Awarding an option that will have task orders that exceed KO warrant

RIFFENR said:

Navy Services contract

KO needs to award option, all funding is at the task order level. This option will allow for reoccurring services to be executed on separate task orders with a value of over $600K.  KO's warrant is only $250K can they award an option at no cost if it will allow task orders that exceed their warrant?

A question that  has been raised many times with all kinds of responses.   In truth the real answer will come from your agency's own policy.

Will there be task orders exceeding $250k or simply cumulative task orders exceeding the limit? Of course, that KO won’t be able to award any task order exceeding the limit of their obligation authority.

I don’t know about the question of awarding an option that may result in cumulative task order amounts that would exceed the warrant authority.  However, it isn’t an obligation exceeding the warrant and doesn’t obligate the government to issue or obligate  anything other than a minimum, if any.

I agree with Carl that the real answer will come from your agency's own policy.

The

joel hoffman said:

Will there be task orders exceeding $250k or simply cumulative task orders exceeding the limit?

Yes there are task orders that will exceed the $250K, but those will be awarded by another KO.

RIFFENR said:

Navy Services contract

KO needs to award option, all funding is at the task order level. This option will allow for reoccurring services to be executed on separate task orders with a value of over $600K.  KO's warrant is only $250K can they award an option at no cost if it will allow task orders that exceed their warrant?

If:

1. the contract is IDIQ, and
2. all the option will do is extend the contract ordering and performance periods as set forth in FAR 52.216-18 and 52.216-22, and
3. there is no minimum guarantee for the option period,

then exercising the option would not create an obligation.

And if the $250K warrant states a limit only on obligational authority, then any CO should be able to exercise it.

1.108 FAR conventions.

The following conventions provide guidance for interpreting the FAR:

      (a) Words and terms. Definitions in part  2 apply to the entire regulation unless specifically defined in another part, subpart, section, provision, or clause. Words or terms defined in a specific part, subpart, section, provision, or clause have that meaning when used in that part, subpart, section, provision, or clause. Undefined words retain their common dictionary meaning.

      (b) Delegation of authority. Each authority is delegable unless specifically stated otherwise (see 1.102-4(b)).

      (c) 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.

Carl has, I think, made the point that if the option has its own maximum, then that's the level of authority that the CO must have.

Good catch, Carl. But I'm not sure that applies to warrant authority, since the maximum is not an obligation, and dollar limits on certificates of appointment are usually obligational limits.

I would be very interested in responses from active COs where the term "obligate" is stated, or not  on specific warrants.

I support Vern's interpretation but my hazy memory does recollect obligation language on any warrant I held back in the day.    Just wondering.....

FAR 1.108 says:

Quote

The following conventions provide guidance for interpreting the FAR...

(c) 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.

Emphasis added. That rule explains how to interpret dollar thresholds in the FAR. It does not explain how to interpret limitations on certificates of appointment. The general rule when I was a contracting officer was that the dollar limitation on a warrant referred to the maximum obligation that a contracting officer could make. But that was before the widespread use of IDIQs that we see today.

When the exercise of an option does nothing more than give the government a right, without entailing a new obligation, I don't see how the dollar amount on a warrant has any applicability. The maximum on an IDIQ contract is a limitation on a right, not an obligation. Moreover, I'm not sure that COs modify IDIQ contract maximums when exercising options. In any case, obligations other than a minimum are made on task and delivery orders, not on the option exercise document.

Maybe the amount on a warrant means different things in different agencies.

Maybe the OP should address their question to the authority that signed the certificate of appointment.

C Culham said:

I would be very interested in responses from active COs where the term "obligate" is stated, or not  on specific warrants.

I support Vern's interpretation but my hazy memory does recollect obligation language on any warrant I held back in the day.    Just wondering.....

Vern Edwards said:

FAR 1.108 says:

Emphasis added. That rule explains how to interpret dollar thresholds in the FAR. It does not explain how to interpret limitations on certificates of appointment. The general rule when I was a contracting officer was that the dollar limitation on a warrant referred to the maximum obligation that a contracting officer could make.

When the exercise of an option does nothing more than give the government a right, without entailing a new obligation, I don't see how the dollar amount on a warrant has any applicability. The maximum on an IDIQ contract is a limitation on a right, not an obligation.

Maybe the amount on a warrant means different things in different agencies.

Maybe the OP should address their question to the authority that signed the certificate of appointment.

If there are any active warranted contracting officers on this forum, Carl’s request doesn’t seem to be too demanding or difficult. How about it somebody? 

