NCMA Certification Study
Group
CDC PGO
Feb-Mar, 2010
NCMA Certification
Study Group
Contract Essentials
Commercial Contract:
An agreement between persons which obliges
each party to do or not to do a certain thing.
Technically, a valid contract requires an offer
and an acceptance of that offer, and, in common
law countries, consideration.
• 2 or more parties that have capacity to
contract
• Agreement – Offer, Acceptance & Mutual
Assent
• Something of Value (Consideration)
• Legal
• Be in the correct form “Formalities” (e.g., in
writing)
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The Federal Acquisition Regulation
(https://www.acquisition.gov/far/index.html)
• Is the basic governing document
• Is reflective of Public Law
• Can be supplemented by Agency Regulations
(Health & Human Services Acquisition
Regulation HHSAR)
• Can have its prescriptions waived only through
a rigorous process
• Is not just “guidance.” For all practical
purposes it should be considered tantamount to
law.
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FAR 1.103 -- Authority.
(a) The development of the FAR System is in
accordance with the requirements of the Office of
Federal Procurement Policy Act of 1974 (Pub. L.
93-400), as amended by Pub. L. 96-83.
(b) The FAR is prepared, issued, and maintained,
and the FAR System is prescribed jointly by the
Secretary of Defense, the Administrator of
General Services, and the Administrator,
National Aeronautics and Space Administration,
under their several statutory authorities.
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FAR General Structure and Subparts
There are 8 Subchapters, an Appendix and an Index
• Subchapter A—General
• Subchapter B—Competition and Acquisition
Planning
• Subchapter C—Contracting Methods and
Contract Types
• Subchapter D—Socioeconomic Programs
• Subchapter E—General Contracting
Requirements
• Subchapter F—Special Categories of Contracting
• Subchapter G—Contract Management
• Subchapter H—Clauses and Forms
Appendix
Index
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FAR General Structure and Subparts
Subchapter A—General
Part 1—Federal Acquisition Regulations System
Part 2—Definitions of Words and Terms
Part 3—Improper Business Practices and Personal Conflicts of
Interest
Part 4—Administrative Matters
Subchapter B—Competition and Acquisition Planning
Part 5—Publicizing Contract Actions
Part 6—Competition Requirements
Part 7—Acquisition Planning
Part 8—Required Sources of Supplies and Services
Part 9—Contractor Qualifications
Part 10—Market Research
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Part 11—Describing Agency Needs
Part 12—Acquisition of Commercial Items
Subchapter C—Contracting Methods and Contract Types
Part 13—Simplified Acquisition Procedures
Part 14—Sealed Bidding
Part 15—Contracting by Negotiation
Part 16—Types of Contracts
Part 17—Special Contracting Methods
Part 18—Reserved
Subchapter D—Socioeconomic Programs
Part 19—Small Business Programs
Part 22—Application of Labor Laws to Government
Acquisitions
Part 23—Environment, Energy and Water Efficiency,
Renewable Energy Technologies, Occupational Safety,
and Drug-Free Workplace
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Part 24—Protection of Privacy and Freedom of Information
Part 25—Foreign Acquisition
Part 26—Other Socioeconomic Programs
Subchapter E—General Contracting Requirements
Part 27—Patents, Data, and Copyrights
Part 28—Bonds and Insurance
Part 29—Taxes
Part 30—Cost Accounting Standards Administration
Part 31—Contract Cost Principles and Procedures
Part 32—Contract Financing
Part 33—Protests, Disputes, and Appeals
Subchapter F—Special Categories of Contracting
Part 34—Major System Acquisition
Part 35—Research and Development Contracting
Part 36—Construction and Architect-Engineer Contracts
Part 37—Service Contracting
Part 38—Federal Supply Schedule Contracting
Part 39—Acquisition of Information Technology
Part 41—Acquisition of Utility Services
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Subchapter G—Contract Management
Part 42—Contract Administration and Audit Services
Part 43—Contract Modifications
Part 44—Subcontracting Policies and Procedures
Part 45—Government Property
Part 46—Quality Assurance
Part 47—Transportation
Part 48—Value Engineering
Part 49—Termination of Contracts
Part 50—Extraordinary Contractual Actions
Part 51—Use of Government Sources by Contractors
Subchapter H—Clauses and Forms
Part 52—Solicitation Provisions and Contract Clauses
Part 53—Forms
Appendix
Index
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Contracts basic:
A FAR (Government ) Contract is:
A mutually binding legal relationship obligating the seller to
furnish the supplies or services (including construction) and the buyer to
pay for them. It includes all types of commitments that obligate the
Government to an expenditure of appropriated funds and that, except as
otherwise authorized, are in writing. In addition to bilateral instruments,
contracts include (but are not limited to) awards and notices of awards;
job orders or task letters issued under basic ordering agreements; letter
contracts; orders, such as purchase orders, under which the contract
becomes effective by written acceptance or performance; and bilateral
contract modifications. Contracts do not include grants and cooperative
agreements covered by 31 U.S.C.6301, et seq.
