Don Mansfield

Navy,

FAR 15.306( c )(1) states:

Agencies shall evaluate all proposals in accordance with 15.305(a), and, if discussions are to be conducted, establish the competitive range. Based on the ratings of each proposal against all evaluation criteria, the contracting officer shall establish a competitive range comprised of all of the most highly rated proposals, unless the range is further reduced for purposes of efficiency pursuant to paragraph ©(2) of this section.

Now to FAR 15.305(a)(1):

Cost or price evaluation. Normally, competition establishes price reasonableness. Therefore, when contracting on a firm-fixed-price or fixed-price with economic price adjustment basis, comparison of the proposed prices will usually satisfy the requirement to perform a price analysis, and a cost analysis need not be performed. In limited situations, a cost analysis (see 15.403-1©(1)(i)() may be appropriate to establish reasonableness of the otherwise successful offeror’s price. When contracting on a cost-reimbursement basis, evaluations shall include a cost realism analysis to determine what the Government should realistically expect to pay for the proposed effort, the offeror’s understanding of the work, and the offeror’s ability to perform the contract. Cost realism analyses may also be used on fixed-price incentive contracts or, in exceptional cases, on other competitive fixed-price-type contracts (see 15.404-1(d)(3)). (See 37.115 for uncompensated overtime evaluation.) The contracting officer shall document the cost or price evaluation.

So, the way I read this is that a competitive range determination must be based on the results of the proposal evaluation. The proposal evaluation must include a cost realism analysis when contracting on a cost-reimbursement basis. Doesn't it follow that a cost realism analysis be completed prior to the establishment of the competitive range?

As opposed to an "incomplete" cost realism analysis? Please explain the distinction that you are making.

Not in the FAR.

An internal review in a federal agency has suggested that unless a contractor's signature is handwritten in ink on a contract record it isn't official, i.e., not a writing & not authenticated so not binding.

What is the basis for this assertion?

Besides formal training, there are other ways to obtain continuous learning points. One can earn CLPs following the self-directed study program that Vern describes above. From the DAU Continuous Learning Web site (http://www.dau.mil/clc/Pages/apv.aspx):

In addition to DAU courses, examples of continuous learning activities include:

Performing Self-Directed Study. An individual can keep current or enhance his or her capabilities through a self-directed study program agreed to by the supervisor.

This is how I meet my CLP requirement. The Web site provides many examples of ways to earn CLPs other than through formal training.

All he can say for himself is "We do not allow options, unless you pay for the total amount at the time of contract award." I think this is bogus. They also don't sign government contracts either when we award anything to him, however, it's under the SAT so i believe 41.2 allows that.

Thoughts? Am i incorrect in this scenario?

Look, he doesn't want to accept your terms and you can't compel him to do so. Either propose different terms or find someone else willing to accept your terms.

Don - I can't argue with the logic of your statement, but does it make sense to separately obligate funds on the contract for the minimum, when funds are concurrently being obligated on a task order for much more than the minimum?

Whether recorded on the IDIQ contract or not, the award creates an obligation for the amount of the guaranteed minimum. That's why it's incorrect to say that "no funds are obligated nor guaranteed by the award of this contract." I don't see a problem with recording the obligation on a concurrent order in lieu of the IDIQ contract. As long as the amount of the obligation created is equal to the amount of the obligation recorded, the Recording statute has been satisfied.

Don's original post didn't say no consideration was given; it said the announcement contained an "indication." The announcement said "No funds are obligated nor guaranteed by the award of this contract; funds will be obligated on individual task orders." It's interesting because I'm told that despite that statement, the contract did include a guaranteed minimum number of hours to be ordered, and the minimum was met by issuance, concurrent with award of the contract, of the first task order. So the fact is that consideration was given and the contract did include a guaranteed minimum.

If the contract did include a guaranteed minimum, then the statement "No funds are obligated nor guaranteed by the award of this contract" is inaccurate. An obligation would have been created for the amount of the guaranteed minimum upon award of the contract.

Before you start looking for courses, I suggest that you determine what skill or ability you need to develop to do your job better. Then, determine how best to develop that skill or ability. The answer may or may not be a training course.

View training as a means to an end--not an end itself.

Yes, essentially.

