Scenario 6.0: 2
ABC Corporation (ABC) entered into a firm-fixed-price, indefinite-delivery/indefinite-quantity (IDIQ) contract with a Federal buyer for the purchase of various "Soviet-style" parts. The contract language allowed for changes to:
o Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the buyer; o The method of shipment or packing; and o Place of delivery.
The contract also specified that:
If any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, the buyer shall make an equitable adjustment in the contract price, the delivery schedule, or both, and shall modify the contract.
ABC was unable to obtain a particular part required to fulfill a delivery order under the contract, and missed the deadline for delivery. Two years after the deadline passed, with no delivery, the failure provided cause for termination for default under the conditions outlined in the contract. To avoid default, ABC entered into Bilateral Modification 4 with the buyer. The modification required ABC to provide additional parts as consideration for late delivery. The modification also stated that a new delivery date for the original delivery would be determined in another modification.
ABC remained unable to purchase the parts to fulfill the original order. A new modification, Bilateral Modification 7 , provided that ABC would deliver "new production" models of the parts in question, rather than the "new surplus" parts specified in the original delivery order. The idea to deliver new production models of the parts had originated with ABC and was accepted by the buyer. ABC did not attempt to negotiate any changes in price, no discussions of price were held, and no price adjustment was included in this modification.
ABC completed delivery of these parts on time. However, the new production models cost significantly more than the new surplus parts originally ordered.
Approximately four months later, ABC submitted a request for equitable adjustment (REA) to the buyer. In the REA, ABC requested $1,369,377.47 , which represented the difference in price between the parts called for by the original delivery order and the parts ABC ultimately delivered. The buyer rejected the request.
Question:
Does "Bilateral Modification 7" contain constructive changes, entitling ABC to submit the REA?
- A. Yes, because the cost of performance significantly exceeded the contract price.
- B. Yes, because the contractor performed above and beyond the requirements of the contract.
- C. No, because at the time of agreement, the seller could not have known that it would increase the cost of performance.
- D. No, because the contractor was complying with contract and delivery order specifications.
Reveal Solution
Discussion
Correct Answer: D š³ļø
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