My question is does the amount of the ceiling of the contract reduced by the 2 million that was de-scope since the amount bid was for all the work and now some of the work will not be done. The contract is still active and now that funding has been found for more work and not the work that was de-scoped. The contractor feels that the ceiling should have remain the same.
First, let me see if I understand the issue. You de-scoped or reduced the work required under the contract do to funding issues and you reduced the ceiling amount at the same time. Now you have additional funding and want to add new work to the contract. This new work is different from the work that was de-scoped or reduced.
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If that is correct, you can modify your contract for the new work, provided that it is within scope of the contract, and increase the price accordingly. The ceiling should not remain the same when descoping or adding work. You reduce the ceiling amount accordingly for the amount reduced and increase the ceiling amount accordingly for the amount added. You may want to talk with your counsel and contracting officer on any specifics.