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Lionel Hutz

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About Lionel Hutz

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  1. For the record, I'm not saying the government's approach is good, bad or mediocre. The discussion started with jwomack's statement that "Responsible agencies issue warrants on an 'as needed' basis not an 'as capable' basis," and Jamaal asked why an agency "wouldn't warrant to capability." My answer is that "warranting to capability" requires more training and resources than warranting to "agency need." If you don't provide that addition training and resources, then "warranting to capability" increases risk over issuing warrants on an as needed basis. Either choice, more money or more risk, is unattractive to an agency so that is the reason it doesn't "warrant to capability." Now, there may be a million reasons why that is a bad approach (e.g., it is short-sighted, it undervalues cross training, it is a disincentive to keep star employees, etc.), I don't know. But that's my best guess as to why an agency would take such an approach. Anyone else can feel free to offer a different explanation.
  2. You're right. I compared "capable of learning" something with "competence to do" that thing. That's not a fair comparison. Warranting every KO up to the level of his or her capability works in theory when things like budgets, schedules, and training availability are not issues. And it could work for certain offices, or KOs. But I still maintain my second point, which is that agencies, in general, are not going to expend significant time, money, and other resources to maintain a deep bench of KO capability above that which is needed for the KOs to do their jobs. Giving KOs warrants but not adequate experience and training to maintain capability commensurate to the warrant and then asking them to step in when needed increases risk to the agency.
  3. Because capability is not competence. Someone may be a smart, hard-working employee fully capable of learning and understanding the ins and outs of $100M contract awards. But, if that person only works on GPC and SAP purchases, he or she is less likely to have the training, knowledge, and experience to be competent (or maintain competence over the long term) in much larger procurements. An agency is going to see spending money on training and maintaining employee competence in an area that the employee does not need as a waste of resources.
  4. There are no cases directly citing FAR 1.108(c), in my opinion because the language clearly and unambiguously applies to IDIQ contracts and the contract maximum should be used as the anticipated value when applying dollar thresholds. My guess is that if you search for cases involving IDIQ contracts where the value of the contract is at issue for the purpose of applying a threshold the GAO, Boards, or Courts will have applied the contract maximum without even bothering to reference FAR 1.108. For example, while decided before FAR 1.108(c) was added to the FAR, the protest of Nations Inc. is an example. In it the GAO states, I don't have time to do a more exhaustive search, so I'll have to leave it to someone else to either prove me right or wrong. In the absence of an explicit FAR definition or case law, we fall back on another FAR convention in the same FAR Section, “Undefined words retain their common dictionary meaning.” FAR 1.108(a). Alternative means “one of two or more things.” The “more things” to choose from in an IDIQ contract are the amount of supplies or services to be ordered. And, in an IDIQ contract, your options range from the guaranteed minimum to the contract maximum. FAR 1.108(c) tells us that the “final anticipated dollar value must be” (emphasis added) the highest price within that range of options, i.e., “the highest final priced alternative…” Your interpretation defines “highest final priced alternative” to mean the minimum amount that the Government is required to buy. While ordering the minimum guaranteed amount is one of the alternatives available to the government, there is no reasonable interpretation that will support the minimum guarantee being the highest final priced alternative. It is literally the opposite of that. The Travel Centre case you cite stands for the proposition that "when an IDIQ contract between a contracting party and the government clearly indicates that the contracting party is guaranteed no more than a non-nominal minimum amount of sales, purchases exceeding that minimum amount satisfy the government's legal obligation under the contract." It has nothing to do with how to calculate the final anticipated value of a contract for the purposes of applying thresholds. You are reading way too much into this. FAR 1.108(a) tells you that “the final anticipated dollar value must be the highest final priced alternative to the Government…” You don’t have to look into anybody’s perspective, you do what the FAR instructs and apply the “highest final priced alternative to the Government.” The price of an order is not established until it is issued, but the contract maximum amount is absolutely established by the time of contract award. “A solicitation and contract for an indefinite quantity must … (ii) Specify the total minimum and maximum quantity of supplies or services the Government will acquire under the contract…” FAR 16.504(a)(4). Further, " Quantity limits may be stated as number of units or as dollar values." FAR 16.504(a). So, either the contract maximum is stated as a dollar amount in which case we know the maximum price. Or, the maximum is stated as numbers of units which can then be multiplied by the awarded unit price and a dollar amount calculated. Just apply this line of thinking to actual thresholds in the FAR and tell me what makes sense. Do you think a contracting officer with a $1 warrant can make a direct award of a contract with a $1 guaranteed minimum and a $100M maximum to a vendor using Micro Purchase authority? Unless an exception applies, FAR 16.504(c)(2) provides that “if an indefinite-quantity contract for advisory and assistance services exceeds 3 years and $13.5 million, including all options, the contracting officer must make multiple awards…” Are you suggesting that this restriction only applies to IDIQ’s with a minimum guaranteed amount of that exceeds $13.5M?
