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Don Mansfield

It's been almost 10 months since the FAR Council issued the last Federal Acquisition Circular (FAC). The streak of inactivity will be broken on November 6 when FAC 2005-96 will be published. The FAC contains a single rule that removes the Fair Pay and Safe Workplaces Rule. But that's not what makes the rule so remarkable. Item 16 of the FAC makes changes to the provision at FAR 52.204-8 as follows:

 

Quote

 

16. Amend section 52.204-8 by—

a.Revising the date of the provision;

b.Removing paragraph (c)(1)(xvi), and Note to Paragraph (c)(1)(xvi); and

c.Redesignating paragraphs (c)(1)(xvii) through (xxv) as (c)(1)(xvi) through (xxiv), respectively.

The revision reads as follows:

Annual Representations and Certifications.
*****

HTTPS://WWW.YOUTUBE.COM/WATCH?V=B-OFXUAMIV8ANNUAL

REPRESENTATIONS AND CERTIFICATIONS (NOV 2017)

*****

 

 

 Notice something strange? See that link to a YouTube Video? That's really there. It's in both the html and pdf versions of the FAC. It is officially contained in the FAR. What is the video? I won't spoil it for you--click and find out.

Don Mansfield

I always thought that the FAR Matrix was a good idea that was poorly executed. To begin with, it's notorious for containing errors. Second, most of the entries in the "Principle Type and/or Purpose of Contract" columns are "A", Required when applicable, which means you have to look up the prescription anyway. Lastly, the matrix isn't going to tell you if your agency deviates from the FAR prescription, which DoD does a lot. As such, I created a matrix that I think overcomes these problems.

A few things about the matrix:

  • It contains every provision and clause in the FAR, DFARS, and in DoD Class Deviation memoranda.
  • It doesn't have any "Principle Type and/or Purpose of Contract" columns except for a Commercial Items column.
  • It contains the actual prescription of the provision or clause. For readability, I removed the number and title of the provision or clause in the block and just wrote "use this provision..." or "use this clause..." The identifying information for the provision or clause is already contained in the row.
  • For DoD, it contains additional instructions for the use of FAR clauses that is contained in the DFARS or in a class deviation. This information appears in bold. If you work for a civilian agency, just ignore what's in bold.
  • In the "IBR" column (Incorporation by Reference), there are no "N" entries for "no", with the exception of the provisions and clauses prescribed at FAR 52.107. This may cause some people to freak out, so I'll explain. FAR 52.102(c) states:
Quote

Agency approved provisions and clauses prescribed in agency acquisition regulations, and provisions and clauses not authorized by Subpart 52.3 to be incorporated by reference, need not be incorporated in full text, provided the contracting officer includes in the solicitation and contract a statement that—

(1) Identifies all provisions and clauses that require completion by the offeror or prospective contractor;

(2) Specifies that the provisions and clauses must be completed by the offeror or prospective contractor and must be submitted with the quotation or offer; and

(3) Identifies to the offeror or prospective contractor at least one electronic address where the full text may be accessed.

Thus, if the FAR Matrix contained a "Y" in the IBR column, my matrix will also contain a "Y". If the FAR Matrix contained an "N" in the IBR column, or the provision or clause came from the DFARS or a DoD class deviation, then my matrix will contain a "Y*". The key at the top of the matrix contains an explanation for the "Y*" entry. If you're wondering how to incorporate a provision or clause that contains fill-in material or something the offeror must complete, see FAR 52.102(a) and FAR 52.104(d).

You can see the matrix on the DAU Acquisition Community Connection. I'm open to suggestions for making it better. Also, I would like to think that it doesn't contain any errors. However, if you spot one please let me know. As an incentive, I will add your agency's provisions and clauses (the ones in Title 48 of the CFR) to the matrix if you point out a mistake.

 

Don Mansfield

It’s time we rethink our approach to the training problem. Our traditional approach is to dictate a blueprint of training classes that must be followed in order to obtain prescribed levels of certification. To put it in acquisition terms, we’ve been using a design specification. What if we were to use a performance specification instead? What might that look like? Before answering these questions, we should identify what it is we are trying to achieve with training.

The purpose of training is to make the trainee proficient in performing one or more defined learning objectives by means of specialized instruction and practice. A learning objective consists of three parts—an action, a condition, and a standard. For example, someone new to federal contracting will likely receive training to select FAR provisions and clauses (action) given a set of facts about an acquisition and access to the FAR (condition) (the implied standard would be “correctly”). It follows that if an individual already behaves in the prescribed way under the prescribed conditions to the prescribed standard, then training would be unnecessary for that individual—they’ve already attained the learning objective.

Under the “design specification” training model that we currently use, there is an implied assumption that an individual cannot attain the requisite learning objectives without following the prescribed blueprint of training classes. Further, there is no method of demonstrating the attainment of the requisite learning objectives prior to the prescribed training classes. As a result, everyone must take the required training classes, regardless of individual necessity. Considering the resources involved in carrying out such a program, this is an expensive proposition.

While the implied assumption of the “design specification” training model may prove true in some cases, a more reasonable assumption would be that some individuals need to follow the prescribed training blueprint and some do not. Those that do not would include those that have already attained the requisite learning objectives by other means and those that could without following the prescribed training blueprint. Thus, the challenge would be to identify those that don’t need a particular training class before requiring their attendance at the training class.

What if we borrowed the thinking behind performance-based acquisition and applied it to the training problem (i.e., a “performance specification” training model)? That is, instead of dictating how the workforce is to attain requisite learning objectives, we specify the requisite learning objectives (performance outcomes) and method of assessment, and let the workforce decide how they are going to attain them. Some workforce members may choose a program of self-study, others may study in informal groups, some contracting offices may develop their own ongoing training programs, etc. Still others may choose to follow the existing blueprint of training classes. Regardless of how one attains the requisite learning objectives, all are held to the same standard using the same method of assessment.

For an illustration of how such a model might look, consider the profession of actuarial science. Beanactuary.org contains the following description:

Like other top-ranked professions (such as law and medicine), one must pass a set of examinations to achieve professional status as an actuary. Unlike other professions, in actuarial science you’ll have the opportunity to work as an actuary while completing the examination process—employers often allow study time during working hours, pay exam fees, provide internships, and even award raises for each exam passed. Though, to get the best start on a rewarding career, many soon-to-be actuaries begin taking exams while still in college. Of those that do, most achieve associateship in three to five years. All candidates acquire a core set of knowledge from required preliminary exams. The preliminary exams and Validation by Educational Experience requirements are the starting points for an actuarial career.

To attain an “Associate of the Society of Actuaries” (ASA) designation from the Society of Actuaries, one must pass exams in probability, financial mathematics, models for financial economics, models for life contingencies, and construction and evaluation of actuarial models. In addition, there is one required e-Learning course and a required one-day seminar in professionalism. After attaining the ASA designation, one typically pursues a “Fellow of the Society of Actuaries” (FSA) designation within one of six specialties: corporate finance and enterprise risk management, quantitative finance and investment, individual life and annuities, retirements benefits, group and health, and general insurance. To attain the designation, the FSA candidate must take 3-4 more exams unique to the specialty, complete four e-learning courses, and attend a three-day case-based fellowship admissions course that requires each candidate to deliver an oral presentation on a topic within the field. In case you weren’t keeping track, that’s a total of four days of required attendance in classrooms to achieve the highest designation in the field. In contrast, DoD contract specialists must attend 32 days of classroom training to attain the lowest level of certification.

What if to attain level 1 certification in contracting, one had to pass exams in, for example: acquisition planning, contracting methods, contract types, socioeconomic programs, and contract administration, and attend a one-day seminar on ethics? After level 1, contract specialists would choose a specialty in which they would pursue Level 2 certification. Specialties would be, for example, major system acquisition, research and development contracting, construction and A/E contracting, service contracting, IT acquisition, acquisition of commercial items, contract administration, etc. To attain Level 2 certification, contract specialists would have to pass a series of exams unique to that specialty. For example, to attain Level 2 certification in service contracting, there would be exams on specification of service requirements, source selection for services, pricing services, and service contract administration. There could also be a Level 2 admissions course where the candidate would have to submit and present a paper on a topic related to their specialty.

If nothing else, use of the performance specification training model would cost less than the design specification model currently in use. I would go as far as to say that, on the whole, the workforce would be at least as competent as it is now.

What’s your opinion? We’d like to know.

Don Mansfield

In January 1944, the Office of Strategic Services, a wartime intelligence agency and predecessor to the modern Central Intelligence Agency (CIA), issued Strategic Services Field Manual No.3 (Simple Sabotage Field Manual) to its agents to aid the Allied war effort in Europe. The purpose of the classified document was to explain the technique of simple sabotage, outline its possible effects, and present suggestions for inciting and executing it. It introduced the concept of simple sabotage as follows:

Quote

Sabotage varies from highly technical coup de main acts that require detailed planning and the use of specially trained operatives, to innumerable simple acts which the ordinary individual citizen-saboteur can perform. This paper is primarily concerned with the latter type. Simple sabotage does not require specially prepared tools or equipment; it is executed by an ordinary citizen who may or may not act individually and without the necessity for active connection with an organized group; and it is carried out in such a way as to involve minimum danger of injury, detection, and reprisal.

 

 

The manual goes on to describe two types of simple sabotage: destructive and nondestructive. Regarding the latter type, the manual explains that—       

Quote

 

“It is based on universal opportunities to make faulty decisions, to adopt a non-cooperative attitude, and to induce others to follow suit. Making a faulty decision may be simply a matter of placing tools in one spot instead of another. A non-cooperative attitude may involve nothing more than creating an unpleasant situation among one’s fellow workers, engaging in bickerings, or displaying surliness and stupidity.

This type of activity, sometimes referred to as the ‘human element,’ is frequently responsible for accidents, delays, and general obstruction even under normal conditions. The potential saboteur should discover what types of faulty decisions and non-cooperation are normally found in his kind of work and should then devise his sabotage so as to enlarge that ‘margin for error.’”

 

 

 

The manual has a section titled “Specific Suggestions for Simple Sabotage” that provides suggestions for how to execute simple sabotage for different targets. There are suggestions on how to innocently start fires in buildings, set off automatic sprinklers to ruin warehouse stock, change sign posts at intersections and forks, dilute gasoline with water, wine, or urine so it won’t combust, and other Dennis the Menace type hijinks. What seemed most familiar were the suggestions under “General Interference with Organizations and Production.” Here are a few:

Quote

 

(a)    Organizations and Conferences

 

(1)    Insist on doing everything through “channels.” Never permit short-cuts to be taken in order to expedite decisions.

(2)    Make “speeches.” Talk as frequently as possible and at great length. Illustrate your “points” by long anecdotes and accounts of personal experiences. Never hesitate to make a few appropriate “patriotic” comments.

(3)    When possible, refer all matters to committees, for “further study and consideration.” Attempt to make committees as large as possible—never less than five.

(4)    Bring up irrelevant issues as frequently as possible.

(5)    Haggle over precise wordings of communications, minutes, resolutions.

(6)    Refer back to matters decided upon at the last meeting and attempt to re-open the question of the advisability of that decision.

(7)    Advocate “caution.” Be “reasonable” and urge your fellow conferees to be “reasonable” and avoid haste which might result in embarrassments or difficulties later on.

(8)    Be worried about the propriety of any decision—raise the question of whether such action as is contemplated lies within the jurisdiction of the group or whether it might conflict with the policy of some higher echelon.

(b)    Managers and Supervisors

 

[…]

(9)    When training new workers, give incomplete or misleading instructions.

(10)  To lower morale and with it, production, be pleasant to inefficient workers; give them undeserved promotions. Discriminate against efficient workers; complain unjustly about their work.

(11)  Hold conferences when there is more critical work to be done.

(12)  Multiply paper work in plausible ways. Start duplicate files.

(13)  Multiply the procedures and clearances involved in issuing instructions, pay checks, and so on. See that three people have to approve everything where one would do.

(14)  Apply regulations to the last letter.

(c)    Office Workers

[…]

(7) Spread disturbing rumors that sound like inside dope

               (d) Employees

 

                       […]

(4) Pretend that instructions are hard to understand, and ask to have them repeated more than once. Or pretend that you are particularly anxious about your work, and pester the foreman with unnecessary questions.”

 

 

               The manual was declassified in 2008, but I suspect it fell in to enemy hands long before that. The question is, though, why is the enemy targeting Federal contracting offices?

Don Mansfield

I'm looking for feedback on a tool that I'm creating for DoD. Basically, it would be a single document that would contain the FAR, DFARS, DFARS PGI, and DoD Class Deviations. The concept is similar to that used in the General Services Administration Acquisition Manual (GSAM), where both regulatory (GSAR) and nonregulatory information is integrated into one document and distinguished by shading. The main difference is the document that I envision also contains the FAR. I've attached a sample of what an integrated FAR subpart 1.1, DFARS subpart 201.1, and DFARS PGI subpart 201.1 would look like. Take a look and let me know what you think. I'd appreciate any feedback, but I'm particularly interested in the following:

1. Would you use such a tool?

2. Is there a better way to distinguish between FAR, DFARS, and DFARS PGI text than the use of shading?

3. Do you have any ideas to make the tool better (more useful)?

Consolidated FAR, DFARS, DFARS PGI, DoD Class Deviations.docx

Don Mansfield

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

--Lewis Carroll, Through the Looking Glass

When Better Buying Power (BBP) 1.0 was first issued in September 2010, then Undersecretary of Defense for Acquisition, Technology, & Logistics (USD(AT&L)) Ashton Carter used the word “tradecraft” when describing one of the five “areas” of BBP initiatives. The area was called “Improving Tradecraft in Services Acquisition.” The initiatives that were subsequently identified under this area were:

· Create a senior manager for acquisition of services in each component, following the Air Force’s example

· Adopt uniform taxonomy for different types of services

· Address causes of poor tradecraft in services acquisition

· Increase small business participation in providing services

“Tradecraft” was also used by current USD(AT&L) Frank Kendall in the 2015 Defense Acquisition Performance Assessment:

The objective is to see how well we are doing, learn from these generalities, and change our policies and tradecraft as we seek to improve outcomes.

