CAS applicability to delivery orders under IDIQ contracts

If full CAS coverage is correclty applied to an IDIQ contract (i.e. none of the exemptions apply), does the CAS applicability flow down to all subsequently awarded delivery orders under that IDIQ contract? Example: A cost plus incentive fee delivery order for $600K which would qualify for an exemption (under $700K) except in this case the $600K delivery order is just one of many delivery orders totaling over $50 million under the CAS covered IDIQ contract. Thanks in advance for your help on this topic.

Yes, if you believe the FAR Councils. Don Acquisition has an excellent discussion of the applicability of TINA and CAS to such contract types. See his blog entry.

Don's discussion should be a "must-read" for all who deal with ID/IQ types.

H2H

Don's article also appears at 24 N&CR ? 50 (Oct. 2010). Of course, the discussion in Federal Register comments is not binding, but it seems to be the only guidance that seems to be entirely on point. Prior to FAC 2005-01 (70 Fed. Reg. 11743), it was understood to be an open question (and, to my mind at least, still is). Here's what Karen Manos says in 2 Government Contract Costs & Pricing section 60:7:

Professors Nash and Cibinic [8 N&CR ? 41] suggested that a similar approach [to an analogy drawn to Service Technicians, 70 Comp. Gen. 676 (1991), B-243606, Aug. 7, 1991, 91-2 CPD ? 136] be used in the context of applying the CAS thresholds, i.e., that the "value" of an ID/IQ contract should be determined based on the government's estimate of what will actually be ordered over the life of the contract. The professors' suggested approach seems reasonable.

I couldn't find anything suggesting Department of Defense Working Group Guidance (WGG) 76-2 discussed in the N&CR article remains current. [Edit: It appears the substance of this Guidance appears in DoD CAS Working Group Paper 76-2, which, according to DCAA's Contract Audit Manual, remains current. See, e.g., CAM section 8.103-5. I'm not sure that this is the current version, but if it is, it doesn't directly answer the issue.] The issue is mentioned in passing in Victorino & Chierichella, Multiple Award Task & Delivery Order Contracts, 96-10 Briefing Papers 1 (Sept. 1996).

If full CAS coverage is correclty applied to an IDIQ contract (i.e. none of the exemptions apply), does the CAS applicability flow down to all subsequently awarded delivery orders under that IDIQ contract? Example: A cost plus incentive fee delivery order for $600K which would qualify for an exemption (under $700K) except in this case the $600K delivery order is just one of many delivery orders totaling over $50 million under the CAS covered IDIQ contract. Thanks in advance for your help on this topic.

What did you use to determine the value of the IDIQ contract (i.e., minimum quantity, maximum quantity, something else) in making your determination that the contract is subject to the CAS?

Thanks all for jumping in. You're right; Don Acquisition's Blog was an excellent read. I understand even further now why I struggle with this question.

For what it's worth I've always viewed the CONTRACT ACTION as the basis for determining whether TINA (and in the absence of tailored definitions for TINA/CAS/Limitation of Funds/etc) or other such requirements apply. If we were to use the overarching value of a contract as the basis to apply TINA for example, one might see the requirement for submission of cost or pricing data for say a $5K delivery order under an IDIQ contract with a ceiling of $100M, or a $5K mod to a stand-alone non-competitive $200M FFP contract. Clearly that would not be practical across federal contracting business.

As Don's Blog reveals, the question gets murkier when we try to apply one definition of "contract" to all concepts such as TINA/CAS/Rule of 2 etc. Although I don't have a definitive answer I am much more informed on the topic.

NOTE: To the person who asked about whether the value was based on the Min or max value, I was simply establishing that the IDIQ was in fact correctly assigned under CAS coverage. It was more the subsequent delivery order scenarios I was seeking to clarify.

Thanks again

Thanks all for jumping in. You're right; Don Acquisition's Blog was an excellent read. I understand even further now why I struggle with this question.

For what it's worth I've always viewed the CONTRACT ACTION as the basis for determining whether TINA (and in the absence of tailored definitions for TINA/CAS/Limitation of Funds/etc) or other such requirements apply. If we were to use the overarching value of a contract as the basis to apply TINA for example, one might see the requirement for submission of cost or pricing data for say a $5K delivery order under an IDIQ contract with a ceiling of $100M, or a $5K mod to a stand-alone non-competitive $200M FFP contract. Clearly that would not be practical across federal contracting business.

As Don's Blog reveals, the question gets murkier when we try to apply one definition of "contract" to all concepts such as TINA/CAS/Rule of 2 etc. Although I don't have a definitive answer I am much more informed on the topic.

NOTE: To the person who asked about whether the value was based on the Min or max value, I was simply establishing that the IDIQ was in fact correctly assigned under CAS coverage. It was more the subsequent delivery order scenarios I was seeking to clarify.

Thanks again

How do you know that the "IDIQ was in fact correctly assigned under CAS coverage" without first answering the basic question of how to compute the value of the contract? To the best of my knowledge, how to compute the value of such a contract is an open question since I have not been able to find an appeals board or court decision that specifically addresses that issue in this context. However, there are cases that address the issue in other contexts that hold that it is the minimum amount that determines the value of an IDIQ contract. For example, see Travel Centre v. Barram, 236 F.3d 1316 (2001) and Varilease Technology Group, Inc. v. U.S., 289 F.3d 795 (2002).

