Contracting Officer Unlimited Warrant
Board
What is an option? - Answer An option is a unilateral right in a contract, for a specific
period of time, where the Government may elect to purchase additional supplies or
services called for by the contract, or extend the period of performance.
The PCO should use options when (1) in the Governments best interest, (2) there is a
need for service beyond the initial period, and (3) to ensure continuity of service.
The use of options are not normally in the Governments best interest when (1) The
foreseeable requirements involve minimum economic quantities and delivery
requirements are far enough in the future to permit competitive acquisition, production,
and delivery (2) an indefinite quantity or requirements contract would be more
appropriate than a contract with options.
What must a PCO do before exercising an option? - Answer The PCO must determine
that:
1. Funds are available
2. The requirement fulfills an existing Government need
3. Exercising the option is the most advantageous method price and other factors
considered
4. The option was synopsized IAW FAR 5 (or exempted)
The PCO should have a written D&F in the file in order to use options
The PCO should also consider if the contractor is responsible and if their performance is
satisfactory.
If the option price during a competitive source selection was not evaluated, is the option
valid? - Answer No. All options need to be priced because they were awarded on a
competitive basis.
Can the PCO cite the "Changes Clause" to increase quantities on a production
contract? - Answer No. The Changes Clause cannot be used to increase quantities on a
production contract.
(a) The Contracting Officer may at any time, by written order, and without notice to the
sureties, if any, make changes within the general scope of this contract in any one or
more of the following:
(1) Drawings, designs, or specifications when the supplies to be furnished are to be
specially manufactured for the Government in accordance with the drawings, designs,
or specifications.
(2) Method of shipment or packing.
(3) Place of delivery.
,Is any approval required for an effort that is out of scope ? - Answer Changes outside
the scope of the original contract are considered new work and constitute a cardinal
change, and in this case, one of two things should happen:
1. Compete the new work
2. Get a J&A and seek proper approval
What are the four essential elements the PCO must address when making a Scope
Determination? - Answer 1. Scope of the competition - could the original offerors have
reasonable anticipated such a change?
2. Contract type - Requirments should be better defined in a FFP contract therefore
require less changes.
As opposed to a RDT&E contract.
3. Period of performance - will the PoP be extended significantly so as to constitute new
work?
4. Overall cost/price change - what has been the total change in price throughout all
modifications?
What must the PCO do for any change and/or modification estimated to be $1M or
more? - Answer Obtain legal review of the proposed action and document the review in
the contract file
Where can a PCO look to help determine if a change is in-scope? - Answer Various
source documents to include: SOO/SOW/PWS, synopsis, RFP, exchanges with
industry, market surveys, RFIs, etc.
What is "scope creep?" - Answer Scope creep occurs when a series of in-scope
changes make the contract as a whole out-of-scope. The PCO must remain cognizant
of scope creep when changing/modifying existing contracts.
What is a T&M contract? - Answer Limitations. A time-and-materials contract may be
used only if—
(1) The contracting officer prepares a determination and findings that no other contract
type is suitable. The determination and finding shall be—
(i) Signed by the contracting officer prior to the execution of the base period or any
option periods of the contracts; and
(ii) Approved by the head of the contracting activity prior to the execution of the base
period when the base period plus any option periods exceeds three years; and
(2) The contract includes a ceiling price that the contractor exceeds at its own risk. The
contracting officer shall document the contract file to justify the reasons for and amount
of any subsequent change in the ceiling price. Also see 12.207(b) for further limitations
on use of Time-and-Materials or Labor Hour contracts for acquisition of commercial
items.
Can a T&M contract be used for a commercial service? - Answer a) Except as provided
in paragraph (b) of this section, agencies shall use firm-fixed-price contracts or fixed-
price contracts with economic price adjustment for the acquisition of commercial items.
,(b) (1) A time-and-materials contract or labor-hour contract (see Subpart 16.6) may be
used for the acquisition of commercial services when—
(i) The service is acquired under a contract awarded using— Competitive Procedures,
Fair Opportunity, with an executed D&F
Define Certified Cost or Pricing Data. - Answer All facts, that as of the date of price
agreement, or if applicable, an earlier date agreed upon between the parties that's as
close as practicable to the date of agreement on price, prudent buyers and sellers
would reasonably expect to affect price negotiations significantly.
When is Certified Cost and Pricing data required? - Answer When executing actions
over $750,000 with the exception of prices established by statute, commercial items,
with adequate price competition, and when a TINA waiver is granted.
