Government Contracts in a Nutshell
Author:
Feldman, Steven W.
Edition:
6th
Copyright Date:
2016
42 chapters
have results for Government Contracts in a Nutshell
Preface 5 results
- The Government Contracts Nutshell, Sixth Edition, is intended to highlight the essential elements and principles of government contracting regarding both contract formation and contract administration. It provides the reader with a foundation for understanding how government procurement works in formal and informal ways. Ideally, this treatment will enable students and practitioners to become familiar with the fundamentals of government contracting in a relatively short time.
- Although the Nutshell’s primary audience is the student of federal government procurement, those with contracting experience should also find it of value. The text has been organized to parallel the events that someone would probably experience as a government contractor or as a government contracting official or other procurement professional. For them, the book will serve as a guide to specific areas with which they may be unfamiliar and as a useful reference in those areas where they are already knowledgeable.
- As its title indicates, this text is a “Nutshell,” and not a full analysis of all contracting doctrines and procedures. Thomson Reuters has several multi-volume treatises devoted to this subject. Government contracting is a field filled with laws and regulations and countless significant legal decisions and is rife with protests, disputes and litigation. It is also a field in constant flux and has changed in major ways since the publication of the Fifth Edition of this book in 2011. Chapter numbering follows the coverage in the applicable part of the Federal Acquisition Regulation, the guidepost of federal executive branch contracting.
- Contracting with the federal government is an important part of American economic life. The United States spends billions of dollars every year on the procurement of supplies, services, and construction. But government contracting also has unique problems and pitfalls. So, while many companies have become successful by concentrating most of their efforts on doing business with the federal government, either as a prime contractor or subcontractor, others have not fared as well.
- This text was written by Mr. Feldman in his personal capacity and the views expressed do not represent those of any federal agency.
- Open Chapter
Chapter 36. Construction and Architect-Engineer Contracts 100 results (showing 5 best matches)
- The basic principles of government contracting are the same whether a contract is for supplies or construction, although supply contracts involve more varied procedures and contract types than construction contracts. Thus, the policy favoring full and open competition, the preferences for small businesses and other groups, the rules limiting the authority of government agents, the government’s duty of fairness and noninterference with contractors, policies regarding patents and data, and the other fundamental policies and procedures reviewed in earlier chapters in this Nutshell with regard to supply contracts apply with equal force to construction contracts.
- Just as the contractor is obliged to proceed with contract performance in the case of a contract change (see Chapter 33), the contractor is obliged to proceed with the contract work if so directed after notifying the government of a differing site condition. A contractor is not entitled to stop work while waiting for a government decision on its equitable adjustment proposal.
- Whereas supply contracts are typically performed in a production facility owned or leased by the contractor and generally under its control, a construction contract is more commonly performed on government property. The construction contractor, even when it is responsible for quality control, is subject to a great deal more surveillance and control by government inspectors and other government representatives than is the supply contractor.
- The “Default” clause for construction contracts varies from the supply contract “Default” clause in some respects. For example, the construction contract “Default” clause renders the surety liable for any damage to the government based on the contractor’s failure to complete the work within the specified time. The clause also does not require the government to issue a cure notice to the contractor before terminating a contract for default. In addition, the clause requires the contractor to notify the government in writing of the causes of any excusable delay, such as fires, floods, or strikes.
- The notice requirement of the “Differing Site Conditions” clause affords the government the opportunity to inspect the condition and modify the contract requirements if necessary, or even abandon the contract work if it is no longer feasible. Usually, the government modifies the contract, but failure to follow the notice requirements may result in the rejection of a contractor’s otherwise valid differing site conditions claim.
- Open Chapter
Chapter 44. Subcontracting 104 results (showing 5 best matches)
- Because subcontracting is an important part of government contracting, it is treated as a separate part of this Nutshell, composed of this chapter and one other chapter. This chapter discusses (1) the basic matters involving subcontracts as they pertain to government contracts, and (2) subcontract terms and conditions.
- Consider, for example, the government’s right to terminate a prime contract for the government’s convenience. A number of clauses give the government power to terminate prime contracts “in whole or, from time to time, in part if the Contracting Officer determines that a termination is in the government’s interest” (see Chapter 49). The concept of a termination for convenience is not always found in commercial contracts, and the “Termination for Convenience of the Government” clause is not a mandatory flow-down to government subcontracts, although the FAR does contain convenience termination clauses that it suggests for use (together with appropriate modifications) in fixed-price and cost-reimbursement subcontracts.
- The government also exercises control over subcontracts when it includes a clause in certain types of prime contracts requiring the consent of the government to subcontract. If the prime contractor has an approved purchasing system, consent generally will only be required for subcontracts specifically identified by the Contracting Officer in the “Subcontracts” clause of the contract.
- To enforce contractual rights against a party, there must be a direct contractual relationship with that party (i.e., there must be “privity of contract”). Thus, there are situations where, although the ultimate responsibility for a contract problem (such as defective drawings) can be readily traced to the government, a subcontractor is unable to seek a remedy directly from the government—unless the subcontractor is otherwise in privity with the government through a direct contractual tie. Similarly, although the government may ultimately provide the entire contract funding, it is not liable to a subcontractor for problems caused by the prime contractor/higher tier subcontractor.
- Although there is no direct contractual relationship between the government and subcontractors, the government nevertheless exercises considerable control over subcontracts and subcontractors. This control is manifested in several notable ways: (a) a requirement in various instances for government review of a contractor’s purchasing system, (b) the requirement that the government consent to certain subcontracts, (c) the requirement that certain contract clauses in the prime contract be passed on (“flowed down”) by the prime contractor to the subcontractor, (d) the government’s policy of encouraging subcontracting with disadvantaged social groups, and (e) terms protecting subcontractors from late payment from prime contractors.
- Open Chapter
Chapter 32. Payment and Financing 75 results (showing 5 best matches)
- The Act prohibits the assignment of federal government contracts (and the assignment of claims against the federal government). The policy is to prevent fraud and multiple claims, which further protects the government’s right to determine its contracting partner. An unauthorized attempt to transfer an interest in a government contract, such as the contract proceeds, may result in an agency or judicial declaration that the transfer is null and void.
- Under the Prompt Payment Act, the government’s due date for making a payment (if the contract does not specify a particular date) is 30 days after the government receives a proper invoice for the amount due. The 30 days is computed from the later of the dates when (1) the person or place designated by the agency in the contract to first receive an invoice actually receives a proper invoice from the contractor or (2) the seventh day after delivery of the contract property or performance of the contract services, unless actual acceptance by the government is earlier or the contract specifies a longer period.
- Payment and financing are related subjects in government contracting; both concern how much money a contractor can expect to receive from the government under various types of contracts. Contract payments typically are made in exchange for actual work performed, while various forms of government financing may be available before a contract product or service is delivered and accepted. Agency regulations commonly supplement the Federal Acquisition Regulation (FAR) in these areas, and should be consulted.
- To minimize risk to the government, the regulations also provide that when a contractor requests financing, the Contracting Officer should consider the financing methods in the following order of preference—(a) private financing without government guarantees, (b) “customary” contract financing, (c) loan guarantees, (d) “unusual” contract financing, and (e) advance payments.
- Contractors may finance a government contract in much the same way as they would finance a commercial contract—by obtaining financing through a commercial bank or financial institution. As might be expected, commercial financing is the government’s preferred financing method. Because private financing institutions typically require a contractor to assign to it the proceeds of the contract to be financed as security for any funds advanced, the government imposes restrictions on these transactions. If contract proceeds are to be assigned in exchange for a loan, the contractor must comply with the Assignment of Claims Act and the Anti-Assignment Act and their implementing regulations.
- Open Chapter
Chapter 4. Administrative Matters 24 results (showing 5 best matches)
- Administration of contracts in a general sense covers all matters treated in this Nutshell. The Federal Acquisition Regulation (FAR), however, has limited one part solely to prescribing policies and procedures relating to the administrative aspects of contract execution, distribution, reporting, retention, and files. These minimum administrative guidelines are for files made uniform among all agencies of the government, which constitutes an improvement by itself.
