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Navy_Contracting_4

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Posts posted by Navy_Contracting_4

  1. On 6/24/2017 at 8:16 AM, Vern Edwards said:

    Under a CPIF contract the contractor earns the incentive fee when it completes the work and the contracting officer determines the total allowable cost. The current underrun could disappear in a heartbeat. The parties might not realize there was actually an overrun until after the contract is physically complete and the participants have gone on to other jobs. Don't assume that the current underrun is the final result.

    Everything Vern says is true.  However, if "the Contractor demonstrates that performance or cost clearly indicates that the Contractor will earn a fee significantly above the target fee, [emphasis added]," and after considering Vern's advice about the sometimes fleeting nature of underruns, you still think payment at a higher rate is appropriate, then I would suggest that the contractor request that the order be modified to so provide.  The contractor isn't allowed to invoice at a rate other than that provided in the order, so the order must be modified.

  2. On 3/10/2017 at 8:29 AM, Vern Edwards said:

    Navy:

    It wouldn't matter, because Looking has only a BOA with his "teammates" about rates. A BOA like the ones described in FAR 16.703 is not a contract. In order to bind one the teammates to perform under the task order from the government, Looking would have to issue an order against the BOA, and a teammate would have to accept. In other words, he would have to award a subcontract. Under FAR 52.215-12 he must get certified cost or pricing data from the teammate before awarding a subcontract.

    Vern,

    Yes, I understand about BOAs and how they differ from subcontracts. That's why I told Looking (see my post from Wednesday at 11:08 AM) that in his scenario, certified cost or pricing data would be required.

    In the post for which you took me to task, I postulated an alternative scenario – one in which there was a binding subcontract not a BOA – and suggested that in that scenario, cost or pricing data would not be required in conjunction with issuing orders.  Do you think otherwise?  If so, why?

  3. On 3/8/2017 at 1:55 PM, Vern Edwards said:

    Navy, what do you mean "I don't think"? Do you know?

    Even if an IDIQ contract is in place between a prime and a subcontractor, the issuance of a T&M task order by the prime to the sub creates a newly priced subcontract, because hourly rates are only part of the equation, and the prime must obtain certified cost or pricing data from the subcontractor for the completion of the pricing. The same would not be true of a delivery order for a fixed-price item of supply, which is already fully priced.

    Vern,

    Well, I obviously didn't "know," as you have explained why I was wrong, but since the order would be FFP., it would likely be FFP level-of-effort, in which case, wouldn't it be comparable to ordering supplies at set prices?

     

  4. 32 minutes ago, Looking for Thoughts said:

    Nope- Just BOA's with the rates...

    Then I think we're stuck with FAR !5.404-3(c), which says 

    Quote

      (C)  Any contractor or subcontractor that is required to submit certified cost or pricing data also shall obtain and analyze certified cost or pricing data before awarding any subcontract, purchase order, or modification expected to exceed the certified cost or pricing data threshold, unless an exception in 15.403-1(b) applies to that action.

    as well as FAR 15.404-3(b)(3):

    Quote

    (b) The prime contractor or subcontractor shall—

    ...(3) When required by paragraph (c) of this subsection, submit subcontractor certified cost or pricing data to the Government as part of its own certified cost or pricing data.

     

     

    So  it sounds to me like the subcontractor in your scenario is required by 15.404-3(c) to submit certified cost or pricing data, and thus the prime is required  by 15.404-3(b)(3) to obtain it from the sub and submit it "as part of its own certified cost or pricing data."

    ...unless an exception in 15.403-1(b) applies.

     

  5. 12 minutes ago, Looking for Thoughts said:

    Hi All- thanks for the great convo-

    This is all "hypothetical" at this point.  The Prime IDIQ contract from the Gov't contains teammates rates.  When RFP's for DO's go out they are often very quick turn around so suppose the prime uses the contract rates and estimates hours and plugs in profit for various tasks.  When the DO is awarded the prime then parcels out work to various teammates. The ones that go over the CCPD threshold are problematical as no proposal was requested or received but I have found no exception for CCPD and was curious because in reality there was no proposal to certify to.  Does this help explain the scenario?