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Contracts Basic – A Contract is:
• Mutually binding
• Legal relationship
• Obligates the seller to furnish the supplies or
services (including construction)
• Obligates the buyer to pay for them
• Includes all types of commitments that obligate
the Government to an expenditure of appropriated
funds and that, except as otherwise authorized,
are in writing.
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Contracts include (but are not limited to):
• Awards and notices of awards
• Job orders or task letters issued under basic
ordering agreements
• Letter contracts
• Orders, such as purchase orders, under which
the contract becomes effective by written
acceptance or performance;
• And bilateral contract modifications
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Peculiar to Federal Government
Contracts
• Must be in writing
• Must be signed by a Warranted Contracting
Officer
• “Apparent authority” insufficient
• Must be fully funded or contract must state
level of funding
• Must contain federally mandated clauses
• May require a series of certifications, e.g.,
Certification of Current Cost or Pricing Data
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A Contract is NOT a Grant (Grants & Coop Act 1977)
• A Contract is formed to benefit the Government
• Contracting is inherent to function of the Executive
Department of Government
• A Grant benefits mankind (stimulation or aid)
• Granting is NOT inherent to the function of the
Executive but must be specifically authorized in law.
• Different rules apply.
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Contract Management (From NCMA)
Process of managing:
• Contracts,
• Deliverables,
• Deadlines,
• Contract terms and conditions,
• Ensuring customer satisfaction
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Contract Life Cycle:
• Acquisition Planning (Mkt Research, Contract
type, acquisition strategy)
• Pre-award – requirements, proposal evaluation,
negotiation
• Award – contract, notifying vendors, addresseing
mistakes and protests
• Post Award – contract admin – modifications –
contract performance, payment, termination or
closeout
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Contract Stakeholders
• Requiring organization (end user) Program
Office
• Finance office
• Contracting Officer
• Company or org that provides the item or
service, including subcontractors
• Institution that finances (“source of funding”) the
company
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Organizational Influences
• Organizational management, e.g., change in
focus or approach
• Technological change
• Competition (best practices)
• Efficient and effective contracting process
required to be market leader.
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Business Competencies
• Management – Planning, Organizing, Directing
& Controlling
• Skills: Technical, Communication, Human
relations, Time management, Technology
• Operations Management
o Correct quantity of necessary inputs
Success of transformation process
o Produce correct outputs – quality and
quantity
o
Feedback – informational, corrective,
reinforced
o
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Business Competencies Continued…
• Accounting – capturing financial information
• Budgeting – quantitative plan of operations
• Economics – competition, S&D, inflation, effect
of Government policies
• Information Technology – computer based info
systems
• Marketing
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Business Competencies Continued…Legal
Environment
• Uniform Commercial Code (49 States & LA, part)
Established by Joint Effort -- Nat. Conf. of
Commissioners & American Law Institute
o
Consists of nine articles (see page 15 –
CMBK)
o
• Federal Acquisition Regulation
• International Contracting Laws – For. Corrupt
Practices, Export Regs, Intl Traffic in Arms, AntiBoycott, Foreign Laws and Customs
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Business Competencies Continued…Legal
Environment
• Standards of Conduct
• Formal, written statements issued by Govt,
Businesses, Prof Organizations, etc.