I had a similar thought as Vern this evening as I reread the cited FAR definition of “dollar threshold”.

Thanks.

Vern Edwards said:

Maybe the amount on a warrant means different things in different agencies.

Maybe the OP should address their question to the authority that signed the certificate of appointment.

No maybe about it......

 https://www.va.gov/oal/docs/business/pps/ppm202001.pdf    ("value" but not obligation value 🤷‍♂️)

From the Department of Veterans affairs link provided by C Culham, a memo from the Executive Director, Office of Acquisition and Logistics and Senior Procurement Executive (SPE), addressed to Heads of Contracting Activity (HCA), subject, "VA Procurement Policy Memorandum (PPM) 2020-01, Contracting Officer Warrant Program", dated October 1, 2019:

Quote

12. Limitations of Warrant Authority. Although the FAR does not address the limitation of a contracting officer's warrant as per action or cumulative/aggregate, a VA Contracting Officer’s (CO) signatory authority is linked to the value of each action. The warrant level required for signing procurement actions shall be determined by the cumulative value of the individual transaction (e.g., contract, modification, supplemental agreement), rather than the aggregate value of the contract. If an individual transaction includes both additions and deductions, the aggregate of the absolute value of the changes determines the warrant level required for award (e.g., the value of an individual action that adds $35,000 of work and deducts $80,000 is $115,000). Individual transactions include the following: 1) The dollar value of a contract award, including the dollar value of option periods. 2) The dollar value of a contract modification and not the aggregate contract dollar value. 3) The dollar value of a blanket purchase agreement award, including the dollar value of option periods. 4) The dollar value of a blanket purchase agreement modification and not the aggregate blanket purchase agreement dollar value. 5) The dollar value of an order award against an indefinite delivery, indefinite quantity contract (e.g., Federal Supply Schedules, Governmentwide Acquisition Contracts, Multi-agency Contacts, agency-specific indefinite delivery, indefinite quantity contracts) including the dollar value of option periods, and not the aggregate contract dollar value. 6) The dollar value of a modification to an order against an indefinite delivery, indefinite quantity contract, and not the aggregate order dollar value. 7) The dollar value of a purchase order. 😎 The dollar value of a modification to a purchase order and not the aggregate purchase order dollar value.

I have bolded every appearance of the word "value". Now, in the context of this memo, what is the value of an IDIQ contract? We're not talking about the application of FAR dollar thresholds, so FAR 1.108 does not apply.

The Certificate of Appointment for our agency does not use the word "obligate".

"Unlimited signature authority for all contract actions are up to but not exceeding $XXX".

This is a change from previous language in the agency used, due to scope of authority issues similar to this one.

Weno2 said:

The Certificate of Appointment for our agency does not use the word "obligate".

So what? Does it say "value"? If so, what does that mean? if not, then to what does the dollar amount refer?

The certificate of appointment language is "Unlimited signature authority for all contract actions up to but not exceeding $$$ (i.e., dollar value of warrant).  All work must be in compliance with the requirements of the FAR, the (name of agency regulations), and all associated policies, procedures, and guidance."

@Weno2Seems to me that leaves room for interpretation when it comes to IDIQ. Does the amount on the certificate apply to the amount of the minimum, which is an obligation, or the maximum, which is the limit on the government's right to buy? I don't know, absent a clear statement on the certificate of appointment as to what the dollar limitation applies. Why should it apply to the maximum? The CO who signs the contract may not sign any of the orders.

Interesting.

Regarding IDIQs, it's the amount of the maximum.  The signing level of the order's based on the dollar value of the certificate.  For example, the CO has a warrant for $5M.  If the IDIQ has a maximum dollar amount of $7M, the CO could not sign the K.  If there's an order under the IDIQ for $3M, the CO could sign the order.  If the order was for $5.1M, the CO could not sign the order.

Weno2 said:

Regarding IDIQs, it's the amount of the maximum.

@Weno2Who says?

On 9/10/2021 at 7:03 AM, Vern Edwards said:

We're not talking about the application of FAR dollar thresholds, so FAR 1.108 does not apply.

As I follow this thread I am intrigued by the above statement and related comments on application of FAR dollar thresholds.  While I agree the FAR makes no statement about dollar threshold for delegation of authority, except for the micro purchase threshold,  yet FAR 1.603-3 does require limitations which are then stated by agencies in dollar amounts on a Certificate of Appointment required by the FAR. Further it would seem a memorandum like that of the VA reference is an extension of the FAR whereby the threshold statement of FAR 1.108 applies.   In support of my view the FAR provides at 1.301(a)(2) that "Subject to the authorities in paragraph (c) of this section and other statutory authority, an agency head may issue or authorize the issuance of internal agency guidance at any organizational level (e.g., designations and delegations of authority, assignments of responsibilities, work-flow procedures, and internal reporting requirements)."   

