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Vern Edwards

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Everything posted by Vern Edwards

  1. From the Department of Veterans affairs link provided by C Culham, a memo from the Executive Director, Office of Acquisition and Logistics and Senior Procurement Executive (SPE), addressed to Heads of Contracting Activity (HCA), subject, "VA Procurement Policy Memorandum (PPM) 2020-01, Contracting Officer Warrant Program", dated October 1, 2019: I have bolded every appearance of the word "value". Now, in the context of this memo, what is the value of an IDIQ contract? We're not talking about the application of FAR dollar thresholds, so FAR 1.108 does not apply.
  2. If contract specialists were taught about and understood contract line items and line-item structuring and about how the FAR works, questions like the OP's would never be asked. And does anyone ever look up "hybrid" in a dictionary?
  3. I don't see why not. The contract could have one line item for the services and one line item for the concession, with different clauses applying to each. <Sigh> The never-ending quest for examples. The contract specialist's lodestone. The Grail. I don't know of any examples, but someone has probably done it. There are very few things that no one has done. <Sigh> OT authority. What Congress hath wrought out of its incompetence. Got a problem you can't figure out how to solve? How about OT authority? I don't know. It depends on what the agency's OT authority covers. If your agency has OT authority, find the statute and read it.
  4. Yes, the purchase ("order") of widgets would be a contract. See the definition of "contract" in FAR 2.101. But it probably will not be subject to the executive order. The government generally distinguishes among contracts for "supplies "(products, goods), for "services", and for "construction". See the definitions of "supplies" and "construction" in FAR 2.101 and the definition of "service contract" in FAR 37.101. The plain language of the executive order states that it applies to contracts for services, construction, and leaseholds of real property. It makes no mention of contracts for supplies (products, goods) and specifically states that it does not apply to subcontracts "solely" for "products". So it appears that it will not apply to a contract or subcontract for the purchase of anything other than services and construction and for leases of real property. However, the executive order must be implemented through the Federal Register rule-making process. The agencies tasked with issuing implementing regulations will probably publish an "interim rule", which will take effect before the receipt of public comments, and ultimately issue a "final rule" after consideration of public comments. The rules will be drafted in haste. Until they are published, we cannot be sure what they will say and how they will implement the policy. There will be issues of interpretation and application. For instance, it's not clear whether it will apply to contracts for supplies that include installation and maintenance or that include on site repair warranties, although some people will insist or speculate that it certainly does or certainly doesn't. Will it apply to Other Transactions ("contract-like instruments")? In short, don't hold your breath waiting for clarity and certainty. And there will almost certainly be litigation in Federal court to block the order, which could delay its implementation. Stand by now, RF-SA, for insistent requests for more information and for rampant speculation and war stories.
  5. @Lakegirl2010The above from C Culham is the appropriate response to your inquiry. You should send your request to the COR in writing with a copy to the contracting officer. Keep your request short and to the point: Pursuant to what term of the contract do you make your request? You want your request to be formal, but not a rejection, because it might be valid. Don't comply, but don't refuse, and don't assert that the request is a change until you see the COR's (or the CO's) response and think it through. Document all your communications with the COR and CO about this matter. Things may become tense, so stay cool.
  6. No, if by "award" you mean issuing a task or delivery order.
  7. @Tzarina of Compliance In your opening post you asked: I don't know of anyone in the Federal government who has done a PFS contract under the FAR or an other transaction, and no one has stepped up here to date to say that they have. The responses that you have received thus far, including mine, have not been helpful. As I said, I don't think FAR provides for PFS contracting, wherein a private financier pays a service provider and the government pays the financier if the service provider is successful. It's a strange kind of subcontracting arrangement conjured up by bureaucrats short of taxpayer money. Now you ask: I don't want to sound harsh. I don't mean to be. But it strikes me that you have heard about something that seems promising, but you haven't done enough research and don't understand PFS contracting or the FAR well enough to figure out how it would work, so you have come here. I for one don't want to write a thousand words or more in this awkward back-and-forth and forever-branching-out forum to sort things out for you. Consider this from the Delaware State Code that I cited earlier: https://delcode.delaware.gov/title29/c069/sc07/index.html As I tried to explain in my earlier post, PFS contracting is largely a financing arrangement. The FAR makes no mention of and prescribes no rules or guidance for such privately financed contracts. You could call Delaware officials to learn more about what they are doing, but they probably know next to nothing about the FAR and what it permits federal agencies to do. In short, if you want to know more about the possibility of PFS contracting under the FAR, either wait for someone to post here who has done one under the FAR or start a research file and go to the library and make some phone calls. Best of luck to you.
