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  1. Performance • Consider the contractor’s need to meet the obligations of the contract and perform the requirements of the contract: • compliance with the Ts & Cs, reg’s • the successful building, fabrication, performance of the final product or service • to get full payment for all work under the contract

  2. Performance • The contract is written to successfully accomplish the goal of providing a good or service. • To be successful means meeting the specifications outlined in the contract. • SOW • referenced specs (specifications)

  3. Performance • What is a spec(ification)? • A description of the technical requirements for a material, product, or service that includes criteria for determining whether requirements are met.

  4. Performance • Two general categories of specifications • Design • Performance

  5. Performance • Design = government states materials to be used and the mode and manner in which the work is to be performed. • Incorporate text,dwgs that set out requirements such as measurements, tolerances, testing procedures, quality control, inspection procedures. • Govt assumes responsibility for design, omissions, errors, deficiencies.

  6. Performance • Performance = less precise than design specs. Describe the performance desired of the end product without specifically directing how the contractor should design or assemble the end product. • Design, measurements, tolerances, etc. not stated nor considered important as long as performance requirements met.

  7. Performance • Performance = less precise than design specs. Describe the performance desired of the end product without specifically directing how the contractor should design or assemble them. • Contractor accepts responsibility for design, engineering, achievement of stated performance requirements.

  8. Performance • Govt minimum needs • Under the Armed Services Procurement Act, specs are to be developed with the goal of promoting full and open competition. Therefore, specs should describe and require only the govt’s minimum needs.

  9. Performance • Govt minimum needs = specs shall precisely and fully define the supplies and services being procured, yet only meet the those provisions and conditions that satisfy the specs. • Specs that exceed the Govt’s minimum needs by containing unnecessary requirements improperly restrict competition by preventing responsive bids.

  10. Performance • Why minimum needs vs maximum needs? • To allow more organizations to join in the competitive process. • GAO states that competition can only be obtained where specs fall outside a prescribed and restricted common basis.

  11. Performance • Types of Specs: • Federal Specifications • Military Specifications • Industry Specifications

  12. Performance • Types of Specs: • Federal Specifications: Issued or controlled by General Services Administration (GSA) and listed in the Index of Fed’l Specs, Standards, and Commercial Item Descriptions. In 1994, acquisition streamlining directed agencies that, to the maximum extent practicable, use performance specs. Therefore, these are stated in terms of function to be performed, performance required, essential physical characteristics.

  13. Performance • Types of Specs: • Military Specifications: Specs issued by DoD for mandatory use by DoD activities. DoD Index of Specs and Standards lists unclassified fed’l and military specs and standards, related standardization documents, and voluntary standards approved for DoD use. • Acquisition streamlining = simplified buys, commercial and performance standards whenever possible.

  14. Performance • Types of Specs: • Industry Specs: Specs prepared by technical or industry associations, approved for use by federal agencies,.

  15. Performance • Government specs will not be furnished with a solicitation unless they are key to the competitive process.

  16. Performance • Standards: FAR defines a standard as “a document that establishes engineering and tech limitations , applications of items, materials, processes, methods, designs, and engineering practices.” • Not specs • BUT-- • Criteria considered essential to achieve uniformity of mat’ls & prod’s or interchangeability of parts.

  17. Performance • Purchase Description • IAW FAR, Purchase Description = description of essential physical characteristics, functions required to meet Govt’s minimum needs when no spec is required, or • brand names = type of PD that identifies desired prod by name; where physical or functional characteristics are named. • Products that are essential to Govt’s needs.

  18. Performance • Deviations vs. Waivers • Deviation = Authorization to depart from a designated spec before work is done. • Waiver = Authorization to depart from a designated spec after work is done.

  19. Performance • Implied Warranty: In regards to design specs, compliance to Govt specs implies that the Govt knows what the end-product will be and, therefore, is responsible for the design. Anticipate a satisfactory end-product. • Meeting specs = responsibility of Govt for defects.

  20. Performance • Implied Warranty • Govt disclaimers only work if risks to contractor reasonably determined, Govt discloses all available information, and disclaimer gives clear notice that potential problems exist.

  21. Performance • Defective Specifications • Impossibility of Performance • Actual Impossibility = cannot be performed because of erroneous specs, specs cannot be met, or specs are beyond state-of-the-art. • Practical Impossibility = specs not possible within basic contract objectives. • Govt assumes risk in cases of design specs in impossible situations and/or superior knowledge vs Contractor assumed risk of obvious failure and,or superior knowledge.

  22. Performance • Compliance with Specs • FAR Strict compliance but… • in minimum manner or least expensive means.

  23. Performance • Substantial Performance • The Doctrine of Substantial Performance says that the Govt may not reject and terminate contract performance that minorly deviates from the requirements and has performed a major portion of completion, delivery. • It can still insist on completion • If not practical or desired, contractor is entitled to credit for reasonable value of work and unperformed work.

  24. Performance • Substantial Performance • These construction contract requirements make other issues of substantial performance easier to understand • In supply contracts, looking at timely delivery, substantial conformity, contractor’s reasonable belief of compliance. Non-conformance is minor and correctable in reasonable time.

  25. Performance • Substantial Performance • These construction contract requirements make other issues of substantial performance easier to understand • In service contract, looking at % of completion and quality of work performed.

  26. Performance • The adherence and compliance to specifications is addressed in the Govt’s inspection of contractor supplies and services being acquired.

