Subpart 17.4 - Leader Company Contracting, Subpart 17.6 - Management and Operating Contracts. (1) Each Economy Act order to obtain supplies or services by interagency acquisition shall be supported by a determination and findings (D&F). This is necessary for situations when exercise of the option would result in the obligation of funds that are not available in the fiscal year in which the contract would otherwise be completed. 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. There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive; (4) In a subsequent workshop the team delved deeper, crafting four high-level desired outcomes, seven goals, and 22 tactical and measurable objectives. 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. (h) Include the value of options in determining if the acquisition will exceed the World Trade Organization Government Procurement Agreement or Free Trade Agreement thresholds. (2) Fails to notify the contractor that funds are available for performance of the succeeding program year requirement. Which of the following is NOT, [Recognize how contract types impacts COR responsibilities], Cost reimbursement contracts require less monitoring by the COR than other. Remediation Accessed shows whether you accessed those links. Ceilings must exclude amounts for requirements included in prior program years. 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 . The benefits of informal handshake deals have been studied and promoted over the decades; legal scholars Stewart Macaulay and Ian Macneil were early advocates in the 1960s. (f) Solicitations may, in unusual circumstances, require that options be offered at prices no higher than those for the initial requirement; e.g., when-. But the process we have outlined should be part of the contracting tool kit to govern highly complex relationships that demand collaboration and flexibility. Recurring costs means costs that vary with the quantity being produced, such as labor and materials. This method is most advantageous for relatively straightforward and small projects such as: renovations. 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 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. When the population is high, they manage their hours in a way thats within the budget and optimizes patient care. (a) If cancellation occurs, the Governments liability will be determined by the terms of the applicable contract. CLC 222 Contracting Officers Representative (COR) In two-step sealed bidding, discussions conducted during the first step may indicate the need for revised ceilings and dates which may be incorporated in step two. Each of these contract types is suitable for some projects and not others, and each has both advantages and disadvantages for the various stakeholders . (b) Each individual worked with a counterpart from the other organization to establish connections in key areas. (c) 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. Cancellation means the cancellation (within a contractually specified time) of the total requirements of all remaining program years. (b) 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. (a) The contract shall specify limits on the purchase of additional supplies or services, or the overall duration of the term of the contract, including any extension. 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. By the eighth year, the parties were at the breaking point. (c) Requirements for determinations and findings. IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Contracting methods available which can streamline the contracting timeframe include: . Both parties felt that the new model was a win-win solution that would have been unachievable under previous contracts. (4) Its use is authorized in accordance with agency procedures. 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. (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. We not only came in under budget, we also increased our revenue by improving our MSP billing process. (b) The contract shall state the period within which the option may be exercised. (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. (c) Within 2 years of the effective date of this regulation, agencies shall review their current contractual arrangements in the light of the guidance of this subpart, in order to-, (1) Identify, modify as necessary, and authorize management and operating contracts; and. (b) When the contract provides for economic price adjustment and the contractor requests a revision of the price, the contracting officer shall determine the effect of the adjustment on prices under the option before the option is exercised. We put everything on the table, and we challenged the contracting team to figure out ways to work with the money weve got.. (c) Cancellation procedures. (d) The termination for convenience procedure may apply to any Government contract, including multiyear contracts. Oliver and Moores expanded theory focuses on contracts as reference points, a new perspective that emphasizes the need for mechanisms to continually align expectationsor update reference pointsas unanticipated events occur and needs change over time. (g) Contracts may express extensions of the term of the contract as an amended completion date or as additional time for performance; e.g., days, weeks, or months. Dells attempts to lower costs, including bidding out the work three times during the eight-year relationship, ate into FedExs profits. Multi-year contract including the requirements for each program year. (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. The contracting officer shall include these dates in the schedule, as appropriate. (5) The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. We argue that the remedy is to adopt a totally different kind of arrangement: a formal relational contract that specifies mutual goals and establishes governance structures to keep the parties expectations and interests aligned over the long term. Cancellation ceilings and dates may be revised after issuing the solicitation if necessary. Benefits may accrue by including options in a multi-year contract. (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. Enhancement of standardization. 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). (h) 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. (b) The contracting officer need not evaluate offers for any option quantities when it is determined that evaluation would not be in the best interests of the Government and this determination is approved at a level above the contracting officer. (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. A statement that award will not be made on less than the first program year requirements. (b) Criteria for comparing the lowest evaluated submission on the first program year requirements to the lowest evaluated submission on the multi-year requirements. 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. If a third party is proposed, consent of the third party should be obtained in writing. Cancellation procedures. chapter 33, and the agencys regulations governing such contracts. Subpart 17.7 - Interagency Acquisitions: Acquisitions by Nondefense Agencies on Behalf of the Department of Defense, This part prescribes policies and procedures for the acquisition of supplies and services through special contracting methods, including-. (c) Cancellation or termination for insufficient funding. It may be negotiated as a percentage of the estimated costs but it is written into the contract as a precise amount, not a percentage. 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%. And if their previous contracting process led to distrust and a vicious cycle of shading, they should reflect on how and why that happened. 10 U.S.C. 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. At Island Health and South Island, the parties tossed out the old contract and chartered a team of 12 administrators and 12 hospitalists to design a formal relational contract. A contracting officer issues a solicitation on January 9, 2019 that requests offers by February 11, 2019. (3) Whether it is likely that qualified offerors will compete for the contract. (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. L. 110-181, section 801, as amended ( 10 U.S.C. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (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 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. A.) Both companies now consider the contracting approach a best practice and have applied it in other relationships. This method may be used in sealed bidding or contracting by negotiation. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. The contracting officer shall reduce the cancellation ceiling for each program year in direct proportion to the remaining requirements subject to cancellation. 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)? If cancellation occurs, the Governments liability will be determined by the terms of the applicable contract. 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. (a) In awarding the basic contract, the contracting officer shall, except as provided in paragraph (b) of this section, evaluate offers for any option quantities or periods contained in a solicitation when it has been determined prior to soliciting offers that the Government is likely to exercise the options. The requesting agency shall furnish the servicing agency any information needed to make the justification and approval or D&F. 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. 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. (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. The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. 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. (f) Before exercising an option, the contracting officer shall make a written determination for the contract file that exercise is in accordance with the terms of the option, the requirements of this section, and part 6. (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. (The DFARS, DoD class deviations, and PGI are accessible at: http://www.acq.osd.mil/dpap/dars). Shading happens when one party isnt getting the outcome it expected. 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. Buyers must consider three key factors when deciding what type of contracting arrangement is right for each supplier relationship.