(2) If approved by the servicing agency, payment for actual costs may be made by the requesting agency after the supplies or services have been furnished. (d) The period may extend beyond the contract completion date for service contracts. There are five common types of construction contracts: lump sum (or fixed price), time and materials (T&M), unit price, guaranteed maximum price (GMP), and cost-plus. (f) Solicitations may, in unusual circumstances, require that options be offered at prices no higher than those for the initial requirement; e.g., when-. The contract may not be awarded until the thirty-firstday after the date of notification. (c) (1) This subpart implements 41 U.S.C. (c) Agency funding of multi-year contracts shall conform to the policies in OMB Circulars A-11 (Preparation and Submission of Budget Estimates) and A-34 (Instructions on Budget Execution) and other applicable guidance regarding the funding of multi-year contracts. Avoidance of the need for establishing quality control techniques and procedures for a new contractor each year. The use of such a contract will result in significant savings of the total estimated costs of carrying out the program through annual contracts; (2) Enhancement of standardization. (a) Subject to the limitations of paragraphs (b) and (c) of this section, for both sealed bidding and contracting by negotiation, the contracting officer may include options in contracts when it is in the Governments interest. (a) This subpart prescribes policies and procedures applicable to all interagency acquisitions under any authority, except as provided for in paragraph (c) of this section. (1) Multi-year contracting is a special contracting method to acquire known requirements in quantities and total cost not over planned requirements for up to 5 years unless otherwise authorized by statute, even though the total funds ultimately to be obligated may not be available at the time of contract award. and provides policy and procedures for the use of multi-year contracting. (a) The wording crafted by Island Health and South Island, which they embedded in the preamble of their contract, can be used by other companies as a model for drafting their own guiding principles. Leaders employ a range of tactics to try to ensure that they are not taken advantage of by a powerful partner. repairs. When contracting for services, the contracting officer-. Every contract so authorized shall show its authorization upon its face. In order to establish a multi-agency or governmentwide acquisition contract, a business-case analysis must be prepared by the servicing agency and approved in accordance with the OFPP business case guidance, available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/procurement/memo/development-review-and-approval-of-business-cases-for-certain-interagency-and-agency-specific-acquisitions-memo.pdf . (f) Before exercising an option, the contracting officer shall make a written determination for the contract file that exercise is in accordance with the terms of the option, the requirements of this section, and part 6. To ensure that all interested sources of supply are thoroughly aware of how multi-year contracting is accomplished, use of presolicitation or pre-bid conferences may be advisable. To the extent practicable, multi-year contracting shall not be carried out in a manner to preclude or curtail the existing ability of the Department or agency to provide for termination of a prime contract, the performance of which is deficient with respect to cost, quality, or schedule. (f) (g) Contracts may express extensions of the term of the contract as an amended completion date or as additional time for performance; e.g., days, weeks, or months. (c) The period shall be set so as to provide the contractor adequate lead time to ensure continuous production. Results have not been tracked for all of them, but many have told us that they and their partners are happy with the approach and cite benefits including cost savings, improved profitability, higher levels of service, and a better relationship. The limitation in paragraph (a) of this section shall not apply to the acquisition of supplies and services on behalf of DoD by a nondefense agency during any fiscal year for which the Under Secretary of Defense for Acquisition and Sustainment has determined in writing that it is necessary in the interest of DoD to acquire supplies and services through the nondefense agency during the fiscal year. (e) Waiver. Criteria for comparing the lowest evaluated submission on the first program year requirements to the lowest evaluated submission on the multi-year requirements. Ceilings must exclude amounts for requirements included in prior program years. Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. (d) (3) The contracting officer shall establish cancellation dates for each program years requirements regarding production lead time and the date by which funding for these requirements can reasonably be established. Again, its important to note that these guiding principles have teeth. (e) Unless otherwise approved in accordance with agency procedures, the total of the basic and option periods shall not exceed 5 years in the case of services, and the total of the basic and option quantities shall not exceed the requirement for 5 years in the case of supplies. The contracting officer shall insert the amount for the first program year in the contract upon award and modify it for successive program years upon availability of funds. It would be against our fiduciary responsibility to our shareholders to invest in any program for a client with a 60-day termination clause that required longer than two months to generate a return. The implications for innovation are obvious. (b) Criteria for comparing the lowest evaluated submission on the first program year