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On ‎3‎/‎6‎/‎2020 at 4:38 PM, Retreadfed said:

Also, for IDIQ contracts, you have to look at the value of each order to determine if it is a CAS covered order.  If the order would be exempt from CAS coverage if it were a separate contract, the order is not subject to the CAS.  See FAR 30.001.

If true, that was the piece I was missing.  I don't understand how FAR 30.001 supports that conclusion, but you've been doing this a lot longer than I have.  In my defense, here's why I thought the IDIQ was the contract:  In 1 Accounting for Government Contracts--Cost Accounting Standards § 3.03[5] it states, at least in the context of prepriced IDIQs:

Quote

Under basic ordering agreements and basic agreements each purchase order is considered a contract. However, for an Indefinite Delivery contract the “expected value” at the date of award is considered the contract value.

* * *

However, unlike basic ordering agreements, the IDIQ award is the contract rather than the individual awarded task orders.

Sorry for the confusion.

EDIT:  I'm feeling a little less ashamed of my bad research, but just a little.  Volume 2 of the Section 809 Report, put out in 2018, recommends the CASB add guidance "for CAS applicability to hybrid contracts and indefinite delivery contract vehicles."  The Advisory Panel recommends:

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Add specific guidance for indefinite delivery vehicles to CAS program requirements at 48 CFR 9903.201-1 that would determine CAS applicability at the time of order placement. Evaluate each order for CAS applicability on its own.

Vol. 2, at 145.  On 17 Jul 18, the CASB, when releasing a different rule, included a Q&A about "hybrid" and IDIQ contracts, stating,

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The Board intends to review these issues more carefully to determine whether clarification of its rules is needed to ensure appropriate application of CAS coverage.

83 Fed. Reg. 33146, 33147 (July 17, 2018).  My earlier post made a big assumption that turns out wasn't well-grounded.  I didn't understand that at the time, but hopefully I wasn't grossly negligent.  While I'm an avid reader of WIFCON, apparently my memory is bad, as I completely forgot about this thread:  

EDIT (9 Mar 20):  While I've slept since the following 2011 thread, it seems particularly on-point:

 

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Unless one stands on their head, a ceiling is above. A minimum is akin to a floor.  

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Jacques, look at the definition of "fixed price contracts and subcontracts.  30.001 includes within that definition "Orders issued under indefinite-delivery contracts and subcontracts where final payment is not based on actual costs incurred."  Similarly, within the definition of "flexibly priced contracts" are " Orders issued under indefinite-delivery contracts and subcontracts where final payment is based on actual costs incurred." Thus, orders under IDIQ contracts are considered as separate contracts.

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4 minutes ago, Retreadfed said:

Jacques, look at the definition of "fixed price contracts and subcontracts.  30.001 includes within that definition "Orders issued under indefinite-delivery contracts and subcontracts where final payment is not based on actual costs incurred."  Similarly, within the definition of "flexibly priced contracts" are " Orders issued under indefinite-delivery contracts and subcontracts where final payment is based on actual costs incurred." Thus, orders under IDIQ contracts are considered as separate contracts.

Thanks so much.  Technically speaking, the definition at FAR 30.001 only applies to the use of those two phrases in FAR Part 30.  Those are at FAR 30.604(e) & (h) and FAR 30.605(d) & (h).  That said, I think the FAR Council agrees with you, judging from Comment 31 accompanying Federal Acquisition Circular 2005-1.  70 Fed. Reg. 11743, 11748 (March 9, 2005).

 

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20 hours ago, Jacques said:

Volume 2 of the Section 809 Report, put out in 2018, recommends the CASB add guidance "for CAS applicability to hybrid contracts and indefinite delivery contract vehicles." 

This would be long overdue.  A couple of examples show the need for such guidance.  First, is the example of a contract that contains CLINs for commercial items, with the accompanying clauses, and CLINs for non-commercial items.  How is the value of this contract determined for CAS purposes?  Second, how do you determine the value of a requirements contract for CAS purposes?

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On ‎3‎/‎6‎/‎2020 at 2:38 PM, Retreadfed said:

Also, for IDIQ contracts, you have to look at the value of each order to determine if it is a CAS covered order.  If the order would be exempt from CAS coverage if it were a separate contract, the order is not subject to the CAS.  See FAR 30.001.

Oh, how I wish this statement were true. Unfortunately ….

The issue of proper calculation of the value of an ID/IQ contract for CAS applicability purposes has a long -- and to date, unsolved -- pedigree. The CAS Board has not seen fit to issue guidance and DCAA often takes the position that it is the max value of the ID/IQ contract that determines CAS applicability, not the value of the individual orders issued under the ID/IQ contract.

