Incentivize Me

Some practical concerns being expressed by PCOs that I have heard: 1. Paragraph (1) of the memo makes reference to "...rates paid to the contractor for the same or similar contract services performed under contract with procuring DoD component in fiscal year 2010". (Note: The emphasized language was not in the statute.) DPAP uses DoD Component as a broader context in its various memos than the contracting activities it lists in the DFARS 202.101. (No defintion of DoD Component exists in the DFARS.) Several DoD Components (e.g., Navy, Army) are rather large entities with multiple Heads of Contracting Activity which often have smaller procuring activities thereunder. So how will a PCO at one Navy buying activity know the rates of same or similar services paid in FY10 to a contractor under any contract/order across the entire Navy? 2. The same concern applies to paragraph (2) with regards to the annual price (not rates) paid in FY2010. How would a PCO find this out and how could a Secretary of MILDEP or Head of Defense Agency verify? 3. Paragraph (1) can be interpreted to mean a specific contractor and how the FY12/13 to-be-negotiated rates compare to FY10 rates paid to that same contractor. Can paragraph (2) be interpreted the same way? I say yes. Even if it is ambiguous, a PCO simply applies the notion of "contra proferentem" so if the drafters of the statutory/regulatory/policy language aren't nonambiguous they should not blame the folks for how they interpret the language but use more specific, exact language. However, applying that same approach for interpreting "DoD component" in paragraph (2) to mean HCA level or lower-tier procuring activity likely wouldn't be taken by the HCAs or lower-tier procuring activities without knowing how the waiver authority (SPEs) would interpret it and the SPEs are trying to work that out with the DAR Council know. Until the PGI language comes out, HCAs, lower-tier procuring activities, and PCOs are left to their own discretion. The PCOs are the ones executing the contracts/orders so they need to exercise their independent business judgment when interpreting the existing statutory and class deviation language. This is what we have to do when statutory/regulatory/policy language that is ambiguous.

Comment/suggestion with regards to a protest to Court of Federal Claims (COFC). Exercise of option on IDIQ contract. See Magnum Opus Technologies, Inc., v. U. S. and Luke & Associates, Inc. and TerraHealth, Inc., Nos. 10-106C, 10-127C; May 28, 2010. (June 4, 2010) A: COFC case found for plaintiff (contractor) which alleged Govt.'s exercise of an unpriced IDIQ option violated Competition in Contracting Act (CICA) as Contracting Officer would not be able to make determination that: (1) the price of an unexercised option is the more advantageous offer and fair and reasonable per [FAR 17.207(d)]; and (2) that the option satisfies FAR Part 6 with regards to amount specified in or reasonably determinable from the basic contract [FAR 17.207(f)]. B: FAR 16.504 [indefinite Quantity Contracts] subparagraph (a) [Description] states "Quantity limits may be stated as number of units or as dollar values." Based on A & B above, one should always ensure option ordering CLINs are stated in terms of at least price (if not quantity AND price). Otherwise, exercise of the option would be in violation of CICA. (By the way, this is another reason advocating the use of using longer base year ordering CLINs in lieu of option CLINs for additional ordering periods.)

Well, I posted a comment accordingly to the openregs.com website under this FAR Case. Surprised how user friendly the site is. First time I've submitted a comment on a FAR Case. We'll see if/how it gets addressed.

From FAR Case 2008-11....." Language was added to FAR 15.404?4(a)(3) as follows? ??Unless the contractor acquired property is a deliverable under the contract, no profit or fee shall be permitted on the cost of the property.?? " I see the distinction you are trying to make interpreting the language as a deliverable itself vice being material that comprised part of the final delivered product. It may be a bad assumption on my part to assume this proposed language deals with contractor acquired property that is part of a deliverable (a broader interpretation) vice it being in and of itself a deliverable (a more strict interpretation). However, if it's the later interpretation, I'm lost as to what the intent of the proposed language would be. In that scenario, the contractor would only get profit on an item it acquires as a whole from its subcontractor and delivers "as is" to the Government. The majority of Government dollars spent on supplies involve the contractor acquiring material that is that bent, shaped, modified, configured (or otherwise twisted, turned, etc.) into a whole that is greater than the sum of its parts. The stricter interpretation would mean the Govt. is advocating (i.e. rewarding via profit) effort that is basically buying COTS "as is" and never rewarding innovation or using Govt. unique requirements. Maybe that's what Uncle Sam meant but as a taxpayer wanting my tax dollars spent wisely to support our troops and enhance our national security, I hope not. Regardless, either interpretation is bad for both the Contractor and the Government. Hopefully, the FAR Case language will be clarified.

