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Min Guarantee MAC IDIQ Service Buy

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Hello fellow contracting seniors,

I am building a FFP IDIQ logistics support services contract with the intention to issue multiple IDIQ awards. The IGCE for the base year is estimated to be $10Mil and I intend to write the MAC with 4 one year options. I understand that I can do without a minimum guarantee CLIN however with such high dollar value solicitation out at the streets expecting prospective contractors to bid on it; it does seems to be of a necessity. My question in my mind is how do I determine the amount of the minimum guarantee for this MAC?

My case has 29 geographical locations around South-East Asia and the Federated States of Micronesia, which I need contracting support but not all locations have the same amount of logistics requirement that also relates to the same IGCE, for example Pohnpei Island is having an estimate of 1.2Mil per year whereas the other extreme Brunei is having only a mere estimate of $900 per year.

A little background of myself; I'm a junior contract specialist (OCONUS) with only a mere 3 years of Government contracting whom is continuously learning. Hope to have some insight and advice from all contracting professionals out there and greatly appreciate it.

Very Respectfully,

Camp Henry

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You don't really determine a minimum, in the sense of calculating it. You really just decide on a minimum.

The purpose of the minimum is to provide consideration to contractually bind the parties. Any amount that is acceptable to both parties is enough. Since you cannot talk to the potential contractors prior to their selection, you simply have to decide how much you are willing to provide. Taking the government's point of view, I suggest that you offer the least amount that is likely to survive court scrutiny in the event of a termination for default, in which case the contractor might claim that the consideration was merely nominal and that there really was no contract.

$1,000 dollars is clearly enough. $500 might be enough. $100 might be enough. We're seeing IDIQ contracts with very large maximums and very low minimums.

Alternatively, you could say you'll provide an amount that is sufficient to cover the contractor's administrative cost and ask offerors to propose a minimum up to some limit, but that is complicated and unnecessary.

A couple of other points:

1. You do not need a separate line item for the minimum as long as the amount of the minimum is stated in the contract, but I believe that some agencies include one because their financial automation system requires it.

2. You do not need options. Simple establish an ordering period of five years. Buy the minimum in the first year, and if you don't get funds in future years simply do not place any orders in those years. Options are a needless nuisance in an IDIQ contract. This has been discussed many times at Wifcon. Check the archives.

Question: What was the basis for an IGCE for an indefinite quantity contract? Is it a cost estimate or a funding estimate?

Another question: Why did you ask your questions here? Was there no one in your organization whom you could ask? Are you doing it out of curiosity about the website?

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Thanks Vern. I guess the amount is just based on individual scenerio and experiences.

My basis for an IGCE is purely a cost estimate and also for determining the type of forms to be use. This MAC shall be unfunded.

Yes, apparently no one in my organization had done MAC before and just commented that I could check with some past contracts in EDS.

For sure I'm not so boring as to test this portal.

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Make sure you define your scope of contract broadly enough to support your customer's needs wherever your customer might need support. If you are not careful, you will find that a port, country, body of water or a key logistical function is not included in the scope of work. When Murphy's law kicks in, you may have difficulty providing a key logistical function (e.g. port services, transportation, potable water, security svcs.) if your scope is too limited.

I suggest that you list all the countries, ports, bases, bodies of water, supplies and services to be encompassed by your contract in its Section B or C.

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napolik:

Could the scope be defined as "all areas of agency operations, current and future"? Listing raises the risk of inadvertently missing something.

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Here, "MAC" was used as an acronym for "Multiple Award Contract". I found a reference to one for Camp Henry, Korea through A YAHOO Search.

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Yes, if there are definitions of the area of agency operations and of the range of logistics support in some DoD or DOA pub.

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Vern, in point #2 you stated there isn't a need for options in an IDIQ contract.

2. You do not need options. Simple establish an ordering period of five years. Buy the minimum in the first year, and if you don't get funds in future years simply do not place any orders in those years. Options are a needless nuisance in an IDIQ contract. This has been discussed many times at Wifcon. Check the archives.

During the 2009-2011 Wifcon period - there was a discussion regarding IDIQ contracts and the use of options. I remember reading there was an exception: Using options for IDIQ multiple award contracts.

The reason for the exception was because if you had multiple award contracts, the contracting officer must provide each awardee a fair opportunity: FAR 16.505(B)(1).

