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I like it too and one could conclude it is a FFP contract. It would be very interesting in the context of a MATOC where some work has more risk that other work what a contractor would propose and the in the end negotiate with the government as to the fixed profit rate for the entire MATOC. By saying this I am not suggesting varying profit rates just wondering what the final rate settled on would be. I do like it.

Great idea, Vern. Because of highly variable market conditions and individual scope of work/locations Joel mentioned, evaluation of fixed costs at the contract level is not practical. Publish that notice in the solicitation and state what the evaluation will consists of. Offerors will then have a limited time to protest.

I agree with Joelwhen it comes to direct costs. So try this: Instead of instructing prospective offerors for a construction MATOC to propose unit prices for construction tasks, instruct them to propose a fixed project profit rate and and a fixed indirect cost rate. Then, when conducting a fair opportunity project competition, ask only for proposed direct costs. 0001 Project Fixed Rates 0001AA Fixed Project Price Profit Rate 0001AB Fixed Project Price Indirect Cost Rate Will that satisfy CICA? I don't know. So try it and see. Innovate! Isn't that what they keep teilling you to do? What have you got to lose? You might be a successful pioneer. And remember, you can always tell the GAO to get lost if it sustains a protest. There has never been a better time to do it.

Happy Friday. It’s end of school time in many parts of the country, as students move on a grade or graduate from college. College graduation is a big deal in a college town like ours. Congratulations to all the graduates. And speaking of changes, the federal government contracting world certainly hasn’t slowed down this week. Stories included the large proposed defense budget along with efforts at saving taxpayer money in the defense budget and elsewhere in the federal government. DoD civilian workforce losses strain military installation operations Army Corps of Engineers faces high attrition over plans to relocate NYC office Trump’s staggering defense budget could weaken bipartisan NDAA support GAO IDs up to $251 billion in cost savings across agencies Burchett Announces Roundtable on Saving Taxpayers Money with Military Contracts Tribal-owned firms want answers about state of 8(a) program Everything you know about contracting has changed GAO: 2026 Annual Report: Opportunities to Reduce Duplication, Overlap, and Fragmentation and Achieve an Additional One Hundred Billion Dollars or More in Future Financial Benefits New Cyber Strategy Shows White House Getting Serious on Enforcement, Says Capgemini Exec CBO estimates Golden Dome could cost $1.2 trillion over 20 years OMB plans to make IT contract data collection public, per federal CIO DoD launches a departmentwide review of the military legal system The post SmallGovCon Week in Review: May 11-15, 2026 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Why can't the competition just be binding for one or so Firm-Fixed-Unit-Rate priced line item(s) integral to the whole MATOC? Proper pre-award requirements analysis could lead to this being solicited in the IDIQ Section B and described as "binding for the life of the contract" in Section L.

Yes, “sample task orders” do result in fictional (non-binding) pricing. Phase two, Competition for a construction or design-build construction “seed task order” would normally result in receiving prices that would bind an offeror, if they were awarded the seed task order. Therefore, we could evaluate pricing for selection of award of MATOC base contracts, even though the base contract wouldn’t include fixed prices. Subsequent task order competitions would generally result in price competition. I wrote two-phase Model RFP’s that were used USACE-wide for MATOC base contract competitions and another Model for task order competitions (for design-build and for some straight construction contracting). Too bad, this method wasn’t available government wide.

