Vern Edwards

@joel hoffmanWhy be snarky? The negotiation of sole source construction contracts is not really all that difficult. Try negotiating an FPI(F) (Firm-Target) contract for the development, test, and installation of a spacecraft downlink subsystem for aircraft carriers with strictly limited port availability. Don't take too much pride in your experience, Joel. The negotiation and administration of sole source construction contracts that have been set-aside for small businesses is not rocket science. I won't get snarky. I will say outright that I don't think you have thought through your ideas in this thread. When I say we don't know why it's your opinion, I mean that I don't know why you think it's necessary to actively monitor the contractor's compliance with the limitations, given the natures of the statute, the SBA policy, and the contract clause. But I can see now that your position is based largely on some notion that COs must monitor and enforce compliance with every clause in a government contract. Well, that's a fool's errand. A manager must prioritize. They must manage, which includes deciding how to allocate your resources. I think your positions on pre-award activity and on post-award active monitoring of compliance are unsound. I think the limitations have clearly been designed for post-performance compliance assessment and enforcement.

We know that's your opinion. What we don't know is why.

Do you think the fine is the exclusive remedy for noncompliance?

If there is an obvious disconnect between the limitations on subcontracting and the contractor's cost breakdown and/or cost or pricing data, then a CO should, of course, inquire. But "negotiate"? Negotiate what? A change to their cost breakdown? Or are you suggesting that COs must negotiate to a contractually binding agreement on a specific element of cost? Or, by "negotiate" do you mean try to understand the proposal?

@joel hoffman I simply do not think that there is any reason to devote any significant amount of time to "monitoring" the contractor's compliance with the limitations on subcontracting. Why not? Because the statute (15 USC 657s), the SBA policy (13 CFR 125.6), and the implementing contract clause (FAR 52.219-14) say that compliance is determined at the end of performance, not during. Because meaningful monitoring would entail more than just looking at amounts subcontracted. It would also entail verification of which subcontractors are "similarly situated entities" and which of the similarly situated subcontractors' subcontractors (second-tier subcontractors) are "similarly situated entities". Because the statute and the SBA policy provide a specific remedy for noncompliance—a minimum fine of $500,000—that can be assessed and collected only after the end of performance. Because it is not clear that a CO is authorized by law, regulation, or contract to take action against a contractor prior to a determination made at the end of performance. In short, given the terms of the statute, the SBA policy, and the clause, what is the point of "monitoring", especially when subcontracts might be affected by changes and changed conditions, and compliance dependent on the prime's ultimate settlements with the government? Instead of devoting any time to "monitoring", I would instruct COs to adopt the measures that I have already described twice in this thread: Include a special clause in the contract requiring the contractor to confirm its compliance or acknowledge its noncompliance in writing prior to final payment. I think this is authorized pursuant to 13 CFR 125.6(e)(4). Remind the contractor, in writing, of the limitations—once at the start of performance and once at the midpoint, and ask for acknowledgement of receipt. Require that the contractor confirm its compliance or report its noncompliance and provide supporting data prior to final payment and contract closeout. Document a determination in the closeout file to the effect that there were or were not any indications of noncompliance.

Those of you who call for "monitoring during performance" must explain what you mean by that phrase. What kind(s) of action(s) do you contemplate when you say "monitoring"? After you explain that, tell us what the point of it would be, since the clause does not require compliance throughout performance, i.e., at all times during performance, but only "by the end" of performance. Even if at the halfway point of performance you conclude that the contractor will not be able to comply by the end, what would you do about it? What could you do? Would you try to make the contractor terminate a large business subcontractor and reward the rest of the work to a small business subcontractor? Would you have the statutory, regulatory, or contractual authority to do that? Would you suspend progress payments, performance-based payments, or partial payments? Would you terminate the contract for default on grounds of anticipatory breach, even if the requiring activity were happy with the contractor's work? Would you take an action that would prevent the requiring activity from getting what it needs when and where it needs it? Or, would it make more sense to (1) remind the contractor of the limitations at the start and midway point of performance, (2) wait until the end of performance to make a determination, and then, (3) if the contractor did not comply, ask SBA to assess the minimum $500,000 fine prescribed by statute and make an appropriate entry in CPARS?

