Multiple Award IDIQ Contracts - What are they?

Vern Edwards said:

Two questions:

1. When the government makes "multiple awards" pursuant to FAR 16.505(c)(1), is it---

     (A) awarding a single contract with multiple parties, each of which is severally liable or

     (B) establishing a pool of multiple separate contracts with the same terms?

2. As a practical matter, does it make a difference?

These are not "trick" questions. I am trying to answer them for myself and want to see what others think.

Does each award to a pool member have a separate contract number. If so, (B) applies. If no, then it would seem that (A) applies. As a practical matter,  I would thank it is administratively difficult, if not impossible to have one contract and one contract number with multiple contractors when dealing with contracting software programs, databases, keeping track of separate funding,  DFAS, segregating writing and tracking correspondence, performance evaluations. etc. 

I don’t know the answer but highly suspect that each pool member has a unique contract number.

Ok: “

“16.504  

...(c) Multiple award preference-

(1)Planning the acquisition.(i) Except for indefinite-quantity contracts for advisory and assistance services as provided in paragraph (c)(2) of this section, the contracting officer must, to the maximum extent practicable, give preference to making multiple awards of indefinite-quantity contracts under a single solicitation for the same or similar supplies or services to two or more sources.”

@joel hoffman We know from treatises on the law of contracts that the term contract refers to both the agreement between the parties and the document that memorializes the agreement. See Black's Law Dictionary, 11th ed.:

Quote

contract n. (14c) 1. An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law . 2. The writing that sets forth such an agreement...

Vern, I found and posted 16.504 (c) while you were composing the above post.

Yeah, I saw it. What was your point? I'm interested in a legal analysis of the matter, not FAR references. Do you think the FAR councils thought about this matter when they wrote 16.504? I don't.

One solicitation but multiple contracts awarded.

One contract, multiple contract documents.

Vern Edwards said:

@joel hoffman We know from treatises on the law of contracts that the term contract refers to both the agreement between the parties and the document that memorializes the agreement. See Black's Law Dictionary, 11th ed.:

Perhaps different contract numbers reflect the fact that a single agreement with multiple severally liable parties is memorialized in separate documents, not that the separate documents memorialize separate contracts. Separate documents are necessary for administrative purposes.

The reason I'm think about this is the case of CE.ai, Inc., GAO B-418676, July 28, 2020, which was about a MATOC in which 15 awards had been made. In that case the GAO described an interesting fact:

 Emphasis added.

Why would they need to reallocate the cap among awardees if each of the contracts were a separate agreement? The GAO seems to describe the contract as a single agreement among multiple parties.

"If the order does not exceed the simplified acquisition threshold, the contracting officer need not contact each of the multiple awardees under the contract [singular] before selecting an order awardee if the contracting officer has information available to ensure that each awardee is provided a fair opportunity to be considered for each order."

joel hoffman said:

I don’t know how many they awarded but each contract could have had provisions for coordination between contracts... or perhaps each CLIN was for an individual contractor?

Vern Edwards said:

One contract, multiple contract documents.

Just now, joel hoffman said:

Awfully complex contract admin if they do it that way.

Vern Edwards said:

The contract could have had provisions for coordination among the contractors.

Maybe.

Vern Edwards said:

Why do you say that? If the contracts were separate, wouldn't reallocation require separate contract mods? Seems to me that one contract would be simpler.

Multiple contracts that are interrelated. The contracts I’m thinking of are entered into with two or more sources pursuant to the same solicitation; share a maximum total value and similar terms (e.g., fair opportunity/competition, minimum guarantees).

FAR 2.101 defines multiple award contract as follows:

@Lionel Hutz I agree that the language in FAR seems to contemplate one contract with multiple parties. I just wish I were confident that the people who wrote the FAR chose their words thoughtfully and with specific intent.

I don’t think that it matters if you can make either method (one contract or multiple contracts) work.

joel hoffman said:

I don’t think that it matters if you can make either method (one contract or multiple contracts) work.

If we are going to discuss FAR concerns, the FAR Subpart 4.16 prescribes policies and procedures for assigning unique Procurement Instrument Identifiers (PIID) for each solicitation, contract, agreement, or order and related procurement instrument. Each multiple-award contract is given a unique PIID. The PIID policies and procedures, in practice, don’t align with the single contract concept at FAR 16.505(b)(1)(ii) and FAR 2.101’s definition of multiple-award contract.

joel hoffman said:

Important points are simply that there is one solicitation and multiple awards (= awards made to multiple firms).

Yes I understand now. An Order is the individual contract action or instrument under the base ID/IQ contract between the government and a pool member contractor.

Vern Edwards said:

But now I'm done with the topic.

C Culham said:

Well shoot.   But I will express my opinion anyways.   Not a flippant thought either.   I think it depends and can be (A) or (B).  The FAR holds some legal parameters in its guiding principles but isn't the contract the legal document?   So the contract can be anything the parties to the contract(s) want it to be within the parameters of the FAR.  As we know in the FAR guiding principles if something is not prevented by law, EO, etc. it is ok.   So noting the cited case  an agency decided make the multiple award contract what it wanted it to be, closely associated to (B) and there is no prevention of doing so in the FAR.   Another agency may want theirs to be more closely associated to (A).