It would seem that both Carter and Kendall are using “tradecraft” to mean the knowledge and skills for a particular occupation. However, that’s not what “tradecraft” actually means, nor is it commonly used in that sense. According to Merriam-Webster online dictionary (www.m-w.com), “tradecraft” means “the techniques and procedures of espionage”. The Oxford English Dictionary (OED) online (www.oed.com), gave three definitions of “tradecraft” dating as far back as 1812:

a. A trade-guild

b. Skill or art in connection with a trade or calling; specifically skill in espionage and intelligence work

c. The craft or art of trading or dealing

In “’Tradecraft’ Infiltrates the Language” lexicographer Neal Whitman describes the resurgence of “tradecraft” in the language:

Tradecraft, which has been spy jargon since at least the 1960s, has been making its way into more mainstream consciousness recently, as we hear about operations like the search for Osama bin Laden, or about Edward Snowden's training as a spy. Maybe you were thinking that it referred to the knowledge and skills for any particular occupation, but tradecraft is a good example of how words, compounds, or phrases with seemingly transparent meanings can settle into semantic idiosyncrasy through historical circumstance.

Whitman uses a quote from Agent Maya in the movie Zero Dark Thirty to illustrate its most common use:

“Over the course of two months he's called home from six different pay phones, from two different cities, never using the same phone twice. And when his mother asked him where he was, he lied. He said that he was in a place in the country with bad cell reception—implying he was in the Tribals—but he was in Peshawar. I'm sorry, but that's not normal guy behavior. That's tradecraft.

The article continues:

These days, the most common meaning of tradecraft is indeed the one that Agent Maya had in mind. The Corpus of Contemporary American English, which contains 450 million words of English from 1990 through 2012, has 56 examples of tradecraft or trade craft, and of them only four (about 7%) do not have an espionage-related meaning. One of them refers author Paul Theroux's craft as a writer; one refers to medical skill; one refers to political savvy in dealing with upset constituents; and the last is a proper noun, apparently the name of an online travel advisory service (though I was unable to locate a current website for it). The remaining 93% of the COCA hits are more like these:

"Poor tradecraft, meeting in the open like this," Jake said.

It sure didn't sound like any CIA tradecraft I'd ever learned—but I wasn't going to argue.

Regarding the OED definition, Whitman explains:

However, tradecraft didn't start out with this intelligence-related meaning. The Oxford English Dictionary has it from 1812 with the meaning "the craft or art of trading or dealing." This citation from 1899 illustrates it well: "It is a lesson in tradecraft … to see how the girl holds her own with the dealers." And even now you can find examples like those lonely four that I found in COCA, as well as the occasional company name...

While it would not seem out of the ordinary to hear this use of “tradecraft” on an episode of Downton Abbey, the broad meaning of the word is virtually dead in Contemporary English. “Tradecraft” has settled into semantic idiosyncrasy. While I’m not above purloining a word from another field if I find no other word as apt, there are plenty of words that could have been used to describe the particular BBP area (“skill”, “expertise”, and “proficiency” come to mind). As acquisition professionals, we have a hard enough time communicating in the language of acquisition without adopting words from other fields (no matter how cool they sound). The Plain Language Action and Information Network (PLAIN) advises us to “understand your readers and match your language to their needs” (see http://www.plainlanguage.gov/howto/wordsuggestions/index.cfm). When choosing words, the objective should be to communicate, not to impress. Even if “tradecraft” meant what the authors of BBP thought it meant, its obscurity would still have made it a poor choice.

Eavesdropping, making dead drops, drycleaning--that's tradecraft. Creating senior manager positions in charge of service acquisition, adopting a uniform taxonomy for different types of services, increasing small business participation in service acquisition--that’s not tradecraft.

Don Mansfield

In a earlier blog entry, I posted a draft version of the provision at FAR 52.212-1 tailored for simplified acquisition procedures and requested comments. First, I'd like to thank everyone who provided comments. I believe the final version (below) is an improvement over the draft. Second, Carl Culham suggested that I include instructions on how to incorporate a tailored version of FAR 52.212-1 into a solicitation. I thought that was a good idea, so I will include instructions in this entry. Third, Vern Edwards tailored FAR 52.212-1 for SAP using plain language. His version is clear and easy to read, which may cause some of your lawyers and policy folks to balk at using it. If that's the case, you may want to refer them to plainlanguage.gov so they can familiarize themselves with the Federal Government's policy on the use of plain language to communicate with the public. Vern's plain language version is also posted below.

Incorporating a Tailored Version of FAR 52.212-1

FAR 12.302(d) contains the following guidance regarding tailoring:

Tailoring shall be by addenda to the solicitation and contract. The contracting officer shall indicate in Block 27a of the SF 1449 if addenda are attached. These addenda may include, for example, a continuation of the schedule of supplies/services to be acquired from blocks 18 through 21 of the SF 1449; a continuation of the description of the supplies/services being acquired; further elaboration of any other item(s) on the SF 1449; any other terms or conditions necessary for the performance of the proposed contract (such as options, ordering procedures for indefinite-delivery type contracts, warranties, contract financing arrangements, etc.).

According to the format prescribed at FAR 12.303(e)(2), the addendum to FAR 52.212-1 should be located with the solicitation provisions. The addendum should be clearly identified as such (e.g., "Addendum to FAR 52.212-1"). Carl Culham suggested, and I agree, that there should also be some kind of lead in statement that indicates that the version of FAR 52.212-1 in the addendum supersedes the version of FAR 52.212-1 contained in the FAR (e.g., "FAR 52.212-1 is replaced in its entirety by this addendum"). If using the streamlined solicitation for commercial items discussed at FAR 12.603, then you must include a statement that the provision at 52.212-1, Instructions to Offerors -- Commercial, applies to the acquisition and a statement regarding any addenda to the provision. The addendum should then be included in full text.

FAR 52.212-1 Tailored for SAP

Here's the final version of the provision at FAR 52.212-1 tailored for SAP:

Instructions to Quoters—Commercial Items

(a) North American Industry Classification System (NAICS) code and small business size standard. The NAICS code and small business size standard for this acquisition appear in Block 10 of the solicitation cover sheet (SF 1449). However, the small business size standard for a concern which submits a quotation in its own name, but which proposes to furnish an item which it did not itself manufacture, is 500 employees.

( b ) Submission of quotations. Submit quotations to the office specified in this solicitation at or before the exact time specified in this solicitation. Quotations may be submitted on the SF 1449, letterhead stationery, or as otherwise specified in the solicitation. As a minimum, quotations must show-

(1) The solicitation number;

(2) The time specified in the solicitation for receipt of quotations;

(3) The name, address, and telephone number of the quoter;

(4) A technical description of the items being quoted in sufficient detail to evaluate compliance with the requirements in the solicitation. This may include product literature, or other documents, if necessary;

(5) Terms of any express warranty;

(6) Price and any discount terms;

(7) “Remit to” address, if different than mailing address;

(8) A completed copy of the representations and certifications at FAR 52.212-3 (see FAR 52.212-3( b ) for those representations and certifications that the quoter shall complete electronically);

(9) Acknowledgment of Solicitation Amendments;

(10) Past performance information, when included as an evaluation factor, to include recent and relevant contracts for the same or similar items and other references (including contract numbers, points of contact with telephone numbers and other relevant information); and

(11) If the quotation is not submitted on the SF 1449, include a statement specifying the extent of agreement with all terms, conditions, and provisions included in the solicitation. Quotations that fail to furnish required representations or information, or reject the terms and conditions of the solicitation may be excluded from consideration.

( c ) Reserved.

(d) Product samples. When required by the solicitation, product samples shall be submitted at or prior to the time specified for receipt of quotations. Unless otherwise specified in this solicitation, these samples shall be submitted at no expense to the Government, and returned at the sender’s request and expense, unless they are destroyed during testing.

(e) Multiple quotations. Quoters are encouraged to submit multiple quotations presenting alternative terms and conditions or commercial items for satisfying the requirements of this solicitation. Each quotation submitted will be evaluated separately.

(f) Late submissions.

(1) Quoters are responsible for submitting quotations so as to reach the Government office designated in the solicitation by the time specified in the solicitation. If no time is specified in the solicitation, the time for receipt is 4:30 p.m., local time, for the designated Government office on the date that quotations are due.

(2) Any quotation received at the Government office designated in the solicitation after the exact time specified for receipt of quotations is late and will not be considered unless it is received before purchase order issuance and the Contracting Officer determines that accepting the late quotation would not unduly delay the acquisition.

(3) If an emergency or unanticipated event interrupts normal Government processes so that quotations cannot be received at the Government office designated for receipt of quotations by the exact time specified in the solicitation, and urgent Government requirements preclude amendment of the solicitation or other notice of an extension of the closing date, the time specified for receipt of quotations will be deemed to be extended to the same time of day specified in the solicitation on the first work day on which normal Government processes resume.

(g) Issuance of purchase order. Quotations should contain the quoter’s best technical and price terms. The Contracting Officer may reject any or all quotations. The Contracting Officer may issue a purchase order to other than the quoter with the lowest priced quotation. After the evaluation of quotations, the Contracting Officer may negotiate final terms with one or more quoters of the Government’s choice before issuing any purchase order. The Contracting Officer will not negotiate with any quoters other than those of the Government’s choice and will not use the formal source selection procedures described in FAR part 15.

(h) Multiple purchase orders. The Government may issue a purchase order for any item or group of items of a quotation, unless the quoter qualifies the quotation by specific limitations. Unless otherwise provided in the Schedule, quotations may not be submitted for quantities less than those specified. The Government reserves the right to issue a purchase order for a quantity less than the quantity quoted, at the unit prices quoted, unless the quoter specifies otherwise in the quotation.

(i) Availability of requirements documents cited in the solicitation.

(1)(i) The GSA Index of Federal Specifications, Standards and Commercial Item Descriptions, FPMR Part 101-29, and copies of specifications, standards, and commercial item descriptions cited in this solicitation may be obtained for a fee by submitting a request to-

GSA Federal Supply Service Specifications Section

Suite 8100

470 East L’Enfant Plaza, SW

Washington, DC 20407

Telephone (202) 619-8925

Facsimile (202) 619-8978.
(ii) If the General Services Administration, Department of Agriculture, or Department of Veterans Affairs issued this solicitation, a single copy of specifications, standards, and commercial item descriptions cited in this solicitation may be obtained free of charge by submitting a request to the addressee in paragraph (i)(1)(i) of this provision. Additional copies will be issued for a fee.

(2) Most unclassified Defense specifications and standards may be downloaded from the following ASSIST websites:

(i) ASSIST (https://assist.dla.mil/online/start/).

(ii) Quick Search (http://quicksearch.dla.mil/).

(iii) ASSISTdocs.com (http://assistdocs.com).

(3) Documents not available from ASSIST may be ordered from the Department of Defense Single Stock Point (DoDSSP) by-

(i) Using the ASSIST Shopping Wizard (https://assist.dla.mil/wizard/index.cfm);

(ii) Phoning the DoDSSP Customer Service Desk (215) 697-2179, Mon-Fri, 0730 to 1600 EST; or

(iii) Ordering from DoDSSP, Building 4, Section D, 700 Robbins Avenue, Philadelphia, PA 19111-5094, Telephone (215) 697-2667/2179, Facsimile (215) 697-1462.

(4) Nongovernment (voluntary) standards must be obtained from the organization responsible for their preparation, publication, or maintenance.

(j) Data Universal Numbering System (DUNS) Number. (Applies to all quotations exceeding $3,000, and quotations of $3,000 or less if the solicitation requires the Contractor to be registered in the System for Award Management (SAM) database.) The quoter shall enter, in the block with its name and address on the cover page of its quotation, the annotation “DUNS” or “DUNS+4” followed by the DUNS or DUNS+4 number that identifies the quoter’s name and address. The DUNS+4 is the DUNS number plus a 4-character suffix that may be assigned at the discretion of the quoter to establish additional SAM records for identifying alternative Electronic Funds Transfer (EFT) accounts (see FAR Subpart 32.11) for the same concern. If the quoter does not have a DUNS number, it should contact Dun and Bradstreet directly to obtain one. A quoter within the United States may contact Dun and Bradstreet by calling 1-866-705-5711 or via the internet at http://fedgov.dnb.com/webform. A quoter located outside the United States must contact the local Dun and Bradstreet office for a DUNS number. The quoter should indicate that it is a quoter for a Government contract when contacting the local Dun and Bradstreet office.

(k) System for Award Management. Unless exempted by an addendum to this solicitation, by submission of a quotation, the quoter acknowledges the requirement that a prospective contractor shall be registered in the SAM database prior to purchase order issuance, during performance and through final payment of any contract resulting from this solicitation. If the quoter does not become registered in the SAM database in the time prescribed by the Contracting Officer, the Contracting Officer will proceed to issue the purchase order to the next otherwise successful registered quoter. Quoters may obtain information on registration and annual confirmation requirements via the SAM database accessed through https://www.acquisition.gov.