To be clear: nobody knows. And while Retreadfed's position is appealing, it's not based on anything that's enforceable. The cite to 30.001 is misleading because the definitions of fixed-price and flexibly priced contracts pertain to administration of CAS when the contractor (or subcontractor) makes a change and a cost impact must be calculated. The better cite is 30.201-1 ("CAS Applicability") -- which says NOTHING and simply refers the contracting officer to the CASB rules at 48 C.F.R. 9903.201-1. That CAS language says, in essence, "Negotiated contracts not exempt from CAS in accordance with 9903.201-1(b) are subject to CAS. Then 9903.201-1(b) lists the well-known CAS exemptions.

So we are back to: there is no authoritative guidance regarding how to value an ID/IQ contract for purposes of determining CAS applicability. We are all still waiting for the CAS Board to tell us how to do it. But don't hold your breath, because we've been waiting for 25 years.

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H2H, you have misunderstood what I wrote.  While I agree that how you determine the value of an IDIQ contract is still unresolved, and an issue that the CASB needs to address, I was not talking about valuing an IDIQ contract.  I was talking about the application of the CAS to individual orders under an IDIQ contract.  I don't think you would advocate that an order for $10K under an IDIQ contract should be or is subject to full CAS coverage.  We have learned from the definition of "contract" in FAR 2.101, Kingdomware and other decisions that orders are considered to be contracts.  We cannot ignore those authorities when discussing the application of the CAS to orders under IDIQ contracts.

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5 hours ago, Retreadfed said:

H2H, you have misunderstood what I wrote.  While I agree that how you determine the value of an IDIQ contract is still unresolved, and an issue that the CASB needs to address, I was not talking about valuing an IDIQ contract.  I was talking about the application of the CAS to individual orders under an IDIQ contract.  I don't think you would advocate that an order for $10K under an IDIQ contract should be or is subject to full CAS coverage.  We have learned from the definition of "contract" in FAR 2.101, Kingdomware and other decisions that orders are considered to be contracts.  We cannot ignore those authorities when discussing the application of the CAS to orders under IDIQ contracts.

Thank you, but I stand by my post. Right now, until some authoritative body publishes something official, my position is that each order issued under an ID/IQ carries the same CAS coverage as the initial ID/IQ award. I believe my position is aligned with DCAA's position on the matter.

To be clear, my heart is with you. But my head is not.

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@Retreadfed,

I'm not connecting the dots.

The definitions at FAR 30.001 recognize task and delivery orders as contracts. Check.

Kingdomware held that task and delivery orders are "contracts" as defined at FAR 2.101. Check.

Therefore, CAS applicability for IDIQ contracts is determined at the order level?

I don't see how you get to that conclusion by deduction. It seems like a hopeful inference.

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On 3/9/2020 at 6:47 PM, here_2_help said:

I believe my position is aligned with DCAA's position on the matter.

H2H, I think you give too much credence to what DCAA thinks.  The CAM is riddled with inaccurate statements and only provides guidance to DCAA auditors. It is not an authoritative source for procurement information. Further, we have to look at the culture of DCAA to evaluate that guidance.  Based on my 15 years at DCAA Headquarters, the culture of DCAA is to squeeze contractors whenever possible.  If there is any question as to the interpretation of the FAR or CAS, DCAA will take the position that is least favorable to contractors.  Moreover, even if a question has been settled, if DCAA disagrees with it, DCAA will follow its own path.  For example, look at the issue of who has the burden of proof regarding the allowability of a cost.  It is well settled that the government has the burden of showing that a cost is unallowable.  However, if allowability is an issue in an audit, the audit report will frequently state that the contractor failed to show that the cost was allowable.  Similarly, look at how DCAA is reacting to the ASBCA's J.F. Taylor and Metron decisions concerning executive compensation.  DCAA simply refuses to accept the results of those decisions and treats them as invalid.

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23 minutes ago, Retreadfed said:

H2H, I think you give too much credence to what DCAA thinks.  The CAM is riddled with inaccurate statements and only provides guidance to DCAA auditors. It is not an authoritative source for procurement information. Further, we have to look at the culture of DCAA to evaluate that guidance.  Based on my 15 years at DCAA Headquarters, the culture of DCAA is to squeeze contractors whenever possible.  If there is any question as to the interpretation of the FAR or CAS, DCAA will take the position that is least favorable to contractors.  Moreover, even if a question has been settled, if DCAA disagrees with it, DCAA will follow its own path.  For example, look at the issue of who has the burden of proof regarding the allowability of a cost.  It is well settled that the government has the burden of showing that a cost is unallowable.  However, if allowability is an issue in an audit, the audit report will frequently state that the contractor failed to show that the cost was allowable.  Similarly, look at how DCAA is reacting to the ASBCA's J.F. Taylor and Metron decisions concerning executive compensation.  DCAA simply refuses to accept the results of those decisions and treats them as invalid.

