Overview
FAR 11.701 establishes the parameters for allowing quantity variations (overruns or underruns) in fixed-price supply contracts due to manufacturing or shipping factors. It also defines the government's rights regarding the disposition of excess items delivered beyond authorized limits.
Key Rules
- Permissible Causes: Variations are only authorized if caused by loading, shipping, packing conditions, or allowances in manufacturing processes.
- Percentage Limits: Variations must be stated as a percentage (except for subsistence items) and are generally capped at plus or minus 10% unless otherwise specified by agency regulations.
- Commercial Standards: There is no "standard" variation; percentages must be based on normal commercial practices for the specific industry and item.
- Multiple Destinations: If a contract involves multiple delivery points, the contract must explicitly state if the variation applies to the specific quantity for each destination.
- Excess Quantities (Clause 52.211-17):
- Excess items valued at $250 or less may be retained by the government at no cost to the contractor.
- Excess items valued at more than $250 may be returned at the contractor’s expense or retained and paid for at the contract unit price at the government's discretion.
Practical Implications
- Contractor Risk: Contractors must strictly monitor production and shipping to avoid overages; delivering small quantities of excess stock (under $250) effectively results in a "donation" to the government since the government is not required to provide compensation.
- Administrative Efficiency: The $250 threshold exists to prevent the government from incurring administrative costs that exceed the value of the overshipped items.