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Changing a service contract to a supply order

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GM Forum,

I've tried searching on this topic to no avail, however, I believe this has been covered on WIFCON before...anyhoo, here goes:

Background: Inherited a service contract for administration from another CO. Conducted a review of the file and it screamed supply. Findings were validated when the vendor submitted an invoice for full payment, FFP, net 30. The purchase is for software to be installed on a server with maintenance support for three years. Let me know if more information is required.

Corrective action: I held a teleconference with the client and vendor to verify my findings. I've explained to all parties that the order will need to be modified, bi-laterally of course, to correct the order. The order is against a GSA schedule. There is no need to change pricing. I'll scrub the "PWS" as it really doesn't say squat with regards to what actually was needed. Go figure!

I'll frame the corrective action plan in the form of a MFR to document all findings, place in the file, and execute the mod.

My question, am I missing anything?

If this topic has been covererd please share the link and thanks for taking the time to read!

"Erin Go Braugh" Happy St. Patrick's Day!

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Is the issue whether software is a service or supply? Here are a couple of links to previous discussions on that point.

http://www.wifcon.com/discussion/index.php?/topic/277-do-you-consider-annual-license-fees-to-be-a-service-or-supply/

http://www.wifcon.com/discussion/index.php?/topic/1088-software-mntc-services-can-a-service-be-brand-name/

A good case can be made for either. I think software is unique with elements of both service and supply. Circumstances may dictate how you classify it. Note the NAICS code 511210 definition for software publishers:

“This industry comprises establishments primarily engaged in computer software publishing or publishing and reproduction. Establishments in this industry carry out operations necessary for producing and distributing computer software, such as designing, providing documentation, assisting in installation, and providing support services to software purchasers. These establishments may design, develop, and publish, or publish only.

Cross-References. Establishments primarily engaged in--

  • Reselling packaged software--are classified in Sector 42, Wholesale Trade or Sector 44-45, Retail Trade;
  • Providing access to software for clients from a central host site--are classified in Industry 518210, Data Processing, Hosting, and Related Services;
  • Designing software to meet the needs of specific users--are classified in U.S. Industry 541511, Custom Computer Programming Services; and
  • Mass duplication of software--are classified in U.S. Industry 334611, Software Reproducing.

Index entries that bring you to this industry:

  • Applications software, computer, packaged
  • Computer software publishers, packaged
  • Computer software publishing and reproduction
  • Games, computer software, publishing
  • Operating systems software, computer, packaged
  • Packaged computer software publishers
  • Programming language and compiler software publishers, packaged
  • Publishers, packaged computer software
  • Software computer, packaged, publishers
  • Software publishers
  • Software publishers, packaged
  • Utility software, computer, packaged”

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What is the GSA SIN? Do a search on the GSA Ebuy website for "sin 132 32". Not sure how to provide a link to the results, but here is what you will find:

"(SIN 132 32) Software maintenance as a product includes the publishing of bug/defect fixes via patches and updates/upgrades in function and technology to maintain the operability and usability of the software product. It may also include other no charge support that is included in the purchase price of the product in the commercial marketplace. No charge support includes items such as user blogs, discussion forums, on-line help libraries and FAQs (Frequently Asked Questions), hosted chat rooms, and limited telephone, email and/or web-based general technical support for users self diagnostics. Software Maintenance as a product is billed at the time of purchase.

(SIN 132 34) Software maintenance as a service creates, designs, implements, and/or integrates customized changes to software that solve one or more problems and is not included with the price of the software. Software maintenance as a service includes person-to-person communications regardless of the medium used to communicate: telephone support, on-line technical support, customized support, and/or technical expertise which are charged commercially. Software maintenance as a service is billed in arrears in accordance with 31 U.S.C. 3324."

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How long ago was the contract awarded? Has the software been installed? Has it been accepted?

Vern: The contract was awarded at year end 2012, installation is still on going, partial acceptance has occured. The software is being installed on multiple servers.

Larry: Thanks for the links and suggestions. I agree, circumstances are dictating this as a supply. Both the vendor and client agreed.

jtolli: I'm one step ahead of you. We discussed the SIN during the telecon, SIN 132 34, was cited for the maintenance portion.

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jtolli: I'm one step ahead of you. We discussed the SIN during the telecon, SIN 132 34, was cited for the maintenance portion.

So if the maintenance is under SIN 132 34, then it seems to me like you have a contract for both a supply (software) and a service (software maintenance). After all, SIN 132 34 is "software maintenance as a service" and the maintenance piece should not have been invoiced for full payment, but should be billed in arrears. Although I realize the contract CLIN(s) may have been set up for full payment. I have certainly seen that done, but it doesn't make it right.

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Exactly. It's really a matter of how you set up the CLINS. You'd need the mainteThis is just typical of what happens when you receive a requirement five minutes, (not literally), before the end of the fiscal year.

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What do you expect to gain by changing the order from one for services to one for supply at this point? What difference will it make?

Vern: Good question and after speaking with all of the parties, held two teleconferences since original post, and gaining more clarity there is no need to change. Ultimately, the only issue was the structuring of the payment arrangements. Payment arrangements had been set up to bill as 1/12th (FFP) when actually the vendor should have been allowed to bill out upon delivery and acceptance. I believe I was over thinking this one and knew I needed to talk it out to ensure I was approaching it the right way.

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