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Acq_4_life

Not Needing to Exercise the Next Option Due to Agency Consolidation

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I am administering a firm-fixed price IDIQ contract that consists of a base and four 1-year option periods. Under Task Order 1, the contractor is providing mailroom support services for Agency 1 located in Maryland. Under Task Order 2, the contractor is providing mailroom support services for Agency 2 located in the District of Columbia.  Effective July 30, 2016, the Department plans to relocate Agency 2 to Agency 1 located in Maryland.  Since Option Period 1 is due to expire on June 30, 2016, Agency 2 is required to notify the contractor that mailroom services are no longer needed at this location, as well as not needing to exercise the next option period.

 My question: Is there a need to renegotiate the contract?  The contractor is providing the same services for both locations. The contractor is managing the proper receipt, collection, handling, processing and distribution of both agencies’ mail and express parcel workload.  The difference is that the mailroom workload is much heavier at Agency 1 than at Agency 2. Agency 1 consists of 4,265 employees and Agency 2 consists of 610 employees.

Any recommendations you could provide would be greatly appreciated.

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It depends on how the Agency 2 task order is set up.

Maybe the Agency 2 task order can absorb the additional volume with no change at all.  If a change is needed (unable to tell from the original posting), the change might be within the scope of the Agency 2 task order, or it might not be (unable to tell from the original posting).

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Is this a single award IDIQ? If so, you'll have more flexibility in my opinion.

Based on what you provided, task order 1 is expiring before task order 2 services are going to be assumed so that's good. You have an option available, but options have to be executed in strict accordance with the contract terms. You'll probably need to consider how the original task order 1 was awarded and how pricing could be affected - based on workload estimates, personnel serviced, etc. It sounds commercial and 52.212-4 requires changes, of this nature, to be accomplished through supplemental agreement.

Is it possible to negotiate new terms to include the additional workload into the option(s) now?

 

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Let me take another stab...

You have three contractual documents--

(1) the parent IDIQ contract:  No, there is no need to renegotiate your parent IDIQ contract.

(2) the Agency 1 task order:  For the Agency 1 task order, you simply don't exercise the option.

(3) the Agency 2 task order:  For the Agency 2 task order, my answer above stands.

I make this posting without the benefit of seeing any of the three contractual documents, but in terms of general principles based on the information provided.  As a general principle, and unless you set up the parent IDIQ contract some weird way, you should not need to renegotiate your parent IDIQ contract.  Does the parent IDIQ contract make any promises to the contractor that you haven't mentioned?

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Jamaal Valentine,

This is a single award IDIQ. Both task orders were awarded at the same time; therefore, both options are up for renewal. Additional, this is a commercial service. I believe It is possible to renegotiate the new terms to include the additional workload into the option, since the requirement is within the scope of work. This is something I will need to present to the program office.

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Negotiating the changes into task order 1's option may be quicker than my next alternative, which is letting the task orders expire and issuing a new task order with the newly revised statement of work. It shouldn't necessarily be quicker, but unfortunately reality is such that it likely will be.

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23 minutes ago, ji20874 said:

Let me take another stab...

You have three contractual documents--

(1) the parent IDIQ contract:  No, there is no need to renegotiate your parent IDIQ contract.

(2) the Agency 1 task order:  For the Agency 1 task order, you simply don't exercise the option.

(3) the Agency 2 task order:  For the Agency 2 task order, my answer above stands.

I make this posting without the benefit of seeing any of the three contractual documents, but in terms of general principles based on the information provided.  As a general principle, and unless you set up the parent IDIQ contract some weird way, you should not need to renegotiate your parent IDIQ contract.  Does the parent IDIQ contract make any promises to the contractor that you haven't mentioned?

ji20874,

The parent IDIQ contract does not make any other promises that I haven't mentioned. Thanks for your recommendation.

 

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Acq_4_life,

Think hard about this.  If the Agency 2 task order is to operate a mailroom, then nothing is changing from a contractual perspective.  The mail volume might change, but maybe a mailroom staffed with five people can handle a volume of 1,000 pieces per month as easily as a volume of 5,000 pieces per month?  Maybe no contractual change is needed to the Agency 2 task order?

