some methods of contracting require more time than others

(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. A contract is a binding agreement between a buyer and a seller. (See 35.017; see also 6.302 for procedures to follow where using other than full and open competition.) 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. Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. (a) A unit price contract can be used for all or part of a project. 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. 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. 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. Physical asset specificity (location, machinery, processes), Level of integration required with suppliers systems or processes. Options should not include charges for plant and equipment already amortized, or other nonrecurring charges which were included in the basic contract. Shading happens when a party isnt getting the outcome it expected from the deal and feels the other party is to blame or has not acted reasonably to mitigate the losses. Each lacked trust and confidence in the other, yet neither could afford to end the relationship. 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. 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. (d) Contracts awarded under the multi-year procedure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. With the right mindset, the development of the contract becomes a joint problem-solving exercise rather than an adversarial contest. 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) If you "overrun" the costs, your fee is the same, or fixed. A variety of contractual clausessuch as termination for convenience, which grants one party total freedom to end the contract after a specified periodare used to try to gain the upper hand. In a lump sum contract, a company and customer agree on a predetermined price for an entire project. Relational contracts that rely on parties making choices in their mutual self-interest are nothing new, of course. Dells attempts to lower costs, including bidding out the work three times during the eight-year relationship, ate into FedExs profits. At the time, there were too many unknowns about how it would be implemented to address the issue formally. Working with the University of Tennessee (including Kate), they embarked on the five-step process. Some methods of contracting require more time than others. (b) The contract shall state the period within which the option may be exercised. all of these are Contract terms commonly allow 30, 60, even 90 days or more to pay invoices. The requirements, by item of supply or service, for the-, (1) (2) In a negotiated acquisition, negotiations with offerors may provide information requiring a change in cancellation ceilings and dates before final negotiation and contract award. 1) What is an Independent Government Estimate (IGE)? 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. (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. This method may be used in sealed bidding or contracting by negotiation. 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. From the following statements, select the correct statement pertaining to the, Personnel services contracts are authorized by the government When? (a) (b) We put everything on the table, and we challenged the contracting team to figure out ways to work with the money weve got.. 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. Subpart 17.4 - Leader Company Contracting, Subpart 17.6 - Management and Operating Contracts. (b) 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. 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 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. Exam (elaborations) - Clc 222 mod 4 contract monitoring: performance exam 3. $15 million The contract may not be awarded until the thirty-firstday after the date of notification. It is key to the buyer and seller relationship and provides a framework to deal with each other. 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. 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%. Cancellation means the cancellation (within a contractually specified time) of the total requirements of all remaining program years. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. refurbishing. (1) (5) A specific price that is subject to change as the result of changes to prevailing labor rates provided by the Secretary of Labor. Here is your test result.The dots represent the choices you have made. (5) The estimates of both the cost of the contract and the cost avoidance through the use of a multi-year contract are realistic. (1) All program years except the first are subject to cancellation. Obtaining both also provides a basis for the computation of savings and other benefits. developing an independent Government cost estimate.]. (a) (4) In no event shall the servicing agency require, or the requesting agency pay, any fee or charge in excess of the actual cost (or estimated cost if the actual cost is not known) of entering into and administering the contract or other agreement under which the order is filled. We consciously approached the economics of the relationship with full transparency and a problem-solving mentality instead of a negotiations mentality, she told us. (2) Limit option quantities for additional supplies to not more than 50 percent of the initial quantity of the same line item. (g) Level unit prices. (b) Because of the nature of the work, or because it is to be performed in Government facilities, the Government must maintain a special, close relationship with the contractor and the contractors personnel in various important areas (e.g., safety, security, cost control, site conditions). Method of contracting. In unusual circumstances, an authorized person at a level above the contracting officer may approve a greater percentage of quantity. A procurement contract includes: Product or service selection. (e) (a) When exercising an option, the contracting officer shall provide written notice to the contractor within the time period specified in the contract. 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. (2) For special protection covering the orderly transition of personnel and work in the event of a change in contractors. (1) The option cannot be evaluated under 17.206; or; (2) Future competition for the option is impracticable. Enhancement of standardization. Buyers are crazy to expect us to invest in innovation if they do the math.. Which of the following is NOT, [Recognize how contract types impacts COR responsibilities], Cost reimbursement contracts require less monitoring by the COR than other. (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. (b) For DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of $150 million may not be awarded until the head of the agency gives written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the committees on armed services and appropriations of the House of Representatives and Senate. Examples of more specific authority are 40 U.S.C. (e) Waiver. 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. This subpart prescribes policies and procedures for management and operating contracts for the Department of Energy and any other agency having requisite statutory authority. 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. (b) Achieve geographic dispersion of suppliers. 