- The Federal Procurement Data System (FPDS) collects data on contracts from government agencies. It then disseminates statistical data to provide a basis for submitting a special report to the President, the Congress, the Government Accountability Office, executive agencies, and the general public. This process provides a means of measuring and assessing the impact of contracting on the economy and the extent to which small business concerns and small disadvantaged business concerns are sharing in contracts. It also provides data for other policy and management control purposes. A clause entitled “Data Universal Numbering System (DUNS) Number” must be placed in solicitations that are expected to result in a requirement for the generation of a Federal Procurement Data System (FPDS)—Individual Contract. All contract actions over the micropurchase threshold must be reported to FPDS-NG as individual contract actions after September 30, 2004. The FPDS website, https://www.fpds.gov,...
- In the case of partnerships, a contract must be signed in the partnership name. Before signing for the government, the Contracting Officer must obtain a list of all partners and ensure that the individual(s) signing for the partnership “have authority to bind the partnership.” A contract with a corporation is signed in the corporate name, followed by the word “by” and the signature and title of the person authorized to sign. The regulations prescribe that a Contracting Officer ensures that the person signing for the corporation “has authority to bind the corporation.” Normally this action is accomplished by having the corporate secretary certify that the corporate officer who signed in fact held that office at the time he signed; the secretary will also stamp the corporate seal on top of (or after) his certification.
- The government must ascertain the authority of the signor, and requires often-illegible script be followed by the typed or printed name that can be read. In the case of a corporation, where the contract involves a significant amount, it is commonplace for the signature of the corporate officer to be certified by corporate secretary after execution. This is because the board of directors could have modified or eliminated that officer’s authority on the eve of the date the contract was executed. The Contracting Officer normally signs the contract after it has been signed by the contractor.
- Prospective contractors must be registered in the SAM database prior to award of a contract or agreement, with some exceptions, such as (but not limited to (1) purchases under the micro-purchase threshold that use a Government-wide commercial purchase card as both the purchasing and payment mechanism, as opposed to using the purchase card for payment only and (2) classified contracts when registration in the SAM database, or use of SAM data, could compromise the safeguarding of classified information or national security. Unless the acquisition is exempt, the contracting officer shall verify that the prospective contractor is registered in the SAM database be awarding a contract or agreement.
- Open Chapter
Chapter 1. Federal Acquisition Regulations System 90 results (showing 5 best matches)
- The FAR is codified as Chapter 1 of Title 48 of the Code of Federal Regulations and contains 52 parts (with some parts being reserved) categorized in eight Subchapters: (A) General; (B) Competition and Acquisition Planning; (C) Contracting Methods and Contract Types; (D) Socioeconomic Programs; (E) General Contracting Requirements; (F) Special Categories of Contracting; (G) Contract Management; and (H) Clauses and Forms. This Nutshell shall follow its sequence in treating the subject matter of government contract law.
- In a government of delegated powers, no activity may be undertaken by a government employee except pursuant to such power. Accordingly, persons in the private sector should have knowledge of the limitations of the particular government employee’s authority, in negotiating a government contract, in order to meet or, if necessary, to counter the actions of the government.
- The person executing or terminating a contract on behalf of the government is called a “Contracting Officer.” The term includes authorized representatives of the Contracting Officer acting within the limits of their authority delegated by the Contracting Officer. Thus, several individuals may represent the public body in the capacity of Contracting Officers. For example, a “termination Contracting Officer” (TCO) is only authorized to settle terminated contracts while a single Contracting Officer may be responsible for duties in this area as well as many others.
- The most important limitation regarding employment of cost contracts is the statutory and regulatory prohibition against the “cost plus a percentage of cost system of contracting” (CPPC). In this method of contracting, the government is obligated to pay the contractor’s costs, undetermined at the time the contract is made and to be incurred in the future, plus a profit based on a percentage of these future costs.
- Although government and private contracts are similar, when a contract is executed by a government official or employee without authority to do so, or if funds have not been appropriated by the Congress for a contract so executed, it has generally been held that the agreement does not bind the government. A leading case is , 74 U.S. 666, 19 L.Ed. 169 (1868), in which the Supreme Court held that the United States was not bound by bills of exchange accepted by government agents where the bills constituted advance payments that were prohibited by statute. The Court stated:
- Open Chapter
Chapter 3. Improper Business Practices and Personal Conflicts of Interest 128 results (showing 5 best matches)
- Such an agency may neither exert nor propose to exert improper influence to solicit or obtain government contracts or to hold itself out as being able to obtain any government contract(s) through improper influence. “Improper influence” as used in this context means any influence that induces or tends to induce a government employee or officer to give consideration or to act regarding a government contract on any basis other than the merits of the matter.
- In the most significant qualification, this arrangement must be distinguished from a general agency to obtain government contracts, commercial contracts, or both. Thus, for example, when a firm hires a consultant to assist in securing a specific government contract, and the consultant will be compensated provisionally based on his success, this arrangement can be illegal. However, even if the agent’s compensation is conditioned upon receipt of a contract, there can be no contingent fee violation if the agreement does not contemplate any direct contact with government officials.
- The Close the Contractor Fraud Loophole Act of 2008 requires timely notification by federal contractors of violations of federal criminal law or overpayments in connection with the award or performance of covered contracts or subcontracts, including those performed outside the United States and those for commercial items. “Covered contract” means “any contract in an amount greater than $5,000,000 and more than 120 days in duration.” FAR now requires government contractors and subcontractors to report to the Government whenever they have “credible evidence” of certain criminal violations, a violation of the civil False Claims Act, or a “significant overpayment” in connection with the award, performance, or close-out of a government contract or subcontract.
- Contracts between the federal government and its retired or former employees are not generally prohibited by statute. Under the FAR, however, a Contracting Officer generally may not knowingly award a contract to a current government employee or to a business concern or other organization owned or substantially owned or controlled by one or more current government employees. The agency head or an authorized delegee may authorize an exception with a “most compelling reason,” such as when the government employee is a sole source.
- The time of award is the critical point at which the prospective contractor may not be owned or controlled by a government employee Therefore, government employees are free to propose on government contracts (except as otherwise prohibited), and the award can even be made to a former government employee who separated from federal service as late as one day before the award. A federal employee in a terminal leave status will be in a prohibited category, but a consultant, independent contractor, the employee’s spouse or other family relation, or a subcontractor will not be so constrained. Although the Contracting Officer has reasonable discretion to seek an exception to FAR, cost savings alone will not be a compelling reason.
- Open Chapter
Chapter 46. Inspection and Warranty 87 results (showing 5 best matches)
- The FAR states that the “principal purposes of a warranty in a government contract are—(1) to delineate the rights and obligations of the contractor and the government for defective items and services and (2) to foster quality performance.” The FAR sets forth five factors that must be considered by the government in determining whether to include a warranty clause in a given contract:
- As noted above, the government must conduct its inspections so as to avoid undue delay in the contract work. There are other limitations on the government’s inspection rights. The government may not inspect in a way that interferes with the contractor’s performance—for example, by excessive supervision or undue numbers of inspectors or by impeding the contractor’s employees’ ability to accomplish their tasks. Similarly, inspection and test procedures used by the government must be consistent with the contract specifications. For example, the government may not use an unspecified test that does not reasonably measure contract compliance or use a test that increases the level of performance.
- With regard to inspection, this chapter discusses (a) the government’s inspection rights under the regulations and contract clauses dealing with inspection, (b) inspection procedures, (c) government rejection and contractor correction of defective work, and (d) the effect, methods, and limits on the government’s final acceptance of the contract work. In addition, this chapter briefly examines warranty coverage under government contracts.
- The government has used this “gross mistake” concept more frequently than the fraud theory to revoke acceptance, probably because it is easier for the government to prove its case and because the government is more likely to seek remedies for contractor fraud under the civil or criminal fraud statutes. The gross mistake theory was successfully invoked by the government where a contractor failed to tell the Contracting Officer and a government inspector of a change in material in a previously approved component, and where a contractor incorrectly certified that certain contract items were identical to ones previously tested and approved by the government.