@C Culham Carl, thanks for the thoughts. I said I was done because I don't want to be an accomplice in one of those endless Wifcon back-and-forths that don't go anywhere.

According to Black's Law Dictionary: "contract n. (14c) 1. An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law . 2. The writing that sets forth such an agreement..."

One additional thought. If a MATOC or MADOC is one contract with multiple parties, and if one contractor cheats to win an order during a fair opportunity, and if there is a protest, the cheat is discovered, and the protest sustained, would the other contractors have standing to sue the cheater for breach damages in a Federal district court?

Vern Edwards said:

But I'll respond to your comment.

This was a thought provoking discussion.  Thanks Vern.

formerfed said:

This was a thought provoking discussion.  Thanks Vern.

So if you have a $50 million maximum, for example, and you apply it as a cumulative amount in a contract clause applicable to the entire pool of all contract holders, it’s one thing - orders can be placed with contract holders in the pool up to the cumulative maximum.  It’s a contract with multiple awards.

But if the $50 million was divided up among the awards such as five awardees each with a clause saying the contract has a $10 million ceiling, it’s something different.

@C Culham You're welcome, Carl, and thank you, in return.

@formerfed FAR 16.504(a)(1) says

Quote

The contract must require the Government to order and the contractor to furnish at least a stated minimum quantity of supplies or services. In addition, if ordered, the contractor must furnish any additional quantities, not to exceed the stated maximum. The contracting officer should establish a reasonable maximum quantity based on market research, trends on recent contracts for similar supplies or services, survey of potential users, or any other rational basis.

How does that apply to multiple-award contracts (MACs)?

If a MAC consists of one contract with multiple contractor parties

1. The parties might agree that one min for the contract might serve as consideration for all the contractors and that the government is promising to buy the min from any one contractor or some combination of contractors, but not from every contractor. If the parties expressly agree on that point, then it is likely to stand up in court.

2. All parties might agree that the contract max is equal to the program max, and that the government can go to the max with any one contractor or with some combination of contractors, but not with every contractor. (To say that the government could go to the program max with every contractor would seem to violate the FAR requirement for a "reasonable" maximum quantity.)

3. Or all parties could agree on a min for each of the contractors and set one max for the contract, rather than a max for each contractor.

4. Or the parties might agree to set a min and a max for each of the contracting parties. However, the requirement that the max be a reasonable quantity might be interpreted to mean that you must allocate a portion of the program max to each contractor. That might not be in the government's best interest.

If a MAC is consists of multiple independent contracts

If "a" MAC is really a pool of independent contracts, then you need a min and a max for each and it seems reasonable that the max for each could be either the program max or some equitably allocated portion of the program max.

I am well aware that MACs have been in widespread use since the mid-1990s and that there does not seem to have been much if any litigation arising from disagreements over the nature of a MAC, whether "it" is one contract with multiple parties or multiple independent contracts.

Yet.

@joel hoffman

joel hoffman said:

The only reason to state a separate individual maximum amount would be to recognize and account for the guaranteed minimum amounts within the overall maximum contract amount, for r the other pool members.

The individual limit can be modified, if for some reason one or more firms drop out early. [Emphasis added.]

Joel, please clarify what you are talking about---one contract with multiple parties or multiple independent contracts.

To all readers:

Please understand that I am speculating about these matters. I am not asserting anything except that I think the FAR is in some ways obscure with respect to the topic at hand. I do not claim to know the answers to the questions that I have posed. I'm just trying to figure things out.

Vern Edwards said:

@joel hoffman

Joel, please clarify what you are talking about---one contract with multiple parties or multiple independent contracts.

I was referring to one contract with multiple parties.

The best way to do it is probably not to bother setting individual maximum limits.  Simply state in the single solicitation and resulting contract(s) the max contract limit, which includes minimum guaranteed amounts to each awarded pool member. This would be applicable for single awarded contract or separately awarded contracts, alike.

So you can just say something to the effect that the maximum contract amount is $XXXX, including the minimum guaranteed amounts for all pool members.

No one contractor in a MATOC can win orders for the max contract amount. So explain that - that’s the short of it.

joel hoffman said:

No one contractor in a MATOC can win orders for the max contract amount. So explain that - that’s the short of it.

Why not (at least in theory)?

Vern Edwards said:

Why not (at least in theory)?

Because all the guaranteed minimums to other pool members are included in the maximum contract amount

 One contractor theoretically can win all orders but you must subtract the guaranteed minimums from the max total

Total contract amount would be sum of all orders plus sum of all guaranteed minimums to the rest of the pool.

So you can just say something to the effect that the maximum contract amount is $XXXX, including the minimum guaranteed amounts for all pool members.

I do not know much about Multiple Award Contracts. Here is what Defense Acquisition University (DAU) indicates:

"IDIQ: Multiple Award

A new multiple award IDIQ contract containing the scope of products or services that can be ordered against it may be established and awarded to multiple vendors. When the need arises to place orders against the multiple award contract, all awardees holding a base contract are requested to submit a proposal to provide each contractor a fair opportunity to be considered for each order."

In the above statement, I don't see the consideration that I would normally want to see in order to label it a contract...the Government doesn't seem to be required to order anything and the contractor doesn't seem obligated to even bid on whatever the Government may order.

