CAS Applicability - IDIQ level or at individual TO level?

Several years ago, DoD put out guidance saying CAS apply at the order level.  It was a guidance memo not a part of the DFARS or PGI.

Take a look at comment #31 of this Federal Register notice. The FAR Councils asserted that you can't have both CAS-covered and non-CAS-covered task orders under the same contract. They didn't explain why.

On 6/1/2023 at 2:46 PM, Michelle Adams said:

whether a CAS determination is applied at the IDIQ level (which is a $0 award) or at the individual Task Order level.

As noted in the comments to date it is a fleeting question that has yet to resolved and is otherwise applied by the courts on a contract by contract basis.

On 6/1/2023 at 2:46 PM, Michelle Adams said:

(which is a $0 award)

Is not the lynch pin to your own question in your own specific instance.   Think about creating an obligation and recording an obligation.

On 6/1/2023 at 2:46 PM, Michelle Adams said:

I am having difficulty finding firm information around whether a CAS determination is applied at the IDIQ level (which is a $0 award) or at the individual Task Order level.  I've found a lot of opinions going both ways but does anyone have any regulatory information around this OR case support one way or the other?   Thank you

It's unclear to me what you mean by "CAS determination." Do you mean a determination regarding CAS coverage? I.e., are you asking whether CAS coverage is determined at the ID/IQ level or at the individual order level? I'm afraid there is very little in the way of regulatory language or case law to help you with this one. As Don pointed out, the FAR Council says CAS coverage is determined at the contract level but that is a silly position, since both TINA coverage and Limitation of Cost/Limitation of Funds requirements are applied at the order level. It's just silly to have a different approach for CAS coverage; but that's what the FAR Council asserted was the case.

I think your statement that an ID/IQ is a "$0 award" is not exactly correct. First of all, there's a guaranteed minimum, right? Second of all, there's a ceiling amount. Finally -- and in my view this is an important data point -- there is the Government estimate regarding how much $ will be awarded to the contractor or contractors. Maybe there's an IGE somewhere. Those might assist you.

But there's almost nothing firm you can rely on. This is has been a known issue for almost 30 years yet the CAS Board has declined to address it. So you are on your own, unfortunately.

@here_2_help

Your comment made me think of the DOD Source Selection Procedures. Outside of the FAR 1.108(c) reference it's not relevant here, but it says “In determining applicability of these source selection procedures, calculate the value of the contract action in accordance with FAR 1.108(c), except that the value of an indefinite delivery indefinite quantity (IDIQ) contract includes only the value of orders for which pricing terms are established in the basic contract.” I find the instruction interesting given FAR convention and the things you've mentioned (e.g., minimums, IGEs, etc.).

Jamaal Valentine said:

@here_2_help

Your comment made me think of the DOD Source Selection Procedures. Outside of the FAR 1.108(c) reference it's not relevant here, but it says “In determining applicability of these source selection procedures, calculate the value of the contract action in accordance with FAR 1.108(c), except that the value of an indefinite delivery indefinite quantity (IDIQ) contract includes only the value of orders for which pricing terms are established in the basic contract.” I find the instruction interesting given FAR convention and the things you've mentioned (e.g., minimums, IGEs, etc.).

Strictly speaking, FAR 1.108(c) isn't relevant.  With only one exception, the prescriptions at FAR 30.201-3 & -4 point the reader to 48 CFR 9903.  The CAS regulations don't have a convention like FAR 1.108(c).  In my opinion, this isn't terribly surprising, since CAS is about consistency in the treatment of costs.  Once a business unit has a CAS-covered contract (what is sometimes called the "trigger contract"), more and more of its subsequent contracts are CAS-covered.  

EDIT:  While it isn't obvious to me that "net awards" as defined at 48 CFR 9903.301 is used in determining CAS applicability, if it is, then mMy comment above, "The CAS regulations don't have a convention like FAR 1.108(c)," may not be entirely on is entirely off the mark.

Consider the DAU's CAS decision tree.

Thanks, Jamaal, for your comment. It was thought-provoking and led me to some additional research.

Quote

Technically, an IDIQ contract is only a contract to the extent that the work is completely priced and can be unilaterally ordered by the government. To the extent that the IDIQ contract contemplates newly priced offers to perform additional tasks, such work is not part of the originally awarded contract, but is more in the nature of a basic ordering agreement.