    Do the teammates have binding subcontracts under which they must accept orders for labor at specified rates?

  6. 3 minutes ago, Vern Edwards said:

    What I think is happening with the OP is that the prime is negotiating a task order with the government. The prime has already negotiated hourly T&M labor rates with a "subcontractor" and, when submitting a price to the government, used those rates in combination with its own estimate of the number of hours the sub would need to complete its work under the task order. The question is: Does the prime have to get certified cost or pricing data from the 'subcontractor."

    The answer turns on whether the prime actually has a subcontract with the "subcontractor" for performance of the work under the task order or just an agreement on rates. If the prime has only an agreement on hourly labor rates and must enter into a contract with the subcontractor, or issue an order, for performance, or give the sub an order, then the answer is yes, the prime must get certified cost or pricing data.

    An agreement on hourly T&M labor rates might not, in fact, be a subcontract. Is the subcontractor legally bound to perform? If not, and if a subcontract must be formed in order to bind the sub, then the requirement for certified cost or pricing data applies. Moreover, an agreement on T&M rates does not constitute a price for the subcontract work without an agreement on the number of hours the sub will need to complete its part of the job. That's because, as described in the FAR, a T&M contract is not complete until the parties have established a ceiling price for the work to be done, i.e., rates X hours. Thus, the CO must require the prime to require the sub to submit certified cost or pricing data in connection with the negotiation of a ceiling price for the subcontract awarded or order issued to the sub. See FAR 16.505(b)(3).

    One might argue that a subcontract, being a private agreement, need not have a ceiling price, and thus the prime and its sub need not negotiate an agreement on a ceiling price in order to complete their subcontract. I think that's a good argument if you can get the CO to buy it. 

    Or perhaps there is an actual subcontract in place ("the IDQ") that sets out "contractual rates" under the terms of which the prime may issue unilateral orders for specified numbers of hours of various labor categories, and the sub is bound to perform.  In that circumstance, I don't think certified cost or pricing data would be required.

  7. I'm not an attorney, but it seems to me that there is at least a general policy that the government is not to compete with private industry when industry has the capability to provide the needed goods or services, so I think that in order for the government to sell to private parties, some specific authority is needed.  See, for example, 10 USC 2563.  I know this isn't an answer to your question about flowdown of clauses, but perhaps it gets you headed in a direction where you can find an answer.  I expect that the government is not likely to agree to flowdown of FAR clauses in any agreement to sell products or services to private industry, but if there was a particular term or condition that you felt was important to include, you could suggest it and see if they would agree or not.

  8. 21 minutes ago, Don Mansfield said:

    My interpretation is closer to your #1.

    A= Value of labor & material incorporated into work

    B= Value of materials suitably stored at the site of the work

    C= Value of preparatory work completed

    D= Contract price

    E= Amount of previous payments

    PP= Progress Payment

    PP=((A+B+C)/D)*D) - E

    While I don't have a better answer, I think it unlikely that your equation is what is intended, because ((A+B+C)/D)*D = A+B+C, thus taking the contract price out of the calculation, and it seems to me that it wouldn't be described the way it is if that were the case.  Actually, I could come up with a complicated description for the payment problem, but I don't think I'd be able to determine the amount to be retained by paragraph (c), since it says " The Government will retain . . . an amount estimated or approved by the Contracting Officer under paragraph (b) of this clause," yet I find no mention of a retention in paragraph (b).  Possibly, someone who knows about DFARS 217.71 MARAVs, which I don't, can explain, but I think it would take a lot of explaining to get me to understand.

