"WHETHER OR NOT CHANGED" 2.0

You may dismiss this post as a repetition.  I hope so. That will mean you have received the message.  If not, we repeat the rule for emphasis. The quoted language is at the heart of what constitutes an equitable adjustment and projects the outer limits of cost recovery. If you read our posts, we explore the outer limits, which may well include rewriting and repricing the original work, considering the effects of inflation. Yes, those posts.

Too many of us are unfamiliar with the words "whether or not changed," where they are found, and what they mean.  The standard fixed price changes clause contains the following language:

Suppose any such change causes an increase or decrease in the cost or time required to perform any part of the work under this contract, whether or not changed by the order. In that case, the Contracting  Officer shall make an equitable adjustment in the contract price, the delivery schedule, or both . . . .  (Emphasis added.)

The words, in essence, mean the contractor is entitled to an equitable adjustment, which includes the effect of the change on the unchanged work.  This allows the contractor in development to reprice the entire piece to the extent the change affects that work.

While we're on the subject, the contractor is always entitled to also show entitlement to a schedule adjustment based on changes, if justified.  Too many of us forget this aspect of the changes clause as well.

These rules apply to all changes, including constructive changes based on breaches of implied duties under each contract.

This concept has been around forever and is akin to the provision in FAR 49.208, which permits the contractor to reprice unchanged work after a partial termination. That regulation says that after partial termination, "a contractor may request an equitable adjustment in the price or prices of the continued portion of a fixed-price contract."

Changed or partially terminated work may cause an increase in prices of the unchanged work, especially where the change results in delay.  Material and labor costs may increase because of the postponement, although this is more likely in times of inflation.  The modification or partial termination may also change how the remaining work must be performed, making it more expensive.  The point is these clauses contemplate recovery of consequential damage resulting from the change.

The schedule adjustment aspect of the changes clause comes into play in most termination for default cases.  Every compensable change can become an excusable cause of delay, entitling the contractor to a schedule extension.

bill@spriggslawgroup.com