Don Mansfield

KMY,

Does each labor category have its own LOE for a given task order, or is there one LOE for the entire task order?

KMY,

When issuing task orders, will you be negotiating anything? Or will you just be ordering off a pre-priced schedule?

eriand2,

Your position is clear, but the original basis of your position ("past consideration is no consideration") is no longer present in your posts. This prompted my question as to why. Have you found this basis to be inapplicable to the exercise of options in IDIQ contracts? Or do you still think that a promise to buy the minimum under an IDIQ is "past consideration" when exercising the option?

eriand2,

What happened to your "past consideration is no consideration" argument? There's no mention of it in your last five posts. Did you realize that you had been misusing the term "past consideration"? If your answer is no, then please define "past consideration" for us.

Whynot,

Note that the ASBCA was trying to interpret the word "contract" as it was used in the Small Business Competitiveness Demonstration Program Act--not as it is used in the FAR.

While it is true, as stated in my prior post, that the first year's minimum is not past consideration relative to the formation of the option contract obligation (i.e., the option CLIN) which option contract is formed contemporaneously with the initial award of the base year (i.e., the base year’s min serves a double duty as both consideration for the base year and the option contract), the first year's minimum is past consideration (i.e., “no consideration” and therefore not good consideration) relative to the prospective contract obligation underlying the OPTION CONTRACT and may not be used to form that new contract obligation upon the option contract's exercise.

There you go again. You are misusing the term "past consideration." You think that the consideration given upon formation of the IDIQ contract is "past consideration" when it comes to exercising the option. That is not "past consideration." "Past consideration" has a specific meaning. It is used to describe a situation where the consideration is given prior to the exchange of promises. From my post #19:

Past consideration:

Something that has already been given or some act that has already been performed that cannot therefore be induced by the other party's thing, act, or promise in exchange and is not truly a consideration. For example, A gives B a ride to the market and back home again. When A delivers B to his house, B promises to give A some gas money. A cannot sue B to enforce B's promise since the consideration (A's act of giving B a ride) occurred before B's promise. A gave B the ride without expecting anything in return. (A did not give B a ride in exchange for B giving A gas money.)

That does not describe a situation under an IDIQ contract with options whereby the consideration is concurrent and subsequent to the exchange of promises. The discussion on "One consideration for a number of promises" that Vern posted above more accurately describes what happens under an IDIQ contract with options.

Your argument is based on a false premise.

Don Acquisition

While it is true that the first year's minimum is not past consideration in application to the formation of the option contract obligation (i.e., the option CLIN) which arises in the base year and forces the contractor to keep its offer open, the exercise of that option (i.e., acceptance of the offer) requires consideration to form the new underlying contract obligation where none previously existed and may not rely upon something that has already been given or some act that has already been performed in support of the base year’s obligation to honor delivery orders up to the base year ‘s stated maximum. There is a difference between the option contract itself and the the underlying contract obligation to honor deliver orders up to a stated maximum.

The basis for your assertion in bold was that "past consideration is no consideration." Now that you seem to acknowledge that you've been misusing the term "past consideration", what support do you offer now?

According to FAR 8.405-2( c ):

Request for Quotation procedures. The ordering activity must provide the Request for Quotation (RFQ), which includes the statement of work and evaluation criteria (e.g., experience and past performance), to schedule contractors that offer services that will meet the agency’s needs. The RFQ may be posted to GSA’s electronic RFQ system, e-Buy (see 8.402(d)).

According to FAR 8.405-2( b ):

Statements of Work (SOWs). All Statements of Work shall include a description of work to be performed; location of work; period of performance; deliverable schedule; applicable performance standards; and any special requirements (e.g., security clearances, travel, special knowledge). To the maximum extent practicable, agency requirements shall be performance-based statements (see Subpart 37.6).

The FAR doesn't define the term "statement of work", so I don't know if it includes a SOO. My understanding is that a SOO is not a statement of work, but I can't prove it using the FAR. As such, I think if your SOO includes the information required by FAR 8.405-2( b ), then you can use a SOO.

That's a technical reading of the FAR. If you ask GSA, they would probably say sure, go ahead, no problem.

