7103.23

was benefited thereby, such assurance being wholly inoperative and void (96 U.S. 689; 28 Ct. Cl 332; 36 Ct. Cl. 138; 61 Ct. Cl. 756). No changes in the printed provisions of the standard forms of contract are authorized by change order. A change order likewise may not be employed to change any of the essential obligations of the contract, such as the time of commencement, methods of payment, refund of retained percentages, etc.

b. Obligation of contractors under lump sum contracts. The contractor and the surety have agreed under the terms of the contract to such changes in the drawings and/or specifications as are within the general scope the reof. A written order to the contractor making a change in the drawings and/ or specifications which is within the scope of the contract, approved by higher authority, when required, is binding upon the contractor whether or not it contains an adjustment of price and time, and the contractor is obligated to proceed immediately with the work as provided therein.

c. Adjustments in price and time under lump sum contracts. If a change causes an increase or decrease in the amount due under a contract or the time required for its performance, an equitable adjustment will be made and stated in the change order. Ordinarily the adjustment of price and time will be negotiated with the contractor in advance, the amount agreed upon incorporated in the change order and the change order will be signed by the contractor to denote his acceptance thereof. If the adjustment of time and price cannot be mutually agreed upon in advance of the change order and time requires the change to be immediately made, or the work must progress to some extent before the subsurface or other conditions are sufficiently known or disclosed to permit the determination of an equitable adjustment, the change order may be issued in two parts, the initial part setting forth the details of the change and the second part, which may consist of one or more supplements, containing the equitable adjustment of price and time. The initial change order will state that a supplemental order will be issued containing the price and time adjustment and that the 10-day period within which the contractor may protest will begin upon receipt by him of the supplemental change order. If the contractor refuses to sign the supplemental change order, it will be issued with the amounts determined by the contracting officer as fair and equitable, leaving the contractor to his right of appeal as provided in the contract. In cases where the changes involve a substantial sum and considerable time will be required to determine the equitable adjustment and the contractor's financial resources are insufficient to carry him through the period necessary for the determination thereof, the initial change order may contain an amount not exceeding the contracting officer's best estimate of the adjustment, with the express stipulation that such amount is tentative for the purpose of partial payments only, and that the final adjustment will be made in the supplemental change order. All change orders or the supplements there to must provide for an adjustment of the contract time or a statement that no extension or decrease of the contract time is involved.

CHANGE 15, 30 Sep 50

To Part I, Chapter VII

7103.23

d. Claims for adjustment under change orders under lump sum contracts. The Changes Articles of the supply and construction forms of contract, and similar articles of other standard forms of contract, provide that any claim for adjustment of time or price under a change order must be asserted by the contractor within 10 days as prescribed in construction contracts and 30 days for supply contracts from the date the change is ordered. This provision affords a remedy to the contract or if he considers the proposed change outside of the scope of the contract or if the adjustment of time and/or price stated in the change order is not acceptable to him. If the contractor objects to the adjustment of time or price he is required to proceed with the work and to submit a claim to the contracting officer for adjustment within the required period. If the contractor fails to protest the proposed change and to submit his claim within the required period, he forfeits his right thereafter to submit a claim for adjustment. It will be noted, however, that the contracting officer may, in his discretion, receive and consider, with the approval of the Division or District Engineer as indicated in paragraph 7103.45, below, a claim submitted after the said period and before final payment under the contract has been made. Such action, however, is discretionary, and is designed to afford administrative relief in cases where the facts and circumstances are such as to render impossible or to excuse submitting the claim within the prescribed period. It will not be taken in cases where the ability of the contracting officer to determine the adjustment has been jeopardized as a result of the delay by the contractor in submitting his claim. In such cases the claim will be denied by the contracting officer.

7103.25 Findings of Fact in Support of Change Orders and Supplemental Agreements

Contracting officers will in all instances prepare or cause to be prepared, or have in the file, findings of fact ordinarily personally signed by them justifying the execution of each change order or supplemental agreement. Adherence will be made to the requirements of the preceding sentence irrespective of the type of contract which is being modified or the purpose of the change order or supplemental agreement. There will be set forth in each findings of fact all pertinent facts viewed in the light of the particular circumstances, the provisions of the contract being modified, the interests of the Government, pertinent regulations, and the law applicable to the transaction. Such findings of fact are not contract instruments and will not be distributed to disbursing officers or GAO. However, they are a necessary part of the official record file and ordinarily contain essential information for those reviewing such documents for technical and legal sufficiency. (See par. 7103.03).

