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J&A Increasing Ceiling on Multiple Award IDIQ Contracts

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We have a suite of multiple award IDIQ contracts that was awarded using FAR Subpart 13.5 and share a ceiling of $5M.  When running reports to track how much we had remaining against that shared ceiling, it appears as if we need to do a J&A ASAP so that we do not exceed our shared ceiling.  The question came up as to whether we could exceed the current threshold of $7M afforded under FAR Subpart 13.5 since we awarded the contracts using FAR Subpart 13.5.  Is there a prohibition against using FAR Part 6 as our authority and moving out of FAR Part 13 during contract administration?

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21 minutes ago, anon_ said:

The question came up as to whether we could exceed the current threshold of $7M afforded under FAR Subpart 13.5 since we awarded the contracts using FAR Subpart 13.5.

That threshold ($7M or $13M) concerns the anticipated value at contract award. You said you have already awarded the contract(s).

21 minutes ago, anon_ said:

Is there a prohibition against using FAR Part 6 as our authority and moving out of FAR Part 13 during contract administration?

PepeTheFrog suggests you read FAR 13.501, and wonders if you should be asking about a "sole source justification" rather than a "J&A."

Just because you can do something doesn't mean you should do something. Why would you not want to use FAR Part 13?

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Yes, we have already awarded the contracts.  Although the value was below the the $7M (FAR 13.500(c) is N/A to this requirement so the $13M is moot) at the time of award, should we really be continuing to use FAR Part 13 when the value would be increased to an amount greater than that $7M (especially given the historical info that I see shows we really should have used FAR Part 15 and had a ceiling around $17.5M)?

No, I did mean J&A since the question that came up involved using FAR Part 6 and not FAR Subpart 13.5.  

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Maybe you should award a new suite of contracts that more accurately reflects your real needs.

Your current shared ceiling is $5 Million.  Your new desired shared ceiling is $17.5 Million.  Thus, your sole-source amount is $12.5 Million.  Yes, you need a J&A.

But if I was your agency's competition advocate, I would want to disapprove the J&A and tell you to award a new suite of contracts that more accurately reflects your real needs.

Even so, there is no prohibition on awarding a contract under $7 Million using FAR Subpart 13.5 and later modifying the contract to an amount over $7 Million.

But still, maybe you should award a new suite of contracts that more accurately reflects your real needs.

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Thanks and I agree with awarding a new suite of contracts.  My opinion is that we should increase the ceiling for enough time to get new contracts in place.  We cannot be without them as there's risk to life and property involved.

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If I understood the opening post correctly, the contracts "shared" a single "ceiling" (maximum quantity) of $5M. Why? Why not give each contract a maximum of $5M?

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Good question, Vern.  I don't know why the CO chose to write the contracts with a single shared ceiling (max quantity) of $5M.

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I bet I know. You awarded a "suite" of MATOCs. Let's say four. And you proceeded under FAR 13.5. I bet the CO thought that if each had a max of $5M it would put the acquisition over the FAR 13.5 dollar threshold. (In applying dollar thresholds IDIQ contracts you apply it against the max, not the min.)

The question is: Should the dollar threshold be applied to the sum of the four contract maximums or to the maximum for each contract? In other words, was there one acquisition of $15M or were four simultaneous but separate ones of $5M each?

I know of nothing in the FAR and of no GAO, COFC or authoritative policy decision that has ruled on that question. Maybe someone else does.

Which do you think is right? One or three?

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1 hour ago, Vern Edwards said:

Which do you think is right? One or three?

I believe it should be based on what is stated in the contract (assuming that it is).  If the contract clearly states that the maximum quantity/dollars to be ordered is the shared value of all multiple award contracts, then I think it would be one shared value. 

The clause 52.216-22, Indefinite Quantity, refers to the quantity designated in the schedule as the maximum.  FAR 15.504(a)(1) and (a)(4)(ii) requires the CO to also specify a total maximum.  If the contract clearly stated the maximum as the shared value of all orders against the multiple award contracts, then I'm not sure how one could successfully argue that the maximum applies to each contract separately.  Maybe they could.  I only took a quick look and I also could not find any GAO decisions or COFC opinions on the matter.  Nor, could I find any board of appeals opinions (i.e. if the contractor had a dispute with the CO over the interpretation of a shared contract maximum).   it would be interesting to find out if and how this issue has been ruled on.