  5. I agree. The language of FAR 1.602-1(a), by itself, only restricts the amount the contracting officer may bind the Government. However, both 1.602-1(a) and 1.603-3(a) state that other limitations on the contracting officer's authority shall be stated on the Certificate of Appointment. A discussion of a contracting authority without reference to the warrant itself is fruitless, and that is why the last sentence of my first post had the caveat "subject to the sample delegation provided."
  6. Lionel, I know you quoted FAR 1.108(c) as the basis for this statement. Let me clarify the sentence fragment of mine that you quoted. I should have written, “awarding an IDIQ contract with a $100M maximum is a $100M contract contract action for purposes of applying FAR thresholds.” Can you clarify what "text" you are referring to that does not support the conclusion? The text of FAR 1.108? FAR Part 16? The warrant? How would that argument go? I'm having a tough time coming up with a reasonable argument, given the language of FAR 1.108(c). If you are arguing that a threshold established in a warrant is not governed by FAR 1.108, then I disagree as stated in my previous post, but I understand the argument. However, assuming the warrant threshold is governed by FAR 1.108, then it is pretty clear that the "highest final priced alternative to the Government, including the dollar value of all options" would be the contract maximum. I do not see how an IDIQ's guaranteed minimum can also be the highest final priced alternative, including the value of all options.
  7. Before answering, there are two issues to be addressed. First, the original post states that the contract in question is a $100M IDIQ contract. I will assume this means $100M is the stated contract maximum as awarded, as opposed to the estimated, evaluated value of the contract. Second, Sunstrider states that the guaranteed minimum of the contract is $1. It is possible that a $1 guaranteed minimum on a $100M contract is insufficient consideration to form a binding contract. (See FAR 16.504(a)(2), “To ensure that the contract is binding, the minimum quantity must be more than a nominal quantity, but it should not exceed the amount that the Government is fairly certain to order.”) While the courts and boards of contract appeals do not require much to establish adequate consideration, $1 might not pass muster. However, that doesn’t address the gist of the question, so let’s assume that it $1 is adequate. On to the question at hand: As Joel pointed out, the authority of the KO to contract is limited by the authority delegated to him or her. In the example warrant you provided, the limitation states, “the individual named herein is granted the authority to enter into, administer, terminate contracts, and make related determinations and findings for actions that shall not exceed $1.” Therefore, the question presented is whether an IDIQ contract with a guaranteed minimum amount of $1 and maximum amount of $100M exceeds $1. Presumably, the argument that the IDIQ does not exceed $1 is that the guaranteed minimum is only $1, and any amount greater will be obligated by other contracting officers when subsequent task/delivery orders are placed. In my opinion, this argument is incorrect as it conflates the rules governing obligating funds with entering into a contract. Just because only $1 was obligated by the award does not mean the KO entered into a $1 contract. FAR 1.108, FAR Conventions, states the following: “(c) Dollar thresholds. Unless otherwise specified, a specific dollar threshold for the purpose of applicability is the final anticipated dollar value of the action, including the dollar value of all options. If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events, the final anticipated dollar value must be the highest final priced alternative to the Government, including the dollar value of all options.” Based on this, an IDIQ contract with a $100M maximum is a $100M contract. Because the terms of the KO’s warrant only grant “authority to enter into … contracts … that shall not exceed $1,” she cannot enter into a contract with a $100M value. Now, it should be noted that the first sentence of FAR 1.1108 states that the “conventions provide guidance for interpreting the FAR.” One could argue that the limitation in question is not in the FAR, rather it is in the delegation of authority. Therefore, the conventions associated with interpreting the FAR do not apply to interpreting the delegation of authority. And, if an agency, as a matter of policy, expressly exempted authority delegations from the FAR conventions, then I could support that interpretation. However if, as stated by Sunstrider, “all agency regulations and supplements are silent on the matter,” then I think the FAR convention applies to the delegation’s limitation of authority. First, the FAR expressly directs delegations of authority to state any limitations; therefore, the limitation is in fact a FAR threshold even if the specific dollar amount is not stated in the FAR. Second, establishing different dollar values to the same contract would add unnecessary confusion by creating scenarios where a contracting officer who is held out to the public as having authority that does not exceed the SAT is awarding a contract that cannot even be awarded using FAR Part 13 simplified procedures. Based on the above, absent agency regulations or supplements that state otherwise, a contracting officer subject to the sample delegation provided cannot award an IDIQ contract with a maximum amount that exceeds her authority.
