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Don Mansfield

The myth about communication being 93% nonverbal probably didn't start in the contracting field, but we are partly responsible for its spread. This is especially true when it comes to the subject of contract negotiation. The course manual for CON 100 used to state that communication was 90% nonverbal as a matter of fact. A speaker at a recent conference that I attended used a figure of 93% in a presentation on contract negotiation. The current Contract Pricing Reference Guides contain a variation of this claim in a chapter titled "Nonverbal Communication" (Volume V, Chapter 5):

Communication Is More Than Verbal. Good negotiators must first be good communicators. Unfortunately, many negotiators think of communication only as oral or written verbal exchanges. But verbal exchanges account for only a fraction of the messages people send and receive. Research has shown that between 70 and 90 percent of the entire communication spectrum is nonverbal. Consequently, you should be aware of the different forms of nonverbal communication that you are likely to encounter during negotiation conferences. [bold added]

Whenever this claim is made, it's almost always accompanied by a statement that it is supported by "research", but what "research"?

Well, there actually was a research study done in 1967 that found that 93% of communication was nonverbal...under very specific conditions. The following excerpt from The Virtual Handshake explains just what the study found:

Albert Mehrabian, a UCLA professor, completed research in 1967 showing the significance of non-verbal cues in communications. He concluded, in part, ?The combined effect of simultaneous verbal, vocal and facial attitude communications is a weighted sum of their independent effects ? with the coefficients of .07, .38, and .55, respectively.? (Albert Mehrabian and Susan R. Ferris, ?Inference of attitudes from nonverbal communication in two channels.? Journal of Consulting Psychology 31 (1967): 248-252. ) Out of context, this implies that in face-to-face conversation, 38% of communication is inflection and tone of voice, 55% is facial expression, and only 7% is based on what you actually say.

This statistic has grown into a very widely quoted and oft-misunderstood urban legend. Many communication skills teachers and image consultants misuse this data to indicate that your intonation, speaking style, body language, and other non-verbal methods of communication overpower your actual words. As a result, many people are concerned that online communication is much more difficult because body language, tone of voice, and facial expressions cannot today be effectively conveyed over the internet.

Not true. Mehrabian?s study only addressed the very narrow situation in which a listener is analyzing a speaker?s general attitude towards that listener (positive, negative, or neutral). Also, in his experiments the parties had no prior acquaintance; they had no context for their discussion. As Mehrabian himself has said explicitly, these statistics are not relevant except in the very narrow confines of a similar situation.

Mehrabian's exact words appear in a description of his book "Silent Messages" -- A Wealth of Information About Nonverbal Communication (Body Language):

Inconsistent communications -- the relative importance of verbal and nonverbal messages. My findings on this topic have received considerable attention in the literature and in the popular media. "Silent Messages" contains a detailed discussion of my findings on inconsistent messages of feelings and attitudes (and the relative importance of words vs. nonverbal cues) on pages 75 to 80.

Total Liking = 7% Verbal Liking + 38% Vocal Liking + 55% Facial Liking

Please note that this and other equations regarding relative importance of verbal and nonverbal messages were derived from experiments dealing with communications of feelings and attitudes (i.e., like-dislike). Unless a communicator is talking about their feelings or attitudes, these equations are not applicable. Also see references 286 and 305 in Silent Messages -- these are the original sources of my findings. [bold added].

For a thorough debunking of this myth, see Contributions of Different Modalities to "Content".

Nonverbal communication is important in a contract negotiation. Eye-rolling usually communicates disagreement. A long sigh usually communicates frustration. Busting out laughing at the other party's counteroffer can be an effective way of communicating your intent to consider it. However, unless the parties intend to discuss their emotions in lieu of contract terms, they shouldn't go in to the negotiation thinking that 93% of the message they are sending is nonverbal. If they do, they'll find themselves focusing too much on the form of the negotiation instead of the substance.

As contracting professionals, we all need to do our part to stop the spread of this common communication myth.

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

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

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 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

When taking a class on the Cost Accounting Standards (CAS) last year, I came across a DCAA rule that made perfect sense to the auditors, but left some of the contracting officers scratching their heads. The rule deals with how to calculate the cost impact of a CAS noncompliance or accounting change on a cost-plus-award-fee (CPAF) contract.

