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Don Mansfield

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  1. Don Mansfield
    I was recently perusing some of the recent final rules issued by the FAR Council when I came across a statement that I found interesting. In responding to a comment concerning the applicability of TINA to task and delivery orders, the FAR Councils stated that TINA applicability is to be determined when negotiating a basic IDIQ contract, as well as when negotiating subsequent orders under the contract. A description of the comment that they received read as follows:

    The Councils' response was as follows:

    (See FAR Case 2008-012, Clarification of Submission of Cost or Pricing Data on Non-Commercial Modifications of Commercial Items (75 FR 13414)).
    My initial reaction was "Good, they got it right." However, I was not satisfied with the complete lack of explanation other than that this information was "commonly understood." "It is commonly understood?" is the equivalent to saying "Well, everybody knows?", which is not an answer that I would accept from a student nor is it one that the public should be accepting from the FAR Councils. Further, the FAR Councils' use of "commonly understood" raises the question: Commonly understood by whom? Based on my experience, "commonly debated" would be a more apt description.
    Task and Delivery Orders are "Contracts"
    By stating that TINA applicability determinations must be made at the task and delivery order level, the FAR Councils have, perhaps unwittingly, admitted that task and delivery orders are "contracts" as defined at FAR 2.101. Consider the requirements for obtaining cost or pricing data at FAR 15.403-4(a)(1):

    If TINA applies to task and delivery orders, then task and delivery orders must fall into one of the three enumerated categories. A task or delivery order issued by the Government is certainly not a subcontract, so (ii) is out. A task or delivery order under a contract is not a "written change in the terms of a contract", so they do not meet the definition of "contract modification", thereby eliminating (iii). Thus, task and delivery orders must be "contracts."
    However, one cannot reasonably describe this information as "commonly understood" either. Consider the following statements made in FEATURE COMMENT: Contesting Task And Delivery Order Awards At The COFC--Policy Implications Of A Choice Federal Courts May Soon Have To Make (51 NO. 20 Gov't Contractor ? 174). In discussing the automatic stay provisions of CICA, the author writes:

    The author, seemingly indecisive, also writes:

    This author is not alone. In FEATURE COMMENT: Acquisition Reform Revisited--Section 843 Protests Against Task And Delivery Order Awards At GAO (50 NO. 9 Gov't Contractor ? 75) the authors put forth the following argument:

    I agree with the first author's assessment of the potential controversy that would ensue if the FAR Councils were to redefine "contract" to include task and delivery orders. If the FAR Councils were to propose such a rule, I would estimate that they would receive no less than 100 public comments.
    Where's the Cost or Pricing Data Clause for Task and Delivery Orders?
    If it's "commonly understood" that TINA applies to task and delivery orders, why isn't there a standard FAR clause for use in task and delivery order contracts that compels the submission of cost or pricing with a task or delivery order proposal when applicable? There's a standard FAR provision at FAR 52.215-20, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data (Oct 1997), that can be used to compel offerors to submit cost or pricing data when submitting offers for a basic IDIQ contract. There's also a standard FAR clause at FAR 52.215-21, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data?Modifications (Oct 1997), that compels submission of cost or pricing data when pricing contract modifications (if applicable). Where is "Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data?Task and Delivery Orders"? Why not have offerors agree to submit cost or pricing data (if applicable) with subsequent task and delivery order proposals?
    TINA Yes, CAS No
    The Councils' response in the publication of this rule reminded me of an earlier response pertaining to the applicability of CAS to task and delivery orders accompanying a final rule on CAS (70 FR 11743-01). In that response, the Councils reached the opposite conclusion. The exchange was as follows:

    Thus, a determination of CAS applicability is made only when placing the basic IDIQ contract. If an IDIQ contract is subject to CAS, all orders under the contract are subject to CAS. If an IDIQ contract is not subject to CAS, none of the orders under the contract are subject to CAS.
    So, according to the FAR Councils, a contracting officer must determine applicability of TINA when awarding a basic IDIQ contract and issuing any subsequent orders, but need only determine the applicability of CAS once?when awarding a basic IDIQ contract.
    This raises another yet another question?how is a CO supposed to know this? Consider the rules for determining CAS applicability at 48 CFR 9903.201-1:

    By asserting that CAS determinations are not made at the task or delivery order level, the FAR Councils must be using a definition of "contract" that is different than what appears at FAR 2.101. What definition are they using and why does that definition exclude task and delivery orders? I don't get it.
    Recommendation
    If the FAR Councils believe that task and delivery orders are "contracts" as defined at FAR 2.101, then they can clear up a considerable amount of confusion by including these types of orders in that definition. If they do that, why not add a standard FAR clause compelling submission of cost or pricing data (when applicable) with task or delivery order proposals? While they're at it, how about an explicit statement in the FAR stating that TINA applicability determinations are made at the task and delivery order level and another statement that CAS applicability determinations are not? Probably too much to ask.
  2. Don Mansfield
    “How do you do simplified acquisition?” is a common question I hear from acquisition personnel that are more familiar with using FAR part 15 procedures to solicit offers and award contracts. The question presupposes that there is a regulated set of procedures that one must follow—similar to what is prescribed in FAR part 15, agency FAR supplements to FAR part 15, agency guidebooks on source selection, and the decisions of the Government Accountability Office (GAO) and Court of Federal Claims (COFC). Fortunately, that is not the case. Rather, FAR part 13 (Simplified Acquisition Procedures (SAP)) expressly states that certain procedures contained in FAR part 15 (Contracting by Negotiation) do not apply and requires contracting officers to “use innovative approaches, to the maximum extent practicable, in awarding contracts using simplified acquisition procedures.” FAR 13.003(h)(4). An underlying message in FAR part 13 is to not bring your FAR part 15 baggage with you. The following list presents thirteen reasons why SAP is simpler than the competitive negotiation procedures of FAR part 15.
    See complete list.
  3. Don Mansfield
    A former student of mine is part of a team conducting a survey to gauge interest in a Mentoring program for Acquisition. If you work in federal acquisition and work for a federal agency (including DoD), please take a few minutes to complete the survey. The more junior you are, the better. From the team:
     
  4. Don Mansfield
    DoD implemented a Clause Control Policy in 2015 that would require the same degree of transparency in the development and use of "local clauses" by the military departments and defense agencies as FAR and DFARS clauses (see PGI Case 2015-P003 and attached). Specifically, local clauses would be subject to publication for comment in the Federal Register and codified in the Code of Federal Regulations (CFR). However, not a single local clause has been incorporated in the CFR since the new policy was implemented. At the same time, there seems to be a lot more requirements in statements of work that don't have anything to do with describing work, but read a lot like a FAR or DFARS clause. Some of it is even prescribed in agency supplements to the DFARS. What's going on here?
    The Acquivores discuss https://www.youtube.com/watch?v=fK6GKDEqAhM&ab_channel=DonAcquisition
    2015-P003 DFARS PGI Text LILO.doc
  5. Don Mansfield
    In B&B Medical Services, Inc.; Rotech Healthcare, Inc.; B-404241, B-404241.2, (January 19, 2011), the Comptroller General held that the statutory nonmanufacturer rule does not apply to procurements set aside for Historically Underutilized Business Zone (HUBZone) small business concerns. The decision contains the following analysis:

    The analysis is technically correct?the statutory nonmanufacturer rule does not apply to HUBZone set-asides. Reading this analysis, one may conclude that, for HUBZone set-asides, HUBZone small business nonmanufacturers need not provide end items that were produced by HUBZone small business concerns. However, that would be incorrect.
    While it is true that the statutory nonmanufacturer rule does not apply to HUBZone set-asides, the regulatory nonmanufacturer rule does. The Small Business Administration (SBA), the agency with the authority to implement the HUBZone Program, has imposed a nonmanufacturer rule applicable to HUBZone small business concerns at 13 CFR 126.601:

    This rule is implemented in the FAR at 19.1303(e) and the clauses at FAR 52.219-3(e) and FAR 52.219-4(f).
    It?s remarkable that the GAO decision makes no mention of the regulatory nonmanufacturer rule. Perhaps the GAO limited its decision to the arguments that were made by the parties. If that?s the case, then it?s remarkable that the protesters would limit their argument to the applicability of the statutory nonmanufacturer rule to HUBZone set-asides without mentioning the HUBZone nonmanufacturer rule at 13 CFR 126.601(f). It wouldn?t have made a difference in the outcome of the protest?the requirement in question was determined to be a service by the SBA under an earlier NAICS code appeal. As such, the applicability of the statutory nonmanufacturer rule to the acquisition was a moot point.
  6. Don Mansfield
    This morning I read two different threads in the Wifcon forum. In the first thread, the discussion centered on late Government payments. (See “Significant Delays in voucher review/approval”). Some of the participants shared stories of how the Government does not consistently respect contractual payment due dates. Because some contractors are reluctant to enforce their rights under the payment clauses of their contracts, the Government continues to take advantage of them. One poster put it this way:
    I was embarrassed for the Government after reading this thread. Then, I read the following advice (from a different poster) in a thread dealing with how the limitation on subcontracting clause is applied (see "Small bus Set Aside 50%, can pass part of that to another Small?"):
    The underlying message: “it’s ok to take advantage of the fact that the government does not enforce this right under the contract.” After reading this, it became clear that Government personnel really aren’t that different than contractor personnel. On both sides, there will be those that respect the rights of the other party under the contract and those whose behavior is guided by what they can get away with. I think we should all strive to be included in the former group. Those in the latter group have little right to cry foul when they find themselves on the opposite sides of a contract.
  7. Don Mansfield
    To answer the title question--most likely yes, for DoD. A recent DFARS final rule, Procurement of Commercial Items (DFARS Case 2016-D006), added the following definition at DFARS 202.101:
    Since small business concerns are exempt from CAS, most small business concerns would fall within the definition. This has significant consequences because the final rule also added the following at DFARS 212.102(a)(iii):
    So, DoD contracting officers can use FAR part 12 procedures to buy both commercial and noncommercial items from most small business concerns. I admit that I did not appreciate the scope of this rule when I first read it. I would have expected more dancing in the streets by both small business concerns and DoD contracting officers. Maybe there was and I missed it.
  8. Don Mansfield
    In a recent DoD IG report, the Army Contracting Command was cited for its failure to perform "component assessments" on 23 contracts subject to the Buy American Act (see DoD IG Report No. 2015-026). The report states as follows:
    Not having ever heard of such a requirement, I checked the reference to this requirement, which was allegedly located in DFARS 252.225-7001( a )(3)(ii)(A). DFARS 252.225-7001 is a contract clause entitled "Buy American Act and Balance of Payments Program". The clause does not contain "( a )(3)(ii)(A)", but it does contain a paragraph "( a )". Paragraph ( a ) defines, for purposes of their use in the clause, the terms "Commercially available off-the-shelf (COTS) item", "component", "domestic end product", "end product", "foreign end product", "qualifying country", "qualifying country component", "qualifying country end product", and "United States". The paragraph does not require the contracting officer to do anything. In fact, it doesn't require that anybody do anything--it merely defines words and terms. The balance of the clause imposes an explicit requirement on the contractor in paragraph ( c ) and an implied requirement on the contractor in paragraph ( d ):
    Nothing in the entire clause requires the contracting officer to do anything. The terms "contracting officer" and "component assessment" do not appear in the clause. The term "component test" appears once--in paragraph ( b ) (see above). No duty of the contracting officer can reasonably be inferred.
    When read together with the provision at DFARS 252.225-7000, it is clear that any assessment of end item components should be done by an offeror when determining how to complete the certification in DFARS 252.225-7000( c ):
    I assume that the Army Contracting Command pointed out the flawed assumption that the IG had made when responding to the audit. Let me just check their response to this finding to be sure:
    Oh, well. Get ready ACC contracting personnel--you will soon be receiving a policy memo requiring you to take CLC 027 Buy American Act. And no, it does not contain guidance on how contracting officers are to perform "component assessments".
  9. Don Mansfield
    When taking a class on the Cost Accounting Standards (CAS) last year, I came across a DCAA rule that made perfect sense to the auditors, but left some of the contracting officers scratching their heads. The rule deals with how to calculate the cost impact of a CAS noncompliance or accounting change on a cost-plus-award-fee (CPAF) contract.
    Chapter 8 of the DCAA Contract Audit Manual (CAM) contains guidance on how to evaluate cost impact proposals submitted to the Government as a result of a CAS noncompliance or cost accounting practice change (see CAM 8-503). The CAM outlines a five-step process, which is shown in an abbreviated form below:
    Step 1 Compute the increased/decreased cost estimates and/or accumulations for CAS-covered contracts and subcontracts.
    Step 2 Combine the increased/decreased cost estimates and/or accumulations within each contract group.
    Step 3 Determine the increased/decreased cost paid by the Government for each contract group, using the net impact on cost estimates, accumulations and profits/fees.
    Step 4 Determine the increased costs paid by the Government in the aggregate by combining across contract groups the increased/decreased costs paid by the Government for both contract groups, as determined in step 3.
    Step 5 Negotiate a settlement with the contractor.
    The guidance stated under step 3 for determining increased costs to the Government states the following:

    There is a similar guidance for determining decreased costs to the Government.
    Thus, the assumption is that the Government would have negotiated a lesser fixed, target, or incentive fee but for the contractor's CAS noncompliance or accounting practice change that caused the cost estimate to be higher than it should have been. For example, let's say a contracting officer negotiates a cost-plus-fixed-fee (CPFF) contract for an estimated cost of $1,000,000 and a fixed-fee of $100,000. The contractor completes the contract and is paid the fixed-fee of $100,000. However, it's later discovered that the contractor used a noncompliant estimating practice that caused the cost estimate to be higher than it should have been. If the contractor had used a compliant estimating practice, their estimated cost would have been $900,000. It is assumed that had the contracting officer known this, he/she would have negotiated a fixed-fee of $90,000. This may not be true in some cases, but it is reasonable as a general assumption.
    This guidance is based on an interpretation in the FAR Appendix at 9903.306( c ), which states:

