aordway

Thanks @Don Mansfield and @joel hoffman. Understood, and i'm on board.

@Don MansfieldI will have to inquire as to if the contractor meets the definition of nontraditional defense contractor or not, but I had not considered that as a method of making certified cost or pricing data exempt. Thanks for that suggestion. If we assume they are not a nontraditional defense contractor (for argument's sake), then to sum up where we stand thus far, a non-commercial purchase in which a fair and reasonable determination can be made without the need for cost or pricing data (because cost or pricing data by definition is information that includes or supports cost elements, and the data in hand is that which supports the total price proposed), would therefor NOT fall under the 15.404-1(a)(3) requirement to do cost analysis when certified cost or pricing data is required, therefore a cost analysis would not be required to be performed because we have no cost or pricing data as it was not necessary for this procurement's fair and reasonable determination. However, because we are claiming certified cost or pricing data is not needed, and this is a negotiated procurement over $2M, then we would require a waiver of the submission of certified cost or pricing data in accordance with 15.403-1(c)(4), which is reserved for "exceptional cases" and requires HCA approval, both of which may deter us from requesting the waiver out of prudency. And if we decide not to submit for that waiver, then we would be required to request "unnecessary" certified cost or pricing data and do a cost analysis to reach the fair and reasonable determination to comply with the Part 15 rules. Is that the correct summation of everything I have learned on this post?

Hmm I thought we were on the same page there. This makes it seem like certified cost or pricing data is required prior to award of a negotiated contract above the threshold (it does not make the need of that info by the contracting officer to make a fair and reasonable determination as a condition for its requirement). As a result, I understood the word "required" in FAR 15.404-1(a)(3) to reference only these two factors; above the threshold, and a negotiated contract. However it seems you view the word "required" in FAR 15.404-1(a)(3) to mean "needed by the contracting officer to make a fair and reasonable determination" no matter the dollar value, which completely changes the discussion I have been having on this entire post. My initial example in my very first post was trying to get at this specific question. I had said: My example tried to illustrate a situation where it appears cost or pricing data was not required to make the fair and reasonable determination, yet the acquisition met the two stated requirements for certified cost or pricing data: above $2M and a negotiated procurement. I understood your response to say that cost analysis is required in my example, despite the fact that i did not need certified cost or pricing data to make a fair and reasonable determination. Now, it appears you are saying that even if I have a negotiated procurement above $2M (which meets the only two requirements for being required to have certified cost or pricing data), if i don't actually have any cost or pricing data or cost elements to evaluate, then i did not "require" cost or pricing data in accordance with what 15.404-1(a)(3) says, and therefore I need not conduct cost analysis. Am I understanding your thinking correctly?

Got it, thanks. I appreciate the discussion!

That is not what the FAR says, IMO, and that is not what Don said, IMO. @ji20874 what Don just now said in item #1 of his post (When certified cost or pricing data are required, cost analysis is required and price analysis should also be conducted) and what you say you agree with seems identical to me to the statement I made in your first post, in which I said "when cost or pricing data is required (i.e. when the contract is over $2M), fair and reasonable price determination must be made through the cost analysis method" and you said you do NOT agree. Help me understand how you agree with one and not the other, since they seem like they are saying the exact same thing. Are we all in agreement that "certified cost or pricing data" could be comprised entirely of information that aids only a price analysis and not a cost analysis? Are we in agreement that when the FAR says "when certified cost or pricing data is required", it is talking about the dollar threshold, and not "when certified cost or pricing data is necessary to come to a fair and reasonable price"?

@Don Mansfield Thanks. If that is the case, can you expand upon what your initial post was trying to convey? I feel like I am getting mixed messages. My initial question was "Is 15.404-1(a)(3) trying to say that (a) WHEN individual cost elements have been proposed (or when a Contracting Officer has requested they be submitted/proposed), they must be evaluated using cost analysis, OR is it trying to say that (b) cost analysis must always occur when certified cost or pricing data is required? Stated another way, could we do only a price analysis when certified cost or pricing data is required?" [I added (a) and (b) for clarity's sake] You had initial said that (b) is the one that is correct; "cost analysis must always occur when certified cost or pricing data is required". As a result, that would mean that the requirement to perform cost analysis is not based on if you have had cost elements broken out/proposed/provided, but rather is based on the certified cost or pricing data threshold of $2M. Said another way: you must do cost analysis when the purchase is over $2M, regardless of if you have/need/want cost elements to review. ji20874's post says that if you have cost elements, you use cost analysis, and if you have just price proposed, you do price analysis. That would correlate to (a) I think. Are you now saying (a) is the correct interpretation? Or still saying (b) is correct?

