Exceedance of IDIQ Capacity with Modification to Existing Task Order

[Vern Edwards]

@formerfedAre you assuming that extension of the construction management task order is at no cost to the government?

According to the OP:

On 11/30/2022 at 2:31 PM, 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?

[formerfed]

@Vern Edwards I’m assuming the extension is not at no cost but probably not a significant amount.  I’m guessing below the threshold most agencies have for preparation and approval of formal justifications.  I would just do the task order extension with documentation explaining my actions.

[Vern Edwards]

Just now, formerfed said:

I would just do the task order extension with documentation explaining my actions.

Explain why you didn't follow the law? That would make it okay? 🤗

I could write a proper justification in less time.

[formerfed]

18 minutes ago, Vern Edwards said:

Explain why you didn't follow the law? That would make it okay? 🤗

Hmmm.  My approach doesn’t sound so good in that light.  But my thinking was I didn’t order new task work - just took action to complete an existing task that’s required because of delays.  The more I think, the more I see I’m wrong.

 

[Vern Edwards]

Just now, formerfed said:

But my thinking was I didn’t order new task work - just took action to complete an existing task that’s required because of delays.

It doesn't matter that you didn't add "new" work if the amount added exceeds the maximum value of the underlying contract.

What do you guys think the "maximum" of an IDIQ contract means? What don't you understand about "maximum? Read FAR 16.505(a)(10))(i):

Quote

No protest under subpart 33.1 is authorized in connection with the issuance or proposed issuance of an order under a task-order contract or delivery-order contract, except—

                     (A) A protest on the grounds that the order increases the scope, period, or maximum value of the contract...

That is not new. That is more than 27 years old. Where have you been all your lives? I'm embarrassed for some of you guys.

Jeez... Writing a justification for other than full and open competition under the circumstances described in the OP requires no more than half a brain. Some of you made it sound like its heart surgery.

An explanation for breaking the law will make it okay? What a crock.

Ooooohhhh, the mission! It's a construction management contract, for Pete's sake, not a contract to provide ammunition, water, and food to the surviving defenders of a city under siege before the attackers' final assault. It's not Stalingrad or Dien Bien Phu.

[here_2_help]

Back in the 90's the max value of our ID/IQ was doubled. We still hit the new ceiling, but they wouldn't double it a second time.

No, I don't know how the CO justified it. But we were glad to accept it.

[formerfed]

Deleted

[Vern Edwards]

15 hours ago, here_2_help said:

No, I don't know how the CO justified it. But we were glad to accept it.

Maybe the CO didn't justify it. Maybe the CO just did it. We know from this thread that some COs might do just that.

And wouldn't it have been funny if someone in authority had announced that the maximum had been increased improperly and that the orders issued in excess of the improperly-increased maximum were thus issued in violation of the law, were thus void ab initio, and could thus not be ratified?

COs may not like rules, or a particular rule, but when enough of them don't comply we just get more rules. That is exactly what happened to MATOC ordering after the enactment of FASA in 1994. The original fair opportunity rule in FAR 16.505(b) was 565 words long and protests were extremely limited. But after enough bozo COs violated it for one reason or another ("work-arounds" "innovations") it's now 2,397 words long and protests are now more liberally allowed, excuses and after-the-fact explanations notwithstanding.

Today, 16.505(b) is one of the most convoluted rules in FAR.

Congratulations.

[joel hoffman]

Agreed.  

[ji20874]

Actually, formedfed, I'm not so sure that you are wrong.  Maybe, maybe not -- we haven't seen the contract so we don't know its text, and its text certainly will matter.  To me, the key is whether the extension constitutes new work or is merely a matter of contract administration.

If it is new work, beyond the scope of the initial task order, then YES, the parent contract's maximum order limitation applies and a J&A (or other appropriate sole source justification) is required -- the task order modification for new work would be subject to protest, as the task order modification orders new work which exceeds the contract's maximum order limitation.

