Flexibilty to award the appropriate contract type at award with the possibility to convert the contract type during performance.
This technique allows procurement teams to build flexibility into the solicitation to allow for future conversion from one contract type to another, such as from time-and-materials to firm-fixed-price, after award.
Consider this text in your next solicitation: "As appropriate, after award, Labor Hour/Time & Material (T&M) contract line item numbers (CLINs) may be converted to Firm-Fixed Price (FFP) CLINs through mutual agreement of both parties, based on the rates (and labor categories) negotiated at the time of award."
Possible clause to reference: FAR 52.212-4(c), Contract Terms and Conditions – Commercial Items, Changes (Oct 2018)
- Allows procurement teams to award the most appropriate type of contract, at time of award, but convert to a more appropriate, less risky, type after enough historical performance data is known.
- Improves collaboration between the contracting office, program office, and the contractor. As appropriate, after award, CLINs may be converted through mutual agreement of both parties.
- Provides the flexibility to include optional CLINs for support that cannot be accurately priced before work commences. For example – an optional T&M CLIN can be converted to FFP when appropriate, such as when the work is more defined after performance or when funding becomes available.
- Allows flexibility when the program office is faced with budget constraints, such as in continuing resolutions. The team can convert CLINs to firm-fixed price when appropriate.
- Contract type can be converted during the life of the contract instead of waiting until the next competition.
- Allows for additional flexibility under hybrid-type contracts.
- Increase successful outcomes of the work being performed under the selected contract type. The government and contractor teams can build upon previous work and/or once knowns are more determined, finalizing pricing, within scope and within the awarded price estimation.
- Procurement teams can test a new contract type environment within scope during award.
- Allows the team to be more flexible in meeting the mission during continuing resolutions.
Awarding other than firm-fixed-price contracts is often seen as risky and leadership often has concerns when the government utilizes riskier types of contracts. There is nothing in the FAR that states that a contract type must remain the same throughout the life of the contract. This technique allows for flexibility to award the appropriate contract type at award while being able to potentially convert the contract type during performance.
o Solicitation: DHS Financial Systems Modernization (FSM) Request for Proposals (RFP), pg. 57 [pdf document]
o Solicitation: DHS Service Management Tool (SMT) and Support Services Request for Quote (RFQ), pg. 11 [pdf document]
o DHS PILCast #5 (training video) [URL]
o Presentation: DHS Enhanced Contract Type Conversion, 2021 [pdf document]