  8. FAR 1.108 says: Emphasis added. That rule explains how to interpret dollar thresholds in the FAR. It does not explain how to interpret limitations on certificates of appointment. The general rule when I was a contracting officer was that the dollar limitation on a warrant referred to the maximum obligation that a contracting officer could make. But that was before the widespread use of IDIQs that we see today. When the exercise of an option does nothing more than give the government a right, without entailing a new obligation, I don't see how the dollar amount on a warrant has any applicability. The maximum on an IDIQ contract is a limitation on a right, not an obligation. Moreover, I'm not sure that COs modify IDIQ contract maximums when exercising options. In any case, obligations other than a minimum are made on task and delivery orders, not on the option exercise document. Maybe the amount on a warrant means different things in different agencies. Maybe the OP should address their question to the authority that signed the certificate of appointment.
  9. That must be a local policy. There is nothing in statute or governmentwide regulation that requires the issuance of a delivery order within 24 hours after contract award.
  10. Carl has, I think, made the point that if the option has its own maximum, then that's the level of authority that the CO must have. Good catch, Carl. But I'm not sure that applies to warrant authority, since the maximum is not an obligation, and dollar limits on certificates of appointment are usually obligational limits.
  11. If: the contract is IDIQ, and all the option will do is extend the contract ordering and performance periods as set forth in FAR 52.216-18 and 52.216-22, and there is no minimum guarantee for the option period, then exercising the option would not create an obligation. And if the $250K warrant states a limit only on obligational authority, then any CO should be able to exercise it.
  12. Pay for success contracting is really a funding scheme. The idea has been around for about ten years. It's being done by some states, Delaware is one that I know of. See Delaware Code, Title 29, Part VI, Ch. 69, Subchapter VII, which defines "pay for success contract" as follows at § 6990: See also Burand, "Contracting (Incompletely) for Success: Designing Pay for Success Contracts for Social Impact Bonds (SIBS)," Cornell Journal of Law and Public Policy (Fall, 2019). It cannot be done under FAR. It's not really about procurement contracts. There would have to be authorizing legislation and new regulations, which would take years for Congress and the FAR councils to produce. Congress has mentioned pay for success contracts about four times, mostly in hearings in connection with war on poverty and welfare programs.
  13. For those of you who don't know, Major Matthew Fleharty is a U.S. Air Force officer, a graduate of the U.S. Air Force Academy, where he earned a Bachelor's degree in economics. He is now serving as a Program Element Monitor in the Pentagon after spending a year studying at Harvard, where he earned a Masters degree in public administration. He also earned an MBA at the Naval Postgraduate School. Before going to Harvard, Matthew served as the chief of an Air Force contracting office. Before that he was the executive officer for the Deputy Assistant Secretary of the Air Force for Acquisition (Major General Holt), and before that he served as a contracting officer with an unlimited warrant in the Global Positioning System Directorate at the Air Force Space and Missile Systems Center. Matthew is the outstanding example of everything that an acquisition professional should be, as demonstrated by his last post.
  14. I used the guidance available at the time, which was not much. The Weighted Guidelines do not require the use of formal risk assessment techniques. Look at the guidance in DFARS 215.404-71-2 and -3. Also see this: https://www.dau.edu/tools/Lists/DAUTools/Attachments/122/WGL Extraction.pdf The WG are just analytical tools. The results you get are just aids to analysis and argument. I used to do three or four of them for a negotiation, plugging in different numbers just to see what results I'd get and how convincing I could make them seem, not only to the contractor, but also to the people who would review my file. It's a game, Dude! PLAY it!