Per 16.504, it looks like the contractor is required to furnish the minimum. Does this apply to each multiple award contractor? Do the awarded multiple award contracts each include a price for the minimum quantity? If not, what happens if a contractor, for whatever the reason, does not submit any bids for orders? Apparently, under 16.505, the contractor must be awarded the minimum.

What happens in real life?

@Neil Roberts

Neil Roberts said:

What happens in real life?

Almost anything you could think of. Nobody knows how each of those contracts actually work over the course of millions of orders each year, not even their administrative contracting officers, and certainly not DAU.

I'm looking for inputs from people who think they know what they are and how they work.

@joel hoffmanThanks.

My thinking but not yet a conclusion.

“Multiple Award Contract”  One solicitation that results in more than one contract.

“Multiple” – “having or involving several parts, elements, or members” Ref. Online dictionary

“Award” – “To take a bid for a contract” Ref.  Online dictionary

“Contract” – “An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law . 2. The writing that sets forth such an agreement...”  Ref.  post by Vern Edwards

@C Culham

Vern Edwards said:

I'm confused

@C Culham What do you think? If we could simply decide whether to make a MAC (1) a single agreement with multiple parties or (2) multiple separate agreements, which approach would be in the best interests of all involved?

Vern Edwards said:

@C Culham What do you think? If we could simply decide whether to make a MAC (1) a single agreement with multiple parties or (2) multiple separate agreements, which approach would be in the best interests of all involved?

I guess that in order to answer that question we would have to think through the implications associated with each approach.

C Culham said:

FAR 52.236-8 – “The Government may undertake or award other contracts for additional work at or near the site of the work under this contract….”

Neil Roberts said:

From a Contractor standpoint, not sure how a single agreement would work for multiple parties. Each Contractor may have different outlooks regarding exceptions to terms and conditions or business matter additions or exceptions. Typically, Contractors prefer not to share their contract language with competitors.

Vern Edwards said:

I guess that in order to answer that question we would have to think through the implications associated with each approach.

C Culham said:

I understand you later noted Vern's post yet I would not buy into this statement 100%.  In my experience, while minimal, I have seen the scopes almost be identical.  A whole other subject that should not detract from the discussion here.

I don't know the answer to the original question, but I think that it's interesting that it's common practice to treat the minimum as if the contracts are separate but the maximum is treated as if it's a single contract.

Don Mansfield posted a comment on a topic, Multiple Award IDIQ Contracts - What are they?   

Posted in Multiple Award IDIQ Contracts - What are they?

I don't know the answer to the original question, but I think that it's interesting that it's common practice to treat the minimum as if the contracts...

Don, The maximum is simply the max dollar scope of all orders under the MATOC. The min guarantee is simply that.

Don Mansfield said:

I don't know the answer to the original question, but I think that it's interesting that it's common practice to treat the minimum as if the contracts are separate but the maximum is treated as if it's a single contract.

What's interesting about it? Do you think it means something?

joel hoffman said:

Don Mansfield posted a comment on a topic, Multiple Award IDIQ Contracts - What are they?   

Posted in Multiple Award IDIQ Contracts - What are they?

 

I don't know the answer to the original question, but I think that it's interesting that it's common practice to treat the minimum as if the contracts...

Don, The maximum is simply the max dollar scope of all orders under the MATOC. The min guarantee is simply that.

joel,

Suppose the Government's anticipated requirement was $100M. The solicitation for a MAC states a contract maximum of $100M. The Government makes multiple awards and each IDIQ contract states a maximum of $100M. It doesn't say that $100M is the maximum that could be ordered under all contracts combined.

Fast forward. The Government has issued a total of $100M in orders to multiple MAC contractors, such that no one contractor has received $100M in orders.

If the Government issues another order to one of the MAC contractors, does the contractor have to perform the order? Assume the order would not result in any contractor receiving more than $100M in orders.

Vern Edwards said:

What's interesting about it? Do you think it means something? What?

I think it's indicative that nobody thinks about the distinction that you're making.

Don Mansfield said:

joel,

Suppose the Government's anticipated requirement was $100M. The solicitation for a MAC states a contract maximum of $100M. The Government makes multiple awards and each IDIQ contract states a maximum of $100M. It doesn't say that $100M is the maximum that could be ordered under all contracts combined.

Fast forward. The Government has issued a total of $100M in orders to multiple MAC contractors, such that no one contractor has received $100M in orders.

If the Government issues another order to one of the MAC contractors, does the contractor have to perform the order? Assume the order would not result in any contractor receiving more than $100M in orders.

I think it's indicative that nobody thinks about the distinction that you're making.

I don’t know. The solicitation and the contract are supposed to state the maximum dollar limit of the ID/IQ. You may identify a max for each contractor.

But you must identify the overall max for the ID/IQ. Reference 16.504(a).

Don Mansfield said:

I think it's indicative that nobody thinks about the distinction that you're making.

Oh, I wouldn't be surprised to learn that no COs have thought about the distinction that I'm making. I wouldn't be surprised to learn that no policymakers have thought about it.

joel hoffman said:

Neil,  Vern is comparing a MATOC arrangement where there is one ID/IQ contract or many separate ID/IQ contracts. Either way, the purpose is to compete for delivery or task orders. For the latter, there is no conflict between the seaparate pool members. The work is ordered and purchased using an order that incorporates the terms and conditions of the Base ID/IQ contract(s) for convenience. The orders are stand alone arrangements.