requirements to the lowest evaluated submission on the multi-year requirements. Value-eroding friction and shading occur because one or both parties feel unfairly treated. CLC 222 Mod 4 Contract Monitoring Exam.docx, CLC 222 Module 4 Exam Contract Monitoring - Performance.docx, CLC 222 Module 6 Exam Special Considerations.docx, Contract Monitoring - Performance Exam - 1st Attempt.pdf, The service contract act was enacted to protect economies in the geographical areas where the contract is performed. South Island has the opportunity to earn incentives if they improve efficiency and billing, which they can invest in research and quality-of-care initiatives they are passionate about. We will make decisions based on a balanced assessment of needs, risks, and resources.. (d) Achieve economies in production. Which of the following is NOT, [Recognize how contract types impacts COR responsibilities], Cost reimbursement contracts require less monitoring by the COR than other. Which of the following is, [Identify the various methods of contracting for, Ordering off a Blanket Purchase Agreement, Buys against a GSA Federal Supply Schedule. It may be negotiated as a percentage of the estimated costs but it is written into the contract as a precise amount, not a percentage. The extent to which cancellation terms are used in multi-year contracts will depend on the unique circumstances of each contract. A case in point is Vancouver Island Health Authority and South Island Hospitalists, a partnership of administrators and doctors who work together to provide inpatient care for patients with the most complex medical issues in British Columbia. Last Updated Apr 24, 2023. may not be awarded until the head of the agency gives written notification of the proposed contract and of the proposed cancellation ceiling for that contract to the committees on armed services and appropriations of the House of Representatives and Senate. (f) Contracts may express options for increased quantities of supplies or services in terms of-. (a) The Economy Act ( 31 U.S.C.1535) authorizes agencies to enter into agreements to obtain supplies or services from another agency. (a) Multi-year contracting is a special contracting method to acquire known requirements in quantities and total cost not over planned requirements for up to 5 years unless otherwise authorized by statute, even though the total funds ultimately to be obligated may not be available at the time of contract award. For example, Kim Kerrone and Jean Maskey, informal partners, both say that formal relational contracting was transformational for their respective organizations. Working with the University of Tennessee (including Kate), they embarked on the five-step process. To perform this calculation, the contracting officer should obtain in-house engineering cost estimates identifying the detailed recurring and nonrecurring costs, and the effect of labor learning. The parties ultimately came up with an alternative to the standard fee-for-billable-hours method. (c) For use of project labor agreements, see subpart 22.5. They are especially useful for complex purchasing arrangements, outsourcing, strategic alliances, joint ventures, franchises, public-private partnerships, large construction projects, and collective bargaining agreements. The minimum need to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities; (3) (1) Funds are available; (2) The requirement covered by the option fulfills an existing Government need; (3) The exercise of the option is the most advantageous method of fulfilling the Governments need, price and other factors (see paragraphs (d) and (e) of this section) considered; (4) The option was synopsized in accordance with part 5 unless exempted by 5.202(a)(11) or other appropriate exemptions in 5.202; (5) The contractor does not have an active exclusion record in the System for Award Management (see FAR 9.405-1); (6) The contractors past performance evaluations on other contract actions have been considered; and. If cancellation occurs, the Governments liability will be determined by the terms of the applicable contract. all of these are correct IDENTIFY THE VARIOUS METHODS OF CONTRACTING FOR A SUPPLY OR SERVICE:Some methods of contracting require more time than others. Multi-year contract procedures provide for the amortization of certain costs over the entire contract quantity resulting in identical (level) unit prices (except when the economic price adjustment terms apply) for all items or services under the multi-year contract. (b) Since issuance of an authorization under 17.602(a) is deemed sufficient proof of compliance with paragraph (a) immediately above, nothing in paragraph (a) immediately above shall affect the validity or legality of such an authorization. (g) Insert a clause substantially the same as the clause at 52.217-9, Option to Extend the Term of the Contract, in solicitations and contracts when the inclusion of an option is appropriate (see 17.200 and 17.202) and it is necessary to include in the contract any or all of the following: (1) A requirement that the Government must give the contractor a preliminary written notice of its intent to extend the contract. The model also gave the hospitalists autonomy in scheduling. Nondefense agency means any department or agency of the Federal Government other than the Department of Defense. This method is most advantageous for relatively straightforward and small projects such as: renovations. (c) An interagency acquisition is not exempt from the requirements of subpart 7.3, Contractor Versus Government Performance. If level unit pricing is not in the Governments interest, the head of a contracting activity may approve the use of variable unit prices, provided that for competitive proposals there is a valid method of evaluation. (f) Nondefense agency certifications, waivers, and