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Everything posted by metteec

  1. Unless your contract says that the Government can, then no it cannot compel you. However, see FAR 15.404-4©(4) on limitations on profit in certain types of contracts: (4)(i) The contracting officer shall not negotiate a price or fee that exceeds the following statutory limitations, imposed by 10 U.S.C. 2306(d) and 41 U.S.C. 254(: (A) For experimental, developmental, or research work performed under a cost-plus-fixed-fee contract, the fee shall not exceed 15 percent of the contract’s estimated cost, excluding fee. ( For architect-engineer services for public works or utilities, the contract price or the estimated cost and fee for production and delivery of designs, plans, drawings, and specifications shall not exceed 6 percent of the estimated cost of construction of the public work or utility, excluding fees. © For other cost-plus-fixed-fee contracts, the fee shall not exceed 10 percent of the contract’s estimated cost, excluding fee. If your contract is one of these types of contracts, then it is illegal for the Government to enter into business with you when the fee exceeds those statutory maximums.
  2. Good thing you were not around for the Renegotiation Act. Going back to my administrative law days, the Renegotiation Act included a 6-percent limitation on profit that applied to both cost-type and fixed price contracts. Its purpose was to squelch what Congress considered rampant excessive wartime profits after World War II. The Renegotiation Act worked about as well as a swamp cooler in a Florida summer (not well, would not recommend it). I think your first mistake was to divulge your profit on a firm-fixed price line item if you did not have to. The only instance where you would need to release that information is if the Government required you to submit cost or pricing information so that it could make a fair and reasonable price determination. The Government people see that you are asking for a 15-percent profit, and are likely thinking that it is a little greedy. Why do Contractors need profit anyways when those profiteering mongrels should just give us everything free? Since I am not in the submersible widget business, I cannot speak to whether 15-percent is reasonable. What I would do if I had your contract was tell the Government that while you think your fee is reasonable, you really appreciate its business and your ability to meet the agency’s needs. As such, you would be willing to reduce your fee in this instance to 12-percent. Then, in the future, never indicate what your profit margin is on a firm-fixed price requirement unless required. By indicating your profit, though, you are just asking an area of contention. That does not mean that the Government will not ask you for price reductions in the future. Government people have it pretty tough, you know? I had to throw Government Furnished Property at a low flying bird just to eat lunch.
  3. I recommend taking a look at FAR Section 25.8. 25.801 General. Treaties and agreements between the United States and foreign governments affect the evaluation of offers from foreign entities and the performance of contracts in foreign countries. 25.802 Procedures. (a) When placing contracts with contractors located outside the United States, for performance outside the United States, contracting officers must— (1) Determine the existence and applicability of any international agreements and ensure compliance with these agreements; and (2) Conduct the necessary advance acquisition planning and coordination between the appropriate U.S. executive agencies and foreign interests as required by these agreements. ( The Department of State publishes many international agreements in the “United States Treaties and Other International Agreements” series. Copies of this publication normally are available in overseas legal offices and U.S. diplomatic missions. © Contracting officers must award all contracts with Taiwanese firms or organizations through the American Institute of Taiwan (AIT). AIT is under contract to the Department of State. Some countries are extremely territorial with business conducted under its borders. Many countries have Foriegn Ownership Control or Foriegn Ownership Restrictions, that prevent or limit foreign businesses from performing domestic work or owning domestic property. For example, if not for the Panamanian Free Trade Agreement of 2007, it would be extremely difficult for contractors to do business in Panama because of the stringent property laws and market protectionism. Woe to the foriegn firm that seeks to purchase real property in downtown Panama. The U.S. Department of State diplomatic consulate, Political/Economic Affairs Section, for the country you intend to business in would be a good place to start. You can sometimes find the point of contact by going onto www.usembassy.gov, and finding the country of performance. That country's embassy should have its website broken out by Government agency.
