Contracting 101 makes it a cinch to write better Statements of Work

2. Overview Who Can Bind Government in a Contract Requirements Process Contracting Process Elements of a Contract Anti-Deficiency/Ratifications Title 22 Funds �Catch� Ethics Personal/Non-Personal Services Ambiguities in Specifications/SOWs �Implied� Actions Acceptance Changes Contract Privity of Contract

3. Who Can Bind the U.S. Government in a Contract? Only those individuals duly appointed as Contracting Officers are authorized to issue contracts, or otherwise obligate the Government, for the purchase of supplies or services and to make changes to such contracts. However, the contracting activity does not establish quantities or types of supplies or services to be purchased. This is the responsibility of the requiring activity. The customer establishes the standards, quality specifications, or design desired through a Statement of Work (SOW).

4. Requirements Process

5. Contracting Process

6. Elements of a Contract Offer - �We Want to buy 634 jersey barriers.� Acceptance - �Okay, we�ll sell them to you�� Consideration - �For $$ a piece in US dollars.� Competent Parties Legality of Purpose Clear Terms and Conditions

7. Anti-Deficiency/Ratifications Anti-Deficiency Act (Finance�s Hammer) Law prohibiting Government agencies from obligating the Government in excess of, or in advance of funds Unauthorized Commitment Agreement that is not binding solely because the Government representative who made it lacked the authority to enter into that agreement on behalf of the Government (Remember �Competent Parties?�) Ratification Act of approving an unauthorized commitment by an official who has the authority to do so

8. Title 22 / Title 10 What�s Different About Title 22 Funds? Title 22 funds are used to train & equip the Afghan National Army (ANA) and Afghan National Police (ANP).� � The MIPRs come with a statement�that local sources and not U.S. sources are to be used.� They want us to focus on local procurement while they work foreign military sales cases and other requirements that may be subject to export restrictions or International Trafficking in Arms Regulations (ITAR) restrictions

9. Title 22 / Title 10

10. Ethics Procurement Integrity/Conflicts of Interest Cannot favor a particular vendor Cannot direct a requirement to a particular vendor Cannot divulge source selection information to vendors Cannot accept gifts or services of any kind from vendors Cannot use your position for gain at any kind (gifts, future employment, discounts) Cannot do anything that gives even the appearance of favoring a particular vendor

11. Personal vs. Non-Personal Services Personal Contract, by its express terms or as administered, makes Contractor personnel appear to be Government employees Example: Having a labor crew that cleans one day, moves equipment the next, and something different after that There�s a certain amount of �bossing them around� in the way the contract is administered Non-Personal Contract under which the personnel rendering services are not subject to the supervision and control usually prevailing in relationships between the Government and its employees

12. �Privity of Contract�

13. Purchase Requests WHEN ARE PURCHASE REQUESTS REQUIRED? A purchase request constitutes administrative authority for making local purchase. It is required for any obligation of funds, whether a new contract or changes to an existing contract. WHO INITIATES AND APPROVES PURCHASE REQUESTS? Commanders and Staff Agency Chiefs determine and designate within their organizations those individuals authorized to initiate purchase requests. Commanders are responsible for internal controls on issuance of purchase requests. Purchase requests under $25,000 do not require the commander's approval unless the request is for emergency contracting support. Purchase requests over $25,000 must be approved by the responsible commander or his deputy. Purchase request initiators must have an authorization to obtain particular supplies or services by contract. Commander's are responsible to ensure requirements are not split in order to preclude the solicitation process.

14. Purchase Requests cont., WHO MUST ENSURE AUTHORITY FOR LOCAL PURCHASES? The Contracting Office does not share in the responsibility for erroneous/inadequate purchase authority (AFI 64-109). Initiators of purchase requests need to protect themselves as well as their commanders, by being certain that they do have authority to obtain particular supplies or services by contractual means. SPECIFICATIONS If you are requesting a supply or equipment item, determine if a formal specification already exists. You can best do this by researching your own functional area directives (Technical Orders, AFIs, etc.), or consulting with Base Supply. If no specification applies, or if you are requesting a service, you must prepare either a description or specification as applicable. Preference should be given to standard commercial items, whenever possible, if they meet your minimum needs, even if a specification is available.

