some methods of contracting require more time than others

division C of subtitle I, Procurement.). Standard forms can also be useful if the same parties are involved on repeat projects. Method of contracting. (3) The requesting agency shall furnish a copy of the D&F to the servicing agency with the request for order. To date, 57 companies have employed the vested methodology. How to build better long-term strategic partnerships. For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. When the population is high, they manage their hours in a way thats within the budget and optimizes patient care. Some methods of contracting require more time than others. They designed a hybrid pricing model with a combination of fixed and variable rates, coupled with incentives to improve efficiencies. They realized that an equally important problem is shading, a retaliatory behavior in which one party stops cooperating, ceases to be proactive, or makes countermoves. (1) Leader company, obligating it to subcontract a designated portion of the required end items to a specified follower company and to assist it to produce the required end items; (2) Leader company, for the required assistance to a follower company, and a prime contract to the follower for production of the items; or. (b) Protection of existing authority. In a lump sum contract, a company and customer agree on a predetermined price for an entire project. (a) Effective work performance under management and operating contracts usually involves high levels of expertise and continuity of operations and personnel. However, if the servicing agency is not subject to the Federal Acquisition Regulation, the requesting agency shall verify that contracts utilized to meet its requirements contain provisions protecting the Government from inappropriate charges (for example, provisions mandated for FAR agencies by part 31), and that adequate contract administration will be provided. (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). 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. 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). (b) When leader company contracting is used, the Government shall reserve the right to approve subcontracts between the leader company and the follower(s). 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. 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. 17.106-3 Special procedures applicable to DoD, NASA, and the Coast Guard. (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). In this step, contracting parties go beyond crafting the terms of the agreement and establish governance mechanisms that are formally embedded in the contract. A statement that award will not be made on less than the first program year requirements. 501 for the Federal Supply Schedules (subpart 8.4), and 40 U.S.C. If the buyer refuses to adjust the suppliers fee or the statement of work, the supplier may try to recoup losses by, for example, replacing the expensive A team it currently has on the project with its less costly C team. (b) The contracting officer need not evaluate offers for any option quantities when it is determined that evaluation would not be in the best interests of the Government and this determination is approved at a level above the contracting officer. 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. It was a lose-lose scenario. 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. 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. (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. (e) (d) An agency shall not use an interagency acquisition to make acquisitions conflicting with any other agencys authority or responsibility (for example, that of the Administrator of General Services under title 40, United States Code, "Public Buildings, Property and Works" and 41 U.S.C. 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. (d) In that event, contracting officers must follow the requirements of subpart 17.2. 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. Dells cost of switching to another company would be high, and FedEx would have trouble replacing the revenue and profits the contract generated. 17.604 Identifying management and operating contracts. ), (b) Inclusion of an option is normally not in the Governments interest when, in the judgment of the contracting officer-, (1) The foreseeable requirements involve-, (i) Minimum economic quantities (i.e., quantities large enough to permit the recovery of startup costs and the production of the required supplies at a reasonable price); 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. (d) Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. (c) (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. (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. Participation by subcontractors, suppliers, and vendors. A growing number of large organizationssuch as the Canadian government, Dell, Intel, AstraZeneca, and the Swedish telecommunications firm Teliaare successfully using this approach. (g) The contract modification or other written document which notifies the contractor of the exercise of the option shall cite the option clause as authority. 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. 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 misalignments when unforeseen circumstances occur. (a) Heads of agencies, with requisite statutory authority, may determine in writing to authorize contracting officers to enter into or renew any management and operating contract in accordance with the agencys statutory authority, or 41 U.S.C. Remediation Accessed shows whether you accessed those links. (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. 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. (3) 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 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. (f) The contract also specifies a second governance mechanisma two in a box communication approach in which an administrator is teamed with a hospitalist for each of the four governance teams. 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. Cancellation results when the contracting officer-, (1) Notifies the contractor of nonavailability of funds for contract performance for any subsequent program year; or. (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. Level unit prices. (b) (1) Funds are available; (2) The requirement covered by the option fulfills an existing Government need; (3) The exercise of the option is the most advantageous method of fulfilling the Governments need, price and other factors (see paragraphs (d) and (e) of this section) considered; (4) The option was synopsized in accordance with part 5 unless exempted by 5.202(a)(11) or other appropriate exemptions in 5.202; (5) The contractor does not have an active exclusion record in the System for Award Management (see FAR 9.405-1); (6) The contractors past performance evaluations on other contract actions have been considered; and. Cancellation ceilings and dates may be revised after issuing the solicitation if necessary. If you "overrun" the costs, your fee is the same, or fixed. L. 110-181, section 801, as amended ( 10 U.S.C. Reduction of administrative burden in the placement and administration of contracts. (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. 