some methods of contracting require more time than others some methods of contracting require more time than others
(d) The period may extend beyond the contract completion date for service contracts. (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. Each lacked trust and confidence in the other, yet neither could afford to end the relationship. Cancellation ceiling means the maximum cancellation charge that the contractor can receive in the event of cancellation. 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. 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. (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. Termination payment. This subpart prescribes policies and procedures specific to acquisitions of supplies and services by nondefense agencies on behalf of the Department of Defense (DoD). Leaders employ a range of tactics to try to ensure that they are not taken advantage of by a powerful partner. Cancellation procedures. (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). Subpart 17.4 - Leader Company Contracting, Subpart 17.6 - Management and Operating Contracts. (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. For DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of A procurement contract includes: Product or service selection. Imagine that a supplier of engineering services submits a proposal in a competitive bidding process and wins the contract. (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. 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. For each program year subject to cancellation, the contracting officer shall establish a cancellation ceiling. (f) In preparing interagency agreements to support assisted acquisitions, agencies should review the Office of Federal Procurement Policy (OFPP) guidance, Interagency Acquisitions, available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/assets/OMB/procurement/interagency_acq/iac_revised.pdf . (see The New, Improved Keiretsu, HBR, September 2013). (b) Insert a provision substantially the same as the provision at 52.217-4, Evaluation of Options Exercised at Time of Contract Award, in solicitations when the solicitation includes an option clause, the contracting officer has determined that there is a reasonable likelihood that the option will be exercised, and the option may be exercised at the time of contract award. 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. 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? (c) (b) (1) Both companies now consider the contracting approach a best practice and have applied it in other relationships. 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. Recurring costs means costs that vary with the quantity being produced, such as labor and materials. (a) This subpart prescribes policies and procedures applicable to all interagency acquisitions under any authority, except as provided for in paragraph (c) of this section. Contracts awarded under the multi-year procedure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. 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. One objective, for example, called for improving physicians billing to the provincial Medical Services Plan (MSP) for cost recovery for the hospitalist fees. Lowest Price Technically Acceptable (LPTA) 2. (c) The period shall be set so as to provide the contractor adequate lead time to ensure continuous production. (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. (f) Eliminate problems in the use of proprietary data that cannot be resolved by more satisfactory solutions. (d) The contracting officer, after considering price and other factors, shall make the determination on the basis of one of the following: (1) A new solicitation fails to produce a better price or a more advantageous offer than that offered by the option. (b) Type of contract. The Economy Act also provides authority for placement of orders between major organizational units within an agency; procedures for such intra-agency transactions are addressed in agency regulations. in the overall strategic planning of an acquisition]. (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. (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. 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) If funds are not appropriated to support the succeeding years requirements, the agency must cancel the contract. Recurring costs means costs that vary with the quantity being produced, such as labor and materials. (f) 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. 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. (2) Each of these contract types is suitable for some projects and not others, and each has both advantages and disadvantages for the various stakeholders . They agonize over every conceivable scenario and then try to put everything in black-and-white. 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. The contracting officer shall include these dates in the schedule, as appropriate. (c) Solicitations normally should allow option quantities to be offered without limitation as to price, and there shall be no limitation as to price if the option quantity is to be considered in the evaluation for award (see 17.206). (d) [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 (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. Historically, the two parties had operated under a shroud of opaqueness. A contract is a binding agreement between a buyer and a seller. With the right mindset, the development of the contract becomes a joint problem-solving exercise rather than an adversarial contest. Cancellation ceilings. (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. (g) For nearly a decade, FedEx met all its contractual obligationsbut neither party was happy in the relationship. 10) Some methods of contracting require more time than others. Which of the following is, [Identify the various methods of contracting for, Ordering off a Blanket Purchase Agreement, Buys against a GSA Federal Supply Schedule. 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. (7) The contractors performance on this contract has been acceptable, e.g., received satisfactory ratings. (1) All program years except the first are subject to cancellation. (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. Ceilings must exclude amounts for requirements included in prior program years. (3) Additional numbered line items identified as the option. A developer or sole producer of a product or system is designated under this acquisition technique to be the leader company, and to furnish assistance and know-how under an approved contract to one or more designated follower companies, so they can become a source of supply. (g) Level unit prices. 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. (1) Each Economy Act order to obtain supplies or services by interagency acquisition shall be supported by a determination and findings (D&F). We will make decisions based on a balanced assessment of needs, risks, and resources.. 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. (2) The multi-year contracting method may be used for the acquisition of supplies or services. We consciously approached the economics of the relationship with full transparency and a problem-solving mentality instead of a negotiations mentality, she told us. Damage to the buyers customer or brand experience, Damage to the buyers employee experience, Excellence in patient care (develop a formal and robust quality structure), A sustainable and resilient hospitalist service (strengthen recruitment, mentorship, and retention processes; create an efficient and flexible hospitalist scheduling model; clearly define hospitalist services and workload; develop stronger interdepartmental working relationships; and train and develop current and future hospitalist leaders), A strong partnership (continue to build a healthy relationship between Island Health and South Island), A best-value hospitalist service (proactively manage the budget, optimize billing, review workload, and increase operational efficiencies). 