    So far, so good.
    What's puzzling is the guidance stated in the last sentence of the above-quoted paragraph from the CAM:

    Thus, the assumption is that, in the case of CPAF contracts, a contractor's cost estimate has no effect on the amount of award fee that a contractor is eventually paid. To illustrate this, let's say a contracting officer negotiates a CPAF contract with an estimated cost of $1,000,000 and an award fee pool of $100,000 (assume no base fee). After performance, the Government determines that the contractor is entitled to 100% of the available award fee and pays the contractor $100,000 (the typical practice is to determine award fee entitlement by applying the earned percentage to the award fee pool?this is a required practice in DoD). It is later found that the contractor used a noncompliant estimating practice which caused the cost estimate to be higher than it should have been. If the contractor had used a compliant estimating practice, their estimated cost would have been $900,000. In this case, it is assumed that had the contracting officer known this, he/she still would have negotiated an award-fee pool of $100,000. This may be true in some cases, but it is curiously inconsistent with the assumption made when calculating the cost impact on a CPFF contract.
    Is it reasonable to assume that a contractor's estimated cost has no affect on the size of the award fee pool that a contracting officer negotiates?
    While it is true that a structured approach to developing prenegotiation fee objectives, which relies heavily on prenegotiation cost objectives, is generally not required when developing a prenegotiation award-fee pool objective, it's quite a stretch to assume that prenegotiation cost objectives have no effect on the prenegotiation award fee pool objective (or the size of the award fee pool negotiated). Official guidance on negotiating award fee pools acknowledges that estimated cost can be a consideration. The Air Force Material Command Award Fee Guide offers the following guidance for establishing the award fee pool:

    [bold added].
    The Navy-Marine Corps Award Fee Guide offers almost identical guidance.
    In my experience, as well as that of some of my colleagues, a contract's estimated cost was a significant factor (if not the most significant factor) in negotiating the size of award fee pools in CPAF contracts. I would be surprised if my experience were atypical.
    I'd be interested in hearing to what extent my readers consider estimated costs when negotiating an award fee pool for a CPAF contract. Let me know your experience.
  10. Don Mansfield
    I'm looking for feedback on a tool that I'm creating for DoD. Basically, it would be a single document that would contain the FAR, DFARS, DFARS PGI, and DoD Class Deviations. The concept is similar to that used in the General Services Administration Acquisition Manual (GSAM), where both regulatory (GSAR) and nonregulatory information is integrated into one document and distinguished by shading. The main difference is the document that I envision also contains the FAR. I've attached a sample of what an integrated FAR subpart 1.1, DFARS subpart 201.1, and DFARS PGI subpart 201.1 would look like. Take a look and let me know what you think. I'd appreciate any feedback, but I'm particularly interested in the following:
    1. Would you use such a tool?
    2. Is there a better way to distinguish between FAR, DFARS, and DFARS PGI text than the use of shading?
    3. Do you have any ideas to make the tool better (more useful)?
    Consolidated FAR, DFARS, DFARS PGI, DoD Class Deviations.docx
  11. Don Mansfield
    There has been a considerable amount of controversy over the last year or so in the area of small business programs. In International Program Group, Inc., (B?400278, B?400308, 19 September 2008) the Government Accountability Office (GAO) held that HUBZone set-asides took priority over service-disabled veteran-owned small business (SDVOSB) set-asides and SDVOSB sole source acquisitions. This was unsurprising given the clear language in the FAR. In Mission Critical Solutions (B?401057, 4 May 2009) (also see reconsideration), the GAO held that the HUBZone set-asides took precedence over the 8(a) program. This was surprising given the clear language of the FAR. Of note in both cases was that the GAO solicited and rejected the Small Business Administration's (SBA's) interpretation of the applicable statutes, which was that there was parity among the 8(a), HUBZone, and SDVOSB programs. It was after the latter case that the Office of Management and Budget (OMB) stepped in with a memorandum advising agencies to disregard the two GAO decisions and providing the following guidance:

    Remarkably, this guidance 1) assumes that contracting officers had been following the parity policies implemented in SBA's regulations and 2) implies that, henceforth, contracting officers are free to treat HUBZone, SDVOSB, and 8(a) contractors as equals. There is no acknowledgement of the fact that there were no pre-existing "parity" policies in the FAR. Prior to the GAO decisions, the FAR Council issued a proposed rule that would have implemented parity among the three programs?something that clearly did not exist in the FAR. See 73 FR 12699. As of today, the FAR Case dealing with Socioeconomic Program Parity (2006-034) has been tabled. As such, any contracting officer subject to the FAR that thinks that they have been given the green light to disregard the FAR and treat all three programs the same should think again.
    Consider the following scenarios:
    Scenario 1: The conditions for both a HUBZone set-aside and a SDVOSB set-aside (or sole source) exist for a particular acquisition exceeding the simplified acquisition threshold. The requirement cannot be satisfied through the 8(a) program.
    In this scenario, FAR 19.1305 requires a HUBZone set-aside:

    If a CO chose to pursue a SDVOSB set-aside (or sole source) in this scenario, he or she would be deviating from the express requirements of FAR 19.1305. However, a CO subject to the FAR does not have the authority to deviate from the FAR without approval from the agency head (see FAR 1.4). Further, we already know from International Program Group that the GAO would sustain a protest if an agency were to pursue a SDVOSB set-aside (or sole source) when the conditions for a HUBZone set-aside existed. While we don't know for sure how the Court of Federal Claims would decide such a protest, it would be surprising if they were to find that a HUBZone set-aside were not required, given the clear language of the FAR. On the other hand, proceeding with a HUBZone set-aside would be compliant with statute, the FAR, and the SBA regulations (which allow a choice of programs).
    Scenario 2: The conditions for a HUBZone set-aside exist and the requirement can be satisfied through the 8(a) program.
    FAR 19.800(e) provides for a "soft" priority for 8(a) as follows:

    While FAR 19.800(e) doesn't mandate that an acquisition be offered to the SBA under the 8(a) program if it can be, the implication is that there should be a good reason for not doing so. (FAR 2.101 defines should as "an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance.") Thus, it would be unwise to simply ignore FAR 19.800(e) and proceed with a HUBZone set-aside?there should be something in the file that evidences the contracting officer's compliance with FAR 19.800(e). The same would be true if the conditions for a HUBZone sole source, SDVOSB set-aside, or SDVOSB sole source existed.
    The Department of Justice Opinion
    Responding to a request from the SBA, the Justice Department provided a legal opinion pertaining to the SBA's interpretation of the relevant statutes. The opinion found as follows:

    I can't wait to see how DOJ's reasoning holds up in the Court of Federal Claims (assuming we'll see a case). For argument's sake, let's assume that the opinion is correct. Does this mean that contracting officers can now ignore the FAR and treat all three programs equally? I don't think so. The opinion did not say that the FAR is wrong. It says that the SBA did not misinterpret the statute. Thus, the SBA has permissibly given agencies the discretion to choose among the three programs. The FAR Council has already made the choice for contracting officers?HUBZone takes priority over SDVOSB and 8(a) takes priority (albeit a "soft priority") over HUBZone and SDVOSB. The FAR Council may give this discretion to contracting officers, but the FAR would have to be changed to do so.
    My Advice
    In its memorandum, OMB stated that the results of its review of the legal basis underlying the GAO's decisions were expected this past summer?still no word from them as of Black Friday. Any further guidance issued by OMB should acknowledge the priorities that exist in the FAR and explain how contracting officers are to proceed. Merely stating that contracting officers are free to abide by SBA's "parity" policies without acknowledging the rules of the FAR will be most unhelpful.
    In the meantime, contracting officers that find themselves in Scenario #1 above should proceed with a HUBZone set-aside. Contracting officers that find themselves in Scenario #2 above should document compliance with FAR 19.800(e) before proceeding to any other type of set-aside or sole source.
  12. Don Mansfield
    In one of my earlier blog entries, I inferred that the FAR Councils interpreted the definition of ?contract? at FAR 2.101 to include task and delivery orders based on their answer to a question about the applicability of TINA to task and delivery orders (see ?Commonly Understood? I Think Not). Well, there is no reason to draw any inferences anymore. In a recently published final DFARS rule, the DAR Council unequivocally stated that the definition of ?contract? included task and delivery orders. The following exchange appears in the Background section of the final rule for DFARS Case 2010-D004 (72 FR 76296):

    Save this, because it?s unlikely that the definition of ?contract? at FAR 2.101 will ever be changed to explicitly include task and delivery orders.
    In addition to the DAR Council, the GAO has also interpreted the definition of ?contract? to include task and delivery orders. In Delex Systems, Inc., B-400403, October 8, 2008, the GAO stated:

    While it?s nice to have more clarity on the status of task and delivery orders, there remains ambiguity on how to apply clauses in indefinite delivery contracts. Should they be applied at the ?whole contract? level, the task or delivery order level, or both? The FAR Councils routinely receive public comments asking how a new requirement is to be implemented in an IDIQ contract. Consider the following from the final rule implementing the current version of the clause at FAR 52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts (75 FR 13424):

    Apparently, the ?right? way to implement this clause was at the task order level, not the ?whole contract? level. How a contracting officer is supposed to just know this is beyond me. The FAR Councils have declined to clarify this policy in the clause.
    So should we applying all clauses at the task and delivery order level? Apparently not. Contracts that are set aside for small business concerns are required to contain a limitation on subcontracting clause. FAR 52.219-14( sets forth the limitations as follows:

    By operation of the clause at FAR 52.202-1, Definitions, the applicable definition of ?contract? would be the one located at FAR 2.101:

    It would seem that since both indefinite delivery contracts and task and delivery orders meet this definition, so one would think that the subcontracting limitation applied to both. However, that?s not how the GAO interprets the clause.
    The decision in Lockheed Martin Fairchild Systems, B-275034, 17 January 1997, stated the following:

    Thus, the GAO determined that this clause was applicable at the ?whole contract? level, and not at the task order level. There?s no discussion on why this is necessarily so.
    What about the clause at FAR 52.232-20, Limitation of Cost? Do the notification requirements apply at 75% of the estimated cost of the task or delivery order, or at 75% of the estimated cost of the indefinite delivery contract? What about the clause at FAR 52.216-8, Fixed Fee? Does the $100,000 fee withholding limitation apply to each task or delivery order, or to the whole IDIQ contract? The questions are endless. Contracting officers have answers to these questions, but they are not all the same. Without a clear set of rules, it?s hard to argue that anybody is wrong.
    Fortunately, some clauses are clear on this point. For example, the clause at FAR 52.216-23, Limitations on Pass-Through Charges, states the following reporting requirement:

    Some of the newer FAR rules recognize the potential confusion caused in the case of indefinite delivery contracts and have adapted. That?s encouraging, but it doesn?t help us interpret the older rules. The FAR Councils could clarify things by adding an interpretation convention at FAR 1.108 stating at which level (whole contract, task order or delivery order, or both) requirements of clauses in indefinite delivery contracts apply, if not otherwise specified. Probably won?t happen. I can hope.
  13. Don Mansfield
    I read something that I found remarkable in the recently published GAO decision Master Lock Company, LLC, B-309982.2, June 24, 2008. Bob posted the decision on the Wifcon home page. The protester argued that the agency's evaluation of the awardee's past performance should have taken into account the fact that they had declined a delivery order under a different IDIQ contract. In response, the agency argued that a delivery order was not binding and the GAO agreed. Here's an excerpt:


    "During the course of this protest, Master Lock also argued that the agency?s evaluation of Evergreen?s past performance was unreasonable. As discussed above, Evergreen declined to accept order No. 2745, which was issued under a different contract. DLA acknowledges that it did not consider these events in its evaluation of Evergreen?s past performance. AR at 8. The agency contends, however, that it was not required to do so because the submission of a quote by a vendor under an ID/IQ contract does not result in a binding obligation. Thus, the agency argues, because Evergreen did not accept the order, there was no contract performance for the agency to evaluate.
    The agency is correct that neither the submission of a quote by a vendor nor the issuance of an order by an agency results in a binding contractual obligation. Rather, the government?s order represents an offer that the vendor may accept either through performance or by a formal acceptance document. M. Braun, Inc., B-298935.2, May 21, 2007, 2007 CPD ? 96 at 3."
    [italics added].
    However, the case that the GAO cited as support for their position did not deal with a task or delivery order under an IDIQ contract--it was a purchase order using simplified acquisition procedures. There's a big difference. FAR 16.506 requires the inclusion of the clauses at FAR 52.216-18, Ordering, 52.216-19, Order Limitations, and 52.216-22, Indefinite Quantity, in an IDIQ contract. Here's what the Indefinite Quantity clause says regarding the contractor's obligation to perform:


    "Delivery or performance shall be made only as authorized by orders issued in accordance with the Ordering clause. The Contractor shall furnish to the Government, when and if ordered, the supplies or services specified in the Schedule up to and including the quantity designated in the Schedule as the 'maximum.' The Government shall order at least the quantity of supplies or services designated in the Schedule as the 'minimum.'"
    [bold added].
    Now, what in this required FAR clause would give the contractor the right to decline an order, provided that the order complies with the Ordering and Order Limitations clauses? I don?t see it.
    The decision includes the following statements further on in an attempt to clarify:


    "Although the work required under any task or delivery order will only become a binding obligation on the parties if the vendor accepts the order, the underlying ID/IQ contract may itself have obligations. For example, a contract may require a vendor to accept orders placed by the agency within certain parameters.?
    This is conceptually incorrect. IDIQ contracts do require (not ?may?) the contractor to accept orders placed by the agency within certain parameters (stated in the Ordering and Order Limitations clauses). The only instance where a contractor?s acceptance of a task or delivery order would matter would be if the agency?s order was not within the stated parameters in the Ordering and Order Limitations clauses. Furthermore, an arrangement where the Government was required to order a minimum quantity and the contractor would not be required to perform would arguably lack consideration and, thus, not be an enforceable contract.
    The main problem with this decision is that it characterizes the exception to the rule (i.e., situations where the contractor may decline a task or delivery order under an IDIQ contract) as the rule itself. It also fails to recognize the distinction between purchase orders made in the open market and task and delivery orders under IDIQ contracts.
  14. Don Mansfield
    Consider the following exchange between two people:
    Obviously, Speaker 2's answer is not responsive to Speaker 1's question. Speaker 1 wanted to know about a particular aspect of Speaker 2's car:  its origin. Speaker 2 described a different aspect of his car:  its color. While Speaker 2's statement about the color of his car may be true, it doesn't tell us anything about the origin of his car.
    Easy enough, right? Ok, let's try another one. Consider the following exchange between two contract specialists:
    Is Contract Specialist 2's answer responsive to Contract Specialist 1's question? No, the answer is no more responsive to the question than Speaker 2's answer was to the question of whether his car was foreign or domestic. Why? In this exchange, Contract Specialist 1 wanted to know about a particular aspect of Contract X:  ts compensation arrangement. Contract Specialist 2 described a different aspect of Contract X:  its delivery arrangement. While Contract Specialist 2's statement about the delivery arrangement of Contract X may be true, it doesn't tell us anything about the compensation arrangement of Contract X.
    Make sense? If so, see if you can spot anything wrong with the following passage of an article on contract types that recently appeared in the December 2010 issue of Contract Management (see Government Contract Types: The U.S. Government?s Use of Different Contract Vehicles to Acquire Goods, Services, and Construction by Brian A. Darst and Mark K. Roberts):
    Do you see anything wrong?  Notice that the first two "families" are categorized by compensation arrangement. However, the third family contains a mix of terms used to describe compensation arrangement (T&M/LH), delivery arrangement (indefinite delivery), the extent of contractor commitment (level-of-effort), and a unique term used to describe a contract that is not definitive (letter contract). The way this passage is written implies that an indefinite delivery contract, a level-of-effort contract, and a letter contract are necessarily different (belong to a different "family") from a fixed-price or cost reimbursement contract. However, an indefinite delivery contract or a level-of-effort contract will have a compensation arrangement. The compensation arrangement can be fixed-price, cost-reimbursement, T&M/LH, or some combination thereof. A letter contract may or may not have a compensation arrangement when it is issued. You could conceivably have a letter contract that had a cost-reimbursement compensation arrangement, an indefinite delivery arrangement, and that provided for level-of-effort orders. As such, the authors? categorization of contract types makes as much sense as categorizing cars into three families?foreign, domestic, and red.
    Incentive Contracts? Not What You Think They Are
    Consider the following simplified description of a compensation arrangement:
    Does the preceding describe an incentive contract? Many would say yes, because the arrangement provides for an incentive--specifically, a performance incentive. However, that would be incorrect. Just because a contract contains an incentive does not mean that it is an incentive contract. FAR 16.202-1 contains the following statements in a description of firm-fixed-price contracts (similar statements pertaining to fixed-price contracts with economic price adjustment can be found at FAR 16.203-1.
    [bold added].
    Further, FAR 16.402-1(a) states:
    Thus, it's not enough for a contract to contain an incentive to be an incentive contract. It must contain a cost incentive (or constraint).
    In the aforementioned Contract Management article, an endnote references FAR 37.601(3) and misinterprets this paragraph as--encouraging the use of incentive-type contracts where appropriate.  Here's what FAR 37.601(3) actually says:
    The authors have made the mistake of assuming that a contract that contained a performance incentive was necessarily an incentive contract. In fact, when acquiring services FAR 37.102(a)(2) states the following order of precedence:
    As shown above, a firm-fixed-price contract would take precedence over an incentive contract.
    A Genuine Misunderstanding
    In a discussion of additional contract types and agreements, the Contract Management article contained the following statement (which caused me to stop reading and start writing):
    Huh? T&M/LH is a type of indefinite delivery contract? I'll let you readers ponder that one.
    The article concludes with a plug for the authors-two-day course in, you guessed it, types of contracts. I will pass.
  15. Don Mansfield
    In Latvian Connection General Trading and Construction LLC, B-408633, September 18, 2013, the Comptroller General denied a protest of a solicitation issued by an Air Force unit in Oman for armored cable to be used at Thumrait Air Base, Oman. At issue was the Air Force’s decision to not automatically reserve the acquisition for small business concerns, which both the protester and the Small Business Administration (SBA) argued was required under the Small Business Act. The protester relied on 15 U.S.C. § 644(j)(1), which states:

    [Note: these thresholds have since been raised by the FAR Council. See FAR 19.502-2( a ).]
    The SBA implemented this statutory provision at 13 C.F.R. § 125.2(f)(1), which states that contracting officers (COs):


    The Air Force argued that the automatic reservation, which is stated at FAR 19.502-2(a), did not apply because the acquisition was outside the United States and its outlying areas. The Air Force relied on FAR 19.000( b ), which states:

    The Comptroller General sought the views of the SBA regarding the geographical restriction at FAR 19.000( b ). In its comments, the SBA argued that this regulatory “statement of policy” does not properly implement Small Business Act requirements. Further, the SBA noted that elsewhere the Small Business Act exempts certain provisions from applying outside the United States. Thus, if Congress wanted to place a geographical restriction on § 644(j)(1), it would have done so.

