HCuffage

Good find..This goes back to 1982 but the GAO report clearly says the SCA applies to BPAs in excess of $2,500 ($1 MiL certainly meets that standard). And the report also says that the DOL regulations define contracts to include BPAs. As they say sometimes, what's old is what's new.

Let me also express concern about a BPA that may possibly rack up $1mil in orders at $2.5 k or less...potentially at least 400 orders - an average of about 33 a month or 1.65 orders for each working ay of the average month. If you actually have requirements that estimate $4,125/day (an amount that would invoke the SCA), your BPA presents the appearance of deliberate attempt to skirt the labor laws - not a good news story. I assume the intent is to place and pay for orders by credit card to streamline administration of the work. However, even at that, that is a lot of effort compared to awarding one IDIQ contract for all of the work - or better yet a fixed priced contract. I hope there is more to the story that would shed light on why this approach.

I would not agree with the same being true for a task order type contract (IDIQ). An IDIQ contract is a contract and the SCA would apply based on the estimated value of the contract being over $2,500. Remember, the SCA applies to all Government contracts whose value exceeds the threshold. In an IDIQ contract, the contractor is required to keep performing under that single contract for every order issued. Once the orders aggregate over $2,500 and the minimum wages and fringes have not been paid because you did not incorporate the requirement, you will likely be hearing from the contractor employees via the DOL and would find yourself in a pickle. Orders are contracts by FAR definition, but so are IDIQ contracts (and requirements contracts as well).

Let me preface my remarks with the underlying assumption that your BPA is for services of the nature that would be subject to the SCA and its minimum wage and fringe benefit requirements, e.g. not professional services. Is your only point that SCA doesn't apply to orders under $2,500, or are you suggesting that you do not need to have terms in the blanket purchase agreement regarding the SCA; e.g., that the vendor understands and agrees that orders issued against the BPA in excess of the $2,500 threshold require the vendor to pay the minimum SCA wages and fringes? You are correct that the SCA would apply to orders above the threshold, but if that is not set forth in the agreement, what do you do when an order for $10,000 is issued against the BPA and the vendor does not comply with the SCA minimum wage payment because he billed at the labor prices contained in the BPA which did not reflect paying SCA wages because that was not discussed between the parties in establishing the agreement? You cannot get around the labor law by entering into a services BPA which ignores the SCA minimum wages and fringes in the pricing part of its agreement. I think it wise to have terms in the BPA that the vendor will comply with the SCA on orders that are applicable. If that means there are two sets of labor rates established in your BPA, one for orders below the SCA threshold and one for orders above then you will both (contractor and government) be better off when you start doing business together. No need to set yourself up for misunderstandings. If you intend to enter into a BPA for servcies (non-professional) that contemplates orders both above and below the threshold that invokes the application of the SCA and associated minimum wage and fringe benefit requirements, then you should be thinking about laying out in the agreement the circumstances when compliance with the SCA is required.

What did the prime submit as supporting data to demonstrate whether he performed adequate cost or price analysis or price comparisions? According to FAR 44.202-2, the CO reviews and considers the contractor's submission (request and supporting data) in deciding to give consent. FAR 44.202-2(a)(8) says " Has the Contractor performed adequate cost and price analysis or price comparisons..." The CO should be reviewing those and not doing his own. Your suggestion is probably exactly how the prime should have documented his request and, after showing that the proposed sub's pricing is 50% lower than similar consultants, objected to any request for further breakdown. If that fact (50% lower pricing) is documented, I would agree with Vern that the CO is incompetent. I suppose if a CO wanted to do his or her own cost and price analysis for comfort, he or she could, but it would be wasted time if the prime has done what he is supposed to do and adequately and thoroughly documented his effort. If the prime does not do what he is supposed to, then he should not be surprised to have consent withheld. The CO in that case could required the prime to go back and do due diligence. 44.202-2 (a) gives a list of items the CO should consider at minimum in reviewing the request for consent. Subpara ( B ) says particularly careful and thorough consideration is necessary when, among other things, subcontracts are proposed on a T&M basis. But I don't think doing your own cost and price analysis is necessary to be particularly careful and thorough. To circle back and sum up, if your assertion that the subs pricing is 50% less than similar consultants is accurate and your CO has been presented with this fact, and the request passes the other 13 considerations listed in FAR 44.202-2(a), then Vern is right, your CO is incompetent. Or, at least he is acting incompetent.

Denise is correct. See the form instructions in FAR Part 53, FAR 53.301-30. It tells you to do exactly what Denise has told you to do. More specifically it says "Check the appropriate box to indicate the type of modification. Insert in the corresponding blank the authority under which the modification is issued. Check whether or not contractor must sign this document. (see FAR 43.103)" FAR 43.103 defines the modification types. Now who is telling you and exactly what are they telling you?