Retreadfed,

Good point but it was just a ficticious IDIQ I made up with the assumption that CAS applied so I could get to the delivery order question. But to your point, if we were to use the minimum value of an IDIQ as you suggested to determine what applies, I could see problems in that many of the minimum values I've seen over the years were simply nominal values (despite the guidance at 16.504(a)(2) which states it should be more than a nominal quantity). Example: more often than not I've seen IDIQ minimum assigned something like $1000 with a ceiling/anticipated value of $100M. Not saying it's right, only that's what I've seen.

How do you know that the "IDIQ was in fact correctly assigned under CAS coverage" without first answering the basic question of how to compute the value of the contract? To the best of my knowledge, how to compute the value of such a contract is an open question since I have not been able to find an appeals board or court decision that specifically addresses that issue in this context. However, there are cases that address the issue in other contexts that hold that it is the minimum amount that determines the value of an IDIQ contract. For example, see Travel Centre v. Barram, 236 F.3d 1316 (2001) and Varilease Technology Group, Inc. v. U.S., 289 F.3d 795 (2002).

It is not an open question of how to compute the value of an IDIQ contract for purposes of application of dollar thresholds. See FAR 1.108( c). For purposes of application of dollar thresholds, the value of an IDIQ contract is the contract maximum.

It is not an open question of how to compute the value of an IDIQ contract for purposes of application of dollar thresholds. See FAR 1.108( c). For purposes of application of dollar thresholds, the value of an IDIQ contract is the contract maximum.

Vern, I appreciate your opinions and insights. However, I know there are others whose opinions I also appreciate who have a different view. Can you support this assertion with some authoritative citation?

The issue is the dollar value of an IDIQ contract for purposes of the application of dollar thresholds. I gave you an authoritative citation -- FAR 1.108( c). I am not offering you an opinion or insight. I'm reporting the language of the Federal Acquisition Regulation.

I know of no case dealing with determinations of dollar value of an IDIQ for the purposes of applying dollar thresholds. I know of no case that invalidates the rule in FAR 1.108( c) and neither do you. Neither of the cases cited by you has anything whatsoever to do with the determination of dollar values of IDIQ contracts for the purpose of applying dollar thresholds. Nothing whatsoever. The courts and the boards have relied on FAR 1.108 for other purposes, so why not the one in question? See Bearing Point, Inc. v. U.S., 77 Fed. Cl. 109 (2007) and Textron, Inc. v. U.S., 74 Fed. Cl. 277 (2006).

See also FAC 2005-50, 76 FR 14559, 14560, March 16, 2011:

The FAR (1.108( c)) establishes the following rule:

Dollar thresholds. Unless otherwise specified, a specific dollar threshold for the purpose of applicability is the final anticipated dollar value of the action, including the dollar value of all options. If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events, the final anticipated dollar value must be the highest final priced alternative to the Government, including the dollar value of all options.

Unless there is a specific reason, such as a statutory requirement to establish the dollar value of a procurement using a different method, agencies will not deviate from this FAR convention.

See also FAC 2005-22, 72 FR 65873, 65877, November 23, 2007:

Comment: One respondent is concerned that the rule fails to state how the $5 million threshold for the application of the clause is to be determined and questions if the threshold should apply to contracts with multi-years as the option years for such contracts may not be awarded, thereby impacting the total value of the contract award. The respondent recommends that the threshold apply to contracts with one term and only to the base year in contracts with options.

Response: FAR 1.108( c) provides uniform guidance for application of thresholds throughout the FAR.

IDIQ contracts establish a maximum quantity (dollar value) pursuant to FAR 16.504(a)(1) and (4)(ii). There is no statutory requirement to establish the dollar value of an IDIQ contract for purposes of applying dollar thresholds using a different method.

As far as I'm concerned, there is no issue. You can think what you please.

Gibson, don't think in terms of contract actions. The general rule is, "If the initial contract is covered, changes and amendments thereto are also subject to CAS, even though they might otherwise be exempted ($500,000 or under, for example). If, however, the initial contract is not covered, changes and amendments are not covered." Cibinic & Nash, Cost-Reimbursement Contracting (3d Ed. 2004), at 661.

In this Wifcon thread from 9 Nov 07, Vern discussed how "CAS may apply on a task order by task order basis." It isn't obvious to me whether I've misunderstood his post, he has changed his mind or if the issues in the two threads are distinguishable.

Prior to 4 Nov 93, "net awards" in the CAS meant "the total obligated value of negotiated prime contract and subcontract awards received during the reporting period." (emphasis added). The CASB redefined "net awards" on 4 Nov 93 to mean the total value of negotiated covered prime contract and subcontract awards, including the potential value of contract options received during the reporting period.

The issue as I understand it (which apparently is not very well) is whether task orders against an ID/IQ contract should be treated like options for purposes of assessing CAS coverage. The FAR Council appears to believe that they should. Is the "total value" of an ID/IQ contract (when no longer tied to a government obligation) its ceiling? Probably [edit: for a priced IDIQ]. Nash & Cibinic in the article I cited earlier attempts to distinguish task orders from options, but they don't go so far as to suggest that the contract minimum should be used in assessing whether CAS applies. They did, however, recommend something other than contract ceiling. However, this article--while after the CAS change--was before FASA (and, of course, before the comment in the Federal Register). I don't think anyone would fault a CO for using the ceiling.

