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Don Mansfield

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  1. Don Mansfield
    It’s time we rethink our approach to the training problem. Our traditional approach is to dictate a blueprint of training classes that must be followed in order to obtain prescribed levels of certification. To put it in acquisition terms, we’ve been using a design specification. What if we were to use a performance specification instead? What might that look like? Before answering these questions, we should identify what it is we are trying to achieve with training.

    The purpose of training is to make the trainee proficient in performing one or more defined learning objectives by means of specialized instruction and practice. A learning objective consists of three parts—an action, a condition, and a standard. For example, someone new to federal contracting will likely receive training to select FAR provisions and clauses (action) given a set of facts about an acquisition and access to the FAR (condition) (the implied standard would be “correctly”). It follows that if an individual already behaves in the prescribed way under the prescribed conditions to the prescribed standard, then training would be unnecessary for that individual—they’ve already attained the learning objective.

    Under the “design specification” training model that we currently use, there is an implied assumption that an individual cannot attain the requisite learning objectives without following the prescribed blueprint of training classes. Further, there is no method of demonstrating the attainment of the requisite learning objectives prior to the prescribed training classes. As a result, everyone must take the required training classes, regardless of individual necessity. Considering the resources involved in carrying out such a program, this is an expensive proposition.

    While the implied assumption of the “design specification” training model may prove true in some cases, a more reasonable assumption would be that some individuals need to follow the prescribed training blueprint and some do not. Those that do not would include those that have already attained the requisite learning objectives by other means and those that could without following the prescribed training blueprint. Thus, the challenge would be to identify those that don’t need a particular training class before requiring their attendance at the training class.

    What if we borrowed the thinking behind performance-based acquisition and applied it to the training problem (i.e., a “performance specification” training model)? That is, instead of dictating how the workforce is to attain requisite learning objectives, we specify the requisite learning objectives (performance outcomes) and method of assessment, and let the workforce decide how they are going to attain them. Some workforce members may choose a program of self-study, others may study in informal groups, some contracting offices may develop their own ongoing training programs, etc. Still others may choose to follow the existing blueprint of training classes. Regardless of how one attains the requisite learning objectives, all are held to the same standard using the same method of assessment.

    For an illustration of how such a model might look, consider the profession of actuarial science. Beanactuary.org contains the following description:

    Like other top-ranked professions (such as law and medicine), one must pass a set of examinations to achieve professional status as an actuary. Unlike other professions, in actuarial science you’ll have the opportunity to work as an actuary while completing the examination process—employers often allow study time during working hours, pay exam fees, provide internships, and even award raises for each exam passed. Though, to get the best start on a rewarding career, many soon-to-be actuaries begin taking exams while still in college. Of those that do, most achieve associateship in three to five years. All candidates acquire a core set of knowledge from required preliminary exams. The preliminary exams and Validation by Educational Experience requirements are the starting points for an actuarial career.

    To attain an “Associate of the Society of Actuaries” (ASA) designation from the Society of Actuaries, one must pass exams in probability, financial mathematics, models for financial economics, models for life contingencies, and construction and evaluation of actuarial models. In addition, there is one required e-Learning course and a required one-day seminar in professionalism. After attaining the ASA designation, one typically pursues a “Fellow of the Society of Actuaries” (FSA) designation within one of six specialties: corporate finance and enterprise risk management, quantitative finance and investment, individual life and annuities, retirements benefits, group and health, and general insurance. To attain the designation, the FSA candidate must take 3-4 more exams unique to the specialty, complete four e-learning courses, and attend a three-day case-based fellowship admissions course that requires each candidate to deliver an oral presentation on a topic within the field. In case you weren’t keeping track, that’s a total of four days of required attendance in classrooms to achieve the highest designation in the field. In contrast, DoD contract specialists must attend 32 days of classroom training to attain the lowest level of certification.

    What if to attain level 1 certification in contracting, one had to pass exams in, for example: acquisition planning, contracting methods, contract types, socioeconomic programs, and contract administration, and attend a one-day seminar on ethics? After level 1, contract specialists would choose a specialty in which they would pursue Level 2 certification. Specialties would be, for example, major system acquisition, research and development contracting, construction and A/E contracting, service contracting, IT acquisition, acquisition of commercial items, contract administration, etc. To attain Level 2 certification, contract specialists would have to pass a series of exams unique to that specialty. For example, to attain Level 2 certification in service contracting, there would be exams on specification of service requirements, source selection for services, pricing services, and service contract administration. There could also be a Level 2 admissions course where the candidate would have to submit and present a paper on a topic related to their specialty.

    If nothing else, use of the performance specification training model would cost less than the design specification model currently in use. I would go as far as to say that, on the whole, the workforce would be at least as competent as it is now.

    What’s your opinion? We’d like to know.
  2. Don Mansfield
    In Latvian Connection General Trading and Construction LLC, B-408633, September 18, 2013, the Comptroller General denied a protest of a solicitation issued by an Air Force unit in Oman for armored cable to be used at Thumrait Air Base, Oman. At issue was the Air Force’s decision to not automatically reserve the acquisition for small business concerns, which both the protester and the Small Business Administration (SBA) argued was required under the Small Business Act. The protester relied on 15 U.S.C. § 644(j)(1), which states:

    [Note: these thresholds have since been raised by the FAR Council. See FAR 19.502-2( a ).]
    The SBA implemented this statutory provision at 13 C.F.R. § 125.2(f)(1), which states that contracting officers (COs):


    The Air Force argued that the automatic reservation, which is stated at FAR 19.502-2(a), did not apply because the acquisition was outside the United States and its outlying areas. The Air Force relied on FAR 19.000( b ), which states:

    The Comptroller General sought the views of the SBA regarding the geographical restriction at FAR 19.000( b ). In its comments, the SBA argued that this regulatory “statement of policy” does not properly implement Small Business Act requirements. Further, the SBA noted that elsewhere the Small Business Act exempts certain provisions from applying outside the United States. Thus, if Congress wanted to place a geographical restriction on § 644(j)(1), it would have done so.