  9. 17 hours ago, Retreadfed said:

    I have just come across a situation that I have never encountered before and need a sanity check on my reaction.  The government issued a T&M contract for severable services effective January 2016 that is funded with DoD O&M funds.  The base period of performance was to run from January 2016 to 30 Sep. 2016.  Option year 1 was to run from October 1, 2016 to Sep. 30, 2017.  The contract does not contain any FAR option clauses, but does contain a home brewed option clause that essentially gives the government the right to exercise the option up to 60 days after the base period of performance has expired.

    Instead of exercising the option when the base period was expiring, because all the funds initially obligated on the contract had not been expended by Sep. 30, 2016, the government unilaterally extended the base period for 60 days to Nov. 30, 2016.  The authority cited for the extension mod was CICA.  Although the extension mod appears to have been issued after October 1, the effective date of the mod is January 2016.

    While I have several issues with the contract and extension mod, I have two major concerns.  First, is the effect of the extension mod on the possible exercise of the option.  The extension mod did not change the option period.  Thus, if it is exercised, the option will be running concurrently with the base period.  I don't see how that is possible.  Am I missing something here?  Also, I do not see how the option can be exercised in accordance with its terms if it does not begin on October 1.

    Second, is the extension of the base period of performance into a new fiscal year.  Although there was no new obligation of funds, there was nothing in the contract that permitted the extension and the option was available to cover the severable services in FY 17.  If the period of the base year had initially run to Nov. 30, there would be no problem.  However, the way the extension was done gives me an uneasy feeling that something is just not right here.  Am I over reacting on this?

    Retread,

    Regarding your first issue, this is pure speculation, but it sounds to me like they overlooked the performance periods for the option items, and may be expecting to exercise them within 60 days after the original base period of performance (i.e. November 29) with a performance period of December 1 - November 30.  Now would be a good time to clarify with the CO what the government's intentions are, because  I think your concerns are valid, and there could be problems if they're not addressed early.. Suppose the government thinks that by changing the base period of performance to run through November 30, the option exercise date is likewise extended to January 29, 2017?

    Second, it seems to me that as a contractor, you are safe in relying on the CO's extension, if your concern is the ultimate allowability of costs of performance between October 1 and November 30, notwithstanding the propriety, or lack thereof, of the government's actions, so to that extent, I'm thinking you may be over-reacting.  I haven't had the time to look into the propriety of extending the base period of performance as you describe to take advantage of the 10 USC 2410a authority.

     

  10. This raises the question of whether your existing contract actually needs these personnel to be working full-time.  If not, why are they charging full time?  If so, how can they be spared for another effort?  If you have good answers to these issues, then I agree with here_2_help that you should make it an explicit part of your proposal.  I can think of no good reason for an unsuccessful offeror to protest such a practice.  What would be the basis of a protest?

  11. LM_ABITWT,

    What types(s) of contract are we talking about?  Are both the existing and future contracts fixed price? Cost-reimbursement? One of each?  If your existing contract is fixed price, and you have people working on it full time, then is't the government program office going to think they've already paid for those people's hours?

    Did you win the existing work competitively, or was it negotiated on a non-competitive basis?

  12. 4 hours ago, jb208 said:

    ...Even if we look at it from the "awarded and performed" perspective, I feel like few would argue that the contract would be awarded outside the U.S., although it may be technically performed in the U.S..  It wouldn't be both awarded AND performed in the U.S., therefore the $30k threshold would apply.

     

    jb,

    To consider your "awarded and performed" logic from a different perspective, how do you respond to the argument that in order for the $30 K threshold to apply, the contract must be awarded and performed outside the U.S., and in your scenario, it wouldn't have been performed completely outside the U.S., so the $20 K threshold applies?

  13. On 8/16/2016 at 4:05 PM, Vern Edwards said:

    If an agency is governed by FAR, then people should not be all over the ballpark about whether a contract is fully or incrementally funded.

