claims, formal resolution of constructive changes, the impact on unchanged work, suspension
of work, and time extension.
An independent estimate for contract modifications requested by the Government must be
prepared before the proposal request is sent to the contractor. The Independent Government
Estimator must be provided the same documents concerning the proposed modification that
the contractor will be provided, or have access to them.
The IGE prepared in response to a contractor-initiated proposal must be prepared to the same
level of detail as the contractor's proposal and be based on the scope of the modification. A
copy of the contractor's proposal with the costs deleted can be used.
Regulations require an IGE for any procurement of ,000 or more. If the Contracting Officer
determines it is necessary, he or she may require estimates of lesser amounts. In the case of
contract modifications, the ,000 trigger figure is the sum of the absolute values of decreases
and increases. For example, a modification resulting in decreases of ,000 and increases of
,000 would sum to the absolute value of ,000, and an IGE would be required. Adjustments
in methods or formats for the prime purpose of escaping this requirement are prohibited.
For all negotiated procurements, including contract modifications, regulations state that award
must not be made unless:
The final IGE equals or exceeds the negotiated price, or
In the case of reductions, which must be considered separately from increases, the
negotiated credit is equal to or exceeds the final IGE, and
The correct final IGE is included in the contract file, supplemented by a complete
statement justifying the award at a cost different from the estimate, and adequate for
The overall objective of a contract modification negotiation is to reach an agreement with the
contractor that is in the best interest of the Government. The lowest possible price does not
always meet this objective nor would a "generous" price, if that price offers more payment than
necessary to include sufficient incentive. The negotiation team strives for some intermediate
point, which is generally regarded as the lowest reasonable price the amount at the bottom of
the price range that the negotiator considers to be fair and reasonable.
project estimating requirements P-120