1) Is the government obligated to compensate the contractor for these 3 extra units?
2) Would the government have had the right to refuse the three extra units and send them back prior to acceptance, or is the government obligated to accept them because they fall within the allowable variation percentage as stated in 52.211-16?
3) If the contractor had exceeded the Variation in Quantity %, but the government had still accepted all units, would the government be obligated to compensate the contractor for all units included the ones that exceeded the VIQ % stated in the clause?
The question has been raised in my office because the clause does not explicitly discuss compensating the contractor for excess units within (or in excess of) the clause's stated VIQ %. My assumption would be that if the government is accepting and retaining the supplies they would be contractually obligated to pay for them at the contract price. The only exception being when 52.211-17 is included, and then only if the value is $250 or less.
Question #1: Yes
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Question #2: No, we cannot refuse them as they are "within the scope" of the contract. If we did the government would be in breach of contract.
Question #3: Lots of variables here, hard to say yes or no. Did they get paid? Does the government need the items? If they got paid and the items were “used” by the government. The action would likely result in a ratification action since the acceptance would be an unauthorized action. The COR/QAR/KO would have exceeded their authority under the contract by accepting the “out of scope” units.
In summary pay the contractor for the three units, they are not “extra” as they are within the scope of the contract since the use of the clause allows for a “variation in quantity.” This is exactly how the clause works. If additional funds are needed finance needs to make them available, since variation in quantity contracts are “recorded” as a “contingent liability” (IAW the FMR). This means finance knows the funded amount can go up or down during performance.