Minimum Guarantee Task Order

[Chad_S]

I have awarded a multiple award task order contract. The contracts were awarded with a $1,000.00 minimum guarantee task order for each. The minimum guarantee task orders were awarded last fiscal year. Can the minimum guarantee task orders be modified to be utilized for project work?

[Don Mansfield]

You mean without providing a fair opportunity notice to other contractors?

[joel hoffman]

Please clarify what the $1,000  minimum guarantee task orders are for and what you mean by “modify them to be utilized for project work” . Will it be through competition(s)? 

thanks

[C Culham]

I think the issue is a new twist on an old idea so my answer - It Depends.  Here is the old idea and how it worked.

A TO is awarded at IDIQ award for the IDIQ contract guaranteed minimum.   Reason it is done is to fulfill the agencies contractual obligation of achieving the minimum with each contractor.

At some later time when “real” work is needed the TO to accomplish the minimum is cancelled and new TO is issued for the work that is needed. 

In the old stubby pencil days when fund accounting was done in a finance office that was easily accessible by the contracting office the money for the minimum TO was then returned to the program offices allocation from which the funding came and then became available for the next TO’s award.  In those stubby pencil days we did this effort in sequence to de-obligate the funding that was committed to the minimum TO and then of sorts re-use it or in other words record the obligation for the subsequent TO.

Again all done to accomplish the minimum.  All done to adhere to appropriate accounting as opined by GAO that required a IDIQ to have its minimum guarantee obligated on the accounting books at time of award.  Some agency program folks were offended by or did not understand the “obligation” need as they felt it tied up funding as an obligation so the work around was created.  By example think contracts that had say a $25,000 minimum guarantee and you had 10 multiple award IDIQs.

Now to today and the specific question by the OP.

With the new electronic systems there is no guarantee that when the TO that was written to capture the minimum is cancelled and the funding for it is de-obligated that the funds will return to the allocation that is available to the program office through the electronic system today.  Sometimes the systems return the money all the way to the total allocation for the agency.

Likewise, if it is available, and if somebody is faster at going into the electronic system for a need creates a PR and captures the money, then the money gets held for obligation otherwise.

There is also the issue of whether the funding for the minimum guarantee TO is the same color of money that is needed for the TO with a real project.   Things like no year funds versus one year funds, funds for say O&M versus funds for a new endeavor – so the color of money counts too.

Finally, there is the issue of scope.   There was really no scope for the minimum obligating TO.  To change the scope of the TO to an actual project is not in keeping with proper contract processes.  Following is a separate thread in WIFCON that sheds some light on the scope issue.  And as already noted how does the Fair Opportunity process play into the matter of changing the purpose of the TO from a minimum obligating TO to a project work TO.

All said the idea of having a TO issued to obligate a minimum guarantee is dumb and creates some really questionable business practices.  The dang IDIQ contract minimum should have been obligated as required and that minimum de-obligated from the IDIQ (via a mod) when and if a TO (or multiple TOs)  for real work was finally placed to accomplish the minimum.