As provided by that guidance, the funds obligated for multi-year contracts must be sufficient to cover any potential cancellation and/or termination costs; and multi-year contracts for the acquisition of fixed assets should be fully funded or funded in stages that are economically or programmatically viable. (c) This subpart does not apply to-, (1) Interagency reimbursable work performed by Federal employees (other than acquisition assistance), or interagency activities where contracting is incidental to the purpose of the transaction; or. (a) The senior procurement executive for each executive agency shall submit to the Director of OMB an annual report on interagency acquisitions, as directed by OMB. Protection of existing authority. Multi-year contract including the requirements for each program year. IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Contracting methods available which can streamline the contracting timeframe include: . (2) They often undermine the partnerlike relationships and trust needed to cope with external uncertainty. The total estimate of the above costs must then be compared with the best estimate of the contract cost to arrive at a reasonable percentage or dollar figure. 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. Cancellation results when the contracting officer-, (1) Notifies the contractor of nonavailability of funds for contract performance for any subsequent program year; or. (g) Payment limit. An official website of the General Services Administration. Physical asset specificity (location, machinery, processes), Level of integration required with suppliers systems or processes. Multi-year contracting shall be used in such a manner as to seek, retain, and promote the use under such contracts of companies that are subcontractors, suppliers, and vendors; and. (5) A specific price that is subject to change as the result of changes to prevailing labor rates provided by the Secretary of Labor. Buyers must consider three key factors when deciding what type of contracting arrangement is right for each supplier relationship. Subpart 17.4 - Leader Company Contracting, Subpart 17.6 - Management and Operating Contracts. 17.208 Solicitation provisions and contract clauses. 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. Multi-year contracting is a flexible contracting method applicable to a wide range of acquisitions. There are five common types of construction contracts: lump sum (or fixed price), time and materials (T&M), unit price, guaranteed maximum price (GMP), and cost-plus. (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. It would be against our fiduciary responsibility to our shareholders to invest in any program for a client with a 60-day termination clause that required longer than two months to generate a return. The implications for innovation are obvious. (1) The solicitation contains an option clause; (2) An option is not to be exercised at the time of contract award; (3) A firm-fixed-price contract, a fixed-price contract with economic price adjustment, or other type of contract approved under agency procedures is contemplated; and. 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. Results have not been tracked for all of them, but many have told us that they and their partners are happy with the approach and cite benefits including cost savings, improved profitability, higher levels of service, and a better relationship. (b) In 2008, Oliver, together with economic theorist John Moore, revisited his work on contracts. Both point to the surveys conducted immediately before the process began and one year after the relational contract was in place: The number of people who expressed a positive attitude toward the relationship increased by 84% in just two years. Cancellation means the cancellation (within a contractually specified time) of the total requirements of all remaining program years. Dells attempts to lower costs, including bidding out the work three times during the eight-year relationship, ate into FedExs profits. In the first two years, Dell and FedEx were able to reduce costs by 42%, scrap by 67%, and defective parts per million to record-low levels. Review and, Which three of the following statements about convenience checks are true? An official website of the United States Government, FAC Number: 2023-02 Effective Date: 03/16/2023. Historically, the two parties had operated under a shroud of opaqueness. A statement that award will not be made on less than the first program year requirements. Cancellation ceiling means the maximum cancellation charge that the contractor can receive in the event of cancellation. However, these tactics not only confer a false sense of security (because both firms switching costs are too high to actually invoke the clauses) but also foster negative behaviors that undermine the relationship and the contract itself. (1) The servicing agency may ask the requesting agency, in writing, for advance payment for all or part of the estimated cost of furnishing the supplies or services. In this step, contracting parties go beyond crafting the terms of the agreement and establish governance mechanisms that are formally embedded in the contract. 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. 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. (d) An agency shall not use an interagency acquisition to make acquisitions conflicting with any other agencys authority or responsibility (for example, that of the Administrator of General Services under title 40, United States Code, "Public Buildings, Property and Works" and 41 U.S.C. Level unit prices. There is a reasonable expectation that, throughout the contemplated contract period, the head of the agency will request funding for the contract at a level to avoid contract cancellation; and. 