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Exceedance of IDIQ Capacity with Modification to Existing Task Order


vsup

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I am currently working on a modification to an existing Task Order for A/E Services.  The A/E was selected utilizing competition under the Multiple Award contract holders established for the PD/SD and CD/DD.  Following completion of the full design, the construction contract was awarded and a new task order was issued for the Title III services during construction; however, the Task Order now needs to be extended as the construction contract is taking longer than anticipated.

 

The IDIQ ceiling capacity has been met so the question is whether the Task Order can be extended to add additional costs for continued Title III services until the construction contract has ended which will exceed the IDIQ ceiling capacity?

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So you issued an order for A-E Title III (construction management) services under a multiple-award IDIQ contract. Now you want to extend the order because the construction contract is behind schedule. However, extending the order will increase its value, and an increase in its value would exceed the maximum value of the IDIQ contract.

So you want to know if it is permissible to increase the value of the order.

Is that right?

I suspect that since an increase in the value of the order would exceed the maximum value of the IDIQ contract, you would have to prepare a justification for other than full and open competition pursuant to FAR 6.302-1. That's what I suspect. But IDIQ contract practice is all over the map these days and the rules are confusing, so who knows?

If I were in your shoes I would prepare a FAR 6.302-1 justification, which should not be difficult under the circumstances. But check with your contracting staff to see what they say.

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Is a FAR 6.302-1 justification necessary for an in-scope* change to a task order?

“6.001 Applicability.

This part applies to all acquisitions except—

       …(c) Contract modifications, that are within the scope* of the contract, including the exercise of priced options that were evaluated as part of the original competition (see  17.207(f));

       …(e) Orders placed under indefinite-quantity contracts that were entered into pursuant to this part when-

   (1) The contract was awarded under  subpart  6.1 or 6.2 and all responsible sources were realistically permitted to compete for the requirements contained in the order; or…

       (f) Orders placed against task order and delivery order contracts entered into pursuant to  subpart  16.5.”

* I understand that the change may exceed the (overall ID/IQ? Individual contract holder) limit?). 

Perhaps the other MATOC contract holders would need to be notified of the necessity to exceed the limit in order to support the extended, separate construction contract. I seriously doubt whether any of them would not understand the need or would object to it. It could happen to any of them under similar circumstances.

We need to be practical here.

 

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15 hours ago, vsup said:

The IDIQ ceiling capacity has been met so the question is whether the Task Order can be extended to add additional costs for continued Title III services until the construction contract has ended which will exceed the IDIQ ceiling capacity?

 We are talking about the maximum on the IDIQ as well as the increasing the value of a TO, presumably awarded via fair opportunity right?

So is FAR 52.216-19 in the parent contract?   If so consider (d) of the clause.  

As to the TO consider what your fair opportunity selection process may or may not say.  It might have bearing on what you need to do to increase the TO.  Here I am keying in on that addition of the work cause by the extension and how it may, or may not, be subject to an "exception" to fair opportunity.

In the end I would bet you can extend the TO but you just have administrative actions that you and the contractor must do to make it legit under the terms of the parent IDIQ and TO. 

PS - I do find it interesting that you would have one and the same contractor who designed the work do the construction management.   I  do not know all the details but I had a similar situation way back when and it was akin to letting the fox in the hen house and resulted in significant issues and a claim by the Government against the A-E .

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Yes we are wanting to increase the value of the task order and extend the period of performance so services can continue through the end of the construction contract.  The Task Order was awarded under fair opportunity with all multiple award contract holders being given an opportunity to provide these services.  The base IDIQ contract has met its ceiling and by increasing the value of the task order would take the costs over the IDIQ contract ceiling.  The work to be performed is in-scope - it's just a matter of continuing the exact same services until completion of the construction contract.  

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I am also curious if they are any GAO or other court rulings that indicate it is acceptable to exceed the IDIQ contract ceiling.  I have done some searching in these venues but have been unable to locate any cases relative to this topic.

 

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1 hour ago, vsup said:

I am also curious if they are any GAO or other court rulings that indicate it is acceptable to exceed the IDIQ contract ceiling.  I have done some searching in these venues but have been unable to locate any cases relative to this topic.

 

Erickson Helicopters, Inc., B-415176.3; B-415176.5 (Dec 11, 2017) 

Liebert Corp., B-232234.5, 70 Comp. Gen. 448 (Apr. 29, 1991). 

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6 hours ago, C Culham said:

PS - I do find it interesting that you would have one and the same contractor who designed the work do the construction management.   I  do not know all the details but I had a similar situation way back when and it was akin to letting the fox in the hen house and resulted in significant issues and a claim by the Government against the A-E .

