Just as with my Quick Hitter series on the FAR, my Quick Hitter series on the GSAR is meant to simplify contracting business with the government. This time with GSA.
GSAR 536.7105 Construction Contract Administration
GSAR 536.7105-1 Responsibilities
The A&E company designs the project. That’s it. No building, repair or demolition in any way. The construction company may provide work and pay schedules, system analysis (workflow), subcontractor involvement, variations of different cost analysis, project reviews and analysis of the current and future market trends inside the construction industry.
In short, the construction contractor prices the designs at various benchmarks of the project. The construction contractor and the A&E contractor can collaborate to hit the target ECW. In other words, talk about where to save money. However, only the CO can change the scope of the construction contract.
GSAR 536.7105-2 Guaranteed Maximum Price
The GMP is the ceiling price (not-to-exceed) portion of a GMP contract. Read FAR 16.403-2 for a grasp on FFP Incentive contracts. The GMP is negotiated and established at award. It can be cumulative or broken out by line-item. The GMP can fluctuate as project costs and even scope change over time. The CO documents their rationale and any fluctuations for placement in the contract file. The GMP may change during the design phase and such is incorporated by modification. The final GMP is established through option after the ECW is locked in. If the GMP is greater than the sum of the ECW, CCA and the fee for construction work then the CO shall issue a bilateral modification to decrease the GMP before exercising the GMP option. If the GMP is less than the sum of the ECW, CCA and work fee then the CO will seek reductions to either or all of the CCA, the fee or even the contract scope. If unable to negotiate reductions then the GMP option will not be exercised. Although, once exercised, any scope changes can occur as an adjustment to the GMP or as a separate line-item by way of modification. Note that early work packages may be included in the GMP option. If this decreases the contract scope then ECW, CCA and work fee must be adjusted accordingly. Any GMP adjustments are privy to modification and PNM by the CO. You may hear groaning if this changes frequently!. 
This estimated ceiling price is calculated by an ECW. Nope. That doesn’t mean Extreme Championship Wrestling. It’s just a fancy acronym for a project estimate. This is negotiable and established at award. It’s accumulated at the completion of the design phase, but no earlier than 75% completion of the project’s design. It’s incorporated by way of bilateral modification before the GMP.
The CCA allowance may only be used with CMC contracts which GSA likes to use with the vast majority of their construction contracts. This is set-aside monies for project uncertainties. The CCA is usually 3% of the construction estimate, but can go as high as 5% if justified by the HCA.
The construction work fee can be broken up into phases if each phase is an option. The fee includes home office overhead and should be itemized. The fee(s) may be expressed as a percentage of the ECW, but must be totaled before conversion of the GMP option. The fee does not change with the price of work, but can change with scope changes, changes in work conditions and/or delays caused by the government. Changes in fee are not an automatic percentage. Instead, a negotiated change order is administered by the CO.
GSAR 536.7105-3 Accounting & Auditing Requirements
Read FAR 30 for CAS. It pretty much just means that you have accounting software that can account for the type of monitoring that the contract requires. Your accounting records of the contracted project must be viewable by the CO and/or acquisition team. This is how payments are reconciled. An audit can occur by the IG or a CPA firm.
GSAR 536.7105-4 Value Engineering
Value engineering is the known tolerable loss of performance by way of materials and components to maximize profit. Such is not tolerable when using the CMC method with GSA. They want your best at a fair and reasonable price.
GSAR 536.7105-5 Shared Savings Incentive
This is the difference between the final GMP and the final cost of work.
The share is usually 30% to the construction contractor and 70% to the government. However, it can be as high as 50-50 on more complex contract projects. The HCA has the authority to control the share ratio outside of the established norm.
GSAR 536.7105-6 Allowances
The DOC has the authority to extend monies on the contract for work that is a part of the scope but that requires buyer selection such as lighting or finishes. This is separate from the CCA.
GSAR 536.7105-7 Early Work Packages
These are basically the research and analysis conducted by the construction contractor. This may be a separate line-item or simply done after award. The CO and awardee must be in agreement that early work needs to be done and exactly what that is. If this reduces scope then the GMP and its components must be reduced accordingly. Early work is subject to modification and PNM, but not open book accounting, shared savings or a final settlement. If early work is agreed upon then the construction contractor simply does it for the agreed upon price.
GSAR 536.7105-8 Conversion To FFP
When all construction docs are complete then the entire buy can be converted to a FFP contract by way of bilateral modification. This can also be done after contingency risks are negotiated if the CCA favors the government. The FFP contract can’t be higher than the GMP, this requires an open book audit and is a risk to the construction contractor. Thus, they may include a risk contingency line-item, but forgo auditing, shared savings and a final settlement. It’s a risk. However, if you’re sure then you could gain because you can just basically concentrate on construction work with less government intrusion.
Let me be honest and tell you that I have never written a construction contract for the government, but contracting is contracting, and I would like to explore this avenue. Even after 10 years working at the VA’s FSS program and consulting, I still have a craving to learn.
If you think I can help you then email nicholas.s.robertson@outlook.com for an introductory email and free consultation. 
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