Your organization may require a government contract modification if there are changes that must be made to the original details of your contract. Completing work that is added after the contract was finalized that was not originally discussed, could cause you to lose profits if the contract is not modified.
Diener & Associates assists clients with government contract modification, a process that can often be complex and requires negotiation, showing financial records, and other tasks. Our certified public accountants (CPAs) understand the government contract modification process and can do what is necessary to assist in getting the federal government to agree on modifying your contract specifications.
What Is Government Contract Modification?
Contracts with the government work differently than in the private sector. While the initial terms are rarely changed in the private sector, the government can modify contracts when certain criteria are met. This occurs most frequently when the amount of work or schedule to complete the work changes from what was originally established in the contract.
Engineering Change Orders
An engineering change order (ECO) can take place at any time during a contract. Engineering change orders are negotiated by the government agency that awarded the contract and the contractor. There are three primary components of the contract that might be modified during an engineered change order:
- Costs
- Schedule
- Technical
If more or less work is required to complete a contract, the deadline of the contract requires an extension, or if there are technical problems with the contract (or a combination of two or more of these factors), then an ECO may be issued to officially authorize the changes in the contract.
Constructive Contract Changes
A constructive contract change (CCC) is necessary when your organization is asked to perform work that was not included in the original contract with the government agency. If you do not modify your government contract when this occurs, your organization could lose money by spending more on labor costs, costs of resources, and more. A constructive contract change ensures that you are fairly compensated for work that you perform that was not included in the original contract.
When Is A Government Contract Modification Necessary?
As discussed, your organization may require a government contract modification if you are asked to perform work that was not anticipated or included in the initial contract proposal. Often, this is because your company must spend more on resources and labor or the schedule changes when work is added to your contract after it is established and active. There are many instances and situations that require a modification. Feel free to reach out to our team to see if your situation qualifies for a government contract modification.
Discuss Government Contract Modifications With Our CPA Specialists
Understanding government contract modifications and having accountants on your side who know how to handle the processes is essential to ensure you are fairly compensated for the work your organization does. Diener & Associates assists with government contract modifications. Feel free to call us at 703.386.7864 or schedule a consultation online and speak directly with our team of knowledgeable CPAs today.