(l) Requests for information. The contracting officer will not notify unsuccessful quoters that responded to this solicitation. Quoters may request information on purchase order(s) resulting from this solicitation from the contracting officer.

FAR 52.212-1 Tailored for SAP (Plain Language Version)

Here's Vern's plain language version of FAR 52.212-1 tailored for SAP:

INSTRUCTIONS TO QUOTERS

Submitting your quote. Submit your company’s quote in writing and on paper to the address specified in Block __ of this Request For Quotes (RFQ). You may submit more than one quote. If you do, we will evaluate each separately.

Submission deadline. We must receive your quote at the address specified in Block __ by the deadline specified in Block __. We will not consider any quote that we receive after the deadline unless we receive it before we issue a purchase order and considering it will not delay our purchase. In case of an emergency that delays our operations and makes submission or receipt of your quote impossible, we will extend the deadline by one working day.

Terms and content of your quote. Your quote must be based on the terms of this RFQ. We might reject any quote that is not based on these terms in every respect. Your quote must contain all of the information described below.

Small Business Status. In order to submit a quote, you must know whether your company is a small business. The small business size standard that applies to this purchase is stated in Block __ of the cover sheet of this RFQ, along with the North American Industry Classification System (NAICS) code on which it is based. Regardless of the information in Block __, the small business size standard is 500 employees if you are submitting your quote in your own name but intend to provide a product that you did not manufacture yourself.

Issuance of purchase order. Your quote should contain your best terms. The Contracting Officer may reject any or all quotes. After the evaluation of quotes, the Contracting Officer may negotiate final terms with one or more quoters of the Government’s choice before issuing a purchase order. The Contracting Officer will not negotiate with any quoters other than those of the Government’s choice and will not use the formal source selection procedures described in FAR Part 15.

The Contracting Officer may issue a purchase order to other than the quoter with the lowest price. We might issue multiple orders, purchasing various items or groups of items from different quoters. We might issue an order for less than the quantity on which your quote is based, at the quoted price, unless you tell us that you will not accept an order on that basis.

Information to be submitted. Put the following information on the first page of your quote:

1. the number of this RFQ;

2. your company name, address, DUNS number (see below) and telephone number;

3. your price and any discount terms;

4. acknowledgement of any amendments to this RFQ; and

5. a statement that you assent to all terms of this RFQ.

Beginning on the second page of your quote, provide the following information in the following order:

1. a detailed description of the product or service that you will provide, including any product or service literature that you wish to give us;

2. the terms of any express warranty;

3. your payment address;

4. references to current or former customers who will attest to the quality of your product or service in the within the past three years, including (i) customer name, (ii) customer address, (iii) contract or purchase order numbers, (iv) persons to contact, and (v) telephone numbers.

Product samples. If this RFQ requires that you submit product samples, you must deliver them to us at the location specified for our receipt on or before the deadline for submission of your quote. We will not pay for the samples, and we will return them to you only upon request and at your expense, unless they are destroyed during testing.

Availability of Government Documents. If the descriptions in this RFQ of the products or services we want to buy refer to any Government specification, standard, or commercial item description, you may obtain a copy of any such documents from the places listed in Federal Acquisition Regulation 52.212-1, paragraph (i).

System for Award Management (SAM). Unless exempted by the Contracting Officer, you must register in SAM before we will issue a purchase order to you. If you do not register by the date set by the Contracting Officer, the Contracting Officer might issue the order to a different quoter. Once registered, you must remain registered throughout performance until final payment. Go tohttps://www.acquisition.gov for information on SAM registration and annual confirmation.

DUNS Number (Data Universal Numbering System Number). [This applies to all quote if the solicitation requires that you be registered in the System for Award Management (SAM).] Place the annotation “DUNS” or “DUNS+4” next to your name and address on the first page of your quote followed by the DUNS or DUNS+4 number that identifies the quoter’s name and address.

If you do not have a DUNS number, contact Dun and Bradstreet to obtain one. If you are located within the United States, you may contact Dun and Bradstreet by calling 1-866-705-5711 or via the internet at http://fedgov.dnb.com/webform.

If you are located outside the United States, you must contact the local Dun and Bradstreet office for a DUNS number. Tell Dun and Bradstreet that you are a quoter for a Government contract when contacting the local Dun and Bradstreet office.

The DUNS+4 is the DUNS number plus a 4-character suffix that you may use at your discretion to establish additional SAM records for identifying alternative Electronic Funds Transfer (EFT) accounts (see FAR Subpart 32.11) for your company.

I hope some of you will try these provisions. If you do, let us know how it goes.

Don Mansfield

In Latvian Connection General Trading and Construction LLC, B-408633, September 18, 2013, the Comptroller General denied a protest of a solicitation issued by an Air Force unit in Oman for armored cable to be used at Thumrait Air Base, Oman. At issue was the Air Force’s decision to not automatically reserve the acquisition for small business concerns, which both the protester and the Small Business Administration (SBA) argued was required under the Small Business Act. The protester relied on 15 U.S.C. § 644(j)(1), which states:

“Each contract for the purchase of goods and services that has an anticipated value greater than $2,500 but not greater than $100,000 shall be reserved exclusively for small business concerns unless the contracting officer is unable to obtain offers from two or more small business concerns that are competitive with market prices and are competitive with regard to the quality and delivery of the goods or services being purchased.”

[Note: these thresholds have since been raised by the FAR Council. See FAR 19.502-2( a ).]

The SBA implemented this statutory provision at 13 C.F.R. § 125.2(f)(1), which states that contracting officers (COs):

...shall set aside any acquisition with an anticipated dollar value exceeding the Micropurchase Threshold but not exceeding the Simplified Acquisition Threshold . . . for small business concerns when there is a reasonable expectation that offers will be obtained from at least two small business concerns that are competitive in terms of quality and delivery and award will be made at fair market prices.

The Air Force argued that the automatic reservation, which is stated at FAR 19.502-2(a), did not apply because the acquisition was outside the United States and its outlying areas. The Air Force relied on FAR 19.000( b ), which states:

This part [Part 19-Small Business Programs], except for subpart 19.6 [Certificates of Competency], applies only in the United States or its outlying areas. Subpart 19.6 applies worldwide.

The Comptroller General sought the views of the SBA regarding the geographical restriction at FAR 19.000( b ). In its comments, the SBA argued that this regulatory “statement of policy” does not properly implement Small Business Act requirements. Further, the SBA noted that elsewhere the Small Business Act exempts certain provisions from applying outside the United States. Thus, if Congress wanted to place a geographical restriction on § 644(j)(1), it would have done so.

Siding with the Air Force, the Comptroller General stated:

“Given the silence of the Small Business Act with respect to the application of § 644(j)(1) outside the United States and its outlying areas, we cannot say that the validly-promulgated, long-standing regulation found at FAR § 19.000( b ) is inconsistent with, or contrary to, the Small Business Act. This FAR provision is also not inconsistent with the SBA’s own regulation implementing § 644(j)(1). Although the SBA disagrees with how the Federal Acquisition Regulatory Council has interpreted the Small Business Act in this regard, and states that our Office is required to give deference to the SBA’s interpretation of the Act, the SBA’s interpretation reflects its informal legal opinion. The SBA’s view of the statute-- which is not reflected in its own implementing regulation despite the existence of the government-wide FAR rule for decades--does not overcome the deference accorded to the FAR.”

This logic suggests that had the FAR Council exempted Kansas City, Missouri, from the application of § 644(j)(1), that would have been okay, too.

The New SBA Regulations

Fast-forward two weeks to October 2, 2013. The SBA issued a final rule amending its regulations governing small business contracting procedures (see 78 FR 61114). 13 C.F.R. § 125.2 was amended as follows:

“(a)…Small business concerns must receive any award (including orders, and orders placed against Multiple Award Contracts) or contract, part of any such award or contract, and any contract for the sale of Government property, regardless of the place of performance, which SBA and the procuring or disposal agency determine to be in the interest of:…”

[…]

( c ) Procuring Agency Responsibilities—(1) Requirement to Foster Small Business Participation. The Small Business Act requires each Federal agency to foster the participation of small business concerns as prime contractors and subcontractors in the contracting opportunities of the Government regardless of the place of performance of the contract…”

[underlining added].

Although the amended SBA regulation seemingly put to bed the issue of the geographical restriction stated at FAR 19.000( b ), the FAR Council has taken no action to amend the FAR (see “FAR Open Cases Report” at http://www.acq.osd.mil/dpap/dars/far_case_status.html).

Where are We Now?

On July 14, 2014, Latvian Connection, LLC, (Latvian) filed a protest with the Government Accountability Office (GAO) (B-410081.1) of a State Department solicitation for spare and replacement parts for the United States Consulate General in Dubai, United Arab Emirates (Solicitation No. 3458493). One of the bases of the protest was the State Department’s decision to not automatically reserve the acquisition for small business concerns. The Comptroller General sought the views of the SBA. In a letter to the GAO, the SBA explained their position as follows:

“State argues that the GAO decision of Latvian Connection General Trading and Construction LLC, B-408633, Sept. 18, 2013, 2013 CPD ¶ 224, applies here. In that case, GAO ruled that FAR 19.000( b ) limits the application of FAR part 19 (dealing with the SBA’s small business programs) to acquisitions conducted in the United States (and its outlying areas). We believe the basis for GAO’s ruling was that SBA’s regulations were silent on this issue and therefore, the more specific FAR regulation controlled.”

“Heeding this advice, SBA recently promulgated regulations to address this issue. Specifically, SBA made wholesale changes to 13 CFR § 125.2 on October 2, 2013.”

[Letter from SBA to GAO, dtd. 25 August 2014, RE: B-410081 Protest of Latvian Connection, LLC]. The letter went on to reference the changes to 13 CFR § 125.2 shown above. The protest against the State Department solicitation was subsequently dismissed on other grounds.

On December 10, 2014, Latvian filed a protest with the GAO (B-410921) of an Army solicitation for the installation of canopy sunshades on Camp Arifjan, Kuwait (Solicitation No. W912D1-15-R-0004). Again, Latvian argued that the acquisition should have been automatically reserved for small business as required by the Small Business Act and the newly amended SBA regulations. Presumably understanding that they would be fighting a losing battle, the Army amended the solicitation to automatically reserve it for small business concerns and the protest was dismissed. The description block of the amendment contained the following statement:

“The purpose of this amendment is to cancel the solicitation in its entirety and pursue a revised acquisition strategy considering small business set-aside requirements, without regard to Federal Acquisition Regulation (FAR) Part 19.000( b ).”

[Amendment 0004 to W912D1-15-R-0004]

Conclusion

As it stands, overseas COs and small business concerns seeking overseas contracting opportunities are in a tough spot. Overseas COs must deviate from the FAR to comply with the Small Business Act and SBA regulations. Small business concerns seeking overseas contracting opportunities are dealing with contracting officers that are blissfully ignorant of the changes to the SBA regulations due to the longstanding geographical restriction stated at FAR 19.000( b ). It may take nothing short of a GAO protest to get overseas COs to pay attention to the amended SBA regulations.

The ball is squarely in the FAR Council’s court. It needs to revisit FAR 19.000( b ) in light of the amended SBA regulations. If there is a legal argument for keeping the geographical restriction at FAR 19.000( b ), then the Office of Federal Procurement Policy should issue guidance to that effect to agencies. If there is no legal argument for keeping FAR 19.000( b ), then it should be removed. Sitting back and letting overseas COs and small business concerns fight it out solicitation by solicitation is not fair to either party.

Don Mansfield

I recently gave a course on simplified acquisition procedures where I was again confronted with the use of the provision at FAR 52.212-1 Instructions to Offerors--Commercial Items in requests for quotations (RFQs) issued pursuant to FAR part 13. (We discussed this issue in the Wifcon forum before here and here). The problem is that the provision was not designed for use in RFQs under FAR part 13. To begin with, the provision requests "offers"--not quotations--which are different (see the definition of "offer" at FAR 2.101). The provision also includes elements that don't apply when requesting quotations under FAR part 13 (e.g., a minimum offer acceptance period, the dreaded late proposal rule, instructions on how to withdraw offers, a statement of intention to award without discussions, debriefing information, etc.). Although the FAR permits tailoring of FAR 52.212-1, it is typically just incorporated by reference without tailoring. I've wanted to create a version of FAR 52.212-1 tailored for SAP for a long time and I promised my last class that I would. As such, I submit my first draft to the Wifcon community for comment below. I've also created a side-by-side comparison of the untailored version of FAR 52.212-1 and my draft version that you can access here.

Instructions to Quoters—Commercial Items

(a) North American Industry Classification System (NAICS) code and small business size standard. The NAICS code and small business size standard for this acquisition appear in Block 10 of the solicitation cover sheet (SF 1449). However, the small business size standard for a concern which submits a quotation in its own name, but which proposes to furnish an item which it did not itself manufacture, is 500 employees.