What is the "Bona Fide Needs" Rule? - Answer The Bona Fide Needs Rule basically
means that a federal agency must have a legitimate or bona fide need for the
requirement during the time period that the appropriation is available. Pursuant to 31
U.S.C. 1502(a), "The balance of an appropriation limited for obligation to a definite
period is available only for payment of expenses incurred during the period of
availability, or to complete contracts properly made during the period of availability and
obligated consistent with Section 1501 of this title.." In other words, the basic rule states
that a fiscal year's (FY) appropriation may be obligated to meet a legitimate or bona fide
need existing in the FY for which the appropriation was made. This aspect of fund
availability seeks to ensure that only appropriations, which are available for a specific
FY are used to meet the legitimate needs of that FY. The bona fide needs rule applies
to both multiple year and annual appropriations. TIME, PURPOSE, AMOUNT
You have just awarded 3 contract actions. You remember something in FAR Part 5
about synopsizing contract awards. The first action was a Small Business Innovation
Research contract for $99,978. The second action was a $3M new delivery order under
an existing IDIQ contract and the third action was a purchase order for $12,995. As a
PCO, would you synopsize these contract actions? - Answer SBIRs, delivery orders
under existing IDIQ contracts and actions under the simplified acquisition threshold
($150K) do not require an award synopsis. 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.
What is the requirement for obligating funds when awarding indefinite-quantity
contracts? - Answer For ID/IQ contracts all supplies and services to be furnished shall
be obtained via delivery order(s) or task order(s) issued by individuals designated in the
contract. Upon execution of the contract, an obligation shall be recorded based upon
the issuance of a delivery or task order for the cost/price of the minimum quantity
specified. Obtaining a certification of availability of funding from the finance office does
not satisfy the requirement to record an obligation in the official accounting records of
the Government for the minimum order amount established by the award of an IDIQ
contract. The Government's actual obligation must be recorded at the time of contract
, award. Recording and subsequently reporting the required obligation using anything
other than a delivery or task order will result in the action not being reported in FPDS-
NG. The Recording of Obligations Act is implemented in the DoD Financial
Management Regulation (FMR) (DoD 7000.14-R) (See paragraph 080504 of the FMR).
The Defense Finance and Accounting Service (DFAS) is responsible for recording
contractual obligations in the Air Force accounting records. Where the quantity required
under a contract is indefinite, the ultimate amount of obligation is determined by
subsequent orders; the amount of any required minimum order specified in the contract,
however, shall be recorded as an obligation upon execution of the contract. For
contracts that require the contractor to perform unilaterally placed orders above the
required minimum, record an obligation in the amount of the order price or ceiling at the
time the order is placed. An order in excess of the required minimum that has to be
negotiated or accepted by the contractor under terms of the contract shall be recorded
as an obligation upon contractor's acceptance of the order in the amount of the agreed
price or ceiling . In the case of orders for services where a contractor cannot undertake
performance without direction from an authorized Government official, order amounts
may be consolidated periodically (at least monthly) into a list of orders placed with the
contractor identifying the estimated dollar amount of each. On definite-quantity
contracts, obligate the full amount of the definite quantity at the time of contract award.
When may a T&M contract be used? What must the D&F contain? Who would approve
the following D&Fs: A T&M contract for $650K; A T&M contract for $500K in which the
base period plus option periods will be a total of 4 years; A T&M contract for $1.5M of
services (base plus options will be 5 years.)? - Answer T&M contract may be used only
when it's not possible at the time of placing the contract to estimate accurately the
extent or duration of the work or to anticipate costs with any reasonable degree of
confidence, and ONLY if the PCO prepares a D&F that "no other contract type is
suitable," and the contract includes a ceiling price that the contractor exceeds at their
own risk. The D&F must contain sufficient facts and rationale to justify that no other
contract type is suitable (should go through all the contract types). At a minimum the
D&F shall include a description of the market research conducted and establish that it is
not possible at the time of placing the contract or order to accurately estimate the extent
or duration of the work or to anticipate costs with any reasonable degree of certainty. A
T&M contract for less than $1 million would have the PCO as the approval for the D&F.
A T&M contract for $500K in which the base plus options is 4 years would be approved
by the HCA. A T&M contract for $1.5 of services, where the base plus options will be 5
years, would be approved by the COCO and then the HCA.
As a PCO, what kinds of things could cause you to lose your warrant? - Answer A PCO
loses their warrant upon retirement from employment, reassignment from the position
requiring a warrant, termination of employment, or unsatisfactory performance.
Terminations must be in writing, and requests must be submitted 30 days in advance of
the requested termination along with the reason.