If you are dealing with a fixed price prime contract, it should not matter. However, if you are dealing with a cost reimbursable, time-and-materials, labor-hour, or letter prime contracts, then the government may [i'm going to amend my earlier post here - whether the government imposes consent to contracting depends on whether a contractor has an approved purchasing system - if not then it should be imposed, if yes, then the Government may still opt to impose consent for whatever subcontracts the CO determines impose risk for the Government] should have imposed consent to subcontracting on the prime IAW FAR 44.201-1. While the FAR limitations you cited are for government selection of a contract type at the prime level, the CO who has retained consent to contracting would likely apply the "no other contract type is suitable" standard in deciding whether to consent to such a contract type at the subcontract level depending on the specific circumstances. See the policy on not consenting to repetitive or unduly protracted use of time-and-materials subcontracts at FAR 44.203( B )(5). This may help you decide the answer to your questions. The smiley face in the FAR reference at 44.203 is supposed to be the letter b - have not figured out yet how to stop the system from converting these bs when I post. However, I see it is now showing up as a B. But also note that consent requirements are not applicable to prime contracts for commercial items procured using FAR Part 12 procedures. You did not reveal information about the prime contract you are dealing with.

Exactly what were you asked to sign? Several things come to mind. Vern's utility contracts were a good example. Historically many utilities, refuse to sign goverment contract documents. FAR 41.2 now provides procedures on ways to handle that situation. Other types of vendors want you to sign their contract forms as well. An example is hotel conference facility providers. I've seen that a lot. You have to be very careful because they do generally include terms that you cannot agree to - such as binding arbitration with, of course, their arbitrator. Vern gave you some good advice on things to think about before you do - especially whether you have the authority to agree to all of the terms in their contract form. Xerox and other reproductive copier companies are also notorious for this and their standard contracts have many hidden terms that we would never consider putting in our own. Another example I have run into is time sheets for professional support contractors. I found that some of my government customers and CORs were signing these things which had several problems - personal services behavior of course, but in one case there was a certification that the government signer understood the contractor employee was an employee of the company and agreed never to consider hiring that person for a federal position, or allow that person to be hired for a federal position, and agreed to pay damages in some measure relative to the contract value and a portion of the employees' salary if that employee ever became a federal employee. Now what if you signed something like that and the contractor employee decided he really want to work as a fed and applied for a federal position somewhere in the government and was hired? My advice would be not to sign any document a contractor asks you to sign, be it a contract form or time sheet or other document. The best advice is to always consult your legal counsel first before you even contemplate signing one.

Vern In post #26 you wrote Unless I am reading MORI wrong, I think the COFC determined that a protest based on failure to follow the rule-of-two is not considered a protest in conjunction with the issuance of a task order, and therefore COFC can hear these protests. The following passage is from the COFC Decision in Mori (10-289C under seal Dec 15, 2011, reissued Dec 21, 2011) Passage starts on page 31 of the Decision: I take this to mean that protests based on a rule-of-two violation can be filed with the COFC for any proposed task order of any dollar value under multiple award IDIQ contracts. And that makes your earlier advice that discretion does not mean you can do whatever you want to do even more apropos, since every IDIQ task order could become subject to a rule-of-two protest if a CO does not properly act on the rule-of-two market information. Do you read this the same way?

Retreadfed, You posted: I have a different take. In all three situations our presumption should also be that clause 52.222-41 is in the prime contract and has flowed down to the subcontracts - because if the prime contract is an SCA contract then this clause is required. Instead of focusing on whether there is an express term in the subcontract on adjusting the price for a wage determination, I think the focus should be on whether wages and fringes were required to be adjusted with the assumption that if so, they were (don't want to complicate the discussion with what if increases are not paid to employees). The next consideration is whether to adjust the primes contract for wage increase paid by the sub at the subcontract level - and this is the perspective from which I was trying to slant my posts. I tried to clarify in my post # 17 that while I acknowledge there is no express term in the 43 or 44 clauses that they flow down and require the prime by their express language to adjust the subcontract price, I believe a line of reasoning can be advanced that in order for a prime to meet ther terms of clause 43 (express language that the wage increase are made) and get an adjustment at the prime contract level that he must incur the cost (make the wage increase at the subcontract level) through adjusting the subcontract price and therefore one can conclude that the prime is "required" to increase the subcontract price for wage increases made at that level. So I think we are saying the same thing on that point, but I don't think we can reduce things to if you adjust the subcontract you get an adjustment. As I said in post 17, the prime's adjustment is typically made before the prime would consider adjusting the subcontract price. I think our approach as government COs should be if the prime and subcontracts include the SCA clause (41) then each must pay required wage and fringe increases. In accordance with the spirit and intent of the 43 clause, rather than the letter of the clasue (I think everyone agrees that the express language of that clause does not specifically cover the subcontract) that the primes contract should be adjusted for wage increases paid at both the prime and sub level and if that is so, then the prime is expected to adjust the subcontract price and we take actions in support of that expectation. In other words, I would say in all three of your scenarioes that the prime should get an adjustment for increases at the sub level because they were required to be made (and presumably were). But we should also be duly diligent in our jobs and not allow the prime to be unjustly enriched by pocketing the increase for the sub level wage increases, thereby wasting taxpayer dollars and contributing to the possibility the sub employess do not actually get paid. I think this should be the approach because it is the right thing to do, to use Vern's words. Part of the reason I believe it is the right thing to do is I consider the spirit and intent of the 43 clause - contractors (prime and sub) are required to comply with wage determinations and if they do, the Government will adjust the contract price accordingly, i.e. the government is expected to fund the wage increases, all of the wage increases - not just those at the prime level. It's the right thing to do because we are supporting the labor laws, treating the contractors fairly, and practicing effective contract administration. We don't let this seeming hole in the contract regulation and clauses create barriers to effective conduct of public business performed by contract by not letting the money flow to fund all of the wage increases by hanging ourselves up on the letter of the contract. That's my perspective on the issue. Also, don't forget the 43 clause allows the government to assert a claim under that clause for decreases in wages. So, if we can assert a claim against the prime for a price reduction for wage decreases made at the subcontract level and adjust the prime contract downward accordingly forcing the prime to suffer a price decrease (regardless of whether a specific price adjustment clause exists in the subcontract), why should the prime not be entitled to a price increase when the wages are increased at the subcontract level, whether on not a specific clause exists in the subcontract for an adjustment to the subcontract price.

