Types of Contract Confusion

[Boogie_Down]

I'm working on an IDIQ contract that will be a firm fixed price contract.  Within my Acq. Plan I state that this will be a firm fixed price IDIQ contract.  My local QA review had me remove the term "firm fixed price" and stated that the contract type is an IDIQ not a firm fixed price contract.  I responded citing FAR 16.101(b) stating there are two broad contract types which are fixed price and cost reimbursement.  I said that the contract type is fixed price and the contract delivery with be an IDIQ.  I stated that I needed to list that this will be a firm fixed price IDIQ because it impacts what provisions and clauses that I will use.  Their response was that I can state in each TO that it is a firm fixed price.  I'm confused because shouldn't the provisions and clauses be tailored towards an fixed price contract?  I said that my concern would be that the base IDIQ will not have the adequate fixed price clauses now but I was overruled.  

My question is, am I interpreting the contract type correctly?  Is stating a firm fixed price IDIQ contract correct?  Or is the QA reviewer correct in that it's only an IDIQ with no mention of fixed price?

[Don Mansfield]

Read this:

Then share it with your QA reviewer.

[Boogie_Down]

12 minutes ago, Don Mansfield said:

Read this:

Then share it with your QA reviewer.

I sure will.  Thank you.  I cannot get them to sign off on the Acq. Plan without me removing "firm fixed price" which would put my solicitation in a pickle.  They will also be reviewing my solicitation for approval.  I'll try to discuss it with them again and show them your explanation.  I hope it helps.

[Don Mansfield]

Maybe don't use the term "contract type". Just say the contract will have a firm-fixed price compensation arrangement and an indefinite delivery indefinite quantity delivery arrangement.

[joel hoffman]

You need to Discuss this with you PCO/KO.

What gives your “local QA review” the right to dictate what pricing approach or arrangement you must use? i sense that they want you to use an ID/IQ  contract vehicle but not to identify the type of pricing arrangement. Are they in charge of the Acquisition plan? 

The acquisition team, and I presume, including the PCO, want to use an ID/IQ  with FFP orders. The plan should describe both the ID/IQ format and intended pricing arrangement (I.e., Type, see below).

I don’t know the format prescribed for your acquisition plan. However, it would be stupid not to describe the pricing arrangement for an ID/IQ where the acquisition only intends to issue FFP task orders..

Some FAR References

“Part 7 Acquisition Planning

7.104 General procedures.

…(c) The planner shall coordinate with and secure the concurrence of the contracting officer in all acquisition planning…

7.105 Contents of written acquisition plans.

…(b) Plan of action 

…(3) Contract type selection.  Discuss the rationale for the selection of contract type. For other than firm-fixed-price contracts, see 16.103(d) for additional documentation guidance. Acquisition personnel shall document the acquisition plan with findings that detail the particular facts and circumstances, (e.g., complexity of the requirements, uncertain duration of the work, contractor's technical capability and financial responsibility, or adequacy of the contractor's accounting system), and associated reasoning essential to support the contract type selection. The contracting officer shall ensure that requirements and technical personnel provide the necessary documentation to support the contract type selection…”

Also: 

“PART 16 - TYPES OF CONTRACTS 

“16.101 General.

(a) A wide selection of contract types is available to the Government and contractors in order to provide needed flexibility in acquiring the large variety and volume of supplies and services required by agencies…

(b) The contract types are grouped into two broad categories: fixed-price contracts (see subpart 16.2) and cost-reimbursement contracts (see subpart 16.3). The specific contract types range from firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed. In between are the various incentive contracts (see subpart 16.4), in which the contractor's responsibility for the performance costs and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance.”

“Subpart 16.2 - Fixed-Price Contracts

[16.201 General.

…(b) Time-and-materials contracts and labor-hour contracts are not fixed-price contracts.]”  [They are not Cost reimbursement contracts, either. They are separate types.]

“16.5 Indefinite Delivery Contracts

…16.501-2 General.