Previous to this discussion I had never thought about multiple award contracts having a shared value.  If I solicited and awarded multiple award contracts, each had its own value and the sum of those estimated maximum values was the total value of the procurement.  I did a search and found a DOD press release which included what appear to be multiple contracts sharing a total value. http://www.defense.gov/News/Contracts/Contract-View/Article/630619

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I also believe it is best to use the dollar value of each awarded contract, not the shared total, when looking at thresholds for approval purposes.  However, there are others who insist on the total acquisition value, with acquisition meaning all the possible awarded contracts.

Thus, if I issue one solicitation with a potential for four contract awards, each with a value of $3 Million, I want to use $3 Million for all review and approval threshold purposes -- but others will insist on reviews and approvals based on $12 Million.  In my last agency, we did it my way.  In my current agency, we don't.

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4 hours ago, Vern Edwards said:

I bet I know. You awarded a "suite" of MATOCs. Let's say four. And you proceeded under FAR 13.5. I bet the CO thought that if each had a max of $5M it would put the acquisition over the FAR 13.5 dollar threshold. (In applying dollar thresholds IDIQ contracts you apply it against the max, not the min.)

The question is: Should the dollar threshold be applied to the sum of the four contract maximums or to the maximum for each contract? In other words, was there one acquisition of $15M or were four simultaneous but separate ones of $5M each?

I know of nothing in the FAR and of no GAO, COFC or authoritative policy decision that has ruled on that question. Maybe someone else does.

Which do you think is right? One or three?

I think the limiting factor is the scope of the competition. I think the Government would have the contractual right to order up to $5 million on each contract, but the question would be whether offerors could have reasonably anticipated that the total amount of orders against the "suite" of MATOCs would exceed $5 million. 

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Vern, you stated "In applying dollar thresholds IDIQ contracts you apply it against the max, not the min."  This has always been an interesting point for me in regard to multiple award IDIQ contracts.  Consider this fact scenario.  The government anticipates that it will have a need for an estimated $5M of work.  The government decides to satisfy this need by awarding four IDIQ contracts.  Each contract states that the minimum the government will order under that contract is $25K and states that the maximum amount that will be ordered for the entire project is the $5M.  Because of the minimum amount contained in each contract, no contractor will receive the entire $5M of work.  Further, because of the fair opportunity requirement for awarding orders under multiple award IDIQ contracts, no contractor or the government can reasonably anticipate that any specific contractor will receive orders that exceed the minimum amount stated in each contract.  In this case, how would you apply FAR 1.108 to determine the anticipated value of each contract?

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Hi Retread:

Good question.

FAR 1.108 was added by final rule in 2000, 65 FR 36015, June 6, 2000, FAC 97-18, "to enhance a common understanding of how the Federal Acquisition Regulation is drafted." The proposed rule appeared in 65 FR 4346, January 26, 2000. Paragraph (c) read then as it reads now. I don't think that the councils thought about the MATOC maximum problem. Neither the proposed nor the final rule makes any mention of how to handle thresholds when you make multiple awards. They don't appear to have received any comments on paragraph (c).  Paragraph (c) uses the word "action," not acquisition. The terms action and contract action are not defined in FAR Part 2 and so have no FAR-wide definition.

If I were a CO or chief of the contracting office today and proceeding under the SAT or the FAR Subpart 13.5 threshold to award MATOCs, I would set a separate maximum for each contract, but all the maximums would be the same. I would consider each prospective award to be a separate action, even though it is the result of a single acquisition. When applying the dollar threshold in accordance with FAR 1.108(c), I would use the maximum--which I would treat as the most that I would buy under any one or combination of the contracts--unless I knew that I intended or was likely to buy more than the maximum. I would consider anything else to be splitting requirements in order to get below the applicable threshold.

Did I answer satisfactorily?

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3 hours ago, Vern Edwards said:

FAR 1.108 was added by final rule in 2000, 65 FR 36015, June 6, 2000, FAC 97-18

Hi Vern,

I'm somewhat familiar with the rule making process and issuance of FACs.  If I understand correctly, each subject on a FAC usually references a case number that usually ties back to a FR publication.  How do you look up a reference like you did here (FAR 1.108) and know what FAC (in this case one from 16 years ago) added or revised a section and what FR publication it was in?  Thank you in advance.

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In determining contract values I've had success reviewing contract clearance request amounts as indicative of the originators intent. If the clearance documents requested and authorized $5M I'd presume $5M is the shared value of the suite of contracts.

