Multi-year Service Contracts?

I suggest that you contact the Professional Services Council (psc.org) and ask them if they can help you.

Multiyear (multi-year) or multiple year?

We are looking for multiyear, not multiple year.  We have talked to PSC, but are looking for additional contacts.  Thank you.

You might try Army Contracting Command.  They deal with many service contracts.

Thank you.  We have talked to Army Contracting.  We have talked to many DoD offices.  So far, we have found one multi-year service contract.  We were hoping to potentially find one outside of DoD.

Can you define what you mean by multi-year service contract?

By multi-year I am referring to the contracts defined in FAR part 17.  I am aware of multi-years used for purchasing weapons systems, but as mentioned above, only one for services.  I had thought we might find some that were for performance base logistics, or maintenance, repair and overhaul, but we haven't.

Notice that FAR Part 17 says it implements policies set forth in 10 U.S.C. 2306b.  However, multiyear service contracts are described in 10 U.S.C. 2306c.  Looking at what 2306c says multiyear service contracts can be used for have you inquired about DoD GOCO contracts, FFRDC contracts and DoE M&O contracts?  They seem to possibly fit what you are looking for.

Yes, we have. Thank you.

On 8/14/2018 at 12:43 PM, SRose said:

My name is Susan Rose with the Institute for Defense Analyses.  I am working on a study for Congress regarding best practices/lessons learned in the use of longer term - I.e. greater than 5 years - multiyear service contracts (see attached).  We are having difficulty finding anyone who has used multiyear service contracts.  If you have used multiyear service contracts and are willing to be talk to us about it, please contact me.

Thank you.

Section 854 NDAA FY18 Longer Term Multiyear Service Contracts.pdf

Did you query FPDS? One of the fields is for multiyear contracts. I just found tons of records for multiyear service contracts.

SRose said:

Thank you.  We have talked to Army Contracting.  We have talked to many DoD offices.  So far, we have found one multi-year service contract.  We were hoping to potentially find one outside of DoD.

Are the Systems Contracts for the “Chemical Weapons Demilitarization Program” and specifically the “Chemical Demilitarization–Assembled Chemical Weapons Alternatives Program” considered multi year contracts for Services?  I know of two contracts that were awarded in circa 2001 are are ongoing  

The Army Contracting Command Rock Island is the PCO. The PEO is located at Edgewood Arsenal.

This is what she means:

Quote

“Multi-year contract” means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. A multi-year contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds, and (if it does so provide) may provide for a cancellation payment to be made to the contractor if appropriations are not made. The key distinguishing difference between multi-year contracts and multiple year contracts is that multi-year contracts, defined in the statutes cited at 17.101, buy more than 1 year’s requirement (of a product or service) without establishing and having to exercise an option for each program year after the first.

I don't know that there have ever been many such service contracts. Don says he's found a lot of records of them. It's up to the researchers to find sources for their research, especially if they're being paid.

Vern, I was mistaken. But after reading Susan’s original post and her link,  she appears to be looking to evaluate multi year service contracts awarded for longer than five years. And the legislation mentioned examples such as Energy Savings Performance Contracts.  

“SEC. 854. PILOT PROGRAM FOR LONGER TERM MULTIYEAR SERVICE CONTRACTS”

If so, She could contact the US Army Corps of Engineers Engineering and Support Center in Huntsville, AL. They have been and are currently involved in ESPC programs.

joel hoffman said:

Vern, I was mistaken. But after reading Susan’s original post and her link,  she appears to be looking to evaluate multi year service contracts awarded for longer than five years. And the legislation mentioned examples such as Energy Savings Performance Contracts.

I asked her if she was interested in multi-year or multiple year. She said multi-year. I gave you the definition of multi-year. That's all I know.

You've mentioned the Corps. If she's interested, she'll contact them, don't you think?.

SEC. 854. PILOT PROGRAM FOR LONGER TERM MULTIYEAR SERVICE CONTRACTS.

From the conference report:

Quote

The Secretary of Defense would also be required to enter into an agreement no later than 90 days after enactment of this Act with an independent organization with relevant expertise to study best practices and lessons learned from using services contracts for periods longer than 5 years by commercial companies, foreign governments, and state governments, as well as service contracts for periods longer than 5 years used by the Federal Government, such as Energy Savings Performance Contracts. Such Energy Savings Performance Contracts provide an existing example of longer term multiyear service contracts and are an alternative financing mechanism designed to accelerate investment in cost effective energy conservation measures in existing federal buildings.

If you are told to look at ESPCs, EERE will tell you where to go.

Joel:

Would utility contracts be considered service contracts?  If so, I'm sure there is some branch of DoD that can identify each one.

Thank you all for your suggestions. 

We have looked at ESPCs.  They fall under a different authority, but we have talked to people using them to learn about their best practices.  I am very familiar with FPDS.  However, the data in the check box is not reliable.  I am not sure what people are using the check box for, but they aren't actual multi-years.  We have actually found other long term service contracts (under working capital funds, utilities, the ESPCs mentioned above) and talked to the offices managing them, but they are not using the multi-year authority.  It has been a surprise to us that the multi-year option appears to be so seldom used for service contracts.  Posting here was a bit of a hail mary.

