CONTRACTING OFFICER WARRANT
BOARD QUESTIONS
YouaiareaitheaiPCOaiforaiaaimajoraicompetitiveainegotiatedaisourceaiselection.aiTheaiRFP,ai
whichaireflectsaitheaiuser'sairequirementsaiandaiisaibasedaionaitheaiuser'saibudget,aihasaiaai
requirementaiforai220aicargoailoadersaitoaibeaideliveredaiatai55aiperaiyearaioveraitheainextaif
ouraiyears.aiOneaiofferoraiproposesaitoaideliveraiallai220ailoadersaiinaitheaifirstaiyearaiataiaaid
ramaticallyaireducedaiprice.aiCanaiyouaiacceptaitheaiofferor'saiproposal?
aiWhataifactorsaishouldaiyouaiconsideraiinaiyouraidecision?ai-aians--
Youaicanaiacceptaitheaiofferor'saiproposalaiunderaicertainaicircumstances.aiFirstly,aiwhataidi
daitheaiRFPaisayaiaboutaialternateaiproposals?
aiIsaithisaiaaisituationaiwhereairequirementsaiareaichangedaiandaitheaiotheraiofferorsaishould
aibeaiallowedaitoaiproposeaionaitheaibasisaiofaitheaichangedairequirements?
aiYouaineedaitoaiaskaitheaiuseraiifaiheaiwantsaiallai220aiinaitheaifirstaiyearaiandaiareaitheaioper
atingailocationsaiphysicallyaiableaitoaiaccommodateaitheirailoadersaiinaitheaifirstaiyear.aiFina
lly,aitheaiofferoraicouldaibeaitakenaiintoaidiscussionsaiandaiaskedaitoaiconformaitoaitheaiRFPa
iwithaithereaibeingaitheaipossibilityaiofainotaibeingaiselectedaiforaiawardaioraieliminationaifro
maitheaicompetitiveairangeaiifaitheaiproposalaiisainotaimadeaicompliantaiwithaitheaiRFP.
YouaiareaitheaiPCOaionaiaainewai$2Baiaircraftaidevelopmentaiprogram.aiTheaiprogramaiisaii
naicontractainegotiationsaiforaiaaiFixedaiPriceaiIncentiveai(FirmaiTarget)aiSystemaiDevelop
mentaiandaiDemonstrationaicontractaiawardaitoaiaaisoleaisourceaicontractor.aiTheaiprogram
aidirector,aiaaifast-burningaiyoungaicolonel,aie-
mailsaiyouaithataisheaiisaiveryaiconcernedaiwithaitheaiaircraft'saiultimateaispeedaiataitheaifullai
specificationaipayload.aiSheaiwouldailikeaitheaicontractoraitoaiachieveaitheaifaster,aidesiredai
objectiveaispeedairatheraithanaitheaimandatoryaithresholdaispeed,aiandaithinksaithataianaiob
jectiveaiperformanceaiincentiveaiwouldaibeaitheaiwayaitoaigoaitoaiachieveaiheraigoal.aiYouaia
reaiaskedaitoaigoaitoaiheraiofficeaiandaidiscussaitheaimatteraiandaitheaiissuesaiinvolvedaiinaiu
singaisuchaianaiincentive.aiWhataidoaiyouaitellaitheaicolonel?ai-aians--
Thereaiareaiaainumberaiofaiconsiderationsaiforaitheaicolonel:
TheaidesiredaiadditionalaispeedaishouldaiprovideaibenefitaitoaitheaiGovernmentaiinaiorderait
oaijustifyaitheaiexpenditureaiofaifundsaitoaiachieveaiit.aiTheaicolonelaishouldaibeaiableaitoaiarti
culateaitheaijustification.
Theaisituationaiisaiveryaiamenableaitoaiaaiclassicaiperformanceaiincentiveaithataiwouldaiallo
waitheaicontractoraitoaiearnaiprofitaiforaiachievingaitheaidesiredaispeedaiaboveaiandaibeyond
aiwhataitheaifinalaiFPIFaiprofitaiwouldaibeaiforaiachievingaithresholdaispeed.aiIfaitheaicontract
oraiperceivesaithisaican'taihappen,aiheaiwillaieitherainotaisignaiupaitoaitheaiincentiveaioraiwillaii
gnoreaiitaifromaiDayaiOne.
