CHANGE CAN BE GOOD, BUT ONLY IF IT IS DOCUMENTED
Contract changes are usually the number one cause of claims litigation, according to government contract attorneys, but rarely do contractors do a good job documenting those changes. Failure to get changes in writing can eat into a contract’s bottom line more than many companies realize. While much has been written on the need to document and obtain CO approval before a significant change is made, the same is also true for smaller changes. Even if each individual change isn’t substantial, the number of new requirements can quickly add up. Sheppard Mullin contracts attorney Christopher Loveland states, “if the terms of the contract are not followed to fully document extracontractual changes and their impacts, the contractor can be on the hook for increased costs and delay liability, despite the fact that the customer asked for the changes in the first place.” Even experienced contractors have found this out the hard way. Relationships with customers can often be collegial, while contracting officers may be nowhere to be seen during the fulfillment of a project. This can lead to a false sense that everything can be taken care of with a handshake and an oral agreement. Loveland recommends becoming re-familiarized with the Changes Clause that is in nearly every contract. One part of the Firm, Fixed Price Changes Clause (FAR 52.243-1) does allow contracts to be modified on an oral basis, but contractors are required to give notice to the contracting officer of (1) the date, circumstances, and source of the order; and (2) that the contractor regards the order as a change to the contract. This still requires record keeping on the part of the contractor. Government contractors are always under pressure to please clients with exceptional performance but are also pressured now to meet bottom lines in a time of unusual inflation. Change can be good for your contract and your business, but make sure you get it in writing if you seek continued success.