Joel, is it fair to say that for MATOC (unlike IDIQ Multiple Award Contracts), there is really no "Base ID/IQ contract" for any Contractor because the Government is not required to order anything from any Contractor and no Contractor is required to perform any work, until and unless there is an Order issued to and accepted by a Contractor? In your experience, have Contractors regularly negotiated exceptions to base document(s) before an Order? Thanks.

joel hoffman said:

Vern is comparing a MATOC arrangement where there is one ID/IQ contract or many separate ID/IQ contracts.

I am asking whether a "multiple-award contract" (MAC) is one contract with multiple parties or multiple independent contracts, and I am wondering what the implications are in either case.

@Neil Roberts Your phrase:

Neil Roberts said:

for MATOC (unlike IDIQ Multiple Award Contracts)

does not make sense.

MATOC stands for multiple-award task-order contract. A task-order contract is an IDIQ contract for services. See FAR 16.501-1. Thus, a MATOC is a species of multiple-award contract, an IDIQ multiple-award contract for services.

So what are you talking about?

Vern Edwards said:

@Neil Roberts Your phrase:

does not make sense.

MATOC stands for multiple-award task-order contract. A task-order contract is an IDIQ contract for services. See FAR 16.501-1. Thus, a MATOC is a species of multiple-award contract, an IDIQ multiple-award contract for services.

So what are you talking about?

I am talking about a contract. When it is a contract. Joel indicated that there is a "Base ID/IQ" MATOC contract (where no Order exists). I am asking whether there is really such a contract or whether it is really a contract only when an Order is issued and accepted.

Neil Roberts said:

Joel indicated that there is a "Base ID/IQ" MATOC contract (where no Order exists). I am asking whether there is really such a contract or whether it is really a contract only when an Order is issued and accepted.

In order for there to be an order, there must first be a contract. Think about it. That contract is commonly referred to as the "base contract," although it is a silly term.

And an order placed against an IDIQ contract does not have to be accepted. The contract requires the contractor to perform. See FAR 52.216-22(b), which is a contract clause in an IDIQ contract.

This thread isn't educational. When I started it I assumed that participants would be people with enough background to understand and think about the issues I am raising.

Neil - yeah, “what he said.” I agree with Vern. The term “base ID/IQ contract” is a colloquial expression for the ID/IQ contract whether, MATOC, SATOC, MAC, MACC or whatever acronym you want to use. For a multiple award contract, it establishes a pool of contractors and is the mechanism used to issue task or delivery orders.

Neil Roberts said:

Thanks for the reference to FAR, Vern. It clearly indicates to me that there is no contract until there is an order.

FAR 52.216-22(b) ( nor 52.216-22(a) for that matter) does not indicate, state or hint that “there is no contract until there is an order”. If the contract includes a minimum order obligation, it is a binding contract.

Neil Roberts said:

Joel, is it fair to say that for MATOC (unlike IDIQ Multiple Award Contracts), there is really no "Base ID/IQ contract" for any Contractor because the Government is not required to order anything from any Contractor and no Contractor is required to perform any work, until and unless there is an Order issued to and accepted by a Contractor?

One practical challenge is that the IDIQ creates an obligation, which triggers the Recording Statute and requires certain things within certain timeframes. We commonly see this resolved by issuing an order for the ‘minimum’ concurrent to the award of the base or parent contract. What’s interesting to me is that maybe all parties don’t need to receive separate minimums. If they’re parties to a single contract, perhaps a single awarded minimum is all that’s required (regarding consideration) for contract formation.

Jamaal Valentine said:

One practical challenge is that the IDIQ creates an obligation, which triggers the Recording Statute and requires certain things within certain timeframes. We commonly see this resolved by issuing an order for the ‘minimum’ concurrent to the award of the base or parent contract. What’s interesting to me is that maybe all parties don’t need to receive a minimum if theirs parties to a single contract.

Back in the day, when I awarded IDIQ contracts for supplies, we recorded the obligation for the minimum on the contract document, then assigned those funds to an order or orders via "administrative notice" ("administrative change" today) as we issued them until the minimum was purchased. We did that because we did not always have an immediate requirement on the date of contract award or for some time afterward. Some agencies may still do that. But simultaneous award of the contract and issuance of an order for the minimum seems to be a common practice today.

Jamaal Valentine said:

What’s interesting to me is that maybe all parties don’t need to receive a minimum if theirs parties to a single contract.

I speculated about that in an earlier post in this thread.

I further speculate that a promise (1) to include an offeror in an exclusive pool of contractors and (2) to give them a fair opportunity to compete for sales against only others in the pool could serve as the consideration necessary to bind the parties. If that is right, then there would be no need for the government to promise a minimum purchase from each (or any) contractor in order bind the parties. That being the case, there would be no need to record an obligation of funds on the date of award.

Vern Edwards said:

Neil, you're not going to educate others if you are going to say things like there is no IDIQ contract until there is an order. You clearly don't know enough about IDIQ contracts to do any educating.

I didn't start this thread so I could answer questions from people who want to learn about IDIQ contracts. I started it to solicit the opinions of others who know something about the subject, and said so in my first post.

As for your expectations, well, if you say something as wrong as you said in your last post, I'm going to say so, and in no uncertain terms. Expect that.

