some methods of contracting require more time than others

(1) The incumbent contractors overall performance, including, specifically, technical, administrative, and cost performance; (2) The potential impact of a change in contractors on program needs, including safety, national defense, and mobilization considerations; and. (g) Solicitations that require the offering of an option at prices no higher than those for the initial requirement shall-, (1) Specify that the Government will accept an offer containing an option price higher than the base price only if the acceptance does not prejudice any other offeror; and. (a) The contracting officer may award a prime contract to a-. The requesting agency shall furnish the servicing agency any information needed to make the justification and approval or D&F. A unit price contract can be used for all or part of a project. But the reality is that their external motivations are subtly different because of three ways that their work lives differ: How they are paid: Because FTEs receive salary while contractors are . Cancellation ceiling means the maximum cancellation charge that the contractor can receive in the event of cancellation. Information on such committees may not be readily available to contracting officers. (h) Reduction of administrative burden in the placement and administration of contracts. (1) 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. (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. Options should not include charges for plant and equipment already amortized, or other nonrecurring charges which were included in the basic contract. Upon accrual of any payment or other benefit under such a multi-year contract to any subcontractor, supplier, or vendor company participating in such contract, such payment or benefit shall be delivered to such company in the most expeditious manner practicable. This subpart implements 41 U.S.C. Kim Kerrone, of Island Health, described how the vested methodology broke the impasse. 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. All program years except the first are subject to cancellation. (h) Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology. Nor should they. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. (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. Which of the following is not a streamlined method of acquisition? In that event, contracting officers must follow the requirements of subpart 17.2. They agonize over every conceivable scenario and then try to put everything in black-and-white. (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. (2) Orders of $600,000 or less issued against Federal Supply Schedules. (g) The cancellation ceiling shall not be an evaluation factor. The objectives of this technique are one or more of the following: (a) Reduce delivery time. (d) (e) (e) Unless otherwise approved in accordance with agency procedures, the total of the basic and option periods shall not exceed 5 years in the case of services, and the total of the basic and option quantities shall not exceed the requirement for 5 years in the case of supplies. 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. In unusual circumstances, an authorized person at a level above the contracting officer may approve a greater percentage of quantity. (b) Criteria for comparing the lowest evaluated submission on the first program year requirements to the lowest evaluated submission on the multi-year requirements. Historically, the two parties had operated under a shroud of opaqueness. Solicitations for multi-year contracts shall reflect all the factors to be considered for evaluation, specifically including the following: (a) 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. (Its called vested because the parties have a vested interest in each others success.) (c) Cancellation procedures. To date, 57 companies have employed the vested methodology. All others, with the exception of a time-and-materials contract which is a hybrid of the two, are, subsets of cost reimbursement or fixed-price contracts. 1. (b) Agencies may authorize management and operating contracts only in a manner consistent with the guidance of this subpart and only if they are consistent with the situations described in 17.604. 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. With the right mindset, the development of the contract becomes a joint problem-solving exercise rather than an adversarial contest. Value-eroding friction and shading occur because one or both parties feel unfairly treated. (f) Nondefense agency certifications, waivers, and additional information are available at http://www.acq.osd.mil/dpap/cpic/cp/interagency_acquisition.html. (f) (b) The order may be placed on any form or document that is acceptable to both agencies. Which of the following is NOT, [Recognize how contract types impacts COR responsibilities], Cost reimbursement contracts require less monitoring by the COR than other. Economic price adjustment clauses are adaptable to multi-year contracting needs. (f) (e) We put everything on the table, and we challenged the contracting team to figure out ways to work with the money weve got.. A procurement contract includes: Product or service selection. 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) And South Islands less-than-optimal reporting processes meant inevitable bickering over billable hours. Standard forms can also be useful if the same parties are involved on repeat projects. (1) The leader company has the necessary production know-how and is able to furnish required assistance to the follower(s); (2) No other source can meet the Governments requirements without the assistance of a leader company; (3) The assistance required of the leader company is limited to that which is essential to enable the follower(s) to produce the items; and. (f) Annual and multi-year proposals. Companies have traditionally used contracts as protection against the possibility that one party will abuse its power to extract benefits at the expense of the otherfor example, by unilaterally raising or lowering prices, changing delivery dates, or requiring more-onerous employment terms. From the following statements, select the correct statement pertaining to the, Personnel services contracts are authorized by the government When? (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 a lump sum contract, a company and customer agree on a predetermined price for an entire project. Accordingly, for multi-year contracts, the agency head may authorize modification of the requirements of this subpart and the clause at 52.217-2, Cancellation Under Multi-year Contracts. 