Efficiency-Reducing Transaction Costs Flashcards
FAR Parts 8, 12, 13, 17, 18, and 38
1
Q
Efficiency-Reducing Transaction Costs: FAR Parts 8, 12, 13, 17, 18, and 3
A
Efficiency-Reducing Transaction Costs: FAR Parts 8, 12, 13, 17, 18, and 38
FAR Part 8 - Required Sources of Supplies and Services
FAR Part 12 - Acquisition of Commercial Products and Commercial Services
FAR Part 13 - Simplified Acquisition Procedures
FAR Part 17 - Special Contracting Methods
FAR Part 18 - Emergency Acquisitions
FAR Part 38 - Federal Supply Schedule Contracting
2
Q
Public Law _____________ authorizes extraordinary contractual actions to facilitate the national defense.
85-804
112-61
65-804
112-110
FAR 18.127
A
85-804
3
Q
Which of these mandatory government supply sources has the highest priority for supplies?
Federal Supply Schedule
Service Disabled
Veteran Owned Small Businesses
Federal Prison Industries, Inc.
Services that are on the Procurement List maintained by the Committee for Purchase From People Who Are Blind or Severely Disabled
FAR 8.002
A
Federal Prison Industries, Inc.
4
Q
The contracting officer may exercise options only after determining that all of the following are true, except:
Funds are available.
The requirement covered by the option fulfills an existing Government need.
The contractor has consented to the exercise of the option.
The contractor’s performance on the contract has been acceptable.
FAR 17.207(c)
A
The contractor has consented to the exercise of the option.
5
Q
Which of the following is an order for supplies or services for which the price is not established at the time of issuance of the order?
Purchase order
Unpriced Purchase Order
Letter Contract
Blanket Purchase Order
FAR 13.302-2
A
Unpriced Purchase Order
6
Q
An acquisition of supplies or services that has an anticipated dollar value exceeding the micro-purchase threshold and not exceeding the simplified acquisition threshold:
Is reserved exclusively for small business concerns and shall be set aside
Shall be fulfilled with the acquisition of commercial items
Must be purchased using a government-wide commercial purchase card
Must be set aside for HUBZone small business concerns or service-disabled veteranowned small business concerns
FAR 13.003
A
Is reserved exclusively for small business concerns and shall be set aside
7
Q
Except for information technology contracts and unless otherwise approved in accordance with agency procedures, the total of the basic and option periods shall not exceed ___ years in the case of services, and the total of the basic and option quantities shall not exceed the requirement for ___ years in the case of supplies.
10; 10
10; 5
5; 10
5; 5
FAR 17.204(e)
A
5; 5
8
Q
When identical services are on the Procurement List issued by Federal Prison Industries, Inc. that is on the Procurement List issued by AbilityOne, what is the priority for ordering services?
Commercial sources
Federal Prison Industries, Inc.
General Services Administration (GSA)
AbilityOne participating nonprofit agencies
FAR 8.704
A
AbilityOne participating nonprofit agencies
9
Q
When identical supplies are on the Procurement List issued by Federal Prison Industries, Inc. that is on the Procurement List issued by Ability One, what is the priority for ordering supplies?
General Services Administration (GSA)
Federal Prison Industries, Inc.
AbilityOne participating nonprofit agencies
Commercial sources
FAR 8.704
A
Federal Prison Industries, Inc.
10
Q
Which of the following is not a method for simplified acquisition?
Blanket purchase agreement
Purchase order
Governmentwide commercial purchase card
Advance agreement
FAR 13.3
A
Advance agreement
11
Q
Which of the following is the Government’s preferred method to purchase and pay for micro purchases?
Firm-Fixed-Price contract
Purchase order
Government-wide commercial purchase card
Cost Plus Fixed Fee contract
FAR 13.201
A
Government-wide commercial purchase card
12
Q
______________ is an online shopping service through which ordering activities may search specific information (national stock number, part number, common name), review delivery options and place orders directly with schedule contractors
E-Buy
SAM.gov
GSA Advantage!
Federal Supply
Schedule (FSS)
FAR 8.402
A
GSA Advantage!
Federal Supply
13
Q
mplied warranty of merchantability means:
items are reasonably fit for ordinary purposes for which such items are sold or used.
it is within the merchant’s ability to repair or replace any defective item.
items have a warranty that is specified in terms of months or years.
the seller refuses to put the warranty in writing.
FAR 12.404
A
items are reasonably fit for ordinary purposes for which such items are sold or used.
14
Q
Contracts for commercial items shall ______________.
rely on the contractor’s existing quality assurance systems.
rely on either the contractor’s quality assurance system or the government system, whichever is more stringent.
include all relevant government specifications.
include provisions for source inspection.
FAR 12.207
A
rely on the contractor’s existing quality assurance systems.
15
Q
To meet the implied warranty of merchantability, the commercial items acquired by the government must be ______________.
manufactured to the highest commercial standards.
of at least average, fair, or medium-grade quality.
factory seconds if they are available.
of at least AAA+ or very high quality.