Ok, Vern. No problem. I would like to let readers to decide for themselves or collaborate with others to decide what this means in FAR 52.216-22 (b) "Delivery or performance shall be made only as authorized by orders..." I didn't post a related question for you to answer, but I am glad you took the time to respond with the FAR reference. I do believe I am qualified by experience and education to answer your initial post here entitled, "Multiple Award IDIQ Contracts-What are they? I think at what point in formulation they are or are not an enforceable contract IS an answer to your question. I look forward to you responding to my views and wish you have no problem with my doing the same. Peace!

Neil Roberts said:

I would like to let readers to decide for themselves or collaborate with others to decide what this means in FAR 52.216-22 (b) "Delivery or performance shall be made only as authorized by orders..."

The complete paragraph is:

Quote

Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the "maximum." The Government shall order at least the quantity of supplies or services designated in the Schedule as the "minimum.

The contractor is obligated from the date of award to deliver what is ordered within the ordering period, and the government is obligated to buy the stipulated minimum. There must be a contract before the government can issue any order and have a right expect the contractor to perform.

The purpose of the first sentence in FAR 52.216-22(b), quoted above, is to stipulate that the Government will pay only for what the Government orders in accordance with the Ordering clause. It is a limitation on the Government's liability.

Neil, I respect you for what you know, and I don't want you to withdraw. But you clearly don't know much about indefinite-delivery contracts. When it comes to IDIQ, read a book to get a clue. Try Formation of Government Contracts, 4th ed, by Cibinic, Nash, and Yukins, pp. 1,386 - 1,406. Learn something before you quibble with people who have been around for a while. (Not that we can't be wrong.)

Start your own post, a place where learners can collaborate with others in study.

Everybody has to start learning at some point. No shame in that.

@Neil Roberts This might help--Both the "basic" IDIQ contract and an order under an IDIQ are contracts.

On 3/8/2021 at 7:26 PM, Vern Edwards said:

Oh, I wouldn't be surprised to learn that no COs have thought about the distinction that I'm making. I wouldn't be surprised to learn that no policymakers have thought about it.

I agree.  Until this thread I thought each contract could have a minimum and a clause defining the maximum as a ceiling consisting of cumulative orders placed against all contracts.  That became the basis of multiple stand-alone individual contracts.

@formerfedI think what you will see now if you look at RFPs for MATOCs and MADOCs is one of the following:

1. a min is set for each contractor and the program max applies to the pool of contractors; or
2. a min is set for each contractor and a share of the program max is allocated to each contractor as its max.

Under 1 and 2, the sum value of all orders cannot exceed the program max.

I have not seen an RFP in which the entire program max was set as the max for each contractor, but I have not seen all the RFPs. I would not think that appropriate if a MATOC/MADOC is one contract with multiple parties, but if it's multiple separate contracts... ?

This is an important thread as the "contract value" impacts the CAS coverage status of both the contract and the contractor.

Vern Edwards said:

but if it's multiple separate contracts... ?

Well I am probably lost but here is my thinking.

The FAR says this – “The contracting officer should establish a reasonable maximum quantity based on market research, trends on recent contracts for similar supplies or services, survey of potential users, or any other rational basis.”   

Isn’t reasonable that there is an outside chance that under every MAC that only one contractor could get all the work that the multiple awards are intended to acquire?  So I say that each contract could use the maximum of all the needs even where there is hope that the program will get their needs from the many on the MAC and not just one.   I understand ability, capability and capacity of a contractor when it comes to delivery orders but for task orders, where this discussion seems targeted, are these same concerns present?

The government is only obligated with regard to the minimum.  Dare I say the minimum they will acquire.   For the max there is no obligation, no “will”.  There is no guarantee even under fair opportunity that any contractor will get more than their minimum.  There is no fiscal obligation beyond the minimum so no issue on fund management, anti-deficiency, etc..   Simply stating a possible wish and a possible “if you win all task/delivery orders contractor” the government might spend $XXXX with you Mr/Mrs contractor.

And then there is the ability to curb hitting the maximum and overextending the abilities of a contractor on a contract where the MAC can also carry maximums with regard to how many individual task/delivery orders in numbers or dollars that a contractor would be forced to accept unilaterally. 

I harken back to my read, and a previous post, where more money, at least from data from 5 years back, was spent on single award IDIQs.   My guess here is that all the MAC’s have irrelevant maximums anyway.   Add in as well the thought that while my read of the discussion does not seem to rope in GSA FSS and how they work, GSA FSS are an example where the max is carried as implied by individual contracts and not the sum total of all the contracts under a specific SIN. 

here_2_help said:

This is an important thread as the "contract value" impacts the CAS coverage status of both the contract and the contractor.

Makes me wonder what there are more of…Commercial Item or Non-Commercial Item MACs (not counting GSA FSS)?

GSA's OASIS GWAC, which is a MAC, has a minimum, but does not have a maximum. I don't know how that was done. I saw no mention in the contract of a FAR deviation.

C Culham said:

Isn’t [it] reasonable that there is an outside chance that under every MAC that only one contractor could get all the work that the multiple awards are intended to acquire?

Yes.

Vern Edwards said:

GSA's OASIS GWAC, which is a MAC, has a minimum, but does not have a maximum. I don't know how that was done. I saw no mention in the contract of a FAR deviation.

