TRICARE Management Activity

TRICARE Management Activity Contract Operations Division – Falls Church Acquisition Desktop Reference Guide
Updated May 2010
 

TABLE OF CONTENTS
 
 
Click here for an Index of Checklists, Templates, Examples and Worksheets
 

 
1.0 INTRODUCTION

1.1 Purpose
The purpose of this Desktop Reference is to provide guidance on preparing TMA acquisition packages. It is intended to be a user friendly “how to” guide with background discussions, excerpts from key governing documents, and hyperlinks to other reference material. It links to key TRICARE Management Activity (TMA) acquisition policy documents and also links to several TMA acquisition-related examples and templates. The intended audience for the Desktop Reference consists of Task Managers, Program Managers (PMs), and other customers within the TMA Requiring Activities engaged in preparing TMA acquisition packages and administering TMA contracts. The Desktop Reference is organized in a functional fashion, with special emphasis on requiring activity procurement planning and post-award administration responsibilities. It is a living document that will be updated regularly to meet the needs of the TMA acquisition customer.
 
1.2 Applicability
This guide is applicable to all TMA procurements executed through TMA COD-FC.
 
1.3 References
 
1.3.1 Order of Precedence.
This guide is intended to implement the following Federal procurement regulations, policies, and procedures, and should in no way be interpreted as replacing or superseding such guidance.  The TMA Contract Operations Division – Falls Church (COD-FC), within the TMA Acquisition Management & Support (AM&S) Directorate, will endeavor to keep this reference up to date, but current law and policy will always take precedence over the contents of this guide.
 
1.3.1.1
Federal Acquisition Regulation (FAR), on the web at FAR. 
 
1.3.1.2
Defense FAR Supplement (DFARS), on the web at DFARS.
 
1.3.1.3
The Army Supplement to the FAR (AFARS) governs the TMA contracting support provided by Army contracting activities, such as the U.S. Army Medical Research Acquisition Activity (USAMRAA).  This document is available on the web at AFARS. 
 
1.4 Acronyms and Definitions
Commonly used acronyms are available at COD-FC Acronyms.  Acquisition terms are defined within the FAR, Part 2, at FAR.
 
2.0 PROCUREMENT ETHICS

2.1 Procurement Integrity
Federal employees hold positions of public trust and all their actions are expected to reflect their loyalty to the Constitution, laws and ethical principles above private gain.  Employees fulfill that public trust by adhering to general principles of ethical conduct as well as specific ethical standards.  In addition, contractors seeking or doing Government business are expected to adhere to firm ethical standards.  Certain laws and ethical standards apply and must always be adhered to.  The DoD Joint Ethics Regulation (DoD 5500.7-R) provides guidance on comprehensive ethical issues.  Specific standards apply to the procurement process and the manner in which federal and contractor personnel conduct business with each other.  Specific guidance on procurement integrity is provided within FAR Part 3.104.  Three key over-arching principles dictate that procurement officials:

• Must act impartially
• Must not have financial interests that conflict with official duties, and
• May not use “inside information” to further any private interest

2.1.1 Procurement Official.
For the purposes of TMA procurements and in accordance with FAR Part 3.104-3, any individual (regardless of whether they are a federal or contractor employee) who has access to procurement sensitive information or participates in any way in the following activities is considered to be a “procurement official”:

• Determination of requirements for a procurement,
• Development of a strategy for the procurement,
• Preparation, review or approval of an SOW, SOO, or task statement/package,
• Development of a Government Cost Estimate,
• Development of evaluation criteria,
• Selection of evaluation team members,
• Evaluation of bids or proposals.
• Negotiations to establish contract price, terms, conditions, or modifications
• Review or approval of the award or modification

2.1.2 Non-Disclosure of Procurement Information.
Safeguarding procurement information is critical to maintaining government procurement integrity.  In accordance with FAR Part 3.104-4, procurement officials shall not, other than prescribed by law, knowingly disclose contractor bid or proposal information, or source selection information, before award of a contract to which the information relates. 
 
2.1.2.1
Contractor bid or proposal information includes:

• Cost or pricing data
• Proprietary information
• Information contained in a bid or proposal

2.1.2.2
Source selection information is information prepared for use by a Federal Agency for the purpose of evaluating a bid or proposal.  Source selection information includes:

• Source selection plans
• Technical evaluation plans
• Reports or evaluations of source selection panels, boards or advisory councils
• Rankings of bids, proposals or competitors
• Cost or pricing data

2.1.3 Contractor Gratuities to Government Personnel.
In accordance with FAR Part 3.101-2, no Government employee may solicit or accept, directly or indirectly, any gratuity, gift, favor, entertainment, loan, or anything of monetary value from anyone who has or is seeking to obtain Government business with the employee’s agency.  Likewise FAR Part 3.204 states that contracts may be terminated and contractors debarred, suspended and/or fined if it is determined that a contractor:

• Offered or gave a gratuity (e.g., an entertainment or gift) to an officer, official, or employee of the Government; and
• Intended, by the gratuity, to obtain a contract or favorable treatment under a contract.

2.2 Inherently Governmental Functions
FAR Part 37.102(c) directs that "Agencies shall not award a contract for the performance of an inherently governmental function”. 
 
2.2.1
This is supplemented by Office of Federal Procurement Policy (OFPP) Policy Letter, 92-1 “Inherently Governmental Functions” which provides guidance and federal policy on this topic OFPP Policy Letter PL92-1.  This policy letter defines “inherently governmental functions”, and provides assistance in application of the policy.  The following data is provided from the OFPP letter:
 
Contractors, when properly used, provide a wide variety of useful services that play an important part in helping agencies to accomplish their missions. Agencies use service contracts to acquire special knowledge and skills not available in the Government, obtain cost effective services, or obtain temporary or intermittent services, among other reasons.
 
Not all functions may be performed by contractors, however. Just as it is clear that certain functions, such as the command of combat troops, may not be contracted, it is also clear that other functions, such as building maintenance and food services, may be contracted.
 
As a matter of policy, an "inherently governmental function" is a function that is so intimately related to the public interest as to mandate performance by Government employees. These functions include those activities that require either the exercise of discretion in applying Government authority or the making of value judgments in making decisions for the Government. Governmental functions normally fall into two categories:

• The act of governing, i.e., the discretionary exercise of Government authority, and
• Monetary transactions and entitlements.

An inherently governmental function involves, among other things, the interpretation and execution of the laws of the United States so as to:

• Bind the United States to take or not to take some action by contract, policy, regulation, authorization, order, or otherwise;
• Determine, protect, and advance its economic, political, territorial, property, or other interests by military or diplomatic action, civil or criminal judicial proceedings, contract management, or otherwise;
• Significantly affect the life, liberty, or property of private persons;
• Commission, appoint, direct, or control officers of employees of the United States; or
• Exert ultimate control over the acquisition, use, or disposition of the property, real or personal, tangible or intangible, of the United States, including the collection, control, or disbursement of appropriated and other Federal funds.

Inherently governmental functions do not normally include gathering information for or providing advice, opinions, recommendations.
 
2.2.2
In addition to the above guidance, the AFARS Subpart 5107-503 states “Requiring officials must provide the contracting officer a written determination that none of the functions required are inherently governmental.  Disagreements regarding the determination must be resolved by the Contracting Officer prior to issuance of the solicitation.”
 
2.3 Personal vs. Non-Personal Services
FAR Subpart 37.101 provides a definition of non-personal services contract:
 
"Nonpersonal services contract" means a contract under which the personnel rendering the services are not subject, either by the contract’s terms or by the manner of its administration, to the supervision and control usually prevailing in relationships between the Government and its employees.”
 
Further, FAR Subpart 37.104 defines personal services contracts and discusses their applications:
 
(a) A personal services contract is characterized by the employer-employee relationship it creates between the Government and the contractor’s personnel. The Government is normally required to obtain its employees by direct hire under competitive appointment or other procedures required by the civil service laws. Obtaining personal services by contract, rather than by direct hire, circumvents those laws unless Congress has specifically authorized acquisition of the services by contract.
 
(b) Agencies shall not award personal services contracts unless specifically authorized by statute (e.g., 5 U.S.C. 3109) to do so.

TMA is not authorized to issue personal services contracts.  To ensure that non-personal service contracts remain as such requires continual oversight.  The recent TMA memo, subject: Appropriate Management Oversight and use of TMA Non-Personal Services Contracts, emphasizes several special points of interest that Government Task Managers and PMs need to be aware of and comply with.

2.5 Use of Appropriated Funds  
Under 31 U.S.C. § 1301(a) (the "Purpose Statute"), appropriated funds are available only for the objects for which the appropriations were made.   Congress cannot and does not specify every item of expenditure in DoD appropriation acts.  Thus, under the "necessary expense rule," appropriations made for particular objects, by implication, confer authority to incur expenses that are reasonably necessary or incident to the proper execution of those objects.  The TMA Director for Resource Management has published guidance on what constitutes proper use of TMA funds. 
 
2.6 Office of General Counsel (OGC) Point of Contact
Anyone within TMA having questions concerning procurement ethics should contact TMA OGC - (703) 681-6012.
 
3.0 ACQUISITION PLANNING
Proper planning and documentation is crucial to effective acquisition actions.  The main purpose of this section of the Desktop Reference is to provide guidance on planning for TMA contracts and funds transfers and preparing TMA acquisition packages. 
 
3.1 Roles, Responsibilities, and Authority
There are six organizational participants that play pivotal roles regarding the effective use, administration, and management of TMA acquisitions: 

• The Contract Specialist,
• The Contracting Officer’s Representative for the prime contract,
• The Contracting Officer’s Representative for the task order,
• The fund Certifying Officer,
• The Contracting Officer, and
• The Contractor. 

Together they form a partnership essential to achieving contracting objectives.  These participants have both separate and mutual responsibilities, with the lead responsibility often shifting from one participant to another during the acquisition process.  Detailed information on the roles and responsibilities of TMA acquisition and contract administration officials is available at: Acquisition and Contract Administration Roles and Responsibilities.  These officials should be identified as early as possible in the planning process and specified in the contract statement of work (SOW).  
 
3.1.1 Contract Specialist (CS).
The CS is assigned by the Director, COD-FC and works proactively with all supported activities to plan for their acquisition needs. COD-FC will specify a CS responsible for assisting designated program offices in planning each of their upcoming contract actions. The CS acts as an acquisition consultant and serves as liaison between COD-FC and the requesting Program Office, as well as liaison between TMA and the supporting contracting office, during the pre-solicitation planning phase of each acquisition. When a Full and Open acquisition is anticipated, the CS will assist the requiring activity in preparing an acquisition plan. They also support post award activities and provide guidance on contract administration and conduct on-site COR assistance visits.
 
3.1.2 Contracting Officer Representatives (CORs). 
CORs are individuals with an appropriate functional or technical background, who have been nominated, completed required training, and have been appointed to perform certain administrative functions on behalf of the CO. The COR’s specific duties are defined in a written appointment memorandum issued by the CO. Within TMA there are two levels of COR.
 
3.1.2.1 COR for the Prime Contract.
In addition to the CS, COD-FC will nominate an individual to act as the COR to oversee each prime contract. The COR for the prime contract serves as a first level resource to those individuals administering task orders for a given contract vehicle. The COR for the prime contract will periodically check on a number of task orders to validate that appropriate surveillance activities are being accomplished. It is possible that for a given contract action or a given requiring activity, the CS and COR for the prime contract roles may be filled by two separate individuals.
 