  8. Lionel Hutz

    Exercise option SAF

    I agree.
  9. Lionel Hutz

    Exercise option SAF

    When discussing appropriations, the term “availability” or “available” is a term of art that means an organization has legal authority to obligate the funds in question, i.e., the prerequisites of purpose, time, and amount have been satisfied. Per the OP, the funds were available; the PR was certified by the budget office but could not be routed through the IT system. The fact that the budget office had technical issues routing the PR does not render otherwise available funds “unavailable.” An appropriation is a type of budget authority that allows an agency to incur obligations and make payments out of the Treasury for specified purposes. Below an appropriation is the “apportionment,” which is a distribution by the OMB of amounts available in an appropriation into amounts available for specified time periods, activities, projects, or programs. The OMB apportions funds to prevent obligation at a rate that would create a need for a deficiency or supplemental appropriation. Administrative subdivisions imposed by an agency are the third level of fiscal control. These administrative subdivisions are divided into “formal” and “informal” administrative subdivisions. Formal administrative subdivisions consist of allocations and allotments. Informal administrative subdivisions are created by agencies at lower levels and are considered funding targets, or “allowances.” The Antideficiency Act, 31 U.S.C. §§ 1341-42, 1511-19, prohibits any government officer or employee from: a. Obligating, expending, or authorizing an obligation or expenditure of funds in excess of the amount available in an appropriation, an apportionment, or a formal subdivision of funds. b. Incurring an obligation in advance of an appropriation, unless authorized by law. c. Accepting voluntary services, unless otherwise authorized by law. Exceeding an allowance or other informal subdivision of funds does not violate the ADA unless to do so would also cause a formal subdivision, an apportionment, or an appropriation to be exceeded. The purpose of 52.232-18 is to prevent a contracting officer from violating the Antdeficiency Act when it is necessary to take a contract action (e.g., contract award or option exercise) in one fiscal year but funds will not be available (i.e., they will not be appropriated, apportioned, and formally subdivided) until the next fiscal year. With regard to the issue raised by RachelleR’s original post, I’ll need to speculate a bit, so take the following with a grain of salt. RachelleR stated that the budget office had certified the funds as available. This leads me to believe that funds had been appropriated, apportioned, allocated, and allotted as needed. However, an IT glitch prevented the routing of the funded PR. I do not know the administrative ramifications are of routing the PR in RachelleR’s agency. It could simply be a technical notification process with no impact on the funds at all. But at most, it involved a transfer of funds authority between informal subdivisions, i.e., an allowance, and obligating in excess of that allowance does not implicate the ADA. Therefore, while the KO might have committed an internal, administrative violation, the exercise of the option was valid. It was not necessary to exercise the option “subject to availability of funds” because the funds were legally available and exercising the option did not violate the ADA. Stating the option was being exercised pursuant to 52.232-18, while not technically accurate or necessary, did not cause any harm, assuming unbroken service was not needed.