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) (h) Such other elements of any department or agency as have been designated by the President, or designated jointly by the Director of National Intelligence and the head of the department or agency concerned, as an element of the intelligence community. Six of the most common project delivery methods in construction are Design-Bid-Build (D-B-B), Design-Build (D-B), Construction Manager at Risk (CMAR), Construction Management Multi-Prime (CMMP), Public-Private Partnership (PPP or P3), and Integrated Project Delivery (IPD). (Its called vested because the parties have a vested interest in each others success.) Again, its important to note that these guiding principles have teeth. (f) Imagine that a supplier of engineering services submits a proposal in a competitive bidding process and wins the contract. The final rule revises FAR 19.202-1 to require contracting officers to provide procurement center representatives copies of any proposed acquisition package and other reasonably obtainable information related to the acquisition, if the representatives exercise their discretion to review the acquisition. This subpart applies to all acquisitions made by nondefense agencies on behalf of DoD. The limitation in paragraph (a) of this section shall not apply to the acquisition of supplies and services on behalf of DoD by a nondefense agency during any fiscal year for which the Under Secretary of Defense for Acquisition and Sustainment has determined in writing that it is necessary in the interest of DoD to acquire supplies and services through the nondefense agency during the fiscal year. Some companies go so far as to install a shadow organization to micromanage the supplier. 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). Nor should they. (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. (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. (g) These include contracting with multiple suppliers, forcing suppliers to lock in prices, using termination-for-convenience clauses, or obligating suppliers to cover activities that might arise after the initial contracting phase. (e) For acquisitions on behalf of the Department of Defense, also see subpart 17.7. (2) Fails to notify the contractor that funds are available for performance of the succeeding program year requirement. (1) Leader company, obligating it to subcontract a designated portion of the required end items to a specified follower company and to assist it to produce the required end items; (2) Leader company, for the required assistance to a follower company, and a prime contract to the follower for production of the items; or. (1) The Governments need in certain service contracts for continuity of operations; and. (c) Requirements for determinations and findings. Buyers are crazy to expect us to invest in innovation if they do the math.. (b) The 100-page-plus document was filled with supplier shall statements that detailed FedExs obligations and outlined dozens of metrics for how Dell would measure success. (a) Effective work performance under management and operating contracts usually involves high levels of expertise and continuity of operations and personnel. 1) Funds must be available to cover the check value and the bank's processing fee 2) The Cardholder can dispute a. The D&F shall-. Shading happens when one party isnt getting the outcome it expected. (f) Solicitations may, in unusual circumstances, require that options be offered at prices no higher than those for the initial requirement; e.g., when-. The nature of the requirement should govern the selection of the method of contracting, since the multi-year procedure is compatible with sealed bidding, including two-step sealed bidding, and negotiation. In order to broaden the defense industrial base, to the maximum extent practicable-, (1) Accordingly, agencies should provide such information through its internal regulations. South Island has the opportunity to earn incentives if they improve efficiency and billing, which they can invest in research and quality-of-care initiatives they are passionate about. Written contracts that are legally enforceable (which is why we call them formal), they include many components of a traditional contract but also contain relationship-building elements such as a shared vision, guiding principles, and robust governance structures to keep the parties expectations and interests aligned. Some methods of contracting require more time than others. In a lump sum contract, a company and customer agree on a predetermined price for an entire project. The inclusion of recurring costs in cancellation ceilings is an exception to normal contract financing arrangements and requires approval by the agency head. Nonrecurring costs means those costs which are generally incurred on a one-time basis and include such costs as plant or equipment relocation, plant rearrangement, special tooling and special test equipment, preproduction engineering, initial spoilage and rework, and specialized work force training. (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. A multi-year contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds, and (if it does so provide) may provide for a cancellation payment to be made to the contractor if appropriations are not made. Each was crafted to establish a new norm for the partnership. But when contract negotiations begin, they default to an adversarial mindset and a transactional contracting approach. 3201 note prec.). (e) A statement that award will not be made on less than the first program year requirements. 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. To keep expectations aligned in a complex and changing environment, both partiesnot just the one with greater powerneed to explain their vision and goals for the relationship. Economists call this the hold-up problem: the fear that one party will be held up by the other. (e) Insert a clause substantially the same as the clause at 52.217-7, Option for Increased Quantity-Separately Priced Line Item, in solicitations and contracts, other than those for services, when the inclusion of an option is appropriate (see 17.200 and 17.202) and the option quantity is identified as a separately priced line item having the same nomenclature as a corresponding line item. (a) Multi-year contracting; (c) Leader company contracting. (d) The work is closely related to the agencys mission and is of a long-term or continuing nature, and there is a need-, (1) To ensure its continuity; and. This subpart implements 41 U.S.C. (C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies. (2) Any other DoD official authorized to approve a direct acquisition or an assisted acquisition on behalf of DoD. Issuing RFI. Which of the following is not a, When a COR is involved in the Source Selection Evaluation Board, what might his/her main roles, The purpose of market research is to determine capabilities in the marketplace able to satisfy the, Who has the official responsibility for performing market research? 