Economic price adjustment clauses are adaptable to multi-year contracting needs. Some methods of contracting require more time than others. This wide selection of contract types is available to the government and contractors to provide flexibility in acquiring the large variety and volume of supplies and services required by agencies. May use an economic price adjustment clause authorized by 16.203, when potential fluctuations require coverage and are not included in cost contingencies provided for by the clause at 52.222-43. The following criteria can generally be applied in identifying management and operating contracts: (a) Government-owned or -controlled facilities must be utilized; for instance-. Payment of cancellation charges. In Step 3, parties commit to six guiding principles that contractually prohibit opportunistic tit-for-tat moves. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. (b) Business-case analysis requirements for multi-agency contracts and governmentwide acquisition contracts. The DoD reimburses the allowable incurred costs and pays a fixed amount that is negotiated at the beginning of the contract. (c) Cancellation procedures. Solicitations for multi-year contracts shall reflect all the factors to be considered for evaluation, specifically including the following: (a) The requirements, by item of supply or service, for the-, (1) First program year; and. 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. 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. Office of the Director of National Intelligence; Intelligence elements of the Federal Bureau of Investigation, Department of Energy, and Drug Enforcement Agency; Bureau of Intelligence and Research of the Department of State; Office of Intelligence and Analysis of the Department of the Treasury; The Office of Intelligence and Analysis of the Department of Homeland Security and the Office of Intelligence of the Coast Guard; and. (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. When contracting for services, the contracting officer-. chapter 33, and the agencys regulations governing such contracts. And in a publicly funded health care environment, that is exactly what we need to be focusing on., The governance structure also helped the parties surmount the tricky problem of scope creep. (g) Except for DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of 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. (b) Insert a provision substantially the same as the provision at 52.217-4, Evaluation of Options Exercised at Time of Contract Award, in solicitations when the solicitation includes an option clause, the contracting officer has determined that there is a reasonable likelihood that the option will be exercised, and the option may be exercised at the time of contract award. 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. 17.106-3 Special procedures applicable to DoD, NASA, and the Coast Guard. It has been determined that the government and contractor personnel can be used interchangeably. For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. (5) A specific price that is subject to change as the result of changes to prevailing labor rates provided by the Secretary of Labor. Last Updated Apr 24, 2023. Cancellation ceilings and dates may be revised after issuing the solicitation if necessary. Management and operating contract means an agreement under which the Government contracts for the operation, maintenance, or support, on its behalf, of a Government-owned or -controlled research, development, special production, or testing establishment wholly or principally devoted to one or more major programs of the contracting Federal agency. (1) Each Economy Act order to obtain supplies or services by interagency acquisition shall be supported by a determination and findings (D&F). The contract may not be awarded until the thirty-firstday after the date of notification. The Government has an, Question 17 of 28 You have an Azure Storage account named storage1 that is configured to use the Hot access tier. 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 use of such a contract will result in significant savings of the total estimated costs of carrying out the program through annual contracts; (2) (1) 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. (a) But the process we have outlined should be part of the contracting tool kit to govern highly complex relationships that demand collaboration and flexibility. For each program year subject to cancellation, the contracting officer shall establish a cancellation ceiling. You need to ensure, Prior to certifying the Managing Accounting Billing Statement for contract payments by Governmentwide Commercial Purchase Card, the Approving/ Billing Official must do what two things? We not only came in under budget, we also increased our revenue by improving our MSP billing process. At Island Health and South Island, the parties tossed out the old contract and chartered a team of 12 administrators and 12 hospitalists to design a formal relational contract. 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. These result in a decrease in paperwork as well as less costs on both the government and contractor. The contracting officer shall insert the clause at 52.217-2, Cancellation Under Multi-year Contracts, in solicitations and contracts when a multi-year contract is contemplated. A provision that, if the Government determines before award that only the first program year requirements are needed, the Governments evaluation of the price or estimated cost and fee shall consider only the firstyear. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. Termination payment. The nonsponsoring agency shall provide to the sponsoring agency necessary documentation that the requested work would not place the FFRDC in direct competition with domestic private industry. (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. 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 FAR applies when one agency uses another agencys contract to obtain supplies or services. (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. (2) Limit option quantities for additional supplies to not more than 50 percent of the initial quantity of the same line item. Few companies will want to risk an expensive court case for breaching the guiding principles; thus the contract becomes a deterrent against counterproductive behavior. all of these are Contract terms commonly allow 30, 60, even 90 days or more to pay invoices. 