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4 hours ago, Todd Davis said:

Hi Vern,

I'm somewhat familiar with the rule making process and issuance of FACs.  If I understand correctly, each subject on a FAC usually references a case number that usually ties back to a FR publication.  How do you look up a reference like you did here (FAR 1.108) and know what FAC (in this case one from 16 years ago) added or revised a section and what FR publication it was in?  Thank you in advance.

Todd:

I go either to Westlaw or to the official CFR site and look up FAR 1.108 (48 CFR § 1.108). At the end of the section they list the historical sources of the section in the Federal Register by citation, going back to the original FAR. I then go to Westlaw or to the official Federal Register site and find that volume and page number and read the final rule. The final rule provides the FAC number. The final rule also cites the proposed rule by Federal Register citation, and then I can go to the proposed rule and read it. It takes just a few moments once you get the hang of it, unless the rule is old and has been subject to many changes, in which case it might take a while to find what you're looking for. Before I retired from teaching I taught my students how to do that. It's a useful skill.

Vern

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Vern, thank you for your response.  That seems like a reasonable approach from the government's perspective.  In many cases, the contractor probably will not have a problem with it either.  However, there may be circumstances where a contractor may have a different view, such as if the "action" would put the contractor over the $50M threshold for being subject to full CAS coverage.

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Quote

 If I were a CO or chief of the contracting office today and proceeding under the SAT or the FAR Subpart 13.5 threshold to award MATOCs, I would set a separate maximum for each contract, but all the maximums would be the same. I would consider each prospective award to be a separate action, even though it is the result of a single acquisition. 

I'm trying to understand how it could be any other way than as described in Vern's quote.  

MACS are kind of an artificial construct created by the contracting office who awarded them, in that they are MACS because the CO said they expect to 'award X number of contracts as a result of the solicitation'; otherwise, they have no defining characteristics on their face to distinguish them from single-award.  That is why many times you can only spot a MAC "in the wild" by noting X IDIQ's with sequential numbering, all with the same ceiling. 

So why in the world would anyone ever not set a ceiling for each vehicle?  As amply demonstrated by this example, you run the risk of losing the bubble on your ceiling if you're trying to track the combined ceiling on X vehicles which are otherwise independent in their administration.  The mess you are in seemed entirely predictable....contracting is complicated enough without going out of your way to make it more so...

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REA'n Maker, what is the maximum you would set in each contract in the circumstances I identified in my hypo yesterday, a government budget of $5M, 4 awards with a $25,000 minimum for each award?

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Retread:

I guess I never answered your question from yesterday. Sorry.

$5M budget. Four contractors. $25K minimum for each. A purely mathematical answer would be a maximum of $4.25M for each of the four contracts. (If my math is right.) You'd have to deduct the $25K minimum for the other three offerors from the budget in order to set a maximum for each. Of course, it's possible (but unlikely) that you would terminate the other three for convenience (or default) before you have to pay their minimums. 

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On Wednesday, April 27, 2016 at 8:37 AM, Vern Edwards said:

I go either to Westlaw or to the official CFR site and look up FAR 1.108 (48 CFR § 1.108). At the end of the section they list the historical sources of the section in the Federal Register by citation, going back to the original FAR. 

Vern:

The e-CFR site doesn't include the Air Force FAR Supplement text - it shows as "RESERVED" and has for years.

Any ideas on how to research the AFFARS history, without Westlaw or Lexis?

 

NOTE: "[Reserved]" is a term used as a place holder within the Code of Federal Regulations. An agency uses "[Reserved]" to simply indicate that it may insert regulatory information into this location some time in the future. Occasionally "[Reserved]" is used to indicate that a portion of the CFR was intentionally left empty and not accidentally dropped due to a printing or computer error.

~e-CFR website FAQs

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To ask a follow-up question regarding contract maximums on multiple award contracts:

Suppose our office followed Vern's advice and awarded a multiple award ID/IQ to two vendors with separate maximums for each contract, but all the maximums are the same. It's year 2 of the contract and Vendor A has been awarded enough task orders that their contract maximum has been met. Vendor B is still well below their contract maximum. Both vendors were given fair opportunity on all orders placed.

Can we continue to use Vendor B's contract and basically treat it as a single award ID/IQ? Since none of the exceptions to fair opportunity in FAR 16.505(b)(2) apply, what documentation should be written to justify the continued use of Vendor B's contract?

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