• Ethics – how one should act based on “values” –
core beliefs.
• International Contracting Laws – For. Corrupt
Practices, Export Regs, Intl Traffic in Arms,
Anti-Boycott, Foreign Laws and Customs
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Deviations (FAR 1.4)
1.401 Definition.
“Deviation” means any one or combination of the following:
(a) The issuance or use of a policy, procedure, solicitation provision (see
definition in 2.101), contract clause (see definition in 2.101), method, or
practice of conducting acquisition actions of any kind at any stage of the
acquisition process that is inconsistent with the FAR.
(b) The omission of any solicitation provision or contract clause when its
prescription requires its use.
(c) The use of any solicitation provision or contract clause with modified or
alternate language that is not authorized by the FAR (see definition of
“modification” in 52.101(a) and definition of “alternate” in 2.101(a)).
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Cont.
Deviations (FAR 1.4)
1.401 Definition.
(d) The use of a solicitation provision or contract clause prescribed by the
FAR on a “substantially as follows” or “substantially the same as” basis (see
definitions in 2.101 and 52.101(a)), if such use is inconsistent with the
intent, principle, or substance of the prescription or related coverage on the
subject matter in the FAR.
(e) The authorization of lesser or greater limitations on the use of any
solicitation provision, contract clause, policy, or procedure prescribed by the
FAR.
(f) The issuance of policies or procedures that govern the contracting
process or otherwise control contracting relationships that are not
incorporated into agency acquisition regulations in accordance with
1.301(a).
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Deviations (FAR 1.4)
1.402 Policy
Unless precluded by law, executive order, or regulation, deviations from
the FAR may be granted as specified in this subpart when necessary to
meet the specific needs and requirements of each agency. The
development and testing of new techniques and methods of acquisition
should not be stifled simply because such action would require a FAR
deviation. The fact that deviation authority is required should not, of
itself, deter agencies in their development and testing of new techniques
and acquisition methods. Refer to 31.101 for instructions concerning
deviations pertaining to the subject matter of Part 31, Contract Cost
Principles and Procedures. Deviations are not authorized with respect to
30.201-3 and 30.201-4, or the requirements of the Cost Accounting
Standards Board (CASB) rules and regulations (48 CFR Chapter 99
(FAR Appendix)). Refer to 30.201-5 for instructions concerning waivers
pertaining to Cost Accounting Standards.
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Deviations (FAR 1.4)
1.403 Individual deviations.
Individual deviations affect only one contract action, and, unless
1.405(e) is applicable, may be authorized by the agency head. The
contracting officer must document the justification and agency approval
in the contract file.
1.404 Class deviations
Class deviations affect more than one contract action. When an agency
knows that it will require a class deviation on a permanent basis, it
should propose a FAR revision, if appropriate. Civilian agencies, other
than NASA, must furnish a copy of each approved class deviation to the
FAR Secretariat.
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1.404 Class deviations. Cont.
(a) For civilian agencies except NASA, class deviations may be authorized
by agency heads or their designees, unless 1.405(e) is applicable.
Delegation of this authority shall not be made below the head of a contracting
activity. Authorization of class deviations by agency officials is subject to the
following limitations:
(1) An agency official who may authorize a class deviation, before doing so,
shall consult with the chairperson of the Civilian Agency Acquisition Council
(CAA Council), unless that agency official determines that urgency precludes
such consultation.
(2) Recommended revisions to the FAR shall be transmitted to the FAR
Secretariat by agency heads or their designees for authorizing class
deviations.