    Siding with the Air Force, the Comptroller General stated:

    This logic suggests that had the FAR Council exempted Kansas City, Missouri, from the application of § 644(j)(1), that would have been okay, too.
    The New SBA Regulations
    Fast-forward two weeks to October 2, 2013. The SBA issued a final rule amending its regulations governing small business contracting procedures (see 78 FR 61114). 13 C.F.R. § 125.2 was amended as follows:

    Although the amended SBA regulation seemingly put to bed the issue of the geographical restriction stated at FAR 19.000( b ), the FAR Council has taken no action to amend the FAR (see “FAR Open Cases Report” at http://www.acq.osd.mil/dpap/dars/far_case_status.html).
    Where are We Now?
    On July 14, 2014, Latvian Connection, LLC, (Latvian) filed a protest with the Government Accountability Office (GAO) (B-410081.1) of a State Department solicitation for spare and replacement parts for the United States Consulate General in Dubai, United Arab Emirates (Solicitation No. 3458493). One of the bases of the protest was the State Department’s decision to not automatically reserve the acquisition for small business concerns. The Comptroller General sought the views of the SBA. In a letter to the GAO, the SBA explained their position as follows:

    [Letter from SBA to GAO, dtd. 25 August 2014, RE: B-410081 Protest of Latvian Connection, LLC]. The letter went on to reference the changes to 13 CFR § 125.2 shown above. The protest against the State Department solicitation was subsequently dismissed on other grounds.
    On December 10, 2014, Latvian filed a protest with the GAO (B-410921) of an Army solicitation for the installation of canopy sunshades on Camp Arifjan, Kuwait (Solicitation No. W912D1-15-R-0004). Again, Latvian argued that the acquisition should have been automatically reserved for small business as required by the Small Business Act and the newly amended SBA regulations. Presumably understanding that they would be fighting a losing battle, the Army amended the solicitation to automatically reserve it for small business concerns and the protest was dismissed. The description block of the amendment contained the following statement:

    Conclusion
    As it stands, overseas COs and small business concerns seeking overseas contracting opportunities are in a tough spot. Overseas COs must deviate from the FAR to comply with the Small Business Act and SBA regulations. Small business concerns seeking overseas contracting opportunities are dealing with contracting officers that are blissfully ignorant of the changes to the SBA regulations due to the longstanding geographical restriction stated at FAR 19.000( b ). It may take nothing short of a GAO protest to get overseas COs to pay attention to the amended SBA regulations.
    The ball is squarely in the FAR Council’s court. It needs to revisit FAR 19.000( b ) in light of the amended SBA regulations. If there is a legal argument for keeping the geographical restriction at FAR 19.000( b ), then the Office of Federal Procurement Policy should issue guidance to that effect to agencies. If there is no legal argument for keeping FAR 19.000( b ), then it should be removed. Sitting back and letting overseas COs and small business concerns fight it out solicitation by solicitation is not fair to either party.
  3. Don Mansfield
    I'm looking for feedback on a tool that I'm creating for DoD. Basically, it would be a single document that would contain the FAR, DFARS, DFARS PGI, and DoD Class Deviations. The concept is similar to that used in the General Services Administration Acquisition Manual (GSAM), where both regulatory (GSAR) and nonregulatory information is integrated into one document and distinguished by shading. The main difference is the document that I envision also contains the FAR. I've attached a sample of what an integrated FAR subpart 1.1, DFARS subpart 201.1, and DFARS PGI subpart 201.1 would look like. Take a look and let me know what you think. I'd appreciate any feedback, but I'm particularly interested in the following:
    1. Would you use such a tool?
    2. Is there a better way to distinguish between FAR, DFARS, and DFARS PGI text than the use of shading?
    3. Do you have any ideas to make the tool better (more useful)?
    Consolidated FAR, DFARS, DFARS PGI, DoD Class Deviations.docx
  4. Don Mansfield
    I invite you to participate in a plain language writing contest. To participate, re-write the passage below in plain language and post your entry in the comments section below. Here is the passage:
    You may submit more than one entry. I will score your entry for readability using the Dale-Chall Readability Formula. 
    Your entry must communicate the essential information in the passage to be acceptable. The acceptable entry with the lowest adjusted readability score will be the winner. I will send the author of the winning entry a copy of The Write Way: The S.P.E.L.L. Guide to Real-Life Writing by Richard Lederer and Richard Dowis.
    I will also give an award for the most humorous entry. I will send the author of the most humorous entry a copy of The Play of Words: Fun & Games for Language Lovers by Richard Lederer.
    The deadline for receipt of entries is December 27 at 4:30 pm Pacific Standard Time. If an emergency or unanticipated event interrupts normal Wifcon processes so that entries cannot be received on the Web site designated for receipt of entries by the exact time specified in the invitation, and urgent requirements preclude amendment of the invitation, the time specified for receipt of entries will be deemed to be extended to the same time of day specified in the invitation on the first work day on which normal Wifcon processes resume.
    Enjoy.
  5. Don Mansfield
    To answer the title question--most likely yes, for DoD. A recent DFARS final rule, Procurement of Commercial Items (DFARS Case 2016-D006), added the following definition at DFARS 202.101:
    Since small business concerns are exempt from CAS, most small business concerns would fall within the definition. This has significant consequences because the final rule also added the following at DFARS 212.102(a)(iii):
    So, DoD contracting officers can use FAR part 12 procedures to buy both commercial and noncommercial items from most small business concerns. I admit that I did not appreciate the scope of this rule when I first read it. I would have expected more dancing in the streets by both small business concerns and DoD contracting officers. Maybe there was and I missed it.
  6. Don Mansfield
    I always thought that the FAR Matrix was a good idea that was poorly executed. To begin with, it's notorious for containing errors. Second, most of the entries in the "Principle Type and/or Purpose of Contract" columns are "A", Required when applicable, which means you have to look up the prescription anyway. Lastly, the matrix isn't going to tell you if your agency deviates from the FAR prescription, which DoD does a lot. As such, I created a matrix that I think overcomes these problems.
    A few things about the matrix:
    It contains every provision and clause in the FAR, DFARS, and in DoD Class Deviation memoranda. It doesn't have any "Principle Type and/or Purpose of Contract" columns except for a Commercial Items column. It contains the actual prescription of the provision or clause. For readability, I removed the number and title of the provision or clause in the block and just wrote "use this provision..." or "use this clause..." The identifying information for the provision or clause is already contained in the row. For DoD, it contains additional instructions for the use of FAR clauses that is contained in the DFARS or in a class deviation. This information appears in bold. If you work for a civilian agency, just ignore what's in bold. In the "IBR" column (Incorporation by Reference), there are no "N" entries for "no", with the exception of the provisions and clauses prescribed at FAR 52.107. This may cause some people to freak out, so I'll explain. FAR 52.102(c) states: Thus, if the FAR Matrix contained a "Y" in the IBR column, my matrix will also contain a "Y". If the FAR Matrix contained an "N" in the IBR column, or the provision or clause came from the DFARS or a DoD class deviation, then my matrix will contain a "Y*". The key at the top of the matrix contains an explanation for the "Y*" entry. If you're wondering how to incorporate a provision or clause that contains fill-in material or something the offeror must complete, see FAR 52.102(a) and FAR 52.104(d).
    You can see the matrix on the DAU Acquisition Community Connection. I'm open to suggestions for making it better. Also, I would like to think that it doesn't contain any errors. However, if you spot one please let me know. As an incentive, I will add your agency's provisions and clauses (the ones in Title 48 of the CFR) to the matrix if you point out a mistake.
     