@ji20874 That's what logic would tell me makes sense, however that appears to be the opposite of what Don stated. I'm curious what you take Don's initial response to mean. Or perhaps @Don Mansfield can let us know if he agrees with your post or not. I would also note that it says cost analysis SHALL be used, and price analysis SHOULD be used. It does not use "shall" in both instances. Also, it does not require cost analysis when cost elements are submitted, but rather when certified cost or pricing data is required, which is at $2M. Although what I think you stated is how i thought it should work, I can't help but think the FAR would have worded those two sentences a lot differently if that's what they intended it to mean. @joel hoffman My scenario would indeed be for a sole source situation, since we cannot rely on price competition to make a fair and reasonable determination (or could be for a competitive acquisition where only one offer was received, since DOD cannot rely on the "expectation of competition" fair and reasonable determination strategy any longer. A non-commercial purchase is likely unique, which would make price analysis difficult or impossible in most circumstances, but I would not say that is always the case. I'm curious about the situation where a price analysis is possible for a non-commercial purchase, and am just trying to determine if the FAR allows only a price analysis to occur.

@Retreadfed I'm just talking about fair and reasonable price determination. FAR 15.404-1(a)(3) says "Cost analysis shall be used to evaluate the reasonableness of individual cost elements when certified cost or pricing data are required." That appears to say, and with Don's guidance, that when cost or pricing data is required (i.e. when the contract is over $2M), fair and reasonable price determination must be made through the cost analysis method. It does not say "when certified cost or pricing data is submitted" or "when certified cost or pricing data is requested", but says "when required", whether actually submitted/needed for the fair and reasonable determination or not. It seems then that the need to do cost analysis is tied to a dollar threshold rather than submission of actual certified cost or pricing data. Submission in the Table 15-2 is optional in accordance with FAR 15.403-5(b)(1). If we requested info in the Table 15-2 format, then yes we would receive a breakdown of cost elements, and it would be obvious that a cost analysis would be the best way to evaluate those submitted elements to determine a fair and reasonable price. If the initial citation said "a cost analysis is required when individual cost elements have been submitted as certified cost or pricing data", there would be no confusion. But since the citation says "when certified cost or pricing data is required", and the requirement occurs for anything over $2M, that citation then applies to purchases where we did not request cost element breakdowns at all (whether in the 15-2 format or another format) because we have sufficient pricing data to determine the overall price proposed fair and reasonable. The citation referenced requires (apparently) that we perform a cost analysis in that situation nonetheless.

Fair enough. Thanks @Don Mansfield!

Thanks @Don Mansfield. This would be for DOD, so the FAR 15.403-1(c)(1)(ii)(B) allowance could not apply. How does that jive with DFARS PGI 215.404-1(c)(i) where it says "When the contracting officer cannot obtain sufficient data to perform a price analysis in accordance with the pricing steps in FAR 15.404-1(b), a cost analysis is required." In my example, we do have enough pricing data to perform a price analysis. The DFARS seems to say try and do a price analysis first and foremost. I guess 15.404-1(b) is missing something that says "unless you are over the cost or pricing data threshold, in which case you must expend time and resources to evaluate using cost analysis despite the sufficient pricing data already in hand"? I don't quite understand the logic behind the mandate to evaluate using cost analysis, but perhaps I should not be looking for logic within the FAR... Thanks again.

Can someone help me understand FAR 15.404-1(a)(3)? It says: "Cost analysis shall be used to evaluate the reasonableness of individual cost elements when certified cost or pricing data are required. Price analysis should be used to verify that the overall price offered is fair and reasonable." Is 15.404-1(a)(3) trying to say that WHEN individual cost elements have been proposed (or when a Contracting Officer has requested they be submitted/proposed), they must be evaluated using cost analysis, OR is it trying to say that cost analysis must always occur when certified cost or pricing data is required? Stated another way, could we do only a price analysis when certified cost or pricing data is required? For example, lets say I have a non-commercial purchase for a supply item that will cost $2.5M. The Contractor is able to provide numerous previous invoices proving they have sold the item in question to other Government agencies at the same price. As a result, we feel we are able to justify a fair and reasonable price based on price analysis alone. However, because the purchase is above $2M, certified cost or pricing data is required per 15.403-4(a)(1). And also as a result, 15.404-1(a)(3) says that cost analysis SHALL BE USED. If we were to award our contract using only price analysis, did we comply with 15.404-1(a)(3) because no cost element breakdown was submitted or requested to be submitted? Or did we fail to comply with 15.404-1(a)(3) because cost analysis was not used at all in the evaluation, and it says cost analysis "shall be used"? It seems like the current wording in 15.404-1(a)(3) does not account for the possibility that certified cost or pricing data could be required without a cost breakdown of individual cost elements being submitted.