(a) There are three types of indefinite-delivery contracts: Definite-quantity contracts, requirements contracts, and indefinite-quantity contracts. The appropriate type of indefinite-delivery contract may be used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award. Pursuant to 10 U.S.C. 2304d and 41 U.S.C. 4101, requirements contracts and indefinite-quantity contracts are also known as delivery-order contracts or task-order contracts…

..(c) Indefinite-delivery contracts may provide for any appropriate cost or pricing arrangement under part 16. Cost or pricing arrangements that provide for an estimated quantity of supplies or services (e.g., estimated number of labor hours) must comply with the appropriate procedures of this subpart.”

 

[joel hoffman]

I just realized that you posted this under “Beginners”.  Ok, so it is important to know who is on the acquisition team that is planning the acquisition.

i don’t think that a QA reviewer can dictate either the Pricing “type” or contract vehicle/format/ “type”. I don’t know if you are on the Acquisition Planning team but you are supposed to coordinate the plan with your PCO, per the Part 7 reference above.

This is yet again another FAR semantic problem, isn’t it? So don’t get hung up on the term “contract type” where it falls under both Fixed Price payment type and ID/IQ/MATOC?/SATOC? contract format type. 

[joel hoffman]

2 hours ago, Don Mansfield said:

Read this:

Then share it with your QA reviewer.

Don, with all due respect, hi don’t think that it is up to a QA reviewer to dictate the contract type or the pricing arrangements for ID/IQ orders. The reviewer could perhaps suggest but not dictate pricing options to the AP team. 

It’s up the the PCO and other members of the acquisition planning team. That would be my first advice to a beginner. 

Edited August 31, 2022 by joel hoffman

[bob7947]

Don:

I started correcting the  code in your blog post.  That is when the software was making up its own code with decorations in 2010.  I see what was done and I think I can fix it.  I'll try to get back to it later.

[C Culham]

4 hours ago, Boogie_Down said:

I'm confused because shouldn't the provisions and clauses be tailored towards an fixed price contract? 

Don's response is spot on.  Two simple thoughts to help.

So what does the QA person believe should be in 52.216-1?

And has the QA person considered 52.216-18 at (b) with regard to your discussion.

[joel hoffman]

1 minute ago, C Culham said:

Don's response is spot on.  Two

Yes - but it’s not the QA reviewer’s decision for that either. 

[C Culham]

5 minutes ago, joel hoffman said:

Yes - but it’s not the QA reviewer’s decision for that either. 

Slow down Joel I was editing while you responded.  Are you sure?   Maybe the agency has regulation or policy that gives the QA person the power.  Maybe even power delegated from the HCA.

[joel hoffman]

Carl, I think that the newbie should first consult with the KO/PCO (required per above reference) and the acquisition team. I really doubt if the (self-declared Beginner)  OP came up with the acquisition strategy on their own.

The OP shouldn’t have to debate a “Quality Assurance reviewer” concerning the acquisition strategy. Get confirmation of the acquisition strategy from the team and the KO.

According to the Acquisition plan coverage in FAR 7.104, the plan explains the reasons for the strategy and approach. For other than firm-fixed-price contract type, the “Acquisition personnel shall document the acquisition plan with findings that detail the particular facts and circumstances, (e.g., complexity of the requirements, uncertain duration of the work, contractor's technical capability and financial responsibility, or adequacy of the contractor's accounting system), and associated reasoning essential to support the contract type selection. “ 

In addition, the contracting agency should have the requisite expertise and personnel to award and manage cost contracts or task orders.

In short, the acquisition plan would have to have a whole lot more discussion if there may be the possibility of cost type task orders, as the reviewer has suggested.

[joel hoffman]

1 hour ago, C Culham said:

Maybe the agency has regulation or policy that gives the QA person the power.  Maybe even power delegated from the HCA.

“Maybe” is speculation. The OP didn’t indicate that. What the The OP did say made very good sense though.  

[C Culham]

3 hours ago, joel hoffman said:

“Maybe” is speculation. The OP didn’t indicate that. What the The OP did say made very good sense though.  