3.1.2.2 Task Order COR.
The Program Office is responsible for defining requirements, preparing supporting documentation, estimating costs, obtaining funding, evaluating contractor Technical Proposals, and managing the resulting task order. Each Program Office shall designate one individual (usually the task manager) to be a Contracting Officer’s Representative for each task order. This individual will be required to take training on their COR duties. TMA employees nominated to be a COR must complete and pass a general COR course, such as the Army Logistics Management College (ALMC) Contracting Officer’s Representative Course, or successfully complete, for credit, all of the modules of the Defense Acquisition University (DAU) Continuous Learning Center (CLC) web-based training course – (COR with a Mission Focus (CLC106), within six months of being assigned as a COR. The web site for this training is https://acc.dau.mil/COR. To take this module for credit, you must register with the DAU CLC site (http://www.dau.mil/clc/default.aspx). Since the task order COR is an official representative of the CO, TMA's acquisition support agreements generally recognize the right of each contracting office to impose their own special COR training requirements. Task order CORs must be familiar with and adhere to the training requirements specified by their CO. The task order COR will be designated in writing by the CO, and granted specific authority and responsibilities for a given task order. The task order COR will interface with the contractor, the CS, the COR for the prime contract, and the CO on contract matters.
 
3.1.3 Certifying Officer.
The Certifying Officer within the Financial Operations Division (FOD) of the TMA Resource Management (RM) Directorate certifies that adequate funding exists to cover the cost of a contract.  Each Program Office receives annual funding of a specified amount.  RM tracks the status of those accounts as funds are spent.  Before an order for products or services is placed, the RM Certifying Officer must certify that the Program Office has enough money, of the correct type, available to make the purchase.
 
3.1.4 Contracting Officer (CO).
The CO has legal authority to interface with the non-government commercial world and obligate the government for the purchase of supplies and services. The CO is responsible for award, contract administration, and management of contracts and orders. Task Statements forwarded from the CS are reviewed by COs, formatted IAW the FAR, DFARS and AFARS, and reissued as either Requests for Proposal or Requests for Quotes to the appropriate contractors for preparation of Technical and Cost Proposals. After the CO receives the contractor's proposals, they are forwarded through the CS to the TM/task order COR for evaluation. After a source selection recommendation is made, the CO must determine price reasonableness and approve the order.
 
3.1.5 Contractors.
Contractors are responsible for preparation of Technical and Cost/Price proposals, performance of work in accordance with issued task orders, preparation and delivery of Monthly Performance and Progress Reports, submission of specified deliverables in accordance with associated task orders, and preparation and submission of invoices and receiving reports utilizing the Wide Area Workflow system.

3.2 Acquisition Support.
The rules regarding the acquisition of TMA requirements are often complex and may vary depending on the circumstances.  TMA managers at all levels must nevertheless become familiar with these rules and abide by the procedures for TMA acquisitions. 
 
3.2.1
COD-FC has developed a comprehensive TMA Acquisition Support Guide.  COD-FC has also developed a series of procurement package documentation checklists outlining required documentation for TMA acquisitions, depending on the type of transaction and the contracting office used.  All procurement packages for contracts/orders in excess of $10,000,000 (including option periods) will be reviewed and approved by the TMA Deputy Director prior to sending the requirement or any DHP funds to the performing activities.  COD-FC has developed procedures and a template to facilitate this review.
 
3.2.2
The TMA Acquisition Support Guide has been updated to include a recent DoD requirement for service contracting identified in the Deputy Secretary of the Defense (DEPSECDEF) memorandum, Subject: Implementation of Section 324 of the National Defense Authorization Act for Fiscal Year 2008 (FY 2008 NDAA) - Guidelines and Procedures on In-sourcing New and Contracted Out Functions, dated 4 Apr 08,  and DEPSECDEF memorandum, Subject: In-sourcing Contracted Services – Implementation Guidance, dated 28 May 2009. For new or expanded mission requirements and other functions (not inherently governmental or exempt from private sector performance) that are performed under contract but that could be performed by DoD civilian employees, DoD Components shall perform an economic analysis to determine whether DoD civilians or private sector contractors are the low cost provider and should perform the work.  The determination of suitable DoD civilian grade levels and series, and the performance of this analysis is an inherently governmental function.  COD-FC has developed tools to facilitate this analysis.  Three separate tools are available for economic analyses comparing the cost of DoD civilian employees to contracting options under D/SIDDOMS-3, TEAMS and T/AARMS.  A fourth tool is available when another contract vehicle has been approved for use.  Additional DoD-wide instruction relating to this subject has been incorporated into DoD Instruction (DoDI) 1100.22, Subject: Policy and Procedures for Determining Workforce Mix, dated 12 April 2010.
 
3.3 Acquisition of Services
Within TMA special requirements apply regarding the acquisition of services.  Section 812 of the FY 2006 Defense Authorization Act established a series of requirements for acquisition of services within DoD.  This legislation directed the Secretary of Defense to establish and implement a management structure for the procurement of services for the Department of Defense.
 
3.3.1
As provided in DoD Instruction (DoDI) 5000.02, acquisition of services shall support and enhance the warfighting capabilities of the DoD while meeting the following objectives:

• All acquisitions of services shall be based on clear, performance-based requirements; include identifiable and measurable cost, schedule, and performance outcomes consistent with customer needs; and receive adequate planning and management to achieve those outcomes.
• Managers shall use a strategic, enterprise-wide approach for both planning and execution of the acquisition, and shall use business arrangements that are in the best interests of the DoD.
• All acquisitions of services shall comply with applicable statutes, regulations, policies, and other requirements, whether the services are acquired by or on behalf of the DoD.

3.3.2 TMA Procedures for the Acquisition Of Services.
To ensure compliance with the policies outlined in Enclosure 9, Acquisition of Services, of DoDI 5000.02, TMA has issued guidance in TRICARE Acquisition Practice (TAP) 37-03, Acquisition of Services, which includes procedures for the acquisition of services.  These procedures apply to all TMA acquisitions of services executed through COD-FC, except for research and development or construction activities, and apply to any task order or any transfer of funds to acquire a service on behalf of TMA.

3.3.3 Tracking the Acquisition of Services.
In accordance with Title 10 § 2330a., as amended by section 807 of the Fiscal Year 2008 National Defense Authorization Act (FY 2008 NDAA), DoD activities are required to track and report on the purchase of services in excess of the simplified acquisition threshold, regardless of whether such a purchase is made in the form of a contract, task order, delivery order, military interdepartmental purchase request, or any other form of interagency agreement.  For support provided by agreement, this information will be gathered and reported by Supplying Activities as part of the standard TMA support agreement for program type support.  For acquisition actions, TMA requiring activities will complete and submit to COD-FC a Purchased Services Inventory Form along with their proposal evaluation recommendation (e.g., Evaluation Consensus Report, or evaluation of a proposal in response to a sole source procurement). 

3.4 Acquisition of Hardware and Software
COD-FC has developed a Request for Quote template to be used when ordering hardware or software. 

3.5 Contracting Activities

3.5.1 Use of TMA “Preferred” Contracting Activities.
TMA has established a number of acquisition support agreements with both DoD and non-DoD contracting activities for acquisition support requirements of a recurring nature.  Under these Preferred Contracting Activity (PCA) umbrella agreements, the PCAs will provide acquisition support to multiple TMA customers.  These PCAs will collectively represent TMA’s first choice for acquisition support; however a DoD PCA, such as the US Army Medical Research Acquisition Activity (USAMRAA) should be used whenever possible.   DoD contracting activities are aware of and bound by a number of legal and regulatory requirements ensuring appropriate use of DoD resources.  If the desired contracting activity is a non-DoD agency, adherence with DoD regulations and TMA interagency acquisition support policy is the responsibility of the requiring DoD activity.  The use of non-DoD contracting activities requires special planning, review and approval consistent with the TMA Acquisition Support Guide.
 
3.5.2 Exceptions to Use of TMA “Preferred” Contracting Activities.
Through its PCA agreement with USAMRAA, TMA has established a suite of three contract vehicles, which are key components of the TMA acquisition infrastructure and their use is preferred over all other vehicles.   Use of another contract vehicle or use of another contracting agency is authorized, but must be approved by the Director, AM&S, consistent with the current TMA Policy for the Acquisition of Non-Purchased Care Support, dated October, 01, 2009.  This is typically done as part of the formal Acquisition Planning process.  If a PCA cannot be used and the requiring activity wishes to use an external contracting agency in lieu of a PCA, the requiring activity will make that desire known to their supporting CS along with the rationale for the use of a non-PCA for acquisition support.  If approval is granted to proceed, the procurement package will be processed in accordance with the TMA Acquisition Support Guide. 
 
In cases where the external contracting activity does not have a current acquisition support agreement with TMA, a separate agreement must be coordinated and approved.  DoDI 4000.19 provides guidance on support agreements.  The acquisition support agreement shall be in the form of a DD Form 1144 and supporting documentation.  It is the responsibility of the requiring activity within TMA to justify the need for a new acquisition support agreement, and coordinate establishing the agreement through AM&S.  Completed support agreements are required prior to release of funds or processing of acquisition packages to external organizations.  Information required to initiate an acquisition support agreement can be submitted by completing an Agreement Worksheet.
 
3.5.3 Intragovernmental Acquisition Support Agreements and Orders.
As provided in theTMA Acquisition Support Guide, a written support agreement is required when a DoD activity requires support from a non-DoD Federal activity in order to accomplish an authorized task more simply and economically by using the non-DoD activity’s experience and/or expertise.  There must be a legal basis for obtaining this support.  The Economy Act provides this authority and within DoD all transactions with non-DoD activities must follow the fiscal rules for Economy Act transactions.  The repository for the official TMA copy of each signed agreement shall be within the Resource Management Directorate.  Working copies of acquisition support agreements and program support agreements are also kept by COD-FC and the requiring activities, as the functional sponsors of these agreements.  All requests for contracting support to be obtained from non-DoD sources require special review and approval in accordance with the TMA Acquisition Support Guide.  All proposed support agreements that could possibly result in the award of a Government contract will be coordinated with COD-FC in advance and will adhere with FAR Subpart 9.5 and the TMA OCI procedures. 

3.6 Contract Risk Management
All contracting actions require the acceptance of some level of risk and development of plans to manage the risk.  TMA requiring activities must consider contract risk as early as possible in the acquisition planning process.  Contract risk management must be forward-looking, structured, insightful and continuous.  Risk management should be an integral part of any procurement process beginning with planning and preparing the Request For Proposal (RFP) or Request for Quote (RFQ), through proposal evaluation, and continuing throughout the life of the contract.  The following are some of the key elements of risk management:
 
3.6.1 Risk.
Risk is a measure of the potential inability to achieve overall objectives within defined cost, schedule, and technical constraints.  Risk has two components:
 
3.6.1.1 Probability.
This component consists of the probability/likelihood of failing to achieve a particular outcome.
 
3.6.1.2 Consequence.
This component consists of the consequences or impacts of failing to achieve that outcome.  Some examples of adverse contracting consequences include:

• Never seeing an acceptable deliverable
• Accepting a deliverable that does not in fact satisfy the end user’s ctual need
• No longer needing the deliverable by the time the user receives it
• Paying more than a reasonable price for the work

3.6.2 Risk Management.
Risk management is the act or practice of dealing with risk.  It includes planning for risk, assessing (identifying and analyzing) risk areas, developing risk-handling options, monitoring risks to determine how risks have changed, and documenting the overall risk management program.
 
3.6.3 Risk Assessment.
Risk assessment is the process of identifying and analyzing program and process risks to increase the probability/likelihood of meeting cost, schedule, º  and performance objectives.  Risk assessment includes not only identifying and documenting risks, but also examining each risk to determine its cause and effects, level of severity, probability of occurrence and relationship to other risk areas or processes.
 
3.6.4 Risk Handling.
Risk handling is the process that identifies, evaluates, selects, and implements options in order to set risk at acceptable levels given known constraints and objectives.  Acquisition planning should address how risks are to be handled and identify which risks are to be shared with the contractor and which are to be retained by the Government.
 
3.6.5 Alpha Contracting.
Alpha Contracting is one technique used to reduce contract-related risk while streamlining the acquisition process and reducing cycle time for contracts. It emphasizes conducting actions concurrently, with a close relationship between a Government integrated product team (IPT) and the contractors. It is typically used for sole source contracts. Under Alpha contracting, the Government and contractors may work together to develop a solicitation package that meets the Government's needs, while also eliminating contractor questions or concerns with it. Similarly, as the contractors complete development of portions of their technical and cost proposals, the IPT, including representatives of the Program Office, the contracting office, the contract administration office, and the Defense Contract Audit Agency (DCAA), may review the proposal and attempt to resolve issues the team identifies. When the completed proposals are then formally submitted to the CO, much of it may already be negotiated. This approach helps increase the likelihood of an optimized program with an achievable scope, improved performance or quality, and the avoidance of non-value added requirements, at a lower overall cost than what was originally contemplated. Following-up alpha contracting with partnering is a natural follow-on, because alliance and team building have already been fostered.