As part of federal contracting, the total price of each award is disclosed. This is of course a great way to promote trust and transparency in federal contracting and in the handling of taxpayer dollars. But it also leads to other contractors scrutinizing an awardee’s price and thinking one of two things: (1) “That price is too low to do this work”; or (2) “that price is too high for this work.” Naturally contractors will consider protesting on one of those pricing intuitions, but often mix up how to properly frame or phrase that pricing concern. Thus, they find themselves at the crossroad of “price realism” vs. “price reasonableness.” This installment of our Back to Basics series will help you learn which is which and why that matters. As an initial note, despite that first paragraph, price realism and reasonableness don’t only arise in the context of an award, they are also discussed in most solicitations’ price evaluation scheme. An agency will often state in their solicitation something along the lines of “an offerors price will be evaluated for [realism or reasonableness, or both].” What that means is the agency will see if a price is too high or too low based on which method is chosen. So, which is which? Price realism is the evaluation of whether a proposed price is realistic for the work to be performed. This basically means the agency will determine if the price is too low to realistically meet the goals of the solicitation. FAR 15.404-1 provides a good definition of “cost realism” (it says “cost” but in application, it also refers to price) as: “. . . the process of independently reviewing and evaluating specific elements of each offeror’s proposed cost estimate to determine whether the estimated proposed cost elements are realistic for the work to be performed; reflect a clear understanding of the requirements; and are consistent with the unique methods of performance and materials described in the offeror’s technical proposal.” In contrast, price reasonableness is the evaluation of whether a proposed price is reasonable for the work to be performed. This basically means the agency will determine if the price is too high for the work of the solicitation. FAR 15.404-1 states that reason for this analysis is to “ensure that the final agreed-to price is fair and reasonable.” The FAR says an agency can “use various price analysis techniques and procedures to ensure a fair and reasonable price.” So, agencies have some leeway to determine how to best figure out if a price is too high, but some examples provided by the FAR are: “Comparison of proposed prices received in response to the solicitation”; “Comparison of the proposed prices to historical prices paid”; certain estimating methods to find inconsistencies; “Comparison with competitive published price lists”; “Comparison of proposed prices with independent Government cost estimates”; “Comparison of proposed prices with prices obtained through market research for the same or similar items”; and “Analysis of data other than certified cost or pricing data” provided by offerors. The FAR in multiple places discusses different cost and price analyses involving realism and reasonableness, but those FAR clauses cited above give general ideas on both concepts and how they are implemented by agencies. GAO has also provided some additional clarity on this topic in the past. In a 2013 GAO case, Contract Services, Inc., B-407894 (Apr. 3, 2013) (we blogged about that case back then here) GAO laid out the difference between price realism and reasonableness quite clearly: “The purpose of such a price reasonableness review is to determine whether the prices offered are too high, as opposed to too low. Arguments that an agency did not perform an appropriate analysis to determine whether prices are too low, such that there may be a risk of poor performance, concern price realism.” Now what can you do with this information? Ensure you are ready for evaluation of your price in a competition, and be ready for any possible protest grounds related to price after award. If the solicitation does not mention price realism or say the agency will evaluate for whether prices are too low, it can be very difficult to later make that argument as part of a bid protest after award. The Solicitation (and the incorporated FAR) should lay out which version of price evaluation the agency will conduct. Naturally, the determination of if a price is realistic or reasonable generally falls on the discretion of the agency, but that discretion is not unlimited. If an agency fails to adhere to that evaluation (such as applying the wrong standard or missing it completely), or someone feels the evaluation was flawed in its calculations, you could possibly protest that award decision. For example: In a 2018 GAO case, Shearwater Mission Support, LLC, B-416717 (Nov. 20, 2018) (we of course blogged about it here) the agency said the prices would be evaluated to determine if they were “fair and reasonable” indicating a price reasonableness evaluation would occur. But through the course of the evaluation and procurement, the agency basically conducted a price realism analysis instead, which lead to the GAO sustaining a protest on that basis. In another GAO case, Criterion Corporation, B-422309 (Apr 16, 2024) (you guessed it, we blogged on this one too here), while the agency did a price realism analysis, it was not a proper one under the solicitation’s terms, and thus was flawed, leading to GAO sustaining the protest. So, if an agency doesn’t do the price evaluation it states it will in the solicitation, or conducts it incorrectly, that could be grounds for protest. Also, prior to a bid being submitted, if a contractor is not clear on whether the solicitation is using price realism or reasonableness (or what those mean), a bid may be doomed from the start. When in doubt, remember price realism looks to see if the price is too low to be true (i.e., realistic), and price reasonableness looks to see if the price is too high for what is being provided (i.e., whether it is fair and reasonable). Hopefully this back to basics helps dispel some of the confusion around these price evaluation techniques, but if you find yourself in a position with questions or a possible protest about price realism or reasonableness, be sure to reach out to a federal contracting lawyer such as ourselves, for help. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook The post Back to Basics: Price Realism vs. Price Reasonableness first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