15. Purchase Requests cont., PURCHASE DESCRIPTIONS A purchase description should be written in such a manner as to clearly describe the essential physical and functional characteristics of the item being procured. It should include as many of the following characteristics as necessary to express the minimum requirements of the Government such as:- Type of Material- Electrical data, if any- Dimensions, in terms of minimums or maximums- Principles of operation- Restrictive or significant environmental conditions- If part of an assembly, the location within the assembly- Essential operating conditions- Special features, if any- Intended use- Operation to be performed- Equipment with which the item is to be used- Other requirements, as appropriate. As you can see, the average specialist can easily prepare an adequate purchase description. Labels, tags, etc., often contain considerable information from the manufacturer. However, if a description is not feasible, a less desirable alternative exists - "brand name or equal."

16. Purchase Requests cont., BRAND NAME OR EQUAL DESCRIPTIONS Brand name "or equal" descriptions may be used only as a last resort for supplies/equipment, when it is otherwise unfeasible to describe the requirement. You must describe the salient characteristics of the item, i.e. what criteria must any "equal" item meet. Failure to do this will not only prohibit Contracting from acting on your purchase request but may also subject you to having to accept a product you can't use. It is a long-standing legal principle that a product must be accepted as "equal" if it performs the same general function as the brand name specified. As an example, a 20" Brand X lawn mower with a 2HP engine must be accepted as an equal to a 22" Brand Y lawn mower with a 3 HP engine as salient (essential) characteristics. Any BRAND NAME description received without an accompanying "sole source" justification will be considered a "BRAND" name or "Equal" description and purchased accordingly.

17. Purchase Requests cont., INADEQUATE SPECIFICATIONS/DESCRIPTIONS Purchase requests containing inadequate specifications or descriptions will be returned to the initiator. Careful screening of purchase request item descriptions by initiating authorities will preclude delays in contracting actions. Poor descriptions / specifications contribute to misunderstandings between the Government and the contractor and frequently lead to either inferior products or unnecessary high prices or both. Contracting Officers are charged with the responsibility for reasonable prices to satisfy the Government's minimum needs. Consequently, they are prohibited from accepting inadequate or overly restrictive descriptions or specifications.

18. DOCUMENTATION WHICH MUST ALWAYS ACCOMPANY PURCHASE REQUESTS Always Required: Purchase description or specifications. If already on a current contract, an abbreviated description with reference to the specific contract line item (by contract number, page number, etc.) will suffice. Required as Indicated: For Brand Name/Sole Source Requirements: (a) Using activities must furnish a detailed, written justification in official letter format, signed by the commander or a staff agency chief for which the item is being requested. (b) Citing a brand name in a purchase description will not ensure receipt of that particular item unless the request is accompanied by a sole source letter. Citing the item as a "genuine replacement part" in an item description is not an acceptable sole source letter. For Contract Repair: The purchase request should be prepared. All equipment custodians should have access to a copy. (a) If equipment needs to be repaired off base, the Equipment Custodian shall prepare a DD Form 1149. (b) Warranties/Guarantees: An Electronic Form PR-001 will be prepared, funded, and forwarded to contracting in case the required repairs are not covered by the warranty / guarantee, or are later determined to have been caused by abuse. (c) Illegal Actions: Only Contracting Officers are authorized to obligate the government. Any unauthorized person who does obligate the government will be dealt with through a ratification action (see Definitions, ratification).

19. Statement of Work (SOW) - Preparation Ambiguities: Defined as - where meaning cannot be determined from it�s context; unclearness by virtue of having more than one meaning Interpretations usually go against the Government Leads to Contractor receiving an equitable adjustment Increase in contract costs; time/delivery extensions Examples of potentially ambiguous situations SOW requires equipment not older than 7 years, but cannot exceed 50 operating hours Pool lane dividers shall be installed commensurate with lane markers Underground cable warning in SOW but not identified on drawings or marked at the site

20. Statement of Work (SOW) � Preparation cont., �Implied Acceptance� Acceptance Must be definite, communicated, and unconditional Action or Inaction can send a message of acceptance Large liquid storage tanks arrive in the specified volume, but different shape than requested; they�re conditionally accepted to figure out what�s going on, but end up sitting for a couple of months due to rotation confusion, before calling the contractor to swap out The contractor deviates from a design or performance requirement, but is allowed to continue the construction or service over an extended period of time beyond when the deviation should have been recognized by a reasonable person