    Siding with the Air Force, the Comptroller General stated:

    This logic suggests that had the FAR Council exempted Kansas City, Missouri, from the application of § 644(j)(1), that would have been okay, too.
    The New SBA Regulations
    Fast-forward two weeks to October 2, 2013. The SBA issued a final rule amending its regulations governing small business contracting procedures (see 78 FR 61114). 13 C.F.R. § 125.2 was amended as follows:

    Although the amended SBA regulation seemingly put to bed the issue of the geographical restriction stated at FAR 19.000( b ), the FAR Council has taken no action to amend the FAR (see “FAR Open Cases Report” at http://www.acq.osd.mil/dpap/dars/far_case_status.html).
    Where are We Now?
    On July 14, 2014, Latvian Connection, LLC, (Latvian) filed a protest with the Government Accountability Office (GAO) (B-410081.1) of a State Department solicitation for spare and replacement parts for the United States Consulate General in Dubai, United Arab Emirates (Solicitation No. 3458493). One of the bases of the protest was the State Department’s decision to not automatically reserve the acquisition for small business concerns. The Comptroller General sought the views of the SBA. In a letter to the GAO, the SBA explained their position as follows:

    [Letter from SBA to GAO, dtd. 25 August 2014, RE: B-410081 Protest of Latvian Connection, LLC]. The letter went on to reference the changes to 13 CFR § 125.2 shown above. The protest against the State Department solicitation was subsequently dismissed on other grounds.
    On December 10, 2014, Latvian filed a protest with the GAO (B-410921) of an Army solicitation for the installation of canopy sunshades on Camp Arifjan, Kuwait (Solicitation No. W912D1-15-R-0004). Again, Latvian argued that the acquisition should have been automatically reserved for small business as required by the Small Business Act and the newly amended SBA regulations. Presumably understanding that they would be fighting a losing battle, the Army amended the solicitation to automatically reserve it for small business concerns and the protest was dismissed. The description block of the amendment contained the following statement:

    Conclusion
    As it stands, overseas COs and small business concerns seeking overseas contracting opportunities are in a tough spot. Overseas COs must deviate from the FAR to comply with the Small Business Act and SBA regulations. Small business concerns seeking overseas contracting opportunities are dealing with contracting officers that are blissfully ignorant of the changes to the SBA regulations due to the longstanding geographical restriction stated at FAR 19.000( b ). It may take nothing short of a GAO protest to get overseas COs to pay attention to the amended SBA regulations.
    The ball is squarely in the FAR Council’s court. It needs to revisit FAR 19.000( b ) in light of the amended SBA regulations. If there is a legal argument for keeping the geographical restriction at FAR 19.000( b ), then the Office of Federal Procurement Policy should issue guidance to that effect to agencies. If there is no legal argument for keeping FAR 19.000( b ), then it should be removed. Sitting back and letting overseas COs and small business concerns fight it out solicitation by solicitation is not fair to either party.
  16. Don Mansfield
    In competitive acquisitions, it is common for solicitations to require offerors to conduct surveys of their past and present customers using standard questionnaires developed by the contracting office. Offerors are typically instructed to send the questionnaires to their customers with instructions to send the completed surveys to the contracting office. This information is then used to evaluate the offeror past performance. In effect, individual contracting offices have shifted the burden for collecting information about offeror past performance to the public.

    The problem with this practice is that it is done without regard for the requirements of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) (PRA). The PRA imposes a requirement on Federal agencies to obtain approval from the Office of Management and Budget (OMB) before collecting information from 10 or more members of the public. 44 U.S.C. § 3502 defines “collection of information” as—

    As part of the approval process, 44 U.S.C. § 3506©(2)(A) generally requires that each agency—


    OMB approval of a proposed collection of information or recordkeeping requirement is manifested in the issuance of a valid OMB control number. FAR 1.106 contains a list of approved information collections and OMB control numbers relating to Federal acquisition. The list includes, among other things, solicitation provisions requiring offerors to provide certain types of information in their proposals to the Government. For example, the requirement for offerors to provide certified cost or pricing data or data other than certified cost or pricing data is approved under OMB Control Number 9000-0013. The approval granted by OMB is not permanent, which is why the FAR Council will periodically publish their intent to request an extension of an existing OMB clearance in the Federal Register and provide an opportunity for public comment. Denial of OMB approval would render the information collection or recordkeeping requirement unlawful and, arguably, unenforceable if contained in a solicitation provision. To this point, 5 CFR 1320.6 states:

    In addition to periodically requesting the extension of existing OMB approvals for collections of information, the FAR Council must address compliance with the Paperwork Reduction Act in FAR rules published in the Federal Register. Typically, the Federal Register notice will either state that the rule does not contain any information collection requirements or that any information collection requirements are currently covered by an existing OMB clearance. If the FAR Council is imposing a new information collection requirement, the notice will contain an estimate of the administrative burden and solicit public comments.
    One need only look at the nearest competitive solicitation to conclude that contracting offices don’t pay much attention to these requirements. Despite the public protection provision of the PRA, it is unlikely that offerors will exercise their rights for fear of reprisal. As a result, the public will continue to absorb this administrative burden—a burden that is ultimately passed on to the Government in the form of higher overhead costs.
  17. Don Mansfield
    I recently gave a course on simplified acquisition procedures where I was again confronted with the use of the provision at FAR 52.212-1 Instructions to Offerors--Commercial Items in requests for quotations (RFQs) issued pursuant to FAR part 13. (We discussed this issue in the Wifcon forum before here and here). The problem is that the provision was not designed for use in RFQs under FAR part 13. To begin with, the provision requests "offers"--not quotations--which are different (see the definition of "offer" at FAR 2.101). The provision also includes elements that don't apply when requesting quotations under FAR part 13 (e.g., a minimum offer acceptance period, the dreaded late proposal rule, instructions on how to withdraw offers, a statement of intention to award without discussions, debriefing information, etc.). Although the FAR permits tailoring of FAR 52.212-1, it is typically just incorporated by reference without tailoring. I've wanted to create a version of FAR 52.212-1 tailored for SAP for a long time and I promised my last class that I would. As such, I submit my first draft to the Wifcon community for comment below. I've also created a side-by-side comparison of the untailored version of FAR 52.212-1 and my draft version that you can access here.




    Please provide comments and questions below.
  18. Don Mansfield
    In a earlier blog entry, I posted a draft version of the provision at FAR 52.212-1 tailored for simplified acquisition procedures and requested comments. First, I'd like to thank everyone who provided comments. I believe the final version (below) is an improvement over the draft. Second, Carl Culham suggested that I include instructions on how to incorporate a tailored version of FAR 52.212-1 into a solicitation. I thought that was a good idea, so I will include instructions in this entry. Third, Vern Edwards tailored FAR 52.212-1 for SAP using plain language. His version is clear and easy to read, which may cause some of your lawyers and policy folks to balk at using it. If that's the case, you may want to refer them to plainlanguage.gov so they can familiarize themselves with the Federal Government's policy on the use of plain language to communicate with the public. Vern's plain language version is also posted below.
    Incorporating a Tailored Version of FAR 52.212-1
    FAR 12.302(d) contains the following guidance regarding tailoring:

    According to the format prescribed at FAR 12.303(e)(2), the addendum to FAR 52.212-1 should be located with the solicitation provisions. The addendum should be clearly identified as such (e.g., "Addendum to FAR 52.212-1"). Carl Culham suggested, and I agree, that there should also be some kind of lead in statement that indicates that the version of FAR 52.212-1 in the addendum supersedes the version of FAR 52.212-1 contained in the FAR (e.g., "FAR 52.212-1 is replaced in its entirety by this addendum"). If using the streamlined solicitation for commercial items discussed at FAR 12.603, then you must include a statement that the provision at 52.212-1, Instructions to Offerors -- Commercial, applies to the acquisition and a statement regarding any addenda to the provision. The addendum should then be included in full text.
    FAR 52.212-1 Tailored for SAP
    Here's the final version of the provision at FAR 52.212-1 tailored for SAP:





    FAR 52.212-1 Tailored for SAP (Plain Language Version)
    Here's Vern's plain language version of FAR 52.212-1 tailored for SAP:


    I hope some of you will try these provisions. If you do, let us know how it goes.
  19. Don Mansfield
    I always thought that the FAR Matrix was a good idea that was poorly executed. To begin with, it's notorious for containing errors. Second, most of the entries in the "Principle Type and/or Purpose of Contract" columns are "A", Required when applicable, which means you have to look up the prescription anyway. Lastly, the matrix isn't going to tell you if your agency deviates from the FAR prescription, which DoD does a lot. As such, I created a matrix that I think overcomes these problems.
    A few things about the matrix:
    It contains every provision and clause in the FAR, DFARS, and in DoD Class Deviation memoranda. It doesn't have any "Principle Type and/or Purpose of Contract" columns except for a Commercial Items column. It contains the actual prescription of the provision or clause. For readability, I removed the number and title of the provision or clause in the block and just wrote "use this provision..." or "use this clause..." The identifying information for the provision or clause is already contained in the row. For DoD, it contains additional instructions for the use of FAR clauses that is contained in the DFARS or in a class deviation. This information appears in bold. If you work for a civilian agency, just ignore what's in bold. In the "IBR" column (Incorporation by Reference), there are no "N" entries for "no", with the exception of the provisions and clauses prescribed at FAR 52.107. This may cause some people to freak out, so I'll explain. FAR 52.102(c) states: Thus, if the FAR Matrix contained a "Y" in the IBR column, my matrix will also contain a "Y". If the FAR Matrix contained an "N" in the IBR column, or the provision or clause came from the DFARS or a DoD class deviation, then my matrix will contain a "Y*". The key at the top of the matrix contains an explanation for the "Y*" entry. If you're wondering how to incorporate a provision or clause that contains fill-in material or something the offeror must complete, see FAR 52.102(a) and FAR 52.104(d).
    You can see the matrix on the DAU Acquisition Community Connection. I'm open to suggestions for making it better. Also, I would like to think that it doesn't contain any errors. However, if you spot one please let me know. As an incentive, I will add your agency's provisions and clauses (the ones in Title 48 of the CFR) to the matrix if you point out a mistake.
     
  20. Don Mansfield
    The end of the fiscal year is always a good time to start brush up on fiscal law?particularly the bona fide needs rule. Contracting offices may soon face questions of fiscal law that have already been answered in Volume I, Chapter 5, of Principles of Federal Appropriations Law (GAO Red Book).
    One interesting case of fiscal law, which you won't find in the Red Book, deals with funding undefinitized contract actions (UCAs) that cross fiscal years. Consider the following scenario:
    A DoD activity issues a UCA in late fiscal year 2009 with a not-to-exceed price of $1,000,000. In accordance with DFARS 217.7404-4(a), the agency obligates $500,000 of the not-to-exceed price (the DFARS limit is currently 50% of the price ceiling, or 75% if the agency is in receipt of a "qualifying proposal"). The agency does not get around to definitizing the UCA until early FY 2010. When they do, the contracting officer and the contractor agree to a final contract price of $950,000. The unfunded balance is $450,000 (assuming actual costs prior to definitization were $500,000).
    Assuming the contract is funded with annual appropriations, which fiscal year's appropriation must be charged to fund the additional $450,000?
    Believe it or not, fiscal year 2010 funds must be used. A number of people that I have spoken to are befuddled by this, because they believe that the definitizing contract modification would be fulfilling a bona fide need of FY 2009, which would thus require the use of FY 2009 funds. However, this is incorrect.
    The Comptroller General answered this question in Obligating Letter Contracts, B-197274, September 23, 1983. In that case, a procurement official from the Department of Justice requested guidance on how to fund letter contracts that crossed fiscal years. Agency practice had been to record an obligation for the amount of the price ceiling and include a clause that limited the liability of the Government to 50% of the price ceiling. In other words, they would overrecord their obligation. The procurement official described his dilemma as follows:

    The Comptroller General responded as follows:

    Following the initial example, the $450,000 to be added to the contract when the definitizing contract modification is executed covers a bona fide need of fiscal year 2010. This need was originally a bona fide need of FY 2009, but it went unsatisfied within the time period available for new obligations. As such, the bona fide need was carried forward to FY 2010.
    UCAs have become a hot topic in contracting, particularly in DoD. In response to a GAO report that found a significant number of UCAs still undefinitized beyond the 180-day window imposed at DFARS 217.74, the DFARS was recently revised to include more rules pertaining to UCAs. However, I never saw any discussion about how to fund UCAs that cross fiscal years (maybe everybody already knows the rule ). Based on the GAO report, I'm willing to speculate that a good number of UCAs are left undefinitized until the fiscal year following their issuance. For UCAs funded by annual appropriations, I wonder what fiscal year's funds are being obligated when the UCAs are definitized. My guess is, in most cases, the same fiscal year's funds that were obligated for the UCA.
  21. Don Mansfield
    In a remarkable statement issued today, the Government Accountability Office (GAO) apologized to the Department of Defense for what it called "decades of unwarranted and unsubstantiated criticism." The admission came in the wake of the release of a March 2009 GAO report titled Defense Acquisitions: Assessments of Selected Weapon Programs that claims that for 2008 programs, research and development costs are now 42 percent higher than originally estimated and the average delay in delivering initial capabilities has increased to 22 months.
    "Who knows if any of that stuff is true" said the author of the study. "We write these reports years in advance when there are no data. Last month, I completed documenting my 'findings' for a 2010 report on DoD's mismanagement of 2009 stimulus funding." He added, "From what I do know of DoD, they are a stellar organization."
    GAO also recanted recent Congressional testimony that stated:

    "That was a gross mischaracterization and we regret those statements. Truth be told, DoD's weapon system programs, in particular the Future Combat Systems program, are models of responsible program management. They represent the Federal Government at its best" said the GAO.
    When asked what motivated today's statement, a GAO spokesperson responded that "we can't keep up with the demand for this type of criticism. The DoD-bashing crowd is insatiable. It's getting to the point where we are ignoring some real problems in other agencies, like NASA", an obvious reference to the recent expose of former astronauts at the space agency.
    GAO had painted DoD as a largely dysfunctional, overinflated, and wasteful bureaucracy in numerous reports dating back to the 1970s. One retired GAO auditor, who now runs a Web site dedicated to Federal contracting, added some insight: "DoD wasn't half as bad as what we wrote about them, but nobody wanted to hear it."
    DoD has yet to formally respond to the GAO's apology.
  22. Don Mansfield
    In January 1944, the Office of Strategic Services, a wartime intelligence agency and predecessor to the modern Central Intelligence Agency (CIA), issued Strategic Services Field Manual No.3 (Simple Sabotage Field Manual) to its agents to aid the Allied war effort in Europe. The purpose of the classified document was to explain the technique of simple sabotage, outline its possible effects, and present suggestions for inciting and executing it. It introduced the concept of simple sabotage as follows:
     