FAR 12.404
A
of at least average, fair, or medium-grade quality.
16
Q
Which of these mandatory Government supply sources has the highest priority for services?
Service Disabled Veteran Owned Small Businesses
Federal Prison Industries, Inc.
Services that are on the Procurement List maintained by the Committee for Purchase From People Who Are Blind or Severely Disabled
Federal Supply Schedule
FAR 8.002
A
Services that are on the Procurement List maintained by the Committee for Purchase From People Who Are Blind or Severely Disabled
17
Q
Which of the following contract types can be used for the acquisition of commercial items?
Firm-Fixed-Price or Cost Plus Fixed Fee
Firm-Fixed-Price or Fixed Price with Economic Price Adjustment
Any contract type authorized in the FAR
Firm-Fixed-Price only
FAR 12.207(a)
A
Firm-Fixed-Price or Fixed Price with Economic Price Adjustment
18
Q
Which of the following is not included in an Interagency Acquisition?
Funds citation
Small business subcontracting plan
Delivery requirements
A description of the supplies and services
FAR 17.503
A
Small business subcontracting plan
19
Q
To the extent practicable, acquisition officials should define requirements in terms that enable and encourage offerors to supply what?
Developmental items
Commercial items
Nondevelopmental items, or commercial items if nondevelopmental items are not available
Real property
FAR 12.101
A
Commercial items
20
Q
What provides federal agencies with a simplified process of acquiring commercial supplies and services in varying quantities while obtaining discounts associated with volume buying?
Effective competition.
Federal Supply Schedule.
Modular contracting.
Service contract.
FAR 38.101
A
Federal Supply Schedule.
21
Q
When contracting for commercial items, the contracting officer must establish price reasonableness and take into account which of the following customary commercial terms and conditions?
Speed of delivery
Quantities ordered
Length of performance period
All of the above
FAR 12.209
A
All of the above
22
Q
All of the following statements concerning Federal Supply Schedules are true EXCEPT:
They provide Federal agencies with a simplified process of acquiring commercial supplies and services in varying quantities while obtaining volume discounts.
Firms provide supplies and services at stated prices for given periods of time, for delivery within a stated geographic area.
Federal agencies not identified in the schedules as mandatory users may issue orders under the schedules.
Federal agencies not identified in the schedules as mandatory users may NOT issue orders under the schedules.
FAR 38.101
A
Federal agencies not identified in the schedules as mandatory users may NOT issue orders under the schedules.
23
Q
Which FAR part prescribes policies and procedures for contracting for supplies and services under the Federal Supply Schedule program?
Part 42
Part 19
Part 6
Part 38
FAR 38
A
Part 38
24
Q
What is the relationship between the Economy Act and more specific statutory authority, like the statutory authorities for the Federal Supply Schedules or Governmentwide acquisition contracts?
The Economy Act applies when more specific statutory authority does not exist.
The Economy Act always applies, regardless of whether more specific statutory authority exists.
Orders using the Federal Supply Schedules or Governmentwide acquisition contracts are to be treated as Economy Act orders.
The Contracting Officer must use discretion in deciding whether to use the Economy Act or more specific statutory authority that may apply to an acquisition.
FAR 17.502-2(b)
A
The Economy Act applies when more specific statutory authority does not exist.
25
Imprest Funds are used for cash purchases below what level?
$1,000
$500
$2,500
$750
FAR 13.305
500
26
Which of the following statements is true in regard to contracting officers tailoring the clause at FAR 52.212-4, Contract Terms and Conditions-Commercial Products and Commercial Services?
Contracting officers may not tailor this clause.
Contracting officers may tailor any paragraph of this clause.
Contracting officers may tailor any paragraph of this clause if a waiver is approved.
Contracting officers shall tailor this clause by addenda to the solicitation and contract.
FAR 12.302.
Contracting officers shall tailor this clause by addenda to the solicitation and contract.
27
What method of special contracting is used to acquire known requirements in quantities and total cost not over planned requirements for up to five 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?
Multi-Year Contracting
Indefinite-Delivery Contracting
Time & Material Contracting
Option Contracting
FAR 17.104
Multi-Year Contracting
28
Which of the following statements are not true regarding emergency acquisitions conducted under FAR Part 18:
A Waiver of electronic funds transfer payments is prohibited for acquisitions to support unusual and compelling needs or emergency acquisitions.
The use of the no-setoff provision never appropriate in order to facilitate the national defense in the event of a national emergency or natural disaster.
The chief of the contracting office may waive the requirement to obtain a bid guarantee for emergency acquisitions when a performance bond or a performance bond and payment bond is required.
Agencies may authorize advance payments to facilitate the national defense for actions taken under Public Law 85-804 as specified in subpart 50.1.
FAR 18.124
The use of the no-setoff provision never appropriate in order to facilitate the national defense in the event of a national emergency or natural disaster.