1. (c) Within 30 days of the beginning of each fiscal year, submit nondefense agency certifications of compliance to Principal Director, Defense Pricing and Contracting at: Office of the Under Secretary of Defense (Acquisition and Sustainment). We will make decisions based on a balanced assessment of needs, risks, and resources.. The contract may not be awarded until the thirty-firstday after the date of notification. 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. 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. But the real power is it threads all the way down to core decisions on how the parties would work. In a business world where strategic, long-term relationships are critical to competitive advantage, leaders have no choice but to overturn the status quo. 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 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. These result in a decrease in paperwork as well as less costs on both the government and contractor. A contracting officer issues a solicitation on January 9, 2019 that requests offers by February 11, 2019. (b) This subpart implements Pub. 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? Ceilings must exclude amounts for requirements included in prior program years. (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. Island Health and South Island created four joint governance teams chartered to live into the relational contract: Each team meets at regular intervals to review progress against the shared vision, goals, outcomes, and measures. The D&F shall-. Department of Defense (DoD) acquisition official means-. The requesting agency shall provide to the servicing agency any unique terms, conditions, and applicable agency-specific statutes, regulations, directives, and other applicable requirements for incorporation into the order or contract. The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. 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. 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. 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. Here is your test result.The dots represent the choices you have made. 3501 The order should include-. In that event, contracting officers must follow the requirements of subpart 17.2. The DoD reimburses the allowable incurred costs and pays a fixed amount that is negotiated at the beginning of the contract. Imagine that a supplier of engineering services submits a proposal in a competitive bidding process and wins the contract. 3903 and (5) The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. Cancellation procedures. 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). Buyers are crazy to expect us to invest in innovation if they do the math.. 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: . The contracting officer shall include these dates in the schedule, as appropriate. The requirements, by item of supply or service, for the-, (1) Method of contracting. For each program year subject to cancellation, the contracting officer shall establish a cancellation ceiling. It is crucial that all terms and conditions of the formal relational contract are aligned with the guiding principles. Accordingly, agencies should provide such information through its internal regulations. 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. 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) 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. (e) If it is anticipated that the Government may exercise an option at the time of award and if the condition specified in paragraph (d) of this section applies, solicitations shall specify the price at which the Government will evaluate the option (highest option price offered or option price for specified requirements). (e) The determination of other factors under paragraph (c)(3) of this section-, (1) Should take into account the Governments need for continuity of operations and potential costs of disrupting operations; and. The extent to which cancellation terms are used in multi-year contracts will depend on the unique circumstances of each contract. 17.208 Solicitation provisions and contract clauses. (a) Leader company contracting is to be used only when-. (2) Laws and regulations that apply to procurements of supplies and services made by DoD through other Federal agencies, including DoD financial management regulations, the Defense Federal Acquisition Regulation Supplement (DFARS), DoD class deviations, and the DFARS Procedures, Guidance, and Information (PGI). If you "overrun" the costs, your fee is the same, or fixed. Now I have someone I know fairly well at a high level in administration. The extent to which cancellation terms are used in multi-year contracts will depend on the unique circumstances of each contract. (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. (C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies. 