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Three-year PoP


ab535

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A fair number of vendors, including SEWP vendors, are moving to three-year PoPs for software/hardware maintenance contracts. 10 USC 2410a prevents us from using annual O&M funds for PoPs of more than one year, and we, like many DoD agencies, do not have no-year funds. So, how are other agencies executing these three-year contracts? What am I missing?

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A fair number of vendors, including SEWP vendors, are moving to three-year PoPs for software/hardware maintenance contracts. 10 USC 2410a prevents us from using annual O&M funds for PoPs of more than one year, and we, like many DoD agencies, do not have no-year funds. So, how are other agencies executing these three-year contracts? What am I missing?

I assume the new SEWP contracts will be IDIQ contracts with three year periods of performance. For most, or all, agencies, there is no problem with an IDIQ contract period or performance extending up to 5 years. You will obligate monies via delivery or task orders using the O&M monies appropriate for the year in which you have the need for the supplies or services..

See posts 8 and 9 to this thread:

http://www.wifcon.com/discussion/index.php?/topic/2519-commerical-supply-idiq-multiyear-or-multiple-year-options-required/

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I don't mean the IDIQs, I mean the orders off the IDIQs, or even just non-IDIQ open market contracts. O&M dollars, per 10 USC 2410a, cannot be used for a PoP of more than one year.

Which agencies are issuing delivery or task orders of more than 1 year duration?

Do the orders have options?

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I don't know who, if anyone, is doing the ordering. I just know that HP's maintenance, for example, is only available in three-year durations. As in not a base year + two one-year options, but a base of three years.

Here is an email from a vendor of HP support, through NASA SEWP:

Good morning:

Yes. Final answer is we are quoting 3 years of HP DOD support.

1 year support is truly gone.

I Received refreshed quote from HP about an hour ago. Trying to get a lot request out to the door because people are taking off on long holiday breaks.

I'll have this config'd in the next hour and back over to you for review.

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The HP re-seller is attempting to tell you that you must enter into an obligation with them for three years for a maintenance contract? You make it sound as if you are quoting the terms and conditions of NASA SEWP, rather than the terms being dictated to you by an HP re-seller. Which one is it?

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We wrangle with this issue all the time, and are currently dealing with it on a particular buy. The question seems to boil down to are you purchasing a supply (product) or a service? Is it a maintenance plan, or an extended warranty? See GAO Decision B-249006 where they say you can pay for warranties in advance, but not maintenance contracts.

As far as what the SEWP vendor telling you about 1 year support agreements for HP equipment being gone, I don’t believe it, unless it is something that very recently came about (as in within the past few weeks). HP still has a 1 year support option available through GSA. HP is also a SEWP vendor, and when they quote on SEWP they will only allow you to pay monthly or quarterly in arrears, and will not accept up-front payment. Other SEWP vendors will want up-front payment for HP support however.

See this related discussion: http://www.wifcon.com/discussion/index.php?/topic/2501-it-hardware-maintenance-supply-or-service/?hl=hardware

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I was unable to locate any discussion of order length on the SEWP website. However, I did find a discussion on the use of options in orders.

Regardless of what the contractors quote, you must comply with appropriation law which limits to 12 months the terms of the orders funded with O&M monies.

BTW, the MOA between DOD and NASA includes this paragraph:

Orders of the Requesting/Procuring Agency will be placed only for bonafide needs within the period of fund availability. Orders and funds of the Requesting/Procuring Agency shall be in accordance with applicable statutory authorities and restrictions. The Requesting/ Procuring Agency will ensure any revised or altered statutory restrictions affecting funds are handled appropriately.

Tell the contractor you want a quote for 12 months plus options. If you have time, contact the SEWP contracting officer and tell him or her what’s going on.

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Maybe they're saying the software/hardware maintenance contracts are not severable services?

Maybe the other agencies are not using annual appropriations?

Maybe they're saying its the standard commercial practice?

Maybe they're looking at the software/hardware maintenance contracts as warranties?

Maybe they're looking at the software/hardware maintenance contracts as supply items rather than service items? (such as a warranty)

I don't know for sure, because I don't use SEWP. But my previous and current agencies have no-year funds, and we commonly rely on GSA's distinction between some software maintenance as a product versus other software maintenance as a service.

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So this is two questions--

Can the government pay for 3 years of warranty upfront - Answer is yes, as its a warranty, not maintenance. You are not buying a service, you are buying a COTS warranty. Maintenance and warranty are not the same, but the two terms get interchanged often.

Does HP offer a one year warranty- Depends on the product line, but you always have the option of a 3rd party warranty...

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I've contacted SEWP and they are no particular help. It's not in the terms and conditions. And it is apparently very recent, as in the last few weeks. Both the reseller and HP are saying that HP is moving exclusively to three-year periods for this type of software maintenance.

SDVR, you're saying if it's more of a warranty, 10 USC 2410a does not apply, even though it would be a warranty covering three years?

Okay, I read that decision, and it is about the Advance Payments statute, not 10 USC 2410a. I have no problem with paying a "warranty" in advance. But what about a "warranty" for three years in advance? Is the argument that I'm getting the "supply" all at once, it's not a severable service and it's not really for a three-year PoP?

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Yes this would be vendor specific term (outside of SEWP's control) , and software is a different animal. Still the same discussion though, its a warranty, not maintenance. And the vendor (HP or whomever) will be able to dictate this, as there wont be a 3rd party option.

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You might (depending on what kind of software you wish to buy) have third-party options, but those options would be in the form of a service contract with the third party. That could very well be a base plus three year contract if they provide additional services.

If you just want a software warranty guaranteed by the manufacturer, you can buy three years of that now. The assumption is "something breaks, they replace", rather than they give you a 1-800 number for all of the user errors you encounter on a daily basis.

HP knows that they would have a huge issue with federal customers if they started demanding a three year funds obligation for services. I am going to guess you will find this is a commodity buy.

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If you are talking about software versus hardware maintenance, then the rules could be different. Software maintenance is more well defined. GSA has definitions for software maintenance as a product and software maintenance as a service. Many of the DoD Enterprise Software Initiative (ESI) blanket purchase agreements (BPAs) also now incorporate a definition on software maintenance as a product and software maintenance as a service. For Army customers, the Army Computer Hardware Enterprise Software and Solutions (CHESS) office also has came up with a definition of software maintenance as a product and software maintenance as a service. All of these definitions would indicate that software maintenance as a product can be paid for up-front, and I would opine that as a product the term could span more than 1 year. However, software maintenance as a service could not be paid for in advance, and in my opinion could not span for more than 1 year.

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