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    My question is whether or not we can do a modification for the negotiated amount plus an incentive of $375K if they complete the work by December 2014? Is there regulations preventing an agency from doing this? How would this look to an auditor coming in after the mod was issued. If it is allowable, what is the documentation that is needed to support this incentive mod? I have some heartburn putting an incentive in this contract, however I have a variety of differing opinions on the issue. Any light you can shed on the subject would be helpful.


    Answer

    Enough information is not provided for me to provide a complete response.
     
    At a minimum, the following additional questions are applicable.
     
    1) What type of solicitation was issued?  IFB or RFP?
    2) Is the contract or proposed contract fixed price?
    3) Is the acquisition competitive,  8(a) or other?
    4) Has the contract been awarded or are you still in pre-award status?
    5) How do you intend to handle the contractors proposal of two completion
    dates and two fixed prices?
     
    Comments:
     
    If the original solicitation and contract award was competitive, I would contend that the incentive of $375,000 could not be added by modification. The addition of an incentive would in effect change the contract type. Change of contract could be considered a cardinal change. Changing the contract type would hardly be within the "original scope of the contract". Scope is defined as "original intent of the parties" when the basic contract was signed. In addition, if the original contract was competitive, any contractor that did not receive the award would have a potential basis for "protest" based on a violation of the Competition in Contracting Act. Why? Because the basis for
    pricing the contract has changed if the incentive is included and no contractor other the awardee had the opportunityto bid or propose on the new contract type.
     
    When any modification to an existing contract is contemplated, the contracting officer must determine what their legal authority is for the modification. The authority is usually an existing contract clause. Based on the information provided, I could not determine a legal authority to include the incentive after contract award. If the original contract is an 8(a), why do you need an incentive.
     
    Why do you belief an incentive will necessarily be effective? An incentive is a reward to perform above the minimum requirements of the Government. The contractor may earn none of the incentive and still perform satisfactorily. When a construction project is involved, the Government typically requires so many  design changes after award requiring a performance period extension, the contractor cannot meet the original competition date even with an incentive.
     
    I will readdress this issue if you provide additional facts or have questions.
     

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