- The FAR states that where express warranties are included in a contract (except contracts for commercial items), all implied warranties of merchantability and fitness for a particular purpose “shall be negated.” Moreover, because the “Inspection of Supplies-Fixed-Price” clause provides that acceptance is conclusive unless “otherwise provided in the contract,” courts and boards of contract appeals have held that where contracts contain such language, final acceptance by the government bars government claims based on the implied warranties since they are not “contained” in the contract. On the other hand, if no such language is included in the contract, there is nothing to bar the government from taking advantage of implied warranties—and it has done so.
- Open Chapter
Chapter 27. Intellectual Property 78 results (showing 5 best matches)
- To implement the statutory policy in this area, an “Authorization and Consent” clause is to be included in most government contracts. These clauses are normally broad and generally provide that the government gives its authorization and consent to a contractor to use any invention covered by a United States patent in the performance of its contract. This authorization also extends to subcontracts performed under a prime contract.
- Misuse of proprietary contractor data related to a government contract can occur either inside or outside the procurement process. There are essentially three remedies available to a contractor for data misuse by the government: (a) an injunction (and declaratory relief) to stop a threatened disclosure; (b) a “bid protest” remedy—to counter a threat to disclose as an error in the course of a contract competition; or (c) money damages—in cases where the government has already made a disclosure to the public.
- The government may be liable for damages caused by an infringement of a patent by a government contractor, or the government may pass the liability on to the infringing contractor by means of a “Patent Indemnity” clause. Under such a clause, the contractor agrees to indemnify the government for any damages suffered by the government as a result of the contractor’s infringement of a patent. “Patent Indemnity” clauses are usually not considered to be appropriate for inclusion in R & D contracts, however, because they tend to restrain the creativity of contractors performing such work.
- The FAR instructs that, except as provided by agency-specific statutes, the government will seek to “acquire only the technical data and the rights in that data customarily provided to the public with a commercial item or process.” The Contracting Officer is directed to assume that data delivered under a contract for commercial items was developed exclusively at private expense and is therefore subject to limited rights. If a contract for commercial items requires the delivery of technical data, appropriate clauses delineating the rights in such data will be included in the solicitation and contract.
- Where the government violates the contractor’s rights under the FAR rights in data clause the government will be liable to the contractor for its lost profits, as contrasted with the speculative relief for the contractor’s diminished net worth or lost contract claims. Finally, if the misuse has occurred or cannot be prevented, monetary compensation—based on a theory of breach of contract or unconstitutional taking of property, for example—may be available from the government. A tort remedy of wrongful disclosure of a trade secret is another possible remedy.
- Open Chapter
Chapter 33. Protests, Disputes and Appeals 214 results (showing 5 best matches)
- Both sides should consider whether the contractor has standing to bring its case before the board. In this regard, the CDA grants the boards of contract appeals jurisdiction over appeals by and against a “contractor,” defined as “a party to a government contract other than the government.” Because the CDA covers only claims by a contractor against the government relating to a contract, a surety is not a contractor under the statute. The qualification is a surety may file a claim when it has privity of contract with the government.
- The FAR disputes process begins with the presentation of a claim by the contractor to the Contracting Officer or by the transmission of a government claim to the contractor. The Contracting Officer has two primary roles in the disputes process: to settle disagreements and to render decisions on contractor and government claims.
- One of the more important changes made by the CDA was the extension of the disputes process to all claims of either party “relating to” a contract. Before the CDA was enacted, only claims “arising under” the terms of a government contract were subject to the jurisdiction of the agency boards of contract appeals. Therefore, boards did not have the authority to hear breach of contract claims against the government because breach claims were considered to arise “outside” the contract’s terms. The contractor had to sue the government in court for breach of contract. The CDA established that all claims “relating to” a contract are subject to the disputes procedure regardless of whether relief is available under the contract’s terms.
- Requiring the contractor to proceed with work pending an appeal protects the government by preventing interruption of the work. A Contracting Officer’s direction to proceed with the work is a matter of contract administration that is not appealable separately from the underlying claim. Thus, if the contractor refuses or fails to proceed in accord with the Contracting Officer’s decision, the contract may be terminated for default.
- If negotiation fails, however, the Contracting Officer’s second duty is to issue a final decision on a contractor’s claim, usually within 60 days. If the decision is adverse to the contractor, the contractor may appeal the Contracting Officer’s decision to the appropriate board of contract appeals (within 90 days) or file suit against the government in the Court of Federal Claims (within twelve months) (except that a claim filed a year and a day qualifies as “twelve months” under COFC rules). The contractor similarly may appeal a government claim, most commonly, a termination for default or a withholding of monies.
- Open Chapter
Chapter 42. Delays and Suspensions of Work 118 results (showing 5 best matches)
- The “Government Delay of Work” clause must be included in fixed-price contracts for most types of supplies. The use of the clause is optional in fixed-price contracts for services or for supplies that are commercial or modified-commercial items. This clause covers suspensions of work that are caused by the government but occur without an express order from the Contracting Officer—known as “constructive suspensions” of work. In the event of a government delay of the work, an adjustment in the contract price and schedule will be made for any increase in performance costs or time caused by the delay.
- Arguably, one other limitation in the “Government Delay of Work” clause—that no contract adjustment will be made “for which an adjustment is provided or excluded under any other term or condition of this contract”—indicates that where a delay claim for an equitable adjustment could be brought under the contract’s “Changes” clause (or “Government Property” or other clause), then the use of these other clauses is preferred.
- The government may waive the sovereign act defense. In a similar vein, a government promise to compensate a contractor for damages resulting from a sovereign act can be implied from other contract terms, provided the contract must be read as a whole on this point.
- The construction contract’s “Default” clause is basically the same as the supply contract “Default” clause. The list of enumerated excusable delays for construction contracts includes, however, one cause of excusable delay in addition to those enumerated for supply contracts: “acts of another contractor in the performance of a contract with the government.” In addition, the construction contract “Default” clause requires that the contractor notify the Contracting Officer in writing of the causes of delay within 10 days from the beginning of any delay. The supply and service contract “Default” clause does not contain a notice requirement.
- The effect of a delay in contract performance on the contractor and the government depends on the cause of the delay and the contract clause involved. Generally, the government agrees in the contract, through the “Government Delay of Work” clause and “Stop-Work Order” clause (for supply and service contracts) or the “Suspension of Work” clause (for construction contracts), to compensate the contractor in both time and money for the delays the government causes. On the other hand, the contractor is responsible for both the time and cost of delays that it causes or that are within its control. Normally, if the delay was caused by events beyond the contractor’s control, the contractor will be excused for the delay in performance (under the contract’s “Default” clause) but is responsible for the additional costs caused by the delay.
- Open Chapter
Chapter 17. Options 32 results (showing 5 best matches)
- An “option” under the FAR refers to the government’s unilateral right in the contract whereby, for a specified time, the government may choose to (1) purchase additional supplies or services called for by the contract, or (2) extend the term of the contract. Put another way, an option under the procurement regulations is an unaccepted, irrevocable offer from the contractor to sell upon agreed terms, which binds the contractor after being unilaterally accepted by the government in its discretion. Therefore, the contractor derives no benefit from the mere existence of the option, and the government is not bound in any sense until it acts upon the standing offer.
- It bears emphasis that those who propose on government contracts bear the risk that the agency may not exercise the option. When the government does exercise an option, the Contracting Officer ordinarily must provide any required advance written notice thereof (which could include an e-mail message) to the contractor in compliance with the means for communicating the exercise and the time period as stated in the contract.
- Subject to certain restraints, such as the statutory requirement that funds be available, contracting officials have broad discretion on whether to exercise an option or to proceed with a separate, new procurement. In deciding whether an option or a new procurement is most advantageous to the government, and considering price and other factors, the Contracting Officer must base his decision on one of the following considerations:
- 3. The time between the option exercise and the award of the basic contract is so short that the option price appears to be the most advantageous to the government. When relying on this theory, the Contracting Officer must consider factors such as market stability and the need for continuity in government operations.
