rios0311

Thanks Vern and Joel. Vern I like your suggested approach. I will study it a bit more before committing to the program office. [edited]

I have a task order that was awarded under an agency specific MAC. The order has a base period of performance with two one-year option periods. The base period ends in September 2013. Program will not have the funds required to fund the 1st option (Oct 13 through September 14). They've asked me if they can instead exercise the second option next year for which they anticipate they will have funds (Oct 14 through September 15). I don't see any way of doing this unilaterally. But can I do this bilaterally? In other words, can I provide notice to the contractor that we will not exercise option 1 of the contract, but that we would like to continue performance on the following year according to the terms of option 2 (length of performance and technical requirements)? I understand this approach doesn't constitute exercising an option. I'm simply extending the contract, but for a later date. So I'm not even sure it can be called an extension. However, I'm concerned about the gap with no performance. I think that since the original task contemplates a total of three years of performance, doing this would not require drafting a justification for an exception to fair opportunity since the total performance time under the task order would not exceed the three year period contemplated by the original order. Is this something I can do bilaterally? If not and assuming that I simply place a new order under the MAC for the required services, would I have a good basis for sole sourcing this (exception to fair opportunity) to the current contractor? Or would I have to compete it again?

Nope, no DOD here. Thank you Vern and Don for clearing this up for me. I appreciate it.

Thank you very much. This helps a lot. Regarding your question, I am not aware of any of the other new requirements that might apply to my situation, so I am not aware of other requirements, if any, that I might have to comply with. My concern for contract consolidation arose when it appeared to me that I was working with what I thought was a bundled contract. To my surprise and edification I learned that there was a distinction between contract bundling and contract consolidation. It was at that point that I realized that what I was working with appeared to be in fact a consolidated requirement. I learned of the requirements necessary to proceed with such an award while researching the subject. I approached my division chief with a question related to the subject and the subject question of this thread followed. Are you suggesting that since this is a proposed rule I do not need to need to comply with it? The FAR only requires that the contracting officer justify bundling. It does not reference contract consolidation. If it does, I was not able to locate it in the FAR. The Jobs Act amended the the Small Business Act to define contract consolidation, but the rules set forth therein haven't made it into the FAR. Does that mean I'm not required to comply with them?

Thank you Vern. This is what I thought, but your rationale clears it up.

Background: My customer has 15 contracts that are coming to an end at different times in the near future. Those contracts are being performed by large and small businesses. The customer wants to roll-up the 15 requirements into 3 separate awards under the CIO-SP3 GWAC and place the 3 orders under the small business section of this GWAC to ensure the awards go out to small businesses. The rates on the GWAC are lower than the rates being charged under the incumbent contracts. I believe that this is a contract consolidation (not bundling). Please see 15 U.S.C. 657q Consolidation of Contract Requirements. Specifically, the definition of the term Consolidation of Contract Requirements". I believe this is also Section 44 of the Small Business Jobs Act of 2010 (PL 111-240-Sept. 27, 2010). I apologize if the reference is incorrect. I’ve included the definition below: It states: The term “consolidation of contract requirements”, with respect to contract requirements of a Federal agency, means a use of a solicitation to obtain offers for a single contract or a multiple award contract to satisfy 2 or more requirements of the Federal agency for goods or services that have been provided to or performed for the Federal agency under 2 or more separate contracts lower in cost than the total cost of the contract for which the offers are solicited. If the requirement I’m working on is indeed a consolidated requirement, there are certain statutory requirements that the acquisition team must comply with prior to awarding the contract. I raised my concern to my division chief, but he disagreed with my interpretation of the definition. He does not believe my requirement is a consolidation. I would be fine with his interpretation, were it not for the possibility of my requirement being exposed to a protest and the consequences of not having complied with the statutory requirements of a consolidated contract. I underlined the text in the definition that my division chief and I are having difficulty with. We do not agree on its meaning. The division chief argues that a requirement is not considered a consolidated contract if the resulting [consolidated] award is lower in cost than the TOTAL cost of the separate contracts prior to consolidating them. According to him, if my [consolidated] contract is lower in value than the total cost of the separate contracts, I do not have a consolidated requirement and therefore do not have to comply with any of the statutory requirements. I interpret the definition as meaning that provided that EACH of the separate contracts prior to consolidating them is lower in cost than the total cost of the resulting [consolidated] contract (which I expect would occur in the majority of cases), then my requirement is in fact a consolidated contract. In researching this I turned up a number of protests related to the issue of consolidation. Every example of consolidation I found while reading GAO decisions included consolidated contracts in which the price or cost of the consolidated contract was lower than the total cost of the individual requirements prior to consolidating them. Those contracts were in fact considered consolidated contracts. This is in direct contrast to the division chief’s interpretation. According to GAO, the area of concern with consolidating requirements (excluding bundling) resides with the restriction of competition (without regard to business size). GAO has stated that because bundled or consolidated procurements combine separate and multiple requirements into one contract, they have the potential for restricting competition by excluding firms that furnish only a portion of the requirement; See 2B Brokers et al., B-298651, Nov. 27, 2006, 2006 CPD ¶ 178 at 9; Pemco Aeroplex, Inc., B-280397, Sept. 25, 1998, 98-2 CPD ¶ 79 at 8-9. I could not find anywhere where the cost or price of the final contract (in relation to the individual contracts prior to the consolidation) was a consideration in determining if a contract is considered consolidated or not. Further, according to GAO an agency may consolidate or bundle requirements where the agency reasonably determines that consolidation will result in significant cost savings or efficiencies. B.H. Aircraft Co., Inc. , B-295399.2, July 25, 2005, 2005 CPD ¶ 138 at 7. This statement seems to evidence that consolidation occurs with or without regard to cost savings on the resulting [consolidated] contract. Although the determining factor is not the final price of the consolidated contract alone, the final price may be a deciding factor in determining whether or not the consolidated contract is permissible or not. What is the proper interpretation of the definition? Is my requirement a consolidation of contract requirements per the definition?

