When the period of production is likely to warrant a labor and material costs contingency in the contract price, the contracting officer should normally use an economic price adjustment clause (see 16.203). How to build better long-term strategic partnerships. These include complicated outsourcing and purchasing arrangements, strategic alliances, joint ventures, franchises, public-private partnerships, major construction projects, and collective bargaining agreements. Remediation Accessed shows whether you accessed those links. If the interagency business transaction does not result in a contract or an order, then the FAR does not apply. The Truth in Negotiation Act of 1962 required both prime and subcontractors on contracts over $500,000 to certify the cost data submitted under the solicitation. The 5 Key Types of Construction Contracts | Procore - Levelset Which of the following is not a streamlined method of acquisition? Glenn Gallins, the attorney representing South Island Hospitalists and a law professor at the University of Victoria, offers the following advice when it comes to embracing formal relational contracts: The focus on negotiating the foundation of the relationship first is brilliant. B). Together, we are a team that celebrates and advances excellence in care for our patients and ourselves through shared responsibility, collaborative innovation, mutual understanding, and the courage to act, in a safe and supportive environment. Historically, the two parties had operated under a shroud of opaqueness. In that event, contracting officers must follow the requirements of subpart 17.2. (d) The work is closely related to the agencys mission and is of a long-term or continuing nature, and there is a need-, (1) To ensure its continuity; and. Under the new pricing model, when the inpatient population is low, the hospitalists can opt to take time off and save Island Health money. (3) The time between the award of the contract containing the option and the exercise of the option is so short that it indicates the option price is the lowest price obtainable or the more advantageous offer. The Economy Act also provides authority for placement of orders between major organizational units within an agency; procedures for such intra-agency transactions are addressed in agency regulations. To satisfy requirements of part 6 regarding full and open competition, the option must have been evaluated as part of the initial competition and be exercisable at an amount specified in or reasonably determinable from the terms of the basic contract, e.g.-. Fixed Price Contracts: The Ultimate Expert Guide | NetSuite In Step 3, parties commit to six guiding principles that contractually prohibit opportunistic tit-for-tat moves. The benefits of informal handshake deals have been studied and promoted over the decades; legal scholars Stewart Macaulay and Ian Macneil were early advocates in the 1960s. Annual and multi-year proposals. 10) Some methods of contracting require more time than others. Nonrecurring costs means those costs which are generally incurred on a one-time basis and include such costs as plant or equipment relocation, plant rearrangement, special tooling and special test equipment, preproduction engineering, initial spoilage and rework, and specialized work force training. Review and, Which three of the following statements about convenience checks are true? (ii) Each agencys file shall include the interagency agreement between the requesting and servicing agency, and shall include sufficient documentation to ensure an adequate audit consistent with 4.801(b). The contract also specifies a second governance mechanisma two in a box communication approach in which an administrator is teamed with a hospitalist for each of the four governance teams. division C of subtitle I, Procurement.). The extent to which cancellation terms are used in multi-year contracts will depend on the unique circumstances of each contract. 1. (f) Avoidance of the need for establishing quality control techniques and procedures for a new contractor each year. Some companies go so far as to install a shadow organization to micromanage the supplier. Some Days Require More Carpe Than Others October 29, 2013. (5) Functions that can more properly be accomplished in accordance with subpart 45.3, Authorizing the Use and Rental of Government Property. The multi-year contracting method may be used for the acquisition of supplies or services. Cancellation procedures. From the following statements, select the correct statement pertaining to the, Personnel services contracts are authorized by the government When? (ii) Complying fully with the competition requirements of part 6 (see 6.002). 10 U.S.C. Last Updated Apr 24, 2023. (b) The parties ultimately came up with an alternative to the standard fee-for-billable-hours method. They shall not include any costs of labor or materials, or other expenses (except as indicated above), which might be incurred for performance of subsequent program year requirements. (a) Except for DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of $15 million 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 appropriations of the House of Representatives and Senate and the appropriate oversight committees of the House and Senate for the agency in question. (b) Multi-year contracting is a flexible contracting method applicable to a wide range of acquisitions. 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. We not only came in under budget, we also increased our revenue by improving our MSP billing process. (d) 3501 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. An official website of the General Services Administration. (b) This subpart applies to interagency acquisitions, see 2.101 for definition, when-, (1) An agency needing supplies or services obtains them using another agencys contract; or. For example, Spencer Cleave, a hospitalist from South Island, and Kim Kerrone, Island Healths vice president for finance, legal, and risk, led a small group focused on rethinking the conventional fee-for-billable-service-hour payment structure. (c) The contracting officer may exercise options only after determining that-. The D&F shall-. 