This is common, both for government construction contracts and especially in local government and private A/E contracting.

When I was a consulting engineer in an A/E firm, I usually provided contract admin, QA and technical oversight of the projects that I designed for clients, whether private or local governments and utilities.

As a Registered Professional Engineer, my livelihood, reputation and career always depended upon my honesty and competence in serving our clients.

”Title III” services may mean different things to different organizations. The A/E firm is the “designer of record”.  The USACE often employs The A/E for technical support during construction, shop drawing  and other submittal reviews, etc. USACE generally has its own QA and contract admin staffs.

A problem with many government personnel and organizations is that they often have little knowledge of the licensing laws, professional standard of care in the deign process, the regulations concerning registered PE’s or their roles as the designers of record. The A/E is often considered just another “contractor” rather than a professional partner. 

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21 minutes ago, joel hoffman said:

This is common, both for government construction contracts and especially in local government and private A/E contracting.

When I was a consulting engineer in an A/E firm, I usually provided contract admin, QA and technical oversight of the projects that I designed for clients, whether private or local governments and utilities.

As a Registered Professional Engineer, my livelihood, reputation and career always depended upon my honesty and competence in serving our clients.

”Title III” services may mean different things to different organizations. The A/E firm is the “designer of record”.  The USACE often employs The A/E for technical support during construction, shop drawing  and other submittal reviews, etc. USACE generally has its own QA and contract admin staffs. 

In this instance that is exactly what we are going - using the A/E "Designer of Record" for technical support during construction, shop drawings, RFI's, submittals reviews, etc.  The QA is being performed by an outside Construction Management company who is separate and apart from the A/E firm.

 

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3 hours ago, C Culham said:

Erickson Helicopters, Inc., B-415176.3; B-415176.5 (Dec 11, 2017) 

See that decision:

Quote

Task orders that are outside the scope of the underlying multiple-award contract are subject to the statutory requirement for full and open competition set forth in the Competition in Contracting Act of 1984 (CICA), absent a valid determination that the work is appropriate for procurement on a sole-source basis or with limited competition. 10 U.S.C. § 2305(a)(1)(A)(i) (2006); DynCorp Int’l LLC, B-402349, Mar. 15, 2010, 2010 CPD ¶ 59 at 6.

Emphasis added.

The maximum quantity or value of an IDIQ contract is one of its scope-defining terms.

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53 minutes ago, vsup said:

In this instance that is exactly what we are going - using the A/E "Designer of Record" for technical support during construction, shop drawings, RFI's, submittals reviews, etc.  The QA is being performed by an outside Construction Management company who is separate and apart from the A/E firm.

 

Yes, those are exactly the typical roles and responsibilities of a “designer of record” under building codes and state licensing laws and regulations. 

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22 minutes ago, Vern Edwards said:

The OP needs to obey the law here.

If the need is immediate in order to continue services and not impact construction, this would appear to be an urgent and compelling need to 1) increase the ID/IQ and 2) task order limit . Thus I’d recommend using the exception at FAR  6.302-2.  The justification for using the same A/E could be the same as previously touched upon herein above. But 6.302-2 allows you to proceed ASAP.

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1 hour ago, joel hoffman said:

But 6.302-2 allows you to proceed ASAP.

True. But why should it an extension of the construction management task order be an unusual and compelling urgency? Was it sudden and surprising news to the construction manager that the construction would take longer than expected?

Remember, justifications for other than full and open competition can be and are protested.

Just sayin'.

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I don’t know when they discovered that the ID/IQ ceiling expired or if the impact of not extending the services will be imminent.

Perhaps another PM or office used it up.

It will likely impact the construction contract effort if not extended, unless there is plenty of time to go through the 6.302-1 process prior to extending the task order. 

I doubt if anyone in the A/E community would protest letting the original A/E who is the engineer of record (designer) complete their services during the construction time extension.  The government would have to go through a form of the Part 36 A/E selection process (qualifications based selection - no price competition) to select a new contractor.

So a protestor would have no advantage over the incumbent, who is already responsible for the integrity of the design. The government has no need or benefit to relieve the A/E of those professional responsibilities.

Why would another firm spend the time and resources to compete for services during a time extension?????  A/E’s don’t have vast resources to compete for a small logical follow on effort with marginal chances for award. 

 

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On 11/30/2022 at 4:31 PM, vsup said:

...a new task order was issued for the Title III services during construction...

Is this true?  Or, was a task order issued for a fixed period of performance?