I agree with amthomf's interpretation. It took me some time to realize this a while back, but the issue is with the term "period of availability". As amthom referenced, the bona fide needs rule applies to multiple year as well as fiscal year appropriations; 55 Comp. Gen. 768, 773–74 (1976); B-235678, July 30, 1990. See also 64 Comp. Gen. 163, 166 (1984). In other words, an agency may use a multiple year appropriation for needs arising at any time during its period of availability. It seems that the rules are silent on when obligation must occur, so long as it occurs within the fund's period of availability. I emboldened the term period of availability because it is essential to understanding the rule. When determining the appropriate use of funds, they should be looked at in terms of their period of availability, not simply the fiscal year(s) they're available for. There are different periods of availability; 1 fiscal year (annual appropriations), 2 or more fiscal years (multiple year appropriation) and no-year appropriations. In other words, funds can be used at any time during their period of availability and for as long as the period of availability makes the funds available for use, with the exception that for an annual appropriation, the period of performance can extend beyond the period of availability so long as the period of performance does not exceed a 12-month period. This exception is by statute and does not apply to multiple-year appropriations. These rules do not apply to the use of no-year funds because the bona fide needs rule does not apply to those types of funds. In conclusion, yes, JKS195 can use an FY13 multiple-year appropriation to purchase in FY13 a supply or a service that won't be used until FY14 because FY14 is within the appropriation's period of availability. This is consistent with the bona fide needs rule as it applies to multiple-year appropriations.

I'm the contracting officer on a new requirement which will encompass consolidating 15 smaller contracts (currently performed by small and large businesses) into 3 separate orders under the CIO-SP3 GWAC. We intend to award the 3 orders to a small business, a HubZone and a Woman Owned Small Business. Among the numerous questions that the program office has raised, they submitted this to me this morning: "What is best approach in structuring this contract/RFP so that it can accommodate unexpected surges in current work and new work, all within the same scope of "Operations"? While we want to stay honest and keep our estimates for level of effort real based on what we know today, we all know each year (Program) has "pop-up work" that was not planned at the time a contract is awarded. So to help minimize the work on both Acquisitions and (Program), we want to maximize the value and scope of this contract (say $23M over 5-6 year), either by adding hours, or adding say an SME labor category not currently needed, or adding optional tasks under one or more of our 5 functional areas (Testing, Sys Admin, Security, etc.), or other. And can we do something like a 9 month base period, with 5-6 one-year options under a T&M?" I'm trying to come up with the best way to respond to this. I see a few items of concern with what the program office wants to accomplish with this contract, but I would like someone else's perspective on it. The services that we're procuring are IT support services such as help desk, security, system admin, database admin and testing. Program has requested a T&M contract for these services. I dislike T&M (and LH) contracts, but since what we're essentially procuring is bodies, I think this is the route we'll take. However, is there a better contract type for procuring bodies? What I'm particularly uncomfortable with is "unexpected surges in current work and new work all within the same scope". For "surges to current work", the work may be the same, but depending on how much of a surge they experience, it may not be within the scope of the contract. But what if potential surges are contemplated in the solicitation? Is it appropriate to over estimate hours to account for potential surges? As for "New work", new work is definitely not within the scope of the order. But is it appropriate to add labor categories for related services that we're certain we won't need at the inception of the contract, but might require down the road if? And is it appropriate, once the contract is being performed, to modify it to reduce hours from one or more labor categories to increase hours in another labor category provided that the contract value remains essentially unchanged? Can doing this be considered a change in scope? Thank you.