Source: Accounting for Government Contracts: The Cost Accounting Standards (LexisNexis) at 3.03[5][a].

Food for thought, huh?

The following is another data point.  The more I try to understand this stuff, the more confused I get.

Quote

Comment: Four commenters recommended that the Board revise the rule to include counting only "net awards" in determining whether certain CAS thresholds are met.

Response: The Board does not agree with the commenters. As the Board understands the commenters' position, "net awards" refers to the total obligated value of the contract at the time of award, excluding as-yet-to-be-obligated incremental funding, and the potential value of contract options. The Board believes that CAS applicability thresholds are met when the total dollar value of the contract (including as-yet-to-be-provided incremental funding and the potential value of contract options) exceeds the appropriate thresholds. Because this appeared to be a recurring issue among some contractors, the Board is amending the definition of "net awards" in order to make it clear that incrementally-funded contracts and the potential value of contract options are to be included in determining a contractor's or subcontractor's CAS eligibility status. The Board believes that it is the value of the pricing proposal or action that gives rise to CAS applicability.

58 Fed. Reg. 58798, 58800 (Nov. 4, 1993).  The "certain CAS thresholds" discussed here may be for purposes of a disclosure statement rather than generic CAS coverage, so this quote may be completely irrelevant.  I share it anyway.

EDIT:  I think I'm tracking a little better now.  48 CFR 9903.301 defines "net awards" but then Chapter 99 uses the phrase "net CAS-covered awards" at 48 CFR 9903.201-2(a)(2) (full coverage), 48 CFR 9903.201-2(b)(1) (modified coverage), & 48 CFR 9903.201-2(d) (subcontracts).  Net awards are relevant to full or modified coverage, step 2 in DAU's decision tree linked earlier.

H2H, who is the author of the quote you provided above?

Nick Sanders is the editor now.  Judging from his LinkedIn biography, he was or is a FAR Bootcamp instructor, so that certainly puts him in good company.  (Sorry if I'm ruining an inside joke.)

Jacques said:

Nick Sanders is the editor now.  Judging from his LinkedIn biography, he was or is a FAR Bootcamp instructor, so that certainly puts him in good company.  (Sorry if I'm ruining an inside joke.)

You kind of are, but it's an open secret so no big deal.

Retreadfed said:

H2H, who is the author of the quote you provided above?

Nobody of any consequence

Thanks, H2H.

here_2_help said:

Technically, an IDIQ contract is only a contract to the extent that the work is completely priced and can be unilaterally ordered by the government. To the extent that the IDIQ contract contemplates newly priced offers to perform additional tasks, such work is not part of the originally awarded contract, but is more in the nature of a basic ordering agreement.

What?

Don Mansfield said:

What?

I second that opinion.

Isn't CAS coverage sort of like being pregnant, i.e., "partial" coverage makes no sense (per Don's comment above)?  Considering CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders I don't know why it wouldn't be included in the overarching legal agreement with that entity which states the total estimated value of all orders.

REA'n Maker said:

I second that opinion.

Isn't CAS coverage sort of like being pregnant, i.e., "partial" coverage makes no sense (per Don's comment above)?  Considering CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders I don't know why it wouldn't be included in the overarching legal agreement with that entity which states the total estimated value of all orders.

And then applied consistently to all orders…

REA'n Maker said:

CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders

What is the basis for your statement concerning "the total estimated value of all orders"?

joel hoffman said:

And then applied consistently to all orders

I'm not sure what this means, but since an order is a contract, wouldn't CAS applicability to an order depend on whether the order falls within one of the CAS exemptions?  For example, if the contract includes commercial products and non-commercial products and the  order is for commercial products would you say the CAS apply to that order?

Don Mansfield said:

What?

The author is making a analogy. As with all analogies, it is imperfect.

REA'n Maker said:

I second that opinion.

Isn't CAS coverage sort of like being pregnant, i.e., "partial" coverage makes no sense (per Don's comment above)?  Considering CAS coverage is based on an entity (corporation, business unit, office, branch, etc.) and the total estimated value of all orders I don't know why it wouldn't be included in the overarching legal agreement with that entity which states the total estimated value of all orders.