3.7 Contract Type Selection
There is no single contract type that is right for every contracting situation. Contract type selection is done on a case-by-case basis considering contract risk, incentives for contractor performance, and other factors such as the adequacy of the contractor’s accounting system. Contract Type Decision Guide is a tool designed by COD-FC for use as a starting point in determining a suitable contract type for your procurement. Part 16 of the FAR provides additional information on understanding and selecting contract types. Contract types vary according to the degree and timing of the responsibility assumed by the contractor for the costs of performance; and the amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals. Contract types range from firm-fixed-price (FFP), in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee (CPFF), in which the Government has maximum responsibility for the performance costs, and the negotiated fee (profit) is fixed. FAR 16.103 mandates that, with the exemption of most FFP contracts, the CO include documentation in the contract file to show why the particular contract type was selected. To support this requirement, TMA requiring activities are required to submit a full justification as part of the required acquisition package cover memo whenever requesting contract types other than FFP. The CO will make the final determination of contract type, taking into consideration COD-FC and the requiring activity’s input. In general, the following guidelines should be considered when determining the contract type.
 
3.7.1 Fixed Price Contracts.
Commercially available items must be purchased using firm-fixed-price or fixed-price with economic price adjustment contracts.  Fixed Price contract types include the following: 
 
3.7.1.1 FFP Contracts.
FFP contracts provide for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract.  This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.  It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum contract administrative burden upon the contracting parties.  In FFP contracts, payments are based on delivery of products or completion of a service.  Where the items are “off-the-shelf” a unit price per item is appropriate, payable upon delivery.  Where the item is more complex, or for a study or services, a payment schedule should be set that provides multiple, logical deliverables with a price for each deliverable.  Typically, the final deliverable represents the largest payment.  An example of this is provided below.
 

	Deliverable	Payment	Cumulative Payment
1.	Study Plan/Approach	$5,000	$5,000
2.	Interview Guide	$5,000	$10,000
3.	Raw Data Findings	$10,000	$20,000
4.	Preliminary Analysis Report and Briefing	$10,000	$30,000
5.	Final Study Report	$20,000	$50,000

3.7.1.2 Fixed Price with Economic Adjustment (FP/EA).
A FP/EA contract provides for upward and downward revision of the stated contract price upon the occurrence of specified contingencies.  Economic price adjustments are of three general types:

• Adjustments based on established prices provides for increases or decreases from an agreed-upon level in published or otherwise established prices of specific items or the contract end items.
• Adjustments based on actual costs of labor or material provides for increases or decreases in specified costs of labor or material that the contractor actually experiences during contract performance.
• Adjustments based on cost indexes of labor or material provides for increases or decreases in labor or material cost standards or indexes that are specifically identified in the contract.

3.7.1.3 Fixed Price Incentive (FPI).
A FPI contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by a formula based on the relationship of final negotiated total cost to total target cost.  FPI contract would be used with services of a commercial nature, where quality or performance targets are easily established and measured.  For example, a technology help desk contract, where call wait time is measured by an automated system, would be a good candidate for FPI.
 
3.7.1.4 Fixed Price Redeterminable (FPR).
A FPR contract provides for a firm fixed price for an initial period of contract deliveries or performance; and prospective redetermination, at a stated time or times during performance, of the price for subsequent periods of performance.  A fixed-price contract with prospective price redetermination may be used in acquisitions of quantity production or services for which it is possible to negotiate a fair and reasonable firm fixed price for an initial period, but not for subsequent periods of contract performance. This type of contract can provide for a ceiling price based on evaluation of the uncertainties involved in performance and their possible cost impact.  The ceiling price should provide for reasonable sharing of risk by the contractor and, once established, may be adjusted only by operation of contract clauses providing for equitable adjustment or other revision of the contract price under stated circumstances.
 
3.7.1.5 Fixed Price with Award Fee (FPAF).
A fixed price contract with award fee (FPAF) may be used when the Government wishes to motivate a contractor and other incentives cannot be used because contractor performance cannot be measured objectively. FPAF contracts establish a fixed price (including normal profit) for an effort. In addition, an award fee will be paid based on the contractor’s performance against an established award fee plan. FPAF contracts may only be used if the administrative costs of conducting award-fee evaluations are not expected to exceed the expected benefits; procedures have been established for conducting the award-fee evaluation; the award-fee board has been established; and an individual above the level of the CO approved the fixed-price award-fee incentive.
 
3.7.2 Cost Reimbursable Contracts.
Cost-reimbursement contracts are suitable for use only when uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract.  Complex or unique services for which quality of performance is paramount frequently fall into this category.  A cost-reimbursement contract may be used only when:  the contractor’s accounting system is adequate for determining costs applicable to the contract; and appropriate Government surveillance during performance will provide reasonable assurance that efficient methods and effective cost controls are used.  Cost-reimbursable contracts can include reimbursement for cost only, cost sharing, cost plus incentive fee, cost plus award fee, and cost plus fixed fee.  Cost-reimbursable contracts may not be used for the acquisition of commercial items.  Under cost reimbursable contracts it is especially important that contractor employees record all hours worked whether they are paid or not.  This is necessary because labor costs and associated overheads are affected by total hours worked, not just paid hours worked.  In most cases this works to the Government’s benefit.  For example, if an employee working on multiple projects records billable (or a combination of billable and non-billable) hours in excess of a standard 40-hour week, this should result in lower computed labor rates and labor overhead costs.
 
3.7.3 Time and Materials (T&M).
A time-and-materials contract has elements of both fixed price and cost-reimbursable contracts. A T&M contract provides for acquiring supplies or services on the basis of: direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and materials at cost, including, if appropriate, material handling costs as part of material costs. Within DoD, T&M contracts are the least preferred contract type. Because T&M contracts have been misused in the past, DoD has imposed certain restrictions. FAR 16.601 specifies that T&M contracts may be used only after a D&F has been signed by the CO for use of a T&M award. As with all recommendations for use of a contract type other than FFP, it is incumbent upon the TMA requiring activity to provide adequate justification to the CO as part of the required cover memo to support a recommendation for a T&M award. When the TMA requiring activity recommends the use of a T&M type contract, the period of performance will be limited to 3 years, unless a very strong justification is made and approved by the supporting contracting office.
 
3.7.4 Labor Hour Contract. 
A labor-hour contract is a variation of the time-and-materials contract, differing only in that the contractor does not supply any materials.
 
3.8 Other Contracting Methods.
The Federal Acquisition Streamlining Act of 1994, Public Law 103-355 (FASA), provided a number of authorities that streamlined the acquisition process and made a number of substantial changes in the manner in which relatively low dollar procurements are conducted.  FASA created a micro-purchase threshold of $2,500 (now $3,000), and a simplified acquisition threshold of $100,000.  Note: the micro-purchase threshold has been increased to $3,000.  Generally, increasingly restrictive provisions are placed on purchases as the dollar value of the purchased item increases.  The term "splitting requirements" refers to the practice of breaking down known requirements into two or more purchases to reduce the dollar value of each below restrictive thresholds for competitive simplified acquisition procedures or full-and-open competitive procedures.  FAR 13.003(c) (1) prohibits this practice.  Simplified Acquisition Procedures are addressed within FAR Part 13.  The methods used within TMA to make simplified acquisitions include:
 
3.8.1 Blanket Purchase Agreement (BPA).
A BPA is a set of pre-negotiated terms and conditions governing future transactions between the Government and the vendor.  It is not a contract, but simply an agreement on specific conditions or terms for future actions if and when they occur.  A BPA may be established with any responsible vendor when it is likely that there will be repetitive purchases during a stated period within a broad class of supplies or services, and the exact items/services, quantities and delivery requirements cannot be accurately forecasted.
 
3.8.2 Purchase Orders.
A purchase order, awarded as a result of a quotation, is an offer by the Government to buy certain supplies or services in accordance with specified terms and conditions contained in the order. 
 
 
3.9 Contract Vehicle Selection
Through its PCA agreement with USAMRAA, TMA has established a suite of contract vehicles, which are key components of the TMA acquisition infrastructure and their use is preferred over all other vehicles.  Use of another contract vehicle or use of another contracting agency is authorized, but must be approved by the Director, AM&S consistent with the current TMA Policy for the Acquisition of Non-Purchased Care Support, dated October, 01, 2009.  This is typically done as part of the formal Acquisition Planning process.
 
3.9.1 D/SIDDOMS 3.
Over the past several years TMA has utilized a series of competitive contracts to provide support for ongoing and future health care programs that support the OASD(HA), TMA, and Military Health System (MHS) missions.  The DoD/Systems Integration, Design, Development, Operations and Maintenance Services (D/SIDDOMS) contracts is currently in its third generation (D/SIDDOMS-3).  D/SIDDOMS 3 is an Indefinite Delivery/Indefinite Quantity (ID/IQ) contract vehicle for use of the MHS, its components, and the Department of Veterans Affairs to provide quick-turn-around orders for execution of MHS design, development, integration, test, deployment, operations, maintenance, and training as they relate to Category 3 requirements.  D/SIDDOMS 3 is a multiple award contract vehicle, allowing TMA to solicit bids from multiple contractors on a Fair Opportunity basis.  Orders issued against D/SIDDOMS 3 may be Time & Material, Firm Fixed Price (FFP), Fixed Price Award Fee (FPAF), Fixed Price Labor Hour (FPLH), Cost Plus Fixed Fee (CPFF), or Cost Plus Award Fee (CPAF).  
 
3.9.2 T/AARMS.
The TRICARE Acquisition Automation and Resource Management Support (T/AARMS) contract, is an ID/IQ contract vehicle designed to satisfy Category 1 requirements – for TMA “Internal” Support Services.  This includes, for example:  administrative support services; procurement support services; systems and database management services; budget, financial, or cost estimation services; and information technology services, facilities, and support.  T/AARMS is a multiple award contract vehicle, allowing TMA to solicit bids from multiple contractors on a Fair Opportunity basis.  Orders issued against T/AARMS may be Firm Fixed Price (FFP), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF), or Time & Material / Labor Hour (T&M/LH). 
 
3.9.3 TEAMS.
The TRICARE Evaluation, Analysis, and Management Support (TEAMS) contract is an ID/IQ contract vehicle designed to satisfy Category 2 requirements – for Program Management Support Services, which assist TMA in planning and managing its activities and programs.  This includes, for example:  program management support services; studies and analysis; performance based budgeting / financial management; business process improvement; functional validation and verification; records management; information management; acquisition management; and logistical support.  TEAMS is a multiple award contract vehicle, allowing TMA to solicit bids from multiple contractors on a Fair Opportunity basis.  Orders issued against TEAMS may be Firm Fixed Price (FFP), Fixed Price Incentive (FPI), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF), or Time & Material / Labor Hour (T&M/LH). 
 
3.9.4 GSA Schedules.
If an existing TMA contract vehicle cannot be used, TMA may order from any existing General Services Administration (GSA) schedule, provided that the scope of the schedule adequately covers the scope of the intended work and the use of a non-TMA contract vehicle is approved by the Director, AM&S, consistent with the TMA Policy for the Acquisition of Non-Purchased Care Support, dated October 01, 2009.  These schedules have already met the requirements for “full and open” competition, and only require a “fair opportunity” phase for award.  Please refer to the GSA Federal Supply Schedule (FSS) User’s Guide.  The guide describes the roles and responsibilities, including those of GSA, in placing orders against GSA FSSs.  See also the GSA e-Library.
 
