Velhammer

I think that this would be considered an unlawful augmentation of the agency's appropriations. I'm curious what authority the CO is citing. This, much like some of your other posts, seems like you are dealing with an incompetent contracting office. I hope Vern reconsiders, I'd love to see that response.

Not withstanding the good discussion on what satisfactory means, the DoD CPARS Guide states: A3.24 Block 18c - Cost Control. (Not Applicable for Firm-Fixed Price or Firm-Fixed Price with Economic Price Adjustment). (Attachment 3, page A7) You should respond with that point. Presumably the office would then remove the entire discussion about the over-run.

What is an example of something in an insurance policy that could be adverse to the Government? A couple of thoughts come to mind: Lowering the coverage amount below the contract's minimum requirements, naming additional named insured's or cancelation of the policy without (or minimal notice). In CA, the state only requires 10 days cancelation notice; the FAR requires 30. My advice to our contractors is: if you cannot convince your insurance company to change their policy's terms, find another insurance company.

H2H: "Joint Venture: A legal entity in the nature of a partnership engaged in the joint prosecution of a particular transaction for mutual profit. It is a grouping of two or more persons or companies that, unlike a parnership, does not entail a continuing relationship between the parties. (...)" Source: The Government contracts Reference Book, 3rd Edition, p.341, Nash, Schooner, O'Brien-DeBakey, and (of course) Edwards. Vel

I read the original post and don't agree with the assumption. A JV of two large businesses would be a separate legal business entity and would have one subcontracting plan - if it were an individual plan. If the JV opted for a commercial plan, it would still be one plan for the JV; not the separate partners.

In my opinion, even if the contractor's normal rate structure included material handling overhead and/or G&A on subs, they probably could not include those costs in determining whether they met the limitation on subcontracting. Material handling overhead generally wouldn't have "direct labor as its base" and there is a difference in including all G&A costs as opposed to only including the "G&A rate multiplied by the labor cost."

Outsidelegalguy: Sorry, I didn't mean to hijack the thread. I figured the initial question was answered with Don's response, as well as your own point about not having to flow down the limitation on subcontracting requirements. For what its worth, I too ran across this practice while doing SB subcontracting compliance reviews. We couldn't ding them on it because it didn't violate the regulations. There are currently no class waivers for computers or monitors and I agree that it would be difficult to obtain an individual waiver. The Gov't may not want to buy a computer made in a garage, but I suspect they are probably plenty of folks out there who would claim to do it. So, in my view, unless the supply contract is less than $25K or the 8(a) is providing a product manufactured by a small business; the 8(a) shouldn't be supplying computer hardware.

Don: Your last response intrigued me. Looking at 13 CFR 121.406 ©(4), example 2 seems to contradict your response to the Dell scenario: "Example 2 to paragraph ((4). A procuring agency seeks to acquire computer hardware, as well as computer integration and maintenance services. If the procuring agency determines that the principal nature of the procurement is for supplies and classifies the procurement as a supply procurement, the nonmanufacturer rule applies to the computer hardware portion of the requirement. A firm seeking to qualify as a small business nonmanufacturer must supply the computer hardware manufactured by a small business. Because the requirement is classified as a supply contract, the contractor does not have to meet the performance of work requirement set forth in §125.6 for the services portion of the contract." In lieu of that example, do you think that 52.219-14©(2) only apply to cases where the non-manufacturer rule is waived (below $25,000 or by class waiver), or in the case of kit assemblers?

Ipod24: I'd be careful about tossing out the low guy solely on his low price if your solicitation didn't state you were going to perform cost realism analysis.

Hi Reno54. I have seen construction contracts that allow the contractor to order furniture, fixtures, and equipment (FF&E) from Government sources of supply (typically GSA FSS Schedules). This sounds like the example you have seen for the skate-board park equipment. The FF&E to be ordered and installed is modified into the contract at cost, plus an allowance for a handling & administrative rate. Letters citing which sources are authorized for use are provided to the contractor. Those letters are typically provided to the FSS vendors to cover any audits from GSA. FF&E items are not subject to additional bonding and are typically tax exempt, because they are not considered construction material or part of the construction cost. The MACC contracts or instant contracts specifically authorize this process, and there was a class D&F executed for this practice. The D&F relies on 51.101(a)(2), "Other types of negotiated contracts when the agency determines that a substantial dollar portion of the contractor's contracts are of a Government cost reimbursment nature." A bit of a stretch in my opinion, but there it is. A word of caution: If your contract doesn't authorize this practice, I wouldn't go there now as you may create a CICA problem by allowing the contractor to obtain "materials" at a lower cost than its competitors.

Duplicate

I don't really have a problem with the requirement for legal review, because I have learned alot from the attorneys over the years. The problem I have is attorneys forget that they are providing advice. If we disagree, they tend to withhold their endorsement (conditioned or otherwise). I believe that because they typically aren't challenged, they begin to believe they have the final say and expect their recommendations to be incorporated without question.

Joel: Thanks for your responses. Yes, it is a NAVFAC Spec and it is design build. You certainly provided other good reasons why submittals would be listed as procurement activities, thank you. Your agency has done a better job of defining "work accomplished", because I have found no such definition in the FAR or my agency's guidelines. Of course I have "the way we've always done it", but I have been asked to explain that rationale by a contractor that hasn't dealt with our agency very often. They have a much more liberal view of "work accomplished."