Theaiincentiveaiandairesultingaipaymentaihaveaitoaibeaistructuredaisoaiasaitoaibeaibasedaion
aiobservable,aimeasurableairesultsaithataiwouldaidetermineaihowaimuchaiisaiearnedaibyaithe
,aicontractor.aiSubjectivityaiisainotaiallowableaiunderaicurrentaiAFaipolicyaiwithoutaiHCAaiapp
roval.
Weaihaveaitoaibeaiveryaicarefulaitoaiunderstandaiwhataipossibleaiunintendedaiconsequence
saicouldaibeaicausedaibyaitheaiexistenceaiofaithisaifeatureaiinaitheaicontract.aiForaiexample,ai
willaitheaicontractoraireduceaiaircraftaiweightaibeyondaisafeailimitsaiinaiorderaitoaihelpaiachie
veaitheaipayment?
aiAlso,aiwillaitheaicontractoraiconsumeaiexcessiveaischeduleaitoaigetaitheaiextraaispeed?
Thereaihasaitoaibeaiaaicostaiincentiveaiinaiplaceaisoaithataitheaicontractoraidoesn'taispendaia
naiunconstrainedaiamountaiofaimoneyaitoaiwinaitheaipayment,aisuchaiasaiunderaiaaiCPFFaic
ontract.aiTheaiFPIFaishareailineaiservesaithisaipurposeaiwhenaibalancedaiagainstaitheaiince
ntive.
TheaiincentiveaihasaitoaibeaibalancedaiwithaitheaiFPIFaishareailineaisoaithataitheaicontractora
idoesn'taispendaimoreaimoneyaitoaiachieveaitheaidesiredaispeedaithanaiheaihasaipotentialait
oaiearnaibyaireceivingaitheaipayment.aiSimilarly,aitheaicontractoraican'taibeaiallowedaitoaispe
ndaianaiexcessiveaiamountaiofaimoneyaiwithailittleaicostaipenaltyaitoaiachieveaisuccess.
Inaisomeaicases,aiContractingaiOfficersaiareaialsoaiGrantsaiOfficers.aiTheyaicanaiawardaiGr
antsaiandaiAssistanceaiInstrumentsaiasaiwellaiasaicontracts.aiWhataiisaiAssistance?
aiHowaidoesaiitaidifferaifromaiAcquisition?
aiWhataigivesaitheaiGrantsaiOfficersaitheiraiauthorityaitoaienteraiintoaiassistance?
aiWhataiareaitheaitypesaiofaiAssistance?ai-aians--
Whenaitheaiprincipalaipurposeaiisaitoaitransferaiaaithingaiofaivalue,aitoaicarryaioutaiaaipublicai
purposeaiofaisupportaioraistimulationaiauthorizedaibyailawaiofaitheaiUnitedaiStates,aiitaiisaiAs
sistance.
Acquisition,aibyaicontrast,aihasaitheaiprincipalaipurposeaiofaiacquiringaipropertyaioraiservice
saiforaitheaidirectaibenefitaioraiuseaiofaitheaiUnitedaiStatesaiGovernment.
Federalaiagenciesaimustaibeaiauthorizedaibyaistatuteaitoaisupportaioraistimulateaiaaipublicaip
urpose.aiTheaistatutoryaiauthorityaifromaiCongressaimustaiexistaieitheraiinaibroadailegislatio
naioraiinaiaaiprogram-
specificaistatute.aiAbsentaithataistatutoryaiauthority,aiaaiGrantsaiOfficeraimayainotaiuseaianai
assistanceaiinstrument.
AuthoritiesaitoaiissueaiAssistanceaicanaibeaiofaithreeaitypes:ai(1)aiProvideaitoaitheaiSecretar
yaiofaiDefenseaibyaistatute,aie.g.,ai10aiU.S.C.ai2391;ai(2)aiAuthorityaiprovidedaitoaiDoDaicom
ponentsaithatairequiresainoaidelegationaibyaitheaiSecretaryaiofaiDefense,aie.g.,ai10aiU.S.C.ai
2358;ai(3)aiAuthorityaicomingaiindirectlyaifromaistatutes,aii.e.,aifederalaistatuteaiauthorizingai
aaiprogramaithataiisaiconsistentaiwithaiusingaiaaigrantaioraicooperativeaiagreement.