 
3.9.5 Non-TMA Multiple Agency Contracts (MACs).
Agencies outside of TMA sometimes issue a contract, or set of contracts, for PM services, which may be available to TMA if an existing TMA contract vehicle cannot be used.  Examples include the NIH CIO-SP contracts and VA management studies contracts.  Typically, these multiple award, ID/IQ contracts have already met the requirements for “full and open” competition, and only require a “fair opportunity” phase for award.  Like GSA contracts, a MAC is a non-TMA contract vehicle and its use must be approved by the Director, AM&S, consistent with the TMA Policy for the Acquisition of Non-Purchased Care Support.
 
 
3.10 Competition Requirements
Federal Law defines acquisition methods and processes.  There are three levels of competition in contracting.
 
3.10.1 Full and Open Competition.
10 United States Code (USC) and FAR Subpart 6.1 requires COs to promote and provide for full and open competition in soliciting offers and awarding Government contracts.  Full and open competition when used with respect to a contract action, means that all responsible sources are permitted to compete.  This approach potentially provides a large universe of prospective offerors.  The more proposals, the better the chances for the Government to obtain a good "buy".  Contracting without providing for full and open competition is a violation of statute, unless it is permitted by one of the exemptions listed in Federal Acquisition Regulation (FAR) 6.302.  Lack of advance planning and/or concerns related to amount/type of funds available are NOT justifications for sole sourcing a contract action.  Full and Open acquisitions include contracting through sealed bids and competitive proposals.
 
3.10.2 Fair Opportunity.
Fair opportunity for orders under multiple award contracts, as described in FAR Subpart 16.505 and Subpart 8.4 (for GSA orders), means the CO must provide each awardee a fair opportunity to be considered for each order exceeding $3,000.  In providing fair opportunity the CO must:

• Develop ordering procedures that will provide each awardee a fair opportunity to be considered for each order and that reflect the requirement and other aspects of the contracting environment;
• Not use any method (such as allocation or designation of any preferred awardee) that would not result in fair consideration being given to all awardees prior to placing each order;
• Tailor the procedures to each acquisition;
• Include the procedures in the solicitation and the contract; and
• Consider price or cost under each order as one of the factors in the selection decision.

Section 803 Requirements.
The Fiscal Year (FY) 2002 National Defense Authorization Act (NDAA) invoked specific guidance to the DoD for application of “fair opportunity”.  This guidance is implemented in DFARS 208.404-70 and is summarized in the following boxes:
 

Require fair notice to be provided to all contractors offering such products or services under the multiple award contract of the intent to make that procurement;		Notice may be provided to fewer than all contractors…  if notice is provided to as many contractors as practicable   AND
AND	OR	offers were received from at least three contractors that can fulfill the work requirement
		OR
afford all such contractors a fair opportunity to make an offer and have that offer fully and fairly considered by the official making the procurement.		the CO determines in writing that no additional contractors that can fulfill the work requirements could be identified despite reasonable efforts to do so.

 
 
When using D/SIDDOMS 3 (or future TMA contract vehicles, such as TEAMS or T/AARMS), this guidance is clear:  each contract holder must be given an opportunity to bid.  However, when using GSA schedules, the guidance is more difficult to implement.  Many GSA schedules, such as the IT Schedule and MOBIS, have hundreds, or even thousands of contractors.  When ordering from GSA schedules, TMA must identify a strategy that will ensure receipt of at least three quotes.  The general approach is to solicit bids from at least ten (10) schedule holders.  Should this approach not yield at least three bids, then the Government will solicit from ten more contractors.  If this also fails, the CO will identify a strategy which may include a third solicitation or may coordinate with the PM to document the attempts to solicit bids and will make an award based on the bids received.
 
3.10.2.2 Exceptions to Fair Opportunity.
The only exceptions to the above procedures are:

• The agency need for the supplies or services is so urgent that providing a fair opportunity would result in unacceptable delays;
• Only one awardee is capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized;
• The order must be issued on a sole-source basis in the interest of economy and efficiency as a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order; or
• It is necessary to place an order to satisfy a minimum guarantee.

For additional information, refer to in FAR Subpart 8.405-6 (GSA) or in FAR Subpart 16.505 (ID/IQ) for a discussion of exceptions to Fair Opportunity.

 
3.10.3 Sole Source. 
Sole source acquisition means a contract for the purchase of supplies or services that is entered into, or proposed to be entered into, by an agency after soliciting and negotiating with only one source. 
 
3.10.3.1
Sole source acquisitions are permitted only for conditions described in FAR Subpart 6.302.  No action can be taken on a sole source acquisition until a Justification and Approval (J&A) as required by FAR Subparts 6.303 and 6.304 has been prepared. 
 
3.10.3.2
The FAR 6.304 J&A approval levels were recently changed.  To be consistent with the FAR, the Director, Defense Procurement and Acquisition Planning (DPAP) has directed that both J&As for sole source orders under Federal Supply Schedules, and determinations to waive competition for orders for supplies or services under Multiple Award Contracts must be approved by individuals at the levels cited in FAR Subpart 6.304.  These procedures apply whether an order is placed by DoD or on behalf of DoD. 
 
3.10.3.3
J&As For Other Than Full and Open Competition IAW FAR Subpart 6.3 shall be prepared in draft form by the requiring activity in consultation with the CO, and in accordance with the FAR Subpart 6.3 J&A template.  Highlighted portions of the J&A template should be replaced with non-highlighted text specific to the contracting action and justification.  The draft J&A should be provided electronically to the CO for their review, completion and routing according to the contracting agency’s procedures.
 
3.10.4 Limited Source.
Under the Multiple Award Schedule Program a special J&A is required if the acquisition is restricted to limited sources IAW FAR 8.405-6.  This J&A shall be prepared in draft form by the requiring activity in consultation with the CO, and in accordance with the FAR Subpart 8.4 J&A template.  Highlighted portions of the template should be replaced with non-highlighted text specific to the contracting action and justification.  The draft J&A should be provided electronically to the CO for their review, completion and routing according to the contracting agency’s procedures.
 
3.10.5 Competition Guide.
TMA managers should always promote adequate levels of competition to encourage the best firms (in terms of their track records on pricing, quality, timeliness, and integrity), to offer TMA quality products and services at reasonable prices.  COD-FC has created an interactive decision support tool called the Competition Guide to assist in planning the competition aspects of acquisitions.  This tool is designed to serve as a starting point in determining a suitable competition methodology for your procurement. 
 
3.10.6 Publicizing Contract Actions.
Under certain circumstances federal agencies are required to post information related to pending solicitations.
 
3.10.6.1 Full and Open Procurements.
For Full and Open procurements, the FAR requires all federal agencies to provide access to their notices of solicitation by making them available through a Government-wide Point of Entry (GPE).  The GPE serves as the single point where the public can access announcements of Government business opportunities greater than $25,000, including synopses of proposed contract actions, solicitations, and associated information, electronically.  Posting of solicitations through the GPE is typically the responsibility of the supporting contracting agency.  The GPE may be accessed via the Internet at http://www.fedbizopps.gov/ (FedBizOpps).  Other DoD E-Business/E-Commerce sites, such as DoDBusOpps, automatically link to FedBizOpps.  The US Army Medical Research Acquisition Activity (USAMRAA) uses the Army Single Face to Industry (ASFI) website to post its solicitations.
 
3.10.6.2 Brand Name Specifications.
Brand Name acquisitions require a Justification and Approval (see FAR Subpart 6.302, or FAR Subpart 8.405-6), depending on the contract vehicle used.  TMA requiring activities should limit the use of brand name specifications so as to maximize competition.  However, for acquisitions exceeding $25,000 that do use brand name specifications, including simplified acquisitions and sole source procurements, federal agencies are required to post the brand name justification or documentation to either one of the following sites:

• The GPE at http://www.fedbizopps.gov/, with the solicitation, or;
• The e-Buy system at http://www.ebuy.gsa.gov, with the request for quotation (RFQ) when using the General Services Administration (GSA) Federal Supply Schedules (FSS).

3.11 Contract Work Specification
The way in which contract performance is specified can have enormous impact on contractor performance, efficiency, quality and cost to the Government.  The type of contract, contract vehicle, contracting source, and desired end product all have a bearing on the strategy used to develop a contract work statement.  If the work is for services, then the contract/order must include a work statement, which describes what will determine successful performance by the contractor.  The work statement will also serve as the basis for administration of the contract by the government.  The work statement is probably the single most critical document in the acquisition process.  The work statement will take one of two forms, a SOW, or a Statement of Objectives (SOO).

• SOW.  The SOW describes the work to be performed or the services to be rendered, defines the respective responsibilities of the Government and the contractor, and provides an objective measure so that both the Government and the contractor will know when the work is complete and payment is justified.  The SOW is a very important part of the acquisition package and it is essential that the requiring activity clearly communicate the requirements of the contract.  TMA emphasizes the use of a performance-based SOW (PBSOW), called a PWS.  PWS templates have been developed for each of the major TMA contract vehicles.  These Templates are listed within the index of checklists, templates examples and worksheets. 
• SOO.  The SOO states the overall solicitation objectives.  It can be used in those solicitations where the intent is to provide the maximum flexibility to each offeror to propose an innovative development approach.  The SOO captures the key objectives of a solicitation and allows the offerors freedom in the structure and definition of SOW tasks as they apply to the proposed approach.  Offerors use the RFP/FRQ, performance requirements, and SOO as a basis for preparing their proposals, which include a contractor-prepared SOW that specifies the approach proposed and gives details on the work to be performed.

3.11.1 Performance Based Acquisition (PBA).
DoD has placed great emphasis on using a performance-based approach to acquiring goods and services.  All TMA requiring activities are strongly encouraged to utilize this technique for acquiring goods or services.  Both the FAR and Public Law 106-398 (Section 821) specify that performance-based acquisition is the preferred method for acquiring services.   In an effort to increase performance gains and contract savings the Under Secretary of Defense, Acquisition, Technology & Logistics (USD (AT&L) has established DoD-wide goals that 50 percent of service acquisitions, measured in terms of dollars, are to be performance based.  There are certain key characteristics that make a contract performance-based.
 
3.11.1.1
FAR 37.601 characterizes a performance-based acquisition as having the following three key attributes:

• A PWS
• Measurable performance standards (i.e., in terms of quality, timeliness, quantity, etc.) and
• Performance incentives where appropriate. 

3.11.1.2
To help implement this guidance, DoD has developed a Performance-Based Service Contracting (PBSC) Guidebook, available at: DoD Guidebook for PBSC.  This guidance takes the FAR description of a performance-based contract with the addition of a Quality Assurance Surveillance Plan as an essential element.  According to the DoD Guidebook for PBSC, to be considered performance-based, an acquisition should contain, at a minimum, the following elements:

• A PBSOW describing the requirement in terms of measurable outcomes rather than by means of prescriptive methods.
• Measurable performance standards, defining what is considered acceptable performance, in order to determine whether performance outcomes have been met.
• Remedies that address how to manage performance that does not meet performance standards.  Also consider using incentives to encourage performance that will exceed performance standards.  Remedies and incentives complement each other.
• A Quality Assurance Surveillance Plan or other performance assessment plan describing how contractor performance will be measured and assessed against performance standards.

The following paragraphs address each of these key elements of a performance-based service contract.
 
3.11.2 PWS.
A PWS, sometimes referred to as a Performance-Based SOW (PBSOW) is a fundamental requirement of PBSC.   The PWS provides a description of the tasks to be performed by the contractor in terms of required outcomes or results.  With a PWS, accountability for the final outcome is more clearly drawn; the contractor remains responsible and accountable for achieving the required results based upon the proposed technical and management approach and internal processes which have not been dictated by the Government.  The offeror is given greater flexibility in their proposal but, commensurate with this greater flexibility, also absorbs greater risk for contract performance.  The OFPP offers a checklist that may be used as an aid in developing an PWS for performance-based service contracts or task orders.  The checklist is available at: OFPP PBSC Checklist.  Key components of a PWS are:

• Specific and clearly defined contract goals.
• Technical and schedule requirements stated in terms of desired results.
• Methods of performance measurement.
• Clearly established deliverables and other reporting requirements.
• Mandatory requirements that are limited to the Government's actual minimum needs.