We're having a debate regarding the payment of pre-construction submittals (not administrative submittals) such as shop drawings. One school of thought is we only pay for work put in place and the cost of submittals are included in the respective construction activity. The other position is that the submittals are tangible and have value in the event of a surety take-over, as they would likely still be used. UFGS 01 32 17.05 20 states: Procurement Activities: Examples of procurement activities include, but are not limited to; Material/equipment submittal preparation, submittal and approval of material/equipment; material/equipment fabrication and delivery, and material/equipment on-site. As a minimum, separate procurement activities will be provided for critical items, long lead items, items requiring government approval and material/equipment procurement for which payment will be requested in advance of installation. Then under cost-loading: Cost Loading Activities: Costs for incremental design preparation shall be assigned to the respective design phase submittal milestone(s). Material and Equipment Costs for which payment will be requested in advance of installation shall be assigned to their respective procurement activity (i.e., the material/equipment on-site activity). All other construction costs shall be assigned to their respective Construction Activities. I don't understand why the guide spec says to treat submittals as procurement activities, but then seemingly limits reimbursement to only material & equipment delivered to the site. I'm curious how others treat the payment of these type of submittals and what basis is used.

I have to disagree with Carl's answer for number 3, based on FAR 8.405-6 (g)(2)(i). "Identification of the agency and the contracting activity, and specific identification of the document as a ?Limited Source Justification.?" Agree with the first two answers.

Hi Joel. Thanks for the response. I'm familiar with the case law on consistency for prime contractors [ASBCA No 40750 Appeal of M.A. Mortenson, Co. (Oct 16, 1996); and ASBCA No 49333 Appeal of Caddell Construction Co (Dec 20, 1999)]. I'll send you a message because I don't want to reveal too much info.

What I meant by fiscally in scope: Does the work to be performed fall within the purpose of the funding. If you are doing repair work that is part of the T&E, then you probably are ok; assuming those funds are still available for new obligations (i.e. year 1 or 2). If you are doing repair work that isn't part of the T&E, then you probably should be using O&M or possibly procurement funds. Why fund part of it: If it is going to take a while to definitize the action, then your contractor may want to receive payment for some of the work that has been performed.

I'll take a stab at this: What type of funds: Don't know, what type of funds are on the contract? Is the change fiscally in scope? Will the price the O&A CLIN be the ceiling amount, with the obligation amount being zero: That is how I would process it; however you may want to fund some of it (much like a UCA).

I have a FPAF construction contract where performance is going to be delayed by the Gov't. The prime contractor uses the percentage method to recover field overhead costs, while some of the subcontractors use the daily rate method. FAR 31.105(d)(3) requires consistency with established accounting practices in treating field overhead costs as direct or indirect. My question is: Does the prime contractor's established practice of treating field overhead costs as indirect costs preclude the subcontractors (that treat field overhead costs as direct) from recovering extended overhead costs as a result of Government delay.

Thank you both for your comprehensive responses.

Background: This is a FFP design-build task order for a renovation of a BEQ. Funding was ARRA MILCON. The original scope included elevator repair and the contractor's proposed plans were accepted by the Gov't. As the building was preparing to be turned over, a new government elevator inspector imposed some additional requirements beyond the original scope and accepted specifications. The building was BOD'd, (Beneficial Occupancy Date) but the elevator was not certified and was thus not allowed to be used. The contract completion date (CCD) passed shortly after the BOD. Had this additional scope been included as part of the contract, it would have been considered punch-list, but since the Gov'ts level of inspection increased, the contractor is due the additional funds to meet the changed requirements. After hammering out a scope, obtaining funding, and negotiating; I'm ready to issue a modification for (well less than $10K) the additional work; four months after the expiration of the contract. Questions: Is the contract expired, or is this a period of forbearance (see AKSS discussion: Forebearance vs. expired)? If the former, is it necessary to extend the CCD for four months to accomplish one additional day of work. Yes, I'm checking with legal, but wanted some input from those with a construction background in case there are other issues that have not been considered.

Sounds like you've done your due diligence by consulting with the SBA and DOL. On a personal note, I've only been doing construction for the last 18 months. As I look back at some of the things I've done when I was working services (roughly 20 years), I realize I've been doing construction a lot longer - just didn't realize it. It's funny how your perspective changes once you've been exposed to different areas of contracting.

I'd say Construction because it is alteration or repair of real property. The definition of Construction in 2.101 states: "(including dredging, excavating, and painting)..." I've seen agency regulations that specify painting over a certain square footage is considered construction, so touch-up or spot painting wouldn't necessarily be classified as construction (i.e. maintenance painting). But by combining these two, I think you have clearly crossed into the construction arena.

Hi Vern. I know from conversations I've had with you that you had done construction at some point in your storied career, so you probably have done it but just forgot. For construction contracts funded with O&M, this issue comes up quite a bit. I frequently have to look at whether a change was a result of a design deficiency (which has antecedent liability) or some other factor such as a customer request and requires the use of current year funds. Going back to the author of the original post, I've learned the hard way that my PM usually doesn't have a clue about this matter and is usually more focused on the outcome than the process. But if things go south I'm the one left holding the bag. Learn the big picture. Talk to your financial folks, ask them to teach you. I've never had a fiscal law class either, but I've learned a lot by asking and unfortunately by making mistakes. This is an area that is too important to put blind faith in others.

NAVFAC does consider some maintenance and repair services, such as painting, to be candidates for commercial services; even if they are subject to Davis-Bacon. If this particular project is really just for scraping and applying a non-skid coating, even if the coating that had to be used is a mil-spec, I'd tend to agree that it could be classified as a commercial service; provided that the instructions for the application were consistent with commerical practices. To Joel's point about being based on established catalog or market prices, DWGerard's answer is probably better if there are commercial dry-docks in the area, but I would also submit that the Wage Determination could arguably be used as a "market price", since it is from an independent source (DOL) and is established based upon the wages being paid in that area for that type of work.