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FAR Part 16 Flashcards

Types of Contracts

1
Q

FAR Part 16

A

Types of Contracts

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2
Q

FAR Part 16: Types of Contracts

Overview of FAR Part 16 - Types of Contracts

Purpose: Provides guidance on selecting and managing different types of contracts (FAR 16.000).

Key Sections:

A

16.1 Selecting Contract Types
16.2 Fixed-Price Contracts
16.3 Cost-Reimbursement Contracts
16.4 Incentive Contracts
16.5 Indefinite-Delivery Contracts
16.6 Time-and-Materials, Labor Hour, and Letter Contracts
16.7 Agreements

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3
Q

FAR Part 16: Types of Contracts

Overview of FAR Part 16 - Types of Contracts

Instructor Dialogue

A

“FAR Part 16 focuses on the various types of contracts available for use in federal procurement.“

“This part helps mitigate risks by providing guidelines on selecting the most appropriate contract type for a given situation.”

“Understanding the different contract types is essential for effective risk management and successful project execution.”

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4
Q

FAR Part 16: Types of Contracts

Subpart 16.1 - Selecting Contract Types

Purpose: Provides criteria for selecting the appropriate contract type (FAR 16.101).

Key Considerations:

A

Nature and complexity of the requirement (FAR 16.104(a)).

Uncertainties involved in contract performance (FAR 16.104(b)).

Need for flexibility and incentives (FAR 16.104(c)).

Market conditions and competition (FAR 16.104(d)).

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5
Q

FAR Part 16: Types of Contracts

Subpart 16.1 - Selecting Contract Types

Instructor Dialogue

A

“Subpart 16.1 outlines the criteria for selecting the appropriate contract type.“

“The selection process considers factors such as the nature and complexity of the requirement.“

“It also takes into account the uncertainties involved in contract performance.“

“Flexibility and incentives are important considerations.“

“Market conditions and competition play a crucial role in this decision

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6
Q

FAR Part 16: Types of Contracts

Subpart 16.2 - Fixed-Price Contracts

Purpose: Establishes fixed-price contracts to provide a firm price for the work (FAR 16.201).

Key Features:

A

Contractor assumes full responsibility for performance costs (FAR 16.202-1).

Suitable for projects with well-defined requirements (FAR 16.202-2).

Includes firm-fixed-price and fixed-price with economic price adjustment (FAR 16.203).

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7
Q

FAR Part 16: Types of Contracts

Subpart 16.2 - Fixed-Price Contracts

Instructor Dialogue

A

Subpart 16.2 deals with fixed-price contracts, which provide a firm price for the work.“

“In these contracts, the contractor assumes full responsibility for performance costs.“

“Fixed-price contracts are suitable for projects with well-defined requirements.“

“Types of fixed-price contracts include firm-fixed-price and fixed-price with economic price adjustment

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8
Q

FAR Part 16: Types of Contracts

Subpart 16.3 - Cost-Reimbursement Contracts

Purpose: Allows payment of allowable incurred costs to the extent prescribed in the contract (FAR 16.301).

Key Features:

A

Government assumes more risk by reimbursing allowable costs (FAR 16.301-1).

Suitable for projects with uncertain or unpredictable costs (FAR 16.301-2).

Includes cost-plus-fixed-fee and cost-plus-incentive-fee contracts (FAR 16.304).

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9
Q

FAR Part 16: Types of Contracts

Subpart 16.3 - Cost-Reimbursement Contracts

Instructor Dialogue:

A

Subpart 16.3 focuses on cost-reimbursement contracts, which allow payment of allowable incurred costs.“

“In these contracts, the government assumes more risk by reimbursing allowable costs.“

“Cost-reimbursement contracts are suitable for projects with uncertain or unpredictable costs.“

“Types of cost-reimbursement contracts include cost-plus-fixed-fee and cost-plus-incentive-fee

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10
Q

FAR Part 16: Types of Contracts

Subpart 16.4 - Incentive Contracts

Purpose: Provides incentives to contractors to improve performance (FAR 16.401).

Key Features:

A

Incentives linked to achieving specific performance targets (FAR 16.402).