Recent focus has been on decreasing the amount of time it takes to negotiate a
contract. There are several current examples of contracts that are taking months to
Board
What is an option? - Answer An option is a unilateral right in a contract, for a specific
period of time, where the Government may elect to purchase additional supplies or
services called for by the contract, or extend the period of performance.
The PCO should use options when (1) in the Governments best interest, (2) there is a
need for service beyond the initial period, and (3) to ensure continuity of service.
The use of options are not normally in the Governments best interest when (1) The
foreseeable requirements involve minimum economic quantities and delivery
requirements are far enough in the future to permit competitive acquisition, production,
and delivery (2) an indefinite quantity or requirements contract would be more
appropriate than a contract with options.
What must a PCO do before exercising an option? - Answer The PCO must determine
that:
1. Funds are available
2. The requirement fulfills an existing Government need
3. Exercising the option is the most advantageous method price and other factors
considered
4. The option was synopsized IAW FAR 5 (or exempted)
The PCO should have a written D&F in the file in order to use options
The PCO should also consider if the contractor is responsible and if their performance is
satisfactory.
If the option price during a competitive source selection was not evaluated, is the option
valid? - Answer No. All options need to be priced because they were awarded on a
competitive basis.
Can the PCO cite the "Changes Clause" to increase quantities on a production
contract? - Answer No. The Changes Clause cannot be used to increase quantities on a
production contract.
(a) The Contracting Officer may at any time, by written order, and without notice to the
sureties, if any, make changes within the general scope of this contract in any one or
more of the following:
(1) Drawings, designs, or specifications when the supplies to be furnished are to be
specially manufactured for the Government in accordance with the drawings, designs,
or specifications.
(2) Method of shipment or packing.
(3) Place of delivery.
,Is any approval required for an effort that is out of scope ? - Answer Changes outside
the scope of the original contract are considered new work and constitute a cardinal
change, and in this case, one of two things should happen:
1. Compete the new work
2. Get a J&A and seek proper approval
What are the four essential elements the PCO must address when making a Scope
Determination? - Answer 1. Scope of the competition - could the original offerors have
reasonable anticipated such a change?
2. Contract type - Requirments should be better defined in a FFP contract therefore
require less changes.
As opposed to a RDT&E contract.
3. Period of performance - will the PoP be extended significantly so as to constitute new
work?
4. Overall cost/price change - what has been the total change in price throughout all
modifications?
What must the PCO do for any change and/or modification estimated to be $1M or
more? - Answer Obtain legal review of the proposed action and document the review in
the contract file
Where can a PCO look to help determine if a change is in-scope? - Answer Various
source documents to include: SOO/SOW/PWS, synopsis, RFP, exchanges with
industry, market surveys, RFIs, etc.
What is "scope creep?" - Answer Scope creep occurs when a series of in-scope
changes make the contract as a whole out-of-scope. The PCO must remain cognizant
of scope creep when changing/modifying existing contracts.
What is a T&M contract? - Answer Limitations. A time-and-materials contract may be
used only if—
(1) The contracting officer prepares a determination and findings that no other contract
type is suitable. The determination and finding shall be—
(i) Signed by the contracting officer prior to the execution of the base period or any
option periods of the contracts; and
(ii) Approved by the head of the contracting activity prior to the execution of the base
period when the base period plus any option periods exceeds three years; and
(2) The contract includes a ceiling price that the contractor exceeds at its own risk. The
contracting officer shall document the contract file to justify the reasons for and amount
of any subsequent change in the ceiling price. Also see 12.207(b) for further limitations
on use of Time-and-Materials or Labor Hour contracts for acquisition of commercial
items.
Can a T&M contract be used for a commercial service? - Answer a) Except as provided
in paragraph (b) of this section, agencies shall use firm-fixed-price contracts or fixed-
price contracts with economic price adjustment for the acquisition of commercial items.
,(b) (1) A time-and-materials contract or labor-hour contract (see Subpart 16.6) may be
used for the acquisition of commercial services when—
(i) The service is acquired under a contract awarded using— Competitive Procedures,
Fair Opportunity, with an executed D&F
Define Certified Cost or Pricing Data. - Answer All facts, that as of the date of price
agreement, or if applicable, an earlier date agreed upon between the parties that's as
close as practicable to the date of agreement on price, prudent buyers and sellers
would reasonably expect to affect price negotiations significantly.
When is Certified Cost and Pricing data required? - Answer When executing actions
over $750,000 with the exception of prices established by statute, commercial items,
with adequate price competition, and when a TINA waiver is granted.