Duplicate post

Thanks Vern. That helps.

Solid advice. Thank you very much. Spot on regarding contractor relationships with program offices.

Thank you for your response. To make the contractor whole, as you stated, wouldn't we have had to modify the contract while its period of performance was in effect? The period of performance ended on September 30, 2012. Is there an authority that would allow us to modify a contract under these circumstances after the POP has ended? I think the specialist will need to dig a little deeper to find out if our program people requested that the contractor continue working, or if the contractor decided to work in excess of the allowable hours on its own accord. I think it would be appropriate to pay up if our program people requested the work, but I would not be inclined to do so if the contractor took it upon itself to continue working when no one requested it. Thank you.

Don, (or anyone else who would like to contribute) if I understand you correctly, there are two possible courses of action; ratify the unauthorized commitment or not ratify the unauthorized commitment. If we don't ratify the commitment, is the contractor's only recourse to take it up with the COR or whomever allowed the work to proceed? Does the contractor have a valid basis on which to submit a claim? I ask because we did receive and accept a service of value. Are there any other alternative solutions? This brings me to another point; is the COR the responsible party, or could it be anyone else who allowed the contractor to work the additional hours? Thank you Don.

No Don, the contracting officer was not aware of the fact that the contractor was working the extra hours. The specialist has been looking into it and finally had all the facts required to understand what had taken place. She's just made the CO aware of the situation. That is why I've posted the question. I've edited my original post to reflect this information. Thank you.

The clause is in the contract, but witholding was not required. No other charges or expenses were contemplated at time of award other than for the amount that was obligated and the number of hours that was estimated.

Scenario: Time-and-Materials contract awarded under SBA 8(a) program. Contract consisted of a base period of performance and four option periods. Only two options were ever exercised. Contract ran its course and ended at the end of FY'12. COR retired shortly thereafter. Contractor submitted final invoice subsequent to the end of FY'12. The amount on the invoice exceeded the contract ceiling - and the obligated amount - by approximately $5,500 because the COR, through inaction, constructively allowed the contractor to worked in excess of the estimate of hours stated on the contract. The contracting officer was not aware that the contractor was working in excess of what was required by the contract. Finance rejects the contractor's invoice because work occurred in FY'12, but there were no FY'12 funds remaining on the original obligation. The Government does not dispute the fact that it accepted and received a benefit from the services provided by the contractor in excess of what was contractually agreed upon. Questions: 1. Does the COR's oversight in allowing the contractor to exceed the number of hours specified on the contract constitute an unauthorized commitment? 2. Is there any way to resolve the issue other than ratifying the action? 3. Is the agency at risk of incurring an Anti Deficiency Act violation? Thank you!

Thank you!

We are beginning to work on these modifications and I'm unclear as to whether we've breached our contract or not. Since we provided the following language in the contract, were we required to award a task order to all contractors or pay the minimum ordering amount during the base period of performance, or does the following language allow us to comply with this requirement at any point throughout the life of the contract, inclusive of options? Minimum and Maximum Contract Amounts During the contract period of performance (which includes the base period plus all exercised options), the Government shall place orders at a minimum of $1,000 under this contract. The maximum value of all contracts is $140,000,000.00. The cumulative amount of all task orders shall not exceed $140,000,000.00 for the entire lifecycle of all the R&D 2014 contracts. The authority and ordering procedures to issue task orders are addressed under Section G.3 and Section H.5 of the contracts. Fulfilling Minimum Ordering Requirements The Government has no obligation to issue task orders to any contractor beyond the minimum amount specified above. For each successful contractor, there will be a one time "minimum guarantee award amount" during the life of the contract, which includes all option years, if exercised. This amount can only be claimed at the end of the contract period if the contractor takes advantage of fair opportunity by proposing on at least one Task Order, within the Technical Areas for which the Contractor received award, offered to the contractor during the years for which the contractor is eligible. Returning to my original question and assuming that we did not breach the contract, when exercising the options on contracts that have not been awarded task orders, are we required to fund the new option period for the minimum ordering amount? It seems that the funds that were originally obligated were no-year funds.

