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Don Mansfield

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Posts posted by Don Mansfield


  1. I am in receipt of an invoice from a subcontractor that billed for unperformed services. The contracting officer's technical representative questioned the invoice and the subcontractor readily acknowledged the error. However, that did not prevent the subcontractor representative from signing and dating the invoice, stating "I certify that this invoice is correct and proper for payment, and so forth." Is such an action fraudulent only if the payment is made or is the action deemed fraudulent in its application? What do you do in such a case?

    No, the claim does not have to be paid for it to be a false claim. Presentment is sufficient. There are other considerations such as specific intent and materiality. You should really consult with an attorney.


  2. The reason the MSMO contracts do not have the price for future options listed in the contract is that the contractor is allowed to inspect a vessel before work begins and then negotiate the price of the work based on the condition of the ship.

    There is enough variation in each vessel that even similar work packages can have a wide variance in price. If the Navy tried to pre-price the work, it would likely result in even higher costs as the vendor would have to assume each vessel was as poor as the worst in order to protect his company from losses.

    In addition, the actual MSMO work packages are not identical for each vessel in the class of ships that the contract deals with. One ship in an earlier phase of construction may not have the same equipment of a vessel constructed later in time. During the MSMO phase, which maintains a previously constructed vessel, equipment that was added or changed during the construction phase is updated in earlier vessels so that each ship's capabilities are equalized.

    Work packages that are considered upon the award of a MSMO contract also change based upon how much funding is allocated to the contract per vessel. That amount sometimes changes based on various environmental and management functions, and of course political factors count too.

    All of these reasons are part of why the amounts are not listed. When I worked for NAVSEASYSCOM in Code 024 on MSMO contracts, we only listed the prices for CLINS where we already had the vessel work package finalized and the vendor had inspected the vessel and agreed to the pricing. The balance of CLINS were left blank until they too were finalized and agreed upon. SUPSHIP is the organization that negotiaed the CLIN prices after the contracts had been awarded as the ACO organization.

    dwgerard,

    When you awarded MSMO contracts, did you consider the options to be priced or unpriced?


  3. Vern,

    I don't believe that NAVSEA's MSMO contracts violate the CPPC prohibition because fee is not paid as a percentage of incurred cost. At award, the parties have agreed to a percentage for base and award fee. After award and before the option is exercised, the parties agree to an estimated cost for that option and apply the predetermined percentages to determine the amount of base fee and the size of the award fee pool. After this negotiation, the parties will have agreed to an estimated cost, a base fee amount (expressed in dollars), and the size of the award fee pool (expressed in dollars). The base fee and award fee pool amounts remain the same regardless of the contractor's incurred cost.

    Would you say that such an option is unpriced? If so, how does it fail to meet the criteria at FAR 17.207(f)(3)?


  4. Navy,

    When the contract is awarded, the contract does not specify an amount at which the option may be exercised. All the parties have agreed to is the percentage for the base and award fee. After award and before exercise of an option, the parties agree to an estimated cost for that option and apply the predetermined percentages to determine the amount of base fee and the size of the award fee pool.

    I'm not suggesting that NAVSEA's interpretation of FAR 17.207(f)(3) is correct, because I'm not sure I know what it means. It doesn't require that an option in a cost-type contract state an estimated cost to be "exercisable at an amount specified in or reasonably determinable from the terms of the basic contract." It only requires that i) the option contain a fixed or maximum fee or (ii) the fixed or maximum fee amount is determinable by applying a formula contained in the basic contract.


  5. Vern,

    That's a good question and one that I have been thinking about lately. I'm not sure if they are unpriced options. Consider FAR 17.207(f)(3):

    To satisfy requirements of Part 6 regarding full and open competition, the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract, e.g.?

    [...]

    (3) In the case of a cost-type contract, if?

    (i) The option contains a fixed or maximum fee; or

    (ii) The fixed or maximum fee amount is determinable by applying a formula contained in the basic contract (but see 16.102©);

    NAVSEA would argue that their options meet those criteria. I don't know that they're wrong.


