Posted: May 4th, 2016

What is the importance of a contract?

November 5, 1999. The contracting officer notified Conrad that the required GFM was not available and that the Government planned to convert the balance of the contract to Contrctor-Furniched Material (CFM). At that time, Conrad estimated that 95,000 yards of material would be required to complete the balance of the contract (39,584 units).

November 19, 1999. The contracting officer issued a unilateral change converting the outer shall material from GFM to CFM. At that time, Conrad indicated that a 3-4 weeks of uncut GFM inventory remained and projected a 5 to 6 week lead time for receipt of the CFM.

January 5, 2000. Conrad submitted a request for equitable adjustment

Proposed Equitable Adjustment
Material 95,000 yards@ $10/yard $950,000
Material Overhead 5% of material Cost $ 47,500
Other Direct Cost Estimation of cost impact of $ 500
the change ________

Total Manufacturing $998,000
G&A Expense 10% of Total Mfg Cost $ 99,800
Total Cost $1,097,800
Profit 15% of Total Cost $ 164,670
Requested Adjustment $1,262,470

February 1, 2000. The Contracting Officer requested assistance from the ACO cognizant auditor and technical personnel.

February 28, 2000. Technical personnel found that:

? Conrad purchased a reasonable amount of material.
? The proposed Material Overhead was excessive for the effort involved, issuing and administering a single purchase order. Estimated actual cost was $250.

February 28, 2000. The cognizant auditor did not question any of the proposed cost. The auditor did comment that the proposed indirect rates complied with the current Forward Pricing Rate Agreement (FPRA)

March 5, 2000. The contracting officer developed a negotiation position based on the audit and technical reports.

Equitable Adjustment Negotiation Objective

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