Jacques,

Thank you. Your insight is very helpful. Your latest post draws an important distinction between CAS and TINA (i.e. it's not uncommon to hear some of our junior folks get these to concepts intertwined).

You point out the idea that one should not be thinking in terms of "action" value when considering the application of CAS but rather the [potential] contract value. But clearly the value of a given contract "action" (mod, delivery order, other) would drive the applicability of TINA and whether a certification is required. Agree?

But clearly the value of a given contract "action" (mod, delivery order, other) would drive the applicability of TINA and whether a certification is required. Agree?

The question seems to be off-topic, so it might be better for a different thread. I recommend a close read of Don's blog entry, "Commonly Understood": I Think Not. If you have access to it, I would also encourage you to take a look at Nash & Cibinic, Task Order Contracting: Too Much of a Good Thing?, 7 N&CR ? 63 (Nov. 1993).

Here is the original question in this thread:

If full CAS coverage is correclty applied to an IDIQ contract (i.e. none of the exemptions apply), does the CAS applicability flow down to all subsequently awarded delivery orders under that IDIQ contract? Example: A cost plus incentive fee delivery order for $600K which would qualify for an exemption (under $700K) except in this case the $600K delivery order is just one of many delivery orders totaling over $50 million under the CAS covered IDIQ contract. Thanks in advance for your help on this topic.

The applicability of CAS to an IDIQ contract is a complex question for several reasons. First among them is that IDIQ contracts can be written so as to enable an agency to buy different things under different contract types. Dollar threshold is only one criterion for determining the applicability of CAS. Here is the rule about CAS applicability, from 48 CFR ? 9903.201-1(:

( The following categories of contracts and subcontracts are exempt from all CAS requirements:

(1) Sealed bid contracts.

(2) Negotiated contracts and subcontracts not in excess of the Truth in Negotiations Act (TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502((1)(). For purposes of this paragraph ((2), an order issued by one segment to another segment shall be treated as a subcontract.

(3) Contracts and subcontracts with small businesses.

(4) Contracts and subcontracts with foreign governments or their agents or instrumentalities or, insofar as the requirements of CAS other than 9904.401 and 9904.402 are concerned, any contract or subcontract awarded to a foreign concern.

(5) Contracts and subcontracts in which the price is set by law or regulation.

(6) Firm fixed-priced, fixed-priced with economic price adjustment (provided that price adjustment is not based on actual costs incurred), time-and-materials, and labor-hour contracts and subcontracts for the acquisition of commercial items.

(7) Contracts or subcontracts of less than $7.5 million, provided that, at the time of award, the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts or subcontracts valued at $7.5 million or greater.

(8)?(12) [Reserved]

(13) Subcontractors under the NATO PHM Ship program to be performed outside the United States by a foreign concern.

(14) [Reserved]

(15) Firm-fixed-price contracts or subcontracts awarded on the basis of adequate price competition without submission of cost or pricing data.

Now suppose that you have an IDIQ contract which permits orders to be priced in different ways, e.g., FFP, CPFF, and T&M, with or without competition, and for different items of supply or different kinds of services, e.g., both commercial and noncommercial items. (Contracts for commercial items are exempt.) And suppose that each order stands alone, i.e., has no connection to other orders except for the fact that they were issued under the same contract. So it is possible that one order might be exempt pursuant to the above regulation, while other orders are not.

To the best of my knowledge the issue of whether the exemptions apply to all orders under the contract or only to the nonexempt orders has not been resolved by any tribunal - BCA, Court of Federal Claims, or Federal Circuit. I think that a good argument could be made for applicability at the order level. I also think that a good argument could be made for applicability at the contract level.

In looking at whether a task order or delivery order is a contract, it is interesting to see how the terms ?negotiated? and ?acquisition? might apply in making a distinction on whether a task order or delivery should be considered a contract or not. Could it be possible that under certain IDIQs, that if a task order is awarded though an acquisition process that it is considered a contract, and if it is just an order placed for supplies and services under an existing contract, without going through an ?acquisition? then it is not considered a contract? The definition of acquisition in 2.101 includes the ?acquiring by contract? and ?solicitation and selection of sources?. It is easy to see some task orders and delivery orders under IDIQs falling under this context and others not.

FAR part 15 applies to ?negotiated acquisitions? and ?negotiated contracts?, not just contracts. Likewise, FAR part 30 applies to ?negotiated contracts?. Perhaps some task orders and delivery orders do not fall under ?negotiated contracts?.

If you read DON?s blogs on this subject carefully from this vantage you do not necessarily see a conflict.

In looking at whether a task order or delivery order is a contract, it is interesting to see how the terms ?negotiated? and ?acquisition? might apply in making a distinction on whether a task order or delivery should be considered a contract or not. Could it be possible that under certain IDIQs, that if a task order is awarded though an acquisition process that it is considered a contract, and if it is just an order placed for supplies and services under an existing contract, without going through an ?acquisition? then it is not considered a contract? The definition of acquisition in 2.101 includes the ?acquiring by contract? and ?solicitation and selection of sources?. It is easy to see some task orders and delivery orders under IDIQs falling under this context and others not.