TwoaitypesaiofaiAssistanceaiareaiGrantsaiandaiCooperativeaiAgreements.aiTheyaidifferaiinait
heaifollowingaiway:aiInaiaaiGrant,aisubstantialaiinvolvementaiisainotaiexpectedaibetweenaithe
aiagencyaiandaitheairecipient.aiInaiCooperativeaiAgreement,aisubstantialaiinvolvementaiisaie
xpectedaibetweenaitheaiagencyaiandaitheairecipient.aiCooperativeaiAgreements,aithen,aiare
aiparticularlyaiusefulaiinaitheairesearchaiarenaaiwhenaitheaiGovernmentaiisaiinterestedaiinaib
eingaiinvolvedaiinaiprogramaidecisionsaioraimayaibeaidoingaisomeaitestingaiorairesearchaithe
mselves.
YouaiareaitheaiContractingaiOfficeraionaiaainewaiResearchaiandaiDevelopmentaiprogram.aiP
roposalsaiwereairecentlyaireceivedaiinairesponseaitoaiaaiBroadaiAgencyaiAnnouncement,aia
,ndaiaaiCostaiPlusaiFixedaiFeeaicontractaitypeaiisaianticipated.aiTheaiproposalaimostaifavored
aibyaitheaitechnicalaiteamaiwasaipricedaisignificantlyaiunderaiwhataiwasaiestimatedaiforaitheai
effort.aiTheaicontractoraiproposedaifeeaiinaianaiamountaithataiequatesaitoai20%aiofaitheaiesti
matedaicost.aiTheaiusersaihaveaimoreaithanaienoughaifundsaitoaicoveraitheaiproposalaiandai
wantaiyouaitoaiacceptaitheaipriceaiasaiis.aiHowaishouldaiyouaiadviseaitheaiuseraiandaiwhataifa
ctorsaishouldaiyouaiconsideraiinaideterminingaiaaireasonableaifee?ai-aians--
TheaistatutoryailimitationaionaifeeaiforaiCPFFaitypeaicontractsaidoainoaipermitaiexceedingai1
5%aiofaiestimatedaicostaiforaiexperimental,aidevelopmental,aiorairesearchaiperformedaiund
eraiaaiCPFFaicontract.aiSinceaitheaiproposedaiamountaiofaifeeaiisaioutsideaitheaistatutoryaili
mitationsaiyouaineedaitoaidetermineaiwhataiaaifairaiandaireasonableairateaiisaithataifallsaiwithi
naitheailimitations.aiTheaiFARairecommendsaiaaistructuredaiapproachaiforaideterminingaifee
aisuchaiasaiWeightedaiGuidelines.aiIfaiaaicostaireasonablenessaireviewaideterminesaitheaies
timatedaicostsaitoaibeaiacceptable,aiweaicanaistillainegotiateaiandaiadjustaitheaifee.
YouaiareaitheaiContractingaiOfficeraiforaiaaiwellaiestablishedaitransportaiaircraftaiprogram.ai
Theaiprogramaiisainearingaitheaiendaiofaiproduction.aiAaiProgramaiManageraiapproachesaiy
ouairequestingaithataiyouaiissueaiaaiBroadaiAreaaiAnnouncementai(BAA)aitoaisupportaitheai
developmentaiofaiaaisourceailistaitoaisupplyaiactiveainoiseaireducingaiheadsets.aiTheaiheads
etsaiareaicommerciallyaiavailableaifromaimultipleaisourcesaiandaitheaiPMaiwantsaitoaireceive
aiperformanceaispecificationaisheetsaifromaieachaiofferoraiandaithenairequestaisampleaihea
dsetsaibeaisubmittedaiforaitesting.aiTheaiendairesultaiofaitheaieffortaiwillaibeaitheaidevelopme
ntaiofaiaaisourceailistaithataicanaibeaiusedaibyaivariousaigovernmentaientitiesaitoaiindividually
aiprocureaitheaineededaiheadsetsaiforaitheiraispecificairequirements.aiTheaiPMaitellsaiyouaith
ataiheaiwillainotaibeaiprocuringaianyaiofaitheaiheadsetsaiasaiaairesultaiofaitheaiBAA.aiWhataido
aiyouaiadviseaitheaiPM?ai-aians--
YouaishouldaiadviseaitheaiPMaithataiBAAsaiareaiaaimethodaiofaisolicitationaiandaicanaionlyai
beaiusedaiifaitheaiGovernmentaiintendsaitoaiawardaiaaicontract.aiYouaimightaisuggestaithatait
heaidevelopmentaiofaitheaisourceailistaicouldaibeaiachievedaibyaiissuingaiaaiSourcesaiSough
taiSynopsisaiwithaitheaisynopsisaispecifyingaitheai2aistepaiprocessai(specaisheetsaifirstaiand
aithenaisampleaiheadsetsaifromaiselectedaiofferors),aiandaitheaiultimateaiintentaiofaitheaiproc
ess,aie.g.,aiaaisourceailistaiforaiuseaibyaiindividualaiusersaiinaifutureaiprocurements.aiYouaimi
ghtaialsoaiadviseaitheaiPMaithataithereaicouldaibeailiabilityaiissuesaiassociatedaiwithaitheaius
e,aihandling,aiandaireturnaiofaitheaiheadsetsaitoaitheaiofferorsaiandaithataiitaimightaibeaiappro
priateaiforaitheaiGovernmentaitoaicoveraishippingaiandaianyaidamage/
wearaitoaitheaiunitsaiforaitheaitesting.