3.11.2.1
The time spent by the requiring activity in determining contracting needs and what kinds of services and outputs are to be provided by the contractor is invaluable to effective PWS preparation. The PWS establishes the framework for contractor performance. Work statement planning involves organizational analysis, work analysis, and performance analysis. 

• Organization Analysis.  Organization analysis involves reviewing the requiring activity's needs and identifying the services and outputs required from the contractor. It should emphasize the outputs the contractor will produce, but should not dictate how to produce these outputs.
• Work Analysis.  Work analysis involves further analyzing the required outputs by breaking down the work into its lowest task level and linking tasks in a logical flow of activities.  Requiring activities should start with the overall service or output required from the contractor, then divide the job into all its parts and subparts, and identify the relationships among all the parts.
• Performance Analysis.  Performance analysis assigns a performance requirement to each task, which involves determining how a service can be measured and what performance standards and quality levels apply. The performance standard establishes the performance level required by the government. 

3.11.2.2
Developing the work statement is of particular importance because the services or outputs identified during planning form the basis for determining and establishing performance requirements, performance standards, appropriate indicators, and effective performance incentives. 
 
3.11.3 Work Statement Format and Content.
General guidance on the content and format of the PWS is contained within the Handbook for Preparation of Statement of Work: MIL-HDBK-245D.  The format for a TMA PWS may vary slightly depending on the contract vehicle used.  Requiring activities should refer to the anticipated contracting vehicle User's Guide listed within the index of checklists, templates examples and worksheets, for specifics on that vehicle’s PWS template.  A TMA PWS should consist of a cover memo that provides information to the CS on summarized scope, Program Office POC, desired source/contract type, and certification of the type of services to be provided.  The body of the PWS consists of the following sections:

• BACKGROUND.  This section describes the scope and objectives of the work.  The scope paragraph defines the breadth and limitations of the work to be done.
• SPECIFIC TASKS.  This section defines the work effort, listing all tasks in terms of what is required, not how it shall be accomplished.  Specify requirements clearly to permit the government and offerors to estimate the probable cost and the offeror to determine the levels of expertise, manpower, and other resources needed to accomplish the task.
• DELIVERIES/PERFORMANCE.  This section specifies the place and period of performance as well as the schedule for deliverables.
• INSPECTION AND ACCEPTANCE CRITERIA.  This section addresses the acceptance criteria.  It also specifies the timelines for Government review and comment and contractor deficiency correction.
• OTHER TERMS, CONDITIONS, AND PROVISIONS.  This section addresses information protection, data rights, Government furnished property, contractor standards of conduct, anticipated contractor level of effort, contractor travel, and the Government’s quality assurance/surveillance of products or services.
• EVALUATION CRITERIA.  This section includes a discussion of the criteria the Government will use to select a contractor.
• PROPOSAL INSTRUCTIONS.  This section addresses proposal formatting and submission requirements.

3.11.4 Performance Standards.
Assessing the success of any performance based contract requires clear and well thought out standards of performance.   One or more performance standards should be developed for each requirement, task or deliverable under a performance based contract that reflects the criticality of the service and the minimum needs for that service.
 
3.11.4.1
Performance standards typically address the following questions: What? How well? How many? When?  To be effective, performance standards should:

• Be measurable or quantifiable.
• Be clear and understandable.
• Be realistically achievable.
• Be true indicators of outcome or output.
• Reflect actual needs.
• Avoid prescribing how the contractor should perform the work.

3.11.4.2
Each performance standard requires an associated acceptable quality level (AQL) that a contractor must meet.  An AQL establishes a maximum allowable error rate or variation from the standard for each task. This is the worst-case quality level or maximum error rate, expressed as a percentage or ratio, still considered acceptable performance under the contract terms.  To determine an AQL, ask these questions: What measures of quality, quantity, and/or timeliness are appropriate and reasonable and, what tolerance or deviation (if any) from the performance standards should be permitted?
 
3.11.5 Remedies and Incentives.
The catalyst of any performance based contract is an effective set of remedies and incentives.  The right mix of remedies and incentives, often vary depending on the contract type.  They serve to promote outstanding performance and discourage poor performance.
 
3.11.5.1
Remedies come into play when the contractor does not meet the AQL.  They are designed to protect the Government’s interest, ensure contract and statutory compliance, correct any nonconforming deliverables, address and reverse any unfavorable performance trends and motivate the contractor to a higher level of performance.
 
3.11.5.2
Incentives complement remedies, and should represent a judicious balance between the costs and value to the Government and attractiveness to the contractor.  They can be either positive or negative (disincentives) but the Government should assure that incentives do not conflict with one another.  The incentives that can be employed often depend on contract type.  Review section 3.3, Contract Type Selection, when determining incentives.  The Government can use fixed fee, award fee, or incentive fee arrangements as incentives.  Some examples of incentives include:

• Bonus payments.
• Price/fee reductions.
• Increased award fees on cost plus award fee contracts.
• Reduction in contract surveillance and/or reporting requirements.
• Positive performance evaluation reports.
• Additional performance periods. (Award Term).

3.11.6 Quality Assurance Surveillance Plan.
The Quality Assurance Surveillance Plan (QASP) provides a surveillance standard for monitoring service performance and provides a systematic method to evaluate contractor performance.  While the DFARS requires surveillance, it does not prescribe specific methods to evaluate performance.
 
3.11.6.1
A good QASP adds structure, consistency and objectivity to the surveillance process.  COD-FC has developed a QASP template, which can be found here.  The completed QASP should:

• Identify key Government players and describe their roles and responsibilities
• Identify key contractor players and describe their roles and responsibilities
• Describe all applicable performance standards
• Describe the methods of surveillance to be used
• Describe the performance rating system to be used
• Describe the planned frequency of performance measurement
• Describe how good performance will be documented and rewarded
• Describe how poor performance will be documented and corrected 

3.11.6.2
Development of the QASP is a key component of the Performance Based Acquisition planning process.  The connection between the performance work statement and the QASP is so fundamental that FAR 46.401 specifies that the QASP should be prepared in conjunction with the preparation of the SOW.   The QASP is nevertheless a “living document” and the Government may review and revise it on a regular basis.  The Government should coordinate any QASP changes with the contractor.
 
3.12 Socio-Economic Procurement Goals
It is the policy of the Government to provide maximum practicable opportunities in its acquisitions to small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns.  Business owners who certify that they are members of named groups (Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans) are to be considered socially and economically disadvantaged.  Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) established a program that authorizes the Small Business Administration (SBA) to enter into all types of contracts with other agencies and let subcontracts for performing those contracts to firms eligible for program participation. The SBA’s subcontractors are referred to as “8(a) contractors.”
 
3.12.1 Small Business Goals.
In accordance with FAR Sub-Part 19.502-2(a), all acquisitions expected to exceed $3,000, but not over $100,000, are reserved exclusively for small business concerns.  These requirements will be set aside unless the CO decides there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality and delivery.  The OFPP has issued a policy letter on Small Business Goals, available at OFPP Policy Letter PL99-1.  In addition to the above, section 1207(a) of Public Law 99-661 established an objective of 5% of total DoD obligations for contracts and subcontracts awarded to Small Disadvantaged Business Concerns.  The Small and Disadvantaged Business Utilization (SADBU) office within the Office of the Secretary of Defense (OSD) is the DoD’s lead policy office for small business issues.  Guidance from this office is available at: DoD SADBU.
 
3.12.2 Women’s Business Goals.
The Federal Acquisition Streamlining Act (FASA), of 1994 Section 7106 amends the Small Business Act to add a 5 percent goal for Women-Owned Business concerns.
 
3.12.3 Other Socio-Economic Programs.
The FAR Part 26 provides guidance on additional socio-economic programs such as:

• Indian Incentive Program
• Disaster or Emergency Assistance Activities
• Historically Black Colleges and Universities and Minority Institutions

3.12.4 Monitoring and Reporting Requirements.
TMA is required to measure the extent of small business participation in TMA acquisition programs by taking the following actions:

• Require each prospective contractor to represent whether it is a small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, or women-owned small business concern.
• Accurately measure the extent of participation by small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns in Government acquisitions in terms of the total value of contracts placed during each fiscal year, and report data to the Small Business Administration (SBA) at the end of each fiscal year.

3.12.5 Small Business Guide.
In FY04 COD-FC updated the TMA Small Business Procurement Guide.  This Small Business Guide is available on the COD-FC web site for use by small business concerns interested in doing business with TMA.  The guide gives a comprehensive introduction to federal procurement in general and to TMA in particular.  It also offers detailed information and links related to small business issues. 
 
3.13 Cost Estimates
The FAR requires that COs ensure the final contract price is fair and reasonable for all acquisitions through cost/price analysis.  Within TMA an Independent Government Cost Estimate (IGCE) is required as part of the acquisition plan package submitted for procurement, for all source selections over the simplified acquisition threshold.  Program Offices develop the IGCE as a key early step in t»˜he acquisition.  Properly developed IGCEs provide program and task managers with a tool º to defend, make tradeoff decisions, and manage their acquisitions throughout the life cycle of the requirement.  IGCE related guidance is at: IGCE Guide and IGCE Template and IGCE Example. 
 
3.14   Contract Funding
FAR Part 32 states that “No officer or employee of the Government may create or authorize an obligation in excess of the funds available, or in advance of appropriations (Anti-Deficiency Act, 31 U.S.C. 1341), unless otherwise authorized by law.”   Before executing any contract, the CO must either get written certification that funds are available from the responsible fund certifying officer or make the contract conditional upon the availability of funds.
 
3.14.1 Subject to the Availability of Funds (STAF).
The award of a "conditional contract" prior to the enactment of an appropriations act does not violate statutory funding requirements.  A "conditional contract" is one that expressly makes the government's liability under the contract contingent upon or subject to the availability of appropriated funds (STAF).  The Government may not accept supplies or services under a contract conditioned upon the availability of funds until the CO has given the contractor notice, to be confirmed in writing, that funds are available.  The rationale for issuing actions on a STAF basis, applies in only the following two cases:

• For recurring O&M services for which funding is routinely provided on an annual basis, or; 
• For special projects budgeted for the next fiscal year and for which the contractor must be given sufficient advance notice of the Government's intent to authorize commencement of the work once funding is made available.  STAF actions may be issued prior to the end of the fiscal year for a contract that has a start date after 1 October, i.e. 20 November.

3.14.2 Incremental Funding.
FAR 32.7 and DFARS 232.7 prescribe the use of incremental funding for certain contracts and require specific clauses to stipulate that funding and the Government’s obligation are limited.  A fixed-price contract may be incrementally funded only if:
 
a. The contract is funded with research and development appropriations;
b. Congress has otherwise incrementally appropriated program funds; or
c.The head of the contracting activity approves the use of incremental funding for either base services contracts or hazardous/toxic waste remediation contracts.
 
If b. or c. above does not apply, then neither Operations and Maintenance nor Procurement appropriations may be used to incrementally fund the contract.
 
3.14.3 Military Interdepartmental Purchase Request (MIPR) Processing.
Purchase request packages sent by TMA to a contracting office other than CCE or USAMRAA are typically funded via MIPR (DD Form 448).  The MIPR amount must be based on the requiring activity’s best estimate of eventual cost, and MIPR amounts are to be adjusted when new information becomes available.   The following procedures will apply:
 
a. There will be only one contract awarded or task order issued per MIPR.
b.   Occasionally a reimbursable MIPR results in a contract award for less   than the amount originally sent on the MIPR.  If any funds remain after    the contract is awarded, they must be returned to TMA.