Includes fixed-price incentive and cost-reimbursement incentive contracts (FAR 16.403).

Encourages cost savings and efficiency (FAR 16.405).

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11
Q

FAR Part 16: Types of Contracts

Subpart 16.4 - Incentive Contracts

Instructor Dialogue

A

Subpart 16.4 covers incentive contracts, which provide incentives to contractors to improve performance.“

“Incentives are linked to achieving specific performance targets.“

“Types of incentive contracts include fixed-price incentive and cost-reimbursement incentive contracts.“

“These contracts encourage cost savings and efficiency.”

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12
Q

FAR Part 16: Types of Contracts

Subpart 16.5 - Indefinite-Delivery Contracts

Purpose: Provides flexibility for acquiring supplies and services when the exact times or quantities are unknown (FAR 16.501).

Key Features:

A

Types include definite-quantity, indefinite-quantity, and requirements contracts (FAR 16.504).

Suitable for recurring needs (FAR 16.503).

Allows for flexibility in delivery schedules (FAR 16.505).

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13
Q

FAR Part 16: Types of Contracts

Subpart 16.5 - Indefinite-Delivery Contracts

Instructor Dialogue:

A

Subpart 16.5 addresses indefinite-delivery contracts, which provide flexibility for acquiring supplies and services.“

“These contracts are used when the exact times or quantities of future deliveries are unknown.“

“Types of indefinite-delivery contracts include definite-quantity, indefinite-quantity, and requirements contracts.“

“They are suitable for recurring needs and allow flexibility in delivery schedules

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14
Q

FAR Part 16: Types of Contracts

Subpart 16.6 - Time-and-Materials, Labor Hour, and Letter Contracts

Purpose: Provides contracts based on direct labor hours and materials used (FAR 16.601).

Key Features:

A

Suitable for projects with uncertain durations or scopes (FAR 16.601-1).

Includes time-and-materials and labor-hour contracts (FAR 16.602).

Letter contracts allow immediate start of work pending negotiation (FAR 16.603).

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15
Q

FAR Part 16: Types of Contracts

Subpart 16.6 - Time-and-Materials, Labor Hour, and Letter Contracts

Instructor Dialogue:

A

“Subpart 16.6 focuses on time-and-materials, labor-hour, and letter contracts.“

“These contracts are based on direct labor hours and materials used.“

“They are suitable for projects with uncertain durations or scopes.“

“Types include time-and-materials and labor-hour contracts.“

“Letter contracts allow work to start immediately pending negotiation.”

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16
Q

FAR Part 16: Types of Contracts

Subpart 16.7 - Agreements

Purpose: Establishes agreements that outline terms for future contracts (FAR 16.701).

Key Features:

A

Includes basic ordering agreements and blanket purchase agreements (FAR 16.702).

Provides pre-negotiated terms and conditions (FAR 16.703).

Facilitates faster procurement processes (FAR 16.704).

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17
Q

FAR Part 16: Types of Contracts

Subpart 16.7 - Agreements

Instructor Dialogue

A

Subpart 16.7 covers agreements, which establish terms for future contracts.“

“These include basic ordering agreements and blanket purchase agreements.“

“Agreements provide pre-negotiated terms and conditions.“

“They facilitate faster procurement processes by streamlining the contracting phase

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18
Q

16.1 Selecting Contract Types

Selecting the contract type is generally a matter

A

for negotiation and requires the exercise of sound judgment.

Negotiating the contract type and negotiating prices are closely related and should be considered together.

Factors to consider in determining contract type:
* Price competition * Price analysis
* Cost analysis
* Type and complexity of requirement * Urgency of requirement

The contractor’s facilities, technical capabilities, and financial responsibility must also be considered.

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19
Q

Buyers Risk

Highest to lowest

A

Fixed Price
- FFP
- FPw/EPA
- FPIncentive

T&M
- T&M
- Labor hour

Cost reimbursement
- Cost
- Cost plus
- Cost plus %

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20
Q

The cost-plus-a-percentage-of-cost system of contracting shall not be used

A

Cost-plus-percentage-of-cost contracts pay a fee that rises as the contractor’s costs rise. Because this contract type provides no incentive for the contractor to control costs it is not used.