A.aiUnderaiwhataicircumstancesaiisairatificationaiofaianaiunauthorizedaicommitmentaipermitt
ed?
B.aiInaigeneral,aiwhataiareaitheaigenericaiproceduresaiforaihandlingairatificationaiactions?
C.aiWhoaiareaitheaiapprovalaiauthoritiesaiforairatifications?ai-aians--
A.aiIfaitheaicontractaiawardaiwouldaihaveaibeenaiproperaiifaiexecutedaibyaiaaiwarrantedaiPC
O,aitheaipriceaicanaibeaideterminedaitoaibeaifairaiandaireasonable,aiandaithereaimustaihaveai
beenaienoughaiofaitheaiproperaitypeaiofaifundingaiavailableaitoaipayaiforaitheaiitemaibothaiatait
heaitimeaiofaitheaicommitmentaiandaiataitheaitimeaiofaitheairatification.
B.aiAnaiinvestigationaiisairequiredaitoaibeaicompletedaiwithinai30aidaysaiofaidiscoveryaiofaith
eaiunauthorizedaicommitmentaiexplainingaihowaiandaiwhyaiitaioccurred,aihowaifutureaioccur
, rencesaiwillaibeaiavoided,aiandaidescribingaianyaicorrectiveaiactionsaitakenaiagainstairespo
nsibleaiindividuals.aiLegalaireviewaiisaialsoairequired.ai
C.aiTheairatificationaiapprovingaiofficialaiforaiallaiunauthorizedaicommitmentsaivaluedaiataior
aiaboveai$1MaiisaitheaiSPE.aiTheairatificationaiapprovingaiofficialaiforaiallaiNon-
DISAaiunauthorizedaicommitmentsai(regardlessaiofaiamount)aiandaiDISAaiunauthorizedaic
ommitmentsaivaluedaibelowai$1MaiisaitheaiHCA.ai(DARSai1.602-3(b)(2))
YouaiareaitheaiContractingaiOfficeraiforaiaaimuch-
delayedaieffort.aiOnaiFridayaiyouaifinallyaireceiveaitheainecessaryaiauthorityaitoaireleaseaith
eaicontractaiforaisignature.aiIt'sailateaionaiFridayaiafternoonaiwhenaiyouaie-
mailaitheaimodificationaitoaitheaicontractoraiforaisignature.aiTheaionlyaipersonaiataitheaicontr
actor'saiofficeaionaiFridayaiafternoonaiisaitheaiCompanyaiPresident'sai17aiyearaioldaidaughte
raiwhoaiisaiworkingaithereaiasaiaaisummer-
hireaisecretary.aiSheaiknowsaiheraifatheraiurgentlyaiwantsaitheaicontractaimodificationaisoais
heaisignsaitheaidocumentaiandaireturnsaiitaitoaiyouraioffice.aiYouainoteaitheailastainameaiisait
heaisameaiasaitheaiPresident'saisoaiassumeaithataihe'saitheaioneaiwhoaisignedaitheaimodific
ation.aiIsaithisaiaailegalaiagreement?ai-aians--
Probablyainot.aiTheaielementsaiofaiaaicontractaiareai-
aioffer,aiacceptance,aiconsideration,aiforaiaailawfulaipurpose,aicertaintyaiofaiterms,aiandaileg
alaicapacity.aiItaiisaiunlikelyaithataiaai17aiyearaioldaisummeraihireaiwouldaihaveaitheaiauthorit
yaitoaibindaitheaicompany,airegardlessaiofaiherairelationshipaitoaitheaiCompanyaiPresident.ai
Courtsaimayaigenerallyaifindaithataiindividualsailackai"theaiageaimajority"aiifaitheyaiareaiunde
rai18aiyearsaiofaiage.ai
Theailawaiinaiaaigivenaijurisdictionaimayaineveraiactuallyaiuseaitheaitermai"ageaiofaimajority"ai
andaitheaitermaitherebyairefersaitoaiaaicollectionaiofailawsaibestowingaitheaistatusaiofaiadulth
ood.aiTheaiageaiofaimajorityaiisaiaailegallyaifixedaiage,aiconcept,aioraistatutoryaiprinciple,aiwh
ichaimayaidifferaidependingaionaitheaijurisdiction,aiandaimayainotainecessarilyaicorrespondai
toaiactualaimentalaioraiphysicalaimaturityaiofaianaiindividual.
