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  • Question

    If a service contract is awarded without a "ceiling" but has exceeded it's estimated costs, is the government required to re-solicit the contract?


    Answer

     
    1. A ceiling is used in incentive contracting- it has nothing to do with a service contract per se.
     
    2. The estimated cost of the procurement is just that- an estimate. It has no legal significance, other than as a data point in trying to figure out the original intent of the parties. The real question is how much did the contracting officer think would be used on the contract, in other words the real value- and what was negotiated (if anything).
     
    3. How much work is within scope and how much is outside of the scope is the judgment call of the contracting officer. If the original intent was to award a 10 year contract for $500 million, and you want to go to $550 million or $600 million, you are probably OK. If you want to go to $3 billion without writing a new J&A and Acq Plan and getting internal approvals, I see that as out of scope work. The judgement call for the contracting officer is what's in between. If the contracting officer says, "I never intended to spend $1 over $500 million"- you are done at $500 million. If the contracting officer says "I always figured this would come in with an additional $200 million on it, and I knew I had the clause to extend the contract for 6 months already in the contract"- then you're probably OK to $700 million.

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