The question is whether an agency can convert two or more existing single-award BPAs with overlapping scope into a de facto multiple-award BPA. Putting aside the obvious questions about what on earth OP's agency is doing, my answer to the question under the rules would be no, as the agency made the decision to deny competitors of additional BPAs when it determined that a single-award BPA was in the Government's interest. Converting these single-award BPAs into a multiple-award BPA after the fact subverts GSA competitive procedures and undermines the agency's rationales for awarding single-award BPAs to begin with.

FAR or RFO? If FAR it seems your question poses the idea of "multiple award" BPA's as discussed in FAR 8.405-3 and see paragraph (a)(b)(2). If RFO 8.4 leads you to subpart 538.71 where 538.7104-1 allows for 'one or more" FSS contractors on BPA's and allows at paragraph (a)(4) for less than "all" competition with caveates.

Hello everyone, I am looking for some insight and community consensus on a situation involving contract formation under the new FAR Overhaul (RFO) language, specifically regarding how a vendor accepts a Government offer. I wanted to see how other contracting professionals are interpreting this shift. We recently issued a Purchase Order. The vendor did not sign the physical signature block on the PO. Instead, they sent an email stating that they "formally accept the PO" and that "performance has been initiated." The vendor subsequently failed to deliver. I am trying to determine if a binding bilateral contract was actually formed based on the changing regulatory text. Old FAR 13.004(b) "...the contracting officer may ask the supplier to indicate acceptance of an order by notification to the Government, preferably in writing." New RFO 12.201-1(b) "...a contract is formed when the supplier accepts the Government’s offer, either by written acceptance of the purchase order or substantial performance of the purchase order." While the language is similar, the Part 12 RFO text feels much more vague in application. My primary concerns are: The Definition of "Written Acceptance": I can see how the RFO 12.201-1(b) language clearly applies to a vendor physically (or digitally) signing the actual purchase order form to establish a bilateral contract. However, is an informal email simply stating they accept the PO legally sufficient to meet the strict threshold of "written acceptance of the purchase order," or does that fundamentally differ from a bilateral signature on the document itself? Under the old FAR we did not accept email as proof of acceptance of a contract, but substantial performance or a signature. However the new language appears to permit this, which would greatly reduce the efficiency of unilateral purchase orders if contractors can now just respond to the email saying they accept, as then we will have to do T4Ds instead of withdrawing the purchase orders. I would appreciate any thoughts, past experiences, or case law precedents you might have regarding this specific change in the language.