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21
Q

16.2 Fixed-Price Contracts

Fixed-price

A

A form of pricing that includes a ceiling beyond which the buyer bears no responsibility for payment

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22
Q

16.2 Fixed-Price Contracts

Firm-fixed-price (FFP) contract

A

A contract that provides for a price that is not subject to any adjustment by reason of costs experienced by the contractor in the performance of the contract

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23
Q

16.2 Fixed-Price Contracts

A firm-fixed-price contract:

A
  • Places maximum risk on the contractor
  • Places maximum responsibility for profit (or loss) on the contractor
  • Provides maximum incentive for the contractor to control costs and perform effectively
  • Imposes minimum administrative burden on the contracting parties
  • May be used in conjunction with a performance incentive or award fee if not based on cost
  • Remains a firm-fixed-price contract when used with incentives
  • May be used to purchase commercial items
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24
Q

16.2 Fixed-Price Contracts

Fixed-price incentive (FPI) contract

A
  • A type of contract that provides for adjust-ing profit and establishing the final contract price by application of a formula based on the relationship of total final negotiated cost to total target cost

The final price is subject to a price ceiling, negotiated at the outset

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25
Q

16.2 Fixed-Price Contracts

Fixed-price contract with economic price adjustment

A

A fixed-price contract that permits an element of cost to fluctuate to reflect current market prices

Economic price adjustments may be based on established prices, actual costs of labor or material, or cost indexes of labor or material

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26
Q

16.2 Fixed-Price Contracts

Fixed-price contract with prospective price redetermination

A

A contract that provides for a firm-fixed-price for an initial period of contract deliveries or performance and prospective redetermination (at a stated time or times
during performance) of the price for subsequent periods of performance

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27
Q

16.2 Fixed-Price Contracts

Fixed-ceiling-price contract with retroactive price redetermination

A

A contract that provides for a fixed ceiling price and a retroactive price determination within the ceiling after completion of the contract

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28
Q

16.2 Fixed-Price Contracts

Firm-fixed-price, level-of-effort term contract

A

A contract that requires the contractor to provide a specified level of effort over a stated period of time for work that can only be stated in general terms, and requires the government to pay a fixed dollar amount for these services

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29
Q

16.2 Fixed-Price Contracts

Level of effort (LOE)

A

The devotion of talent or capability to a predetermined level of activity, over a stated period of time, on the basis of a fixed-price or cost-reimbursement pricing
arrangement; payment is usually based on effort expended rather than results achieved

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30
Q

16.3 Cost-Reimbursement Contracts

Cost-reimbursement contract

A

A form of pricing arrangement that provides for payment of allowable, allocable, and reasonable costs incurred in the performance of a contract to the extent that
such costs are prescribed or permitted by the contract

Types of cost-reimbursement contracts include:
* Cost
* Cost-plus-incentive-fee
* Cost-plus-award-fee
* Cost-plus-fixed-fee

The contracting officer shall document the rationale for selecting the contract type in the written acquisition plan and
ensure that the plan is approved and signed by at least one level above the contracting officer

Cost-reimbursement contracts may
not be used for acquisitions of commercial items

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31
Q

16.3 Cost-Reimbursement Contracts

Cost contract

A

The least complicated form of cost-reimbursement contract

A contract in which the contractor receives no additional fee

May be appropriate for research and development work, particularly with nonprofit educational institutions or other nonprofit organizations

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32
Q

16.3 Cost-Reimbursement Contracts

Cost-plus-incentive-fee (CPIF) contract

A

A cost-reimbursement type of contract with a provision for a fee that is adjusted by a formula in accordance with the relationship between total allowable costs and
target costs.

Appropriate for services or development and test programs, as wel as others if use of both cost and technical performance incentives is desired and administratively practical.

