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Multiple Award Construction Contract

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Per FMR Vol 3, Chapter 8 para 080604 "Where the quantity required under a contract is indefinite, the ultimate amount of obligation is determined by subsequent orders; the amount of any required minimum order specified in the contract, however, must be recorded as an obligation upon execution of the contract."

Question:  In regards to the MACC contract, the minimum is $2000 and the maximum is $9M; there are multiple awards. In order to be compliant with the above, am I required to immediately issue a task order to each awardee for $2000 or does issuing a task order to one awardee for at least the minimum $2000 meet "an obligation upon execution of the contract"?

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You have multiple contracts, and each contract has a minimum.

Neither the FAR nor the GAO require issuance of orders satisfying the minimum simultaneous with award of IDIQ contracts.  The recordings for the contract minimums can be administratively done by the finance office on the books of the agency

However, some agencies do require issuance of orders satisfying the minimum simultaneous with award of IDIQ contracts. 

You have to follow the rules of your agency.

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I don't understand what you mean by your statement

17 minutes ago, ji20874 said:

The recordings for the contract minimums can be administratively done by the finance office on the books of the agency

 

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RYE, in order to form a contract, there must be an exchange of mutual consideration.  For an IDIQ contract, the consideration provided by the government is a promise to pay the contractor a specified minimum amount.  For a multiple award contract, the government makes the same promise to each contractor.  When the government makes a contractual promise to pay the contractor money, it has created an obligation.  Under a multiple award IDIQ contract, it is not necessary to issue an order for an obligation to be created.  However, the creation of an obligation is not the end of the matter.  In addition to the creation of an obligation, that obligation also needs to be recorded.  This is done in the financial records of the agency.  Creation of an obligation and recording of an obligation are separate and distinct actions. 

What ji was explaining is that the government has already created an obligation when it promised to pay the contractors the stated minimum so that it is not necessary to issue an order to create the obligation.  However, once the obligation has been created, it needs to be recorded, but it is not necessary to issue an order before the obligation can be recorded.

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Right.  In many agencies, contracting officers are allowed to issue the first order (to satisfy the minimum) at any time during the life of the contract, rather than simultaneous with the award of the contract.  The agency comptroller has already recorded the obligation for the minimum amount on the books of the agency.

But we don't know your agency or your agency's rules.  Other agencies require simultaneous award of IDIQ contracts and issuance of orders satisfying the minimum obligation.

You have to follow the rules of your agency.

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ji20874 and Retreadfed, thank you both.  I completely understand it now.  I work for the Air Force. I searched the AFFARS and MPs; but, have yet to find guidance on the rules on recording of obligations.  I will continue my search and thank you both again.

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When I worked for the Air Force, we were able to issue the first order (to cover the minimum) anytime during the life of the IDIQ contract.  But Brig.Gen. Anderson, when he was SAF/AQC, changed the AFFARS to require simultaneous issuance of the contract and the first order.  I don't know what the AFFARS says now.

The AFFARS and MPs probably won't discuss recording of the obligation -- that is a finance thing done by the comptroller people -- so you will want to look to see if the AFFARS requires simultaneous issuance of the contract and the first order.  Look at AFFARS 5316.504(a)(1).

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20 minutes ago, ji20874 said:

When I worked for the Air Force, we were able to issue the first order (to cover the minimum) anytime during the life of the IDIQ contract.

Wouldn't you have to order in the fiscal year that the funds were available for obligation to avoid a bona fide need rule violation?

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2 hours ago, RYE said:

I work for the Air Force. I searched the AFFARS and MPs; but, have yet to find guidance on the rules on recording of obligations.

This guidance is in the DoD Financial Management Regulation.

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It's become common practice to issue a task order simultaneous with the contract award. I take exception with the practice because a task order is issued to every awardee for the minimum amount.  I think this definitely violates the bona fide need rule; there is no need/requirement. Only the need to meet a perception that a task order must be issued upon award of the contract.  I was advised the AFFARs states “reporting the required obligation using anything other than a delivery/task order will result in the action not being reported in FPDS-NG.”.  I have been unable to access the referenced language myself...technology :( 

 

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3 hours ago, Don Mansfield said:

Wouldn't you have to order in the fiscal year that the funds were available for obligation to avoid a bona fide need rule violation?

The comptroller recorded the obligation on the books of the agency in the year the contract was awarded.  If the minimum was not ordered during that fiscal year, the liability was carried over to the next fiscal year. 

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18 hours ago, RYE said:

It's become common practice to issue a task order simultaneous with the contract award. I take exception with the practice because a task order is issued to every awardee for the minimum amount.  I think this definitely violates the bona fide need rule; there is no need/requirement. Only the need to meet a perception that a task order must be issued upon award of the contract.  I was advised the AFFARs states “reporting the required obligation using anything other than a delivery/task order will result in the action not being reported in FPDS-NG.”.  I have been unable to access the referenced language myself...technology :( 

 

Consider this....

IDIQs are reportable in FPDS.  (IDV)  https://www.fpds.gov/help/Reportable_Nonreportable_Contract_Actions.htm

IDIQs have a minimum obligation that is to be recorded.

IDIQs like any contract is to have their "obligation reported". (FAR 4.606)  For DoD go here- http://farsite.hill.af.mil/reghtml/regs/far2afmcfars/fardfars/dfars/PGI 204_6.htm#TopOfPage 

ACTION OBLIGATION (Data Dictionary Element 3C)

This data element is required for all Awards and Modifications for both Civilian Agencies and DoD. It is not required for a Change or Delete/Void. Enter the net amount of funds (in dollars and cents) obligated or deobligated by this transaction. If the net amount is zero, enter zero. If the net amount is a deobligation, enter a minus sign at the beginning of the amount. See Data Dictionary Element 3C Use Case for appropriate data entry requirements.

Validation Rule 3C can be found at the following location: https://www.fpds.gov/downloads/FPDS-DES-SDD-validation_rules-DES.doc#_Toc204158310 

FPDS makes no exception to the validation rules for obligation amount for IDV. (Ref - FPDS Validation Document Competition)

3C       Dollars Obligated

Serial Number

Element/ Characteristics

Rule

Service Version

1

Format

Dollars Obligated must be currency - US Dollars.

1.0+

2

Award Type

The "Action Obligation" must be greater than or equal to $0.00.

1.0+

3

Reason for Modification

The "Action Obligation" must be less than or equal to $0.00 when the "Reason for Modification" is "Terminate for Default."

1.0+

4

Current Contract Value

The sum of Dollars Obligated for all transactions with the same PIID* must be less than or equal to the sum of Current Contract Value for the same transactions.

1.0+

5

PIID

If Dollars Obligated is less than $0.00, then the total of all dollars obligated for the same PIID* must be greater than the amount for this transaction.

1.0+

 

However FPDS allows it to be optional on the basis of an agency who uses a TO/DO to accomplish the minimum at award will not record the minimum for the IDIQ but as an amount (even above the minimum) for the TO/DO.  See page 225 of "GSA Federal Procurement Data System-Next Generation (FPDS-NG) Data Element Dictionary"   https://www.fpds.gov/downloads/Version_1.4_specs/FPDSNG_DataDictionary_V1.4.pdf (specific matrix not quoted here)

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How on earth do you issue a “task order” for construction to every awardee at award ? A task order is for a “task” not for funds. 

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