We will definitely check out the chemical demilitarization program, it certainly seems to be a good candidate.  Thank you Joel Hoffman.

bob7947 said:

SEC. 854. PILOT PROGRAM FOR LONGER TERM MULTIYEAR SERVICE CONTRACTS.

From the conference report: [ ]

If you are told to look at ESPCs, EERE will tell you where to go.

Joel:

Would utility contracts be considered service contracts?  If so, I'm sure there is some branch of DoD that can identify each one.

Thanks, Bob. Not sure about straight contracts to purchase utililities such as electricity, gas, water, etc.

However, DOD has been in the process of privatizing their government owned utility systems, including operations and maintenance, for quite awhile now. I don’t know if many or any of them are not privatized. These are long term service contracts.  Although Installations administer the contracts after award, I think that the Services have somebody writing and awarding the contracts.  The US Army Corps of Engineers’ Engineering and Support Center (CEHNC) in Huntsville, AL has a Center of Expertise or similar designation who (when I worked  at the Center, in Chemical Demilitarization) developed those contracts and awarded or supported award of them for Installations and other clientele. 

In addition, DoD has privatized much of their Military Family Housing, including turning over possession of existing Government owned housing area to the Contractors. Those are long term contracts. 

And - as I said yesterday, the Chemical Weapons Disposal Program involves long term Systems contracts, including services.  To my recollection, they were classified as service contracts, with design and construction, too.

Joel:

Title 10 USC 2306c (b) lists services under that section.

10 U.S. Code § 2306c - Multiyear contracts: acquisition of services.

Susan,I believe that all of my examples have specific authorities but may be useful examples for your lessons learned efforts.  

It appears that you are looking for example that specifically are classified as multi-year . It appears that the general authority for longer multi-year service contracts was instituted as a limited, Pilot program and perhaps you are trying to find those test contracts. For DoD, there should be somebody in the Pentagon at DoD or Service Level that is aware of which projects were using the Pilot Program authority.

Good luck.

bob7947 said:

Joel:

Title 10 USC 2306c (b) lists services under that section.

10 U.S. Code § 2306c - Multiyear contracts: acquisition of services.

Yes. I think that Susan is trying to find the FY 2016 Pilot program contracts that are called for In Section 854.

Using limited Pilot program authority with reports back to Congress has been a common practice for many years.

Joel,

Yes, I agree that all the suggestions are helpful to understanding best practices.  We have been talking to offices using those contracts.  The NDAA calls for pilots for service contracts longer than 5 years, and DPAP hopes that our study will help inform it.  What I am trying to find right now, are any examples of contracts actually using the multi-year authority for service contracts.  It appears to be very rare and we have found just one.

SRose:

In your original post you wrote:

Quote

I am working on a study for Congress

In the law, it says

Quote

the Secretary of Defense shall enter into an agreement with an independent organization with relevant expertise to study best practices and lessons learned from using services contracts for periods longer than five years by commercial companies, foreign governments, and State governments, as well as service contracts for periods longer than five years used by the Federal Government, such as energy savings performance contracts (as defined in section to section 804(3) of the National Energy Conservation Policy Act (42 U.S.C. 8287c(3)).  (emphasis provided)

Are you working for Congress on another sudy or are you working for the Secretary of Defense in accordance with the law?

SRose said:

Joel,

Yes, I agree that all the suggestions are helpful to understanding best practices.  We have been talking to offices using those contracts.  The NDAA calls for pilots for service contracts longer than 5 years, and DPAP hopes that our study will help inform it.  What I am trying to find right now, are any examples of contracts actually using the multi-year authority for service contracts.  It appears to be very rare and we have found just one.

Okay - to clarify, you are not only looking for pilot program contracts exceeding five years, you are looking for any service contracts that are or should be specifically classified as multi-year service contracts. Is that correct? 

EDIT: as Bob has indicated, it isn’t clear from your posts the scope of what you are hired to study or who you are hired by.  Apparently, DPAP.

I am NOT looking for pilot program contracts (they are not doing them yet).  I am sorry that that was not clear.  I am looking for service contracts that are specifically multi-year contracts of whatever length.  We are trying to understand when and why that specific authority is used.  It appears to be used very rarely.  I hope that clears it up a bit.

We have found many other types of contracts (ESPCs, services under working capital funds etc.) that have been very helpful to us.

SRose said:

I am NOT looking for pilot program contracts (they are not doing them yet).  I am sorry that that was not clear.  I am looking for service contracts that are specifically multi-year contracts of whatever length.  We are trying to understand when and why that specific authority is used.  It appears to be used very rarely.  I hope that clears it up a bit.

We have found many other types of contracts (ESPCs, services under working capital funds etc.) that have been very helpful to us.

Ok, thanks.  

By the way, I would think that there are WIFCON members and readers out there who are involved in multi year service contracting . Okay, readers, now you should know what DPAP is interested in learning.