  4. I found a GAO case that involved a case very similar to the one the OP mentioned. In Comp. Gen Decision B-219136, the National Park Service (NPS) retroactively exercised an option to extend Ticketron's contract that expired four months previously. Ticketcenter, a competitor, protested NPS' decision because it was not in compliance with CICA. The findings of the case were as follows: “We agree with Ticketcenter that this attempt was improper. Upon expiration of Tickettron’s contract, neither the Government nor Ticketron was obligated by any of the contract terms; Ticketron no longer was bound to provide visitor reservation services, and the Government no longer was bound to pay Tickettron commissions for such services. The unexercised option provisions were part of the contract and, thus, necessarily expired when the contractual relationship was terminated. Thus, the attempted retroactive extension of Ticketron’s contract was not an extension at all. There was no contract to extend, but the noncompetitive creation of a new contractual relationship with Ticketron.” In the OP's case, if you were to "resurrect" the expired contract option at this point, you would need to comply with CICA. You could just extend the contract and hope and pray that no one would be any the wiser, but the FAR does provide the tools for handling the situation. Whether you would get a protest is dependent on how competitive your market is and which companies are paying attention; though, in my opinion, extending the contract without any sort of justification is an ethical abandonment. If you competed the initial term of the contract, you could extend the term of the contract through a logical follow-on long enough to recompete your requirement, see FAR 16.505((2)©. However, you would need to make a sufficient argument that the extension is in the best interest of the Government in terms of economy and efficiency. I think you'd have a reasonable justification based upon the information you provided.
  5. Don, you are correct. I dug out my agency's PA from the basement and it reads: "SBA delegates to the agency for re-delegation to all warranted agency contracting officers, its authority under section 8(a)(1)(A) of the Act to enter into 8(a) prime contracts, and its authority under section 8(a)(1)( of the Act to arrange for the performance of such procurement contracts by 8(a) participants. In accordance with 13 C.F.R 124.501(a), SBA delegates its 8(a) contract execution function." At that point I stopped reading (whoops). After your post, I read a a few pages further and found: "SBA remains the prime contractor on all 8(a) contracts and the 8(a) Participant remains the SBA's subcontractor."
  6. Brian, take a look at FAR 19.800(a) (emphasis added): (a) Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) established a program that authorizes the Small Business Administration (SBA) to enter into all types of contracts with other agencies and let subcontracts for performing those contracts to firms eligible for program participation. The SBA’s subcontractors are referred to as “8(a) contractors.” Don's argument is good one. However, many agencies have partnership agreements with the SBA that include specific instructions for agency's to follow when issuing contracts under the 8(a) Program. Under some of these partnership agreements, it delegates to agencies the authority to enter into a direct award with the 8(a) Contractor. Consequently, FAR Clauses prescribed at FAR Subsection 19.811-3 are not included. This delegation is pursuant to FAR 19.800(f): When SBA has delegated its 8(a) Program contract execution authority to an agency, the contracting officer must refer to its agency supplement or other policy directives for appropriate guidance. In the case of a delegation of authority, I do not think that FAR 12.102(e)(5) would apply because the agency would directly make the award to the 8(a) contractor, not the SBA.
  7. Sorry for being a little late to the conversation. I, too, have found quite a few instances were FAR Part 12 and FAR Subpart 19.8 conflict. For a written commercial item 8(a) acquisition over the SAT, what form would one use? FAR Section 12.204, Solicitation/contract form: "(a) The contracting officer shall use the Standard Form 1449, Solicitation/Contract/Order for Commercial Items, if (1) the acquisition is expected to exceed the simplified acquisition threshold; (2) a paper solicitation or contract is being issued; and (3) procedures at 12.603 are not being used." FAR Subsection 19.811-1, Sole Source: "The contracting officer shall use the Standard Form 26 as the award for, except for construction contracts, in which case the Standard Form 1442 shall be used as required in 36.701(a)." FAR Subsection 19.811-2, Competitive: "The contract will be prepared in accordance with 14.408-1(d), except that appropriate blocks on the Standard Form 26 or 1442 will be asterisked and a continuation sheet appended as a tripartite agreement..."
