Government Contracts
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Overview
• What is a Government Contract?
• Authority to Enter into Government
Contracts
• Four Phases of Government Contracts
• The Role of the Government Contract
Professional
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Sources
• Statutes
• Federal Acquisition Regulation (FAR)
• 48 C.F.R. Chapter 1 (FAR Council)
• http://farsite.hill.af.mil/
• Don’t forget FAR Supplements…
• Case Law—administrative cases and
Federal cases
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What is a Government
Contract?
• Offer, Acceptance, Consideration…
• Government is a party (of course)
• Specialized statutes, regulations, and
case law
• Many differences from common law: e.g.,
socioeconomic policy, contract changes,
contract terminations, etc….
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FAR Definition of a
“Contract”
Definition:
“...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…”
FAR 2.101
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General Categories
of Government Contracts
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Supplies
Construction
Services
Research and Development (R&D)
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Every Good Government
Procurement System Has…
• Competition
• Transparency
• Integrity
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Government Authority
• Who has the authority to bind the
Government with a contract?
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Government Authority
• General Rule: Only someone with
actual authority may bind the
Government
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Government Authority
• Agency Heads (FAR 1.601)
• By virtue of their positions (e.g.,
SecAF)
• Delegate down to Senior Center
Contracting Official (SCCO)
• Folks with warrants (FAR 1.602)
• Contracting Officers (COs)
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Government Authority
• HCAs appoint COs IN WRITING
(WARRANT)
• Warrant must be posted (no secrets!)
• May include further limitations (e.g.
dollar limits)
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Government Authority
• What about other folks?
• Apparent authority—not recognized
• Ratification (of unauthorized act)
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Contractor Authority
• All types of authority apply:
• Actual
• Apparent
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Phases of Government
Contracts
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4 Phases of Government
Contracts
• Acquisition Planning
• Pre-Award (Source Selection)
• Post-Award (Performance)
• Close-out
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Acquisition Planning
• KEY to successful procurement
• Basically, looking at:
• What do we need? (user)
• How are we going to get it? (contracting)
• How are we going to pay for it? (finance)
• Are we following the rules? (legal)
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Acquisition Planning:
Basic Contract TYPES
• Two Basic Types:
• Fixed Price
• Cost Reimbursement
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Acquisition Planning:
Basic Contract TYPES
• Fixed Price Contract
(FAR Subpart 16.2)
• Set, predetermined price
• Who bears the risk?
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Acquisition Planning:
Basic Contract TYPES
• Fixed Price Contract
(FAR Subpart 16.2)
• Set, predetermined price
• Contractor bears risk of
increased costs (bound to
perform at specified price)
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Acquisition Planning:
Basic Contract TYPES
•Cost Reimbursement
Contract (FAR Subpart
16.3)
•Government pays
contractor’s costs of
performance (plus a
“fee”)
•Who bears the risk?
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Acquisition Planning:
Basic Contract TYPES
•Cost Reimbursement
Contract (FAR Subpart
16.3)
•Government pays
contractor’s costs of
performance (plus a
“fee”)
•Government bears risk
of increased costs
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Acquisition Planning:
Contract TYPES—What else?
• Incentive Contracts
• Level-of-Effort Contracts
• Variable Quantity Contracts
• e.g., IDIQ
• e.g., Requirements
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Acquisition Planning:
Contract METHODS
• Sealed Bidding (FAR Part 14)
• Price is the only basis for
award
• Invitation for Bids (IFBs)
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Acquisition Planning:
Contract METHODS
• Negotiated Procurements
(FAR Part 15)
• Various factors (inc. price
and past performance)
• Best value
• Request for Proposals
(RFPs)
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Acquisition Planning:
Contract METHODS
• Commercial Items (CI) and Services (FAR
Part 12)
• Definition of CI and Services
• Phonebook Test
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Acquisition Planning:
Contract METHODS
• Simplified Acquisitions (FAR Part 13)
• Under $3,000 (Micro-purchase)
• $3,000 to $100k (Simplified acquisition
threshold--SAT)
• Up to $5.5M (SAT for commercial items)
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4 Phases of Government
Contracts
• Acquisition Planning
• Pre-Award (Source Selection)
• Post-Award (Performance)
• Close-Out
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Pre-Award (Source Selection):
Competition
• Every contract requires competition
• Micro-purchases (under $3,000)
- “reasonable price”-FAR 13.202
• Between $3,000 and Simplified
Acquisition Threshold (SAT)
- “reasonable number of
sources” (“Rule of 3”)-FAR 13.104
• Over SAT-Competition in Contracting Act
- Full and open competition-FAR 6.101
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Pre-Award (Source Selection):
Competition
• Full and open competition AFTER EXCLUSION OF
SOURCES FAR Subpart 6.2
• e.g., contracts set aside for small business, etc.
