Retreadfed

I agree with most of what you have written. However, I don't know if this is a true statement. If it is then I agree with what you have written. If it is not, we have to have other facts.

No, but my quick reading of it is that it is similar to SCP-FSS-002.

No. The terms of the contract apply to the BPA and each order issued under the BPA. I did a quick check of the current Schedule 70 solicitation and it incorporates a WD that appears to provide for required wages and fringe benefits for various localities throughout the country (interestingly, the clause cited by Carl does not apply to the IT 70 Schedule). If a similar WD is incorporated in your contract, you would need to pay the wages and fringe benefits for the location where services are provided under each order.

I read this decision. Note that it references a change to SBA regs that took place in 2013. I looked at the FR for the particular rule change. On Oct. 2, 2013, the SBA amended its rules to clearly state that they apply regardless of where the contract is to be performed. I went back to the 2012 version of the CFR to look at 13 CFR 125.2 and could find no indication there that the SBA rules only applied to contracts to be performed in the US.

The first thing we need to recognize is that 31.205-26 is not a clause, but a subsection. The general purpose of this cost principle is to prevent pyramiding of profit on profit when the transaction is between entitles under common control. However, the rule against profit on profit has some exceptions. That is, if a commercial item is transferred between entities under common control, the item can be transferred at price. Also, if it is the practice of the transferring entity to provide services to an affiliate at price for commercial contracts, the same services can be provided at price for government contracts. As for the statement that subcontracts between subsidiary companies cannot include profit is not true. As discussed above, they clearly can. Further, you need to remember, that the cost principles do not apply to all contracts. In this regard, also see, FAR 52.232-7(a)(1) for another example of transfer of labor (services) between entities under common control at an hourly rate that includes profit.

Wage determinations are issued and incorporated into contracts for the place where services are to be performed, which is not necessarily where the contractor is located. Thus, if an order is issued against the BPA for services subject to the SCA, that order should have a current wage determination attached to it. In the case of an order that contains options, that wage determination would remain in effect until an option is exercised. At that time, in accordance with FAR 22.1007, the contracting officer is required to obtain a new WD and incorporate it into the contract. Once the option is exercised with the new WD, in accordance with FAR 52.222-43, the contractor is to comply with the new WD and is entitled to a price adjustment if it has to incur specified additional costs.

However, if an agency is challenged on this in a protest, as pointed out in this forum on several occasions, the agency generally caves.

You did not say how the task orders are priced, but have you read FAR 52.222-43 and -44?

However, in order to understand what the words in the Limitation on Subcontracting clause mean and how to compute compliance with the 50% requirement, contracting officers and contractors have to look at the SBA regulations. Because the current SBA regulations do not address the FAR clause, we have to go back to the SBA regs as they existed in the 2012-2013 time frame.

CR, are you talking about an 8(a) contractor?

If it was significant to the SB, I would advise the SB to object to the standard clause and to request that the agency negotiate a clause that is consistent with the NDAA and SBA rules. If the agency refused, I would suggest that the SB then file a protest against the terms of the solicitation which would have to be filed before the time set for receipt of proposals. Who knows what the GAO or COFC will do? It's always a crap shoot anytime you go before either. I have lost on issues that I thought were a slam dunk in my favor and won on what I thought were weak arguments.

And the likely way to get the answer is to file a protest. Six years is long enough to wait.

GAO cannot require agencies to do anything, but the COFC and CAFC can. In any event, read footnote 3 of the decision. The FAR Councils did amend the FAR based on this decision.

Carl, if we go back to the original post, General Z was asking about an overall process for awarding an order. He was not asking about the evaluation criteria that should be used to make the award or how to state the agency's needs. The evaluation criteria are only a portion of the overall procedures that are to be used to issue an order. Unfortunately, this discussion has digressed to a discussion of evaluation criteria or statement of needs instead of what placement procedure is applicable in General Z's situation. To me, he was not asking about evaluation criteria or how to state agency needs.

The GAO has already opened the door for this in MCS Portable Restroom Service, B-299291, March 28, 2007. There the GAO sustained a protest that asserted the Air Force had improperly refused to make a sole source award to an SDVOSB concern based on the then current version of FAR 19.1406(a). In sustaining the protest, GAO stated that "a regulation must be interpreted so as to harmonize with and further and not conflict with the objective of the statute it implements." The GAO went on to say that "We think the FAR should be read consistent with the SBA statutory and regulatory language." While MCS did not present the same facts as here, it does provide a basis for a protest to GAO. Thus, I do not accept that it is foolishness to file a protest challenging the use of the current Limitation on Subcontracting clause in solicitations.