In my experience, "growth" meant additional work within the scope of the contract. "Growth" is the opposite of "new work" (additional work outside the scope of the contract). Navy ship repair contracts use both terms extensively, but do not define them.

simplemiz,

I was a contracting officer in the ship repair world and I experienced the same type of thing when awarding prime contracts (i.e., an offeror would win with a low price and "get well" on changes). Did you ever see that picture of the yacht named "Change Order" with the little dinghy named "Original Contract" next to it? That was probably one of our contractors.

I was discussing this situation with one of the disappointed offerors and I got an idea. I would create a line item for "Over and Above Work" with an estimated number of hours. Besides proposing a price for the specified work (open and inspect), the offerors would propose a binding rate for the over and above work that would be used to price the over and above work (what you are calling growth work). To evaluate a proposed price, I would add the proposed price for the specified work and the proposed price for the over and above work (proposed rate x estimated number of hours). The result was that we received more realistic pricing for the specified work and the incentive to seek changes during contract performance was reduced.

As you can imagine, I was quite impressed with myself when I came up with this. That was until I found out that a lot of other agencies do the same thing when contracting for all types of repair and have been doing it that way for a long time. In any case, your contractor may want to consider doing something similar to mitigate what they experiencing with their subcontractors' prices.

Don:

The contract is for RDT&E services, and the five year limit on base + options does not apply to R&D contracts. See FAR 17.200( c). I wanted to see if people are remembering to read the Scope section first. Remember? Hmmmm?

Damn, I got "Scoped." I even use FAR 17.200( c ) to demonstrate to students how one can get scoped. This is a bad day.

Do you think the issue of whether consideration is nominal turns on proportion? What happened to "a penny or a peppercorn"?

That's a good point. The cases that I've read on "nominal amount" discuss the amount of the minimum guarantee compared to the contract maximum. However, I've never read a case where the basis of deciding that a minimum guarantee was nominal was that it was too small compared to the contract maximum.

Vern,

The contract was awarded by the Navy, which has the authority to award task order contracts with ordering periods up to ten years pursuant to DFARS 217.204(e)(i).

You found it. They call it an IDIQ contract, but then end with:

No funds are obligated nor guaranteed by the award of this contract; funds will be obligated on individual task orders.

We've got a couple of possibilities:

1. It is an IDIQ contract that contains a minimum that they didn't report. In this case, they failed to record an obligation for the amount of the obligation created by the contract (the minimum)--a violation of the Recording statute; or

2. The "IDIQ contract" does not guarantee a minimum as required by FAR 16.504(a)(1), in which case the arrangement would lack consideration.

Either way, something's wrong.

Bob posted an excerpt of a recent contract award announcement that I found remarkable. Here it is:

"The Pennsylvania State University Applied Research Laboratory, State College, Pa., is being awarded an estimated $415,045,425 cost-plus-fixed-fee indefinite-delivery/indefinite-quantity task order contract to provide up to 2,060,076 staff hours for research, development, engineering, and test and evaluation in the areas of guidance, navigation and control of undersea systems; advanced thermal propulsion concepts and systems for undersea vehicles; advanced propulsors and other fluid machinery for marine systems; materials and manufacturing technology; atmosphere and defense communications systems; and other related technologies. The contract includes an option for an additional five years, which, if exercised, would bring the total cumulative value of the contract to $853,275,100 and the cumulative staff hours to 3,935,759. No funds are obligated nor guaranteed by the award of this contract; funds will be obligated on individual task orders."

The announcement contains a clear indication of a violation of law. See if you can find it.

The prime would include the dollars in both categories. From the SF 294 instructions (which is used to report performance against a subcontracting plan):

Block 12: Report all subcontracts awarded to WOSBs (including SDBs, VOSBs (including service-disabled VOSBs), and HUBZone SBs that are also WOSBs).

Frequently, the clause at FAR 52.230-2 is included in solicitations, when the CO doesn't know who the contractor will be. Then, when the successful offeror's offer is accepted, the clause isn't explicitly removed, notwithstanding that the contractor may be exempt. Thus, the need for the self-deleting language.

I don't think that's the reason for the self-deleting language because FAR 52.230-2 is not prescribed for use in solicitations--it is prescribed for use in "negotiated contracts."