21. Statement of Work (SOW) � Preparation cont., �Implied Changes� Changes Any alterations to a contract permitted by a contract clause Two types: Change Order & Constructive Change Constructive Change An example would be not bringing to the contractors attention over a very long period of time that he wasn�t cleaning, dumping, or servicing a particular item or area required under the contract -- In this case the contractor could argue that the contract was effectively modified by the government�s action or inaction

22. Statement of Work (SOW) � Preparation cont., �Implied Contract� Contract An agreement, enforceable by law, between two or more competent parties, to do or not to do something not prohibited by law, for a legal consideration Implied Contract A neighborhood child cuts your lawn every week and then you go on vacation for a month, but he continues to cut the yard weekly even though you didn�t ask him to--you�ll owe the little guy when you get back, even if you�d planned on letting the grass grow for a month

23. Gratuities Officials or employees of the government must not accept or agree to accept any gratuity for themselves, members of their families, or others, either directly or indirectly from any source that is engaged in or seeking business or financial relations of any sort with any DOD component. Gratuities include, money, gifts, favors, entertainment, hospitality, transportation, loans or any other tangible item, and any intangible benefits including discounts, passes, and promotional vendor training given or extended to or on behalf of Government personnel, their families, or household, for which fair market value is not paid by the recipient or the government.

24. Disclosure of Government Estimates Government cost estimates must be treated as confidential information FOR OFFICIAL USE ONLY. The dollar amount included on the request can be considered an official government estimate. Such estimates will not be revealed to the public until after bid opening or award. Likewise, knowledge of future procurements or intent to procure services or supplies shall not be made known to vendors. Disclosure of this information prior to bid opening or award puts contracting personnel at a disadvantage in dealing with proposed contractors and gives those potential contractors who have received the information an unfair advantage over others competing for the same work.

25. Modifications to Existing Contracts Modifications may be needed to correct deficiencies in designs, specifications, changed conditions or unforeseeable problems. A modification request must be provided in writing giving a full explanation for the change. The change must be submitted to the Contracting Officer who will make the determination as to whether or not the change is "within the scope" of the contract. The above information will be provided with a new Purchase Request, increase in funds, a cost estimate breakdown, and revised drawings or specifications. A cost estimate breakdown will be furnished to the Contracting Officer for increased, decreased or no-cost changes because it serves as an essential tool for negotiating with the contractor to initiate the modification. Every modification must have sufficient back-up data to stand alone as if it were a contract in and of itself because, in a court of law, a modification is considered on its individual merits.

26. Contract Changes Only the Contracting Officer is authorized to make contract changes. Basically, changes fall into two broad categories: changes within the scope of the contract and changes outside the scope of the contract. The Contracting Officer generally has final authority for determining which category applies. Changes within the scope of the contract are those that effect the work originally specified in the contract. The Contracting Officer is empowered to make such changes upon receipt of proper documentation (see below). Changes outside the scope of contract are only authorized upon existence of special circumstances, presented by the using activity in the form of a written justification. Otherwise, directives classify such changes as a "new contract" and require separate contracting action. Documentation required for contract changes. Generally, the same supporting documentation is required for contract changes as for the original contract.

27. Termination of Contracts for the convenience of the Government Most formal contracts and some purchase orders contain a clause under which the Government may terminate at its own convenience. Usually this action occurs when there is no longer a requirement for the items and/or service under contract. It may also follow when a higher authority decides a termination for default to be improper. Termination for convenience may involve payment of a settlement cost to the contractor to compensate for expenses incurred in anticipation of contract performance.