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. (e) A statement that award will not be made on less than the first program year requirements. Accordingly, for multi-year contracts, the agency head may authorize modification of the requirements of this subpart and the clause at 52.217-2, Cancellation Under Multi-year Contracts. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. Therefore, when reviewing contractor performance, contracting officers should consider-. (a) (g) The cancellation ceiling shall not be an evaluation factor. The contracting officer shall limit the Governments payment obligation to an amount available for contract performance. The indefinite-delivery contracts used most frequently to support interagency acquisitions are Federal Supply Schedules (FSS), Governmentwide acquisition contracts (GWACs), and multi-agency contracts (MACs). (3) The servicing agency is responsible for compliance with all other legal or regulatory requirements applicable to the contract, including-, (i) Having adequate statutory authority for the contractual action; and. Tradeoff What does Best Value mean? (a) Effective work performance under management and operating contracts usually involves high levels of expertise and continuity of operations and personnel. Fixed-price contracts, also known as firm-price or lump-sum contracts, are agreements in which the two parties state the goods or services one party will provide and establish the price the other party will pay for them. (d) Substantial continuity of production or performance, thus avoiding annual startup costs, preproduction testing costs, make-ready expenses, and phaseout costs. (b) Solicitations containing option provisions shall state the basis of evaluation, either exclusive or inclusive of the option and, when appropriate, shall inform offerors that it is anticipated that the Government may exercise the option at time of award. (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. Is the suppliers product or service a strategic differentiatorfor the buyer? Using multiple suppliers instead of only one, for example, increases costs; so does operating a shadow organization. (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. (c) Reduction of administrative burden in the placement and administration of contracts. Cancellation charge means the amount of unrecovered costs which would have been recouped through amortization over the full term of the contract, including the term canceled. (b) The contracting officer need not evaluate offers for any option quantities when it is determined that evaluation would not be in the best interests of the Government and this determination is approved at a level above the contracting officer. (f) Annual and multi-year proposals. Broadening the competitive base with opportunity for participation by firms not otherwise willing or able to compete for lesser quantities, particularly in cases involving high startup costs. (4) In no event shall the servicing agency require, or the requesting agency pay, any fee or charge in excess of the actual cost (or estimated cost if the actual cost is not known) of entering into and administering the contract or other agreement under which the order is filled. A New Approach to Contracts - Harvard Business Review For DoD, NASA, and the Coast Guard, the authorities cited in 17.101 do not apply to contracts for the purchase of supplies to which 40 U.S.C.759 applies (information resource management supply contracts). (d) (2) An agency uses another agency to provide acquisition assistance, such as awarding and administering a contract, a task order, or delivery order. In that event, contracting officers must follow the requirements of subpart 17.2. The contract may not be awarded until the thirty-firstday after the date of notification. The contracting officer shall take into consideration such factors as market stability and comparison of the time since award with the usual duration of contracts for such supplies or services. These include contracting with multiple suppliers, forcing suppliers to lock in prices, using termination-for-convenience clauses, or obligating suppliers to cover activities that might arise after the initial contracting phase. Course Hero is not sponsored or endorsed by any college or university. At the same time that Oliver and Moore were looking at the contracting problem from an economics perspective, University of Tennessee researchers (including two of us, Kate and David) were working with companies to come up with a new approach that would produce healthier and more sustainable partnerships. The requesting agency administers the order; therefore, no written agreement with the servicing agency is required. A provision specifying a separate cancellation ceiling (on a percentage or dollar basis) and dates applicable to each program year subject to a cancellation (see 17.106-1(c) and (d)). There is a reasonable expectation that, throughout the contemplated contract period, the head of the agency will request funding for the contract at a level to avoid contract cancellation; and. Some relationships, such as those involving the purchase of commodity products and services, are truly transactional and only need traditional contracts. But many organizations require long-term, complex relationships for which the vested methodology is well suited. (d) Insert a clause substantially the same as the clause at 52.217-6, Option for Increased Quantity, 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 