Jump to content

CAS Applicability - IDIQ level or at individual TO level?


Recommended Posts

I am having difficulty finding firm information around whether a CAS determination is applied at the IDIQ level (which is a $0 award) or at the individual Task Order level.  I've found a lot of opinions going both ways but does anyone have any regulatory information around this OR case support one way or the other?   Thank you

Link to comment
Share on other sites

On 6/1/2023 at 2:46 PM, Michelle Adams said:

whether a CAS determination is applied at the IDIQ level (which is a $0 award) or at the individual Task Order level.

As noted in the comments to date it is a fleeting question that has yet to resolved and is otherwise applied by the courts on a contract by contract basis.

On 6/1/2023 at 2:46 PM, Michelle Adams said:

(which is a $0 award)

Is not the lynch pin to your own question in your own specific instance.   Think about creating an obligation and recording an obligation. 

Link to comment
Share on other sites

On 6/1/2023 at 2:46 PM, Michelle Adams said:

I am having difficulty finding firm information around whether a CAS determination is applied at the IDIQ level (which is a $0 award) or at the individual Task Order level.  I've found a lot of opinions going both ways but does anyone have any regulatory information around this OR case support one way or the other?   Thank you

It's unclear to me what you mean by "CAS determination." Do you mean a determination regarding CAS coverage? I.e., are you asking whether CAS coverage is determined at the ID/IQ level or at the individual order level? I'm afraid there is very little in the way of regulatory language or case law to help you with this one. As Don pointed out, the FAR Council says CAS coverage is determined at the contract level but that is a silly position, since both TINA coverage and Limitation of Cost/Limitation of Funds requirements are applied at the order level. It's just silly to have a different approach for CAS coverage; but that's what the FAR Council asserted was the case.

I think your statement that an ID/IQ is a "$0 award" is not exactly correct. First of all, there's a guaranteed minimum, right? Second of all, there's a ceiling amount. Finally -- and in my view this is an important data point -- there is the Government estimate regarding how much $ will be awarded to the contractor or contractors. Maybe there's an IGE somewhere. Those might assist you.

But there's almost nothing firm you can rely on. This is has been a known issue for almost 30 years yet the CAS Board has declined to address it. So you are on your own, unfortunately.

Link to comment
Share on other sites

@here_2_help

Your comment made me think of the DOD Source Selection Procedures. Outside of the FAR 1.108(c) reference it's not relevant here, but it says “In determining applicability of these source selection procedures, calculate the value of the contract action in accordance with FAR 1.108(c), except that the value of an indefinite delivery indefinite quantity (IDIQ) contract includes only the value of orders for which pricing terms are established in the basic contract.” I find the instruction interesting given FAR convention and the things you've mentioned (e.g., minimums, IGEs, etc.).

Link to comment
Share on other sites

11 hours ago, Jamaal Valentine said:

@here_2_help

Your comment made me think of the DOD Source Selection Procedures. Outside of the FAR 1.108(c) reference it's not relevant here, but it says “In determining applicability of these source selection procedures, calculate the value of the contract action in accordance with FAR 1.108(c), except that the value of an indefinite delivery indefinite quantity (IDIQ) contract includes only the value of orders for which pricing terms are established in the basic contract.” I find the instruction interesting given FAR convention and the things you've mentioned (e.g., minimums, IGEs, etc.).

Strictly speaking, FAR 1.108(c) isn't relevant.  With only one exception, the prescriptions at FAR 30.201-3 & -4 point the reader to 48 CFR 9903.  The CAS regulations don't have a convention like FAR 1.108(c).  In my opinion, this isn't terribly surprising, since CAS is about consistency in the treatment of costs.  Once a business unit has a CAS-covered contract (what is sometimes called the "trigger contract"), more and more of its subsequent contracts are CAS-covered.  

EDIT:  While it isn't obvious to me that "net awards" as defined at 48 CFR 9903.301 is used in determining CAS applicability, if it is, then mMy comment above, "The CAS regulations don't have a convention like FAR 1.108(c)," may not be entirely on is entirely off the mark.

Edited by Jacques
Link to comment
Share on other sites

Thanks, Jamaal, for your comment. It was thought-provoking and led me to some additional research.

Quote

Technically, an IDIQ contract is only a contract to the extent that the work is completely priced and can be unilaterally ordered by the government. To the extent that the IDIQ contract contemplates newly priced offers to perform additional tasks, such work is not part of the originally awarded contract, but is more in the nature of a basic ordering agreement.

Source: Accounting for Government Contracts: The Cost Accounting Standards (LexisNexis) at 3.03[5][a].

Food for thought, huh?

Link to comment
Share on other sites

The following is another data point.  The more I try to understand this stuff, the more confused I get.

Quote

Comment: Four commenters recommended that the Board revise the rule to include counting only "net awards" in determining whether certain CAS thresholds are met.

Response: The Board does not agree with the commenters. As the Board understands the commenters' position, "net awards" refers to the total obligated value of the contract at the time of award, excluding as-yet-to-be-obligated incremental funding, and the potential value of contract options. The Board believes that CAS applicability thresholds are met when the total dollar value of the contract (including as-yet-to-be-provided incremental funding and the potential value of contract options) exceeds the appropriate thresholds. Because this appeared to be a recurring issue among some contractors, the Board is amending the definition of "net awards" in order to make it clear that incrementally-funded contracts and the potential value of contract options are to be included in determining a contractor's or subcontractor's CAS eligibility status. The Board believes that it is the value of the pricing proposal or action that gives rise to CAS applicability.