The Govt. does not need to fully fund the minimum if the contract and fiscal law allows for incremental funding beyond the 1st year (e.g., R&D funding). However, the Govt. still needs to comply with fiscal law so that the funding is reasonably pro-rated across the fiscal years in which the effort is being performed. For example, if 50% of the effort would be completed in the 1st year and 50% in the 2nd year, one should not provide only 20% of the funds in the 1st year and 80% of the funds in the 2nd year as you would be using later-year funding to pay for prior year effort. The key point is that the conditions of the minimum must be clearly stated in IDIQ contracts (as always) and even more explicit when the initial ordering period is longer than 1 year. An auditor looking in from the outside may wonder if spreading the minimum over a longer-than-one-year ordering period is simply a multi-year contract by another name. Clear contract language that complies with fiscal law and expressing your minimum in terms of a quantity unit of supply/service vice a dollar amount can easily avoid this appearance of "multi-year" abuse. A simpler solution is simply plan to limit, buy, & fund your miminum in the first year (which is what Vern reminded all of us about earlier in this thread). It should be a rare circumstance that you would want to, and fiscal law will allow you to, have a minimum ordered piecemeal across a longer-than-12-month period. It does make for an interesting academic discussion though.

I spoke with Professor Douglas Goetz, an true expert on Government Property, of Defense Acquisition University and asked him the very question about the FAR case excluding profit on contractor-acquired property that is not part of the delivered product to the Govt. He mentioned that the FAR Case was intended to address the matter (i.e. no fee/profit) with regards to facilities contracts and it does. That concept was inadvertently extended to apply to non-facilities contracts. Many, many, many times prime contractors buy materials from different vendors to test in their development & manufacturing process to determine which material is most suitable for meeting the Govt.'s requirements. Then, the prime selects the best material and the remainder does not end up in the delivered product to the Govt. This common risk reduction practices requires time, effort, and material necessary to provide a compliant, cost-effective deliverable and should be fee/profit bearing. The Govt. benefits greatly from this practice. Even if this FAR case language did pass "as is", I think the parties would find it nearly impossible to determine how much, and especially which, material would end up in the final deliverable product. Negotiating that would be a futile exercise. Nonetheless, let's hope the FAR Case is clarified and this idea of no fee on material not delivered as part of a completion type supply item deliverable goes no where. By the way, Professor Goetz wrote an excellent article in the Summer 2008 NCMA Journal dealing with the subtleties of when title of contractor-acquired-property transfers to the Govt., when contractor-acquired-property needs to be tracked IAW Government Property clauses, and how conflicting FAR language can lead to tax implications on such contractor-acquired-property. Even if you are not interested in the tax implication aspect, it provides a good summary of handling contractor-acquired-property.

No.

Distinguishing between: (i) award fee pool dollars that the contractor has not yet had a chance to earn; and (ii) award fee pool dollars that the contractor had a chance to earn but failed to do so (i.e. got a score < 100%).

I didn't advocate or oppose locking in prices over five years. The pricing remains at the CLIN level. The question dealt with further subdividing hours & cost/prices down to the SLIN level. It was a contract administration question, not a pricing question.

"Rollover" is a term used to describe the carryover of award fee (AF) the contractor FAILED to earn (key is FAILED to earn) to a later award fee period/event in the contract. For example, if the contractor was eligible to earn $100 (i.e. AF pool is $100) during the 1st AF period but only earned $90, the remaining $10 would be considered "rollover" if it was added to a subsequent potential award fee pool. Let's say the CLIN price was $9000 cost and $900 award fee and the unit price was $90/hr. cost & $9/hr. AF pool for a maximum quantity of 100 hours for the current CLIN. If the contractor was tasked and delivered 80 hours at $7200 and earned only $700 of the $720 AF pool for those 80 hours, the remaining $20 is what the contractor FAILED to earn. $120 is what the unused award fee pool associated with unexpended work that could be transferred (not rolled over) to a subsequent CLIN, providing the contract language allows you to do that or there is a bilateral modification (mindful of orignal scope of competition) executed. Please note that this scenario assumes the maximum quantity is defined in terms of dollars (not hours). If it is in terms of hours, then this scenario assumes the hourly unit price is the same from one CLIN to the next. If not, then you should be transferring unused hours from one CLIN to the next CLIN but applying the price of the next CLIN. Otherwise, you are likely denying the contractor (or Govt.) the benefit of then-year pricing. Your recent comment about evaluating offers implies you are talking about transferring unused "ceiling" in a multiple award environment. If so, you should be transferring equal amounts of unused "ceiling" per contractor to ensure an equilibrium of fair opportunity for the remainder of the contract.

