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FrankJon

Contract Setup - Thousands of Unit Prices

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I'm seeking recommendations for optimal contract type and CLIN structure given the following requirement characteristics:

 

  • Requirement is for record pulls.
     
  • Contract will be with an intermediary organization that pulls from approx. 5,000 different sources.
     
  • Each source charges their own unique price per pull.
     
  • Intermediary charges a tiered flat fee per pull. If annual quota is not met for anticipated tier price, Government will owe the difference between anticipated tier price and actual tier price multiplied by QTY actually ordered that year.
     
  • Ordering will occur on as-needed basis. Each order will be below the MPT.
     
  • Open market, commercial sole source. SAP not available due to total anticipated price.

 

Regarding the multitude of unit prices, I think an optimal setup might be an IDIQ with a CLIN referencing an exhibit with unit prices for each of the 5,000 sources. I would appoint an Ordering Officer under this scenario; however, the agency making the award does not have a specific policy permitting the appointment of Ordering Officers. Without an OO, I don't know how an IDIQ would work.

An alternative approach being contemplated is a firm-fixed-unit-price C-type contract with an exhibit, estimated QTY per source, and NTE price per source.

Regarding the tiered fixed fee, the current approach is to include a reimbursable CLIN that will be used to pay the contractor the difference in pricing if needed. I don't love this approach - one reason being that I don't like having a reimbursable CLIN on a commercial contract, another being that the CLIN doesn't provide the Gov't deliverables on its own - but I can't think of a better way to set this up.

Ideas?

 

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39 minutes ago, FrankJon said:

Open market, commercial sole source.

This seems to be in conflict?

My quick thoughts otherwise -

If truly a sole source it would seem that you have the perfect opportunity to "negotiate" with the sole source all elements of the contract, especially contract type, CLIN structure and ordering procedures that fits every ones needs - a true meeting the minds!!!!!!   If the intent is open market then armed with ideas from here and otherwise, issue an RFI and get input from potential sources as to the structure of the proposed contract and then meld everything for your final product you put on the street.

 

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So, the “intermediary” is the prime contractor?

What does the prime contractor do?

Is each “source” a subcontractor to the “intermediary”?  Government-directed subcontractor, or selected-by-the-prime subcontractor?  Or is each source just a normal supplier, approached on a transaction-by-transaction basis?

Don’t dismiss SAP so quickly — you can do a BPA for commercial items with no overall ceiling or maximum but each individual purchase doesn’t exceed $7 Million.

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11 minutes ago, C Culham said:

If the intent is open market then armed with ideas from here and otherwise

By "open market" I mean not on an established contract. It will be sole source.

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5 minutes ago, ji20874 said:

So, the “intermediary” is the prime contractor?

What does the prime contractor do?

Is each “source” a subcontractor to the “intermediary”?  Government-directed subcontractor, or selected-by-the-prime subcontractor?  Or is each source just a normal supplier, approached on a transaction-by-transaction basis?

Don’t dismiss SAP so quickly — you can do a BPA for commercial items with no overall ceiling or maximum but each individual purchase doesn’t exceed $7 Million.

Intermediary is the only contractor. Sources are not subs to my knowledge; they're independent entities that have a separate agreement to provide records through the intermediary.

Good point about the individual order limit.

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2 minutes ago, FrankJon said:

It will be sole source.

You have the perfect situation to work with a contractor to address all of your concerns.  What you love or may not love can be negotiated so you and the contractor love it together!

 

1 minute ago, FrankJon said:

Good point about the individual order limit.

But won't the requirements for synopsis kick in?   After all establishing the BPA with a single contractor does not relieve you from obtaining competition otherwise and complying with FAR Part 5 regarding synopsis when certain thresholds are hit.   A BPA is not a contract!    A contract properly synopsized will insulate you from further competition requirements during the ordering efforts you anticipate.

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Carl,

  • With a BPA under FAR part 13, synopsis can be handled on a purchase-by-purchase basis.  I'm not saying a BPA is ideal for this situation.

FrankJon,

  • Is your intermediary (prime contractor) a mandatory source?
  • Are the 5,000 different sources state and local government organizations?
  • Carl is right -- since you are sole source, you can work it all out with the intermediary.
  • For me, I would envision contracting with the intermediary for whatever value the intermediary provides (you haven't told us what the prime contractor does).  May a flat fee per transaction, say fifteen cents.  I would envision the payment to the 5,000 sources as direct reimbursable to the intermediary (direct reimbursable, not cost-reimbursement), with the intermediary simply as a pass-through.  So if a transaction involved a five dollar payment to one of the 5,000 sources, you would pay the intermediary $5.15.