Let's say you have an multiple award ID/IQ with a ceiling of $100 Million. Twenty formerly non-CAS-covered contractors receive an award. According to current DCAA thinking, each contractor has a $100 Million contract award, subject to Full CAS coverage and requiring submission (and audit) of a CASB Disclosure Statement.

The contracting officer and the contractors all know that the likely value of the awards to each is much less than $100 Million. But how much less? Should the $100 Million simply be divided by 20--so that each contractor expects only $5 million each? (Note that $5 Million is under the $7.5 Million CAS trigger threshold.) Nothing in the regulations or guidance suggests that is the right approach.

If each order is a separate contract (and there is much to support that notion) then CAS should be applied at the order level not the parent ID/IQ level. But that's not the current state of things. Instead, CAS coverage is determined based on the total value of the ID/IQ contract awarded.

To all,

I just got off the phone with Vern (his eye is improving a little bit each day, by the way). He wanted me to make the following points on his behalf. 

1. As I stated in an earlier post, this is a known issue. It's been around since ID/IQ awards started to be made to multiple offerors, especially those for services. Formerly (according to Vern), agencies awarded ID/IQ contracts to individual contractors, and those awards were for goods (not services). That has changed but the FAR Council and CAS Board haven't adapted to the changes. There is simply very little (if any) guidance on the issue.

2. Since FAR and CAS are silent, a contracting officer has the flexibility to craft their own solution (See FAR 1.102(d).) This would be a permissible exercise of authority and not a deviation.

3. Therefore, a contracting officer faced with this situation could craft one or two contract clauses, stating that (a) each order is divisible and separate from the others, and (b) CAS coverage and rules shall be applied at the individual order level. 

Again, I'm paraphrasing a conversation. Any errors in translation are mine.

See below

Retreadfed said:

I'm not sure what this means, but since an order is a contract, wouldn't CAS applicability to an order depend on whether the order falls within one of the CAS exemptions?  For example, if the contract includes commercial products and non-commercial products and the  order is for commercial products would you say the CAS apply to that order?

Clarification : Nope, it’s obviously exempt.

I do agree with those who say that the KO should craft the solution

Retreadfed said:

What is the basis for your statement concerning "the total estimated value of all orders"?

AKA total IDIQ value/contract maximum.  It was intended to address stuff like the $7.5M CAS thresholds.  

I think it's a totally fair statement to say that CAS is applied at the task order level, but I also think that the determination to do so is in the IDIQ.  It's sort of like how you make a SB set-aside determination at the IDIQ level even though you are actually setting aside the TOs.

here_2_help said:

The contracting officer and the contractors all know that the likely value of the awards to each is much less than $100 Million.

Assuming the maximum order value on a $100M IDIQ is over $7.5M, that would practically dictate CAS coverage. It's definitely not an exact science, or a science at all for that matter, but I've never heard of CAS coverage being a big deal to any vendor proposing on a $100M federal contract.  Aren't CAS basically GAAP anyway?*  That's not rhetorical; I honestly don't know for sure.

(* I believe this construction is bizarre yet grammatically correct however I am also a product of the American public school system)

REA'n Maker said:

AKA total IDIQ value/contract maximum.  It was intended to address stuff like the $7.5M CAS thresholds.  

I think it's a totally fair statement to say that CAS is applied at the task order level, but I also think that the determination to do so is in the IDIQ.  It's sort of like how you make a SB set-aside determination at the IDIQ level even though you are actually setting aside the TOs.

Assuming the maximum order value on a $100M IDIQ is over $7.5M, that would practically dictate CAS coverage. It's definitely not an exact science, or a science at all for that matter, but I've never heard of CAS coverage being a big deal to any vendor proposing on a $100M federal contract.  Aren't CAS basically GAAP anyway?*  That's not rhetorical; I honestly don't know for sure.

(* I believe this construction is bizarre yet grammatically correct however I am also a product of the American public school system)

31.201-2 Determining allowability.

(a) A cost is allowable only when the cost complies with all of the following requirements:

(1) Reasonableness.

(2) Allocability.

(3) Standards promulgated by the CAS Board, if applicable, otherwise, generally accepted accounting principles and practices appropriate to the circumstances.

(4) Terms of the contract.