28. Recourse Against the Contractor The contracting officer or Contracting Officer Representative (COR) closely monitor all contractor progress/performance reports. In the event of unsatisfactory performance, several courses of action are available. Listed from least to most serious they are: a. Initial Discussion: The Contracting Officer will normally conduct a discussion with the contractor in an attempt to resolve discrepancies in performance. These discussions are documented for possible later references. b. Cure Notice: Continued unsatisfactory performance may result in the Contracting Officer issuing a "Cure" notice. This notice itemizes the unsatisfactory performance areas and prescribes a fixed number of days (cannot be less than 10 days) within which performance must be corrected. c. Show Cause Notice: Failure to satisfy a "Cure" notice or lack of 10 days remaining on contract performance may result in a "Show Cause" considered for termination for default (or breach) of contract. Usually the only cause for retraction of this notice is if the contractor positively corrects the problem and/or performance, and can prove steps have been taken to prevent a recurrence. Otherwise, termination will be the next step. d. Termination for Default (or Breach) of Contract: This is the final step in contract enforcement. Once a termination notice is issued there is no turning back. Faulty termination would be not only embarrassing, but would subject the government to possible liability for claims ($$) filed by the contractor. Termination for Default likewise has grave consequences for the contractor. The contractor may be liable for all re-procurement costs incurred by the Government including the difference between the contract price and that of the new/re-procurement and chances for future Government contract awards. e. The Importance of Timeliness: Fast and accurate reporting is the key to satisfactory contract performance. Report early symptoms of defective performance to the Contracting Officer immediately, and FOLLOW-UP IN WRITING!

29. Receiving Reports The customer is required to promptly certify on DD Form 250, Material Inspection and Receiving Report for Supplies or Services, for all services received. These reports shall be forwarded to finance within two (2) working days of receipt of the service/supply. Any delays or non-submittal could cause payment of interest to the contractor from time of receipt of invoice by finance.

30. Sources of Contract Law Constitution Article 1, Section 8 is foundation for contracting authority Inherent Power - Based on Government sovereignty Implied Power - Necessary to perform duties Statutes Armed Services Procurement Act Competition in Contracting Act of 1984 Federal Acquisition Streamlining Act Administrative Law Executive Orders Rules and Regulations Comptroller General Decisions Common Law

31. Conclusion "To preserve the faith of the nation by an exact discharge of its debts and contracts, expend the public money with the same care and economy we would practice with our own, and impose on our citizens no unnecessary burden... are the landmarks by which we are to guide ourselves in all our proceedings." --Thomas Jefferson: 2nd Annual Message, 1802. ME 3:348

32. GENERIC LIFE CYCLE

33. �A contract is an agreement between two or more parties enforceable by law.� It may be written or oral. In Government Contracting, all contracts must be reduced to writing, at some point.  Okay�now some concepts of law, but no I am not a lawyer but FYI almost anything a KO does that time permits you always try to get a legal review. At times it seems there are more ways in contracting to get in trouble than to excel Okay�now some concepts of law, but no I am not a lawyer but FYI almost anything a KO does that time permits you always try to get a legal review. At times it seems there are more ways in contracting to get in trouble than to excel

34. Agency Theory Agency: relationship in which one person has the authority to act or represent another person Principal: party for whom agent works within scope of authority Agent: person who works on behalf of the principal Third Party: party with whom the agent is dealing on behalf of the principal Now digressing once again to authority lets quickly look at the law version or �Agency theory� First Agency�Government to KO Second the Principal�We know as U. S. Government The Agent�KO, a COR is a �special agent� Third Party�this is the contractor Now seeing as a picture is worth 1000 words Now digressing once again to authority lets quickly look at the law version or �Agency theory� First Agency�Government to KO Second the Principal�We know as U. S. Government The Agent�KO, a COR is a �special agent� Third Party�this is the contractor Now seeing as a picture is worth 1000 words

35. CONTRACTUAL RELATIONSHIPS

36. CCO�s AUTHORITY IN GOVERNMENT CONTRACTS Actual Expressed Implied

37. UNAUTHORIZED COMMITMENT UNAUTHORIZED COMMITMENT An agreement that is not binding solely because the Government representative who made it lacked the authority to enter into that agreement on behalf of the Government. RATIFICATION The act of approving an unauthorized commitment by an official who has the authority to do so.