I did describe rollover appropriately. The 2nd sentence of the quote could have been interpreted two ways (as your reply has shown). Failure to avoid transferring only the unearned AF attached to unpurchased quantities (i.e transferring unearned fee for purchased quantities) results in rollover.

Agree with the longer-than-one-year ordering period. Folks make them annual options out of habit thus requiring a new contract modification and set of CLINs each fiscal year. (Note: I said CLINs, not SLINs. You will always need more SLINs to differentitate between funding lines within and in different fiscal years.) As to the other original comments, it is a good idea to avoid subdividing units/pricing at the SLIN level on services efforts. This allows more flexibility in contract administration (i.e. again, few contract modifications). Yes, follow what the contract states with regards to transferring unused quantity from one CLIN to another. If not in the contract, folks often do a bilateral modification to allow the Govt. to do so without requiring a bilateral modification each time. Yes, you need to be mindful of the protest risk (i.e. out of scope of original competition). One last note: If you are transferring unused quantity from one CLIN to another, be sure you are not transferring any award fee pool that was eligible to be earned but was not earned. This would result in award fee "rollover". You should transfer only the award fee pool portion that is associated with the unexpended work. Of course, if the contract already has language covering award fee rollover, then follow the contract accordingly. I am not saying award fee rollover is good or bad, but, given the current anti-rollover Govt. leadership sentiment, just making sure one doesn't inadvertently rollover award fee for which the contractor expended effort but didn't earn the full amount.

Thanks for reminding me of the proper terminology. Understand that ECP is a configuration management (CM) term and as such is not inherently within or outside of scope. However, if an ECP then gets incorporated into a contract, a determination must be made that the effort is within the general scope of such contract and not outside the scope of the original competition (or, if a sole source contract, within the scope of the corresponding J&A). My personal experience (using "experience" in lieu of "training" as one has assessed my training to be poor; of course that does not mean my "experience" cannot be characterized as "pathetic") with incorporating an ECP into a contract has been applying the CM term ECPs to changes made to what is currently being bought under the contract. If the ECP was to an item previously bought under another contract but the ECP effort was to be procured under a new contract that stated words to the effect "The contract is to implement an ECP to "X" item that is provided as GFP", then yes, the ECP would be an out-of-scope ECP. However, in my personal (and possibly pathetic) experience, I have not encountered that scenerio. Is it absolute that an ECP cannot result in an increase in quantity ? For example, let's say the Govt. issued a contract for a surveillance system covering X square miles that must be comprised by Y interoperable units due to the force structure of the mission. The system was accepted on a per unit basis so the units could be immediately used as the old system was phased out. Then, due to a revised force structure, the new system still must cover the same X miles but cannot be interoperable unless 2 more units are added (i.e. Y+2). The Govt. considered it within the general scope of the contract and the orginal scope of the competition. Was this a judgment call or a flat-out wrong decision ? "The notion that an ECP that results in an upward equitable adjustment is, for that reason, not within scope is patently absurd." I am glad we agree on something....almost. I fail to see how FAR Part 27 has anything to do with this matter. (That was a joke -- not poor training.)

