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FrankJon

T&M CLIN as De Facto Ordering Period?

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Are there serious reasons (i.e., contrary to regulation or the Government's best interests) why the Government could not or should not use a T&M CLIN as a de facto vehicle to order ad hoc services defined in the PWS, the quantities of which are presently unknown?

In the scenario I'm reviewing, the CO has created a hybrid FFP/T&M solicitation and will use FAR 8.4 procedures. He intends to include a base and four option year T&M CLINs to order as-needed work that is described in the PWS. The ostensible basis for this strategy is that at this time the Government cannot estimate the extent, duration, or costs of the work, in accordance with FAR 8.404(h)(3)(i) (even though we probably will have this information when each job is "ordered"). Mechanically, the contract will contain terms allowing the COR handle "ordering" by requesting and stopping work at will, up to the CLIN ceiling. 

Apart from my own discomfort at the twisting of the FAR's intended usage of the T&M contract type, I'm struggling to find a strong reason to advise against this plan. My intuition says to make this CLIN an IDIQ (or BPA?) with T&M or FFP pricing , but I can't articulate a reason as to why this would be superior. 

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In other words, the government wants to issue an order against a GSA FSS contract that will include an IDIQ CLIN for certain services that are to be priced on a T&M basis. The government (a) knows that it will need some amount of such services, but not how much, when, or where, and (b) the services will be of such a nature that at the time of order placement the parties will not be able to price them on any other basis than T&M.

Is that right?

If so, why are you experiencing "discomfort"? Why are you struggling to find a reason to advise against it? Without more explanation, what kind of response are you looking for?

You come across like a man who has heard a noise in his own backyard at night and calls a friend in another city to ask if he should take a gun outside to investigate. What kind of noise? Why do you want to know if you need a gun? Is somebody out to get you? Are there mama bears with cubs in your neighborhood?

:lol:

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6 minutes ago, Vern Edwards said:

Is that right?

 

Vern - Not quite. The CLIN is pure T&M, not IDIQ. The funds are obligated each year and sit until the COR asks for ad hoc work at intervals over the life of the contract. 

Making it an IDIQ/T&M CLIN is my preference. 

In my backyard as I sit here in my office? Worse than bears, Vern. The White House and buses full of tourists with selfie-sticks. So I clutch to my FAR and try to make sense of it.

 

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8 minutes ago, FrankJon said:

The CLIN is pure T&M, not IDIQ. The funds are obligated each year and sit until the COR asks for ad hoc work at intervals over the life of the contract. 

Making it an IDIQ/T&M CLIN is my preference. 

Why didn't you make that clear in the first place?

4 hours ago, FrankJon said:

... to order ad hoc services defined in the PWS, the quantities of which are presently unknown?

The T&M CLIN must be supported by IDIQ-type terms. T&M is a pricing arrangement, not an ordering device. Moreover, you cannot record an obligation (put funds on a contract) for unspecified "as needed" work. Explain that to the idiots.

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I once developed and implemented a method to execute myriads of individually small changes to fix design coordination conflicts in large, complex industrial plants about 18 years ago.  It probably wasn’t FAR kosher but was successful in avoiding impact delays and impact costs to critical treaty mandated milestone dates. The construction phase of three,  multi-hundred million dollar plants were priced as FFP, within overall $ Billion(s) Systems contracts.

  In the late 90’s to mid 2000’s, I was Division Chief of Contract Administration for construction phases on Systems Contracts at seven sites for (design-build at four plants) construction, systemization and operation of Chemical Weapons Demilitarization Plants to destroy our Nation’s Chemical Weapon Stockpile. We were under a Chemical Weapons Treaty deadline with Russia to destroy the weapons.  We had three sites under construction at the time. Two plants had been completed and were in operatiions and four others had not yet started. The three plants under construction at the time used huge furnaces to incinerate  Mustard, Sarin and VX chemical agents that had been drained from various types of munitions as they were disassembled in the plants, or from bulk stored agent or incinerated agent filled rockets that were chopped into pieces.

There were several separate types of furnaces and process lines at each plant. Each furnace flued toxic waste gases through very complex Pollution Abatement Systems (PAS) that were all mounted on a huge structural steel tower with smoke stacks. Essentially all of the process equipment for the weapons handling systems and production lines, PAS etc. were government designed or performance specified.  Each plant had over $100 million dollars of GFE process equipment, most of which was pre-positioned and stored on site. 