  7. Don Mansfield
    I recently gave a course on simplified acquisition procedures where I was again confronted with the use of the provision at FAR 52.212-1 Instructions to Offerors--Commercial Items in requests for quotations (RFQs) issued pursuant to FAR part 13. (We discussed this issue in the Wifcon forum before here and here). The problem is that the provision was not designed for use in RFQs under FAR part 13. To begin with, the provision requests "offers"--not quotations--which are different (see the definition of "offer" at FAR 2.101). The provision also includes elements that don't apply when requesting quotations under FAR part 13 (e.g., a minimum offer acceptance period, the dreaded late proposal rule, instructions on how to withdraw offers, a statement of intention to award without discussions, debriefing information, etc.). Although the FAR permits tailoring of FAR 52.212-1, it is typically just incorporated by reference without tailoring. I've wanted to create a version of FAR 52.212-1 tailored for SAP for a long time and I promised my last class that I would. As such, I submit my first draft to the Wifcon community for comment below. I've also created a side-by-side comparison of the untailored version of FAR 52.212-1 and my draft version that you can access here.




    Please provide comments and questions below.
  8. Don Mansfield
    It's been almost 10 months since the FAR Council issued the last Federal Acquisition Circular (FAC). The streak of inactivity will be broken on November 6 when FAC 2005-96 will be published. The FAC contains a single rule that removes the Fair Pay and Safe Workplaces Rule. But that's not what makes the rule so remarkable. Item 16 of the FAC makes changes to the provision at FAR 52.204-8 as follows:
     
       Notice something strange? See that link to a YouTube Video? That's really there. It's in both the html and pdf versions of the FAC. It is officially contained in the FAR. What is the video? I won't spoil it for you--click and find out.
  9. Don Mansfield
    In a recent DoD IG report, the Army Contracting Command was cited for its failure to perform "component assessments" on 23 contracts subject to the Buy American Act (see DoD IG Report No. 2015-026). The report states as follows:
    Not having ever heard of such a requirement, I checked the reference to this requirement, which was allegedly located in DFARS 252.225-7001( a )(3)(ii)(A). DFARS 252.225-7001 is a contract clause entitled "Buy American Act and Balance of Payments Program". The clause does not contain "( a )(3)(ii)(A)", but it does contain a paragraph "( a )". Paragraph ( a ) defines, for purposes of their use in the clause, the terms "Commercially available off-the-shelf (COTS) item", "component", "domestic end product", "end product", "foreign end product", "qualifying country", "qualifying country component", "qualifying country end product", and "United States". The paragraph does not require the contracting officer to do anything. In fact, it doesn't require that anybody do anything--it merely defines words and terms. The balance of the clause imposes an explicit requirement on the contractor in paragraph ( c ) and an implied requirement on the contractor in paragraph ( d ):
    Nothing in the entire clause requires the contracting officer to do anything. The terms "contracting officer" and "component assessment" do not appear in the clause. The term "component test" appears once--in paragraph ( b ) (see above). No duty of the contracting officer can reasonably be inferred.
    When read together with the provision at DFARS 252.225-7000, it is clear that any assessment of end item components should be done by an offeror when determining how to complete the certification in DFARS 252.225-7000( c ):
    I assume that the Army Contracting Command pointed out the flawed assumption that the IG had made when responding to the audit. Let me just check their response to this finding to be sure:
    Oh, well. Get ready ACC contracting personnel--you will soon be receiving a policy memo requiring you to take CLC 027 Buy American Act. And no, it does not contain guidance on how contracting officers are to perform "component assessments".
  10. Don Mansfield
    Consider the following exchange between two people:
    Obviously, Speaker 2's answer is not responsive to Speaker 1's question. Speaker 1 wanted to know about a particular aspect of Speaker 2's car:  its origin. Speaker 2 described a different aspect of his car:  its color. While Speaker 2's statement about the color of his car may be true, it doesn't tell us anything about the origin of his car.
    Easy enough, right? Ok, let's try another one. Consider the following exchange between two contract specialists:
    Is Contract Specialist 2's answer responsive to Contract Specialist 1's question? No, the answer is no more responsive to the question than Speaker 2's answer was to the question of whether his car was foreign or domestic. Why? In this exchange, Contract Specialist 1 wanted to know about a particular aspect of Contract X:  ts compensation arrangement. Contract Specialist 2 described a different aspect of Contract X:  its delivery arrangement. While Contract Specialist 2's statement about the delivery arrangement of Contract X may be true, it doesn't tell us anything about the compensation arrangement of Contract X.
    Make sense? If so, see if you can spot anything wrong with the following passage of an article on contract types that recently appeared in the December 2010 issue of Contract Management (see Government Contract Types: The U.S. Government?s Use of Different Contract Vehicles to Acquire Goods, Services, and Construction by Brian A. Darst and Mark K. Roberts):
    Do you see anything wrong?  Notice that the first two "families" are categorized by compensation arrangement. However, the third family contains a mix of terms used to describe compensation arrangement (T&M/LH), delivery arrangement (indefinite delivery), the extent of contractor commitment (level-of-effort), and a unique term used to describe a contract that is not definitive (letter contract). The way this passage is written implies that an indefinite delivery contract, a level-of-effort contract, and a letter contract are necessarily different (belong to a different "family") from a fixed-price or cost reimbursement contract. However, an indefinite delivery contract or a level-of-effort contract will have a compensation arrangement. The compensation arrangement can be fixed-price, cost-reimbursement, T&M/LH, or some combination thereof. A letter contract may or may not have a compensation arrangement when it is issued. You could conceivably have a letter contract that had a cost-reimbursement compensation arrangement, an indefinite delivery arrangement, and that provided for level-of-effort orders. As such, the authors? categorization of contract types makes as much sense as categorizing cars into three families?foreign, domestic, and red.
    Incentive Contracts? Not What You Think They Are
    Consider the following simplified description of a compensation arrangement:
    Does the preceding describe an incentive contract? Many would say yes, because the arrangement provides for an incentive--specifically, a performance incentive. However, that would be incorrect. Just because a contract contains an incentive does not mean that it is an incentive contract. FAR 16.202-1 contains the following statements in a description of firm-fixed-price contracts (similar statements pertaining to fixed-price contracts with economic price adjustment can be found at FAR 16.203-1.
    [bold added].
    Further, FAR 16.402-1(a) states:
    Thus, it's not enough for a contract to contain an incentive to be an incentive contract. It must contain a cost incentive (or constraint).
    In the aforementioned Contract Management article, an endnote references FAR 37.601(3) and misinterprets this paragraph as--encouraging the use of incentive-type contracts where appropriate.  Here's what FAR 37.601(3) actually says:
    The authors have made the mistake of assuming that a contract that contained a performance incentive was necessarily an incentive contract. In fact, when acquiring services FAR 37.102(a)(2) states the following order of precedence:
    As shown above, a firm-fixed-price contract would take precedence over an incentive contract.
    A Genuine Misunderstanding
    In a discussion of additional contract types and agreements, the Contract Management article contained the following statement (which caused me to stop reading and start writing):
    Huh? T&M/LH is a type of indefinite delivery contract? I'll let you readers ponder that one.
    The article concludes with a plug for the authors-two-day course in, you guessed it, types of contracts. I will pass.
  11. Don Mansfield
    I recently heard from a contractor regarding an experience he had with reverse auctions. A federal agency was conducting a reverse auction using FedBid and he decided to compete (FedBid, Inc., provides a service whereby federal agencies can conduct reverse auctions). Although he submitted several bids, he ultimately lost the reverse auction. When he checked to see who had won, he was surprised to see that the federal agency that was in need of the required items was the low bidder. In other words, the federal agency was submitting bogus bids in an effort to get the contractor to reduce his bid price. The federal agency then contacted him and offered to purchase the items from the contractor at his lowest bid price. Feeling that he had been duped, he told them to get lost.
    The tactic employed by the federal agency, called phantom bidding, is not new. Many view the practice as unethical while others see it as a legitimate tactic. In regular auctions, the legality of seller participation in bidding varies from state to state. For those states that allow it, sellers typically must disclose that they reserve the right to participate in the bidding.
    In any case, should the Federal Government be allowed to place phantom bids in reverse auctions? Would your answer be different if the disclosure of the practice was required prior to the reverse auction?
  12. Don Mansfield
    I read something that I found remarkable in the recently published GAO decision Master Lock Company, LLC, B-309982.2, June 24, 2008. Bob posted the decision on the Wifcon home page. The protester argued that the agency's evaluation of the awardee's past performance should have taken into account the fact that they had declined a delivery order under a different IDIQ contract. In response, the agency argued that a delivery order was not binding and the GAO agreed. Here's an excerpt:


