KA20003

Thanks Don. The agreement is IT in nature - cloud software. From my perspective, this small business has already entered into a binding agreement with my company; if it was relying on another agreement with this government agency for purposes of funding, then it should have waited until that was finalized before signing the agreement with my company. I can understand why the small biz wants the agreement signed (free money from the gov't), and my hunch is that the agency wants to treat my larger company almost as an insurance policy and someone against whom it can enforce rights, so I can understand the agency wanting the agreement signed. But I can't understand why my company would or should sign this. 

The agency director's stance made me think that perhaps this is just normal - I'm admittedly unfamiliar with cooperative agreements, and in my time with government I never once dealt with one. 

Thanks, Retreadfed. I have scanned through those regs and guidance - this entire process is very strange to me, and it's reassuring to hear you say that it doesn't seem to make sense. That's how I feel about it also.

I'm hoping someone might share their experience(s) with cooperative agreements. I work for a company with a large federal contracts practice (as well as commercial practice). My company currently has a commercial agreement with a small business who is now seeking financial aid from a subset of the Department of Commerce. After the agreement was signed between my company and the small biz, the federal agency sent a separate agreement to the small biz, which is required to be signed by the agency, small biz, and my company before the agency will give any funding to the small biz. 

The law authorizing cooperative agreements (31 U.S.C. § 6305) states that a cooperative agreement shall be used when (1) the principal purpose of the relationship is to transfer money to a recipient to carry out a public purpose of support or stimulation authorized by United States law and (2) substantial involvement is expected between the federal agency and the recipient when carrying out the activity contemplated in the agreement.

I do not see why my company needs to be involved in this cooperative agreement, given that we will not be receiving any funding directly from the Commerce agency. I spoke with the agency's director, and his explanation was that because his agency is providing taxpayer money to the small biz for purposes of its purchase from my company, the agency must have an agreement in place to show that the use of taxpayer funds went toward the purchase from my company. The director was unable to explain why a separate agreement between the agency and the small biz was insufficient, and instead posited that this agreement involves three parties: my company, the small biz, and the agency.

Shouldn't a cooperative agreement be between the funding agency and the funding recipient? Is it a normal practice to also loop in a larger business that has no relationship with the agency but instead is the seller of the small biz recipient's purchase for which the small biz is seeking funding? No one on our team, either commercial or government, has seen this kind of agreement before, and the agency point of contact is not helping me understand this. I think we may just have a difference in opinion on facts, but I'm having a hard time believing that other companies of our size have agreed to this kind of cooperative agreements. (The agency director said that these agreements are signed "all the time," but they are not publicly available, and he was unwilling to share any information on what companies they have worked with.) 

Does anyone have experience with these? Any information would be helpful. Thanks. (And please let me know if further info is needed; I often try to keep these as brief as I can, but then end up leaving out information or details.)

Thanks everyone! My ultimate advice was that it is a market research tool. I did advise my concerns with the anti-deficiency act (but everything appears to simply turn off once the trial is over), as well as any OCI concerns that the CO may need to address in a subsequent solicitation and any IT certifications that the end user will need to confirm are met (ie, Section 508, NIST, FedRAMP, etc.). Thanks everyone for all the great resources - extremely helpful reading. I appreciate it.

May an agency participate in a free trial program (ie, 30 days) for cloud services? I have not found much guidance on this - I know of nothing in the FAR discussing this type of free trial. There are two OFPP memos that discuss the need for early, frequent discussions with industry (which seems to point toward allowing this type of free trial). As I think about this, the primary issues that come up in my mind would be ensuring that the agency takes proper steps to avoid any OCIs, as well as ensuring that any applicable IT regs are followed.

Are you familiar with agencies that participate in these types of free trials? Are you aware of any issues that have arisen?

I am reading a 2008 article published in the Public Contracts Law Journal, where it discusses the distinction between set-asides and contract reservations. I am admittedly green in contracting, but I have never heard the term "contract reservation" as separate from a set-aside, and I am trying to understand the difference between the two. A few key citations from this article:

"...the Small Business Act provides no guidance for contract reservations."

"When implementing contract reservations, contracting authorities often cite the set-aside provisions in FAR 19.5. The theory is that contract reservations "set aside" a certain number of contract awards for small business concerns in a multiple-award acquisition."

"Contract reservations do not propose to set aside any acquisition for exclusive award to small business concerns. They simply set aside contracts."

The article is: Trepkowski, Gerald L., "Multiple Award Contract Reservations: The Examination of an Emerging Conflict in Small Business Preferencing," 37 Pub. Cont. L.J. 509 (Spring 2008).