( b ) Submission of quotations. Submit quotations to the office specified in this solicitation at or before the exact time specified in this solicitation. Quotations may be submitted on the SF 1449, letterhead stationery, or as otherwise specified in the solicitation. As a minimum, quotations must show-

(1) The solicitation number;

(2) The time specified in the solicitation for receipt of quotations;

(3) The name, address, and telephone number of the quoter;

(4) A technical description of the items being quoted in sufficient detail to evaluate compliance with the requirements in the solicitation. This may include product literature, or other documents, if necessary;

(5) Terms of any express warranty;

(6) Price and any discount terms;

(7) “Remit to” address, if different than mailing address;

(8) A completed copy of the representations and certifications at FAR 52.212-3 (see FAR 52.212-3( b ) for those representations and certifications that the quoter shall complete electronically);

(9) Acknowledgment of Solicitation Amendments;

(10) Past performance information, when included as an evaluation factor, to include recent and relevant contracts for the same or similar items and other references (including contract numbers, points of contact with telephone numbers and other relevant information); and

(11) If the quotation is not submitted on the SF 1449, include a statement specifying the extent of agreement with all terms, conditions, and provisions included in the solicitation. Quotations that fail to furnish required representations or information, or reject the terms and conditions of the solicitation may be excluded from consideration.

( c ) Product samples. When required by the solicitation, product samples shall be submitted at or prior to the time specified for receipt of quotations. Unless otherwise specified in this solicitation, these samples shall be submitted at no expense to the Government, and returned at the sender’s request and expense, unless they are destroyed during preaward testing.

(d) Multiple quotations. Quoters are encouraged to submit multiple quotations presenting alternative terms and conditions or commercial items for satisfying the requirements of this solicitation. Each quotation submitted will be evaluated separately.

(e) Late submissions.

(1) Quoters are responsible for submitting quotations so as to reach the Government office designated in the solicitation by the time specified in the solicitation. If no time is specified in the solicitation, the time for receipt is 4:30 p.m., local time, for the designated Government office on the date that quotations are due.

(2) Any quotation received at the Government office designated in the solicitation after the exact time specified for receipt of quotations is late and will not be considered unless it is received before award is made and the Contracting Officer determines that accepting the late quotation would not unduly delay the acquisition.

(3) If an emergency or unanticipated event interrupts normal Government processes so that quotations cannot be received at the Government office designated for receipt of quotations by the exact time specified in the solicitation, and urgent Government requirements preclude amendment of the solicitation or other notice of an extension of the closing date, the time specified for receipt of quotations will be deemed to be extended to the same time of day specified in the solicitation on the first work day on which normal Government processes resume.

(f) Contract award. The Government intends to evaluate quotations and issue a purchase order based on the initial quotations received. Therefore, the quoter’s initial quotation should contain the quoter’s best terms from a price and technical standpoint. The Government reserves the right to request revised quotations from, or negotiate final purchase order terms with, one or more, but not all, quoters if later determined by the Contracting Officer to be necessary. However, the Contracting Officer will not establish a competitive range, conduct discussions, or otherwise use the procedures described at FAR 15.306. The Government may reject any or all quotations if such action is in the public interest; and issue a purchase order to other than the quoter with the lowest priced quotation.

(g) Multiple awards. The Government may issue a purchase order for any item or group of items of a quotation, unless the quoter qualifies the quotation by specific limitations. Unless otherwise provided in the Schedule, quotations may not be submitted for quantities less than those specified. The Government reserves the right to make an award on any item for a quantity less than the quantity quoted, at the unit prices quoted, unless the quoter specifies otherwise in the quotation.

(h) Availability of requirements documents cited in the solicitation.

(1)(i) The GSA Index of Federal Specifications, Standards and Commercial Item Descriptions, FPMR Part 101-29, and copies of specifications, standards, and commercial item descriptions cited in this solicitation may be obtained for a fee by submitting a request to-

GSA Federal Supply Service Specifications Section

Suite 8100

470 East L’Enfant Plaza, SW

Washington, DC 20407

Telephone (202) 619-8925

Facsimile (202) 619-8978.
(ii) If the General Services Administration, Department of Agriculture, or Department of Veterans Affairs issued this solicitation, a single copy of specifications, standards, and commercial item descriptions cited in this solicitation may be obtained free of charge by submitting a request to the addressee in paragraph (h)(1)(i) of this provision. Additional copies will be issued for a fee.

(2) Most unclassified Defense specifications and standards may be downloaded from the following ASSIST websites:

(i) ASSIST (https://assist.dla.mil/online/start/).

(ii) Quick Search (http://quicksearch.dla.mil/).

(iii) ASSISTdocs.com (http://assistdocs.com).

(3) Documents not available from ASSIST may be ordered from the Department of Defense Single Stock Point (DoDSSP) by-

(i) Using the ASSIST Shopping Wizard (https://assist.dla.mil/wizard/index.cfm);

(ii) Phoning the DoDSSP Customer Service Desk (215) 697-2179, Mon-Fri, 0730 to 1600 EST; or

(iii) Ordering from DoDSSP, Building 4, Section D, 700 Robbins Avenue, Philadelphia, PA 19111-5094, Telephone (215) 697-2667/2179, Facsimile (215) 697-1462.

(4) Nongovernment (voluntary) standards must be obtained from the organization responsible for their preparation, publication, or maintenance.

(i) Data Universal Numbering System (DUNS) Number. (Applies to all quotations exceeding $3,000, and quotations of $3,000 or less if the solicitation requires the Contractor to be registered in the System for Award Management (SAM) database.) The quoter shall enter, in the block with its name and address on the cover page of its quotation, the annotation “DUNS” or “DUNS+4” followed by the DUNS or DUNS+4 number that identifies the quoter’s name and address. The DUNS+4 is the DUNS number plus a 4-character suffix that may be assigned at the discretion of the quoter to establish additional SAM records for identifying alternative Electronic Funds Transfer (EFT) accounts (see FAR Subpart 32.11) for the same concern. If the quoter does not have a DUNS number, it should contact Dun and Bradstreet directly to obtain one. A quoter within the United States may contact Dun and Bradstreet by calling 1-866-705-5711 or via the internet at http://fedgov.dnb.com/webform. A quoter located outside the United States must contact the local Dun and Bradstreet office for a DUNS number. The quoter should indicate that it is a quoter for a Government contract when contacting the local Dun and Bradstreet office.

(j) System for Award Management. Unless exempted by an addendum to this solicitation, by submission of a quotation, the quoter acknowledges the requirement that a prospective awardee shall be registered in the SAM database prior to award, during performance and through final payment of any contract resulting from this solicitation. If the Quoter does not become registered in the SAM database in the time prescribed by the Contracting Officer, the Contracting Officer will proceed to award to the next otherwise successful registered Quoter. Quoters may obtain information on registration and annual confirmation requirements via the SAM database accessed throughhttps://www.acquisition.gov.

(k) Requests for information. The contracting officer will not notify unsuccessful quoters that responded to this solicitation. Quoters may request information on award(s) resulting from this solicitation from the contracting officer.

Please provide comments and questions below.

Don Mansfield

In a recent DoD IG report, the Army Contracting Command was cited for its failure to perform "component assessments" on 23 contracts subject to the Buy American Act (see DoD IG Report No. 2015-026). The report states as follows:

ACC contracting personnel did not complete component assessments for 23 contracts. DFARS 252.225-7001(a) (3) (ii) (A) requires contracting officers to determine whether the cost of the end product and its components that are mined, produced, or manufactured in the United States or qualifying country exceed 50 percent of the cost of all components. However, for 16 of the 36 contracts for commercial items reviewed, ACC contracting personnel did not distinguish between commercial items that require an assessment and commercial off-the-shelf items that do not require an assessment. In addition, for 7 of the 14 contracts for non-commercial items reviewed, ACC contracting personnel did not complete component assessments to determine compliance with the Buy American Act.

Not having ever heard of such a requirement, I checked the reference to this requirement, which was allegedly located in DFARS 252.225-7001( a )(3)(ii)(A). DFARS 252.225-7001 is a contract clause entitled "Buy American Act and Balance of Payments Program". The clause does not contain "( a )(3)(ii)(A)", but it does contain a paragraph "( a )". Paragraph ( a ) defines, for purposes of their use in the clause, the terms "Commercially available off-the-shelf (COTS) item", "component", "domestic end product", "end product", "foreign end product", "qualifying country", "qualifying country component", "qualifying country end product", and "United States". The paragraph does not require the contracting officer to do anything. In fact, it doesn't require that anybody do anything--it merely defines words and terms. The balance of the clause imposes an explicit requirement on the contractor in paragraph ( c ) and an implied requirement on the contractor in paragraph ( d ):

(b ) This clause implements 41 U.S.C chapter 83, Buy American. In accordance with 41 U.S.C. 1907, the component test of the Buy American statute is waived for an end product that is a COTS item (see section 12.505(a)(1) of the Federal Acquisition Regulation). Unless otherwise specified, this clause applies to all line items in the contract.

(c ) The Contractor shall deliver only domestic end products unless, in its offer, it specified delivery of other end products in the Buy American--Balance of Payments Program Certificate provision of the solicitation. If the Contractor certified in its offer that it will deliver a qualifying country end product, the Contractor shall deliver a qualifying country end product or, at the Contractors option, a domestic end product.

(d) The contract price does not include duty for end products or components for which the Contractor will claim duty-free entry.

Nothing in the entire clause requires the contracting officer to do anything. The terms "contracting officer" and "component assessment" do not appear in the clause. The term "component test" appears once--in paragraph ( b ) (see above). No duty of the contracting officer can reasonably be inferred.

When read together with the provision at DFARS 252.225-7000, it is clear that any assessment of end item components should be done by an offeror when determining how to complete the certification in DFARS 252.225-7000( c ):







      • Certifications and identification of country of origin.
      • (1) For all line items subject to the Buy American and Balance of Payments ProgramBasic clause of this solicitation, the offeror certifies that
        (2) The offeror certifies that the following end products are qualifying country end products:
      • (i) Each end product, except those listed in paragraphs ©(2) or (3) of this provision, is a domestic end product; and
        (ii) For end products other than COTS items, components of unknown origin are considered to have been mined, produced, or manufactured outside the United States or a qualifying country.




      • Line Item Number


        Country of Origin





      • (3) The following end products are other foreign end products, including end products manufactured in the United States that do not qualify as domestic end products, i.e., an end product that is not a COTS item and does not meet the component test in paragraph (ii) of the definition of domestic end product:




      • Line Item Number


        Country of Origin (If known)





      • (End of provision)






      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

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      [*]

I assume that the Army Contracting Command pointed out the flawed assumption that the IG had made when responding to the audit. Let me just check their response to this finding to be sure:

The Deputy to the Commanding General, U.S. Army Contracting Command, responding for the Commanding General, Army Contracting Command, agreed with the findings and the recommendations, stating Army Contracting Command personnel would receive training on the distinction between commercial and commercial off-the-shelf items, as well as how to perform component assessments and the requirements to include the Buy American Act implementing clauses. In addition, Army Contracting Command will require contracting personnel to take Buy American Act training offered by the Defense Acquisition University. The training will be mandatory for all contracting personnel in FY 2015.

Oh, well. Get ready ACC contracting personnel--you will soon be receiving a policy memo requiring you to take CLC 027 Buy American Act. And no, it does not contain guidance on how contracting officers are to perform "component assessments".

Don Mansfield

Section 1331 of the Small Business Jobs Act of 2010 (Pub.L. 111-240) recognizes the significant opportunities that exist to increase small business participation on multiple award contracts and the ability of set-asides— the most powerful small business contracting tool—to unlock these opportunities. Under Section 1331, Federal agencies may: (1) set aside part or parts of multiple award contracts for small business; (2) reserve one or more awards for small businesses on multiple award contracts that are established through full and open competition; and (3) set aside orders under multiple award contracts awarded pursuant to full and open competition that have not been set-aside or partially set-aside, nor include a reserve for small businesses.

You can download the article "Section 1331 Authorities: A Primer" by clicking here.

Don Mansfield

In competitive acquisitions, it is common for solicitations to require offerors to conduct surveys of their past and present customers using standard questionnaires developed by the contracting office. Offerors are typically instructed to send the questionnaires to their customers with instructions to send the completed surveys to the contracting office. This information is then used to evaluate the offeror past performance. In effect, individual contracting offices have shifted the burden for collecting information about offeror past performance to the public.

The problem with this practice is that it is done without regard for the requirements of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) (PRA). The PRA imposes a requirement on Federal agencies to obtain approval from the Office of Management and Budget (OMB) before collecting information from 10 or more members of the public. 44 U.S.C. § 3502 defines “collection of information” as—

the obtaining, causing to be obtained, soliciting, or requiring the disclosure to third parties or the public, of facts or opinions by or for an agency, regardless of form or format, calling for either--

(i) answers to identical questions posed to, or identical reporting or recordkeeping requirements imposed on, ten or more persons, other than agencies, instrumentalities, or employees of the United States; or

(ii) answers to questions posed to agencies, instrumentalities, or employees of the United States which are to be used for general statistical purposes…”

As part of the approval process, 44 U.S.C. § 3506©(2)(A) generally requires that each agency—

“provide 60-day notice in the Federal Register, and otherwise consult with members of the public and affected agencies concerning each proposed collection of information, to solicit comment to--

(i) evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;

(ii) evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information;

(iii) enhance the quality, utility, and clarity of the information to be collected; and

(iv) minimize the burden of the collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology”

OMB approval of a proposed collection of information or recordkeeping requirement is manifested in the issuance of a valid OMB control number. FAR 1.106 contains a list of approved information collections and OMB control numbers relating to Federal acquisition. The list includes, among other things, solicitation provisions requiring offerors to provide certain types of information in their proposals to the Government. For example, the requirement for offerors to provide certified cost or pricing data or data other than certified cost or pricing data is approved under OMB Control Number 9000-0013. The approval granted by OMB is not permanent, which is why the FAR Council will periodically publish their intent to request an extension of an existing OMB clearance in the Federal Register and provide an opportunity for public comment. Denial of OMB approval would render the information collection or recordkeeping requirement unlawful and, arguably, unenforceable if contained in a solicitation provision. To this point, 5 CFR 1320.6 states:

(a) Notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information that is subject to the requirements of this part if:

(1) The collection of information does not display, in accordance with § 1320.3(f) and § 1320.5( B)(1), a currently valid OMB control number assigned by the Director [of OMB] in accordance with the [Paperwork Reduction Act of 1995] Act; or

(2) The agency fails to inform the potential person who is to respond to the collection of information, in accordance with § 1320.5( B)(2), that such person is not required to respond to the collection of information unless it displays a currently valid OMB control number.