  8. Thanks for chiming in Vern. I consider “maximum” financial risk to be the highest possible risk assigned when the Contractor and Government agreed upon the contract’s scope and complexity. The highest possible risk would be all of that risk. The quote you provided was paraphrased from FAR Subsection 16.202-1, “[t]his contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.” Financial risk mitigation clauses that you mentioned, for example FAR Clause 52.236-2, Differing Site Conditions, or FAR Clause 52.211-18, Variation in Estimated Quantities (VEQ), root from the understanding that contingencies happen that can change the scope or complexity of work originally envisioned. But if both the scope and complexity of work were exactly as both parties agreed, the Government would have zero financial risk. I omitted FAR Section 36.207 in my previous response because it weakened my argument by labeling unit-price contracts as firm-fixed price. I think that a unit price contract could be a true firm-fixed price when used in conjunction with the VEQ clause and the Government provided reasonable estimates. Some agencies have cracked down on how the Government uses contracts under FAR Section 36.207 (October 2011 DOD Memo, “Contract Line Item Pricing Integrity”) because they were used improperly. I still routinely see fixed unit-price contracts used as a blank check (i.e. Purchase of Excavation Services @ $50 ft^3, Lump Sum NTE $300,000); the $300,000 is because the Government had that much money apportioned for the contract not because of a reasonable estimate. Or even scarier, a “FFP” unit-price contracts with the VEQ clause but with a bogus estimate; and the Government pays the fixed unit-price for a significant overrun. I wonder if the Government considered the contract type as a FFP in Foley Corporation CFC decision? My overall point was entering into a contract without knowing the actual amount of work required, either with an arbitrary estimate or no estimates at all, does not lend itself to a firm-fixed price contract just because there are fixed unit prices. Performance uncertainties are allowable under a firm-fixed price contract, but the Government needs to be able to identify those uncertainties and reasonably estimate their cost impact (FAR 16.202-2).
  9. Joel, I agreed with you that the contract type was not T&M – we are talking per unit prices here, not a per hour price plus materials cost. I stated that I understood how CSalt’s management could interpret the contract type as T&M when neither party at time of exercising the option could estimate accurately the extent or duration of the work or anticipate costs with any reasonable degree of confidence (FAR Section 16.601). If you read what CSalt stated, while his contracts specified maximums on the amount of excavation work required, others did not include any maximums. They were using the option to increase quantities as an open-ended commitment for an unknown quantity of excavation services. When I think of a firm-fixed price, I think of a contract that places the maximum financial risk on the Contractor to get the job done. If I tell the Contractor remediate land contaminated by an oil spill, but pay him by cubic feet of soil, the Government and the Contractor share substantial financial risk. The Contractor is removing both contaminated and uncontaminated soil for remediation, yet the Government pays for both. The Government will not know the actual cost of remediation effort until after completion, creating significant financial risk. The Government and Contractor sharing the financial risk and a firm-fixed price contract just seem mutually exclusive. In CSalt’s example, he would purchase excavation services to a maximum of 5,000 cubic feet. Based upon this, it is my assumption that the Government has a reasonable confidence that it requires only a maximum of 5,000 cubic feet. Further, CSalt mentioned that the Contractor was able to propose a fixed-price per cubic feet, leading me to believe that there is some sort of historical basis for that price. My recommendation, which you did not like, was to have a true firm-fixed price. If the Government had a reasonable confidence that the work was less than 5,000 cubic feet, it could have a line item for a maximum of 4,000 feet, or whatever historically those types remediation projects have required, and pay the Contractor a firm-fixed price. You may pay more than if you paid the Contractor only by the cubic foot, but you would not need multiple GS-14 Professional Dirt Watchers checking out how many cubic feet of soil the Contractor dug up. You would not need to spend the few hours working to modify your option modification to do the true-up. You could use that time saved to do more valuable tasks that us Contract Specialists have been reduced to, like checking first-tier subcontracts in FSRS; making sure your Contractor submitted its quarterly ARRA report; or making sure to fill out all fields in FPDS. I appreciate the link to ACE Omaha District. It seems like interesting work for a Contracting Officer. The work that they do would probably be on a much larger scale than the incidental excavation work proposed here. I think I have an air conditioner unit that is rated to cool 5,000 cubic feet, about the size of a small bedroom. For the large-scale remediation that ACE Omaha does, I’d agree that paying a firm-fixed price regardless of the number of cubic feet does not make sense; in most cases, I would say that any fixed-price type contract would not make sense either.