  15. I think open discussion of risk is an important topic in price negotiation. I wouldn't hesitate to share my risk assessment.
  16. I have worked with the DOD weighted guidelines since 1975 and have shared my computations with contractors in several negotiations with some positive results and a few laughs. If a CO understands the weighted guidelines method and knows how to use it, he or she need not worry about being shot down. The negotiator for the other side can disagree, and undoubtedly will, but opinions are just opinions.
  17. I gave you my best answer. I hope it was clear. Negotiating is fun. Enjoy.
  18. Keep in mind that an increase in the estimated cost of a cost-reimbursement contract need not be based on a contract change in order for the government to increase the estimated cost. If, in accordance with FAR 52.232-20(b) the contractor notifies the CO that "The total cost for the performance of this contract, exclusive of any fee, will be... greater... than had been previously estimated," then the CO must decide whether to (1) fund the overrun and increase the estimated cost, (2) modify the contract to reduce the estimated cost, (3) terminate the contract, or (4) let the contractor work until the funds run out. It doesn't matter why the contractor is going to overrun, the choices are still the same. An increase in the estimated cost is an increase in the government's obligation and must be funded. This is cost-reimbursement contracting 101.
  19. If you are negotiating an equitable adjustment, I don't think you should begin by discussing profit. If the EA is based on the changes clause, I think you should begin the negotiation with a discussion of the change and the consequent change in cost. Only after you have settled the issue of cost should you go into the issue of profit. When the time comes to discuss profit, I generally do not like to negotiate profit on the basis of percentage. That's because profit should reflect risk—the higher the risk the higher the profit. Thus, if the estimate of the effect of the change on cost ranges from, say, $1,000,000 to $1,250,000, then I would plot a profit that decreases in amount as the cost settlement amount approaches $1,250,000. The rate of decrease could be linear or nonlinear. I would not utter or acknowledge the word "percentage." On the other hand, taking what might be an easier path, if the changed work were similar in nature to the work originally specified, I might agree to apply the contract profit percentage to the increase. If the changed work were more challenging, I might agree to a higher percentage. If the changed work were less challenging I would propose a lower percentage.
  20. I'm not sure I understand that question. Please clarify. Are you asking whether to begin the negotiation with a discussion of profit percentage or whether to begin the negotiation of profit with a discussion of profit percentage?
  21. @Don MansfieldDid you see footnote 6? And do you think DODM 4120.24 is covered by 5 USC 553(a)(2).?
  22. @NASA COFirst, let's use proper terminology. In professional discussion there is no such thing as a "cost-plus" contract. There are cost-reimbursement contracts: cost (no fee), cost-sharing, CPFF, CPIF, and CPAF contracts. Cost-reimbursement contracts have an "estimated cost" or "target cost," not a "contract value." If the current estimate to complete a cost-reimbursement contract exceeds the current contract estimated cost, then the government has a choice. It can (a) increase the estimated cost to cover all or part of the projected overrun, (b) terminate the contract, or (c) let the contractor stop working when the funds run out. Since an increase in the estimated cost of a cost-reimbursement contract would be an increase in the government's obligation (see FAR 52.232-20 or -22), the government must have appropriated funds to cover the amount of the increase. Increasing the estimated cost without enough appropriated funds to cover the amount of the increase would violate the Anti-deficiency Act (ADA), for which there are criminal penalties. So, NASA CO, are there funds to cover an increase in the estimated cost from $385M to $1B? If not, then the mod that the PM wants would be illegal. (The ADA provides for criminal penalties.) You cannot increase the estimated cost just to save the PM from having to deal with settling overruns. You do it to increase the obligation of both the government and the contractor. If the PM does not understand all that, then he or she is professionally ignorant. (Maybe confused by people who talk about "contract value.") The CO should understand all that and explain it to the PM with appropriate references—FAR clauses and the GAO Red Book.
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