Improving Contract Quality
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1 DEFENSE PROCUREMENT AND ACQUISITION POLICY PROCURE-TO-PAY TRAINING SYMPOSIUM Improving Contract Quality Presented by: D. Bruce Propert, DPAP May 30 June 1, 2017 Hyatt Regency Orlando FL 1
2 PDS Validations Data formats and required data elements Data elements required due to other elements E.g. cost plus fixed fee contract must have estimated cost and fixed fee Validation against authoritative lists SAM, DODAAD, etc. Units of measure, currencies, country codes, etc. Clauses Used to validate another data element, e.g. clauses allowing ceiling prices Selected clauses that had been flagged as being of interest Scorecards, IG finding Combating Trafficking in Persons*, White House query Providing Accelerated Payments to Small Business Subcontractors Expansion to add all possible remaining clause validations being phased in starting in August Procure-to-Pay Training Symposium 2
3 Q2 FY17 PDS Validations - Awards 81,071 Awards 746,907 Awards 2017 Procure-to-Pay Training Symposium 3
4 Non-Clause Fatal Errors (non DLA) Q2 FY Procure-to-Pay Training Symposium 4
5 Non-Clause Warning Errors (non DLA) Q2 FY Procure-to-Pay Training Symposium 5
6 Clause Errors (non DLA) Q2 FY17 39% Purchase Card 2017 Procure-to-Pay Training Symposium 6
7 Issue Top WAWF CDR reasons % CDRs Payment Office, Admin Office Assignment* 18.5% Clauses* 10.9% Inspection/Acceptance* 9.4% Line of Accounting 8.4% Missing Pages or Attachments 9.2% Payment Instructions* 7.0% Math Errors* 4.4% All Other 32.2% * Current or future PDS validations 2017 Procure-to-Pay Training Symposium 7
8 Selected Error Details Fatal errors Quantity and Unit of Measure Pricing Zero values Invalid DODAAC or MAPAC Invalid DUNS or CAGE Missing addresses Warnings SIC should not be used Non-deliverable item with delivery information Supply with Period of Performance $1 unit price Lot Back up Clauses NAICS 42, 43, 44, Procure-to-Pay Training Symposium 8
9 Quantity and Unit of Measure Error message examples: <UnitOfMeasure> is required when <Quantity> is provided. For the product or services ordered on line '4001', the value 'Dollars, U.S.' is invalid for <UnitOfMeasure> DFARS PGI : Line items a "shall include a description of the item or service being procured, the associated Product or Service Code (PSC), the quantity, a unit of measure, defined acceptance and inspection locations and requirements, and the delivery schedule or performance period." "The list of available units of measure is on the Defense Procurement and Acquisition Policy website at Procure-to-Pay Training Symposium 9
10 Pricing Error message examples: When <PricingArrangementBase> is 'Firm Fixed Price' then an iteration of <GroupOtherAmounts/ItemOtherAmounts> or <LineItemAmounts/ItemOtherAmounts> where <AmountDescription> = 'Firm Price' is required. When <PricingArrangementBase> is 'Cost Plus Fixed Fee' then an iteration of <GroupOtherAmounts/ItemOtherAmounts> or <LineItemAmounts/ItemOtherAmounts> where <AmountDescription> = 'Fixed Fee' is required. Causes Placeholder line items - do not use "Reserved" line items Unpriced options Improper pricing, e.g. FFP not to exceed 2017 Procure-to-Pay Training Symposium 10
11 Error message examples: Zero values The value '0' is not a valid entry for <UnitPrice>. It must be greater than zero. For the product or service ordered on line '0001' the value '0' is not a valid entry for <Quantity>. It must be greater than zero. Causes Not separately priced line items Informational line items 2017 Procure-to-Pay Training Symposium 11
12 Error message examples: Invalid DODAAC or MAPAC The value 'B6R0TP2' is not a valid entry for <DoDAAC>. It must be 6 alphanumeric characters (0-9, A-Z). Position 1 must be 0-9, A-Z but not B-E, I, K, L, O, P, Q, T, U, or X. Positions 1 and 2 cannot be HG, SD or Z0. The value 'W80PUW' for <DoDAAC> must be active in the authorized DoDAAC list provided by the DAASC Inquiry System. It was deleted on ' '. Procurement Instrument Effective Date is ' '. The value 'FA6201' for <DoDAAC> must have the Procurement Authority Flag set to "Y" in the authorized DoDAAC list provided by the DAASC Inquiry System. Causes Use of other codes mislabeled as DODAAC (USACE codes, CAGE, MAPAC) Expired codes Offices not registered to do task Procure-to-Pay Training Symposium 12
13 Error message examples: Rules Invalid DUNS or CAGE Generic <DunsNumber> ' ' cannot be used when <AddressDescription> is 'Contractor'. (FAR 4.605(b)(2), PGI 204.6) The value ' ' for <DunsNumber> must be in the authorized DUNS list provided by the US Federal System for Award Management (SAM). The value '05606' for <DataValue> is not in the Defense Logistics Agency Commercial and Government Entity (DLA CAGE) system. FAR (a)(2)(2) "The contracting officer shall include the contractor s CAGE code in the contract and in any electronic transmissions of the contract data to other systems when it is provided in accordance with paragraph (a)(1) of this section." FAR "Contracting officers shall verify the offeror s CAGE code by reviewing the entity s registration in the System for Award Management (SAM). For entities not required to be registered in SAM, the contracting officer shall validate the CAGE code using the CAGE code search feature at " 2017 Procure-to-Pay Training Symposium 13
