POLICY & OVERSIGHT DIVISION (POD) February 2014 PROCESSING CONTRACT MODIFICATIONS TRAINING 1

TABLE OF CONTENTS Overview…………………………………………………………….3 Objective…………………………………….………………………4 Contracting Officer’s Role & Responsibility………….5 Definitions………………………………………..…………………6 Modification Types………………………………………………7-9 Standard Form 30……………………………………………… Commonly-Used Modification Authorities………… Consideration…………………………………………………… Points To Remember…………………………………………..19 2

view OVERVIEW This training outlines the contract modification process in accordance with FAR Part 43/NOAA policies and procedures. 3

OBJECTIVE  Discuss the Contracting Officer’s role & responsibility when executing modifications  Provide definitions  Define/discuss modification types  Discuss preparation/usage of the Standard Form 30  Provide commonly-used modification authorities  Define/discuss consideration  Provide points to remember 4

CONTRACTING OFFICER’S ROLE & RESPONSIBILITY  Only Contracting Officers acting within the scope of their authority are empowered to execute modifications.  Contracting Officers shall not execute a modification that causes or will cause an increase in funds without first obtaining a certification of funds availability. (See FAR for exceptions.)  Contracting Officers shall ensure that modifications, including changes that could be issued unilaterally, are priced before their execution if this can be done without adversely affecting the interest of the government. (See FAR re: negotiating ceiling price. ) 5

DEFINITIONS Administrative change -- unilateral contract change, in writing, that does not affect the substantive rights of the parties (e.g., a change in the paying office or the appropriation data). Change order -- a written order, signed by the Contracting Officer, directing the contractor to make a change that the Changes clause authorizes the Contracting Officer to order without the contractor's consent. Supplemental agreement -- a contract modification that is accomplished by the mutual action of the parties. 6

MODIFICATION TYPES There are two types of modifications -- 1) Bilateral - supplemental agreement signed by the contractor and the Contracting Officer 2) Unilateral - signed only by the Contracting Officer 7

8 BILATERAL MODIFICATIONS Bilateral modifications are used to -- Make negotiated equitable adjustments resulting from the issuance of a change order Definitize letter contracts Reflect other agreements of the parties modifying the terms of the contract

9 UNILATERAL MODIFICATIONS Unilateral modifications are used to – Make administrative changes Issue change orders Make changes authorized by clauses other than a changes clause (e.g., Property clause, Options clause, Suspension of Work clause, etc.) Issue termination notices

STANDARD FORM 30 (SF 30) Amendment of Solicitation/Modification of Contract The SF 30 is a self-explanatory form and when properly executed by the Contracting Officer, constitutes a legal modification. The SF 30 is a stand alone document which must accurately reflect any and all changes to the contract terms, conditions, scope of work, and/or specifications. 10

PREPARATION & USE OF SF 30 Block 13 identifies – 1)The type of change being processed, i.e., change order, administrative change, supplemental agreement, other specified changes. 2)The authority selected by the Contracting Officer (CO) to execute a specified contract change. NOTE: The CO must select and complete one of the four fields (13A- 13D to identify the proper modification type and authority. 11

PREPARATION & USE OF SF 30 (Block 13) 13A – Select when issuing an undefinitized contract action pursuant to the Changes clause that permits changes within the general scope of the contract, i.e., a change order. The change order directs the contractor to perform the change with execution of a bilateral modification at a later date incorporating all final negotiated changes. 13B – Select when issuing an administrative change to the contract, e.g., a change in the paying office or the appropriation data. 13C – Select when issuing a supplemental agreement, e.g., a negotiated equitable adjustment resulting from the issuance of a change order or other agreements of the parties modifying the terms of the contract. 13D – Select for all other changes that are not included in 13A – 13C. These changes may be bilateral or unilateral, and the Contracting Officer must indicate appropriate modification type and authority, e.g., Unilateral pursuant to FAR Option to Extend Services. 12

13 Commonly-Used Modification Authorities  A proper authority is mandatory for both unilateral and bilateral modifications, but is not necessary for administrative modifications.  General rule--cite an explicit authority that already exists in the contract, i.e., appropriate FAR/other clause.  Cite “mutual agreement of the parties” ONLY when no other authority exists.  The f ollowing tables (not all-inclusive) consist of commonly-used modification authorities that apply to specific contract changes.