• COD-FC will distribute copies of award documents to the requiring   activity and to TMA RM
• TMA RM will automatically issue a MIPR Amendment to pull back any excess funds
• If these excess funds have not expired, they will be credited to the   originating APC

c. Funds may be sent on a MIPR two different ways

• A Direct Cite MIPR means that TMA’s funds are to be directly cited on any contract award.  Once a copy of the contract is received, it becomes the basis for the TMA Resource Management Office to establish an obligation for the amount of the contract.
• A Reimbursable MIPR gives the contracting office authority to increase its own funds by the amount sent on the MIPR, and using its own funds, establish a contract on behalf of TMA.  When the   contracting office returns a MIPR Acceptance (DD Form 448-2), the TMA Resource Management Office establishes an obligation for the amount accepted.  The contracting office then conducts the  procurement and awards a contract or issues a task order. 

d.   The conditions of any transaction for acquisition support services depend on the governing statute for that transaction.  The primary governing statute for reimbursable services within the federal government is the Economy Act.  All DoD contracting offices and many other federal contracting offices are subject to the Economy Act, which stipulates that they must:

• Award the contract prior to funds expiration, or all funds must be returned to the requesting agency.
• Return any excess funds to the requesting agency before they expire. 

e. The DoD IG has cited several DoD activities for inappropriate use of non-DoD contracting support, and some reports have revealed significant funding irregularities, and potential Anti-Deficiency Act Violations against the DoD activity obtaining the contracting support.  For this reason, DoD agencies are now required to follow the Economy Act fiscal law rules for all non-DoD contracting support.  Non-Economy Act orders must follow the same fiscal law rules as Economy Act orders.  In other words when a DoD activity uses any contracting office, including Franchise Funds and GSA, that contracting office must obligate the DoD funding by awarding or modifying a contract/order prior to funds expiration.  Since non-DoD contracting offices are sometimes unaware of (and usually do not have to adhere to) limitations and special requirements placed on DoD acquisitions by federal law or regulations, the onus is on the requesting agency to see that DoD funds are used for the purpose for which they were appropriated and within mandatory time limits.  (For more information see the TMA Acquisition Support Guide.)
 
f. MIPRs must contain the following statements:

• MIPRs for severable services:  “These funds are available for services for a period not to exceed one year from the date of obligation and acceptance of this order.  All unobligated funds shall be returned to the ordering activity no later than one year after the acceptance of the order or upon completion of the order, which ever is earlier.”
• MIPRs for goods:  “I certify that the goods acquired under this agreement are legitimate, specific requirements representing a bona fide need of the fiscal year in which these funds are obligated.”

3.14.4   Fiscal Year Contracts.
Under this type contract, performance cannot begin prior to the date of enactment of the appropriations.   FAR 32.703-2(a) states that “The contracting officer may initiate a contracting action properly chargeable to funds of the new fiscal year before these funds are available; provided, that the contract includes the clause at 52.232-18.”   This authority may be used only for operation and maintenance and continuing services which are:

• Necessary for normal operations and
• For which Congress previously had consistently appropriated funds, unless specific statutory authority exists permitting applicability to other requirements.

The key to a fiscal year contract that is awarded STAF is that contract performance (i.e., the start work date) cannot occur prior to enactment of the appropriation.  However, performance does not have to be scheduled for the date of appropriation enactment or the first day of the next fiscal year in the event of a continuing resolution.  A conditional contract can be awarded prior to the end of a fiscal year with a start work date programmed some time on or after 1 October of the next fiscal year – provided actual work does not start until some date after enactment of the appropriations or a continuing resolution.  A STAF contract can be awarded after the beginning of a new fiscal year in the absence of an appropriations act provided Congress has enacted a continuing resolution, sufficient funds have been apportioned to cover the contract, and the contract does not involve a new start.
 
3.14.5   Contracts Crossing Fiscal Years.
Since TMA operates with funds that have a finite “life span”, the end of the fiscal year often marks the limits on the use a particular appropriation.  The funding of contracts that cross fiscal years is largely determined by the so-called bona fide needs rule: A fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or in some cases arising prior to but continuing to exist in, the fiscal year for which the appropriation was made.  An appropriation may not be used for the needs of some time period subsequent to the expiration of its period of availability.  For annual appropriations, a more common statement of the rule is that an appropriation for a given fiscal year is not available for the needs of a future fiscal year.  The application of the bona fide needs rule depends largely on the facts and circumstances of the particular case.  Normally a service contract that is funded by annual appropriations may not cross fiscal years, except if the contract is non-severable.
 
3.14.5.1 
A service contract is non-severable if the service represents a single undertaking, producing a single or unified outcome, product or report that cannot be subdivided for separate performance in different fiscal years.  For example, a contract to re-carpet or paint an office is non-severable – the customer needs the whole thing done; i.e., the end result of the service. 
 
3.14.5.2 
On the other hand, a service is severable if it is continuing and recurring in nature or can be separated into components that independently meet a separate need of the government.  Most program support contracts are continuing and recurring in nature, and therefore are severable requirements.  As a general rule within the federal government, severable services are a bona fide need of the fiscal year in which performed, may not cross fiscal years, and must be funded with an appropriation that is available at the time the service is provided.  Fortunately, DoD has been granted a statutory exception to this general rule.  10 U.S.C. 2410a provides authority for the Secretary of Defense to enter into contracts for severable services “for a period that begins in one fiscal year and ends in the next fiscal year if (without regard to any option to extend the period of the contract) the contract period does not exceed one year.”  For example, under this authority a contract for severable services with a period of performance (POP) that runs from August 15, 2006 up to August 14, 2007, may be funded with FY06 funds.  Under no circumstances should any order for severable services entered into as part of an interagency agreement, using Operations and Maintenance funds, extend beyond one year from the date the funds were accepted by the servicing agency (reference USD(Comptroller) memo Subject: Proper Use of Interagency Agreements with Non-Department of Defense Entities Under Authorities Other Than the Economy Act, dated March 27, 2006).
 
3.14.6  No Cost Extensions. 
Occasionally a requiring activity requests a no-cost extension to use expired funds remaining on a severable service contract, but while 10 U.S.C. 2410a provides authority for a severable contract to cross fiscal years, it does not automatically give agencies the right to extend severable contracts based on lack of acquisition planning, or in order to “save” funds that have been placed on the contract.  A no cost extension for a severable services contract that causes the POP to exceed 12 months, or if funded by Operations and Maintenance funds, to extend beyond one year from the date funds were accepted by the servicing agency, is not authorized and may result in a violation of the antideficiency act.
 
3.14.7  Special Funding Issues.
Some of the more recent TMA and DoD policy guidance memos on special funding topics are included below.

• Use of Appropriated Funds to Purchase Light Refreshments at Conferences – This GAO Descision, dated January 27, 2003 provides GAO’s decision and guidance on the Use of Appropriated Funds to Purchase Light Refreshments at Conferences.
• Use of Appropriated Funds to Purchase Food – This TMA policy memo, dated September 7, 2006 describes the minimum legal requirements for the purchase of food under a variety of circumstances.

3.15 Contractor Access to Classified Information
All contractor personnel who will have access to classified information must possess a security clearance.  This requirement must be referenced in the contractor’s awarded contract.  The following are the TMA internal procedures for establishing the requirement for contractor personnel to obtain security clearances.
 
3.15.1  Documenting the Requirement.
The requiring activity specifies in the PWS the requirement for contractor personnel to have access to classified information, and to possess security clearances.  The PWS identifies which positions to include, the labor categories, and locations.  The requiring activity also prepares a DD Form 254 “Contract Security Classification Specification”.
 
3.15.2  Coordination and Review.
The requiring activity forwards completed DD Form 254 and PWS package for the new contract/modification to the TMA Security Officer (Skyline 5, Room 810A, 703-681-8707), who will then coordinate with the OSD Industrial Security Program, Defense Protective Service for review and signature.  The requiring activity also provides a copy to COD-FC for their concurrent review.
 
3.15.3  Contract Award.
After the package is coordinated with the OSD Industrial Security Program, the TMA Security Officer will notify the requiring activity and the requiring activity will notify COD-FC. COD-FC will then forward the package to the contracting activity for award. The CO awards the contract or modification and signs the DD Form 254.
 
3.15.4  Filing Requirements.
The requiring activity forwards the completed DD Form 254 and a copy of the awarded contract/modification to the TMA Security Officer.  The TMA Security Officer forwards the signed DD Form 254 and awarded contract/modification to the Pentagon Force Protection Agency (PFPA) for their files.
 
3.15.5  Clearance Processing.
The contractor security manager submits the necessary information to the Defense Security Service (DSS) to process the security clearance for contractor employees.  DSS processes the clearance request and provides the results to contractor security manager.
 
3.15.6  Contractor Documentation.
The contractor security manager provides the TMA Security Officer with a visitor request, non-disclosure form, and letter of consent for employees acquiring access to classified information.
 
3.17 Reserved


3.18 Acquisition Timeline
A major full and open procurement can often be a long process with many complex steps and milestones along the way.  Acquisition planners should have an understanding of the approximate milestones for major full and open procurements, so they can allow for the necessary lead-time.  The actual duration of each step will vary for different procurements depending on value, complexity and other factors. A Microsoft Excel version is available at Excel Timeline. This generic timeline is meant to serve only as a guideline for requiring activities to better understand the sequence of events for full and open procurements and should by no means be considered as “set in stone”. 
 
3.19 Support Agreements
Please contact supportagreements@tma.osd.mil for information.

4.0 Reserved


4.1 Reserved 

4.2 Reserved

4.3 Reserved


5.0 CONTRACT ADMINISTRATION

5.1 COR Responsibilities 
After contract award, the COR takes a leading role in managing the technical elements of the contract.  Should a COR need to be replaced due to turn-over or for other reasons, submit a completed COR Replacement Form to COD-FC.  The COR must:

• Be technically competent regarding the requirements within the contract,
• Maintain complete and accurate records,
• Establish and maintain a professional working relationship with the contractor, and
• Monitor contractor performance according to the guidelines of the contract.

5.2 COR Files 
Documentation is an essential duty of the COR.  After being appointed COR, create a COR file.  The COR records are part of the official contract file. Place notes or memoranda documenting all actions and decisions in the file. Remember that documents should include a signature and a date. Note the date, time, place, and persons involved when meeting with contractor personnel. Upon contract close out the COR must send the COR file to the CO for retirement. As a minimum, files must contain a copy of the following documents:

• Solicitation and amendments.
• Proposal on which contract was based.
• Contract and modifications.
• Correspondence with contractor, CO, or others.
• Reports submitted by contractor.
• Reports of inspections and site visits.
• Signed COR Appointment letter.

5.3 Post Award Kick-Off Meeting 
After a contracting office awards a contract, a post award kick-off meeting may be held. A post award kick-off meeting is a planned discussion between the COR and other appropriate Government representatives, and the contractor that focuses on understanding the technical aspects of the contract, identifying and resolving oversights, preventing problems, averting misunderstandings, deciding how to solve problems that may occur later, and reaching agreement on common issues. A post award kick-off meeting may be a structured meeting chaired by the CO, an informal meeting between the contractor and the COR, or a teleconference. The CO will decide on the format and may request assistance from the COR in preparing for and conducting the post award kick-off meeting. Topics may include such things as an overview of the work to be performed, recent changes in regulations, discussion of any applicable procedures or processes, and an opportunity for the contractor to provide input.
 
5.4 Contract Surveillance
The Government always has the responsibility to conduct surveillance over the expenditure of public funds.  Contract surveillance is used to determine if contractor-provided service meets the Government’s quantity and quality standards.   As discussed earlier, contract types often dictate how and when the contractor can charge for their services.  Contract surveillance should be tailored by contract type so that key factors contributing to Government costs are monitored closely.   Some points to consider and common problem areas to look out for when developing a surveillance plan are displayed in the box below.
 

Contract Type	Surveillance Points to Emphasize	Common Problems
Time and Materials	- Time card review   - # of hours charged to project   - # of staff charged to project - Work progress	- Running out of money
Cost Reimbursable	- Time card review   - # of hours charged to project   - # of staff charged to project   - individual’s hours charged to project versus other activities - Work progress	- Time spent on other activities not accounted for
Firm Fixed Price	- Quality of product/s at delivery point/s	- Products don’t meet Government standards

 
A contract surveillance strategy should be developed systematically, with surveillance activities planned at a level indicated by a realistic project risk assessment.  The task order COR and COR for the prime contract should continuously monitor the project risk, and recommend realignment of the levels of surveillance as circumstances indicate.
 
