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J&A Increasing Ceiling on Multiple Award IDIQ Contracts

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On July 19, 2016 at 6:17 AM, EHorner said:

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?

For multiple award contracts, FAR 16.505(b)(1)(i) requires that contracting officers to provide each awardee fair opportunity to be considered for each order exceeding $3,500 (unless exempted by FAR 16.505(b) - to which you point out is not applicable) and FAR 16.505(b)(1)(iii) requires orders in excess of the SAT be placed on a competitive basis.  I'd argue that the fact that a contractor has reached their ceiling does not relieve the contracting officer of the requirements of FAR 16.505(b)(1)(i) & FAR 16.505(b)(1)(iii), it just makes the requirements impossible to fulfill (because a contractor that has reached their ceiling cannot be fairly considered for the award of any more orders).  If the preceding analysis is correct, it would be improper to just use Vendor B's contract and treat it as a single award ID/IQ.

Does anyone else have any thoughts on this issue?

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Is there an authoritative definition for considered?

What is a fair opportunity to be considered for each order? Can a contract's ceiling or max (quantity or dollars) be used in consideration? We know the competition requirements in Part 6 and the policies in subpart 15.3 do not apply to the ordering process. 

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It would seem that you would have a defacto single source or "single award" scenario if one of the two multiple awardees reaches a hard ceiling order limitation that would contractually prevent making additional orders to that firm. You would definitely want to have ordering procedures which would allow a negotiated task order process. The government wouldn't have to award a task order at an unreasonably high price that would otherwise be competitive in the market. 

Surely there are readers here that have experienced a similar scenario where some or all other of the pool members have reached the ceiling limitation. What say ye? 

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If the pool is four contractors and one reaches the ceiling, then there are still three players to provide adequate competition.

We simply need to plan a little better.

If the plan is for only two contractors, then make the ceiling high enough so that both contractors can compete on all your requirements.

Or, change the plan and allow for four or five contractors.

Sometimes, we need to do a new competition sooner than we planned.  If our planning doesn't match reality, we need to adapt -- that might mean doing a new competition sooner than we planned.

A multiple-award IDIQ contract DOES NOT turn into a single-award IDIQ contract.

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4 hours ago, Jamaal Valentine said:

Is there an authoritative definition for considered?

Jamaal,

I wish there was a FAR definition for "fair opportunity to be considered for..." but there isn't.  Under the common definition though (https://ahdictionary.com/word/search.html?q=consider&submit.x=46&submit.y=26), I think a contracting officer would be unable to "consider" a contractor for an order if the contractor has reached the ceiling of their contract.

46 minutes ago, joel hoffman said:

It would seem that you would have a defacto single source or "single award" scenario if one of the two multiple awardees reaches a hard ceiling order limitation that would contractually prevent making additional orders to that firm. You would definitely want to have ordering procedures which would allow a negotiated task order process. The government wouldn't have to award a task order at an unreasonably high price that would otherwise be competitive in the market. 

Surely there are readers here that have experienced a similar scenario where some or all other of the pool members have reached the ceiling limitation. What say ye? 

Joel, the ordering procedures might provide more specifics, but I don't know that they would/could change the nature of the situation because any ordering procedures for a multiple award contract must comply with FAR 16.505(b).  

From what I've read, I don't believe and cannot find anything stating that a multiple award contract can become a single award IDIQ when only one contractor has ceiling remaining.

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So, the contracts are over when there is no more possibility of competition ( assuming that all pool members have met the minimum orders)?  Okay with me.  Certainly could prematurely finish off the use of an ID/IQ if one of the two firms wins most of the orders.

This also should make it clear that it would been foolish to divide the total value of anticipated orders between the pool in establishing the maximum contract limit, as in the initial question. 

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On 4/28/2016 at 5:04 PM, Retreadfed said:

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?

Why not $5M each?    Surveillance over 4 contracts with $1.25M ceilings is no different than surveilling 4 contracts with $5M ceilings.   Fair Opportunity doesn't prohibit awarding every single TO to the same contractor, so why hem yourself in by trying to guess the ultimate award value on each?

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On 8/11/2016 at 1:19 PM, REA'n Maker said:

Why not $5M each?    Surveillance over 4 contracts with $1.25M ceilings is no different than surveilling 4 contracts with $5M ceilings.   Fair Opportunity doesn't prohibit awarding every single TO to the same contractor, so why hem yourself in by trying to guess the ultimate award value on each?

"Why not $5 million?"  Assuming that one pool member wins all orders, there is a maximum of $4.925 million available in the budget for total orders to any single firm after meeting the $25k minimum for the other 3 pool members (EDIT: see Vern Edwards' earlier, 4/28/2016 response along the same lines, except for a math error). But you are on the right track.

As noted in the Wenesday, July 10 discussions, splitting the overall program budget or scope of funding level between the individual pool members would be foolish and might lead to the unintended result that you prematurely eliminate competition as individual firms reach their contract ceilings before you are able to award the full program.

Splitting the overall limit effectively assumes that awards will be evenly distributed among the pool members. How often would that otherwise happen under competitive conditions, absent deliberate distribution of awards?

It also has the unintended effect of early elimination of the most competitive firms, leaving the remainder of the program to those less competitive.

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EDIT: What happens if you select less than your originally estimated number pool members during the initial ID/IQ competition?

If you set the individual contract limits at or near an announced overall scope limit, the firms should be smart enough to know that they probably won't win all the orders. Bottom line would seem to be clear - don't split the overall contract maximum limit among individual pool members.

Edited by joel hoffman

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