GAO Reports on Change Order Delays

On July 2, the Government Accountability Office (GAO) released its report, Army Corps of Engineers and GSA Need to Improve Data on Contract Changes, on how the federal government monitors contract changes. AGC participated in this study and agrees with the report’s findings. In the report, GAO reviewed one military and one civilian agency that procure billions of dollars in construction annually. In evaluating the U.S. Army Corps of Engineers (USACE) and the General Services Administration (GSA), the report found neither agency regularly tracks how long it takes to process contract changes, which makes it more difficult for them to identify and respond to problems and puts them in a position to not meet the deadline this year to begin reporting. Both agencies agreed with GAO that an effective strategy should be developed, including at the headquarters level.   

Among GAO’s findings is a recommendation to develop a strategy that outlines the steps needed to routinely collect information on and monitor the time frames for finalizing construction contract changes at the headquarters level. This strategy could address issues such as the types of construction contract changes that should be included, when the measurement of the contract change process should begin, and the information systems that would be affected.

As AGC has previously reported, federal agencies are required under Section 855 of the 2019 National Defense Authorization Act to report information on how quickly they finalize contract changes authorized by contracting officers. Neither agency believed they could meet the August 2019 deadline. The report states that the change order process “negatively affects cash flows, increases administrative and legal costs, and creates a risk of not receiving reimbursement for completed work.” 

AGC continues to be at the forefront in advocating for greater accountability of the change order process among the different federal agencies. The report references AGC members’ testimony in 2017 at the House Small Business Committee on change order delays and the impacts it has on federal construction contractors. AGC has previously called on the Federal Acquisition Regulation Council to improve the data federal agencies collect regarding the administration of change orders in response to the Council’s information request. 

 For more information, contact Jordan Howard at jordan.howard@agc.org or (703) 837-5368.