5.4.1 Contract Quality Assurance.
Contract quality assurance is a primary goal of contract surveillance.  Contract quality assurance is a joint effort by the contractor and the Government to ensure that the contractor fulfills the contract requirements in terms of quality of the product or service.  Contract quality control roles are performed both by the contractor and the Government.

• A Quality Control Plan (QCP) is a plan developed by the contractor for its internal use to ensure that it performs and delivers high-quality service.  The quality control plan is usually developed, submitted and evaluated as part of a contractor’s proposal.
• The Quality Assurance Surveillance Plan (QASP) specifies how Government quality assurance surveillance of the contract will occur (see section 3.10.6 above).  The QASP is intended to ensure that the Government receives the services for which it contracted, and pays only for the services it receives.  TMA requiring activities are responsible for prescribing contract quality requirements to be included in the QASP.  QASPs are especially important as TMA moves toward greater use of a performance based acquisition approach.  All QASPs must be fully consistent with the quality assurance language in the contract to be legally effective.  The QASP determines if the contractor meets the performance standards of the contract, as well as provides guidelines for how and when surveillance will be performed.  The objective of the QASP is to evaluate the contractor’s rate of progress, the quality of the contractor’s performance and compliance with standard commercial practices.  The QASP focuses on the quality, quantity, timeliness, etc. of the performance outputs to be delivered by the contractor(s) and not on the steps required or procedures used to provide the contracted product or services.

5.4.2 Surveillance Activities.
Personnel within the Program Office typically perform surveillance activities based on the QASP.  Surveillance may be carried out by the Task Manages/ task order COR, quality assurance monitors, and/or technical inspectors.  COD-FC will monitor these surveillance activities to ensure that the proper measures are being taken to protect the Government’s interests.  COD-FC will regularly check a sample of active task orders to ensure that the Program Office is performing effective contract surveillance.
 
5.4.3 Management of Contract Deliverables.
Deliverable management is necessary to ensure that TMA only accepts deliverables that meet contract requirements and contractors are only paid for acceptable deliverables.  Typically it is the responsibility of the task order COR to oversee the status of contract deliverables.  The COR may seek the assistance of functional managers/specialists to ensure the assigned deliverable is reviewed from a technical perspective, compiling responses from other reviewers, as necessary.  If necessary, the COR may arrange a comment review meeting with the reviewers to consolidate the comments and determine whether the deliverable meets the terms of the contract and should be accepted.
 
The COR should establish procedures to facilitate the timely review of contractor deliverables; to ensure deliverables are tracked and all events are recorded; and to ensure a copy of each deliverable and all supporting materials are filed.  These procedures should address the approach to deliverable review and approval, and depending on complexity and the terms of the contract, may include methods of documenting the quality of the deliverable or tools used to track the progress of the deliverable.   If authorized under the contract, the deliverable should be produced through various working sessions with TMA staff, users and stakeholders to ensure their needs will be met.  Reviews of early drafts are encouraged to ensure a smooth and timely final review.
 
If any deliverables are unacceptable, the COR will immediately notify the contractor in writing indicating the required corrections and next steps. Depending on the seriousness and corrective action required, a copy of this notice should be provided to the CO. The COR should track and maintain the status of any unacceptable deliverables and keep the CO informed as appropriate.
 
The COR, in coordination with the functional managers, should ensure that a hard copy of the deliverable is properly filed and that an electronic copy is stored, in accordance with the deliverable’s security classification and sensitivity.
 
5.4.4 Contract Performance Monitoring.
Performance monitoring includes administration of inspections, acceptance testing, and reviewing invoices and other payment issues.  Monitoring contractor performance is essential in order to ensure:

• Delivery or performance of the specified supplies or services
• The level of quality specified
• Adherence to the terms and conditions of the contract

Monitoring activities include site visits and communicating with the contractor concerning the progress of the contract.  Schedules of inspections should be made using a contract administration checklist.  A sampling plan should be designed using quality standards.  Monitoring should be commensurate with the criticality of the service or task and the resources available to accomplish the monitoring.
 
5.4.5 Restrictions on Performance Monitoring.
Over zealous surveillance could be construed as Government direction, and could potentially release the Contractor from accountability.  Performance monitoring does not include controlling the way the Contractor performs, except when imminent environmental, safety, or health hazards dictate.  This is especially true for performance-based contracts, since the Contractor is held accountable for the performance outputs to be delivered under the contract/order, and not for the steps required or procedures used to provide contracted products or services.
 
5.5 Communication with Contractors
Since communication between the Government and the contractor often is the basis for the contractor to do or not do something, the COR must take great care about what he or she communicates to the contractor. This applies to both oral and written communication. Always exercise care so as not to accidentally generate the basis for claims or delays. Be familiar with terms allowing the contractor to request action by the Government. If in doubt, consult the CO. If the contractor asks questions, be aware of and enforce proper procedures on when and how the contractor should present requests. Respond to the contractor’s properly submitted request within the timeframe set by the contract. Forward any questions to the CO in sufficient time to permit a timely response. When conveying technical or assessment information to contractor personnel, it is critical not to instruct, supervise or attempt to control contractor efforts except as specifically authorized in the contract.
 
5.6 Avoiding Constructive Changes
A constructive change occurs when, because of Government action or inaction, a change has occurred in the circumstances of the contractor’s performance, and the change results in an increase or decrease in the cost or period of performance. The COR must not give any guidance to contractors, either orally or in writing, which might be interpreted as a change in the scope or terms of the contract. The COR is responsible only for giving technical guidance to assure that the technical scope and terms of the contract are met. The COR may be held liable in constructive change situations. If it appears a constructive change has occurred, notify the CO immediately. Provide the CO as much detail as possible regarding events leading up to the situation. The CO requires information in order to determine if a constructive change actually occurred and to determine an appropriate corrective action. Therefore, it is important to keep records about any situation. Common causes include inadequate or latently defective specifications, improper interpretations of specifications, overly strict inspections, Government-caused delays, or improper technical direction.
 
5.7 Reserved


5.8 Contractor Identification
It is imperative that both Government and contractors make the status of contractors’ staffs clear at all times.  Ensure that no one inappropriately affords a contractor access to situations where sensitive information is being distributed and/or discussed.  Contractors must wear a badge identifying themselves as contractors. At the start of meetings, they must state their contractor status and the name of their company. They must identify themselves as contractors on all email by listing their name and company name in their signature block.  Contractor personnel, while performing in a contractor capacity, shall refrain from using their retired or reserve component military rank or title in all written or verbal communications associated with the contracts in which they provide services under (reference TMA PGI 11.106).
 
5.9 Security Procedures
The COR must ensure that the contractor understands all security requirements within the contract.  The COR should request and review the contractor’s security related written procedures (classified information, protected health information, etc.), and should consider checking those procedures as part of their QASP reviews.  The COR should specify the location of the facility, the times of day, and days of week that the contractors’ personnel may access the facility, and whether contractors; staffs are authorized to access the facility when Government staff are not present.  Contractor personnel must track and protect any issued keys or entry codes.
 
5.10   Handling Issues or Disputes
The Government’s policy is to try to resolve all contractual issues by mutual agreement at the CO’s level.  Reasonable efforts should be made to resolve controversies prior to the submission of a claim.  The FAR defines an "issue in controversy" as a material disagreement between the Government and the contractor which: may result in a claim; or is all or part of an existing claim. Procedures for addressing contract issues or disputes are covered within Subpart 33.2 of the FAR.
 
5.10.1   Alternate Dispute Resolution (ADR).
TMA officials are encouraged to use ADR procedures to the maximum extent practicable.  The objective of using ADR procedures is to increase the opportunity for relatively inexpensive and expeditious resolution of issues in controversy. Prerequisites to an ADR settlement include:

• Existence of an issue in controversy;
• A voluntary election by both parties to participate in the ADR process;
• An agreement on alternative procedures and terms to be used in lieu of formal litigation; and
• Participation in the process by officials of both parties who have the authority to resolve the issue in controversy.

ADR consists of a variety of streamlined resolution techniques designed to resolve issues in controversy more efficiently when the normal negotiation process fails.  ADR techniques often involve a neutral third party.  The Office of ADR within the Defense Office of Hearings and Appeals administers the DoD Roster of Neutrals which provides neutrals for ADR proceedings for DoD organizations, acts as a clearinghouse for ADR information, is involved in ADR education and awareness training, and supports the Office of General Counsel in implementing the DoD ADR Program. 
 
5.10.2   ADR Procedures.
ADR procedures may include, but are not limited to, fact-finding, mediation, mini-trials, and arbitration.  It is important to note that ADR is not the first step to litigation, rather it is an extremely effective business tool available to the CO, CS, and Programs Manager to resolve contract issues in controversy long before litigation is contemplated.  The Office of Personnel Management (OPM) has developed an excellent guide on ADR, which is located on the web at OPM ADR Guide.  This guide covers a number of federal agency approaches to ADR.
 
5.11   Cost/Price Reporting Requirements
COD-FC has developed a standardized format which can be used in situations where contractor cost reporting and contract “burn rate” monitoring is necessary.  One version of this report is to be used by D/SIDDOMS 3 contractors as part of their Monthly Progress Report, and is available at: D-3 Contractor Cost Report.  Similar cost report formats have been developed for use with T/AARMS contracts – T/AARMS Contractor Cost Report, and for TEAMS contracts – TEAMS Contractor Cost Report.  For contracts outside of D/SIDDOMS-3, T/AARMS and TEAMS, a generic version of the cost report may be used – Standard Contractor Cost Report Format.
 
5.12   Cost Monitoring
When using cost reimbursement type contracts, the Government must monitor costs and funding.  The COR should use all available information to anticipate both over-runs and under-burn.  The COR must avoid formal or informal action that would lead a contractor to exceed the contract cost limitation.  They should likewise remain vigilant of any potential under-burn that could free up resources that might be applied elsewhere within their program or within TMA.
 
5.12.1  
FAR clause 52.232-20, Limitation of Cost and 52.232.22 Limitation of Funds require a contractor to give advance notice if they believe an overrun will occur. The notice must be given when the contractor has reason to believe that 75 percent of the funds available on the contract will have been expended in the next 60 days. Notice is also required if, at any time, the contractor has reason to believe the total cost of performance will substantially exceed, or be less than, the estimated cost. The contractor must provide a revised cost estimate with the notice. In addition to the above, the COR should immediately notify the CO in cases when an overrun seems likely. Communications from Government personnel should avoid any implications that might justify an assumption by the contractor that costs beyond the existing limitation may be incurred. All CORs should note that encouraging a contractor to continue work in the absence of funds may result in a violation of financial management statutes and may subject the COR to criminal penalties.
 
5.12.2
Towards the end of each and every period of performance, the COR should conduct a thorough assessment of funds remaining on the contract based on historical data and what the contractor is required to do prior to the end of the order.  Any funds determined available for deobligation should be immediately brought to the attention of the TMA FOD.  
 
5.13   Invoice and Receiving Report Procedures
The contractor’s invoice and the receiving report are vital aspects of the contract administration and contractor payment process.  A contractor’s invoice represents a bill or written request for payment of materials and services rendered.  A receiving report documents the receipt, inspection, and acceptance of materials and services by authorized personnel.  Under most circumstances, the Defense Finance Accounting Services (DFAS) cannot make payment to a contractor without a valid invoice and receiving report confirming the vendor has met contract specifications.  Recent changes to the DFARS specify that except for purchases to support unusual or compelling needs of the type described in FAR 6.302-2; and purchases paid for with a Government-wide commercial purchase card, contractors shall utilize, to the extent possible, the Wide Area Workflow (WAWF) system to submit electronic payment requests and receiving reports in accordance with DFARS 232.7004.  WAWF is a DoD-wide paperless contracting application designed to eliminate paper from the receipts and acceptance process of the DoD contracting lifecycle.  The goal is to enable authorized Defense contractors and DoD personnel the ability to create invoices and receiving reports and access contract related documents.  Using WAWF, electronic documents are shared, eliminating paper and redundant data entry.  Data accuracy is increased and the risk of losing a document is greatly reduced.  The contract is available through an interface with an application called Electronic Document Access (EDA).  Contractors can electronically submit invoices and receiving documents on the Web or through other approved means.  Authorized DoD personnel receive notification electronically of pending actions and have a virtual folder of documents accessible.  For security purposes, the online data transmissions are protected with encryption, and user identities within WAWF are assured through the use of digital signatures and certificates or User IDs and passwords over a secure connection developed for transmitting private documents via the Internet.  WAWF documents will not process properly unless the correct routing information (in the form of a two-part location code) is entered when the contractor submits their WAWF documents.  TMA WAWF Location Codes have been established for TMA offices that administer TMA contracts.  COD-FC has developed a WAWF On-Ramp Guide to serve as a ready reference for TMA CORs and contractors using WAWF for TMA contracts/orders.
 
