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    When we did the math for the increase it came out to an addiitonal 46% increase to the total cost of the contract. We are telling the customer that because the increase is almost at 50% this request would not be honored at this time. The cusotmer states that because this was an 8a direct award and because the request for an additional FTE will still have the total cost of the contract under the 8a threshold that there should not be an issue and furthermore that the FAR does not state anything about a percentage of when a CO can deny the request. We know that the FAR doesnt state a percentage but arent we correct in stating that it is a CO discretion as to when to say to the customer that this percentage is too high? How does the 8a direct award affect this? Is there special consideration when contracts are awaded (direct) 8a and therfeore if a customer requests a scope increase, etc that we just issue the modificatoin s as long as the total cost of the contract does not exceed the 8a threshold? or do we handle this like any other type of contract and take into consideration the percentage, the work, etc?


    Answer

    13CFR124.506 states that when the estimate of the total value of a proposed 8(a) contract is less than the applicable competitive threshold amount ($6.5 million per FAR 19.805-1), a sole source award can be made even though the contract price that is eventually negotiated exceeds $6.5 million. This is subject to a limit of 10% above the $6.5 million competitive threshold. If the modification being proposed does not result in a contract price that exceeds $6.5 million, I don't see any problem with issuing the modification.

    However, if the new contract price exceeds $6.5 million, then a case could be made that the scope has increased to such an extent that it would have rendered the Government's requirement as ineligible for sole source consideration if the full extent of the work scope had been known. This could invite a protest from another 8(a) firm if the modification puts the total price above $6.5 million. A J&A per FAR Subpart 6.3 may be required. 

    Please consult with your organization's legal counsel and SBA representative for more definitive guidance.

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