7103.26

7103.26 Changed Conditions

CHANGE 15, 30 Sep 50 To Part I, Chapter VII

In all cases where changed conditions are encountered, the procedure provided in Article 4, T-ENG Form 5580 (Te ntative), or in any similar article of other standard forms of construction contracts, will be promptly complied with. Where the contracting officer finds that the conditions do differ materially as provided in that article, he will prepare a written modification of the contract providing for an increase or decrease in cost and/or in time resulting from such conditions. Such written modifications will be prepared and disposed of in the same form and under the same procedure as change orders for changes in the contract drawings and specifications, with the exception that all such orders require the approval of the Chief of Engineers, regardless of the amounts involved.

7103.27 Transmittal of Contracts for Approval, etc.

Three signed numbers and one authenticated copy of all contracts, change orders, and supplemental agreements requiring the approval of higher authority must be transmitted for examination and approval, and such approval must be evidenced by the written signature of the approving officer on the cover sheet or first page of each copy thereof. Approvals of contract documents, including change orders and supplemental agreements, cannot be given by telephone or wire. Prompt notice of approval when given, however, may be communicated by telegram, teletype, or radio, upon receipt of which formal written notice to proceed may be issued without awaiting return of the approved contract document. Letters or indorsements transmitting contracts, change orders, and supplemental agreements for the approval of the Chief of Engineers, or the Assistant Chief of Staff, G-4, Logistics, Attn: Current Procurement Branch, will be addressed to the Chief of Engineers, *.attention: ENGAC, and will contain a citation to the communication approving the award in all cases where approval of award is required, as well as a statement of the reasons and justification requiring such approval. par. 7103.04b).

7103.28 Records of Contracts and Purchases

(See

The following procedure will govern in the maintenance of official record files covering contracts and purchases:

a. The office of record will be the office whose station number is placed on the contract, except as hereinafter provided. Such office, except as noted below, will maintain as the official record the duplicate signed number of all numbered contracts and the duplicate signed modifications thereto and all documents and correspondence in connection therewith. Also such office will maintain as the official record an authenticated copy of all unnumbered contracts and all documents and correspondence in connection therewith.

Contracts transferred to successor contracting officers. With respect to any contract transferred to a successor contracting officer not under the jurisdiction of the office in which the contract originated, the

CHANGE 16, 15 Jan 51

To Part I, Chapter VII

7103.29

army commander, or to the commanding general of the Air Force installation, for his files, as the case may be. (See par. 7103.52d).

(4) Fixed fee contracts. Three copies to the Chief of Engineers, attention: ENC. C. Where the instrument is executed jointly by a using service, 5 additional copies will be forwarded. Plans and specifications will not be attached to the contract when distributed, nor will they be distributed in the manner prescribed for contract documents.

(5) Army Audit Agency. (a) Contracting officers will distribute authenticated copes of signed contracts and other necessary information as enumerated below to the regional offices of the Army Audit Agency in order that the Army Audit Agency may plan for the performance of the independent audits contemplated by General Orders No. 85, Department of the Army, 1948:

1 Four copies of all cost (or cost-sharing), cost-plus-a-fixed-fee, and time and materials contracts (including letter contracts); also 4 copies of all changes, amendments, and supplements to such contracts.

2 Four copies of any other type of negotiated contract (including letter contracts) where the total compensation to be paid the contractor is based, in whole or in part, on the actual costs incurred, the quantity of work or service performed, the time element in performing the work or service, or on other similar variable factors and the Government has the contractual right of audit; also 4 copies of all changes, amendments, and supplements to such contracts.

3 Three copies of all letter contracts and fixed-price contracts which provide for price redetermination, price escalation, advance payments, partial payments or Government furnished property (as defined in par. 5g, SR 35-6550-2); also 3 copies of all changes, amendments and supplements to such contracts.

(b) In addition to the contractual documents required by the above subparagraphs, the contracting officer will also promptly forward an original and one copy of all cost statements, financial data, and other information furnished by the contractor in accordance with the provisions of each contract referred to in the above subparagraphs, or requested by the contracting officer. The copy of the cost statements and other data furnished will be retained by the Army Audit Agency and filed with the audit work papers, and the original returned at the time of submission of the audit report at the time the Army Audit Agency determines an audit is not to be initiated.

(c) Distribution of the above indicated contractual documents and supplemental information will be made by the procuring activity to the regional office of the area in which the performance will be accomplished. **Special arrangements may be made by agreement with the Army Audit Agency. **The areas and addresses of the regional offices are stated in Section I, DA Circular 25, 1950.