Or, maybe you don't have a task order to operate a mailroom -- instead, you might have a task order to process all the mail that generates at that location -- or, you might have a task order to process up to 1,000 pieces of mail per month -- or, you might have a task order to provide five people to work in the mailroom.  Before you decide that a change is needed, you will want to make sure that you fully understand the parent IDIQ contract and the Agency 2 task order.  I'm sure you do, but you haven't shared any of that information here.

Except, you did share that the parent IDIQ contract is a single-award IDIQ contract.  If that is the case, maybe you shouldn't deal exercise or re-negotiate the option -- just issue a new task order for Agency 2 for whatever new workload volumes you need.

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2 hours ago, Acq_4_life said:

 

I am administering a firm-fixed price IDIQ contract that consists of a base and four 1-year option periods. Under Task Order 1, the contractor is providing mailroom support services for Agency 1 located in Maryland. Under Task Order 2, the contractor is providing mailroom support services for Agency 2 located in the District of Columbia.  Effective July 30, 2016, the Department plans to relocate Agency 2 to Agency 1 located in Maryland.  Since Option Period 1 is due to expire on June 30, 2016, Agency 1 is required to notify the contractor that mailroom services are no longer needed at this location, as well as not needing to exercise the next option period.

 

I am confused about the option. Will the option extend the ordering period of the contract or will the option extend the performance period of one of the task orders?

Will you exercise a contract option, after will you will issue one new task order that covers both agencies, or will you exercise an option for one of the task orders, after which you will negotiate a change so that the task order covers both agencies?

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9 hours ago, ji20874 said:

Acq_4_life,

Think hard about this.  If the Agency 2 task order is to operate a mailroom, then nothing is changing from a contractual perspective.  The mail volume might change, but maybe a mailroom staffed with five people can handle a volume of 1,000 pieces per month as easily as a volume of 5,000 pieces per month?  Maybe no contractual change is needed to the Agency 2 task order?

Or, maybe you don't have a task order to operate a mailroom -- instead, you might have a task order to process all the mail that generates at that location -- or, you might have a task order to process up to 1,000 pieces of mail per month -- or, you might have a task order to provide five people to work in the mailroom.  Before you decide that a change is needed, you will want to make sure that you fully understand the parent IDIQ contract and the Agency 2 task order.  I'm sure you do, but you haven't shared any of that information here.

Except, you did share that the parent IDIQ contract is a single-award IDIQ contract.  If that is the case, maybe you shouldn't deal exercise or re-negotiate the option -- just issue a new task order for Agency 2 for whatever new workload volumes you need.

ji20874,

The umbrella IDIQ contract was awarded as a single award to the incumbent contractor XYZ, a non-profit organization through the Ability One Program. The general requirements under the umbrella contract require XYZ Company to operate a full service mail and express parcel operations center as well as manage the high volume of workload on a regular and daily basis. Since XYZ Company has provided these services to both agencies for more than ten years, XYZ Company is familiar with the high volume of workload that they are required to manage.

 

As far as the workload volume, neither the umbrella contract nor the individual task orders provide any specifics about how much workload the contractor is required to manage on a daily basis. However, the individual task orders provide specifics about incoming and outgoing mail. I hope this helps. If not, please let me know what specific information you need me to provide. Again, I appreciate any recommendations you can provide.

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How is the Agency 2 task order set up?  What do you pay for?  Do you pay a firm-fixed-price to operate a high volume mailroom?  Is postage included?  Or do you pay a firm-fixed-price for a certain number of employees?  Or do you pay a firm-fixed-price for a specified volume range?  No one can give you meaningful advice about how to deal with the Agency 2 task order unless you explain how the Agency 2 task order is set up -- see the very first comment to your posting.  "A problem clearly stated is a problem half/solved" -- Dorothea Brande.

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ji, task order 1 will assume an additional workload that was being performed under task order 2, unless I'm reading the scenario backwards. 

Acq_4_life, you said that the task orders provide certain "specifics about incoming and outgoing mail".  Will any of those "specifics" be affected by the transfer of people and functions from site 2 to site1?  Assuming that the two task orders were negotiated before issuance, there must have been some bases for the agreement of prices, right?  Will the move affect or impact the bases of the pricing or staffing in the option for continuation of services at site 1?  Seems to me that the answer to your question hinges on what cost and staffing impacts the additional workload will have after the move  and whether the parties negotiated the contract options based upon a certain staff size and workload  

I'm not sure why that is so difficult to explain to us  

 

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On February 19, 2016 at 11:16 AM, Acq_4_life said:

 My question: Is there a need to renegotiate the contract?