NOTE:
(b) And (c) pertain to DoD and NASA
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Determinations and Findings (FAR 1.7)
1.701 Definition.
“Determination and Findings” means a special form of written approval by an
authorized official that is required by statute or regulation as a prerequisite to
taking certain contract actions. The “determination” is a conclusion or decision
supported by the “findings.’’ The findings are statements of fact or rationale
essential to support the determination and must cover each requirement of
the statute or regulation.
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1.702 General.
(a) A D&F shall ordinarily be for an individual contract action. Unless
otherwise prohibited, class D&F’s may be executed for classes of
contract actions (see 1.703). The approval granted by a D&F is
restricted to the proposed contract action(s) reasonably described
in that D&F. D&F’s may provide for a reasonable degree of
flexibility. Furthermore, in their application, reasonable variations
in estimated quantities or prices are permitted, unless the D&F
specifies otherwise.
(b) When an option is anticipated, the D&F shall state the
approximate quantity to be awarded initially and the extent of the
increase to be permitted by the option.
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Minimum Contents of D&F – NCMA
•
•
•
•
•
•
Identification of Agency
Identification of Contracting Activity
Specific identify the document as a D& F
Nature and description of the action being approved
Citation of the appropriate statue and/or regulation
Findings that detail the particular circumstances, facts,
or reasoning essential to support the determination
• The determination based on the findings that the
proposed action is justified under the applicable statue
or regulation
• An expiration date
• If required, the signature of the authorized official and
date signed.
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Conventions. (FAR 1.108)
The following conventions provide guidance for interpreting the FAR:
(a) Words and terms. Definitions in Part 2 apply to the entire
regulation unless specifically defined in another part, subpart,
section, provision, or clause. Words or terms defined in a specific
part, subpart, section, provision, or clause have that meaning
when used in that part, subpart, section, provision, or clause.
Undefined words retain their common dictionary meaning.
(b) Delegation of authority. Each authority is delegable unless
specifically stated otherwise (see 1.102-4(b)).
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Conventions. (FAR 1.108) Cont.
(c) Dollar thresholds. Unless otherwise specified, a specific dollar
threshold for the purpose of applicability is the final anticipated dollar
value of the action, including the dollar value of all options. If the
action establishes a maximum quantity of supplies or services to be
acquired or establishes a ceiling price or establishes the final price to
be based on future events, the final anticipated dollar value must be
the highest final priced alternative to the Government, including the
dollar value of all options.
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Conventions. (FAR 1.108) Cont.
(d) Application of FAR changes to solicitations and contracts. Unless
otherwise specified—
(1) FAR changes apply to solicitations issued on or after the effective date of
the change;
(2) Contracting officers may, at their discretion, include the FAR changes in
solicitations issued before the effective date, provided award of the
resulting contract(s) occurs on or after the effective date; and
(3) Contracting officers may, at their discretion, include the changes in any
existing contract with appropriate consideration
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Conventions. (FAR 1.108) Cont.
(e) Citations. When the FAR cites a statute, Executive order, Office
of Management and Budget circular, Office of Federal
Procurement Policy policy letter, or relevant portion of the Code
of Federal Regulations, the citation includes all applicable
amendments, unless otherwise stated.
(f) Imperative sentences. When an imperative sentence directs
action, the contracting officer is responsible for the action, unless
another party is expressly cited.
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Federal Acquisition Regulation
(FAR)
Overview
FAR Part 5
Publicizing Contract Actions
Publicizing Contractual Actions - Part 5
5.1 Dissemination of Information
5.2 Synopses of Proposed Contract Actions
5.3 Synopses of Contract Awards
5.4 Release of Information
5.5 Paid Advertisements
5.6 Publicizing Multi-Agency Use Contracts
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Government Point of Entry (GPE) means the
single point where Government business
opportunities greater than $25,000, including
synopses of proposed contract actions,
solicitations, and associated information, can be
accessed electronically by the public. The GPE is
located at http://www.fedbizopps.gov.