It sometimes takes a little time for federal statutes to be reflected in federal regulations. Recent proposed updates to DFARS regarding Foreign Ownership, Control, or Influence (FOCI) is a good example of this. These updates, meant to implement sections of the National Defense Authorization Acts of 2020 and 2021, are meant to mitigate risks related to FOCI or beneficial ownership. Today, we shall explore these updates and what they mean for federal contractors. As a brief refresher, a beneficial owner, as defined by 17 C.F.R. § 240.13d-3, means “any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (1) Voting power which includes the power to vote, or to direct the voting of, such security; and/or, (2) Investment power which includes the power to dispose, or to direct the disposition of, such security.” FOCI, as noted in 32 C.F.R. § 117.11, is when “(i) A foreign interest has the power to direct or decide issues affecting the entity’s management or operations in a manner that could either: (A) Result in unauthorized access to classified information; or (B) Adversely affect performance of a classified contract or agreement,” or “(ii) The foreign government is currently exercising, or could prospectively exercise, that power, whether directly or indirectly, such as: (A) Through ownership of the U.S. entity’s securities, by contractual arrangements, or other means, or; (B) By the ability to control or influence the election or appointment of one or more members to the entity’s governing board.” On May 7, 2026, the Department of Defense proposed a rule that would implement section 847 of the 2020 NDAA and section 819(c)(2) of the 2021 NDAA. As the proposed rule itself states, Section 847 requires covered contractors and subcontractors to disclose their beneficial ownership and whether they are under FOCI to the Defense Counterintelligence and Security Agency (DCSA), as well as update DCSA regularly for changes on the same. As for Section 819(c)(2), that provision is simply a statutory deadline for DoD to make these changes. (Of note, the statutory deadline was July 1, 2021). With regards to the actual proposed rule, first, DoD seeks to define “covered contractor or subcontractor” as “existing or prospective contractors or subcontractors, at any tier, of DoD with a contract or subcontract valued above $5 million.” As for what is required of said covered contractor/subcontractors, the proposed regulation states that such entities must: disclose to DCSA their beneficial ownership and whether they are under any FOCI; update DCSA when changes occur (it does not specify if this means all changes to ownership or just changes that involve beneficial ownership or FOCI) if under FOCI, disclose contact information for each of the entity’s foreign owners that is a beneficial owner Effectively mitigate FOCI risks throughout the duration of the contract or subcontract Note that apparently, if the contract or subcontract is a commercial products/services contract or subcontract, the above disclosure requirement does not apply unless DoD determines the contract has a certain risk to national security or could compromise sensitive data. This latter exception to the exception was added by DoD out of fear that excluding all commercial item contracts would endanger national security. Of course, if you have some other contract or subcontract above $5 million, the disclosure requirement will apply during those contracts anyways. Meeting such disclosure requirements would apparently result in the contractor being marked as “eligible” in the National Industry Security System. Contracting officers would be forbidden from awarding, modifying, exercising an option, or extending a contract or order with a value in excess of $5 million if the contractor lacks this eligible status unless it is a commercial procurement as discussed above. Additionally, if approved as proposed, contractors can expect a new solicitation provision in these larger procurements that speaks to disclosure of beneficial ownership and FOCI. One important aspect of this provision is that it puts offerors on notice that if the contracting agency determines FOCI or beneficial ownership poses a risk to national security that can be mitigated, the offeror must agree at the time of award to implement a risk mitigation strategy within 90 days of said award. The one thing that stands out is that, with the definition of “beneficial ownership” as used in 17 C.F.R. § 240.13d-3 apparently applying, it would appear that disclosure must be made of any owner and change in ownership, not just foreign owners and changes in ownership involving foreign owners. The proposed solicitation clause on disclosure states: “If the Contractor has any changes in FOCI or beneficial ownership during performance of the contract, or if the Contractor is notified of such by a subcontractor at any tier or supplier, the Contractor shall report the changes by submitting an updated SF 328, Certificate Pertaining to Foreign Interests, in the National Industrial Security System.” If the change results in the contractor or subcontractor coming under FOCI, the prime would then have to report the foreign owner’s name, relevant information, and any available information about risk mitigation within three business days and, within 10 business days of notice from DCSA, initiate a plan to implement DCSA recommended actions. But even if the change doesn’t involve FOCI, it appears it must be reported to the National Industrial Security System. We will see if this rule gets tweaked a little more. Comments are welcome until July 6, 2026. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook The post Proposed Updates to DFARS Regarding Foreign Ownership, Control, or Influence first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Can a CO establish, under FAR 8.4 FSS, several single award BPAs and later solicit competition among the some of the FSS BPA holders?

I understand your point, but note that RFO part 16 and the EO are not diametrically opposed. The RFO indeed moved from a restrictive framework ("Contract types not described in this regulation shall not be used") to a permissive framework ("contract types...not described in this regulation, are permitted"). To your point, I imagine on balance the policies will result in a loss of efficiency, but there are still flexibilities to be found in the RFO that weren't there before.

