(1) The Governments need in certain service contracts for continuity of operations; and. 1) What is an Independent Government Estimate (IGE)? (2) (5) Document roles and responsibilities in the administration of the contract. 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. (2) In determining cancellation ceilings, the contracting officer must estimate reasonable preproduction or startup, labor learning, and other nonrecurring costs to be incurred by an "average" prime contractor or subcontractor, which would be applicable to, and which normally would be amortized over, the items or services to be furnished under the multi-year requirements. (f) Contracts may express options for increased quantities of supplies or services in terms of-. 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. Each lacked trust and confidence in the other, yet neither could afford to end the relationship. 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. (2) Orders of $600,000 or less issued against Federal Supply Schedules. In order to broaden the defense industrial base, to the maximum extent practicable-, (1) 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. (2) An indefinite quantity or requirements contract would be more appropriate than a contract with options. Again, its important to note that these guiding principles have teeth. Looking for U.S. government information and services? For DoD, NASA, and the Coast Guard, the head of the agency may enter into a multi-year contract for supplies if-. (b) (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. 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. (e) An official website of the General Services Administration. 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. To date, 57 companies have employed the vested methodology. Avoidance of the need for establishing quality control techniques and procedures for a new contractor each year. (7) The contractors performance on this contract has been acceptable, e.g., received satisfactory ratings. Contracts awarded under the multi-year procedure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. (2) An agency uses another agency to provide acquisition assistance, such as awarding and administering a contract, a task order, or delivery order. (h) These contracts, which are legally enforceable, specify mutual goals and establish governance structures to keep the parties expectations and interests aligned. Obtaining both also provides a basis for the computation of savings and other benefits. From the following statements, select the correct statement pertaining to the, Personnel services contracts are authorized by the government When? (b) Criteria for comparing the lowest evaluated submission on the first program year requirements to the lowest evaluated submission on the multi-year requirements. (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. (c) The contracting officer shall reduce the cancellation ceiling for each program year in direct proportion to the remaining requirements subject to cancellation. (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. 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. (e) Recurring costs in cancellation ceiling. (2) Limit option quantities for additional supplies to not more than 50 percent of the initial quantity of the same line item. Gone were the battles of not in scope; instead, there was a spirit of how can we accommodate this new reality given our statement of intent?. The termination for convenience procedure may apply to any Government contract, including multiyear contracts. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. Cancellation ceilings and dates may be revised after issuing the solicitation if necessary. Is the suppliers product or service a strategic differentiatorfor the buyer? 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. (3) Whether it is likely that qualified offerors will compete for the contract. 2) What is a KEY role of the COR in Acquisition Planning? This subpart implements 41 U.S.C. When the population is high, they manage their hours in a way thats within the budget and optimizes patient care. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) (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. (d) (C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies. A multi-year contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds, and (if it does so provide) may provide for a cancellation payment to be made to the contractor if appropriations are not made. (a) 10) Some methods of contracting require more time than others. The contracting officer shall limit the Governments payment obligation to an amount available for contract performance. The primary goal of Step 1 is to establish a partnership mentality. (f) For example, Kim Kerrone and Jean Maskey, informal partners, both say that formal relational contracting was transformational for their respective organizations. (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. 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. A contract is a binding agreement between a buyer and a seller. 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). The remedy is to adopt a totally different kind of arrangement: a formal relational contract that creates a flexible framework designed to foster collaboration in complex strategic relationships over the long term. (e) Stabilization of contractor work forces. 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. Subpart 17.7 - Interagency Acquisitions: Acquisitions by Nondefense Agencies on Behalf of the Department of Defense, This part prescribes policies and procedures for the acquisition of supplies and services through special contracting methods, including-. Their efforts led to the vested methodology for creating formal relational contractsa process that establishes a whats in it for we partnership mentality. 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? Given the longer performance period associated with multi-year acquisition, consideration in pricing fixed-priced contracts should be given to the use of economic price adjustment terms and profit objectives commensurate with contractor risk and financing arrangements. (a) Except for DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of $15 million may not be awarded until the head of the agency gives written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the committees on appropriations of the House of Representatives and Senate and the appropriate oversight committees of the House and Senate for the agency in question. 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. (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). For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive; (4) Multi-year contract including the requirements for each program year. (e) Payment of cancellation charges. We will make decisions based on a balanced assessment of needs, risks, and resources.. Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. 