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Procurement situation:

  • Establish an IA for Travel and no cost Subject Matter Experts (SME) with a non-profit agency (Red Cross)
    • Purpose is to replace the current time consuming and costly Invitational Travel (IT) process
    • A business case has been made that the Red Cross can provide this travel for less cost than our Agency

    [*]We have pre-determined scheduled travel and fixed travel costs for the locations

    [*]The SOW includes providing SME's related to emergency management to speak at these scheduled conferences

    • The Red Cross will provide these SME's at no cost to our Agency

    [*]Duration of this IA will be 5 years

Our legal and HQ is currently reviewing the validity of using the IA to replace the current IT process and one of their comments related to contract formation concerns me.

They are stating "we do not have a contract if the Red Cross is not providing a service".

Understanding that the elements of a contract are offer and acceptance, competent parties, legal capacity, and mutuality of obligation, I am trying to wrap my mind around the notion that the proposed agreement is not a contract if a paid service is not provided.

Reviewing the four elements of a contract I want to say the element "Mutuality of obligation" would be what my HQ is hanging their hat on that this contemplated IA is not legal. They are telling me this because the service provided by the Red Cross is at no cost and we are not receiving any benefit. In my opinion, the benefit to our Agency is that it will reduce our administrative costs while having the Red Cross provide the same travel service we have been providing at a substantially lower cost. So we have disagreement on this point.

Perhaps the real issue is "Consideration", can we have a valid and enforcable contract if we are not better able to define with more clarity what the Red Cross will do. What if they decide not to travel when they are scheduled to...how can we enforce this and is it a breach of contract?

The are also saying we are attempting to use a procurement instrument to replace what essentially is just a financial transaction.

There are other issues related to this action such as, is the Red Cross an Agency or what authority to use, but the one issue I want to focus on is:

Do we have a contract if the service being provided is at no cost?

So considering the above, I appreciate any and all comments.

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I'll respond only to your question: Do we have a contract if the service being provided is at no cost?

There does not need to be a monetary payment, but there must be some consideration provided by both parties. I've known of a couple of federal contracts where the contractor received benefits from the federal government other than money in consideration for the services/supplies they provided.

Also, see the definition of contract in the FAR :

“Contract” means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301, et seq. For discussion of various types of contracts, see Part 16.

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In addition to what Don said, the legal office is exactly right with this comment

we are attempting to use a procurement instrument to replace what essentially is just a financial transaction

Invitational travel is exactly that - a financial transaction. You are asking someone to travel for your agency and agree to pay their expenses.

The process of issuing and processing invitational travel orders is very simple and straight-forward. If it takes too long for the agency, that needs looked at and fixed instead of playing games and trying to force interagency agreements to fix the situation.

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OP wrote:

Procurement situation:

  • Establish an IA for Travel and no cost Subject Matter Experts (SME) with a non-profit agency (Red Cross)
  • A bunch of other stuff...

Stop there. Can only enter into an interagency agreement with another federal agency, which the Red Cross is not. Formerfed has it right - continue using invitational travel orders to the extent that the SMEs are speaking at no-cost other than travel expenses.

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What about a Cooperative Agreement? Have you looked into this possibility?

The Red Cross' speakers are speaking at agency conferences at no charge, other than reimbursable travel expenses, per the OP. 31 USC 6304 and 6305 discuss using grants or cooperative agreements, respectively, "when the principal purpose of the relationship is to transfer a thing of value...to carry out a public purpose of support or stimulation..."

It would be a stretch to argue that reimbursing the travel expenses of an unpaid SME speaker to speak at an agency conference is either "transferring a thing of value" or acting to "support or stimulate" his organization. Sure, if the agency gave a grant to the Red Cross to pay the guy's salary for a year and travel around the country speaking to various conferences about emergency preparadness or management, that could work.

Why the reluctance to just do the obvious thing and issue invitational travel orders? The acquisition community is too often regarded as the "fixer" of other peoples' problems. It sounds like what's happening here is somebody is complaining the invitational travel orders are a nuisance, so the OP is trying to shoehorn this situation into a contract or IA. Reminds me of the "my boss said I can't hire anybody so I drafted this SOW..." nonsense we see all too frequently.

