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Is a Unit Priced Contract an Indefinite Quantity Contract?

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Vern and ji are correct in that a construction contract that contains unit priced line items is a FFP contract.

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That's not Carl's issue. Carl thinks that a unit-priced contract is FFP if the quantity of units is definite. If the quantity of units is estimated, then the contract is fixed-price, but not firm-fixed-price.

He's wrong for the reasons I gave, but that's what he thinks.

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That's not Carl's issue. Carl think that a unit-priced contract is FFP if the quantity of units is definite. If the quantity of units is estimated, then the contract is fixed-price, but not firm-fixed-price.

He's wrong for the reasons I gave, but there it is.

i agree with you. I forgot to include the words "with estimated quantities". Sorry

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Vern -

"Do you think that a CO can use an FUP contract to buy services? I mean a contract with unit prices, an estimated quantity, and a variation in quantity clause. Yes or no?"

Fine, if you want to call them FFUP or FUP "contracts" and I will go along with it as well but when I discuss them they will be Firm Fixed Priced or Fixed Price “contracts" with the unit quantities for unit priced items that are not or are estimated.

Specific to your question -

Yes, and as I already stated in a previous thread, for services, commercial item, which allows for the addition of a variation in quantity clause via tailoring when tailoring is applied in the correct manner.

And

Neither Yes or No as I am not sure. Services, non-commercial item, as also already stated, I have not come to a personal conclusion as to whether the CO could contrive their own variation in quantity clause, or not, since by my read of the FAR there is no prescribed variation clause for such a contract.

As I attempted to exemplify in a previous posts in this forum this discussion is not merely semantics. I already pointed to the fact from FBO posts that agencies use a clause prescribed for construction in contracts other than construction. I have also experienced where an agency has attempted to apply the variation in estimated quantity clause for construction to a construction contract’s line items where the quantities were not “estimated”. Am I too hardnosed, I do not think so, but would agree I am too literal however I do not think my personal tendencies for being so have caused me to be other than a good problem solver and hope that my past performance demonstrates so.

Finally, please forgive me that I bring a past thread into this discussion but I remain really confused. You said at one time this in a previous thread- “As for terminology, fixed-price contracts based on an estimated number of units with fixed prices and subject to adjustment based on actual unit quantities are still called "firm-fixed-price" (even though they aren't, really). See FAR 36.207”. Candidly I thought I had learned something and I am trying to say the same thing.

ji – I know I am going to probably cause a whole bunch of new reactions with the following but since I am in the bucket full already here is my thought about 16.202-1. It says “….is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract." The Variation in Estimated Quantity Clause for Construction provides that for any adjustments “….the equitable adjustment shall be based upon any increase or decrease in costs…” . My conclusion by this read is that costs are subject to adjustment based on the contractors cost experience therefore not a firm-fixed-priced contract.

For supply (FAR 52.211-16) I would yield that it might still be a FFP contract as the only allowed variations have to do with “….loading, shipping, or packing, or allowances in manufacturing processes…” and not what the Government actually demands as happens in construction as the variation in estimated quantity for construction is by result of the what the Government demands for performance via the specifications and drawings.

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Carl:

You wrote:

Am I too hardnosed, I do not think so, but would agree I am too literal however I do not think my personal tendencies for being so made me a lousy or even stupid CO as a problem solver but for that I will just let my past performance demonstrate.


No one has called you a lousy or even stupid CO. If I saw such a post it would be edited or deleted and I would contact the poster. I've told you that already in a private message.

You also said:

Candidly I thought I had learned something and now my professionalism is questioned when I am trying to say the same thing.


I've quickly scanned the posts and have been unable to find someone questioning your professionalism. If I saw such a post it would be edited or deleted and I would contact the poster. I've told you that already in a private message.

You have one position and Vern and others have another. I have no problem with any of you stating your opinions.

I do not doubt your professionalism and I would not question it. I don't know why anyone else would either. You are helping those who are reading your posts by forming these opinions and defending them--even if they are done vehemently. Those reading your arguments can do further research and decide if they agree with either position presented here.

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Thanks Bob and I apologize for reading between the lines. I could point out where but not going to be labor this anymore. My next step will be to edit my post to take out the statements that you have noted.

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Carl:

"Do you think that a CO can use an FUP contract to buy services? I mean a contract with unit prices, an estimated quantity, and a variation in quantity clause. Yes or no?"

Yes, and as I already stated in a previous thread, for services, commercial item, which allows for the addition of a variation in quantity clause via tailoring when tailoring is applied in the correct manner.

Services, non-commercial item, as also already stated, I have not come to a personal conclusion as to whether the CO could contrive their own variation in quantity clause, or not, since by my read of the FAR there is no prescribed variation clause for such a contract.