    "During the course of this protest, Master Lock also argued that the agency?s evaluation of Evergreen?s past performance was unreasonable. As discussed above, Evergreen declined to accept order No. 2745, which was issued under a different contract. DLA acknowledges that it did not consider these events in its evaluation of Evergreen?s past performance. AR at 8. The agency contends, however, that it was not required to do so because the submission of a quote by a vendor under an ID/IQ contract does not result in a binding obligation. Thus, the agency argues, because Evergreen did not accept the order, there was no contract performance for the agency to evaluate.
    The agency is correct that neither the submission of a quote by a vendor nor the issuance of an order by an agency results in a binding contractual obligation. Rather, the government?s order represents an offer that the vendor may accept either through performance or by a formal acceptance document. M. Braun, Inc., B-298935.2, May 21, 2007, 2007 CPD ? 96 at 3."
    [italics added].
    However, the case that the GAO cited as support for their position did not deal with a task or delivery order under an IDIQ contract--it was a purchase order using simplified acquisition procedures. There's a big difference. FAR 16.506 requires the inclusion of the clauses at FAR 52.216-18, Ordering, 52.216-19, Order Limitations, and 52.216-22, Indefinite Quantity, in an IDIQ contract. Here's what the Indefinite Quantity clause says regarding the contractor's obligation to perform:


    "Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the 'maximum.' The Government shall order at least the quantity of supplies or services designated in the Schedule as the 'minimum.'"
    [bold added].
    Now, what in this required FAR clause would give the contractor the right to decline an order, provided that the order complies with the Ordering and Order Limitations clauses? I don?t see it.
    The decision includes the following statements further on in an attempt to clarify:


    "Although the work required under any task or delivery order will only become a binding obligation on the parties if the vendor accepts the order, the underlying ID/IQ contract may itself have obligations. For example, a contract may require a vendor to accept orders placed by the agency within certain parameters.?
    This is conceptually incorrect. IDIQ contracts do require (not ?may?) the contractor to accept orders placed by the agency within certain parameters (stated in the Ordering and Order Limitations clauses). The only instance where a contractor?s acceptance of a task or delivery order would matter would be if the agency?s order was not within the stated parameters in the Ordering and Order Limitations clauses. Furthermore, an arrangement where the Government was required to order a minimum quantity and the contractor would not be required to perform would arguably lack consideration and, thus, not be an enforceable contract.
    The main problem with this decision is that it characterizes the exception to the rule (i.e., situations where the contractor may decline a task or delivery order under an IDIQ contract) as the rule itself. It also fails to recognize the distinction between purchase orders made in the open market and task and delivery orders under IDIQ contracts.
  13. Don Mansfield
    In TYBRIN Corporation, B-298364.6; B-298364.7, March 13,2007, the GAO held that an offeror's cost estimate that indicated that it would not perform 51% of the contract work on a small business set-aside rendered the offer unacceptable, even though the offeror did not explicitly take exception to the solicitation's limitation on subcontracting clause (FAR 52.219-14) and the SBA granted the offeror a certificate of competency. The GAO reasoned as follows:

    As a result, the Air Force reopened discussions with offerors and sought revised proposals. This action was unsuccessfully challenged in the Court of Federal Claims (see The Centech Group, Inc., v. U. S. and Tybrin, Inc., 07-513C, Filed December 7, 2007, Refiled December 13, 2007) and unsuccessfully appealed to Court of Appeals for the Federal Circuit (The Centech Group, Inc., v. U. S. and Tybrin Corporation, No. 08-5031, February 3, 2009).
    Thus, it would seem that we have a general rule that if information in a cost estimate indicates that an offeror will not comply with a material term of a solicitation, then the offeror has implicitly taken exception to that term of the solicitation, which would make their offer unacceptable (or nonresponsive).
    However, in Group GPS Multimedia, B-310716, January 22, 2008, the opposite conclusion was reached. In that case, the successful offeror submitted a cost estimate that contained a proposed labor rate that was below the labor rate stated in the Department of Labor Wage Determination (the contract would be subject to the Service Contract Act). The protester argued that this gave the awardee an unfair price advantage. The GAO held as follows:

