Variation in Quantity Clause Provides for Adjustment in Contract Amount

(Editor’s Note. The following case illustrates the importance of taking advantage of the Variation in Quantity clause which frequently is not voluntarily offered.)

Brinks’ contract to provide guard services included a Variation in Quantity clause that provided Brinks would be entitled to an adjustment if services varied by more than 25 percent of estimated hours. During the base year, the services were only three percent of the estimated hours where there was a 9 percent markup for overhead and other indirect cost and it submitted a request for additional compensation to recover its increase in costs resulting from the 97 percent shortfall. In its rejection, the government said that (1) there was no guarantee of any hours in the contract and (2) Brinks would receive a windfall for work it did not have to perform. The Board agreed that the contract did not guarantee any hours but sided with Brinks for additional compensation explaining that when the government failed to offer the minimum amount of hours expected, the fixed indirect costs originally allocated to the hours the government failed to order were incurred nonetheless but not compensated for. It stated the Variation in Quantity clause provided for an adjustment in the hourly rate in situations where the stated range of estimated hours was exceeded or not met so as to cause the contractor to reap a windfall or incur a loss (Brinks/Hermes Joint Venture V State Dept., CBCA, No 1188).

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