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After 10 years and being the poster child for a failed acquisition system, the Army picked the successor to the Beretta.

"Sig Sauer Inc., Newington, New Hampshire, was awarded a $580,217,000 firm-fixed-price contract for the Modular Handgun System including handgun, accessories and ammunition to replace the current M9 handgun.  Bids were solicited via the Internet with nine received. Work locations and funding will be determined with each order, with an estimated completion date of Jan. 19, 2027.  Army Contracting Command, Picatinny Arsenal, New Jersey, is the contracting activity (W15QKN-17-D-0016)."

My questions are about choice of contract type. The award notice, quoted in full above, says the contract type is FFP. Pentagon press releases touted the "cost control" of the FFP contract type.

My first question is that the quantities must be fixed. The quantity of handguns, accessories and ammunition must be fixed. So this is just the first contract and there will be more to follow, because ammunition (among other things) gets consumed. Where's the cost control in that?

My second question concerns the comment in the award notification that indicates there will be "orders" under the FFP contract. Apparently the contract is not currently funded (even though awarded) and will be funded via "orders." Orders for what? Either the contractor provides the quantities or it doesn't. Based on the use of "orders" to establish funding and (apparently) quantities, I'm wondering if the contract is really an FFP type? Is there a better contract type description, found in FAR Part 16, that should have been used?

I may be wrong in all this and, if so, I'd appreciate being set straight.

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The "D" in the contract number indicates that this is a indefinite-delivery contract.

Just by reading your post, it seems that the Army has awarded an IDIQ contract, structured so that FFP type orders can be placed off of it. If so, that should answer your two questions; (1) indefinite quantities, where the cost risk of each (future) order will be placed on the contractor and (2) each order ("F") will be funded once issued. Pretty standard practice.

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Thanks for the edification. That makes sense.

One last question: If no funding has been appropriated, and there is no minimum amount, why is this a contract?

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Did your source(s) say no funding has been appropriated or that the minimum order wasn't executed?  I'd find that hard to believe for a contract of this magnitude as fulfillment of those criteria is an IDIQ 101 lesson.  The more likely case is that the order for the minimum amount (whatever it might be) got lost in the noise of the announcement of the overall contract.

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Matthew,

My only "source" is the announcement I quoted in full. It says that a $580M FFP contract was awarded and "funding will be determined with each order." Further, it makes not mention of use or expiration of current year funds. Now I may be reading too much into this, but taken together I conclude that zero funding has been appropriated. Since we know that an ID/IQ contract requires a minimum quantity and that the funding for the minimum quantity must be obligated at the time of award, I am curious about the situation. As a taxpayer, if for no other reason.

Your explanation makes sense. However, it fails to inspire me with confidence regarding the contract administration of this highly visible procurement.

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Thanks Bob!

Contract Award Dollar Amount:
$0.00 Base IDIQ Award; Ceiling Amount $580.2 Million
 
Now I am about the least experienced contracts person here. I could be way off base and, if so, I expect to be enlightened. That being said, I am having a hard time distinguishing a "$0.00 Base IDIQ Award" from a BOA. Can somebody help me to see the difference?

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8 hours ago, here_2_help said:

My only "source" is the announcement I quoted in full. It says that a $580M FFP contract was awarded and "funding will be determined with each order." Further, it makes not mention of use or expiration of current year funds. Now I may be reading too much into this, but taken together I conclude that zero funding has been appropriated.

You are reading too much into this. You can't conclude that from the announcement you quoted.

2 hours ago, here_2_help said:

Now I am about the least experienced contracts person here. I could be way off base and, if so, I expect to be enlightened. That being said, I am having a hard time distinguishing a "$0.00 Base IDIQ Award" from a BOA. Can somebody help me to see the difference?

No offense, but your understanding of what an IDIQ is and the mechanics behind the vehicle are way off. You should read Subpart 16.5—Indefinite-Delivery Contracts. Then, to see the difference when compared to a BOA, you should read Subpart 16.7—Agreements.

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6 hours ago, Gordon Shumway said:

You are reading too much into this. You can't conclude that from the announcement you quoted.

I agree. You cannot expect to learn much about a complex contract from a synopsis of award or other agency public announcements. A synopsis of contract award, see FAR Subpart 5.3, does not have to contain a detailed description of the terms of the contract, such as details about funding, pricing, or delivery arrangements.