My initial thought is: Why are you linking the payment of fee to incurred cost? Why aren't you linking the payment of fee to the percentage of completion (for a CPFF completion contract) or the percentage of the level of effort delivered (for a CPFF term contract)? You are setting yourself up for being in a position where you have paid out all of the fixed fee and either the contract is not complete or the level of effort has not been delivered. What if there will be an overrun and you decide not to provide additional funding? Are you going to request that the contractor pay back part of the fee?

Note that DFARS subpart 208.4, which contains special rules for orders exceeding $150,000, contemplates the receipt of offers, not quotations, when soliciting FSS contractors. When the new DFARS rule titled "Only One Offer" (DFARS Case 2011-D013) was out for comment, I submitted a comment asking if the rule applied to quotations because, pursuant to FAR supbart 8.4, agencies solicit quotations when ordering under Federal Supply Schedules. I also pointed out the inconsistency between FAR subpart 8.4's use of "quotations" and DFARS 208.4's use of "offers" and suggested that DFARS subpart 208.4 be revised for consistency with the FAR. The response that I got, which I honestly don't understand after reading and re-reading several times, is shown below:

Comment: One respondent questioned whether this rule is applicable to the solicitation of quotations. The respondent noted that quotations are solicited routinely when using the procedures of FAR subpart 8.4.

Response: This rule is applicable to quotes as well as offers. Quotes should be treated the same as offers, for the purposes of this rule. The term ``offer'' used in the provision is comprehensive enough to apply to all competitive acquisitions subject to the final rule. Specifically, the term ``offer'' appropriately applies to acquisitions exceeding the simplified acquisition threshold conducted under FAR parts 8, 12, 14, 15, and 16. FAR defines ``offer'' to include responses to invitations for bids (sealed bidding) and responses to requests for proposals (negotiation), but to exclude responses to requests for quotations (RFQs). However, DFARS parts 208 and 216 already use the term ``offer'' in reference to orders awarded under those subparts. Finally, the final rule does not apply to acquisitions below the simplified acquisition threshold awarded based on quotations received. Therefore, the provisions in the final rule, because they use the term ``offer,'' can be used appropriately for competitions under FAR parts 8, 12, 14, 15, and 16 exceeding the simplified acquisition threshold.

I think this means the DAR Council believes that agencies solicit offers when using FSS procedures for orders over $150,000.

C Culham/Vern,

I just received legal's reveiw on the RFP solicitation. See comments below:

"a. Award without discussions - As presented there is no clear indication that award will be made without discussions. According to FAR 15. 305(a)(3) if award will be made without conducting discussions, offerors may be given the opportunity to clarify certain aspects of proposals or to resolve minor or clerical errors. Award will be made without discussions if the solicitation states that the Govnt intends to evaluate proposals and make award without discussions. Please refer to the FAR part mentioned above."

"b. Past Performance - As presented the evaluation of Past Performance is against the rule established in FAR 15.305(a)(2)(iv). Accordingly, in the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorable on past performance. Please refer to FAR 15.305(a)(2)(iv).

Acq_4_Life,

What do you think of the comments that you received from legal?

eriand2,

I don't think that you understand what "past consideration" is. The way you have been using the term (e.g., contrasting it with "good and current" consideration), it seems that you think it means consideration for a contract formed in the past. That is not what it means. Far from it.

First, let's distinguish between executory, executed, and past consideration.

Executory consideration:

Executed consideration:

If one has a cost reimburseable contract with the CIA for research and development (and if anyone has done business with this agency, you will know they are anything less than willing to explain themselves when they administer contracts, you can't even get the prescriptions for their agency specific clauses they insert) and one purchases equipment under said contract, but there is no Government Property clause, or anything else that addresses equipment, the allowability of the purchase of said equipment, or who owns title to the equipment, then who owns it? I might add that permission was sought and received from the CO to purchase such equipment. Just wondering if anyone has dealt with a similiar situation in the past.

HigherEd123,

1. Is the contract for basic or applied research?

2. Is the contractor an educational institution?

What are market-based, cost-based, and based on estimates of past and future economic benefits?

Does this help? http://www.wipo.int/sme/en/documents/value_ip_intangible_assets.htm

Ok. Thanks.

