(e) Ensure uniformity and reliability in equipment, compatibility or standardization of components, and interchangeability of parts. Ceilings must exclude amounts for requirements included in prior program years. (a) The contracting officer shall insert the clause at 52.217-2, Cancellation Under Multi-year Contracts, in solicitations and contracts when a multi-year contract is contemplated. The DoD reimburses the allowable incurred costs and pays a fixed amount that is negotiated at the beginning of the contract. Value-eroding friction and shading occur because one or both parties feel unfairly treated. In two-step sealed bidding, discussions conducted during the first step may indicate the need for revised ceilings and dates which may be incorporated in step two. Recurring costs means costs that vary with the quantity being produced, such as labor and materials. 2. (e) A statement that award will not be made on less than the first program year requirements. (b) Because of the nature of the work, or because it is to be performed in Government facilities, the Government must maintain a special, close relationship with the contractor and the contractors personnel in various important areas (e.g., safety, security, cost control, site conditions). The Economy Act also provides authority for placement of orders between major organizational units within an agency; procedures for such intra-agency transactions are addressed in agency regulations. 3501 and provides policy and procedures for the use of multi-year contracting. Procurement Contracts in Project Management: Types and Examples (d) Insert a clause substantially the same as the clause at 52.217-6, Option for Increased Quantity, in solicitations and contracts, other than those for services, when the inclusion of an option is appropriate (see 17.200 and 17.202) and the option quantity is expressed as a percentage of the basic contract quantity or as an additional quantity of a specific line item. (g) Payment limit. Information on such committees may not be readily available to contracting officers. Formal relational contracts are built on a foundation of trust and are shaped by a shared vision and six universal guiding principles. A Fair Way to Lead a Team of Contractors and Full-Time Employees Under reciprocity, for example, they highlighted the need to conduct ourselves in the spirit of achieving mutual benefit and understanding. Under equity, they acknowledged the unavoidable imbalances that arise in contracts: We are committed to fairness, which does not always mean equality. (1) The use of such a contract will result in significant savings of the total estimated costs of carrying out the program through annual contracts; (2) The minimum need to be purchased is expected to remain substantially unchanged during the contemplated contract period in terms of production rate, procurement rate, and total quantities; (3) There is a stable design for the supplies to be acquired, and the technical risks associated with such supplies are not excessive; (4) There is a reasonable expectation that, throughout the contemplated contract period, the head of the agency will request funding for the contract at a level to avoid contract cancellation; and. If level unit pricing is not in the Governments interest, the head of a contracting activity may approve the use of variable unit prices, provided that for competitive proposals there is a valid method of evaluation. (Its called vested because the parties have a vested interest in each others success.) (2) Fails to notify the contractor that funds are available for performance of the succeeding program year requirement. There is a reasonable expectation that, throughout the contemplated contract period, the head of the agency will request funding for the contract at a level to avoid contract cancellation; and. They agonize over every conceivable scenario and then try to put everything in black-and-white. (c) Agency funding of multi-year contracts shall conform to the policies in OMB Circulars A-11 (Preparation and Submission of Budget Estimates) and A-34 (Instructions on Budget Execution) and other applicable guidance regarding the funding of multi-year contracts. For DoD, NASA, and the Coast Guard, the head of the agency may enter into a multi-year contract for supplies if-. (d) The period may extend beyond the contract completion date for service contracts. Any competitive negotiated acquisition having a basis for award stating that factors in addition to cost/price will be considered in selecting the successful offeror (s) (f) Before exercising an option, the contracting officer shall make a written determination for the contract file that exercise is in accordance with the terms of the option, the requirements of this section, and part 6. In this article, we look at the theoretical underpinnings of formal relational contracts and lay out a five-step methodology for negotiating them. However, the preparation and evaluation of dual offers may increase administrative costs and workload for both offerors and the Government, especially for large or complex acquisitions. Economists call this the hold-up problem: the fear that one party will be held up by the other. In that event, contracting officers must follow the requirements of subpart 17.2. (c) Replacement of an incumbent contractor is usually based largely upon expectation of meaningful improvement in performance or cost. Before, we had no one to speak with [if concerns arose]. An example of a circumstance that may support a determination not to evaluate offers for option quantities is when there is a reasonable certainty that funds will be unavailable to permit exercise of the option. Broadening the competitive base with opportunity for participation by firms not otherwise willing or able to compete for lesser quantities, particularly in cases involving high startup costs. For DoD, NASA, and the Coast Guard, a multi-year contract which includes a cancellation ceiling in excess of From the following statements, select the correct statement pertaining to the, Personnel services contracts are authorized by the government When? The limitation in paragraph (a) of this section shall not apply to the acquisition of supplies and services on behalf of DoD by a nondefense agency during any fiscal year for which the Under Secretary of Defense for Acquisition and Sustainment has determined in writing that it is necessary in the interest of DoD to acquire supplies and services through the nondefense agency during the fiscal year.