- The Contracting Officer may include an option in a solicitation and resulting contract when this determination is in the government’s best interests and does not unduly restrict competition. In view of the agency’s primary responsibility to determine its minimum needs, the Comptroller General has said that a mere difference of opinion between the agency and a protester concerning the agency’s needs for an option is not sufficient to upset an agency’s determination. Instead, the record must contain clear evidence that the decision is arbitrary or unreasonable.
- Open Chapter
Chapter 49. Terminations for Default and Convenience 136 results (showing 5 best matches)
- The right of the government to terminate a contract for its own convenience is embodied in standard “Termination for Convenience of the Government” clauses. Typical of these is the FAR’s “Termination for Convenience of the Government (Fixed-Price)” clause, designated for use in fixed-price contracts expected to exceed $100,000. Another important clause is the “Termination for the Government’s Convenience” term in the “Commercial Items” clause that is a part of the standard terms for commercial item contracts, despite the fact that the right to terminate contracts without cause is generally inconsistent with standard commercial practices.
- If the contractor fails to perform on or before the due date, the government thereafter must—within a reasonable time—elect whether to terminate the contract for default or permit performance to continue. The government is entitled to a period of “forbearance”—that is, a sufficient time in which to determine what to do. However, if the government does not exercise its right to terminate within a reasonable time, and if the contractor relies on the government’s inaction and continues to perform the contract and incur costs, the government may lose its right to terminate the contract.
- The government’s reservation in its contracts of the right to terminate contracts for convenience is extremely broad. It is not limited to a cardinal change in government requirements or a decrease in the need for the purchase items.
- Time is of the essence in any contract containing a fixed date for performance, provided the government has not “waived” the delivery date (or otherwise has foregone its rights). When a contractor fails to make timely delivery, the government ordinarily may terminate the contract for default immediately and without notice after the close of business on the exact day specified in the delivery schedule.
- In addition, although not explicitly set forth in either the “Default” clauses or the commercial item contract “Termination for Cause” term, express or implied repudiation of the contract also constitutes a basis for default termination. The government’s right to terminate is not limited by standard inspection clauses, because they permit the government to exercise any other rights and remedies allowed by the contract.
- Open Chapter
Chapter 9. Contractor Qualifications 151 results (showing 5 best matches)
- “Debarment” means action taken by a debarring official under to exclude a contractor from government contracting and government approved subcontracting for a reasonable, specified period. The “debarring official” is the agency head or a designee authorized to impose debarment. A “contractor” is an individual or any other legal entity that submits an offer for, or is awarded, or reasonably may be expected to submit offers for, or be awarded, a government contract or a subcontract under a government contract. In addition, a person or firm is a “contractor” when it conducts business with the government as an agent or representative of another contractor or when the firm is a subcontractor under a prime contract for which the government must give consent to the award.
- To ensure full and open competition, federal policy is that contracting agencies are to solicit offers from, award contracts to, and consent to subcontract only with, responsible contractors. In limited cases, the agency may exclude an individual or other legal entity from contracting with executive branch activities by applying the remedy of debarment or suspension. As explained more fully below, “debarment” is a total exclusion of a contractor from government contracting for a specified term, and “suspension” is a temporary exclusion from government contracting for a specified term pending the completion of other proceedings.
- “Suspension” means action taken by a suspending official to disqualify a contractor temporarily from government contracting and government-approved subcontracting. When an agency suspends a contractor or subcontractor, the action will be effective throughout the government’s executive branch, unless an acquiring agency head or a designee states in writing a compelling reason justifying continued business dealing between the agency and the contractor.
- The second group consists of situations in which a firm, as part of its performance of a government contract, has in some sense set the ground rules for another government contract by, for example, writing the statement of work or the specifications. In these “biased ground rules” cases, the primary concern is whether the firm could skew the competition, whether intentionally or not, in favor of itself. These situations also may involve a concern that the firm, by virtue of its special knowledge of the agency’s future requirements, would have an unfair advantage in the competition for these requirements.
- A FAR solicitation provision requires information from an offeror in contracts expected to exceed the simplified acquisition threshold (see definition in FAR Part13) certifying its status on debarment, suspension, proposed debarment, and related responsibility issues. A standard contract clause protects the government’s interests when a contractor subcontracts with contractors debarred, suspended, or proposed for debarment in solicitations and contracts where the contract value exceeds $35,000.
- Open Chapter
Chapter 16. Types of Contracts 123 results (showing 5 best matches)
- First, FAR requires the Contracting Officer to obtain the prior written determination of the head of the agency’s contracting activity (or a designee) that no other contract type is suitable. In addition, FAR mandates that the agency include a standard contract clause, Limitation of Government Liability, to state the government’s maximum liability for the costs of performance prior to definitization.
- A fixed price contract with economic price adjustment (EPA) (formerly called a fixed price contract with escalation) provides for upward or downward revision of the contract price based on the occurrence of described contingencies. The basic purpose of a fixed price contract with an EPA clause is to protect the government in case of a decrease in labor or material and to protect the contractor in the event of an increase. This mechanism has no analogy to a liquidated damages contract clause, because the EPA clause does not seek to exact damages in the event of a breach but seeks to minimize contingencies in a fixed price contract.
- A standard contract clause used in T & M contracts, indicates that this ceiling actually functions like a limitation-of-cost provision characteristic of cost reimbursement contracts. The inclusion of overhead and profit in the fixed rates for labor saves the contract from being a cost plus a percentage of cost system of contracting (CPPC). The Government under a time and materials contract (or a labor hour contract) is obligated under FAR 52.232–7 to pay a contractor in full for hours its employees worked, regardless of whether the contractor paid the salaried employees for those hours.
- FAR describes three types of indefinite delivery contracts: definite quantity contracts, requirements contracts, and indefinite quantity contracts. These contracts are bilateral instruments wherein the government reserves the right, after the execution of the basic contract, to issue “orders” for specified services or supplies in a particular amount and at a particular time and place as permitted by the basic instrument.
- An indefinite quantity (IQ) contract provides for an indefinite quantity—within stated contract limits—of specific supplies or services to be furnished during a fixed period. According to FAR, IQ contracts may be used when the government cannot predetermine, above the specified minimum, the precise quantities of supplies or services that will be needed during the contract period, and when it is inadvisable for the government to commit itself for more than the stated minimum. Deliveries under an IQ contract are scheduled by placing in-scope orders with the contractor, which orders do not have to be synopsized in the FedBizOpps.
- Open Chapter
Chapter 48. Value Engineering 12 results (showing 5 best matches)
- Under the typical government contract “Changes” clause, a contractor has little monetary incentive to submit a change proposal suggesting a method of reducing the cost of performance. If such a change is ordered, the contract price will be reduced by the full cost saved, plus the contractor’s profit on such cost. As a result, the contractor is “penalized” by a reduction in profit for suggesting a method of saving the government money.
- In fact, the use of “Value Engineering” clauses is mandatory in a great number of government contracts. The most widely used clauses for implementing the concept are the “Value Engineering” clause for supply and service contracts, and the “Value Engineering-Construction” clause, which is used in most construction contracts
- To avoid this potentially unfair result, and to encourage contractors to come up with new ways of performing contracts more economically, the government developed the concept of “value engineering,” which permits contractors to share in savings resulting from their suggestions. The government encourages the use of value engineering through its regulations, contract clauses, and even in its implied contract requirements.
- The VECP must relate directly to the work required under the contract. Government officials have no authority to purchase unsolicited suggestions that are not submitted under an existing contract. Furthermore, a contractor cannot enforce a “Value Engineering” clause that was improperly included in its contract.
- Other disputes arising under the “Value Engineering” clause routinely have been appealed by contractors. For example, contractors have appealed the Contracting Officer’s determination that (1) the contractor was not entitled to “future contract” royalties for merchandise delivered under a subsequent contract, (2) a contractor that suggested a VECP was not owed royalties when the government inadvertently omitted the proposal from a subsequent contract, and (3) a time extension granted by the Contracting Officer to another contractor deprived the protester of royalties it would have earned under a VECP. Whether a VECP can be “constructively accepted” by the government after the contract has been completed also has been the subject of appeals.