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. 1) What is an Independent Government Estimate (IGE)? 17.604 Identifying management and operating contracts. Here is your test result.The dots represent the choices you have made. 10) Some methods of contracting require more time than others. 3) There are two basic contract types, cost reimbursement and fixed-price. The multi-year contracting method may be used for the acquisition of supplies or services. Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology. The key distinguishing difference between multi-year contracts and multiple year contracts is that multi-year contracts, defined in the statutes cited at 17.101, buy more than 1 years requirement (of a product or service) without establishing and having to exercise an option for each program year after the first. (b) 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. Economic price adjustment clauses are adaptable to multi-year contracting needs. The nonsponsoring agency shall provide to the sponsoring agency necessary documentation that the requested work would not place the FFRDC in direct competition with domestic private industry. (4) In no event shall the servicing agency require, or the requesting agency pay, any fee or charge in excess of the actual cost (or estimated cost if the actual cost is not known) of entering into and administering the contract or other agreement under which the order is filled. When Dell and FedEx reached their breaking point, they chose to abandon their existing contracting process and create a formal relational contract that specified desired outcomes and defined relationship-management processes at the operational, management, and executive levels. (b) When leader company contracting is used, the Government shall reserve the right to approve subcontracts between the leader company and the follower(s). (h) Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology. (b) Any justifications and approvals and any determination and findings required by part 6 shall specify both the basic requirement and the increase permitted by the option. (d) Type of contract. However, this does not preclude the use of an indefinite quantity contract or requirements contract with options. We will achieve this vision by building relationships grounded in trust and respect, and anchored in the following Guiding Principles and Intended Behaviors. This method is most advantageous for relatively straightforward and small projects such as: renovations. (d) When an interagency acquisition requires the servicing agency to award a contract, the following procedures also apply: (1) If a justification and approval or a D&F (other than the requesting agencys D&F required in 17.502-2(c)) is required by law or regulation, the servicing agency shall execute and issue the justification and approval or D&F. (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. Nondefense agency contracting officers are responsible for ensuring support provided in response to DoDs request complies with paragraph (b) of this section. (d) Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. (b) Solicitations containing option provisions shall state the basis of evaluation, either exclusive or inclusive of the option and, when appropriate, shall inform offerors that it is anticipated that the Government may exercise the option at time of award. A case in point is Vancouver Island Health Authority and South Island Hospitalists, a partnership of administrators and doctors who work together to provide inpatient care for patients with the most complex medical issues in British Columbia. In long-term, complex deals, shading can be so pervasive that the tit-for-tat behavior becomes a death spiral. (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. The extent to which cancellation terms are used in multi-year contracts will depend on the unique circumstances of each contract. (d) 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. (2) Direct acquisitions. (c) For use of project labor agreements, see subpart 22.5. (g) The contract modification or other written document which notifies the contractor of the exercise of the option shall cite the option clause as authority. (c) 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. (a) Except for DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of $15 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 appropriations of the House of Representatives and Senate and the appropriate oversight committees of the House and Senate for the agency in question. In the event funds are not made available for the continuation of a multi-year contract awarded using the procedures in this section, the contract shall be canceled or terminated. Having set the foundation for the relationship in the first three steps, parties hammer out the terms of the dealfor example, responsibilities, pricing, and metrics. In a negotiated acquisition, negotiations with offerors may provide information requiring a change in cancellation ceilings and dates before final negotiation and contract award. If level unit pricing is not in the Governments interest, the head of a contracting activity may approve the use of variable unit prices, provided that for competitive proposals there is a valid method of evaluation. Office of the Director of National Intelligence; Intelligence elements of the Federal Bureau of Investigation, Department of Energy, and Drug Enforcement Agency; Bureau of Intelligence and