"out-of-scope" work that is not "new work" ? This is a case of semantics -- likely poor semantics on my part. Let's take out the fact of an FMS customer officially stating the specific vendor. (In that scenario, there is no requirement to synopsize and I'll be using synopsizing as part of my clarifying response to Vern's question.) Some folks are very specific about the term contract scope and view "new scope" or "out of scope" work quite literally to mean any change in specs (i.e. any non-administrative word, paragraph, page changes) or quantity or pricing. Other folks view contract scope more broadly by using the litmus test of the need to synopsize and execute a J&A per FAR 6.3. If a synopsis and (presuming no viable industry response from another source to perform the work) a J&A is required, then the work is "new scope" or "out of scope". Now we introduce an engineering change proposal (ECP). My personal training was that ECPs are "within scope changes". A "within scope increase" was an ECP (if incorporated into contract) that results in an increase to the current contract quantity and/or (mostly likely at least) price (i.e. an equitable adjustment due to the contractor). A "within scope decrease" is an ECP (if incorporated into contract) that results in a corresponding decrease. However, some folks (of the specific interpretation) often wanted to argue that any ECP requiring an upward equitable adjustment (i.e. "within scope increase" in my book) was "out of scope" simply because the Govt. would be increasing the quantity and/or price. The number of these folks seemed to be growing in the organization I previously worked in so the "terms of choice" evolved into "out of scope work that is new work" vice "out of scope work that is not new work". My thought is that this stricter intrepretation was only adding confusion. The bottom-line litmus test is ensuring the Govt. always stayed mindful of the need to synopsize and comply with FAR 6.3 (J&As). If the synopsis and J&A were required (or in the event of an FMS customer specificying the vendor, just the J&A being required), then the effort is in effect a new contract, even if executed via a contract modification. Thus, if executing via contract modification, one must then include the most current FAR/DFARS clauses in the resulting contract action and cannot simply piggy-back on 100% of the terms & conditions in the existing contract. Hope this clarifying response "educates" more than "confuses". Any better or official terminology folks can point me to would be most appreciated. On another note, I was surprised to hear no one object to the notion that the most current FAR/DFARS clauses must be used when a new contract effort (i.e. FAR 6.3 applies) is added as a modification to an existing contract. Later in my career, I noticed a growing number of Govt. attorneys, contract specialists, & PCOs missing this critical step and would get such vehement objections on this very point (or dirty looks from those who I reminded when they forgot about this).

I am one of "those" contracting folks that once believed price analysis was always required. I guess I was very impressionable because I had an excellent mentor and viewed his "should" statements in his world to be "shall" statements as I was new to the field. Years later, it was pointed out to me. Agree absolutely that if price analysis could be done, then it should be done. To take this "should" one step farther, let's look at FAR 15.404-1((2)(i) & (ii): "(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to the following: (i) Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition established price reasonableness (see 15.403-1©(1)). (ii) Comparison of previously proposed prices and previous Government and commercial contract prices with current proposed prices for the same or similar items, if both the validity of the comparison and the reasonableness of the previous price(s) can be established." Five price analysis techniques are subsequently identified but FAR 15.404-1((3) states that the 1st two (identified above) "are the preferred techniques". For competitive proposals, many folks simply state that adequate price competition automatically establishes price reasonableness and simply state that as the basis of price analysis. Note the FAR says [b]"Normally"[/i] . It is not automatic by default. I was trained that whenever the 2nd preferred technique can used in competitive situations, one should use it. If the 2nd preferred technique results in a significant difference from the proposal prices and one cannot explain it via changes differing market conditions or specifications, then one needs to double-check that there were no unintended mistakes in the Govt.'s term and conditions or specifications that could have cause the price analysis differential. If your price analysis indicates $300,000 for a widget and the proposal prices all come in about $150,000 for the same widget and there is no known different market conditions, it is prudent to go over your solicitation (including specifications) with a fine-toothed comb before executing the contract and obligating our taxpaying dollars.

I am one of "those" contracting folks that once believed price analysis was always required. I guess I was very impressionable because I had an excellent mentor and viewed his "should" statements in his world to be "shall" statements as I was new to the field. Years later, it was pointed out to me. Agree absolutely that if price analysis could be done, then it should be done. To take this "should" one step farther, let's look at FAR 15.404-1((2)(i) & (ii): "(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to the following: (i) Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition established price reasonableness (see 15.403-1©(1)). (ii) Comparison of previously proposed prices and previous Government and commercial contract prices with current proposed prices for the same or similar items, if both the validity of the comparison and the reasonableness of the previous price(s) can be established." Five price analysis techniques are subsequently identified but FAR 15.404-1((3) states that the 1st two (identified above) "are the preferred techniques". For competitive proposals, many folks simply state that adequate price competition automatically establishes price reasonableness and simply state that as the basis of price analysis. Note the FAR says [b]"Normally"[/i] . It is not automatic by default. I was trained that whenever the 2nd preferred technique can used in competitive situations, one should use it. If the 2nd preferred technique results in a significant difference from the proposal prices and one cannot explain it via changes differing market conditions or specifications, then one needs to double-check that there were no unintended mistakes in the Govt.'s term and conditions or specifications that could have cause the price analysis differential. If your price analysis indicates $300,000 for a widget and the proposal prices all come in about $150,000 for the same widget and there is no known different market conditions, it is prudent to go over your solicitation (including specifications) with a fine-toothed comb before executing the contract and obligating our taxpaying dollars.