Chapter 8 of the DCAA Contract Audit Manual (CAM) contains guidance on how to evaluate cost impact proposals submitted to the Government as a result of a CAS noncompliance or cost accounting practice change (see CAM 8-503). The CAM outlines a five-step process, which is shown in an abbreviated form below:

Step 1 Compute the increased/decreased cost estimates and/or accumulations for CAS-covered contracts and subcontracts.

Step 2 Combine the increased/decreased cost estimates and/or accumulations within each contract group.

Step 3 Determine the increased/decreased cost paid by the Government for each contract group, using the net impact on cost estimates, accumulations and profits/fees.

Step 4 Determine the increased costs paid by the Government in the aggregate by combining across contract groups the increased/decreased costs paid by the Government for both contract groups, as determined in step 3.

Step 5 Negotiate a settlement with the contractor.

The guidance stated under step 3 for determining increased costs to the Government states the following:

( c ) Profit/fee. Increased costs paid by the Government also occur when more profit/fee was negotiated than would have been contemplated by the contracting parties if the cost estimate had been based on changed or compliant practices. Accounting practice changes and estimating noncompliances affect fixed, target, and incentive fees. Accumulation noncompliances also affect incentive fees. Profit/fee that is not based on estimated costs (e.g., award fees) is generally not subject to adjustment.

There is a similar guidance for determining decreased costs to the Government.

Thus, the assumption is that the Government would have negotiated a lesser fixed, target, or incentive fee but for the contractor's CAS noncompliance or accounting practice change that caused the cost estimate to be higher than it should have been. For example, let's say a contracting officer negotiates a cost-plus-fixed-fee (CPFF) contract for an estimated cost of $1,000,000 and a fixed-fee of $100,000. The contractor completes the contract and is paid the fixed-fee of $100,000. However, it's later discovered that the contractor used a noncompliant estimating practice that caused the cost estimate to be higher than it should have been. If the contractor had used a compliant estimating practice, their estimated cost would have been $900,000. It is assumed that had the contracting officer known this, he/she would have negotiated a fixed-fee of $90,000. This may not be true in some cases, but it is reasonable as a general assumption.

This guidance is based on an interpretation in the FAR Appendix at 9903.306( c ), which states:

"The statutory requirement underlying this interpretation is that the United States not pay increased costs, including a profit enlarged beyond that in the contemplation of the parties to the contract when the contract costs, price, or profit is negotiated, by reason of a contractor's failure to use applicable Cost Accounting Standards, or to follow consistently its cost accounting practices. In making price adjustments under the Cost Accounting Standards clause at 9903.201-4(a) in fixed price or cost reimbursement incentive contracts, or contracts providing for prospective or retroactive price redetermination, the Federal agency shall apply this requirement appropriately in the circumstances."

So far, so good.

What's puzzling is the guidance stated in the last sentence of the above-quoted paragraph from the CAM:

Profit/fee that is not based on estimated costs (e.g., award fees) is generally not subject to adjustment.

Thus, the assumption is that, in the case of CPAF contracts, a contractor's cost estimate has no effect on the amount of award fee that a contractor is eventually paid. To illustrate this, let's say a contracting officer negotiates a CPAF contract with an estimated cost of $1,000,000 and an award fee pool of $100,000 (assume no base fee). After performance, the Government determines that the contractor is entitled to 100% of the available award fee and pays the contractor $100,000 (the typical practice is to determine award fee entitlement by applying the earned percentage to the award fee pool?this is a required practice in DoD). It is later found that the contractor used a noncompliant estimating practice which caused the cost estimate to be higher than it should have been. If the contractor had used a compliant estimating practice, their estimated cost would have been $900,000. In this case, it is assumed that had the contracting officer known this, he/she still would have negotiated an award-fee pool of $100,000. This may be true in some cases, but it is curiously inconsistent with the assumption made when calculating the cost impact on a CPFF contract.

Is it reasonable to assume that a contractor's estimated cost has no affect on the size of the award fee pool that a contracting officer negotiates?

While it is true that a structured approach to developing prenegotiation fee objectives, which relies heavily on prenegotiation cost objectives, is generally not required when developing a prenegotiation award-fee pool objective, it's quite a stretch to assume that prenegotiation cost objectives have no effect on the prenegotiation award fee pool objective (or the size of the award fee pool negotiated). Official guidance on negotiating award fee pools acknowledges that estimated cost can be a consideration. The Air Force Material Command Award Fee Guide offers the following guidance for establishing the award fee pool:

There are different methods that can be used to establish the award-fee pool.