(5) Any limitations set forth in this subpart.

here_2_help said:

The author is making a analogy. As with all analogies, it is imperfect.

But the first sentence is just plain wrong. "Technically", an IDIQ contract is a contract. Period. It doesn't have to be pre-priced to be a contract. Regardless of whether an order is ever placed, it's a contract. There's an offer, acceptance, consideration--the whole shebang. 

A BOA is not a contract. There's no exchange of enforceable promises.

I think the author knows this but didn't explain it well.

Don Mansfield said:

It doesn't have to be pre-priced to be a contract.

I agree.  FAR 16.505(b)(3) states, "If the contract did not establish the price for the supply or service, the contracting officer must establish prices for each order using the policies and methods in subpart 15.4."  If a basic IDIQ contract has to be pre-priced to qualify as a contract, the language at FAR 16.505(b)(3) does not make a lot of sense.

The OP has most likely disappeared.  Yet as the thread continues I thought this contribution might be an interesting read for all...

REA'n Maker said:

AKA total IDIQ value/contract maximum.

Are you equating the contract maximum with "the final anticipated dollar value of the action" as stated in FAR 1.108(c)?

On 6/7/2023 at 11:01 AM, here_2_help said:

But that's not the current state of things. Instead, CAS coverage is determined based on the total value of the ID/IQ contract awarded.

Is there a statute, regulation or contract clause that says this or is this based on DCAA's view of things?

Retreadfed said:

Is there a statute, regulation or contract clause that says this or is this based on DCAA's view of things?

Based on DCAA's view

On 6/4/2023 at 3:59 PM, Retreadfed said:

Several years ago, DoD put out guidance saying CAS apply at the order level.  It was a guidance memo not a part of the DFARS or PGI.

@C CulhamCan you find this?

Retreadfed said:

Are you equating the contract maximum with "the final anticipated dollar value of the action" as stated in FAR 1.108(c)?

In 1.108(c) context, my reference was closer to "ceiling price".  "Maximum" is probably more applicable to quantities so not the best word choice.

Don Mansfield said:

@C CulhamCan you find this?

Sorry, I can not.   I spent some time looking and could not find where such guidance was issued.  In fact everything I read indicates the following quote still stands true.  Yes it is dated (2018) but by my research and as evidenced by this thread the matter of confusion regarding IDIQ's (IDC) remains today. 

"There is no DoD CAS Working Group guidance concerning IDCs which, unlike basic agreements, BOAs, and BPAs, are considered to be contracts. IDCs include definite-quantity contracts, requirements contracts, and indefinite-quantity contracts (see FAR Subpart 16.5)."

Ref: https://discover.dtic.mil/wp-content/uploads/809-Panel-2019/Volume2/Recommendation_30.pdf

C Culham said:

Sorry, I can not.

I have also tried to find it again, but have been unable to do so.  It was issued well before 2018, probably some time between 2012 and 2015.  It could have been rescinded.

If in DoD does this muddy the water even more or does it help?

PGI 215.406-3 Documenting the negotiation. (D) If an initial indefinite-delivery indefinite-quantity (IDIQ) task or delivery order contract contemplates issuance of task or delivery orders that will invoke negotiated rates or values from the basic contract, then the business clearance record for the basic IDIQ contract shall be uploaded if the estimated value of the contract (e.g. ceiling price) exceeds the prescribed dollar threshold. To the extent individual task or delivery orders entail a negotiation (i.e. did not simply incorporate prices established at the basic contract level), a business clearance record for the individual task or delivery orders that exceed the prescribed dollar thresholds shall be uploaded to CBAR.

Okay, I will stop posting with this entry as I realize I am all over the board with references.   I will say that I took a different approach in my research and used TINA as my search topic.   It lead me to the PGI I just posted and then to this (see below).   I looked through the thread and did not see this as a reference but I will admit I did not read the references linked in posts to see if this was present.  All for the good of the order I hope.....

"In the case of IDIQ contracts, it is commonly understood that it is the estimated total value of orders for the specified period at the time of contract award, as well as the individual value of any subsequent discrete orders, to which the TINA thresholds apply."

Reference - https://www.federalregister.gov/documents/2010/03/19/2010-5986/federal-acquisition-regulation-far-case-2008-012-clarification-of-submission-of-cost-or-pricing-data