Vern, In post 16 you wrote: ------------------------- In Post #9 you said that 52.222-43 'and 52.222-44 require the prime to compensate the sub. Quote That is why the prime is entitled to an adjustment and required to adjust the subcontract price. The 43 and 44 clauses do not require the prime to adjust the subcontract price. That is the only point I wanted to make. The sentence that you wrote is wrong in that regard. Did you not mean to say that? Is it just badly written? -------------------------------------------- I see now the reasoning you are using to make that connection but, no, I did not mean to infer from the language of my sentence that the 43 and 44 clauses require either by express or implied language that the prime contractor must adjust the subcontract price. So, in that regard, yes, I did write what I meant to say very badly. And I see now I should have laid out reasoning for why I believe the prime contractor is required to adjust the subcontract price if he is entitled to and receives an adjustment to his prime contract based on subcontract increase in wages and fringes to subcontract employees. And that reasoning goes directly to your comment later in your post about Retreadfed perhaps thinking that the government would not have to compensate the prime if the prime did not compensate the sub. My reasoning, for which I will use a contract for recurring severable services with a base period and option years to explain, is: If the prime presents a request to the CO for a contract price adjustment under the 43 clause, after receiving a new wage determination effective for the first option year, his theory of recovery (in abbreviated form for this discussion) presumably has to be: · The contract requires me and my sub to comply with the SCA per clause 52.222-41 which is in my contract and which I included in the subcontract; · The Government provided a new wage determination (WD) on (date) to be applicable for option year one; · My sub and I have examined the new WD and determined it will cause an increase in wages and fringes that we will have to pay; · Contract clause 52.222-43 established that the contract price will be adjusted to reflect these increases; · The Government is required to adjust my contract price in the amount of ___ (my proposed adjustment calculations are attached). Please note by the language of clause 43 that the contractor must notify the CO within 30 days of receiving the new wage determination, so the modification to incorporate the wage increase into the prime contract is typically done within 60 days of the start of the option period. The language of clause 43 says that the contract price will be adjusted to the extent the increase is made to comply with the WD. If the interpretation is that subcontract increases can be included in the prime’s adjustment, then the expectation for me as a CO is that the increases are made (cost incurred). The prime does not incur these costs if he does not increase the subcontract price and pass the funds related to the subcontract increases to the subcontractor. My reasoning is that he is required to both make the increases to his own employees and increase the subcontract price to make the increases at that level in order meet the terms of the clause 43 for eligibility for adjustment to the extent that adjustment is related to subcontract wage and fringe increases. If the prime wants the CO to apply the broader interpretation of the 43 clause to include subcontractor increases, then he must meet the broader interpretation and application of test to see if the “increase is made.” It is in this sense and under these circumstances that I believe the prime is required to adjust the subcontract price, whether or not the subcontract has specific language for an increase. If the prime requests an adjustment that includes subcontractor increase but has no intention of increasing the subcontract price then he has not dealt and negotiated with the government in good faith and has used deceptive dealings to gain an unjust enrichment. If I found that to be the case as a CO, I would not hesitate to pull those funds back on a unilateral mod and force him to dispute the deductive modification. . If I feel a prime has purposefully tried to hoodwink me by asking for the increase related to the sub in order to gain an unjust enrichment, then his ethics and integrity in business dealings is now called into question and I begin to wonder if he is any longer a responsible contractor as defined in FAR Part 9. That may cause me to consider other actions. You also wrote: _______________ As for SharpOne's question, Retread appears to make the reasonable assumption that the prime might not adjust the subcontract price if if the subcontract does not require that it do so. Who knows why? Who cares? That's between the prime and the sub. Maybe they were both clueless when they made their bargain. The government doesn't care whether the prime compensates the sub. Why should it? The sub is on the hook for wage increases through operation of 52.222-41, which is a mandatory slowdown clause. The sub has to look out for itself. ___________ True. However, as a CO I will have to deal with the consequences if the sub does not get an adjustment and those consequences may include purposeful failure or consequential inability to pay the employees proper wages and fringes resulting in wage violations. That may lead to strikes, complaints to DOL, withholdings, etc. A CO may want to be proactive in discouraging those situations from evolving. A proactive step might be making it clear to the prime who requests a prime contract adjustment for increased wage payments at the subcontract level that, if granted, he is expected to pass the appropriate increase on the sub. COs who have this concern might consider writing that condition in to the wage increase modification. And you wrote: _______________ I think the reasonable interpretation is that the prime's adjustment will include adjustments that It makes to subcontracts for wage increases made by the subcontractors, but I can't get to that interpretation through the language in the clauses themselves. As far as I can tell the issue has never been litigated, which might mean that most people agree with that interpretation, so there are no disputes. But I can see how SharpOne would wonder ___________ We agree on that. I think the lack of litigation is testament to a prevalence of agreement on that interpration. Lastly, you wrote: ______________ I think the right answer to SharpOne is: The clauses do not explicitly require the government to compensate the prime for increases made by subs, but that is probably the common understanding and the right thing to do. The government does not have to compensate the prime for subcontract increases unless the prime has compensated or must compensate the sub. Check agency policy and practice, ask your senior colleagues, and, if necessary, seek guidance from your superiors and counsel. __________________ I think your first sentence here adds a lot by pointing out that the clauses do not explicitly require this compensation and your last bit of advice also – that advice should probably go with most responses to questions in this forum. I have a different slant on your second sentence. I think it is worth pointing out that in the normal course of these actions the Government adjusts the prime contract before the prime adjusts the sub. So COs may want to be on the lookout to ensure the sub follows through with that action.

