I have an interesting situation developing. Under DPAS, a contractor is required to accept a rated order unless certain exceptions are met. What about an existing, unrated purchase order, to which the buyer wants to add a rating to one of the quantities (out of 8 total)? In other words, the buyer wants to mod the order to add a rating to a partial quantity.

Is the seller obligated to accept this modification under the same standards as it would an initial order? My answer is no, because the law and the regs all talk about contracts or orders, and a rated order is defined as "a prime contract, a subcontract, or a purchase order ...." This doesn't seem to leave room for changing an unrated order for partial quantities.

Any other thoughts?

By Vern Edwards on Saturday, May 11, 2002 - 11:45 am:

Fara Fasat:

The contractor must accept the modification under the same standards as an original order. See 15 C.F.R. 700.16, Changes or cancellations of priority ratings and rated orders, especially paragraph (b), which reads as follows:

"If an unrated order is amended so as to make it a rated order, or a DO rating is changed to a DX rating, the supplier must give the appropriate preferential treatment to the order as of the date the change is received by the supplier."

By Vern Edwards on Saturday, May 11, 2002 - 11:47 am:

Fara Fasat:

P.S., 15 C.F.R. 700.16, paragraph (a), allows the the agency to modify the order unilaterally.

By Vern Edwards on Saturday, May 11, 2002 - 01:54 pm:

Fara Fasat:

P.P.S. Correction to my last post--15 C.F.R. 700.16 does not allow an agency to modify an unrated order unilaterally. It only authorizes an agency to unilaterally modify the rating on a rated order.

I assume that the authority to rate an unrated order is the same as the authority to issue a rated order in the first place.

By Fara Fasat on Monday, May 13, 2002 - 12:53 pm:

Thanks Vern. That looks to be the answer.

By Fara Fasat on Tuesday, May 14, 2002 - 02:27 pm:

Now that we have established the authority to change an unrated order to a rated order, I have a question regarding the interpretation of the preferential treatment that a supplier must give to rated orders. When determining whether it can meet the required delivery date, is the supplier required to give priority to the rated order over unrated orders for the same product, or over all other work on the production line? If the latter, this can have a tremendous impact.

By Vern Edwards on Tuesday, May 14, 2002 - 02:43 pm:

Fara Fasat:

The rules about preferential scheduling are in 15 C.F.R. 700.14(b), and read, in pertinent part, as follows:

"(a) A person must schedule operations, including the acquisition of all needed production items, in a timely manner to satisfy the delivery requirements of each rated order. Modifying production or delivery schedules is necessary only when required delivery dates for rated orders cannot otherwise be met.

(b) DO rated orders must be given production preference over unrated orders, if necessary to meet required delivery dates, even if this requires the diversion of items being processed or ready for delivery against unrated orders. Similarly, DX rated orders must be given preference over DO rated orders and unrated orders.

Examples: If a person receives a DO rated order with a delivery date of June 3 and if meeting that date would mean delaying production or delivery of an item for an unrated order, the unrated order must be delayed. If a DX rated order is received calling for delivery on July 15 and a person has a DO rated order requiring delivery on June 2 and operations can be scheduled to meet both deliveries, there is no need to alter production schedules to give any additional preference to the DX rated order."

The rule talks about "orders," and does not say that preference is only given among orders for the same item.

By Kennedy How on Wednesday, May 15, 2002 - 12:12 pm:

Vern,

I'm deferring to your cite on the matter, but back when I was in Contracting 101, it seemed to me that everybody was talking mainly that a higher rated order had priority over anything else going on in the plant (same item or no). I seem to recall our instructors sayint the same thing.

Our activity generally rates it's orders either DO or DX. My section did mainly DO while our sister section did DX. Don't recall if we ran into a DO/DX conflict over the exact same item, but I do know that we shared a common pool of contractors, who were pretty well versed in this DPAS ratings arena. I seem to recall that a contractor came to us to give us a "heads up" that they may be late in delivering on our order due to a hot DX-rated order that had priority. I don't know if we dinged him on performance or not, I'm sure we noted it, but the ACO probably sent a notice of deliquency due to DX-rated orders coming in. Theoretically, I suppose, we could zing him on being overloaded, but when you bid on work, you take your chances (by this I mean winning more than you can handle in a short time).

I do recall once a contractor abandoning our DO rated order for commercial work which was his bread and butter (ours was a fill in to keep his folks employed). We just clobbered him on delinquency and failure to perform, I don't recall pointing out the DO rating issue to him.

Kennedy

By Vern Edwards on Wednesday, May 15, 2002 - 02:50 pm:

Kennedy:

I interpret the C.F.R. as meaning that a DX-rated order takes precedence over all DO-rated orders and all unrated orders in the plant, and that a DO-rated order takes precedence over all unrated orders in the plant.

In other words, I think you and I share the same understanding of the rating system. Keep in mind, however, that I am citing the rules as stated in the C.F.R. I have not checked for any case law.

By Kennedy How on Thursday, May 16, 2002 - 12:03 pm:

Vern,

Yes, I think so as well.

Kennedy

By Anonymous on Wednesday, May 22, 2002 - 01:47 pm:

I think you are both correct as relates to the order of precedence of rated orders but the item of supply still has to be in an approved program before the rating has any effect .....does'nt it?