I don’t think the FAR requires a maximum.  FAR 16.504 uses “should” in saying “The contracting officer should establish a reasonable maximum quantity based on market research, trends on recent contracts for similar supplies or services, survey of potential users, or any other rational basis.”

It isn’t possible for one contractor in a MAC to be awarded orders for the maximum contract amount, since the other pool members will have guaranteed minimums within the max limit.

However, unless the guaranteed minimums are substantial amounts, that delta probably wouldn’t matter, except if it affects CAS status or if it affects a construction contractor’s bonding capacity.

But one firm could win all the orders.

Quote

I don’t think the FAR requires a maximum.

That's an interesting thought.

I think the FAR does require a contract maximum for IDIQ contracts.  FAR 16.504 (a) calls for "within stated limits" and (a)(1) calls for a "stated maximum."  I think the "should" in (a)(1) cannot be read to eviscerate the requirement for a maximum, and to eviscerate the maximum mentioned in para. (b) of the clause at FAR 52.216-22, Indefinite Quantity.  Thus, for me in my practice, the "should" in FAR 16.504(a)(1) merely describes how the maximum should be established.

As I understand, GSA did a deviation (or something else) to provide for no maximum on OASIS.

formerfed said:

I don’t think the FAR requires a maximum.

I disagree.

FAR implements statute. See 41 USC §§ 4101(1)(A) and (2)(A); 4103(b)(2) and (e); and 4106(f)(1)(A). I don't know how GSA managed a deviation, especially in light of 41 USC 4103(b)(2) and (e). Same requirements in 10 USC.

Have I missed something?

Withdrawn.

Vern Edwards said:

I don't know how GSA managed a deviation, especially in light of 41 USC 4103(b)(2) and (e).

I don't know, either -- I definitely remember hearing a few years ago that something happened to allow a no maximum approach -- but I don't recall if it was a deviation, or an OMB waiver, or a legislative action.

I’m still not sure GSA needed a waiver or something else to do GWACS without establishing a ceiling.   41 USC 4103(b) says 

Quote

Solicitation.—The solicitation for a task or delivery order contract shall include—

(1)

the period of the contract, including the number of options to extend the contract and the period for which the contract may be extended under each option;

(2)

the maximum quantity or dollar value of the services or property to be procured under the contract; and

(3)

a statement of work, specifications, or other description that reasonably describes the general scope, nature, complexity, and purposes of the services or property to be procured under the contract.

So what if GSA says there isn’t a maximum in response to (2)?

Well, formerfed, I don't know. And I'm beyond arguing about such stuff at my age. So maybe a maximum of none is okay.

Just speculating Vern.  I don’t know either.  I’m guessing GSA did some kind of waiver or sought approval knowing how much attention GWACS get just to be safe.  I know a couple GSA people are here so maybe they will chime in.

formerfed said:

I don’t think the FAR requires a maximum.

It depends........

From FAR Part 2 - "Should means an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance."

joel hoffman said:

It isn’t possible for one contractor in a MAC to be awarded orders for the maximum contract amount, since the other pool members will have guaranteed minimums within the max limit.

Not quite accurate.   I did not go looking but I believe one could find decisions where a guaranteed minimum for a particular contract was not realized and the matter was litigated otherwise.  In fact that standards of fair opportunity are  read with the implication that a contractor may  not realize their minimum and in such cases the government could, if they wanted,  place an order to satisfy a minimum guarantee.  I do not read the FAR as this being a have to.

David Drabkin or a protégé could answer this. I’m thinking that it is open ended for stated period limit.

C Culham said:

Not quite accurate.   I did not go looking but I believe one could find decisions where a guaranteed minimum for a particular contract was not realized and the matter was litigated otherwise.  In fact that standards of fair opportunity are  read with the implication that a contractor may  not realize their minimum and in such cases the government could, if they wanted,  place an order to satisfy a minimum guarantee.  I do not read the FAR as this being a have to.

There have been one or more cases where the government was only liable for a portion of the minimum guarantee, when no orders were made, not the entire amount.

my point is that the entire contract amount generally isn’t available for any single pool member. But that would be fairly easy to state in the solicitation and basic ID/IQ.

joel hoffman said:

my point is that the entire contract amount generally isn’t available for any single pool member. But that would be fairly easy to state in the solicitation and basic ID/IQ.

I think everybody gets what you've said.

Would it be a FAR deviation to incorporate 52.215-1 into a "fair notice of intent" (aka RFTOP) issued pursuant to 16.505(b)(1)?

Vern Edwards said:

I think everybody gets what you've said.

Apparently not. They keep commenting. 

C Culham said:

Not quite accurate.   I did not go looking but I believe one could find decisions where a guaranteed minimum for a particular contract was not realized and the matter was litigated otherwise.  In fact that standards of fair opportunity are  read with the implication that a contractor may  not realize their minimum and in such cases the government could, if they wanted,  place an order to satisfy a minimum guarantee.  I do not read the FAR as this being a have to.

The point is not that complex.

Well, for what it's worth, I understand you and agree.

If you have multiple minimums, one for each contractor, and if the minimums counts against the maximum, then, assuming that more than one contractor receives its minimum, no one contractor can receive all of the maximum.

Right?

Now, what about my FAR deviation question, above?

formerfed said:

I don’t think the FAR requires a maximum.

