Contracting Officer Unlimited Warrant
Board
What is an option? correct answerAn 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? correct answerThe 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? correct
answerNo. 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? correct
answerNo. 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 ? correct answerChanges 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?
correct answer1. 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? correct
answerObtain 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? correct answerVarious source
documents to include: SOO/SOW/PWS, synopsis, RFP, exchanges with industry, market surveys, RFIs,
etc.
,What is "scope creep?" correct answerScope 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? correct answerLimitations. 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? correct answera) 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. correct answerAll 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? correct answerWhen 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? correct answerThe 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? correct answerSBIRs,
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? correct
answerFor 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
Board
What is an option? correct answerAn 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? correct answerThe 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? correct
answerNo. 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? correct
answerNo. 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 ? correct answerChanges 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?
correct answer1. 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? correct
answerObtain 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? correct answerVarious source
documents to include: SOO/SOW/PWS, synopsis, RFP, exchanges with industry, market surveys, RFIs,
etc.
,What is "scope creep?" correct answerScope 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? correct answerLimitations. 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? correct answera) 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. correct answerAll 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? correct answerWhen 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? correct answerThe 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? correct answerSBIRs,
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? correct
answerFor 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
