Government Contracts

Overview What is a Government Contract? Authority to Enter into Government Contracts Four Phases of Government Contracts The Role of the Government Contract Professional

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

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….

FAR Definition of a “Contract” “...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

General Categories of Government Contracts Supplies Construction Services Research and Development (R&D)

Every Good Government Procurement System Has… Competition Transparency Integrity

Government Authority Who has the authority to bind the Government with a contract?

Government Authority General Rule: Only someone with actual authority may bind the Government

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)

Government Authority HCAs appoint COs IN WRITING (WARRANT) Warrant must be posted (no secrets!) May include further limitations (e.g. dollar limits)

Government Authority What about other folks? Apparent authority—not recognized Ratification (of unauthorized act)

Contractor Authority All types of authority apply: Actual Apparent

Phases of Government Contracts

4 Phases of Government Contracts Acquisition Planning Pre-Award (Source Selection) Post-Award (Performance) Close-out

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)

Acquisition Planning: Basic Contract TYPES Two Basic Types: Fixed Price Cost Reimbursement $

Acquisition Planning: Basic Contract TYPES Fixed Price Contract (FAR Subpart 16.2) Set, predetermined price Who bears the risk? $

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) $

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? $

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 $

Acquisition Planning: Contract TYPES—What else? Incentive Contracts Level-of-Effort Contracts Variable Quantity Contracts e.g., IDIQ e.g., Requirements $

Acquisition Planning: Contract METHODS Sealed Bidding (FAR Part 14) Price is the only basis for award Invitation for Bids (IFBs)

Acquisition Planning: Contract METHODS Negotiated Procurements (FAR Part 15) Various factors (inc. price and past performance) Best value Request for Proposals (RFPs)

Acquisition Planning: Contract METHODS Commercial Items (CI) and Services (FAR Part 12) Definition of CI and Services Phonebook Test

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)

4 Phases of Government Contracts Acquisition Planning Pre-Award (Source Selection) Post-Award (Performance) Close-Out

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

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”

Pre-Award (Source Selection): Advertising Publicication FAR 5.101 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): 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)

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

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)

4 Phases of Government Contracts Acquisition Planning Pre-Award (Source Selection) Post-Award (Performance) Close-out

Post-Award (Performance) The “Life” of the Contract Contract Administration Contract Changes Claims/Disputes

Post-Award (Performance): 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

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

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)

4 Phases of Government Contracts Acquisition Planning Pre-Award (Source Selection) Post-Award (Performance) Close-Out

Close-Out “Natural” Causes

Close-Out Early Termination Convenience Default

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

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

Role of the Government Contract Professional Legal Reviews Legal Advice Business Counsel Litigation Support

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

Summary What Is a Government Contract? Authority to Enter into Government Contracts Four Phases of Government Contracts The Role of the Government Contract Professional