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) Cancellation procedures. 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. (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. (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. If cancellation occurs, the Governments liability will be determined by the terms of the applicable contract. (a) The expected value of the acquisition is $5 million. 3903 and 10 U.S.C. 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. 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. Economic price adjustment clauses are adaptable to multi-year contracting needs. (f) Presolicitation or pre-bid conferences. In 2008, Oliver, together with economic theorist John Moore, revisited his work on contracts. However, the preparation and evaluation of dual offers may increase administrative costs and workload for both offerors and the Government, especially for large or complex acquisitions. For nearly a decade, FedEx met all its contractual obligationsbut neither party was happy in the relationship. (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. Unfortunately, this story is not unique. (3) The requesting agency shall furnish a copy of the D&F to the servicing agency with the request for order. 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. In order to broaden the defense industrial base, to the maximum extent practicable-, (1) (2) 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. 3) There are two basic contract types, cost reimbursement and fixed-price. Information on such committees may not be readily available to contracting officers. (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). Shading happens when one party isnt getting the outcome it expected. Before jumping into a formal relational contract process, companies must determine whether it is right for them. 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. Obtaining both also provides a basis for the computation of savings and other benefits. (a) 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) The need for the supplies or services is reasonably firm and continuing over the period of the contract; and. (g) The cancellation ceiling shall not be an evaluation factor. Issuing RFI. (h) Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology. 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. (e) Nonsponsoring Federal agencies may use a Federally Funded Research and Development Center (FFRDC) only if the terms of the FFRDCs sponsoring agreement permit work from other than a sponsoring agency. (c) Maximize the use of scarce tooling or special equipment. 3501 and provides policy and procedures for the use of multi-year contracting. If level unit pricing is not in the Governments interest, the head of a contracting activity may approve the use of variable unit prices, provided that for competitive proposals there is a valid method of evaluation. (d) Insert a clause substantially the same as the clause at 52.217-6, Option for Increased Quantity, in solicitations and contracts, other than those for services, when the inclusion of an option is appropriate (see 17.200 and 17.202) and the option quantity is expressed as a percentage of the basic contract quantity or as an additional quantity of a specific line item. Dells cost of switching to another company would be high, and FedEx would have trouble replacing the revenue and profits the contract generated. (see The New, Improved Keiretsu, HBR, September 2013). The indefinite-delivery contracts used most frequently to support interagency acquisitions are Federal Supply Schedules (FSS), Governmentwide acquisition contracts (GWACs), and multi-agency contracts (MACs). Benefits may accrue by including options in a multi-year contract. This method is most advantageous for relatively straightforward and small projects such as: renovations. This subpart prescribes policies and procedures specific to acquisitions of supplies and services by nondefense agencies on behalf of the Department of Defense (DoD). (The DFARS, DoD class deviations, and PGI are accessible at: http://www.acq.osd.mil/dpap/dars). (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). (d) The termination for convenience procedure may apply to any Government contract, including multiyear contracts. (2) May consider the effect on small business. 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. (b) The contracting officer shall limit the Governments payment obligation to an amount available for contract performance. (1) All program years except the first are subject to cancellation. (3) Additional numbered line items identified as the option. A technical representative that is appointed by the contracting officer through a designation letter The procuring Contracting Officer, Administrative Contracting Officer, Termination Contracting Officer, and the Contracting Officer's Representative are key players in the acquisition process. 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. (d) If funds are not appropriated to support the succeeding years requirements, the agency must cancel the contract. and provides policy and procedures for the use of multi-year contracting. Any contract between two or more parties to deliver services or goods is a procurement contract. Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. (2) 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. 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. (b) Written contracts that are legally enforceable (which is why we call them formal), they include many components of a traditional contract but also contain relationship-building elements such as a shared vision, guiding principles, and robust governance structures to keep the parties expectations and interests aligned. (2) An informal analysis of prices or an examination of the market indicates that the option price is better than prices available in the market or that the option is the more advantageous offer. 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. A case in point is Vancouver Island Health Authority and South Island Hospitalists, a partnership of administrators and doctors who work together to provide inpatient care for patients with the most complex medical issues in British Columbia. 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. Oliver and Moores expanded theory focuses on contracts as reference points, a new perspective that emphasizes the need for mechanisms to continually align expectationsor update reference pointsas unanticipated events occur and needs change over time. (e) Ensure uniformity and reliability in equipment, compatibility or standardization of components, and interchangeability of parts. (2) A statement that an extension of the contract includes an extension of the option. (d) But many organizations require long-term, complex relationships for which the vested methodology is well suited.

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