Exceedance of IDIQ Capacity with Modification to Existing Task Order

[Don Mansfield]

9 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.

Great point. 

[joel hoffman]

6 minutes ago, Don Mansfield said:

Great point. 

Great point but not applicable to the situation in this thread. 

[REA'n Maker]

It has often occurred to me that there should be a class (maybe and entirely separate curriculum) covering "interpretation, planning, and execution of contractual actions based on somebody else's crappy work".  This would be in recognition that as a practical matter, most CO's spend their careers trying to understand and manage a contract awarded by someone who has moved on long ago.  This is particularly true in task order contracting, where you might be placing an order against a very poorly written IDIQ authored by some unknown person in a whole 'nother agency.

I say this because I was recently handed a task order against the GSA OASIS MAC, which had busted its maximum a long time ago without ever acknowledging it.  Even as an entirely innocent party, I still had to justify my own actions in regard to the instant option exercise.  Bottom line, I had to craft a JEFO which 1) explained why the current requested increase was justified, and 2) subtlety glossed over the fact that no JEFO was ever approved in the past for mod amounts over the award TCV (this is why we make the big bucks after all).

Considering that this was a 5-year task order with 14 four-month option periods (who does that???), the busted TCV was the least of my problems.

[Vel]

On 12/1/2022 at 4:13 PM, vsup said:

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. 

I've always viewed this type of work (Title II or PCAS) as a severable service, because the benefit is received at the time the services are rendered.  Depending on the type of funding you have, and the original duration of the task order; you may not be able to continue to use the funds that are currently obligated on the task order. Assuming it was annual appropriations and the duration was a year, I believe that if you want to extend the term of the task order, you would need to add current year funds for the amount for the work not yet performed. If you deobligate the expired funds at the same time, and there is no additional work being added, this won't increase the overall value of the task order.

[Vern Edwards]

Some background:

In 1995, FAC 90-33, 60 FR 49723, September 26, 1995, which implemented the task and delivery order contracting rules created by FASA, added this sentence to 16.504(a)(4)(ii): "Specify the total minimum and maximum quantity or dollar value of supplies or services to be acquired under the contract[.]"

In 2000, FAC 97-17, 65 FR 24317, April 25, 2000, replaced that sentence with this one, which now appears in FAR 15.504(a): "Quantity limits may be stated as number of units or as dollar values."

Prior to FAC 90-33, FAR 16.504 made no mention of dollar values, only quantities. See, e.g., 48 CFR 16.504, 10-1-94 Edition.

Neither FAC explained or commented upon the addition of the phrase "dollar values." However, the phrase "or dollar value" was mandated by FASA itself, Pub. L. 103-355, §§ 1003 and 1054:

"SOLICITATION.-The solicitation for a task or delivery order contract shall include the following...(2) The maximum quantity or dollar value of the services or property to be procured under the contract."

Quantities of units is one thing, dollar values is another. The addition of "dollar values" was probably in recognition of the fact that services are not always measured as quantities of units.

The issue we've been discussing is the product of Congress's and the FAR councils' use of the phrase "dollar values" without explanation as to whether and how changes in dollar values were to apply to the maximum. I have not yet reviewed the congressional hearings leading to FASA, but I suspect that neither Congress nor the councils thought through the implications and potential complications of stating the maximum as a dollar value.

It seems to me, however, that the FAR councils should have thought it through and provided some guidance. I think that failure to apply the dollar value of task order work modifications (not wage determination increases) to the maximum quantity of an IDIQ contract effectively renders the maximum a nullity.

[vsup]

33 minutes ago, Vel said:

I've always viewed this type of work (Title II or PCAS) as a severable service, because the benefit is received at the time the services are rendered.  Depending on the type of funding you have, and the original duration of the task order; you may not be able to continue to use the funds that are currently obligated on the task order. Assuming it was annual appropriations and the duration was a year, I believe that if you want to extend the term of the task order, you would need to add current year funds for the amount for the work not yet performed. If you deobligate the expired funds at the same time, and there is no additional work being added, this won't increase the overall value of the task order.

The funds are no year funds so this is not an issue in this instance.

 

[Retreadfed]

15 hours ago, joel hoffman said:

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

Good question.

[Don Mansfield]

2 hours ago, Vern Edwards said:

I think that failure to apply the dollar value of task order work modifications (not wage determination increases) to the maximum quantity of an IDIQ contract effectively renders the maximum a nullity.

Why the distinction between work and nonwork (?) modifications? Why would that matter?

[Vern Edwards]

Because I think the purpose of the limit was to establish one dimension of the scope of the contract in terms of how much could be bought based on a single competition . I.e., the quantity. I don’t think no work mods affect quantity.

