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Sole Source (Comm. Item Srvs) IDIQ Contract w/ Rates cq. on LH basis

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WIFCON Gut-check assistance required:

Can this be done:

Award a sole source IDIQ contract for commercial services (over $6.5M under $103M) with rates established on a time-and-materials or labor-hour basis. The IDIQ will be structured to allow for order to be placed on a FFP, or LH basis.

(See FAR 12.207[c][1][ii] and [c][2])

BUT THEN I READ.....

FAR 12.207[1], which says a T&M, or LH contract may be used for the acquisition of commercial services when -

[A] Competitive procedures (e.g., the procedures in 6.102, the set-aside procedures in Subpart 19.5, or competition conducted in accordance with Part 13);

The procedures for other than full and open competition in 6.3 provided the agency receives offers that satisfy the Government’s expressed requirement from two or more responsible offerors; or

[C] The fair opportunity procedures in 16.505 (including discretionary small business set-asides under 16.505[2][F]), if placing an order under a multiple-award delivery-order contract; and

[ii] ...D&F stuff. Yeah, I get this part.

Well....my requirement doesn't meet the above [1], which leads me to believe I can't treat it as a commercial services.

Thoughts welcome.

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A service either meets the definition of commercial item or it doesn't. If it does, then you must treat it as a commercial item and follow the procedures in FAR Part 12. You don't have a choice. See FAR 12.107(a). If it does not meet the definition of commercial item, then you cannot treat it as a commercial item and you cannot use the procedures in FAR Part 12.

So does the service you want to buy meet the definition of commercial item or not?

If a service is a commercial item, and if you cannot meet the conditions for using a T&M contract in FAR 12.207, then you cannot use a T&M contract.

Those are my thoughts.

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Probably does not apply noting the mention of T&M/LH but when commercial item and service are mentioned together I am always reminded of

FAR 12.102(g). Noting just in case it does provide a alternative approach.

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In the same situation presented by GOVCO (commercial item, sole source, IDIQ that allows for FFP and LH orders), I have heard people argue that since you are awarding an IDIQ contract, that (IDIQ) is your contract type. They essentially argue that the type of order you issue (FFP or LH) is irrelevant and any regulations addressing FFP or LH contracts (in this case, FAR 12.207(B)) is not applicable to IDIQ contracts. As "support" for their argument, they state that FAR Part 16 is entitled "Contract Type" and Indefinite Quantity contracts are their own contract type, separate from FFP, T&M/LH, and CR.

I do not agree with this argument. Regardless of the inclusion of Indefinite Quantity contracts in FAR Part 16 - and thus the argument that it is its own contract type - an Indefinite Quantity contract cannot exist w/o one or more pricing arrangements (i.e., FP, CR, T&M/LH). In fact, FAR 16.501-2© specifically says "Indefinite-delivery contracts may provide for any appropriate cost or pricing arrangement under PAR 16."

All of this to say that I'd like to know if the WIFCON community thinks the following argument is valid: an IDIQ contract is its own contract type, and therefore rules that apply to T&M/LH contract types don't apply to an IDIQ contract or the T&M/LH orders that may be issued against it.

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FAR Part 16 uses the term "type" without sorting out the fact that there are different kinds of types. FAR Subparts 16.1 through 16.4 and most of 16.6 are about types of pricing arrangements. Subpart 16.5 is about various delivery arrangements, and FAR 16.603 is about letter contracts. Subpart 16.7 isn't about contract types at all.

The pricing types, delivery types, and letter contracts are not mutually exclusive categories. Thus, you can have a fixed-price, cost-reimbursement, T&M or L-H contract that is definite-quantity, indefinite-quantity or requirements type, and that is fully definitized at the time of award or a letter contract. Putting it another way, if you decide to award an IDIQ type you still have to select a pricing type. IDIQ is not "its own" type.

FAR 12.207(B) states that you must fulfill certain conditions in order to use a T&M or L-H pricing arrangement to buy commercial items. FAR 12.207( c) states that you must fulfill certain additional conditions when you have decided to use a T&M or L-H pricing arrangement with an IDIQ delivery arrangement.

When read as a whole, FAR 12.207 is most reasonably interpreted to mean that in order to use a T&M or L-H pricing arrangement in conjunction with an IDIQ delivery arrangement you must first comply with FAR 12.207(B) and then comply with 12.207( c). That strikes me as more reasonable than saying that 12.207(B) does not apply because your contract type is IDIQ.

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Well, we now know what Vern thinks of the argument, and if you want to know what the WIFCON community thinks, I'm reasonably confident that the vast majority will agree completely with Vern's Post #8. Actually, I'd be surprised to hear an opposing position on this site at all.

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Vern - thank you very much for the response. It clearly and succinctly puts the issue to rest for me. Navy_Contracting: Thank you for your thoughts as well, although I must admit the "opposing position" won a recent argument in my office. Don: thank you for the link; it was an interesting read.

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So:

When read as a whole, FAR 12.207 is most reasonably interpreted to mean that in order to use a T&M or L-H pricing arrangement in conjunction with an IDIQ delivery arrangement you must first comply with FAR 12.207(B) and then comply with 12.207( c). That strikes me as more reasonable than saying that 12.207(B) does not apply because your contract type is IDIQ.

Yet:

I must admit the "opposing position" won a recent argument in my office.

Conclusion:

At least

...the vast majority will agree completely with Vern's Post #8.

[Joins the "vast majority" group and calls it a day]. B)

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