contractor100

Please note that the "Ask A Professor's" questioner did not ask the question that the Professor answered (incorrectly.) I believe the questioner was asking, Can the prime include the prime's markup on the sub's labor (G&A, materials handling fee) as "cost of contract performance"? That is a harder question, I cannot find the answer either. Does anyone else know? Original question: "Can the prime include the G&A on subcontracts in the calculations to achieve the goals of 51% per the above referenced FAR? Scenario - This is in reference to a CPFF type contract for technical/scientific support to an 8(a) ANC [Alaska Native Corporation] contractor serving as the prime; however they have proposed a subcontractor (a small business), and per FAR 52.219-14((1) "Limitations on Subcontracting", the prime must perform at least 50% of the cost of contract. During review of the proposal, based on direct labor cost, the subcontractor is performing more than the prime. It appears the prime is including the G&A on subcontracts as labor."

None. But quite a few COs adopted DCAA's interpretation before the rewrite came out in 2007. I know this from personal experience/industry exchanges. LM_ABITWT may be dealing with a CO that has done so. Verbum sapientis, is all.

Thanks Carl

See the third paragraph in this memo: http://www.dcaa.mil/mmr/07-PPD-023.pdf

I don't see a definition of "consider" anywhere, but that doesn't seem to fit the ordinary meaning of the word. I think rejecting it as nonresponsive makes the word "consider" meaningless. Part 19 does not apply, so the procedures in part 19, including rejecting the offer as nonresponsive, are not applicable. I think the language means a quote has to be "fairly considered... in accordance with the evaluation criteria in the RFQ." If you are saying the quote can be downgraded because socioeconomic status is an evaluation criterion, fine. But that was the old rule.

Okay, harmonize it. What does the language in 8.405-2, which was there long before the new language in 8.405-5(a), mean now. Surely the new language in 8.405-5(a) does not delete the words that are still there in 8.405-2. ’...we must follow the canons of statutory interpretation which demand that a court give meaning to each word and phrase when explicating a statute, and read the component parts of a legislative enactment as a unified whole. [ See United Technologies Corp. v. Browning-Ferris Indus., Inc., [1994] USCA1 432; 33 F.3d 96, 101 (1st Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1176, 130 L.Ed.2d 1128 (1995); United States v. Ven-Fuel, Inc., [1985] USCA11 14; 758 F.2d 741, 751-52 (1st Cir.1985); see also Greenwood Trust Co. v. Massachusetts, [1992] USCA1 399; 971 F.2d 818, 827 (1st Cir.1992)]

