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Say an agency awarded a multiple award IDIQ.  There are two contractors who got award.  Each contract has a price ceiling.  What if contractor A's ceiling is maxed out, so it is ineligible to get award of any future task orders.  Can the agency just issue task orders to contractor B without doing a "fair opportunity" competition? 

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Perhaps the agency should establish a new set of multiple-award IDIQ contracts?  I speak from a practitioner's perspective -- I do not know the legal answer to your question.  Even if it is legally permissible, it might not make good business sense.

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53 minutes ago, govt2310 said:

What if contractor A's ceiling is maxed out, so it is ineligible to get award of any future task orders.

Contractor A isn't "ineligible". Rather, they are no longer contractually required to comply with the Government's task orders. They could waive that limitation. The question would then be whether the work to be ordered was within the scope of the original competition for the MAC.

Just wondering what was the value of the original acquisition? What was the maximum in each contractor's contract?

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There is no time to establish a new multiple award IDIQ.

I believe GAO has stated in the past that, if the ceiling on a task order has been reached, if the agency were to go past that, even if the contractor agrees to waive the ceiling, that that is indeed out of scope of the original competition for the MAC.

I don't have an answer for "what was the value of the original acquisition" and "what was the maximum on each contractor's contract."  Sorry.

Well, since Contractor A is out, this brings me back to my original question: Can the agency just make award to Contractor B for a new task order without doing any "fair opportunity" competition?

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Yes, by "price ceiling," I mean the "maximum" quantity mentioned in FAR 52.216-22(b).

For the total value of the future task order that I am asking about, assume the amount is > $10 million.  Say it is $20 million.

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1 hour ago, govt2310 said:

Well, since Contractor A is out, this brings me back to my original question: Can the agency just make award to Contractor B for a new task order without doing any "fair opportunity" competition?

Okay, I'll give you an answer.  You have to give every multiple award contract holder a fair opportunity to be considered, right?  So that is what you do.  You give the notice to A and B.  Maybe A doesn't respond because it has already reached its contract maximum (FAR 52.216-22(b) and FAR 16.504(a)(1)), or maybe it does respond but but you don't select it because it has reached its maximum.  B does respond.  All contract holders were given a fair opportunity to be considered, right? 

So now, you have to decide if you will award a task order to B.  If B gives you a good price, is there a problem?  See FAR 16.505(b)(3), Pricing Orders.  

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Posted (edited)

If the agency were to give notice to A and B, knowing that A doesn't have a chance because its contract has hit the price ceiling/maximum quantity already, Contractor A could file a protest at GAO.  GAO would find that Contractor A is an interested party.  Why?  See REEL COH, a GAO decision from January 2020.

In REEL COH, the protester, who was ineligible for award (due to a technically unacceptable proposal), challenged the award to the awardee, and GAO found that, even though the agency properly found the protester to be technically unacceptable, protester was still an interested party because, if GAO sustained the protest, the agency would have to issue a new solicitation, so protester had an economic interest because it would be eligible to submit a new proposal to the new solicitation.

So it looks like Contractor A could file a protest contending that the agency's doing a sham fair opportunity competition exceeded the scope of the Master IDIQ Contract.  The remedy that Contractor A could seek is for GAO to make the agency do a totally new solicitation for the Master IDIQ Contract, not just a new solicitation at the task order level on the existing Master IDIQ Contract.  Thoughts?

REEL COH Inc.B-418095,B-418095.2: Jan 10, 2020

Edited by govt2310
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Oh, just issue a task order to the contractor who hasn't reached the max!  You awarded to two contractors and one has reached the max. The contractor who has reached the max is done. Try to increase the max without competition and you'd face the possibility of a protest that you"d probably lose. See FAR 16.505(a)(10)(i)(A).

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govt, I'm not sure I agree with your analysis the REEL case, but okay, so don't share the notice with both A and B -- share it only with B.  If B gives you a good price, or you have to negotiate to get to a good price, is there a problem?  Award the task order.

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Ok, I  see where Vern and ji20874 might be coming from. 

Well, let me throw this out there: How about taking the position that both A and B were already given fair opportunity because, at time of the original Master IDIQ Contract Competition, it was already known to all offerors that there would be a price ceiling/maximum quantity on each contract awarded, so all offerors were on notice of the possibility of it turning out later down the road that one awardee's ceiling/maximum might be reached before the other awardee's? 