Inaipracticalaiterms,aithereaiareaicertainaispecificaiactionsaiwhichaiaaipersonaiwhoaiattainsait
heaiageaiofaimajorityaiisaipermittedaitoaitake,aiwhichaitheyaicouldainotaidoaibefore.aiTheseaim
ayaiincludeaienteringaiintoaiaaibindingaicontract,aibuyingaistocks,aivoting,aibuyingaiand/
oraiconsumingaialcoholicaibeverages,aidrivingaimotoraivehiclesaionaipublicairoads,aiandaima
rryingaiwithoutaiobtainingaiconsentaiofaiothers.aiTheaiagesaiataiwhichaitheseaivariousairights
aioraipowersaimayaibeaiexercisedaivaryaiasaibetweenaitheaivariousairightsaiandaiasaibetween
aidifferentaijurisdictions.aiForaiexample,aitheaiagesaiataiwhichaiaaipersonaimayaiobtainaiaailic
enseaitoaidriveaiaaicaraioraiconsumeaialcoholicaibeveragesaivaryaiconsiderablyaibetweenaia
ndaialsoaiwithinaijurisdictions.
YouaiareaitheaiContractingaiOfficeraiforaiaaifollow-
onaibuyaisourceaiselection.aiTheaicurrentaieffortaihasaihadaitheaisameaiProgramaiManagerai
foraioverai10aiyears.aiSheaibeganaiasaitheaiPMaiwhileaistillaiaaiMilitaryaiOfficeraiandaithenairet
iredaiandaiwasaire-
hiredaiasaianaiA&ASaiemployeeaitoaicontinueaitoaimanageaitheaiprogram.aiSheaihasaiextens
iveaiexperienceaionaitheaiprogramaiandaiisaiconsideredaiaaiPrimaryai"GoaiTo"aipersonaiforaia
llaiProgram-relatedaimanagerialaiissues.
BOARD QUESTIONS
YouaiareaitheaiPCOaiforaiaaimajoraicompetitiveainegotiatedaisourceaiselection.aiTheaiRFP,ai
whichaireflectsaitheaiuser'sairequirementsaiandaiisaibasedaionaitheaiuser'saibudget,aihasaiaai
requirementaiforai220aicargoailoadersaitoaibeaideliveredaiatai55aiperaiyearaioveraitheainextaif
ouraiyears.aiOneaiofferoraiproposesaitoaideliveraiallai220ailoadersaiinaitheaifirstaiyearaiataiaaid
ramaticallyaireducedaiprice.aiCanaiyouaiacceptaitheaiofferor'saiproposal?
aiWhataifactorsaishouldaiyouaiconsideraiinaiyouraidecision?ai-aians--
Youaicanaiacceptaitheaiofferor'saiproposalaiunderaicertainaicircumstances.aiFirstly,aiwhataidi
daitheaiRFPaisayaiaboutaialternateaiproposals?
aiIsaithisaiaaisituationaiwhereairequirementsaiareaichangedaiandaitheaiotheraiofferorsaishould
aibeaiallowedaitoaiproposeaionaitheaibasisaiofaitheaichangedairequirements?
