some methods of contracting require more time than others

(f) Presolicitation or pre-bid conferences. (2) An indefinite quantity or requirements contract would be more appropriate than a contract with options. (a) Leader company contracting is to be used only when-. (1) In the interest of national defense or mobilization readiness; (2) To perform the agencys mission adequately; or. 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. repairs. Cancellation ceilings. (e) Waiver. (c) (3) The time between the award of the contract containing the option and the exercise of the option is so short that it indicates the option price is the lowest price obtainable or the more advantageous offer. The need for the supplies or services is reasonably firm and continuing over the period of the contract; and. A developer or sole producer of a product or system is designated under this acquisition technique to be the leader company, and to furnish assistance and know-how under an approved contract to one or more designated follower companies, so they can become a source of supply. Results have not been tracked for all of them, but many have told us that they and their partners are happy with the approach and cite benefits including cost savings, improved profitability, higher levels of service, and a better relationship. Multi-year contract including the requirements for each program year. (2) Orders of $600,000 or less issued against Federal Supply Schedules. (a) Solicitations shall include appropriate option provisions and clauses when resulting contracts will provide for the exercise of options (see 17.208). 3903 and 10 U.S.C. (c) The contracting officer may exercise options only after determining that-. (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. developing an independent Government cost estimate.]. 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. 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. (d) 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. Nondefense agency that is an element of the intelligence community means the agencies identified in 50 U.S.C. (a) 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. (f) (see The New, Improved Keiretsu, HBR, September 2013). 3903 and (c) 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. In long-term, complex deals, shading can be so pervasive that the tit-for-tat behavior becomes a death spiral. The contract may not be awarded until the thirty-firstday after the date of notification. 11302(e) for Governmentwide acquisition contracts (GWACs). 3003(4) which include the-. Leader company contracting is an extraordinary acquisition technique that is limited to special circumstances and utilized only when its use is in accordance with agency procedures. Economists call this the hold-up problem: the fear that one party will be held up by the other. The contracting officer shall take into consideration such factors as market stability and comparison of the time since award with the usual duration of contracts for such supplies or services. (a) 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. (a) Compliance with this subpart is in addition to the policies and procedures for interagency acquisitions set forth in subpart 17.5. 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. (a) 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. Consider how the Island Health administrators and South Island hospitalists tackled pricing, which had always been their sticking point. 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. A.) This subpart prescribes policies and procedures for the use of option solicitation provisions and contract clauses. There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive; (4) 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?. 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. (b) This subpart implements Pub. 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. B). And South Islands less-than-optimal reporting processes meant inevitable bickering over billable hours. For nearly a decade, FedEx met all its contractual obligationsbut neither party was happy in the relationship. (b) Solicitations containing option provisions shall state the basis of evaluation, either exclusive or inclusive of the option and, when appropriate, shall inform offerors that it is anticipated that the Government may exercise the option at time of award. 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. Cash flow is easier to predict in a lump sum contract. (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. When Dell and FedEx reached their breaking point, they chose to abandon their existing contracting process and create a formal relational contract that specified desired outcomes and defined relationship-management processes at the operational, management, and executive levels. The 100-page-plus document was filled with supplier shall statements that detailed FedExs obligations and outlined dozens of metrics for how Dell would measure success. 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). 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. . (a) When exercising an option, the contracting officer shall provide written notice to the contractor within the time period specified in 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. (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). Shading happens when one party isnt getting the outcome it expected. 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. This method may be used in sealed bidding or contracting by negotiation. 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. If it is anticipated that the best price available is the option price or that this is the more advantageous offer, the contracting officer should not use this method of testing the market. This subpart applies to all acquisitions made by nondefense agencies on behalf of DoD. 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. This method may be used in sealed bidding or contracting by negotiation. 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). (1) The contractor will incur undue risks; e.g., the price or availability of necessary materials or labor is not reasonably foreseeable; (2) Market prices for the supplies or services involved are likely to change substantially; or, (3) The option represents known firm requirements for which funds are available unless-, (i) The basic quantity is a learning or testing quantity; and. Each of these contract types is suitable for some projects and not others, and each has both advantages and disadvantages for the various stakeholders . Competitive negotiated contract A streamlined method of acquisition refers to contracting methods aimed at making the acquisition process streamlined as well as procurement facilitating. Protection of existing authority. In an era when businesses increasingly have to depend on their suppliers to lower costs, improve quality, and drive innovation, traditional contracts dont work. Historically, the two parties had operated under a shroud of opaqueness. Therefore contracting officers should take extraordinary steps before award to assure themselves that the prospective contractors technical and managerial capacity are sufficient, that organizational conflicts of interest are adequately covered, and that the contract will grant the Government broad and continuing rights to involve itself, if necessary, in technical and managerial decisionmaking concerning performance. (1) All program years except the first are subject to cancellation. (a) Participation by subcontractors, suppliers, and vendors. (b) The contract shall state the period within which the option may be exercised. contracting officers shall avoid, to the maximum extent practicable, using the lowest price technically acceptable source selection process in the case of a procurement that is predominantly for the acquisition of (1)Information technology services, cybersecurity services, systems engineering and technical If cancellation occurs, the Governments liability will be determined by the terms of the applicable contract. (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. (g) The cancellation ceiling shall not be an evaluation factor. Cancellation ceiling means the maximum cancellation charge that the contractor can receive in the event of cancellation. This subpart implements 41 U.S.C. 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. (a) The Economy Act ( 31 U.S.C.1535) authorizes agencies to enter into agreements to obtain supplies or services from another agency. 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. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. 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. (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. 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). 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. (e) A statement that award will not be made on less than the first program year requirements. (d) Buyers must consider three key factors when deciding what type of contracting arrangement is right for each supplier relationship. A provision specifying a separate cancellation ceiling (on a percentage or dollar basis) and dates applicable to each program year subject to a cancellation (see 17.106-1(c) and (d)). (g) Payment limit. 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. Island Health and South Island formally embedded their interpretations of the principles in the preamble of their contract. You also have an on-premises Active Directory domain that contains a user named User1. 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. (See 17.207(f) with regard to the exercise of options. 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. (d) The DoD acquisition official, as defined at 17.701, shall provide to the servicing nondefense agency contracting officer any DoD-unique terms, conditions, other related statutes, regulations, directives, and other applicable requirements for incorporation into the order or contract. (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. They are especially useful for complex purchasing arrangements, outsourcing, strategic alliances, joint ventures, franchises, public-private partnerships, large construction projects, and collective bargaining agreements. 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. (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). Lowest Price Technically Acceptable (LPTA) 2. (ii) Delivery requirements far enough into the future to permit competitive acquisition, production, and delivery. Cancellation or termination for insufficient funding. Obtaining both also provides a basis for the computation of savings and other benefits. 10) Some methods of contracting require more time than others. (Its called vested because the parties have a vested interest in each others success.) 3501 and provides policy and procedures for the use of multi-year contracting. 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) These include complicated outsourcing and purchasing arrangements, strategic alliances, joint ventures, franchises, public-private partnerships, major construction projects, and collective bargaining agreements. Work placed with the FFRDC is subject to the acceptance by the sponsor and must fall within the purpose, mission, general scope of effort, or special competency of the FFRDC.

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