The formal relational contract addresses these deficiencies. (ii) Each agencys file shall include the interagency agreement between the requesting and servicing agency, and shall include sufficient documentation to ensure an adequate audit consistent with 4.801(b). $15 million (g) The cancellation ceiling shall not be an evaluation factor. The FAR applies when one agency uses another agencys contract to obtain supplies or services. Economic price adjustment clauses. When the period of production is likely to warrant a labor and material costs contingency in the contract price, the contracting officer should normally use an economic price adjustment clause (see 16.203). The head of a contracting activity may authorize the use of a solicitation requesting only multi-year prices, provided it is found that such a solicitation is in the Governments interest, and that dual proposals are not necessary to meet the objectives in 17.105-2. As contrasted with cancellation, termination can be effected at any time during the life of the contract (cancellation is effected between fiscal years) and can be for the total quantity or partial quantity (where as cancellation must be for all subsequent fiscal years quantities). chapter 33, and the agencys regulations governing such contracts. (5) Document roles and responsibilities in the administration of the contract. The contracting officer shall limit the Governments payment obligation to an amount available for contract performance. Nor should they. Given the longer performance period associated with multi-year acquisition, consideration in pricing fixed-priced contracts should be given to the use of economic price adjustment terms and profit objectives commensurate with contractor risk and financing arrangements. Except as provided in agency regulations, this subpart does not apply to contracts for (a) services involving the construction, alteration, or repair (including dredging, excavating, and painting) of buildings, bridges, roads, or other kinds of real property; (b) architect-engineer services; and (c) research and development services. The head of a contracting activity may authorize the use of a solicitation requesting only multi-year prices, provided it is found that such a solicitation is in the Governments interest, and that dual proposals are not necessary to meet the objectives in 17.105-2. (2) An agency uses another agency to provide acquisition assistance, such as awarding and administering a contract, a task order, or delivery order. They are especially useful for complex purchasing arrangements, outsourcing, strategic alliances, joint ventures, franchises, public-private partnerships, large construction projects, and collective bargaining agreements. Accordingly, agencies should provide such information through its internal regulations. It was a lose-lose scenario. (1) The incumbent contractors overall performance, including, specifically, technical, administrative, and cost performance; (2) The potential impact of a change in contractors on program needs, including safety, national defense, and mobilization considerations; and. The contracting officer shall establish cancellation dates for each program years requirements regarding production lead time and the date by which funding for these requirements can reasonably be established. The termination for convenience procedure may apply to any Government contract, including multiyear contracts. First program year; and. When contracting for services, the contracting officer-. (2) Which of the following is not a streamlined method of acquisition? (d) Other contract types include incentive contracts, time-and-materials, labor-hour contracts, indefinite-delivery contracts, and letter contracts. 2. (e) Ensure uniformity and reliability in equipment, compatibility or standardization of components, and interchangeability of parts. The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. (c) The contract may not be awarded until the thirty-firstday after the date of notification. Cancellation results when the contracting officer-, (1) Notifies the contractor of nonavailability of funds for contract performance for any subsequent program year; or. The contract may not be awarded until the thirty-firstday after the date of notification. (1) A specific dollar amount; (2) An amount to be determined by applying provisions (or a formula) provided in the basic contract, but not including renegotiation of the price for work in a fixed-price type contract; (3) In the case of a cost-type contract, if-, (i) The option contains a fixed or maximum fee; or. Examples of more specific authority are 40 U.S.C. refurbishing. (2) In determining cancellation ceilings, the contracting officer must estimate reasonable preproduction or startup, labor learning, and other nonrecurring costs to be incurred by an "average" prime contractor or subcontractor, which would be applicable to, and which normally would be amortized over, the items or services to be furnished under the multi-year requirements. (ii) The fixed or maximum fee amount is determinable by applying a formula contained in the basic contract (but see 16.102(c)); (4) A specific price that is subject to an economic price adjustment provision; or. (c) The conduct of the work is wholly or at least substantially separate from the contractors other business, if any. For DoD, NASA, and the Coast Guard, the authorities cited in 17.101 do not apply to contracts for the purchase of supplies to which 40 U.S.C.759 applies (information resource management supply contracts). Fixed-price contracts, also known as firm-price or lump-sum contracts, are agreements in which the two parties state the goods or services one party will provide and establish the price the other party will pay for them. Payment limit. Agency funding of multi-year contracts shall conform to the policies in OMB Circulars A-11 (Preparation and Submission of Budget Estimates) and A-34 (Instructions on Budget Execution) and other applicable guidance regarding the funding of multi-year contracts. Ceilings must exclude amounts for requirements included in prior program years. Relational contracts that rely on parties making choices in their mutual self-interest are nothing new, of course. Cancellation charge means the amount of unrecovered costs which would have been recouped through amortization over the full term of the contract, including the term canceled. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. (b) A nondefense agency is compliant with applicable procurement requirements if the procurement policies, procedures, and internal controls of the nondefense agency applicable to the procurement of supplies and services on behalf of DoD, and the manner in which they are administered, are adequate to ensure the compliance of the nondefense department or agency with-, (1) The Federal Acquisition Regulation and other laws and regulations that apply to procurements of supplies and services by Federal agencies; and. (1) Shall add the clause at 52.222-43, Fair Labor Standards Act and Service Contract Labor Standards- Price Adjustment (Multiple Year and Option Contracts), when the contract includes the clause at 52.222-41, Service Contract Labor Standards; (2) May modify the clause at 52.222-43 in overseas contracts when laws, regulations, or international agreements require contractors to pay higher wage rates; or. However, the preparation and evaluation of dual offers may increase administrative costs and workload for both offerors and the Government, especially for large or complex acquisitions. (f) Presolicitation or pre-bid conferences. (5) A specific price that is subject to change as the result of changes to prevailing labor rates provided by the Secretary of Labor. (1) A description of the supplies or services required; (2) Delivery requirements; (3) A funds citation; (4) A payment provision (see 17.502-2(d) for Economy Act orders); and. IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Contracting methods available which can streamline the contracting timeframe include: . Last Updated Apr 24, 2023. Some methods of contracting require more time than others. Method of contracting. all of these are correct IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Some methods of contracting require more time than others. Formats for Submission of Line Item Summaries C(8)) are estimated at 10 percent of the total multi-year price, and the percentages for each of the program year requirements for 5 years are (i)30 in the firstyear, (ii)30 in the second, (iii)20 in the third, (iv)10 in the fourth, and (v)10 in the fifth. (c) The multi-year contracting method may be used for the acquisition of supplies or services. A 60-day termination for convenience translates to a 60-day contract, one CFO at a supplier told us. If I need to make an urgent decision or have a difficult issue that cant wait for the next formal meeting, I can phone my two-in-a-box partner and ask to meet., Such pairings are also highly encouraged outside the governance teams to strengthen the relationship and build trust between parties at all levels. For nearly a decade, FedEx met all its contractual obligationsbut neither party was happy in the relationship. (b) For DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of $150 million may not be awarded until the head of the agency gives written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the committees on armed services and appropriations of the House of Representatives and Senate. in the overall strategic planning of an acquisition]. (f) A technical representative that is appointed by the contracting officer through a designation letter The procuring Contracting Officer, Administrative Contracting Officer, Termination Contracting Officer, and the Contracting Officer's Representative are key players in the acquisition process. (a) The contracting officer shall justify in writing the quantities or the term under option, the notification period for exercising the option, and any limitation on option price under 17.203(g); and shall include the justification document in the contract file. Any competitive negotiated acquisition having a basis for award stating that factors in addition to cost/price will be considered in selecting the successful offeror (s) However, if the servicing agency is not subject to the Federal Acquisition Regulation, the requesting agency shall verify that contracts utilized to meet its requirements contain provisions protecting the Government from inappropriate charges (for example, provisions mandated for FAR agencies by part 31), and that adequate contract administration will be provided. If a third party is proposed, consent of the third party should be obtained in writing. Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. (2) Limit option quantities for additional supplies to not more than 50 percent of the initial quantity of the same line item. (f) Insert a clause substantially the same as the clause at 52.217-8, Option to Extend Services, in solicitations and contracts for services when the inclusion of an option is appropriate. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. (2) The potential cost of disrupted support, options may be included in service contracts if there is an anticipated need for a similar service beyond the first contract period. 3903 and 10 U.S.C. The requesting agency shall provide to the servicing agency any unique terms, conditions, and applicable agency-specific statutes, regulations, directives, and other applicable requirements for incorporation into the order or contract. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) Enhancement of standardization. (3) May use an economic price adjustment clause authorized by 16.203, when potential fluctuations require coverage and are not included in cost contingencies provided for by the clause at 52.222-43. 1) What is an Independent Government Estimate (IGE)? (5) Does the buyer benefit from access to the suppliers criticalsystems and processes (and vice versa)? 501 for the Federal Supply Schedules (subpart 8.4), and 40 U.S.C. A.) This subpart prescribes policies and procedures for the use of option solicitation provisions and contract clauses. For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. Using multiple suppliers instead of only one, for example, increases costs; so does operating a shadow organization. A multi-year contract will serve the best interests of the United States by encouraging full and open competition or promoting economy in administration, performance, and operation of the agencys programs. (2) If approved by the servicing agency, payment for actual costs may be made by the requesting agency after the supplies or services have been furnished. If demand is lower during the term of the contract than the buyer stated in the RFP or the scope expands in an unanticipated area, the suppliers profit will take a hit. The cancellation percentages, after deducting 3 percent for the first program year, would be 7, 4, 2, and 1 percent of the total price applicable to the second, third, fourth, and fifth program years, respectively. (b) Before, we had no one to speak with [if concerns arose]. A statement that award will not be made on less than the first program year requirements. Japanese keiretsu, an arrangement in which