AbilityOne Beneficial and Conflicting Clauses

Fil Tellez (703) 626-3108 Ftellez@sourceamerica.org

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Overview

• Our focus is on types of provisions and clauses found in your solicitations and contracts

• The focus is on AbilityOne Program covered actions. • We will review “how” they get into your solicitation or

contract and will cover: – The “types” of clauses that serve useful and positive

purpose and those that pose challenges – How AO1 may impact their implementation – And, you can share specific clauses or terms and

conditions that cause you “pause” and concern or you’ve discovered of benefit.

• But why do we really care?

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Principles of Contract Formation

• Offer • Acceptance • Consideration • Form • Legal We care because of the binding nature of our contract agreements!

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Federal Acquisition Regulation

• FAR establishes the provisions and clauses that will be included in a solicitation and contract. – FAR Part 52 describes the Solicitation Provisions

and Contract Clauses that are to be used in each solicitation and the resulting contract.

• Provisions apply only to solicitations • Clauses apply to contracts throughout the lifecycle of

the instrument – Each FAR Part and Subpart establishes rule,

regulation, policy and authority via provisions and clauses incorporated into each solicitation.

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AbilityOne Program “Nuances”

• Uniquely, there are some constraints on how provisions and clauses may be applied to AbilityOne Program covered contracts.

• AbilityOne Program covered contracts ARE: – Single source non-competitive negotiated

contracts – With prices established by law or regulation – And are required sources of supply and

service

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AbilityOne procurements are considered “other than competitive” procurements under the Competition in Contracting Act (CICA),

• Full and open competition need not be provided for when: (i) A statute expressly authorizes or requires that the acquisition be made through another agency or from a specified source

– FAR 6.302-5 (a) (1) and 6.302-5 (b)(2)

– Therefore, AO1 procurements are single source, non-competitive in nature.

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Prices are established under the AbilityOne Program by the U.S. AbilityOne Commission and therefore are exempt from submission of Certified Cost and Pricing Data by FAR .

• 15.403-1 Prohibition on obtaining certified cost or pricing data (2) When the contracting officer determines that prices agreed upon are based on prices set by law or regulation

– Prices are “negotiated” and a Recommended FMP is provided to the Commission for their final price determination.

– Commission Pricing Policy describes the method by which the FMP Recommendation will be achieved so the price is set by law and regulation.

– Therefore, Federal Agencies must submit to AO1 procedures.

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AbilityOne Program covered contracts are “required sources of supply and service””

• The 41 U.S.C. chapter 85 requires the Government to purchase supplies or services on the Procurement List, at prices established by the Committee, from AbilityOne participating nonprofit agencies if they are available within the period required. FAR Subpart 8.7, 8.704 Purchase priorities.

– Once a contract opportunity is placed on the Procurement List, it limits the federal agencies choice of procurement strategies

– It also limits the discretion a federal agency has to exercise or not the out year, option year or “follow on year” as it is called under AO1 nomenclature

– Therefore, option clauses are not implemented in the same manner as could otherwise be under conventional contracts.

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• The impact of AbilityOne Program “nuances” can be seen in many of the clauses that are added to your contracts.

• In order to help educate your federal agency procuring contracting officers as to what they can or not accomplish is an important aspect of determine whether a clause helps or hinders you in performance of the contract.

• Personally, “I believe all clauses are beneficial and intended to ensure fair and reasonable prices and delivery of services/product on time and to the quality requirements stipulated in the contract.”

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• Your “job one” is to ensure that the terms, conditions, provisions in solicitations and causes in your contract serve the best interest of both parties; you the NPA and your Federal Agency Customer.

• Hopefully this briefing will help you understand “how” those provisions and clauses end up in your contract.

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REMEMBER? FAR Impact

• FAR establishes the provisions and clauses that will be included in a solicitation and contract. – FAR Part 52 describes the Solicitation Provisions

and Contract Clauses that are to be used in each solicitation and the resulting contract.

• Provisions apply only to solicitations • Clauses apply to contracts throughout the lifecycle of

the instrument – Each FAR Part and Subpart establishes rule,

regulation, policy and authority via provisions and clauses incorporated into each solicitation.

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• Subpart 52.2—Text of Provisions and Clauses – Provisions and Clauses are included in full text – If your solicitation has “by reference” P’s or C’s, look

them up to assure yourself of what they require • Most overlooked aspect of Solicitation review and

analysis • “READING” the full text of a provision or clause helps

you determine the requirement, the risks associated with compliance and the impact it may have on your price proposal

• How can you seek to mitigate risks and price reasonably if you don’t read the full text of a provision or clause?

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• Subpart 52.3—Provision and Clause Matrix – Matrix contains all the provisions and clauses – It provides instruction to the contracting staff

• What do they include • When do they include them • The manner by which they are included

– Full text – By reference – By contract type specific

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• The Matrix of provisions and clauses in FAR 52 describes; – Whether a listing is a Provision or a Clause – Whether it is to be incorporated by reference or in full text – The Part within the Uniform Contract Format where they

should be placed – The type of contract in which they are to be used

• There are three categories of classification for provisions and clauses: – Required – Required-when-applicable – Optional

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• Generally, the provisions and clauses are referenced in each specific FAR part and conditioned for use based on the procurement strategy being implemented – the contract type.

