# DLAD PART 43 – CONTRACT MODIFICATIONS

- SUBPART 43.1 – GENERAL

- 43.102 Policy.
- 43.104 Notification of Contract Changes.
- 43.104(a)(90)

- SUBPART 43.2 – CHANGE ORDERS

- 43.201 General.

- 43.204-70 Definitization of change orders.
- 43.204-70-1 Scope.
- 43.204-70-1

PART 43 – CONTRACT MODIFICATIONS

TABLE OF CONTENTS

SUBPART 43.1 – GENERAL

43.102 Policy.

43.103 Types of contract modifications.

43.104 Notification of contract changes.

SUBPART 43.2 – CHANGE ORDERS

43.201 General.

43.204 Administration.

SUBPART 43.1 – GENERAL

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43.102 Policy.

(b)(90) See 17.74 when issuing a UCA.

43.103 Types of contract modifications.

(a) Bilateral.

(90) Delivery schedule extension - modifications.

(1)(i) It is the Government's express expectation that contractors will make all deliveries in accordance with contractual terms. It is, therefore, DLA's policy neither to endorse nor condone delivery extensions for the convenience of the contractor. There are times, however, (as, for example, when we deal with sole source suppliers, or when our supply position for a particular item will not permit the time and effort necessary for termination and reprocurement) when the Post-Award Acquisition Specialist (AS), in coordination with the Supply Planner for DLA Direct items or CAS for Customer Direct items, will determine that extending a delivery schedule at the contractor's request via contract modification is in the Government's best interest (but also see 11.401-92 for policy on potential alternative sourcing strategies). At those times, they must decide on the form of consideration that is most acceptable under the circumstances. Often, the most appropriate form of consideration is a monetary adjustment to the contractual total. When this is so, the Post-Award AS for all Supply Chains except DLA Energy may use the following guidance. Any contractually-binding decisions made by the Post-Award AS are subject to contracting officer approval if the Post-Award AS has no warrant (see 11.401-90(a)(2)). (The Energy Supply Chain is not included because, in general, its delivery delays are governed by demurrage procedures.)

(ii) For supply contracts other than for direct vendor delivery or base support, contracting officers at the centers listed above are encouraged to use the calculation provided at (2), below, when a delivery schedule has to be extended for monetary consideration due to contractor-caused delay. The result should be used as a guide in determining the amount of consideration to assess the contractor for a contractor-requested delivery extension/delay.

(2) As a consequence of the Government's cost incurrence associated with a contractor's delinquent delivery, the following formula will generally be used to determine the basis for an adequate amount of consideration for a delivery schedule extension when that schedule is extended as a result of contractor caused delay:

Amount of consideration = D + [R * L * V]

Where - D = Direct costs for the particular supply center, as detailed in DLA- DORRA Report entitled "Cost of Late Contract Delivery Update" April 1998 ("the Report");

DLA Land and Maritime (Construction) = $ 76

DLA Land and Maritime (Electronics) = $ 76

DLA Aviation (General) = $ 73

DLA Troop Support (C & T) = $ 175

DLA Troop Support (Medical) = $ 115

DLA Troop Support (Subsistence) = $ 85

DLA Troop Support (Industrial) = $ 84

Contracts Administered by:

DCMA = $ 291

R = Day/Cost ratio (the cost per day of lateness of additional inventory resulting from increased production lead time triggered by late delivery expressed as a proportion of overall contract cost) for the particular supply center, as follows (see details in the Report):

DLA Land and Maritime (Construction) = .00118

DLA Land and Maritime (Electronics) = .00256

DLA Aviation (General) = .00079

DLA Troop Support (Industrial) = .00077

DLA Troop Support (C & T) = .00017

DLA Troop Support (Medical) = .00004

DLA Troop Support (Subsistence) = .00017

L = Total number of days the delivery Schedule is extended;

V = Dollar Value of the extended portion of the contract.

Step One: Multiply the total number of days the contract delivery schedule is being extended by the "Day-Cost Ratio" for the appropriate Center.

Step Two: Multiply the result from step one, above, by the contract dollar amount of the supplies being extended. This is the total variable cost component for delinquent delivery.

Step Three: Add the direct cost to the DLA Component of the delinquent delivery (the $100 in the formula) to the result of step two. This is the total amount of consideration which should be used as a guide in determining the adequacy of the contractor's final offer of compensation for the extension.

(3) It is important to note that, whether or not the Post-Award AS chooses to use the guidance at 43.103(a)(90)(2) or another method for determining an appropriate amount of consideration, when the Post-Award AS is unable to obtain agreement with the contractor on a reasonable (vice a token) consideration amount, the Government is not obligated to accept a lesser amount merely for the sake of reaching that agreement and restoring the contractor to a "current status." In such situations (and assuming demand for performance or explanation of delinquency has been made in writing to the contractor), it is preferable to leave the contract in a delinquent status than to modify it for an insignificant amount, or at no cost to the contractor. Refusing to restore the contractor to a satisfactory status in the event of its failure to make a good-faith offer of adequate consideration permits the Government to maintain a record of the delinquency, and to consider future business with the contractor in light of this poor performance. Availability of accurate past performance information on contractors’ delinquent deliveries is essential in order to make best value award decisions and avoid future delinquencies and backorders to the maximum extent possible. Concern about the possibility of failure to reach agreement with the contractor should, therefore, not affect the decision of the Post-Award AS to use this means of determining the adequacy of the contractor's offer. Any contractually-binding decisions made by the Post-Award AS are subject to contracting officer approval if the Post-Award AS has no warrant (see 11.401-90(a)(2)).

(91) Modifications for waivers and deviations are discussed at 46.407(f)(91).

43.104 Notification of Contract Changes.

43.104(a)(90)

Use 52.243-9000, Design Change- Supply Items (AMCOM DLR – DLA Aviation), in all Aviation Basic Ordering Agreements when engineering changes are anticipated.

SUBPART 43.2 – CHANGE ORDERS

43.201 General.

(90) The requirements of DFARS 217.74 and DLAD 17.74 shall be met when an undefinitized change order (UCO) which involves a Government directed change to the design/manufacturing drawings or specifications is issued by a DLA contracting office.

43.204-70 Definitization of change orders.

43.204-70-1 Scope.

43.204-70-1

(90) Unpriced change orders with an estimated value exceeding $5 million require approval by the Director, DLA before issuance or contractor performance. See DLAD 17.74 and DLAD PGI 17.7404-3 for applicable requirements.