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) 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. 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. Enhancement of standardization. (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). Under reciprocity, for example, they highlighted the need to conduct ourselves in the spirit of achieving mutual benefit and understanding. Under equity, they acknowledged the unavoidable imbalances that arise in contracts: We are committed to fairness, which does not always mean equality. (b) This subpart applies to interagency acquisitions, see 2.101 for definition, when-, (1) An agency needing supplies or services obtains them using another agencys contract; or. Information on such committees may not be readily available to contracting officers. (a) The contract may not be awarded until the thirty-firstday after the date of notification. (a) The contracting officer shall justify in writing the quantities or the term under option, the notification period for exercising the option, and any limitation on option price under 17.203(g); and shall include the justification document in the contract file. Nor should they. (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. (b) Economic price adjustment clauses. (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. In a negotiated acquisition, negotiations with offerors may provide information requiring a change in cancellation ceilings and dates before final negotiation and contract award. Each was crafted to establish a new norm for the partnership. (d) (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. Nondefense agency contracting officers are responsible for ensuring support provided in response to DoDs request complies with paragraph (b) of this section. Nondefense agency means any department or agency of the Federal Government other than the Department of Defense. 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. (3) Follower company, obligating it to subcontract with a designated leader company for the required assistance. (a) This subpart prescribes policies and procedures applicable to all interagency acquisitions under any authority, except as provided for in paragraph (c) of this section. From the following statements, select the correct statement pertaining to the, Personnel services contracts are authorized by the government When? 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) (h) One objective, for example, called for improving physicians billing to the provincial Medical Services Plan (MSP) for cost recovery for the hospitalist fees. Information on such committees may not be readily available to contracting officers. Examples of more specific authority are 40 U.S.C. 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) 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. 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. (3) Whether it is likely that qualified offerors will compete for the contract. (See 35.017; see also 6.302 for procedures to follow where using other than full and open competition.) Shading happens when one party isnt getting the outcome it expected. Multi-year contract including the requirements for each program year. 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. (c) 11302(e) for Governmentwide acquisition contracts (GWACs). (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. Working with the University of Tennessee (including Kate), they embarked on the five-step process. Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. To the extent practicable, multi-year contracting shall not be carried out in a manner to preclude or curtail the existing ability of the Department or agency to provide for termination of a prime contract, the performance of which is deficient with respect to cost, quality, or schedule. IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Contracting methods available which can streamline the contracting timeframe include: . 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. 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. This subpart prescribes policies and procedures for the use of option solicitation provisions and contract clauses. They are especially useful for complex purchasing arrangements, outsourcing, strategic alliances, joint ventures, franchises, public-private partnerships, large construction projects, and collective bargaining agreements. (h) Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology. 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. The main disadvantages are: they will not reflect project-specific risks or unusual provisions in the master contract; 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). (c) The contracting officer shall not employ options if-. (d) The termination for convenience procedure may apply to any Government contract, including multiyear contracts. (c) The conduct of the work is wholly or at least substantially separate from the contractors other business, if any. The contracting officer shall insert the amount for the first program year in the contract upon award and modify it for successive program years upon availability of funds. Recurring costs means costs that vary with the quantity being produced, such as labor and materials. In this article, we look at the theoretical underpinnings of formal relational contracts and lay out a five-step methodology for negotiating them. 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. In fact, many companies now believe that even the vaunted keiretsu model, which Toyota and Nissan, among others, used so successfully, ties up capital and limits flexibility. 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. Benefits may accrue by including options in a multi-year contract. Options should not include charges for plant and equipment already amortized, or other nonrecurring charges which were included in the basic contract. 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. 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. Stabilization of contractor work forces. 10) Some methods of contracting require more time than others. (f) Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) (c) Requirements for determinations and findings.
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