For example, if there was an awardee and there were issues with the awardee (e.g. contractor deciding not to submit a task order proposal) with an awardee, unless there was an exception under FAR 16.505(B)(2), the contracting officer must provide the awardee a fair opportunity during the ordering period of the contract.

If the contracting the contracting officer had options, the contracting officer could decide not to exercise the option of the awardee.

Would having options be a nuisance for multiple award IDIQ contracts?

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Weno2:

Good post and good question.

To me, exercising options is always a nuisance. But, how do you avoid having to consider a poor performer for future orders if you don't use them?

Instead of using options, I would include a clause such as the following in a MAC:

Cessation of Opportunities to be Considered for Further Orders

(a) At any time after completion of the first year of contract performance, the Contracting Officer may, in the Government's sole discretion and at its option, and at no cost to the Government, unilaterally decide to give the Contractor no further opportunities to be considered for the issuance of orders during the remainder of the contract ordering period. Upon making such a decision, the Contracting Officer will notify the Contractor in writing. Upon receipt of such notification, the Contractor will be under no obligation to accept further orders from the Government.

( b ) The Contracting Officer's decision shall not constitute either a termination for convenience or a termination for default. It thus shall afford neither party any rights under any termination clause in this contract.

( c ) The Contracting Officer's decision shall not affect the rights and obligations of the parties under the contract with respect to any orders that were issued to the contractor.

(End of Clause)

What do you think?

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Vern: My MAC is referring to multiple award contract.

Napolik: Thank you and yes i did list all 29 geographical locations.

Ya, suddenly thought of this...if a particular service or supply item is not 'CLIN' on my MAC IDIQ contract, It would not be possible for me to issue a task order even though that item is within the scope of the basic contract. Am I right in my interpretation?

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In my view, the addition of CLIN does not necessarily represent a change in scope. I used to award contracts for logistics support services for the Navy in Europe and Southwest Asia. I was always careful to identify and evaluate the major line items of support in the CLIN structure while including in the SOW or Ts and Cs a statement to the effect that other types of logistics support could be required by other services within DoD and in other ports and countries adjacent to the relevant bodies of water (e.g. the Med and Black Seas, Persian Gulf, Atlantic Ocean, etc.).

Several times (e.g. during the war in the ex-Yugoslavia, and the run –up to the second Iraqi war), we added work for other DoD services and for supplies or services not included in the CLIN structure. I think you can too.

Neither the GAO nor the COFC has set out a specific definition for determining whether a modification or change is “out of scope”. One needs to look at the specifics on a case-by-case basis and consider such issues as the following:

  • Was there a change to the nature and type of work?

  • Could the competitors have reasonably anticipated the change?

  • If the change has appeared in the original solicitation, would the change have impacted the number of competitors?

  • Was there a change to the quantity or volume of goods or services ordered?

  • Was the period of performance substantially extended?

  • How broadly written were the terms of the solicitation terms and its SOW?

The GAO has set out its standard of review of scope issues as follows:

In determining whether a modification triggers the competition requirements in the Competition in Contracting Act of 1984, 10 U.S.C. sect. 2304(a)(1)(A) (Supp. IV 1998), we look to whether there is a material difference between the modified contract and the contract that was originally awarded. Neil R. Gross & Co., Inc., supra, at 2-3; see AT&T Communications, Inc. v. Wiltel, Inc., 1 F.3d 1201, 1205 (Fed. Cir. 1993). Evidence of a material difference between the modification and the original contract is found by examining any changes in the type of work, performance period, and costs between the contract as awarded and as modified. Access Research Corp., B-281807, Apr. 5, 1999, 99-1 CPD para. 64 at 3-4; MCI Telecomms. Corp., B-276659.2, Sept. 29, 1997, 97-2 CPD para. 90 at 7-8. The question for our review is whether the original nature or purpose of the contract is so substantially changed by the modification that the original and modified contract would be essentially different, and the field of competition materially changed.

Engineering & Prof’l Servs., Inc., B-289331, Jan. 28, 2002.

In 2012, the COFC concluded that a contract mod was within scope even though it added 2 line items while increasing the contract cost from $20 million to $37 million: “Although Bluewater’s estimated contract price increased by approximately $17,187,887.08, the nature of the items procured under Bluewater’s contract remained the same.” . (American Apparel, Inc., v. U. S. and Bluewater Defense Inc., No. 12-293C, December 14, 2012). http://www.wifcon.com/cofc/12-293.pdf.