So what does it mean to "setaside" an order on a GSA schedule, given that the boldface language below has not been changed? 8.405-2 Ordering procedures for services requiring a statement of work. (a) General. Ordering activities shall use the procedures in this subsection when ordering services priced at hourly rates as established by the schedule contracts. The applicable services will be identified in the Federal Supply Schedule publications and the contractor’s pricelists. For establishing BPAs and for orders under BPAs see 8.405-3. ( Statements of Work (SOWs). All Statements of Work shall include a description of work to be performed; location of work; period of performance; deliverable schedule; applicable performance standards; and any special requirements (e.g., security clearances, travel, special knowledge). To the maximum extent practicable, agency requirements shall be performance-based statements (see Subpart 37.6). © Request for Quotation procedures. The ordering activity must provide the Request for Quotation (RFQ), which includes the statement of work and evaluation criteria (e.g., experience and past performance), to schedule contractors that offer services that will meet the agency’s needs. The RFQ may be posted to GSA’s electronic RFQ system, e-Buy (see 8.402(d)). (1) Orders at, or below, the micro-purchase threshold. Ordering activities may place orders at, or below, the micro-purchase threshold with any Federal Supply Schedule contractor that can meet the agency’s needs. The ordering activity should attempt to distribute orders among contractors. (2) For orders exceeding the micro-purchase threshold, but not exceeding the simplified acquisition threshold. (i) The ordering activity shall develop a statement of work, in accordance with 8.405-2(. (ii) The ordering activity shall provide the RFQ (including the statement of work and evaluation criteria) to at least three schedule contractors that offer services that will meet the agency’s needs or document the circumstances for restricting consideration to fewer than three schedule contractors based on one of the reasons at 8.405-6(a). (iii) The ordering activity shall specify the type of order (i.e., firm-fixed-price, labor-hour) for the services identified in the statement of work. The contracting officer should establish firm-fixed-prices, as appropriate. (3) For proposed orders exceeding the simplified acquisition threshold. In addition to meeting the requirements of 8.405-2©(2)(i) and (iii), the following procedures apply: (i) Each order shall be placed on a competitive basis in accordance with ©(3)(ii) and (iii) of this section, unless this requirement is waived on the basis of a justification that is prepared and approved in accordance with 8.405-6. (ii) The ordering activity contracting officer shall provide an RFQ that includes a statement of work and the evaluation criteria. (iii) The ordering activity contracting officer shall— (A) Post the RFQ on e-Buy to afford all schedule contractors offering the required services under the appropriate multiple-award schedule(s) an opportunity to submit a quote; or ( Provide the RFQ to as many schedule contractors as practicable, consistent with market research appropriate to the circumstances, to reasonably ensure that quotes will be received from at least three contractors that can fulfill the requirements. When fewer than three quotes are received from schedule contractors that can fulfill the requirements, the contracting officer shall prepare a written determination to explain that no additional contractors capable of fulfilling the requirements could be identified despite reasonable efforts to do so. The determination must clearly explain efforts made to obtain quotes from at least three schedule contractors. © Ensure all quotes received are fairly considered and award is made in accordance with the evaluation criteria in the RFQ. (4) The ordering activity shall provide the RFQ (including the statement of work and the evaluation criteria) to any schedule contractor who requests a copy of it. (d) Evaluation. The ordering activity shall evaluate all responses received using the evaluation criteria provided to the schedule contractors. The ordering activity is responsible for considering the level of effort and the mix of labor proposed to perform a specific task being ordered, and for determining that the total price is reasonable. Place the order with the schedule contractor that represents the best value (see 8.404(d) and 8.405-4). After award, ordering activities should provide timely notification to unsuccessful offerors. If an unsuccessful offeror requests information on an award that was based on factors other than price alone, a brief explanation of the basis for the award decision shall be provided. (e) Use of time-and-materials and labor-hour orders for services. When placing a time-and-materials or labor-hour order for services, see 8.404(h). (f) Minimum documentation. The ordering activity shall document— (1) The schedule contracts considered, noting the contractor from which the service was purchased; (2) A description of the service purchased; (3) The amount paid; (4) The evaluation methodology used in selecting the contractor to receive the order; (5) The rationale for any tradeoffs in making the selection; (6) The price reasonableness determination required by paragraph (d) of this subsection; (7) The rationale for using other than— (i) A firm-fixed price order; or (ii) A performance-based order; and (8) When an order exceeds the simplified acquisition threshold, evidence of compliance with the ordering procedures at 8.405-2©. jlbdca, august, and I believe it means an order can't be setaside because the RFQ has to be given to any schedule contractor who asks for it, and that schedule contractor's offer has to be considered. Where is any language consistent with part 19 on setasides, see bold face language below? 19.501 General. (a) The purpose of small business set-asides is to award certain acquisitions exclusively to small business concerns. A “set-aside for small business” is the reserving of an acquisition exclusively for participation by small business concerns. A small business set-aside may be open to all small businesses. A small business set-aside of a single acquisition or a class of acquisitions may be total or partial. 19.502-4 Methods of conducting set-asides. (a) Total small business set-asides may be conducted by using simplified acquisition procedures (see Part 13), sealed bids (see Part 14), or competitive proposals (see Part 15). Partial small business set-asides may be conducted using sealed bids (see Part 14), or competitive proposals (see Part 15). ( Except for offers on the non-set-aside portion of partial set-asides, offers received from concerns that do not qualify as small business concerns shall be considered nonresponsive and shall be rejected. However, before rejecting an offer otherwise eligible for award because of questions concerning the size representation, an SBA determination must be obtained (see Subpart 19.3).

https://dap.dau.mil/...estionID=110935 The issue is what does the "cost of contract performance incurred for personnel" in the limitations on subcontracting clause mean. He or she says it cannot include any G&A. I cannot understand the reasoning below. "3. As indicated above, FAR 52.219-14( (1) states that the base for calculating the prime contractor’s “50%” (i.e., versus a “51%”) expenditure requirement is the cost of contract performance incurred for personnel. First, because G&A expense includes both labor and non-labor costs, the entire G&A expense could not, in any event, be counted in the labor cost base to determine whether the contractor’s proposal is compliant with the “50%” work percentage requirement because the relevant cost of contract performance must be incurred for personnel only. Furthermore, pursuant to the definition in FAR 2.101, unlike “direct” labor cost, G&A expense covers the general management and administration of the business unit as a whole and does not include those management expenses whose beneficial or causal relationship is associated with a particular cost objective (i.e., an individual contract). Therefore, even if that portion of the G&A expense which represents only labor costs could be segregated, such labor costs cannot be included as part of the performance cost base to determine compliance with "The 50% Rule"." Also please note the question was not answered, the question was: Can the prime include the G&A on subcontracts in the calculations to achieve the goals of 51% per the above referenced FAR?