33
Q

16.3 Cost-Reimbursement Contracts

Cost-plus-award-fee (CPAF) contract

A

A cost-reimbursement type contract with special incentive fee provisions used to provide motivation for excellence in contract performance

Areas of “excellence” in performance may include:
*Quality
* Timeliness
* Ingenuity
* Cost effectiveness

34
Q

16.3 Cost-Reimbursement Contracts

Cost-plus-fixed-fee (CPFF) contract

A

A cost-reimbursement type contract that provides for the payment of a fixed fee to the contractor

The fee does not vary with actual costs, but may be adjusted as a result of any subsequent changes in the work or services to be performed under the contract

There are two types:
* Completion form has a clearly defined task with a definite
goal and specific end product
* Term form comes with a scope of work described in general
terms

35
Q

16.3 Cost-Reimbursement Contracts

The cost-plus-a-percentage-of-cost

A

system of contracting shall not be used.

36
Q

16.4 Incentive Contracts

A

Appropriate when required supplies or services can be acquired at lower costs or with improved delivery or technical performance by relating the fee or amount of profit ot the contractor’s performance

Incentives can be applied ot cost, technical performance, and/or delivery

37
Q

16.4 Incentive Contracts

Fixed-price-incentive (FPI) contract

A

A type of contract that provides for adjusting profit and establishing the final contract price by application of a formula based on the relationship of total final
negotiated cost to total target cost

The final price is subject to a price ceiling, negotiated at the outset

There are two types of FPI contracts:
- Firm target specifies target cost, target profit, price ceiling, and a profit adjustment formula. These elements are all negotiated at the
outset.
- Successive target negotiates final cost target later.

38
Q

16.4 Incentive Contracts

Fixed-price award fee (FPAF) contract

A

A contract that establishes a fixed price (including normal profit) for the effort. This price will be paid for satisfactory contract performance

An award fee earned (if any) will be paid in addition to that fixed price

39
Q

16.5 Indefinite-Delivery Contracts

Indefinite-delivery contracts are appropriate when

A

the exact times and/or quantities of future deliveries are not known at the time of contract award.
There are three types:
* Definite-quantity
* Indefinite-quantity
* Requirements

40
Q

16.5 Indefinite-Delivery Contracts

Definite-quantity contract

A

A contractual instrument that provides for a definite quantity of supplies or services to be delivered at some later, unspecified date

41
Q

16.5 Indefinite-Delivery Contracts

Indefinite-quantity contract

A

Contracts that provide for an indefinite quantity within stated limits of supplies or services to be furnished within a fixed period with deliveries or performance to be scheduled by placing orders with the contractor

42
Q

16.5 Indefinite-Delivery Contracts

Requirements contact

A

An indefinite-delivery contract that provides for filling all actual purchase requirements of designated government activities for supplies or services during a specified contract period

Deliveries or performance to b scheduled by placing orders with the contractor

Provides for the filling of all actual purchase requirements of specific supplies or services for a designated activity during a specified contract period

43
Q

16.6 Time-and-Materials, Labor-Hour, and Letter Contracts

Time-and-materials contract

A

Provides for acquiring supplies/services on the basis of direct labor hours at
specified fixed hourly rates that include wages, overhead, profit, and materials

Used only when ti is not possible at the time of placing the contract to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence

44
Q

16.6 Time-and-Materials, Labor-Hour, and Letter Contracts

Labor-hour contract

A

A type of time-and-materials contract differing only in that materials are not furnished by the contractor

45
Q

16.6 Time-and-Materials, Labor-Hour, and Letter Contracts

Letter contract

A

A written, preliminary contractual instrument that authorizes the contractor to begin
immediately manufacturing supplies or performing services

Must include price ceiling (“not to exceed”) and milestones for definitization

Used when the government’s interests demand that the contractor’s work must commence
immediately and it is
not possible to negotiate a definitive contract in sufficient time

Must be superseded by a definitized contract at the earliest
possible date

46
Q

16.7 Agreements

Basic agreement

A

Contains contract clauses applying to future contracts, which will incorporate by reference or attachment the applicable clauses ni the basic agreement

47
Q

16.7 Agreements

Basic ordering agreement

A

Contains terms and conditions for future orders and describes
supplies or services to be provided and methods for pricing, issuing, and delivering the orders

Basic agreements and basic
ordering agreements are not contracts

48
Q

Contract types vary according to the degree and timing of the responsibility

A

assumed by the contractor for the costs of performance and the amount and nature of the profit incentive offered to the contractor for achieving or exceeding goals.