It depends........

From FAR Part 2 - "Should means an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance."

Carl, the requirement for a maximum is statutory. See my post, above. I think formerfed is suggesting that the maximum can be set at zero.

What about my FAR deviation question, above? Anybody got any ideas in that regard?

This question has not been overlooked in the contractor community but it has also not been answered as far as I can see.  

I review subcontracting plans for multiple award contracts (one solicitation with separate contracts for each awardee), and the subcontracting plans vary depending on what the contractor thinks the "total" contract amount in the SubK plan is.  Some think it is the whole contract amount or maximum for the MAC, others think it is a subset of the maximum and other punt say they cannot figure what the total contract amount and have the Government tell them what to put into that area of their plan.

This situation has been around for at least 8 years now, for that is the time that I have been in the PCR role and it has always been that way.  Perhaps one day their will be an answer on how to resolve how MACs should be administered, but that day has not come yet.

@DWGerard1102 I'm surprised that COs don't stipulate an amount against which all competitors must plan. Do you know of any who do that?

Vern,

My practice has always been to establish an identical minimum and a maximum for each multiple-award IDIQ contract.  Generally, I might set a contract maximum at half or two-thirds of the program's estimated maximum volume or quantity.

Vern Edwards said:

Would it be a FAR deviation to incorporate 52.215-1 into a "fair notice of intent" (aka RFTOP) issued pursuant to 16.505(b)(1)?

I will take a swing.

No.  Fair opportunity is a competitive environment and GAO has reasoned that FAR part 15 can be applied to task order competitions.

References -

FAR 15.002

 https://www.gao.gov/assets/b-416654.2,b-416654.3.pdf

Vern Edwards said:

@DWGerard1102 I'm surprised that COs don't stipulate an amount against which all competitors must plan. Do you know of any who do that?

None of the KO's that I have worked with via the Small Business Specialists have done that.  I have recommended it but the closest that I have seen is where the KO issued a sample task order or statement of work for them to submit a proposed cost for and then they used that cost to build their subcontracting plan. That does not happen in all of the plans that I have to review.  If I was the KO, that is how I would set up the subcontracting plan part of the question; but that does not answer the OP question. 

If it was up to me, I would state specifically what the minimum awards would be and then communicate that in a competitive arena, the best value proposal would win without regard to how many awards went to any specific contractor.  One contractor could very well win all of the maximum funding for the contract less the minimum awards.  Not all contracting offices would agree with me on that, I have worked with some that insist that all contractors should receive awards.  I have asked how they would deal with one contractor consistently not submitting the best proposal and they could not really answer that question.

@C CulhamThanks, Carl. I don't think GAO has ever ruled on the question of whether application of Part 15 procedures to fair opportunities under 16.505(b) via 52.215-1 is a FAR deviation requiring approval.

GAO has said that Part 15 does not govern, but has acknowledged in at least 27 decisions that agencies apply it, and they say they will enforce such applications.

I don't think the application of Part 15 to fair opportunities has ever been challenged, and I believe that GAO is unlikely to take up the issue s_ua sponte_.

Have I missed a decision? The one you cite doesn't address the issue I have raised.

@DWGerard1102 Thanks, DW. Interesting perspective and ideas.

Vern Edwards said:

Have I missed a decision? The one you cite doesn't address the issue I have raised.

You have not.  The decision implies application of part 15 but like you I could not find a decision specific to the issue.  My "no" leaned more on the FAR reference than the decision.

On 3/5/2021 at 9:34 AM, Vern Edwards said:

Two questions:

1. When the government makes "multiple awards" pursuant to FAR 16.505(c)(1), is it---

     (A) awarding a single contract with multiple parties, each of which is severally liable or

     (B) establishing a pool of multiple separate contracts with the same terms?

2. As a practical matter, does it make a difference?

These are not "trick" questions. I am trying to answer them for myself and want to see what others think.

Based on a FAR Case that @Don Mansfield shared with me in November on a topic pertaining to the award of multiple/split requirements contracts, my responses are:

(1) a single contract with multiple parties; and

(2) I don't know about IDIQs, but in the context of requirements contracts, it matters.

In 2010, the FAR Council explained FAR Case 2008-006, in part, as follows:

Quote

Requirements contracts. The Councils amended the language at FAR 16.503(a) to clarify that a requirements contract is awarded to one contractor. This change is made to dispel the implication at FAR 16.503(b)(2) that a requirements contract may be awarded to multiple sources.

https://www.federalregister.gov/documents/2010/03/19/2010-5989/federal-acquisition-regulation-far-case-2008-006-enhanced-competition-for-task--and-delivery-order

Despite this, they left FAR 52.216-21 Alt. III in place. This states:

Quote

(c) The Government’s requirements for each item or subitem of supplies or services described in the Schedule are being purchased through one non-set-aside contract and one set-aside contract. Therefore, the Government shall order from each Contractor approximately one-half of the total supplies or services specified in the Schedule that are required to be purchased by the specified Government activity or activities. The Government may choose between the set-aside Contractor and the non-set-aside Contractor in placing any particular order. However, the Government shall allocate successive orders, in accordance with its delivery requirements, to maintain as close a ratio as is reasonably practicable between the total quantities ordered from the two Contractors.