     
    The manual goes on to describe two types of simple sabotage: destructive and nondestructive. Regarding the latter type, the manual explains that—       
     
     
    The manual has a section titled “Specific Suggestions for Simple Sabotage” that provides suggestions for how to execute simple sabotage for different targets. There are suggestions on how to innocently start fires in buildings, set off automatic sprinklers to ruin warehouse stock, change sign posts at intersections and forks, dilute gasoline with water, wine, or urine so it won’t combust, and other Dennis the Menace type hijinks. What seemed most familiar were the suggestions under “General Interference with Organizations and Production.” Here are a few:
     
                   The manual was declassified in 2008, but I suspect it fell in to enemy hands long before that. The question is, though, why is the enemy targeting Federal contracting offices?
  23. Don Mansfield
    In TYBRIN Corporation, B-298364.6; B-298364.7, March 13,2007, the GAO held that an offeror's cost estimate that indicated that it would not perform 51% of the contract work on a small business set-aside rendered the offer unacceptable, even though the offeror did not explicitly take exception to the solicitation's limitation on subcontracting clause (FAR 52.219-14) and the SBA granted the offeror a certificate of competency. The GAO reasoned as follows:

    As a result, the Air Force reopened discussions with offerors and sought revised proposals. This action was unsuccessfully challenged in the Court of Federal Claims (see The Centech Group, Inc., v. U. S. and Tybrin, Inc., 07-513C, Filed December 7, 2007, Refiled December 13, 2007) and unsuccessfully appealed to Court of Appeals for the Federal Circuit (The Centech Group, Inc., v. U. S. and Tybrin Corporation, No. 08-5031, February 3, 2009).
    Thus, it would seem that we have a general rule that if information in a cost estimate indicates that an offeror will not comply with a material term of a solicitation, then the offeror has implicitly taken exception to that term of the solicitation, which would make their offer unacceptable (or nonresponsive).
    However, in Group GPS Multimedia, B-310716, January 22, 2008, the opposite conclusion was reached. In that case, the successful offeror submitted a cost estimate that contained a proposed labor rate that was below the labor rate stated in the Department of Labor Wage Determination (the contract would be subject to the Service Contract Act). The protester argued that this gave the awardee an unfair price advantage. The GAO held as follows:

    This raises several questions. Why wouldn't a cost estimate that contains proposed labor rates below the SCA-minimum labor rates render an offer unacceptable, but a cost estimate that shows an offeror performing less than 51% of the contract work on a small business set-aside would? In neither circumstance does the cost estimate indicate compliance with a material term of the solicitation (the Limitation on Subcontracting clause and the Service Contract Act, respectively). Yet, we have different results. Is compliance with the Limitation on Subcontracting clause a special case? If so, why? Or is proposed compliance with the SCA (as evidenced in a cost proposal) a special exception to the rule? If so, why?
    Any ideas?
  24. Don Mansfield
    Did you ever wonder about the type of debate that goes on before an acquisition rule becomes final and is incorporated into the Federal Acquisition Regulation System? This information can be found in the Background section of the final rule when it appears in the Federal Register. I make a point of reading this section whenever a new rule comes out because it tells the story behind the rule?who the rule is going to affect, who is happy about the rule, who is upset about the rule, who thinks it should be scrapped, what the rule makers were thinking when they created and revised it, etc. This section is also a valuable reference when you are trying to interpret a rule in the FAR System that is unclear or ambiguous.
    Typically, the comments received range from pointing out errors in the rule to blatantly self-serving statements from private parties either praising the wisdom of the rule or explaining how the rule will inevitably bankrupt small business concerns, cost the Government more money, and lead to a widespread malaise in the country. The rule makers' responses to the comments range from nonresponsive or evasive to well-written explanations of why the comment is or is not valid (I've generally had good responses to comments that I have submitted for consideration).
    DoD recently issued a final rule revising the existing rules on the restriction on the acquisition of specialty metals (DFARS Case 2008-D003). The rule contained a straightforward definition of "high-performance magnet" in the new clause at DFARS 252.225-7009, Restriction on Acquisition of Certain Articles Containing Specialty Metals, as follows:

    Apparently, the Background statement pertaining to this definition that accompanied the interim rule drew criticism from a number of interested parties. The comments received went so far as to suggest that the definition, as written, would pose a threat to national security:

    DoD's response to these comments brought me back to high school physics class (God bless you, Mr. Michel). Here is an excerpt:

    I don't know if that is right. However, I did learn a new word (anisotropy) and I now know something about the magnetic properties of rare earth metals and transition elements that I didn't know before.
    You may ask: "what good is knowing this?" Other than trying to make someone think that you are smarter than you actually are, there may be no value. However, as evidenced by the discussion in the Background section of the rule, there was a great deal of deliberation about the final definition. A contracting officer may encounter situations where he or she needs to apply the new rule and knowing that the definition of "high-performance magnet" is very narrow will help.
    Take a look at the Background section of an acquisition rule the next time one comes out (FAC 2005-036 was just issued last week). Not only will it add some life to the rule as it appears in the regulation, you may learn something.
  25. Don Mansfield
    "You can't be distracted by the noise of misinformation."
    -James Daly

    In my career as a contracting professional and now an educator, I have come to appreciate the growing body of misinformation in Federal contracting. Contracting misinformation is pervasive. You can see it in the popular press, periodicals dedicated to the contracting profession, in posts at the Wifcon forum, internal policy memoranda at a Government agency, etc. As I'm writing this, somewhere a senior contracting professional is imparting misinformation on a newbie, and the newbie is believing him.

    A certain amount of misinformation is understandable in Federal contracting, given the volumes of regulations and case law that govern Federal acquisition. I can accept that (it keeps me employed). However, certain contracting misinformation seems to resist any efforts to eradicate it. This class of misinformation has its origins in the operational contracting offices of the Federal Government and is usually created in the form of rules that have no basis in law or regulation, but sound like they do (especially when spoken by senior contracting professionals, legal counsel, or contract policy office personnel). It is this class of misinformation that is most aptly described as contracting "myth-information."

    As a service to my profession, I will attempt to bust some of the more popular contracting myth-information that I have heard. I've created my own list of myth-information and am collecting more from participants in the Wifcon discussion forum (thank you to those that have contributed). I'll try to debunk at least one myth per blog entry. If you think you have heard some contracting myth-information and would like to share with others, please contact me and I will include it in the blog. Think of the blog as a clearinghouse for busted contracting myth-information.

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