Contract types are grouped into two broad categories: fixed price and cost reimbursement.

49
Q

The objective is to negotiate a contract type and price (or estimated cost and fee) that will

A

result in reasonable contractor risk and provide the contractorwith the greatest incentive for efficient and economical performance.

A firm-fixed-price contract, which best utilizes the basic profit motive of business enterprise, shall be used when the risk involved is minimal or can be predicted with an acceptable degree of certainty.

However, when a reasonable basis for firm pricing does not exist, other contract types should be considered, and negotiations should be directed toward selecting a contract type (or combination of types) that will appropriately tie profit to contractor performance.

50
Q

In particular, contracting officers should avoid protracted use of a cost-reimbursement or time-and-materials contract after

A

experience provides a basis for firmer pricing.

51
Q

Factors that should be considered in selecting contract type are

A

price competition, price analysis, cost analysis, type and complexity of the requirement, and its urgency.

Several factors regarding the contractor also influence contract type, such as the contractor’s accounting system and ability to account for a complex contract, technical capability, and financial responsibility. All considerations should be fully considered and documented in the contract file.

52
Q

Firm-fixed-price contracts provide for a price that is not

A

subject to any adjustment on the basis of the contractor’s costs experienced in performing the contract.

This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.

It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties. The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (FAR 16.404) and performance or delivery incentives (FAR 16.402-2 and 16.402-3) when the awardfee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives.

53
Q

A firm-fixed-price contract is suitable for acquiring commercial items (see parts 2 and 12) or for acquiring other supplies or services on the basis of reasonably definite functional or detailed specifications (see part
11) when the contracting officer can establish fair and reasonable prices at the outset, such as when

A
  1. There is adequate price competition;
  2. There are reasonable price comparisons with prior purchases of the same or similar supplies or services made on a competitive basis or supported by valid cost or pricing data;
  3. Available cost or pricing information permits realistic estimates of the probable costs of performance; or
  4. Performance uncertainties can be identified and reasonable estimates of their cost impact can be made, and the contractor is willing to accept a firm fixed price representing assumption of the risks involved.
54
Q

FIXED-PRICE INCENTIVE CONTRACTS are fixed-price contracts that

A

provide for the adjust-ment of profit and establishment of the final contract price by a formula based on the relationship of final negotiated total cost to total target cost.

This contract type is appropriate for development and production efforts.

55
Q

FIXED-PRICE WITH ECONOMIC PRICE ADJUSTMENT provides

A

for upward or downward revision of the stated contract price upon occurrence of specified contingencies.

Economic price adjustments can be based on established prices, actual costs of labor or material, or cost indexes of labor or material.

This contract type is appropriate when there is serious doubt concerning the future stability of market or labor conditions over an extended period of contract performance, and when contingencies that would otherwise be included in the contract price can be identified and covered separately.

56
Q

FIXED-PRICE WITH PROSPECTIVE
PRICE REDETERMINATION

A

results in a firm-fixed-price for an initial period with prospective redetermination at a stated time during performance.

Appropriate for production or services for which it is possible to negotiate a fair and reasonable firm fixed price for an initial period, but not for subsequent periods of contract performance.

57
Q

FIXED CEILING PRICE WITH RETROACTIVE PRICE REDETERMINATION

A

provides for a fixed ceiling price and price redetermination within the ceiling after contractor completion.

Appropriate for research and development efforts value. Refer to FAR 16.206-2.

58
Q

FIRM-FIXED-PRICE/LEVEL-OF-EFFORT TERM CONTRACT requires the contractor to provide

A

a specified level of effort over a stated period of time for work that can only be stated in general terms, and requires the government to pay a fixed dollar amount for these services.

Appropriate for investigation or study in a specific research and development area.

Time-and-materials contracts and labor-hour contracts are not fixed-priced contracts.

59
Q

C. COST REIMBURSEMENT CONTRACTS
(FAR 16.3)
A COST REIMBURSEMENT CONTRACT provides

A

for payment of allowable incurred costs, to the extent prescribed in the contract.

They are suitable when uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract.