Finally, please forgive me that I bring a past thread into this discussion but I remain really confused. You said at one time this in a previous thread- “As for terminology, fixed-price contracts based on an estimated number of units with fixed prices and subject to adjustment based on actual unit quantities are still called "firm-fixed-price" (even though they aren't, really). See FAR 36.207”. Candidly I thought I had learned something and now my professionalism is questioned when I am trying to say the same thing.

Okay, so you agree that a CO can use a unit-priced contract with estimated quantities and a variation in quantity clause to buy commercial services. You're not sure (or have no opinion) about noncommercial services. Thank you.

As for your question about my statement, I'm not going to forgive you for anything, but I will answer. You have not been trying to say the same thing that I said. My point was that FAR establishes a category of contracts that it misleadingly calls "firm-fixed-price." FAR describes the category as follows:

A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties. The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives.

Five sentences. The first is entirely misleading, because all FFP contracts include clauses that provide for price adjustment on the basis of the contractor's actual cost experience in performing the contract. So the price may be "fixed" (set?) at the outset of performance, depending on what "fixed" is supposed to mean, but it is not necessarily "firm." My students are frequently confused by that sentence. In light of the truth, the second and third sentences are also misleading. The fourth sentence tells us again that the price might not be either firm or fixed, but the fifth sentence tells us that the contract is to be called "firm-fixed" nonetheless. Unit priced contracts with estimated quantities fix a firm price depending on the actual quantity delivered, but the price is adjustable if the actuals vary too far from the estimates, the adjustment essentially being an equitable adjustment, as Joel tried to explain to you. So they, too, are not really FFP, but they satisfy the FAR definition of FFP, as indicated by FAR 36.207 and the GAO decision from which I quoted in my last post.

The bottom line is that no contract stipulates a price that is firm or fixed unless absolutely nothing happens during performance that the parties did not anticipate when they set the price.

A better name for what we call a FFP contract would be "stipulated price," and a better description would read something as follows:

A stipulated price contract states an amount to be paid for each of the items to be delivered or services to be rendered. The price or prices may be stated as a single lump sum amount for each item or as an amount per unit of item performance. The prices are adjustable under certain conditions, as provided by the contract terms. Unless the Government provides financing in accordance with Part 32 or agrees to pay for acceptable partial performance, the stipulated prices are payable only upon completed performance that is accepted by the Government.

The names in FAR for the contract types are very old, as are the descriptions, most of which long predate the FAR. The names never accurately described the various government contracts ("cost-reimbursement" is also misleading), but they are okay for those who know what's what and understand the limitations of the FAR descriptions.

I hope that clarifies my statement for you.

Since you have clarified your position with respect to contracts for commercial services, and since you appear to have no opinion about contracts for noncommercial services, I see no need to discuss this further with you and I hope that you feel the same about further discussion with me. (Bob -- Take note.)

It is my opinion that contracts which state unit prices and estimated quantities and include a variation in quantity clause, whatever you want to call them, are firm-fixed-price contracts as described by FAR and that they may be used to acquire both commercial and noncommercial services. I rely on long-standing government practice, the guiding principles in FAR 1.102, the definition of "deviation" in FAR 1.401, FAR Part 16, and numerous decisions of the GAO, the boards of contract appeals, and the courts.

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I think Carl and Vern are both wrong. Carl is wrong because FAR 16.102 does specify a contract mechanism to acquire services on a unit price basis. Vern is wrong because FFUP process described at FAR 36.207 applies to construction contracts (note the title of FAR 36.207, "Pricing fixed-price construction contracts."). What both parties are describing is an indefinite quantity (IQ) contract line item.

Carl's argument was "[t]he FAR 16.102 at (a) seems to support [a FFUP contract being unallowable] when it says “….contract types not described in this regulation shall not be used.." However, FAR does prescribe a FFUP process for non-construction procurements. Sorry to get back on topic, but I consider a FFUP contract as described by members of this board as an indefinite delivery contract. Per FAR 16.504(a):

"An indefinite-quantity contract provides for an indefinite quantity, within stated limits, of supplies or services during a fixed period. The Government places orders for individual requirements. Quantity limits may be stated as number of units or as dollar values."

Please do not make the argument that the difference between a FFUP and IQ contract is the ordering process in a IQ contract. In placing orders for FFUP services, that order does not necessarily have to be issued on an OF-347. Orders may be issued orally (16.504(a)(4)(vii)), or "using any medium specified in the contract" (FAR 16.505 (a)(6). An oral ordering have equivalent flexibility as afforded in a FFUP contract, and there is no requirement for that order to specify a definite quantity. For example, in Vern's search and rescue example from the previous thread, your oral order could be to take as many flight hours as needed to find the missing person, but not exceeding the maximum.