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. division C of subtitle I, Procurement.). It is key to the buyer and seller relationship and provides a framework to deal with each other. Perhaps unsurprisingly, most companiesand their legal counsels in particularare uncomfortable with informal handshake deals, especially when the stakes are high. (g) Payment limit. Last Updated Apr 24, 2023. The inclusion of recurring costs in cancellation ceilings is an exception to normal contract financing arrangements and requires approval by the agency head. (b) The requesting agency administers the order; therefore, no written agreement with the servicing agency is required. As contrasted with cancellation, termination can be effected at any time during the life of the contract (cancellation is effected between fiscal years) and can be for the total quantity or partial quantity (where as cancellation must be for all subsequent fiscal years quantities). Accordingly, agencies should provide such information through its internal regulations. (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. 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. 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. Unfortunately, this story is not unique. Some companies go so far as to install a shadow organization to micromanage the supplier. Stabilization of contractor work forces. 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%. (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. 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. 10) Some methods of contracting require more time than others. The need for the supplies or services is reasonably firm and continuing over the period of the contract; and. It is a description of a task, subtask, activity, and/or deliverable; and reflects corresponding pricing assumptions proposed and accepted by the client. Is the suppliers product or service a strategic differentiatorfor the buyer? (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. (1) This authority shall not be delegated. (2) Upon accrual of any payment or other benefit under such a multi-year contract to any subcontractor, supplier, or vendor company participating in such contract, such payment or benefit shall be delivered to such company in the most expeditious manner practicable. Using multiple suppliers instead of only one, for example, increases costs; so does operating a shadow organization. (c) Requirements for determinations and findings. developing an independent Government cost estimate.]. 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). A provision specifying a separate cancellation ceiling (on a percentage or dollar basis) and dates applicable to each program year subject to a cancellation (see 17.106-1(c) and (d)). 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. We not only came in under budget, we also increased our revenue by improving our MSP billing process. (David and Kate have consulted on many of these projects, including several mentioned in this article.) (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. (g) Indeed, the Canadian supreme court recently took up a case in which a franchisee alleged that it was not being treated fairly by the franchise owner. in the overall strategic planning of an acquisition]. 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. (c) Maximize the use of scarce tooling or special equipment. The written determination shall identify the acquisition categories to which the waiver applies. (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. 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. Any contract between two or more parties to deliver services or goods is a procurement contract. (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. (c) The period shall be set so as to provide the contractor adequate lead time to ensure continuous production. (See 17.207(f) with regard to the exercise of options. The business-case analysis shall. false. (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. (1) The Governments need in certain service contracts for continuity of operations; and. We will be recognized leaders in health care. 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) 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. The expected value of the acquisition is $5 million. (h) These limitations do not apply to information technology contracts. Competitive negotiated contract A streamlined method of acquisition refers to contracting methods aimed at making the acquisition process streamlined as well as procurement facilitating. Economists call this the hold-up problem: the fear that one party will be held up by the other. Does the buyer benefit from access to the suppliers criticalsystems and processes (and vice versa)? (d) The period may extend beyond the contract completion date for service contracts. (ii) Complying fully with the competition requirements of part 6 (see 6.002). (g) If it is anticipated that the best price available is the option price or that this is the more advantageous offer, the contracting officer should not use this method of testing the market. 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. (2) A statement that an extension of the contract includes an extension of the option. If demand is lower during the term of the contract than the buyer stated in the RFP or the scope expands in an unanticipated area, the suppliers profit will take a hit. Buyers must consider three key factors when deciding what type of contracting arrangement is right for each supplier relationship. 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. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) Enhancement of standardization. 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. Avoidance of the need for establishing quality control techniques and procedures for a new contractor each year. Cancellation ceilings. Benefits may accrue by including options in a multi-year contract. The wording crafted by Island Health and South Island, which they embedded in the preamble of their contract, can be used by other companies as a model for drafting their own guiding principles. 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. (d) The DoD acquisition official, as defined at 17.701, shall provide to the servicing nondefense agency contracting officer any DoD-unique terms, conditions, other related statutes, regulations, directives, and other applicable requirements for incorporation into the order or contract.

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