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. (d) Cancellation ceilings. However, it does not preclude the use of options in those contracts. (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. 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. (c) Maximize the use of scarce tooling or special equipment. 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). (b) The contract shall state the period within which the option may be exercised. Exam (elaborations) - Clc 222 mod 5 contract monitoring: documentation & handling issues exam 5. 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) (f) Presolicitation or pre-bid conferences. Early research by one of us (Oliver, who won the 2016 Nobel Prize in economics for his work on contracts) predicted that in response to the combined problems of hold-ups and incomplete contracts, companies are very likely to make distorted investments that produce poor outcomes. Payment of cancellation charges. 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. (1) Cash flow is easier to predict in a lump sum contract. Each individual worked with a counterpart from the other organization to establish connections in key areas. Type of contract. The FAR applies when one agency uses another agencys contract to obtain supplies or services. (2) May consider the effect on small business. 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). And therein lies the beauty of the formal relational contract. 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. For sealed bids, the determination shall be in writing. 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. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) Enhancement of standardization. Benefits may accrue by including options in a multi-year contract. 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) The servicing agency has the capability or expertise to enter into a contract for such supplies or services that is not available within the requesting agency. (1) Funds are available; (2) The requirement covered by the option fulfills an existing Government need; (3) The exercise of the option is the most advantageous method of fulfilling the Governments need, price and other factors (see paragraphs (d) and (e) of this section) considered; (4) The option was synopsized in accordance with part 5 unless exempted by 5.202(a)(11) or other appropriate exemptions in 5.202; (5) The contractor does not have an active exclusion record in the System for Award Management (see FAR 9.405-1); (6) The contractors past performance evaluations on other contract actions have been considered; and. 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. (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. (David and Kate have consulted on many of these projects, including several mentioned in this article.) division C of subtitle I, Procurement.). (c) The contracting officer shall not employ options if-. The main advantage of using this method is avoiding the need to draft the subcontract from scratch and hopefully saving time negotiating it. (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. 501 for the Federal Supply Schedules (subpart 8.4), and 40 U.S.C. (c) Cancellation or termination for insufficient funding. 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. (d) (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. (g) Facilitate the transition from development to production and to subsequent competitive acquisition of end items or major components. 3201 note prec.). 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. 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. Every contract so authorized shall show its authorization upon its face. 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. 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. 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. all of these are Contract terms commonly allow 30, 60, even 90 days or more to pay invoices. (b) In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. 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. (b) The D&F shall-. Course Hero is not sponsored or endorsed by any college or university. 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. Some relationships, such as those involving the purchase of commodity products and services, are truly transactional and only need traditional contracts. (d) Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. 2. Further, the rule revises procurement . 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. (f) Annual and multi-year proposals. 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. Obtaining both annual and multi-year offers provides reduced lead time for making an annual award in the event that the multi-year award is not in the Governments interest. Presolicitation or pre-bid conferences. (2) Modify as necessary or terminate contracts not so identified and authorized, except that any contract with less than 4 years remaining as of the effective date of this regulation need not be terminated, nor need it be identified, modified, or authorized unless it is renewed or its terms are substantially renegotiated. In the event there are no agency unique requirements beyond the FAR, the requesting agency shall so inform the servicing agency contracting officer in writing. (a) Method of contracting. (2) An indefinite quantity or requirements contract would be more appropriate than a contract with options. At the same time that Oliver and Moore were looking at the contracting problem from an economics perspective, University of Tennessee researchers (including two of us, Kate and David) were working with companies to come up with a new approach that would produce healthier and more sustainable partnerships. (h) Termination payment. (3) Follower company, obligating it to subcontract with a designated leader company for the required assistance. 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). The contracting officer shall include these dates in the schedule, as appropriate. (c) Multi-year contract procedures provide for the amortization of certain costs over the entire contract quantity resulting in identical (level) unit prices (except when the economic price adjustment terms apply) for all items or services under the multi-year contract. (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. For patent rights, see 27.304-2. But when contract negotiations begin, they default to an adversarial mindset and a transactional contracting approach. If you "overrun" the costs, your fee is the same, or fixed. 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%. (d) A management and operating contract is characterized both by its purpose (see 17.601) and by the special relationship it creates between Government and contractor. 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. Together, we are a team that celebrates and advances excellence in care for our patients and ourselves through shared responsibility, collaborative innovation, mutual understanding, and the courage to act, in a safe and supportive environment. (b) Economic price adjustment clauses. 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. (ii) Delivery requirements far enough into the future to permit competitive acquisition, production, and delivery. Department of Defense (DoD) acquisition official means-. 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. 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. 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. Value-eroding friction and shading occur because one or both parties feel unfairly treated. The following criteria can generally be applied in identifying management and operating contracts: (a) Government-owned or -controlled facilities must be utilized; for instance-. 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. 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. 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.
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