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Guest Vern Edwards

The legal office is out to lunch. The Red Cross offers to speak about a topic of the Government's choice at the Government's invitation in return for the cost of travel. The Government accepts the offer. Alternatively, the Government offers to pay the cost of travel in return for the promise to speak upon invitation. The Red Cross accepts. Either way, you have all of the elements of a contract. What law school did the lawyers in that legal office go to?

The Red Cross people are not speaking "at no charge." They are charging the cost of travel. Why isn't that a "charge"? Snap out of it. The headquarters is staffed by idiots if they say there is no mutuality of obligation under the scenarios I described above.

If a contract is what is wanted, and assuming that the Red Cross is willing, write a BPA under FAR Part 13 for Pete's sake. Make BPA calls by email. Each call is a contract. Whether a BPA call can be funded with travel money is a separate question.

An interagency agreement with the Red Cross is stupid, for reasons given above. I don't know anything about the policies and procedures of invitational travel orders, but I have received them and think they are a pain in the tookus.

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Guest Vern Edwards

It would be a stretch to argue that reimbursing the travel expenses of an unpaid SME speaker to speak at an agency conference is either "transferring a thing of value"...

Are you saying that reimbursing travel expenses would not constitute consideration? If so, you don't know what you're talking about.

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Are you saying that reimbursing travel expenses would not constitute consideration? If so, you don't know what you're talking about.

No, that's not what I'm trying to say. I agree there is mutual consideration to form a contract. What I'm trying to say is that, in my opinion, the repayment of travel expenses only in this situation does not satisfy the "transferring a thing of value" test under FGCA because I don't believe it helps the speaker's organization. The agency is inviting an SME to speak at the agency's conference presumably because the agency wants him to do so, not because the SME's organization wants to. That's an acquisition purpose under FGCA, not an assistance purpose, but I digress. Suppose the agency doesn't invite him; then he doesn't travel, no travel costs are incurred, no reimbursement of travel costs are required, and his organization pays his salary for his time. Suppose the agency invites him; then he does travel and his travel costs are reimbursed, but the organization still pays his salary for his time. Either way, his organization's budget is not impacted other than possibly the collection of overhead charges on the reimbursable travel (which is another reason to use ITOs, by the way).

I fully agree this could be a contract/purchase order, but that invitational travel orders are more appropriate. An interagency agreement is inappropriate. I argue that a grant/cooperative agreement is also inappropriate, but I don't feel particularly strongly about that because a rational argument in favor could be made if one were so inclined. One would have to demonstrate that the invitation to speak is primarily intended to support or stimulate the organization, not to meet an agency need, and that the transference of the "thing of value" actually assists the organization. It's not impossible to make those arguments.

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Guest Vern Edwards

How is the Federal Grants and Cooperative Agreements Act implicated in this? The only person who mentioned a grant or cooperative agreement was leo1102. I agree that a cooperative agreement is not appropriate.

On what grounds do you say that invitational orders are more appropriate? The problem is that the organization does not want to be bothered with them. How would you be solving their problem by telling them that invitational orders are more appropriate. Is a contract wrong? Are invitational orders easier than a BPA?

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I wish I had stopped by earlier. Like right after this was first posted.

My reply wouldn't have been as elegant as Acquisition Don's,

but MAN that musta felt sweet,

pointing out that the Red Cross is not a Government agency.

In the test that is life,

sometimes the only ones I get right are the obvious ones.

And sometimes the obvious ones are actually trick questions.

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Our purpose is to attempt to find a better, less cumbersome process for processing Invitational Travel for our Agency. The business case we wrote clearly shows that our Agency can save dollars by having another agency or contractor pay for this travel and those costs be reimbursed, but our struggle has been to find the right instrument, be it an IA, Grant or BPA.

This discussion has helped me and my one man contracting shop to make a reasoned decision on how we want to proceed. Based on the discussions above I have concluded I will recommend using a BPA.

I appreciate everyone’s comments!

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How is the Federal Grants and Cooperative Agreements Act implicated in this? The only person who mentioned a grant or cooperative agreement was leo1102. I agree that a cooperative agreement is not appropriate.