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Makes sense to me. Or you could just say that no more orders can be placed against A's contract because the maximum quantity has been purchased. So as long as quality and price agreement can be reached with B, this order and all future orders will be placed against B's contract until the maximum is reached or there are no further requirements.

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I have cherry picked the below referenced case.   It is not spot on but my read does seem to provide that the maximum order limitation is where the governments obligation for “fair opportunity” stops.  Not going to guarantee it but just the way I read it.

From the decision –

“Thus, each contractor under the SUM IQC has the opportunity to compete for awards up to the ceiling…”

And;

“Every contract contains with it the implied obligation that the parties will act in good faith during performance. Exculpatory language giving one party broad discretion to act in its own best interest does not negate other parts of the contract which also impose duties on that party. While the indefinite quantities clause of the contract only obligates respondent to order a specified dollar amount of services, a bidder has a right to rely on other contract provisions implying that it will be fairly considered for additional work, if required by the government.”

Noting the two quotes together it would stand to reason that the government would have the “right” to rely on other parts of the contract, in the case of this thread the “maximum order limitation”, and exclude the contractor from a fair opportunity when that limitation is reached.

But then again I am not a judge…….with all the facts.   But I am inclined to rule with the majority here, issue the fair opportunity request to the contractor whose ceiling has not been realized.

Reference - https://www.asbca.mil/Decisions/2002/53489.pdf

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2 hours ago, govt2310 said:

Vern and C Culham: Thanks!  These are all good points.

Yes, I agree that if there is a  maximum ID/IQ limit,  applicable to the pool member’s individual contract, then the government has met its obligation. If the government continues to include a pool member in future task order competitions that has reached its limit, then I think that competitors have grounds to claim a breach. 

Maximum limits have been described MATOCs in different ways, including individual limits and/or overall MATOC limits. The overall limit is usually stated in those MATOC’s that I’ve seen, regardless of whether there is an individual limit.  The case that Carl referenced appears to back this up. 

“16.504 (a) Description. An indefinite-quantity contract provides for an indefinite quantity, within stated limits, of supplies or services during a fixed period. The Government places orders for individual requirements. Quantity limits may be stated as number of units or as dollar values.”

The above doesn’t distinguish between MATOCs and SATOCs or individual MATOC pool members limits, if any. So it depends upon how the MATOC contracts are worded. 

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46 minutes ago, joel hoffman said:

If the government continues to include a pool member in future task order competitions that has reached its limit, then I think that competitors have grounds to claim a breach.

I don't think sending the notice contemplated by FAR 16.505(b)(1)(iii)(B)(1) or (iv)(A) would constitute a breach.

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4 hours ago, ji20874 said:

I don't think sending the notice contemplated by FAR 16.505(b)(1)(iii)(B)(1) or (iv)(A) would constitute a breach.

I don’t know. We don’t know exactly what the stated “maximum limit” in contractor A’s contract represents.  govt2310 said that contractor A was ineligible for further awards.

If the government ignores a stated limit and includes contractor A in future task order competitions, it has unilaterally changed the task order award ground rules/procedures, when reading the contract as a whole.

I’m presuming that govt2310 is correct that there is a limit, thus no more orders can be awarded to contractor A and that there is additional overall ID/IQ capacity still available.

If one argues that the government’s only obligation to contractor B is the minimum order amount, the ASBCA held in the referenced Appeal of Community Consulting International, ASBCA No. 53489 (2002) that “(w)hile the minimum quantity represents the extent of the Government’s purchasing obligation, however, it does not constitute the outer limit of all of the Government’s legal obligations under an indefinite quantity contract.

I don’t know if B would prevail. The government wouldn’t have to issue any more task orders to the single remaining contract holder B but can’t issue any more to contractor A using the fair opportunity ordering process.
 

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If the government can’t issue a task order to one “remaining” contract holder, pursuant to the FAR 16.505 ordering procedures, then its over. But it seemingly can’t simply ignore a limit - depending upon how the limit is written and described. 