The methods listed below are possible approaches:

- Review past acquisition history/experience

- Research current award-fee pools for similar efforts

- Use Weighted Guidelines Method as a reference point

- Establish evaluation criteria and apply a percentage based on risk and importance

- Cash flow analysis

[bold added].

The Navy-Marine Corps Award Fee Guide offers almost identical guidance.

In my experience, as well as that of some of my colleagues, a contract's estimated cost was a significant factor (if not the most significant factor) in negotiating the size of award fee pools in CPAF contracts. I would be surprised if my experience were atypical.

I'd be interested in hearing to what extent my readers consider estimated costs when negotiating an award fee pool for a CPAF contract. Let me know your experience.

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

There seems to be a closely held belief by some in the Federal contracting community that the FAR requires the contracting officer to perform a price analysis before awarding any contract. CON 111 used to contain the following statements:

You must use price analysis to ensure that the overall price is fair and reasonable. Even when an offeror is required to provide the most in depth type of proposal data ? data known as "cost or pricing data" -- you will still need to use price analysis to ensure that the overall price is fair and reasonable. Point: You'll always, always, always use price analysis!

A number of my colleagues, both practitioners and instructors, would agree with those statements. Further, I have had a number of students pre-programmed by their contracting offices to believe that price analysis is always required.

What does the FAR say?

Subparagraphs a(2) and a(3) of FAR 15.404-1 discuss the requirements for the performance of price and cost analysis:

(2) Price analysis shall be used when cost or pricing data are not required (see paragraph (B) of this subsection and 15.404-3).

(3) Cost analysis shall be used to evaluate the reasonableness of individual cost elements when cost or pricing data are required. Price analysis should be used to verify that the overall price offered is fair and reasonable.

Note that a(2) qualifies the requirement for price analysis with the language "when cost or pricing data are not required." To interpret a(2) to mean that price analysis is always required would render meaningless the qualifying language in the statement ("when cost or pricing data are not required"). Such an interpretation would be inconsistent with the fundamental principle that statutes and regulations must be read and interpreted as a whole, thereby giving effect to all provisions. See Waste Mgmt. of North Am., B-225551, B-225553, Apr. 24, 1987, 87-1 CPD ? 435 at 5.

Subparagraph a(3) sets forth the requirement for performing cost analysis (i.e., when cost or pricing data are required) and contains the statement that "Price analysis should be used to verify that the overall price offered is fair and reasonable." Does this statement require price analysis when cost or pricing data are required? To answer this, we need to review the definitions of "should" and "shall" in FAR 2.101:

"Should" means an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance.

"Shall" means the imperative.

Thus, when cost or pricing data are required, the contracting officer is 1) required to perform cost analysis and 2) expected to perform price analysis unless it's inappropriate for a particular circumstance. That's different than stating that the contracting officer must perform both price and cost analysis when cost or pricing data are required. The implicit acknowledgement that price analysis could be inappropriate in a particular circumstance (and thus, not required) contradicts the assertion that price analysis is always required.

Why the Confusion?

I'm not sure why some folks think that price analysis is always required. Perhaps they haven't read the FAR carefully. I recently had my students read subparagraphs a(2) and a(3) and asked them whether it was true or false that price analysis was always required. They were split about 50% true 50% false. When I had the students who answered "False" re-read a(2) and a(3), I was able to get the split to about 15% true 80% false and 5% I don't know. I can live with that.

A more likely reason behind the existence of this myth is that an uncomfortably large number of people in our field do not know what the FAR says because they do not read it. Instead, they are guided by, and they repeat, rumors.

Don Mansfield

If the preconceived notions that our students are bringing to the classroom is any indication, there's a good deal of myth-information being spread regarding indefinite-delivery indefinite-quantity (IDIQ) contracts. The one belief that I want to focus on today deals with obligating the contract minimum upon award of an IDIQ contract.

You don't have to obligate the minimum when you award an IDIQ contract. You can wait until you issue an order to make obligations.

This belief usually stems from a fundamental misunderstanding of the difference between creating and obligation and recording an obligation. The difference is explained in Chapter 7 of the GAO Redbook (p. 7-8):

It is important to emphasize the relationship between the existence of an obligation and the act of recording.

