For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. Each of these contract types is suitable for some projects and not others, and each has both advantages and disadvantages for the various stakeholders . Options should not include charges for plant and equipment already amortized, or other nonrecurring charges which were included in the basic contract. For example, Island Health never shared the budget with the hospitalists. Again, its important to note that these guiding principles have teeth. (d) If funds are not appropriated to support the succeeding years requirements, the agency must cancel the contract. Protection of existing authority. (d) Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. A statement that award will not be made on less than the first program year requirements. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. An official website of the General Services Administration. (b) The order may be placed on any form or document that is acceptable to both agencies. To perform this calculation, the contracting officer should obtain in-house engineering cost estimates identifying the detailed recurring and nonrecurring costs, and the effect of labor learning. 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. In this step, contracting parties go beyond crafting the terms of the agreement and establish governance mechanisms that are formally embedded in the contract. 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. (a) Leader company contracting is to be used only when-. Therefore, when reviewing contractor performance, contracting officers should consider-. Nondefense agency means any department or agency of the Federal Government other than the Department of Defense. All program years except the first are subject to cancellation. And if their previous contracting process led to distrust and a vicious cycle of shading, they should reflect on how and why that happened. The parties created a joint project collaboratively working with billing support and IT technologists to develop an electronic billing program to maximize billing submissions, ultimately improving cost recovery from 87% to 100%. (g) The order should include-. Physical asset specificity (location, machinery, processes), Level of integration required with suppliers systems or processes. For each program year subject to cancellation, the contracting officer shall establish a cancellation ceiling. 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. 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. Working with the University of Tennessee (including Kate), they embarked on the five-step process. (1) The option cannot be evaluated under 17.206; or; (2) Future competition for the option is impracticable. In the event there are no DoD-unique requirements beyond the FAR, the DoD acquisition official shall so inform the servicing nondefense agency contracting officer in writing. (b) 'N' represents links. 1) What is an Independent Government Estimate (IGE)? The inclusion of recurring costs in cancellation ceilings is an exception to normal contract financing arrangements and requires approval by the agency head. (f) Annual and multi-year proposals. The contracting officer shall include these dates in the schedule, as appropriate. CLC 222 Mod 4 Contract Monitoring Exam.docx, CLC 222 Module 4 Exam Contract Monitoring - Performance.docx, CLC 222 Module 6 Exam Special Considerations.docx, Contract Monitoring - Performance Exam - 1st Attempt.pdf, The service contract act was enacted to protect economies in the geographical areas where the contract is performed. A.) 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. For patent rights, see 27.304-2. Which of the following is NOT, [Recognize how contract types impacts COR responsibilities], Cost reimbursement contracts require less monitoring by the COR than other. The contract also specifies a second governance mechanisma two in a box communication approach in which an administrator is teamed with a hospitalist for each of the four governance teams. Gone were the battles of not in scope; instead, there was a spirit of how can we accommodate this new reality given our statement of intent?. (a) The Economy Act ( 31 U.S.C.1535) authorizes agencies to enter into agreements to obtain supplies or services from another agency. Requirements to be written in a, manner that promotes full and open competition in order to obtain maximum competition in obtaining, What is an Independent Government Estimate (IGE)? (c) The contracting officer may exercise options only after determining that-. Review and, Which three of the following statements about convenience checks are true? Administrators and hospitalists who had called their relationship broken, dysfunctional, and distrustful now describe it as collaborative, trusting, and supportive., Kerrone points to financial benefits as well. (a) In that event, contracting officers must follow the requirements of subpart 17.2. 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. (a) Multi-year contracting; (c) Leader company contracting. A contract is a binding agreement between a buyer and a seller. Course Hero is not sponsored or endorsed by any college or university. (3) The servicing agency is responsible for compliance with all other legal or regulatory requirements applicable to the contract, including-, (i) Having adequate statutory authority for the contractual action; and. This method is most advantageous for relatively straightforward and small projects such as: renovations. Last Updated Apr 24, 2023. 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. What are the two most common types of best Value evaluations? Options should not include charges for plant and equipment already amortized, or other nonrecurring charges which were included in the basic contract. Presolicitation or pre-bid conferences. The contracting officer shall limit the Governments payment obligation to an amount available for contract performance. (f) The Governments administrative costs of annual contracting may be used as a factor in the evaluation only if they can be reasonably established and are stated in the solicitation. Department of Defense (DoD) acquisition official means-. 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. (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. Relational contracts that rely on parties making choices in their mutual self-interest are nothing new, of course. (c) An interagency acquisition is not exempt from the requirements of subpart 7.3, Contractor Versus Government Performance. Dells attempts to lower costs, including bidding out the work three times during the eight-year relationship, ate into FedExs profits. 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. 