I think that if you want a FFUP contract for a non-construction contract, slap on that ordering limitation, indefinite quantity, and ordering clauses to create an IQ contract and develop an oral ordering process that explains how to the parties handle variation in quantity.

Otherwise, if you disagree, please explain the material difference between an IQ contract and a FFUP contract.

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I disagree.

If FAR Subpart 16.5 (Indefinite-Delivery Contracts) did not exist, I would still be able to award a contract for an estimated quantity at a fixed price per delivered/performed unit -- we were able to do so before the FAR Subpart 16.5 re-write from FASA, and we can do so now. FAR Subpart 16.5 applies only if the contract provides for the issuance of orders for the performance of tasks during the period of the contract -- see FAR 16.501-1. See also FAR 16.501-2( a ):

"The appropriate type of indefinite-delivery contract may be used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at time of contract award."

Some people err in mis-reading this as:

"The appropriate type of indefinite-delivery contract shall be used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at time of contract award."

Material difference between a FUP and IDIQ contract: the IDIQ contract provides for the issuance of orders for the performance of tasks during the period of the contract.

Note: I am not opposed to IDIQ contracts -- they serve a useful and valid purpose. But sometimes, a standard contract with an estimated quantity and a fixed-unit-price makes good business sense.

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metteec:

The fact that FFUP is described only in FAR Subpart 36.2 does not mean that it cannot be used elsewhere. FAR 16.102( b ) prohibits the use of only a type or combination of types "not described in this regulation." It doesn't say "not described in this part." Well, FFUP is described in the regulation -- in 36.207. Moreover, FAR 36.307 does not say that FFUP may not be used in other acquisitions. Your interpretation violates the guiding principles for the Federal Acquisition System. By the way, since lump-sum is also mentioned only in FAR Subpart 36.2, are you prepared to argue that you cannot use a lump-sum contract to buy services?

As for your IDIQ argument, read FAR 16.504(a). A key feature of an IDIQ contract is an ordering clause, the standard one being FAR 52.216-18.

A FFUP contract may include an ordering clause, but not necessarily. For example, I can award a contract telling a contractor to plant enough trees to cover a specified area of land to achieve a specified degree of soil stabilization. That's a service. Each tree is a unit of service. We unit-price the contract, because the terrain is such that we cannot know how many trees will be needed to achieve the desired stabilization. We estimate a quantity and agree to a variation in quantity adjustment provision. The contractor then goes to work. There is no ordering and there is not ordering clause. No ordering, no IDIQ contract.

I can award a contract to serve meals in a field mess hall. The number of meals to be served may vary considerably depending on the pace of military operations and the number of troops off base and in the field. Each meal is a unit, I set a unit price, estimate a quantity of meals, and include a variation in quantity adjustment clause. There is no ordering clause. The contractor is paid for what it actually serves, depending on who shows up. There is no ordering. No ordering, no IDIQ contract.

Do you need more examples? There are plenty of real life examples.

Now, if you want to call an FFUP contract with estimated quantities an FFUPIQ contract, and distinguish it from an IDIQ contract as described in FAR 16.5, be my guest. I'll go for almost any name.

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I think Carl and Vern are both wrong. Carl is wrong because FAR 16.102 does specify a contract mechanism to acquire services on a unit price basis. Vern is wrong because FFUP process described at FAR 36.207 applies to construction contracts (note the title of FAR 36.207, "Pricing fixed-price construction contracts."). What both parties are describing is an indefinite quantity (IQ) contract line item.

Carl's argument was "[t]he FAR 16.102 at (a) seems to support [a FFUP contract being unallowable] when it says “….contract types not described in this regulation shall not be used.." However, FAR does prescribe a FFUP process for non-construction procurements. Sorry to get back on topic, but I consider a FFUP contract as described by members of this board as an indefinite delivery contract. Per FAR 16.504(a):

"An indefinite-quantity contract provides for an indefinite quantity, within stated limits, of supplies or services during a fixed period. The Government places orders for individual requirements. Quantity limits may be stated as number of units or as dollar values."

Please do not make the argument that the difference between a FFUP and IQ contract is the ordering process in a IQ contract. In placing orders for FFUP services, that order does not necessarily have to be issued on an OF-347. Orders may be issued orally (16.504(a)(4)(vii)), or "using any medium specified in the contract" (FAR 16.505 (a)(6). An oral ordering have equivalent flexibility as afforded in a FFUP contract, and there is no requirement for that order to specify a definite quantity. For example, in Vern's search and rescue example from the previous thread, your oral order could be to take as many flight hours as needed to find the missing person, but not exceeding the maximum.