I agree with you regarding DCAA culture, even though I've not spent any time working at Fort Belvoir. It would be great if each Order under an ID/IQ carried its own CAS coverage, but I don't read anything authoritative as permitting that. I believe you are reading too much into the definitions at FAR Part 30, as I believe they apply to CAS administration at 30.6 not to CAS applicability, where the FAR expressly points the CO to the CAS regulations themselves (which, as I've pointed out above, don't address ID/IQ contracts at all). The definitions are used for calculating cost impacts since fixed-price and flexibly priced contracts have different approaches. The same definitions break out a single contract type (T&M) into fixed-price (T) and flexibly priced (M) for the same reason. I really do not believe those definitions were intended to guide COs in determining CAS applicability.

However, I don't think you and I are going to resolve this at WIFCON.

When I post here, I'm wary of giving answers/advice to posters that would lead them into a dispute. To be clear, I do not personally agree that the ceiling value of the ID/IQ determines CAS applicability. But I do believe that CAS applicability is determined at the time of contract award, and ID/IQ is certainly a type of contract (unlike BOAs). If we are going to assert that each Order carries its own CAS coverage, I think it's important to point out that that position is an aggressive interpretation with which DCAA is likely to disagree. Implementing that position could also lead to problems with CPSRs (as contractors must report CAS-covered awards and subcontract awards to their ACOs). It could lead to problems with calculating cost impacts (since contracts have to calculate the cost impacts on affected CAS-covered contracts).

If I were consulting to the poster, I might advise an aggressive position, so long as my client understood the risks. But since I don't have that ability here, I'm wary of doing so in an anonymous forum.

 

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On 3/9/2020 at 7:02 PM, Don Mansfield said:

I'm not connecting the dots.

Let me see if I can help in this regard.  

The CASB was created in the early 1970s.  It established the 19 standards and the preambles to those standards.  However, the CASB went out of existence in the early-1980s.  In the interim, the FAR was promulgated effective April 1, 1984.  A few years after the original CASB went out of existence, Congress reconstituted the CASB.  Thus, we have two iterations of the CASB, the original CASB, and the new CASB.  

When the new CASB was created, it had to decide whether to keep the old CAS rules and standards or to start over.  The CASB decided to keep the old rules and standards with some tweaks.  Thus, when the new CASB adopted its rules and standards, it was aware of the definition of contract in the FAR.  This is significant because the CASB has not defined what is a contract in its rules.  Therefore, the FAR definition of what is a contract must be applied when interpreting the CAS.  Put another way, when the CASB uses the term contract, it means contract as defined in the FAR.  Consequently, a contract for CAS purposes includes orders under IDIQ contracts.

FAR 52.216-18 is required to be included in IDIQ contracts.  That clause says that orders under the IDIQ contract are subject to the terms and conditions of the IDIQ contract.  For CAS covered contracts, the CASB has promulgated certain clauses that are to be used in CAS covered contracts.  One of those clauses has been incorporated into the FAR as 52.230-2.  That clause applies to contracts subject to full CAS coverage and begins "Unless the contract is exempt under 48 CFR 9903.201-1 and 9903.201-2, the provisions of 48 CFR Part 9903 are incorporated herein by reference and the Contractor, in connection with this contract, shall-"comply with all applicable standards and file a disclosure statement.  Clearly, this language makes the remainder of the clause applicable if the "contract" is not exempt from CAS applicability.  By operation of FAR 52.202-1, contract as used in 52.230-2 includes task orders.  Thus, to parse 52.230-2 and 52.202-1, the former must be interpreted to read, "Unless the task order is exempt under 48 CFR 9903.201-1 and 9903.201-2, the provisions of 48 CFR Part 9903 are incorporated herein by reference and the Contractor, in connection with this task order, shall."

I hope this helps.

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On ‎3‎/‎9‎/‎2020 at 5:47 PM, here_2_help said:

I believe my position is aligned with DCAA's position on the matter.

I have no doubt that you subjectively believe that, if DCAA were to take an official position on this question, it would be likely be one with which @Retreadfed would disagree.  My problem is that I have not been able to find any official DCAA position, and when I asked this question of DCAA through DCMA, I got the run-around.