aiYouaineedaitoaiaskaitheaiuseraiifaiheaiwantsaiallai220aiinaitheaifirstaiyearaiandaiareaitheaioper
atingailocationsaiphysicallyaiableaitoaiaccommodateaitheirailoadersaiinaitheaifirstaiyear.aiFina
lly,aitheaiofferoraicouldaibeaitakenaiintoaidiscussionsaiandaiaskedaitoaiconformaitoaitheaiRFPa
iwithaithereaibeingaitheaipossibilityaiofainotaibeingaiselectedaiforaiawardaioraieliminationaifro
maitheaicompetitiveairangeaiifaitheaiproposalaiisainotaimadeaicompliantaiwithaitheaiRFP.
YouaiareaitheaiPCOaionaiaainewai$2Baiaircraftaidevelopmentaiprogram.aiTheaiprogramaiisaii
naicontractainegotiationsaiforaiaaiFixedaiPriceaiIncentiveai(FirmaiTarget)aiSystemaiDevelop
mentaiandaiDemonstrationaicontractaiawardaitoaiaaisoleaisourceaicontractor.aiTheaiprogram
aidirector,aiaaifast-burningaiyoungaicolonel,aie-
mailsaiyouaithataisheaiisaiveryaiconcernedaiwithaitheaiaircraft'saiultimateaispeedaiataitheaifullai
specificationaipayload.aiSheaiwouldailikeaitheaicontractoraitoaiachieveaitheaifaster,aidesiredai
objectiveaispeedairatheraithanaitheaimandatoryaithresholdaispeed,aiandaithinksaithataianaiob
jectiveaiperformanceaiincentiveaiwouldaibeaitheaiwayaitoaigoaitoaiachieveaiheraigoal.aiYouaia
reaiaskedaitoaigoaitoaiheraiofficeaiandaidiscussaitheaimatteraiandaitheaiissuesaiinvolvedaiinaiu
singaisuchaianaiincentive.aiWhataidoaiyouaitellaitheaicolonel?ai-aians--
Thereaiareaiaainumberaiofaiconsiderationsaiforaitheaicolonel:
TheaidesiredaiadditionalaispeedaishouldaiprovideaibenefitaitoaitheaiGovernmentaiinaiorderait
oaijustifyaitheaiexpenditureaiofaifundsaitoaiachieveaiit.aiTheaicolonelaishouldaibeaiableaitoaiarti
culateaitheaijustification.
Theaisituationaiisaiveryaiamenableaitoaiaaiclassicaiperformanceaiincentiveaithataiwouldaiallo
waitheaicontractoraitoaiearnaiprofitaiforaiachievingaitheaidesiredaispeedaiaboveaiandaibeyond
aiwhataitheaifinalaiFPIFaiprofitaiwouldaibeaiforaiachievingaithresholdaispeed.aiIfaitheaicontract
oraiperceivesaithisaican'taihappen,aiheaiwillaieitherainotaisignaiupaitoaitheaiincentiveaioraiwillaii
gnoreaiitaifromaiDayaiOne.
Theaiincentiveaiandairesultingaipaymentaihaveaitoaibeaistructuredaisoaiasaitoaibeaibasedaion
aiobservable,aimeasurableairesultsaithataiwouldaidetermineaihowaimuchaiisaiearnedaibyaithe
,aicontractor.aiSubjectivityaiisainotaiallowableaiunderaicurrentaiAFaipolicyaiwithoutaiHCAaiapp
roval.
Weaihaveaitoaibeaiveryaicarefulaitoaiunderstandaiwhataipossibleaiunintendedaiconsequence
saicouldaibeaicausedaibyaitheaiexistenceaiofaithisaifeatureaiinaitheaicontract.aiForaiexample,ai
willaitheaicontractoraireduceaiaircraftaiweightaibeyondaisafeailimitsaiinaiorderaitoaihelpaiachie
veaitheaipayment?
aiAlso,aiwillaitheaicontractoraiconsumeaiexcessiveaischeduleaitoaigetaitheaiextraaispeed?
Thereaihasaitoaibeaiaaicostaiincentiveaiinaiplaceaisoaithataitheaicontractoraidoesn'taispendaia
naiunconstrainedaiamountaiofaimoneyaitoaiwinaitheaipayment,aisuchaiasaiunderaiaaiCPFFaic
ontract.aiTheaiFPIFaishareailineaiservesaithisaipurposeaiwhenaibalancedaiagainstaitheaiince
ntive.