Again, and hopefully I am clearer this time... I interpreted the question asked as whether the prime could get an increase to his prime contract for wage increases to be incurred by the subcontractor in complying with a new DOL wage determination, not whether the prime had to make an adjustment to the sub's contract and on what basis/authority. Retreadfed introduced the question about what the subcontract says about adjusting the subcontract price due to wage increases in his first response to Sharpone. I don't believe Sharpone was asking about making an adjustment to the subcontract price - maybe he could clarify whether that is so. I never said clauses 43 and 44 flow down - I pointed out that they governed the prime contract price adjustment. The excerpt from my earlier post is here with bolded text for emphasis: "I did mention clauses 52.222.43 and 44 because those are the clauses that authorize a contract price adjustment for increased costs due to compliance with the Wage Determination and because it is the prime contract price that is adjusted by the Government - not the subcontract. SharpOne asked the question about the prime contract adjustment." When I made that post I was intepreting that Sharpone is a prime asking the question but then in a later post after rereading the original question I realized it was more likely that Sharpone was asking the question about adjusting the prime contract price as a Government CO because of the way the comment about how much work the sub was doing was phrased. In answering the question as I thought it was posed, my answer was, and is, that I believe 52.222-43 can be interpreted to allow an adjustment to the prime contract for all wage increases paid at both the prime and subcontractor levels. I did suggest that the practicality is that there is, more likely than not, a mechanism in the subcontract to adjust that price but also said whether there was or not is immaterial to Sharpone's question as I believe it was posed. But obviously Retreadfed and you believe SharpOne was aksing about whether he has to adjust the subcontract price, not whether the prime can get an adjustment to his contract base on subcontractor incurred costs. Again, maybe SharpOne can confirm that.

