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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: January 24, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Acquisition Regulation (FAR); Time-and-Materials or Labor-Hours Contracts

SOURCE: Federal Register, January 24, 2000, Vol. 65, No. 15, page 3761

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that the FAR be amended to clarify the requirements regarding changes to time-and-materials and labor-hour contracts. Specifically, this proposed rule would bring FAR 52.243-3, Changes -- Time-and-Materials or Labor-Hours, into conformance with the guidance in Alternate II of FAR 52.243-1, Changes -- Fixed Price, because most of the work performed under time-and-materials or labor-hour contracts involves services.

DATES: Submit comments on or before March 24, 2000.

ADDRESS: Send comments to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, e-mail: farcase.1999_606@gsa.gov. Cite FAR case 1999-606 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Klein, Procurement Analyst, 202-501-3775.

SUPPLEMENTAL INFORMATION: FAR 52.243-3 is required to be included in time-and-material or labor-hours contracts. Paragraph (a) of FAR 52.243-3 authorizes the contracting officer to make changes to (1) drawings, designs, or specifications; (2) method of shipment or packing; (3) place of delivery; and (4) amount of government-furnished property.

Alternate II of FAR 52.243-1 is required to be included in service contracts (other than architect-engineer or other professional services) when supplies are to be furnished. Paragraph (a) of Alternate II authorizes the contracting officer to make changes to (1) description of services to be performed; (2) time of performance (that is, hours of the day, days of the week); (3) place of performance of the services; (4) drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the government in accordance with the drawings, designs, or specifications; (5) method of shipment or packing of supplies; or (6) place of delivery.

Since almost all time-and-materials and labor-hours contracts involve services, it is proposed that FAR 52.243-3 be brought into conformance with Alternate II of FAR 52.243-1. This would be done by revising paragraph (a) of FAR 52.243-3 to authorize the contracting officer to make changes in the "(1) description of services to be performed; (2) time of performance (i.e., hours of the day, days of the week, etc.); (3) place of performance of the services; (4) drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the government in accordance with the drawings, designs, or specifications; (5) method of shipment or packing of supplies; (6) place of delivery; [or] (7) amount of government-furnished property." In other words, FAR 52.243-3(a) would duplicate paragraph (a) of FAR 52.243-1, Alternate II, except that "amount of government-furnished property" would be added.

Also, paragraph (c) of FAR 43.205, Contract Clauses, which requires that FAR 52.243-3 be included in solicitations and contracts when a time-and-materials or labor-hour contract is contemplated, would have the following sentence added: "The contracting officer may vary the 30-day period in paragraph (c) of the clause according to agency procedures." The first sentence of paragraph (c) now states, "the contractor must assert its right to an adjustment under this clause within 30 days from the date of receipt of the written order."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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