(c) Cancellation procedures. It is a description of a task, subtask, activity, and/or deliverable; and reflects corresponding pricing assumptions proposed and accepted by the client. The main disadvantages are: they will not reflect project-specific risks or unusual provisions in the master contract; Ceilings must exclude amounts for requirements included in prior program years. Formal relational contracts will never completely replace traditional transactional contracts. Before jumping into a formal relational contract process, companies must determine whether it is right for them. Last Updated Apr 24, 2023. (b) For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. 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. Cancellation means the cancellation (within a contractually specified time) of the total requirements of all remaining program years. Imagine that a supplier of engineering services submits a proposal in a competitive bidding process and wins the contract. Except for DoD, NASA, and the Coast Guard, the contracting officer may enter into a multi-year contract if the head of the contracting activity determines that-, (1) Contracts awarded under the multi-year procedure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. The formal relational contract addresses these deficiencies. A sole source procurement (called an Other than Full & Open Competition) is when the government enters into a contract with a contractor without going through the typical competitive process as required by law because it deems that the contractor is the only source available that can meet the government requirements. (b) An agency shall not use an interagency acquisition to circumvent conditions and limitations imposed on the use of funds. In Step 3, parties commit to six guiding principles that contractually prohibit opportunistic tit-for-tat moves. (3) Whether it is likely that qualified offerors will compete for the contract. 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 contract may not be awarded until the thirty-firstday after the date of notification. IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Contracting methods available which can streamline the contracting timeframe include: . 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. Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. Information on such committees may not be readily available to contracting officers. They agonize over every conceivable scenario and then try to put everything in black-and-white. (1) Administrators and hospitalists who had called their relationship broken, dysfunctional, and distrustful now describe it as collaborative, trusting, and supportive., Kerrone points to financial benefits as well. https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/assets/OMB/procurement/interagency_acq/iac_revised.pdf, https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/procurement/memo/development-review-and-approval-of-business-cases-for-certain-interagency-and-agency-specific-acquisitions-memo.pdf, http://www.acq.osd.mil/dpap/cpic/cp/interagency_acquisition.html, Civilian Agency Acquisition Council (CAAC), Interagency Suspension and Debarment Committee (ISDC). For example, Island Health never shared the budget with the hospitalists. Avoidance of the need for establishing quality control techniques and procedures for a new contractor each year. 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. Here is your test result.The dots represent the choices you have made. The business-case analysis shall. 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. (2) Orders of $600,000 or less issued against Federal Supply Schedules. (g) (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. (b) The contracting officer shall ensure that any contract awarded under this arrangement contains a firm agreement regarding disclosure, if any, of contractor trade secrets, technical designs or concepts, and specific data, or software, of a proprietary nature. 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. (See 17.208.). These contracts, which are legally enforceable, specify mutual goals and establish governance structures to keep the parties expectations and interests aligned. The expected value of the acquisition is $5 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. $150 million (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. (g) 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. Accordingly, agencies should provide such information through its internal regulations. (d) When an interagency acquisition requires the servicing agency to award a contract, the following procedures also apply: (1) If a justification and approval or a D&F (other than the requesting agencys D&F required in 17.502-2(c)) is required by law or regulation, the servicing agency shall execute and issue the justification and approval or D&F. (2) May consider the effect on small business. To satisfy requirements of part 6 regarding full and open competition, the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract, e.g.-. (1) A specific dollar amount; (2) An amount to be determined by applying provisions (or a formula) provided in the basic contract, but not including renegotiation of the price for work in a fixed-price type contract; (3) In the case of a cost-type contract, if-, (i) The option contains a fixed or maximum fee; or. First program year; and. (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. (b) The contracting officer shall review each management and operating contract, following agency procedures, at appropriate intervals and at least once every 5 years. (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. Looking for U.S. government information and services? false. 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. (f) Contracts may express options for increased quantities of supplies or services in terms of-. Few companies will want to risk an expensive court case for breaching the guiding principles; thus the contract becomes a deterrent against counterproductive behavior. (c) An interagency acquisition is not exempt from the requirements of subpart 7.3, Contractor Versus Government Performance. In a subsequent workshop the team delved deeper, crafting four high-level desired outcomes, seven goals, and 22 tactical and measurable objectives. (3) Additional numbered line items identified as the option. Some methods of contracting require more time than others. Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. 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. They designed a hybrid pricing model with a combination of fixed and variable rates, coupled with incentives to improve efficiencies. The inclusion of recurring costs in cancellation ceilings is an exception to normal contract financing arrangements and requires approval by the agency head. 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. Economic price adjustment clauses. 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) 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 . 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. Cancellation ceilings and dates may be revised after issuing the solicitation if necessary. (e) Payment of cancellation charges. 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. division C of subtitle I, Procurement.). (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). At the time, there were too many unknowns about how it would be implemented to address the issue formally. (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. 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. (2) Fails to notify the contractor that funds are available for performance of the succeeding program year requirement. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) They shall not include any costs of labor or materials, or other expenses (except as indicated above), which might be incurred for performance of subsequent program year requirements. (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. 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. Some Days Require More Carpe Than Others October 29, 2013. 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. (ii) Delivery requirements far enough into the future to permit competitive acquisition, production, and delivery. 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. (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. Economists call this the hold-up problem: the fear that one party will be held up by the other. One objective, for example, called for improving physicians billing to the provincial Medical Services Plan (MSP) for cost recovery for the hospitalist fees. (3) Follower company, obligating it to subcontract with a designated leader company for the required assistance. For acquisitions on behalf of the Department of Defense, also see subpart 17.7. A 60-day termination for convenience translates to a 60-day contract, one CFO at a supplier told us. 2. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. Economic price adjustment clauses are adaptable to multi-year contracting needs. 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. and provides policy and procedures for the use of multi-year contracting. The FAR applies when one agency uses another agencys contract to obtain supplies or services. (e) The Truth in Negotiation Act of 1962 required both prime and subcontractors on contracts over $500,000 to certify the cost data submitted under the solicitation. 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. (a) Compliance with this subpart is in addition to the policies and procedures for interagency acquisitions set forth in subpart 17.5. In that event, contracting officers must follow the requirements of subpart 17.2. (c) Unfortunately, this story is not unique. The parties ultimately came up with an alternative to the standard fee-for-billable-hours method. This authority shall not be delegated. (b) 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. Exam (elaborations) - Clc 222 mod 3 contract management exam 4. 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. (a) 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. (a) Method of contracting. (c) Requirements for determinations and findings. (c) For use of project labor agreements, see subpart 22.5. 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. 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. Benefits may accrue by including options in a multi-year contract. 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. 1. And if their previous contracting process led to distrust and a vicious cycle of shading, they should reflect on how and why that happened. (f) Nondefense agency certifications, waivers, and additional information are available at http://www.acq.osd.mil/dpap/cpic/cp/interagency_acquisition.html. 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. The Island Health and South Island team held a three-day off-site to craft their vision: 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. They further established a set of four desired outcomes that flowed from the shared vision: About the art: Artist Cecil Touchons collages of sliced and rearranged letterforms create subliteral poems. In his Typographic Abstraction series, the compositions transform letters from a symbol of written language into a kind of visual architecture. Adjustment on the basis of actual costs shall be made as agreed to by the agencies. (g) Facilitate the transition from development to production and to subsequent competitive acquisition of end items or major components. 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.