This is speculation on my part.

[C Culham]

My conclusion - What a CO will not do is the life blood of protests!

[Don Mansfield]

I think it comes down to the "scope of the competition" test, which is stated in Neil R. Gross & Co., 69 Comp. Gen. 247 (B-237434), 90-1 CPD ¶212:

Quote

In weighing [whether a modification is beyond the scope of the competition], we look to whether there is a material difference between the modified contract and the prime contract that was originally competed…. In determining the materiality of a modification, we consider factors such as the extent of any changes in the type of work, performance period and costs between the contract as awarded and as modified…. We also consider whether the solicitation for the original contract adequately advised offerors of the potential for the type of changes during the course of the contract that in fact occurred … or whether the modification is of a nature which potential offerors would reasonably have anticipated under the changes clause.

If the solicitation for an IDIQ contract contained a Changes clause, the offerors were on notice that prices of orders could be adjusted after issuance as a result of change orders. While I think that potential offerors could reasonably expect the agency to ensure that orders are within the contract maximum before issuing them, I don't think it's reasonable to expect the agency to continuously look over their shoulder to ensure subsequent price adjustments don't exceed the contract maximum. 

 

[C Culham]

More to digest.

https://www.gao.gov/products/b-299315.7%2Cb-299315.8

 

[joel hoffman]

Carl, I have no idea why you mentioned a ceiling on a CPFF contract???? This thread  isn’t about a CPFF A/E contract or task order. The original poster has never hinted that the A/E task order is CPFF! 

Secondly, nobody is going to protest extending the A/E task order in this thread. The problem to solve is raising the ID/IQ upper limit so that the government can issue a relatively small increase to the task order to provide designer support during a time extension on a separate construction contract that the A/E designed. If there was ever a situation where a sole source would need to be justified,  this would be a cinch to justify. No other A/E would be interested, either.

 

[C Culham]

9 hours ago, joel hoffman said:

Carl, I have no idea why you mentioned a ceiling on a CPFF contract????

Because you and Retread kicked it around as part of the thread.   I never said the OP did.  Because it was brought up I added what I found, just that simple.

 

9 hours ago, joel hoffman said:

nobody is going to protest extending the A/E task order in this thread.

Let me change my conclusion - What a CO will not do and thinking that everything is 100% is the life blood of protests.

[Vern Edwards]

19 hours ago, Don Mansfield said:

I don't think it's reasonable to expect the agency to continuously look over their shoulder to ensure subsequent price adjustments don't exceed the contract maximum. 

😄 That's a laugh. What does reasonableness have to do with anything when it comes to rules? Rules are rules. The questions are: What do they mean? and How are they to be applied? Think about the late electronically-submitted proposal rules.

The rules in this case are (1) an IDIQ contract must state either a maximum quantity or a maximum dollar value, and (2) a company may protest the issuance of an order that increases the maximum dollar value. And see the statutes that I quoted above.

So if an IDIQ contract states a maximum dollar value, then it seems reasonable that the CO must keep track of the contract dollar value. Thus, the question is: How is contract dollar value to be determined? What dollars count against dollar value?

If a CO issues a CPFF task order, and if the task order overruns, does the amount of the overrun count against the maximum contract dollar value? Why? Why not? What does the rule say?

Does the amount of a within-scope change to an order count against maximum contract dollar value? If not, why? What does the rule say?

Does the amount of an out-of-scope change to an order count? If so, why? What does the rule say?

What changes in dollar amount count as changes in dollar value? Does a CO have go keep track of some, but not others? If so, which ones? What does the rule say?

Or should COs just go about their business as they see fit and deal with protests if and when they arise? Would that approach be "professional"?

Is the rule clear? Can you base an argument on the language of the rule alone, or do you have to make a bunch of assumptions? And if you must make assumptions, on what do you base them? Reasonableness? From whose point of view?

[C Culham]

I did not go through an example exercise but as I was researching  I do wonder if other "limitation" clauses for a CPFF Task Order (in the order itself or the parent IDIQ) play into the whole of monitoring.

Also I do have trouble applying decisions from other than IDIQ contracts to a discussion of scope regarding a maximum for an IDIQ.   Case in point was the last decision I posted.  It would seem a J&A solves the debate on raising an IDIQ maximum.

"As discussed below, we do not need to decide the question of whether the modification is within the scope of MEP's contract because, even assuming that it was not, the agency properly supported the modification with a reasonably based J&A under 10 U.S.C. sect. 2304(c)(1)."  

[Vern Edwards]

A modification of the maximum grounded on a sound J&A mutes the issue. But it's "extra" effort. I'd bet that most agencies do not track order mods against the maximum.