The plants were designed from prototypes at Johnson Island and Tooele, Utah. However, the process system designs were not mature and were constantly changing due to lessons learned, design evolution, differences between manufacturers specific equipment specs, etc., etc.

The plant designs were site adapted from the earlier plants, using 2D CAD, but had never been able to keep up with design and equipment evolution, as-built conditions, etc., even under a massive Design Configuration Management Program. 

The numbers of design conflicts in the PAS and furnace lines were tremendous, for various reasons. The 2D CAD design couldn’t detect or be used to de-conflict the electrical, piping , equipment and structural steel ahead of time. 

The bureaucratic process of initiating individual changes for each small conflict , and negotiating and settling, issuing mods, and going through the Design Configuration management  process would have resulted in millions of dollars in impacts and possibly months delays to the critical path schedule. Each day of delay cost $50,000-$75,000 at the time and affected up to 1000 tradespersons and hundreds of contractor and govt staff. To go back to the CPFF designer would have cost hundreds of thousands of dollars.

I devised a cost reimbursement (CPFF) CLIN for about $1 million at each site (all under construction at same time with almost identical designs).

I had no experience with ID/IQ contracting at the time, but had earlier Air Force Civil Engineering experience with job orders for daily operations, maintenance and repairs (not JOC or SABRE).  

So, the mod establishing the CPFF CLIN included a “job order” method, complete with forms to describe the problem, document the Contractor’s Rough Order of Magnitude estimate for labor and materials (sometimes equipment), for government technical review and concurrence or adjustment and contractor agreement and for the ACO to authorize the job order.

Job orders were issued as design error conflicts were discovered in the PAS and other Process Equipment systems. 

 Each job order would be tracked against the CLIN balance. I don’t remember if we had to bump up the funding for the CPFF CLIN at any site or if we kept all job orders within the $1 million limit.

 We captured all field routing error corrections, etc. in the as-builts for RCRA, Treaty, design configuration, etc. 

From my perspective, it was highly successful and saved many millions in impact costs, delay costs, design costs, government site extension costs, etc. 

So, I guess we idiots put funds on contracts for unspecified, “as needed”,  “job orders” and got away with it.

Our organization was reknowned within USACE for being able to think and act “outside the box” long before I worked there. 

 Our KO’s and lawyers agreed with it and issued the Mods to implement it.  

I had learned from three of my employees who were on loan from TVA with nuclear plant construction background that changing a $30 clock in the elevator of a nuclear plant, as an example,  cost $10,000- $15,000 in design fees, configuration management processes,  documentation, permitting approvals, changes, etc...

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Thank you for your perspective, Joel. I've used firm-fixed unit pricing (FFUP) based on this efficiency rationale, like you. Essentially, for services purchased like supplies (e.g., dry cleaning, credit reports), I would price the unit, establish the annual ceiling, and let the COR go wild. Apart from exercising options and deobligating funds after each POP, I never got involved after award. Many have told me that these should have been handled as IDIQs, but to my mind, my strategy was preferable because (1) it was more efficient and had less potential for waste, and (2) the contractor still was accepting most of the risk, meeting the intent of FFP, just on a unit level vice CLIN level. 

When I compare my prior decision and your story to the situation I describe at the top of this post, I think: What's the risk vs. reward? We are constantly breaking the "rules" in this field anyway, both intentionally and unintentionally, and getting away with it, so if it's determined to be good for the Government, does it matter? (Disclosure: For my well-being, I've recently taken a far more nihilistic approach to this field after moving from DOD to Civilian contracting.)

It's this line of thinking that collides with my "FAR purist" roots; hence, "mama bears."

 

 

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9 hours ago, joel hoffman said:

So, I guess we idiots put funds on contracts for unspecified, “as needed”,  “job orders” and got away with it.

@joel hoffman

Probably because the people who reviewed your contract were as ignorant of the rules as you were then. (I assume you know better now.) Contracting people get away with all kinds of mistakes.

In order to "put funds on a contract," i.e., record an obligation, you have to have a contractual obligation to spend those funds--you have to be contractually obligated to buy something. See the GAO Red Book, Vol. II, Ch. 7, B. "Criteria for Recording Obligations."  The GAO says that you have to be obligated to buy "specific" [italics in original] goods or services. (Look under heading "Requirement of Specificity.") You have to establish the amount to be obligated based on the amount of the contractual obligation--something other than a mere budget. If you don't satisfy those criteria there is no real obligation, and if that is discovered after the end of the period of fund obligational availability you will lose those funds. There are many ways to establish such an obligation.