- Open Chapter
Chapter 15. Contracting by Negotiation 186 results (showing 5 best matches)
- In 1962, Congress passed the Truth in Negotiations Act (TINA). The purpose of the Act is to put the government on an equal footing with contractors in contract negotiations by requiring contractors to provide the government with an extremely broad range of cost or pricing information relevant to the expected costs of contract performance.
- All offers with separately priced line items or subline items shall be analyzed to determine if the prices are unbalanced. If cost or price analysis techniques indicate that an offer is unbalanced, the Contracting Officer shall consider the risks to the Government associated with the unbalanced pricing in determining the competitive range and in making the source selection decision. The Contracting Officer also shall consider whether award of the contract will result in paying unreasonably high prices for contract performance. An offer may be rejected if the Contracting Officer determines that the lack of balance poses an unacceptable risk to the Government.
- A Request for Proposals (RFP) is used in negotiated acquisitions to communicate government requirements to prospective contractors and to solicit proposals. At a minimum, the RFP must describe the government’s requirement and the anticipated terms and conditions that will apply to the contract. In this way, the agency will permit offerors to prepare proposals intelligently and thereby allow the government to meet a fundamental principle of government procurement that competition must be conducted on an equal basis, i.e., offerors must be treated equally and with a common basis for the preparation of their proposals.
- The government has the burden of proof in a defective pricing data case. The elements of the claim are: (1) the information is “cost or pricing data” under TINA; (2) the data were not disclosed, or not meaningfully disclosed, to a proper government representative, and (3) the government relied on the defective data and shows by some reasonable method the amount by which the final negotiated price was overstated. An agency will fail to prove cost overstatement in TINA case where any alleged defective pricing could not have affected the prime contract price. After the government establishes a prima facie case, the contractor will have the burden to rebut the presumption that the natural and probable consequences of the defective data were an overstated contract price.
- “Clarifications” are limited exchanges between the government and offerors that may occur when the government contemplates making a contract award without “discussions” with eligible offerors. If award will be made without conducting discussions, offerors may be given the opportunity to clarify certain aspects of their proposals (for example, the relevance of an offeror’s past performance information) or to resolve minor or clerical errors in a proposal. An award may be made without discussions as long as the solicitation announces that the government intends to evaluate proposals and make award without discussions.
- Open Chapter
Chapter 43. Changes and Equitable Adjustments 105 results (showing 5 best matches)
- This chapter examines (a) the standard “Changes” clauses used in government contracts, (b) the authority of government representatives to order changes, (c) the contractor’s duty to proceed with contract performance even though an adjustment for a change is in dispute, (d) formal change orders, (e) the constructive change doctrine, and (f) the principles of equitable adjustments.
- 4. The government insisted on completion of the contract within a period shorter than the period to which the contractor would be entitled by taking into account the period of excusable delay, after which the contractor notified the government that it regarded the alleged order to accelerate as a constructive change in the contract; and
- Regardless of the type of government conduct that forms the basis for a constructive changes claim, for the government to be held liable for the cost of the extra work, the contractor must establish the following three elements: (1) the government’s act can be traced, in some way, to a government employee with authority to order the additional work, (2) the “extra” work exceeded the requirements of the contract, and (3) depending on the specific contract involved, the contractor gave the proper notice to the government of the government action that the contractor believed constituted a constructive change.
- The irony here is that where the contract contains such a term to continue the work, the contractor must proceed as directed even though the change ordered is a cardinal change or is deemed another type of breach of contract. It should be re-emphasized, however, that a contractor runs a risk in not proceeding with performance merely because it believes that a government representative has issued an order beyond his or her authority. The risk for the contractor is that if the contractor refuses to continue because it believes the government has materially breached the contract, the contractor could find itself on the outside looking in if a board or court agrees with the government that it was the contractor that committed the first uncured material breach by refusing the Contracting Officer’s order to perform, thereby leaving the contractor open to a default proceeding (discussed further below).
- The Federal Acquisition Regulation (FAR) sets forth several standard “Changes” clauses for use in government contracts. The choice of clause depends on the nature of the contract. For purposes of examining these standard clauses, it is best to treat those used in fixed price contracts separately from those used in cost reimbursement contracts—a distinction made in the FAR.
- Open Chapter
Chapter 19. Socioeconomic Requirements 165 results (showing 5 best matches)
- In response to the increasing problem of illicit drug use, the government has taken steps to counteract drug use among government employees and in the government contractor workplace. The Drug-Free Workplace Act of 1988 requires that for contracts in excess of the simplified acquisition threshold (except for contracts for commercial items), contractors must establish and maintain a drug-free workplace as a condition of maintaining their current contracts and eligibility for future contracts.
- To ensure compliance with the BAA, TAA, and other domestic and foreign product preference requirements, contractors must file documentation certifying the country of origin of the products they plan to supply to the government. A false certification—in addition to making the contractor vulnerable to suspension and debarment from government contracting and to potential civil and criminal action—also exposes a contract award to a potential protest.
- Most of the boards of contract appeals have held that in the absence of an agency regulation authorizing a fee higher than the statutory cap, the boards cannot exceed the cap even when it could have been justified by a special factor. Nevertheless, knowledge in government contract law is not a special factor that would warrant justify increase the standard hourly rate.
- Although the issue is case-specific, the government’s position in one piece of litigation was substantially justified where the case was a close one of first impression and where the contractor recovered only 18% of its claim. In another case, the government’s position was held not substantially justified where the government failed to recognize industry customs and practice, failed, without explanation, to produce an important witness, and where the government’s interpretation of the contract either ignored or rendered meaningless a significant portion of the contract’s specifications. Thus, the logic and factual information supporting the actual merits of the government’s position is the central issue for deciding whether its position was “substantially justified.”
- In construction contracts to be performed in the United States, the BAA and its implementing regulations require the government to use only “domestic construction materials.” A “domestic construction material” is an “unmanufactured construction material mined or produced in the United States” or a “construction material manufactured in the United States, if the cost of its components mined, produced, or manufactured in the United States exceeds 50% of the cost of all of its components.”
- Open Chapter
Chapter 11. Describing Agency Needs 89 results (showing 5 best matches)
- In government contracts, the reasonableness of the forecast of liquidated damages is determined by looking at the situation at the time the parties executed the contract rather than at the time of the breach. The stipulated amount must be reasonable in light of the harm the government anticipates in the case of a breach. In other words, the per diem damages rate must not be disproportionate to the actual damages expected in the event of breach, based on the government’s knowledge at the time the contract was made.
- If a “Liquidated Damages” clause is held to be unenforceable, the government may recover its actual damages for breach of contract. The irony here is that if the contractor prevails in challenging overstated liquidated damages, it could be in a worse position if the government files the action for actual damages
- Because they are pre-established in the contract, liquidated damages afford the government an exceedingly valuable remedy in instances where a construction contractor’s delay is caused by its own fault. In a way, these damages—because they place a cap on the contractor’s liability for delays—also benefit contractors. This section reviews the “Liquidated Damages” clause and its enforceability in construction contracts, as well as the means by which contractors may seek relief when the government asserts its rights under the clause.
- Liquidated damages are not punitive and are not negative performance incentives…. Liquidated damages are used to compensate the government for probable damages. Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contract. Use a maximum amount or a maximum period for assessing liquidated damages if these limits reflect the maximum probable damage to the government. Also, the Contracting Officer may use more than the liquidated damages rate when the Contracting Officer expects the probable damage to the government to change over the contract period of performance.
- When establishing a delivery or performance schedule in a supply or service contract, agencies shall consider factors such as the urgency of need; industry practices; market conditions; transportation time; production time; capabilities of small business concerns; administrative time for obtaining and evaluating offers and for awarding contracts; time for contractors to comply with any conditions precedent to contract performance; and time for the Government to perform its obligations under the contract; such as furnishing Government property.
- Open Chapter
Chapter 29. Taxes 16 results (showing 5 best matches)
- Frequently, property (including property acquired under the progress payments clause of fixed-price contracts or the Government property clause of cost-reimbursement contracts) owned by the Government is in the possession of a contractor or subcontractor. Situations may arise in which States or localities assert the right to tax Government property directly or to tax the contractor’s or subcontractor’s possession of, interest in, or use of that property. In such cases, the Contracting Officer shall seek review and advice from the agency-designated counsel on the appropriate course of action.