  27. INSPECTION The measures and steps the government can use to ensure that they receive a quality product

  28. Government Inspection Rights Commercial Contract Items Non-Commercial Contract Items Contract Clauses Inspection Procedures FAR 46.105(a) Requirements Summary

  29. Government Inspection Rights • The Government’s inspection rights under the regulations and contract clauses dealing with inspection • Inspection procedures • Government rejection and contractor correction procedures • The effect, methods, and limits on the Government’s final acceptance of the work

  30. FAR Guidance: • Inspection is the primary means of assuring quality • Intensity of inspection varies depending on contractor and nature of the contract • Therefore, quality assurance requirements can vary

  31. Government Inspection RightsCommercial Items • The Government must rely on contractor’s existing inspection systems as a substitute for government inspection • An exception would be where customary market practices for the product include in-process inspection

  32. Contracts for Noncommercial Items • FAR’s policy is to rely on contractors for the inspection of the contract work • Government must rely on contractors to accomplish all necessary inspection and testing for supplies or services acquired at or below the simplified acquisition threshold.

  33. Contracts for Noncommercial Items • To assure quality, the FAR has established standard inspection requirements in contract clauses • Where the contract is for complex and critical items higher level contract quality requirements may apply

  34. Contract Clauses • FAR sets basic rules • Applies to quality assurance, acceptance of the contract work by the Government, and the parties’ rights and obligations regarding inspection • Separate clauses are prescribed for different categories of contracts • Most commonly used is the “Inspection of Supplies – Fixed Price” clause

  35. Inspection Clause Elements • The contract must provide and maintain an inspection system acceptable to the Government • The Government may reserve the right to inspect the contractor’s work during the course of contract performance or before acceptance • The Government has the right to require the contractor to correct or replace nonconforming work or to reduce the contract price if the nonconforming work has decreased in value • The Government’s right to correct or replace nonconforming work at the contractor’s expense or to terminate the contract for default if the contractor fails to correct the work

  36. Inspection Procedures • Contractor Inspection - As listed in the FAR, the contractor must provide and maintain an inspection system acceptable to the Government

  37. FAR 46.105(a) Requirements • Control the quality of the supplies tendered • Offer to the Government only supplies that conform to the contract specification • Ensure that its suppliers and subcontractors have adequate quality control systems • Maintain substantiating evidence of conformance , where applicable • Contractor accurately keep records for a reasonable period of time after completion

  38. Levels of Inspection • There are three levels of inspection • Inspection only by contractor • Standard Inspection • Higher level quality inspection

  39. Levels of Inspection • Level that applies depends on the extent of quality assurance needed by the government for the acquisition involved • At the high end, the contractor may have to comply with a government specified inspection or quality control system (Complex and critical items) • At the lower end, the government relies on inspection only by contractor (Commercial, non-critical items)

  40. Inspection Procedures • Rejection & Correction • Acceptance

  41. INSPECTION PROCEDURES Contractor’s Inspection Time of Inspection Place of Inspection Costs of Inspection Manner of Inspection

  42. TIME OFINSPECTION • Under the “Inspection of Supplies – Fixed Price” Clause, the Gov’t reserves the right to inspect & test the contract supplies “at all places & times, including the period of manufacture, & in any event before acceptance.” • This gives the Gov’t flexibility to choose when to conduct inspection. The Gov’t’s discretion is not unlimited. • The Gov’t “shall perform inspections & tests in a manner that will not unduly delay the work.” • Not all delay is unreasonable. • The Gov’t may conduct repeated inspections provided they are at reasonable times and do not unduly delay work. • The Contractor may be entitled to an extension of time in the contract schedule (excusable delay) and the recovery of delay costs if the Gov’t unreasonably delays the contract work.

  43. TIME OF INSPECTION • The Clause contemplates that the Gov’t will generally inspect supplies before acceptance. • The FAR provides for the use of a “Certificate of Conformance” (certification by the Contractor that the supplies comply with the contract’s requirements) as the sole basis for the Gov’t acceptance of the supplies when: • (1) Small losses would be incurred in the event of a defect - or – • (2) When the Contractor’s reputation or past performance provides assurance that the supplies or services will be acceptable and any defective work will be corrected without contest. • Even where this procedure is followed, the Gov’t retains its right to conduct inspections if it wishes to do so. • (FAR 52.246-15, FAR 46.504, FAR 46.504(b)(2))

  44. PLACE OF INSPECTION • The “Inspection of Supplies – Fixed Price” Clause states that the Gov’t inspection may be conducted “at all phases.” • The FAR is more specific: It requires each contract to designate the place or places (including sub-contractor’s plants) where the Gov’t reserves the right to perform the inspections it considers necessary to determine that the supplies conform to the contract requirements. (FAR 46.401(a)(b))

  45. PLACE OF INSPECTION • The FAR requires that inspection be performed “at source” if: • (a) Inspection at any other place would require uneconomical disassembly or destructive testing. • (b) Considerable loss would result from the manufacture & shipment of unacceptable supplies or delay in making corrections. • (c) Special required instruments, gauges, or facilities are available only “at source.” • (d) Performance at any other place would destroy or require replacement of costly packing and packaging. • (e) Gov’t inspection during contract performance is essential. - OR – • (f) It is otherwise in the Gov’t’s interest. • FAR 46.402