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Synopses:
In addition to contract solicitations, awards of
contracts $25K or over must also be synopsized.
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Federal Acquisition Regulation
(FAR)
Overview
FAR Part 6
Competition Requirements
Part 6—Competition Requirements
6.1 Full and Open Competition
6.2 Full and Open Competition After Exclusion
of Sources
6.3 Other Than Full and Open Competition
6.4 Sealed Bidding and Competitive Proposals
6.5 Competition Advocates
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Part 6—Competition Requirements
6.1 Full and Open Competition
6.101 Policy.
(a) 10 U.S.C. 2304 and 41 U.S.C. 253 require, with certain limited
exceptions (see Subparts 6.2 and 6.3) that contracting officers shall
promote and provide for full and open competition in soliciting offers
and awarding Government contracts.
(b) Contracting officers shall provide for full and open competition
through use of the competitive procedure(s) contained in this subpart
that are best suited to the circumstances of the contract action and
consistent with the need to fulfill the Government’s requirements
efficiently (10 U.S.C. 2304 and 41 U.S.C. 253).
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Exceptions to Full and Open
Competition
6.202 Establishing or maintaining alternative
sources.
6.203 Set-asides for small business
concerns.
6.204 Section 8(a) competition.
6.206 Set-asides for service-disabled
veteran-owned small business concerns.
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Other than Full and Open Competition
• 6.302-1 Only one responsible source and no
other supplies or services will satisfy agency
requirements.
• 6.302-2 Unusual and compelling urgency.
• 6.302-3 Industrial mobilization; engineering,
developmental, or research capability; or expert
services.
• 6.302-4 International agreement.
• 6.302-5 Authorized or required by statute.
• 6.302-6 National security.
• 6.302-7 Public interest.
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Federal Acquisition Regulation
Part 7: Acquisition Planning
Part 8: Required Sources
Part 9: Contractor Qualifications
Part 10: Market Research
CDC PGO
Feb-Mar, 2010
7.102 Policy.
(a) Agencies shall perform acquisition planning and conduct
market research (see Part 10) for all acquisitions in order to
promote and provide for—
(1) Acquisition of commercial items
(2) Full and open competition (see Part 6)
(b) This planning shall integrate the efforts of all personnel
responsible for significant aspects of the acquisition. The
purpose of this planning is to ensure that the Government
meets its needs in the most effective, economical, and timely
manner.
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7.202 Policy.
(a) Agencies are required by 10 U.S.C. 2384(a) and 41
U.S.C. 253f to procure supplies in such quantity as—
(1) Will result in the total cost and unit cost most advantageous to the
Government, where practicable; and
(2) Does not exceed the quantity reasonably expected to be required by
the agency.
(b) Each solicitation for a contract for supplies is required, if practicable, to
include a provision inviting each offeror responding to the solicitation—
(1) To state an opinion on whether the quantity of the supplies proposed
to be acquired is economically advantageous to the Government; and
(2) If applicable, to recommend a quantity or quantities which would be
more economically advantageous to the Government. Each such
recommendation is required to include a quotation of the total price and the
unit price for supplies procured in each recommended quantity.
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Subpart 7.3-Contractor Versus Government Performance
7.300 Scope of subpart.
This subpart prescribes policies and procedures for use in acquisitions of
commercial or industrial products and services subject to—
(a) OMB Circular No. A-76 (Revised) (the Circular), Performance of Commercial
Activities; and
(b) The Supplement to OMB Circular No. A-76.
7.301 Policy. The Circular provides that it is the policy of the Government to
(a) rely generally on private commercial sources for supplies and services, if
certain criteria are met, while recognizing that some functions are inherently
Governmental and must be performed by Government personnel, and (b) give
appropriate consideration to relative cost in deciding between Government
performance and performance under contract. In comparing the costs of
Government and contractor performance, the Circular provides that agencies shall
base the contractor’s cost of performance on firm offers.