None of this answers SharpOne's question which was "...if a prime can submit payroll for their subcontractor and receive a wage adjustment?.." If your position is that clauses 43 and 44 only apply to prime contract direct payroll costs, and therefore he cannot, then we absolutely disagree. Whether or not there is a specific clause in the subcontract requiring the prime to adjust the subs contract price for this is immaterial to this question. The labor law intends that all workers, prime and sub, are paid the minimum wages and fringe benefits which are adjusted when a new wage adjustment is incorporated. When that happens, the "futurity" is here. A new WD is issued and incorporated into the contract. So the "anticipated future action" expressed by the word "will" in paragraph (d) to clause 52.222-43 is that the contract price is adjusted in an amount commensurate with the increase incurred for all workers, prime and sub and should now be taken. Assume for discussion sake that the subcontract does have a clause requiring the prime to increase the sub's contract price for this. When the prime submits his request for a contract price adjustment, he can and should submit for all costs to him, including subcontract impact costs, related to compliance with the SCA. Who takes that now due "anticpated future action" of increasing the contract price? The Government. Whose contract price do they increase? The prime's. SharpOne does not identify him or herself as a prime wondering if he can submit a request to the Government for a wage increase based on the sub's increased payroll costs or if he or she is a Government CO with such a request from a prime. I am guessing the latter because he says " Apparently the subcontractor is doing more than 25% of the estimated value of the contract." If SharpOne was the prime in the situation, I would expect he would know for sure how much work the sub is doing. It does not matter whether the sub is doing more than 25% of the work, less than 25%, or some significantly greater % in either direction. All subcontractor increases to wages are governed by the SCA and related WDs. My advice to SharpOne is that if you want to deal in good faith with this prime, you allow the requested wage increase provided it complies with the rules set forth in 52.222-43 for making the adjustment. If he is unfamiliar or inexperienced in processing the adjustment, DOL offers a reference on SCA compliance that you should be able to recover from their website - sorry I do not have a handy link reference. In my experience I have had to withold monies from a prime's contracgt for wage increases not paid to subcontract workers under the SCA. In that case it was not because there was no clause requiring the prime to adjust the sub's contract price. It was because the sub submitted his request for an increase to the prime but would not provide payroll documentation. The prime refused to change the subs contract. The sub did not give the increases to his workers telling them he couldn't pay because the prime did not give him the money and serveral of them found their way to the DOL to register a complaint. Shortly after the withholding started, the prime and sub resolved their differences, and the workers got paid. Once proof of payment to the sub employees was provided to DOL, I was allowed to release the witheld monies to the prime. And when the prime finally submitted his request for a contract price adjustment, his documentation of payrolls included his and the subs.

Vern, Your repsonse suggests that a prime contractor may escape increasing a subs contract to cover mandatory wage and fringe benefits if a price adjustment clause is not in the subcontract. This may be technically legally correct but in practice is not likely going to happen. As I suggested, the chances of SCA providers at the subcontract level accepting a subcontract with clause 52.222-41, which requires them to comply with the SCA, included and not be savvy enough to make sure a mechanism for price increase is included are very slim. But even if that happens, that sub will quickly get savvy and fail to pay the increase (he's not going to eat it out of pocket) and when his employees complain to DOL, the Federal contracting agency will be required to withhold monies from the prime's contract until the wage violations are resolved. I am sure a that point, the prime will feel "required" to adjust the subcontract price. Worse, the sub's employess can engage in strikes making the situation for the prime very tenuous. No prime wants to deal with either strikes of DOL wihtholding if it can be avoided. Now if the prime pays the sub for wage increases and that payment increases the prime's costs because of the new wage determination ,he is thereby entitled to a price adjustment to his prime contract through either the 43 and 44 clause, whichever is in his contract. Do you realistcally think that a prime will pay a sub this increase out of his own pocket and not come back to the Government? Do you think that is what is intended by the FAR? At some point common sense has to prevail. While its on the table, I'll point out that a request for adjustment is due within a certain time after a new WD is incorporated. While subcontract workers may not be complaining to DOL or striking at that point, such actions will certainly get the prime's attention down the road and put ample pressure on the prime to treat the subcontractor fairly in regards to wage increases. And that was the initial question - can the prime get an increase for wage increases paid by the sub, to paraphrase. In my years of experience, no savvy prime contractor ever played a "gotcha' game with a sub over wage increases - no skin off the prime's nose - the Government pays the bill. And DOL does not play games in this area. I am not sure whether there is any case law out there, but I cannot believe either the COFC or an Administrative Board of Appeals would ever rule that the 43 and 44 clause only apply to increases paid on the prime's direct payroll. That would be nonsensical to me, because how else would the funds for the subcontractor wage increases flow from the Government to the prime to get to a sub? And that is the intent - the Government pays for all wage increases and only has privity of contract with the prime - not the sub. Rather than stand on a legally tecnically correct answer to the poser of the question, I think he needs the practical answer. As for the word "will," I clearly attributed that to the 43 and 44 clauses. which more specifically say that " The contract price...will be adjusted to reflect the Contractor's actual increase..." The subject of the verb "will" is the party to the contract - Government. Government will and Contractor shall, It is a command to the Government in the contractual relationship between the Government and prime. I will stipulate that my chosen language may have confused some, but back to the poster's question, I believe a prime can submit for a wage increase based on subcontractor costs. If not, why would any service contractor ever subcontract any part of an SCA requirement? I never said clauses 43 and 44 flow down. I did say 52.222-41 does.