additional information are available at http://www.acq.osd.mil/dpap/cpic/cp/interagency_acquisition.html. (d) The termination for convenience procedure may apply to any Government contract, including multiyear contracts. In two-step sealed bidding, discussions conducted during the first step may indicate the need for revised ceilings and dates which may be incorporated in step two. Although the contractual language may be vague, courts are obligated to interpret it should there be a dispute. (3) Therefore, when reviewing contractor performance, contracting officers should consider-. If funds are not appropriated to support the succeeding years requirements, the agency must cancel the contract. (2) (2) Laws and regulations that apply to procurements of supplies and services made by DoD through other Federal agencies, including DoD financial management regulations, the Defense Federal Acquisition Regulation Supplement (DFARS), DoD class deviations, and the DFARS Procedures, Guidance, and Information (PGI). Solicitations for multi-year contracts shall reflect all the factors to be considered for evaluation, specifically including the following: (a) The requirements, by item of supply or service, for the-, (1) First program year; and. Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. (a) The written determination shall identify the acquisition categories to which the waiver applies. Unfortunately, this story is not unique. . This method may be used in sealed bidding or contracting by negotiation. Management and operating contract means an agreement under which the Government contracts for the operation, maintenance, or support, on its behalf, of a Government-owned or -controlled research, development, special production, or testing establishment wholly or principally devoted to one or more major programs of the contracting Federal agency. In the event funds are not made available for the continuation of a multi-year contract awarded using the procedures in this section, the contract shall be canceled or terminated. And in a publicly funded health care environment, that is exactly what we need to be focusing on., The governance structure also helped the parties surmount the tricky problem of scope creep. (b) The contract shall state the period within which the option may be exercised. Multi-year contracting shall be used in such a manner as to seek, retain, and promote the use under such contracts of companies that are subcontractors, suppliers, and vendors; and. Cancellation ceiling means the maximum cancellation charge that the contractor can receive in the event of cancellation. Payment limit. Damage to the buyers customer or brand experience, Damage to the buyers employee experience, Excellence in patient care (develop a formal and robust quality structure), A sustainable and resilient hospitalist service (strengthen recruitment, mentorship, and retention processes; create an efficient and flexible hospitalist scheduling model; clearly define hospitalist services and workload; develop stronger interdepartmental working relationships; and train and develop current and future hospitalist leaders), A strong partnership (continue to build a healthy relationship between Island Health and South Island), A best-value hospitalist service (proactively manage the budget, optimize billing, review workload, and increase operational efficiencies). Both parties must make a conscious effort to create an environment of trustone in which they are transparent about their high-level aspirations, specific goals, and concerns. Economic price adjustment clauses are adaptable to multi-year contracting needs. Subcontracting under construction contracts - Pinsent Masons The requesting agency shall provide to the servicing agency any unique terms, conditions, and applicable agency-specific statutes, regulations, directives, and other applicable requirements for incorporation into the order or contract. In this article, we look at the theoretical underpinnings of formal relational contracts and lay out a five-step methodology for negotiating them. (a) The contract shall specify limits on the purchase of additional supplies or services, or the overall duration of the term of the contract, including any extension. An example of a circumstance that may support a determination not to evaluate offers for option quantities is when there is a reasonable certainty that funds will be unavailable to permit exercise of the option. (d) If funds are not appropriated to support the succeeding years requirements, the agency must cancel the contract. 17.604 Identifying management and operating contracts. The cancellation percentages, after deducting 3 percent for the first program year, would be 7, 4, 2, and 1 percent of the total price applicable to the second, third, fourth, and fifth program years, respectively. Obtaining both annual and multi-year offers provides reduced lead time for making an annual award in the event that the multi-year award is not in the Governments interest. This risk is highest when there are many unknowns about what will occur after the contract is signed. For example, consider that the total nonrecurring costs (see 15.408, Table 15-2, III. Designed from the outset to foster trust and collaboration, this legally enforceable contract is especially useful for highly complex relationships in which it is impossible to predict every what-if scenario. Each was crafted to establish a new norm for the partnership. (e) Insert a clause substantially the same as the clause at 52.217-7, Option for Increased Quantity-Separately Priced Line Item, in solicitations and contracts, other than those for services, when the inclusion of an option is appropriate (see 17.200 and 17.202) and the option quantity is identified as a separately priced line item having the same nomenclature as a corresponding line item.