38. Contracting Officer�s Representative Authority/Duties and Forms �Eyes and ears of the CCO� �Where the rubber meets the road�

39. What is a COR? COR - Contracting Officer�s Representative The COR is provided by the requiring activity Responsible for performing contract quality assurance which means he/she either accepts or rejects the products or services for the Government Most vulnerable to constructive changes

40. COR DUTIES Verify that the contractor has performed the requirements of the contract IAW the contract terms, conditions, and specifications Perform, or cause to be performed, all necessary inspections Verify that the contactor has corrected all correctable deficiencies Perform acceptance for the government of supplies and services received Submit, as required, a report concerning performances of services rendered under the contract Maintain liaison and direct communications with both the contractor and the contracting officer

41. PROHIBITIONS Make any agreement with the contractor requiring the obligation of public funds Encourage the contractor by words, actions, or failure to act to undertake new work or an extension of existing work beyond the contract period Authorize a contractor to obtain property for use under a contract Interfere with the contractor�s management prerogative by �supervising� contractor employees or otherwise directing their work efforts Allow government property accountable under one contract to be used in the performance of another contract

42. Authority Vehicle to procure is the CCO�s individual warrant Specific authority to purchase shall be outlined in the COR�s letter of appointment Just as I am given my authority to contract for the government via a warrant from the PARC, the COR is given their authority from the contracting Officer. This authority to appoint a COR is described in both the FAR and DFAR and is done through an appointment such as the example on your desks. This appointment will outline the scope of the COR, basically what they can and can not do. The authority given by the appointment letter is dependent on what your duties will be to accomplish your role. One thing which the example spells out in chapter 1 page 5 paragraph 3 these limitations are actions which would actually affect the conditions or terms of the contract affecting price, delivery/ performance, quality, quantity�etc. One thing I do not want to overlook as we discuss appointment and authority is termination. This is very important because just as you were appointed you must be terminated from your duties. This also is done with a letter from the KO and usually gives instructions such as turn-in of files and involves some coordination with an incoming COR such as will be the case at RS when people are replaced. Contracting can be confusing enough without adding in no continuity or handoff between CORs. I have placed an example of a III CORPs termination letter in your packets. Now appointment and termination�so when are you a COR�only when appointed, this is not a permanent position.Just as I am given my authority to contract for the government via a warrant from the PARC, the COR is given their authority from the contracting Officer. This authority to appoint a COR is described in both the FAR and DFAR and is done through an appointment such as the example on your desks. This appointment will outline the scope of the COR, basically what they can and can not do. The authority given by the appointment letter is dependent on what your duties will be to accomplish your role. One thing which the example spells out in chapter 1 page 5 paragraph 3 these limitations are actions which would actually affect the conditions or terms of the contract affecting price, delivery/ performance, quality, quantity�etc. One thing I do not want to overlook as we discuss appointment and authority is termination. This is very important because just as you were appointed you must be terminated from your duties. This also is done with a letter from the KO and usually gives instructions such as turn-in of files and involves some coordination with an incoming COR such as will be the case at RS when people are replaced. Contracting can be confusing enough without adding in no continuity or handoff between CORs. I have placed an example of a III CORPs termination letter in your packets. Now appointment and termination�so when are you a COR�only when appointed, this is not a permanent position.

44. COR Files Appointment Letter Copy Of Contract All modifications All Invoices Correspondence between the CCO and Contractor File Review of COR inspections Records of Contractor�s inspection system Documentation: Memorandums for Record & Email Messages, Telephone Conversations, any other conversations or meetings Receipts and Acceptance Documents

45. Methods of Surveillance and Modifications

46. Surveillance 100 % Inspection - Most expensive and time consuming - Most accurate Random Sampling - A percentage of contractor performance is evaluated - Every service output must have equal chance of being evaluated - May not focus attention on problem areas Validate customer complaints - Document certain kinds of problems - Seldom used to reject a service or deduct money - Cannot be used to satisfy a random observation

47. Modifications Changes Clause Unilateral vs. Bilateral Scope

48. Constructive ChangeAny action by a Government employee that is not a formal modification, but which has the effect of requiring the contractor to perform work different from that prescribed in the original contract, constitutes a constructive change order and may require some relief to the contractor�

49. CONSTRUCTIVE CHANGE COR directing a contractor to make a deviation from a specification, or saying nothing to a deviation which benefits the Government COR providing information which later turns out to be incorrect Some examples of Constructive changes are: Clean the chalk Boards- not in SOW but done Eritrea Airfield- Inspecting 1200 ft, K only for 900 Or yes even the KO is not perfectSome examples of Constructive changes are: Clean the chalk Boards- not in SOW but done Eritrea Airfield- Inspecting 1200 ft, K only for 900 Or yes even the KO is not perfect