Recording evidences the obligation but does not create it. If a given transaction is not sufficient to constitute a valid

obligation, recording it will not make it one. E.g., B-197274, Feb. 16, 1982 (?reservation and notification? letter held not

to constitute an obligation, act of recording notwithstanding, where letter did not impose legal liability on government

and subsequent formation of contract was within agency?s control). Conversely, failing to record a valid obligation

in no way diminishes its validity or affects the fiscal year to which it is properly chargeable. E.g., B-226782, Oct. 20,

1987 (letter of intent, executed in fiscal year 1985 and found to constitute a contract, obligated fiscal year 1985 funds,

notwithstanding agency?s failure to treat it as an obligation). See also 63 Comp. Gen. 525 (1984); 38 Comp. Gen. 81,

82?83 (1958).

[bold added].

When a contracting officer awards an IDIQ contract, she has obligated the Government to purchase the contract minimum. She has created an obligation. When that same contracting officer cites a long line of accounting (containing the appropriation citation) and a dollar amount on the award document, she has recorded an obligation (when she distributes the award document to her accounting office, they will record the obligation in the agency's books).

Let's say that the contracting officer awards the IDIQ contract, but does not record the amount of the Government's obligation on the award document. What has happened? An obligation has been created, but has not been recorded. Is there a problem with that? (Yes, go back and read the bolded sentence in the citation that I provided above). The problem is that the contracting officer has caused her agency to violate the ?recording statute,? 31 USCA ? 1501, which sets forth the criteria for recording an obligation as follows:

(a) An amount shall be recorded as an obligation of the United States Government only when supported

by documentary evidence of?

(1) a binding agreement between an agency and another person (including an agency) that is?

(A) in writing, in a way and form, and for a purpose authorized by law; and

(B.) executed before the end of the period of availability for obligation of the appropriation or fund used

for specific goods to be delivered, real property to be bought or leased, or work or service to be provided?..

In the second example I provided, there exists a binding document that meets the criteria of (1)(A) and (B.) (the IDIQ contract), but no obligation would have been recorded. The agency would have underrecorded its obligations. That's bad. Chapter 7 of the GAO Redbook (p. 7-6) states the following regarding under- and overrecording of obligations:

The overrecording and the underrecording of obligations are equally improper. Both practices make it impossible

to determine the precise status of the appropriation and can lead to other adverse consequences. Overrecording

(recording as obligations items that are not) is usually done to inflate obligated balances and reduce unobligated balances

of appropriations expiring at the end of a fiscal year. Underrecording (failing to record legitimate obligations)

may result in violating the Antideficiency Act. 31 U.S.C. ? 1341.

I always urge my students to take a course in Federal Appropriations Law at some time in their career--the sooner the better. Unlike Federal Acquisition Law, where the acquisition team is permitted to "assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority", there is very little flexibility when it comes to applying the rules Federal Appropriations Law.

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

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 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)






      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

      [*]

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

The end of the fiscal year is always a good time to start brush up on fiscal law?particularly the bona fide needs rule. Contracting offices may soon face questions of fiscal law that have already been answered in Volume I, Chapter 5, of Principles of Federal Appropriations Law (GAO Red Book).

One interesting case of fiscal law, which you won't find in the Red Book, deals with funding undefinitized contract actions (UCAs) that cross fiscal years. Consider the following scenario:

A DoD activity issues a UCA in late fiscal year 2009 with a not-to-exceed price of $1,000,000. In accordance with DFARS 217.7404-4(a), the agency obligates $500,000 of the not-to-exceed price (the DFARS limit is currently 50% of the price ceiling, or 75% if the agency is in receipt of a "qualifying proposal"). The agency does not get around to definitizing the UCA until early FY 2010. When they do, the contracting officer and the contractor agree to a final contract price of $950,000. The unfunded balance is $450,000 (assuming actual costs prior to definitization were $500,000).

Assuming the contract is funded with annual appropriations, which fiscal year's appropriation must be charged to fund the additional $450,000?

Believe it or not, fiscal year 2010 funds must be used. A number of people that I have spoken to are befuddled by this, because they believe that the definitizing contract modification would be fulfilling a bona fide need of FY 2009, which would thus require the use of FY 2009 funds. However, this is incorrect.