What are the chances of the "parking" being discovered? It probably depends on where you work, but I'd say that given the general level of ignorance in the contracting community you'd have a pretty good chance of getting away with it.

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What’s the Statute of Limitations? The KO retired years ago.  

One more reason why it doesn’t pay to try to save the taxpayers money, meet a Treaty Deadline or use any initiative if you are a government employee.

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Too bad for the KO. I didn't sign anything.  He and the lawyers and finance folks should have known better.  Another reason not to ever suggest ways to save the taxpayers money.

There was no “parking” of funds involved.  They weren't expiring anytime soon and were expended during their period of availability.  Plus, the funds were for in-scope changes.  They were for known requirements, specifically a scope of work to resolve design and construction conflicts in the process system.  They were being encountered but not in a specific known amount to be able to be determined in time to avoid massive impact costs - thus, CR was the appropriate type of arrangement for that work.  The Systems Contract included both CPFF and FFP scopes of work. 

Edited  on 17 February to add some further context. I tried earlier to not overburden the reader with details which led to decisions on how best to address construction challenges affecting productivity, cost and schedule.

The design for these plants were site adapted from the plant at Tooele, Utah, which had not yet completed systemization and begun incineration operations. The Tooele Plant Systems contract was cost reimbursement, not only for the Ops phases but also for construction.  That design was site adapted from the cost plus Johnson Island plant, which was still under construction when Tooele began. Due to the incomplete designs at the times of award of those two contracts, there were tremendous cost and time growth. The DoD and the Chemical Weapons Destruction Program had to get the program under better control. So the Program adapted what they thought were the as-built conditions at Tooele to issue as FFP construction at the other plants. This proved to be problematic, complicated by incorporating process equipment specific and Real Property Installed Equipment specific shop drawings in the as-built condition into the FFP design. This included hundreds of pages of piping schematics and other equipment specific routing and connection details, including the Pollution Abatement System (PAS), which ended up having differences as the contractors had to integrate all of the GFE process equipment for the subsequent plants into their construction.

The hundreds of millions of dollars of GFE plant and process equipment was all in storage, boxed and wrapped. There was no way for anyone to be able to determine if or what differences would be found upon bringing them out of storage.

In addition, all of the designs of the plants and the GFE itself were being modified though constant issuance of Engineering Change Proposals, originating from the first two plants, as they were being systemized and lessons learned during operations.  

A cost plus solution for adapting the numerous, relatively small process equipment conflict resolutions and fitting modifications (especially in the PAS) was deemed to be the most efficient and least impactive solution. The contractors’ field engineers were adapting the mods as discovered into the shop drawings and field routing shop drawings, rather than going back through the tortuous, expensive and slow ECP process. 

One would have to have a full appreciation of the size and complexity of this program, the plant designs and process designs and understand  the nature of the Chemical Weapons, agents, their deadliness, the time, schedule  and cost constraints to have a full appreciation for the need to find solutions to all these challenges. 

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12 hours ago, joel hoffman said:

I once developed and implemented a method to execute myriads of individually small changes to fix design coordination conflicts in large, complex industrial plants about 18 years ago.  It probably wasn’t FAR kosher...

Sounds to me like grounds for a conspiracy charge.

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3 minutes ago, Vern Edwards said:

Sounds to me like grounds for a conspiracy charge.

ok, good.  I'd go to jail with some good company, I guess. The KO should have issued task orders instead of job orders.

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13 hours ago, joel hoffman said:

I was Division Chief of Contract Administration...

 

13 hours ago, joel hoffman said:

I devised a cost reimbursement (CPFF) CLIN for about $1 million at each site...

 

13 hours ago, joel hoffman said:

We idiots put funds on contracts for unspecified, “as needed”,  “job orders” and got away with it.

I don't think the KO has anything to worry about. He'll get probation for giving you up.

I know some good lawyers.

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16 hours ago, Vern Edwards said:

I don't think the KO has anything to worry about. He'll get probation for giving you up.

I know some good lawyers.

I have every confidence that President Trump will pardon me.   Don’t believe everything that you read, especially, when taken out of context, my friend.

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