Thanks @C Culham ! I also just re-read Professor Nash's article Sample Task Prices in IDIQ Contracting: Valid Only With Binding Rates?, 25 N&CR ¶ 20 (April 2011) I think this was the key takeaway from that article: Having expressed our view that this rule makes little sense, we understand why the GAO has arrived at it. We put in under the heading of making a silk purse out of a sow’s ear. The sow’s ear is the fact that the statutes require price to be evaluated in competitively negotiated procurements, yet there is no way to price an IDIQ contract because the agency hasn’t decided what to buy. The silk purse is what we called a “level of fiction” in Evaluating Cost to the Government When Quantities Are Unknown: A Puzzlement, 14 N&CR ¶ 10. Agencies are required to call for a fictional price, either by using sample tasks or multiplying proposed unit “prices” by estimated quantities. In order to make the resulting fictional price seem real, the unit “prices” have to be “binding.”

I have not been active in the arena for quite a while. Yet, here are a few thoughts/examples that may help in your research I found based on previous experience. You may have already found in your research but offered all the same. https://sam.gov/workspace/contract/opp/2b422539d44a4ec79de516056b8410db/view When it came to some IDIQ's we used a sample project where actual order priciing was based on IDIQ prices say for furnish and install pipe and negotiations via "fair opportunity" for unique aspects of the project. We found borrowing from the Federal Highway Admistration and using the "FP-14" specifications was a sound basis for firm fixed prices in the IDIQ and prices for the unique side as well negotiated for a specific task order. https://highways.dot.gov/federal-lands/specs/fp-14 And then of course there is the evolution to BPA's rather than IDIQ's. Some agencies are finding them to be a useful alternative. Once again they use a sample project for the cost/price evaluation to issue BPA's with the pricing of Calls being much more specific and not based on specific schedule pricinig of the BPA. Example - https://sam.gov/workspace/contract/opp/64fa02a81c3f49878afbffa8f6ad04d2/view Finally this read of IDIQ's for Federal Aid construction might raise additional ideas for you on where to extend your research to. I especially like the hints in the actual Federal Register Final Rule that ellude to variety of names beyond MATOCS such as JOC, push button, on call, stand-by, etc. https://www.fhwa.dot.gov/construction/cqit/idiq.cfm If you have not found these in your research to date I hope they help.

Sees the attached: BRIEFING PAPERS: Competitive Negotiation Under the Revolutionary FAR Overhaul. BP26-4_wbox.pdf

Thanks @joel hoffman . We don't have the authority under 15.304(c)(1)(ii)(A) that DOD, NASA, and the Coast Guard have, so we are finding it more challenging, as we know that the best/real price competition actually occurs at the task order level. So I'm researching how other agencies are doing it - I should have clarified that if an agency is using a process developed with the 15.304(c)(1)(ii)(A) authority that I can't use that example.

RFO :This update [to FAR Part 16] represents a deliberate shift from a restrictive to a permissive framework, empowering contracting officers to use novel and innovative contract structures ..." Seven months later... EO: Use of any non-fixed-price contract...must be justified in writing by the contracting officer to the agency head. Who - well, probably not the RFO team. and also probably not someone familiar with how governments actually work, unlike these two: Jennifer Pahlka, whose work I admire: The response to every failure is a new layer of oversight and approval. James Q Wilson, whom everyone should admire: The response to any scandal or failure is to add another layer of oversight.

The E.O. is what I call "political performative reform". It will produce nothing but wasted time and paper. That is not to say it isn't a reaction to a real problem. It says only that it will not solve the problem. Most acquisition reform, like the RFO, has been performative reform. The last great era of performative reform was the Clinton-Gore "Reinventing Government" campaign of the 1990s. It gave us "performance-based contracting" among other things. Some of you may have been around long enough to remember it.

Task order pricing for construction MATOC’s may be based upon competition among pool members, rather than fixed contract level pricing. It is highly impractical to use fixed contract unit prices for ID/IQ task orders due to highly variable market conditions and individual scopes of work/locations.