The contracting officer shall use cost reimbursement contracts only when circumstances do not allow the agency to define its requirements sufficiently to allow for a fixed price-type contract or uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract.

The contracting officer shall document the rationale for selecting the contract type in the written acquisition plan and ensure that the plan is approved and signed by at least one level above the contracting officer.

The use of a cost reimbursement-type contract requires that the contractor’s accounting system be adequate for determining costs applicable to the contract and that adequate government resources are available to award and manage a contract other than firm-fixed-price. They may not be used to acquire commercial items.

60
Q

A COST CONTRACT is a cost reimbursement contract

A

in which the contractor receives no fee.

These may be appropriate for research and development work, particularly with nonprofit educational institutions or other nonprofit organizations.

61
Q

A COST-PLUS-INCENTIVE-FEE CONTRACT provides for an

A

initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs.

Appropriate for services or development and test programs, as well as others if use of both cost and technical performance incentives is desired and administratively practical.

62
Q

A COST-PLUS-AWARD-FEE CONTRACT provides for

A

a fee consisting of a base amount (which may be zero).fixed at inception of the contract and an award amount, based upon a judgmental evaluation by the government, sufficient to provide motivation for excellence in contract performance.

They are costly to administer and appropriate for level of effort services that can only be subjectively measured.

63
Q

A COST-PLUS-FIXED-FEE CONTRACT provides for payment of a negotiated fee

A

that is fixed at the inception of the contract and that does not vary with actual costs incurred, though it may be adjusted as a result of changes in the work to be performed under the contract.

There are two types:
completion form (clearly defined task with a definite goal and specific end product) and
term form (scope of work described in general terms).

Completion form is preferred. This contract type is costly to administer and is the least preferred type because the contractor assumes no financial risk. Appropriate for research and development.

64
Q

D. INCENTIVE CONTRACTS (FAR 16.4)

A

Incentive contracts are appropriate when a firm-fixed-price contract is not appropriate and the required supplies/services can be acquired at lower costs and, in certain instances, with improved delivery or technical performance by relating the amount of profit or fee payable to the contractor’s performance. Incentives can be applied to cost, technical performance, and/or delivery.

65
Q

A FIXED-PRICE INCENTIVE CONTRACT is a fixed-price contract

A

that provides for adjustment of profit and establishment of the final contract price by applying a formula based on the relationship of total final negotiated cost to total target cost.

There are two forms:
firm target-firm target cost, target profit, and profit-sharing formula negotiated into basic contract, with profit adjusted upon contract completion;
and successive targets-initial cost and profit targets negotiated into contract but final cost target (firm) not negotiated until sometime during performance. Appropriate for development and production.

66
Q
A
67
Q

A FIXED-PRICE CONTRACT WITH AN AWARD FEE is

A

appropriate when the government wishes to motivate a contractor and other incentives cannot be used because contractor performance cannot be measured objectively.

Such contracts include a fixed price (including normal profit) for the effort. This price is paid for satisfactory performance.

Award fee earned (if any) is paid in addition to that fixed price. This contract type is appropriate when the administrative cost of conducting award-fee evaluations is not expected to exceed the expected benefits; procedures have been established for conducting the award-fee evaluation; the award-fee board has been established; and an individual above the level of the contracting officer approved the fixed-price-award-fee incentive.

There are two forms of cost-reimbursement incentive contracts: cost-plus-incentive-fee and cost-plus-award-fee (reference paragraph c).

68
Q

E. INDEFINITE-DELIVERY CONTRACTS

A

Indefinite-delivery contracts are appropriate when the exact times and/or quantities of future deliveries are not known at the time of contract award. There are three types:

69
Q

A DEFINITE-QUANTITY CONTRACT provides

A

for delivery of a definite quantity of specific supplies or services for a fixed period, with deliveries or performance to be scheduled at designated locations upon order.

It is appropriate when it can be determined in advance that a definite quantity of supplies or services will be required during the contract period and the supplies or services are regularly available or will be available after a short lead time.

70
Q

A REQUIREMENTS CONTRACT provides

A

for acquisition of all actual purchase requirements of designated government activities for specific supplies or services during a specified period, with deliveries or performance to be scheduled by placing orders.