If the task order was issued for the Title III services during construction (perhaps with an anticipated period of performance) and construction isn't finished yet, then the scope has not been completed.  In such a case, the extension is not "new" work.  I believe the intent of the contract maximum requirement of FAR 16.504(a) is to limit the quantity of supplies or services that can be ordered under the aggregate of all task orders -- I do not believe the intent of the maximum requirement is to limit the flexibility of administering existing task orders.

For example, if an IDIQ contract has a maximum quantity (expressed in dollars) of $100 million, and the aggregate of all task orders is $99,000,000, then there is no capacity for a new $2 million task order (or a task order modification for "new" work for $2 million).  However, if there was a need for an adjustment in task order price of $2 million such as pursuant to the Changes clause, Government Property clause, Government Delay of Work clause, or other reason, I do not want to believe that a J&A would be required for the modification to effect that adjustment.

In other words, the maximum quantity is a limit on ordering.

12 minutes ago, joel hoffman said:

...the ID/IQ ceiling expired...

IDIQ contracts don't have ceilings; rather, they have minimum and maximum quantities that can be ordered.

I'm sharing this as food for thought in a professional forum -- I am not making a legal argument.

Let me use another example -- the IDIQ contract maximum quantity (expressed in dollars) is $100 million, and the aggregate of all task orders is $100 million.  Now it is time for an upward wage determination modification for one task order.  I would want to say the contracting officer does not need a J&A to raise the contract maximum to allow for the subsequent contract price adjustment, as nothing new is being ordered to violate the maximum quantity limitation on ordering.

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12 minutes ago, ji20874 said:

Is this true?  Or, was a task order issued for a fixed period of performance?

If the task order was issued for the Title III services during construction (perhaps with an anticipated period of performance) and construction isn't finished yet, then the scope has not been completed.  In such a case, the extension is not "new" work.  I believe the intent of the contract maximum requirement of FAR 16.504(a) is to limit the quantity of supplies or services that can be ordered under the aggregate of all task orders -- I do not believe the intent of the maximum requirement is to limit the flexibility of administering existing task orders.

For example, if an IDIQ contract has a maximum quantity (expressed in dollars) of $100 million, and the aggregate of all task orders is $99,000,000, then there is no capacity for a new $2 million task order (or a task order modification for "new" work for $2 million).  However, if there was a need for an adjustment in task order price of $2 million such as pursuant to the Changes clause, Government Property clause, Government Delay of Work clause, or other reason, I do not want to believe that a J&A would be required for the modification to effect that adjustment.

In other words, the maximum quantity is a limit on ordering.

IDIQ contracts don't have ceilings; rather, they have minimum and maximum quantities that can be ordered.

I'm sharing this as food for thought in a professional forum -- I am not making a legal argument.

Let me use another example -- the IDIQ contract maximum quantity (expressed in dollars) is $100 million, and the aggregate of all task orders is $100 million.  Now it is time for an upward wage determination modification for one task order.  I would want to say the contracting officer does not need a J&A to raise the contract maximum to allow for the subsequent contract price adjustment, as nothing new is being ordered to violate the maximum quantity limitation on ordering.

One would certainly think so - but that seems to make too much sense.

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@ji20874@joel hoffman

See Pegasus Global Strategic Solutions, LLC, B-400422.3, March 24, 2009, and tell us what you think.

Quote

Pegasus protested to our Office the modification of SRCTec’s contract and issuance of the delivery order to that firm, arguing that the “adjunct systems” being procured were beyond the scope of the original contract because the agency had exhausted the amount it was allowed to procure under the contract’s ceiling value. Pegasus argued that the Army was required to compete the requirement on a full and open basis. After developing the record, the GAO attorney assigned to the case conducted an alternative dispute resolution conference, at which he informed the parties that Pegasus’s protest appeared meritorious, given that the agency’s delivery order, and the modification to that order, exceeded the contract’s ceiling value, and thus the modification to the delivery order was beyond the contract’s scope and could not be accomplished noncompetitively absent an appropriate justification and approval.8 This is so because the delivery order, and modification to that order, would result in a contract materially different from that for which the original competition was held, and absent a valid sole-source determination would be subject to the CICA requirements for competition. See, e.g., Liebert Corp., B-232234.5, Apr. 29, 1991, 91-1 CPD ¶ 413 at 11-12. In response, the agency took corrective action, canceling the contract modification, and we dismissed Pegasus’s protest as academic.

Emphasis added.

There is more. I urge you to read the entire decision.

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54 minutes ago, Vern Edwards said:

@ji20874@joel hoffman

See Pegasus Global Strategic Solutions, LLC, B-400422.3, March 24, 2009, and tell us what you think.

Emphasis added.

There is more. I urge you to read the entire decision.

