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Desparado

Unpriced Options - Legal?

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8 minutes ago, Desparado said:

That was one suggestion as well.  But, like you, I find that clunky and unnecessary.  Sadly, my lack of A&E knowledge puts me at a disadvantage in these discussions with the HQ peeps.

If this is USACE, I’d be glad to discuss offline with you. 

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Sadly, it is not, but I appreciate the offer!  I feel that if this were USACE, I wouldn't have this problem.

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4 hours ago, Desparado said:

They don't argue that there can be options... but insist they much be priced.

They are really just going with the basic concept that any award has to have a negotiated cost/price (even if a ceiling) to be legal and binding.

Desparado,

I don't think unpriced options are binding, either. They lack the requirement for certainty of terms. We probably shouldn't call them "options" at all, because they don't meet the FAR definition of "option". I understand them as an agreement to negotiate the price of work that may or may not be defined in the contract.

For an A-E contract, you select your contractor and then negotiate the price. I don't know of anything that requires you to price the entire contract all at once. I think you can price some contract work now (for work you want done now) and some later (for work you want done later). Call the work you haven't priced "unpriced work"--don't call it an "unpriced option".

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Don - I agree with you, but unfortunately that is the battle I am fighting (and losing).  They won't allow unpriced anything.

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2 hours ago, Desparado said:

Don - I agree with you, but unfortunately that is the battle I am fighting (and losing).  They won't allow unpriced anything.

What about an IDIQ?

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This has been an intriguing puzzle.   

Putting all the pieces together provides the following.

FAR part 6 provides that A-E contracting (Brooks Act) is a competitive procedure.  (FAR 6.102(d)(1))

FAR part 6 provides that FAR part 6 does not apply to orders placed under IDIQ contracts when the contract was entered into pursuant to FAR 6.1 as well as orders placed against task and delivery orders entered into pursuant to FAR 16.5.  (FAR 6.001(e) & (f))

FAR part 16.505 provides that orders are to describe all services to be performed so the full price or cost of the work can be established when the order is issued.

FAR part 17 does not apply to A-E contracts but does not preclude the use of options in A-E contracts. (FAR 17.2)  Note here that the considerations of exercise of options at FAR 17.207 provide that requirements of FAR part 6 should be considered and satisfied when it comes to options but as already noted FAR part 6 provides that it does not apply to task orders.

FAR subpart 36.6 provides that its processes can be used with regard to FAR subpart 16.505.  (36.600)

It is generally held and supported in part by determinations that a task order is a “contract”.  http://www.wifcon.com/discussion/index.php?/blogs/entry/2044-dar-council-interprets-contract-to-include-task-and-delivery-orders/

Conclusion – The award of multiple award IDIQ contracts implied in this thread were accomplished using a competitive procedure and as such task orders, which are determined to be contacts in and of themselves,  under the IDIQ contacts are not subject to competition requirements of FAR part 6.   FAR part 16.5 provides that task orders are to be priced but does not provided the imperative that they cannot include an option, priced or un-priced, and options are not precluded in an A-E contract (task order).

The GAO document that is indicated as the lynch pin for the discussion in this thread deals specifically with standalone “umbrella” contracts and provides no reference to task orders and more specifically task orders under multiple award IDIQ contracts for A-E services.

Considering the specifics of all the facts an option can be used in a task order for A-E services and the option is not subject to FAR part 6 competition requirements.   An un-priced option is not precluded and is not subject to any limitations, procedures, or processes of FAR part 6 and therefore not FAR 17.   The unpriced option is subject only to limitations, procedures or processes stated in the task order and/or the parent IDIQ contract.

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23 hours ago, Desparado said:

They won't allow unpriced anything

I presume that your agency has lawyers.  What do they say about this?

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“Some “ in Desperado’s organization appear to be hanging their hats on 17.2 and perhaps 17.207, which aren’t applicable to A-E contracts.

A-E contracts use a specifically directed QBS process to select the most qualified.firm, then the parties negotiate fair and reasonable pricing to accomplish the A-E services task.

I hope that my understanding is correct that that they cant definitize a price for later phases of the contract that will depend upon the initial design. 

If so, how would the organization  contract for A-E services to design the project if there were no ID/IQ ?  

Also, please note 36.101(b):

“(b) When a requirement in this part is inconsistent with a requirement in another part of this regulation, this part 36 shall take precedence if the acquisition of construction or architect-engineer services is involved.”

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Ok, so just issue the follow up task orders to the same A-E firm as an exception to fair opportunity. Mutually determine and define the scope then negotiate the design fee. 

If the follow on design work is within the overall scope of the instant task order, you can add the work as in-scope changes. Mutually define the additional design work and negotiate the price.

if You are in the initial task order solicitation process , include your intended course of action for the phases in the task order statement of work. 

Edit: you probably ought  to state that it is the government’s intent to... but the government reserves the right to separately contract for such design work, if it is determined  to be in the best interest of the government to do so. Not being familiar with the nature  of the follow on  limits my recommendation somewhat. 

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Everyone's assumptions above are accurate.  It is a multiple award IDIQ contract for A&E services. We do a QBS competition where the most highly qualified firm is selected for task order award IAW 36.6, but as a task order also has some 16.505 applicability..

The "some" people in my organization feel that no contract, task order or anything can be awarded without being priced, period...

I appreciate all your input.  It has been informative.

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On ‎5‎/‎17‎/‎2019 at 11:44 AM, Retreadfed said:

I presume that your agency has lawyers.  What do they say about this?

Lawyers appear to be on board with the "some" as well.  Small agency, limited A&E experience.

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You can only price what you can definitize.

What do they say about my suggestions, both of which would be consistent with 16.5?

Your organization would have to be totally ignorant about architect -engineer design processes, design development, design integrity if they won’t let you use the same architects and engineers of record for follow on design work that would be essentially non-severable or based off of the initial design effort. 

The other A-E pool members should understand that if you let everyone know that during the initial task order selection process. 

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Why not issue a task order for what you can price at the outset, then subsequent task orders for other work when you price the other work?

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3 hours ago, Desparado said:

It is a multiple award IDIQ contract for A&E services

Why do you need options for this contract type?  Why not just issue a contract with an ordering period that covers the entire period of performance?

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30 minutes ago, Don Mansfield said:

Why not issue a task order for what you can price at the outset, then subsequent task orders for other work when you price the other work?

Yes, that is one of my suggestions, with the proviso that it or they will be follow on task orders, exempt from fair opportunity (based upon the description provided). If so, then state that intent in the initial task order. 

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I think that this thread concerns an internal debate over hypothetical scenarios, not an actual A/E task order. 

Edited by joel hoffman

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Not knowing the details of the actual multi-phase project, I can only speculate. You said that it is not possible to define the follow on phase design effort well enough to price now.

I’m guessing that the follow on design phase involves using the initial design somehow. Is the follow on work segregable or integral to the initial design and construction? 

If yes, then how would “some” proceed to obtain design services for those latter phases? 

If no, then you should not be tied to the initial A-E firm. 

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