Apologies for the broken response. Vern, tell me if this helps. I should have included this with my original post. The section of the contract that precedes the section I provided above states the following: Minimum and Maximum Contract Amounts During the contract period of performance (which includes the base period plus all exercised options), the Government shall place orders at a minimum of $1,000 under this contract. The maximum value of all contracts is $140,000,000.00. The cumulative amount of all task orders shall not exceed $140,000,000.00 for the entire lifecycle of all the R&D 2014 contracts. The authority and ordering procedures to issue task orders are addressed under Section G.3 and Section H.5 of the contracts. I think they messed up with the language. I think the section in parenthses should probably have stated all exercised and unexercised options. Based on this language, do you still believe the contract was breached?

One other thing Vern, had we paid those contractors who did not receive an award the first year the minimum guaranteed amount, would we continue to be on the hook the following periods as options are exercised? Would that minimum amount have to be funded again?

That is interesting Vern. Was the Government required to comply with providing an order in the first year even if there were other optional periods to be exercised? What about the language that was used in the contract suggesting that the amount is not payable until the last year if no award was made to a contractor? Also, the language I provided above (from the contract) states that the contractor must have submitted a proposal to qualify for that amount. I don't agree with that. I think that by virture of having won one of the contracts, we're on the hook to place an order or pay the minimum. What's your opinion on this?

To date, the available options on each of the 37 contracts has been exercised. We anticipate exercising all options on each of the contracts.

Scenario: A multiple award IDIQ contract for R&D servcies was awarded sometime near the end of FY'09. The vehicle consisted of 37 base contracts with 37 different contractors. All base contracts were funded with the established minimum ordering amount. I have recently taken over this contract and the time has come to exercise an option period on all of the contracts. To date there are 15 to 20 contractors that have not been awarded task orders. My reasoning tells me that upon exercising the option on these base contracts, I should be required to obligate funds in an amount equal to the minimum ordering amount and ensure that those funds remain present throughout all periods of performance until that time when a task order is awarded and the minimum ordering amount has been satisfied. I don't think this has taken place to date. I believe the contracts were modified to exercise the options, but the amount required to satisfy the minimum ordering amount was never carried through to the new period of performance. What would be the effect had the funds that were obligated upon award been no-year funds? Also, the specific language that was used in the contract seems to suggest that the minimum ordering amount is payable only at the end of the contract period, inclusive of options. Does that make a difference as regards the amount that should have been funded on the contract at time of award? The exact language from the contract follows: Fulfilling Minimum Ordering Requirements The Government has no obligation to issue task orders to any contractor beyond the minimum amount specified above. For each successful contractor, there will be a one time "minimum guarantee award amount" during the life of the contract, which includes all option years, if exercised. This amount can only be claimed at the end of the contract period if the contractor takes advantage of fair opportunity by proposing on at least one Task Order, within the Technical Areas for which the Contractor received award, offered to the contractor during the years for which the contractor is eligible.

Thank you for your responses.

What are the limitations on the Government sitting in on a contractor's interview with prospective contractor employees for a particular contract? Can the Government "approve" or "reject" a candidate for employment with a contractor under a specific contract? Scenario: Government solicitation includes labor category descriptions for a T&M contract. Solicitation includes minimum qualifications contractor employees are required to have (skills, education, experience, etc...). Contractor invites Government to sit-in during contractor's interview with contractor candidate. Candidate's resume suggests candidate is qualified for employment under a specific labor category based on stated skills and experiences. However, candidate's responses during interview suggest that candidate is unqualified for the labor category. Is it proper and allowable for the Government tell the contractor that the candidate is unsuitable for the labor category in question? I'm used to hearing that the Government cannot interfere with the contractor's internal operations. But it would seem to me that if the Government knows that a contractor employee is unsuitable for a category of labor, the Government should be allowed to voice its concerns and request that the unsuitable employee not provide services under the Government's contract with the contractor. What is the appropriate way of approaching this scenario?