29
The Federal Supply Schedule Program is also known as the:
Central Contractor Registry (CCR)
E-Buy Program
Source-Supply List (SSL)
Multiple Award Schedule Program
FAR 8.402
Multiple Award Schedule Program
30
When does a quotation become a contract?
When the government issues an order in response to a supplier's quotation, and the supplier accepts by furnishing these supplies or services
Only when the contractor and government's agent have agreed to terms and put it in writing
A quote can be accepted by the government without negotiation and is a contract when the government awards the contract.
When the government issues an order to buy certain supplies or services upon specified terms and conditions in response to a supplier's quotation
FAR 13.004b
When the government issues an order in response to a supplier's quotation, and the supplier accepts by furnishing these supplies or services
31
Emergency acquisition flexibilities, as used in this part, means flexibilities provided with respect to any acquisition of supplies or services by or for an executive agency that, as determined by the head of an executive agency, may be used except:
In support of a contingency operation.
To facilitate the defense against or recovery from cyber, nuclear, biological, chemical, radiological attack against the United States.
When the Secretary of Homeland Security issues an emergency declaration, or a major disaster declaration.
In support of a request from the Secretary of State or the Administrator of the United States Agency for International Development to facilitate the provision of international disaster assistance.
FAR 18.001
In support of a request from the Secretary of State or the Administrator of the United States Agency for International Development to facilitate the provision of international disaster assistance.
32
Which of the following acquisitions may not use the acquisition procedures of FAR Part 12?
Performance-based acquisition
Acquisition of a commercial-off-the-shelf item
A purchase made directly from another Federal agency
Acquisition based on the results of market research
FAR 12
A purchase made directly from another Federal agency
33
What is a multi-year contract?
A contract for the purchase of supplies or services for more than one, but not more than five, program years, under which the contracting officer must establish and exercise an option for each program year after the first.
A contract for the purchase of supplies or services for more than one, but not more than five, program years, under which the contracting officer does not have to establish and exercise an option for each program year after the first, and performance during the second and subsequent years of the contract may be contingent upon the appropriation of funds.
A contract which is funded with multi-year appropriations.
A contract for the purchase of supplies or services for more than one, but not more than five, program years, under which full funding for all program years must be obligated at contract inception.
FAR 17.103
A contract for the purchase of supplies or services for more than one, but not more than five, program years, under which the contracting officer does not have to establish and exercise an option for each program year after the first, and performance during the second and subsequent years of the contract may be contingent upon the appropriation of funds.
34
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is the GSA Schedules Program and what is its purpose?
The General Services Administration (GSA) administers a wide variety of federal contracts for commercial supplies and services. Any federal agency can place orders against these large, indefinite-delivery, indefinite-quantity (IDIQ) contracts.
The paramount idea behind the GSA Schedules Program is for agencies to save time and money by ordering goods and services with pre-negotiated terms and conditions and with prices associated with bulk-buyer discounts. GSA performs all the upfront work and every agency reaps the benefits-along with the taxpayer.
35
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is an indefinite delivery, indefinite-quantity contract?
An indefinite-delivery, indefinite-quantity or IDIQ contract allows agencies the flexibility to place orders for amounts they need when the need arises. If the agency knew it needed 1,000 computers in 30 days, the agency could sign a simple purchase order for 1,000 computers. This purchase order would have a definite quantity (1,000) and a definite delivery schedule (within the next 30 days).
But what if the agency knows it needs between 1,000 and 1,000,000 computers at various points within the next 5 years? Enter the IDIQ contract, which establishes a minimum and maximum quantity (between 1,000 and 1,000,000) and an ordering period (today through the next 5 years). Through this IDIQ contract, the agency can easily satisfy its needs for computers whenever they arise. Next month, the agency can order 2,000 computers. The following month, the agency can place zeroorders. At the end of next year, the agency can order 30,000 computers. This flexibility is very convenient for the agency and the contracting office.
36
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is an order for supplies called?
A delivery order is for supplies. Sometimes a delivery order is abbreviated as "DO."
37
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is an order for services called?
A task order is for services. Sometimes a task order is abbreviated as "TO."
38
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is an ordering activity?
The ordering activity is the federal agency (or office) that places the order.
39
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is the requiring activity?
The requiring activity is the federal agency (or office) that needs the supplies or services.
40
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
Is the ordering activity always the same as the requiring activity
No, sometimes the ordering activity is different from the requiring activity. For example, the Washington Headquarters Services has a contracting office that performs contracting on behalf of several other Department of Defense agencies. For example, the Office of the Secretary of Defense needs something, so it is the requiring activity. Washington Headquarters
Services places the order, so it is the ordering activity.
41
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What are the various names for the GSA
Schedule contracts?
GSA Schedule contracts are also called Federal Supply Schedule (FSS) contracts or Multiple Award
Schedule (MAS) contracts.
42
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
Are GSA Schedule contracts and pricing available to the public?
Yes, you can examine GSA Schedule contracts and pricing on the Internet. GSA maintains a website called GSA Advantage and publishes the
"Authorized Federal Supply Schedule Pricelist."
