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I began working at a Navy working capital fund agency 10 yrs ago. The way the R&D contracts were set up completely different than they are now. The contracts back then provided maximum flexibility to meet our customers requirements. Fast forward to today, most people here (new) state how multiple aspects of the old contracts were not right or legal. We are now setting up the contracts completely different and I believe is in a way an annually appropriated agency does which decreases flexibility for our R&D efforts. The more I research I conduct the more I think it was OK to do. To add to the confusion is section 2330 of title 10, United States Code, the definition of services specifically excludes research and development, while in 37.101 of the FAR and elsewhere, research and development is mentioned in the list of potential activities that could qualify as services. Service or not a service? Anyway, I have a couple questions I was hoping people could shed some light on:

1. Nonseverable, CPFF Completion development contracts >12 or >18 month PoPs: Our customers here are unable to fully fund practically anything considering they have to go pitch their ideas out and hope sponsors fund them so it comes in piece by piece. Currently its stated we are not to incrementally fund these types of contracts. I understand the bona fide needs rule; however, does GAO B-277165 provide an exception and allow for incrementally funded nonseverable contracts?

2. Severable CPFF-Term (LOE) R&D contracts:

    A. I'm directed to set up these up with a base year with options for the subsequent 4 years. I believe GAO B-322455 allows us to remove the options for these types and have a 5 year PoP. Do you agree?  This would allow for the acceleration/deceleration of the burn rate (IAW LOE clause) over each of the 5 years without the administrative nightmare (One year the LOE is used up early, next year LOE isn't used up, which then if its on a year CLIN, we would lose the unused LOE). Also, B-277165  will allow us to fund it appropriately, correct?

    B. If options are used, options used to be set up IAW FAR 17.204(f)(2). They used to look like this: "Option 1: 100,000 LOE, $10M, 12 month PoP. If exercised, will increase CLIN 0001."   Was told this isn't allowed for options and you SHALL use different CLIN numbers for options. This then required dates, and wouldn't allow them to be exercised "at any time (inserted in 217-9)".  At the end it would look like this: "CLIN 0001, 500,000 LOE, 60 month PoP." This would be allowable, correct?

    C. Directed to have a "Cost Only" CLIN for Travel, another for Material, or any other ODC for each year. We give the vendor amounts to propose in the RFP as the requirement's travel, material, etc isn't defined and is unknown at time of RFP. I agree with one of Vern's post's in Wifcon saying: "what the heck is the deliverable under these type of CLIN's? There isn't one. It's consumed by labor to perform and deliver CLIN 0001. ODC's shouldn't be separate CLIN's. People do it but are not correct. ODC's should or shouldn't be separate CLIN's? 

Another day I'll go into how we are making our R&D contracts (PSC Axx1-Axx5) as PBSA. 😞 

A lot of information. I'd appreciate anyone's feedback of what I got right or wrong. Thanks.

 

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22 hours ago, ry_lock said:

 To add to the confusion is section 2330 of title 10, United States Code, the definition of services specifically excludes research and development,

What is causing the confusion?  This statute is not intended to define what is a service contract for all purposes.  When it defines a service contract, it is only talking about the contracts that are covered by the statute.  It does not define service contracts for any other purpose. 

23 hours ago, ry_lock said:

Currently its stated we are not to incrementally fund these types of contracts.

I don't know what guidance you are referring to here.  Nonseverable services contracts can be incrementally funded without violating the Anti-Deficiency Act so long as there are funds available in the appropriation used to fund the contract to cover the entire contract.  In this regard, the customer agency is probably dealing with appropriated funds.  When that agency issues a requisition to you, it obligates the appropriation.  Your job is to use the funds provided, either in advance or as a reimbursement to you, to pay for the work covered by the requisition.  I don't see your job to be the conduct of R&D independent of what your customers want you to do.  B-277165 did not deal with incrementally funded contracts. 

 

23 hours ago, ry_lock said:

B-322455

This decision deals with the use of funds to fund multiple-year contracts.  Look at FAR 17.1 and DFARS 217.171 for guidance on multi-year contracting.  From my reading of these sections, you would not have the ability to enter into a multi-year contract.

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If you are using a working capital fund now, or even if you aren’t, there are (may be) constraints in how other agency funds are used.  This is especially true with annual appropriations.  Take a look at this:

https://www.everycrsreport.com/files/20090917_R40814_3def4b0205331e0843abcd212e2a6fba3f639944.pdf

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Because ry_lock is working for the Navy, the appropriate statute is 10 U.S.C. 2208, which deals with the appropriations aspect of contracting with a working capital fund.

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