10) Some methods of contracting require more time than others. The contracting officer shall insert the amount for the first program year in the contract upon award and modify it for successive program years upon availability of funds. (b) Achieve geographic dispersion of suppliers. (a) 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. (2) Direct acquisitions. The six principlesreciprocity, autonomy, honesty, loyalty, equity, and integrityform the basis for all contracts using the vested methodology and provide a framework for resolving potential misalignments when unforeseen circumstances occur. IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Contracting methods available which can streamline the contracting timeframe include: . not visited and 'Y' represents visited links. Type of contract. Standard forms can also be useful if the same parties are involved on repeat projects. (David and Kate have consulted on many of these projects, including several mentioned in this article.) (c) Replacement of an incumbent contractor is usually based largely upon expectation of meaningful improvement in performance or cost. The review should determine whether meaningful improvement in performance or cost might reasonably be achieved. Competitive negotiated contract A streamlined method of acquisition refers to contracting methods aimed at making the acquisition process streamlined as well as procurement facilitating. It is a description of a task, subtask, activity, and/or deliverable; and reflects corresponding pricing assumptions proposed and accepted by the client. Always have a copy of the contract, price assumptions, budgets, scope baseline, and other related documents nearby. To perform this calculation, the contracting officer should obtain in-house engineering cost estimates identifying the detailed recurring and nonrecurring costs, and the effect of labor learning. (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. (2) Any other DoD official authorized to approve a direct acquisition or an assisted acquisition on behalf of DoD. For the first time, the administration and our doctors are innovating together to drive efficiencies and optimize for patient care with our limited budget, she said. An example of a circumstance that may support a determination not to evaluate offers for option quantities is when there is a reasonable certainty that funds will be unavailable to permit exercise of the option. (1) All program years except the first are subject to cancellation. (a) Multi-year contracting is a special contracting method to acquire known requirements in quantities and total cost not over planned requirements for up to 5 years unless otherwise authorized by statute, even though the total funds ultimately to be obligated may not be available at the time of contract award. We not only came in under budget, we also increased our revenue by improving our MSP billing process. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. (b) (e) Recurring costs in cancellation ceiling. (a) Effective work performance under management and operating contracts usually involves high levels of expertise and continuity of operations and personnel. They should analyze their dependency on the particular supplier, the strategic value of its product, and the impact of nonperformance on a buyers operations. The cancellation ceiling shall not be an evaluation factor. Their efforts led to the vested methodology for creating formal relational contractsa process that establishes a whats in it for we partnership mentality. So the sustainability team came up with a pilot project to address how to fairly add the additional scope of work and new role for health care providers to the hospitalists schedule and pricing model. Glenn Gallins, the attorney representing South Island Hospitalists and a law professor at the University of Victoria, offers the following advice when it comes to embracing formal relational contracts: The focus on negotiating the foundation of the relationship first is brilliant. Cancellation ceiling means the maximum cancellation charge that the contractor can receive in the event of cancellation. 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. Payment limit. Each was crafted to establish a new norm for the partnership. Obtaining both also provides a basis for the computation of savings and other benefits. (1) The use of such a contract will result in significant savings of the total estimated costs of carrying out the program through annual contracts; (2) The minimum need to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities; (3) There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive; (4) 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. How to build better long-term strategic partnerships. Termination payment. 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. (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. Recurring costs means costs that vary with the quantity being produced, such as labor and materials. If the buyer refuses to adjust the suppliers fee or the statement of work, the supplier may try to recoup losses by, for example, replacing the expensive A team it currently has on the project with its less costly C team. (c) For use of project labor agreements, see subpart 22.5. The job order contracting method can be incorporated for projects that range from private residential jobs to public works projects. (ii) Delivery requirements far enough into the future to permit competitive acquisition, production, and delivery. The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. (e) 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. The written determination shall identify the acquisition categories to which the waiver applies. (a) Subject to the limitations of paragraphs (b) and (c) of this section, for both sealed bidding and contracting by negotiation, the contracting officer may include options in contracts when it is in the Governments interest. (h) Termination payment. Termination-for-convenience clauses create perverse incentives for suppliers to not invest in buyer relationships. 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. (d) Cancellation ceilings. (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. 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. Tradeoff What does Best Value mean? In a subsequent workshop the team delved deeper, crafting four high-level desired outcomes, seven goals, and 22 tactical and measurable objectives. While the contract was being developed, in 2016 and 2017, Canada passed a law legalizing medical assistance in dying. However, statutes applicable to various classes of contracts, for example, the Service Contract Labor Standards statute (see 22.1002-1), may place additional restrictions on the length of contracts. 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. The fact that virtually all contracts contain gaps, omissions, and ambiguitiesdespite companies best efforts to anticipate every scenarioonly exacerbates hold-up behavior. (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). 