To original inquiry: Notice also that the [Federal Funding Accountability and Transparency Act] FFATA requirement to report subcontracts only goes to first-tier subcontracts. So the practice is not even required to be disclosed.

"I don't read the language that you bolded as referring to the limitation on subcontracting clause, because I don't view a contract clause as a "program eligibility requirement." Totally agree. Is the loop really closed? Setasides are still not mandatory. Can't ordering agencies still make socioeconomic status an evaluation criterion, even though that language in 8.405-5( has been taken out, and count a GSA order to a small business as a small business award, while that small business subcontracts 99% of the thing back to a large business?

Agree with jlbdca, that the regs didn't prohibit setaside but made it effectively impossible. So agencies used an evaluation preference to actually limit consideration to only small bidders. But here is something more interesting. Does the new reg close one of the biggest subcontracting loopholes in the game? Before the new reg, on a GSA schedule buy, contractors could win work based on their small business status, and not have to comply with the limitations on subcontracting clause. Part 19 did not apply. Sp the small business that won one of these "preference" contests could subcontract as much of the award as they wanted! And they did. So does the language in bold prevent this from happening or not, what is anyone's opinion? 8.405-5 Small business. (a) Although the preference programs of part 19 are not mandatory in this subpart, in accordance with section 1331 of Public Law 111-240 (15 U.S.C. 644®)— (1) Ordering activity contracting officers may, at their discretion— (i) Set aside orders for any of the small business concerns identified in 19.000(a)(3); and (ii) Set aside BPAs for any of the small business concerns identified in 19.000(a)(3). (2) When setting aside orders and BPAs— (i) Follow the ordering procedures for Federal Supply Schedules at 8.405-1, 8.405-2, and 8.405-3; and (ii) The specific small business program eligibility requirements identified in part 19 apply. ( Orders placed against schedule contracts may be credited toward the ordering activity’s small business goals. For purposes of reporting an order placed with a small business schedule contractor, an ordering agency may only take credit if the awardee meets a size standard that corresponds to the work performed. Ordering activities should rely on the small business representations made by schedule contractors at the contract level. © Ordering activities may consider socio-economic status when identifying contractor(s) for consideration or competition for award of an order or BPA. At a minimum, ordering activities should consider, if available, at least one small business, veteran-owned small business, service disabled veteran-owned small business, HUBZone small business, women-owned small business, or small disadvantaged business schedule contractor(s). GSA Advantage! and Schedules e-Library at http://www.gsa.gov/fas contain information on the small business representations of Schedule contractors. (d) For orders exceeding the micro-purchase threshold, ordering activities should give preference to the items of small business concerns when two or more items at the same delivered price will satisfy the requirement.

