Bridge Contract

[bob7947]

This was posted as a blog, incorrectly by KT Administrator. The "blog" has been removed.

My office is exploring an option to utilize a “bridge contract” to have continued services. I’m not referring to exercising 52.217-8 or -9 clauses. We’ve already exercised -8 and there are no more -9 to exercise. In other words, there will be no valid contracts in place to support the requirements in a couple of months. The current contract that is about to expire is a level of effort services contract that was originally awarded as a sole source. I believe the procurement team in my office has a clear understanding as far as new J&A requirements are concerned. However, as far as the contract price and procurement execution procedure matters are concerned, everyone is in a disarrayed mode. Important information that cannot be ignored is that the estimated contract value exceeds the certified cost or pricing data. That is a very short summary of challenging background. Research indicated, “A bridge contract is a short-term solution to obtain services during an interim period until a new contract can be established”. With that being said, my questions at this point are how to handle the contract price and how to establish contract in the contract writing system. Is the contractor required to submit a new proposal under this fancy term of “bridge contract”? How the contractor should be notified and with what kinds of instructions should be provided to the contractor to submit their proposal for the contract price? The messages and instructions have been given to use are “obtain quick and minimal proposal”. During the discussion session, there were two options were presented; 1) issue a modification under the existing contract that is about to expire or 2) generate a new contract number since the bridge contract is a stand-alone contract. Further discussed as to if we were to issue a modification, under what authority? Also, does it require negotiations? If anyone has this type of experience, please feel free to share your experience and if possible, please share some samples would be greatly helpful!!!

[MICHIGANKO]

OK I'll bite. Before I even address your bridge question, can you actually support a J&A? If so, under which exception? How quickly can you have a signed J&A in place?

[joel hoffman]

If you issue a modification to the existing contract, it will be an out of scope supplemental agreement. The advantage of a modification versus a "new" contract is mostly for convenience. You already have the contract terms and conditions without having to re-develop and provide again to the contractor and to the government contract administration team. You would modify as necessary and applicable to the "bridge services". The authority to issue an out of scope modification depends upon which exception to full and open competition under FAR Supart 6.3 is applicable.

You said that the existing contract is a sole source, thus I am assuming that there was no competition to establish the existing unit prices. Am I correct? Please advise if this is a commercial services contract or not.

Why would you think that you wouldn't have to negotiate a modfication or new contract? Either one appears to be a non-competitive pricing action. Also, do you think that an exception to the requirements to obtain cost or pricing data under FAR 6.403-1 would apply, if any to this situation?

Thanks.

[joel hoffman]

For a supplemental agreement, you would request a proposal , presumably with instructions to provide cost or pricing data to support the pricing. Youwouldneed to describe the scope of services. If the existing contract services are merely to be extended, you would describe that (including provisions for transmit ion at the end?). I presume that you will have to update any applicable wage rates. This would be a bi-lateral action. You can't issue it as a change order.

I assume here that the existing contract is still underway...

[Guest Vern Edwards]

Goodness, where to begin? The problem seems to be this, as reported by KT Administrator:

[T]here will be no valid contracts in place to support the requirements in a couple of months... However, as far as the contract price and procurement execution procedure matters are concerned, everyone is in a disarrayed mode. Important information that cannot be ignored is that the estimated contract value exceeds the certified cost or pricing data... That is a very short summary of challenging background... my questions at this point are how to handle the contract price and how to establish contract in the contract writing system.

Based on the second sentence of that quote, the agency is in disarray, alright. What on earth does it mean to say that the estimated contract value exceeds the certified cost or pricing data? Certified cost or pricing data are just that, data, they are not an estimate. An estimated contract value cannot exceed, be equal to, or be less than certified cost or pricing data. Certified cost or pricing data might be used to develop a cost estimate or critique one, but they do not, in and of themselves, indicate what the estimate should be. They are inputs, not conclusions, and there are other factors to be considered during cost analysis.

Moreover, TINA is a disclosure statute. That's all. TINA does not require an offeror to use the certified cost or pricing data it submits to the government when setting its proposed estimated cost or its price. That is well-established in the law, which is why contract specialists should read books. There is no legally necessary connection between the certified cost or pricing data submitted and the proposed price. The use of certified cost or pricing data to develop a cost estimate might lead to an estimated cost of $1,000,000, but TINA does not prevent a contractor from proposing a price of $5,000,000. That's why you have to negotiate.

Bottom line: The hold up is that the contractor wants more money than the government thinks it ought to pay, but the government has put itself in the position of needing the contractor on contract right away. Gee, I wonder why the contractor would ask for so much. Could be because the agency has been in disarray for quite some time and is now between a rock and a hard place. Could be because the agency is a pain in the neck to do business with and the contractor wants to get paid not just for the work but also for having to deal with the agency. On the other hand, it could be that the agency does not know a good price (under the circumstances) when it sees it.

Assuming that the government is not willing not run up the white flag on price without a fight, the solution to KT Administrator's problem might be to enter into a letter contract for the bridge so that the work can begin immediately and the parties can negotiate ("definitize") the contract price after contract award. That would give the government more time to negotiate the terms of its surrender. How difficult it would be to get approval to proceed in that way depends on agency policy and know-how. It could be that the agency knows letter contracts and doesn't like them. It could be that no one in the agency knows what a letter contract is or how they work.

The availability of alternative solutions depends on facts that we do not have, but one step in the right direction would be to get KT Administrator a contracting officer who knows contracting.

Joel wrote:

If you issue a modification to the existing contract, it will be an out of scope supplemental agreement. The advantage of a modification versus a "new" contract is mostly for convenience. You already have the contract terms and conditions without having to re-develop and provide again to the contractor and to the government contract administration team.

That last sentence is wrong and so is the second sentence to the extent that it is premised upon the last.

A mod to extend the term of the contract would be out of scope and thus a new procurement. It would have to be handled like a new procurement: (1) issued in compliance with currently applicable laws and regulations, (2) be backed by all new file documentation, and (3) include all currently applicable contract clauses. If the agency were to obey the law, there would be little if any substantive administrative advantage in doing an out of scope mod instead of a new contract.

A new contract would be simpler and "cleaner" than a mod.

[jwomack]

The authority to issue an out of scope modification depends upon which exception to full and open competition under FAR Supart 6.3 is applicable.

Why would that matter?

[joel hoffman]

Why would that matter?

Why would it not matter? The questioner asked under what authority would the KO have to issue an out of scope, sole source modification. Apparently it would be done as an exception to the requirements for full and open competition.

[jwomack]

The OP said, “if we were to issue a modification, under what authority?” I interpret this to mean, “What gives me the authority to make an out-of-scope modification?” and not “What gives me the authority to bypass full and open competition?”

A more appropriate authority for an out-of-scope mod would be FAR 1.602-1. “Contracting officers have authority to enter into, administer, or terminate contracts...”

The authority to bypass full and open does not give a KO the authority to enter into a contract or modification. Competition is but one of many items the KO must consider (e.g., funding, related D&Fs, Executive Orders).