We have 2 questions with respect to Government issued modification for change orders greater than $5M under the "Changes" clause: (1) is the DFARS clause interpreted to mean that all FAR/DFARS clauses that in effect and applicable to the modification would be unilaterally included in the contract upon issuance of the change order, and (2) isn't this counter to the requirement that a contract have only those clauses required on the date the base contract was executed (i.e., not on the dates of subsequent modifications)?
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Both FAR 52.216-25 and DFARS 252.217-7027 have that language. The paragraph we believe you are referring to is paragraph (c). This paragraph is addressing action to be taken if the definitization schedule is not met (it would be good to point this out when negotiating. Contractors are likely not clear on the Government's right to set the price).
The language means that what was in effect at the time of contract award remains in effect. The second statement (c)(1)(ii) refers not to the FAR, but to the law. It is effectively saying, that if the law has changed, these changes are to be incorporated. That is different than saying updated clauses are automatically included.
DFARS 252.217-7027(c) If agreement on a definitive contract action to supersede this undefinitized contract action is not reached by the target date in paragraph (b) of this clause, or within any extension of it granted by the Contracting Officer, the Contracting Officer may, with the approval of the head of the contracting activity, determine a reasonable price or fee in accordance with Subpart 15.4 and Part 31 of the FAR, subject to Contractor appeal as provided in the Disputes clause. In any event, the Contractor shall proceed with completion of the contract, subject only to the Limitation of Government Liability clause.
(1) After the Contracting Officer’s determination of price or fee, the contract shall be governed by
(i) All clauses required by the FAR on the date of execution of this undefinitized contract action for either fixed-price or cost-reimbursement contracts, as determined by the Contracting Officer under this paragraph (c);
(ii) All clauses required by law as of the date of the Contracting Officer’s determination; and
(iii) Any other clauses, terms, and conditions mutually agreed upon.
In responding to the second part of your query, this is not a change to the requirement that a contract have only those clauses required on the date the base contract was executed. This clause language is not inconsistent with the FAR language you are referring to.