    This raises several questions. Why wouldn't a cost estimate that contains proposed labor rates below the SCA-minimum labor rates render an offer unacceptable, but a cost estimate that shows an offeror performing less than 51% of the contract work on a small business set-aside would? In neither circumstance does the cost estimate indicate compliance with a material term of the solicitation (the Limitation on Subcontracting clause and the Service Contract Act, respectively). Yet, we have different results. Is compliance with the Limitation on Subcontracting clause a special case? If so, why? Or is proposed compliance with the SCA (as evidenced in a cost proposal) a special exception to the rule? If so, why?
    Any ideas?
  14. Don Mansfield
    I was recently perusing some of the recent final rules issued by the FAR Council when I came across a statement that I found interesting. In responding to a comment concerning the applicability of TINA to task and delivery orders, the FAR Councils stated that TINA applicability is to be determined when negotiating a basic IDIQ contract, as well as when negotiating subsequent orders under the contract. A description of the comment that they received read as follows:

    The Councils' response was as follows:

    (See FAR Case 2008-012, Clarification of Submission of Cost or Pricing Data on Non-Commercial Modifications of Commercial Items (75 FR 13414)).
    My initial reaction was "Good, they got it right." However, I was not satisfied with the complete lack of explanation other than that this information was "commonly understood." "It is commonly understood?" is the equivalent to saying "Well, everybody knows?", which is not an answer that I would accept from a student nor is it one that the public should be accepting from the FAR Councils. Further, the FAR Councils' use of "commonly understood" raises the question: Commonly understood by whom? Based on my experience, "commonly debated" would be a more apt description.
    Task and Delivery Orders are "Contracts"
    By stating that TINA applicability determinations must be made at the task and delivery order level, the FAR Councils have, perhaps unwittingly, admitted that task and delivery orders are "contracts" as defined at FAR 2.101. Consider the requirements for obtaining cost or pricing data at FAR 15.403-4(a)(1):

    If TINA applies to task and delivery orders, then task and delivery orders must fall into one of the three enumerated categories. A task or delivery order issued by the Government is certainly not a subcontract, so (ii) is out. A task or delivery order under a contract is not a "written change in the terms of a contract", so they do not meet the definition of "contract modification", thereby eliminating (iii). Thus, task and delivery orders must be "contracts."
    However, one cannot reasonably describe this information as "commonly understood" either. Consider the following statements made in FEATURE COMMENT: Contesting Task And Delivery Order Awards At The COFC--Policy Implications Of A Choice Federal Courts May Soon Have To Make (51 NO. 20 Gov't Contractor ? 174). In discussing the automatic stay provisions of CICA, the author writes:

    The author, seemingly indecisive, also writes:

    This author is not alone. In FEATURE COMMENT: Acquisition Reform Revisited--Section 843 Protests Against Task And Delivery Order Awards At GAO (50 NO. 9 Gov't Contractor ? 75) the authors put forth the following argument:

    I agree with the first author's assessment of the potential controversy that would ensue if the FAR Councils were to redefine "contract" to include task and delivery orders. If the FAR Councils were to propose such a rule, I would estimate that they would receive no less than 100 public comments.
    Where's the Cost or Pricing Data Clause for Task and Delivery Orders?
    If it's "commonly understood" that TINA applies to task and delivery orders, why isn't there a standard FAR clause for use in task and delivery order contracts that compels the submission of cost or pricing with a task or delivery order proposal when applicable? There's a standard FAR provision at FAR 52.215-20, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data (Oct 1997), that can be used to compel offerors to submit cost or pricing data when submitting offers for a basic IDIQ contract. There's also a standard FAR clause at FAR 52.215-21, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data?Modifications (Oct 1997), that compels submission of cost or pricing data when pricing contract modifications (if applicable). Where is "Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data?Task and Delivery Orders"? Why not have offerors agree to submit cost or pricing data (if applicable) with subsequent task and delivery order proposals?
    TINA Yes, CAS No
    The Councils' response in the publication of this rule reminded me of an earlier response pertaining to the applicability of CAS to task and delivery orders accompanying a final rule on CAS (70 FR 11743-01). In that response, the Councils reached the opposite conclusion. The exchange was as follows:

    Thus, a determination of CAS applicability is made only when placing the basic IDIQ contract. If an IDIQ contract is subject to CAS, all orders under the contract are subject to CAS. If an IDIQ contract is not subject to CAS, none of the orders under the contract are subject to CAS.
    So, according to the FAR Councils, a contracting officer must determine applicability of TINA when awarding a basic IDIQ contract and issuing any subsequent orders, but need only determine the applicability of CAS once?when awarding a basic IDIQ contract.
    This raises another yet another question?how is a CO supposed to know this? Consider the rules for determining CAS applicability at 48 CFR 9903.201-1:

    By asserting that CAS determinations are not made at the task or delivery order level, the FAR Councils must be using a definition of "contract" that is different than what appears at FAR 2.101. What definition are they using and why does that definition exclude task and delivery orders? I don't get it.
    Recommendation
    If the FAR Councils believe that task and delivery orders are "contracts" as defined at FAR 2.101, then they can clear up a considerable amount of confusion by including these types of orders in that definition. If they do that, why not add a standard FAR clause compelling submission of cost or pricing data (when applicable) with task or delivery order proposals? While they're at it, how about an explicit statement in the FAR stating that TINA applicability determinations are made at the task and delivery order level and another statement that CAS applicability determinations are not? Probably too much to ask.
  15. Don Mansfield
    Assume that you are pricing a firm-fixed-price contract using cost analysis. The prospective contractor has included a contingency of $100,000 in its cost proposal of the type described at FAR 31.205-7(c)(1):
    There is a 90% chance that this contingency will occur. If it occurs, there's a 100% chance it will cost $100,000.
    The prospective contractor can take Precaution A, which will cost $50,000. If the contingency occurs, Precaution A would reduce the chance of the contingency costing $100,000 to 30% (there would be a 70% chance the contingency would cost $0).
    The prospective contractor can take Precaution B, which will cost $75,000.  If the contingency occurs, Precaution B would reduce the chance of the contingency costing $100,000 to 10% (there would be a 90% chance the contingency would cost $0).
    The prospective contractor is free to take Precaution A, Precaution B, or do nothing. 
    What amount for this contingency would you allow in the contract price?
    You may ask for more facts if you'd like or ask to make an assumption. Do not fight the hypothetical. Enjoy.
  16. Don Mansfield
    A former student of mine is part of a team conducting a survey to gauge interest in a Mentoring program for Acquisition. If you work in federal acquisition and work for a federal agency (including DoD), please take a few minutes to complete the survey. The more junior you are, the better. From the team:
     