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Part 8—Required Sources of Supplies and
Services
8.1 Excess Personal Property
8.4 Federal Supply Schedules
8.5 Acquisition of Helium
8.6 Acquisition from Federal Prison Industries, Inc.
8.7 Acquisition from Nonprofit Agencies Employing
People Who Are Blind or Severely Disabled
8.8 Acquisition of Printing and Related Supplies
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Part 9—Contractor Qualifications
9.1 Responsible Prospective Contractors
9.2 Qualifications Requirements
9.3 First Article Testing and Approval
9.4 Debarment, Suspension, and Ineligibility
9.5 Organizational and Consultant Conflicts of
Interest
9.6 Contractor Team Arrangements
9.7 Defense Production Pools and Research and
Development Pools
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10.001 Policy.
(a) Agencies must—
(1) Ensure that legitimate needs are identified and trade-offs evaluated to acquire
items that meet those needs;
(2) Conduct market research appropriate to the circumstances—
(i) Before developing new requirements documents for an acquisition by that agency;
(ii) Before soliciting offers for acquisitions with an estimated value in excess of the
simplified acquisition threshold;
(iii) Before soliciting offers for acquisitions with an estimated value less than the
simplified acquisition threshold when adequate information is not available and the
circumstances justify its cost;
(iv) Before soliciting offers for acquisitions that could lead to a bundled contract (15
U.S.C. 644(e)(2)(A)); and
(v) Agencies shall conduct market research on an ongoing basis, and take advantage
to the maximum extent practicable of commercially available market research
methods, to identify effectively the capabilities, including the capabilities of small
businesses and new entrants into Federal contracting, that are available in the
marketplace for meeting the requirements of the agency in furtherance of a
contingency operation or defense against or recovery from nuclear, biological,
chemical, or radiological attack;
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Federal Acquisition
Regulation
Subchapter C—
Contracting Methods and
Contract Types
CDC PGO
Feb-Mar, 2010
Part 13—Simplified Acquisition Procedures
Part 14—Sealed Bidding
Part 15—Contracting by Negotiation
15.1 Source Selection Processes and Techniques
15.2 Solicitation and Receipt of Proposals and
Information
15.3 Source Selection
15.4 Contract Pricing
15.5 Preaward, Award, and Postaward Notifications,
Protests, and Mistakes
15.6 Unsolicited Proposals
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15.2 Solicitation and Receipt of Proposals and Information
This subpart prescribes policies and procedures for—
(a) Exchanging information with industry prior to
receipt of proposals;
(b) Preparing and issuing requests for proposals (RFPs)
and requests for information (RFIs); and
(c) Receiving proposals and information.
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15.3 Source Selection
15.302 Source selection objective.
The objective of source selection is to select
the proposal that represents the best value.
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15.4 Contract Pricing
15.402 Pricing policy.
Contracting officers must—
(a) Purchase supplies and services from responsible sources at fair and reasonable prices.
In establishing the reasonableness of the offered prices, the contracting officer must not
obtain more information than is necessary. To the extent that cost or pricing data are not
required by 15.403-4, the contracting officer must generally use the following order of
preference in determining the type of information required:
(1) No additional information from the offeror,
(2) Information other than cost or pricing data:
(i) Information related to prices
(ii) Cost information, that does not meet the definition of cost or pricing data at 2.101.
(3) Cost or pricing data.
(b) Price each contract separately and independently and not—
(1) Use proposed price reductions under other contracts as an evaluation factor; or
(2) Consider losses or profits realized or anticipated under other contracts.
(c) Not include in a contract price any amount for a specified contingency to the extent that
the contract provides for a price adjustment based upon the occurrence of that contingency
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Part 16—Types of Contracts
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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Contract types vary according to—
(1) The degree and timing of the responsibility assumed by the contractor for
the costs of performance; and
(2) The amount and nature of the profit incentive offered to the contractor for
achieving or exceeding specified standards or goals.
