Don’t you love the feeling of hitting send on a proposal? It is so easy to believe that once the gold team has signed off and the final version is submitted, the hard part is done. However, the true challenge often lies in the execution and delivery phases, whether your contract involves RDT&E, production, or OMS.
Contracts are inherently imperfect, which is why modifications are common. But what happens when these adjustments are minor, or when the contract or PWS/SOW is overly broad?
As a small business, you might find yourself prompted by your COR, PM, or TPOC to make unexpected adjustments. Sometimes these adjustments are minor enough to go unnoticed, but other times, they can lead to significant cost or schedule implications, or accumulate over time. Managing these changes without jeopardizing your relationship with the government is crucial. In GovCon, especially as a small business, adaptability is key.
It’s important to recognize that the government, while treated as a single entity for contractual purposes, interacts with small businesses through various representatives like PMs, CORs, and TPOCs each day. These representatives have different perspectives, interests, and authorities. For instance, while a PM/COR/TPOC might prefer a change to avoid contract modifications or schedule delays, a Contracting Officer (KO) might be upset if changes occur without their approval. This can place you in an uncomfortable position. An engineer might push for testing a performance boundary, while a PM might prioritize sticking to their schedule baseline. In larger programs, you may encounter stakeholders from entirely different organizations, such as a Program Office and a Major Command or a Test Organization, leading to potential conflicts over budgets, procedures, command chains, or cultures.
To navigate such complexities, consider the type, scope, and impact of the requested changes. Questions to consider include whether the change involves increasing quantities beyond the contract stipulations, deviating from the SOW, or differing from what you proposed. Assess the formality of where these changes are documented—from contract to undocumented discussions—and how they impact cost, schedule, or performance.
Once you've evaluated the change’s type, magnitude, and potential impact, decide whether and how to notify the government. Many contracts contain clauses that require notifying the government within a specified period if you perceive a directed change. Understanding these clauses across different contract types (fixed-price, cost-reimbursable) and products (construction, services, products) is crucial. It helps you comprehend the government’s unilateral change rights, your notification obligations, and how to submit claims for adjustments.
When communicating potential changes to the government, tact is key. Initial notifications usually take the form of a contract letter. Ensure these communications are factual, supported by contractual clauses, and professionally worded. It’s also prudent to align internally, ensuring all of your team members have engaged their government counterparts (i.e. TPOC, PM, COR, or KO) before sending such letters–you do not ever want to surprise the government with a formal contract letter.
A few other things to consider:
-In the event that the government wants to follow formal processes, relations are strained, or things do not go according to plan, you can always avail yourself of the Request for Equitable Adjustment (REA) or Claim process. These processes can be complex, so I recommend you see GovCon or Legal counsel early on to ensure that you are compliant. Do not be afraid to do so if necessary—these processes exist for a reason and are sometimes necessary.
-Understanding how to plan for, manage, and track changes is inherently tied to contract type. If you are using the same methodology to price, negotiate, and manage fixed-price, T&M/LH, and cost-type contracts—you are doing it wrong. Changes are an inherent risk to doing business with the government and should be factored into your proposal planning. The difference by contract type and requirement is where and how you build that risk in. Likewise, how you are able to adjust to and recuperate costs as a result of those changes may vary based on your contract type, structure, and requirement.
No one can predict how an acquisition will go, and no one can write a perfect requirements document or contract. It is important to understand that changes will occur and be ready to adapt when they do. Having a framework to manage those changes across all functions—engineering, program management, finance, and contracts—will ensure you’re ready to adapt and succeed.