In addition to periodically requesting the extension of existing OMB approvals for collections of information, the FAR Council must address compliance with the Paperwork Reduction Act in FAR rules published in the Federal Register. Typically, the Federal Register notice will either state that the rule does not contain any information collection requirements or that any information collection requirements are currently covered by an existing OMB clearance. If the FAR Council is imposing a new information collection requirement, the notice will contain an estimate of the administrative burden and solicit public comments.

One need only look at the nearest competitive solicitation to conclude that contracting offices don’t pay much attention to these requirements. Despite the public protection provision of the PRA, it is unlikely that offerors will exercise their rights for fear of reprisal. As a result, the public will continue to absorb this administrative burden—a burden that is ultimately passed on to the Government in the form of higher overhead costs.

Don Mansfield

I have recently noticed an interesting phenomena regarding how the term "statement of work" is being used and understood in practice. If what many of my students are being taught in their contracting offices is any indication, "statement of work" (SOW) has come to mean a work statement that is not performance-based--the opposite, if you will, of a "performance work statement." Why is this happening? The definition of "performance work statement" (PWS) at FAR 2.101 could not be more clear:

“Performance Work Statement (PWS)” means a statement of work for performance-based acquisitions that describes the required results in clear, specific and objective terms with measurable outcomes.

A PWS is an SOW--an SOW for performance-based acquisitions.

In researching the origin of this phenomena, I came across the "A COR's Guide to Statements of Work, Performance Work Statements, and Statements of Objectives". Citing nothing, the author asserts the following regarding SOWs:

SOWs are detailed descriptions telling the contractor what to do and how to do it. By describing the work in such detail, the Government essentially provides the preferred approach or solution to the problem and locks in the approach the contractor must take. The danger of this method, of course, is that if the contractor follows the government's SOW and the result is unacceptable, it is the government's fault.

The guide goes on to explain the difference between the SOW and the PWS:

The distinguishing difference between a SOW and a PWS is that the PWS does not tell the contractor how to do the work, but rather describes the work in terms of outcomes or results. As an example, let's use mowing a lawn. A SOW would define how and when to mow the lawn (the contractor shall mow the grass once a week using a gasoline-powered lawn mower set at a two-inch height), whereas a PWS would define the required outcome (the contractor shall mow the grass so that it is maintained at a level that is two to four inches at all times). The SOW requirement does not take into account seasonal variations, such as weeks when it rains continuously and weeks when it does not rain at all and the grass does not grow. The PWS attains the same objective--maintaining the grass at a certain height--but without dictating how often it must be done.

Sigh. Believe it or not people were charged for this misinformation--the fine print of the guide says that it is part of a subscription service. Ironically, the article refers the reader to the "Seven Steps" library, which also contains the DoD Handbook for the Preparation of Statement of Work (SOW) (MIL-HDBK-245D). Paragraph 3.1 of the Handbook contains the following description of the purpose of the SOW:

The SOW should specify in clear, understandable terms the work to be done in developing or producing the goods to be delivered or services to be performed by a contractor. Preparation of an effective SOW requires both an understanding of the goods or services that are needed to satisfy a particular requirement and an ability to define what is required in specific, performance-based, quantitative terms.

Emphasis added.

The truth is that some SOWs are performance-based, some are not. We refer to those that are as PWSs.

Don Mansfield

In a recent blog post, Steve Kelman took issue with GSA for the way they intend to evaluate past performance under the One Acquisition Solution for Integrated Services (OASIS) procurement (see “GSA is Saying What?"). Specifically, the evaluation scheme in the draft request for proposals (RFP) shows that GSA intends to weigh past performance with federal customers more heavily than past performance with nonfederal customers (the draft RFP is available for viewing on FedBizOpps). Kelman says that GSA’s approach is “not a good idea” and is hopeful that the OASIS program will “rectify this mistake.”

Kelman seems to acknowledge the uniqueness of the Government as a buyer and describes the accompanying problems as follows—

One of the problems with the government's procurement system is that government-unique regulations create a barrier to commercial, predominantly private-sector oriented companies doing more business in the government marketplace. This is a problem because -- like any tariff barrier -- it creates a hothouse environment where competition is lower and insiders can gain business based on mastery of procurement rules more than satisfying their customers. And the commercial environment is one where performance is strongly prioritized, and failure to perform is punished more swiftly than in a government environment. It's good for the government to hire firms that are used to such an environment.

Further, Kelman states—

Some government folks feel more comfortable with government-unique contractors who know the government's environment better. But if I were in the government and wanted to put a premium on performance, I would want to be sure I had access to predominantly commercial firms. At a minimum, such firms should be in a multiple-award mix, to increase the range of options available to government customers.

Kelman’s argument boils down to this—nontraditional Government contractors (what Kelman terms “commercial firms”) would be just as good, if not better, than traditional Government contractors (what Kelman terms “government-unique” contractors) at performing the work. That may be so, but it would be naïve to ignore the risk posed by an offeror with no Government contracting experience. Such an offeror will be faced with having to comply with a plethora of rules and regulations that would be new to them. In a blog post, Vern Edwards describes the situation as follows (see “Tips for the Would-be Clueless Contractor”):

Many small to medium sized companies go into government contracting without any idea of what they are getting themselves into. That might be okay with very small sales, but, otherwise, contracting with the U.S. government is the most complex business in the world. It’s right up there with trading derivatives. There are countless rules and contract clauses, many of which are exceedingly hard to understand.

As a buyer, there is value in an offeror having sold to you before—if for no other reason that the parties have a better idea of what to expect from each other. If this were not true, preferred supplier programs would not be so popular with the “commercial firms” that Kelman advocates for. If you are an extraordinarily unique buyer, like the U.S. Government, there is even greater value in an offeror that has sold to you before.

I don’t fault GSA for having a preference for offerors with more Government contracting experience. This is especially true given that the OASIS contracts will be noncommercial and will provide for orders on a cost-reimbursement basis. GSA did not make Government contracting as complicated for contractors as it is. If we want to criticize the procurement system, there’s plenty to talk about. But we shouldn’t react with feigned surprise and indignation when an agency is taking reasonable steps to operate within it.

Don Mansfield

This morning I read two different threads in the Wifcon forum. In the first thread, the discussion centered on late Government payments. (See “Significant Delays in voucher review/approval”). Some of the participants shared stories of how the Government does not consistently respect contractual payment due dates. Because some contractors are reluctant to enforce their rights under the payment clauses of their contracts, the Government continues to take advantage of them. One poster put it this way:

The way contractors frequently react to being abused by contracting officers is the same way many battered spouses react to the batterer "if I am just nicer to him/her, (s)he will stop beating me." However, it just doesn't work.

I was embarrassed for the Government after reading this thread. Then, I read the following advice (from a different poster) in a thread dealing with how the limitation on subcontracting clause is applied (see "Small bus Set Aside 50%, can pass part of that to another Small?"):

Limitations on Subcontracting is often not enforced.

Some strategies I've seen attempted to escape LD:

*** treating it like a subKt plan target, I've seen missing the "target" rationalized by the SB Prime, and that accepted by the CO - in writing.

*** Prime arguing the nature of the work ("it's not services, it's construction.")

*** arguing that the nature of the work changed, and the Prime no longer had organic capacity.

*** teaming after the fact.

If there are no Liquidated Damages stated in the Prime Kt for missing this, maybe you can skate.

The underlying message: “it’s ok to take advantage of the fact that the government does not enforce this right under the contract.” After reading this, it became clear that Government personnel really aren’t that different than contractor personnel. On both sides, there will be those that respect the rights of the other party under the contract and those whose behavior is guided by what they can get away with. I think we should all strive to be included in the former group. Those in the latter group have little right to cry foul when they find themselves on the opposite sides of a contract.

Don Mansfield

I read a lot of rules—proposed rules, interim rules, final rules, second proposed rules, second interim rules, etc. In fact, I decided a year or so ago that I would read all new rules in the Federal Register that affect the FAR or DFARS (I’m only a few rules behind as of this writing). In my reading, I noticed a strange phenomenon that went unexplained in the Federal Register notices—the letters “P” and “S” were getting smaller. That is, citations to FAR parts and subparts were being changed from “FAR Part X” and “FAR Subpart X.1” to “FAR part X” and “FAR subpart X.1” (Notice the lower-case “p” and “s”). I wondered what was going on. Who decided that lower case “p” and “s” were now correct? Why wasn’t the FAR Council following its own rules in the FAR Drafting Guide or at FAR 1.105-2( c)(3) (recently amended—more on that later), which both showed the correct way to cite a part or subpart is with an upper-case “P” or “S.”

I also submit a lot of public comments. My comments usually are usually technical in nature—I don’t get into whether this or that policy is good or bad for the Government. They are usually of something like “If you mean this, then I suggest you say it this way.” As such, I started pointing out that use of the lower-case “p” in “part” and “s” in “subpart” was inconsistent with both the FAR Drafting Guide and FAR 1.105-2( c)(3). Yes, important stuff. I was convinced that there was some unreasonable bureaucrat in the labyrinthine review process of FAR rules who would arbitrarily withhold approval until the “p” and “s” were lower-case. All they had to do was simply read either the FAR Drafting Guide or FAR 1.105-2( c)(3) and they would be forced to relent, I thought.

Eventually, I found out that there was more to the story. The change from upper-case to lower-case could be traced back to the 2008 version of the Government Printing Office Style Manual. The manual contains an entire chapter of capitalization rules (Chapter 3). Rule 3.9 states as follows:

A common noun used with a date, number, or letter, merely to denote time or sequence, or for the purpose of reference, record, or temporary convenience, does not form a proper name and is therefore not capitalized.

The list of examples following Rule 3.9 (or is it “rule 3.9”?) contains the entry “part I”. Chapter 4, which contains a list of capitalization examples, contains the entry “part 2, A, II, etc.; but Part 2, when part of title: Part 2: Iron and Steel Industry”. Ok, so there was no unreasonable bureaucrat to blame. However, the GPO Style Manual was inconsistent with both the FAR Drafting Guide and FAR 1.105-2( c)(3). “What a crisis!”, I thought.

This brings us to a technical amendment published in Federal Acquisition Circular 2005-60 (77 FR 44065) that formally amended FAR 1.105-2( c)(3) to illustrate the “correct” way to cite a part or subpart of the FAR:

Using the FAR coverage at 9.106-4(d) as a typical illustration, reference to the—

(i) Part would be “FAR part 9” outside the FAR and “part 9” within the FAR.

(ii) Subpart would be “FAR subpart 9.1” outside the FAR and “subpart 9.1’’ within the FAR.

Crisis averted. However, there still is a lot of text within the FAR that uses upper-case when referencing parts and subparts. These co-exist in the FAR with citations of parts and subparts that are lower-case. For example, FAR 4.1402( b ) starts with:

When contracting officers report the contract action to the Federal Procurement Data System (FPDS) in accordance with FAR subpart 4.6, certain data will then pre-populate from FPDS, to assist contractors in completing and submitting their reports.

The very next paragraph, FAR 4.1402( c) states:

If the contractor fails to comply with the reporting requirements, the contracting officer shall exercise appropriate contractual remedies. In addition, the contracting officer shall make the contractor’s failure to comply with the reporting requirements a part of the contractor’s performance information under Subpart 42.15.

It’s fair to say that my prodding probably had something to do with the change in FAR 1.105-2( c)(3). However, in retrospect, I’m not sure that the desired result—consistency—was achieved.

Don Mansfield

It seems that every few months we see a new article, report, or hear testimony predicting a mass exodus of "experienced" 1102s from the Federal workforce. Citing workforce data, the conclusion that is commonly drawn is that a "crisis" will result. If we just look at numbers it would seem that this would be a reasonable conclusion. However, has anyone given any thought to the caliber of the 1102s that are leaving the Federal workforce and those that are entering? Do we really need one new 1102 for every 1102 that leaves?

Consider the fact that one must now have a college degree to even be considered for an 1102 position, whereas most of the "experienced" 1102s that will soon be leaving did not have to meet such requirements. Many "experienced" 1102s entered the Federal workforce as clerks, typists, secretaries, etc., and stuck around the organization long enough to move into an 1102 position. That's not to say that these folks did not work hard or that they don't deserve their positions. I'm sure each office has its own success story to share in this regard.

In my experience, I have worked with "experienced" 1102s and I currently teach newbie 1102s. To generalize, the newbie 1102s are smarter, more motivated, and have more respect for the laws and regulations that govern their agency's acquisitions. Give me an office full of 1102s with less than 10 years of experience and we will work circles around an office of "experienced" 1102s with twice the staff. Our processes will be more streamlined, our employees more productive, and our acquisitions fully compliant with law and regulation.

