Just as with my Quick Hitters on the FAR and GSAR, my Quick Hitter series on the DFARS is meant to simplify contracting business with the government. This time DoD.
DFARS 243.3 Change Orders
A change order changes the scope of the contract. Whereas a contract modification changes the terms of the contract. Therefore, change orders can be modifications, but modifications can never be change orders.
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PGI 243204 Administration
The reviewing GS-13 should grant their subordinate CO advanced notice of a pending change order.The GS-13 should review the change order for concurrence with contract performance before passing down the chain. If the effective date is deemed impractical because the contractor is unable to complete the change in a timely manner, the GS-13 shall either issue a change order to reflect a plausible date or draft a supplemental agreement to reflect the original date and the revised date.
DFARS 243.204-70-1 Scope
This section applies to unpriced change orders with an estimated value of $5M or more. Whereas unpriced change orders on foreign buys or special programs are not subject to this section, but its concepts must be followed to the extent practical. If not able to be followed, proper protocol of communication must be adhered to.
DFARS 243.204-70-2 Price Ceiling
Unpriced change orders should include a not-to-exceed price.
DFARS 243.204-3 Definitization Schedule
This is the time it takes to incorporate change orders into the contract. That is either 180 days after the issuance of the change orderr, 180 days after the submission of the qualifying proposal or up to 50% of the NTE is obligated. A qualifying proposal must be submitted or payments may be stopped or suspended. Appropriate action will be taken if the definitization schedule is not adhere to.
DFARS 243.204-70-4 Limitations On Obligations
The CO should never obligate no more than 50% before definitization, but if a qualifying proposal is submitted before 50% is obligated then the number moves to 75%. Obligation should be consistent with the contractors requirements for the undefinitized Period.
DFARS 243.204-70-5 Exceptions
Price ceilings and definitization thresholds don’t apply to initial spares. That’s because replenishible parts keep a weapons system functional. That’s important. Ship construction and ship repair don’t apply to the 50% rule in DFARS 243.204-70-4. That’s because ships are a versatile tool for the United States military. HCA waivers can create exceptions for contingency, humanitarian and peacekeeping operations.
DFARS 243.204-70-6 Allowable Profit
When the final price of an unpriced change order is negotiated after substantial performance has been completed, the HCA must ensure profit includes reimbursement of the contractor’s costs before the final price was negotiated, upfront payment of expected costs to the contractor in order to accomplish full completion and costs incurred to the contractor prior to definitization of the agreement. The risk assessment and cost reimbursement shall be documented in the PNM.
DFARS 243.204-70-7 Plans & Reports
DFARS 217.7405 is used to ensure definitization occurs on appropriate contract actions which are unpriced change orders of $5M and above.
DFARS 243.204-71 Certification For Equitable Adjustment
This process mirrors SOPs in FAR Part 12 and FAR Part 15.
Change orders are very similar to a contract modification, but you are changing the scope of the contract advertised on the solicitation instead of what was agreed upon.
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