You might also wish to read pages 382-396 of the fourth edition of Administration of Government Contracts, by Cibinic, Nash, and Nagle.

Finally, Google “WIFCON” scope of contract” to read the threads on scope of contract.

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Ya, suddenly thought of this...if a particular service or supply item is not 'CLIN' on my MAC IDIQ contract, It would not be possible for me to issue a task order even though that item is within the scope of the basic contract. Am I right in my interpretation?

I don't understand where that question is coming from. You say that the "item" of service or supply is within the scope of the basic contract. How do you know? What does the contract say that leads you to conclude that the item service or supply is within scope?

When you say "item," you suggest that the service or supply is a discrete thing, distinct from other things. Where is that discrete thing mentioned in the contract? If it is not mentioned, why do you think it is within the scope of the contract? Is it a member of a class of items that is mentioned? If so, what are the attributes of the things in the class that make them members and which of those attributes does the item of service or supply have?

Trust me. I'm trying to help you answer your own question.

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I'm not surprised. But you haven't explained, so...

I think the use of such a clause would be inconsistent with FAR 16.505( b )(1)(i), which states:

The contracting officer must provide each awardee a fair opportunity to be considered for each order exceeding $3,000 issued under multiple delivery-order contracts or multiple task-order contracts, except as provided for in paragraph ( b )(2) of this section.

See also FAR 16.505( b )(1)(ii), which states that the contracting officer must--

(A) Develop placement procedures that will provide each awardee a fair opportunity to be considered for each order and that reflect the requirement and other aspects of the contracting environment;

( B ) Not use any method (such as allocation or designation of any preferred awardee) that would not result in fair consideration being given to all awardees prior to placing each order;

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Don:

I agree. So in order to avoid the need for seeking deviation approval, I propose an alteration of my clause. I suggest the following language for use in multiple award IDIQ contracts:

No-Cost Termination of the Contract Ordering Period

( a ) The Contracting Officer may terminate the ordering period of this contract, as stated in the the Ordering clause, 52.216-18, paragraph (a), at no cost to the Government, by transmitting a notification to that effect to the Contractor. Such termination will be pursuant to the Termination for Convenience clause, 52.249-XX. The Contracting Officer will transmit the notification to the Contractor by email. The Contractor shall acknowledge receipt of the notification by email to the Contracting Officer within five calendar days of receipt. The termination shall be effective upon transmission of the notification and shall be effective regardless of whether the Contractor receives it, or acknowledges receipt, or the Government receives an acknowledgement.

( b ) Upon transmission of such notification, the Government will be under no further obligation to give the Contractor opportunities to be considered for orders, and the Contractor will be under no further obligation to accept orders from the Government.

( c ) Notwithstanding termination of the ordering period, the contract shall otherwise remain in full effect with respect to orders already issued. Termination of the ordering period shall not affect the rights and obligations of the parties with respect to such orders.

(End of Clause)

I believe this constitutes nothing more than an advance agreement about the costs of a prospective partial termination for convenience. This wouldl require that the CO follow the procedures in Part 49, but they should be simple given that the termination will affect only the ordering period and will be at no cost to the Government. It will still save the work of exercising options for the other contractors.

What do you think? Still a deviation?

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I see it the way you described it--an advance agreement on termination costs. As long as the termination procedures in the clause are consistent with the applicable FAR termination clause, then I don't think it's a deviation.

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I have seen MAC/ MATOCs with clauses called "On Ramps" or "Off Ramps". Using the latter, the contracting officer identifies the circumstances under which the contractor will no longer be eligible to compete on future task orders. See an example in post 4 here: http://www.wifcon.com/discussion/index.php?/topic/2660-matoc-8a-set-aside/.

Do you think GSA obtained a deviation for this clause?

.

See also the answer to question 4 here: https://chess.army.mil/Content/files/MFD_FAQ.pdf and the clause at the bottom of page 17 here: https://chess.army.mil/Content/files/MFD_Ordering_Guide.pdf.

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MAC = "Multiple Award Contract" I found a reference to one for Camp Henry, Korea through Yahoo.

Actually, MAC stands for "multi-agency contract." See FAR 2.101.