Nothing is more discouraging than to hear stories of how newbie 1102s return to their offices after training, intent on making the necessary changes to ensure that their acquisitions comply with the FAR, only to effectively be told by "experienced" 1102s "I don't care what the FAR says, this is the way we've always done it and we're not about to change." I say good riddance to those folks.

To be fair, there are some "experienced" 1102s who are excellent--the Government will suffer when these folks leave. However, I would not place the majority of "experienced" 1102s in this category. When I hear about the impending exodus of "experienced" 1102s and the ensuing crisis, I'm reminded of a line from an REM song..."It's the end of the world as we know it...and I feel fine." How do you feel?

Don Mansfield

I recently heard from a contractor regarding an experience he had with reverse auctions. A federal agency was conducting a reverse auction using FedBid and he decided to compete (FedBid, Inc., provides a service whereby federal agencies can conduct reverse auctions). Although he submitted several bids, he ultimately lost the reverse auction. When he checked to see who had won, he was surprised to see that the federal agency that was in need of the required items was the low bidder. In other words, the federal agency was submitting bogus bids in an effort to get the contractor to reduce his bid price. The federal agency then contacted him and offered to purchase the items from the contractor at his lowest bid price. Feeling that he had been duped, he told them to get lost.

The tactic employed by the federal agency, called phantom bidding, is not new. Many view the practice as unethical while others see it as a legitimate tactic. In regular auctions, the legality of seller participation in bidding varies from state to state. For those states that allow it, sellers typically must disclose that they reserve the right to participate in the bidding.

In any case, should the Federal Government be allowed to place phantom bids in reverse auctions? Would your answer be different if the disclosure of the practice was required prior to the reverse auction?

Don Mansfield

NOTICE: The table originally posted contained an error in Step 4 of the HUBZone Program Decision Table. The entries for "Yes" and "No" were reversed, which implied that a HUBZone sole source was only permitted below the simplified acquisition threshold. In fact, the opposite is true. This has been corrected.

I created a Small Business Decision Table to help navigate the new small business rules contained in the FAR. Note that there is a lack of clarity on some issues in the interim rule on Socioeconomic Parity (implemented at FAR 19.203) and, as a result, I had to make some assumptions until these issues are clarified (hopefully) in the final rule. Specifically, I assumed that when the FAR says that the contracting officer "shall consider" course of action A before proceeding with course of action B, that means that course of action A would be required if the conditions permitting both course of action A and B were present. For example, FAR 19.203( c ) states:

Above the simplified acquisition threshold. The contracting officer shall first consider an acquisition for the 8(a), HUBZone, SDVOSB, or WOSB programs before using a small business set-aside (see 19.502-2( b )).

I interpret that to mean that if a contracting officer can satisfy a requirement using the 8(a), HUBZone, SDVOSB, or WOSB Programs, then she must do so?she has no discretion to bypass these programs and proceed with a small business set-aside because she thinks doing so would be in the best interests of the Government.

In public comments submitted to the FAR Councils, the Professional Service Council criticized the use of "shall first consider" at FAR 19.203( c ) as follows:

Section 19.203( c ) mandates that contracting officers "shall first consider" socioeconomic programs, in effect creating a disparity within the small business set-aside programs. However, the regulation fails to define what constitutes adequate consideration, or how the contracting officer is to demonstrate it?

...In the absence of a clear standard for "consideration," it is possible for contracting officers to construe this coverage as a mandate to use socioeconomic program acquisition programs ahead of and to the exclusion of other business categories. By removing the statutory preference for HUBZone awards, we do not believe that Congress intended to create another set of preferences through regulation.

I would prefer that the FAR Councils not attempt to define "adequate consideration," but instead cut to the chase. If the intent is to require use of the 8(a), HUBZone, SDVOSB, and WOSB Programs if possible, then state the rule using unambiguous language. For example, FAR 19.203(d) states:

Small business set-asides have priority over acquisitions using full and open competition.

Nobody is going to argue over what that means.

Lastly, there is an error in FAR 19.203 in that it implies that the SBA rule that once a requirement is in the 8(a) Program it must stay in the 8(a) Program only applies over the simplified acquisition threshold. That's wrong?it applies regardless of dollar value. The SBA regulations make no such distinction regarding dollar value. I'm told that this will be corrected in the final rule.

Don Mansfield

An interesting aspect of the new socioeconomic parity rules issued in Federal Acquisition Circular 2005-50 (see 76 FR 14566) is that we now have some scenarios where a contractor is better off not being a small business concern. The Discussion and Analysis section of the Federal Register notice contains the following statement:

For acquisitions exceeding the simplified acquisition threshold, the contracting officer must consider a set-aside or sole source acquisition to a small business under the 8(a), HUBZone, or SDVOSB programs before the contracting officer proceeds with a small business set-aside. See FAR 19.203( c ) and 19.502-2(B).

This policy is implemented at the new FAR 19.203( c ). Further, the new FAR 19.203(d) states the following:

Small business set-asides have priority over acquisitions using full and open competition.

Thus, for acquisitions over the simplified acquisition threshold (SAT), an agency must first consider the 8(a), HUBZone, SDVOSB, and WOSB programs (the latter recently being added by FAC 2005-51). If a requirement can be satisfied under one of these programs, the agency must use one of these programs. The agency is free to choose which of the four programs to use. If a requirement cannot be satisfied under one of these four programs, then the agency must consider a small business set-aside. If the requirement cannot be met by means of a small business set-aside, then the agency may solicit offers on an unrestricted basis.

Let?s assume the following scenario. There?s a requirement over the SAT and under the threshold for a HUBZone sole source (currently $6.5 million for manufacturing and $4 million for other acquisitions) that can be satisfied by three potential offerors. We?ll call them Offerors A, B, and C. Offeror A is a HUBZone small business concern and Offerors B and C are plain old small business concerns. Pursuant to FAR 19.203( c ), the agency would be required to proceed with a HUBZone sole source, since the HUBZone program takes precedence over small business set-asides. Offerors B and C would not have a chance to compete for the requirement.

Now let?s assume the same scenario, except Offerors B and C are large businesses. In this case, the agency would not be required to proceed with a HUBZone sole source. Offerors B and C would have an opportunity to compete for the requirement, if the agency chose not to proceed with a HUBZone sole source. FAR 19.203 gives priority to HUBZone sole source over small business set-asides, but is silent on the relationship between a HUBZone sole source and full and open competition (ditto for 8(a) sole source and SDVOSB sole source). FAR 19.1306 simply states:

A contracting officer may award contracts to HUBZone small business concerns on a sole source basis (see 6.302-5(B)(5)) before considering small business set-asides (see 19.203 and subpart 19.5), provided none of the exclusions at 19.1304 apply; and?

(1) The contracting officer does not have a reasonable expectation that offers would be received from two or more HUBZone small business concerns;

(2) The anticipated price of the contract, including options, will not exceed?

(i) $6.5 million for a requirement within the North American Industry Classification System (NAICS) codes for manufacturing; or

(ii) $4 million for a requirement within all other NAICS codes;

(3) The requirement is not currently being performed by an 8(a) participant under the provisions of Subpart 19.8 or has been accepted as a requirement by SBA under Subpart 19.8;

(4) The acquisition is greater than the simplified acquisition threshold (see Part 13);

(5) The HUBZone small business concern has been determined to be a responsible contractor with respect to performance; and

(6) Award can be made at a fair and reasonable price.

[bold added].

According to FAR 2.101, ?may denotes the permissive.? ?May? is also used at FAR 19.1406 regarding SDVOSB sole source awards.

It would be reasonable to infer that competitive 8(a), HUBZone set-asides, and SDVOSB set-asides take precedence over full and open competition, because the conditions permitting any of these would imply that the conditions for a small business set-aside were present. However, the same cannot be said for HUBZone or SDVOSB sole source. The conditions permitting either a HUBZone or SDVOSB sole source do not imply that the conditions requiring a small business set-aside exist.

So there you go. Sometimes you?re better off being large. It will be interesting to see if the FAR Council will leave things as they are when the rule becomes final. If they do, we can expect this to be the next great debate in small business program policy.

Don Mansfield

In one of my earlier blog entries, I inferred that the FAR Councils interpreted the definition of ?contract? at FAR 2.101 to include task and delivery orders based on their answer to a question about the applicability of TINA to task and delivery orders (see ?Commonly Understood? I Think Not). Well, there is no reason to draw any inferences anymore. In a recently published final DFARS rule, the DAR Council unequivocally stated that the definition of ?contract? included task and delivery orders. The following exchange appears in the Background section of the final rule for DFARS Case 2010-D004 (72 FR 76296):

5. Applicability to task or delivery orders. One respondent recommended that the language at 222.7401(a), Policy, delete the reference to task or delivery orders and bilateral modifications adding new work.

Response: DoD does not agree. In accordance with FAR 2.101, a contract includes all types of commitments that obligate the Government to an expenditure of appropriated funds. Task orders and delivery orders obligate funding, and if they utilize funds appropriated or otherwise made available by the DoD Appropriations Act for Fiscal Year 2010 that are in excess of $1 million, the section 8116 restriction would apply.

Save this, because it?s unlikely that the definition of ?contract? at FAR 2.101 will ever be changed to explicitly include task and delivery orders.

In addition to the DAR Council, the GAO has also interpreted the definition of ?contract? to include task and delivery orders. In Delex Systems, Inc., B-400403, October 8, 2008, the GAO stated:

In our view, the legal question is whether the Rule of Two, which by its terms applies to ?any acquisition over $100,000,? FAR sect. 19.502-2(B), applies to individually competed task or delivery orders under multiple-award contracts. We conclude that it does, because, at least for purposes of this analysis, those orders are properly viewed as ?acquisitions.? We have previously concluded that a delivery order placed under an ID/IQ contract is, itself, a ?contract,? at least for some purposes, see FAR sect. 2.101, and contracts are covered by the definition of ?acquisition? in FAR sect. 2.101. Letters to the Air Force and Army concerning Valenzuela Engineering, Inc., 98-1 CPD para. 51 (Letter to the Air Force at n.1).

While it?s nice to have more clarity on the status of task and delivery orders, there remains ambiguity on how to apply clauses in indefinite delivery contracts. Should they be applied at the ?whole contract? level, the task or delivery order level, or both? The FAR Councils routinely receive public comments asking how a new requirement is to be implemented in an IDIQ contract. Consider the following from the final rule implementing the current version of the clause at FAR 52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts (75 FR 13424):

12. Fee withholding should be different for task orders under indefinite-delivery/indefinite-quantity (IDIQ) contracts.

Four respondents commented that IDIQ contracts should be treated differently. One respondent noted that some small A-E firms believe that the current regulation may not be consistent with IDIQ contracting practices. This comment is supported by four other comments received on this same point. One respondent claimed that retainage for individual task orders under an IDIQ contract is, at times, currently held until the entire IDIQ contract is complete.

Response: Retainage should be related to the contractor's performance on the individual task or delivery order and, in order to be compliant with the requirements of FAR 52.232-10, the contractor must be paid any unpaid balance upon satisfactory completion of the work under that contract, whether it is a task or delivery order or a stand-alone contract. However, this is a matter of educating contracting officers rather than changing policy; the policy is correct, but its execution needs improving.

Apparently, the ?right? way to implement this clause was at the task order level, not the ?whole contract? level. How a contracting officer is supposed to just know this is beyond me. The FAR Councils have declined to clarify this policy in the clause.

So should we applying all clauses at the task and delivery order level? Apparently not. Contracts that are set aside for small business concerns are required to contain a limitation on subcontracting clause. FAR 52.219-14(B) sets forth the limitations as follows:

By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for?

(1) Services (except construction). At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.

(2) Supplies (other than procurement from a nonmanufacturer of such supplies). The concern shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials.

(3) General construction. The concern will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees.

(4) Construction by special trade contractors. The concern will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees.

By operation of the clause at FAR 52.202-1, Definitions, the applicable definition of ?contract? would be the one located at FAR 2.101:

?Contract? means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C. 6301, et seq. For discussion of various types of contracts, see Part 16.

It would seem that since both indefinite delivery contracts and task and delivery orders meet this definition, so one would think that the subcontracting limitation applied to both. However, that?s not how the GAO interprets the clause.

The decision in Lockheed Martin Fairchild Systems, B-275034, 17 January 1997, stated the following:

Lockheed contends that the delivery order violates the subcontracting limitation clause, Federal Acquisition Regulation (FAR) ? 52.219-14, contained in UNITECH's contract. Contrary to Lockheed's contention, this clause, by its terms, only applies to the contract as a whole and does not require that each delivery order placed under the contract satisfy the requirements of that clause.

Thus, the GAO determined that this clause was applicable at the ?whole contract? level, and not at the task order level. There?s no discussion on why this is necessarily so.

What about the clause at FAR 52.232-20, Limitation of Cost? Do the notification requirements apply at 75% of the estimated cost of the task or delivery order, or at 75% of the estimated cost of the indefinite delivery contract? What about the clause at FAR 52.216-8, Fixed Fee? Does the $100,000 fee withholding limitation apply to each task or delivery order, or to the whole IDIQ contract? The questions are endless. Contracting officers have answers to these questions, but they are not all the same. Without a clear set of rules, it?s hard to argue that anybody is wrong.

Fortunately, some clauses are clear on this point. For example, the clause at FAR 52.216-23, Limitations on Pass-Through Charges, states the following reporting requirement:

( c ) Reporting. Required reporting of performance of work by the Contractor or a subcontractor. The Contractor shall notify the Contracting Officer in writing if?

