Tzarina of Compliance

Will, do, oh the Wise One! Part of my new year's resolution is to ask a question on Wifcon that you will approve of 🙂. Happy New Year and Thank you! The question was meant to read: If a prime small business GSA MAS holder proposes a large subcontractor's past performance to meet certain PP requirements under a MAS Order RFQ (FAR 8.405), must the CO consider such subcontractor's PP? The RFQ simply says relevant PP will be considered in a risk/confidence evaluation and defines what PP is considered relevant - contracts of certain value, performed under similar circumstances in the last 3 years. I appreciate that the small business should be asking a question of the CO to see if the subcontractor's PP would be considered. But if the small business did not ask the question and submitted PP of its subcontractor, can the CO assign a neutral rating - i.e. not consider subcontractor past performance as relevant? I am keeping my fingers crossed in hopes that you will not hate the revised question 🙂

yes

Thank you! So to your knowledge there is no specific prohibition, just a CO preference?

I have a slightly odd question. I could not find any information in the MAS Desk Reference or on any GSA blogs. Situation: an agency plans to issue a T&M order under GSA MAS for a small business set aside project management services. The agency wants to use past performance information in evaluation criteria for a confidence rating and is looking for past performance on a comparable scope of work, in a comparable environment (overseas) comparable magnitude (over $10MIL). A GSA MAS holder which is a small business is interested in submitting an offer, but it does not have past performance of the comparable magnitude contracts. It has done this work before successfully, but well below $10MIL contract. The small business wants to subcontract part of the work to a large business which has relevant past performance. Would they agency have to consider the past performance of a subcontractor under a MAS Order? This is not a CTA arrangement. The small business plans to use a large business to perform part of the work and the large business agreed to work within the small business GSA MAS rates.

❤️ - I am feeling this 🙂

This is a very good point ( of course). I think what they are saying is that under paragraph (c) of FAR 52.249-14 they are extending the schedule due to the fact that the scope is not completed under excusable delays. But (c) says the contractor has to request the extension and in this case the contractor did not. The contractor in fact asserts that it has completed all the services that they have been required to complete under the scope and invoiced for all the fee due - i..e fee was to be paid for completing every quarter of the approved work plan to satisfaction of the COR. COR provided satisfaction statement for each quarter. Thank you all as always. Just wanted to make sure I am not missing something here. Will write that memo.... FAR 52.249-14 (c) Upon request of the Contractor, the Contracting Officer shall ascertain the facts and extent of the failure. If the Contracting Officer determines that any failure to perform results from one or more of the causes above, the delivery schedule shall be revised, subject to the rights of the Government under the termination clause of this contract.

They are saying that they are using an equitable adjustment to schedule under Excusable Delays, but then they are adding money to the Total Estimated cost for the extended period and I thought that excusable delays are non-compensable?. Plus the excusable delays only apply if the contractor is delayed, and not as @Vern Edwardspoints out when the contractors that the contractor oversees are delayed. So my view is that this is not an extension under Excusable delays, it is a sole source new procurement. There is nothing in the contract that says that completion is tied to completion of construction, nor did the RFP ask for estimated cost and fee based on however long the construction may take.

No. The contractor is arguing that if the Government wants an extension, it will agree to perform but the government will need to add money for the estimated cost and give the contractor a new fixed fee for the extension period. The government is arguing that the contractor did not earn full fixed fee for the original period of performance and so they will not pay an additional fee, because the construction the contractor was charged with overseeing was extended, so additional oversight services are needed for an additional year. There is nothing in the contract that requires the oversight contractor to only be paid if the construction contractors are on time.

I have a question in regard to what constitutes "completion" in a CPFF Completion Type contract. Specifically, when the Government does not bother to describe what it wants to complete for the contractor to earn Fixed Fee and instead uses very general terms like "Fixed Fee will be paid on an equally calculated quarterly basis, provided the contractor completes work approved by the COR in the workplan to the COR's satisfaction". Here is a situation, the contractor is providing construction oversight services for an agency. As a construction management oversight, the contractor is required to provide on site support, review RFI and REAs and submit quarterly reports to the ordering agency on the progress and issues with construction contractors. The work-plans which are approved for each year of performance require the contractor to provide specialists on day to day basis doing oversight work and submit quarterly reports. The contractor has been performing under all the approved work plans, and submitting fixed fee invoices for every quarter which have been paid. The contract ended after 2 years, however the construction that the contractor oversees is continuing due to the Excusable Delays extensions given to the construction contractors. The oversight contractor feels they have earned full fixed fee, since they completed all the work per approved workplans, were never told to stop work or reduce performance and the contract period of performance ended. The contractor did all that within the total estimated cost and in fact, for 20% less than the original estimated cost. Now the Government wants to extend the services of the contractor to continue providing oversight of construction for the contractors who got executable delay extensions. The contractor agrees to perform for another year but asks for a new Fixed Fee and additional cost in addition to the 20% remaining from the old period of performance. The Government argues that this is simply an "extension due to excusable delays" and so the contractor can only propose additional cost but no additional fee. My interpretation is that the contractor does not have to accept the extension since this is not a pre-priced option and therefore can negotiate a new TEC and Fixed Fee for the new period of performance and the Government is issued to treat this as a new procurement under J&A. Thoughts? Apart from: poorly written CPFF Completion scopes help no-one....