I think that if you want a FFUP contract for a non-construction contract, slap on that ordering limitation, indefinite quantity, and ordering clauses to create an IQ contract and develop an oral ordering process that explains how to the parties handle variation in quantity.

Otherwise, if you disagree, please explain the material difference between an IQ contract and a FFUP contract.

metteec,

FFUP describes a pricing arrangement. IDIQ describes a delivery/quantity arrangement. Two different aspects of a contract. Read this blog entry.

Your question is analogous to asking "What's the difference between a red car and a foreign car?"

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meteec:

To add to what Don has said, you must remember that the term is not IQ, but IDIQ. Indefinite-delivery is the main category, of which indefinite-quantity is a subcategory. The common feature of all such contracts, requirements, definite-quantity, and indefinite-quantity, is that the buyer does not know when and maybe where it's going to need service, and maybe even the specific service it's going to need. The ordering component is what makes those contracts what they are, more than the quantity component. If you know what you're going to need and when and where you're going to need it, but you're unsure about how much of the service you're going to need, then you can handle your problem without an ordering clause. No ordering clause, no IDIQ.

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1. If a construction contract contains unit-priced line items with estimated quantities that cannot be precisely determined and it isnt a "firm fixed price contract" under 26.207 ( a ) or ( b ) or under 16.202, what type of contract under Part 16 is it?

2. The VEQ clause is a method for allocating risk between the parties when the actual quantity of work falls within or outside of an 85-115% band. It doesnt call for complete re-pricing, so both parties would have to live - for the most part - with the bargain they made at contract formation - barring some reason for inapplicability of the clause, such as negligent estimating, differing site condition, directed change to the work, etc. The unit prices are only applicable to the work already required by the contract - not to undefined or new work.

3. For the most part, an adjustment would only be due under the clause where the variation outside the band causes a difference in unit costs for the work outside the band (e.g.,, for underruns, the contractor doesnt recover the set-up and mob costs, etc., for overruns, the contractor has already recovered its set-up or mob costs, the contractor has to bring in more equipment, has to order additional material not originally procured, perhaps more overtime, larger equipment, etc.

4. A "perfect" FFP contract price arrangement would be too risky for the industry and, if they were to accept all risk, it would be frought with contingencies, thus unaffordable.

5. As others have stated, this type of pricing arrangement for construction contracts has been around for years based upon valid needs and has also been used for service contracting based upon valid needs long before there were FAR contracts for "commercial services" or "commercial items" or long before there was a "FAR".

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If you have a contract with unit-prices and an estimated quantity with a variation adjustment > +/- 15 percent, then you have a firm-fixed-price contract. The price is "firm" and "fixed" for every contractually possible quantity within the +/- 15 range and there is an agreement for an equitable adjustment for any quantities in excess. Firm-fixed-price does not mean "single" price despite eventualities. That's the message of the GAO's Maintenance Incorporated decision, which I quoted above.

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Don, I disagree with your first statement. A FFUP contract, as described by the numerous examples indicated throughout this thread, is both a pricing and a quantity arrangement. The arrangement is closest to “using a combination of the two methods [lump-sum basis and unit-price basis]” per FAR 36.207(a) that provides for a variable quantity at a fixed-unit price. The numerous contract examples have an unstated quantity for performance over an unstated period of time, and at a FFUP.

I agree with your analogy, and did enjoy your blog post. However, I thought that the board would infer that when I described an IDIQ contract (which I reduced to IQ for brevity, and shamefully, I also text “2” instead of “to”), it was using FP line items. I think both Ji and Vern were able to make that inference, but I could have been clearer in my post.

Vern, I do not need additional examples; I understand the concept. I made a distinction that in a construction contract, you could have a FFUP contract as both a pricing and quantity arrangement, but outside of construction, you could create IQ contract with FFUPs, which is an allowable contract type, contrary to Carl’s statement. FFUPIQ contract sounds good to me.

I cannot provide a decent defense against your argument concerning FAR 16.102(b ) and the wording of “regulation” versus “part”; I went back to the 1984 version of the FAR (no change) and I cannot determine the writers’ intent.

Though, keep in mind that I did not say that a FFUP contract could not be used outside of FAR 36.307. What I said was “FFUP process described at FAR 36.207 applies to construction contracts.” I think that you can use a lump-sum contract to buy services, but I would not use FAR 36.207 as my guidance. I would look at what is customary in the marketplace. I think your argument is stronger by saying that you can use FFUP and lump-sum contracts because they are deeply rooted in our history for all types of acquisitions, rather than because it is specified in FAR 36.

A few problems I see with using a FFUP contract for services without IQ clauses are:

• What is the minimum obligation on a FFUP contract?

• Are you in violation of law if you award a FFUP contract for advisory and assistance services that will continue over 3-years and $12.5 million to a single contractor?

