Order of Precedence - Contract Modifications - Final

This isn't exactly a re-post of a previous update on this subject but it does come close. Back in January, we wrote that DoD had proposed to amend its FAR supplement (DFARS) to establish an order for application of contract modifications to resolve any potential conflicts that may arise from multiple modifications with the same effective date. The January proposal has now become regulation in DFARS 204.7007.

This is important for contractors to know because circumstances exist in which the numeric order of the modifications to a contract is not the order in which the changes to the contract actually take effect. In order to avoid conflict, confusion and potential litigation, DoD has now clearly established within its procurement regulations, an order of precedence.

• Modifications will be applied in the order of the effective date on the modification
• In the event of two or more modifications with the same effective date, modifications will be applied in signature date order.
• If the modification has the same effective date and the same signature date, PCO mods (those are modifications beginning with the letter 'P') will be applied in numeric order followed by ACO mods (those are the modifications beginning with the letter 'A') will be applied in numeric order.

In short, dates take precedence over numeric order unless there is a tie. Numeric order is the tie-breaker.