FAR part 15 applies to ?negotiated acquisitions? and ?negotiated contracts?, not just contracts. Likewise, FAR part 30 applies to ?negotiated contracts?. Perhaps some task orders and delivery orders do not fall under ?negotiated contracts?.

If you read DON?s blogs on this subject carefully from this vantage you do not necessarily see a conflict.

Whynot,

At this point, there is (or should be) little doubt in any acquisition professional's mind that each task/delivery order is, indeed, a contract as defined in FAR 2.101. The ASBCA just bolstered this interpretation in July.

See WestWind Technologies, No. 57436.

Appellant contends that the $100,000 fee withholding limitation stipulated in FAR 52.216-8( is to be applied once per each of the two base contracts, regardless of the number, prices and fees oftask orders issued. Appellant emphasizes that FAR 52.216-8( is included in the base contract and argues that the limitation applies to ''this contract."

The government maintains that the fixed-fee withholding limitation applies to each order, arguing that the orders meet the FAR 2.101 definition of a contract and the base contract does not contain a schedule or fixed-fee. Therefore, the only appropriate interpretation according to the government is to apply the Fixed Fee clause withholding limitation to each order.

Summary judgment for Government. Motion for reconsideration denied.

The only area of controversy appears to be the valuation of the ID/IQ contract (sans any Task/Delivery orders) for purposes of determining CAS coverage. Vern and I differ on whether FAR 1.108© is dispositive. One day, perhaps soon, a Court will address this issue and let us all know what the correct answer is.

help:

Why do we differ? On what basis do you think that the value is determined if not on the basis of 1.108( c)? The CAS give no instructions. I don't think that that any court of board has stated a different standard. You have to have some basis. What's yours and why does it trump 1.108( c)?

help:

Why do we differ? On what basis do you think that the value is determined if not on the basis of 1.108( c)? The CAS give no instructions. I don't think that that any court of board has stated a different standard. You have to have some basis. What's yours and why does it trump 1.108( c)?

Vern,

As you know it's my general policy not to get into extended arguments on a public forum. In addition, this issue is related to some ongoing litigation so I need to be careful what I post.

I will offer the opinion that using FAR to interpret CAS violates 41 U.S.C. 1502. The statute gives the CAS Board -- and not the FAR Councils -- "the exclusive authority to make, promulgate, amend, and rescind cost accounting standards and interpretations thereof designed to achieve uniformity and consistency in the cost accounting standards governing measurement, assignment and allocation of costs to contracts with the United States." (Emphasis added.)

And that's all I'm going to say on this topic.

H2H

help:

You enter the discussion and say that you disagree on the basis for determining the value of a contract, but won't say on what basis you would make the determination. What's the point in that? If you can't or won't fully explain, perhaps you shouldn't comment at all.

A CO must decide whether or not CAS apply. The CAS Board has given no guidance on how to determine the dollar value of a contract for purposes of application of the threshold. A CO must have some rational basis for making a decision in that regard. FAR 1.108( c) provides a rational basis, and the CAS are part of the FAR System. Anyone who disagrees with that basis must show that it conflicts with the CAS Board's rules or that some other basis would be more reasonable.

In 2 Government Contract Costs & Pricing 2d, ? 60:7, Karen Manos discusses this issue and says that it is something of a mystery, since no reported cases have addressed the issue. I can't quote her at length because of copyright limitations, but I don't think that the "estimated value" method she discusses as recommended by Cibinic and Nash will work in today's IDIQ multiple award environment, and other experts, including Nash, also doubt it. Who knows? FAR 1.108( c) has the advantage over the "estimated value" approach by setting a clear, uniform standard of applicability.

As for using FAR to interpret CAS, I don't think there is any issue unless FAR conflicts with something the CAS Board has stated, in which case the CAS would govern. There is no conflict between FAR 1.108( c) and anything the CAS Board has said, because the CAS Board has been silent on the issue of determining the value of an IDIQ contract for applicability purposes. And see ATK Thiokol, Inc. v. U.S., 68 Fed. Cl. 612 (2005):

Where the CAS does not provide a definition of a particular term or phrase, the United States Court of Appeals for the Federal Circuit has advised trial courts to consult dictionaries or definitions in related regulations for interpretative guidance. See Rumsfeld v. United Technologies Corp., 315 F.3d 1361, 1369 -1370 (Fed.Cir.2003) (?We initially turn, therefore, to standard dictionary definitions and other pertinent regulations.?) (citing Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 477, 112 S.Ct. 2589, 120 L.Ed.2d 379 (1992) (relying on dictionary definition and related statutory provisions to interpret a statute)); see also Wis. Dep't of Revenue v. William Wrigley, Jr., Co., 505 U.S. 214, 223, 112 S.Ct. 2447, 120 L.Ed.2d 174 (1992) (using BLACK'S LAW DICTIONARY to interpret a statute).

Emphasis added. Note, for example, that 48 CFR Part 9903, Contract Coverage, does not define "negotiated contract." Is it defined anywhere in the CAS? If not, how can you know what that term means, and apply CAS, without consulting FAR 15.000? FAR is used to interpret many regulations that are promulgated by other officials. See, e.g., virtually all of FAR Part 22, which interprets regulations that only the Secretary of Labor can issue.