On what grounds do you say that invitational orders are more appropriate? The problem is that the organization does not want to be bothered with them. How would you be solving their problem by telling them that invitational orders are more appropriate. Is a contract wrong? Are invitational orders easier than a BPA?

A contract is not wrong. A BPA is not wrong. We agree that a grant/cooperative agreement is likely wrong, and an interagency agreement is certainly wrong.

I would suggest that ITOs are quite likely easier than the award and administration of a BPA, and that perhaps the "organization" understands the work involved in ITOs but not the work involved in BPAs and calls thereunder, and thus is pushing against the use of ITOs. The "organization" gains nothing if the client side saves administrative hassle and expense but the contracting side gains it.

I think BPAs have been strangled to death by nonsensical bureaucracy, quite frankly, at least at my agency, such that their use is essentially not worth the trouble. Billings, once a simple matter of monthly statements charged to a client's GPC, have been complicated to the point of stupidity. Not to mention that the OP would have to enter into a (gasp!) noncompetitive, (gasp!) single-award BPA with the Red Cross (double gasp!!! not a small business!!!), which will likely trigger higher levels of review, scrutiny, and grief, all over something that can easily be handled by an established ITO process, done likely by the very same financial technicians who will have to deal with the BPA's billings.

I don't know - maybe ITOs are more work than I think they are. Write the BPA and see if it makes the client happy.

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Guest Vern Edwards

GeoJeff:

Please try to be helpful. We have already been told that the client does not want to do invitational travel orders. Why do you keep bringing them up? As for BPAs, you are coming across as an old time naysaying CO. Every bleeping thing is a problem. I cannot think of anything that would be simpler for this than a Part 13 one or two page BPA for individual calls that will not exceed the micropurchase threshold. (The individual calls will almost certainly be below the micropurchase threshold, unless you're putting the Red Cross people in a Four Seasons for a week.)

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GeoJeff:

Please try to be helpful. We have already been told that the client does not want to do invitational travel orders. Why do you keep bringing them up? As for BPAs, you are coming across as an old time naysaying CO. Every bleeping thing is a problem. I cannot think of anything that would be simpler for this than a Part 13 one or two page BPA for individual calls that will not exceed the micropurchase threshold. (The individual calls will almost certainly be below the micropurchase threshold, unless you're putting the Red Cross people in a Four Seasons for a week.)

Given that the number, destination(s) and duration(s) of trips would be unknown, how would this BPA be structured? Cost-reimbursable in accordance with the FTR? Can a Part 13 action (arguably for commercially-available services) be cost type? In a very old post on wifcon (http://www.wifcon.com/arc/forum236.htm), Vern wrote:

By Vern Edwards on Saturday, September 08, 2001 - 08:33 pm:

You say you're writing a purchase order, so I assume that you're using simplified acquisition procedures to buy commercial services. Is that right? If so, you should not use a cost-reimbursement line item. See FAR 12.207 and 13.302-1(a).

Instead of writing a cost-reimbursement line item, write an unpriced line item. See FAR 13.302-2. Use the authority in FAR 13.302-2( B)(iii). Describe the service as work-related travel performed as ordered or agreed. Agree on a total monetary limitation for the line item. After the travel has been completed, agree on a reasonable fixed-price based on the contractor's travel costs and then pay the invoice amount.

How would that be administered here? The caller speaks with the organization, agrees to the parameters of travel in general terms within his micropurchase authority (presumably including an NTE amount,) then negotiates a fixed-price payment after the travel has been complete and pays it with his GPC? Seems reasonable to me. The BPA could lay out that all travel must be in accordance with the FTR and pre-approved by an authorized caller, etc.

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Guest Vern Edwards

Before the CO issues a call it asks the speaker for a quote for travel costs. The speaker gets airfare and hotel rates and estimates food in accordance with the travel regs and sends that in. The CO issues a call in that amount. The speaker is responsible for any costs in excess of that amount. Alternatively, a Part 13 action could also be "unpriced" in accordance with FAR 13.302-2, but limited to the micro purchase threshold. No problem.

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