My replies were prompt, not hasty. I read your posts. And you're avoiding my questions. Go to the hospital. You can come back later and tell us what you'd due by way of due diligence on sole source construction contracts. And by the way, my last government job was Chief of Construction Contracting for the Bonneville Power Administration, U.S. Dept. of Energy, and our office received very high marks from the Department. We did construction of high voltage transmission lines and substations in the Pacific Northwest—Montana, Idaho, Washington, and Oregon. I reported to BPA's Chief Engineer. So I know a little something about both routine and special construction contract administration.

I'm sorry to hear that . I hope all goes well. As for demeaning and belittling your opinions, I'm not doing that. I'm asking you questions about them. That's a sign of respect.

Okay, so tell us what you'd do instead of ignoring it?

Who cares about progress payments? Read the clause. And what are you going to do if you decide at some point in time during performance that the contractor might not comply by the end. T for D? When the clause expressly states that compliance is to be determined at the end?

Okay. Everyone is entitled to an opinion. But then you say: But what is the purpose of "due government diligence during construction" when the parties have agreed that compliance will be determined on the basis of amounts paid by the as of the end of performance, especially since construction usually involve changes and frequently involves claims litigation, moreso than any other kind of government contracting? And what is the procedure for such diligence? Why not just wait until the end, determine compliance after the dust has settled, and then seek guidance from SBA about fines, if any appear due?

Back in the late 1970s, a new boss told me importance to keeping a telephone log for each contract I worked on. I was to document the date and time of all incoming and outgoing official business calls, including the date and time, the name of the person I spoke with, their title, their organization, the topic of conversation, and the gist of the conversation in appropriate detail. A recently ublished decision of the GAO Contract Appeals Board (GAOCAB), The Regal Press v. Government Publishing Office, CAB No. 2019-03, April 20, 2021, shows why my boss gave me good advice. https://www.gao.gov/assets/2019-03.pdf What happened was that the Government Publishing Office (GPO) and one of its contractors got into a dispute about an order for presidential stationary. The contractor had filed a claim for about $290,000 based on the assertion that the contracting officer had given it an oral approval to proceed with production. The CO denied that he had given any such go-ahead. The dispute ended up before the Government Accountability Office Contract Appeals Board. The following is from the decision: The GAOCAP granted the contractor's appeal in the amount of about $225,000.

From the clause, paragraph (c): Why don't we just wait here for a little while... see what happens?

I don't know. But I'm sure that there are persons who will have some strong feelings and ideas about monitoring and enforcement.

I wonder what kind of "monitoring" and verification the president will expect from COs. I can see the GAO reports now: "Most CO's Not Monitoring/Verifying Contractor Compliance With Vaccination Mandate." "Many Contractor Employees Using Fake Vaccination Cards." https://pix11.com/news/coronavirus/ny-man-arrested-after-using-fake-covid-vaccine-card-at-work-officials/ https://www.washingtonpost.com/nation/2021/10/04/va-hospital-nurse-sold-covid-vaccine-cards/ https://abcnews.go.com/Health/michigan-men-charged-separate-vaccination-card-schemes/story?id=80309267 Par for the course in the utopia of rules.

Yes, at risk. If the contract includes FAR 52.232-20, see paragraph (f). If it includes FAR 52.232-22, see paragraph (i).

From the podcast website: And from The Washington Post, October 3, under the headline: "U.S. Navy hit by another international bribery scandal": https://www.washingtonpost.com/investigations/navy-bribery-scandal/2021/10/03/d5181302-245e-11ec-8d53-67cfb452aa60_story.html Contracts to service naval vessels while in port are referred to as "ship husbanding" contracts.

So you can then tackle me? 😄

@C CulhamSince there are so many things you want discussed, why don't you write an article for Contract Management?