If it clearly is not new work, and is wholly within the scope of the initial task order, then I want to think that a J&A is not required.  If the dollar aggregate of all task orders equals the contract's maximum quantity (expressed in dollars), the existing task orders can still be administered.  Any of them could be modified to deal with a wage determination update, a government property nonavailability, a government delay of work, and so forth, and in my mind none of these would require a J&A and none of these would be subject to protest, as the task order modification is not ordering new work but is a matter of routine contract administration.  If I did this, I would document my rationale and include that memo in the file.

If it is messy and could be seen either way, or if the approval burden was too onerous, I would recommend doing the J&A.

[C Culham]

On 12/1/2022 at 11:35 AM, 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.

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. 

It took me a while but I knew I could find it.  I appreciate your thoughts but do me a favor and search a AGBCA case regarding Swan Wooster.  You will find an interesting read -"The Measure of Malpractice".  I could not copy the link for some reason.

I was the CS for the contracts.

[Vern Edwards]

19 hours ago, ji20874 said:

If it clearly is not new work, and is wholly within the scope of the initial task order, then I want to think that a J&A is not required.  If the dollar aggregate of all task orders equals the contract's maximum quantity (expressed in dollars), the existing task orders can still be administered.  Any of them could be modified to deal with a wage determination update, a government property nonavailability, a government delay of work, and so forth, and in my mind none of these would require a J&A and none of these would be subject to protest, as the task order modification is not ordering new work but is a matter of routine contract administration.  If I did this, I would document my rationale and include that memo in the file.

@ji20874I presume the above passage describes a personal theory of yours ("I want to think..."). If I'm wrong, and if you have any authoritative underpinning for your theory, please cite it.

According to the GAO's Pegasus decision, cited and described above, the work that was to be added to the that contract was the product of an engineering change proposal and was the subject of the agency's "Within Scope Determination." See the decision, page 3, second paragraph. However, the added work would exceed the contract maximum. The government wanted to increase the maximum so it could modify the delivery order.

The protestor asserted that contractor could not increase the maximum to order more without a J&A, regardless of whether the modification would be within the scope of the contract work, because it was beyond the scope of the IDIQ maximum. The GAO agreed, and so did the agency. It cancelled the modification and went on to conduct a successful separate procurement. And that procurement was for combat support!

In short, Pegasus indicates that in order to make a J&A unnecessary when modifying an IDIQ order it is not enough for the mod to be within the scope of the work. The modification must also be within the contract maximum. In order to increase the maximum or exceed it (effectively increasing it), you must obtain competition or prepare and receive approval of a justification for other than full and open competition.

The uses to which IDIQ contracts are being put in this post-FASA era confront us with new issues. If we do not want within-scope changes and increases in order values to count against IDIQ maximum values, then we should seek a clarification or a change in the rules.

 

[formerfed]

4 hours ago, ji20874 said:If it is messy and could be seen either way, or if the approval burden was too onerous, I would recommend doing the J&A.

Certainly doing a J&A is a safe approach. The work should be minimal.  FAR requirements include only the CO for actions under $750,000 for example

[Vern Edwards]

It's the proper approach. See 10 USC 3405(g), Contract modifications:

Quote

(g) Contract modifications.--

(1) Increase in scope, period, or maximum value of contract only by modification of contract.--A task order may not increase the scope, period, or maximum value of the task order contract under which the order is issued. The scope, period, or maximum value of the contract may be increased only by modification of the contract.

(2) Use of competitive procedures.--Unless use of procedures other than competitive procedures is authorized by an exception in subsection (a) of section 3204 of this title and approved in accordance with subsection (e) of such section, competitive procedures shall be used for making such a modification.

(3) Notice.--Notice regarding the modification shall be provided in accordance with section 1708 of title 41 and section 8(e) of the Small Business Act (15 U.S.C. 637(e)).

See also 41 USC 4103(e).

[formerfed]

What we’re arguing about here is small stuff.  The larger issue is why don’t contracts like this reflect long terms needs to avoid things like hitting the ceiling in the first year?  Sure legislation can add work in this example but legislation is years in the making.  Agency budget, planners and management know about likelihood of that well in advance.  It’s just not communicated to contracting.