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2 hours ago, Jacques said:

I have no doubt that you subjectively believe that, if DCAA were to take an official position on this question, it would be likely be one with which @Retreadfed would disagree.  My problem is that I have not been able to find any official DCAA position, and when I asked this question of DCAA through DCMA, I got the run-around.

I subjectively believe that, based on my experience dealing with DCAA auditors on this exact issue.

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My experience mirrors that of H2H.  However, like Jacques, I can find no specific pronouncement in the CAM on how to determine the value of an IDIQ contract for CAS coverage purposes or the application of the CAS to individual orders under IDIQ or requirements contracts.  Similarly, I cannot find where DCMA has issued guidance on this issue.  Thus, it appears that individual auditors and ACOs are acting on their own when faced with the question of CAS applicability to orders under IDIQ contracts.  However, they seem to have a fairly consistent view on this subject.  Finally, I would appreciate it if anyone could point us to a definitive interpretation on the applicability of FAR 1.108(c) to IDIQ contracts.

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6 hours ago, Retreadfed said:

Therefore, the FAR definition of what is a contract must be applied when interpreting the CAS.  Put another way, when the CASB uses the term contract, it means contract as defined in the FAR.

FAR 2.101(a) states:

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A word or a term, defined in this section, has the same meaning throughout this regulation (48 CFR chapter 1), unless-

           (1) The context in which the word or term is used clearly requires a different meaning; or

           (2) Another FAR part, subpart, or section provides a different definition for the particular part or portion of the part.

 

Nothing that I know of extends the applicability of the definitions in FAR 2.101 to 48 CFR Chapter 99.

6 hours ago, Retreadfed said:

FAR 52.216-18 is required to be included in IDIQ contracts.  That clause says that orders under the IDIQ contract are subject to the terms and conditions of the IDIQ contract.  For CAS covered contracts, the CASB has promulgated certain clauses that are to be used in CAS covered contracts.  One of those clauses has been incorporated into the FAR as 52.230-2.  That clause applies to contracts subject to full CAS coverage and begins "Unless the contract is exempt under 48 CFR 9903.201-1 and 9903.201-2, the provisions of 48 CFR Part 9903 are incorporated herein by reference and the Contractor, in connection with this contract, shall-"comply with all applicable standards and file a disclosure statement.  Clearly, this language makes the remainder of the clause applicable if the "contract" is not exempt from CAS applicability.  By operation of FAR 52.202-1, contract as used in 52.230-2 includes task orders.  Thus, to parse 52.230-2 and 52.202-1, the former must be interpreted to read, "Unless the task order is exempt under 48 CFR 9903.201-1 and 9903.201-2, the provisions of 48 CFR Part 9903 are incorporated herein by reference and the Contractor, in connection with this task order, shall."

This is the same argument that I use--so I am in violent agreement. I just didn't see what the definitions in FAR 30.001 had to do with anything.

Have you had any success with this argument?

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Quote

Obtain the PCO’s estimate of a reasonable quantity for indefinite delivery/indefinite quantity (IDIQ) contracts (FAR 16.500). IDIQ contracts are used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award. IDIQ contracts generally require the Government to order, and the contractor to furnish, at least a stated minimum quantity of supplies or services. Other considerations should include anticipated funding limitations by year; anticipated order dates; and whether the basic contract includes various contract types (cost-plus, fixed price) for task orders (for service) or delivery orders (for supplies). Proposal audits of IDIQ contracts should be completed in the same manner as any other proposal audit. The risk assessment should be based on the potential order types (cost vs. fixed) and estimated quantities to be ordered. When the PCO cannot provide a reasonable estimate of the potential orders, the maximum order value should be used.

DCAA CAM 9-103.1 d.(8) [Emphasis added.]

(Best I could come up with...)

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45 minutes ago, Don Mansfield said:

Nothing that I know of extends the applicability of the definitions in FAR 2.101 to 48 CFR Chapter 99.

Don, FAR 52.230-2 is a clause drafted by the CASB and adopted by the FAR.  FAR 52.202-1 states in part that "When a solicitation provision or contract clause uses a word or term that is defined in the Federal Acquisition Regulation (FAR), the word or term has the same meaning as the definition in FAR 2.101 in effect at the time the solicitation was issued."  Thus, as a matter of contract interpretation, "contract" as used in 52.230-2 has the same meaning as "contract" in 2.101.

As for success in using this argument, fortunately, I have not had to make it yet, but am prepared to do so should the occasion arise.  

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3 hours ago, general_correspondence said:

Thanks to what Bob Antonio uploaded to the Forum today, I was informed the CASB meeting today in DC is addressing the very issue I came up against.

 

Yep. Better 25 years late than never

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