Contract Change Orders

Have you ever been in a Federal Contract that you knew you were in a bad situation either with delivery problems or loosing money?  Have you felt that there were no viable solutions and you don't know what to do?  There could be relief to this dilemma and in fact, many companies have worked their way out of this problem using contract change procedures outlined in the Federal Acquisition Regulations (FAR).  There is a natural progression for this, depending on each unique situation.  Here are a few of the possible solutions:

Engineering Change Orders – Once the contractor (or the government) recognizes that a contract is lacking something that is critical to successful completion the best solution is an Engineering Change Order (ECO).  ECOs are negotiated between the contractor and the contracting officer to change either costs, schedule, technical or all three items about a contract.  You can prepare an ECO to change the technical aspects of a contract that will not result in a costs or schedule change.  You might prepare an ECO that affects costs, but not schedule.  Regardless of the problem and ECO is an option used to fix a shortcoming in the contractual agreement between the contractor and the government.  It is vital that you clearly stated the reason for the required change and are accurate on the costs and schedule implications.  ECOs provide the government with clear benefit, so be sure that you are doing this new task at a level of effort that is beneficial to the government and profitable for your company. 

Request for Equitable Adjustment – Sometimes you find yourself in a situation where you have performed work under the contract in order to complete the contract objectives and then realize that the original contract had not specified that work directly and the funding was not included in the original contract.  Since the work has already been performed, you would execute a Request for Equitable Adjustment (REA) and ask the government to appropriately compensate you for your efforts.  Other reasons for REA is late compliance by the government with furnished information, materials or equipment, the adjustment here may just be schedule, but it might also include costs associated with the delay.

Constructive Contract Changes – There are times where your company is directed to perform work that is not specific to the contract.  When this happens, your company has just expended resources that was not originally anticipated in the performance of the contract.  Your appropriate action is to submit a request for the compensation (schedule, money, or both) under the banner of Constructive Contract Change.  Constructive Contract Changes can be subtle, for instance, in your proposal you said you would paint an item “flat black”.  The government then directs a special non-reflective black paint that is $700/gallon.  When you proposed “flat black” you provided costs from a local hardware store at $25/gallon.  You are entitled to the difference in the costs, any additional time or materials it took to complete the task.  Remember, if the shoe is on the other foot and you proposed the $700/gal paint but then went down and bought $25/gal paint the government would ask for “consideration” to adjust for the difference.

 Obviously there is a procedure to follow, as defined in FAR part 43 for Contract Changes or 48 CFR 1352.271-85 for Requests for Equitable Adjustments.  A final resort might be to file a claim with the Federal Board of Contract Appeals. ReliAscent has over 170 years of experience in this field and help a contractor figure out the proper way to proceed to resolve this.  Any assistance you request from ReliAscent will be an allowable cost under your contract.  Call today to figure out how ReliAscent may be able to help you.