The Comptroller General answered this question in Obligating Letter Contracts, B-197274, September 23, 1983. In that case, a procurement official from the Department of Justice requested guidance on how to fund letter contracts that crossed fiscal years. Agency practice had been to record an obligation for the amount of the price ceiling and include a clause that limited the liability of the Government to 50% of the price ceiling. In other words, they would overrecord their obligation. The procurement official described his dilemma as follows:

"GIVEN THE 'BONA FIDE NEED' RULE, THE APPLICATION OF YOUR DECISION B-197274 TO LETTER CONTRACTS UNDER THE CIRCUMSTANCES SET FORTH ABOVE PLACES CONSIDERABLE PRESSURE ON THE GOVERNMENT TO SETTLE WITH CONTRACTORS AND DEFINITIZE THESE LETTER CONTRACTS NOT LATER THAN THE END OF THE FISCAL YEAR IN WHICH THEY WERE EXECUTED. IF THE GOVERNMENT DID NOT DO SO, NEITHER FUNDS FOR THAT FISCAL YEAR NOR THE FOLLOWING FISCAL YEAR APPEAR TO BE AVAILABLE FOR DEFINITIZATION. FURTHERMORE, THE MAXIMUM GOVERNMENT COST LIABILITY SET FORTH IN EACH OF THESE LETTER CONTRACTS WOULD BECOME THE PRICE CEILING FOR A CONTRACT DEFINITIZED IN A SUBSEQUENT FISCAL YEAR. BECAUSE THIS DOLLAR AMOUNT IS GENERALLY 50 PER CENT OR LESS OF THE TOTAL ESTIMATED COST, IT IS HIGHLY UNLIKELY THAT SETTLEMENT AND DEFINITIZATION WOULD OCCUR. MOST LIKELY, THESE LETTER CONTRACTS WOULD HAVE TO BE TERMINATED, THE CONTRACTOR WOULD RECEIVE PAYMENT FOR THE WORK HE HAD PARTIALLY PERFORMED AND THE GOVERNMENT WOULD BE WITHOUT THE COMPLETED PRODUCT OR SERVICE FOR WHICH IT HAD CONTRACTED."

The Comptroller General responded as follows:

IT APPEARS THAT THE QUESTION PRESENTED ARISES FROM A MISCONCEPTION OF THE BONA FIDE NEED RULE. UNDER THAT RULE, OBLIGATIONS MAY ONLY BE INCURRED TO SATISFY BONA FIDE NEEDS OF THE PERIOD OF APPROPRIATION AVAILABILITY. THAT IS NOT TO SAY, HOWEVER, THAT THE NEEDS OF A PARTICULAR PERIOD MUST BE FULLY SATISFIED DURING THAT PERIOD. AN UNFULFILLED NEED OF ONE PERIOD MAY WELL BE CARRIED FORWARD TO THE NEXT AS A CONTINUING NEED WITH THE NEXT PERIOD'S APPROPRIATION BEING AVAILABLE FOR FUNDING.

[?]

CONSEQUENTLY, WHERE A LETTER CONTRACT AND THE SUBSEQUENT SUPERSEDING AGREEMENT ARE ENTERED INTO DURING THE SAME FISCAL YEAR, THE COST OF BOTH CONTRACTS IS OBLIGATED AGAINST THE SAME FISCAL YEAR APPROPRIATION. HOWEVER, WHEN THE LETTER CONTRACT IS ENTERED INTO DURING ONE YEAR AND THE DEFINITIZED AGREEMENT DURING THE NEXT, THEN IT IS APPROPRIATE TO OBLIGATE ONLY THE AMOUNT OF THE MAXIMUM LIABILITY WHICH MAY BE INCURRED UNDER THE LETTER CONTRACT SINCE THE UNDERLYING CONTRACT DOCUMENT SUPPORTS OBLIGATING NO MORE. ONCE THE AGREEMENT IS DEFINITIZED (WHICH IS BY NO MEANS A CERTAINTY) THE LETTER CONTRACT IS SUPERSEDED AND THE LEGAL LIABILITY OF THE PARTIES IS MERGED INTO THE NEW CONTRACT. THE DEFINITIZED CONTRACT THEN SUPPORTS OBLIGATING AGAINST THE APPROPRIATION CURRENT AT THE TIME IT IS ENTERED INTO SINCE IT IS, IN FACT, A BONA FIDE NEED OF THAT YEAR. THE AMOUNT OF THE DEFINITIZED CONTRACT WOULD ORDINARILY BE THE TOTAL CONTRACT COST LESS EITHER THE ACTUAL COSTS INCURRED UNDER THE LETTER CONTRACT (WHEN KNOWN) OR THE AMOUNT OF THE MAXIMUM LEGAL LIABILITY PERMITTED BY THE LETTER CONTRACT (WHEN THE ACTUAL COSTS CANNOT BE DETERMINED).