The effort described is clearly out-of-scope work that involves new scope and thus a new J&A or International Agreement Memorandum. This is different from out-of-scope effort that is not considered new work, such as an engineering change proposal. Thus, what you have is a brand new contract effort. The question is whether to create a new stand-alone contract or add the new effort to an existing contract via a contract modification. While one can "piggy back" off SOME existing contract requirements (e.g., use the same specification or statement of work, or special contract requirements clauses in Section H), the current FAR and DFARS provisions and clauses must be used for the new effort. Just because we choose to modify an existing contract instead of awarding a new contract for new effort otherwise subject to FAR 6.3 does not mean we can ignore the latest mandatory clauses (or new versions thereof). I have had to do this many times. While it takes a little more effort to insert the latest clauses and clearly delineate that the new FAR/DFARS clauses apply only to the new contract line items (CLINs), it may still be less administrative hassle overall then creating a brand new contract.

If the FMS customer wants you to contract to a particular contractor, you can go ahead and do it....provided that foreign government specifies that particular firm in an official direction to the U.S. Govt, such as a Letter of Offer and Acceptance [FAR 6.302-4((1)]. If the FMS customer does that, then FAR 6.302-4 International Agreement applies and you can award a sole source contract for effort that is "duplicate" (with the exception of which country owns the aircraft) with another Govt. contract. If the FMS customer will not officially specify the particular firm, then you will have trouble justifying a sole source contract to a new contractor if identical work is being currently provided by another contractor. The FMS customer can insist on its own contract (after all, it is the foreign country's money, not the U.S. Govt.'s). However, there is still no guarantee the FMS customer's preferred contractor would win the contract. Otherwise, I know of no prohibition for two Government contracts buying the same thing. In fact, the Govt. does this all the time. Different federal agencies are buying the same things at the same time under different contracts. Fortunately, the Govt. is trying to leverage economies of scale when it can via "Strategic Sourcing" initiatives.

"Full and open competition is only meant to help small businesses and we do not have socio-economic programs overseas." "If I go to two (2) sources, I have full and open competition according to the FAR." "Who are we hurting by only going to local sources? - in fact we are helping the local economies." "If we use FBO, then we are held to the minimum publicizing and response time. If we don't use it, we aren't bound by them." These comments are a little scary... "Full and open competition is only meant to help small businesses and we do not have socio-economic programs overseas." Full & Open Competition is required by law (Competition in Contracting Act) and helps all companies and the taxpayers by promoting transparency and getting the best value for the Govt. (which is not just the lowest price). "If I go to two (2) sources, I have full and open competition according to the FAR." If you go to 2 sources only, you have limited competition, not full & open competition. "Who are we hurting by only going to local sources? - in fact we are helping the local economies." You are hurting non-local sources who may have been wrongfully excluded from the opportunity to compete. "If we use FBO, then we are held to the minimum publicizing and response time. If we don't use it, we aren't bound by them." I don't follow that logic....if I ignore the FAR, then I'm not bound by the FAR ???? Add me to the list of many on this discussion trail that are verifying your sanity. Ultimately you are signing the contractual document, not the advising attorney. I have been in similar situations as a contracting officer. Glad to see you are trying to do the right thing and not just be a rubber-stamp. Not always easy being a contracting officer but that's part of what makes it rewarding.