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Metteec, in your last post are you thinking of a FFUP contract with an undefined or indefinite scope of work??? The type of services that I am thinking of are routine recurring services that vary in frequency depending upon weather conditions, seasonal conditions, usage, etc. there would be a statement of work with both lump sum and unit-priced line items. At least some of the UP line items would involve estimated quantities.

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metteec:

In the contract that I refer to as FFUP, you would have a statement of work, one or more units of service, an estimated quantity of units that will be needed to do the job, and unit prices. You would not have an "unstated" quantity, and I'm not familiar with the "numerous contract examples" to which you refer in which there were no quantities, although I believe your testimony.

In a contract with an estimated quantity the government commits to buy that much, obligates funds to cover the estimated quantity, and includes a variation in quantity clause such as the following to adjust unit prices in the event actual quantities vary significantly from the estimate:

VARIATION IN WORKLOAD:

The estimated workloads contained in Technical Exhibit 2 of the Performance Work Statement are subject to variations. When the accumulated increases or decreases exceed 15% of the original total estimated workload specified in Technical Exhibits 2a through 2i, an equitable adjustment in the contract price shall be made upon demand of either party. The equitable adjustment shall be based solely upon that portion of the total net increase or decrease in excess of 15% of the original total estimated workload.

That was an Air Force clause. There are several variations of it, all as badly written.

The strongest leg of my argument is that COs may use FFUP contracts to buy services of all kinds, with or without an ordering clause, is not long-standing practice or what is customary in the marketplace. Rather, it is FAR 16.102( b ), which lets a CO use any contract pricing arrangement described in the FAR. Period. The FFUP contract is encompassed within the description of firm-fixed-price contracts at FAR 16.202-1, and is described specifically in FAR 36.207. I don't need anything else. Never did.

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In response to Joel's question, here is an example (derivative of a real life example):

SneakCorp provides independent verification and validation (IV&V) advisory and assistance services for XYZ agency. The Contractor reviews XYZ's major information systems for compliance with the Federal Information Security Management Act (FISMA) FIPS 140-2 information security standards. XYZ has 47 major information systems. For each major information system, SneakCorp will establish rules of engagement and conduct penetration tests to identify security vulnerabilities. Afterwards, SneakCorp will prepare a report detailing its findings and recommendations for remediation. The major information systems for review are static, but the quantity for review change each year, but the agency has estimated 25 reviews per year. While services are not routine, the level of effort for performing these penetration tests is relatively the same for each major information system. XYZ established a FFUP contract over 5 years valued at $20 million, with a FFUP per security assessment on a major information system. Each security assessment includes a penetration test and a final report identifying recommended security remediation efforts. XYZ included its own version of the Variation of Quantity clause.

Is the agency required to comply with FAR 16.504(c )(2) regarding the multiple award preference for IDIQ contracts for advisory and assistance contracts?

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Is the agency required to comply with FAR 16.504(c )(2) regarding the multiple award preference for IDIQ contracts for advisory and assistance contracts?

Come on! Get real! There is no way to answer that question based on the information provided in that post.

meteec, your whole IDIQ or IQ thing is off the mark in this thread. Did you read j20874's post about may versus shall?

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Vern, the whole point of this thread is not whether FFUP contract is an allowable contract; I know that topic is important to you. However, the question presented in this thread was whether a FFUP contract is an IDIQ.

The contract type that I described is a FFUP contract In the exact same structure to the contracts you described with a SOW, unit of service, estimated quantity of services, and a fixed unit price with a variation in quantity clause; the only difference was that my contract was for advisory and assistance services, had a specific duration and value. FAR 16.5 contains limitations on single award advisory and assistance contracts over 3 years and $12.5 million.

The point of my question in the previous post was that if it is true that a FFUP contract is NOT an IDIQ, then the CO need not worry about the requirement for multiple awards and a FFUP contract may be a way to avoid the multiple award requirements for advisory and assistance services.

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metteec:

I've got 4,814 posts to my credit. I don't need you to tell me about the whole point of a thread.

The scenario that preceded your question was badly written. Your question was:

Is the agency required to comply with FAR 16.504(c )(2) regarding the multiple award preference for IDIQ contracts for advisory and assistance contracts?