The GSA Advantage website also contains the GSA E-Library, which lists plenty of information about the GSA Schedule contract-holders. Your company can and should use this free resource to perform market research, evaluate your competitors, and gather open-source intelligence.
43
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is the GSA CALC Tool?
GSA also maintains a website called the GSA CALC Tool. CALC stands for Contract-Awarded Labor Category. The CALC Tool lets you search for actual, historical, awarded prices for orders against the various GSA Schedule contracts.
You can search by labor category and filter by education level, hourly rate, years of experience, and other factors. The CALC Tool will return the average, median, and ranges of prices (within a few standard deviations) for whatever labor category using real, historical pricing data. This CALC Tool is invaluable for your market research on the competitive labor rates for services available to the federal government. Use it!
Bookmark it among your favorite websites!
44
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is GSA Advantage?
GSA Advantage is an online shopping service (website) for agencies to place orders against
GSA Schedule contracts. Think of GSA
Advantage as the central marketplace for GSA
Schedule contract-holders to sell to the federal government. The government contracting officers peruse the GSA Advantage website to
"shop around" and place orders against the GSA
Schedule contracts.
45
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What is GSA E-Buy?
E-Buy, E-Buy, E-Buy...Hmm, what does that sound like? The federal government is in no danger of being successfully sued for trademarkinfringement by E-Bay, which is a different online commerce website. Let's get back to GSA E-Buy.
GSA E-Buy is an online tool within GSA
Advantage. In GSA E-Buy, agencies can publicize requirements, request price quotes, and issue orders electronically. Think of GSA E-Buy as the "online shopping center" and "checkout counter" within GSA Advantage.
46
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
Does my company need a GSA Schedule contract to be competitive?
Maybe, maybe not—it depends! Be careful with consultants who tell you that you need a GSA Schedule contract. For some companies, it is unnecessary and wastes time and money. For other companies, it makes business sense to obtain one or more GSA Schedule contracts.
The answer depends on what your agency sells and how your federal clients buy it.
Keep in mind that only commercial products
and commercial services are available on the
GSA Schedule. If your company specializes in customized weaponry for the Department of Defense, you probably do not need a GSA Schedule contract (because you cannot sell noncommercial weaponry using a GSA Schedule contract). Even if your company specializes in commercial products or commercial services, maybe your top five federal clients rarely use the GSA Schedule. You need to perform market research to determine whether seeking a GSA Schedule contract will be profitable. Again, beware consultants who tell you that you need a GSA Schedule contract-especially if their business specializes in getting paid to hold your hand while you apply for a GSA Schedule contract!
47
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
Is every contractor that holds a GSA Schedule contract successful?
No, absolutely not! While GSA periodically
"clears out the dead wood," you must understand that many GSA Schedule contract-holders are pathetically unsuccessful, with zero or very few orders. Just because you win a GSA Schedule contract does not mean your company will win any orders. You could spend tens of thousands of dollars and waste months or years applying for several GSA Schedule contracts—all for nothing!
Repeat it with me, one more time: Just because you win a GSA Schedule contract does not mean your company will win any orders. Think of a GSA Schedule contract like a hunting license. Just because you get the deer tags does not mean you bag the buck! So, a third time for good measure:
Be careful with consultants who tell you that you need a GSA Schedule contract. Back away, slowly, and clutch your wallet.
48
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
If my company receives an order against my
GSA Schedule contract, what terms apply to the order?
The terms and conditions of your underlying
GSA Schedule contract apply to each and every
order. Just because you do not see a particular clause in the order does not mean you are "off the hook." When performing a GSA order, your company is obligated to follow every clause, term, and condition found in the GSA Schedule contract.
49
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
How can my company be required to perform something that is not found in the GSA order itself?
Every GSA order is placed against a GSA
Schedule contract. Every GSA order is subject to the same clauses, terms, and conditions found in the underlying GSA Schedule contract.
In fact, this arrangement is one reason why the GSA Schedule system is convenient for the government. By negotiating the terms one time
-in the underlying GSA Schedule contract-the government saves time and trouble when it places orders.
50
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
Are the prices in my GSA Schedule contract
"set" or can they be negotiated?
Expect negotiations for every order. The prices in your GSA Schedule contract are ceiling prices.
51
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
What does "ceiling prices" mean?
Ceiling prices means the government will never pay a higher price than you negotiated for your GSA Schedule contract. However, the government will probably try to pay a lower price than your GSA Schedule contract rates.
52
FAR PART 8, REQUIRED SOURCES OF SUPPLIES AND SERVICES
FAR Part 8 explains the rules for placing orders against GSA Schedule contracts and directs the government to consider certain internal sources before issuing contracts.
Isn't $300 per laptop my company's "most favored customer" pricing?
Yes, but you forgot the most important phrase: under similar circumstances. Will each of your GSA orders be for 100,000 or more computer laptops? Probably not. Therefore, it would be unfair (and extremely unprofitable) for your company to lock itself into a GSA Schedule contract ceiling price of $300 per computer laptop. What if you get nothing but orders for a single computer laptop, over and over, each for only $300 or less? At that rate, your company may go bankrupt.
