Minor Modification of a Commerical Item

[jmavery08]

The situation is that a contract extension modification has been approved for a requirements contact of a minor modified commercial item and the contractor has agreed to hold its third year ordering price for our requirement. Originally, the contractor certified to the non-commercial modification but is the original certification still valid for the contract extension or does the contractor have to recertify and provide C&P data?

I know that FAR 15.403-1©(3)(iii)( states that it is not required if the total price of all modifications under a particular contract action does not exceed the GREATER of the C&P data threshold or 5% of the total price of the contract at the time of contract award. Based on the above, I would think that the contractor does have to recertify and provide C&P data for the non-commercial modification and that the commercial portion would require price analysis, but I am not entirely sure.

Any guidance or help is appreciated.

[Guest Vern Edwards]

You must get certified cost or pricing data when extending the contract ordering period, even if the contracctor agrees to give you the same prices as for the last ordering period. Extension of the ordering period entails a new pricing action. The fact that the prices were fair and reasonable for the last period does not mean that they are fair and reasonable for the new one. You must make a new determination and get new certified cost or pricing data if otherwise required by FAR 15.403. New data may reveal that the earlier prices are no longer fair and reasonable. You can no longer rely on the old data and certificate.

[Retreadfed]

The situation is that a contract extension modification has been approved for a requirements contact of a minor modified commercial item and the contractor has agreed to hold its third year ordering price for our requirement. Originally, the contractor certified to the non-commercial modification but is the original certification still valid for the contract extension or does the contractor have to recertify and provide C&P data?

I know that FAR 15.403-1?(3)(iii)( states that it is not required if the total price of all modifications under a particular contract action does not exceed the GREATER of the C&P data threshold or 5% of the total price of the contract at the time of contract award. Based on the above, I would think that the contractor does have to recertify and provide C&P data for the non-commercial modification and that the commercial portion would require price analysis, but I am not entirely sure.

Any guidance or help is appreciated.

You stated that tis is a requirements contract. How did you compute the value of the work that may be ordered during the extension since the government is not obligated to buy anything during that extension?

[jmavery08]

You stated that tis is a requirements contract. How did you compute the value of the work that may be ordered during the extension since the government is not obligated to buy anything during that extension?

That's a good question. Currently, we have requirements in house; however, if we didn't have specific requirements already in house, I would ask the PM to provide a projection of possible orders during the extension time frame. Additionally, the extension was put in place to cover any requirements that may arise before a new requirements contract is put into place. I hope this answer your question.

[jmavery08]

You must get certified cost or pricing data when extending the contract ordering period, even if the contracctor agrees to give you the same prices as for the last ordering period. Extension of the ordering period entails a new pricing action. The fact that the prices were fair and reasonable for the last period does not mean that they are fair and reasonable for the new one. You must make a new determination and get new certified cost or pricing data if otherwise required by FAR 15.403. New data may reveal that the earlier prices are no longer fair and reasonable. You can no longer rely on the old data and certificate.

Thank you Mr. Edwards for replying. Your knowledge and feedback is greatly appreciated.

[Guest Vern Edwards]

For those who may not know, requirements contracts must contain a "realistic estimated total quantity." The contract must also contain, when feasible, a "maximum limit," or "ceiling price." FAR 16.503(a). According to FAR 1.108( c ):

Dollar thresholds. Unless otherwise specified, a specific dollar threshold for the purpose of applicability is the final anticipated dollar value of the action, including the dollar value of all options. If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events, the final anticipated dollar value must be the highest final priced alternative to the Government, including the dollar value of all options.

Thus, if the contract does include a "maximum limit" or "ceiling price," then the contract dollar value for purposes of requiring certified cost or pricing data in accordance with FAR 15.403-4(a) is the maximum limit or celling price. If the contract does not include a maximum limit or ceiling price, then the dollar value would be the "estimated total quantity."