FAR 11.701—Supply contracts.
Plain-English Summary
FAR 11.701 explains how fixed-price supply contracts may handle quantity variation when the difference between ordered and delivered quantities is caused by loading, shipping, packing, or manufacturing-process allowances. It tells contracting officers when and how to authorize permissible overrun or underrun, requires that any allowed variation be stated as a percentage, and notes that subsistence items may use other quantity-variation terms. The section also limits the size of the variation by tying it to normal commercial practice, requiring the smallest reasonable percentage needed to protect the contractor, and capping the variation at plus or minus 10 percent unless agency regulations allow something different. It further addresses how the percentage applies when deliveries go to multiple destinations and the contract must say so explicitly if the variation is to apply separately at each destination. Finally, it assigns responsibility for delivering the specified quantity and explains how the Government may handle excess quantities, including the optional use of FAR 52.211-17 for overshipments up to or over $250 in value.
Key Rules
Allowable quantity variation
A fixed-price supply contract may permit the Government to accept a quantity variation caused by loading, shipping, packing, or manufacturing-process allowances. The contract must state any permissible variation as a percentage, and that percentage may allow an increase, a decrease, or both.
Subsistence exception
Contracts for subsistence items are not limited to percentage-based variation language and may use other applicable terms of variation in quantity. This is a narrow exception specific to subsistence procurement.
No standard percentage
There is no default or usual variation percentage. The permitted overrun or underrun must be based on normal commercial practice for the particular industry and item, and it should be no larger than necessary to give the contractor reasonable protection.
Ten percent cap
The permissible variation may not exceed plus or minus 10 percent unless agency regulations establish a different limit. This makes the 10 percent ceiling the general rule and agency-specific rules the exception.
Define the quantity base
The contract must make clear what quantity the percentage applies to. If the parties want the variation to apply separately to each destination in a multi-destination delivery, the contract must say so expressly.
Contractor delivery duty
The contractor is responsible for delivering the specified quantity within any allowable variation stated in the contract. Delivering outside the allowed range is a contract performance issue.
Excess quantity handling
If the contractor delivers more than the contract requires plus any allowed variation, the contract may include FAR 52.211-17 to manage overshipments. Under that clause, excess quantities up to $250 in value may be retained without payment, and excess quantities over $250 may be returned at the contractor’s expense or retained and paid for at the contract unit price, at the Government’s option.
Responsibilities
Contracting Officer
Determine whether a quantity variation is appropriate for the supply item, base the percentage on commercial practice and the minimum reasonable protection needed, ensure the contract states the variation clearly, and confirm the percentage does not exceed the regulatory limit unless agency regulations allow otherwise. The contracting officer must also specify whether the variation applies to the total quantity or separately to each destination when relevant, and may include FAR 52.211-17 to address excess quantities.
Contractor
Deliver the contract quantity within any allowable variation stated in the contract and avoid overshipments beyond the permitted range. If excess quantities are delivered, the contractor may be required to take them back at its expense when the Government elects that option under the contract clause.
Agency
Establish any agency-specific regulation that permits a different quantity-variation limit from the general plus-or-minus 10 percent cap. Agencies should also ensure their procurement guidance aligns with commercial practice and the needs of the item being bought.
Government receiving activity
Inspect and account for delivered quantities, determine whether any excess quantity falls within the contract’s allowable variation, and apply the contract clause for excess quantities when overshipments occur. The receiving activity must also decide whether to retain or return excess quantities when the clause applies.
Practical Implications
This section is mainly about preventing disputes over small quantity differences that are common in shipping and manufacturing, while still protecting the Government from paying for more than it needs. Contracting officers should not copy a standard percentage into every supply contract; the percentage must fit the item and industry.
The contract language matters a lot. If the Government wants the variation to apply separately to each delivery point, that must be written into the contract, or the contractor may argue the variation applies only to the total contract quantity.
Overshipments can create administrative burden even when the extra quantity is small. Including FAR 52.211-17 can simplify disposition of excess items, but the Government still needs to decide whether to keep, return, or pay for the excess based on the clause and dollar value.
A common pitfall is setting a variation that is too generous or not supported by commercial practice. Another is failing to distinguish between acceptable variation caused by normal production/shipping factors and an unauthorized overshipment beyond the contract terms.
For contractors, the key risk is assuming that a small overrun will automatically be accepted. Unless the contract allows it, excess delivery can lead to return costs, payment disputes, or other administrative action.
Official Regulatory Text
(a) A fixed-price supply contract may authorize Government acceptance of a variation in the quantity of items called for if the variation is caused by conditions of loading, shipping, or packing, or by allowances in manufacturing processes. Any permissible variation shall be stated as a percentage and it may be an increase, a decrease, or a combination of both; however, contracts for subsistence items may use other applicable terms of variation in quantity. (b) There should be no standard or usual variation percentage. The overrun or underrun permitted in each contract should be based upon the normal commercial practices of a particular industry for a particular item, and the permitted percentage should be no larger than is necessary to afford a contractor reasonable protection. The permissible variation shall not exceed plus or minus 10 percent unless a different limitation is established in agency regulations. Consideration shall be given to the quantity to which the percentage variation applies. For example, when delivery will be made to multiple destinations and it is desired that the quantity variation apply to the item quantity for each destination, this requirement must be stated in the contract. (c) Contractors are responsible for delivery of the specified quantity of items in a fixed-price contract, within allowable variations, if any. If a contractor delivers a quantity of items in excess of the contract requirements plus any allowable variation in quantity, particularly small dollar value overshipments, it results in unnecessary administrative costs to the Government in determining disposition of the excess quantity. Accordingly, the contract may include the clause at 52.211-17 , Delivery of Excess Quantities, to provide that- (1) Excess quantities of items totaling up to $250 in value may be retained without compensating the contractor; and (2) Excess quantities of items totaling over $250 in value may, at the Government’s option, be either returned at the contractor’s expense or retained and paid for at the contract unit price.