On one hand the Council is stating that "a" requirements contract cannot "be awarded to multiple sources." On the other, it permits the award of 2 distinct requirements contracts for the same subject matter. Based on the use of the singular in the former, I believe what distinguishes these ideas is that "multiple-award" refers to one contract that is "shared" among parties. I also think this idea extends to IDIQs, though I don't know whether this "matters" for IDIQs. But it does matter in the context of two or more requirements contracts, as we want to avoid the fair opportunity requirements of FAR 16.505(b). 

It's nice to see you "unretired" from Wifcon, Vern. We spoke a bit at the 2019 N&CR Roundtable, a million years ago. You advised me to avoid outings with birders at all costs. 😉

@FrankJon Hey Frank! Good input. Thanks!

I have softened a little on the birding thing. I don't remember if we spoke after I got back from Iceland or Ireland. Probably Iceland. I had a great experience on both trips, but I had a sensational birder experience on the Saltee Islands off Ireland, one I'll never forget. So good, in fact, that I went back to Ireland for a longer visit about four months later.

But I still have little patience for standing around looking through binoculars for hours at a time while people whisper, "There it is! There it is!" referring to something only a little bigger than a golf ball. I don't have an infantryman's eyes anymore.

Sensitized by this topic, I was interested to see that in the daily DOD list of contracts for April 8, 2021, the Army (ACC, Aberdeen Proving Ground) awarded five unique contracts to five contractors, each in the same amount of $25,000,000. Each contract was described as being of the type called "order dependent," which is a term I have not seen before.

Here's an example of what I'm talking about:

Quote

HUBZone Headquarters Inc.,* Virginia Beach, Virginia, was awarded a $25,000,000 order-dependent contract to create and strengthen networks that connect the Combat Capabilities Development Command with academia, industry and government agencies to facilitate the exchange of scientific ideas, the production of knowledge and the development of a STEM (Science, Technology, Engineering and Math) workforce. Bids were solicited via the internet with 12 received. Work locations and funding will be determined with each order, with an estimated completion date of April 7, 2026. U.S. Army Contracting Command, Aberdeen Proving Ground, Maryland, is the contracting activity (W911NF-21-D-0005).

Again, I'm not sure what an "order dependent" contract is, but it seems to be akin to an ID/IQ or requirements contract. So I thought it was worth mentioning here. In this case, five individual contracts to five individual contractors were awarded. Each has the same $25M contract value, so I have to assume the Army is willing to issue up to $25M in future orders to each contractor, for a cumulative award of $125M.

After a little research, I think they are other transaction (OTA) awards that resulted from broad agency announcements. They appear to be IDIQ-type contracts that are not subject to FAR Subpart 16.5 and other IDIQ rules.

Vern Edwards said:

After a little research, I think they are other transaction (OTA) awards that resulted from broad agency announcements. They appear to be IDIQ-type contracts that are not subject to FAR Subpart 16.5 and other IDIQ rules.

Thank you, Vern. A follow-up question: Is it usual to award five apparently identical contracts in the same amount to five offerors who are responding to a BAA? In my (limited) experience, that has not been the case.

@here_2_help

here_2_help said:

Thank you, Vern. A follow-up question: Is it usual to award five apparently identical contracts in the same amount to five offerors who are responding to a BAA? In my (limited) experience, that has not been the case.

It's not unusual.

The  program is as follows:

Quote

Army Futures Command (AFC) requires the Awardee to collaboratively prototype the Army’s first Soldier-led Software Factory. The Factory shall be staffed, built, and operated from zero existing infrastructure or policy precedent, to ultimately transition to Army self-sustaining operation as a fully-soldier/Army civilian-run agile software development unit without reliance on contracted presence. The Factory will train using a wide range of cross-cutting, loosely-scoped problem sets for software development and the Factory must organize, train, and operate in-line with modern commercial technology standards prototyping a reproducible force design and associated processes for widespread implementation in the future operating environment.

DOD is scared to death of falling behind China in the development of hi-tech weaponry. This program is apparently designed to improve the Army's capability in that regard.

The award of five more or less identical contracts is an example of competitive prototyping. That approach is not at all unusual at the outset of a development program and has long been in use. The Army apparently wants to develop a software "factory," and it has given five firms money to develop competitive prototypes. In the long run they will probably choose one or more firm/factory for long-term funding and operation based on program performance.

The Army used broad agency announcements and OTAs to bypass the b***s*** in FAR Part 6, Part 15, and Subpart 16.5.

@here_2_helpI have attached more info about the Army's program.

Army Software Factory Prototypes.pdf

Thank you, Vern -- fascinating stuff

Sooner or later a big portion of the government’s acquisition system needs revised.  DoD and a few civilian agencies successfully use OTAs for things like this cited program.  It is important for DoD to not fall behind China and other nations.  But much of the rest of government needs similar flexibilities whether it’s fighting viruses, drug interdiction, border protection, or natural disaster relief.  Processes like OTA allows innovation and creative solutions from a broad range of sources and not just traditional ones that know how to deal with the government.

Of course, this means a government workforce that can handle the changes.  One scary thing that keeps coming up are thoughts like standardizing OTAs so they become more uniform and employees can be better trained.  But standardized practices can lead to more oversight,  more criticism, more policy to correct perceived problems, and even greater structuring to the point where all flexibility is gone.

We are prisoners of our own devices.