53
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
Why does the government prefer commercial solutions rather than custom solutions?
Commercial solutions are available immediately and have been sold (or offered) to the open market-not just to the government. Developing a new product or new service includes, of course, development and testing costs. The custom-developed item may not work as reliably as solutions that have existed for many years.
Finally, the custom-developed item will usually have a higher price than a commercial solution because the custom item has only one potential customer-the government.
54
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
What is the paramount goal of the special procedures for contracting for commercial items?
Copy the private sector to save time and money.
Mirror, match, and mimic as many customary terms and conditions as possible. Streamline or eliminate as many FAR clauses or mandatory procedures as possible. Doesn't that sound reasonable?
55
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
How can you call them "commercial contracting procedures" if the result is a government contract?
Do not spend too much time worrying about the contradiction in terms. Let me explain. While a contract negotiated using the commercial procedures of FAR Part 12 is a government contract, it is a special type of government contract.
The commercial procedures in FAR Part 12 are designed to mimic private-sector, commercial standards as much as possible. Although it will not be the same as a private-sector, nongovernment contract, a FAR Part 12 contract will be a "middle ground" that is preferable toa traditionally negotiated government contract.
Do not let the perfect be the enemy of the good.
Understand that the commercial procedures of
FAR Part 12 are designed to transform the government contracting process as much as possible into the more efficient and familiar process known in the private sector.
56
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
Should a contractor prefer to win and perform a commercial contract using FAR Part 12 procedures?
Yes, if your company gets a choice between a traditional government contract and a streamlined, commercial contract using FAR Part 12 procedures, the decision is simple. Your company prefers the FAR Part 12 contract in almost any imaginable circumstance.
57
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
Why does the government prefer using the commercial contracting procedures of FAR
Part 12?
The commercial contracting procedures of
FAR Part 12 allow for a faster, streamlined, more convenient method than using more "traditional" government contracting procedures.
58
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
Why are the commercial contracting procedures of FAR Part 12 faster, streamlined, and more convenient?
The commercial procedures of FAR Part 12 are streamlined because they remove many of the
FAR clauses required in other, noncommercial government contracts. The difference in the number of FAR clauses in a traditional government contract versus a FAR Part 12 contract should be striking. Further, the commercial procedures of FAR Part 12 allow the government to skip or minimize several of the procedural steps required in other types of government contract competitions.
The commercial procedures of FAR Part 12 are convenient for your company because they encourage adopting the standards, terms, orpractices that already exist in the private sector. Your company may be accustomed to standard commercial practices. Rather than having to adopt your company practices to the government standards, the government is supposed to accommodate the customary practices of the private sector. All these benefits of FAR Part 12 mean that commercial contracts are usually solicited, negotiated, and awarded much faster than traditional government contracts.
59
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
Can my company suggest that the government should use FAR Part 12 procedures?
Yes, whenever appropriate, your company can and should suggest using the commercial procedures of FAR Part 12. Explain how these commercial procedures can save time and money by streamlining the process.
60
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
When is it appropriate for my company to suggest, and for the government to use, the commercial procedures of FAR Part 12?
Whenever the government wants to buy a product or service that can be classified as commercial, you should be using commercial procedures under FAR Part 12.
61
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
Who determines whether the item (product or service) qualifies as commercial?
The contracting officer has the final say in determining whether a product or service qualifies as a "commercial item." By writing a determination and findings (D&F) or commerciality determination memo, the contracting officer makes the final decision.
62
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
If commercial procedures are so convenient, why would a contracting officer deny that a product or service qualifies as a commercial item?
One potential reason is that the contracting officer wants to force your company to submit certified cost or pricing data. Qualification as a commercial item is a specific exemption to therequirement to provide certified cost or pricingdata. Read more about certified cost or pricingdata in Part 15, Contracting by Negotiation.
63
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
When using commercial procedures under FAR
Part 12, can my company ask the government to accommodate standard commercial terms and conditions?
Yes, and this fact is one of the most important benefits of using commercial procedures. When you are lucky enough to be using commercial procedures, ask the government to match, mirror, or mimic your company's terms and conditions from the private sector. Thegovernment should accommodate reasonablecommercial procedures. Why reinvent the wheel.
For example, if your company's standard terms and conditions directly contradict the
"commercial" contract you're about to sign, negotiate a change to the contract. If your usual delivery schedule differs from the government's request, ask for an accommodation. Anything can and should be negotiated; you just need to ask. Remind the contracting officer of the preference for adopting commercial practices
-including terms and conditions-when using the commercial procedures of FAR Part 12.
64
FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
What is the most common form the government uses for commercial contracts?
You should expect to see a SF 1449 or Standard Form 1449, which the government often uses for the contract you sign.
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FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
What are the two FAR clauses that indicate my contract uses the commercial procedures of
FAR Part 12?