  6. Fixed fee is always stated as a dollar amount, not a percentage. I think that what Blitz was saying is that the fixed fee on the contract amounted to six percent of the esimated cost and that the contractor wanted to use that percentage as the basis for calculating fee on the hazardous duty pay.

    It would not have made sense to write the contract to say:

    Estimated Cost: $1,000,000.

    Fixed Fee: Six (6) percent.

    What would that be about? Why not just state dollars? However, if the contract were to say that the fee would be calculated by applying the percentage to allowable incurred cost, then you would have an illegal contract.

    I've seen contracts with option CLINs that only state a fee percentage. The estimated cost for the options is not negotiated until after the contract is awarded. For example, NAVSEA's multi-ship multi-option (MSMO) contracts for ship repair, which are CPAF contracts, contain numerous option CLINs that look like this:

    Estimated Cost: $

    Base Fee: 0%

    Award Fee Pool: 10%

    I'm not advocating stating fee as a percentage, just pointing out that agencies do it.


  7. If a company is a SDBWO business, and the actual payments to this entityy were $500.00 for example, can we record 500 in both SDB, and WO categories?

    Yes. Did you not believe me when I answered you the other day? Here's the instruction for the SF 294:

    BLOCKS 11 - 16: Each of these items is a subcategory of Block 10a. Note that in some cases the same dollars may be reported in more than one block (e.g., SDBs owned by women or veterans).

  8. Maybe I am misunderstanding something. Blitz stated ?We are adding a new requirement to an existing CPFF contract. The contract has an established 6% fixed fee? By making the ?fixed fee? a percentage aren?t you doing a cost plus percentage of cost type contract (forbidden by FAR 16.102?)?

    Not if the fixed fee was 6% of estimated costs. However, if the contract were written to say that the contractor would be paid 6% of incurred costs, then you would have an illegal CPPC arrangement.


  9. So you didn't tell offerors how you were going to evaluate foreign offers in the solicitation (which would be done by including the appropriate Part 25 clause and provision) and now you are wondering how to evaluate a foreign offer that you have received. Do you see a problem with that? Don't you think you should amend your solicitation to include the appropriate Part 25 clause and provision?


  10. Ok. Read FAR 19.702:

    (a) Except as stated in paragraph b of this section, Section 8(d) of the Small Business Act (15 U.S.C. 637(d)) imposes the following requirements regarding subcontracting with small businesses and small business subcontracting plans:

    (1) In negotiated acquisitions, each solicitation of offers to perform a contract or contract modification, that individually is expected to exceed $550,000 ($1,000,000 for construction) and that has subcontracting possibilities, shall require the apparently successful offeror to submit an acceptable subcontracting plan. If the apparently successful offeror fails to negotiate a subcontracting plan acceptable to the contracting officer within the time limit prescribed by the contracting officer, the offeror will be ineligible for award.

    (2) In sealed bidding acquisitions, each invitation for bids to perform a contract or contract modification, that individually is expected to exceed $550,000 ($1,000,000 for construction) and that has subcontracting possibilities, shall require the bidder selected for award to submit a subcontracting plan. If the selected bidder fails to submit a plan within the time limit prescribed by the contracting officer, the bidder will be ineligible for award.

    b Subcontracting plans (see paragraphs (a)(1) and (2) of this section) are not required?

    (1) From small business concerns;

    (2) For personal services contracts;

    (3) For contracts or contract modifications that will be performed entirely outside of the United States and its outlying areas; or

    (4) For modifications to contracts within the general scope of the contract that do not contain the clause at 52.219-8, Utilization of Small Business Concerns (or equivalent prior clauses; e.g., contracts awarded before the enactment of Public Law 95-507).

    No exception for "foreign businesses" (whatever that means). Want more proof?


  11. It would depend on the type of solicitation - if you are using an RFP and the award results from your acceptance of the contractor's proposal then award should be at the proposed (offered) price.

    Phillygal,

    Why should you award at the offeror's estimated cost? Wouldn't it make more sense to award at the most probable cost? Did you read the citation that I provided?


  12. As far as I know competitive contract awards are always made at the proposed cost. Is there any legal reason award can not be made at the higher most probable cost.