14 Error message examples: Missing Address Codes When <AddressDescription> = 'Acceptance Location', <Address/OrganizationID/DoDAAC> must be provided. When <AddressDescription> = 'Ship To', at least one of <Address/OrganizatonID/Cage>, <Address/OrganizationID/DoDAAC>, <Address/OrganizationID/DunsNumber>, <Address/OrganizationID/Duns4Number>, or <Address/OrganizationID/Mapac> must be provided. When <AddressDescription> = 'Contractor', <Cage> must be provided. DFARS PGI (a) "(3) Delivery and acceptance locations shall be defined using Activity Address Codes published in (1) DoD Activity Address Directory (DODAAD), DoD M, or (2) Military Assistance Program Address Directory System (MAPAD), DoD M and available for verification at (4) No activity shall be assigned acceptance responsibility unless that activity has acceptors registered in Wide Area WorkFlow (WAWF). Available roles for an Activity Address Code can be verified at the Active DoDAACs & Roles link on the WAWF homepage at [future validation] 2017 Procure-to-Pay Training Symposium 14
15 SIC should not be used Error message: <ReferenceDescription> "Standard Industry Classification (SIC) Code" should not be used. SIC was replaced by the North American Industry Classification System (NAICS) effective 1 Oct (Federal Register 65 FR 30836) SPS data maintenance is removing the values from the tables 2017 Procure-to-Pay Training Symposium 15
16 Non-Deliverable Item with Delivery Information Error message examples: When <LineItemType> is 'INFOSLIN', <ReferenceDescription> cannot be 'Product Service Code'. <Delivery> cannot be provided when <LineItemType> is 'INFOSLIN'. <Quantity> and <UnitOfMeasure> must be provided when either <Delivery> or <LineItemDates> for a lease or period of performance is provided. Causes For incrementally funded lines, including the estimated period of performance for the allotted funding as the period of performance? 2017 Procure-to-Pay Training Symposium 16
17 Supply with Period of Performance Error message: When <ProductOrService> = 'Personal Property', it cannot have <LineItemDateDescription> = 'Period of Performance'. Causes Annual Software Licenses or Maintenance Agreements using product PSCs, instead of service, e.g. PSC 5895 instead of D319. Contracts for leases are using product PSCs instead of service, e.g. 310 instead of W018. Using the PSC for the item being shipped instead of the PSC for the shipping. Using PoP when a Delivery Date should be used Procure-to-Pay Training Symposium 17
18 Error message examples: $1 unit price The Supply line item has a unit price of $1. The Product Service Code is '2320'. The non-supply line item has a unit price of $1. The Product Service Code is 'C211'. Causes Ordering limits being carried onto order Badly structured line item requirements Attempts to portray cost type line items as firm fixed price 2017 Procure-to-Pay Training Symposium 18
19 Lot Error message: Use of "Lot" for PSC '1260' is not appropriate. A unit of measure that identifies the type of item being purchased and the corresponding quantity must be used. PSC 1260 Fire Control Designating and Indicating Equipment Includes: Turret, Gun, Torpedo Mount, and Searchlight Indicating Equipment; Target Designating Equipment; Synchro Systems Procure-to-Pay Training Symposium 19
20 Back up Other Clause Requirement Details 2017 Procure-to-Pay Training Symposium 20
21 DFARS Requirements Relating to Compensation of Former DoD Officials As prescribed in DFARS , "Use the clause at , Requirements Relating to Compensation of Former DoD Officials, in ALL solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items." 21
22 DFARS Requirement to Inform Employees of Whistleblower Rights As prescribed in DFARS , "Use the clause at , Requirement to Inform Employees of Whistleblower Rights, in all solicitations and contracts." 2017 Procure-to-Pay Training Symposium 22
23 DFARS As prescribed in DFARS , "Use the clause at , Agency Office of the Inspector General, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that include the FAR clause , Contractor Code of Business Ethics and Conduct." 2017 Procure-to-Pay Training Symposium 23
24 DFARS As prescribed in DFARS , "Use the clause at , Oral Attestation of Security Responsibilities, in solicitations and contracts that include the clause at FAR , Security Requirements." 2017 Procure-to-Pay Training Symposium 24