As for "$0.00 Base IDIQ Award," one can only speculate about what it means.

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Quote

Each contract that is awarded will be issued a delivery order in the base year to meet the minimum guarantee for the contract. The minimum contract guarantee will consist of the weapon system component package (CLIN 0001), as described in the statement of work.

The 2 sentences above come from the contract, page 2.

This clause comes from page 277:

Quote

I-144 52.216-19 ORDER LIMITATIONS OCT/1995

(a) Minimum order. When the Government requires supplies or services covered by this contract in an amount of less than $1.00, the Government is not obligated to purchase, nor is the Contractor obligated to furnish, those supplies or services under the contract.

(b) Maximum order. The Contractor is not obligated to honor --

 (1) Any order for a single item in excess of $580,217,000.00;

 (2) Any order for a combination of items in excess of $580,217,000.00; or

 (3) A series of orders from the same ordering office within 360 days that together call for quantities exceeding the limitation in subparagraph (b)(1) or (2) of this section.

(c) If this is a requirements contract (i.e., includes the Requirements clause at subsection 52.216-21 of the Federal Acquisition Regulation (FAR)), the Government is not required to order a part of any one requirement from the Contractor if that requirement exceeds the maximum-order limitations in paragraph (b) of this section.

(d) Notwithstanding paragraphs (b) and (c) of this section, the Contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within TEN (10) days after issuance, with written notice stating the Contractors intent not to ship the item (or items) called for and the reasons. Upon receiving this notice, the Government may acquire the supplies or services from another source.

 

 

 

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19 hours ago, here_2_help said:

One last question: If no funding has been appropriated, and there is no minimum amount, why is this a contract?

Pure speculation: It could be a "Requirements" contract a la FA16.503 where the consideration is the promise that the Gov't will fulfill all requirement through Sig Sauer. 

I did not see a "Contract Type" clause at the link Bob Antonio provided, so I'm curious how one would tell for sure.  I am unfamiliar with DOD solicitations, though, so this might be more of a "beginner" type question.  I may have just scrolled past an missed it.

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I-145 52.216-22 INDEFINITE QUANTITY OCT/1995 (a) This is an indefinite-quantity contract for the supplies or services specified, and effective for the period stated, in the Schedule. The quantities of supplies and services specified in the Schedule are estimates only and are not purchased by this contract. (b) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the maximum. The Government shall order at least the quantity of supplies or services designated in the Schedule as the minimum. (c) Except for any limitations on quantities in the Order Limitations clause or in the Schedule, there is no limit on the number of orders that may be issued. The Government may issue orders requiring delivery to multiple destinations or performance at multiple locations. (d) Any order issued during the effective period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order. The contract shall govern the Contractor's and Government's rights and obligations with respect to that order to the same extent as if the order were completed during the contracts effective period; provided, that the Contractor shall not be required to make any deliveries under this contract after TEN (10) YEARS AFTER DATE OF AWARD. (End of Clause)

 

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22 minutes ago, apsofacto said:

I did not see a "Contract Type" clause at the link Bob Antonio provided, so I'm curious how one would tell for sure. 

See RFP page 333, Section L-13, 52.216-1 "Type of Contract."

Quote

The Government contemplates award of up to 3 Firm Fixed Price Indefinite Delivery/Indefinite Quantity contract(s) resulting from this solicitation.

 

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23 hours ago, here_2_help said:

My first question is that the quantities must be fixed. The quantity of handguns, accessories and ammunition must be fixed. So this is just the first contract and there will be more to follow, because ammunition (among other things) gets consumed. Where's the cost control in that?

In reading the solicitation it states that the minimum is (at page 6 of the solicitation) –

 

MINIMUM QUANTITY

 

WEAPONS:

1 Weapon System Component Package

(as described in Section C.3.1.1)

AMMUNITION:

Included in the Weapon System Component Package”

 

Interesting to me the maximum is stated at a dollar amount while the minimum is stated as an Unit – “MAXIMUM Program Value - $580.217 Million”.

The cost control is that each weapons system component package is at a set unit price

23 hours ago, here_2_help said:

My second question concerns the comment in the award notification that indicates there will be "orders" under the FFP contract. Apparently the contract is not currently funded (even though awarded) and will be funded via "orders." Orders for what? Either the contractor provides the quantities or it doesn't. Based on the use of "orders" to establish funding and (apparently) quantities, I'm wondering if the contract is really an FFP type? Is there a better contract type description, found in FAR Part 16, that should have been used?