@Contracting Officers: The limitations on sujbcontracting are performance requirements, no different than the requirement to comply with the statement of work or specification or the Service Contract Act clause. FAR 15.304(c)(4), which concerns proposed small business subcontracting, applies only to acquisitions that have not been set-aside. The limitations apply only to contracts resulting from small business set-asides. Here's what the GAO said last year: Hughes Coleman, JV, B- 417787.5 (Comp.Gen.), 2020 CPD P 257, July 29, 2020, footnote 4. Emphasis added. My advice to COs is that they not treat the limitations as a special pre-award issue during bid or proposal evaluation. For more on the limitations on subcontracting, see the following articles: Limitations on Subcontracting: Are They Being Enforced? Will They Ever Be?, by Vernon J. Edwards, The Nash & Cibinic Report (August 2014) 28 NCR-NL ¶ 45 (This article addressed the difficulty of enforcing the old limitations and the challenges of the new limitations as they appeared in statute, before the finalization of the SBA rules.) Postscript: Limitations on Subcontracting, by Ralph C. Nash, Jr., The Nash & Cibinic Report (November 2014) 28 NCR-NL ¶ 62 Postscript II: Limitations on Subcontracting, by Ralph C. Nash, Jr., The Nash & Cibinic Report, December 2020, 34 NCR-NL ¶ 70. To COs: As for post-award compliance—unless you have a lot of time on your hands and are prepared to study and think about the limitations in depth, do not let this Wifcon thread prompt you to become small business activists. As a general rule, do not try to monitor compliance on an interim basis during performance. See the first Nash & Cibinic article cited above for more on the difficulty of in-progress monitoring under the new rules. At contract pre-performance conferences, remind contractors of the clause, of 13 CFR 125.6, of their promises and obligations, and of the possible consequences of nonconformance. Ask for written confirmation of compliance and supporting payment information at the end of performance, after the contract is physically complete, and before final payment and contract closeout. Document the file. If anything suggests a possible violation of the limitations, seek guidance from your superiors and attorney. Let agency policy and instruction guide you about any need to take more active measures. I will have more to say about this in the November issue of The Nash & Cibinic Report, and will provide Bob with a copy of the article to post at Wifcon after its publication. Vern

Just for clarity, here is what the contract clause, FAR 52.219-14, paragraph (f) says: Emphasis added. So by the terms of the contract, compliance is determined on the basis of amounts paid by the end of those periods of time. In reality, however, if at the end of those periods of time there are outstanding requests for equitable adjustment or claims, compliance might not be determinable until they are settled or litigation has been completed. That could be years after the end of those periods.

And here's what I said on September 22, more than a week ago: Yet here's Carl's accusation against ji20874 and me: In-progress monitoring cannot be determinative of compliance, because both 13 CFR 125.6 and the clause expressly state that compliance is to be determined at the end of performance. Any action taken against a contractor based on in-progress monitoring would likely be a government breach of contract unless, perhaps, it revealed that compliance would be impossible. But even then, contract changes and claims affecting subcontracted work could be a defense against assertions of contractor breach, at least pending final resolution. All this moralistic accusation and fussing is a tempest in a looney teapot.

@C CulhamCarl, when did this thread become about the 8(a) Program? I have been writing about the limitations on subcontracting clause, FAR 52.219-14. My comment that you quoted about enforcing the clause was about that clause. I don't recall that clause even mentioning "8(a)". I have said nothing about 8(a) or 8(a) partnership agreements in this thread or anywhere else since I returned to Wifcon. I don't even know what they are. I have not thought much or had much to say about 8(a) since I left the Small Business Administration more than 40 years ago. I haven't read the FAR coverage of 8(a) in many years. If I have mentioned it at all in any of my writings over the past 30 years it has been only in passing. I have not read those parts of 13 CFR that address 8(a). I cannot speak for ji20874, but I certainly have not been a catalyst of anything having to do with 8(a). I'm worried about you, Carl. Did you get any sleep last night? Have you had a seizure? I ask only because you wrote this string of words: That kind of writing is surely the product of apoplexy or some other mental disturbance, perhaps brought on by staying up all night reading in FAR Subchapter D. Lord knows—reading Part 19 or Part 25 alone will disturb even a good mind. Please, get help.

And there is nothing more boring than a moralist retiree citing a regulation as scripture.

I don't know.