5.13.1
Cost-reimbursement, Time and Materials and Labor Hour contracts payment requests are processed within WAWF using the Public Voucher format.  In accordance with current DoD policy, TMA CORs are not authorized to approve Public Vouchers submitted for Cost-reimbursement, Time and Materials and Labor Hour contracts.  DCAA has sole authority to verify and approve interim vouchers and the Administrative Contracting Officer (ACO) has sole authority to approve final vouchers.  Within WAWF, TMA CORs can view these documents for information purposes only. 
 
5.13.2
For processing invoices and receiving reports under fixed-price contracts for services, the Invoice 2-in-1 format is TMA’s preferred WAWF format. See the WAWF-RA 2-in-1 Template Instructions for assistance in completing the WAWF-RA 2-in-1 Format Information Sheet. For processing invoices and receiving reports under fixed-price contracts for tangible items such as supplies, software or equipment, the linked invoice/receiving report documents (referred to as the COMBO format in WAWF) is TMA’s preferred format.  TMA CORs perform interim approval for both contractor WAWF-RA 2in1 Format Information Sheet and COMBO format invoice/receiving reports using the WAWF Acceptor role.  TMA policy memo, dated 28 September 2009, subject: Oversight of Receiving Reports Using Wide Area Workflow, rescinds the previous TMA requirement for a second level review using the Local Processing Office role.  COD-FC has developed a WAWF On-Ramp Guide for new WAWF users.  If the contractor is unable to submit a payment request utilizing the WAWF, or TMA is unable to receive or process a payment request via WAWF, the contractor shall submit a hard copy payment request as outlined in the following section. 
 
5.14   Contractor Past Performance Data
Past Performance information consists of relevant data regarding a contractor's actions under previously awarded DoD contracts.  It is a mandatory non-cost factor, which could justify award to other than the apparent low cost/price offeror.  The Federal Acquisition Streamlining Act of 1994 (FASA) specified that past performance is a relevant factor to consider in contractor selection. 
 
5.14.1   Federal Past Performance Information Retrieval System.
The Federal Past Performance Information Retrieval System, launched in July 2002, allows government users to retrieve past performance information from the four recognized federal past performance evaluation collection systems:

• National Institutes of Health Contractor Performance System
• National Aeronautics and Space Administration Past Performance Database
• The Army's Past Performance Information Management System
• The Contractor Performance Assessment Reporting System (CPARS) used by various defense agencies.

Data from the above federal past performance evaluation collection systems is automatically uploaded into the PPIRS and may be accessed by authorized officials for use in source selection proposal evaluation.  The PPIRS requires government users to request an account on the first use, and to log in for subsequent use.  A good place to start for new users is the Frequently Asked Questions (FAQs) hyperlink found on the PPIRS Web Site.
 
5.15 Reserved


5.16   Defense Contract Audit Agency (DCAA) Support
TMA will maximize the use of DCAA in managing and auditing TMA contracts, to include ensuring that contracts allow for appropriate involvement of DCAA in auditing activities.  Procedures on contract audit services are covered within Subpart 42.1 of the FAR.
 
5.16.1   DCAA Auditing of Contracts.
In order to clearly provide the authority for DCAA to audit all contracts, FAR Clause 52.215-2 MUST be included in all cost type, time and materials type, labor hour type, and incentive type contracts funded with DoD funds.  This clause provides the authority for DCAA audit of contracts or task orders.  Blanket Purchase Agreements (BPAs) awarded against the GSA IT 70 schedule to provide program management and information technology services contain FAR clause 52.212-5, which allows examination of records if the contract award was not from a sealed bid, in excess of the simplified acquisition threshold, or contains the clause at FAR Subpart 52.215-2.
 
5.16.2   Requesting Audit of a Contract.
Officials who feel an audit of any TMA contract is warranted should discuss the need with the appropriate CO. COs may request audit services directly from the DCAA. The audit request should include a suspense date and should identify any information needed by the CO.
 
5.16.3   Projecting Audit Requirements.
Prioritizing audit requirements and early communication of these requirements to the CO and the DCAA helps in projecting the audit workload. Specifically stating in the audit request any special information that should be included in the audit report makes the audit effort more effective and the audit report more useful.
 
5.17   Government Furnished Equipment (GFE)
During contract performance, the Government may provide equipment to a contractor. A list of this GFE needs to be included in the RFP so it can be incorporated into the contract. If GFE is provided to the contractor after performance begins, it too must be incorporated into the contract, by modification, if necessary. The CO may request the COR help transfer GFE to the contractor, ensure an inventory is conducted prior to transfer, manage GFE return, and perform other related functions.
 
5.18   Contract Modifications
A modification is a written alteration of any aspect of the contract. Modifications include changes in the PWS, period of performance, quantity, price, or other contract provisions.  Modifications are required when a number of circumstances occur. They include, but are not limited to change in agency need, inadequate specifications that result in inadequate deliverables, a need to increase or decrease funds, a need for extensions to provide additional time, suspension of work, requiring revisions to the original contract terms and conditions , a change in performance requirements, and development of contingencies that need resolution.  Two modification types exist. They are the unilateral and bilateral modification as stated in FAR Part 43.
 
5.18.1   Bilateral Modifications.
The contractor and CO must sign a bilateral modification (supplemental agreement). Changes to cost, quantity, schedule, and other contract terms require a bilateral modification. A bilateral modification is also necessary whenever exercising an option when the contractor has not been given the amount of notice called for in the contract (normally 60 days).
 
5.18.2   Unilateral Modifications.
Only the CO signs a unilateral modification. When the Government discovers problems, it uses a unilateral modification to correct them. Examples include, but are not limited to, administrative changes that do not affect the substantive rights of the parties including changing accounting codes or changing payment offices.
 
5.18.3   Requirements and Suggestions.
All modifications must be made in writing. Bilateral modifications may be initiated by either the Government or the contractor. Being proactive by recommending an appropriate modification should avoid claims later. In all cases, the changes to the contract must be within the scope of the contract meaning that both parties contemplated the work when they entered into the contract. New work cannot be accomplished by modification unless under certain conditions and a justification and approval (J&A) is signed. As part of the modification process, the COR may be called on to provide documentation. This can include background, rationale, PWS material, cost/price information, delivery information, and suggested contract language. The COR may also be called on to conduct a thorough analysis of the affects of the proposed change on other contract areas, provide a technical evaluation of the proposed change, and assist the CO in negotiating the change. The technical evaluation includes the reasons for the change, a statement that the change is with in the scope, a statement that the technical requirements of the contract do not cover the proposed change, and describes the impact of the proposed change on price; delivery; and performance. Perform all modification-related tasks in a timeframe that does not jeopardize the Government's mission or delay the contractor’s performance.
 
5.18.4   Modification Authority.
Authority for modifications is most often contained in the Changes clause of the contract.  To understand what may be changed based upon contract type; see the clauses at FAR 52.243-1 through 52.243-5.  Caution must always be taken when contemplating a modification to ensure that the modification does not entail a change in the scope of the contract.
 
5.18.5   Request for Modification.
PRW packages requesting a modification to an existing contract, must have a cover memo specifying the changes requested and the reasons for those changes (see cover memo for modification).
 
5.19   Exercising Options
Contracts or task orders in support of TMA may contain options if it is in the Government’s interest.  Exercising an option requires advanced planning and effort on the part of the COR and the CO.  Early notification of intent to exercise an option is very important.  Two steps must be taken by the COR before an option can be exercised:
 
5.19.1   Conduct Market Research.
Prior to exercising an option, the CO must determine that it is in the best interest of the Government. To support this decision, the COR must conduct market research to determine the current cost/price of the same or similar services. The COR must also determine whether there have been significant technological changes in the marketplace. Market research efforts should commence not later than six months prior to the end of the current period of performance.
 
5.19.2   Request the Option be Exercised.
Before an option can be exercised, the CO must provide written notice to the contractor within the time period specified in the contract. If this notice is not provided within the specified timeframe, the contractor can legally refuse to perform the option, and the Government may have to enter bilateral negotiations to obtain the goods or services covered by the option and as a result may incur additional payments to the contractor. To allow the necessary time for review and processing, the COR should send a memo (see cover memo for exercising options) through COD-FC, to the CO well in advance of the time specified in the contract. Since contracts typically call for the CO to notify the contractor 60 days prior to the end of the current period of performance, the COR must submit this memo through their supporting COD-FC CS at least 90 days prior to the end of the current period of performance. This memo should indicate the intent to either exercise the option or not exercise the option. If the intent is to exercise the option, the memo should include a statement that there is a continued need for the service and a discussion of the impact on continuity of operations or cost to the Government if the option is not exercised, or any other rationale supporting the recommendation that exercising the option is in the best interest of the Government.
 
5.20 Contract Closeout
Close out occurs when the Government and contractor have fulfilled their obligations, all outstanding contract administration issues have been resolved, and all records are correctly disposed of.  One of two events makes a contract physically complete and closed.  One is delivery of; performance of; inspection of; and acceptance of all required supplies or services, finality of all administrative tasks, and expiration of all option periods.  The other is notice has been issued to the contractor stating contract termination has been completed.
 
The closeout process requires coordination between the CO, the COR, and the contractor. The main COR functions are certifying that all services have been rendered in a satisfactory manner and all deliverables are complete and acceptable. Examples of tasks include, but are not limited to, identifying any outstanding claims or disputes; identifying and recommending deobligation of excess funds; and verifying the return or disposition of Government property. The COR documents poor performance, provides detailed performance information to the CO, archives files, and provides files to the CO.
 
Contract audit requirements are likely to affect contract closeout on cost-reimbursement contracts.  Contract audits are required to determine the reasonableness, allowability, and allocability of costs incurred under cost reimbursement contracts.

6.0 ACQUISITION MANAGEMENT

6.1 Acquisition Management Oversight
In response to a Study Report of Management Oversight of TMA/Health Affairs Contracting Activities, the TMA Executive Director issued a memorandum dated 19 December 2001 directing that: “All TMA contracting actions shall be processed through the Acquisition Management and Support Directorate..”  AM&S developed an implementation plan to address this requirement as well as other recommendations of the Study Report.  The implementation plan was approved by the TMA Executive Director and is at: Implementation Plan.  In carrying out this plan, COD-FC was assigned responsibility for supporting AM&S in managing all acquisitions within TMA with the exception of managed care contracts.  COD-FC has developed a Contract Formulation Plan (CFP) that outlines COD-FC’s acquisition approach for managing the pre-award phase of the contracting life cycle and identifies associated COD-FC strategic objectives for supporting TMA requirements.  COD-FC has similarly developed a Contract Execution Plan (CEP) that outlines its acquisition approach for managing the post-award phase of the contract life cycle and identifies associated COD-FC strategic objectives for the post-award support of TMA contracts and task orders. 
 
6.2 Acquisition Processing Flow
COD-FC has established an overall flow process for TMA acquisitions.  The acquisition flow diagram is at: Acquisition Flow.  Inputs, outputs, responsibilities and other elements of each step in the acquisition process are addressed at: Process Elements. 
 

 
Index of Checklists, Templates, Examples and Worksheets