(b) The contract types are grouped into two broad categories: fixed-price
contracts (see Subpart 16.2) and cost-reimbursement contracts (see
Subpart 16.3). The specific contract types range from firm-fixed-price, in which
the contractor has full responsibility for the performance costs and resulting
profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal
responsibility for the performance costs and the negotiated fee (profit) is fixed.
In between are the various incentive contracts
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16.2 Fixed-Price Contracts
16.202 Firm-fixed-price contracts.
16.202-1 Description.
A firm-fixed-price contract provides for a price that is not subject to any
adjustment on the basis of the contractor’s cost experience 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.
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16.202-2 Application.
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) There is adequate price competition;
(b) 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;
(c) Available cost or pricing information permits realistic estimates of the
probable costs of performance; or
(d) 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.
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Cost Reimbursement Type -- 16.301-1 Description.
Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the
extent prescribed in the contract. These contracts establish an estimate of total cost for the
purpose of obligating funds and establishing a ceiling that the contractor may not exceed
(except at its own risk) without the approval of the contracting officer.
16.301-2 Application.
Cost-reimbursement contracts are suitable for use only when uncertainties involved in contract
performance do not permit costs to be estimated with sufficient accuracy to use any type of
fixed-price contract.
16.301-3 Limitations.
(a) A cost-reimbursement contract may be used only when—
(1) The contractor’s accounting system is adequate for determining costs applicable to the
contract; and
(2) Appropriate Government surveillance during performance will provide reasonable
assurance that efficient methods and effective cost controls are used.
(b) The use of cost-reimbursement contracts is prohibited for the acquisition of commercial
items (see Parts 2 and 12).
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16.5 Indefinite-Delivery Contracts
16.501-2 General.
(a) There are three types of indefinite-delivery contracts: definitequantity contracts, requirements contracts, and indefinitequantity contracts. The appropriate type of indefinite-delivery
contract may be used to acquire supplies and/or services when the
exact times and/or exact quantities of future deliveries are not
known at the time of contract award. Pursuant to 10 U.S.C. 2304d
and section 303K of the Federal Property and Administrative
Services Act of 1949, requirements contracts and indefinite-quantity
contracts are also known as delivery order contracts or task order
contracts.
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16.601 Time-and-materials contracts.
(a) Description. A time-and-materials contract provides
for acquiring supplies or services on the basis of—
(1) Direct labor hours at specified fixed hourly rates that
include wages, overhead, general and administrative
expenses, and profit; and
(2) Materials at cost, including, if appropriate, material
handling costs as part of material costs.
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Federal Acquisition
Regulation
Part 12:
Acquisition of Commercial Items
CDC PGO
Feb-Mar, 2010
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Commercial item” means—
(1) Any item, other than real property, that is of a type
customarily used by the general public or by nongovernmental entities for purposes other than
governmental purposes, and—
(i) Has been sold, leased, or licensed to the general
public; or
(ii) Has been offered for sale, lease, or license to the
general public;
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12.207 Contract type.
Agencies shall use firm-fixed-price contracts or fixed-price
contracts with economic price adjustment for the acquisition of
commercial items. Indefinite-delivery contracts (see
Subpart 16.5) may be used where the prices are established
based on a firm-fixed-price or fixed-price with economic price
adjustment. Use of any other contract type to acquire
commercial items is prohibited. These contract types may be
used in conjunction with an award fee and performance or
delivery incentives when the award fee or incentive is based
solely on factors other than cost (see 16.202-1 and 16.203-1).
PGO
12.208 Contract quality assurance.
Contracts for commercial items shall rely on
contractors’ existing quality assurance systems as a
substitute for Government inspection and testing
before tender for acceptance unless customary
market practices for the commercial item being
acquired include in-process inspection. Any inprocess inspection by the Government shall be
conducted in a manner consistent with commercial
practice.