Following the initial example, the $450,000 to be added to the contract when the definitizing contract modification is executed covers a bona fide need of fiscal year 2010. This need was originally a bona fide need of FY 2009, but it went unsatisfied within the time period available for new obligations. As such, the bona fide need was carried forward to FY 2010.

UCAs have become a hot topic in contracting, particularly in DoD. In response to a GAO report that found a significant number of UCAs still undefinitized beyond the 180-day window imposed at DFARS 217.74, the DFARS was recently revised to include more rules pertaining to UCAs. However, I never saw any discussion about how to fund UCAs that cross fiscal years (maybe everybody already knows the rule :lol: ). Based on the GAO report, I'm willing to speculate that a good number of UCAs are left undefinitized until the fiscal year following their issuance. For UCAs funded by annual appropriations, I wonder what fiscal year's funds are being obligated when the UCAs are definitized. My guess is, in most cases, the same fiscal year's funds that were obligated for the UCA.

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

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

I read something that I found remarkable in the recently published GAO decision Master Lock Company, LLC, B-309982.2, June 24, 2008. Bob posted the decision on the Wifcon home page. The protester argued that the agency's evaluation of the awardee's past performance should have taken into account the fact that they had declined a delivery order under a different IDIQ contract. In response, the agency argued that a delivery order was not binding and the GAO agreed. Here's an excerpt:

"During the course of this protest, Master Lock also argued that the agency?s evaluation of Evergreen?s past performance was unreasonable. As discussed above, Evergreen declined to accept order No. 2745, which was issued under a different contract. DLA acknowledges that it did not consider these events in its evaluation of Evergreen?s past performance. AR at 8. The agency contends, however, that it was not required to do so because the submission of a quote by a vendor under an ID/IQ contract does not result in a binding obligation. Thus, the agency argues, because Evergreen did not accept the order, there was no contract performance for the agency to evaluate.

The agency
is correct
that neither the submission of a quote by a vendor
nor the issuance of an order
by an agency results in a binding contractual obligation. Rather, the government?s order represents an offer that the vendor may accept either through performance or by a formal acceptance document. M. Braun, Inc., B-298935.2, May 21, 2007, 2007 CPD ? 96 at 3."

[italics added].

However, the case that the GAO cited as support for their position did not deal with a task or delivery order under an IDIQ contract--it was a purchase order using simplified acquisition procedures. There's a big difference. FAR 16.506 requires the inclusion of the clauses at FAR 52.216-18, Ordering, 52.216-19, Order Limitations, and 52.216-22, Indefinite Quantity, in an IDIQ contract. Here's what the Indefinite Quantity clause says regarding the contractor's obligation to perform:

"Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause.
The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the 'maximum.'
The Government shall order at least the quantity of supplies or services designated in the Schedule as the 'minimum.'"

[bold added].

Now, what in this required FAR clause would give the contractor the right to decline an order, provided that the order complies with the Ordering and Order Limitations clauses? I don?t see it.

The decision includes the following statements further on in an attempt to clarify:

"Although the work required under any task or delivery order will only become a binding obligation on the parties if the vendor accepts the order, the underlying ID/IQ contract may itself have obligations. For example, a contract may require a vendor to accept orders placed by the agency within certain parameters.?

This is conceptually incorrect. IDIQ contracts do require (not ?may?) the contractor to accept orders placed by the agency within certain parameters (stated in the Ordering and Order Limitations clauses). The only instance where a contractor?s acceptance of a task or delivery order would matter would be if the agency?s order was not within the stated parameters in the Ordering and Order Limitations clauses. Furthermore, an arrangement where the Government was required to order a minimum quantity and the contractor would not be required to perform would arguably lack consideration and, thus, not be an enforceable contract.

The main problem with this decision is that it characterizes the exception to the rule (i.e., situations where the contractor may decline a task or delivery order under an IDIQ contract) as the rule itself. It also fails to recognize the distinction between purchase orders made in the open market and task and delivery orders under IDIQ contracts.

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

Some of you were confused when I classified the following statement as myth-information in the Federal Contracting Myths thread:

Offerors with no record of past performance must be rated neutral.

Let me explain where I was coming from.