I apologize I guess you know all the facts.   Carry on.

[joel hoffman]

4 hours ago, C Culham said:

I apologize I guess you know all the facts.   Carry on.

Carl, I wasn’t trying to be rude to you. It is exasperating when original posters dribble facts out as a thread proceeds. Im taking the scenario as originally described. If the reviewer has the last word, why would the OP have asked for our opinions? Based upon the information provided, there doesn’t appear to be anything wrong with the acquisition strategy that the OP is articulating. The KO should be the person that the OP confers with here. 

[Boogie_Down]

19 hours ago, Don Mansfield said:

Maybe don't use the term "contract type". Just say the contract will have a firm-fixed price compensation arrangement and an indefinite delivery indefinite quantity delivery arrangement.

Will do.  Thank you.

[Boogie_Down]

17 hours ago, joel hoffman said:

You need to Discuss this with you PCO/KO.

What gives your “local QA review” the right to dictate what pricing approach or arrangement you must use? i sense that they want you to use an ID/IQ  contract vehicle but not to identify the type of pricing arrangement. Are they in charge of the Acquisition plan? 

The acquisition team, and I presume, including the PCO, want to use an ID/IQ  with FFP orders. The plan should describe both the ID/IQ format and intended pricing arrangement (I.e., Type, see below).

I don’t know the format prescribed for your acquisition plan. However, it would be stupid not to describe the pricing arrangement for an ID/IQ where the acquisition only intends to issue FFP task orders..

Some FAR References

“Part 7 Acquisition Planning

7.104 General procedures.

…(c) The planner shall coordinate with and secure the concurrence of the contracting officer in all acquisition planning…

7.105 Contents of written acquisition plans.

…(b) Plan of action 

…(3) Contract type selection.  Discuss the rationale for the selection of contract type. For other than firm-fixed-price contracts, see 16.103(d) for additional documentation guidance. Acquisition personnel shall document the acquisition plan with findings that detail the particular facts and circumstances, (e.g., complexity of the requirements, uncertain duration of the work, contractor's technical capability and financial responsibility, or adequacy of the contractor's accounting system), and associated reasoning essential to support the contract type selection. The contracting officer shall ensure that requirements and technical personnel provide the necessary documentation to support the contract type selection…”

Also: 

“PART 16 - TYPES OF CONTRACTS 

“16.101 General.

(a) A wide selection of contract types is available to the Government and contractors in order to provide needed flexibility in acquiring the large variety and volume of supplies and services required by agencies…

(b) The contract types are grouped into two broad categories: fixed-price contracts (see subpart 16.2) and cost-reimbursement contracts (see subpart 16.3). The specific contract types range from firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed. In between are the various incentive contracts (see subpart 16.4), in which the contractor's responsibility for the performance costs and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance.”

“Subpart 16.2 - Fixed-Price Contracts

[16.201 General.

…(b) Time-and-materials contracts and labor-hour contracts are not fixed-price contracts.]”  [They are not Cost reimbursement contracts, either. They are separate types.]

“16.5 Indefinite Delivery Contracts

…16.501-2 General.

(a) There are three types of indefinite-delivery contracts: Definite-quantity contracts, requirements contracts, and indefinite-quantity contracts. The appropriate type of indefinite-delivery contract may be used to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award. Pursuant to 10 U.S.C. 2304d and 41 U.S.C. 4101, requirements contracts and indefinite-quantity contracts are also known as delivery-order contracts or task-order contracts…

..(c) Indefinite-delivery contracts may provide for any appropriate cost or pricing arrangement under part 16. Cost or pricing arrangements that provide for an estimated quantity of supplies or services (e.g., estimated number of labor hours) must comply with the appropriate procedures of this subpart.”

 

Thank you for the references.  The QA team isn't in charge of the AP, but their signature on the review is mandatory before I send it up higher for further approval.