Luckily agency policy will further solve the threshold question!

C Culham said:

... yet FAR 1.603-3 does require limitations which are then stated by agencies in dollar amounts on a Certificate of Appointment required by the FAR.

@C CulhamThat's just plain wrong. FAR does not "require" limitations. FAR 1.603-3(a) states:

Quote

Contracting officers shall be appointed in writing on an SF 1402, Certificate of Appointment, which shall state any limitations on the scope of authority to be exercised, other than limitations contained in applicable law or regulation. Appointing officials shall maintain files containing copies of all appointments that have not been terminated.

My last Air Force "warrant," which I still possess, stated my limitations as follows: "Unlimited." There are many COs today with "unlimited" warrants.

If an appointment includes a dollar amount, it should be clear about to what that limitation is to be applied. If it's not clear, then, Carl, just apply the FAR guiding principles! 🙂

Vern Edwards said:

That's just plain wrong. FAR does not "require" limitations.

Again intrigued as being consistent with the FAR guiding principles.  The quote provided states  "which shall state" and pursuant to FAR 2.101 "Shall denotes the imperative." 

Vern Edwards said:

My last Air Force "warrant," which I still possess, stated my limitations as follows: "Unlimited."

I had such a warrant for 15 years with the Small Business Administration.  But on point an "Unlimited" warrant having no limitations, it seems the watrrant would by the very language on the SF-1402 that provides "Subject to the limitations contained in the Federal Acquisition Regulation and to the following:"

Vern Edwards said:

If it's not clear, then, Carl, just apply the FAR guiding principles! 🙂

Exactly and as such be inclusive of "internal agency guidance at any organizational level".

C Culham said:

Again intrigued as being consistent with the FAR guiding principles.  The quote provided states  "which shall state" and pursuant to FAR 2.101 "Shall denotes the imperative."

That's a strange interpretation of FAR 1.603-3(a), which says:

Vern Edwards said:

Contracting officers shall be appointed in writing on an SF 1402, Certificate of Appointment, which shall state any limitations on the scope of authority to be exercised, other than limitations contained in applicable law or regulation. Appointing officials shall maintain files containing copies of all appointments that have not been terminated.

If there are any limitations, then the appointment shall state them, but there don't have to be any limitations other than the ones stated in statute and regulation.

Lots to wade through in the links but there is discussion in the IG report and the CBCA decision referenced below regarding warrant authority.   Interestingly in the detail regarding warrant authority the modification at issue - P0004 - was  a zero dollar obligation modification.   

https://www.cbca.gov/files/decisions/2020/LESTER_04-09-2020_6188, 6312_CROWLEY_LOGISTICS,_INC. (Decision).pdf

https://www.oig.dhs.gov/sites/default/files/assets/2020-09/OIG-20-76-Sep20.pdf

https://www.usaspending.gov/award/CONT_IDV_HSFE7016D0204_7022

C Culham said:

Lots to wade through in the links..

You're beating a dead horse.

I'm satisfied with the position I have taken, and I'm not going to "wade through" that stuff in order to deal with pointless quibbling.

I expect each agency to set its own policy about warrant authority, and I expect the statement of policy to be clear.

If a CO isn't sure about his or her authority they should ask the appointing authority.

I have worked in several agencies, and they all handle it differently.  I am okay with that diversity.  Whether or not a contracting officer in Agency X can sign a particular modification (or other action) can only be answered within Agency X.

Hi all,

I'm a Procurement Analyst with Army MEDCOM and this topic is always asked. This is the warrant policy for the Army: 

 “ A warrant must be equal to or greater than the cumulative contract value (base and options) of an initial award, including anticipated or ceiling contract values that may be realized by the issuance of an Indefinite Delivery Indefinite Quantity (IDIQ) or requirements contract.

 Warrants must be equal to or greater than the value of an individual delivery or task order, and the cumulative value to date when modifying a contract to exercise an option or increase scope.”

Basically, 

If the KO is doing a modification to a $10M contract, he/she needs to have a $10M warrant.

It used to be the value of the instant action.  If a KO was doing a $2M modification on a $10M contract, the warrant would have to be greater or equal to the $2M.

Orders against an IDIQ is the only exception.  Then it is the value of the order not the IDIQ.