The obvious sign of a commercial contract using
FAR Part 12 procedures is this pair of clauses:
FAR 52.212-4
FAR 52.212-5
If you cannot find both clauses in your allegedly commercial contract, ask the contracting officer.
Something may be very, very wrong...
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FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
Can my company be subject to Cost Accounting Standards under a commercial contract?
No, the general rule is that Cost Accounting Standards (CAS) do not apply to commercial contracts. For more information about CAS, read Part 30, Cost Accounting Standards Administration and Part 31, Contract Cost Principles and Procedures.
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FAR PART 12, ACQUISITION OF COMMERCIAL ITEMS
FAR Part 12 provides streamlined procedures for buying commercial items and encourages the purchase of commercial items whenever possible.
What payment arrangement can my company expect for a commercial contract?
Most commercial contracts will use a firm-fixed-price payment structure. If the contracting officer writes a memo which justifies the decision, the commercial contract may use a labor-hours or time-and-materials payment structure. To read more about these payment arrangements, read Part 16, Types of Contracts.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds.
What is the first fact you should memorize about FAR Part 13 and simplified acquisition procedures?
You should know the dollar threshold for using simplified procedures for certain commercial items, found in FAR 13.5.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
Why should all contractors know this dollar threshold?
If you offer commercial products or commercial services, in an amount equal to or less than this threshold, the government can procure these items using the simplified procedures of FAR Part 13. Both government and contractor will be pleased if you can use the simplified acquisition procedures because they're faster and simpler.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What is the dollar threshold for using FAR 13.5
for commercial items?
Throughout this book, I strive to avoid using any dollar thresholds and specific FAR quotations because the FAR changes so often. As of writing this paragraph, the dollar threshold listed in FAR 13.5 is $7.5 million, but the threshold will change. You need to check the current threshold yourself. Again, if you provide commercial products or commercial services, in amounts within this dollar threshold found in FAR 13.5, push the government to use simplified procedures.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What if my company's products or services are not commercial?
If your company's products or services are noncommercial, the dollar threshold for using FAR Part 13 procedures is the simplified acquisition threshold or SAT. Be careful to distinguish the simplified acquisition threshold (SAT) from the threshold for using simplified procedures for commercial items. The namesof these different thresholds are confusingly similar, so pay attention.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What is one more reason to memorize the simplified acquisition threshold?
Any government contract at or below the simplified acquisition threshold is-by default-reserved exclusively for small businesses. The government must "rebut the presumption" (provide good reason) for not using a small business set-aside within the simplified acquisition threshold. The Small Business Administration closely tracks each agency's adherence to this special rule favoring small businesses.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What is the government's documentation burden when using simplified acquisition procedures?
The stated policy of the government is to keep documentation to a minimum when using simplified acquisition procedures under
FAR Part 13. Therefore, simplified acquisitionprocedures require sparse documentation, especially when compared to other methods of government contracting.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What is the government's competition standard when using simplified acquisition procedures?
When using simplified acquisition procedures, the government must promote competition to the "maximum extent practicable." This competition standard is significantly less stringent than the "full and open competition" required under FAR Part 15 (Contracting by Negotiation) or other procedures.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
Why did Congress create the simplified acquisition procedures?
Simplified acquisitions are designed to be simple. Congress created simplified acquisitions as a specific "carve-out" or exemption from full and open competition. Recognizing that full and open competition often takes longer and ends up in litigation or protests, Congress purposefully relaxed the competitive standard and the procurement rules to create the simplified acquisition procedures.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What makes the simplified acquisition procedures so simple?
Many of the benefits of simplified acquisition procedures are because of what is not required.
Simplified acquisitions relax or omit several onerous rules. While complex source selections under FAR Part 15 require the following, simplified acquisition procedures do not require:
Establishment of a competitive range
Formal evaluation plans
Formal discussions with each company in the competitive range
Strict adherence to deadlines for receipt of proposals
Extensive documentation of the evaluation and negotiation process
Notification of unsuccessful companies
Formal debriefings of unsuccessful companies
Evaluation factors stated in terms of their relative importance to each other
Using simplified acquisition procedures, the government can skip everything in the list.
The complicated procedures of FAR Part 14 and FAR Part 15 are expressly exempted from FAR Part 13. The lack of rigorous procedures in FAR Part 13 leaves ample room for interpretation. Contracting officers are encouraged to use "innovative approaches" when awarding contracts using simplified acquisition procedures.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
Is a price quotation the same as submitting an offer to the government?
No! A quotation is not an offer, despite how people mix up the two. There is an important contractual distinction between a quotation (a price quote) and an offer in government contracting. A valid contract needs an offer, an acceptance, and consideration (exchange of value). Let's consider formal proposals before we return to mere price quotes.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
Is my proposal an offer to the government?
Yes, your proposal is an offer the government can accept by issuing you a contract. The government has the power to accept or reject your offer, which appears in the form of a proposal.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
I
f my company responds to a formal Request for Proposals, is the response an offer?