In April of 1994, OFPP used a variation of the word neutral with the term "past performance" in a Federal Register notice soliciting comments on their proposed pilot program to increase the use of past performance information in source selections. The notice stated:

"New" Firms. One of the most frequently asked questions about using past performance information in source selections is, "How are new firms to be treated?" In OFPP's view, new firms should be neither rewarded nor penalized as a result of their lack of performance history. If, for example, past performance is to be rated on a scale of one to ten, a new firm should be given the average score of the other competing offerors. Unless the RFP contains a specific requirement for prior performance based on safety, health, national security, or mission essential considerations, agencies should "neutralize" the past performance factor and evaluate the merits of proposals received from new firms in accordance with other stated evaluation criteria. [59 FR 18168-02]

In November of 1994, the Federal Acquisition Streamlining Act (FASA) (Public Law 103-355) amended 41 USC 405 to include a new subsection (j) implementing the Government's policy of considering past performance in source selections. (j)(2) contains the following language:

In the case of an offeror with respect to which there is no information on past contract performance or with respect to which information on past contract performance is not available, the offeror may not be evaluated favorably or unfavorably on the factor of past contract performance.

The FAR Council attempted to "plain language" the statute when it came time to implementing the new policy. In a proposed rule implementing the past performance information policy, FAR 15.608(a)(2)(iii) contained the following statement:

Firms shall be allowed to compete for contracts even though they lack a history of relevant past performance. [59 FR 8108]

When the final rule came out in March 1995 (FAC 90-26), the proposed rule was changed to read as follows:

Firms lacking relevant past performance history shall receive a neutral evaluation for past performance.

The background statement of the FAC stated that the final rule "clarifies that firms lacking relevant performance history shall receive a neutral evaluation for past performance." (60 FR 16718-01) However, since there is no discussion of the comments received in response to the proposed rule, it is unclear why the proposed rule needed clarification.

Apparently, the FAR Council thought that the rule needed even further clarification and proposed the following definition of a neutral evaluation in the first proposed FAR Part 15 Rewrite:

Firms lacking relevant past performance history shall receive a neutral evaluation for past performance. A neutral evaluation means

any assessment that neither rewards nor penalizes firms without relevant performance history. [61 FR 4830]

However, this only muddied the waters. The background of the second proposed rule provides the following explanation:

Several public comments requested that a definition of "neutral'' past performance rating be included in the final rule. This proposed

rule provides only general guidelines for establishing a neutral rating, since what constitutes "neutral'' seems to change with the

circumstances of each individual source selection. However, suggestions from the general public for a more rigorous definition are solicited

and will be considered by the FAR Council in drafting the final rule. [62 FR 26639]

The second proposed rule also contained a valiant attempt to define a neutral past performance evaluation as follows:

Firms lacking any relevant past performance history shall receive a neutral evaluation for past performance. The evaluation

approach shall reflect the circumstances of each acquisition. A neutral evaluation is one that neither rewards nor penalizes offerors without

relevant performance history (41 U.S.C. 405). While a neutral evaluation will not affect an offeror's rating, it may affect the

offeror's ranking if a significant number of the other offerors participating in the acquisition have past performance ratings either above or below satisfactory.[62 FR 26639]

This language failed to clarify anything, so in the final rule the FAR Council said the heck with it, let's just parrot the statute:

Definition of neutral past performance evaluations. The proposed rules provided a definition of neutral past performance evaluations. Public comments recommended that we revise the definition and provide detailed instructions on how to apply neutral past performance ratings in any source selection. 41 U.S.C. 405(j)(2) requires offerors without a previous performance history, to be given a rating that neither rewards nor penalizes the offeror. We did not adopt the public comment recommendations, opting instead to revise the final rule to reflect the statutory language, so that the facts of the instant acquisition would be used in determining what rating scheme is appropriate. This alternative provides for flexible compliance to satisfy requirements of the statute. [62 FR 51224-01, FAC 97-02]

This final rule gave us the rule as it is stated now at FAR 15.305(a)(2)(iv):

In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available, the offeror may not be evaluated favorably or unfavorably on past performance.

So the FAR Council took the language of the statute, attempted to clarify it by introducing the term "neutral past performance evaluation", tried again to clarify it by defining "neutral past performance evaluation", confused a lot of people, then gave up. "Neutral past performance" was removed from the FAR over 11 years ago after a brief and infamous appearance. Despite this fact, it remains popular in the federal contracting vernacular.

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

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 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

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

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

“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.

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