And suppose that each order stands alone, i.e., has no connection to other orders except for the fact that they were issued under the same contract. So it is possible that one order might be exempt pursuant to the above regulation, while other orders are not.

Vern, thanks for clarifying. The 1993 CAS change appears to change the focus from what the government has obligated to what the government can unilaterally do (exercise option, incrementally fund). To my mind, the heart of your observation is the absence of a unilateral right in the government to issue a priced order. To keep with the option analogy, the option has to be a "priced option" to be included in calculating whether the threshold has been met. Put somewhat differently, for purposes of CAS, an IDIQ basic contract that lacks binding prices (or, perhaps in some circumstances like a term or best efforts contract, binding rates) looks more like a basic ordering agreement (where CAS coverage is determined on an order-by-order basis) than it does an option. If you feel I've missed the point, I'd appreciate additional clarification.

H2H

I read the cited case - it appears that there was some very specific terms and conditions in the contract dealing with the handling of task orders. The decision was based on the stated language in the contract - not on any interpretation of FAR or otherwise. Try again.

I don't think you've missed the point. What I think is that the modern IDIQ contract for services (task order contract) confronts us with issues that have not been addressed by the regulation writers and that have not been resolved by the courts. Until there is some resolution, COs must do the best they can to decide how to go forward. That means that compliance will be uncertain and implementation will be inconsistent.

Actually, I think the case that H2H cited supports my position. Clearly each task order went through an acquisition process whereby they were individually solicited, negotiated and awarded. They appear to be separate negotiated contracts.

http://www.asbca.mil/Decisions/2011/57436_072111_WEB.pdf

I would think that we could look to FAR 15.000 for a definition of ?negotiated contract?. Looks to be a contract awarded through a competitive or noncompetitive negotiated acquisition procedure. We also know that a contract awarded through a sealed bid acquisition procedure is not a negotiated contract. We can look to FAR 2.101 for a defintion of acquisition.

There does appear to be a distinction between a contract and a negotiated contract.

So, while each task order may indeed be a contract not all task orders are negotiated contracts.

I will offer the opinion that using FAR to interpret CAS violates 41 U.S.C. 1502.

That is a remarkable assertion. So when we interpret the term "commercial item" at 48 CFR 9903.201-1( b )(6), where it states that commercial items are generally exempt from CAS, we should not use the definition at FAR 2.101 because doing so would violate 41 U.S.C. 1502? If so, then what definition of "commercial item" should we use?

That is a remarkable assertion. So when we interpret the term "commercial item" at 48 CFR 9903.201-1( b )(6), where it states that commercial items are generally exempt from CAS, we should not use the definition at FAR 2.101 because doing so would violate 41 U.S.C. 1502? If so, then what definition of "commercial item" should we use?

Don I believe logic suffers from the "false analogy fallacy".

H2H

That is a remarkable assertion. So when we interpret the term "commercial item" at 48 CFR 9903.201-1( b )(6), where it states that commercial items are generally exempt from CAS, we should not use the definition at FAR 2.101 because doing so would violate 41 U.S.C. 1502? If so, then what definition of "commercial item" should we use?

Don, if we go back in history, we find that the definition of commercial item in FAR 2.101 comes from FASA. The exemption of commercial items from CAS requirements is also found in FASA. It is a principle of statutory interpretation that when a term is used more than once in the same statute that congress intended the same meaning to apply each time the term is used. Applying this principle, it is FASA, not FAR or CAS, that provides the answer to your question.

Don I believe logic suffers from the "false analogy fallacy".

H2H

Please clarify.

Vern,

As you know it's my general policy not to get into extended arguments on a public forum. In addition, this issue is related to some ongoing litigation so I need to be careful what I post.

I will offer the opinion that using FAR to interpret CAS violates 41 U.S.C. 1502. The statute gives the CAS Board -- and not the FAR Councils -- "the exclusive authority to make, promulgate, amend, and rescind cost accounting standards and interpretations thereof designed to achieve uniformity and consistency in the cost accounting standards governing measurement, assignment and allocation of costs to contracts with the United States." (Emphasis added.)

And that's all I'm going to say on this topic.

H2H

H2H, you said "this issue is related to some ongoing litigation." Can you be more specific regarding the litigation such as the forum and the parties, if a complaint has been filed what the specific issue is in the litigation. If the issue being litigated is how to interpret 1.108©, I think that would be of great interest to this forum.

Don, if we go back in history, we find that the definition of commercial item in FAR 2.101 comes from FASA. The exemption of commercial items from CAS requirements is also found in FASA. It is a principle of statutory interpretation that when a term is used more than once in the same statute that congress intended the same meaning to apply each time the term is used. Applying this principle, it is FASA, not FAR or CAS, that provides the answer to your question.

CAS apply only to nonexempt "negotiated contracts," 48 CFR ? 9903.301-1. The term "negotiated contract" is used in many places in the United States Code and the Code of Federal Regulations, but, unless I missed it, the term is not defined in the USC and is defined in only two places in the CFR: 7 CFR ? 1753.2 and 48 CFR ? 15.000. Title 7 of the CFR contains the rules about agriculture. Title 48 is, of course, the FAR system, which include the CAS. In both places in the CFR "negotiated contract" is defined as a contract awarded through other than sealed bidding.