I like Retread's interpretation. If you interpret the passage the way I did, it implies that there are Cost Accounting Standards other than those at 41 USC Ch. 15. So the "under 41 USC Ch. 15" is necessary to specify which Cost Accounting Standards are being discussed. Since I don't know of any other Cost Accounting Standards, this interpretation doesn't seem right. If we go with Retread's interpretation, the implication is that there are other ways a contract could be subject to CAS and the clause is only concerned with contracts subject to CAS by operation of 41 USC Ch. 15--not when the parties agree to make a contract subject to CAS when it's not required.

However, I looked at the final rule for the Business Systems case (77 FR 11355) and came across the following:

3. Definition of Covered Contract

Comment: A respondent suggested that the definition of ``covered contract'' be modified to match the definition in section 893 of the NDAA for FY 2011.

Response: Section 816 of the NDAA for 2012 redefined ``covered contract'' as ``a contract that is subject to the cost accounting standards promulgated pursuant to section 1502 of title 41, United States Code, that could be affected if the data produced by a contractor business system has a significant deficiency.'' The section 816 definition matches the definition used in this rule, therefore, no revisions are necessary.

Does the section 816 definition of "covered contract" match the definition at DFARS 242.7000(a)? That may have been the intent of the DAR Council, but I'm not so sure the definitions match. Here's the definition of "covered contract" from Section 816 of the NDAA for 2012:

(3) The term `covered contract' means a contract that is subject to the cost accounting standards promulgated pursuant to section 1502 of title 41, United States Code, that could be affected if the data produced by a contractor business system has a significant deficiency.'.

No use of "under."

Compare the definition at DFARS 242.7000(a):

“Covered contract” means a contract that is subject to the Cost Accounting Standards under 41 U.S.C. chapter 15, as implemented in regulations found at 48 CFR 9903.201-1 (see the FAR Appendix) (10 U.S.C. 2302 note, as amended by section 816 of Public Law 112-81).

I think if a court or board looked at the statutory definition of "covered contract" to interpret the DFARS definition of "covered contract", they may interpret the DFARS definition the way I did.

Is the IDIQ single-award or multiple-award?

"Contract opportunities" appears once in FAR part 19--at FAR 19.201(d)(11). "Contracting opportunites" appears once in FAR part 19, at FAR 19.402( c )(2), as part of the term "prime contracting opportunities." Neither term is defined in the FAR. Since the applicable definition of "contract" at FAR 2.101 is broad enough to include task orders, I would interpret "contract opportunities" to include opportunities for task orders. "Contracting opportunities" appears to be synonymous with "contract opportunities", so I think that would include task orders, too.

As far as FAR part 5, "contract action" is defined at FAR 5.001 as follows:

"'Contract action,'as used in this part, means an action resulting in a contract, as defined in Subpart 2.1, including actions for additional supplies or services outside the existing contract scope, but not including actions that are within the scope and under the terms of the existing contract, such as contract modifications issued pursuant to the Changes clause, or funding and other administrative changes."

Given that definition, a task order within the scope and under the terms of an existing contract would not be a "contract action." Alternatively, if such a task order were a "contract action", it would be excepted from the synopsis requirement pursuant to FAR 5.202(a)(11).

Retreadfed,

I read the "under 41 U.S.C., Chapter 15..." as modifying "Cost Accounting Standards." You seem to be reading the "under" to mean "by operation of." I don't think your interpretation is unreasonable. Interesting. Have you successfully used your interpretation to fend off a DCMA business systems review?

Where in FAR part 19? The subpart implementing the Small Business Competitiveness Demonstration Program was removed.

If what here_2_help says is true, I would say yes based on a plain reading of DFARS 252.242-7005(a), which states:

This clause only applies to covered contracts that are subject to the Cost Accounting Standards under 41 U.S.C. chapter 15, as implemented in regulations found at 48 CFR 9903.201-1 (see the FAR Appendix).

The definition of "covered contract" is at DFARS 242.7000(a):

“Covered contract” means a contract that is subject to the Cost Accounting Standards under 41 U.S.C. chapter 15, as implemented in regulations found at 48 CFR 9903.201-1 (see the FAR Appendix) (10 U.S.C. 2302 note, as amended by section 816 of Public Law 112-81).

I interpret this to mean that if it is subject to CAS, then the clause applies. Whether or not it should have been subject to CAS is irrelevant.