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    According to 50.102-1(c), authority to approve an amendment that increases the price of the contract may not be delegated below the secretarial level except in extraordinary circumstances. A no-cost period of performance extension does not increase the price of the effort. Can you please point me to case law that states that consideration for schedule extensions is due when the price of the contract will not change?


    Answer

    Modification of contracts without consideration is contrary to established government policy and regulations.  The bargain of the parties to a contract consists of an exchange of consideration - a basic element of contract formation.  During the performance of a contract, it may become desirable to modify the contract, but the fundamentals of contract law dictate that consideration be given in exchange for changing or modifying a contract. 

    The Defense Logistics Acquisition Directive (DLAD 4105.1) which implements the Federal Acquisition Regulation (FAR), Defense FAR Supplement (DFARS), and other DoD publications and establishes procedures governing the acquisition of supplies and services states in part, "It is the Government's express expectation that contractors will make all deliveries in accordance with contractual terms. It is, therefore, DLA's policy neither to endorse nor condone delivery extensions for the convenience of the contractor.  There are times, however, (as, for example, when we deal with sole source suppliers, or when our supply position for a particular item will not permit the time and effort necessary for termination and reprocurement) when contracting officers determine that extending a delivery schedule at the  contractor's request via contract modification is in the Government's best interest. At those times, they must decide on the form of consideration that is most acceptable under the circumstances. Often, the most appropriate form of consideration is a monetary adjustment to the contractual total."

    While there are some exceptions, unless otherwise specifically addressed by law, amendments without consideration are addressed at FAR Part 50 which deals with Extraordinary Contractual Actions. See FAR 50.103-2:
    (a) Amendments without consideration.
    (1) When an actual or threatened loss under a defense contract, however caused, will impair the productive ability of a contractor whose continued performance on any defense contract or whose continued operation as a source of supply is found to be essential to the national defense, the contract may be amended without consideration, but only to the extent necessary to avoid such impairment to the contractor’s productive ability.

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