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FAR 1.604 allows a contracting officer (CO) to designate a representative to assist the CO in the technical monitoring and administration of a contract. The CO authorizes the contracting officer’s representative (COR) to perform many important tasks to assist the CO in administrating the contract during performance. However, FAR 1.602-2(d)(5) specifically prohibits the CO from authorizing the COR “to make any commitments or changes that affect price, quality, quantity, delivery, or other terms and conditions of the contract nor in any way direct the contractor or its subcontractors to operate in conflict with the contract terms and conditions.”
Funding is a Key Term and Condition of a Contract
FAR 32.7, Contract Funding, “describes basic requirements for contract funding and (b) prescribes procedures for using limitation of cost or limitation of funds clauses.” Both FAR 52.232-20, Limitation of Cost, and FAR 52.232-22, Limitation of Funds, require the contractor to notify the CO in writing:
- Whenever the costs are expected to exceed 75 percent of the funding currently available on the contract;
- 60 days before the end of the contract period of performance, if additional funding is required; and,
- Whenever the contractor’s current estimate to complete is significantly different than the original cost estimate.
These contract clauses also make it clear that the CO is the only Government representative authorized to make changes to the funding of a contract. By the way, the contractual mechanism for the CO to change the funding is through a contract modification as provided in FAR part 43, Contract Modifications, not an email.
There are a few key parts of FAR part 43, Contract Modifications, that you need to understand. FAR 43.-102(a) states: “Only contracting officers acting within the scope of their authority are empowered to execute contract modifications on behalf of the Government. Other Government personnel shall not:
(1) Execute contract modifications;
(2) Act in such a manner as to cause the contractor to believe that they have authority to bind the Government; or
(3) Direct or encourage the contractor to perform work that should be the subject of a contract modification.”
FAR 43.105(a) requires that the CO “not execute a contract modification that causes or will cause an increase in funds without having first obtained a certification of fund availability.”
FAR 43.201(a) provides that the CO may use the changes clause to make unilateral changes in the scope of the contract.
To be clear, a COR can do none of these actions, impacting the terms and conditions of your contract. Okay, back to the point of this article.
Often, CORs, which are part of the program office, not the contracting office, see opportunities to accomplish program effort by having you move cost to where the funds are even if the effort underlying the cost does not match the scope of work for those funds. We would not want appropriated funds to go to waste, and why make it work for the CO, right? Well, the moral of this story is that if you play the game the COR is offering, you are the one who will likely get into trouble.
Key Takeaway
Never follow instructions from a COR, or for that matter, a CO, to move your cost around so the Government does not have to do its job of managing its funding and the agreed-upon scope of work on its contract through a contract modification. Moving your cost (i.e., mischarging), even with an email saying to do it, could find you in receipt of a false claim accusation. Yes, the Department of Justice (DOJ) or agency attorney expects that you know better, so they are going to see this as an intentional act on your part.
How Can Redstone GCI Help
Navigating the complexities of government contracts and ensuring compliance with FAR regulations can be challenging. Redstone Government Consulting’s team of experts is here to support your team in understanding COR and CO roles, properly handling contract modifications, and avoiding costly compliance missteps. We provide training, consulting, and ongoing support to help government contractors stay on track and safeguard against issues like mischarging or false claims. Contact us today to learn how we can help protect your business and ensure your contracts remain compliant.
John is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to the DFARS business systems, CAS Disclosure Statements, and DCAA/DCMA compliance preparation, advisory, and defense. Prior to joining Redstone Government Consulting, John served in a number of capacities with DCAA/DCMA for more than 30 years. Upon his retirement, he was based in Texas as an SES-level Corporate Audit Director for DCAA, managing a staff of 300 auditors at one of the largest DOD programs. Professional Experience John began his career in the late 80s working in the Clearwater, FL audit office and over the next three decades he progressed through a number of positions within both DCAA and DCMA with career highlights as DCAA Program Manager at Ft. Belvoir, Chief of Technical Programs Division, Deputy Assistant Director-Policy, Director of the DCMA Cost and Pricing Center, the SES-level Lockheed Martin Corporate Audit Director, and Director of Integrity and Quality Assurance. John’s three decades of experience in performing and leading DCAA auditors and DCMA reviewers provides a wealth of expertise to our clients. John’s role, not only in the performance of audits, but also in the development of audit policy affords him unique insights into the defense of audit findings and the linkage of audit program steps to the underlying regulatory framework. He is an expert in FAR, DFARS, and other agency acquisition regulation, as well as a subject matter expert in the Cost Accounting Standards having reviewed and provided audit feedback on many of the largest and most complex cost accounting practices during his tenure with the DCAA. John’s tenure with DCAA and DCMA came at a critical time during each agency’s history where a number of changes were occurring such as the response to the ICS backlog, development of audit approaches to the DFARS Business Systems and implementation of new audit initiatives as a result of Congressional oversight through the NDAA process. John’s leadership at the DCMA Cost & Pricing center saw oversight of all major DOD pricing actions, leadership of should cost review teams, the Commercial Pricing group and many other areas of strategic value to our clients. His involvement in these and other Agency initiatives is of great value to our clients due to his in depth understanding of DCAA and DCMA’s internal policy directives. Education John holds a Master of Business Administration and a B.A. in Accounting from the University of South Florida. Certifications Certified Information Systems Auditor State of Alabama Certified Public Accountant