Retreadfed. I didn't answer all of your question, so let me add that clauses 43 and 44 state that the contract price will be adjusted to reflect applicable increases in wages and fringe benefits to the extent the increase is made to comply with or the decrease is voluntarily made by the Contractor as a result of either the DOL WD applicable on the anniversay date of a multiple year contract or a WD otherwise applied to the contract by operation of law or and amendment to FLSA enacted after award of the contract that affects the minimum wage and becomes applicable to the contract under law. That is whiy the prime is entitled to an adjustment and required to adjust the subcontract price. This law is about public policy supporting the labor force and making certain those workers on federal contracts are paid the DOL minimum wages and finges. That is why the contractor gets just a contract price adjustment and not an equitable adjustment (i.e.overhead, G&A, and profit as well).

Retreadfed, I totally disagree with you. The wage increases are required to be paid by the subontractor who does have clause 52.222-41 Service Contract Act, which did flow down.Read subparagraph (c ) (3) to that clause. It does say that the contract is subject to adjustment for wage increases. Thus by flowing it down to the subcontract, the prime is obligated to adjust the subcontract price for wage increases. This is not speculation. It is labor law and covered by contract language and flowdown clause language. This clause both obligates the sub to follow the labor law and be in compliance with the DOL minimum wages and fringes and the prime to adjust the contract price.

Retreadfed, I did not suggest that 52.222-41 provides for price adjustment and stated that that clause is the one that flows down. Assumed from the post that the inquirer is dealing with one of the applicable contract types - if he was dealing with a cost type contract there would be no reason to think an adjustment might be in order (my assumption) since costs driven by current wage determinations would be the actual cost incurred and covered by routine administration of invoicing. I did mention clauses 52.222.43 and 44 because those are the clauses that authorize a contract price adjustment for increased costs due to compliance with the Wage Determination and because it is the prime contract price that is adjusted by the Government - not the subcontract. SharpOne asked the question about the prime contract adjustment. The 43 and 44 clauses dictate the rights and obligations of the Govenrment and the prime. I don't believe that there was any intent by DOL to allow contractors to skirt the labor law by subcontracting a portion or all of the requirement and then claiming because the 43 and 44 clauses don't flow down that subcontract laborers do not get the increases. I believe labor law entitles those workers to the increases and I am quite certain that in the case of an alleged labor violation investigated by DOL and found valid, that DOL would require the Government contracting agency to withold funds from the prime contract until the violations were resolved. I believe the prime is entitled to an adjustment and should pass the funds to the subcontractor to effect payment to the workers. In that regard clauses 43 and 44 establish the prime's right to the contract adjustment. The prime has to pass the money to the subs through the terms and conditions of their commercial contracts and hopefully a subcontractor generally engaged in SCA work is smart enough to make sure his contract allows for recovery of that money. And I presumed with my answer that this is the case.

The Service Contract Act of 1965 clause at FAR 52.222-41 requires that clause to be inserted in every subcontract subject to the Act - see subpara l to that clause. Assuming your subcontractor is doing work subject to the Act then those subcontract workers performing that work are entitled to the wage and fringe benefit adjustments under each new Wage Determination incorporated into the contract. There should not be a problem with you requesting an increase with supporting payroll documentation - because you will have to increase your subcontract price accordingly to pass the increase to the subcontractor to fund the wage adjustments. Just be mindful that neither you nor your sub are entitled to any amount for overhead, G&A, or profit in the wage and fringe benefit adjustment made by the Government (see para (e) in clause 52.222-43 or para (d) in clause 52.222-44, depending on which is in and applies to your contract).

This should be easily answered. FAR 44.305-1 states the ACO shall approve a purchasing system only after determining that the contractor's purchasing policies and practices are efficient and provide adequate protection of the Government's interest. Have your colleague require the consultant to explain how the practice of having the same person fill the roles of CA and SCA is inefficient and does not adequately protect the Government's interest. If the consultant cannot provide an answer that passes the smell test, your colleague may want to factor that into the decision on whether to follow the consultant's advice.

I believe the clause at 52.232-20(d)1 tells you that the Government is not obligated to reimburse the contractor for costs incurred in excess of the estimated cost specified in the Schedule, which I believe refers to the total estimated contract cost. In paragraph (a) of this same clause, the contractor agrees to use its best efforts to perform all work within the estimated cost. It is interesting that you use the term "task order ceiling" which I take to mean the total estimated contract cost. Intersting because in another post on CPFF contracts, Vern Edwards stated "Ceiling" is not proper terminology for CPFF contracts. You also later make a statement that there was no ceiling on indirect rates. The problem is if the Government always reimburses based on application of final indirect rates, it may well find many situations where application of the indirect rates against final direct costs send the total actual cost above the estimated cost, which is the only amount for which the Government should have funds obligated. You are the party with control over the costs of your operation, including indirect costs. The Government should not be liable for funds it told you up front that it did not have and would not pay. Otherwise, you could fail to exercise due diligence in controlling costs to the Government's detriment. That is why an estimated cost is established. The Government is not liable for payment beyond that amount and you are not obligate to perform work beyond those costs. The parties can mutally agree to increas the estimated total cost, but that should be done before performance ends.