That is one of those damnable questions that cannot be answered by people who have not read the contract. By now all the regulars ought to know that going back and forth with people who ask such questions, hoping to get enough pertinent facts to make an intelligent answer, is frustrating and often if not always fruitless. Such people know so little about contracts and contracting that they have no idea what facts are pertinent. Against my better judgement I asked one question and got no response.  

The only answers that i can give to the above question are the following:

  1. If the contract is for a noncommercial item, and if the CO wants to require the contractor to do something different in the future than the contract currently requires of them, but that is within the scope of the current contract, then the CO can issue a change order (or negotiate a supplemental agreement). In that case, there is no need to "renegotiate" the contract, but If the change causes an increase or decrease in the contractor's costs, then the contracting officer must make an equitable adjustment. (Equitable adjustment is not "renegotiation." See the note * below.)
  2. If the contract if for a noncommercial item, and if the CO wants the contractor to do something different in the future than the contract currently requires of them, but that is outside of the scope of the current contract, then the CO is seeking to make a "new work" change and cannot issue a change order. In that case the contractor is not obligated to perform in accordance with the desired change. But if the contractor is willing to perform in accordance with the change, it can ask for anything it wants in return for its agreement. It can even ask to renegotiate the contract.
  3. If the contract is for a commercial item, and if no Changes clause was put into the contract in accordance with FAR 12.302, and if the CO wants the contractor to do something different in the future than the contract currently requires of them, then the contractor is not obligated to perform in accordance with the desired change. But if the contractor is willing perform in accordance with the change, it can ask for anything it wants in return for its agreement. It can even ask to renegotiate the contract. If a Changes clause was put into the contract, then see 1, above.
  4. Whether the contract is for a commercial or noncommercial item, if the CO wants the contractor to do something in the future that the contract already requires of them, and thus would not be a change, either formal or constructive, but that is different from what the CO has asked them to do in the past, then there is no need to issue a change order, make an equitable adjustment, or renegotiate, because the cotnractor is already obligated to do what the CO now wants it to do. I'm talking about a new course of action that would not be considered a change.

Whether or not something would be a change depends entirely on the language of the contract and the prior course of conduct of the parties.

* Generally, "renegotiate" means to bargain again from scratch, as if the current contract had never existed. It is sometimes referred to as reformation.

Acq_4_life asked for recommendations. Mine is that he buy or borrow some books or some other publications that explain the fundamental law of contracts and the rules about changing Government contracts, read them from cover to cover at least twice, and then go into a quiet corner and think things through. That's what I did when I got started. The first contracting book I ever read was Government Contract Changes by Prof. Ralph Nash. I'm not especially smart, and if i could do it, he can do it. It would be a much better investment of his time than engaging in the sort of back and forth that I have been reading in this thread.

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On Friday, February 19, 2016 at 1:17 PM, Vern Edwards said:

I am confused about the option. Will the option extend the ordering period of the contract or will the option extend the performance period of one of the task orders?

Will you exercise a contract option, after will you will issue one new task order that covers both agencies, or will you exercise an option for one of the task orders, after which you will negotiate a change so that the task order covers both agencies?

The option will extend the period of performance for Task Order 1. After reading some of the recommendations posted here, I believe exercising the option for Task Order 1 after negotiating a change that would cover both agencies seems more reasonable. Thanks Vern.

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On ‎2‎/‎20‎/‎2016 at 10:10 AM, ji20874 said:

How is the Agency 2 task order set up?  What do you pay for?  Do you pay a firm-fixed-price to operate a high volume mailroom?  Is postage included?  Or do you pay a firm-fixed-price for a certain number of employees?  Or do you pay a firm-fixed-price for a specified volume range?  No one can give you meaningful advice about how to deal with the Agency 2 task order unless you explain how the Agency 2 task order is set up -- see the very first comment to your posting.  "A problem clearly stated is a problem half/solved" -- Dorothea Brande.