expressed as a percentage of the basic contract quantity or as an additional quantity of a specific line item. Cancellation or termination for insufficient funding. Government Contracting Rules You Need to Know | Wolters Kluwer It was a lose-lose scenario. However, the preparation and evaluation of dual offers may increase administrative costs and workload for both offerors and the Government, especially for large or complex acquisitions. (1) Percentage of specific line items, (2) Increase in specific line items; or. (b) Economic price adjustment clauses. CLC 222 Contracting Officers Representative (COR) (h) Providing incentives to contractors to improve productivity through investment in capital facilities, equipment, and advanced technology. For sealed bids, the determination shall be in writing. Some methods of contracting require more time than others. (b) The order may be placed on any form or document that is acceptable to both agencies. 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. Six of the most common project delivery methods in construction are Design-Bid-Build (D-B-B), Design-Build (D-B), Construction Manager at Risk (CMAR), Construction Management Multi-Prime (CMMP), Public-Private Partnership (PPP or P3), and Integrated Project Delivery (IPD). Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. (2) Fails to notify the contractor that funds are available for performance of the succeeding program year requirement. For the first time, the administration and our doctors are innovating together to drive efficiencies and optimize for patient care with our limited budget, she said. Multi-year contract including the requirements for each program year. 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. 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. (b) In long-term, complex deals, shading can be so pervasive that the tit-for-tat behavior becomes a death spiral. In the event there are no DoD-unique requirements beyond the FAR, the DoD acquisition official shall so inform the servicing nondefense agency contracting officer in writing. The nature of the requirement should govern the selection of the method of contracting, since the multi-year procedure is compatible with sealed bidding, including two-step sealed bidding, and negotiation. (a) The contracting officer may award a prime contract to a-. 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. (1) The incumbent contractors overall performance, including, specifically, technical, administrative, and cost performance; (2) The potential impact of a change in contractors on program needs, including safety, national defense, and mobilization considerations; and. Part 17 - Special Contracting Methods | Acquisition.GOV (2) The contract may not be awarded until the thirty-firstday after the date of notification. Working with the University of Tennessee (including Kate), they embarked on the five-step process. Shall add the clause at 52.222-43, Fair Labor Standards Act and Service Contract Labor Standards- Price Adjustment (Multiple Year and Option Contracts), when the contract includes the clause at 52.222-41, Service Contract Labor Standards; (2) in the overall strategic planning of an acquisition]. Administrators and hospitalists who had called their relationship broken, dysfunctional, and distrustful now describe it as collaborative, trusting, and supportive., Kerrone points to financial benefits as well. Cancellation means the cancellation (within a contractually specified time) of the total requirements of all remaining program years. (C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies. Perhaps unsurprisingly, most companiesand their legal counsels in particularare uncomfortable with informal handshake deals, especially when the stakes are high. (g) The contract modification or other written document which notifies the contractor of the exercise of the option shall cite the option clause as authority. Cancellation ceilings and dates may be revised after issuing the solicitation if necessary. When the period of production is likely to warrant a labor and material costs contingency in the contract price, the contracting officer should normally use an economic price adjustment clause (see 16.203). When Dell originally selected FedEx, in 2005, to handle all aspects of its hardware return-and-repair process, the companies drew up a traditional supplier contract. Nor should they. 3903 and 10 U.S.C. Participation by subcontractors, suppliers, and vendors. Exam (elaborations) - Clc 222 mod 6 special considerations exam 2. Subpart 15.1 - Source Selection Processes and Techniques - Acquisition This subpart prescribes policies and procedures for management and operating contracts for the Department of Energy and any other agency having requisite statutory authority. 17.208 Solicitation provisions and contract clauses. 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 contracting officer shall review each management and operating contract, following agency procedures, at appropriate intervals and at least once every 5 years. If I need to make an urgent decision or have a difficult issue that cant wait for the next formal meeting, I can phone my two-in-a-box partner and ask to meet., Such pairings are also highly encouraged outside the governance teams to strengthen the relationship and build trust between parties at all levels. The review should determine whether meaningful improvement in performance or cost might reasonably be achieved. not visited and 'Y' represents visited links. When contracting for services, the contracting officer-. Nonrecurring costs include such costs, where applicable, as plant or equipment relocation or rearrangement, special tooling and special test equipment, preproduction engineering, initial rework, initial spoilage, pilot runs, allocable portions of the costs of facilities to be acquired or established for the conduct of the work, costs incurred for the assembly, training, and transportation to and from the job site of a specialized work force, and unrealized labor learning. A unit price contract can be used for all or part of a project. 