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. (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. Procurement contracts are also known as purchase contracts. Because of program requirements and the unusual (sometimes unique) nature of the work performed under management and operating contracts, the Government is often limited in its ability to effect competition or to replace a contractor. (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. In the event funds are not made available for the continuation of a multi-year contract awarded using the procedures in this section, the contract shall be canceled or terminated. (f) Solicitations may, in unusual circumstances, require that options be offered at prices no higher than those for the initial requirement; e.g., when-. (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. Their efforts led to the vested methodology for creating formal relational contractsa process that establishes a whats in it for we partnership mentality. (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. 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. 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. Perhaps unsurprisingly, most companiesand their legal counsels in particularare uncomfortable with informal handshake deals, especially when the stakes are high. (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. Each of these contract types is suitable for some projects and not others, and each has both advantages and disadvantages for the various stakeholders . (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. (2) Orders of $600,000 or less issued against Federal Supply Schedules. (See 35.017; see also 6.302 for procedures to follow where using other than full and open competition.) For DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of Before, we had no one to speak with [if concerns arose]. 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. Dells attempts to lower costs, including bidding out the work three times during the eight-year relationship, ate into FedExs profits. (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. 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. Accordingly, agencies should provide such information through its internal regulations. (5) Acquisition authority as may be appropriate (see 17.503(d)). (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. Is the suppliers product or service a strategic differentiatorfor the buyer? 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. (7) The contractors performance on this contract has been acceptable, e.g., received satisfactory ratings. 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). 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? Nondefense agency contracting officers are responsible for ensuring support provided in response to DoDs request complies with paragraph (b) of this section. 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. In sealed bidding, the contracting officer shall change the ceiling by amending the solicitation before bid opening. Multi-year contract procedures provide for the amortization of certain costs over the entire contract quantity resulting in identical (level) unit prices (except when the economic price adjustment terms apply) for all items or services under the multi-year contract. (a) For each program year subject to cancellation, the contracting officer shall establish a cancellation ceiling. (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) 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. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) Enhancement of standardization. not visited and 'Y' represents visited links. (The DFARS, DoD class deviations, and PGI are accessible at: http://www.acq.osd.mil/dpap/dars). Therefore, when reviewing contractor performance, contracting officers should consider-. Exam (elaborations) - Clc 222 mod 5 contract monitoring: documentation & handling issues exam 5. (5) Document roles and responsibilities in the administration of the contract. 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. Benefits may accrue by including options in a multi-year contract. 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). For example, Island Health never shared the budget with the hospitalists. (Its called vested because the parties have a vested interest in each others success.) (d) Cancellation ceilings. (h) 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. 11302(e) for Governmentwide acquisition contracts (GWACs). The cancellation ceiling shall not be an evaluation factor. Accordingly, agencies should provide such information through its internal regulations. 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. It is crucial that all terms and conditions of the formal relational contract are aligned with the guiding principles. 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)? 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. We will make decisions based on a balanced assessment of needs, risks, and resources.. 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. (e) Waiver. There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive; (4) A 60-day termination for convenience translates to a 60-day contract, one CFO at a supplier told us. (See 17.208.). (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). (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. Historically, the two parties had operated under a shroud of opaqueness. (b) (a) Compliance with this subpart is in addition to the policies and procedures for interagency acquisitions set forth in subpart 17.5. Competitive negotiated contract A streamlined method of acquisition refers to contracting methods aimed at making the acquisition process streamlined as well as procurement facilitating. (c) 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. 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. We will be recognized leaders in health care. (2) 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. (e) Recurring costs in cancellation ceiling. Every contract so authorized shall show its authorization upon its face. (ii) Competition for the option is impracticable once the initial contract is awarded. (h) (5) and provides policy and procedures for the use of multi-year contracting. Subpart 17.4 - Leader Company Contracting, Subpart 17.6 - Management and Operating Contracts. When contracting for services, the contracting officer-. 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. 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. Economic price adjustment clauses are adaptable to multi-year contracting needs.
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