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Confusing Terminology: "Multiple-Award Contract"

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Vern Edwards

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Official contracting terminology and general legal terminology can push you off at the deep end if you aren't careful. Consider the term "multiple-award contract."

The Federal Acquisition Regulation uses the term "multiple-award contract" (MAC) in 21 places. FAR 2.101 defines "multiple-award contract" as follows:

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Multiple-award contract means a contract that is—

(1) A Multiple Award Schedule contract issued by GSA (e.g., GSA Schedule Contract) or agencies granted Multiple Award Schedule contract authority by GSA (e.g., Department of Veterans Affairs) as described in FAR part 38;

(2) A multiple-award task-order or delivery-order contract issued in accordance with FAR subpart 16.5, including Governmentwide acquisition contracts; or

(3) Any other indefinite-delivery, indefinite-quantity contract entered into with two or more sources pursuant to the same solicitation.

Thus, as used in (3), a "multiple-award contract" is "a" (singular) contract with two or more contractors. FAR 16.504(c)(1)(ii)(D) says:

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(D) (1) No task or delivery order contract [singular] in an amount estimated to exceed $112 million (including all options) may be awarded to a single source unless the head of the agency determines in writing that—

(i) The task or delivery orders expected under the contract are so integrally related that only a single source can reasonably perform the work;

(ii) The contract provides only for firm-fixed price (see 16.202) task or delivery orders....

So a single contract must be awarded to more than one source? Does that mean there must be at least two company names in Block 7 of Standard Form 26 or Block 13 of SF 1447? I doubt that anybody who has been around for a while thinks so, so why say it like that, or seem to? Why not be clear? We've got a lot of new people getting involved in government contracts every day. In order to avoid confusing them, shouldn't we express ourselves as clearly as possible?

Is the terminology "multiple award contract" appropriate? Is what we call "a multiple-award contract" (singular) a single contract with two or more contractors, or is "it" (singular) really several separate contracts with separate contractors? Each contract has its own number and bears the name of only one contractor. In most cases the terms of the separate contracts are not entirely identical, e.g., labor rates, indirect cost rates, and prices differ. When there are both large and small business contractors under a "multiple-award contract," the small business contractors might have to comply with limitations on subcontracting that do not apply to the large business contractors.

"Multiple-award contracts" are not "joint contracts," as that term is used in contract law and defined in Black's Law Dictionary 4th ed.:

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joint contract (17c) A contract in which two or more promisors are together bound to fulfill its obligations, or one in which two or more promisees are together entitled to performance.

Some authorities make a distinction between joint and several contracts. See Contracts, Specifications, and Law for Engineers, 4th ed,, by Bockrath, p. 20:

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Whether the rights and duties created by a particular contract are intended to be (1) joint or (2) several or (3) joint and several is sometimes a difficult question of interpretation. Promises of a number of persons (which promises appear in a single instrument) are presumed to be joint unless a contrary intention is evident from the inclusion of obvious words of severance...

Where a contract is joint, the various obligators must all be joined as parties to any action brought upon the agreement, and release by plaintiff of one obligator discharges the others as well. In contrast, each person bound on a several contract has a liability separate from that of any fellow obligor thereunder, and each individual's obligation must be separately enforced.

The distinction between joint and several contracts hinges on the answer to this question: Did all the persons obligated under the agreement promise one and same performance, or did each one promise only a separate portion of the total?

Emphasis added. Or, as put in Calamari and Perillo on Contracts, 6th ed., by Perillo, in the chapter entitled, "Joint and Several Contracts," p. 697, the question is:

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... whether mulitple promisors of the same performance have promised as a unit (jointly), or have promised the same performance separately (severally), or both as a unit and separately (jointly and severally).

All of those are instances of a single contract document that bears the names of more than one contractor.

Based on the entries above, it seems clear that a government "multiple-award contract" is not a joint contract. There is no single contract document bearing the names of multiple contractors. While all of the contractors have made similar (not identical) promises--to perform as ordered at stipulated prices or rates--it is clear that they are obligated under separate contracts. Failure to perform by Contractor A does not make Contractor B subject to termination for default.

Now consider FAR 19.502-4:

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In accordance with section 1331 of Public Law 111–240 (15 U.S.C. 644(r)) contracting officers may, at their discretion...

(b) Set aside part or parts of a multiple-award contract for any of the small business concerns identified in 19.000(a)(3). The specific program eligibility requirements identified in this part apply....

Does the phrase "part of parts of a multiple-award contract" mean (a) part or parts of a single contract (in the sense of one of two line items, or two of the ten tasks in a statement of work), (b) separate contracts under a single acquisition, or (c) both?

It strikes me that "multiple-award contract" is inappropriate and potentially confusing. What we call "a multiple award contract" is really a set of entirely separate contracts--each with its own contract number, each bearing only one contractor's name and address, and each separately funded, each awarded to fulfill separate requirements that will be specified in task or delivery orders. What we call "a multiple-award contract" is really a multiple-award acquisition--i.e., an acquisition that results in two or more separate IDIQ contract awards for all or part of specified requirements for supplies, services, or construction. The contractors who receive awards then compete for orders.

Why do we contracting folk create and use inappropriate terminology? We just confuse ourselves. Or maybe we start out confused and that confusion shows up in our terminology. The key to better terminology is better understanding of basic concepts. Inappropriate terminology reflects confusion about concepts. And we spread our confusion through the use of inappropriate terminology.

Am I quibbling? Well, yes, maybe. But you can't master a subject like contracting, if you ever can, if you don't master it's specialized terminology.

Some other time I'll discuss the concept of a "severable contract," which Black's defines as follows:

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A contract that includes two or more promises each of which can be enforced separately, so that failure to perform one of the promises does not necessarily put the promisor in breach of the entire contract.

Is a contract for severable services a severable contract?


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From the article: "Why do we contracting folk create and use inappropriate terminology? We just confuse ourselves. Or maybe we start out confused and that confusion shows up in our terminology. The key to better terminology is better understanding of basic concepts. Inappropriate terminology reflects confusion about concepts. And we spread our confusion through the use of inappropriate terminology."

It isn't just the terminology that is confused. A lack of understanding of basic concepts, the historic developments of the concepts and the law that underpins them, coupled with an insatiable desire by those without that understanding to tinker, have resulted in the inefficient, unintelligible mess that now calls itself "multiple- award contracts".  

 

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Maybe a GSA Contractor Team Arrangement is a  multiple-award contract" (singular) a single contract with two or more contractors.

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