  17. Don Mansfield
    In one of my earlier blog entries, I inferred that the FAR Councils interpreted the definition of ?contract? at FAR 2.101 to include task and delivery orders based on their answer to a question about the applicability of TINA to task and delivery orders (see ?Commonly Understood? I Think Not). Well, there is no reason to draw any inferences anymore. In a recently published final DFARS rule, the DAR Council unequivocally stated that the definition of ?contract? included task and delivery orders. The following exchange appears in the Background section of the final rule for DFARS Case 2010-D004 (72 FR 76296):

    Save this, because it?s unlikely that the definition of ?contract? at FAR 2.101 will ever be changed to explicitly include task and delivery orders.
    In addition to the DAR Council, the GAO has also interpreted the definition of ?contract? to include task and delivery orders. In Delex Systems, Inc., B-400403, October 8, 2008, the GAO stated:

    While it?s nice to have more clarity on the status of task and delivery orders, there remains ambiguity on how to apply clauses in indefinite delivery contracts. Should they be applied at the ?whole contract? level, the task or delivery order level, or both? The FAR Councils routinely receive public comments asking how a new requirement is to be implemented in an IDIQ contract. Consider the following from the final rule implementing the current version of the clause at FAR 52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts (75 FR 13424):

    Apparently, the ?right? way to implement this clause was at the task order level, not the ?whole contract? level. How a contracting officer is supposed to just know this is beyond me. The FAR Councils have declined to clarify this policy in the clause.
    So should we applying all clauses at the task and delivery order level? Apparently not. Contracts that are set aside for small business concerns are required to contain a limitation on subcontracting clause. FAR 52.219-14( sets forth the limitations as follows:

    By operation of the clause at FAR 52.202-1, Definitions, the applicable definition of ?contract? would be the one located at FAR 2.101:

    It would seem that since both indefinite delivery contracts and task and delivery orders meet this definition, so one would think that the subcontracting limitation applied to both. However, that?s not how the GAO interprets the clause.
    The decision in Lockheed Martin Fairchild Systems, B-275034, 17 January 1997, stated the following:

    Thus, the GAO determined that this clause was applicable at the ?whole contract? level, and not at the task order level. There?s no discussion on why this is necessarily so.
    What about the clause at FAR 52.232-20, Limitation of Cost? Do the notification requirements apply at 75% of the estimated cost of the task or delivery order, or at 75% of the estimated cost of the indefinite delivery contract? What about the clause at FAR 52.216-8, Fixed Fee? Does the $100,000 fee withholding limitation apply to each task or delivery order, or to the whole IDIQ contract? The questions are endless. Contracting officers have answers to these questions, but they are not all the same. Without a clear set of rules, it?s hard to argue that anybody is wrong.
    Fortunately, some clauses are clear on this point. For example, the clause at FAR 52.216-23, Limitations on Pass-Through Charges, states the following reporting requirement:

    Some of the newer FAR rules recognize the potential confusion caused in the case of indefinite delivery contracts and have adapted. That?s encouraging, but it doesn?t help us interpret the older rules. The FAR Councils could clarify things by adding an interpretation convention at FAR 1.108 stating at which level (whole contract, task order or delivery order, or both) requirements of clauses in indefinite delivery contracts apply, if not otherwise specified. Probably won?t happen. I can hope.
  18. Don Mansfield
    Assume you are soliciting quotes for an item of supply. Suppliers A, B, and C each sell the item for about $100/unit. However, the probability of late delivery is different for each supplier. Supplier A has a 31% chance of delivering late, Supplier B has a 21% chance of delivering late, and Supplier C has a 4% chance of delivering late. There’s a 100% chance that all suppliers will deliver no later than one week after the delivery date and any damages due to late delivery will be negligible.
    Your solicitation requests that vendors quote both a unit price and a per-unit delivery incentive. The supplier can only earn the delivery incentive if delivery is on time. Otherwise, the Government only pays the unit price.
    Supplier A quotes a per-unit price of $71 and a $41/unit delivery incentive.
    Supplier B quotes a per-unit price of $65 and a $41/unit delivery incentive.
    Supplier C quotes a per-unit price of $59 and a $41/unit delivery incentive.
    Considering only the total amount the Government would expect to pay, which quote do you think is best?
  19. Don Mansfield
    DoD implemented a Clause Control Policy in 2015 that would require the same degree of transparency in the development and use of "local clauses" by the military departments and defense agencies as FAR and DFARS clauses (see PGI Case 2015-P003 and attached). Specifically, local clauses would be subject to publication for comment in the Federal Register and codified in the Code of Federal Regulations (CFR). However, not a single local clause has been incorporated in the CFR since the new policy was implemented. At the same time, there seems to be a lot more requirements in statements of work that don't have anything to do with describing work, but read a lot like a FAR or DFARS clause. Some of it is even prescribed in agency supplements to the DFARS. What's going on here?
    The Acquivores discuss https://www.youtube.com/watch?v=fK6GKDEqAhM&ab_channel=DonAcquisition
    2015-P003 DFARS PGI Text LILO.doc
  20. Don Mansfield
    If the preconceived notions that our students are bringing to the classroom is any indication, there's a good deal of myth-information being spread regarding indefinite-delivery indefinite-quantity (IDIQ) contracts. The one belief that I want to focus on today deals with obligating the contract minimum upon award of an IDIQ contract.