[Boogie_Down]

17 hours ago, joel hoffman said:

I just realized that you posted this under “Beginners”.  Ok, so it is important to know who is on the acquisition team that is planning the acquisition.

i don’t think that a QA reviewer can dictate either the Pricing “type” or contract vehicle/format/ “type”. I don’t know if you are on the Acquisition Planning team but you are supposed to coordinate the plan with your PCO, per the Part 7 reference above.

This is yet again another FAR semantic problem, isn’t it? So don’t get hung up on the term “contract type” where it falls under both Fixed Price payment type and ID/IQ/MATOC?/SATOC? contract format type. 

I am part of the team along with the BC and COR.  The QA reviewer is a mandatory approval step and is forcing me to make edits that I don't think are correct.  I'm looping the team in on it and we are going to have a discussion with them.

I am not going to use the term "contract type" as Don said.  I will discuss the delivery and compensation methods and further tell them how important it is to flesh the compensation method out within the AP.

[Boogie_Down]

16 hours ago, C Culham said:

Don's response is spot on.  Two simple thoughts to help.

So what does the QA person believe should be in 52.216-1?

And has the QA person considered 52.216-18 at (b) with regard to your discussion.

They haven't addressed this yet.  They have ignored most of my comments.  We are scheduling a meeting and will discuss this in detail.

[Boogie_Down]

16 hours ago, C Culham said:

Slow down Joel I was editing while you responded.  Are you sure?   Maybe the agency has regulation or policy that gives the QA person the power.  Maybe even power delegated from the HCA.

After I complete the final draft of the AP it goes through several approval reviews that require a signature on the document before moving to the next reviewer.  My AP was reviewed by the BC, DC and is not stuck at the QA review on this issue.  I need to have it resolved before I can move it forward.   

[Boogie_Down]

7 hours ago, joel hoffman said:

Carl, I wasn’t trying to be rude to you. It is exasperating when original posters dribble facts out as a thread proceeds. Im taking the scenario as originally described. If the reviewer has the last word, why would the OP have asked for our opinions? Based upon the information provided, there doesn’t appear to be anything wrong with the acquisition strategy that the OP is articulating. The KO should be the person that the OP confers with here. 

My CO supports me and my decision but everyone seems to accept what QA says without question here.  So this is the first time it appears where the QA reviewer is asking contracting to make a change that isn't correct and will cause further issues with the acquisition and I haven't gone along with their decision.  I think there's some agency confusion about who controls what when it comes to reviews.  Our legal team does the same and they take a hard lined stance on issues that are debatable and will not give legal approval unless contracting does everything that they say.  It's a weird group dilemma.  QA is supposed to be a support and resource outlet but will not let formal reviews go through unless they agree with every issue.  Most of my team will just make the changes without question and go on.  Many are burned out and don't want to go through the trouble of pushing back or questioning decisions.  I normally go along with everything as well except this seems like an issue that can cause me a lot of headache down the road with the solicitation.

[Don Mansfield]

Seems to me the QA reviewer doesn't want to change the contract type, they just want to change the way it's described in the AP. I don't see why this should have any effect on provision or clause selection.

[Voyager]

@Boogie_Down, ask the QA reviewer if he/she is just making it vague enough in writing in the AP so that you don’t have to go back and get it reapproved if you eventually change course. That’s a paperwork nightmare and a common problem you’ll want to avoid. Oh and it’s a sign of a bureaucracy too, but I digress (you and I both work in one).

Because of the Planning Fallacy, there's always the chance you could add a T&M CLIN or something, and you wouldn’t want to be inhibited from doing that by the additional action of needing to revise - and get COCO/HCA to sign - the AP.

[Voyager]

Then again, if this is entirely Firm-Fixed Price, your CO’s boss could approve, depending on your agency supplement’s implementation of FAR 7.103(j):

https://www.ecfr.gov/current/title-48/chapter-1/subchapter-B/part-7/subpart-7.1#p-7.103(j)

[joel hoffman]

Boogie what is the BC? Sorry for not knowing. DC = Director of Contracting, right?