  10. Of course there is a contract. Just because the contract has expired, does not mean it does not exist. I recently dealt with a contractor claim filed 4 years after the end of the contract. I would have loved to have told the contractor that there was no contract. Have the rights and responsibilities of the parties changed under that contract? Absolutely. That is why the option cannot be unilaterally exercised. But the contract still exists. The issue is not whether the contract exists, but whether there is authority to modify the contract to allow the parties to exercise the option. Yes, this is exactly my point. I literally said, “my suggestion for modifying the contract to exercise the option is a legal fiction. In reality, the KO is awarding a new contract for the work.” It does not make sense to add an unlimited number of bilateral modifications on to an existing contract because when you start adding work that is not already covered by the underlying contract, then you need to make sure you have evaluated the proposed work, modified the SOW, included any applicable clauses that are needed, etc. You are not saving yourself any work and are potentially making the contract documents more confusing. In addition, by extending the contract you might inadvertently revive or extend the period to file a claim. I can think of many reasons why you would not want to continually add work to a contract or revive an expired contract via a BAA award. But those are administrative concerns, not CICA violations. Fortunately, modifying the contract to exercise the lapsed option does not implicate those problems. The work was already proposed and evaluated. The terms and conditions have already been agreed upon. My proposed solution is premised on several prerequisites including “1) the BAA allows for a direct award of a contract,” and “2) the work could otherwise be awarded as a new contract under the BAA…” As you noted above, a BAA award is not an exception to CICA, it is full and open competition. (See FAR 6.102(d)(2)(1).) Why would a direct award of a contract via modification of an expired contract be a violation of CICA, if a direct award of a stand-alone contract for that same work would not? CICA governs the “competition,” it does not mandate the format of the contract award. The peer/scientific review already happened when you awarded the contract. Get a memo from the technical office saying the previous evaluation and selection decision has not changed. Yes. That is up to the contracting officer to decide. But we are not talking about adding work that requires a new SOW and clauses along with a new technical submission and evaluation. We are addressing a situation in which the evaluation has already been conducted, all the terms and conditions have already been agreed to by both parties and the same work is still needed. In that situation, every KO I have worked with has preferred to modify an existing contract rather than start from scratch. No. Hopefully, the contracting officer is never exercising an option, modifying a contract, or awarding a contract without involving the requiring activity/program office in some way.
  11. GAO has held that the preliminary written notification is a measure that benefits the contractor and may be waived by the contractor. This waiver could be in the form of a modification, but does not have to be. If the period in which to exercise the option ends before the end of the contract, then the parties could bi-laterally modify the contract to extend the term in which to exercise the option. For example, "The Government may extend the term of this contract by written notice to the Contractor within 30 and 60 days before the contract expires; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 90 days before the contract expires. The preliminary notice does not commit the Government to an extension." In such a case, the parties could agree two weeks before the contract expires to modify the clause to read, "The Government may extend the term of this contract by written notice to the Contractor at any time before the contract expires," or other such language. The option could then be exercised in accordance with the terms of the clause as modified. However, by my read of the regulations and GAO case law, once the contract has expired, the option can no longer be exercised. There may still be contractual obligations that need to be fulfilled or claims to be resolved, but the contract itself is done. As I noted above, my suggestion for modifying the contract to exercise the option is a legal fiction. In reality, the KO is awarding a new contract for the work. The modification is an administrative convenience.
  12. The government must exercise an option in accordance with the terms of the contract. If the government was required to exercise the option in January, and did not do so, it lacks authority under the contract to do so six months later. When parties bi-laterally agree to modify the contract to exercise an option after the period to do so has expired, it is equivalent to a sole-source award. That is why a J&A is often required. But, a FAR Part 6 J&A is not always required. Imagine a contract with a lapsed option period valued at $8,500. In that case, the “sole source” award is below the micro-purchase threshold. Because no J&A would be required to issue a sole source award of such work, then a J&A is not needed to agree to a modification to add the work. Similarly, if the lapsed option period was valued at $175,000, and a sole source could be justified under FAR Part 13.106(b), then a modification supported by a memo from the KO determining only one source reasonably available would be sufficient. All the legal requirements for competition (or limiting competition) must be met, and the modification is simply an administrative convenience that takes the place of having to award a new contract. Now let’s apply those principles to a contract awarded under a BAA. The period to exercise the option has lapsed. Therefore, as stated above, the parties cannot simply agree to modify the contract. One option would be to support the modification with a J&A or FAR 13.106(b) memo as appropriate. However, that is not necessarily the only option. The original contract was (likely) negotiated and awarded on a sole source basis under the terms of the BAA. So, my advice would be to have the contracting officer review the terms of the BAA. Assuming: 1) the BAA allows for a direct award of a contract, 2) the work could otherwise be awarded as a new contract under the BAA, 3) the option price is still fair and reasonable, and 4) modifying the contract to exercise the option is in the best interest of the government, THEN the parties may bi-laterally agree to modify the contract and exercise the option PROVIDED the KO documents the file to reflect the above determinations AND as part of that determination states that although a new contract could be awarded, for administrative convenience the parties have agreed to exercise the lapsed option. If, for some reason, the underlying BAA requires some form of competition, or if the BAA has expired and a new one has not yet been issued, then the contracting officer must justify the limitation of competition in order to directly negotiate, modify the contract, and exercise the option (e.g., FAR Part 6 J&A or FAR 13.106(b)).
