1. Federal Contracting

2. Background There are more than 60 federal government agencies
There are more than 1,500 federal government buying offices
The U.S. federal government is the biggest buyer of supplies and services in the world
More than 14 million procurement actions occur every fiscal year
More than $195 billion is appropriated every fiscal year

3. Procurement Actions Of all federal government procurements….
Small purchases (those under $25,000) have made up more than 50%
Orders (issued per existing task order contracts, basic ordering agreements, and so on) have made up more than 30%
New contracts (those over $25,000) have made up less than 1%

4. Department of Defense (DOD) Procurements
DOD has spent more than $115 billion each year during the past five fiscal years
Which DOD departments spend the most?
Air Force
Navy
Army
Defense Logistics Agency (DLA)

5. The Federal Acquisition Process
Preaward Phase
Needs Recognition
Acquisition
Planning
Solicitation/
Evaluation
Award Phase
Contract
Award
Postaward Phase
Contract
Administration

6. Contract Budgeting and Funding
Key Terms and Concepts
Authorization
Appropriation
Apportionment
Allocation and allotment
Administrative commitment
Obligation and expenditure

7. Authorization and Appropriation
Congressional functions
Provide approval and funding
Strict limits on government acquisition
Annual appropriations (one year money)
Multiyear appropriations (color of money)
No-year appropriations (unlimited)
Anti-Deficiency Act (prohibits an agency from committing money they do not have)

8. Apportionment
Office of Management and Budget (OMB) function (distribution function)
Time period distribution to agencies
Limit on obligations
Controls rate of expenditure

9. Allocation and Allotment
Agency functions
Limits on obligations
Administrative control and expenditures

10. Administrative Commitment
Agency budget office function
Sets funds aside for procurement
Ensures availability of funds
Anticipates obligation

11. Obligation Appropriated funds Legally binding commitment to spend
Function of contracting officer
Accomplished by contract award
Full funding
Incremental funding

12. The Federal Acquisition Regulations (FAR)
Federal Statutes and Regulations
No single procurement law
Governed by many laws
Laws in United States Code (USC)
Laws implemented by regulations
Code of Federal Regulations (CFR)
Federal Register (FR) (announcements of changes to the FAR)

13. FAR (e)
The FAR outlines procurement policies and procedures that are used by members of the Acquisition Team. If a policy or procedure, or a particular strategy or practice, is in the best interest of the Government and is not specifically addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, Government members of the Team should not assume it is prohibited. Rather, absence of direction should be interpreted as permitting the Team to be innovative and use sound business judgment that is otherwise consistent with law and within the limits of their authority.

14. Competition Requirements
Policies
Full and open competition
Full and open after exclusions
Other than full and open competition (required by law to write a justification)
Competitive procedures
Justification and approval
Public notice

15. Full and Open Competition
All responsible sources may compete
Competitive procedures
Sealed bidding
Competitive negotiation
Architect-engineer selections
Research and development (R&D) announcements/reviews
Multiple-award schedules

16. Full and Open Competition After Exclusions
To establish or maintain sources
Requires documentation
Requires approval of agency head
Set-asides
Small business
Section 8(a)

17. Other Than Full and Open Competition
Only one responsible source
Unusual and compelling urgency
Mobilization or R&D capability
International agreement
Authorized or required by statute
National Security
Public Interest

18. Other Than Full and Open Competition cont.
Requires justification and approval
Justification available to public
One source exception
Must give public notice
Must consider other offers
Public interest exception
Approval by agency head
Must notify Congress

19. Measuring Competition
Restrictions determining competition
Not measured by participation
Full and open/one offer = competitive

20. Methods of Contracting
Overview
Simplified acquisition procedures
Negotiation
Special R&D procedures – broad agency announcements

21. Simplified Acquisition Procedures (SAT)
Purchases less than the SAT
Imprest funds ($500 limit)
Purchase Orders ($100,000 limit)
Blanket purchase agreements
Purchase cards (Govt visa, or IMPAC Program)
Other authorized methods
Reserved for small business if above micro-purchase and if does not exceed SAT
FACNET (Federal Acquisition computer network) is preferred for solicitation

22. Simplified Acquisition Procedures cont…
Special test program for certain commercial items
Allows simplified procedures for acquisition grater than the SAT, but not exceeding $5 million including options
Contracting officer discretion
FAR Part 12 procedures

23. Simplified Acquisition Procedures cont…
Standard procedures for SAT purchases
Solicit reasonable number of sources
Request for quotations and solicitations must state basis for award
FACNET is preferred method
Oral solicitations if –
FACNET not available
Less than $25,000
Less than $25,000 – apply the rule of three (three quotes)

24. Simplified Acquisition Procedures cont…
Standard procedures for SAT purchases
Evaluation on price alone or price and other factors
Past performance
Quality
Include transportation charges
Notification to unsuccessful offerors only if requested

25. Simplified Acquisition Procedures cont…
Purchase Orders
Offers to buy
Binding upon acceptance
Optional Form 347
Department of Defense Form 1155
Standard Form 44
Electronic Orders
Minimal contract administration

26. Simplified Acquisition Procedures cont…
Blanket Purchase Agreements (BPA’s)
Charge accounts with vendors
Reduced administrative costs
Used for frequent, repetitive buys
Purchases made orally
Monthly invoicing
Cannot be used to avoid SAT
Does not justify avoiding small business set-asides
Does not justify only one source buys

27. Simplified Acquisition Procedures cont…
Imprest funds
Petty cash funds
Maximum purchase is $500
Purchases made orally without competition