Thank you.

This is precisely what I was looking for. Many thanks for this. and @ji20874 I totally understand that these two are different clauses. I was just thinking of how that would work under Continuity of Services clause if it was not pre-priced either. Thank you @Vern Edwards - very interesting about the FAC 2010-003. I will go and read all of these now. I guess contractors should be asking the Agency which includes this clause in the contract at the time of proposal if they expect the contractor to price that option on monthly basis for up to 6 months. Thank you!

So the question I have and I searched the archives and I can not find an answer to: Situation: CPFF Contract with base period of 3 years and 2 x 12-month option periods. The contract contains both the -8 and -9 option clauses (FAR 52.217-8 and FAR 52.217-9). The contractor bid a Total Estimated Cost (TEC) & Fixed fee for the base period and each of the 12-month option periods. But the contractor did not bid the potential option to extend under the -8 clause for 6 months. If the CO extends last option period by 6 months while waiting for a follow on contract to start (delay in procurement etc) and the contractor has spent all the TEC and earned full Fixed Fee under the last 12-month option, does the CO have to complete a J&A to increase the TEC and add more fee (if any) for the additional 6 month period of performance? Can the CO extend without J&A? Should the CO have requested at the proposal stage for the contractor to pre-price the potential 6 months under the -8 clause? I guess it may have to be the same question for Continuity of Services clause if also included. FAR 52.237-2 Applogies for potentially a stupid questions under a cost type contract.....

Thank you. Learning is my favorite.

Have to look into those, thanks. Do you have any good examples of what it looks like in a GMP contract?

Government pays nothing, not even cost if the objective fails.

Private Sector is a little more attune of what "crap idea is", plus yes, to answer your question, I would rather private money fund far fetched "do good social impact" ideas first before tax payer gets to pay. As to why the Government is using cost type contracts is because the work method can not be specified and achievement of results is a maybe. Under the proposed PFS scenario, the Government (tax payer) does not care about how the work is done (except for maybe ethical considerations and applicable laws), because the payment is only due when desired outcome is confirmed. No outcome, no payment. No settlement, no re-procurement, nothing. If you give me a regular FFP contract and the scope says I get paid when the final deliverable is done, but the final deliverable fails the criteria for acceptance - do I get paid anything if you terminate? Do I have to pay you anything to re-procure? As far as the profit is concerned, the investor is an "impact investor" - so they have money which they could put in fixed income bonds or some other conventional instrument and sit pretty waiting for ROI. They would like to instead invest in something that that would help others, create some kind visible good or achieve progress for their desired cause without sacrificing the ability to earn a return It is not a donation, they already probably doing that. This is just another way to make money but by also doing something of value. In this scenario, the Government can contract with investor (evidently using OT at the moment) and investor contracts service provider. Investor pays the service provider to do the work. The Government gets a third party monitor and only pays the investor when outcomes are achieved. Or the Government can contract with intermediary who then contracts with Investor and a Service Provider. The funding is not the objective, the outcome is the objective. In the first instance where the Government contracts with Investor, the contracts says that If X is achieved the payment is $$ (includes cost plus fee). Investor is not interested in making certifications under any of the FAR clauses, or complying with No texting when driving, since it is already taking all the risk of not getting any of the money back. What instrument would that be - an OT? In the second instance, there may be more flexibility since the intermediary may be willing to accept a Fixed Price or Fixed Unit Price contract with FAR clauses but we are back to what happens if the intermediary fails to produce outcomes, do they get anything under a regular FP contract? Could you set up payments ONLY at 100% achievement with no AQL deviation and if contractor fails to deliver 100%, not settlement of any kind?

US Tax Payer is already paying for this. They are paying under idiotic Government cost reimbursement contracts which have to accomplish nothing and the only people who get benefit are the Potomac residents. Or it is done under "performance based" contracts where if you fail you will still get cost plus profit for "completed work". The point here is to leverage private sector interest in a specific area and align public financed programming by reducing the risk of funding crap ideas which complete nothing. The benefit to a private investor is putting their money to a social impact which may or may not affect where they live or their business and the agency's assistance in having the foreign government or (if at home) a state government buy-in to assist. And yes, the risk the investor takes is rewarded by "profit" - this is America. What is your point? Government contractors pocketing gazzilions in profits for "fearlessly taking on" poorly designed contracts which accomplish nothing in perpetuity is better than someone only making a profit when stuff gets done? I am making a case for real Performance Based Contracts here, where "performance based" is not just a fancy word for "we will pay you for work completed even if you completely fail." I think the grant aspect is interesting but you can not fund "profit" under grants, so a FFP with 100% only AQL is probably the way to go here.

