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No COVID-19 Adjustment in Fixed-Price Contract

  • Writer: R.D. Lieberman,Consultant
    R.D. Lieberman,Consultant
  • May 18, 2023
  • 1 min read

The Boards and Court of Federal Claims have been consistent in denying price adjustments in fixed price contracts. This was the situation in Heart & Core LLC, ASBCA No. 63403, Jan. 11, 2023.


Heart & Core was awarded an Air Force requirements contract to supply comforters, bathrobes, blankets, sweatshirts and sweatpants, each of which was for a firm-fixed price. Heart & Core submitted a Request for Equitable Adjustment (“REA”) on April 4, 2022, seeking a 30% price increase for comforters and 20% increase for bathrobes. The request was based on increased shipping, labor and labor costs, and was subsequently justified given the COVID-19 pandemic. The Board disagreed, and in a small claims, nonprecedential decision noted the following:


· Even though Heart & Core proved its costs substantially increased beyond its expectations, the Board could not grant its appeal because this is a firm-fixed price contract where the contractor bore the risk of price increases and the government is not obligated to adjust prices to account for them.

· Health & Core contended that its costs had become commercially senseless, and implied that performance was commercial impracticable, but the Board rejected this doctrine since the magnitude of the cost increases did not justify commercial impracticability.

· Heart & Core also argued that higher costs were justified under the contract’s recital of acts of God, epidemics and quarantines as grounds to excuse contractor default. However, the Board held that that clause in FAR 52.212-4 did not apply to an unforeseen pandemic.


The Board held that the contractor bears the risk of changes in the market when it submits a fixed-price offer, and no price adjustments were appropriate in this case.

 
 
 

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The website of Richard Donald Lieberman, a government contracts consultant and retired attorney who is the author of both "The 100 Worst Mistakes in Government Contracting" (with Jason Morgan) and "The 100 Worst Government Mistakes in Government Contracting." Richard Lieberman concentrates on Federal Acquisition Regulation (FAR) consulting and training, including  commercial item contracting (FAR Part 12), compliance with proposal requirements (FAR Part 15 negotiated procurement), sealed bidding (FAR Part 14), compliance with solicitation requirements, contract administration (FAR Part 42), contract modifications and changes (FAR Part 43), subcontracting and flowdown requirements (FAR Part 44), government property (FAR Part 45), quality assurance (FAR Part 46), obtaining invoiced payments owed to contractors,  and other compliance with the FAR. Mr.Lieberman is also involved in numerous community service activities.  See LinkedIn profile at https://www.linkedin.com/in/richard-d-lieberman-3a25257a/.This website and blog are for educational and information purposes only.  Nothing posted on this website constitutes legal advice, which can only be obtained from a qualified attorney. Website Owner/Consultant does not engage in the practice of law and will not provide legal advice or legal services based on competence and standing in the law. Legal filings and other aspects of a legal practice must be performed by an appropriate attorney. Using this website does not establish an attorney-client relationship. Although the author strives to present accurate information, the information provided on this site is not guaranteed to be complete, correct or up-to-date.  The views expressed on this blog are solely those of the author. FAR Consulting & Training, Bethesda, Maryland, Tel. 202-520-5780, rliebermanconsultant@gmail.com

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