Yes, when you submit a full proposal in response to a Request for Proposals (RFP), your proposal is an offer to the government. You offer your services, product, or solution. You ask for a contract. The government can accept or reject your proposal (which is your offer).
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
How does the government accept my proposal (offer)?
The government accepts your proposal (offer) by issuing you a contract. With proposals in response to a RFP, the government has the power to accept or reject any offer. The government has the "last word" in whether there will be a contract or not. You made the initial offer with your proposal, but the government is free to accept or reject it.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
For these reasons, should my company always include an expiration date on formal proposals?
Yes, since your proposal is an offer, you should always include an expiration date on your proposal. You do not want to keep your offer open forever, or for an extended period of time.
Think about how long your proposal offer should last and set a limit. Write a proviso something like "This proposal expires on August 21" or "The terms of this proposal remain in effect for ninety (90) days after submission and receipt by the government." However, be careful to comply with any minimum amount of time your offer must remain open if it is required by the government in the RFP. Now, let's return to price quotes.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
If my price quote is not an offer, then what is it?
Think of your quote as a detail of information the government can use to decide how to purchase goods or services, but do not think of your quote as an offer. In a sense, your price quote is an element of market research. Learn more about market research in Part 10, Market Research.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
If the government cannot accept my price quote because it is not an offer, then who makes the initial offer?
The government makes the offer to your company in the form of a purchase order. The government will consider and evaluate several quotes and then choose the best one. Since your quote is not an offer, there is no offer for the government to accept. Therefore, the government must make the initial offer.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What common form will the government use to make an offer to my company after receiving a price quote?
Usually, the government will send your company a purchase order using the Standard Form 1449 (SF 1449). If you sell commercial items to the government, you will become very familiar with SF 1449.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
Is the SF 1449 an offer to my company?
Yes, the SF 1449 (purchase order) is an offer. The proof is on the front page, which will specify whether the contractor is required to sign the purchase order and return it to the government.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
Are you saying my company has the power to accept or reject the purchase order?
Yes, if you sign the purchase order, you exercise your power to accept the contract.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What if the SF 1449 does not require a signature from my company?
You can accept this offer (purchase order) "by performance" rather by signature. When the SF 1449 (purchase order) does not require your signature, you accept the offer-and form a binding contract-by performing the actual contract.
If the purchase order is for supplies, when you deliver the goods, you show that you accepted the contract. If the SF 1449 is for services, you accept the contract by performing the services.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
What about the period of time after the government sends the purchase order but before the company accepts by performance?
There may be a lengthy period when the government has no idea whether you accepted the offer (purchase order, SF 1449) or not.
The government either embraces that risk or eliminates the risk by requiring your signature.
It is for the government to choose since the government initiated and created the offer.
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FAR PART 13, SIMPLIFIED ACQUISITION PROCEDURES
FAR Part 13 explains the simplified acquisition procedures and their dollar thresholds
Is my company required to accept or reject a purchase order, whether by signature or performance?
No. The purchase order (SF 1449) is an offer. Sometimes it requires your signature; sometimes it does not. In either case, you are not required to accept, reject, or notify the government. You have no duty to accept or reject. You could throw the purchase order into the trash and ignore it forever.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting.
What is an option period in the context of government contracting?
Most government contracts are for a total of 5 years. The 5 years are usually separated into 1-year periods of performance. The first year is the base period and starts shortly after you sign the contract. The next 4 years are option periods.
When you signed the contract, your company also agreed to the possibility of performing the option periods.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
What is a Contract Line Item Number or CLIN?
Most government contracts use Contract Line Item Numbers (CLINs) to track different goods or services provided under the contract. Under the usual numbering convention, the base period of performance will be numbered CLIN 0001.
The first option period will be CLIN 1001, the second will be CLIN 2001, the third will be CLIN 3001, and the fourth will be CLIN 4001. So, the typical numbering convention starts with "0" for the base period, "I" for the first option, "2" for the second option, and so on. Sometimes the numbers will be different, but this is the most common arrangement.
The second, third, fourth, and fifth periods of performance are option periods, meaning the government has the unilateral choice ("option") to continue performance or not. Your company started performance under the base period, CLIN 0001, shortly after signing the contract.
However, your company may perform some, all, or none of the option periods, depending on the decisions of the government.
The government gets your company to continue performance through the option periods by exercising an option. If the government does not exercise the next option period, your contractual obligations to perform are finished.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
What does it mean to exercise an option?
Exercise an option is a fancy term for when the government orders your company to perform an option. Some people describe it as "activating" the option period or "turning on" the option CLIN. Your company will receive a written modification to the contract which exercises the option period.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
What do you mean by unilateral right?
The government's right to exercise the option is unilateral because your company cannot reject the exercised option. Your company need not sign or agree to anything. The government sends you a written modification that exercises the option, and your company is obligated to perform.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
What happens if my company refuses to perform the exercised option?
If your company refuses to perform a properly exercised option, your company failed to follow the terms of the contract you signed. When you fail to perform, you risk being terminated for default. Read more about this concept in Part 49, Termination of Contracts.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
Will my company get advance notification before the government exercises the option?
