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    Government Contracting Database

    Impact Costs

    Impact Costs

    Contract changes may result in two types of impact costs, direct and cumulative, and these have been defined as follows:

    The term “direct impact” refers to costs that are, more or less, the direct consequences of a change. Such costs are readily foreseeable, and a contractor is expected to recognize them in forward pricing a change . . . .

    “Cumulative impact” costs … are cost associated with impact on distant work, and are not readily foreseeable or, if foreseeable, are not readily computable as direct impact costs. The source of such costs is the sheer number and scope of the changes to the contract. The result is an unanticipated loss of efficiency and productivity which increases the contractor’s performance costs and usually extends his stay on the job. Trataros Const., Inc., GSBCA No. 15344, 03 – 1 BCA ¶ 32251; Haas & Haynie Corp., GSBCA Nos. 5530, 6224, 6638 , 6919, 6920, 84 – 2 BCA ¶ 17,446, at 86,897; see also Tierney, 88 – 2 BCA at 105,170; Pittman, 81 – 1 BCA at 73,297 – 300; Appeal of Freeman – Darling, Inc., GSBCA No. 7112, 89 – 2 BCA ¶ 21882.

    As a matter of law, an “impact” claim or a “cumulative impact” claim is a claim based on the constructive change theory that is asserted separately from individual compensable changes. Such impact or delay costs are generally compensable under the Changes Clause, clause (d) of which allows for an equitable adjustment of the contract price for any change affecting the cost or time required to perform work “whether or not changed by any order.” Appeal of David J. Tierney Jr., Inc., GSBCA No. 5585, 88 – 2 BCA ¶ 20806 (citing Baltimore Contractors, GSBCA Nos. 3066, 30 68, 80 – 1 BCA ¶ 14,199).

    Updated: August 2, 2018

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