25 DFARS As prescribed in DFARS , "Use the clause at , Safeguarding Covered Defense Information and Cyber Incident Reporting, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, except for solicitations and contracts solely for the acquisition of COTS items." The purpose of the DFARS rule and associated clause is to protect both unclassified controlled technical information provided by the government and that created by the contractor as part of their normal business. 25
26 Clause ' ' As prescribed in DFARS (a)(1), Use the clause at , Item Unique Identification and Valuation, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for supplies, and for services involving the furnishing of supplies, unless the conditions in (b) apply (b)(1) Contingency operations or recovery from nuclear, chemical, or biological attack (b)(2) D&F executed by HCA (or CAE for ACAT I) PSC is being used to determine whether the items are supplies
27 DFARS DFARS Ordering clause provides for issuance of orders electronically via posting to EDA As prescribed in (a), "insert the clause at , Ordering, in lieu of the clause at FAR , Ordering, in solicitations and contracts when a definitequantity contract, a requirements contract, or an indefinitequantity contract is contemplated." 27
28 Combating Trafficking in Persons Clauses Combating Trafficking in Persons is to be used in all solicitations and contracts. It is bundled within clause Contract Terms and Conditions Required to Implement Statutes or Executive Orders Commercial Items and also in Terms and Conditions Simplified Acquisitions (Other Than Commercial Items). Therefore, as long as one of the three clauses exist based on the purchase, the clause requirement has been fulfilled. 28
29 FAR FAR Encouraging Contractor Policies to Ban Text Messaging While Driving, is to be used in all solicitations and contracts. However, it is actually bundled within clause Contract Terms and Conditions Required to Implement Statutes or Executive Orders Commercial Items. Therefore, as long as either clause exists based on the purchase, the clause requirement has been fulfilled Procure-to-Pay Training Symposium 29
30 DFARS As prescribed in DFARS , use clause , Export-Controlled Items, on all solicitations and contracts Procure-to-Pay Training Symposium 30
31 FAR As prescribed in , "Insert the clause at , Providing Accelerated Payments to Small Business Subcontractors, in all solicitations and contracts." It is bundled within clause Contract Terms and Conditions Required to Implement Statutes or Executive Orders Commercial Items and also in Terms and Conditions Simplified Acquisitions (Other Than Commercial Items). Therefore, as long as one of the three clauses exist based on the purchase, the clause requirement has been fulfilled Procure-to-Pay Training Symposium 31
32 DFARS Per DFARS Except as provided in (a), use the clause at , Electronic Submission of Payment Requests and Receiving Reports, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items. Contracts paid via purchase card (Pay Office code CRCARD ) still require this clause. There has been a common misconception that these are excluded. The text of the clause limits its applicability to submission of the receiving report, which is required to document delivery for audit. 32
33 DFARS As prescribed in DFARS (b), "use the clause Government Access, in solicitations and contracts that include the clause FAR , Contractor's Facilities." 2017 Procure-to-Pay Training Symposium 33
34 FAR As prescribed in FAR (a), insert the clause in "All cost reimbursement and time-and-material type solicitation and contracts, and labor-hour solicitations when property is expected to be furnished for the labor-hour contracts." A common issue seen is the use of a cost line item for travel without the use of clause The clause is required if any COST type line item exists Procure-to-Pay Training Symposium 34
35 Government Property DFARS Clauses The following clauses must all exist if at least one of them exists. The multiple rules for Government Property can be found in FAR (a) and DFARS and DFARS
36 NAICS 42, 43, 44, 45 Error message: <ReferenceValue> = '423430' is not valid when <ReferenceDescription> is 'North American Industry Classification System (NAICS)'. Must be 6 numeric digits and cannot begin with 42, 43, 44, or 45. In accordance with 13 CFR 121, Merchant Wholesalers and Retail Trade vendors should utilize the manufacturer NAICS and indicate that they are a non-manufacturer in SAM. Example: ebooks were purchased under NAICS (Book, Periodical, And Newspaper Merchant Wholesalers). NAICS (Book Publishers) is one example of an equivalent manufacturing NAICS Procure-to-Pay Training Symposium 36
37 DEFENSE PROCUREMENT AND ACQUISITION POLICY PROCURE PAY TRAINING TO SYMPOSIUM May 30 June 1, 2017 Hyatt Regency Orlando FL 37
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