@ji20874 Excellent, thank you!

On the SF30 form used for contract modifications, Block 1 ways "CONTRACT ID CODE", and the instructions for filling out the SF30 on page 2 says "Insert the contract type identification code that appears in the title block of the contract being modified." What is the SF30 form looking for us to insert in this block? I could not locate a field called "contract type identification code" or anything similar on common award documents (SF26 and SF1449). My logical assumption is that it just wants the 9th digit in the Procurement Instrument Identifier(PIID) [e.g. C for contracts or P for Purchase Orders], however we use PD2 as our contract writing system, and the dropdown choices we have for completing Block 1 are A, J, K, L, R, S, T, U, V, Y, or Z. C and P are not answer choices, which makes me think that it is asking for a different code than the 9th digit in the PIID. Anyone know what this question is asking?

Thanks @Don Mansfield, I think "constructive waiver of right to be paid" is a great way to look at it, rather than viewing it as a supplemental agreement to the contract as I had been. I can definitely get on board with that. @Ibn Battuta It comes from the Assistant Secretary of the Army (Acquisition, Logistics and Technology) via PARC Policy Alert #18-46 (written in 2018), which states you should not issue a contract mod in any circumstance, and that guidance rescinds and updates PARC Policy Alert #13-39 (written in 2013) which previously stated you should not do a mod unless the KO feels it is prudent and necessary.

Thank you. The Red Book and FAR 43 references seem to say that IF you are doing a mod, they must be done in accordance with those regulations, but they do not address the need for a mod in the first place. 31 USC 1501 seems to say that you only record an obligation when you have a valid contract (meeting the definition of "contract"); I'm not entirely convinced it answers the question of needing to adjust an obligation downward (but if you did choose to adjust an obligation downward, it would need t be a binding agreemnt in writing before you did so).

Thanks for your answers. I think this is prudent advice, and I agree. As we are talking matters under $1,000 I would say yes, give it a try especially if a commercial item contract - its their written agreement to the changed price. I will say your question is skewed as the mod would not be unilateral as you have the contractor agreeing in writing to the change. Your mod would just have one signature! Yes, I was not suggesting to mod entirely unilaterally, I was suggesting the mod document itself would be signed only by one party (perhaps "unilateral" was a poor word choice for such a scenario) because the contractor's "bilateral signature" would be through their actions and /or written confirmation outside the contract document. But I agree with Ibn Battuta that doing so should be as a last resort when contact with the contractor is not possible. I does seem extremely messy and illogical to not mod the contract to reflect any new agreement, but I appreciate your opinion that there is no regulation requiring it be done. Thanks!

The guidance our contracts office repeatedly receive is that if you discover a contract has excess funds obligated to it totaling under $1000, do not do a mod to remove the excess funds from the award. In that situation, the funds are removed from various systems (GFEBS, etc), but the contract document itself remains unchanged. However, by stating we should not modify the contract to deobligate the excess funds, it also implies that we do not modify the contract to change the contract price at all, and that seems problematic. Let's say I have a firm-fixed-price contract to buy 5 t-shirts for $100 total. After delivery of the 5 t-shirts, the contractor invoices for $90, and indicates that they have submitted their final invoice and will not be invoicing for the remaining $10 (it seems illogical that they would not bill for the full price they are owed, but this seems to happen frequently nonetheless). By the contractor stating they only want to be paid $90 instead of $100, it seems like we have a supplemental agreement for the contract. Not only do we have $10 excess funds obligated to the contract, but the contract price has changed from $100 to $90. If we skip doing a deobligation mod on the contract to remove that $10, that also means we are not adjusting the price in the contract to the new agreed upon $90. Therefore the Government has created a back alley agreement with the contractor on a new contract price, but has not officially recognized that new agreement via an official contract document. The contract stating a firm-fixed-price of $100 is not accurate to what is occurring in the real world. What is the necessity for modifying the contract price in this situation? Must it be done so that the contract document's stated price matches what the Contractor has agreed to accept as final payment? Or is there a statutory reason that a mod to change the contract price in this instance is unnecessary? Follow-up question: If we assume a contract mod IS necessary in this scenario, what is the requirement to get the Contractor's signature on the modification to decrease the price on the contract to $90? Can their written confirmation (via email for example) that the $90 invoice submitted is their final invoice serve as bilateral approval of the new contract price, such that the government can unilateraly mod the contract to state $90? Or in an instance where it has been an extended period of time with no invoice submitted for the final $10 (and the contractor may or may not be hard to get a hold of after a that long period), can the Government reasonably assume the Contractor's actions have forfeited that $10 and inherently agreed to the $90 price, and the Gov't can unilaterally mod the contract to change the price to $90? Or must the Contractor's signature be on the mod in either case?