• A review of FAR Parts will reflect how “referencing” occurs.

• You should be familiar with the process so you are able to: – Read the solicitation and comprehend the provision/clause – Research the full text of clauses included “by reference” – Refer to the FAR Part or Subpart describing why the clause

was incorporated and implemented and therefore seek to fully understand it.

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FAR 52.3 Provision and Clause Matrix

Example: FAR 52.202-1 Definitions

• Title of Provision or Clause • The FAR Part which prescribes the P or C • P or C = Whether it is a Provision or Clause • IBR = Can it be Incorporated by Reference • UCF = Location/Section of Uniform Contract Format • FP Sup = Fixed Price Supply • FP SVC = Fixed Price Service

Provision or Clause

Prescribed in P or C IBR UCF FP Sup FP SVC

52.202-1 Definitions

2.201 C Yes I R R

The type of contract and how the Provision or clause must be incorporated

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FAR 52.3 Provision and Clause Matrix

In our example:

• FAR 52.202-1 is prescribed in FAR 2.201 • C = It is considered a Clause • Yes = It may be Incorporated by Reference • I = It can be found in Section “I” the UCF • R = It’s required for Fixed Price Supply type contracts • R = It’s is required for Fixed Price Service

Provision or Clause

Prescribed in P or C IBR UCF FP Sup FP SVC

52.202-1 Definitions

2.201 C Yes I R R

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Acquistion Team Behaviors

• One aspect of contract management I truly embrace is “teaming behaviors”; amongst the parties and stakeholders for each and every contract. – Do not challenge contract clauses as generally the AbilityOne

Program does not have any replacement clauses as alternatives

– Do help your federal agency procurement staff in understanding how a clause or provision should be implemented under AO1 Program solicitations and contracts

– ASK for help from your Field Office if you have issues or need their support to help with understanding of “Do’s & Don’ts”.

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Acquistion Team – FAR Part 1

1.102-3 Acquisition Team. • The purpose of defining the Federal Acquisition Team

(Team) in the Guiding Principles is to ensure that participants in the System are identified beginning with the customer and ending with the contractor of the product or service.

• By identifying the team members in this manner, teamwork, unity of purpose, and open communication among the members of the Team in sharing the vision and achieving the goal of the System are encouraged.

• Individual team members will participate in the acquisition process at the appropriate time.

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Acquistion Team – FAR Part 1

1.102-4 Role of the Acquisition Team. (a) Government members of the Team must be empowered to make acquisition decisions within their areas of responsibility, including selection, negotiation, and administration of contracts consistent with the Guiding Principles. In particular, the contracting officer must have the authority to the maximum extent practicable and consistent with law, to determine the application of rules, regulations, and policies, on a specific contract.

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Acquistion Team – FAR Part 1

(b) The authority to make decisions and the accountability for the decisions made will be delegated to the lowest level within the System, consistent with law. (d) The System will foster cooperative relationships between the Government and its contractors consistent with its overriding responsibility to the taxpayers.

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Acquistion Team – FAR Part 1

(e) The FAR outlines procurement policies and procedures that are used by members of the Acquisition Team. If a policy or procedure, or a particular strategy or practice, is in the best interest of the Government and is not specifically addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, Government members of the Team should not assume it is prohibited.

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Acquistion Team – FAR Part 1

• Rather, absence of direction should be interpreted as permitting the Team to innovate and use sound business judgment that is otherwise consistent with law and within the limits of their authority. Contracting officers should take the lead in encouraging business process innovations and ensuring that business decisions are sound.

• I encourage you to embrace this requirement of FAR Part 1; where possible, seek to practice the guiding principles and performance standards FAR defines.

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Team work…

Unity of purpose… Open communication...

It all can Start With Us!!! And where necessary, you can craft provisions or suggest changes to terms

and conditions that may help clarify the agreement to which the parties will be bound.

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• The majority of problem solving I get involved with is where there are failures in the three principles stated in FAR Part 1:

Team work; lack of it, an “us against them” attitude Unity of purpose; failure to align on “how” to best deliver the service or product required to satisfy the end user, no talk of how to achieve “mutually beneficial outcomes” Open Communication; no communication, poor communication, lack of identified POCs and folks arguing matters over which they have no authority to resolve – accelerated deterioration of the business relationship and contract failure

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My Experience

• No matter the provision, no matter the clause, no matter the circumstance or conditions existing; – Solutions can be found, issues can be solved through positive

use of the three basic principles – Use sound judgement and propose well reasoned and

supportable recommendations – Where you have difficulty teaming, it does become a different

issue, you then resort to: • Empowerment – Educate, share your knowledge with those less

knowing especially about AO1 rule, regulation and policy • Escalation – if they don’t care to learn, elevate to the higher authority

until you find a more receptive audience, more open and willing to listen

• Authority Based Intervention–force the issue and seek opportunity for third party intervention to those with the authority to achieve a final determination or “facilitate” lower level engagement

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How Many?

