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Change of Contract Type

By John Vencius on Friday, July 28, 2000 - 06:16 pm:

Thanks to everybody for your input, especially Vern, who's first response surprised me being within minutes of my initial posting. You've all given me essential insight into the task.

The reason I asked the "parallel track" question, is that I'm dealing with multiple award contracts for scarce medical specialists (nurses), and all of the contractors have expressed their need to be able to offer better rates to attract and hire enough people.

By Vern Edwards on Thursday, July 27, 2000 - 03:20 pm:


A couple of people have raised a flag about the possibility that a change in contract type might spark a protest. While their concerns are not groundless, I think we need to do a little analysis.

First, I have not been able to find a GAO decision in response to a protest about a change of contract type. Changes of contract type during the course of performance are not common, but they are not unheard of.

Second, the likelihood that GAO would sustain a protest about a change in contract type depends mainly on the impact that the change would have had on the outcome of the original competition. In that light, I would be much more concerned about a change from CPFF to FFP than I would about a change from CPAF to CPIF (which I have done) or FFP to FP with EPA.

Third, the likelihood of getting a protest probably depends on how recently you awarded the contract. If the award was recent, then one of the losers is more likely to hear about the change and be motivated to protest in the hope of getting another chance to compete. A significant change soon after an award also makes the award on the original basis more questionable. Similarly, if you are making the change just before or after the exercise of an option, that would make the change more questionable.

Of course, you should document your contract file to explain why you think the change is necessary and in the best interests of the government, and why the change is better than a new procurement. As someone has pointed out, make sure that you obtain and document consideration for the change.

I share Eric's interest in why you want to make the change, especially on a services contract. While it is a seller's labor market, current economic conditions are not especially inflationary, so why an EPA clause? Is the contract period, excluding options, longer than one year?

By Eric Ottinger on Thursday, July 27, 2000 - 12:45 pm:


It stikes me that the question of whether (1) you are changing from a FFP to a FP with EPA to adapt to changing conditions or (2) allowing the contractor to "buy in" with a "low ball" proposal, then taking the contractor off the hook by renegotiating the contract, is very much in the eye of the beholder.

This is just personal opinion-- Any time the contract is "restructured" to give the contractor a better price than the competitive price, the PCO is inviting a protest.

Pragmatically, I think the IG and audit community is rather quiet on this kind of issue right now, because they don't want to be seen blocking "innovation" or "reform."

It might not be the right thing to do. And it might be that the odds of any negative consequences are rather small right now.

Just personal opinion. In any case the fact that you want to do this because prices have gone up, should make you cautious.


By J. Inman on Thursday, July 27, 2000 - 12:19 pm:

Similarly, I'm unaware of any prohibition on changing type, but a protestor might suggest that reforming a contract in such a manner is tantamount to awarding a new contract but without benefit of competition -- this is especially true if marketplace changes make the contractor's price too low and the contract modification allows the contractor to raise its price or otherwise reduce its risk of performance. If this is the basis for the modification, then a caution is in order. Generally, contractors are bound to honor their prices, even if prices in the industry go up and the contractor has to perform at a loss. After all, a deal is a deal. A T4D might be appropriate (if the contractor refuses to honor its contract).

If you do make the change, you should certainly obtain consideration from the contractor to avoid the appearance of giving a gift to the contractor.

By C MERCY on Thursday, July 27, 2000 - 12:14 pm:


By Vern Edwards on Wednesday, July 26, 2000 - 06:44 pm:

When I was a CO I negotiated changes in contract type a couple of times. I don't know any reason why you can't. It's no different than changing anything else and I don't think it increases the scope of the contract. Changing from FFP to FP with EPA doesn't strike me as too great a change.

By John Vencius on Wednesday, July 26, 2000 - 06:20 pm:

I can't find an authority for -- or a prohibition against -- changing a contract type. Specifically, from a firm-fixed-price to a fixed-price with economic price adjustment. The closest I've found is in FAR 16.103(c), "In the course of...., changing circumstances may make a different contract type appropriate in later periods than that used at the outset." If the market for certain professional services has changed significantly, making it virtually impossible to obtain critical services at previously contracted fixed-rates, such a remedy would be preferable to re-soliciting a new procurement. Any input?

On a parallel track, don't GSA IT MAS Vendors update their prices either periodically or in response to specific requests for quotes?