@ji20874 and @joel hoffman bring up interesting points. The fact is that this is not an attempt to circumvent getting the funding upfront nor it is an interest payment. The agency in question would otherwise fund the same program, probably under cost type contract in hopes to achieve a social outcome: train underemployed youth in specific skills in a specific area or decrease mortality for infants in a specific country. This goal may benefit a private sector company, for example, which is willing to invest to get skilled workers in a specific area for their plant or across a specific country for new market entry and it may benefit the funding agency because they have appropriated funding to reduce unemployment. The investor is willing to put up the capital upfront and find someone to do this work and will only claim money + profit back if the program achieves the desired targets - various arrangements are possible for "+profit" - could be local tax breaks in lieu of profit, could be "each trained skilled worker" pays a small% back if fully employed by the investor.... etc. The targets are desired by the Agency and the investor. The update on this from the Federal Agency that uses this currently: they are using OT for the agreement with the investor, but they say that potentially Fixed Amount Grant or a Performance Based Fixed Price Contract could be used where funding is obligated upfront, but the payment is made ONLY under no margin of error AQL, which is what I believe @Acquirersays.

Thank you, Vern and I appreciate your comments and Delaware research. I am writing here not because I don't want to do research, I am simply curious if anyone has done this and could share some thoughts/experiences. I understand that this kind of contracting is really not the type that most people here care about since PBS tend to serve "feel good" public purpose projects rather than war fighters or infrastructure. Nevertheless, there is a real need for some innovative approaches in some of the social impact contracting which could potentially save tax payer funding and leverage private sector funding. I have done a lot of research on PFS contracts as they are implemented at State level and also in other countries. In fact there is at least one agency in the US Government which has done this kind of "bond" arrangement for a project overseas. Bond is really a misleading word here, but essentially it's a private public partnership of sorts where investor's corporate social or philanthropical interests collide with public need. To my knowledge they may have used their OT authority to do this, but I am not quite sure and so I was looking to see if anyone has any experience at all with this. I will continue my research and thank you for y'all's time.

It is not really an Augmentation. There is no commitment by the Government to pay except for a Monitor unless they instantly get what they have a bona fide need to purchase in first place. In other words, if I need to purchase solution/services to reduce infant mortality in a specific area, I would normally do it under a cost type contract with no guarantee of success. Here I am basically having someone else fund this program and only pay if the mortality is reduced by a pre-set percentage, which was my intent and bona fide need in first place.

Do you believe a transaction like this would be an OT? Also, if an agency issues a Fixed Unit Price Contract for services and incrementally obligates and only pays for outcomes or not at all, would it not be possible? Sorry for ignorance. Also I am exploring this option for a defined up to 5 year period of performance and not an indefinite first-outcome type. So an arrangement is basically achieve x within 5 years or get paid nothing.

I am not assuming anything, just trying to figure out how this would work if at all. I will look at Chapter 6 as you suggested, thanks. I was thinking that funding would need to be allotted in full for both evaluator and the max payment amount to avoid ADA violation.

I have a question for anyone familiar with how to innovate within FAR. Has anyone replicated the UK/Australia typePay-For-Success Contracts under FAR? I know some States like NY and WI are doing it in some of their public procurements, but I am curious whether this model would work under a FAR based acquisition and what type of contract one would use? Basically the issue I have is a private sector partner who is willing to put up the funding or wiling to find an investor to do that is not really interested in complying with a huge amount of FAR & supplement clauses. However, since this looks like a good way not to waste tax payer funding, by only paying if results are achieved, I am looking for the best way to contract for this. Although OT is probably the way to do it (not sure), what is the agency does not have OT authority? The Pay for Success (PFS) model is a new way of financing social services to help governments target limited dollars to achieve a positive, measurable outcome. Under the Pay for Success model, a government agency commits funds to pay for a specific outcome that is achieved within a given timeframe. The financial capital to cover the operating costs of achieving the outcome is provided by independent investors or the Government or a combination. In return for accepting the risks of funding the project, the investors may expect a return on their investment if the project is successful; however, payment of the committed funds by the government agency is contingent on the validated achievement of results. In this way, the PFS model shifts the burden of investment risk from the government to private investors, effectively creating a social investment market where the government only pays for results. The PFS financing model relies on independent private funding to provide the working capital for the proposed intervention. Because the up-front money is not provided by the government, the PFS project partners are not constrained by government regulation on how they can spend the money. This financial freedom should allow them to explore, develop, and carry out innovative service delivery strategies that they would have been unable to implement with government dollars. The payment is absolutely contingent on meeting a pre-stated project outcome goal, and typically occurs at the end of the project when outcomes can be measured. Should the PFS project fall short, the government does not pay for the intervention, and the financial risk remains with the private investors, not with the tax-payers. If outcomes/results are achieved, the government pays to the contractor or investor a pre-negotiated amount (which includes an ROI). Results are measured by an independent evaluator hired by the government. The question is what type of contract would one use to pay the investor/contractor?

Thank you as ever!

So to be clear what the calculation should look like is: Prime Costs + Subcontractor Costs + Fixed Fee = Total Prime Costs + Fixed Fee at X% applicable to the Total Prime Costs, where X% can not exceed statutory limit = Total Estimated Cost Plus Fixed Fee Under CPFF Term, the total ordered LOE would then include subcontractors' LOE and the prime would only be paid full fee is the total LOE is delivered?