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12.209 Determination of price reasonableness.
While the contracting officer must establish price
reasonableness in accordance with 13.106-3, 14.408-2, or
Subpart 15.4, as applicable, the contracting officer should
be aware of customary commercial terms and conditions
when pricing commercial items. Commercial item prices are
affected by factors that include, but are not limited to, speed
of delivery, length and extent of warranty, limitations of
seller’s liability, quantities ordered, length of the
performance period, and specific performance
requirements. The contracting officer must ensure that
contract terms, conditions, and prices are commensurate
with the Government’s need.
PGO
12.210 Contract financing.
Customary market practice for some commercial
items may include buyer contract financing. The
contracting officer may offer Government financing
in accordance with the policies and procedures in
Part 32
PGO
Federal Acquisition
Regulation
Other Topics
CDC PGO
Feb-Mar, 2010
PGO
Contractor Financing
32.000
(a) Payment methods, including partial payments and progress payments based on
percentage or stage of completion;
(b) Loan guarantees, advance payments, and progress payments based on costs;
(c) Administration of debts to the Government arising out of contracts;
(d) Contract funding, including the use of contract clauses limiting costs or funds;
(e) Assignment of claims to aid in private financing;
(f) Selected payment clauses;
(g) Financing of purchases of commercial items;
(h) Performance-based payments; and
(i) Electronic funds transfer payments.
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Subpart 7.5—Inherently Governmental Functions
7.500 Scope of subpart.
The purpose of this subpart is to prescribe policies and
procedures to ensure that inherently governmental
functions are not performed by contractors. It implements
the policies of Office of Federal Procurement Policy
(OFPP) Policy Letter 92-1, Inherently Governmental
Functions.
7.503 Policy.
(a) Contracts shall not be used for the performance of
inherently governmental functions.
PGO
Subchapter D—Socioeconomic Programs
Part 19—Small Business Programs
19.1 Size Standards
19.2 Policies
19.3 Determination of Small Business Status for Small Business Programs
19.4 Cooperation with the Small Business Administration
19.5 Set-Asides for Small Business
19.6 Certificates of Competency and Determinations of Responsibility
19.7 The Small Business Subcontracting Program
19.8 Contracting with the Small Business Administration (The 8(a)
Program)
19.9 Very Small Business Pilot Program
19.10 Small Business Competitiveness Demonstration Program
19.11 Price Evaluation Adjustment for Small Disadvantaged Business
Concerns
19.12 Small Disadvantaged Business Participation Program 19.13
Historically Underutilized Business Zone (HUBZone) Program
19.14 Service-Disabled Veteran-Owned Small Business Procurement
Program
PGO
37.104 Personal services contracts.
(a) A personal services contract is characterized by the
employer-employee relationship it creates between the
Government and the contractor’s personnel. The
Government is normally required to obtain its employees
by direct hire under competitive appointment or other
procedures required by the civil service laws. Obtaining
personal services by contract, rather than by direct hire,
circumvents those laws unless Congress has specifically
authorized acquisition of the services by contract.
(b) Agencies shall not award personal services contracts
unless specifically authorized by statute
(e.g., 5 U.S.C.3109) to do so.
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Unauthorized Commitments
1.602-3 Ratification of unauthorized
commitments.
(a) Definitions.
“Ratification,” as used in this subsection, means the
act of approving an unauthorized commitment by an
official who has the authority to do so.
“Unauthorized commitment,” as used in this
subsection, means an agreement that is not binding
solely because the Government representative who
made it lacked the authority to enter into that
agreement on behalf of the Government.
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Contract Termination
• Termination for Cause (Default)
Lack of delivery of acceptable product on
schedule. May result in charging contractor with
the costs of reprocurement.
• Termination for Convenience
Work stopped at Government request, although
work was acceptable and on time. Contractor
can claim all allowable and allocable costs.
PGO