According to Manos, 1 Government Contract Costs & Pricing 2d, ? 5.3:

A contract awarded using anything other than sealed bidding is considered a negotiated contract.[FN1]... Negotiated contracts in excess of the applicable thresholds are subject to CAS[FN5] and TINA[FN6] unless an exception applies.

Footnote 1 cites FAR 15.000. Footnote 5 cites 48 CFR ? 9903.301-1(a). Footnote 6 cites FAR 15.403-4(a)(1)(i).

The assertion that it is improper to use FAR to interpret the CAS rules is absurd. Cryptic and mystical comments about logical fallacies don't validate the assertion. Deliberate obscurity is a sure sign of the lack of a valid argument.

The assertion that it is improper to use FAR to interpret the CAS rules is absurd, cryptic and mystical comments about logical fallacies notwithstanding. Deliberate obscurity is a sure sign of the lack of a valid argument.

Vern,

This extended part of the thread started when you asked me to explain why I posted that you and I would differ on the use of your cited FAR rule to support an interpretation that the proper contract valuation of an ID/IQ contract was the maximum ceiling amount and not another amount. I hesitated to respond, for the reason I stated in my response. Against my better judgment I provided some answer, since I thought it was only fair to you.

And now I see even providing that much of a response was a mistake. I should have remained silent. Shame on me.

Your thinly veiled ad hominem attacks notwithstanding, I refuse to be drawn into this discussion any further.

Retreadfed: I cannot and will not comment any further.

H2H

here_2_help: That's weak. You popped in, dropped an unexplained I disagree, later gave an intentionally incomplete explanation for it and said you wouldn't say more, and then gave Don a cryptic answer. What was the point? Bad form. I would never have done anything so cheap. And you don't know what an ad hominem attack is. Here is an example of an ad hominem attack:

William Bennett?, leader? of the antirap campaign?, [has] had no trouble finding antipolice and antiwomen lyrics to quote in support of [his] claim that "nothing less is at stake than civilization" if rappers are not rendered silent. So odious are the lyrics, that rarely do politicians or journalists stop to ask what qualifies Bennett to lead a moralistic crusade on behalf of America's minority youth. Not only has he opposed funding for the nation's leader in quality children's programming (the Public Broadcasting Corporation), he has urged that "illegitimate" babies be taken from their mothers and put in orphanages.

I attacked your comments, not you. And when I attack, I don't do "thinly veiled."

Ordinarily, I look forward to your posts on issues like this one, because I have great respect for your knowledge about cost and pricing issues. I had hoped you would post, wondered where you were, and almost asked you to comment. Now, however, I hope you keep your resolution not to say anything more.

I started this string and harvested several pearls of wisdom from the exchange. It reveals a vast knowledge of the federal contracts business. Wouldn?t we all agree that opposing positions have even more credibility when egos are not allowed to obscure a vigorous debate on the issues?

I may be completely off base because you both go back many years and this is the way you do it. If that?s it, then my comments are only because I haven?t spent enough time on this terrific forum to know that. Otherwise I enjoyed the ride. You guys are great. Shake hands and continue to offer each other differing opinions.

H2H said that "this issue is related to some ongoing litigation, " then indicated that he can't go into more explanation. Yes, it seems like a teaser to originally offer an opinion that one can't discuss. H2H did offer a Mea Culpa for saying anything about it. I think we probably ought to allow him (or her) to leave it at that for now.

CAS apply only to nonexempt "negotiated contracts," 48 CFR ? 9903.301-1. The term "negotiated contract" is used in many places in the United States Code and the Code of Federal Regulations, but, unless I missed it, the term is not defined in the USC and is defined in only two places in the CFR: 7 CFR ? 1753.2 and 48 CFR ? 15.000. Title 7 of the CFR contains the rules about agriculture. Title 48 is, of course, the FAR system, which include the CAS. In both places in the CFR "negotiated contract" is defined as a contract awarded through other than sealed bidding.

According to Manos, 1 Government Contract Costs & Pricing 2d, ? 5.3:

Footnote 1 cites FAR 15.000. Footnote 5 cites 48 CFR ? 9903.301-1(a). Footnote 6 cites FAR 15.403-4(a)(1)(i).

The assertion that it is improper to use FAR to interpret the CAS rules is absurd. Cryptic and mystical comments about logical fallacies don't validate the assertion. Deliberate obscurity is a sure sign of the lack of a valid argument.

I don't see a connection between the quoted post and this response. Am I missing something?

We don't need to shake hands. I both like and respect H2H. I just didn't like what he did. I hope that he respects me, although I know that he has not liked things that I have done. No big deal. No need for peacemakers.

I don't see a connection between the quoted post and this response. Am I missing something?

I don't understand your comment, so I don't know if you're missing anything. The quoted post is mine. What response are you referring to?

I don't understand your comment, so I don't know if you're missing anything. The quoted post is mine. What response are you referring to?

Going back to your post of 4:48 yesterday, you start with a post I made earlier that day responding to a question Don asked of H2H. You then launch into a discussion that does not appear to be related to my post which you quoted. I don't see a connection between my post that you quoted and what you stated thereafter. Thus, my question as to whether I am missing something.

Oh.

