43.204
Administration
Proper documentation, prompt negotiation, and thorough record-keeping are essential for managing change orders and equitable adjustments in government contracts.
Overview
FAR 43.204 outlines the administrative procedures for managing change orders in government contracts, focusing on documentation, negotiation, and finalization of equitable adjustments. It details the required documentation for change orders, the process and timing for definitizing equitable adjustments, and the importance of thorough record-keeping and analysis to ensure fair contract modifications. The section also emphasizes the need for clear releases to prevent future disputes over adjustments.
Key Rules
- Change Order Documentation
- When change orders are not forward priced, both a change order and a supplemental agreement are required. If terms are agreed in advance, only a supplemental agreement is needed. Administrative or unilateral changes may require just one document initially.
- Definitization of Equitable Adjustments
- Contracting officers must negotiate equitable adjustments promptly. Agencies must track and record the time taken to definitize adjustments, especially for construction contracts. Suspense systems must be in place to monitor unpriced change orders.
- Cost Analysis and Funding
- Contracting officers must conduct cost analyses when appropriate and secure additional funds before adjusting contracts. Field pricing reviews should include a list of significant contract events.
- Final Equitable Adjustments and Releases
- All elements of the adjustment must be resolved, and a release statement should be included in the supplemental agreement to prevent future claims related to the same facts or circumstances.
Responsibilities
- Contracting Officers: Ensure proper documentation, negotiate and definitize adjustments quickly, conduct cost analysis, secure funding, and include release statements.
- Contractors: Submit adequate proposals for adjustments and provide necessary cost data.
- Agencies: Maintain records and suspense systems, and oversee compliance with procedures.
Practical Implications
- This section ensures that contract changes are handled transparently and efficiently, minimizing disputes and delays. Proper documentation and timely negotiation are critical to avoid funding or performance issues. Failure to follow these procedures can result in payment delays, disputes, or audit findings.