[C Culham]

Just now, Vern Edwards said:

I'd bet that most agencies do not track order mods against the maximum.

Not even a bet.   They do not even track orders with regard to the maximum!  While my experience is aged factually it was so.  I expect research today would find IDIQ's (not within GSA FSS) that carry some sort of language that says not only the agency can use but so can XYZ agency (see example below).    I would offer that the whole discussion in this thread was to an extent a reason agency's evolved to BPA's in some cases.  Minor reason,  yes, but I did sit in on discussions where the subject of maximums came up.

https://www.blm.gov/press-release/blm-announces-contracting-opportunities-multi-agency-orphaned-well-cleanup-program

[Don Mansfield]

1 hour ago, Vern Edwards said:

What does reasonableness have to do with anything when it comes to rules?

When applying the "scope of the competition" test, the GAO considers "whether the modification is of a nature which potential offerors would reasonably have anticipated under the changes clause." 

[Retreadfed]

20 hours ago, Don Mansfield said:

I think it comes down to the "scope of the competition" test,

Don, this test would apply if a protest is filed.  However, there is another aspect to this issue and that is whether the contractor is required to comply with a mod that results in the maximum dollar value of an IDIQ contract being exceeded.   The resolution of this question would fall within the disputes process and not protest procedures.

[Don Mansfield]

7 minutes ago, Retreadfed said:

Don, this test would apply if a protest is filed.  However, there is another aspect to this issue and that is whether the contractor is required to comply with a mod that results in the maximum dollar value of an IDIQ contract being exceeded.   The resolution of this question would fall within the disputes process and not protest procedures.

Yes, good point. I was referring to the issue of whether a J&A would be required.

[Vern Edwards]

1 hour ago, Don Mansfield said:

When applying the "scope of the competition" test, the GAO considers "whether the modification is of a nature which potential offerors would reasonably have anticipated under the changes clause." 

Okay, but even if the scope of the competition test applies, and I'm not certain that it does, would it be reasonable to anticipate that the government would increase the dollar value of the contract to more than the maximum dollar value?

[Don Mansfield]

I'm not convinced that would be necessary if, when placed, the order was within the maximum.

[Vern Edwards]

3 hours ago, Retreadfed said:

However, there is another aspect to this issue and that is whether the contractor is required to comply with a mod that results in the maximum dollar value of an IDIQ contract being exceeded.

I don't think so. See FAR 52.216-22(b), second sentence. I think that overrides the Changes clauses.

Of course, it all depends oh now you measure dollar value.

I think COs must track IDIQ contract dollar value and consider the effect on dollar value when modifying the contract. And I do not think a CO can increase an IDIQ maximum dollar value except by supplemental agreement.

The policymakers should provide clarification, except that I suspect no one would want it. They're doing whatever they like.

 

[joel hoffman]

On 12/7/2022 at 5:49 AM, C Culham said:

Because you and Retread kicked it around as part of the thread.   I never said the OP did.  Because it was brought up I added what I found, just that simple.

 

Let me change my conclusion - What a CO will not do and thinking that everything is 100% is the life blood of protests.

I’m not saying don’t do what you have to do to legally increase the limit on the ID/IQ to add a few more months to the design support on the task order. Just do it as quickly as possible.

I’m saying that when you do it, no other A/E firm is going to protest the out of scope action. The most they could get out of it is a chance to do what? Participate in an A/E selection for a small contract that they won’t win?

There is no price competition in an A/E selection. It’s qualification based selection. However, the government won’t select a firm that has to learn the design and construction project from scratch, plus cause delay impact costs on the construction contract! The designer of record would win a new competition to complete the work they are already performing satisfactorily.

It would be very disruptive. A/E firms are dependent upon maintaining good relations with clients . They generally aren’t going to disrupt an active A/E contract and a construction contract for a “chance” to earn what is essentially peanuts.

I am a registered professional engineer. I was in an A/E firm before I went to work for the government. I’ve associated with A/E firms since then over the course of four decades. No reputable A/E firm is going to protest an action to let the current A/E firm, as the designer of record, finish this project, based upon the scenario presented herein.

Most A/E firms don’t have unlimited financial resources to pursue small tasks, especially one where the client is  satisfied with their current firm. Why would they risk pissing off the government to make some point? It’s unrealistic to fear the possibility of a protest here.

If the need is immediate, use the exception to full and open competition that allows the quickest action to fund the extension.

This would be a great example for a Senator William Proxmire Golden Fleece Award. If you don’t know who he was, I suggest looking him up…

…and talk about going down rabbit holes. CPFF? Sheesh!!!!