  10. FAR Subpart 17.2 is confusing and contradictory. In one part of FAR 17, it says you can use options for services, but then in another part it says you can’t use certain types of options for services. From the information that you included in your post, it appears to me that you are attempting to increase the quantity of the services purchased. As you stated, FAR 17.204 expressly allows options in services contracts. However, if you look at the prescriptions for the options that you may include in your contract at FAR Section 17.208, you have: FAR 52.217-6, Option for Increased Quantity; FAR 52.217-7, Option for Increased Quantity – Separately Priced Line Item; FAR 52.217-8, Option to Extend Services; and FAR 52.217-9, Option to Extend the Term of the Contract. In your case, either Option for Increased Quantity clauses would appear to be a good fit, except for the prescription expressly stating that they cannot be used for services (emphasis added): “Insert a clause substantially the same as…, in solicitations and contracts, other than those for services …” Therefore, I would argue that your new management is correct in that options for increasing quantities are not appropriate in the FFP services contract you explained. Further, I understand your management’s position that the method you are using is tantamount to a T&M contract if neither party knows the actual amount of cubic feet required for excavation at time you place your modification. In a FFP arrangement, both parties agree on the contract price to perform the task prior to performance. Per FAR Subsection 16.202-1, “[a] firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract.” In your case, you and the Contractor only know the Government’s maximum obligation, but the actual contract price could be significantly less, or potentially more depending on the amount of excavation. You would only know the actual contract price after completion of performance. Joel’s argument is that this may not be a T&M contract in terms of time spent and materials used, and I agree, but I do not see the arrangement you mentioned as a FFP. A creative contracting approach that I have seen where the Government rewrites its services requirement to be more supply-oriented to allow the use of FAR 52.217-6 or FAR 52.217-7. For example, instead of “Option for up to 3 additional Project Meetings,” you would make that a requirement for a certain deliverable, like a Project Meeting Report. As part of the requirement for the Project Meeting Report deliverable, the Contractor would need to provide those project meetings and detail the findings into the report. For your excavation requirement, rather than paying per cubic feet, you could require a Project Completion Report for Excavation Work up to 5,000 cubic feet. In order for this to be a FFP arrangement, if you exercised that option, the Contractor would be entitled to the unit price amount regardless of if he excavated 4,000 cubic feet or 5,000 cubic feet. Your second “option” would be to use an Indefinite Quantity-type contract and place on order based upon services needs as they arise. However, keep in mind that you would not be issuing a FFP order if you were to continue to use a price per cubic feet arrangement without knowing the number of feet at the time you issue your order.
  11. Based upon the information you provided, I am making a few assumptions. * First, the type of contract your client submitted a proposal last year is a multiple award Indefinite Delivery/Indefinite Quantity (IDIQ)-type contract. * Second, the IDIQ contract does not include specific terms for how the Government must request for quotations or proposals. For example, some Government-Wide Acquisition Contracts (GWACs) include specific instructions for ordering. The NASA SEWP GWAC, for example, allows both market research Request for Information or a Request for Quotation, but the ordering agency must select a Request for Quotation to make an award. * The Government requested that your client submit "another cost proposal" and did not include language in the that notice how the Government would consider that information in placement of the order. * The value of the acquisition exceeds $150,000. Based upon these assumptions, FAR 16.505( provides us with regulatory guidance here: ( Orders under multiple-award contracts— (1) Fair opportunity. (i) The contracting officer must provide each awardee a fair opportunity to be considered for each order exceeding $3,000 issued under multiple delivery-order contracts or multiple task-order contracts, except as provided for in paragraph ( (2) of this section. By requesting "market research" and not including placement procedures (such as significant factors and subfactors, including cost or price, that the agency expects to consider), the Government did not provide IDIQ holders with fair opportunity for consideration. Because the Government did not provide fair opportunity for consideration, it cannot issue an award based upon the revised cost information. The Government does not need to issue a "formal RFP," but it does need to provide fair opportunity in accrodance with the applicable regulations; review FAR 16.505((II) through (iv) for specific requirements in providing fair opportunity related to the dollar value of the acquisition. To sum up, I would carefully review the information requested and whether the Government made any indication if it intended to make an award using the information submitted. However, I generally recommend that Contractors respond to these sorts of requests - if your client is able to make a convincing business case to the Government, there is a possibility that the Government could make a new solicitation, thereby creating a new business opportunity. If a Contractor does not respond to my market research requests, I assume that it is not interested.
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