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  • Question

    Is the limit of the KOs warrant applicable to the total value of the contract (the new total value of $11M as seems the indicated by the error message from FPDS-NG) or is it applicable to the current contract action (this mod being $2.5M) being released? We reviewed FAR Part 1.602 and are still not sure and we are getting different "opinions" from policy.


    Answer

    1. The FAR references quoted below in pertinent part are applicable to this response.

    FAR 1.108 – FAR Conventions
    The following conventions provide guidance for interpreting the FAR:
    (c) Dollar thresholds. Unless otherwise specified, a specific dollar threshold for the purpose of applicability is the final anticipated dollar value of the action, including the dollar value of all options. If the action establishes a maximum quantity of supplies or services to be acquired or establishes a ceiling price or establishes the final price to be based on future events, the final anticipated dollar value must be the highest final priced alternative to the Government, including the dollar value of all options.

    FAR 32.001 -- Definitions
    “Contract action” means an action resulting in a contract, as defined in Subpart 2.1, including actions for additional supplies or services outside the existing contract scope, but not including actions that are within the scope and under the terms of the existing contract, such as contract modifications issued pursuant to the Changes clause, or funding and other administrative changes.

    2. Our research yielded no clear answer to this question. In fact, the contracting experts at wifcon.com opined that, based on their experience and logic, the dollar limit of a Contracting Officer’s warrant applies to a particular contract action and not to the total value of a contract as modified. However, commentators in that forum also indicated that individual buying commands may impose higher approval requirements for situations such as the one described in this inquiry. [Ref: KO Warrant Limitations (May 19, 2010)]
    http://www.wifcon.com/discussion/index.php?/topic/654-ko-warrant-limitations/

    3. However, assuming that the transaction in question is a “contract action” as defined under FAR 32.001, then perhaps the FPDS-NG system might be programmed to follow a strict interpretation of the convention at FAR 1.108(c) pertaining to dollar thresholds.  As a result, once the total dollar value of the contract is modified by actions for additional supplies or services outside the existing contract scope, then it compares the resulting total contract dollar value to the dollar limit of the releasing Contracting Officer’s warrant and, if the contract value as modified exceeds the dollar value of the PCO's warrant, generates the error message as described in this inquiry and consequently does not issue the CAR.

    4. Based on the above, we recommend that the Contracting Officer contact the office that issued their warrant and confirm that they have the authority to sign individual modifications valued at ≤ $10 million to existing contracts, even if the total value of the contract as modified exceeds $10 million. Once confirmed, then the PCO should contact the agency FPDS-NG system administrator to have the specified warrant approval level for that Contracting Officer increased in the system to cover such transactions. Of course, if the response from the office issuing the warrant is negative, then another Contracting Officer with the appropriate warrant level must release the modification in question.



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