I'm looking for examples of how different agencies (I'm at GSA PBS) are doing their construction IDIQ contracting, most specifically how they are complying with CICA on the base/master contract pricing, and subsequently how they are doing the task order contracts. I'm very familiar with multiple ways this has been done historically (and have been discussed on Wifcon), but all options I've reviewed have various..., well, I'll call them "challenges." Any samples you can link me to or email me (if you message me I'll send you my GSA email) would be greatly appreciated. Thanks! Mike

I am an old mossback who has been involved with this stuff since the 1970s. This reminds me of the ASPR days when we had to write D&Fs for a lot if things. Back then you had to use what was known as formal advertising (sealed bidding today). For DoD, there were 17 exceptions to the use of formal advertising. To use one of those exceptions you had to write a D&F citing the exception and why it applied. In addition, if you wanted to use a cost reimbursement contract, you had to write another D&F. If you wanted t write a facilities contract (which no longer exists) you had to write another D&F. Some of these D&F's required secretarial approval. I don't remember which required such approval, but do remember, not having problems getting them approved fairly quickly. Thus, while a pain in the neck, to me, the key is going to be who gets delegated authority to grant these approvals. It may be a deputy assistant assistant deputy secretary who get the joy of doing so and does nothing but grant approvals. My question is who s behind this and why? This nonsense was done away with by statute 40 years ago.

Happy Friday! Mother’s Day is this Sunday, and it’s a good reminder to slow down and thank the moms, grandmas, stepmoms, and mother figures who somehow keep everything moving. Whether you’re planning a get together, making a phone call, sending flowers, or just spending extra time together, we hope they will feel extra special. Happy Mother’s Day! This week in federal government contracting included a focus on fixed-price contracts, an update on 2024 spending, and new regulatory changes. Defense Federal Acquisition Regulation Supplement: Mitigating Risks Related to Foreign Ownership, Control, or Influence (DFARS Case 2021-D011) DoD strikes deals with major tech firms to deploy AI on classified networks The preference for fixed-price contracts receives accountability boost IBM security executive emerges as possible contender to lead CISA GAO: Artificial Intelligence: Uses and Risks for Small Business Contracting and Innovation Research Trump Order Stresses Use of Fixed-Price, Performance Based Contracts GAO: A Snapshot of Government-Wide Contracting for FY 2025 (interactive dashboard) FAR: Defense Federal Acquisition Regulation Supplement: Disclosure of Greenhouse Gas Emissions SBA Announces New $50 Million Grant Opportunity to Support Made in America Manufacturing, Workforce Training Trump admin floats policy language limiting contractor say on agency uses of technology SBA Administrator Loeffler Joins President Trump for National Small Business Week 2026 The post SmallGovCon Week in Review: May 4-8, 2026 first appeared on SmallGovCon - Government Contracts Law Blog.View the full article

Agree with FrankJon generally here from my view down in the trenches. Anecdote: I just had a talk this week with an office the has a LH technical support desk contract that will be soon converted to FP (this conversion pre-dates the EO). Their two initial concerns were that they couldn't estimate accurately enough the workload of the help desk to convert to FP, and that FP just means more expensive in exchange for nothing. I think they would argue that the performance risk is the government's and can't be transferred- customers don't know and don't care about the employer of the help desk rep. They see their cost risk as lower under LH, since their expressed cost risk was having to spend more money on their help desk. FP means either price is too high - they spend more for the same thing - or the price is too low, contractor will cut corners to save money and that will reflect poorly on their office, not the contractor and that will also lead to higher prices later on. So either way they will lose. For what it's worth, I think they are wrong on all accounts, but that's what I heard. Also - "Government in Fiscal Year 2024 identified approximately $120 billion obligated on cost-reimbursement consulting contracts alone. " I looked this up with FPDS, and I don't see how this number is possible. Non-FP contracts for all services - not just cost and not just consulting - is $189 billion. I see no way to slice the data to get to their result from public data using standard definitions.