Don made the point that if you couldn't use FAR to interpret CAS, then how would you know how to define "commercial item" as used in CAS 9903.301.

You responded by making the point that "commercial item" is defined by statute, which I took to mean that you did not think that he he had proved his point, and that it's okay to rely on statute to interpret CAS, but not on the FAR.

My response was to point out that you have to know what a "negotiated contract" is in order to apply CAS 9903.301. That term is not defined in statute, only in two titles of the CFR, one of which is FAR. My point is that you need the FAR in order to define "negotiated contract," which shows that you need FAR in order to interpret CAS and that it is not improper or impermissible, as H2H has asserted, to rely on FAR 1.108( c) in order to determine the dollar value of an IDIQ contract for purposes of application of the CAS dollar thresholds.

It seems the FAR Councils are making a distinction between an order and a contract and are treating each differently for application of certain regulations in FAR case 2011-025.

http://www.gpo.gov/fdsys/pkg/FR-2012-07-26/pdf/2012-18276.pdf

doh

Looks like I wasn't so far off - go figure.

http://www.asbca.mil/Decisions/2012/57400%20MCC%20Construction%20Corporation%207.16.12%20WEB.pdf

"Contrary to the government's contention, FAR 2.101 does not define a task order as a contract in the first instance. FAR 2.101 defines a task order as "an order for services placed against an established contract or with Government sources." While a task or delivery order may also be a contract under some circumstances, see AmerescoSolutions, Inc., ASBCA Nos. 56824, 56867, 11-1 BCA ~ 34,705 at 170,906, the plain meaning ofthe Act does not suggest such an interpretation here."

Whynot,

Note that the ASBCA was trying to interpret the word "contract" as it was used in the Small Business Competitiveness Demonstration Program Act--not as it is used in the FAR.

In light of the above ASBCA decision, do you think that "contract opprtunities" or "contracting opportunities" in FAR Part 19 could refer to either contracts or task orders or both? The language is very close.

Where in FAR part 19? The subpart implementing the Small Business Competitiveness Demonstration Program was removed.

the terms are used elsewhere in FAR part 19.

Likewise, FAR Part 5, Publicizing Contract Actions, does every task order fall within a “contract action”? Maybe we have to look beyond the word contract, and look to its usage, such as “contract opportunity” and “contract action”.

"Contract opportunities" appears once in FAR part 19--at FAR 19.201(d)(11). "Contracting opportunites" appears once in FAR part 19, at FAR 19.402( c )(2), as part of the term "prime contracting opportunities." Neither term is defined in the FAR. Since the applicable definition of "contract" at FAR 2.101 is broad enough to include task orders, I would interpret "contract opportunities" to include opportunities for task orders. "Contracting opportunities" appears to be synonymous with "contract opportunities", so I think that would include task orders, too.

As far as FAR part 5, "contract action" is defined at FAR 5.001 as follows:

"'Contract action,'as used in this part, means an action resulting in a contract, as defined in Subpart 2.1, including actions for additional supplies or services outside the existing contract scope, but not including actions that are within the scope and under the terms of the existing contract, such as contract modifications issued pursuant to the Changes clause, or funding and other administrative changes."

Given that definition, a task order within the scope and under the terms of an existing contract would not be a "contract action." Alternatively, if such a task order were a "contract action", it would be excepted from the synopsis requirement pursuant to FAR 5.202(a)(11).

Gibson, don't think in terms of contract actions. The general rule is, "If the initial contract is covered, changes and amendments thereto are also subject to CAS, even though they might otherwise be exempted ($500,000 or under, for example). If, however, the initial contract is not covered, changes and amendments are not covered." Cibinic & Nash, Cost-Reimbursement Contracting (3d Ed. 2004), at 661.

In this Wifcon thread from 9 Nov 07, Vern discussed how "CAS may apply on a task order by task order basis." It isn't obvious to me whether I've misunderstood his post, he has changed his mind or if the issues in the two threads are distinguishable.

Prior to 4 Nov 93, "net awards" in the CAS meant "the total obligated value of negotiated prime contract and subcontract awards received during the reporting period." (emphasis added). The CASB redefined "net awards" on 4 Nov 93 to mean the total value of negotiated covered prime contract and subcontract awards, including the potential value of contract options received during the reporting period.

The issue as I understand it (which apparently is not very well) is whether task orders against an ID/IQ contract should be treated like options for purposes of assessing CAS coverage. The FAR Council appears to believe that they should. Is the "total value" of an ID/IQ contract (when no longer tied to a government obligation) its ceiling? Probably [edit: for a priced IDIQ]. Nash & Cibinic in the article I cited earlier attempts to distinguish task orders from options, but they don't go so far as to suggest that the contract minimum should be used in assessing whether CAS applies. They did, however, recommend something other than contract ceiling. However, this article--while after the CAS change--was before FASA (and, of course, before the comment in the Federal Register). I don't think anyone would fault a CO for using the ceiling.

Bumping up an old topic.... I cannot find the 9 Nov 07 on "CAS may apply on a task order by task order basis." Perhaps it is too old to query.

I have an FFP IDIQ supply contract. The contract contains five option years; all with negotiated/priced CLINS established prior to the basic contract award.