It is appropriate for acquiring supplies or services when the government anticipates recurring requirements but cannot predetermine the precise quantities of supplies or services that designated government activities will need during a definite period.

71
Q

An INDEFINITE-QUANTITY contract provides

A

for an indefinite quantity, within stated limits, of specific supplies or services to be furnished during a fixed period, with deliveries or performance to be scheduled by placing orders.

Quantity limits may be expressed in terms of numbers of units or as dollar values. The contract shall require the government to order and the contractor to furnish at least a stated minimum quantity of supplies or services.

In addition, if ordered, the contractor shall furnish any additional quantities, not to exceed the stated maximum.

The contracting officer should use an indefinite-quantity contract only when a recurring need is anticipated. The government prefers to make multiple awards.

The contracting officer must, to the maximum extent practicable, give preference to making multiple awards under a single solicitation for the same or similar supplies or services to two or more sources. (Exception: indefinite-quantity contracts for advisory and assistance services.)

72
Q

The contracting officer must provide each awardee a fair opportunity to be considered for each order exceeding the MPT issued under multiple delivery-order contracts or multiple task-order contracts.

Exceptions include:

A
  1. Urgency of need results in an unacceptable delay;
  2. Only one awardee is capable of performing;
  3. The order must be issued on a sole-source basis in the interest of economy and efficiency as a logical follow-on to an order already issued under the contract;
  4. It is necessary to place an order to satisfy a minimum guarantee;
  5. For orders exceeding the simplified acquisition threshold a statute expressly authorizes or requires that the purchase be made from a specified source; and
  6. In accordance with section 1331 of Public Law 111-240 (15 U.S.C. 644(r)), contracting officers may, at their discretion, set aside orders for any of the small business concerns identified in 19.000(a)(3). When setting aside orders for smallbusiness concerns, the specific small business program eligibility requirements identified in part 19 apply. Orders placed under a task-order contract or delivery-order contract awarded by another agency (i.e., a governmentwide acquisition contract or multiagency contract) are not exempt from developing acquisition plans (see subpart 7.1), and an information technology acquisition strategy (see part 39). In addition, placing such orders may not be used to circumvent conditions and limitations imposed on the use of funds (e.g., 31 U.S.C. 1501(a)(1)).
73
Q

Multiple-award contracts for the same or similar services, where the government intends to award a contract to each qualifying offeror, are not required

A

to have price or cost as an evaluation factor. If cost and price are not evaluated, for contract award, they must be considered for orders under that contract.

74
Q

F. TIME-AND-MATERIALS, LABOR-HOUR, AND LETTER CONTRACTS (FAR 16.6)

TIME-AND-MATERIALS CONTRACTS provide

A

for acquiring supplies/services on the basis of direct labor hours at specified fixed hourly rates that include wages, overhead, profit, and materials (at cost).

They may be used only when it is not possible at the time of placing the contract to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence.

This contract type is appropriate for engineering and design services.

75
Q

LABOR-HOUR CONTRACTS are

A

a type of time-and-materials contract differing only in that materials are not furnished by the contractor (often used in conjunction with other contract types).

76
Q

LETTER CONTRACTS are

A

written, preliminary contractual instruments that authorize the contractor to begin immediately manufacturing supplies or performing services.

They must include price ceiling (“not to exceed”) and milestones for definitization.

This contract type is appropriate only when the government’s interests demand that the contractor be given a binding commitment so that work can commence immediatelyand it is not possible to negotiate a definitive contract in sufficient time. It must be superseded by a definitized contract at the earliest possible date.

77
Q

G. AGREEMENTS (FAR 16.7)
A BASIC AGREEMENT is a written

A

instrument of understanding that contains contract clauses applying to future contracts between the parties during its term and contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the basic agreement.
They are not contracts.

78
Q

BASIC ORDERING AGREEMENTS are

A

written instruments of understanding that contain terms and conditions that apply to future orders; a description of supplies and services to be provided; and methods for pricing, issuing, and delivering future orders under the basic ordering agreement. They are not contracts.

CFCM Review Class (82 decks)

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