• OTHER THAN full and open competition FAR
Subpart 6.3
• requires JUSTIFICATION & APPROVAL (J&A);
• e.g., only one source exists
• e.g., “unusual and compelling urgency”
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Pre-Award (Source Selection):
Advertising
• Over $25,000
• Government-wide Point of Entry
(GPE) -- www.eps.gov or
www.fedbizopps.gov
• $10,000 to $25,000
• Posting in a public place
• Under $10,000
• No requirement
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Pre-Award (Source Selection):
Evaluation of Offers
• Responsibility (FAR 9.103)
• A Government contract shall be
awarded only to a RESPONSIBLE
contractor
• Responsiveness (FAR 14.301)
• Offers must meet ALL essential
requirements of the solicitation (only
for sealed bids)
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Pre-Award (Source Selection):
Bid Protests
• What are they?
• Basically, offerors or potential offerors
challenging a solicitation or a contract
award
• Various Remedies—inc. possible STAY…
• Of Award—Pre-Award
• Of Performance—Post-Award
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Pre-Award (Source Selection):
Bid Protests
• Where are they filed?
• Agency Protests (FAR Subpart 33.1)
• Government Accountability Office
(GAO)
• Court of Federal Claims (COFC)
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4 Phases of Government
Contracts
• Acquisition Planning
• Pre-Award (Source Selection)
• Post-Award (Performance)
• Close-out
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Post-Award (Performance)
• The “Life” of the Contract
• Contract Administration
• Contract Changes
• Claims/Disputes
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Post-Award (Performance):
Contract Administration
• Contract Administration
• Primarily conducted by contracting office personnel
(along w/Program Management and functional
quality assurance folks)
• Government should not wait until there is a problem
to involve JA or DCMA
• KEY: Foster strong relationships with
all resources available
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Post-Award (Performance):
Changes/Bilateral Modifications
• Contract Changes (FAR Subpart 43.1)
• Changes Clause allows “minor” changes
• EQUITABLE ADJUSTMENT in price
• Change must be:
• WITHIN SCOPE (of work), and
• Made by one with PROPER AUTHORITY (CO)
• Unilateral Modifications
• Bilateral Modifications
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Post-Award (Performance):
Contract Disputes
• Contract Disputes (FAR Subpart 33.2)
• Administrative or judicial litigation between
the contractor and the agency, relating to
contract performance
• Starts with a CLAIM to the CO
• Adverse final decision by CO perfects appeal
to the Armed Services Board of Contract
Appeals (ASBCA) or the Court of Federal
Claims (COFC)
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4 Phases of Government
Contracts
• Acquisition Planning
• Pre-Award (Source Selection)
• Post-Award (Performance)
• Close-Out
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Close-Out
• “Natural” Causes
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Close-Out
• Early Termination
• Convenience
• Default
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Close-Out
• Termination for Convenience of the
Government (T4C) (FAR Part 49)
• May be for any reason, or for no reason at all
• Financially O.K. for
the contractor
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Close-Out
• Termination for the Default
(T4D) (FAR Part 49)
• Contractor’s unexcused, present or
prospective, failure to perform
• Contractor may have
to pay for Gov’t
reprocurement costs
and risks debarment
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Role of the Government
Contract Professional
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Legal Reviews
Legal Advice
Business Counsel
Litigation Support
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Role of the Government Contract
Professional: Legal Reviews
• Contract File Review
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Funding Document
Contract Document
Statement of Work (SOW)
Price Negotiation Memorandum (PNM)
Technical Evaluation
Other Contract Documents
Talk to the Contracting Officer
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Summary
• What Is a Government Contract?
• Authority to Enter into Government
Contracts
• Four Phases of Government Contracts
• The Role of the Government Contract
Professional
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