Quote Who is required to file a FFATA report in FSRS? The FFATA Sub-award Reporting System (FSRS) will collect data from Federal prime awardees on sub-awards they make: a prime grant awardee will be required to report on its sub-grants and a prime contract awardee will be required to report on its sub-contracts. CONTRACTS In accordance with Federal Acquisition Regulation clause 52.204-10 (Reporting Executive Compensation and First-Tier Sub-contract Awards), Prime Contractors awarded a federal contract or order are required to file a FFATA sub-award report by the end of the month following the month in which the prime contractor awards any sub-contract greater than $25,000. This reporting requirement will be phased-in (see below): Phase 1: Reporting sub-contracts under federally-awarded contracts and orders valued greater than or equal to $20,000,000, reporting started July 8, 2010. Phase 2: Reporting sub-contracts under federally-awarded contracts and orders valued greater than or equal to $550,000, reporting started October 1, 2010. Phase 3: Reporting sub-contracts under federally-awarded contracts and orders valued greater than or equal to $25,000, reporting starts March 1, 2011. Although the requirement to report sub-awards is being phased-in at certain dollar levels, if you would like to start reporting prior to the start date for your sub-contracts, the system is available to you for reporting. GRANTS In accordance with 2 CFR Chapter 1, Part 170 REPORTING SUB-AWARD AND EXECUTIVE COMPENSATION INFORMATION, Prime Awardees awarded a federal grant are required to file a FFATA sub-award report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $25,000. The reporting requirements are as follows: This requirement is for both mandatory and discretionary grants awarded on or after October 1, 2010. All sub-award information must be reported by the prime awardee. For those new Federal grants as of October 1, 2010, if the initial award is equal to or over $25,000, reporting of sub-award and executive compensation data is required. If the initial award is below $25,000 but subsequent grant modifications result in a total award equal to or over $25,000, the award will be subject to the reporting requirements, as of the date the award exceeds $25,000. If the initial award equals or exceeds $25,000 but funding is subsequently de-obligated such that the total award amount falls below $25,000, the award continues to be subject to the reporting requirements of the Transparency Act and this Guidance. I believe the material quoted from the website, see above, refers to the initial grant from the agency, not the subgrant. It is not clearly written, but here this is from the OMB guidance. For those new Federal grants as of October 1, 2010, if the initial award is equal to or over $25,000, reporting of subaward and executive compensation data is required. If the initial award is below $25,000 but subsequent grant modifications result in a total award equal to or over $25,000, the award will be subject to the reporting requirements, as of the date the award exceeds $25,000. If the initial award equals or exceeds $25,000 but funding is subsequently de- obligated such that the total award amount falls below $25,000, the award continues to be subject to the reporting requirements of the Transparency Act and this Guidance. The statute says" Federal awards" must be reported and the definition of Federal awards excludes "individual transactions" below $25K. See below. So, the exclusion should be identical for the federal contract or grant and the subaward issued below it? If so: 1. What if a contract is awarded below $25K and subsequently increased by mod to greater than $25K? Does 52.204-10 have to be added by mod, or does it kick in automatically if a mod increases the value of the K? I cannot tell from the FAR 2. If no to above question, why does OMB stipulate that the statute applies for grants that get new money? 3. Shouldn't subcontracts/grants be treated exactly the same as contracts/grants? (2) F EDERAL AWARD.—The term ‘‘Federal award’’— (A) means Federal financial assistance and expenditures that— (i) include grants, subgrants, loans, awards, cooperative agreements, and other forms of financial assistance; (ii) include contracts, subcontracts, purchase orders, task orders, and delivery orders; ( does not include individual transactions below $25,000; and © before October 1, 2008, does not include credit card transactions.

Sorry, that was wrong, I see "subaward" means both subcontract and subgrant.

Carl, I notice that your correspondent at the help desk says: "...so you will then add the subaward to the system." Perhaps he is actually referring to a subgrant, as he says "subaward" not "subcontract"?

A major product reseller arranges with two other product resellers to offer all of its products on their GSA schedules. When an RFQ appears on ebuy, each reseller submits a bid. This ensures that the CO always receives at least three bids, meeting the FAR requirement. Assuming there is no discussion among the three parties about the price quoted in the bids, is there anything wrong with this?

What you are saying makes sense. But what is the antecedent of the word, "these," then. It certainly appears to refer to contracts with a value of $25K or more." Applicability of the reporting requirements applies to ?all contracts with a value of $25,000 or more, except classified contracts and contracts? (Ref: FAR 4.1401(a)). Likewise the clause itself requires reporting ?any modifications to these subcontracts that change previously reported data?.

The reg could be written to say, "(and any modifications to a subcontract awarded after 3/31/2011) that increases its value over $25,000,) but it's not. A lot of companies don't want to do the compensation reporting. Why is there this loophole???

Must a subcontract initially funded at less than $25K ever be reported--either the subK details or the compensation of the subKtrs' execs? The clause says (in part): 52.204-10 © (1) Unless otherwise directed by the contracting officer, by the end of the month following the month of award of a first-tier subcontract with a value of $25,000 or more, (and any modifications to these subcontracts that change previously reported data), the Contractor shall report the following information at http://www.fsrs.gov for each first-tier subcontract. (The Contractor shall follow the instructions at http://www.fsrs.gov to report the data.) (3) Unless otherwise directed by the contracting officer, by the end of the month following the month of a first-tier subcontract with a value of $25,000 or more, and annually thereafter, the Contractor shall report the names and total compensation of each of the five most highly compensated executives for each first-tier subcontractor for the subcontractor?s preceding completed fiscal year at http://www.fsrs.gov, if ? (i) In the subcontractor?s preceding fiscal year, the subcontractor received ? (A) 80 percent or more of its annual gross revenues from Federal contracts (and subcontracts), loans, grants (and subgrants) and cooperative agreements; and ( $25,000,000 or more in annual gross revenues from Federal contracts (and subcontracts), loans, grants (and subgrants) and cooperative agreements... So, why do not all contractors award subKs for $1 then modify them to the true value, to avoid the reporting requirements?

Well, contractor100, perhaps it is because some companies flow down 52.204-8 (Annual Representation and Certifications) to all of their subcontractors, even though it is not required.