Is the premise of a contract reservation that it is only one piece of a larger acquisition? For example, like a multiple-award IDIQ, where the overall acquisition (the IDIQ) is not set aside, but one or two IDIQ contracts are set aside? I'm still struggling to see the distinction. Why is a reservation NOT a set aside? Does this have something to do with bundling (which is part of the discussion)? I am unfamiliar with bundling, so perhaps that is where I should start my research in trying to understand this.

I'm revisiting the below thread, which is no longer open for comment. 

Commercial item determinations vary in my office, and as I'm beginning to do more complex IT procurements, I see both the logic of the broad commercial item definition but also the difficulty faced by some contractors when procurements are labeled non-commercial.

My question to you fine folks is: (1) With a centralized office to handle DOD commerciality determinations (Sec. 851 of 2016 NDAA), I saw that Vern had indicated that this was a new ground for protest. What standard would that be - arbitrary and capricious? That's a tough standard to meet....would it be worth it for vendors to actually protest a commerciality determination? My question is moreso directed at vendors/contractors. I've only worked on the government side, so I'm curious to see if protesting a commerciality/non-commerciality determination is something that most vendors would consider to be worth their time and resources.

Thanks Retreadfed. I can't argue with that - I'm not too familiar with SBA regs, so that is something I will spend some time reviewing.

I guess it just comes down to how we interpret things. I like to look at the FAR as allowing whatever it (or other laws) do not expressly prohibit. The way I read this section of the FAR is, (1) Send your offer letter; (2) Wait the minimum required number of days; (3) If no response, you can, if you want, ask the AA/BD.....but nothing else. It doesn't say that the options are to either wait or ask, as you say.

It doesn't say one way or another what we are supposed to do, and I don't think it's unreasonable to think that the resulting options are to either wait or ask, but I also don't see it as prohibiting starting the award process. And, it seems like the regulations and MOUs take the same approach that I do, in that if there is no response, we can presume acceptance.

Clearly I wasn't totally comfortable with assuming that the award process could be made, based on the reading of the FAR...but I also don't think my original interpretation (which admittedly failed to consider the MOU/partnership) is so far off; especially since the regulations and MOU clarify it to be the way I was interpreting.

This is a common dispute/discussion in our office - whether we should read the FAR in terms of its prohibitions (and that therefore anything not prohibited is allowed) or whether we should find authority for every action we take. I find the former to more sensible, but I think that's a whole other discussion topic.

Agreed re: the partnership; thanks. But disagree re: 19.804-3(a). I do not read 19.804-3(a) as MANDATING seeking the SBA's acceptance through the Associate administrator. It just says "MAY seek the SBA's acceptance..." "May" does not equal "must."

Nothing appears to prohibit proceeding with the solicitation, at least not within that section of the FAR. If no MOU/partnership existed, would you read the FAR as requiring a CO to seek SBA acceptance through the associate admin?

1. Offer letter was sent via email, per our agency's standard practice. Previously, we assumed that the date of sending was the date of receipt.

2. I have no specific point of contact at this SBA office, but I have called and emailed - no response.

3. "Proceed with action" means that I would like to send the solicitation. My understanding of FAR 19.804-2 is that the offer letter for above SAT is a pre-solicitation action, though I could be wrong.

5. I am not getting responses from SBA, and the customer's period of performance start date is approaching. I also don't want to sit around waiting for something if I don't need to - it seems to me like I can just proceed with soliciting and issuing the award, but the lack of a specific directive in the FAR, especially when one exists for awards below the SAT, makes me unsure.

#4 is the answer and confirms my initial inkling that I may just be an idiot - thank you. I didn't even think to check our MOU. I am good to go.

I sent an offer letter to the SBA for a proposed contract of around $2.5M, directed 8(a), 11 business days ago. I have received no response from SBA.

My plan is to proceed with the action - do you agree?

"19.804-3 -- SBA Acceptance.

(a) Upon receipt of the contracting agency’s offer, the SBA will determine whether to accept the requirement for the 8(a) Program. The SBA’s decision whether to accept the requirement will be transmitted to the contracting agency in writing within 10 working days of receipt of the offer if the contract is likely to exceed the simplified acquisition threshold and within 2 days of receipt if the contract is at or below the simplified acquisition threshold. The contracting agency may grant an extension of these time periods. If SBA does not respond to an offering letter within 10 days, the contracting activity may seek SBA’s acceptance through the Associate Administrator."

19.804-3(a) doesn't appear to mandate that the SBA accept/reject within 10 business days (because of the use of the word "will"), and it only says that if the SBA does not respond to an offering letter within 10 days, the contracting activity "may" seek SBA's acceptance through the Associate Administrator.

I guess I'm feeling uncertain because 19.804-3(c) says that for actions below the SAT, if the contracting activity does not receive a reply within 2 days, then it may assume the offer is accepted and proceed. There is no similar section for actions above the SAT - unless I'm just an idiot and I don't see it/can't read.