Research of the Department of State; Office of Intelligence and Analysis of the Department of the Treasury; The Office of Intelligence and Analysis of the Department of Homeland Security and the Office of Intelligence of the Coast Guard; and. The review should determine whether meaningful improvement in performance or cost might reasonably be achieved. (1) The aggrieved party often cuts back on performance in subtle ways, sometimes even unconsciously, to compensate. B). (i) Prior to the issuance of a solicitation, the servicing agency and the requesting agency shall both sign a written interagency agreement that establishes the general terms and conditions governing the relationship between the parties, including roles and responsibilities for acquisition planning, contract execution, and administration and management of the contract(s) or order(s). In that event, contracting officers must follow the requirements of subpart 17.2. Because of program requirements and the unusual (sometimes unique) nature of the work performed under management and operating contracts, the Government is often limited in its ability to effect competition or to replace a contractor. (f) Eliminate problems in the use of proprietary data that cannot be resolved by more satisfactory solutions. 1. (f) Dell felt that FedEx was not proactive in driving continuous improvement and innovative solutions; FedEx was frustrated by onerous requirements that wasted resources and forced it to operate within a restrictive statement of work. (b) An agency shall not use an interagency acquisition to circumvent conditions and limitations imposed on the use of funds. (b) [Identify the various methods of contracting for a supply or service] [Remediation Accessed :N] Competitive Negotiated contract Ordering off a Blanket Purchase Agreement Simplified Acquisition Procedures In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. (f) Annual and multi-year proposals. (1) Consider strategies for the effective participation of small businesses during acquisition planning (see 7.103(u)); (2) Detail the administration of such contract, including an analysis of all direct and indirect costs to the Government of awarding and administering such contract; (3) Describe the impact such contract will have on the ability of the Government to leverage its purchasing power, e.g., will it have a negative effect because it dilutes other existing contracts; (4) Include an analysis concluding that there is a need for establishing the multi-agency contract; and. (b) Business-case analysis requirements for multi-agency contracts and governmentwide acquisition contracts. The contract may not be awarded until the thirty-firstday after the date of notification. Nonrecurring costs include such costs, where applicable, as plant or equipment relocation or rearrangement, special tooling and special test equipment, preproduction engineering, initial rework, initial spoilage, pilot runs, allocable portions of the costs of facilities to be acquired or established for the conduct of the work, costs incurred for the assembly, training, and transportation to and from the job site of a specialized work force, and unrealized labor learning. (b) For DoD, NASA, and the Coast Guard, the head of the agency may enter into a multi-year contract for supplies if-. Therefore contracting officers should take extraordinary steps before award to assure themselves that the prospective contractors technical and managerial capacity are sufficient, that organizational conflicts of interest are adequately covered, and that the contract will grant the Government broad and continuing rights to involve itself, if necessary, in technical and managerial decisionmaking concerning performance. Relational contracts that rely on parties making choices in their mutual self-interest are nothing new, of course. (e) Under reciprocity, for example, they highlighted the need to conduct ourselves in the spirit of achieving mutual benefit and understanding. Under equity, they acknowledged the unavoidable imbalances that arise in contracts: We are committed to fairness, which does not always mean equality. Exam (elaborations) - Clc 222 mod 4 contract monitoring: performance exam 3. Examples of more specific authority are 40 U.S.C. 1. developing an independent Government cost estimate.]. An independent detailed assessment, developed by a government team member, which includes the cost to the government for services, The Independent Government Estimate includes only direct and indirect cost: . This wide selection of contract types is available to the government and contractors to provide flexibility in acquiring the large variety and volume of supplies and services required by agencies. (2) An indefinite quantity or requirements contract would be more appropriate than a contract with options. (2) The requesting agency shall also be responsible for furnishing other assistance that may be necessary, such as providing information or special contract terms needed to comply with any condition or limitation applicable to the funds of the requesting agency. (b) The order may be placed on any form or document that is acceptable to both agencies. Some methods of contracting require more time than others. After all, the team realized, who better to optimize the scheduling for superior patient care than the doctors on the front lines? Department of Defense (DoD) acquisition official means-. The requesting agency administers the order; therefore, no written agreement with the servicing agency is required. It is crucial that all terms and conditions of the formal relational contract are aligned with the guiding principles. (1) Each Economy Act order to obtain supplies or services by interagency acquisition shall be supported by a determination and findings (D&F). (iii) Include a statement that at least one of the following circumstances applies: (A) The acquisition will appropriately be made under an existing contract of the servicing agency, entered into before placement of the order, to meet the requirements of the servicing agency for the same or similar supplies or services.