What is the "Bona Fide Needs" Rule? - Answer The Bona Fide Needs Rule basically
means that a federal agency must have a legitimate or bona fide need for the
requirement during the time period that the appropriation is available. Pursuant to 31
U.S.C. 1502(a), "The balance of an appropriation limited for obligation to a definite
period is available only for payment of expenses incurred during the period of
availability, or to complete contracts properly made during the period of availability and
obligated consistent with Section 1501 of this title.." In other words, the basic rule states
that a fiscal year's (FY) appropriation may be obligated to meet a legitimate or bona fide
need existing in the FY for which the appropriation was made. This aspect of fund
availability seeks to ensure that only appropriations, which are available for a specific
FY are used to meet the legitimate needs of that FY. The bona fide needs rule applies
to both multiple year and annual appropriations. TIME, PURPOSE, AMOUNT
You have just awarded 3 contract actions. You remember something in FAR Part 5
about synopsizing contract awards. The first action was a Small Business Innovation
Research contract for $99,978. The second action was a $3M new delivery order under
an existing IDIQ contract and the third action was a purchase order for $12,995. As a
PCO, would you synopsize these contract actions? - Answer SBIRs, delivery orders
under existing IDIQ contracts and actions under the simplified acquisition threshold
($150K) do not require an award synopsis. 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.
What is the requirement for obligating funds when awarding indefinite-quantity
contracts? - Answer For ID/IQ contracts all supplies and services to be furnished shall
be obtained via delivery order(s) or task order(s) issued by individuals designated in the
contract. Upon execution of the contract, an obligation shall be recorded based upon
the issuance of a delivery or task order for the cost/price of the minimum quantity
specified. Obtaining a certification of availability of funding from the finance office does
not satisfy the requirement to record an obligation in the official accounting records of
the Government for the minimum order amount established by the award of an IDIQ
contract. The Government's actual obligation must be recorded at the time of contract
, award. Recording and subsequently reporting the required obligation using anything
other than a delivery or task order will result in the action not being reported in FPDS-
NG. The Recording of Obligations Act is implemented in the DoD Financial
Management Regulation (FMR) (DoD 7000.14-R) (See paragraph 080504 of the FMR).
The Defense Finance and Accounting Service (DFAS) is responsible for recording
contractual obligations in the Air Force accounting records. Where the quantity required
under a contract is indefinite, the ultimate amount of obligation is determined by
subsequent orders; the amount of any required minimum order specified in the contract,
however, shall be recorded as an obligation upon execution of the contract. For
contracts that require the contractor to perform unilaterally placed orders above the
required minimum, record an obligation in the amount of the order price or ceiling at the
time the order is placed. An order in excess of the required minimum that has to be
negotiated or accepted by the contractor under terms of the contract shall be recorded
as an obligation upon contractor's acceptance of the order in the amount of the agreed
price or ceiling . In the case of orders for services where a contractor cannot undertake
performance without direction from an authorized Government official, order amounts
may be consolidated periodically (at least monthly) into a list of orders placed with the
contractor identifying the estimated dollar amount of each. On definite-quantity
contracts, obligate the full amount of the definite quantity at the time of contract award.
When may a T&M contract be used? What must the D&F contain? Who would approve
the following D&Fs: A T&M contract for $650K; A T&M contract for $500K in which the
base period plus option periods will be a total of 4 years; A T&M contract for $1.5M of
services (base plus options will be 5 years.)? - Answer T&M contract may be used only
when it's not possible at the time of placing the contract to estimate accurately the
extent or duration of the work or to anticipate costs with any reasonable degree of
confidence, and ONLY if the PCO prepares a D&F that "no other contract type is
suitable," and the contract includes a ceiling price that the contractor exceeds at their
own risk. The D&F must contain sufficient facts and rationale to justify that no other
contract type is suitable (should go through all the contract types). At a minimum the
D&F shall include a description of the market research conducted and establish that it is
not possible at the time of placing the contract or order to accurately estimate the extent
or duration of the work or to anticipate costs with any reasonable degree of certainty. A
T&M contract for less than $1 million would have the PCO as the approval for the D&F.
A T&M contract for $500K in which the base plus options is 4 years would be approved
by the HCA. A T&M contract for $1.5 of services, where the base plus options will be 5
years, would be approved by the COCO and then the HCA.
As a PCO, what kinds of things could cause you to lose your warrant? - Answer A PCO
loses their warrant upon retirement from employment, reassignment from the position
requiring a warrant, termination of employment, or unsatisfactory performance.
Terminations must be in writing, and requests must be submitted 30 days in advance of
the requested termination along with the reason.
Recent focus has been on decreasing the amount of time it takes to negotiate a
contract. There are several current examples of contracts that are taking months to