Why do so many prime contractors make subcontractors notify prime if subKtrs's size changes, either before the prime submits its proposal or during the life of the contract? For the Small Business Subcontracting Program, a subcontractor has to certify its size "at the time it submits its offer as a section 8(d) subcontractor." (SBA regs ? 121.411 (a), quoted in full below.) That could be well in advance of the contractor's submitting its own proposal. There is also no requirement in that reg for the prime contractor ever to ask for a recertification. So why don't primes just ask for the certification with the subcontractor's proposal, or even teaming agreement, then leave it alone? Is there a requirement somewhere else that primes check on subs before counting them against their goals in their eSRS reports? I don't see such a requirement in the eSRS instructions. SBA regs: ? 121.411 What are the size procedures for SBA's Section 8(d) Subcontracting Program? (a) Prime contractors may rely on the information contained in the Central Contractor Registration (CCR), or equivalent data base maintained or sanctioned by SBA, as an accurate representation of a concern's size and ownership characteristics for purposes of maintaining a small business source list. Even though a concern is on a small business source list, it must still qualify and self-certify as a small business at the time it submits its offer as a section 8(d) subcontractor. ( Upon determination of the successful subcontract offeror for a competitive subcontract, but prior to award, the prime contractor must inform each unsuccessful subcontract offeror in writing of the name and location of the apparent successful offeror. © The self-certification of a concern subcontracting or proposing to subcontract under section 8(d) of the Small Business Act may be protested by the contracting officer, the prime contractor, the appropriate SBA official or any other interested party. [61 FR 3286, Jan. 31, 1996, as amended at 69 FR 29205, May 21, 2004]

If you are the prime, you get to decide. CFR Title 13 ? 121.410 What are the size standards for SBA's Section 8(d) Subcontracting Program? For subcontracting purposes pursuant to sections 8(d) of the Small Business Act, a concern is small for subcontracts which relate to Government procurements if it does not exceed the size standard for the NAICS code that the prime contractor believes best describes the product or service being acquired by the subcontract. However, subcontracts for engineering services awarded under the National Energy Policy Act of 1992 have the same size standard as Military and Aerospace Equipment and Military Weapons under NAICS code 541330. [61 FR 3286, Jan. 31, 1996, as amended at 65 FR 30863, May 15, 2000; 69 FR 29205, May 21, 2004; 74 FR 46313, Sept. 9, 2009]

Situation: Business is small for revenue based NAICS code XXXXXX on September 29, 2010. Business's fiscal year ends September 30, 2010. Business submits proposal for contract setaside for small businesses in NAICS code XXXXXX on October 15, 2010, and certifies it is small. October 30, 2010, business closes its books for previous FY and learns that its revenues for 2010, averaged with previous two years, exceed size standard for NAICS XXXXXX. Thus, business was not small when it submitted its proposal and it incorrectly certified. Business is awarded contract on November 1, 2010. Business accepts contract, and there are no size protests. No false claim for the certification on Ocotber 15. T/F? False claim for invoices against the contract. T/F? Other consequences of business accepting/billing the contract? Thanks in advance.

Thanks!

Could you expatiate?

Contractor has a fixed price contract (services) written against a GWACS, to run a cafeteria. Contractor showed, as required, hours by labor category, "for evaluation purposes," in its proposal. Contractor has subsequently been awarded a mod to run another cafeteria under the contract. Contractor provided a proposal for that mod that estimated hours by labor category (at the discounted rates, because the agency required to Ktr to use those rates in its proposal.) This mod is labelled "fixed price" (not FPLOE). There are deliverables on the mod, however, the CLIN the government is purchasing is a unit of "one month of services", and the contractor has billed for each month of the services with no itemization of hours or demonstration that the deliverables have been produced. The mod was necessary because the agency needed to continue services while the government evaluates proposals to run cafeteria 2. The agency is not ready to make an award and has asked the contractor to quote for a bilateral mod to run cafeteria 2 for a few months. The agency has asked the contractor to show number of positions to run the cafeteria, with hours and rates, again. Ktr has been using fewer than half the positions it estimated (in perfectly good faith) in its proposal for the original mod. The agency tech monitor (who is not in close contact with the contract office, which is listed in a different state) has not complained. As far as Ktr knows, the cafeteria is running to the agency's satisfaction. Is there any risk in the Ktr providing its original estimate (with twice the personnel positions actually used) in its proposal for the mod for extension of the services? Or must Ktr downsize its bid to show the actual number of positions it is using (reducing its profits quite a bit.) This is not a competitive proposal. Thanks for opinions -