July 25, 2012

Budget shortfalls and potential “sequestration” will drive government personnel to pressure contractors to perform work that is both greater and more difficult than what the contract expressly requires.  These “constructive changes” inevitably will lead to serious performance and cost problems for contractors.  In this advisory, Partner W. Jay DeVecchio addresses the heightened need for Company counsel to actively consider educating technical and program personnel about the unique clause in government contracts – the Changes clause – that allows the government to modify goods or services the contractor proposed and that the government accepted, but that also obligates the government to pay more to the contractor and to extend the schedule  All too often, Company personnel are not adequately versed in how to assure that the Company is properly compensated both in money and in time for the additional work driven by constructive changes.  The article covers the importance of training Company personnel how to recognize changes, how to address them with the government,  and how to raise constructive changes within management – all as part of a prudent risk-reduction approach.