  13. FAR 15.404-1(b)(2)(i) states, “Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).” In other words, there must be adequate price competition to rely on a comparison of proposed prices. “Adequate price competition” requires, in part that “Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement…” FAR 15.403-1(c)(1)(i) (emphasis added). How can you know whether a competing offer satisfies the Government’s expressed requirement if you have not determined technical acceptability? I do not agree that comparison of proposed prices establishes price reasonableness when only one offeror has been determined technical acceptable. To do so ignores the requirement that there be “adequate price competition.” Of course, as others have mentioned, the OP does not have to evaluate all the offers as there are other ways to determine price reasonableness. In fact, the prices may have already been found fair and reasonable. This is a TO competition. Brent, were ceiling prices established and found fair and reasonable when the contract was awarded? If so, is there any reason those prices would not still be fair and reasonable?
  14. I'm not sure that this is the definitive answer, but DFARS 204.7103-1(f) states, "If a supply or service involves ancillary functions, like packaging and handling, transportation, payment of state or local taxes, or use of reusable containers, and these functions are normally performed by the contractor and the contractor is normally entitled to reimbursement for performing these functions, do not establish a separate contract line item solely to account for these functions. However, do identify the functions in the contract schedule. If the offeror separately prices these functions, contracting officers may establish separate contract line items for the functions; however, the separate line items must conform to the requirements of paragraph (a) of this subsection." (emphasis added) So, it seems like the contracting officer can establish separate contract line items for other direct costs like transportation, provided it satisfies the listed requirements. Or am I reading that wrong?
  15. Lionel Hutz

    COR Conflict of Interest

    Retreadfed identified the applicable portion of the regulation. The Standards of Ethical Conduct impose duties and requirements on federal employees that are enforceable by the government, not by the public. However, if a company has a separate and independent contractual cause of action, then a COR’s violation of ethics regulations could strengthen a claim/appeal. For example, if a contractor alleges the CO’s and COR’s treatment of the contractor was unreasonable, increased the cost of performance, and violated the contract’s implied duty of good faith and fair dealing, then the COR’s violation of the ethics regulations lends weight to the contractor’s argument. It doesn’t prove anything, but in my opinion, a court or board of contract appeals will be less deferential and more skeptical of the actions and explanations of a COR who has a “covered relationship” with the contractor and was appointed in violation of ethics regulations. Even if there is not a claim or appeal in play, a contractor can still seek redress, it just depends on how much of a nuisance she wants to make herself over this issue. In my experience, the key to getting results is to increase the “pain” level until ignoring the issue is more burdensome than dealing with it. So, start by notifying the contracting officer. Maybe she/he was not aware of the prohibition and it can be solved at that level. If you get ignored, go to the Chief of the Contracting Office. Then, the Chief Counsel, Agency Ethics Official, and Agency Inspector General’s Office. If no one in the Agency will address the situation, contact your Senators and Congressman. It’s amazing how quickly an issue will get addressed when a Congressional response must be provided. At each step of the way, articulate the harm being caused to your company by this apparent violation of ethical regulations. This course of action is provided with the following practical considerations: 1) Make sure the issue is worth it. If you go to your Congressman or the IG with every contract issue you have, your complaints will start to lose their effectiveness. Become a “frequent filer” of complaints and people will start thinking the problem is with you and not the Agency. 2) Is the COR actually doing something to negatively affect your company? If this is just an issue that you think doesn’t look right, but the COR is not actually doing anything problematic, it may not be worth becoming a nuisance and jeopardizing your relationship with other agency personnel. 3) In less than a year, the COR will no longer be in a “covered relationship” with the company and will be permitted to be the COR again. Will getting the COR “kicked off” this contract for 6 months make working with him more difficult in the future? 4) Finally, as Vern points out, the regulation says “should” not “shall,” and the “agency designee” can authorize someone to work on a matter regardless of any real or perceived impartiality. In the end, while you may be able to force an answer out of an agency, it won’t necessarily be the one you want.