1 government contracts. 2 overview what is a government contract? authority to enter into government...

1Government ContractsGovernment 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

• 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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• 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”

Pre-Award (Source Selection):Competition

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• 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

Pre-Award (Source Selection):Advertising

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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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• 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)

Post-Award (Performance):Contract Disputes

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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

• Legal Reviews • Legal Advice• Business Counsel • Litigation Support

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Role of the Government Contract Professional: Legal Reviews

• Contract File Review• 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