I don’t disagree with the decision based upon the circumstances. And it was segregable, new work to boot.

Im also not disagreeing that an exception to free and open competition isn’t necessary here. vsup has confirmed that the overall ID/IQ limit has been exhausted. We don’t know how long it has been known that the cost limit has been reached, preventing funding the extension.

Justifying sole source to the designer and its subsequent Title III services task should easily be a no-brainer. The design and Title III services were (apparently) within the scope of the initial selection of the incumbent A/E firm. The A/E firm is the designer of record and is responsible for the integrity of the design. It is the firm that should be and is performing those services.

One can’t simply or easily replace that firm at the (supposed) advance state of construction.

To replace the firm would also require a form of the Part 36 A/E selection process, involving further impact delay. Other firms would have slim chances of  winning a new contract for the remaining services. 

The government have to pay another firm to even become thoroughly familiar with the basis of design - if that is even practical or possible. And it would be wasteful of government funding. 

From the limited description of the circumstances here, there will be harm to the government if the construction is delayed by not extending the Title III services ASAP. We don’t know if there is adequate lead time to justify the ID/IQ increase and justify the sole source extension.

 

 

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On 11/30/2022 at 9:11 PM, Vern Edwards said:

However, extending the order will increase its value, and an increase in its value would exceed the maximum value of the IDIQ contract.

So you want to know if it is permissible to increase the value of the order.

Is that right?

I suspect that since an increase in the value of the order would exceed the maximum value of the IDIQ contract, you would have to prepare a justification for other than full and open competition pursuant to FAR 6.302-1. That's what I suspect. But IDIQ contract practice is all over the map these days and the rules are confusing, so who knows?

If I were in your shoes I would prepare a FAR 6.302-1 justification, which should not be difficult under the circumstances. But check with your contracting staff to see what they say.

 

2 hours ago, Vern Edwards said:

The only issue is exceeding the IDIQ maximum. The OP did not ask about the exception to FULL and open competition.

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To add more background to the discussion, 

The work associated with this Task Order was originally competed amongst all of the multiple award IDIQ holders, in accordance with FAR 16.605(b)(1).  In the Request for Qualifications letters, all Offerors were informed that the A/E Scope of Work includes the serviced noted below, which may be contracted for via one or more independent task orders.

 

1)      PreDesign Services (PD)

2)      Schematic Design Services (SD)

3)      Design Development Services (DD)

4)      Construction Document Services (CD)

5)      A/E Construction Administration Services (Title III)

6)     Possible Supplemental Services

The IDIQ contracts were awarded in April of 2021; however, upon the need for the extension to the Title III task order the capacity on the IDIQ was checked to determine if there was sufficient capacity only to learn the IDIQ's capacity had already been met in less than one year.  The capacity was set at $10M; however, due to the Great American Outdoors Act funding the agency received, the capacity was exceeded rather quickly as these actions were not accounted for when the IDIQ's were solicited and awarded.

As the original RFQ sent to all of the IDIQ holders included the verbiage denoted above advising them of the services that would be required over the course of the project and that one or more independent task orders could be issued toward that end, I believe we have met and satisfied the CICA requirements.  

The only question remains is how to complete the modification knowing that the ceiling limit of the IDIQ has been exceeded.  I agree with comments in the string that reprocuring could jeopardize the construction contract.  When the task order was issued it was assumed that the construction would end on a certain date so the Title III services task order was written accordingly.  As is sometimes the case, issues arise during construction which could not be foreseen which delays certain aspects of the work from being completed.  We are looking at a four month extension; therefore, it seems impractical and not in the best interest of the Government to go to the costly expense of reprocurement and following A/E Brooks Act procedures which in some cases can take way longer than the prescribed four months needed to complete construction.  In my opinion, it would seem that the risk to the successful completion of the construction contract and possible costs for Government delay due to the Government's inability to timely respond to RFI requests, submittal review, etc. would not be in the Government's best interest.  

From reading the various GAO cases provided, it would appear that a simple J&A would suffice to document the harm to the Government if we did not extend the Title III services versus completing a re-procurement.  I have seen a couple of examples on SAM.gov recently where various agencies have completed J&A's to lift the ceiling limit of the IDIQ.  

 

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4 hours ago, Vern Edwards said:

So now you know what to do. Go to it.

Agree!! 

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If I was a CS/CO faced with this situation, I honestly would view it as a simple need to extend the task order period of performance.  The extension is necessary due to delays in the construction.  I would just negotiate the four month extension and be done and likely not even consider a need to modify the contract ceiling since new work is not being ordered.

This discussion is interesting and made me think a little differently.  But I’m still not certain my actions would be wrong.

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