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Well, now there's a twist!  Say the Master IDIQ Contract contains FAR 52.216-18 ORDERING (OCT 1995).  However, somehow the CO did something that resulted in the language in that clause being changed.  The original FAR 52.216-18 reads:

FAR 52.216-18 ORDERING (OCT 1995)
 
Indefinite Quantity (OCT 1995)

(a) This is an indefinite-quantity contract for the supplies or services specified, and effective for the period stated, in the Schedule. The quantities of supplies and services specified in the Schedule are estimates only and are not purchased by this contract.

(b) Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the maximum. The Government shall order at least the quantity of supplies or services designated in the Schedule as the minimum.

(c) Except for any limitations on quantities in the Order Limitations clause or in the Schedule, there is no limit on the number of orders that may be issued. The Government may issue orders requiring delivery to multiple destinations or performance at multiple locations.

(d) Any order issued during the effective period of this contract and not completed within that period shall be completed by the Contractor within the time specified in the order. The contract shall govern the Contractor's and Government's rights and obligations with respect to that order to the same extent as if the order were completed during the contract's effective period; provided, that the Contractor shall not be required to make any deliveries under this contract after ___ [insert date].

 

But say the actual FAR 52.216-18 clause found in the Master IDIQ Contract reads (and it has all these typos and paragraph misnumbering as shown):

 

FAR 52.216-18 ORDERING (OCT 1995)

(c) Any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or task orders by the individuals or activities designated in the Schedule.  Such orders may be issued from DATE through DATE.

(e) All delivery orders or task orders are subject to the terms and conditions of this contract.  In the event of conflict between a delivery order or task order and this contract, the contract shall control.

(c) If this is a requirements contract . . . the Government is not required to order a part of any one requirement from the Contractor if that requirement exceeds the maximum order limitations in paragraph (b) of this section.

(d) Notwithstanding paragraphs (b) and (c) of this section, the Contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within 2 days after issuance, with written notice stating the Contractor's intent not to ship the item (or items) called for and the reasons.  Upon receiving this notice, the Government may acquire the supplies or services from another source.

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Another twist!  Let's say the CO screwed up the language in FAR 52.216-18 by mixing it up with language from FAR 52.216-19.  Let's say the contract contains FAR 52.216-19 with the correct language, just on another page of the Contract.  FAR 52.216-19 contains paragraph "d," which states that "the Contractor shall honor any order exceeding the maximum order limitations," unless they give notice to the Government that they don't intend to fulfill the order, and upon receipt of said notice, the Government is free to acquire the supplies/services from "another source."  So this means its ok to issue the task order to the one remaining awardee on the MAC IDIQ, which is Contractor B, right? 

FAR 52.216-19 Order Limitations.

As prescribed in 16.506(b), insert a clause substantially the same as follows:

Order Limitations (OCT 1995)

(a) Minimum order. When the Government requires supplies or services covered by this contract in an amount of less than ___ [insert dollar figure or quantity], the Government is not obligated to purchase, nor is the Contractor obligated to furnish, those supplies or services under the contract.

(b) Maximum order. The Contractor is not obligated to honor -

(1) Any order for a single item in excess of ___ [insert dollar figure or quantity];

(2) Any order for a combination of items in excess of ___ [insert dollar figure or quantity]; or

(3) A series of orders from the same ordering office within __ days that together call for quantities exceeding the limitation in subparagraph (1) or (2) above.

(c) If this is a requirements contract (i.e., includes the Requirements clause at subsection 52.216-21 of the Federal Acquisition Regulation (FAR)), the Government is not required to order a part of any one requirement from the Contractor if that requirement exceeds the maximum-order limitations in paragraph (b) above.

(d) Notwithstanding paragraphs (b) and (c) above, the Contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within __ days after issuance, with written notice stating the Contractor's intent not to ship the item (or items) called for and the reasons. Upon receiving this notice, the Government may acquire the supplies or services from another source.

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If there is an error in the parent IDIQ contract, that error should be corrected by modification (either unilaterally or bilaterally, as appropriate).

The "maximum" in para. (b) of the clause at FAR 52.216-19, Ordering Limitations, is very different from the "maximum" in para. (b) of the clause at FAR 52.216-22, Indefinite Quantity

  • The former refers to the maximum for any individual order or series of orders, and protects the contractor from orders that are too large to swallow -- there is no scope concern here.  The contractor can waive this protection by accepting an order that exceeds the maximum order limitation.
  • The latter refers to the maximum for the contract as a whole, and establishes the outside bound of the scope of the contract (and all orders cumulatively).
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