/materials, change in (exceeding the funding limitation) FAR 52.236-22 Design Within Funding Limitation

Stop Work FAR 52.242-15 Stop-Work Order

Termination for Convenience FAR 52.249-1 thru 7

Termination for Default FAR 52.249-8 thru 10

Unreasonable suspension, delay, or interruption of work FAR 52.242-14 Suspension of Work

Value Engineering Change Proposal (VECP), incorporation of FAR 52.248-1 Value Engineering,FAR 52.248-2 Value Engineering--Architect-EngineerFAR 52.248-3 Value Engineering--Construction

Variation in shop drawings, (approval of) FAR 52.236-21 Specifications and Drawings for Construction

Modification of Contractual Terms not covered by FAR/other clause or default authority

FAR 43.103(a)(3) mutual agreement of the parties

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CONSIDERATIONConsideration is the benefit each party confers upon the other for the modification; it is required to seal a new bargain.Consideration is something of value given in exchange for something else & can consist of –

→ Monetary → Changes in Specs or Work Statements → Delivery → Payment Terms → Other Contract Terms & Conditions

Contracting Officer cannot agree to modify without consideration, if consideration is required. NOTE: See FAR 43.102(c) & 50.103 for exceptions to consideration.

CONSIDERATIONExample – If contractor is entitled to time extension pursuant to a contract

clause, no consideration is required, e.g., weather/excusable delays. However, if parties negotiate time extension at request of either, and the requesting party is not entitled to the extension pursuant to a clause, the parties are modifying the contract by making a new deal and must exchange new consideration. (Note: an “equitable adjustment” is not consideration.)

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POINTS TO REMEMBERModifications to a contract affect the interests, rights, and obligations of two parties—the NOAA and the contractor. The responsibility of the Contracting Officer (CO) is to preserve the integrity of the relationship between these two parties. The CO reviews the action to determine whether it is consistent with the existing contract and to ensure that the equities of the existing relationship are preserved and will be continued when a modification is issued.

Contact the POD and/or seek Legal Counsel when you have a challenging modification process!

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