Thanks, I'm glad they thought to address it somewhere. However that sentence still makes little sense, and I still don't know what number to put based on that sentence. The total number of proposals received thus far under that overall BAA solicitation? If that is the case, the answer we put literally means nothing. If there are 35 proposal submitted thus far on that BAA solicitation, if we put 35 as the answer, on face value it would look like there were 35 proposals we could have awarded on, but we chose 1 specific offeror to award to, when in reality the other 34 proposals have nothing to do with the proposal we are awarding, because the proposal we are awarding on is the unique and specific idea of the offeror, and award to that offeror does not preclude award to those other 34 proposals as well (they are each judged for possible award on their own individual merit, irregardless of each other). So that answer is misleading to someone viewing the CAR, hence our preference for "999" to dissuade someone form drawing inaccurate conclusions from that single data point. It does feel like they wrote the PGI reference you posted without really thinking about it or what it actually means in practice. Thanks for providing that reference nonetheless.

I am curious what you all think is the appropriate answer to the FPDS-NG CAR question "Number of Offers Received" for awards off of a Broad Agency Announcement (BAA) [FAR 35.016]. Although a BAA proposal submitted to the publicized broad topic is unique in and of itself, an answer of "1" does not seem entirely accurate because there can in fact be multiple proposals submitted and awarded off of that same topic (both before and after the instant award being made), not to mention countless others on other topics under that same BAA solicitation. Our office in the past has put an answer of "999" to both symbolize that the question is somewhat not applicable/irrelevant for BAA awards, and also so that a BAA award can easily be identified based on its CAR data (since no other CAR question specifically references BAAs, so there is no way to filter CAR data to otherwise only list BAA awards, but it can be done if we put a standard answer across the board like "999"). It has been suggested to us by a higher-up Army office that we instead find out what the estimated number of total offers will be under that overall BAA solicitation by the time it closes (based on past data and future projections) and list that number in each CAR, and update that number periodically (such as when a BAA closes and a new one comes out, and we have new data to base the estimate on). I find this suggestion to be less helpful that the previous two answer possibilities I discussed. I am curious what everyone else thinks.

Ibn Battuta - I think you have a great answer here. I like your thought process. Don - I really respect you and your knowledge, and often look to you for guidance on these forums. But I can't shake the feeling that your comments can sometimes have the flavor of smugness rather than charity. Whether ji20874 responded to you as you desired or not, his posts felt earnest in trying to provide info to solve the problem, rather than being tight-lipped and inquisitory for effect. Just my two cents. I appreciate you both nonetheless.

That's an interesting thought and i'm not sure I have an answer for you. I agree that although a solicitation for an order may meet the definition of a "solicitation", it is within the confines of an awarded contract with set terms and conditions, so the addition of newly released clauses would not be necessary. If adding new work to the IDIQ, then yes perhaps new clause additions must be added.