Just looking for confirmation/agreement that I'm good to just proceed (or, if disagreement, why I'm wrong). Thanks!

Thanks, ji. That was really clearly stated; I appreciate it. I think I am mixing up the small biz specialist with the SBA; and I should just leave the small biz specialist out of it and deal with the SBA person who accepted the offer letter.

Ok, thanks for the CFR cites. I've reached out to our small business specialist and he insists that we are stuck with the 8(a) program, citing 13 CFR 124(d)(1). But per my reading, the regulation should apply to awards that have already been made, since the regulation says, "where a procurement IS AWARDED as an 8(a)..." I take that to mean that an actual award has been made.

The customer requires attorney services, and in the past has gotten them for around $50/hour. But the customer was using these as a temporary service, and per 5 CFR 300.504, they could not continue using the same temp firm or people unless we moved to a different strategy. I got the request about 10 days prior to when the services were needed, so I recommended that they choose an 8(a), as the quickest method of getting the attorneys in place.

I did attempt to get the 8(a) firm to come down in price, but they have been unwilling to reduce their price. It sounds like we might just need SBA to get involved with negotiations, and also work with the customer to build a case that the cost does not reflect fair market price.

The whole thing is just so odd to me because no award has been made yet, and based on my interactions with the small biz specialist, I'm not sure how well an attempt to withdraw the offer will go - but thanks for the examples and FAR cites. So very helpful.

To keep this as brief as I can, I'm in a situation that quickly became messy when my customer's IGCE was vastly different (less) than the quote that came in from their selected 8(a).

It's more than the SAT, so I sent the offer letter to the SBA, and received their acceptance letter within 5 days. No contract award has been made, and the customer is balking at the cost.

My small business specialist is telling me that we are stuck with the 8(a) program because of the acceptance letter. But is that true? I was trying to research a little, and found the subject FAR clause, which seems to indicate that the CO is authorized to reject a specific 8(a) firm. Since it's the firm, I take that clause to mean that I can reject the particular 8(a)...but I can't see anything that requires me to justify it, or if there are prohibited reasons for rejecting an 8(a). (My hunch is that I would need to have another reason beyond price to reject the 8(a), right?)

Additionally, since no contract has been made, am I really stuck with the 8(a) program? What if the customer revises their requirement?

Has anyone had experience with this? Any thoughts are appreciated. Thanks!

That makes sense; thank you. We are planning a conference call for Monday so we can figure this out. I also had the same concern of incentivizing the contractor to hold off on work in order to receive the higher rate of payment. It worries me a bit that the contractor isn't able to provide some sort of estimate about how much work it can perform in a certain amount of time, but maybe my expectations are too high. Thank you again for your input on this. Very helpful.

Ok, thank you. And yeah, I'm not entirely sure how to handle this one. I don't want to adjust the order later, but the contractor says he is unable to separate out the different prices because there is no way to estimate how quickly they will get through the tasks. There was no quote because the pricing is already established in the BPA. The services are for claim reviews, and are priced per claim. So the Requisition I received is for x claims, but the customer priced it at the current rate and did not account for the new rate that starts in July (presumably because it's too hard/uncertain to estimate). Does that make sense? Would you recommend a different contract type?

She is taking issue even with the idea of a later modification to reflect price changes, and seems pretty bent on just making the whole award using the current rates. In her mind, the date of award dictates the applicable cost. I may just need a supervisor to get involved, because I don't think the way this customer wants me to make the award is compliant with the BPA.

It's a firm-fixed-price for non-severable services. The only mention of ordering terms in the BPA itself is that all task orders are subject to the terms/conditions of GSA Schedule 874 MOBIS category 874-1. When I check the terms and conditions on that schedule, though, it says nothing related to ordering. Both call orders are above $25k but less than SAT.

I am having a problematic customer and would like to draft the most un-arguable email to her, explaining that the cost of a contracted service is not controlled by the start date of the services. (Talking about/citing the BPA itself is not helping the cause.)

As a brief summary, the BPA has a period of performance in July, with the cost of services increasing at each year. Two of the call orders issued against the BPA cross that period of performance. As a result, midway through the call order performance, the cost of services will increase. To avoid having to modify the call order to account for the cost change, I requested a revised proposal from the vendor that accounted for the price change midway through. Once I have the quote, I'll go back to the customer to request additional funding.

However, she believes that the fact that the work begins PRIOR to the date of the price increase means that the the price at the time of intial performance is what controls the performance of the entire call order. (Hopefully that makes sense.) I've tried explaining that the BPA dates control, but she keeps coming back to the start date of the call order.

I'm right, right? Is there anything other than the BPA itself I can cite to her? Or, if I'm wrong, please let me know. I'm thinking that it might just be easier to do the modification later, but I'd like to avoid the hassle if possible.