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. (f) (d) Solicitations that allow the offer of options at unit prices which differ from the unit prices for the basic requirement shall state that offerors may offer varying prices for options, depending on the quantities actually ordered and the dates when ordered. (2) Limit option quantities for additional supplies to not more than 50 percent of the initial quantity of the same line item. (c) Insert a provision substantially the same as the provision at 52.217-5, Evaluation of Options, in solicitations when-. (f) Avoidance of the need for establishing quality control techniques and procedures for a new contractor each year. Any extension or renewal of an operating and management contract must be authorized at a level within the agency no lower than the level at which the original contract was authorized in accordance with 17.602(a). Examples of more specific authority are 40 U.S.C. Obtaining both also provides a basis for the computation of savings and other benefits. Ceilings must exclude amounts for requirements included in prior program years. If the contract is terminated for the convenience of the Government in whole, including requirements subject to cancellation, the Governments obligation shall not exceed the amount specified in the Schedule as available for contract performance, plus the cancellation ceiling. Multi-year contract including the requirements for each program year. Exam (elaborations) - Clc 222 mod 5 contract monitoring: documentation & handling issues exam 5. 3) There are two basic contract types, cost reimbursement and fixed-price. The use of such a contract will result in significant savings of the total estimated costs of carrying out the program through annual contracts; (2) 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. (c) https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/assets/OMB/procurement/interagency_acq/iac_revised.pdf, https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/procurement/memo/development-review-and-approval-of-business-cases-for-certain-interagency-and-agency-specific-acquisitions-memo.pdf, http://www.acq.osd.mil/dpap/cpic/cp/interagency_acquisition.html, Civilian Agency Acquisition Council (CAAC), Interagency Suspension and Debarment Committee (ISDC). (d) Insert a clause substantially the same as the clause at 52.217-6, Option for Increased Quantity, 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 expressed as a percentage of the basic contract quantity or as an additional quantity of a specific line item. It does not apply to contracts entered into by a nondefense agency that is an element of the intelligence community for the performance of a joint program conducted to meet the needs of DoD and the nondefense agency. (5) The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. (See 17.207(f) with regard to the exercise of options. If the interagency business transaction does not result in a contract or an order, then the FAR does not apply. (a) Insert a provision substantially the same as the provision at 52.217-3, Evaluation Exclusive of Options, in solicitations when the solicitation includes an option clause and does not include one of the provisions prescribed in paragraph (b) or (c) of this section. 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. (g) The cancellation ceiling shall not be an evaluation factor. This subpart implements 41 U.S.C. (ii) Competition for the option is impracticable once the initial contract is awarded. The inclusion of recurring costs in cancellation ceilings is an exception to normal contract financing arrangements and requires approval by the agency head. 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. Each lacked trust and confidence in the other, yet neither could afford to end the relationship. Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. (C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies. Cancellation procedures. (a) Multi-year contracting is a special contracting method to acquire known requirements in quantities and total cost not over planned requirements for up to 5 years unless otherwise authorized by statute, even though the total funds ultimately to be obligated may not be available at the time of contract award. (d) Procurement contracts are also known as purchase contracts. (g) Broadening the competitive base with opportunity for participation by firms not otherwise willing or able to compete for lesser quantities, particularly in cases involving high startup costs. repairs. 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. In order to establish a multi-agency or governmentwide acquisition contract, a business-case analysis must be prepared by the servicing agency and approved in accordance with the OFPP business case guidance, available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/procurement/memo/development-review-and-approval-of-business-cases-for-certain-interagency-and-agency-specific-acquisitions-memo.pdf . (d) The period may extend beyond the contract completion date for service contracts. The DoD reimburses the allowable incurred costs and pays a fixed amount that is negotiated at the beginning of the contract. It has been determined that the government and contractor personnel can be used interchangeably. 11302(e) for Governmentwide acquisition contracts (GWACs). 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. (2) A statement that an extension of the contract includes an extension of the option. However, this does not preclude the use of an indefinite quantity contract or requirements contract with options. 3201 note prec.). (ii) Complying fully with the competition requirements of part 6 (see 6.002). (a) Multi-year contracting is a flexible contracting method applicable to a wide range of acquisitions. (1) Assisted acquisitions. Cash flow is easier to predict in a lump sum contract. Contracts awarded under the multi-year procedure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. Except for DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of (f) Presolicitation or pre-bid conferences. The entities decided to explore relational contracting in 2016, two years after their conventional contract had expired and countless hours of contentious negotiations had failed to replace it. 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. The contracting officer shall limit the Governments payment obligation to an amount available for contract performance. Both parties must make a conscious effort to create an environment of trustone in which they are transparent about their high-level aspirations, specific goals, and concerns. Criteria for comparing the lowest evaluated submission on the first program year requirements to the lowest evaluated submission on the multi-year requirements. (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. (i) State that use of an interagency acquisition is in the best interest of the Government; (ii) State that the supplies or services cannot be obtained as conveniently or economically by contracting directly with a private source; and. A version of this article appeared in the, Cecil Touchon/Courtesy of Sears-Peyton Gallery, New York, CECIL TOUCHON/COURTESY OF SEARS-PEYTON GALLERY, NEW YORK, Note: This table is based on material presented in, From the Magazine (SeptemberOctober 2019).

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