28. Simplified Acquisition Procedures cont…
Micro-purchase
Threshold is $2,500
Any simplified acquisition method is permitted
Purchase card use is encouraged
Competitive quotations are not required

29. Negotiation Any procedure that is not sealed bidding May be used when…
Time is of the essence
Price is not the only award factor
Discussion is necessary
No competition

30. Competitive Negotiations
Basis for award – best value continuum
From lowest-priced technically acceptable source selection process, to
Tradeoff process
Note: This process is also called “competitive proposals contracting” and “source selection”

31. Competitive Negotiations cont…
Procedures
Government plans acquisition
Government prepares request for proposals (RFP)
Government publicizes RFP
Offerors submit proposals
Government evaluates offerors/proposals
Government awards without discussions or determines competitive range

32. Competitive Negotiations cont…
Procedures cont…
Government conducts discussions
Government requests proposal revisions
Offerors submit proposal revisions
Government evaluates proposal revisions
Government selects winner
Government awards contract
Government debriefs unsuccessful offerors

33. Special R&D Procedures—Broad Agency Announcements
Applicable to..
Applied research
Basic research
Award criteria
Merit
Funding
Simplified procedures
Note: The term “program research and development announcement” (PRDA) is also used for this procedure

34. Special R&D Procedures—Broad Agency Announcements cont…
Periodic CBD announcements
Peer or scientific reviews
Selection and award
Note: Government need not evaluate proposals competitively. FAR Subpart 15.6 (unsolicited proposals) rules do not apply. Awards continue until funding is exhausted.

35. Solicitations Describe government requirements Solicit offers
Offer: “A proposal to do a thing or pay an amount, usually accompanied by an expected acceptance, counter-offer, return promise or act. A manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it”
--Black’s Law Dictionary--

36. The Uniform Contract Format (UCF)
Part I – The Schedule
Part II – Contract Clauses
Part III – List of Documents, Exhibits, and Other Attachments
Part IV – Representations and Instructions

37. The Uniform Contract Format (UCF) cont…
Part I – The Schedule
Sections A through H
Specific contract requirements
Describes deliverables
States prices or costs and fees
Sections E and F include…
FAR clauses
Agency supplement clauses
Note: Beware of section H – Special Contract Requirements

38. The Uniform Contract Format (UCF) cont…
Part II – Contract Clauses
Section I
Includes..
FAR Clauses (by reference)
Agency supplement clauses (by reference)

39. The Uniform Contract Format (UCF) cont…
Part III – List of Documents, Exhibits, and Other Attachments
Section J
List varies from agency to agency
Examples:
DOD Form 1423, Contract Data Requirements List (CDRL)
DOD Form 254, Contract Security Classification Specification
Often includes specifications/statement of work

40. The Uniform Contract Format (UCF) cont…
Part IV – Representations and Instructions
Sections K, L, and M
Representations and certifications (K)
Solicitation provisions
Proposal preparation instructions (L)
Evaluation factors for award (M)
For negated procurements over $100,000, past performance is a mandatory evaluation factor
Price is ALWAYS an evaluation factor

41. Contract Types Background Tools for managing uncertainty
Differences according to..
Pricing arrangement
Delivery terms
Selected by contracting officer
Combinations permitted

42. Contract Types Classifications Purpose Pricing arrangement
Method of formation

43. Contract Types Overview FAR Reference Arrangement Subpart 16.2
Risk
Contract Types
Contractor (risk)
Government (risk)
Firm Fixed
Price
Cost Plus
Fixed Fee
Fixed Price w/
Economic price
adjustment
Overview
Fixed Price
Cost Reimbursement
FAR Reference
Arrangement
Subpart 16.2
Subpart 16.3
Subpart 16.4
Subpart 16.5
Subpart 16.6
Subpart 16.7
Fixed-price
Cost-reimbursement
Incentive
Indefinite-delivery
Time-and-materials, labor-hour, letter contracts
Agreements

44. Fixed Price Contracts Payment upon acceptable performance
Contractor must succeed
Contractor bears greatest risks

45. Cost-Reimbursement Contracts
Payment not tied to performance
Payment based on actual costs
No obligation to succeed
Government bears most of the risk

46. Incentive Arrangements
Link profit/fee to performance
Incentive based on..
Cost control
Schedule management
Technical achievement
Combination
Effectiveness is debatable

47. Indefinite-Delivery Definite-quantity Negotiated elements
Unit Price(s)
Ordering procedures
Delivery terms
Period of performance
Note: The government must buy the specified quantity

48. Indefinite-Delivery cont…
Indefinite-quantity
Negotiated elements
Minimum and maximum quantities
Unit Price(s)
Ordering procedures
Delivery terms
Period of performance
Note: The government must buy the minimum and may buy up to the maximum quantity

49. Time-and-Materials, Labor-Hour, Letter Contracts
Overview
FAR Reference
Arrangement
Subpart
Subpart
Subpart
Time-and-Materials
Labor-hour
Letter contracts

50. Time-and-Materials
Provides for acquiring supplies or services on the basis…
Direct Labor hours at specified fixed hourly rates
Materials at cost, including handling costs
Used only when it is not possible to estimate accurately the work
Only after contracting officer determines no other contract type is suitable
Only is the contract ceiling includes a ceiling price
Requires government surveillance

51. Labor-hour contracts
Is a variation of the T&M contract, differing only in that materials are not supplied by the contractor

52. Letter Contracts
Written preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services

53. END OF PRESENTATION