.

The contract would be funded I would hope at  the minimum guarantee noted above and is further support by this language in the Executive summary at page 2 of the solicitation “Each contract that is awarded will be issued a delivery order in the base year to meet the minimum guarantee for the contract. The minimum contract guarantee will consist of the weapon system component package (CLIN 0001), as described in the statement of work.”

 

Subsequent orders for “weapon system component package” after the one issued to achieve the minimum would then have to be funded.  Conclusion is the FFP is the unit price per item or in other words the weapon system component package.

 

As an aside it appears from research that instead of "The Government contemplates award of up to 3 Firm Fixed Price Indefinite Delivery/Indefinite Quantity contract(s) resulting from this solicitation."  there was actually only one award and the award is causing rumblings in the industry, protest pending?????   Who knows?

 

Finally the age old argument can an IDIQ be a FFP contract with FFP orders -

 

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Thanks all. (Probably should have posted this under the Beginner's section, since that's the level I'm operating at.)

You responses are very much appreciated and helped me to understand.

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2 hours ago, Vern Edwards said:

I agree. You cannot expect to learn much about a complex contract from a synopsis of award or other agency public announcements.

As for "$0.00 Base IDIQ Award," one can only speculate about what it means.

Did we ever establish what a "complex" contract was?

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Complexity in a contract is a matter of the number of its terms and the interdependency of their effects. The more terms that a contract has (specifications and clauses) and the greater the interdependency among them in terms of their effects on the parties, the more complex it is. So, for example, a contract with a specification but no changes clause is less complex than a contract with a specification and a changes clause. A contract with a specification, a changes clause, and inspection upon delivery is less complex than a contract with a specification, a changes clause, and in-process inspection.

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On ‎1‎/‎23‎/‎2017 at 3:34 AM, here_2_help said:

One last question: If no funding has been appropriated, and there is no minimum amount, why is this a contract?

See also, Don Mansfield's blog post on IDIQ funding, here: myth-information-obligating-the-minimum-in-idiq-contracts

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See the Indefinite Quantity clause in the contract:

Quote

I-145 52.216-22 INDEFINITE QUANTITY OCT/1995

(a) This is an indefinite-quantity contract for the supplies or services specified, and effective for the period stated, in the Schedule. The quantities of supplies and services specified in the Schedule are estimates only and are not purchased by this contract.

(b) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the maximum. The Government shall order at least the quantity of supplies or services designated in the Schedule as the minimum.

(c) Except for any limitations on quantities in the Order Limitations clause or in the Schedule, there is no limit on the number of orders that may be issued. The Government may issue orders requiring delivery to multiple destinations or performance at multiple locations.

(d) Any order issued during the effective period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order. The contract shall govern the Contractor's and Government's rights and obligations with respect to that order to the same extent as if the order were completed during the contracts effective period; provided, that the Contractor shall not be required to make any deliveries under this contract after TEN (10) YEARS AFTER DATE OF AWARD. (End of Clause)

The Army provides consideration via paragraph (b ).

It should have obligated the funds at the time of contract execution. Perhaps the CO issued the first order at the time of contract execution. If not, there may be an internal problem with the GAO.

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34 minutes ago, napolik said:

It should have obligated the funds at the time of contract execution.

The Army did obligate the funds at the time of contract execution. What it may not have done is record the obligation.

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54 minutes ago, napolik said:

It should have obligated the funds at the time of contract execution. Perhaps the CO issued the first order at the time of contract execution. If not, there may be an internal problem with the GAO.

The first order to satisfy the minimum order guarantee was issued at the time of contract execution.

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The German company will manufacture the new pistol in New Hampshire. Good manufacturing jobs for Americans. Let's see -- award was made on January 19, so the credit goes to....

Maybe I shouldn't go there.

 

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25 minutes ago, Vern Edwards said:

The German company will manufacture the new pistol in New Hampshire. Good manufacturing jobs for Americans. Let's see -- award was made on January 19, so the credit goes to....

Maybe I shouldn't go there.

You issued your own trigger warning!

Take a selfie, distribute it and celebrate yourself!

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