But what about damage to a part of the building on which the contractor has not yet done any work? Suppose the tree damage changes the work that the contractor has yet to do? The specs and drawings no longer describe the work that the contractor will have to do now. I do not think that is covered by the Permits and Responsibilities clause. I think in that case the government will have to change the specs and drawings and that if the new work will cost more and/or take more time the contractor will be entitled to an equitable adjustment.

Joel? Don? Do you agree?

That's a good question. I'm going to defer to Joel.

Joel,

Thanks.

For our readers, DCAA Contract Audit Manual 7-1002.5(d):

Increased competition among airlines has resulted in certain airline companies offering various promotional benefits, including cash, merchandise, gifts, prizes, bonus flights, reduced-fare coupons, upgrade of service, membership in clubs, check-cashing privileges, and free vacations. Contractors are not required to collect airline promotional benefits from their employees. It is up to each contractor to establish its own policy addressing the treatment of these promotional benefits. However, if a contractor has a policy that results in its employees turning in the frequent flyer bonus credits for company use, then the auditor should ensure that the Government receives its applicable share of any credits actually received by the contractor. In those instances where contractors have executed agreements with individual airlines for discounts and bonuses, auditors should determine that appropriate credits or cost reductions are being reflected in forward pricing and actual cost submissions, and that appropriate use of the agreement is being made.

H2H, Retreadfed,

Consider the following scenario:

A contractor has a cost-reimbursement contract and uses a corporate credit card to make purchases that are directly charged to the contract. The card is only used for this purpose. The contractor accrues frequent flyer miles or hotel points (i.e., the kind the IRS doesn't care about according to H2H's point #1) whenever the card is used. The contractor redeems the miles/points to defray travel costs under its fixed-price Government contracts and commercial contracts.

In your opinion, has the contractor done anything wrong?

Don,

The first scenario is correct as to what occurred.

Ok. Then I would say that you are heading down the wrong street with the change order. A fixed-price contract would not generally entitle the contractor to a price adjustment due to damage caused by severe weather. As Joel explained, delays caused by severe weather are generally excusable so a time extension may be in order.

Ask an attorney as Vern advised. However, if the attorney tells you to issue a change order to repair the damage, ask a different attorney.

ndean's question, as I understood it, has to do with benefits accruing to the contractor through the use of a corporate credit card--not benefits accruing to contractor employees through use of personal credit cards. If the contractor received awards for using the card (i.e., cash back or purchase discounts) for allowable costs reimbursed by the Govt., those would have to be passed on to the Govt. in the form of cost reductions or cash refunds.

Usually such points are non-transferrable. If that is the case, they could not be transferred to the government.

The Government doesn't want the points. They want a cost reduction or a cash refund.

Hello:

Our area has recently encountered heavy summer storms. We have an ongoing building renovation project that was recently damaged by the storm? A tree feel on top of the roof of the building causing significant water damage. It is generally known the Government is self insured and that the contractor is insured according to (FAR 52.2285). A copy of the insurance cert is on file. We do not have substantial completion nor beneficial occupancy or final acceptance. Being that the tree would have feel on the building regardless of ongoing construction or not. The plan of action I am planning to put in place is for the construction contractor to evaluate the data see if it is covered under the insurance, if not, we will considered a change order for the repairs. If you will, please let me know if this sounds like in heading down the correct street with my plan.

mrbatesville,

Which of the following happened?

(1) Contractor was renovating the entire building. The storm caused damage to parts of the building already renovated or to be renovated under the contract; or

(2) Contractor was renovating part of the building. The storm caused damage to parts of the building already renovated or to be renovated under the contract AND to parts of the building not included in the renovation contract.

joel,

FAR 52.236-7 states that "The Contractor shall also be responsible for all damages to persons or property that occur as a result of the Contractor’s fault or negligence." How would that make the contractor responsible for storm damage?

ndean,

If the contract is subject to cost principles for commercial organizations, see FAR 31.201-5:

31.201-5 Credits.

The applicable portion of any income, rebate, allowance, or other credit relating to any allowable cost and received by or accruing to the contractor shall be credited to the Government either as a cost reduction or by cash refund.

Other cost principles have similar provisions.

Cody,

If you are in DoD, you need to follow the Department of Defense Source Selection Procedures. Chapter 2 covers source selection plans.