"Certification" is a term of art that is meant to be limited to such as required either statute or approved by the Administrator of Federal Procurement Policy. Some well-known examples of these certifications are: Certificate of Current Cost or Pricing Data (See FAR Part 15.406-2) Contractor Certification of Requests for a specific Performance-Based Payment (FAR Clause 52.232-32) Certification carries unique legal connotations (e.g., liabilities). Adding certification requirements to the FAR as a (reactive) means for "better" enforcement over or control of contractors can be costly in dollars and time to contractors and ultimately the taxpayers' via an inefficient & reactive oversight mechanism. Meanwhile, many Government contracts were requiring "certifications" per clauses that were unique to a Govt. contracting office, or even to that particular contract itself. The over-use and uncertainty of what certification meant in many situations would create confusion and liability concerns for the contractor. Thus, per law, the FAR was updated to minimize further promulgation of new certifications in Chapter 1 of Title 48, Code of Federal Regulations (i.e. the FAR) except when imposed by statue or specifically requested by the FAR council and approved by Administrator of Federal Procurement Policy. The DFARS (Chapter 2 of Title 48) also was updated to allow other-than-statutorily-imposed certifications specifically requested by the Under Secretary of Defense (Acquisition, Technology, and Logistics) and approved by the Secretary of Defense. The Navy went even further in its regulations stating that no certifications beyond those required by the FAR or DFARS shall be used in Navy solicitations/contracts unless approved by the Secretary of Defense. Thus, using the word "certification" in a non-FAR or non-DFARS context is a big "no-no" in Navy contracting. Interestingly, most (if not all) of the other Agency FAR supplements are silent on this. Since my contracting career has been virtually all in the Navy, I am curious to hear if other agencies operate like the Navy does with regards to certifications. Was the Navy just stating the obvious or are other activities still imposing unique certifications ?

See the Dept. of Defense Financial Mgmt. Regulation (DoD FMR). The DFARS used to have th 6.1, 6.2, 6.3....years ago but that was removed. It is now referred to as "Budget Activity" for RDT&E funding. Budget Activity 1, 2, 3...correspond to the former 6.1, 6.2, 6.3 language of the DFARS.

I am aware of all the specifics of the decision and did thoroughly read the 1968 decision with Dynamics Corp. I still believe this is a case of first impression given there does not appear to be a prior decision specifically addressing the use of e-mail as the means of transmission and the use of e-mail alone as the sole fact invalidating the contract action transmitted by the very same e-mail message. The ABSCA cites several related cases dealing with options, orders, and ordering periods, but none address the e-mail transmission method which is the basis of GDC4S's case. We have an outdated FAR ordering clause (1995). Since that time, many FAR & DFARS clauses have been revised or added to include various aspects of e-commerce, including CCR, submission of invoices, & receipt of payments to name just a few. Why this one has yet to be updated, I do not know. E-commerce is the overwhelmingly prevalent means for Govt.-Industry contracting, including but not limited to: contractors to receive solicititations, submit legal binding proposals, receive contract awards, receive contract modifications, submit invoices, receive payment, and receive letters from as well as transmit letters to CORs & PCOs. [it appears GDC4S receives the contract modifications and PCO letters via e-mail and is not disputing other orders issued (under the same contract) by e-mail for which GDC4S did not lose money.] Given the common e-commerce practice (in particular e-mail) for contractual actions, apparently issuing orders via e-mail is the "anomaly" not updated in the FAR though commonly practiced. Hence, my "thought experiment" of how parties, boards, & courts may view a proactive "remedy" that really addresses the "situation" as an administrative change given e-commerce (particularly e-mail) has become the standard practice in Govt.-Industry contracting. (The ideal remedy would be a FAR clause update.) My (very rudimentary) research of agency FAR supplements (i.e. checking all the ones listed on the Hill AFB FAR site) shows only ONE -- the Special Operations Command (SOCOM) -- having a clause that includes e-mail as an authorized means of transmission. GSA has two clauses but they focus on detailed electronic data interchange (EDI) info with no specific mention of e-mail. While it could be true that each local contracting activity addresses e-mail transmission of orders in their local activity clauses, I would bet it would be far from 100% that actually do. Thus, this case of first impression (if not successfully appealed, if the Navy even tries to appeal) with regards to e-mail transmission of an order could be precedent-setting if only for the proverbial brown pants that many Government contracting officers in many Govt. agencies will soon be wearing when contractors realize numerous (if not the majority) of e-mailed delivery or task orders are invalid. We have seen replies from Vern (and he likely will reply again). However, I am curious as to the thoughts and reactions of other contracting professionals out there. Anyone ?