    FAR 32.703-1:

    Since DARPA is part of DOD, see also DFARS 232.001:

    I cannot answer your question, because while you have told me that the option periods would be fully funded, you have not told me how the base period has been funded. Are the estimated cost and fee fully or partially funded?

    It could be that DARPA's program/project is incrementally funded. An incrementally funded program might encompass several efforts and contracts, and some of the contracts might be incrementally funded while others are fully funded. If DARPA's ultra light program is incrementally funded, the contract in question might be for a particular facet of ultra light research and fully funded through the use of a "base period" (more likely an initial phase) and option "periods" (phases). If the initial phase is fully funded, then since the options are fully funded, the contract is fully funded, and should not contain either FAR 52.232-20 or 52.232-22.

    If a program is fully funded, then, ordinarily, there should be no need for any of the program contracts to be incrementally funded.

    Vern,

     

    How can you say that a fully funded cost-reimbursement contract should not contain FAR 52.232-20?

    FAR 32.706-2(a) says to "insert the clause at 52.233-20, Limitation of Cost, in solicitations and contracts if a fully funded cost-reimbursement contract is contemplated."

  14. On 8/23/2016 at 10:47 AM, Todd Davis said:

    If Part 6 applies to your procurement, a J&A is not required so long as the action is less than or equal to $22M (6.302-5(c)(2)(iii)).  If the requirement can be set aside under 8(a) program, then the same authority would apply and a J&A is not required.  However, I think the out of scope work would have to be offered to the SBA to document the fact the out of scope work will also covered under the 8(a) program.

    I agree that no J&A is required, and that the requirement should be offered to the SBA (see, for example FAR 19.804-4) but you should note that if the new requirement exceeds the $ 7/4 M thresholds at FAR 19.805-1(a)(2), then the SBA will normally accept it into the 8(a) program as a sole-source only under the conditions listed at FAR 19.805-1( b ), i.e. there is not a reasonable expectation of receiving offers from 2 or more 8(a) firms or the contract is with an ANC or Indian tribe.

  15. On 8/2/2016 at 0:58 PM, SubK said:

    Thanks, Vern.  I received the ruling number, and it was a protest on a GSA schedule Task Order for the Air Force. File B-411481.3  

    It appears that GSA disagrees with the GAO on this point, and has clarified its position on exercising options. See http://www.gsa.gov/portal/content/200369# (scroll down to the item titled  Options on Orders Placed Against GSA Multiple Award Schedule (MAS) Contracts.  This may not be particularly helpful to you in your situation, because one of the conditions needed to exercise options after expiration of the underlying contract is that the contract must include FAR 52.216-22, with an appropriately lengthy fill-in in paragraph (d).  See also the explanatory article at http://www.mofo.com/~/media/Files/Articles/2016/08/160803GAOAllworld.pdf

  16. 1 hour ago, SubK said:

    Thanks, Vern.  I received the ruling number, and it was a protest on a GSA schedule Task Order for the Air Force. File B-411481.3  

    This isn't surprising, since it it was an order under a GSA FSS contract. I'm not sure other agencies' IDIQ contracts are subject to the same limitations.

  17. 4 minutes ago, SubK said:

    We are currently performing on both of these task orders.  The end of the option periods are both around Sept time frame, with 2 more option periods left for each task order.  The base contract (IDIQ) has a POP that ended February of 2016.

    If the POP of the contract ended in February, but you are still continuing to perform after that period, it follows that you are "working on task orders beyond the expiration of the base IDIQ," which seems to be in violation of the prohibition the contracting officer mentioned in your original post. If the contracting officer is aware of the fact that you're continuing to perform beyond the expiration of the base IDIQ, and doesn't have a problem with that, then I'm with you - the options should be available to be exercised.  

    The underlying contracts aren't GSA FSS contracts, are they?  You might want to look at http://www.wifcon.com/discussion/index.php?/topic/1768-gsa-to-with-options-beyond-k-period/. Perhaps your contracting agency has adopted a policy similar to GSA's.

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