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. (ii) Delivery requirements far enough into the future to permit competitive acquisition, production, and delivery. A 60-day termination for convenience translates to a 60-day contract, one CFO at a supplier told us. Some Days Require More Carpe Than Others October 29, 2013. (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. (c) For use of project labor agreements, see subpart 22.5. (ii) The fixed or maximum fee amount is determinable by applying a formula contained in the basic contract (but see 16.102(c)); (4) A specific price that is subject to an economic price adjustment provision; or. (c) The requesting and servicing agencies should agree to procedures for the resolution of disagreements that may arise under interagency acquisitions, including, in appropriate circumstances, the use of a third-party forum. (b) The need for the supplies or services is reasonably firm and continuing over the period of the contract; and. 17.208 Solicitation provisions and contract clauses. 10) Some methods of contracting require more time than others. (2) Direct acquisitions. (f) 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. (g) The cancellation ceiling shall not be an evaluation factor. The primary contracting methods used by the government are: micro-purchases; simplified acquisition procedures; sealed bidding; contract by negotiations; and, consolidated purchasing programs, such as the use of GSA schedules, Government Wide Acquisition Contracts and other multiple award vehicles. 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. Few companies will want to risk an expensive court case for breaching the guiding principles; thus the contract becomes a deterrent against counterproductive behavior. (f) Eliminate problems in the use of proprietary data that cannot be resolved by more satisfactory solutions. Some companies go so far as to install a shadow organization to micromanage the supplier. Dells cost of switching to another company would be high, and FedEx would have trouble replacing the revenue and profits the contract generated. (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). (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. While the contract was being developed, in 2016 and 2017, Canada passed a law legalizing medical assistance in dying. (f) 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). It has been determined that the government and contractor personnel can be used interchangeably. (The DFARS, DoD class deviations, and PGI are accessible at: http://www.acq.osd.mil/dpap/dars). Adjustment on the basis of actual costs shall be made as agreed to by the agencies. (b) The Economy Act applies when more specific statutory authority does not exist. (b) Any justifications and approvals and any determination and findings required by part 6 shall specify both the basic requirement and the increase permitted by the option. (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. (4) Its use is authorized in accordance with agency procedures. (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). Cancellation or termination for insufficient funding. 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. 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. 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. 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) 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. 3501 and provides policy and procedures for the use of multi-year contracting. Reduction of administrative burden in the placement and administration of contracts. (d) (C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies. These result in a decrease in paperwork as well as less costs on both the government and contractor. (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. 3003(4) which include the-. (a) Method of contracting. 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. (e) Recurring costs in cancellation ceiling. And therein lies the beauty of the formal relational contract. (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. The multi-year contracting method may be used for the acquisition of supplies or services. (3) 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. (a) The contracting officer may award a prime contract to a-. (a) Multi-year contracting; (c) Leader company contracting. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) Last Updated Apr 24, 2023. (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. (b) The contracting officer shall review each management and operating contract, following agency procedures, at appropriate intervals and at least once every 5 years. In that event, contracting officers must follow the requirements of subpart 17.2. (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). (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. But the process we have outlined should be part of the contracting tool kit to govern highly complex relationships that demand collaboration and flexibility. Before, we had no one to speak with [if concerns arose]. For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. (iii) Include a statement that at least one of the following circumstances applies: (A) The acquisition will appropriately be made under an existing contract of the servicing agency, entered into before placement of the order, to meet the requirements of the servicing agency for the same or similar supplies or services. These contracts, which are legally enforceable, specify mutual goals and establish governance structures to keep the parties expectations and interests aligned. 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. 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) (c) Requirements for determinations and findings. 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. (c) An interagency acquisition is not exempt from the requirements of subpart 7.3, Contractor Versus Government Performance. (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. Procurement contracts are also known as purchase contracts. (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. The aggrieved party often cuts back on performance in subtle ways, sometimes even unconsciously, to compensate. Always have a copy of the contract, price assumptions, budgets, scope baseline, and other related documents nearby. (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. Multi-year contracting is a flexible contracting method applicable to a wide range of acquisitions. This risk is highest when there are many unknowns about what will occur after the contract is signed. 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. 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) (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. (1) In the interest of national defense or mobilization readiness; (2) To perform the agencys mission adequately; or. (f) Solicitations may, in unusual circumstances, require that options be offered at prices no higher than those for the initial requirement; e.g., when-. When using sealed bidding, the contracting officer shall make a written determination that there is a reasonable likelihood that the options will be exercised before including the provision at 52.217-5, Evaluation of Options, in the solicitation. 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. For DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of (h) 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. In order to broaden the defense industrial base, to the maximum extent practicable-, (1) Exam (elaborations) - Clc 222 mod 6 special considerations exam 2. The contract may not be awarded until the thirty-firstday after the date of notification. (b) Type of contract. Exam (elaborations) - Clc 222 mod 5 contract monitoring: documentation & handling issues exam 5. (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). 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. It is a description of a task, subtask, activity, and/or deliverable; and reflects corresponding pricing assumptions proposed and accepted by the client. 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. The FAR applies when one agency uses another agencys contract to obtain supplies or services. 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.

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