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MAC is official for multi-agency contract. Period. You want to use it for something else, tell us what you mean. A better and more standard unofficial acronym for multiple award task order contract is MATOC. Yahoo that.

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???? I didn't "want to use" it for anything. I described what the original poster was referring to. The Navy and Army seem to widely use the acronym "MAC" to refer to multiple award task order contracts for services. NAVFAC also widely refer to multiple award task order contracts for construction as "MACCs".

I generally use the terms "MATOC" and "SATOC" for multiple award and single award task order contracts, which is what my agency generally used.

I clarified my earlier answer in post #7 to your question of the OP in post #6.

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Don:

I agree. So in order to avoid the need for seeking deviation approval, I propose an alteration of my clause. I suggest the following language for use in multiple award IDIQ contracts:

No-Cost Termination of the Contract Ordering Period

( a ) The Contracting Officer may terminate the ordering period of this contract, as stated in the the Ordering clause, 52.216-18, paragraph (a), at no cost to the Government, by transmitting a notification to that effect to the Contractor. Such termination will be pursuant to the Termination for Convenience clause, 52.249-XX. The Contracting Officer will transmit the notification to the Contractor by email. The Contractor shall acknowledge receipt of the notification by email to the Contracting Officer within five calendar days of receipt. The termination shall be effective upon transmission of the notification and shall be effective regardless of whether the Contractor receives it, or acknowledges receipt, or the Government receives an acknowledgement.

( b ) Upon transmission of such notification, the Government will be under no further obligation to give the Contractor opportunities to be considered for orders, and the Contractor will be under no further obligation to accept orders from the Government.

( c ) Notwithstanding termination of the ordering period, the contract shall otherwise remain in full effect with respect to orders already issued. Termination of the ordering period shall not affect the rights and obligations of the parties with respect to such orders.

(End of Clause)

I believe this constitutes nothing more than an advance agreement about the costs of a prospective partial termination for convenience. This wouldl require that the CO follow the procedures in Part 49, but they should be simple given that the termination will affect only the ordering period and will be at no cost to the Government. It will still save the work of exercising options for the other contractors.

What do you think? Still a deviation?

There is no longer a conflict with Fair Opportunity. Instead of having a new clause, could the language for "No-Cost Termination of the Contract Ordering Period" be used under FAR clause 52.252-4, Alterations In Contract" to supplement FAR 52.216-18(a), Ordering?

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Joel;

I don't care what you say the Army and Navy "seem to widely" use. I don't care what you say NAVFAC "widely refers" to. I don't care what you say you and your old agency, the Corps, "generally" used. I don't care what you learned from Yahoo and The Washington Post.

Acquisition professionals use professional terms correctly, so that they can understand each other and avoid confusion.

Doctors, lawyers, engineers, and other professionals respect the language of their profession. I expected better from you. Would you call a SOW a "scope" of work because ignorant people do? Would you call a cost estimate cost or pricing data? Would you use "cost realism" and "price realism" interchangeably? Of course not.

Why argue this? MAC means multi-agency contract, because FAR 2.101 says so. Period.

Vern

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You expected "better" from ME???? I only told you that camphenry was referring to a "MAC" as a multiple award contract in post #1.

Camphenry seemed to be pretty clear about what he or she meant in the first paragraph (bold added). Camphenry stated that "the MAC"/"this MAC" will be a multiple award IDIQ contract for logistic support services.

Hello fellow contracting seniors,

I am building a FFP IDIQ logistics support services contract with the intention to issue multiple IDIQ awards . The IGCE for the base year is estimated to be $10Mil and I intend to write the MAC with 4 one year options. I understand that I can do without a minimum guarantee CLIN however with such high dollar value solicitation out at the streets expecting prospective contractors to bid on it; it does seems to be of a necessity. My question in my mind is how do I determine the amount of the minimum guarantee for this MAC ?...

He/she never said anything about it being a multiple agency contract or being "a" MAC. If that wasn't clear enough, please take up the issue with camphenry , not me. Camphenry confirmed that it is a multiple award contract per HIS/HER terminology.

I already knew what camphenry was referring to. I didn't "learn" that through YAHOO. I just found a couple Internet references to illustrate how the term is being used. There are many more references to "MACs" as multiple award ID/IQ contracts by other sources that I found than the Navy and the Army sites I checked. Navy has used the acronyms "MAC" and "MACC" for many years.

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