Yes, the standard FAR clause for options requires the government to notify your company in writing of its intent to exercise the option.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
What happens if the contracting officer forgets to exercise the option in time?
Options must be exercised in precisely the same way they were negotiated in the contract. If the contracting officer fails to follow any material condition, such as the notification requirement, the government loses the unilateral right to exercise the option. In other words, company is no longer obligated to perform the option period.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
Can my company "walk away" from the contract if the government fails to exercise the option properly?
Yes, if the government forgets or fails to exercise your option in time, your company has a choice. You can walk away, with no penalties.
The government cannot force you to perform because it lost the unilateral right to exercise the option.
Instead, you can negotiate with the government to sign a bilateral modification (signed by your company and the government) that "re-creates" the option period to fix the mistake. Some contracting officers or government attorneys will say you cannot fix the mistake and you must solicit, compete, and sign an entirely new contract. Your company cannot do much about risk-averse government employees, but you could persistently request a modification to your current contract.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
Is it a bad sign if the government does not exercise my option and that choice was not a mistake?
Yes, if the government purposefully declined to exercise your option, that choice is a very bad sign for your company. For some reason, the government does not want your company to perform the remaining periods of the contract.
Maybe you failed to satisfy the government.
Maybe the government officials think they can get a better deal elsewhere. Maybe the government no longer needs the subject of the contract. In any case, your company loses future revenue.
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FAR PART 17, SPECIAL CONTRACTING METHODS
FAR Part 17 explains how options work in government contracting
What must the government consider before exercising any option?
Before exercising any option, the contracting officer must consider a long list of items andmust formalize the decision in writing. This determination memo must affirm that:
Government evaluated the contractor's past performance
Money is available
Government still needs the subject of the
contract
Exercising the option is preferable to looking for alternate sources
Contractor performed the contract adequately so
far
Contractor has no disqualifying info in the System for Award Management
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FAR PART 18, EMERGENCY ACQUISITIONS
FAR Part 18 identifies special flexibilities for emergency acquisitions, such as contracting within disaster areas or warzones.
What situations qualify as an emergency acquisition?
Several situations qualify as emergencies that allow for special contracting flexibilities. These situations include:
Presidential declaration of an emergency or major disaster
Contingency operations
Secretary of State requests international disaster assistance for another nation
Contracts to defend or recover from cyber, nuclear, biological, chemical, or radiological attacks against the United States
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FAR PART 18, EMERGENCY ACQUISITIONS
FAR Part 18 identifies special flexibilities for emergency acquisitions, such as contracting within disaster areas or warzones.
What is a contingency operation?
Contingency operation is a fancy term for
operations within or near dangerous warzones.
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FAR PART 18, EMERGENCY ACQUISITIONS
FAR Part 18 identifies special flexibilities for emergency acquisitions, such as contracting within disaster areas or warzones.
Can you provide an example of a situation that qualified as an emergency and allowed for special contracting flexibilities?
In 2005, the destruction caused by Hurricane Katrina led President George W. Bush to declare a state of emergency in Louisiana, which activated the special contracting flexibilities found in FAR Part 18, Emergency Acquisitions.
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FAR PART 18, EMERGENCY ACQUISITIONS
FAR Part 18 identifies special flexibilities for emergency acquisitions, such as contracting within disaster areas or warzones.
What contracting flexibilities are available for emergency acquisitions?
Many! Most of these contracting flexibilities allow for a significant increase in the dollar value threshold for using certain contracting procedures. For example, emergencies allow for a larger dollar threshold for using simplified acquisition procedures. The intent behind these policies is to acquire goods and services faster in an emergency. Other flexibilities include the ability to waive or relax documentation procedural requirements. Again, the policy is to speed things along to respond quickly to the emergency. Understandably, the priority is to save lives, not "check the boxes" on the forms or
write memos.
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FAR PART 18, EMERGENCY ACQUISITIONS
FAR Part 18 identifies special flexibilities for emergency acquisitions, such as contracting within disaster areas or warzones.
What flexibility is available for responses to disaster areas or local emergencies?
Read more about the Robert T. Stafford Disaster Relief and Emergency Assistance Act in Part 26, Other Socioeconomic Programs.
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FAR PART 18, EMERGENCY ACQUISITIONS
FAR Part 18 identifies special flexibilities for emergency acquisitions, such as contracting within disaster areas or warzones.
Are there contracting flexibilities available at the discretion of the contracting officer or federal agency?
Yes, not all the contracting flexibilities in FAR Part 18 require a Presidential declaration of emergency or the like. FAR Part 18 provides a long list of flexibilities available at the discretion of the agency or contracting officer. These flexibilities include:
Limiting sources or limiting competition for urgent situations
Using "letter contracts" and negotiating definite details later
Waiving various qualification or procedural requirements
Overriding the automatic "freeze" during a protest
Extraordinary contract powers discussed in FAR
Part 50
Awarding to contractors not registered in the System for Award Management
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