TheaiincentiveaihasaitoaibeaibalancedaiwithaitheaiFPIFaishareailineaisoaithataitheaicontractora
idoesn'taispendaimoreaimoneyaitoaiachieveaitheaidesiredaispeedaithanaiheaihasaipotentialait
oaiearnaibyaireceivingaitheaipayment.aiSimilarly,aitheaicontractoraican'taibeaiallowedaitoaispe
ndaianaiexcessiveaiamountaiofaimoneyaiwithailittleaicostaipenaltyaitoaiachieveaisuccess.
Inaisomeaicases,aiContractingaiOfficersaiareaialsoaiGrantsaiOfficers.aiTheyaicanaiawardaiGr
antsaiandaiAssistanceaiInstrumentsaiasaiwellaiasaicontracts.aiWhataiisaiAssistance?
aiHowaidoesaiitaidifferaifromaiAcquisition?
aiWhataigivesaitheaiGrantsaiOfficersaitheiraiauthorityaitoaienteraiintoaiassistance?
aiWhataiareaitheaitypesaiofaiAssistance?ai-aians--
Whenaitheaiprincipalaipurposeaiisaitoaitransferaiaaithingaiofaivalue,aitoaicarryaioutaiaaipublicai
purposeaiofaisupportaioraistimulationaiauthorizedaibyailawaiofaitheaiUnitedaiStates,aiitaiisaiAs
sistance.
Acquisition,aibyaicontrast,aihasaitheaiprincipalaipurposeaiofaiacquiringaipropertyaioraiservice
saiforaitheaidirectaibenefitaioraiuseaiofaitheaiUnitedaiStatesaiGovernment.
Federalaiagenciesaimustaibeaiauthorizedaibyaistatuteaitoaisupportaioraistimulateaiaaipublicaip
urpose.aiTheaistatutoryaiauthorityaifromaiCongressaimustaiexistaieitheraiinaibroadailegislatio
naioraiinaiaaiprogram-
specificaistatute.aiAbsentaithataistatutoryaiauthority,aiaaiGrantsaiOfficeraimayainotaiuseaianai
assistanceaiinstrument.
AuthoritiesaitoaiissueaiAssistanceaicanaibeaiofaithreeaitypes:ai(1)aiProvideaitoaitheaiSecretar
yaiofaiDefenseaibyaistatute,aie.g.,ai10aiU.S.C.ai2391;ai(2)aiAuthorityaiprovidedaitoaiDoDaicom
ponentsaithatairequiresainoaidelegationaibyaitheaiSecretaryaiofaiDefense,aie.g.,ai10aiU.S.C.ai
2358;ai(3)aiAuthorityaicomingaiindirectlyaifromaistatutes,aii.e.,aifederalaistatuteaiauthorizingai
aaiprogramaithataiisaiconsistentaiwithaiusingaiaaigrantaioraicooperativeaiagreement.
TwoaitypesaiofaiAssistanceaiareaiGrantsaiandaiCooperativeaiAgreements.aiTheyaidifferaiinait
heaifollowingaiway:aiInaiaaiGrant,aisubstantialaiinvolvementaiisainotaiexpectedaibetweenaithe
aiagencyaiandaitheairecipient.aiInaiCooperativeaiAgreement,aisubstantialaiinvolvementaiisaie
xpectedaibetweenaitheaiagencyaiandaitheairecipient.aiCooperativeaiAgreements,aithen,aiare
aiparticularlyaiusefulaiinaitheairesearchaiarenaaiwhenaitheaiGovernmentaiisaiinterestedaiinaib
eingaiinvolvedaiinaiprogramaidecisionsaioraimayaibeaidoingaisomeaitestingaiorairesearchaithe
mselves.
