Recommended Change in the Pricing of General Services Administration Credit Change Orders

The intent of a GAO report to the General Services Administration (GSA) on the pricing of contract change orders was to have such construction contract adjustments negotiated. It was noted that allowances for overhead, profit, and commission on subcontract work were routinely included in the negotiated price for change orders that added work, but no price deductions were made for change orders that deleted work. It was recommended that construction contract provisions be amended to provide that overhead, profit, and commission be applied on all change orders which either add or delete work.

GSA plans to take steps to recover unexpended amounts of overhead, profit, and commission to credit change orders to construction contracts. In developing language equitable to both government and its contractors, GSA will take into account overhead costs that may not be reduced as a result of deleted work, such as equipment rental, salaries, and temporary plant costs. GSA statements are responsive to the recommendations in the GAO report.