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  • Question

    Is it appropriate to use a class J&A for a single award when the contract includes an unpriced over and above line?


    Answer

    1. The FAR and DFARS references quoted below in pertinent part are applicable to this response. Because this inquiry is from an Air Force PCO, the Air Force FAR Supplement (AFFARS) references quoted below in pertinent part are also applicable to this response.

    FAR Subpart 6.3 -- Other Than Full and Open Competition
    FAR 6.303 -- Justifications
    FAR 6.303-2 -- Content
    (b) As a minimum, each justification, …, shall include the following information:
      (3) A description of the supplies or services required to meet the agency’s needs (including the estimated value).

    DFARS Subpart 217.2 -- Options
    DFARS 217.202 -- Use of options
    (1) See PGI 217.202 for guidance on the use of options

    DFARS PGI 217.202 -- Use of options
      (1) Options may be used for foreign military sales requirements.
      (2) Consider use of surge options to support industrial capability [production planning].

    DFARS Subpart 217.74--Undefinitized Contract Actions
    DFARS 217.7401 -- Definitions
    As used in this subpart—
    (a) “Contract action” means an action which results in a contract.
      (3) It does not include change orders, administrative changes, funding modifications, or any other contract modifications that are within the scope and under the terms of the contract, e.g., engineering change proposals, value engineering change proposals, and over and above work requests as described in Subpart 217.77.

    (d) “Undefinitized contract action” means any contract action for which the contract terms, specifications, or price are not agreed upon before performance is begun under the action.

    DFARS Subpart 217.77--Over and Above Work
    DFARS 217.7701 -- Procedures
    Follow the procedures at PGI 217.7701 when acquiring over and above work.

    DFARS 217.7702 -- Contract clause
    Use the clause at 252.217-7028, Over and Above Work, in solicitations and contracts containing requirements for over and above work.

    DFARS PGI 217.77—Over and Above Work
    DFARS PGI 217.7701 -- Procedures
      (1) Contracts for the performance of maintenance, overhaul, modification, and repair of various items (e.g., aircraft, engines, ground support equipment, ships) generally contain over and above work requirements. When they do, the contracting officer shall establish a separate contract line item for the over and above work.
      (5) Over and above work requests are within the scope of the contract. Therefore, procedures in
    DFARS Subpart 217.74, Undefinitized Contractual Actions, do not apply.

    DFARS 252.217-7028 -- Over and Above Work
    (a) Definitions. As used in this clause—
      (1) “Over and above work” means work discovered during the course of performing overhaul, maintenance, and repair efforts that is— (i) Within the general scope of the contract; (ii) Not covered by the line item(s) for the basic work under the contract; and (iii) Necessary in order to satisfactorily complete the contract.
      (2) “Work request” means a document prepared by the Contractor which describes over and above work being proposed.

    AFFARS Subpart 5306.3 — Other Than Full and Open Competition
    AFFARS 5306.303 Justifications
    AFFARS 5306.303-2 - Content
    See IG5306 for J&A content and a list of recommended coordinating officials.

    IG5306 – II. Nature and/or Description of the Action Being Proposed
    An individual J&A cannot be used to support more than one contract irrespective of the quantities or the dollar value stated therein. If a proposed contract will contain unpriced options (including NTE prices), those options must be supported by a separate J&A prior to option exercise or the J&A supporting the basic contract must be a Class J&A.

    AFFARS 5306.304 -- Approval of the Justification
    See MP5306.304 for Other Than Full and Open Competition approval of J&As.

    MP5306.304 -- Approval for the Justification
      (a)(1) The Chief of the Contracting Office will approve J&As not exceeding $650K. This authority may be delegated to the contracting officer, consistent with the warrant level of the contracting officer.
      (a)(2) J&As for proposed contract actions over $650K but not exceeding $12.5M will be approved by the competition advocate …,
      (a)(3) J&As for actions over $12.5M but not exceeding $85.5M will be approved by the head of the procuring activity or designee, …,
      (a)(4) J&As for actions exceeding $85.5M will be coordinated with the Deputy Assistant Secretary (Contracting) (DAS(C)) or the Assistant Deputy Assistant Secretary (Contracting) (ADAS(C)) and approved by the Senior Procurement Executive (SPE) (ASAF(A)).

    2. Our response addresses three issues identified in this inquiry. First, is “Over and Above Work” considered to be an unpriced contract option as contemplated by AFFARS 5306.303-2 and IG5306 as described above? DFARS 217.202 and DFARS PGI 217.202, which specify the procedures for the use of options, do not describe Over and Above Work as being an “option” whatsoever. Instead, it is DFARS Subpart 217.77 and DFARS PGI 217.77 that define and specify the procedures governing the use of Over and Above Work. Neither of these citations, nor clause DFARS 252.217-7028, refer to a contract line item for Over and Above Work as a contract option. Consequently, any contract line item for Over and Above Work” cannot be defined as an unpriced option under the DFARS, and therefore the provisions of AFFARS 5306.303-2 and IG5306 do not apply, and the use of a class J&A would not be appropriate in this situation.

    3. The next issue is whether a contract line item for Over and Above Work is considered to be an “Undefinitized Contract Action”. When read together, DFARS 217.7401(a)(3) and DFARS 217.7401(d) state that, as used in DFARS Subpart 217.74, the definition of an undefinitized contract action does not include over and above work requests as described in DFARS Subpart 217.77. Furthermore, DFARS PGI 217.7701(5) expressly states that “Over and above work requests are within the scope of the contract, [and] therefore, procedures in DFARS Subpart 217.74, Undefinitized Contractual Actions, do not apply. Based on the express language contained in these DFARS citations, a contract line item for Over and Above Work cannot be considered as an undefinitized contract action.

    4. Finally, this inquiry indicates that because the actual Over and Above Work to be performed can only be determined during the overhaul/repair process, it would be virtually impossible to price this "unknown" work; – the implication being that the estimated value of the Over and Above Work cannot be determined for the J&A.  However, pursuant to FAR 6.303-2(b)(3), the J&A must include the total estimated value of the supplies or services required to meet the agency’s needs that are described in the J&A. Additionally, as specified in AFFARS 5306.304 by reference to MP5306.304, there are various approval levels for a J&A depending upon the total estimated value of the acquisition. Therefore, in order to comply with these requirements, even if the overhaul/repair effort for the particular equipment item has never done before, the requiring activity must provide at least an engineering cost estimate of the anticipated Over and Above Work in order to determine the total estimated value to be used in the J&A. We believe that a parametric cost estimate can be developed based on the actual costs of Over and Above Work experienced on other programs.

    5. In summary, based on our analysis as described above, a contract line item for Over and Above Work cannot be considered either as an unpriced option requiring a class deviation or as an undefinitized contract action.  A single J&A that includes the Over and About Work can be approved for this acquisition under the pertinent regulations, provided that the estimated value of the anticipated Over and Above Work is included in the total overall estimated cost of the acquisition (i.e., the value of the Over and Above Work cannot simply be stated as “To Be Determined”).



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