I read the 52.216-7 clause as well and interpreted the use of ceiling to refer to the estimate of total contract cost in this manner. The actual language of 52.216-7(d)(3) which does discuss executing agreements to establish final indirect cost rates is: (3) The Contractor and the appropriate Government representative shall execute a written understanding setting forth the final indirect cost rates. The understanding shall specify (i) the agreed-upon final annual indirect cost rates, (ii) the bases to which the rates apply, (iii) the periods for which the rates apply, (iv) any specific indirect cost items treated as direct costs in the settlement, and (v) the affected contract and/or subcontract, identifying any with advance agreements or special terms and the applicable rates. The understanding shall not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this contract. The understanding is incorporated into this contract upon execution. So, the clause essentially says that the understanding on agreed final indirect cost rates shall not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this contract. And I take that to mean that if the understanding establishes an indirect cost rate above the original estimated indirect cost rate, that I as a CO am not changing the monetary ceiling of estimated total cost of contract performance, or the obligation amount of the US Government, or any other specific cost allowance or disallowance, including any ceiling on indirect cost rates set as a term of the contract. I am only agreeing what the final rate should be based on the audit of the contractor's accounting system. As example, if the estimated total cost (ceiling as FAR otherwise calls it) of the CPFF contract is $3 million and the final indirect cost rate as recognized in our written understanding is double the original estimated indirect cost rate, applying the final indirect cost rate to actual direct costs shall not send the total cost to be reimbursed above the $3 million estimated total cost (ceiling) established at award, despite our written understanding on the final indirect cost rates. That understanding is just a recognition of the actual indirect rate based on the contractors operation and if it would send the total costs to $3.1 million when it is applied to the total direct costs, the $100 k overage would be a disallowed cost because it exceeds the ceiling, or total estimated cost, which the contractor was not to exceed without approval of the contracting officer. In that context, could the contract language conceivably make use of both terminologies (estimated costs, and ceiling)? Could it not be possible that the terminology total costs in the clauses you referenced and the terminology of ceiling in 52.216-7 are one and the same? These clauses were likely drafted by different folks who each may have preferred one terminology over the other but were both referring to the same thing. It would seem odd that the regulation would establish a terminology considered interchangeable with another and that the so established terminology would not be recognized in addressing contract issues just because a contract clause makes use of the interchangeable terminology.

I have not awarded or administered cost-reimbursement contracts in my career. However, I read this thread for a learning opportunity and reviewed the FAR text on cost-reimbursement contracts to try and follow the discussion. I am puzzled over why "ceiling" is not a term normally used with CPFF contracts after reading FAR Subparts 16.301-1 and 16.306. Perhaps you can explain to JandA100811 and me why "ceiling" isn't standard CPFF terminology in light of the FAR cites below. Subpart 16.3—Cost-Reimbursement Contracts 16.301 General. 16.301-1 Description. Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer. 16.306 Cost-plus-fixed-fee contracts. (a) Description. A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. Given that FAR 16.306 describes CPFF contracts as a cost-reimbursement contract while FAR 16.201 describes cost-reimbursement contracts as those that establish an estimate of total cost for the purpose of obligating funds and establishing a "ceiling" that the contractor may not exceed (except at its own risk) without the approval of the contracting officer, why is "ceiling" not standard terminology for CPFF contracts? If I were venturing into Cost-reimbursement and CPFF contracts for the first time I would, hopefully, read the FAR application for these types of contracts as a first step and would reasonably interpret that the estimated cost on my CPFF contract would be a "ceiling" that the contractor could not exceed (except at his own risk) without my approval as CO. What other policy reference should JandA100811 and I be aware of in order to know that "ceiling" is not terminology normally associated with CPFF contracts. She may have not been precise in explaining what her question truly was, but for her sake, and mine, please share with us why we should not use the terminology "ceiling" when dealing with a CPFF contract.

Please check the current FAR reference - the protest bar was extended for DOD, NASA, and the Coast Guard, but not the civilian agencies. See FAR 16.505(a)(10)(ii) - If you work for the DOD, NASA, or Coast Guard, the answer will be different than for civilian agencies. There is no limit on protests and jurisdiction is not reserved to GAO.

