Reference no: EM131596478

Learning Activity 1

Modifications allow the CO a broad range and ability to change a contract. What are some of the issues that a CO must consider to ensure that contract mod is "within scope"?

Response 1:

A CO must be sure to understand what the overall scope of the contract is. If too different of a modification is done, it is possible for a Bid Protest by a 3rd party. This would challenge the government CO for making an out-of-scope modification. Additionally, current contract agreements may have a contract dispute for any changes that the government makes to their current contract that significantly changes the contract from the original agreement. (Contract & Fiscal Law Department, 2013)

There are several tests the GAO has to test modifications to contracts. Would the modification really change the contract from when it was originally awarded, could the change have been seeable by companies looking to bid, where the companies advised about the changes prior to the changes, and other tests. (Contract & Fiscal Law Department, 2013)

Response 2:

Some of the issues that a CO must consider when changing a contract are cost, is the contract allowed to have changes and also is the change in direct relation to the work that has been agreed upon initially.

First and foremost, the funding cannot be increased unless there is a certification of fund availability (FAR, 2017).

Secondly, the contract must initially state that the contract is allowed change orders. If this statement is not included into the initial contract, nothing can be done.

Lastly, the work that is specified in the new change order must be related to the work that was initially contracted out to make sure that it does not seem as the Government is not giving out work without competition.

Learning Activity #2

Contract Modifications are used to make changes to the award. They come in two types- Bilateral and Unilateral. Discuss each type and the types of changes that are specific to each.

Response 1:

A bilateral modification is used to make contract adjustments and/or changes. It also defines the letter contracts and shows further agreements by both parties that modify the contract. This modification is signed by the contractor and CO (FAR, 2017).

A unilateral modification is when changes are made to the contract that deals with administration. It can issue change orders that will add or delete work from the original contract. Other change clauses can also be authorized like property clause or suspension of work. When a contract is going to be terminated a unilateral modification can be used to issue termination notices. This type of modification only needs to be signed by the CO (FAR, 2017).

Response 2:

The two types of contract modifications are Unilateral modification, and Bilateral modification. The Unilateral modification is official upon the signature of the CO it does not however require the contractor's signature. This modification can be used to issue change orders, make administrative changes, as well as implementing terms and conditions previously authorized in the contract. The Bilateral modification is signed by the contractor and then by the CO. It's used to make negotiated equitable adjustments. It can be used tp change terms and conditions of a contact, definitive change orders, as well as negotiating equitable adjustments.

Learning Activity 1

What are some of the courses of action that a CO should consider before starting the termination of a contractor who is not performing well?
Response 1:

Some of the courses of action that a CO should consider before starting the termination of a contractor who is not performing well are: (FAR, 2017)

(b) The contracting officer shall terminate contracts, whether for default or convenience, only when it is in the Government's interest. The contracting officer shall effect a no-cost settlement instead of issuing a termination notice when-

(1) It is known that the contractor will accept one,
(2) Government property was not furnished, and
(3) There are no outstanding payments, debts due the Government, or other contractor obligations.

(c) When the price of the undelivered balance of the contract is less than $5,000, the contract should not normally be terminated for convenience but should be permitted to run to completion.

(d) After the contracting officer issues a notice of termination, the termination contracting officer (TCO) is responsible for negotiating any settlement with the contractor, including a no-cost settlement if appropriate. Auditors and TCO's shall promptly schedule and complete audit reviews and negotiations, giving particular attention to the need for timely action on all settlements involving small business concerns.

(e) If the same item is under contract with both large and small business concerns and it is necessary to terminate for convenience part of the units still to be delivered, preference shall be given to the continuing performance of small business contracts over large business contracts unless the chief of the contracting office determines that this is not in the Government's interest.

(f) The contracting officer is responsible for the release of excess funds resulting from the termination unless this responsibility is specifically delegated to the TCO.

Response 2:

According to DAU's website; these are the steps a Contracting Officer shall decide on what type of termination and consider these steps prior to the termination:

1. The terms of the contract and applicable laws and regulations.

2. The specific failure of the contractor and the excuses for the failure.

3. The availability of the supplies or services from other sources.

4. The urgency of the need for the supplies or services and the period of time required to obtain them from other sources, as compared with the time delivery could be obtained from the delinquent contractor.

5. The degree of essentiality of the contractor in the Government acquisition program and the effect of a termination for default upon the contractor's capability as a supplier under other contracts.

6. The effect of a termination for default on the ability of the contractor to liquidate guaranteed loans, progress payments, or advance payments.

7. Any other pertinent facts and circumstances.

Learning Activity #2

Once a contractor is notified that their contract is being terminated what are some of the things they should do? How does the type of termination affect the contractor's options?

Response 1:

Per the Federal Acquisition Regulation (FAR) 49.104 these are the steps the contractor should take once notified about the contract termination. "After receipt of the notice of termination, the contractor shall comply with the notice and the termination clause of the contract, except as otherwise directed by the TCO. The notice and clause applicable to convenience terminations generally require that the contractor--
(a) Stop work immediately on the terminated portion of the contract and stop placing subcontracts thereunder; (b) Terminate all subcontracts related to the terminated portion of the prime contract; (c) Immediately advise the TCO of any special circumstances precluding the stoppage of work; (d) Perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price for the continued portion, supported by evidence of any increase in the cost, if the termination is partial; (e) Take necessary or directed action to protect and preserve property in the contractor's possession in which the Government has or may acquire an interest and, as directed by the TCO, deliver the property to the Government; (f) Promptly notify the TCO in writing of any legal proceedings growing out of any subcontract or other commitment related to the terminated portion of the contract; (g) Settle outstanding liabilities and proposals arising out of termination of subcontracts, obtaining any approvals or ratifications required by the TCO; (h) Promptly submit the contractor's own settlement proposal, supported by appropriate schedules; and (i) Dispose of termination inventory, as directed or authorized by the TCO." Additionally, any option years on a contract that have yet to be exercised will be null and void.

Response 2:

Once a contractor is notified that they are being terminated, there are many things that they have to do: (FAR, 2017)

(a) Stop work immediately on the terminated portion of the contract and stop placing subcontracts thereunder;

(b) Terminate all subcontracts related to the terminated portion of the prime contract;

(c) Immediately advise the TCO of any special circumstances precluding the stoppage of work;

(d) Perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price for the continued portion, supported by evidence of any increase in the cost, if the termination is partial;

(e) Take necessary or directed action to protect and preserve property in the contractor's possession in which the Government has or may acquire an interest and, as directed by the TCO, deliver the property to the Government;

(f) Promptly notify the TCO in writing of any legal proceedings growing out of any subcontract or other commitment related to the terminated portion of the contract;

(g) Settle outstanding liabilities and proposals arising out of termination of subcontracts, obtaining any approvals or ratifications required by the TCO;

(h) Promptly submit the contractor's own settlement proposal, supported by appropriate schedules; and

(i) Dispose of termination inventory, as directed or authorized by the TCO.

Depending on the type of termination, a contractor may be authorized costs to shut their program down as well as a small profit (a), they may be reimbursed for any costs they have incurred if they are on a cost reimbursement contract (b) or if they are found to be in default they will not be paid for any work not performed and possibly transfer any remaining materials or supplies over to the government (c). (FAR, 2017)

Federal Acquisitions Regulation, 48 C.F.R. §49.104 (2017).

(a) Federal Acquisitions Regulation, 48 C.F.R. §49.201(a) (2017).
(b) Federal Acquisitions Regulation, 48 C.F.R. §49.301 (2017).
(c) Federal Acquisitions Regulation, 48 C.F.R. §49.402-2(a) (2017).