    I don't think so. I think you can, and probably should, award a cost-reimbursement contract at the most probable cost. Here's an excerpt from Formation of Government Contracts, Third Edition, by Cibinic & Nash (p. 1107-8):

    In most competitive procurements, the cost of performance is a significant evaluation factor in the source selection decision. As a result, offerors are motivated to make very optimistic estimates of the costs of performance. Although such estimates are adjusted, through cost realism analysis, for the purpose of selecting the winning contractor, contracting officers have a tendency to award contracts based on the cost estimate submitted by the contractor in the competitive process. This is a questionable procedure because it results in a contract funded at too low a level to permit accomplishment of the work. A much better procedure would be to include an estimated cost at a level representing the contracting officer's appraisal of the realistic cost of performance. However, it appears that only a minority of contracting officers follow this procedure, with the result that many CPFF contracts contain estimated costs that are unreasonably low.

  13. pmh,

    Does this help?

    45.000 Scope of part.

    This part prescribes policies and procedures for providing Government property to contractors, contractors? management and use of Government property, and reporting, redistributing, and disposing of contractor inventory. It does not apply to property under any statutory leasing authority, (except as to non-Government use of property under 45.301(f)); to property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments; to disposal of real property; or to software and intellectual property.

    [italics added].


  14. Don,

    Would you please explain how you can have "adequate price competition" when you don't have competition in the first place? I understand how you can have a fair and reasonable price without competition, but I don't see at all how you have adequate price competition in, to use your example, a sole source acquisition.

    Thanks,

    Mike

    Sure, let me give you an example. Let's say last year I had a competitive procurement for the purchase of 1000 widgets. Three responsible offerors, competing independently, submitted priced offers that satisfied the Government?s expressed requirement, award was made to the offeror whose proposal represented the best value, price was a substantial factor in source selection, and there was no finding that the price of the otherwise successful offeror was unreasonable. In other words, I had adequate price competition pursuant to FAR 15.403-1©(1)(i). The contract price was $700,000 ($700/widget).

    This year I have the same requirement for 1000 widgets. Instead of having a competition, I'm going to do a HUBZone sole source to Contractor A in order to help meet my agency's small business goals. I receive a price from contractor A and price analysis clearly demonstrates that the proposed price is reasonable in comparison with the contract price for last year's contract, adjusted to reflect changes in market conditions, economic conditions, quantities, and terms and conditions. In other words, I have adequate price competition pursuant to FAR 15.403-1©(1)(iii).

    Make sense?


  15. I don't know the answer, but I would be inclined to choose Vern's possibility #3. My reasoning is as follows:

    The Government can only be bound by contracting officers acting within the scope of their authority. A CO who violates the law is acting outside the scope of his/her authority. As such, the Government cannot be bound by a contract that the CO entered into by violating the law. In this case, I believe that the CO has entered into an unauthorized commitment.


  16. dgm,

    Prior to the FAR Rewrite in 1997, FAR 15.608(a)(2)(iii) contained the following statement:

    "Firms lacking relevant past performance history shall receive a neutral evaluation for past performance."

    The FAR Council decided to change this wording in the FAR Rewrite based on some confusion as to what a neutral evaluation actually meant. Here's an excerpt from the Federal Register (62 FR 51224-01):

    "(f) Neutral past performance evaluations. We considered alternatives relating to two aspects of neutral past performance ratings--

    (1) Definition of neutral past performance evaluations. The proposed rules provided a definition of neutral past performance evaluations. Public comments recommended that we revise the definition and provide detailed instructions on how to apply neutral past performance ratings in any source selection. 41 U.S.C. 405(j)(2) requires offerors without a previous performance history, to be given a rating that neither rewards nor penalizes the offeror. We did not adopt the public comment recommendations, opting instead to revise the final rule to reflect the statutory language, so that the facts of the instant acquisition would be used in determining what rating scheme is appropriate. This alternative provides for flexible compliance to satisfy requirements of the statute."


  17. contractor100,

    You asked:

    "Does a schedule holder that does not sell any fixed price services or supplies ever have to accept an order?"

    I would say yes, the schedule holder still has to accept orders. Theoretically, an agency could issue an unpriced order requiring the contractor to begin work and then definitize the order later.

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