(1) The Contractor changes the amount of subcontract effort after award such that it exceeds 70 percent of the total cost of work to be performed under the contract, task order, or delivery order.

Some of the newer FAR rules recognize the potential confusion caused in the case of indefinite delivery contracts and have adapted. That?s encouraging, but it doesn?t help us interpret the older rules. The FAR Councils could clarify things by adding an interpretation convention at FAR 1.108 stating at which level (whole contract, task order or delivery order, or both) requirements of clauses in indefinite delivery contracts apply, if not otherwise specified. Probably won?t happen. I can hope.

Don Mansfield

In B&B Medical Services, Inc.; Rotech Healthcare, Inc.; B-404241, B-404241.2, (January 19, 2011), the Comptroller General held that the statutory nonmanufacturer rule does not apply to procurements set aside for Historically Underutilized Business Zone (HUBZone) small business concerns. The decision contains the following analysis:

The statutory non-manufacturer rule is set forth in 15 U.S.C. ? 637(a)(17)(A) and states as follows:

An otherwise responsible business concern that is in compliance with the requirements of subparagraph (B) shall not be denied the opportunity to submit and have considered its offer for any procurement contract for the supply of a product to be let pursuant to this subsection or subsection (a) of section 644 of this title solely because such concern is other than the actual manufacturer or processor of the product to be supplied under the contract.

15 U.S.C. ? 637(a)(17)(A) (2006). Thus, by the plain language of the statute, the statutory non-manufacturer rule applies only to ?contracts . . . let pursuant to? ? 637(a) or ? 644(a) of title 15. Id.

Section 637(a) provides the authority for agencies to conduct section 8(a) sole source procurements and section 8(a) competitive procurement set-asides. 15 U.S.C. ? 637(a)(16) (providing for sole source awards to section 8(a) companies); 15 U.S.C. ? 637(a)(1)(D) (providing for set-asides for section 8(a) companies in competitive procurements). Section 644(a) provides the authority for general small business set-asides, which do not include HUBZone set-asides. See Mission Critical Solutions, B-401057, May 4, 2009, 2009 CPD ? 93 at 3-4 (recognizing 15 U.S.C. ? 657a, not ? 644(a), as the statutory provision authorizing contracts to be set aside for HUBZone business concerns); Mission Critical Solutions v. United States, No. 09?864C at 12 (Fed. Cl. Mar. 2, 2010) (same); 67 Fed. Reg. 3826, 3831 (January 28, 2002) (setting forth SBA?s long-standing view that the statutory non-manufacturer rule applies only in connection with a section 8(a) or small business set aside contract, not in connection with a HUBZone procurement); 69 Fed. Reg. 29411, 29415 (May 24, 2004) (same).

Thus, the statutory non-manufacturer rule applies only to section 8(a) procurements and competitive procurements set aside for small business concerns, generally.7 The procurement at issue here is a HUBZone set-aside issued pursuant to ? 31(B) of the Small Business Act (15 U.S.C. ? 657a). Since the contract here is not awarded pursuant to 15 U.S.C. ? 637(a) or 15 U.S.C. ? 644(a), it is not covered by the statutory non-manufacturer rule. Because the statutory non-manufacturer rule does not apply to this solicitation, the Court of Federal Claims decision in Rotech Healthcare Inc., 71 Fed. Cl. 393 (2006) is inapplicable; that case involved solicitations that were set aside for small business.

The analysis is technically correct?the statutory nonmanufacturer rule does not apply to HUBZone set-asides. Reading this analysis, one may conclude that, for HUBZone set-asides, HUBZone small business nonmanufacturers need not provide end items that were produced by HUBZone small business concerns. However, that would be incorrect.

While it is true that the statutory nonmanufacturer rule does not apply to HUBZone set-asides, the regulatory nonmanufacturer rule does. The Small Business Administration (SBA), the agency with the authority to implement the HUBZone Program, has imposed a nonmanufacturer rule applicable to HUBZone small business concerns at 13 CFR 126.601:

(f) A qualified HUBZone SBC may submit an offer on a HUBZone contract for supplies as a nonmanufacturer if it meets the requirements of the nonmanufacturer rule set forth at ?121.406(B)(1) of this chapter, and if the small manufacturer providing the end item for the contact is also a qualified HUBZone SBC.

(1) There are no waivers to the nonmanufacturer rule for HUBZone contracts.

(i) SBA will not issue contract-specific waivers as it does for small business set-aside and 8(a) contracts under ?121.406(B)(3)(i) of this chapter.

(ii) Class waivers issued under ?121.406(B)(3)(ii) of this chapter do not apply to HUBZone contracts.

(2) For HUBZone contracts at or below $25,000 in total value, a qualified HUBZone SBC may supply the end item of any manufacturer, including a large business, so long as the product acquired is manufactured or produced in the United States.

This rule is implemented in the FAR at 19.1303(e) and the clauses at FAR 52.219-3(e) and FAR 52.219-4(f).

It?s remarkable that the GAO decision makes no mention of the regulatory nonmanufacturer rule. Perhaps the GAO limited its decision to the arguments that were made by the parties. If that?s the case, then it?s remarkable that the protesters would limit their argument to the applicability of the statutory nonmanufacturer rule to HUBZone set-asides without mentioning the HUBZone nonmanufacturer rule at 13 CFR 126.601(f). It wouldn?t have made a difference in the outcome of the protest?the requirement in question was determined to be a service by the SBA under an earlier NAICS code appeal. As such, the applicability of the statutory nonmanufacturer rule to the acquisition was a moot point.

Don Mansfield

Consider the following exchange between two people:

Speaker 1 (asking Speaker 2): What type of car do you drive, foreign or domestic?

Speaker 2: I drive a red car.

Obviously, Speaker 2?s answer is not responsive to Speaker 1?s question. Speaker 1 wanted to know about a particular aspect of Speaker 2?s car?its origin. Speaker 2 described a different aspect of his car?its color. While Speaker 2?s statement about the color of his car may be true, it doesn?t tell us anything about the origin of his car.

Easy enough, right? Ok, let?s try another one. Consider the following exchange between two contract specialists:

Contract Specialist 1: Is Contract X a fixed-price or cost-reimbursement contract?

Contract Specialist 2: Contract X is an indefinite delivery contract.

Is Contract Specialist 2?s answer responsive to Contract Specialist 1?s question? No, the answer is no more responsive to the question than Speaker 2?s answer was to the question of whether his car was foreign or domestic. Why? In this exchange, Contract Specialist 1 wanted to know about a particular aspect of Contract X?its compensation arrangement. Contract Specialist 2 described a different aspect of Contract X?its delivery arrangement. While Contract Specialist 2?s statement about the delivery arrangement of Contract X may be true, it doesn?t tell us anything about the compensation arrangement of Contract X.

Make sense? If so, see if you can spot anything wrong with the following passage of an article on contract types that recently appeared in the December 2010 issue of Contract Management (see Government Contract Types: The U.S. Government?s Use of Different Contract Vehicles to Acquire Goods, Services, and Construction by Brian A. Darst and Mark K. Roberts):

FAR Subparts 16.2 through 16.6 describe 11 different permissible contract vehicles. These vehicles can be subdivided into three different families:

? Fixed-price contracts,

? Cost-reimbursement contracts, and

? Other contract vehicles that can be used when the quantity of supplies or services cannot be determined at the time of award (i.e., indefinite delivery, time-and-materials (T&M), labor-hour (LH), and level-of-effort contracts) or where it is necessary for the contractor to begin performance before the terms and conditions of the contracts can be negotiated (i.e., letter contracts).

Do you see anything wrong? Notice that the first two ?families? are categorized by compensation arrangement. However, the third family contains a mix of terms used to describe compensation arrangement (T&M/LH), delivery arrangement (indefinite delivery), the extent of contractor commitment (level-of-effort), and a unique term used to describe a contract that is not definitive (letter contract). The way this passage is written implies that an indefinite delivery contract, a level-of-effort contract, and a letter contract are necessarily different (belong to a different "family") from a fixed-price or cost reimbursement contract. However, an indefinite delivery contract or a level-of-effort contract will have a compensation arrangement. The compensation arrangement can be fixed-price, cost-reimbursement, T&M/LH, or some combination thereof. A letter contract may or may not have a compensation arrangement when it is issued. You could conceivably have a letter contract that had a cost-reimbursement compensation arrangement, an indefinite delivery arrangement, and that provided for level-of-effort orders. As such, the authors? categorization of contract types makes as much sense as categorizing cars into three families?foreign, domestic, and red.

Incentive Contracts?Not What You Think They Are

Consider the following simplified description of a compensation arrangement:

The buyer agrees to pay the seller $100,000 to provide a specified quantity of medical transcription services. If the accuracy of the transcriptions exceeds 99%, the buyer agrees to pay the seller an additional $5,000.

Does the preceding describe an incentive contract? Many would say yes, because the arrangement provides for an incentive?specifically, a performance incentive. However, that would be incorrect. Just because a contract contains an incentive does not mean that it is an incentive contract. FAR 16.202-1 contains the following statements in a description of firm-fixed-price contracts (similar statements pertaining to fixed-price contracts with economic price adjustment can be found at FAR 16.203-1(B)):

The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives.

[bold added].

Further, FAR 16.402-1(a) states:

Most incentive contracts include only cost incentives, which take the form of a profit or fee adjustment formula and are intended to motivate the contractor to effectively manage costs. No incentive contract may provide for other incentives without also providing a cost incentive (or constraint).

Thus, it?s not enough for a contract to contain an incentive to be an incentive contract. It must contain a cost incentive (or constraint).

In the aforementioned Contract Management article, an endnote references FAR 37.601(B)(3) and misinterprets this paragraph as ?encouraging the use of incentive-type contracts where appropriate.? Here?s what FAR 37.601(B)(3) actually says:

Performance-based contracts for services shall include? [?]

(3) Performance incentives where appropriate. When used, the performance incentives shall correspond to the performance standards set forth in the contract (see 16.402-2).

The authors have made the mistake of assuming that a contract that contained a performance incentive was necessarily an incentive contract. In fact, when acquiring services FAR 37.102(a)(2) states the following order of precedence:

(i) A firm-fixed price performance-based contract or task order.

(ii) A performance-based contract or task order that is not firm-fixed price.

(iii) A contract or task order that is not performance-based.

As shown above, a firm-fixed-price contract would take precedence over an incentive contract.

A Genuine Misunderstanding

In a discussion of additional contract types and agreements, the Contract Management article contained the following statement (which caused me to stop reading and start writing):

T&M and LH contracts are varieties of indefinite-delivery contracts and provide procuring agencies with the flexibility to acquire recurring services or when the amount of the effort required to deliver an end-item is uncertain.

Huh? T&M/LH is a type of indefinite delivery contract? I?ll let you readers ponder that one.

The article concludes with a plug for the authors? two-day course in, you guessed it, types of contracts. I will pass.

Don Mansfield

I was recently perusing some of the recent final rules issued by the FAR Council when I came across a statement that I found interesting. In responding to a comment concerning the applicability of TINA to task and delivery orders, the FAR Councils stated that TINA applicability is to be determined when negotiating a basic IDIQ contract, as well as when negotiating subsequent orders under the contract. A description of the comment that they received read as follows:

The respondent also highlighted the example of an indefinite delivery-indefinite quantity (IDIQ) contract where orders are issued and inquired whether ``at the time of contract award'' related to issuance of the IDIQ contract or individual orders placed under this IDIQ contract.

The Councils' response was as follows:

In the case of IDIQ contracts, it is commonly understood that it is the estimated total value of orders for the specified period at the time of contract award, as well as the individual value of any subsequent discrete orders, to which the TINA thresholds apply.

(See FAR Case 2008-012, Clarification of Submission of Cost or Pricing Data on Non-Commercial Modifications of Commercial Items (75 FR 13414)).

My initial reaction was "Good, they got it right." However, I was not satisfied with the complete lack of explanation other than that this information was "commonly understood." "It is commonly understood?" is the equivalent to saying "Well, everybody knows?", which is not an answer that I would accept from a student nor is it one that the public should be accepting from the FAR Councils. Further, the FAR Councils' use of "commonly understood" raises the question: Commonly understood by whom? Based on my experience, "commonly debated" would be a more apt description.

Task and Delivery Orders are "Contracts"

By stating that TINA applicability determinations must be made at the task and delivery order level, the FAR Councils have, perhaps unwittingly, admitted that task and delivery orders are "contracts" as defined at FAR 2.101. Consider the requirements for obtaining cost or pricing data at FAR 15.403-4(a)(1):

?Unless an exception applies, cost or pricing data are required before accomplishing any of the following actions expected to exceed the current threshold or, for existing contracts, the threshold specified in the contract:

(i) The award of any negotiated contract (except for undefinitized actions such as letter contracts).

(ii) The award of a subcontract at any tier, if the contractor and each higher-tier subcontractor were required to submit cost or pricing data (but see waivers at 15.403-1( c )(4)).

(iii) The modification of any sealed bid or negotiated contract (whether or not cost or pricing data were initially required) or any subcontract covered by paragraph (a)(1)(ii) of this subsection.

If TINA applies to task and delivery orders, then task and delivery orders must fall into one of the three enumerated categories. A task or delivery order issued by the Government is certainly not a subcontract, so (ii) is out. A task or delivery order under a contract is not a "written change in the terms of a contract", so they do not meet the definition of "contract modification", thereby eliminating (iii). Thus, task and delivery orders must be "contracts."