Question: What portions of this contract are/ would be CAS covered? Would it be each delivery order, each option year (though exercise of an option year does not generate a delivery order), or the five year IDIQ contract in its entirety? I cant seem to find a clear answer anywhere and looking for some opinions. Thanks

I will check if I can find it.

Which CAS clause is in your contract?

Below is the post requested which was titled CAS Covered, or Not? It was posted by Vern and the entire thread looks interesting. I'll see what I can do to add the entire thread to the archives. Below is Vern's post:

------------------------------------------------------------------
Posted on Friday, November 09, 2007 - 09:23 am:
------------------------------------------------------------------

This thread raises an interesting issue concerning IDIQ contracts that has never been resolved.

According to here_2_help, all CLINs of the hypothetical IDIQ contract are to be firm-fixed-price. Presumably, the offerors are to propose labor rates (presumably "loaded"). The total amount for labor and for other direct costs applicable to each task order will be negotiated on a task order by task order basis. Here_2_help has not said whether the contract would be multiple award or single award.

If I understand the situation correctly, and I'm not sure that I do, the hypothetical contracting officer has taken the position that CAS will/might apply to individual task orders because amounts for other direct costs will be negotiated on a task order by task order basis, without adequate price competition. Is that right, here_2_help?

If that's the situation, see FAR 16.505(B )(3), which reads as follows:

"Pricing orders. 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."

I maintain that the hypothetical contract will not establish the price for the services to be acquired thereunder. It will merely establish an advance agreement on the amount that the contractor may include in its proposed task order price for an hour of labor, including cost and profit. The price for the service described in each work statement will be the total amount agreed upon for each task order, which will be negotiated prior to issuance of the task order. That being the case, and depending whether the contract would be multiple award and on how the task orders would be awarded, there may not be adequate price competition for task order pricing. That being the case, TINA and CAS may apply on a task order by task order basis.

This has been a long-standing, lurking issue that no one has wanted to face because of the unpleasant implicatioins. I feel very comfortable with my position. Some will argue that price has been established because the parties have agreed upon fixed labor rates, but that position is an insult to the intelligence of a knowledgeable and competent contracting professional. That argument may be valid if orders would be priced on a T&M or L-H basis, but not if they will be priced on a firm-fixed-price basis, under which the contractor will not be paid by the hour, but for task completion.

I think the hypothetical contracting officer is right, assuming that the contract meets other CAS criteria. But I'd wager that he/she thinks that TINA would not apply on an order-by-order basis, a position which would be inconsistent with his/her position on CAS.

As for the legal status of the working group guidance, no one has cited a specific statement within that 60 page document. I have not read it in more than 20 years, I have no intention of reading it to find out what you are all referring to, and, in any case, I'm not a lawyer so you probably don't care about my opinion as to its legal standing.

The entire thread from November 2007 is now online at: CAS Covered, or Not?

Which CAS clause is in your contract?

52.230-2

52.230-6

I have an FFP IDIQ supply contract. The contract contains five option years; all with negotiated/priced CLINS established prior to the basic contract award.

Question: What portions of this contract are/ would be CAS covered? Would it be each delivery order, each option year (though exercise of an option year does not generate a delivery order), or the five year IDIQ contract in its entirety? I cant seem to find a clear answer anywhere and looking for some opinions. Thanks.

I think JMG's principal question is whether the CAS apply to each and every order under an IDIQ contract or on an order-by-order basis depending upon each order's attributes. JMG appears to assume that there is a statute, regulation, or policy that answers his/her question. If there is, I do not know about it. I believe that the long and the short of it is that whoever wrote JMG's contract should have thought of how the CAS would apply to orders -- whether across the board or case-by-case -- and provided an answer in the contract itself as one of its terms.

As to whether the CAS apply to each option year or the five year contract in its entirety, the answer seems obvious to me -- to the extent that they apply at all, they apply throughout the life of the contract unless the contract says otherwise.

I think JMG's principal question is whether the CAS apply to each and every order under an IDIQ contract or on an order-by-order basis depending upon each order's attributes. JMG appears to assume that there is a statute, regulation, or policy that answers his/her question. If there is, I do not know about it. I believe that the long and the short of it is that whoever wrote JMG's contract should have thought of how the CAS would apply to orders -- whether across the board or case-by-case -- and provided an answer in the contract itself as one of its terms.

As to whether the CAS apply to each option year or the five year contract in its entirety, the answer seems obvious to me -- to the extent that they apply at all, they apply throughout the life of the contract unless the contract says otherwise.

Yes, you are correct in your assumptions, Vern. I was looking for a "smoking gun" of sorts. It is interesting that IDIQ CAS applicability may be dictated by the terms of the contract. One would think it would be engrained in statute or policy. It would be helpful if the FAR 30.202-6b phrase "CAS-covered contract" were defined in FAR 30.001, but it is not. I am inclined to abide by the definition of a contract in FAR 2.101 where I interpret each delivery order to be a contract, which is then applicable to the CAS. Just my thought process. Agree this could be clarified in the terms of the contract to alleviate debate. Thanks.

No smoking gun, JMG. However, there is an NCMA Webinar on the topic.

I haven't watched it, but it may be helpful.

JMG, while I have not been able to find it, DPAP issued a memo on this topic a couple of years ago. If you work for DoD, maybe you can find it.