Thanks for the quick response! Awarding directly to the desired firm with a J&A on a new contract was our initial idea due to the ordering period having expired, but the COR requested we look into adding it to the current Order for administrative convenience, which I won't deny would definitely be more administratively convenient. We are simply evaluating our options at this point and will go down the best path. I wanted to know if modifying the order was even a viable path to take. I had not considered that the additional work on the order may not require an extension of the ordering period. I thought that new work that is outside the scope of the order constitutes a "new procurement", and I thought it would be akin to a new order that just happens to be added as a mod to a previous order rather than its own separate order, and therefore would need an open ordering period on the base award (whereas an in-scope mod definitely would not need the ordering period extended). I suppose you could view it as a modification only and therefore would not need to extend the ordering period, however the point is somewhat moot since the base award needs modifying in any regard to increase the ceiling. Your combination of J&A and Exception to Fair Opportunities is a good idea. Thank you. I don't quite agree with your jestful statement that we could have had a standalone contract awarded by now. If we presume we found out about this additional requirement today, and we are deciding today if we can add it to the IDIQ or must award a standalone award with a J&A, I think we can mod the IDIQ quicker in my opinion. I still think its a fair question to ask for the administrative convenience of the whole thing (it being a multi-million dollar R&D cost-reimbursement contract that has a lot of manpower in monitoring and allocating costs to specific contracts and CLINS). Thanks for you help!

Would your answer change if you needed to do an out-of-scope mod in this same scenario? That is the scenario I am currently facing. Base IDIQ ordering period has ended, however an order's period of performance is still ongoing. A modification is desired to the order to add work to it, however that new work would necessitate an increase in the base award's IDIQ ceiling (as well as an extension of the ordering period). With a proper J&A, could we bilaterally amend the Base IDIQs ordering period to extend it, increase the base IDIQs ceiling, and add new work to the current order? The fact that you said the base contract is not dead, its ordering period is simply over, makes me thing that this means the base award is still available to be modified in any way it could have been modified when the ordering period was still active.

I think AbilityOne was a bad choice of an example, since I did not consider that they only sell commercial products, although that seems painfully obvious in hindsight. I chose them as an example because in FAR 8.002, 8.003, and 8.004, it essentially lists a series of mandated and then preferred sources that culminate in you being able to purchase in the open market when you get to 8.004. So I was interpreting the mandatory sources in 8.002 s being NOT in the open market, since they are prescribed to be used by statute. I did not consider the fact that AbilityOne likely only sells commercial items and is exempt from the "Contracts For Materials, Supplies, Articles, and Equipment Exceeding $15,000" statute, so it was a poor choice. I'm not sure off the top of my head what mandatory source would sell non-commercial items, but if we pretend there is one, lets substitute that into my initial post for clarification to all who may comment henceforth.

What is the intended applicability of the "Contracts For Materials, Supplies, Articles, and Equipment Exceeding $15,000" statute?" My confusion is based around the broadest statutory exemption located in FAR 22.604-1(a) where it says "Contracts for acquisition of the following supplies are exempt from the statute: (a) Any item in those situations where the contracting officer is authorized by the express language of a statute to purchase “in the open market” generally (such as commercial items, see Part 12); or where a specific purchase is made under the conditions described in 6.302-2 in circumstances where immediate delivery is required by the public exigency." [I'm not concerned with the clear-cut exemptions in 22.604-1(b) through (d)] Am I correct in thinking that any "open market" purchase is exempt from this statute, and that it need not be a commercial purchase? For example, if I have a "sole source" non-commercial contract using the 6.302-1 other than full and open competition authority for the contractor to deliver a supply item, the statute would NOT apply because this is still an open market purchase, correct? An example of a purchase not in the open market would be an AbilityOne purchase using FAR 8.7, because we are required to utilize AbilityOne in 8.002(a)(1)(iv) before we are allowed to pursue an Open Market purchase pursuant to 8.004(b)? Or am I mistaken on either of those examples? I think the second half of 22.604-1(a) adds to my confusion, since I do not understand why 6.302-2 is called-out specifically when use of any of the other 6.302 authorities would still allow for open market purchases. Perhaps my definition of open market is incorrect? I believe open market means that the company or companies you are entering into a contract with are independent companies part of the open market, and whether the actual purchase made is full and open competition or sole source is irrelevant. My example of AbilityOne would NOT be an open market entity because it is prescribed to be utilized by statute when they can supply your requirement, in contrast to a company you freely choose to do the work, or who wins a publicly posted solicitation. I just want to make sure I am understanding the 22.604-1(a) exemption correctly, since it seems like it applies to a wide swath of contracts if I am interpreting it correctly, while the contents of the associate clause (52.222-20) seem like requirements you would want to include in a large number of contracts. So the fact that you would not be including 52.222-20 in a large number of contracts based on my interpretation is concerning, and makes me question my understanding of the exemption.