- When the prime contractor or subcontractor under a prime contract makes the purchase, as opposed to the Government, the right to an exemption of the transaction from a sales or use tax may not rest on the Government’s immunity from direct taxation by States and localities. It may rest instead on provisions of the particular State or local law involved, or, in some cases, the transaction may not in fact be expressly exempt from the tax. The Government’s interest shall be protected by using the Federal Acquisition Regulation (FAR) procedures.
- This chapter explains the policies and procedures for (a) using tax clauses in contracts (including foreign contracts), (b) asserting immunity or exemption from taxes, and (c) obtaining tax refunds. It explains Federal, State, and local taxes on certain supplies and services acquired by executive agencies and the applicability of such taxes to the Federal Government. It is for the general information of Government personnel and does not present the full scope of the tax laws and regulations.
- The Federal Government generally is immune from direct State and local taxation. Whether any specific purchase or lease is immune, however, is a legal question requiring advice and assistance of the agency-designated counsel. When economically feasible, executive agencies shall take maximum advantage of all exemptions from State and local taxation that may be available. If appropriate, the Contracting Officer shall provide a Standard Form 1094, U.S. Tax Exemption Form or other evidence listed in the regulation to establish that the Government is making the purchase.
- For most fixed price contracts to be performed wholly or partly in the United States, the solicitation must contain mandatory clauses requiring the contract price to contain (with limited exceptions) all applicable federal, state, and local taxes and duties. Upward equitable adjustments after award are available in a limited way, for example, the contract price shall be increased by the amount of any after-imposed Federal tax, provided the Contractor warrants in writing that no amount for such newly imposed Federal excise tax or duty or rate increase was included in the contract price, as a contingency reserve or otherwise. Downward equitable adjustments also can occur, for example, the contract price shall be decreased by the amount of any after-relieved Federal tax.
- Open Chapter
Chapter 30. Cost Accounting Standards 57 results (showing 5 best matches)
- The government has certain responsibilities regarding Disclosure Statements. For example, after including an appropriate notice in the solicitation for a proposed contract to indicate that the contract is subject to CAS Board requirements, the Contracting Officer must ensure that offerors submit required Disclosure Statements. The appropriate government auditor is designated to conduct an initial review of Disclosure Statements. Thereafter, the cognizant Administrative Contracting Officer determines whether a Disclosure Statement is adequate and notifies the contractor in case of any deficiencies.
- First, the rule—to encourage greater reliance on the “desirable” change provisions in the CAS—provides that changes in a contractor’s cost accounting practices may be deemed “desirable” even if such a determination has the effect of raising the prices to the government on existing CAS-covered contracts or subcontracts. Secondly, the rule discusses three additional types of cost accounting practice changes: (a) required changes (those that a contractor must make in order to comply with the CAS due to award of an additional CAS-covered contract) for which the government pays the increased costs, (b) unilateral changes (changes from one compliant practice to another that do not satisfy the “desirable” change criteria) for which offsets of increases and decreases are permitted so long as there is no net upward price adjustment, and (c) noncompliant practices for which the government is required to adjust the prices of CAS-covered contracts to avoid paying any increased costs in the...
- The clause identifies several types of adjustments in various provisions. One element permits an upward adjustment in contract price only when a new Standard is issued that has the effect of increasing the cost of a previously-awarded covered contract. Another element requires downward adjustment, if appropriate, pursuant to a “voluntary” cost accounting change by the contractor, but does not permit upward adjustment. A third element entitles the contractor to an adjustment for a “voluntary” cost accounting change, without regard to increased costs to the government, if the Contracting Officer finds the change to be “desirable” and “not detrimental to the interests of the government.” Finally, a fourth element deals with the consequences of a failure, whether unintentional or inadvertent, to comply with the Standards or the contractor’s disclosed accounting practices. This liability is equal to the amount of the increased costs paid by the government as a result of noncompliance.
- In addition, the CAS Board was directed to prepare regulations requiring contractors, as a condition of contracting with the government, to (1) disclose in writing their cost accounting practices and (2) agree to a contract price adjustment in the event of noncompliance with applicable CAS or failure to follow disclosed or established cost accounting practices.
- The CAS Board has published a clause for use in contracts with foreign concerns. Also, the FAR clarifies the CAS as they pertain to contracts with foreign, including United Kingdom, concerns. The changes to clarify that the applicable FAR clause need not be included in contracts with foreign concerns otherwise exempt from CAS coverage, and that foreign business concerns do not include foreign governments, or their agents or instrumentalities.
- Open Chapter
Chapter 14. Sealed Bidding 150 results (showing 5 best matches)
- In some situations, the Contracting Officer may elect to (1) award a contract for a lesser quantity than that stated in the IFB, (2) award more than one contract for the items to be purchased (i.e., split the award), or (3) reject all bids—and then, if the government has a continuing need for the item or items, resolicit.
- If the mistake alleged for the first time after award is a mutual mistake (where the government and the bidder have made the same mistake so that the contract does not express the agreement that the parties intended), the contract may be reformed to reflect the true intent of the parties. Four factors must be satisfied by a party seeking reformation of a government contract on ground of mutual mistake: (1) the parties to the contract were mistaken in their belief regarding a fact, (2) that mistaken belief constituted a basic assumption underlying the contract, (3) the mistake had a material effect on the bargain, and (4) the contract did not put the risk of the mistake on the party seeking reformation. This remedy is available only when the information constituting the mistake existed prior to contract award.
- The prospect of substantial savings to the government justifies rejection of all bids and resolicitation. Small savings are not a sufficient justification. Substantial savings are most often indicated when (a) a significantly lower bid is unacceptable because it was late, nonresponsive, or from a nonresponsible bidder, (b) the price or prices are unreasonable in relation to the government’s estimate or to the Contracting Officer’s general knowledge of market conditions or prior procurements, or (c) an uncorrectable mistake in bid indicates that the government could have obtained a significantly lower bid.
- Bids opened after the time scheduled in the IFB, or intentionally postponed, may be properly considered, even without prior written notice, when such action is deemed to be in the government’s best interest and no bidder is prejudiced thereby. For example, a postponement may occur where the Contracting Officer has reason to believe that the bids of an important segment of bidders have been delayed in the mails, or in the communication system specified for transmission of bids, for causes beyond their control and without their fault or negligence, such as a flood, fire, strike or government equipment blackout.
- In addition to the information and instructions included in the bid package, a bidder may be aided in preparing a bid by (1) seeking clarification from the Contracting Officer of any ambiguities or uncertainties in the specifications, (2) attending prebid conferences—if scheduled by the procuring agency, (3) inspecting the jobsite (site inspections are often scheduled, particularly in construction contracts), and (4) obtaining any government-furnished models or samples that may be made available to assist bidders in understanding the specifications.
- Open Chapter
Copyright Page 5 results
- Nutshell Series, In a Nutshell
- The publisher is not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
- Printed in the United States of America
- © 2000, 2004 West, a Thomson business
- © 2016 LEG, Inc. d/b/a West Academic
- Open Chapter
Chapter 35. Research and Development Contracting 47 results (showing 5 best matches)
- The agency should ensure that each prospective offeror understands the details of the work and the government’s interpretation of the work statement. Thus, in the Department of Defense, the Contracting Officer may include in the RFP the government’s estimate of the man-year effort under a research contract. For complex efforts, the Contracting Officer should afford prospective offerors the opportunity to comment on the RFP. A pre-proposal conference can be appropriate in this regard.
- Fixed price contracts are technically permissible for R & D contracts, but are a good idea only in the rare circumstance when the goals, objectives, specifications, and cost estimates are suited for a fixed price, as opposed to a cost reimbursement, arrangement. Indeed, FAR states that government must typically assume greater risks in R & D contracting and the DOD FAR Supplement provides that fixed price contracts will not ordinarily be used in development program for R & D efforts. When the use of cost and performance incentives is desirable and practicable, the agency may consider fixed price incentive and cost plus incentive fee contracts in that order of preference. In all situations, the contract type must be tailored to the work required.