• Approximately 830 provisions and clauses with alternative text in some cases.

• SO, MY CAVEAT! – NO WAY is my discussion going to be an exhaustive

dissertation of them all – I will discuss some types of beneficial clauses and

some types of challenging clauses. – You can share your experience, concerns and issues

with certain provisions and or clauses.

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Provision “types”

• Administrative information – Address for proposal submittal – Suspense Date and Time for proposal submittal – Federal Agency POC for questions (solicitation)

• Instructions to Offerors – What they want in the proposal – How they want it structured

• Business and Technical proposal separation? – Other

• Evaluation Factors – Basis for award (competitive procurement)

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Beneficial “types” of Clauses

• Solicitation and Contract administration; Communication, Performance, Quality Standards – Pre-Proposal Conferences – Site Visits – Pre/Post Award Conference requirements – Contract type descriptors; FFP/Cost Type ? – Performance Descriptors; PWS/SOW/Specifications – Payment provisions; Prompt Payment Clause – Price Adjustment Clauses; SCA FLSA Price Adjustment,

Economic Price Adjustment, Variation in Workload – Inspection and Acceptance – Changes Clause – Disputes Clause

How are any of these “beneficial” to the NPA?

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Example; Inspection of Services 52.246-4 Inspection of Services—Fixed-Price. • The Contractor shall provide and maintain an

inspection system acceptable to the Government • Complete records of all inspection work performed

by the Contractor shall be maintained and made available to the Government during contract performance and for as long afterwards as the contract requires.

• The Government can inspect and test • The Government shall perform inspections and tests

in a manner that will not unduly delay the work.

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• If any of the services do not conform with contract requirements, the Government may require the Contractor to perform the services again in conformity with contract requirements, at no increase in contract amount.

• When the defects in services cannot be corrected by reperformance, the Government may—

(1) Require the Contractor to take necessary action to ensure that future performance conforms to contract requirements; and (2) Reduce the contract price to reflect the reduced value of the services performed. (f) If the Contractor fails to promptly perform the services again or to take the necessary action to ensure future performance in conformity with contract requirements, the Government may— (1) By contract or otherwise, perform the services and charge to the Contractor any cost incurred by the Government that is directly related to the performance of such service; or (2) Terminate the contract for default.

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1. You control your destiny! It is your quality control plan that you determine necessary to meet the stated quality requirements after fully understanding it.

2. You manage the performance! Nuff said. 3. You develop the accomplishment records and therefore hold

evidence of your performance at hand, by day, time and requirement by contract terms. When challenged by inspections - if the government is unreasonable your records can provide the “alternative” viewpoint that creates a multiple interpretation that may be held against the author – the government!

4. You provide what was bargained! All that the clause provides is assurance the government receives what it contracted for, no more and no less – they cannot ask for more than they bargained and individuals cannot “make up” their own ideas as to what the contract says and standards call for.

• If you don’t perform to contract standards; then you simply admit you haven’t, correct the work, and don’t repeat the same error again.

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• Prompt Payment clause; – Allows you to be paid on time and provides for interest

on delayed payments • Changes clause;

– Allows you to make changes when government directs performance that is not as originally accepted and understood

• Disputes clause; – Allows you to “argue” a government finding in a timely

manner which if used properly eliminates inordinate delay by the government and moves the issue promptly to adjudication where government issues a COFD

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Conflicting “types” of Provisions & Clauses

• AbilityOne Program exemptions, rule, regulation and policy often create “frictions” between conventional clauses and the Program guidance and policy. – Proposal preparation provisions; timelines? – Certified Cost and Pricing Data requirements – Subcontract Plans and SB Goal Setting

• The collision between FAR Subpart 8.7 and FAR Part 19 • Issues related TBD

– Inspection and Acceptance, default provisions – Quality provisions; where corrective action methodology

inconsistent with AO1 Program processes – Default Termination; none without due process by AO1 – Option Exercise; follow on years, non-discretionary aspect

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Challenging “types” of Clauses

• Option Exercise – Because of expectations contracting officer has as to

their discretion to extend contract term or not • Mandatory source nature of AB1 removes CO discretion

– Because of delays issuing notifications of option exercise

• WDR not secured in timely manner • Delayed and protracted negotiations of wage impact price

adjustments • Lack of understanding by both parties as to what the proposal

should or not contain – Nondisclosure of employees in manner that reveals a disability

factor

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• Inspection and Acceptance – Lack of communication for non conforming supplies or

services • Advance and early notification of dissatisfactions

– Lack of documentation for non conforming supplies or services

• No documentation of dissatisfaction with performance until exacerbated then escalation to “nuclear” levels

– Lack of overall “due process” in adjudication of performance aspects under the contract

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• CPARS; Contractor Performance Assessment Reporting System – Lack of process knowledge – Poor identification of issues – Poor responses to findings – Lack of “fact based” recording – Disputes

• Lack of process knowledge • NPAs do not want to “rock the boat” • CPAR finding then permanently reported in PPIRS

– Past Performance Information Retrieval System

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Your Time – Questions?

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Thank You