In order to answer that question, a pro would first have to determine if the arrangement that you described in the scenario would be an IDIQ contract. Here is your scenario. I've stricken out the words that have no bearing on the issue and highlighted in red that ones that might:

SneakCorp provides independent verification and validation (IV&V) advisory and assistance services for XYZ agency. The Contractor reviews XYZ's major information systems for compliance with the Federal Information Security Management Act (FISMA) FIPS 140-2 information security standards. XYZ has 47 major information systems. For each major information system, SneakCorp will establish rules of engagement and conduct penetration tests to identify security vulnerabilities. Afterwards, SneakCorp will prepare a report detailing its findings and recommendations for remediation. The major information systems for review are static, but the quantity for review change each year, but the agency has estimated 25 reviews per year. While services are not routine, the level of effort for performing these penetration tests is relatively the same for each major information system. XYZ established a FFUP contract over 5 years valued at $20 million, with a FFUP per security assessment on a major information system. Each security assessment includes a penetration test and a final report identifying recommended security remediation efforts. XYZ included its own version of the Variation of Quantity clause.

The text in red is the only information that could have any possible bearing on the determination whether the prospective contract is IDiQ and thus subject to FAR 16.504( c )(2), but it is not enough and it is not clear. In order to make the determination, a pro would need some clarity and more info. Please answer the following questions:

First, you said that SneakCorp "provides" the services to XYZ under a contract. Present tense. Why are you asking the question if they are already providing the service under contract? Is the present contract a multiple award? If not, why not?

Okay, let's disregard those questions and chalk them up to a poorly thought out scenario. Let's assume that you meant to ask about a prospective deal, rather than an existing one. Please answer the following:

  1. Will the contract contain the clause at FAR 52.216-22?
  2. Will the contract contain the clause at FAR 52.216-18?
  3. Will the contract stipulate a minimum quantity? If so, what will it be?
  4. Will the contract stipulate a maximum quantity? If so, what will it be?
  5. What did you mean when you said that the contract will be "valued at" $20 million? What "value" is that? Will it appear in the contract?
  6. You described the prospective contract as "over 5 years." What does that mean? Does it mean over a course of 5 years? Does it mean in excess of 5 years? What will be "over 5 years"? The ordering period in FAR 52.216-18(a), the performance period in FAR 52.216-22(d), or some other period?
  7. Do any of the circumstances in FAR 16.504( c )(2)(i)(A) - ( C ) or (ii) apply?

Did you already provide that information? Did I miss it?

Don't bother answering the questions. You have already been told that an FFUP contract that has the attributes of an IDIQ contract is an FFUP contract that is an IDIQ contract. Otherwise, it's an FFUP contract that is not an IDIQ contract. In other words, an FFUP contract is an IDIQ contract if it is an IDIQ contract, otherwise it's not. FFUP is a pricing arrangement. IDIQ is an ordering arrangement. The twain may or may not meet. The two are not necessarily one. What don't you understand about that after all that you've been told and been unable to refute?

It isn't rocket science. It seems simple enough to me, and I'm old and stupid. So why are you having so much trouble?

People who don't know the basics should be reticent about saying that other people are "wrong" on the same. Sometimes it's better to ask a question than to make an assertion: Is it possible that both Vern and Carl are wrong?

The answer is no.

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metteec asked,

Are you in violation of law if you award a FFUP contract for advisory and assistance services that will continue over 3-years and $12.5 million to a single contractor?

No, for two reasons--

No. FAR 16.504( c )( 2 ) applies only to IDIQ contracts -- there are two key principles that must be understood for effective communication to occur in this matter:

- if the contract is not an IDIQ contract, then FAR 16.504( c )( 2 ) does not apply; and

- a contract is not an IDIQ contract if it does not provide for the issuance of orders for the performance of tasks during the period of the contract.

No. Even if the contract is an IDIQ contract, an IDIQ contract for advisory and assistance services that will continue over 3-years and $12.5 million to a single contractor is not prohibited by FAR 16.504( c )( 2 ). Read subparagraphs ( i )(A), ( i )( B ), ( i )( C ), and ( ii ), which make single awards allowable. FAR 16.504( c )( 2 ) establishes a preference for multiple award IDIQ contracts for advisory and assistance services, but does not prohibit single award contracts.

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Sometimes it's better to ask a question than to make an assertion: Is it possible that both Vern and Carl are wrong?

This is great advice here. I should have stated my opinion more tactfully to show respect towards you and Carl as professionals. Sometimes I let my fingers type quicker than I think, but maybe we are both guilty of this? Your implication about not knowing “the basics” does nothing to further your argument; it was a meaningless barb that you added to attack someone that you had a disagreement. While I can take it, I have not been your only target in this thread and others, but thankfully you edited those posts. However, it may be off-putting to others. Acquisition is important but esoteric area of discussion – people that frequent this forum do so because they care about the subject and want to expand their knowledge. I think professionalism and respect are essential in promoting that environment. With that said…

Vern, where I am getting confused with your argument is that on the one hand, a FFUP is a pricing arrangement, but on the other, when described within this thread it has manifested into something more. Post #42 states that “the strongest leg of [your] argument… is FAR 16.102(b ), which lets a CO use any contract pricing arrangement described in the FAR.” However, FAR 16.102(b ) actually states:

“Contracts negotiated under Part 15 may be of any type or combination of types that will promote the Government’s interest, except as restricted in this part (see 10 U.S.C. 2306(a) and 41 U.S.C. 3901). Contract types not described in this regulation shall not be used except as a deviation under Subpart 1.4.”