    This belief usually stems from a fundamental misunderstanding of the difference between creating and obligation and recording an obligation. The difference is explained in Chapter 7 of the GAO Redbook (p. 7-8):

    [bold added].
    When a contracting officer awards an IDIQ contract, she has obligated the Government to purchase the contract minimum. She has created an obligation. When that same contracting officer cites a long line of accounting (containing the appropriation citation) and a dollar amount on the award document, she has recorded an obligation (when she distributes the award document to her accounting office, they will record the obligation in the agency's books).
    Let's say that the contracting officer awards the IDIQ contract, but does not record the amount of the Government's obligation on the award document. What has happened? An obligation has been created, but has not been recorded. Is there a problem with that? (Yes, go back and read the bolded sentence in the citation that I provided above). The problem is that the contracting officer has caused her agency to violate the ?recording statute,? 31 USCA ? 1501, which sets forth the criteria for recording an obligation as follows:

    In the second example I provided, there exists a binding document that meets the criteria of (1)(A) and (B.) (the IDIQ contract), but no obligation would have been recorded. The agency would have underrecorded its obligations. That's bad. Chapter 7 of the GAO Redbook (p. 7-6) states the following regarding under- and overrecording of obligations:

    I always urge my students to take a course in Federal Appropriations Law at some time in their career--the sooner the better. Unlike Federal Acquisition Law, where the acquisition team is permitted to "assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority", there is very little flexibility when it comes to applying the rules Federal Appropriations Law.
  21. Don Mansfield
    WARNING: OMB issued a memorandum on July 10 directing executive agencies to temporarily disregard the two GAO decisions discussed below until a full review can be conducted. Until such a review is conducted, do not use the table.
    Depending on your point of view, two recent GAO decisions have either clarified or muddied our understanding of the rules pertaining to the order of priority for small business programs. In International Program Group, Inc., B-400278; B-400308, September 19, 2008, the GAO held that HUBZone set-asides take precedence over service-disabled veteran-owned small business (SDVOSB) set-asides and SDVOSB sole sources (a highly criticized decision). In Mission Critical Solutions, B-401057, May 4, 2009, the GAO held that HUBZone set-asides take precedence over the 8(a) program. In both cases, the GAO sought, and disagreed with, the SBA's interpretation of the relevant statutes.
    Based on these two decisions, and the current rules that in FAR Part 19, I have created a table to assist in determining the order of priority for small business programs. Instructions and relevant references are provided in the table. The table assumes that the acquisition exceeds the simplified acquisition threshold.
    Take a look and let me know if you have any questions or comments.
  22. Don Mansfield
    There seems to be a closely held belief by some in the Federal contracting community that the FAR requires the contracting officer to perform a price analysis before awarding any contract. CON 111 used to contain the following statements:

    A number of my colleagues, both practitioners and instructors, would agree with those statements. Further, I have had a number of students pre-programmed by their contracting offices to believe that price analysis is always required.
    What does the FAR say?
    Subparagraphs a(2) and a(3) of FAR 15.404-1 discuss the requirements for the performance of price and cost analysis:

    Note that a(2) qualifies the requirement for price analysis with the language "when cost or pricing data are not required." To interpret a(2) to mean that price analysis is always required would render meaningless the qualifying language in the statement ("when cost or pricing data are not required"). Such an interpretation would be inconsistent with the fundamental principle that statutes and regulations must be read and interpreted as a whole, thereby giving effect to all provisions. See Waste Mgmt. of North Am., B-225551, B-225553, Apr. 24, 1987, 87-1 CPD ? 435 at 5.
    Subparagraph a(3) sets forth the requirement for performing cost analysis (i.e., when cost or pricing data are required) and contains the statement that "Price analysis should be used to verify that the overall price offered is fair and reasonable." Does this statement require price analysis when cost or pricing data are required? To answer this, we need to review the definitions of "should" and "shall" in FAR 2.101:

    Thus, when cost or pricing data are required, the contracting officer is 1) required to perform cost analysis and 2) expected to perform price analysis unless it's inappropriate for a particular circumstance. That's different than stating that the contracting officer must perform both price and cost analysis when cost or pricing data are required. The implicit acknowledgement that price analysis could be inappropriate in a particular circumstance (and thus, not required) contradicts the assertion that price analysis is always required.
    Why the Confusion?
    I'm not sure why some folks think that price analysis is always required. Perhaps they haven't read the FAR carefully. I recently had my students read subparagraphs a(2) and a(3) and asked them whether it was true or false that price analysis was always required. They were split about 50% true 50% false. When I had the students who answered "False" re-read a(2) and a(3), I was able to get the split to about 15% true 80% false and 5% I don't know. I can live with that.
    A more likely reason behind the existence of this myth is that an uncomfortably large number of people in our field do not know what the FAR says because they do not read it. Instead, they are guided by, and they repeat, rumors.
  23. Don Mansfield
    There has been a considerable amount of controversy over the last year or so in the area of small business programs. In International Program Group, Inc., (B?400278, B?400308, 19 September 2008) the Government Accountability Office (GAO) held that HUBZone set-asides took priority over service-disabled veteran-owned small business (SDVOSB) set-asides and SDVOSB sole source acquisitions. This was unsurprising given the clear language in the FAR. In Mission Critical Solutions (B?401057, 4 May 2009) (also see reconsideration), the GAO held that the HUBZone set-asides took precedence over the 8(a) program. This was surprising given the clear language of the FAR. Of note in both cases was that the GAO solicited and rejected the Small Business Administration's (SBA's) interpretation of the applicable statutes, which was that there was parity among the 8(a), HUBZone, and SDVOSB programs. It was after the latter case that the Office of Management and Budget (OMB) stepped in with a memorandum advising agencies to disregard the two GAO decisions and providing the following guidance:

    Remarkably, this guidance 1) assumes that contracting officers had been following the parity policies implemented in SBA's regulations and 2) implies that, henceforth, contracting officers are free to treat HUBZone, SDVOSB, and 8(a) contractors as equals. There is no acknowledgement of the fact that there were no pre-existing "parity" policies in the FAR. Prior to the GAO decisions, the FAR Council issued a proposed rule that would have implemented parity among the three programs?something that clearly did not exist in the FAR. See 73 FR 12699. As of today, the FAR Case dealing with Socioeconomic Program Parity (2006-034) has been tabled. As such, any contracting officer subject to the FAR that thinks that they have been given the green light to disregard the FAR and treat all three programs the same should think again.
    Consider the following scenarios:
    Scenario 1: The conditions for both a HUBZone set-aside and a SDVOSB set-aside (or sole source) exist for a particular acquisition exceeding the simplified acquisition threshold. The requirement cannot be satisfied through the 8(a) program.
    In this scenario, FAR 19.1305 requires a HUBZone set-aside:

    If a CO chose to pursue a SDVOSB set-aside (or sole source) in this scenario, he or she would be deviating from the express requirements of FAR 19.1305. However, a CO subject to the FAR does not have the authority to deviate from the FAR without approval from the agency head (see FAR 1.4). Further, we already know from International Program Group that the GAO would sustain a protest if an agency were to pursue a SDVOSB set-aside (or sole source) when the conditions for a HUBZone set-aside existed. While we don't know for sure how the Court of Federal Claims would decide such a protest, it would be surprising if they were to find that a HUBZone set-aside were not required, given the clear language of the FAR. On the other hand, proceeding with a HUBZone set-aside would be compliant with statute, the FAR, and the SBA regulations (which allow a choice of programs).
    Scenario 2: The conditions for a HUBZone set-aside exist and the requirement can be satisfied through the 8(a) program.
    FAR 19.800(e) provides for a "soft" priority for 8(a) as follows:

    While FAR 19.800(e) doesn't mandate that an acquisition be offered to the SBA under the 8(a) program if it can be, the implication is that there should be a good reason for not doing so. (FAR 2.101 defines should as "an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance.") Thus, it would be unwise to simply ignore FAR 19.800(e) and proceed with a HUBZone set-aside?there should be something in the file that evidences the contracting officer's compliance with FAR 19.800(e). The same would be true if the conditions for a HUBZone sole source, SDVOSB set-aside, or SDVOSB sole source existed.
    The Department of Justice Opinion
    Responding to a request from the SBA, the Justice Department provided a legal opinion pertaining to the SBA's interpretation of the relevant statutes. The opinion found as follows:

    I can't wait to see how DOJ's reasoning holds up in the Court of Federal Claims (assuming we'll see a case). For argument's sake, let's assume that the opinion is correct. Does this mean that contracting officers can now ignore the FAR and treat all three programs equally? I don't think so. The opinion did not say that the FAR is wrong. It says that the SBA did not misinterpret the statute. Thus, the SBA has permissibly given agencies the discretion to choose among the three programs. The FAR Council has already made the choice for contracting officers?HUBZone takes priority over SDVOSB and 8(a) takes priority (albeit a "soft priority") over HUBZone and SDVOSB. The FAR Council may give this discretion to contracting officers, but the FAR would have to be changed to do so.
    My Advice
    In its memorandum, OMB stated that the results of its review of the legal basis underlying the GAO's decisions were expected this past summer?still no word from them as of Black Friday. Any further guidance issued by OMB should acknowledge the priorities that exist in the FAR and explain how contracting officers are to proceed. Merely stating that contracting officers are free to abide by SBA's "parity" policies without acknowledging the rules of the FAR will be most unhelpful.
    In the meantime, contracting officers that find themselves in Scenario #1 above should proceed with a HUBZone set-aside. Contracting officers that find themselves in Scenario #2 above should document compliance with FAR 19.800(e) before proceeding to any other type of set-aside or sole source.
  24. Don Mansfield
    “How do you do simplified acquisition?” is a common question I hear from acquisition personnel that are more familiar with using FAR part 15 procedures to solicit offers and award contracts. The question presupposes that there is a regulated set of procedures that one must follow—similar to what is prescribed in FAR part 15, agency FAR supplements to FAR part 15, agency guidebooks on source selection, and the decisions of the Government Accountability Office (GAO) and Court of Federal Claims (COFC). Fortunately, that is not the case. Rather, FAR part 13 (Simplified Acquisition Procedures (SAP)) expressly states that certain procedures contained in FAR part 15 (Contracting by Negotiation) do not apply and requires contracting officers to “use innovative approaches, to the maximum extent practicable, in awarding contracts using simplified acquisition procedures.” FAR 13.003(h)(4). An underlying message in FAR part 13 is to not bring your FAR part 15 baggage with you. The following list presents thirteen reasons why SAP is simpler than the competitive negotiation procedures of FAR part 15.
    See complete list.
  25. Don Mansfield
    The end of the fiscal year is always a good time to start brush up on fiscal law?particularly the bona fide needs rule. Contracting offices may soon face questions of fiscal law that have already been answered in Volume I, Chapter 5, of Principles of Federal Appropriations Law (GAO Red Book).
    One interesting case of fiscal law, which you won't find in the Red Book, deals with funding undefinitized contract actions (UCAs) that cross fiscal years. Consider the following scenario:
    A DoD activity issues a UCA in late fiscal year 2009 with a not-to-exceed price of $1,000,000. In accordance with DFARS 217.7404-4(a), the agency obligates $500,000 of the not-to-exceed price (the DFARS limit is currently 50% of the price ceiling, or 75% if the agency is in receipt of a "qualifying proposal"). The agency does not get around to definitizing the UCA until early FY 2010. When they do, the contracting officer and the contractor agree to a final contract price of $950,000. The unfunded balance is $450,000 (assuming actual costs prior to definitization were $500,000).
    Assuming the contract is funded with annual appropriations, which fiscal year's appropriation must be charged to fund the additional $450,000?
    Believe it or not, fiscal year 2010 funds must be used. A number of people that I have spoken to are befuddled by this, because they believe that the definitizing contract modification would be fulfilling a bona fide need of FY 2009, which would thus require the use of FY 2009 funds. However, this is incorrect.
    The Comptroller General answered this question in Obligating Letter Contracts, B-197274, September 23, 1983. In that case, a procurement official from the Department of Justice requested guidance on how to fund letter contracts that crossed fiscal years. Agency practice had been to record an obligation for the amount of the price ceiling and include a clause that limited the liability of the Government to 50% of the price ceiling. In other words, they would overrecord their obligation. The procurement official described his dilemma as follows:

    The Comptroller General responded as follows:

    Following the initial example, the $450,000 to be added to the contract when the definitizing contract modification is executed covers a bona fide need of fiscal year 2010. This need was originally a bona fide need of FY 2009, but it went unsatisfied within the time period available for new obligations. As such, the bona fide need was carried forward to FY 2010.
    UCAs have become a hot topic in contracting, particularly in DoD. In response to a GAO report that found a significant number of UCAs still undefinitized beyond the 180-day window imposed at DFARS 217.74, the DFARS was recently revised to include more rules pertaining to UCAs. However, I never saw any discussion about how to fund UCAs that cross fiscal years (maybe everybody already knows the rule ). Based on the GAO report, I'm willing to speculate that a good number of UCAs are left undefinitized until the fiscal year following their issuance. For UCAs funded by annual appropriations, I wonder what fiscal year's funds are being obligated when the UCAs are definitized. My guess is, in most cases, the same fiscal year's funds that were obligated for the UCA.
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