Probably contracting will get blamed for delays the next time a need arises for A/E services.

 

 

 

[Vern Edwards]

10 hours ago, formerfed said:

What we’re arguing about here is small stuff.

This site advertises itself as a "forum," which, according to my dictionary, is "a place, meeting, or medium where ideas and views on a particular issue can be exchanged."

What we're arguing about here is (1) the proper interpretation and application of a long-standing rule in a particular set of circumstances and (2) our obligations as "professionals," as some like to call themselves. Participants here have proposed various courses of action, and we have been arguing about them. The arguments prompted me to think about an old rule in a new light.

The OP's problem is small, in my opinion, and easily solved. (Sad to say, but this forum is mostly a Q&A site for the "quick question" crowd.) And who knows what people have actually been doing out there. But issues about our "professional" obligations (see FAR 1.102 and 1.602), which in this case seem to have arisen from a conflict between formalism and pragmatism, are not.

[vsup]

On 12/3/2022 at 9:55 AM, Vern Edwards said:

Thank you for all the comments and suggestions and for providing your professional insights into the matter.  I believe I have what I need to move forward with this matter.  Thank you all again for your time, energies and thoughts.

 

[Voyager]

23 hours ago, ji20874 said:

a wage determination update

ji20874, wouldn't this be justified with a FAR 6.302-5 J&A, Authorized or required by statute, specifically citing the 40 U.S.C. chapter 31, subchapter IV, Wage Rate Requirements (Construction) statute?

23 hours ago, ji20874 said:

a government property nonavailability, a government delay of work

Wouldn't these be justified with a FAR 6.302-1 J&A, "Only one responsible source and no other supplies or services will satisfy agency requirements", specifically citing the agency's GFP or delivery date requirement planned for this modification?

[Voyager]

There is a lot of good guidance on this website, @vsup:

See also:
http://www.wifcon.com/arc/forum28.htm

[Vern Edwards]

See 16.504(a)(4)(ii):

Quote

(4) A solicitation and contract for an indefinite quantity must... (ii) Specify the total minimum and maximum quantity of supplies or services the Government will acquire under the contract...

See FAR 16.505(b)(10)(i):

Quote

(10)(i) No protest under subpart 33.1 is authorized in connection with the issuance or proposed issuance of an order under a task-order contract or delivery-order contract, except—(A) A protest on the grounds that the order increases the scope, period, or maximum value of the contract...

What FAR does not tell us, and what I have not been able to find, is a statement of the purpose of the maximum. Is it to protect the contractor from excessive government demand? Is it to ensure that the government is required to get competition at some point? Is it both? Is it something else?

The fact that FAR 16.505(b)(10) authorizes a protests against an order that "increases" the maximum suggests that at least one purpose is to ensure competition at some point. But I'm speculating. Thus far I have found no information about the origin of the requirement for a maximum. I suspect that the original purpose was to protect the contractor. If so, it may mean that the CO cannot increase the maximum except by supplemental agreement.

 

[Retreadfed]

20 hours ago, Vern Edwards said:

In order to increase the maximum or exceed it (effectively increasing it), you must obtain competition or prepare and receive approval of a justification for other than full and open competition.

The OP said (s)he had a CPFF task order.  I am curious how the foregoing rule would apply if the task order value needed to be increased after the fact, i.e., performance under the TO was complete, because the contractor had a higher final indirect cost rate than contemplated causing an overrun.  For these purposes, the contractor did not know or could not have known of the overrun in time to give the CO notice of the overrun under the LOC clause.

[ji20874]

Voyager, 

I won't do a J&A for these sorts of matters, even if they cause the sum of already-issued orders to exceed the maximum ordering limitation when that limitation is expressed in dollars -- in my mind, a J&A is needed in such a case only if the Government is acquiring new work from the contractor.  

[Voyager]

There's only been two GAO cases, right?  When I read Liebert, the FAA's maximums-by-CLIN clearly were a unique circumstance to the contract.

