1. CONTRACTS WHAT’S YOUR TYPE? Scott Crawford WTP Prime Contract Manager

2. DEFINITION OF A CONTRACT Google Search ◦Six essential elements of a contract ◦Four essential elements of a contract ◦Five elements of a contract

3. DEFINITIONS The six essential elements of a contract: ◦Agreement (i.e., Offer and Acceptance) ◦Consideration ◦Contractual Capacity ◦Legality ◦Genuineness of Assent ◦Form The four essential elements of a contract: ◦Intent to Create Legal Relations ◦Offer ◦Acceptance ◦Consideration ◦Capacity The five elements of a contract: ◦Offer ◦Acceptance ◦Intention of Legal Consequences ◦Consideration

4. FAR Part 2.101 Definition Contract” means 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. For discussion of various types of contracts, see Part 16.Part 16

5. Do We have a Contract if? The Government sends you a Purchase Order ◦You don’t acknowledge it ◦But you provide the service/supply Your Prime sends you a Notice to Proceed Your prime and you sign a Blanket Purchase Agreement ◦Suppose you and the Government executed a Basic Ordering Agreement

6. Types of Contracts Scott’s opinion on the matter ◦Three “TYPES” of Contracts  Firm Fixed Price ◦ FPI ◦ FP-EPA ◦ PF Prospective Redetermination ◦ Fixed Ceiling – Retroactive redetermination ◦ FP-LOE  Cost Reimbursement ◦ Cost ◦ Cost Sharing ◦ CPIF ◦ CPAF ◦ CPFF  Other ◦ Time and Material ◦ Labor Hour ◦ Letter Contract

7. Do we have a contract if? She says yes to going with you to the prom?

8. Kinds of Contracts Scott’s Opinion on the Matter ◦There are many kinds of contracts, but these aren’t a “type” of contract  You can’t tell the type by simply describing the “kind”

9. Do we have a contract if? He proposes and gives you an engagement ring? Your child gets an acceptance letter from a college ◦How about if it’s a scholarship offer ◦Suppose Mom already signed one on your behalf to her alma mater

10. Kinds of Contracts Basic Ordering Agreements ◦Only the orders are contracts Definite-Quantity ◦You ordered them, just didn’t specify exactly when, so it’s a contract Requirements ◦You agree to only buy from one source ◦You agreed to the min and max buy ◦Didn’t specify exactly how many or when ◦So it’s a contract Indefinite-Quantity ◦You agree to order a minimum ◦You agreed to an indefinite quantity “within stated limits” ◦Didn’t specify exactly how many or when ◦If ordered, you must deliver ◦So it’s a contract

11. Do we have a contract if? Your child gets an acceptance letter from a college ◦How about if it’s a scholarship offer Letter of Intent? ◦Suppose Mom already signed one on your behalf to her old school  Now what?

12. Things for watch out for Not everything is a contract: ◦Government Regulations are very specific about who has the authority to contract Mutual Mistake Impossibility to perform Limitations on Cost/Funds What type of Contract is illegal in Government contracting?

13. Do we have a contract if? He asks you on a date and: ◦You shake his hand and nod your head  But have no intention of ever ever ever going out with this “insert inappropriate description here” ◦After dinner, he gets up to go to the restroom but never comes back ◦He orders for you, then expects you to pay ◦He doesn’t bring his wallet ◦He gets frisky on the way home

14. Illegal Types Cost plus percentage of cost: ◦Basically the terms say you get paid “x” percent of what you spend ◦GAO Test  Our Office uses the following criteria to determine whether a method of payment represents a prohibited cost-plus-a-percentage-of-cost arrangement: (1) Payment is at a pre-determined rate, (2) the pre-determined rate is applied to actual performance costs, (3) the contractor's entitlement is uncertain at the time of contracting, and (4) the contractor's entitlement increases commensurately with increased performance costs." There is a way for this concept to be legal ◦A time and material contract has a provision for a “material handling costs” ◦Can be expressed as a rate ◦Requires specific determinations to be made  Ripe for audit fodder

15. Questions As always, answers are not guaranteed