Delex was the first earthquake for those who believed they stood on solid ground when saying that the fair opportunity requirements found in FASA and implemented in FAR Part 16.505 meant they could not set-aside requirements on task orders on multiple-award contracts. Mori v. US was the big one that not only affirmed the GAOs finding that the rule-of-two applied to task orders issued under multiple-award contracts, but found the obvious to some, that the rule-of-two analysis must be performed before selecting a contract vehicle to satisfy the requirement. The COFC said in Mori that selecting an IDIQ contract with no small business contract holders to fill a requirement that should be set-aside under the rule-of-two, made the rule-of-two analysis an "empty gesture." The COFC said many other intriguing things in that decision, including that the IDIQ contract solicitation was not a requirement as contemplated in the FAR Part 19 rule-of-two language, but that the task order requirement fit that bill. This seeming conflict between fair opportunity and rule-of-two language has been going on since the passage of FASA and intensified with section 803 in the 2002 NDAA and subsequently section 863 in the 2009 NDAA. Meanwhile back at the ranch... The Acquisition Advisory Panel said in its 2007 final report to OMB and Congress that agencies were engaged in various practices on this issue: some setting aside part of all of multiple-award IDIQ contracts for SB, some reserving one or more awards for SBs in full and open competitions for multiple-award IDIQs and many setting aside task orders for SB under multiple-award IDIQ contracts. The AAP felt there was no express authority to do any of these things and especially felt that reserving one or more awards for SB in full and open competition for multiple-award IDIQ contracts might be a violation of CICA, since CICA only contemplated unrestricted competition or SB set-asides. It recommended that Congress enact legislation to provide agencies the "discretion" to do all of these very things as it found all of these practices to help agencies meet their SB goals and helped ensure more opportunities for SBs. Voila, in Section 1331 of the 2010 SB Jobs act, Congress used that very language, the president signed the Bill, and the discretionary authority was implemented in the FAR. In Mori, the COFC, in a footnote supporting its conclusion that the Rule-of-Two applied to task orders, cited that very legislation and stated it was presumably to supplement or implement the Rule-of-Two. The COFC was not being asked in Mori to decide what the word "discretion" meant, but is very likely to be asked to do that in the near future. The precise language of the Congress, even though recommended by the AAP, now presents a conundrum. As GAO pointed out in Delex, the rule-of-two was adopted through the rule making process as the agreed process for implementing the intent of the Small Business act to place a fair share of Government procurements with Small Business. Now there is a statute that gives agencies the discretion on whether to follow that regulatory procedure in the case of task orders on multiple-award contracts. That makes the presumption footnoted by the COFC in the Mori decision curious. Why would Congress feel the need to add legislation to supplement or implement a regulatory procedure? Wouldn't the properly established regulation be adequate to force compliance on its own? The COFC will likely realize that its footnoted presumption was a little off the cuff and will have to backtrack. If the Rule-of-Two is mandatory in every situation, then not only do we not need discretion under another law to follow the mandatory regulatory process, we do need discretion granted by law to supplement the mandatory regulation. If asked at some point to decide whether the "discretion" language really means mandatory, the COFC will have to deal with the precise language of PL 111-240 that amends the SB Act, and provides discretion regarding applying the regulation based rule-of-two in situations regarding multiple-award contracts and task orders issued against them. So what was Congress' intent? After all, it's not likely that any agency/CO would use this discretion to set-aside a task order that was not within Small Business capabilities. That would be such a poor business decision it would assault ones sensibilities. Surely, Congress must have been addressing task orders that are otherwise within Small Business capabilities and appropriate for performance by Small Business, and otherwise subject to the rule-of-two analysis. Clearly, agencies/COs are given the discretion to choose between applying fair opportunity procedures that do not involve one of the exceptions to fair opportunity and applying the rule-of-two procedures. Perhaps the discretion given in this law is Congress' way of 'harmonizing' FASA with CICA and the SB Act, as the GAO suggested it was meant to be in Delex. In any event, the COFC will have to start from a presumption that Congress acted with intent and did not pass a law that has no meaning. What will complicate things is that the FAR implementation says no written justification is required when using the new exception (F) to fair opportunity to set-aside a task order for Small Business or one of the Small Business categories found in 19.000(a)(3). The word discretion implies the authority to take a decision for one course of action out of several possible, in this case to set a task order aside, or not. Yes, agency and SBA reps will continue to be a cog in the process and advocate for every possible opportunity for SB, but ultimately the CO now has discretion to set a task order for requirements that othewise meet the rule-of-two aside, or not. Despite written justifications not being required, some CO may at some point be asked to testify to the basis for his or her discretionary decision. There is the conundrum. If case law were to at some later point render the discretion to set aside a task order for SB as mandatory through constant judicial finding that arbitrary and capricious bases were used for decisions to not set a requirement aside, it will effectively nullify specific law that presumably expresses the will of Congress. There is another conundrum.

The new (APR 2012) clause at 52.219-28 requires recertification within certain timeframes after novations, mergers or acquisitions, within 60-120 days prior to the end of the fifth year of the contract, and within 60-120 day prior to the date established for the exercise of any option after the fifth year of the contract. What does the clause in your current contract say, if anything. Also, FAR 19.804-6© authorizes 8(a) concerns to continue to receive orders under a multiple award IDIQ contract after it outgrows the size standard for the NAICs code listed in the contract. This would suggest that unless you are an 8(a) your response to the RFP would be one from a concern that does not meet the size standard for the NAICS Code and small business size standard applied for the requirement and will liekly be considered nonresponsive and rejected in accordance with FAR Clause 52.219-6.