Jump to content
The Wifcon Forums and Blogs

dennismcgowan

Maximum Amount Of Contract Value Language

Recommended Posts

It seems the Government may wish to define, in a standard fashion, the total contract program maximum amount (maximum sum of all orders against associated MATO contracts) in its Indefinite Quantity contracts (FAR Part 16.5). Sometimes this is referred to as the ?MATOC ceiling?. Typically, I have seen the maximum amount defined in a locally derived clause. It seems efficient and effective to develop a standard clause similar to the way the FAR standardizes the language regarding Ordering (FAR 52.216-18 ? Ordering) and Order Limitations (FAR 52.216-19 -- Order Limitations). Does anyone know why there isn?t a ?Maximum? clause?

Share this post


Link to post
Share on other sites

Therre is such a clause. See FAR 52.216-22, Indefinite Quantity, paragraph (B):

(B) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the ?maximum.? The Government shall order at least the quantity of supplies or services designated in the Schedule as the ?minimum.?

The maximum quantity is stated somewhere in the Schedule.

What more do you want a clause to say?

Share this post


Link to post
Share on other sites

Vern-

Thanks for the reply.

Admittedly, I missed the clause. DOH! That is what I get for working past 2100!

What I will coach my folks to do in the future when dealing with MATO contract is avoid the local caluse and fully address the maximum in the schedule (as the clause requires) being sure to explain it as the total maximum of all MATO contracts. That way, the individual contract holders understand their maximum is the shared MATO maximum.

Of course if this was a requirements contract I was speaking of, 52.216-21 -- Requirements, would apply and the max is the single max.

Share this post


Link to post
Share on other sites

dennis:

I'm not sure that will work. Each contractor must know its maximum obligation. See FAR 16.504(a)(4)(ii). If you use a single number for all contractors, say, $50M, how will any of them know what their own maximum obligation is?

Share this post


Link to post
Share on other sites

Dennis,

This may help:

http://www.gsa.gov/portal/content/103733

Go to the link that downloads "COMMITS NexGen Comprehensive Contract"

Clauses H.2, "Maximum Program Ceiling" and B.4, "Minimum and maximum contract amounts" address what you are looking for.

This is a common issue with GWACS. In order to obtain Executive Agency designation, the agency needs to specify a maximum program amount (or at least used to with OMB). The problem comes with specifying a specific contract maximum, especially when you make many individual awards. You run into potential trouble if the cumulative maximum exceeds the total program amount. You also run into trouble if several of the best performing contractors hit their contract maximum while the program still has lots of overall room. So what is shown above in the link is the most common way around this issue.

I'm not 100% certain but I think that's the way most, if not all the GWACS are structured.

Share this post


Link to post
Share on other sites

To save everybody having to click the link, here is the clause:

H.2 MAXIMUM PROGRAM CEILING AND MINIMUM CONTRACT GUARANTEE

There is a contract program maximum of $8 billion over the life of all contracts under the COMMITS NexGen GWAC. As a task order is issued against a contract, the value of task orders that can be issued under all contracts decreases by an equal amount. The $8 billion ceiling is not a contractual guarantee.

THE GUARANTEED MINIMUM IS ONE HUNDRED FIFTY DOLLARS ($150.00). The Government has no obligation to issue orders to a Contractor beyond the minimum guarantee. While Contractors are entitled to the minimum guarantee, it is intended that they will compete for that amount under fair opportunity procedures. Issuance of a single order or a series of orders having a cumulative value equal to or greater than the minimum guarantee satisfies the minimum guarantee.

The exercise of an option does not re-establish, or result in an increase to, the Contract minimum guarantee.

The Contractor and Government agree that the minimum guarantee is adequate consideration to establish a binding indefinite-delivery, indefinite quantity Contract for the purpose intended by the solicitation.

So, when an order is placed against one contract, the value of the maximum in every contract decreases by that amount.

formerfed, you said that this is the "most common" solution to the problen of setting a maximum for each contract under a GWACs. I can see how the solution makes sense under a Governmentwide contract, when orders are not coordinated among agencies and the awarding agency might have trouble monitoring what's going on, but do you think that's a good solution for a non-Governmentwide multiple award task order contract, under which orders are placed by a single agency?

Also, do you think there is anything wrong with an option to increase the maximum?

Share this post


Link to post
Share on other sites
To save everybody having to click the link, here is the clause:

So, when an order is placed against one contract, the value of the maximum in every contract decreases by that amount.

formerfed, you said that this is the "most common" solution to the problen of setting a maximum for each contract under a GWACs. I can see how the solution makes sense under a Governmentwide contract, when orders are not coordinated among agencies and the awarding agency might have trouble monitoring what's going on, but do you think that's a good solution for a non-Governmentwide multiple award task order contract, under which orders are placed by a single agency?

Also, do you think there is anything wrong with an option to increase the maximum?

Vern,

No, I don't think its a good solution for a single agency contract, especially if there isn't a tight control over the program spending limits. I would just set a reasonable maximum for each individual contract.

An option to increase the maximum is an interesting idea. As long as that's part of the original solicitation/competition, it seems fine.

Share this post


Link to post
Share on other sites

formerfed:

I have long thought that an option to increase the maximum is not only legal, but a good way to handle the problem of running out of contract capacity sooner than expected.

I agree that it would have to be included in the solicitation. Also, it would increase the dollar value of the contract for the purpose of applying FAR dollar thresholds.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.

×