Yes, I saw the answer to my question when I read the decision before my posting. I guess I was a little too open-ended in my posting. I do find it interesting though how the ASBCA equates the issuance of an order within a valid ordering period to be treated the same as an option exercise matter. Interesting to note that the contractor only objected AFTER the ordering period expired and ONLY to the orders issued in the last week of the ordering period since the contract prices had become unfavorable to the contractor's current business (revenue/profit) situation. Meanwhile, the contractor had been performing and completing earlier orders transmitted by e-mail. Not (necessarily?) a legal/contractual matter but an illuminating one, none the less. Regardless, let's do a little thought experiment.... Let's say the contracting officer (CO) noticed the discrepancy between the FAR ordering clause and the Govt.-Contractor business rhythm well before the ordering period expired (i.e. DURING the ordering period). The contractor had been performing and completing, and the Govt. accepting, otherwise IAW with the contract and those orders that were transmitted by e-mail. The CO addresses the matter but issuing a unilateral contract modification to the basic IDIQ, citing FAR 43.103((1) and treating this as an administrative change [FAR 43.101 Definitions. ?Administrative change? means a unilateral (see 43.103() contract change, in writing, that does not affect the substantive rights of the parties (e.g., a change in the paying office or the appropriation data).]. One might think the contractor would have a difficult time arguing one of its "substantive rights" had been violated by this unilateral, administrative change contract modification issued during the ordering period. The "substantive right" being to receive an order in paper from the slower mail service vice the faster, e-file that can be immediately further forwared by the contractor to all its pertinent workers and its subcontractors ? (By the way, adminstrative changes often retroactive impact, not by means of an earlier effective date, on the contract modification but simply by the time of the contract modification. For example, correcting an error in a line of accounting or updating an company's address change.) Welcome your thoughts on this "thought" experiment. (By the way, this is a precendent-setting case. It will be interesting to see if the Navy appeals. Regardless, maybe this will spur the FAR council to update the 14-year-old 1995 version of the ordering clause to include any means of transmission to the contractor's designated contracts manager. This could have been done long ago and such a single change then could have saved the Govt. $38M. Yes, the COs should be putting in the Schedule the necessary language. I'm curious to see how many agency FAR supplements have addressed this issue in agency-specific clauses. Will do that research later and get back to you.)

Hi Vern-- Concede on your first 3 sentences. I was thinking in terms of a single IDIQ award only. I believe your last sentence is congruent with my 2nd sentence, with your statement containing more information, especially the crucial protest issue. I only gave one example in my statement -- including any limitations on the length of an order -- and that was because the question involved extending the order's performance period among other things. I guess this forum demands exacting specificity, which is what we would expect to see in our contractual documents... Honored to have my first reply come from you. Your reputation precedes you.

(previously and incorrectly posted under the subcontracts forum. just started using this site. oops.) Anyone seen this decision ? ASBCA No. 54988 Basically, an IDIQ contract was issued in 1998 and the first few delivery orders (DO) were signed and distributed in paper form via U.S. Mail. The Govt. agency then started distributing its DOs in .pdf via e-mail. The orders are still on the DD Form 1155, signed, etc. Just the distribution of the DOs changed. The IDIQ contract includes the FAR ordering clause below. Note paragraph ?. 52.216-18 ? Ordering. Ordering (Oct 1995) (a) Any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or task orders by the individuals or activities designated in the Schedule. Such orders may be issued from __________ through ____________ [insert dates]. ( All delivery orders or task orders are subject to the terms and conditions of this contract. In the event of conflict between a delivery order or task order and this contract, the contract shall control. © If mailed, a delivery order or task order is considered ?issued? when the Government deposits the order in the mail. Orders may be issued orally, by facsimile, or by electronic commerce methods only if authorized in the Schedule. (End of Clause) The contract involved did not include language in the Schedule (Sections B through H) stating that e-mail could be the means of issuing an order. The contractor filed a claim stating these orders were not in accordance with the contract and thus sought an equitable adjustment, because the contractor was losing money. ASBCA ruled in the contractor's favor. I see how the contractor is technically right but fail to see how the contractor was damaged by the Govt. transmitting the executed order via e-mail vice U.S. mail. If anything, the contractor receives the order faster and can start work sooner. Would like to hear folks' thoughts on this ?