The scope of a contract
- By Carl Peckinpaugh
- Jan 23, 2000
The following question was raised by a contractor: In deciding whether an
existing contract may be modified to include a new item, government contracting
officers like to talk about the contract's "scope." What makes up the scope
of a contract?
The scope of a contract is not defined in regulations but is a fact-specific
inquiry based on precedents. The relevant cases are those in which a competitor
has filed a bid protest arguing that the ostensible modification is so far
outside the original competition for the contract that it should be considered
a new contracting action for which other companies should be allowed to
The General Accounting Office often seemed to apply a fairly strict
scrutiny in its consideration of these cases. In more recent years, however,
GAO has appeared to defer to an agency's determination that a modification
is within the scope of a particular contract.
Part of the reason for the shift is a change in the way many contracts
are written. In the past, most contracts were narrowly focused on specific
government requirements. More recently, many contracts have been awarded
to address broader program needs. A modification is more likely to be found
to be within the scope of a broadly written contract.
Furthermore, GAO seems to accept more readily allegedly out-of-scope
modifications since the Court of Appeals for the Federal Circuit issued
its decision in AT&T Communications Inc. v. Wiltel. The court found
that a $100 million modification adding a new type of transmission services
to one of the FTS 2000 contracts was within the scope of the contract, reversing
a decision by the General Services Board of Contract Appeals.
In general, a modification is considered to be outside the scope of
an existing contract when there is a "material difference" between the contract
as modified and the contract as it existed before the modification. In Access
Research Corp., GAO noted that: "Evidence of a material difference between
the modification and the original contract is found by examining any changes
in the type of work, performance period and costs between the contract as
awarded and as modified."
However, in Hughes Space & Communication., GAO approved a contract modification
to a satellite communications services contract that added a new service
to the contract. The agency added system pre-emptible satellite transponder
leases to a contract that had previously specified no pre-emptible transponder
leases. Even so, GAO found the agency actions reasonable.
In Excide Corp., GAO found that a delivery order issued under an existing
requirements contract for a quantity in excess of the contract's order limitation — and to be delivered after the expiration of the contract — was not beyond
the scope of the contract. According to GAO, the contract permitted orders
in excess of the limit, the total quantity ordered did not significantly
exceed the contract's estimated quantity and the contract did not prohibit
deliveries after the contract's expiration date. GAO found that a 13 percent
overrun in ordering was insignificant in terms of the contract's scope,
noting other cases in which 30 percent and 25 percent overruns were found
Indeed, the few cases in which a modification has been found to be outside
the scope of a contract in recent years have involved procurements in which
the contracts were very narrowly drawn. The protests were sustained only
when the agency tried to add a new type of work to a contract that specifically
excluded that kind of work. For example, in Sprint Communications Co., GAO
sustained a protest against a decision to acquire telecom transmission services
by modifying a management services contract because the contract specifically
stated that transmission services would be acquired from other contractors.
GAO's flexibility has made it easier for agencies to satisfy their needs
through existing contracts. Moreover, the number of protests against supposed
out- of-scope modifications — and the percentage of those protests that
are sustained — have dropped dramatically in the last few years.
Peckinpaugh is corporate counsel for DynCorp, Reston, Va., and formerly
a member of the government contracts section for Winston & Strawn, Washington,