Supply contracts
FAR 11.701 requires that any allowable quantity variation in fixed-price supply contracts be clearly stated, tailored to industry norms, and not exceed ±10% unless otherwise regulated, with specific rules for handling excess deliveries.
Overview
FAR 11.701 addresses how fixed-price supply contracts may allow for variations in the quantity of items delivered, primarily due to factors like loading, shipping, packing, or manufacturing processes. The regulation requires that any permissible variation be clearly stated as a percentage in the contract, with the percentage tailored to industry norms and not exceeding plus or minus 10 percent unless otherwise specified by agency regulations. For contracts involving multiple delivery destinations, the contract must specify if the variation applies per destination. Contractors are responsible for delivering the specified quantity within the allowable variation. If excess quantities are delivered, the contract may include a clause (FAR 52.211-17) allowing the Government to retain small excesses (up to $250) without payment, or to return or pay for larger excesses at its discretion.
Key Rules
- Permissible Quantity Variation
- Contracts may allow for quantity variations due to shipping, loading, packing, or manufacturing, stated as a percentage increase, decrease, or both.
- Industry-Based Variation Limits
- No standard percentage; limits should reflect industry norms and not exceed ±10% unless agency regulations specify otherwise.
- Excess Quantity Handling
- Contracts may include a clause allowing the Government to retain excess quantities up to $250 without payment, or to return/pay for larger excesses at the contract price.
Responsibilities
- Contracting Officers: Must specify permissible quantity variations in the contract, ensure limits align with industry standards, and include appropriate clauses for excess deliveries.
- Contractors: Must deliver quantities within the allowable variation and understand the consequences of delivering excess quantities.
- Agencies: May set different variation limits and must oversee compliance with these provisions.
Practical Implications
- This section ensures flexibility for minor quantity variations while protecting both parties from unreasonable overruns or underruns. Contractors must carefully manage production and shipping to avoid costly excess deliveries, and contracting officers must tailor variation terms to each contract and industry.