The White House recently released Executive Order 14402 titled Promoting Efficiency, Accountability, and Performance in Federal Contracting (EO 14402). EO 14402 was released on April 30, 2026. This EO requires agencies to use fixed-price contracts over cost-reimbursement wherever possible. Because of its potential impact on federal contractors, let’s walk through the highlights in this post. EO 14402 seeks to solve the problem that “Federal procurement has tolerated unpredictable costs, bloated overhead, and weak performance incentives.” In order to solve that, the federal “Government must adopt the best business practices to protect taxpayer dollars, hold contractors accountable, and achieve demonstrable returns on investment.” In particular, the EO contrasts fixed-price contracts with “cost-reimbursement” contracts. Fixed-price contracts “tie profit to the contractors’ performance”; reward “work that exceeds expectations and penalizing subpar performance”; and “encourage[] contractors to control costs.” The concern with cost-reimbursement contracts is that they “frequently allow for poorly defined product or service deliverables and increase the Government’s exposure to overspending by providing little incentive to control costs.” The EO notes that about $120 billion in FY 2024 went to cost-reimbursement consulting contracts. So, the goal of the EO is to make federal contracting more efficient and reduce cost-reimbursement contracts. Certainly a laudable goal and one that many administrations have worked on. But how will this EO change the calculus? EO 14402 seeks to make fixed-price contracts “the default and preferred method of procurement in order to advance cost predictability and budget discipline.” The EO requires the following: Agencies must, to the maximum extent allowed, “utilize fixed-price contracts, which for purposes of this order shall mean fixed-price contracts as defined in Part 16 of the [FAR], or contracts that tie profit to performance-based metrics when appropriate.” “Use of any non-fixed-price contract, including a cost-reimbursement contract, a time-and-material contract, a labor-hour contract, or any other non-fixed-price type of contract . . . must be justified in writing by the contracting officer to the agency head.” If a non-fixed-price contract or portion of contract exceeds certain dollar amounts, “the agency head must approve the contract in writing.” The minimums are: DoW $100 million, NASA $35M, DHS $25M, All other agencies $10M. The dollar thresholds will require approval by agency head at some pretty low amounts. $10 million for a civilian agency is not that large of a contract. Does the approval apply to each order, or just the baseline contract? I assume it applies to each order since that has the dollar amount attached. The EO does allow the the approval to be delegated to “appropriate non‑career employees.” Plus, there are some exceptions for “emergency, major disaster, or contingency operation” contracts and for “research and development or pre‑production development for major systems acquisition.” 90-day Timeline. Agency heads have 90 days to “seek to modify, restructure, or renegotiate its 10 largest non-fixed-price contracts by dollar value (including non-fixed-price contracts entered into on behalf of another agency) to facilitate use of fixed prices and performance-based incentives.” Agency heads must submit the number and value of non-fixed-price contracts to OMB within 90 days of the EO and then twice a year. In addition, the OMB shall issue guidance to all agencies within 45 days to implement these rules. FAR clauses have promoted fixed-price contracts already. For instance, RFO 16.301-2 states, that a “contracting officer shall use cost-reimbursement contracts only when” “[c]ircumstances do not allow the agency to define its requirements sufficiently to allow for a fixed-price type contract” and “2) U”[u]ncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract.” In addition, the “contracting officer shall document the rationale for selecting the contract type in the written acquisition plan and ensure that the plan is approved and signed at least one level above the contracting officer (see 7.103(j) and 7.105). However, the EO puts the use of fixed-price contract at the forefront and requires reporting on efforts from all federal agencies. It also makes approving larger contracts the subject matter of the agency head, rather than individual contracting officers. The net effect should be an increase in fixed-price contracts and a reduction in cost-reimbursement contracts. However, it’s not clear if agencies will simply continue to approve cost-reimbursement contracts. Questions about this post? Email us. Need legal assistance? Call us at 785-200-8919. Looking for the latest government contracting legal news? Sign up for our free monthly newsletter, and follow us on LinkedIn, Twitter and Facebook The post EO Maximizes Fixed-Price Over Cost-Reimbursement Contracts first appeared on SmallGovCon - Government Contracts Law Blog.View the full article