I cannot see the term “pricing arrangement” in FAR 16.102(b ). Instead, I see contract type, which is a categorization of risk that takes both price and quantity into consideration. If you take a FFUP pricing arrangement, you can include an estimated quantity, then add a VEQ clause to create a FFP contract pursuant to FAR 16.202. The contract type name that I like today is a FFP Estimated Quantity contract. Regardless, FAR 16.102(b ) provides you with authority to use a FFP contract type, but makes no mention about FFUP.

In Post #35, you stated you can use a FFUP in any contract because of the wording of the prohibition in FAR 16.102(b ) – “regulation” instead of “this part.” Per your argument, since FAR 36.207 which allows lump sum and FFUP pricing arrangements, is part of the “regulation,” it is allowable. However, FAR 36.000, Scope, specifies that this part of the FAR applies to contracts for construction and architect-engineer services (and certain other contracts). By that logic, FAR 36.207 is also only applicable to those specific areas, and not applicable for those services that do not fall within the confines of those requirements. Therefore, if FAR 36.207 is not applicable to a services acquisition, it cannot rest as the sole authority to use a FFUP (or Lump Sum) pricing arrangement.

I believe that the authority for a Contracting Officer to enter into a FFUP pricing arrangement rests with the delegation of authority provided in his or her warrant by operation of law. See FAR 1.601(a ):

“Unless specifically prohibited by another provision of law, authority and responsibility to contract for authorized supplies and services are vested in the agency head. The agency head may establish contracting activities and delegate broad authority to manage the agency’s contracting functions to heads of such contracting activities.”

Agency heads delegate many of those authorities to the Contracting Officer, including the authority of executive discretion. Executive discretion is a powerful and longstanding legal doctrine. FAR 16.102(b ) and FAR 36.207 could be removed from the FAR tomorrow, and Contracting Officers could still use FFUP pricing arrangements. Because no rule exists that expressly prohibits a FFUP pricing arrangement, the Contracting Officer is committed to agency discretion by law. The Contracting Officer may exercise that executive discretion provided his or her decision is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

In conclusion, FAR 16.102(b ) is irrelevant to the discussion of whether a FFUP pricing arrangement is allowable because it discusses contract type, and FFUP is not a contract type. Furthermore, FAR 36.207 is also not applicable, as it applies to construction and other specific contracts. Instead, the authority to use a FFUP pricing arrangement is deeply rooted in law. The FAR does not prescribe any limitations on using a FFUP pricing arrangement. Consequently, absent of a specific legal or regulatory limitation, a FFUP pricing arrangement is allowable from the principal of executive discretion.

I may have created additional confusion when I brought up the topic of IDIQ contracts. The point which I did not clearly make was that an IDIQ contract and a FFP Estimated Quantity Contract have similarities. In some cases, those similarities may be so significant that the only difference is the inclusion/absence of certain clauses. With limitations on single-award contracts included for certain types of advisory and assistance IDIQ contracts, a FFP Estimated Quantity contract may provide an alternative approach to acquire those services.

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You said so many silly things in your last post that I don't know where to begin, but I'll try. I can hardly miss a target.

Your bit about CO authority is way off the mark. FAR 1.601 does not describe CO authority, FAR 1.602 does, and 1.602-1( b ) says COs must obey the rules, which presumably includes the rule in FAR 16.102( b ). Besides, even if 1.601 did describe CO authority, why would you resort to a general statement about CO authority when you have a specific statement that addresses the issue? Goofy.

I cannot see the term “pricing arrangement” in FAR 16.102(b ). Instead, I see contract type, which is a categorization of risk that takes both price and quantity into consideration. If you take a FFUP pricing arrangement, you can include an estimated quantity, then add a VEQ clause to create a FFP contract pursuant to FAR 16.202. The contract type name that I like today is a FFP Estimated Quantity contract. Regardless, FAR 16.102(b ) provides you with authority to use a FFP contract type, but makes no mention about FFUP.

I addressed this in an earlier thread. As shown by FAR 36.207 and the GAO in the decision I quoted at length, FFUP is a subtype of FFP.

Therefore, if FAR 36.207 is not applicable to a services acquisition, it cannot rest as the sole authority to use a FFUP (or Lump Sum) pricing arrangement.

Why tell me that? I never said that it was.