Bob, we are working for DPAP.  The deliverable is a report that will be sent to Congress.  Thanks for helping me clarify.

Ok, can somebody please clarify if the great DoD Contracting Software in the Sky has a mandatory data element to identify that a service contract is a multi-year service contract?  It would seem logical to me that the proponent for the legislation to provide  the authority and the pilot program would certainly be able to determine what contracts are using the authority or are otherwise MYS contracts. Just curious . 

Edit:  if not, then DoD should put out a data call, not require their contractor to. Just saying.

SRose said:

I am looking for service contracts that are specifically multi-year contracts of whatever length.

What I think SRose means is of whatever length up to five years. The study is about service contracts that are annually funded, but for which multi-year authority is granted in accordance with FAR Subpart 17.1. The study is about the prospects from legislation that would permit such contracts to be for more than five years.

This isn't hard. SRose wants to communicate with someone who has used a multi-year service contract. If you've used one, contact SRose based on the info in the OP. If you know someone who's used one, pass the info on to SRose. If you haven't used one and don't know anyone who's used one, have a nice day.

joel hoffman said:

Edit:  if not, then DoD should put out a data call, not require their contractor to. Just saying.

Horse pucky. Why not.

bob7947 said:

Would utility contracts be considered service contracts?

Yes. Look at the title of FAR Part 41. Look at the definition in FAR 41.101.

I presume that a multi-year service contract will be one that requires the contractor to make a long-term capital investment.

SRose said:

We have found many other types of contracts (ESPCs, services under working capital funds etc.) that have been very helpful to us.

@SRose - I understand the following do not fall under the FAR part 17 but under 36 CFR Part 51 but offering as they may be helpful if you have not already looked at.

National Park Service - Concessions contracts.  Especially "headquarters contracts" are for periods of 10 years

Thank you Vern for 41.1.

SRose:

You may try DLA.  I'm not sure if privatization fits your directions but there must be some knowledge there.  It fits services listed in 10 U.S. Code § 2306c (b).  Also, Defense Environmental Remediation contracts fits and may be at DENEX.

SRose:

The NDAA tells DoD to conduct the study 

Quote

by commercial companies, foreign governments, and State governments, as well as service contracts for periods longer than five years used by the Federal Government

I assume that DoD repeated the requirement in your study.  As a matter of personal interest, do you have separate teams covering

• commercial companies,
• foreign governments,
• State governments, and 
• the Federal Government.

A year goes by quickly.

C. Culham, thank you, I will check those out.

Bob, we have already talked to multiple commercial companies, state and foreign governments.  We are working on the Federal government now.

joel hoffman said:

Ok, can somebody please clarify if the great DoD Contracting Software in the Sky has a mandatory data element to identify that a service contract is a multi-year service contract?

Yes, FPDS has a data element for multiyear contracts, but SRose said the data are unreliable.

One thing to keep in mind with lengthy contracts involving transfer of capital assets in addition to recognizing the wasting value capital assets (which will be a primary concern of the contractor) is a capital asset's residual value at contract end. How this is handled differs according to situation at hand.

Privatization efforts for utilities and housing involve analysis of wasting assets and their residual value.

FAR Part 41 regulated utility service contracts already consider capital contribtion, so this tends not to be an issue with regulated utilities. 

Typical commercial leases involve competition and a lease vs buy analysis which  should highlight any problems on this front.

Incidentally, energy savings contracts don't present the same concern over residual value since there is no transfer of government assets (the improvrments remain government property).

Unlike all of the above, a first time or innovative  effort at a long term contract involving capital assets (in lieu of a simple fee for service where the government retains the asset)  may be difficult to fund (constraints of fiscal law on capital contribution) and may suffer for falling outside of any existing regulatory or established privatization review process.  Government shouldn't want to transfer assets to a contractor without considering the residual value at the end of the contract, but it may, ironically, be more difficult for government to fund the effort when giving formal recognition to the residual value of capital assets. Not doing so can be a very expensive mistake.

I was involved with the award of one 10-year service contract for base support services at NASA-KSC over 10 years ago (https://www.nasa.gov/centers/kennedy/news/releases/2008/release-20080618.html).

The services were pretty complex (more more than the typical "roads and commodes" base ops contract) and the SSEB took over a year (and that was with everything going smoothly and no protest) simply because the proposals and the required evaluations were so complex. You can see how this is not something you want to go through every 5 years....

Edit: our base year was 3 years (if I remember right), but the contract also included options. I believe our reason for doing a 3 year base was because we didn't think one year was sufficient to fully evaluate the contractor's performance, and therefore whether it made sense to exercise subsequent options.

Thank you MileHighAcq.  We will reach out to the contacts listed.

Out of curiosity, do other agencies distinguish between whether the services are serverable or non-severable when it comes to multi-year contracts, for the purposes of obtaining HCA approval?

In my mind, it comes down to whether you are buying more than 1 year's requirement. If the services are non-severable (e.g. it will take 3 years to complete a study), then it's essentially one requirement that spans several years rather than buying multiple years' of requirements.