- In addition to including evaluation factors regarding technical competence, the Contracting Officer must consider management evaluation factors such as (but not limited to) cost management techniques and subcontracting practices. Although cost or price is not normally the deciding factor in R & D source selections, cost or price is still a factor for consideration and should not be disregarded in arriving at a selection that best satisfies the government’s needs at a fair and reasonable cost. Indeed, price can become the discriminator for award between technically equal proposals in R & D procurements.
- R & D efforts can be accomplished either by contract or grant, or by a cooperative agreement. R & D contracts are permissible only when the principal purpose of the acquisition is for the direct benefit or use of the federal government. The agency may use grants or cooperative agreements when the principal purpose of the transaction is to stimulate or support research and development for another public purpose.
- An increasingly important aspect of R & D contracting is the use of federally funded research and development centers (FFRDCs) to perform R & D work. The government has a special relationship with FFRDCs. An FFRDC is a privately operated, but publicly funded under a long-term contract or sponsoring agreement with a federal sponsoring agency, and are established to meet some special research or development need which cannot (at the time) be met as effectively by existing in-house or contractor resources. An example of a FFRDC would be the Lawrence Livermore National Laboratory, which is a Department of Energy-sponsored research institution concentrating on nuclear sciences.
- Open Chapter
Chapter 6. Competition Requirements 80 results (showing 5 best matches)
- Despite the statutory preference for competition, the purpose of a competitive procurement is not to ensure that all offerors face the same odds in seeking government contracts or that the government must equalize the competitive position of all potential contractors. No offeror has a right to the award of a government contract, but only the right to a fair competition. The GAO has stated that CICA’s requirement to increase the use of full and open competition is primarily a means to an end—that of “fulfilling the government’s requirements at the lowest reasonable cost considering the nature of the property or services procured.” For this reason, the GAO has frequently commented that the propriety of a particular procurement is not judged by whether every potential contractor is included in the competition. Furthermore, the statutes and regulations recognize that unrestricted competition sometimes can be impracticable, unnecessary, or outweighed by other public policies.
- Under the Competition in Contracting Act (CICA) and FAR, a procurement can be exempt from full and open competition as allowed by international agreement. One example is a treaty between the United States and a foreign government that specifies or limits the sources to be solicited in a contract to be performed in foreign territory. The most common application of this authority is a procurement under the Department of Defense’s (DOD’s) Foreign Military Sale (FMS) program.
- The procuring agencies must use sound judgment in selecting the competitive procedure or combination of procedures best suited to the circumstances, except that an agency may not contract with another government agency to avoid the FAR competition requirements. Various competitive procedures are available for use in fulfilling the requirement for full and open competition.
- The basis of the FMS program is the Arms Export Control Act, as amended. This law authorizes the DOD to enter into contracts with private sources for purpose of resale to foreign countries or international organizations. Generally, the DOD acts as an agent or trustee for the foreign government when DOD conducts these acquisitions. DOD officials will use the foreign government’s funds—which may include funds loaned by the United States—that have been properly deposited in the FMS trust fund account in the United States Department of Treasury.
- FAR lists some statutory programs that qualify for a noncompetitive procurement, Federal Prison Industries; Qualified Nonprofit Agencies for the Blind or other Severely Disabled; Government Printing and Binding; and sole source (but not competitive) acquisitions under the “8(a)” Program (see Chapter 19). Another example of a statute in the latter category is the Buy Indian Act, which authorizes the Secretary of the Interior to contract with Indian-owned firms to the extent practicable.
- Open Chapter
Chapter 5. Publicizing Contract Actions 30 results (showing 5 best matches)
- Generally, Contracting Officers must synopsize through the FedBizOpps awards exceeding $25,000 that are covered by the World Trade Organization Government Procurement Agreement or a Free Trade Agreement. Similarly, the agency must publicize prime contract awards likely to result in the award of any sub contracts. However, the dollar threshold is not a prohibition against publicizing an award of a smaller amount when publicizing would be advantageous to industry or to the Government.
- Frequently an agency can do in-house work where it is less costly than if it were contracted out. In this connection it is important to be cognizant of restrictions in the regulations requiring cost comparisons between contractor and government performance. However, as noted above the Contracting Officer cannot arrive at a conclusion that there are no commercial sources capable of providing the required supplies or services until publicizing the requirement.
- Other methods may also be used, including preparing and displaying periodic handouts listing proposed contracts, assisting local trade associations in disseminating information to their members, making brief announcements of proposed contracts to newspapers, trade journals, magazines, or other mass communication media for publication without cost to the government, and placing paid advertisements in newspapers or other communications media, subject to certain limitations. For example, Contracting Officers shall place paid advertisements of proposed contracts only where it is anticipated that effective competition cannot be obtained otherwise.
- In instances where significant subcontracting opportunities exist, the names and addresses of prospective offerors are published in the FedBizOpps with the suggestion that small business firms or others interested in subcontracting opportunities in connection with the acquisition make direct contract with firm(s) listed. Prime contractors and subcontractors are to be encouraged to use the FedBizOpps to publicize subcontracting opportunities stemming from their government business. Accordingly, where a contract or subcontract exceeding $150,000 is likely to result in award of subcontracts, a notice may be used to seek competition for qualified HUBZone, small business, small, disadvantaged, service disabled, veteran owned, and women-owned small business concerns.
- Although Contracting Officers may make available maximum information to the public, agencies must maintain a high level of business security to preserve the integrity of the acquisition process. Thus, all Government personnel who participate directly or indirectly in any stage of the acquisition cycle must not release information received in confidence from an offeror, exempt under the Freedom of Information Act or the Privacy Act or that would provide undue or discriminatory advantage to private or personal interests.
- Open Chapter
Chapter 8. Required or Authorized Sources of Supplies and Services 87 results (showing 5 best matches)
- 1. Before the award of a contract, the Contracting Officer and the offeror will agree upon (a) the customer or category of customers which will be the basis of award, and (b) the government’s price or discount relationship to the identified customer(s). The parties must maintain this relationship during the life of the contract; any change in the contractor’s commercial pricing or discount arrangement applicable to the identified customer(s) which disturbs this relationship entitles the government to a price reduction;
- Government printing must be done by or through the Government Printing Office (GPO), with exceptions. These are the GPO cannot provide the printing service; the printing is done in field printing plants operated by an executive agency; the printing is acquired by an executive agency from allotments for contract field printing; or the printing is specifically authorized by statute to be done other than by the GPO.
- Before purchasing an item of supply listed in the FPI Schedule, agencies must conduct market research to determine whether the FPI item is comparable to supplies available from the private sector that best meet the Government’s needs in terms of price, quality, and time of delivery. This is a unilateral determination made at the discretion of the Contracting Officer.
- CICA … defines the term ‘competitive procedures’ to include [General Services Administration] multiple award schedule program procedures, if program participation has been open to all responsible sources, and orders and contracts under such procedures result in the lowest overall cost meeting government needs. Under CICA, where the item contained in the FSS contracts have been subject to competitive procedures to ensure that any order placed under the FSS will result in the lowest overall cost to the Government, CICA permits agencies to purchase from FSS contracts [without further competition].
- Typically, two contracting agencies are involved in FSS procurements. The schedule contracting office will award the basic schedule contract. The GSA usually is the schedule contracting office, although the GSA may delegate this authority to other agencies. The second procurement activity is the agency ordering office, which will issue delivery order (supplies) or task order (services) against the basic schedule contract. This procuring activity can be any federal agency, to include any executive agency or even judicial or legislative agencies as permitted by law and regulation. In a recent development, Pub. L. No. 111–263 permits state and local governments and the American National Red Cross to purchase goods and services from the GSA Federal Supply Schedules in certain circumstances.
