52.243-6
Change Order Accounting
Contractors must maintain separate, detailed cost accounts for contract changes exceeding $100,000 when directed, ensuring accurate and transparent cost tracking for equitable adjustments.
Overview
FAR 52.243-6, Change Order Accounting, establishes requirements for contractors to maintain separate accounting records when directed by the contracting officer for changes or related series of changes exceeding $100,000. The purpose is to ensure accurate tracking and segregation of direct costs associated with contract modifications, facilitating the determination of equitable adjustments. Contractors must use job order or other suitable accounting procedures to record all segregable, direct costs (minus allocable credits) for both changed and unchanged work affected by the change order. These records must be maintained until an equitable adjustment is agreed upon or the dispute is resolved under the contract's Disputes clause.
Key Rules
- Change Order Accounting Requirement
- Contractors must maintain separate accounts for changes or related changes exceeding $100,000 when required by the contracting officer.
- Accounting Procedures
- Use job order or other suitable accounting methods to track all segregable, direct costs related to the change, including both changed and unchanged work.
- Duration of Recordkeeping
- Maintain these accounts until an equitable adjustment is reached or the issue is resolved under the Disputes clause.
Responsibilities
- Contracting Officers: Decide when to require change order accounting and notify the contractor accordingly.
- Contractors: Establish and maintain separate accounts for applicable changes, accurately track costs, and retain records until resolution.
- Agencies: Oversee compliance and ensure proper cost tracking for contract changes.
Practical Implications
- This clause ensures transparency and accuracy in cost tracking for significant contract changes, supporting fair and timely equitable adjustments.
- Contractors must have robust accounting systems to comply when this clause is invoked.
- Failure to segregate costs can delay adjustments and lead to disputes or audit findings.