 

ji20874,

 

The former Contract Specialist structured the umbrella IDIQ contract (price schedule) to include a General Clerk I @ 4,016 hrs., a General Clerk II @ 6,024 hrs., a Project Manager @ 2,008 hrs., and a Floor Supervisor @ 104 hrs. The total hours proposed for each individual category reflect the number of hours needed for both task orders. In other words, a General Clerk I requires 3,016 hours for Task Order 1 and 1,000 hours for Task Order 2.  (Note: These positions are covered by the Service Contract Act).

 

The former Specialist structured Task Order 1 and Task Order 2 (price schedule) to include a firm-fixed price payment schedule. The price schedule (for both task orders) does not list any of the categories established for the umbrella contract; it only lists the firm-fixed payment schedule that the contractor is required to invoice monthly.  This price schedule is shown for the base and all option periods.

 

I am uncertain on what the contractor's proposed prices are based upon, since there is no language specified in the umbrella contract on whether the proposed prices are based on workload volume, personnel serviced, etc.

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Since your parent IDIQ contract is a single-award IDIQ contract to cover two locations, why don't you just issue a new task order for the entire requirement at one location?  Just forget about the options and issue a new task order.

If you insist on exercising the option for the Agency 2 task order, maybe you exercise it just like it is -- the scope of the work is operation of the entire mailroom ( I think, based on what I've read) -- a change in workload volume does not necessarily entitle the contractor to an upward change in the task order price.  If the scope of the work is not operation of the entire mailroom, but rather is providing a certain number of employees, you can still exercise the option just like it is and accept a slower work rate.

Below is how I understand your answers to my questions--

.   Do you pay a firm-fixed-price to operate a high volume mailroom?  YES

.   Do you pay a firm-fixed-price for a certain number of employees?  NO

.   Do you pay a firm-fixed-price for a specified volume range?  NO

If this is correct, give some thought to simply exercising the option just like it is.

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Vern:

My guess - to avoid suffering through the clearance approval process again. Often times, exercising options doesn't require the same level of reviews as new awards, yes, including task orders.

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16 hours ago, Vern Edwards said:

Acq_4_life:

If the IDIQ contract is single award, why did your agency include an option in the task order? ji20874 made a good suggestion.

 

Vern,

 

I have limited documentation for this contract. The former Contract Specialist and C/O are no longer with the Agency. There was no PNM or any other supporting documentation to support the basis for this contract. However, I do know that the award was made through the Ability One Program, which is a statutorily mandated source. I understand that services and products that have been set-aside under the Ability One Program remain Ability One contracts for as long as the requirement exists. And the FAR exempts AbilityOne procurements from the justification requirement, which normally applies to other than competitive procurements. So, I am assuming that the former Specialist used this as the basis for the single award.

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19 hours ago, ji20874 said:

Since your parent IDIQ contract is a single-award IDIQ contract to cover two locations, why don't you just issue a new task order for the entire requirement at one location?  Just forget about the options and issue a new task order.

If you insist on exercising the option for the Agency 2 task order, maybe you exercise it just like it is -- the scope of the work is operation of the entire mailroom ( I think, based on what I've read) -- a change in workload volume does not necessarily entitle the contractor to an upward change in the task order price.  If the scope of the work is not operation of the entire mailroom, but rather is providing a certain number of employees, you can still exercise the option just like it is and accept a slower work rate.

Below is how I understand your answers to my questions--

.   Do you pay a firm-fixed-price to operate a high volume mailroom?  YES

.   Do you pay a firm-fixed-price for a certain number of employees?  NO

.   Do you pay a firm-fixed-price for a specified volume range?  NO

If this is correct, give some thought to simply exercising the option just like it is.

ji20874,

I appreciate your recommendations. I use this site quite frequently, because it is very useful and a reliable resource.  I just do not like to read comments that I feel are unkind and unprofessional. I am frustrated as well as the “regulars”, because I work in an environment where professionals believe that “figuring it out for yourself” is the best thing possible. It seems as though no one wants to share his or her knowledge let alone provide hands-on training. I will never understand it.

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Persons who ask for a fish might eat that day, and might get sick from eating a rotten fish. Persons who teach themselves to fish can feed themselves for the rest of their lives and evaluate the quality of the fish they catch.

Get books. Read them. Think.

A lot of what you get by relying on the kindness of strangers will be wrong answers. Most people miss out on the most important things they can learn by reading forum posts: What is a "good" question? What is a "good" answer?

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