POLICY & OVERSIGHT DIVISION (POD) February 2014

1. POLICY & OVERSIGHT DIVISION (POD)February 2014 PROCESSING CONTRACT MODIFICATIONS TRAINING

2. TABLE OF CONTENTS • Overview…………………………………………………………….3 • Objective…………………………………….………………………4 • Contracting Officer’s Role & Responsibility………….5 • Definitions………………………………………..…………………6 • Modification Types………………………………………………7-9 • Standard Form 30……………………………………………….10-12 • Commonly-Used Modification Authorities………….13-16 • Consideration……………………………………………………..17-18 • Points To Remember…………………………………………..19

3. view OVERVIEW This training outlines the contract modification process in accordance with FAR Part 43/NOAA policies and procedures.

4. OBJECTIVE • Discuss the Contracting Officer’s role & responsibility when executing modifications • Provide definitions • Define/discuss modification types • Discuss preparation/usage of the Standard Form 30 • Provide commonly-used modification authorities • Define/discuss consideration • Provide points to remember

5. CONTRACTING OFFICER’S ROLE & RESPONSIBILITY • Only Contracting Officers acting within the scope of their authority are empowered to execute modifications. • Contracting Officers shall not execute a modification that causes or will cause an increase in funds without first obtaining a certification of funds availability. (See FAR 43.105 for exceptions.) • Contracting Officers shall ensure that modifications, including changes that could be issued unilaterally, are priced before their execution if this can be done without adversely affecting the interest of the government. (See FAR 43.102 re: negotiating ceiling price. )

6. DEFINITIONS Administrative change -- unilateral contract change, in writing, that does not affect the substantive rights of the parties (e.g., a change in the paying office or the appropriation data). Change order -- a written order, signed by the Contracting Officer, directing the contractor to make a change that the Changes clause authorizes the Contracting Officer to order without the contractor's consent. Supplemental agreement -- a contract modification that is accomplished by the mutual action of the parties.

7. MODIFICATION TYPES There are two types of modifications -- 1) Bilateral - supplemental agreement signed by the contractor and the Contracting Officer 2) Unilateral - signed only by the Contracting Officer

8. BILATERAL MODIFICATIONS Bilateral modifications are used to -- • Make negotiated equitable adjustments resulting from the issuance of a change order • Definitize letter contracts • Reflect other agreements of the parties modifying the terms of the contract

9. UNILATERAL MODIFICATIONS • Unilateral modifications are used to – • Make administrative changes • Issue change orders • Make changes authorized by clauses other than a • changes clause (e.g., Property clause, Options clause, • Suspension of Work clause, etc.) • Issue termination notices

10. STANDARD FORM 30 (SF 30) Amendment of Solicitation/Modification of Contract The SF 30 is a self-explanatory form and when properly executed by the Contracting Officer, constitutes a legal modification. The SF 30 is a stand alone document which must accurately reflect any and all changes to the contract terms, conditions, scope of work, and/or specifications.

11. PREPARATION & USE OF SF 30 Block 13 identifies – • The type of change being processed, i.e., change order, administrative change, supplemental agreement, other specified changes. • The authority selected by the Contracting Officer (CO) to execute a specified contract change. NOTE:The CO must select and complete one of the four fields (13A-13D to identify the proper modification type and authority.

12. PREPARATION & USE OF SF 30 (Block 13) • 13A – Select when issuing an undefinitized contract action pursuant to the Changes clause that permits changes within the general scope of the contract, i.e., a change order. The change order directs the contractor to perform the change with execution of a bilateral modification at a later date incorporating all final negotiated changes. • 13B – Select when issuing an administrative change to the contract, e.g., a change in the paying office or the appropriation data. • 13C – Select when issuing a supplemental agreement, e.g., a negotiated equitable adjustment resulting from the issuance of a change order or other agreements of the parties modifying the terms of the contract. • 13D – Select for all other changes that are not included in 13A – 13C. These changes may be bilateral or unilateral, and the Contracting Officer must indicate appropriate modification type and authority, e.g., Unilateral pursuant to FAR 52.217-8 Option to Extend Services.

13. Commonly-Used Modification Authorities • A proper authority is mandatory for both unilateral and bilateral modifications, but is not necessary for administrative modifications. • General rule--cite an explicit authority that already exists in the contract, i.e., appropriate FAR/other clause. • Cite “mutual agreement of the parties” ONLY when no other authority exists. • The following tables (not all-inclusive) consist of commonly-used modification authorities that apply to specific contract changes.

17. CONSIDERATION Consideration is the benefit each party confers upon the other for the modification; it is required to seal a new bargain. Consideration is something of value given in exchange for something else & can consist of – → Monetary → Changes in Specs or Work Statements → Delivery → Payment Terms → Other Contract Terms & Conditions Contracting Officer cannot agree to modify without consideration, if consideration is required. NOTE: See FAR 43.102(c) & 50.103 for exceptions to consideration.

18. CONSIDERATION Example – If contractor is entitled to time extension pursuant to a contract clause, no consideration is required, e.g., weather/excusable delays. However, if parties negotiate time extension at request of either, and the requesting party is not entitled to the extension pursuant to a clause, the parties are modifying the contract by making a new deal and must exchange new consideration. (Note: an “equitable adjustment” is not consideration.)

19. POINTS TO REMEMBER • Modifications to a contract affect the interests, rights, and obligations of two parties—the NOAA and the contractor. The responsibility of the Contracting Officer (CO) is to preserve the integrity of the relationship between these two parties. The CO reviews the action to determine whether it is consistent with the existing contract and to ensure that the equities of the existing relationship are preserved and will be continued when a modification is issued. • Contact the POD and/or seek Legal Counsel when you have a challenging modification process!

20. QUESTIONS