14 MODIFICATION SUBJECT AUTHORITY (Select one of the following) Change Orders (within general scope of contract) FAR Changes—Fixed-Price FAR Changes--Cost Reimbursement FAR Changes--Time-and-Materials or Labor-HourFAR Changes--Time-and-Materials or Labor-Hours FAR Changes Changes, terms and conditions of commercial contract FAR / ( c) Changes Data, changing or revising (within general scope of contract) FAR Changes—Fixed-Price FAR Changes--Cost Reimbursement FAR Changes--Time-and-Materials or Labor-HourFAR Changes--Time-and-Materials or Labor-Hours FAR Changes Defects in supplies, correction of Warranty clause or Correction of Deficiency Clause in contract Defective cost or pricing data, price reduction for FAR Price Reduction for Defective Cost or Pricing Data FAR Price Reduction for Defective Cost or Pricing Data-- Modifications Definitization of a Change Order FAR Changes—Fixed-Price FAR Changes--Cost Reimbursement FAR Changes--Time-and- Materials or Labor-HourFAR Changes--Time-and- Materials or Labor-Hours FAR Changes Definitization of a Letter Contract FAR Contract Definitization Delivery, change in the place of FAR Changes—Fixed-Price FAR Changes--Cost Reimbursement FAR Changes--Time-and-Materials or Labor-HourFAR Changes--Time-and-Materials or Labor-Hours Delivery, schedule extension (cost reimbursement (CR)) FAR Excusable Delays Delivery, schedule extension (fixed-price) FAR Government Delay of Work Default (Fixed-Price Supply and Service Default (Fixed-Price Supply and Service)

15 MODIFICATION SUBJECT AUTHORITY (Select one of the following) Differing Site Conditions FAR Differing Site Conditions Drawings, designs, specifications, and SOW, change in FAR Changes—Fixed-Price FAR Changes--Cost Reimbursement FAR Changes--Time-and- Materials or Labor-HourFAR Changes--Time-and- Materials or Labor-Hours FAR Changes Economic Price Adjustment (EPA) FAR Economic Price Adjustment--Standard Supplies FAR Economic Price Adjustment—Semi-standard Supplies FAR Economic Price Adjustment--Labor and Material Funding an overrun (fully funded cost CR contract) FAR Limitation of Cost Funding, increase of (incrementally funded CR contract) FAR Limitation of Funds Government furnished property, disposition of/increase or decrease of/replacement of/repair of FAR Government Property Incentive price revision, final price revision or funding to ceiling for fixed-price incentive (firm target) contract FAR Incentive Price Revision--Firm Target Incentive price revision, establishing a firm-fixed price or firm targets for fixed-price incentive (successive targets) contract FAR Incentive Price Revision--Successive Targets Make or buy program, changes FAR Changes or Additions to Make-or-Buy Program New work, (outside of general scope of work requiring Justification for Other Than Full & Open Competition (JOFOC)) FAR (a)(3) mutual agreement of the parties

16 MODIFICATION SUBJECT AUTHORITY (Select one of the following) Option, exercise of (IAW contract, unilateral) FAR Option for Increased Quantity Option for Increased Quantity--Separately-Priced Line Item Option to Extend Services Option to Extend the Term of the Contract Packing or shipment, change in the method of FAR Changes—Fixed-Price Changes--Cost Reimbursement Changes--Time-and-Materials or Labor-Hour Changes--Time-and-Materials or Labor-Hours Prior possession or use by government, delays in work/additional expense to contractor Use & Possession Prior to Completion Progress payments, adding after award FAR Progress Payments Progress payments, increasing rate or liquidation rate FAR Progress Payments Reduction in % of total amount of work performed under contract FAR Performance of Work by the Contractor Scope/materials, change in (exceeding the funding limitation) FAR Design Within Funding Limitation Stop Work FAR Stop-Work Order Termination for Convenience FAR thru 7 Termination for Default FAR thru 10 Unreasonable suspension, delay, or interruption of work FAR Suspension of Work Value Engineering Change Proposal (VECP), incorporation of FAR Value Engineering, FAR Value Engineering--Architect-Engineer FAR Value Engineering--Construction Variation in shop drawings, (approval of) FAR Specifications and Drawings for Construction Modification of Contractual Terms not covered by FAR/other clause or default authority FAR (a)(3) mutual agreement of the parties

17 CONSIDERATION Consideration is the benefit each party confers upon the other for the modification; it is required to seal a new bargain. Consideration is something of value given in exchange for something else & can consist of – → Monetary → Changes in Specs or Work Statements → Delivery → Payment Terms → Other Contract Terms & Conditions Contracting Officer cannot agree to modify without consideration, if consideration is required. NOTE: See FAR (c) & for exceptions to consideration.

CONSIDERATION Example – If contractor is entitled to time extension pursuant to a contract clause, no consideration is required, e.g., weather/excusable delays. However, if parties negotiate time extension at request of either, and the requesting party is not entitled to the extension pursuant to a clause, the parties are modifying the contract by making a new deal and must exchange new consideration. (Note: an “equitable adjustment” is not consideration.) 18

POINTS TO REMEMBER Modifications to a contract affect the interests, rights, and obligations of two parties—the NOAA and the contractor. The responsibility of the Contracting Officer (CO) is to preserve the integrity of the relationship between these two parties. The CO reviews the action to determine whether it is consistent with the existing contract and to ensure that the equities of the existing relationship are preserved and will be continued when a modification is issued. Contact the POD and/or seek Legal Counsel when you have a challenging modification process! 19

QUESTIONS 20