- Open Chapter
Chapter 7. Acquisition Plans and Outsourcing/Privatization 46 results (showing 5 best matches)
- The government’s policy is to (a) rely generally on private commercial sources for supplies and services, if certain criteria are met, while recognizing that some functions are inherently governmental and must be performed by government personnel, and (b) give appropriate consideration to relative cost in deciding between government performance and performance under contract. In comparing the costs of government and contractor performance, the Circular provides
- The general prohibition on inherently governmental functions is closely related to the general proscription against personal services contracts. A “personal services” contract is defined by the FAR as a contract that, by its express terms or as administered, makes the contractor personnel appear to be (actually or in effect) government employees, as opposed to independent contractors. Implementing § 831 of the National Defense Authorization Act for Fiscal Year 2009, revised DFARS parts 211 and 237 (1) require that statements of work or performance work statements clearly distinguish between Government employees and contractor employees, and (2) ensure that procedures are adopted to prevent contracts from being awarded or administered as unauthorized personal services contracts.
- In most cases, an agency’s decision to contract-out for services currently being performed by government employees is governed by the policy and procedures outlined in the 2003 version of Office of Management and Budget (OMB) Circular A-76, which is modified periodically. Circular A-76 requires federal agencies to compare the cost of contracting with that of in-house performance in order to determine which of the two would be more economical. The FAR implements Circular A-76 as follows:
- The GAO has amended its protest rules in consequence of changes the National Defense Authorization Act for Fiscal Year 2005 made to the Competition in Contracting Act. The GAO’s protest regulations now recognize as an “interested party” (see Chapter 33) the government official responsible for submitting the agency tender in a revised A-76 competition involving more than sixty five full time equivalent government employees.
- When making cost comparisons between contractor and government performance, the agency must (1) prepare an estimate of the cost of government performance based on the same work statement and level of performance as apply to private offerors and (2) compare the total cost of government performance to the total cost of contracting with the potentially successful offeror. Along these lines, the revised A-76 policies make the competition for federal commercial activities similar to FAR source selection procedures and more evenly applied as in both the private and public sector.
- Open Chapter
Chapter 12. Acquisition of Commercial Items 37 results (showing 5 best matches)
- FAR states the policies on warranties for commercial item purchasing. A standard contract clause grants the government the implied warranty of merchantability, the implied warranty of fitness for a particular purpose, and the remedies. As for express warranties, FAR states that agencies shall take advantage of commercial warranties, and that the solicitation shall require offerors to provide the government at least the same warranty terms the firm offers to the general public in customary commercial practice, provided the express warranty must meet the government’s needs.
- 4. The contract shall rely upon the contractor’s existing quality assurance system as a substitute for government inspection and testing, unless customary market practices for the commercial item being acquired include in-process inspection;
- 6. The Contracting Officer may offer government financing in commercial item purchasing;
- The second version of a commercial item is any item that evolved from an item described in the first version of a commercial item above through advances in technology or performance and that is not yet available in the commercial marketplace, but will be available in the commercial marketplace in time to satisfy the delivery requirements under a Government solicitation;
- The sixth version of a commercial item is a “nondevelopmental item (defined extensively in the FAR),” if the procuring agency determines the item was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple State and local governments.
- Open Chapter
Chapter 10. Market Research 6 results (showing 5 best matches)
- As stated in FAR, agencies are encouraged—but not required—to document their market research activity, commensurate with the size and complexity of the acquisition. Of course, the absence of a written document requirement does not excuse the agency from performing these efforts in fact. Clearly, the government’s acquisition planning efforts should stem in large measure from the agency’s market research efforts. No legal bar exists against the same contracting officials who will be conducting the procurement from engaging in market research.
- techniques for conducting market research vary, and may include such procedures as: querying government data bases; obtaining source lists of similar items from other contracting activities or trade associations; and reviewing catalogs and other generally available product literature.
- FAR states the procedures for market research. According to the regulation, acquisitions must begin with a description of the government’s needs stated in terms sufficient to conduct market research, especially with respect to commercial or nondevelopmental items. The actual process of market research involves the gathering of information specific to the item being acquired, and should include such information as: the type of source that can satisfy the requirement (commercial v. noncommercial); the requirements of any laws or regulations unique to the item being procured; and the size and status of potential sources.
- A protest against a solicitation’s failure to permit offers of commercial products based on poor acquisition planning or inadequate market research must establish that better planning might have resulted in a less restrictive or more commercial-friendly solicitation. A protester alleging a lack of market research for a non-competitive sole source procurement must establish prejudice.
- In keeping with the federal policy giving increased emphasis to commercial or nondevelopmental item purchasing, FAR states that if the market research indicates that commercial or nondevelopmental items might not be available to suit agency needs, the agency must reevaluate the need and determine if it can be restated to permit commercial or nondevelopmental item purchases.
- Open Chapter
Outline 212 results (showing 5 best matches)
Chapter 2. Definitions of Words and Terms 6 results (showing 5 best matches)
- The definition section of the Federal Acquisition Regulation (FAR), Part 2, sets forth the meanings of many terms that are used throughout the regulation; this meaning prevails unless a different definition appears elsewhere or the context “clearly requires a different meaning.” Two of these definitions (“Head of Agency,” and “Contracting Office”) are included in a “Definitions Clause” to be included in all significant solicitations and contracts. More definitions are being found to be commonly used in the regulation. For example, in July, 1996, the regulators transferred to Part 2 the definitions pertaining to micro-purchases (Part 13), and simplified acquisition procedures (Part 13).
- Definitions in FAR Part 2 apply to the entire regulation unless specifically defined in another part, subpart, section, provision, or clause. Words or terms defined in a specific part, when used in one of those places have that meaning when used in that part, subpart, section, provision, or clause. The Index section of the FAR contains a comprehensive listing of all definitions in all sections. Thus, for example, “administrative change” appears in the FAR part on contract modifications (Part 43). Significant changes in these definitions may occur from time to time. For example, some occurred in 1995 when “signature” was modified to include electronic symbols, and where the regulators provided comprehensive definitions of a “commercial item” and “electronic commerce.”
- FAR uses the word “shall” extensively. This term has an “imperative” meaning and is to be contrasted with “should,” which means an “expected course of action or policy that is to be followed unless inappropriate for a particular course of action.” An example of “shall” in the regulation is that agencies “shall” impose and collect civil penalties pursuant to the Program Fraud and Civil Remedies Act. An example of a “should” is that the files for firm fixed price contracts above the simplified acquisition threshold should be closed within six months after the date on which the Contracting Officer received evidence of physical completion.
- The FAR system is not all-inclusive on the meaning of words. In construing solicitations and contracts, courts, boards, and GAO commonly employ standard dictionaries as a guide.
- The overwhelming majority of terms appear in the particular parts of the FAR without indicating another Part. Some terms found elsewhere become among those set forth in Part 2. For example, the definitions of “bid sample” and “descriptive literature” were moved from FAR Part 14 to FAR 2.101 because the definitions apply to more than one FAR part (i.e., Parts 14 and 25). Regulations supplementing the FAR also may define terms; for example, the Department of Defense FAR Supplement gives the meaning of “Contracting Officer’s Representative” and “tiered evaluation of offers.”
- Open Chapter
Table of Cases 2 results
Dedication 1 result
- I would like to thank two special persons for their support. First and foremost, to my dear wife, Gayla, for her continuing love and encouragement. She was with me every night (and many days) as I worked on this text. I also express my appreciation to my late wife of 25 years, Ann Feldman, who was a wonderful helpmate during our marriage, even in the final stages of her cancer.
- Open Chapter
- Publication Date: November 24th, 2015
- ISBN: 9781634594448
- Subject: Government Contracts
- Series: Nutshells
- Type: Overviews
- Description: Summarizes the Federal Acquisition Regulation System (FARS), improper business practices and personal conflicts of interest, publicizing contract actions, outsourcing/privatization, and competition requirements. Addresses acquisition plans, contractor qualifications, contract delivery, and performance. Explains socio-economic policies, commercial items, options, sealed bidding, and negotiation. Reviews general contracting requirements, intellectual property, cost accounting standards, cost principles, financing, protests, disputes, and appeals. Explores research and development contracting, construction and architect-engineer contracts, inspection and warranty, value engineering, delays, suspension of work, modifications, subcontracting, and government contract termination.