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Let's assume we go the BPA route.

We would have an executed J&A for all calls thereunder.

Each call (an email) would be under the MPT, so synopsis requirements would not apply.

Calls could be grouped together and billed for monthly against an order created in the contracting system.

Is there a problem with this approach?

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33 minutes ago, ji20874 said:
  • Is your intermediary (prime contractor) a mandatory source?
  • Are the 5,000 different sources state and local government organizations?
  • Carl is right -- since you are sole source, you can work it all out with the intermediary.
  • For me, I would envision contracting with the intermediary for whatever value the intermediary provides (you haven't told us what the prime contractor does).  May a flat fee per transaction, say fifteen cents.  I would envision the payment to the 5,000 sources as direct reimbursable to the intermediary (direct reimbursable, not cost-reimbursement), with the intermediary simply as a pass-through.  So if a transaction involved a five dollar payment to one of the 5,000 sources, you would pay the intermediary $5.15.

The intermediary is not a required source. It's a nonprofit organization with a network of partners and affiliates.

The sources are not government orgs. They're institutions.

I'm not the CO, but I don't think the intermediary is prone to negotiate. The entire ordering process appears to be highly standardized per the intermediary's website. 

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20 minutes ago, FrankJon said:

Let's assume we go the BPA route.

We would have an executed J&A for all calls thereunder.

Each call (an email) would be under the MPT, so synopsis requirements would not apply.

Calls could be grouped together and billed for monthly against an order created in the contracting system.

Is there a problem with this approach?

I don't see a problem.  

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I think you're buying very similar or identical things that my organization also buys.

In my case, we're buying college transcripts. A central organization was set up to provide these transcripts (and has its fee per transcript), with each member institution setting its own fee. Many (but not all) of these institutions' transcripts are only available through this central organization.

I'll be paying close attention to this thread, but it seems to me that a BPA would be the way to go. You can delegate ordering authority. If each call will be below $3500 (MPT if DOD), it doesn't seem that a J&A will be required. I would get a big pool of funding committed and make sure the ordering officer does not exceed that funding amount. There may be value in leaving the BPA unpriced, just so you can avoid having 5,000 CLINs. Perhaps you could price the intermediary's fee (at multiple tiers), then leave the other fees unspecified. Alternatively, set up CLINs for all the possible fee amounts (but not for each institution). (i.e. a $1 CLIN, a $2 CLIN, . . . a $35 CLIN).

If I'm wrong about something, somebody will helpfully correct me. I'm not especially familiar with BPAs.

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29 minutes ago, RightSaidFed said:

You can delegate ordering authority.

I think you might need an agency policy to do this. I agree, it would be useful if possible.

29 minutes ago, RightSaidFed said:

If each call will be below $3500 (MPT if DOD), it doesn't seem that a J&A will be required.

I have a feeling you'd still want a J&A. FAR 13.203(a)(1) contemplates micro-purchases being distributed among vendors. If that's impossible because there is only one vendor, I think that merits justification. (At least as a CYA.)

 

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Sounds like the perfect situation for market research.  Talk with potential companies and get their ideas.  Also talk with federal agencies that do similar things.  FDA, CDC, Patent and Trademark Office, Library of Congress, and OPM all are good sources.

Faced with that situation and not having benefit of market research, my preference would be a cost reimbursable CLIN for records and a fixed monthly rate to cover the contractors efforts including profit/fee.  Designate ordering officials and have them send monthly reports of orders to verify invoices.

Do a competitive procurement and award to a single contractor.

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18 hours ago, FrankJon said:

Let's assume we go the BPA route.

We would have an executed J&A for all calls thereunder.

Each call (an email) would be under the MPT, so synopsis requirements would not apply.

Calls could be grouped together and billed for monthly against an order created in the contracting system.

Is there a problem with this approach?

Make it easier than that, maybe?   Read this thread to completion as well as the GAO case cited.  There may be an opening that provides that if you synopsize the fact of a sole source you have satisfied the need for further competition for needs under the BPA that are  over the MPT.  Of course refreshing research to current times would also be necessary but this may get you headed in a direction that helps your situation.

 

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