When I read the more recent Pegasus Global, I got from it that a GAO attorney conducted ADR before issuance of the decision, and in it the protest risk was determined too great by the Army, due to Liebert.  It was in this ADR, the decision says, that the parties decided the change, "[W]as within the scope of SRCTec’s contract, but for the fact that the upgrade was accomplished by a contract modification that exceeded the contract’s maximum ceiling value."  See B-400422.3, at 8.

Okay, but what if the Army had challenged the protest on the grounds that the changed work could not significantly affect the competitive positions of offerors, a standard against which many other GAO cases are tested?

I think we are due for another case besides these two.  It depends on the answer to Vern's question, though, as these were case law on third-party protests of scope, not scope disputes between Contractor and Government. 

[Vern Edwards]

I have checked in with a number of colleagues on this matter. Most, but not all, are lawyers. They have fallen into three factions.

• The first and largest faction say that a J&A is "obviously" necessary because the TO will raise the contract value to more than the maximum. They cite the "plain language" of FAR, especially 16.505(b)(10), and the terms of the statutes that I cited above. I'm in that faction.
• The second faction agrees with ji20874 that within scope mods to TOs do not apply to the maximum and that a J&A is not required for a within scope mod even if it will cause the value of the contract to exceed the ceiling.
• The third faction is not sure whether a J&A is required, but thinks that a J&A is the "safest" course of action and is easier than dealing with a protest. 

I have delved into the history of IDIQ contracts. The coverage in the 1954 Armed Service Procurement Regulation made no mention of a minimum or a maximum. The 1960 Federal Procurement Regulation required a minimum and a maximum and read very much liked the FAR coverage prior to the enactment and implementation of FASA in 1995. I could find no explanation anywhere, including in the Congressional Serial Set, that explained the purpose of the maximum. The requirement for a minimum appears to have been added in response to court decision which held that a minimum was necessary to provide consideration to bind the parties.

I must admit that I'm intrigued by ji20874's point about increases in wage determinations. It does not make sense to me that they would apply to the maximum.

My bottom line is that if I were CO of an IDIQ contract and wanted to do a within-scope mod to a task order that would raise the sum value of all tasks orders issued to more than the maximum, I would (1) prepare a J&A in support of a modification to increase the contract maximum value and (2) then mod the maximum value and the task order by supplemental agreement. I do not believe that a CO can unilaterally exceed the contract maximum value by changing the task order. I don't think a CO can exceed the maximum contract value except by supplemental agreement. I don't believe that short cuts are sound practice, even with contractor consent.

Although the facts are different𑁋the contract was for supplies, not services𑁋see Liebert Corp., GAO B-232234, April 29, 1991:

Quote

An order in excess of the maximum quantity stated in the contract would be outside the scope of the contract. Such an 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 CICA requirements for competition. See Neal R. Gross & Co., Inc., 69 Comp. Gen. 292 (1990), 90-1 CPD ¶ 212; Clean Giant, Inc., B-229885, supra. We therefore sustain the protest to the extent that the quantities to be ordered are in excess of the stated maximum quantities in the Exide contract.

I'm not sure what bearing that has on a contract under which the maximum is stated in terms of dollars.

[joel hoffman]

8 hours ago, Retreadfed said:

The OP said (s)he had a CPFF task order.  I am curious how the foregoing rule would apply if the task order value needed to be increased after the fact, i.e., performance under the TO was complete, because the contractor had a higher final indirect cost rate than contemplated causing an overrun.  For these purposes, the contractor did not know or could not have known of the overrun in time to give the CO notice of the overrun under the LOC clause.

Where did the OP say that s(he) had a CPFF task order?

It’s task order for “Title III” A/E services during an execution of a separate contract to construct the project that the A/E designed. The construction contract has been extended.  The A/E task order needs to be extended but the ID/IQ has reached the stated maximum amount for expenditures.

Voyager mentioned CPFF, apparently in reference to a post by ji20874 mentioning another thread concerning a CPFF contract or task order.