Contract Changes

Printer Friendly Version


Q. On an operator contract, a successful proposer on an RFP has requested a change order to their contract compensating them for bringing the fleet to current maintenance standards after they submitted in their proposal that they would accept the fleet in 'as is' condition in their proposal? The fleet was well known to them they indicated in their response. This was not a requirement of the RFP. The evaluation committee scored the proposals taking this proposed information into consideration.   The RFP submittal becomes part of the contract.  Would this change be permissible?

A. We do not believe from the facts you submit that this requested change order is permissible.  It appears from your comments that this contractor was selected in part because it agreed to accept the fleet of vehicles "as is," and presumably be responsible for all maintenance required to keep the vehicles operational.  This is a very material promise and one that significantly influenced the selection decision. To relieve the contractor of this responsibility now would undermine the integrity of the award and expose the agency to a protest from the competitors who lost this competition. It could also subject the agency to damaging public criticism and perhaps the loss of federal funds for the contract. We would advise you to carefully review the RFP and the contractor's proposal with your counsel and determine if you believe the contractor accepted the vehicle maintenance responsibility as discussed here.  If so, we would advise you not to change the contract and relieve him of this duty.  It might be preferable to allow him to litigate the matter, and if he is successful, at least the agency will have been protected from the potential adverse outcomes as far as loss of federal funds, protests from the other bidders, etc. (Posted: December, 2010)



Q. 
In March 2009 our office approved a sub-recipient to award a 2009 Model Conversion Lift Vans contract to Mid-South Bus Center, Inc. for a unit price of $36,750.  The Contract period extends for three years from the date of award; therefore, it is still in effect until March 2012. Braun still agrees to honor the $36,750 per unit on the 2011 models, which will have a chassis cut-off date very soon.  This contract unit price comes with a 5.4L V-8 engine with a 4-speed wide ratio automatic transmission (4R753).  The sub-recipient has had problems with the 4R753 transmissions and would like to make a change. The vans are all lift equipped which adds additional weight, and the sub-recipient is of the opinion that the 4R753 transmissions are too small for this size chassis.  Ford offers no optional transmission with the 5.4L V-8 engine; however, Ford does offer a 6.8L V-10 engine with a torque-shift 5-speed automatic transmission (5R110W).  Cost to upgrade to the 6.8L/5-speed would be an additional $984 for a unit price of $37,734.  Since this would be a change to the original bid, the subrecipient is requesting approval to upgrade.  Please advise.

A. The change to the transmission that you describe would appear to fall within the scope of the contract in as much as the change represents only a 2.6% price increase from the original contract price.  However, we would be concerned with the fact that the original transmissions may not be suitable for the size/weight of the vans.  We would suggest that the recipient carefully review the contract performance specifications with its technical personnel and legal counsel to determine which party is responsible for the fact that the vehicle transmissions may be unsuitable for these vans.  If the manufacturer or supplier is responsible, then the new transmissions may be obtainable for the same contract price as the original transmissions.  In fact there would then be a question of the supplier having to replace the original transmissions as well, but that could be a negotiating point with the supplier - perhaps to obtain the upgraded transmission at no additional cost for vehicles yet to be delivered.  We would also strongly suggest the recipient, before committing to the new transmissions, research the experience of other users of these vans to determine if the upgraded transmissions have a satisfactory performance record. (Posted: July, 2011)


Q.
The FTA requires that when deciding whether a proposed change
is considered a change order or a cardinal change that two tests be
applied, which are: 1) the amount of effort the contractor is required to
perform for the changed work vs. the effort in the original contract and
2) what the competitors should have anticipated to be within the scope of
the original competition. If the proposed change satisfies one of the
above but not both can the proposed change be considered a change order?
For example, if the amount of effort is twice the cost from the original
contract but the competitors were made aware in the original contract of
the possibility that the proposed change may happen, can the proposed
change be considered as a change order since it passed one of the tests
but not the other?

A. The subject of change orders, including cardinal changes, is discussed in the FTA BPPM, Section 9.2.1 – "Contract Scope and Cardinal Changes," which is available online: http://www.fta.dot.gov/12831_6192.html#BM9_2_1

The guidance in this section discusses several criteria that the courts have used to decide when a change is within the scope of the contract. One of the most important criteria as stated by the courts, says, “An important factor to be considered is whether the original solicitation adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred . . . or whether the modification is of a nature which potential offerors would reasonably have anticipated under the changes clause.”

We believe that the criteria stated above (i.e., that is was within the contemplation of the parties when the contract was competed) would be sufficient to qualify the change as "within the general scope" of the contract, even though the cost of the change is relatively high when compared with the original contract. (Posted: January, 2012)

A A A    Bookmark and Share