Because no rule exists that expressly prohibits a FFUP pricing arrangement, the Contracting Officer is committed to agency discretion by law. The Contracting Officer may exercise that executive discretion provided his or her decision is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.

Why tell me that? I already said that there is no prohibition against FFUP. I've said it several times.

In conclusion, FAR 16.102(b ) is irrelevant to the discussion of whether a FFUP pricing arrangement is allowable because it discusses contract type, and FFUP is not a contract type.

That's the icing on your silliness cake. FFUP is a type of FFP, which is a type, and FAR 16.102( b ) is not irrelevant, because, like Everest, it's there.

In your favor, at least you've dropped the IDIQ business.

If you're still confused, you might want to consider reading the two-part monograph that I wrote about contract types and that was published by Thomson Reuters: "Contract Pricing Arrangements: A Primer," Briefing Papers, October 2009 and November 2009, 09-11 and 09-12 Briefing Papers 1 and 2.

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metteec:

I want to address another thing you said in your last post that I needed some time to think about:

Vern, where I am getting confused with your argument is that on the one hand, a FFUP is a pricing arrangement, but on the other, when described within this thread it has manifested into something more. Post #42 states that “the strongest leg of [your] argument… is FAR 16.102(b ), which lets a CO use any contract pricing arrangement described in the FAR.” However, FAR 16.102(b ) actually states:

“Contracts negotiated under Part 15 may be of any type or combination of types that will promote the Government’s interest, except as restricted in this part (see 10 U.S.C. 2306(a) and 41 U.S.C. 3901). Contract types not described in this regulation shall not be used except as a deviation under Subpart 1.4.”

I cannot see the term “pricing arrangement” in FAR 16.102(b ). Instead, I see contract type, which is a categorization of risk that takes both price and quantity into consideration. If you take a FFUP pricing arrangement, you can include an estimated quantity, then add a VEQ clause to create a FFP contract pursuant to FAR 16.202. The contract type name that I like today is a FFP Estimated Quantity contract. Regardless, FAR 16.102(b ) provides you with authority to use a FFP contract type, but makes no mention about FFUP.

Part 16 discusses “types” and discusses different categories of types: pricing types: [FFP FP-EPA, FPI(F) and (S), CPFF, T&M, etc.]; delivery types (requirements, indefinite quantity, definite quantity); and an undefinitized type. It also discusses agreements, which aren’t contracts at all.

I use the word “arrangement,” which does not appear in Part 16, in order to show what Part 16 is categorizing into types. One such arrangement concerns pricing, another concerns delivery. If we outlined Part 16 it might look like this, using my terminology:

Contract Types

Contract pricing arrangements

FFP

CPFF

T&M

etc.

Contract delivery arrangements

R

DQ

IQ

Undefinitized contract arrangements

Agreements

You focused on the word "arrangement" and asserted that I call FFUP an arrangement and then try to apply 16.102( b ), which applies to types, not arrangements. You say that an FFUP arrangement is not a type. You then conclude that the FAR authority to use FFUP arrangements is not 16.102( b ), but 1.601.

Now I think that approach is no way to read the FAR and that it is manifestly silly. See the DOD Contract Pricing Reference Guides -- to which FAR 15.404-1(a)(7) refers and provides a link -- Volume 4, Ch. 1, “Establishing and Monitoring Contract Types,” Section 1.1, “Introduction,” the very first sentence of which is:

When used in this chapter, the terms "contract type" and "type of contract" refer to the contract compensation arrangement.

I say “pricing arrangement,” the Reference Guide says “compensation arrangement,” someone else might say "payment arrangement," I say it makes no difference. Type and arrangement are synonymous.

FAR 16.102( b ) directly addresses the issue that Carl raised in the first thread and that has continued into this one: Can COs use an FFUP contract to buy services? You and I appear to agree that they can, and so at long last this thread is out of energy.

At Wifcon I deal with arguments. I will never meet most of the people I encounter here, but I’m pretty sure that I would like almost every one of them were I to meet them personally. I think most people would like me after such an encounter. But at Wifcon I deal with their argument, not them personally, and I judge and react in each instance based on the quality of their argument and on their process. People get irritated in arguments and I don't pay much attention to that, but I get irritated by a persistently silly approach that wastes my time. As for professionalism, I consider it a matter of ability and competence, not manner. I am impatient with nonsense, and I don't mind showing it.

Your manner has been reasonable, but the content in your last couple of posts has been silly, especially the quibbling (“type” versus “arrangement”). Were you to argue like that in a meeting, I would disregard you entirely. I got irritated when you presumed to lecture me about the “whole point” (Jacque’s original point) of this thread, which hasn’t been its whole point at all. My posts since have reflected my irritation over that. I'm sorry.

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