10) Some methods of contracting require more time than others. 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. (d) Contracts awarded under the multi-year procedure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. (e) And if their previous contracting process led to distrust and a vicious cycle of shading, they should reflect on how and why that happened. In unusual circumstances, an authorized person at a level above the contracting officer may approve a greater percentage of quantity. (1) Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) Enhancement of standardization. (5) Acquisition authority as may be appropriate (see 17.503(d)). The need for the supplies or services is reasonably firm and continuing over the period of the contract; and. Kim Kerrone, of Island Health, described how the vested methodology broke the impasse. Relational contracts that rely on parties making choices in their mutual self-interest are nothing new, of course. Indeed, the Canadian supreme court recently took up a case in which a franchisee alleged that it was not being treated fairly by the franchise owner. (b) Insert a provision substantially the same as the provision at 52.217-4, Evaluation of Options Exercised at Time of Contract Award, in solicitations when the solicitation includes an option clause, the contracting officer has determined that there is a reasonable likelihood that the option will be exercised, and the option may be exercised at the time of contract award. You need to ensure, Prior to certifying the Managing Accounting Billing Statement for contract payments by Governmentwide Commercial Purchase Card, the Approving/ Billing Official must do what two things? Ceilings must exclude amounts for requirements included in prior program years. Economic price adjustment clauses are adaptable to multi-year contracting needs. The Government has an, Question 17 of 28 You have an Azure Storage account named storage1 that is configured to use the Hot access tier. Benefits may accrue by including options in a multi-year contract. (a) Heads of agencies, with requisite statutory authority, may determine in writing to authorize contracting officers to enter into or renew any management and operating contract in accordance with the agencys statutory authority, or 41 U.S.C. Issuing RFI. some methods of contracting require more time than others In determining cancellation ceilings, the contracting officer must estimate reasonable preproduction or startup, labor learning, and other nonrecurring costs to be incurred by an "average" prime contractor or subcontractor, which would be applicable to, and which normally would be amortized over, the items or services to be furnished under the multi-year requirements. (d) The termination for convenience procedure may apply to any Government contract, including multiyear contracts. After all, the team realized, who better to optimize the scheduling for superior patient care than the doctors on the front lines? Cancellation results when the contracting officer-, (1) Notifies the contractor of nonavailability of funds for contract performance for any subsequent program year; or. (g) Facilitate the transition from development to production and to subsequent competitive acquisition of end items or major components. (The DFARS, DoD class deviations, and PGI are accessible at: http://www.acq.osd.mil/dpap/dars). (2) Multi-year contract including the requirements for each program year. (1) (2) The requesting agency shall also be responsible for furnishing other assistance that may be necessary, such as providing information or special contract terms needed to comply with any condition or limitation applicable to the funds of the requesting agency. A management and operating contract is characterized both by its purpose (see 17.601) and by the special relationship it creates between Government and contractor. In the first two years, Dell and FedEx were able to reduce costs by 42%, scrap by 67%, and defective parts per million to record-low levels. 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). Some methods of contracting require more time than - Course Hero chapter 33, and the agencys regulations governing such contracts. The contracting officer shall limit the Governments payment obligation to an amount available for contract performance. 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) simple new builds. It is key to the buyer and seller relationship and provides a framework to deal with each other. (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. We will make decisions based on a balanced assessment of needs, risks, and resources.. Use of multi-year contracting is encouraged to take advantage of one or more of the following: (b) (b) Any justifications and approvals and any determination and findings required by part 6 shall specify both the basic requirement and the increase permitted by the option. 3501 and provides policy and procedures for the use of multi-year contracting. (e) Formal relational contracts will never completely replace traditional transactional contracts. Such other elements of any department or agency as have been designated by the President, or designated jointly by the Director of National Intelligence and the head of the department or agency concerned, as an element of the intelligence community. (See 17.208.). Always have a copy of the contract, price assumptions, budgets, scope baseline, and other related documents nearby. (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.
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