58 Fed. Reg. 58798, 58800 (Nov. 4, 1993).  The "certain CAS thresholds" discussed here may be for purposes of a disclosure statement rather than generic CAS coverage, so this quote may be completely irrelevant.  I share it anyway.

EDIT:  I think I'm tracking a little better now.  48 CFR 9903.301 defines "net awards" but then Chapter 99 uses the phrase "net CAS-covered awards" at 48 CFR 9903.201-2(a)(2) (full coverage), 48 CFR 9903.201-2(b)(1) (modified coverage), & 48 CFR 9903.201-2(d) (subcontracts).  Net awards are relevant to full or modified coverage, step 2 in DAU's decision tree linked earlier.

Link to comment
Share on other sites

11 minutes ago, Jacques said:

Nick Sanders is the editor now.  Judging from his LinkedIn biography, he was or is a FAR Bootcamp instructor, so that certainly puts him in good company.  (Sorry if I'm ruining an inside joke.)

You kind of are, but it's an open secret so no big deal.

Link to comment
Share on other sites

8 hours ago, here_2_help said:

Technically, an IDIQ contract is only a contract to the extent that the work is completely priced and can be unilaterally ordered by the government. To the extent that the IDIQ contract contemplates newly priced offers to perform additional tasks, such work is not part of the originally awarded contract, but is more in the nature of a basic ordering agreement.

What?

Link to comment
Share on other sites

12 hours ago, Don Mansfield said:

What?

I second that opinion.

Isn't CAS coverage sort of like being pregnant, i.e., "partial" coverage makes no sense (per Don's comment above)?  Considering CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders I don't know why it wouldn't be included in the overarching legal agreement with that entity which states the total estimated value of all orders.

Link to comment
Share on other sites

37 minutes ago, REA'n Maker said:

I second that opinion.

Isn't CAS coverage sort of like being pregnant, i.e., "partial" coverage makes no sense (per Don's comment above)?  Considering CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders I don't know why it wouldn't be included in the overarching legal agreement with that entity which states the total estimated value of all orders.

And then applied consistently to all orders…

 

Link to comment
Share on other sites

2 hours ago, REA'n Maker said:

CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders

What is the basis for your statement concerning "the total estimated value of all orders"?

Link to comment
Share on other sites

2 hours ago, joel hoffman said:

And then applied consistently to all orders

I'm not sure what this means, but since an order is a contract, wouldn't CAS applicability to an order depend on whether the order falls within one of the CAS exemptions?  For example, if the contract includes commercial products and non-commercial products and the  order is for commercial products would you say the CAS apply to that order?

Link to comment
Share on other sites

2 hours ago, REA'n Maker said:

I second that opinion.

Isn't CAS coverage sort of like being pregnant, i.e., "partial" coverage makes no sense (per Don's comment above)?  Considering CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders I don't know why it wouldn't be included in the overarching legal agreement with that entity which states the total estimated value of all orders.

Let's say you have an multiple award ID/IQ with a ceiling of $100 Million. Twenty formerly non-CAS-covered contractors receive an award. According to current DCAA thinking, each contractor has a $100 Million contract award, subject to Full CAS coverage and requiring submission (and audit) of a CASB Disclosure Statement.

The contracting officer and the contractors all know that the likely value of the awards to each is much less than $100 Million. But how much less? Should the $100 Million simply be divided by 20--so that each contractor expects only $5 million each? (Note that $5 Million is under the $7.5 Million CAS trigger threshold.) Nothing in the regulations or guidance suggests that is the right approach.

If each order is a separate contract (and there is much to support that notion) then CAS should be applied at the order level not the parent ID/IQ level. But that's not the current state of things. Instead, CAS coverage is determined based on the total value of the ID/IQ contract awarded.

Link to comment
Share on other sites

To all,

I just got off the phone with Vern (his eye is improving a little bit each day, by the way). He wanted me to make the following points on his behalf. 

1. As I stated in an earlier post, this is a known issue. It's been around since ID/IQ awards started to be made to multiple offerors, especially those for services. Formerly (according to Vern), agencies awarded ID/IQ contracts to individual contractors, and those awards were for goods (not services). That has changed but the FAR Council and CAS Board haven't adapted to the changes. There is simply very little (if any) guidance on the issue.

2. Since FAR and CAS are silent, a contracting officer has the flexibility to craft their own solution (See FAR 1.102(d).) This would be a permissible exercise of authority and not a deviation.

3. Therefore, a contracting officer faced with this situation could craft one or two contract clauses, stating that (a) each order is divisible and separate from the others, and (b) CAS coverage and rules shall be applied at the individual order level. 

Again, I'm paraphrasing a conversation. Any errors in translation are mine.

Link to comment
Share on other sites

1 hour ago, Retreadfed said:

I'm not sure what this means, but since an order is a contract, wouldn't CAS applicability to an order depend on whether the order falls within one of the CAS exemptions?  For example, if the contract includes commercial products and non-commercial products and the  order is for commercial products would you say the CAS apply to that order?

Clarification Nope, it’s obviously exempt.

I do agree with those who say that the KO should craft the solution

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...