However, one cannot reasonably describe this information as "commonly understood" either. Consider the following statements made in FEATURE COMMENT: Contesting Task And Delivery Order Awards At The COFC--Policy Implications Of A Choice Federal Courts May Soon Have To Make (51 NO. 20 Gov't Contractor ? 174). In discussing the automatic stay provisions of CICA, the author writes:

The first time period, from the date of contract award to 10 days after contract award, is irrelevant to protesting task orders, since such orders are not "contracts" in themselves. See definitions of "task order" and "delivery order" under FAR 2.101.

The author, seemingly indecisive, also writes:

As for the CICA stay--the stay of a contract award decision that automatically comes into play when that contract award decision is challenged before GAO-- this stay may simply be unavailable in the context of task orders because such orders may not be "contracts." The FAR councils could probably resolve the CICA stay issue by redefining the term "contract" under FAR 2.101 to include task orders, but given the serious nature of the controversy and its likely impact on other aspects of the multiple-award IDIQ contracting system, that sort of redefinition appears unlikely because treating task orders as "contracts" could trigger other procedural obligations.

This author is not alone. In FEATURE COMMENT: Acquisition Reform Revisited--Section 843 Protests Against Task And Delivery Order Awards At GAO (50 NO. 9 Gov't Contractor ? 75) the authors put forth the following argument:

However, CICA does not explicitly define the term "contract award." One could argue that protesters of task or delivery orders are not entitled to an automatic suspension of performance because of the definitions of "contract," "task order" and "delivery order" found in the FAR. FAR 2.101 defines "contract" as "a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the government to an expenditure of approved funds ...." On the other hand, the terms "delivery order" and "task order" are defined as orders "placed against an established contract" and, thus, arguably do not constitute "contracts" under the FAR.

Consistent with the FAR's distinction between contracts and task or delivery orders issued under contracts, GAO, in Advanced Tech. Sys., Inc., Comp. Gen. Dec. B-296493.6, 2006 CPD ? 151, concluded that it was unnecessary for an agency to conduct a responsibility determination before awarding an order under a General Services Administration Federal Supply Schedule contract because that determination was made when the underlying "contract" was awarded.

I agree with the first author's assessment of the potential controversy that would ensue if the FAR Councils were to redefine "contract" to include task and delivery orders. If the FAR Councils were to propose such a rule, I would estimate that they would receive no less than 100 public comments.

Where's the Cost or Pricing Data Clause for Task and Delivery Orders?

If it's "commonly understood" that TINA applies to task and delivery orders, why isn't there a standard FAR clause for use in task and delivery order contracts that compels the submission of cost or pricing with a task or delivery order proposal when applicable? There's a standard FAR provision at FAR 52.215-20, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data (Oct 1997), that can be used to compel offerors to submit cost or pricing data when submitting offers for a basic IDIQ contract. There's also a standard FAR clause at FAR 52.215-21, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data?Modifications (Oct 1997), that compels submission of cost or pricing data when pricing contract modifications (if applicable). Where is "Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data?Task and Delivery Orders"? Why not have offerors agree to submit cost or pricing data (if applicable) with subsequent task and delivery order proposals?

TINA Yes, CAS No

The Councils' response in the publication of this rule reminded me of an earlier response pertaining to the applicability of CAS to task and delivery orders accompanying a final rule on CAS (70 FR 11743-01). In that response, the Councils reached the opposite conclusion. The exchange was as follows:

Task Order Contracts

31. Comment: One respondent stated that one of the many situations that greatly affect the cost accumulation calculation that is not addressed in the proposal is the trend toward task order contracts that may have both fixed fee and incentive fee tasks, as well as CAS covered and non-CAS covered tasks.

Councils' response: Nonconcur. The Councils believe that this situation is adequately covered by the language at FAR 30.605(h)(5), and the definition of "Affected CAS-covered contracts" at FAR 30.001.

[?]

As for the issue of CAS-covered versus non-CAS-covered tasks, a contract cannot contain both CAS-covered and non-CAS-covered tasks. In order for CAS-coverage to differ between tasks, each task would have to be a separate contract. In such cases, the definition of affected CAS-covered contracts would exclude the non-CAS covered tasks from the computation of the cost-impact.

Thus, a determination of CAS applicability is made only when placing the basic IDIQ contract. If an IDIQ contract is subject to CAS, all orders under the contract are subject to CAS. If an IDIQ contract is not subject to CAS, none of the orders under the contract are subject to CAS.

So, according to the FAR Councils, a contracting officer must determine applicability of TINA when awarding a basic IDIQ contract and issuing any subsequent orders, but need only determine the applicability of CAS once?when awarding a basic IDIQ contract.

This raises another yet another question?how is a CO supposed to know this? Consider the rules for determining CAS applicability at 48 CFR 9903.201-1:

9903.201-1 CAS applicability.

(a) This subsection describes the rules for determining whether a proposed contract or subcontract is exempt from CAS. (See 9904 or 9905, as applicable.) Negotiated contracts not exempt in accordance with 9903.201?1(B) shall be subject to CAS. A CAS-covered contract may be subject to full, modified or other types of CAS coverage. The rules for determining the applicable type of CAS coverage are in 9903.201?2.

(B) The following categories of contracts and subcontracts are exempt from all CAS requirements:

(1) Sealed bid contracts.

(2) Negotiated contracts and subcontracts not in excess of $650,000. For purposes of this paragraph (B)(2) an order issued by one segment to another segment shall be treated as a subcontract.

(3) Contracts and subcontracts with small businesses.

(4) Contracts and subcontracts with foreign governments or their agents or instrumentalities or, insofar as the requirements of CAS other than 9904.401 and 9904.402 are concerned, any contract or subcontract awarded to a foreign concern.

(5) Contracts and subcontracts in which the price is set by law or regulation.

(6) Firm fixed-priced, fixed-priced with economic price adjustment (provided that price adjustment is not based on actual costs incurred), time-and-materials, and labor-hour contracts and subcontracts for the acquisition of commercial items.

(7) Contracts or subcontracts of less than $7.5 million, provided that, at the time of award, the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts or subcontracts valued at $7.5 million or greater.

(8)?(12) [Reserved]

(13) Subcontractors under the NATO PHM Ship program to be performed outside the United States by a foreign concern.

(14) Contracts and subcontracts to be executed and performed entirely outside the United States, its territories, and possessions.

(15) Firm-fixed-price contracts or subcontracts awarded on the basis of adequate price competition without submission of cost or pricing data.

By asserting that CAS determinations are not made at the task or delivery order level, the FAR Councils must be using a definition of "contract" that is different than what appears at FAR 2.101. What definition are they using and why does that definition exclude task and delivery orders? I don't get it.

Recommendation

If the FAR Councils believe that task and delivery orders are "contracts" as defined at FAR 2.101, then they can clear up a considerable amount of confusion by including these types of orders in that definition. If they do that, why not add a standard FAR clause compelling submission of cost or pricing data (when applicable) with task or delivery order proposals? While they're at it, how about an explicit statement in the FAR stating that TINA applicability determinations are made at the task and delivery order level and another statement that CAS applicability determinations are not? Probably too much to ask.

Don Mansfield

There has been a considerable amount of controversy over the last year or so in the area of small business programs. In International Program Group, Inc., (B?400278, B?400308, 19 September 2008) the Government Accountability Office (GAO) held that HUBZone set-asides took priority over service-disabled veteran-owned small business (SDVOSB) set-asides and SDVOSB sole source acquisitions. This was unsurprising given the clear language in the FAR. In Mission Critical Solutions (B?401057, 4 May 2009) (also see reconsideration), the GAO held that the HUBZone set-asides took precedence over the 8(a) program. This was surprising given the clear language of the FAR. Of note in both cases was that the GAO solicited and rejected the Small Business Administration's (SBA's) interpretation of the applicable statutes, which was that there was parity among the 8(a), HUBZone, and SDVOSB programs. It was after the latter case that the Office of Management and Budget (OMB) stepped in with a memorandum advising agencies to disregard the two GAO decisions and providing the following guidance:

Pending the completion of the legal review of the GAO's decisions by the Executive Branch, the SBA's "parity" regulations should not be disregarded by contracting officers, and Federal agencies should not, as a result of the GAO's decisions, be compelled to prioritize HUBZone small businesses over 8(a) BD or SDVOSBs. Instead, until the legal review is completed, Federal agencies should continue to give active consideration to each small business program pursuant to their pre-existing contracting practices and "parity" policies.

Remarkably, this guidance 1) assumes that contracting officers had been following the parity policies implemented in SBA's regulations and 2) implies that, henceforth, contracting officers are free to treat HUBZone, SDVOSB, and 8(a) contractors as equals. There is no acknowledgement of the fact that there were no pre-existing "parity" policies in the FAR. Prior to the GAO decisions, the FAR Council issued a proposed rule that would have implemented parity among the three programs?something that clearly did not exist in the FAR. See 73 FR 12699. As of today, the FAR Case dealing with Socioeconomic Program Parity (2006-034) has been tabled. As such, any contracting officer subject to the FAR that thinks that they have been given the green light to disregard the FAR and treat all three programs the same should think again.

Consider the following scenarios:

Scenario 1: The conditions for both a HUBZone set-aside and a SDVOSB set-aside (or sole source) exist for a particular acquisition exceeding the simplified acquisition threshold. The requirement cannot be satisfied through the 8(a) program.

In this scenario, FAR 19.1305 requires a HUBZone set-aside:

(a) A participating agency contracting officer shall set aside acquisitions exceeding the simplified acquisition threshold for competition restricted to HUBZone small business concerns when the requirements of paragraph ( b ) of this section can be satisfied.

[?]

( b ) To set aside an acquisition for competition restricted to HUBZone small business concerns, the contracting officer must have a reasonable expectation that?

(1) Offers will be received from two or more HUBZone small business concerns; and

(2) Award will be made at a fair market price.

If a CO chose to pursue a SDVOSB set-aside (or sole source) in this scenario, he or she would be deviating from the express requirements of FAR 19.1305. However, a CO subject to the FAR does not have the authority to deviate from the FAR without approval from the agency head (see FAR 1.4). Further, we already know from International Program Group that the GAO would sustain a protest if an agency were to pursue a SDVOSB set-aside (or sole source) when the conditions for a HUBZone set-aside existed. While we don't know for sure how the Court of Federal Claims would decide such a protest, it would be surprising if they were to find that a HUBZone set-aside were not required, given the clear language of the FAR. On the other hand, proceeding with a HUBZone set-aside would be compliant with statute, the FAR, and the SBA regulations (which allow a choice of programs).

Scenario 2: The conditions for a HUBZone set-aside exist and the requirement can be satisfied through the 8(a) program.

FAR 19.800(e) provides for a "soft" priority for 8(a) as follows:

Before deciding to set an acquisition in accordance with Subpart 19.5 [small business set-asides], 19.13 [HUBZone set-asides], or 19.14 [service-disabled veteran-owned small business set-asides] the contracting officer should review the acquisition for offering under the 8(a) program.

While FAR 19.800(e) doesn't mandate that an acquisition be offered to the SBA under the 8(a) program if it can be, the implication is that there should be a good reason for not doing so. (FAR 2.101 defines should as "an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance.") Thus, it would be unwise to simply ignore FAR 19.800(e) and proceed with a HUBZone set-aside?there should be something in the file that evidences the contracting officer's compliance with FAR 19.800(e). The same would be true if the conditions for a HUBZone sole source, SDVOSB set-aside, or SDVOSB sole source existed.

The Department of Justice Opinion

Responding to a request from the SBA, the Justice Department provided a legal opinion pertaining to the SBA's interpretation of the relevant statutes. The opinion found as follows:

Having carefully reviewed the relevant legal materials, including SBA's own views, we conclude that the Act does not compel SBA to prioritize the HUBZone Program in the manner GAO determined to be required. In our view, SBA's regulations permissibly authorize contracting officers to exercise their discretion to choose among the three programs in setting aside contracts to be awarded to qualified small business concerns. Further, in accord with this Office's longstanding precedent, GAO's decisions are not binding on the Executive Branch.

I can't wait to see how DOJ's reasoning holds up in the Court of Federal Claims (assuming we'll see a case). For argument's sake, let's assume that the opinion is correct. Does this mean that contracting officers can now ignore the FAR and treat all three programs equally? I don't think so. The opinion did not say that the FAR is wrong. It says that the SBA did not misinterpret the statute. Thus, the SBA has permissibly given agencies the discretion to choose among the three programs. The FAR Council has already made the choice for contracting officers?HUBZone takes priority over SDVOSB and 8(a) takes priority (albeit a "soft priority") over HUBZone and SDVOSB. The FAR Council may give this discretion to contracting officers, but the FAR would have to be changed to do so.

My Advice

In its memorandum, OMB stated that the results of its review of the legal basis underlying the GAO's decisions were expected this past summer?still no word from them as of Black Friday. Any further guidance issued by OMB should acknowledge the priorities that exist in the FAR and explain how contracting officers are to proceed. Merely stating that contracting officers are free to abide by SBA's "parity" policies without acknowledging the rules of the FAR will be most unhelpful.

In the meantime, contracting officers that find themselves in Scenario #1 above should proceed with a HUBZone set-aside. Contracting officers that find themselves in Scenario #2 above should document compliance with FAR 19.800(e) before proceeding to any other type of set-aside or sole source.

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