buyers form close associations with (and often own stakes in) suppliers, is a type of relational contract (see The New, Improved Keiretsu, HBR, September 2013). The review should determine whether meaningful improvement in performance or cost might reasonably be achieved. To ensure that all interested sources of supply are thoroughly aware of how multi-year contracting is accomplished, use of presolicitation or pre-bid conferences may be advisable. In a subsequent workshop the team delved deeper, crafting four high-level desired outcomes, seven goals, and 22 tactical and measurable objectives. Therefore, when reviewing contractor performance, contracting officers should consider-. (a) Written agreement on responsibility for management and administration. It is key to the buyer and seller relationship and provides a framework to deal with each other. Always have a copy of the contract, price assumptions, budgets, scope baseline, and other related documents nearby. There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive; (4) In that event, contracting officers must follow the requirements of subpart 17.2. In some ways, they're similar to the prices of goods at the grocery store. The Government has an, Question 17 of 28 You have an Azure Storage account named storage1 that is configured to use the Hot access tier. A contract is a binding agreement between a buyer and a seller. (a) A DoD acquisition official may request a nondefense agency to conduct an acquisition on behalf of DoD in excess of the simplified acquisition threshold only if the head of the nondefense agency conducting the acquisition on DoD's behalf has certified that the agency will comply with applicable procurement requirements for that fiscal year except when waived in accordance with paragraph (e) of this section. They shall not include any costs of labor or materials, or other expenses (except as indicated above), which might be incurred for performance of subsequent program year requirements. (g) Insert a clause substantially the same as the clause at 52.217-9, Option to Extend the Term of the Contract, in solicitations and contracts when the inclusion of an option is appropriate (see 17.200 and 17.202) and it is necessary to include in the contract any or all of the following: (1) A requirement that the Government must give the contractor a preliminary written notice of its intent to extend the contract. B). Cancellation procedures. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. (d) The period may extend beyond the contract completion date for service contracts. Some Days Require More Carpe Than Others October 29, 2013. The requirements, by item of supply or service, for the-, (1) (ii) Delivery requirements far enough into the future to permit competitive acquisition, production, and delivery. The cancellation percentages, after deducting 3 percent for the first program year, would be 7, 4, 2, and 1 percent of the total price applicable to the second, third, fourth, and fifth program years, respectively. Ceilings must exclude amounts for requirements included in prior program years. When Dell originally selected FedEx, in 2005, to handle all aspects of its hardware return-and-repair process, the companies drew up a traditional supplier contract. (2) Orders of $600,000 or less issued against Federal Supply Schedules. We will make decisions based on a balanced assessment of needs, risks, and resources.. contracting officers shall avoid, to the maximum extent practicable, using the lowest price technically acceptable source selection process in the case of a procurement that is predominantly for the acquisition of (1)Information technology services, cybersecurity services, systems engineering and technical (c) The period shall be set so as to provide the contractor adequate lead time to ensure continuous production. Obtaining both also provides a basis for the computation of savings and other benefits. In a lump sum contract, a company and customer agree on a predetermined price for an entire project. (b) This subpart implements Pub. Shading happens when a party isnt getting the outcome it expected from the deal and feels the other party is to blame or has not acted reasonably to mitigate the losses. When using sealed bidding, the contracting officer shall make a written determination that there is a reasonable likelihood that the options will be exercised before including the provision at 52.217-5, Evaluation of Options, in the solicitation. may not be awarded until the head of the agency gives written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the committees on appropriations of the House of Representatives and Senate and the appropriate oversight committees of the House and Senate for the agency in question. Multi-year contract including the requirements for each program year. (c) The requesting and servicing agencies should agree to procedures for the resolution of disagreements that may arise under interagency acquisitions, including, in appropriate circumstances, the use of a third-party forum. Protection of existing authority. Exam (elaborations) - Clc 222 mod 5 contract monitoring: documentation & handling issues exam 5. (b) This subpart applies to interagency acquisitions, see 2.101 for definition, when-, (1) An agency needing supplies or services obtains them using another agencys contract; or. (2) A statement that an extension of the contract includes an extension of the option. (a) (b) The contracting officer shall review each management and operating contract, following agency procedures, at appropriate intervals and at least once every 5 years. In addition to complying with the interagency acquisition policy and procedures in this subpart, nondefense agencies acquiring supplies and services on behalf of the Department of Defense shall also comply with the policy and procedures at subpart 17.7. Recurring costs in cancellation ceiling. And in a publicly funded health care environment, that is exactly what we need to be focusing on., The governance structure also helped the parties surmount the tricky problem of scope creep. (a) Before placing an order for supplies or services with another Government agency, the requesting agency shall follow the procedures in 17.502-1 and, if under the Economy Act, also 17.502-2. 3003(4) which include the-. (see The New, Improved Keiretsu, HBR, September 2013). (b) Since issuance of an authorization under 17.602(a) is deemed sufficient proof of compliance with paragraph (a) immediately above, nothing in paragraph (a) immediately above shall affect the validity or legality of such an authorization.
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