YouaiareaitheaiContractingaiOfficeraionaiaainewaiResearchaiandaiDevelopmentaiprogram.aiP
roposalsaiwereairecentlyaireceivedaiinairesponseaitoaiaaiBroadaiAgencyaiAnnouncement,aia
,ndaiaaiCostaiPlusaiFixedaiFeeaicontractaitypeaiisaianticipated.aiTheaiproposalaimostaifavored
aibyaitheaitechnicalaiteamaiwasaipricedaisignificantlyaiunderaiwhataiwasaiestimatedaiforaitheai
effort.aiTheaicontractoraiproposedaifeeaiinaianaiamountaithataiequatesaitoai20%aiofaitheaiesti
matedaicost.aiTheaiusersaihaveaimoreaithanaienoughaifundsaitoaicoveraitheaiproposalaiandai
wantaiyouaitoaiacceptaitheaipriceaiasaiis.aiHowaishouldaiyouaiadviseaitheaiuseraiandaiwhataifa
ctorsaishouldaiyouaiconsideraiinaideterminingaiaaireasonableaifee?ai-aians--
TheaistatutoryailimitationaionaifeeaiforaiCPFFaitypeaicontractsaidoainoaipermitaiexceedingai1
5%aiofaiestimatedaicostaiforaiexperimental,aidevelopmental,aiorairesearchaiperformedaiund
eraiaaiCPFFaicontract.aiSinceaitheaiproposedaiamountaiofaifeeaiisaioutsideaitheaistatutoryaili
mitationsaiyouaineedaitoaidetermineaiwhataiaaifairaiandaireasonableairateaiisaithataifallsaiwithi
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aisuchaiasaiWeightedaiGuidelines.aiIfaiaaicostaireasonablenessaireviewaideterminesaitheaies
timatedaicostsaitoaibeaiacceptable,aiweaicanaistillainegotiateaiandaiadjustaitheaifee.
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ouairequestingaithataiyouaiissueaiaaiBroadaiAreaaiAnnouncementai(BAA)aitoaisupportaitheai
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etsaiareaicommerciallyaiavailableaifromaimultipleaisourcesaiandaitheaiPMaiwantsaitoaireceive
aiperformanceaispecificationaisheetsaifromaieachaiofferoraiandaithenairequestaisampleaihea
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ntaiofaiaaisourceailistaithataicanaibeaiusedaibyaivariousaigovernmentaientitiesaitoaiindividually
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ataiheaiwillainotaibeaiprocuringaianyaiofaitheaiheadsetsaiasaiaairesultaiofaitheaiBAA.aiWhataido
aiyouaiadviseaitheaiPM?ai-aians--
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beaiusedaiifaitheaiGovernmentaiintendsaitoaiawardaiaaicontract.aiYouaimightaisuggestaithatait
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aithenaisampleaiheadsetsaifromaiselectedaiofferors),aiandaitheaiultimateaiintentaiofaitheaiproc
ess,aie.g.,aiaaisourceailistaiforaiuseaibyaiindividualaiusersaiinaifutureaiprocurements.aiYouaimi
ghtaialsoaiadviseaitheaiPMaithataithereaicouldaibeailiabilityaiissuesaiassociatedaiwithaitheaius
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priateaiforaitheaiGovernmentaitoaicoveraishippingaiandaianyaidamage/
wearaitoaitheaiunitsaiforaitheaitesting.
A.aiUnderaiwhataicircumstancesaiisairatificationaiofaianaiunauthorizedaicommitmentaipermitt
ed?
B.aiInaigeneral,aiwhataiareaitheaigenericaiproceduresaiforaihandlingairatificationaiactions?
C.aiWhoaiareaitheaiapprovalaiauthoritiesaiforairatifications?ai-aians--
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heaitimeaiofaitheaicommitmentaiandaiataitheaitimeaiofaitheairatification.
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eaiunauthorizedaicommitmentaiexplainingaihowaiandaiwhyaiitaioccurred,aihowaifutureaioccur
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nsibleaiindividuals.aiLegalaireviewaiisaialsoairequired.ai
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ommitmentsaivaluedaibelowai$1MaiisaitheaiHCA.ai(DARSai1.602-3(b)(2))
YouaiareaitheaiContractingaiOfficeraiforaiaaimuch-
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yaitoaibindaitheaicompany,airegardlessaiofaiherairelationshipaitoaitheaiCompanyaiPresident.ai
Courtsaimayaigenerallyaifindaithataiindividualsailackai"theaiageaimajority"aiifaitheyaiareaiunde
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enseaitoaidriveaiaaicaraioraiconsumeaialcoholicaibeveragesaivaryaiconsiderablyaibetweenaia
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llaiProgram-relatedaimanagerialaiissues.
