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Don Mansfield

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  1. Don Mansfield
    “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
    “The question is,” said Alice, “whether you can make words mean so many different things.”
    “The question is,” said Humpty Dumpty, “which is to be master—that’s all.”






    --Lewis Carroll, Through the Looking Glass

    When Better Buying Power (BBP) 1.0 was first issued in September 2010, then Undersecretary of Defense for Acquisition, Technology, & Logistics (USD(AT&L)) Ashton Carter used the word “tradecraft” when describing one of the five “areas” of BBP initiatives. The area was called “Improving Tradecraft in Services Acquisition.” The initiatives that were subsequently identified under this area were:
    · Create a senior manager for acquisition of services in each component, following the Air Force’s example
    · Adopt uniform taxonomy for different types of services
    · Address causes of poor tradecraft in services acquisition
    · Increase small business participation in providing services
    “Tradecraft” was also used by current USD(AT&L) Frank Kendall in the 2015 Defense Acquisition Performance Assessment:

    It would seem that both Carter and Kendall are using “tradecraft” to mean the knowledge and skills for a particular occupation. However, that’s not what “tradecraft” actually means, nor is it commonly used in that sense. According to Merriam-Webster online dictionary (www.m-w.com), “tradecraft” means “the techniques and procedures of espionage”. The Oxford English Dictionary (OED) online (www.oed.com), gave three definitions of “tradecraft” dating as far back as 1812:


    In “’Tradecraft’ Infiltrates the Language” lexicographer Neal Whitman describes the resurgence of “tradecraft” in the language:

    Whitman uses a quote from Agent Maya in the movie Zero Dark Thirty to illustrate its most common use:

    The article continues:

    Regarding the OED definition, Whitman explains:

    While it would not seem out of the ordinary to hear this use of “tradecraft” on an episode of Downton Abbey, the broad meaning of the word is virtually dead in Contemporary English. “Tradecraft” has settled into semantic idiosyncrasy. While I’m not above purloining a word from another field if I find no other word as apt, there are plenty of words that could have been used to describe the particular BBP area (“skill”, “expertise”, and “proficiency” come to mind). As acquisition professionals, we have a hard enough time communicating in the language of acquisition without adopting words from other fields (no matter how cool they sound). The Plain Language Action and Information Network (PLAIN) advises us to “understand your readers and match your language to their needs” (see http://www.plainlanguage.gov/howto/wordsuggestions/index.cfm). When choosing words, the objective should be to communicate, not to impress. Even if “tradecraft” meant what the authors of BBP thought it meant, its obscurity would still have made it a poor choice.
    Eavesdropping, making dead drops, drycleaning--that's tradecraft. Creating senior manager positions in charge of service acquisition, adopting a uniform taxonomy for different types of services, increasing small business participation in service acquisition--that’s not tradecraft.
  2. 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.
  3. 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.
  4. 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".
  5. 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.
  6. Don Mansfield
    Section 1331 of the Small Business Jobs Act of 2010 (Pub.L. 111-240) recognizes the significant opportunities that exist to increase small business participation on multiple award contracts and the ability of set-asides— the most powerful small business contracting tool—to unlock these opportunities. Under Section 1331, Federal agencies may: (1) set aside part or parts of multiple award contracts for small business; (2) reserve one or more awards for small businesses on multiple award contracts that are established through full and open competition; and (3) set aside orders under multiple award contracts awarded pursuant to full and open competition that have not been set-aside or partially set-aside, nor include a reserve for small businesses.
    You can download the article "Section 1331 Authorities: A Primer" by clicking here.
  7. 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.
  8. Don Mansfield
    I read a lot of rules—proposed rules, interim rules, final rules, second proposed rules, second interim rules, etc. In fact, I decided a year or so ago that I would read all new rules in the Federal Register that affect the FAR or DFARS (I’m only a few rules behind as of this writing). In my reading, I noticed a strange phenomenon that went unexplained in the Federal Register notices—the letters “P” and “S” were getting smaller. That is, citations to FAR parts and subparts were being changed from “FAR Part X” and “FAR Subpart X.1” to “FAR part X” and “FAR subpart X.1” (Notice the lower-case “p” and “s”). I wondered what was going on. Who decided that lower case “p” and “s” were now correct? Why wasn’t the FAR Council following its own rules in the FAR Drafting Guide or at FAR 1.105-2( c)(3) (recently amended—more on that later), which both showed the correct way to cite a part or subpart is with an upper-case “P” or “S.”
    I also submit a lot of public comments. My comments usually are usually technical in nature—I don’t get into whether this or that policy is good or bad for the Government. They are usually of something like “If you mean this, then I suggest you say it this way.” As such, I started pointing out that use of the lower-case “p” in “part” and “s” in “subpart” was inconsistent with both the FAR Drafting Guide and FAR 1.105-2( c)(3). Yes, important stuff. I was convinced that there was some unreasonable bureaucrat in the labyrinthine review process of FAR rules who would arbitrarily withhold approval until the “p” and “s” were lower-case. All they had to do was simply read either the FAR Drafting Guide or FAR 1.105-2( c)(3) and they would be forced to relent, I thought.
    Eventually, I found out that there was more to the story. The change from upper-case to lower-case could be traced back to the 2008 version of the Government Printing Office Style Manual. The manual contains an entire chapter of capitalization rules (Chapter 3). Rule 3.9 states as follows:
    The list of examples following Rule 3.9 (or is it “rule 3.9”?) contains the entry “part I”. Chapter 4, which contains a list of capitalization examples, contains the entry “part 2, A, II, etc.; but Part 2, when part of title: Part 2: Iron and Steel Industry”. Ok, so there was no unreasonable bureaucrat to blame. However, the GPO Style Manual was inconsistent with both the FAR Drafting Guide and FAR 1.105-2( c)(3). “What a crisis!”, I thought.
    This brings us to a technical amendment published in Federal Acquisition Circular 2005-60 (77 FR 44065) that formally amended FAR 1.105-2( c)(3) to illustrate the “correct” way to cite a part or subpart of the FAR:
    Crisis averted. However, there still is a lot of text within the FAR that uses upper-case when referencing parts and subparts. These co-exist in the FAR with citations of parts and subparts that are lower-case. For example, FAR 4.1402( b ) starts with:
    The very next paragraph, FAR 4.1402( c) states:
    It’s fair to say that my prodding probably had something to do with the change in FAR 1.105-2( c)(3). However, in retrospect, I’m not sure that the desired result—consistency—was achieved.
  9. Don Mansfield
    It seems that every few months we see a new article, report, or hear testimony predicting a mass exodus of "experienced" 1102s from the Federal workforce. Citing workforce data, the conclusion that is commonly drawn is that a "crisis" will result. If we just look at numbers it would seem that this would be a reasonable conclusion. However, has anyone given any thought to the caliber of the 1102s that are leaving the Federal workforce and those that are entering? Do we really need one new 1102 for every 1102 that leaves?
    Consider the fact that one must now have a college degree to even be considered for an 1102 position, whereas most of the "experienced" 1102s that will soon be leaving did not have to meet such requirements. Many "experienced" 1102s entered the Federal workforce as clerks, typists, secretaries, etc., and stuck around the organization long enough to move into an 1102 position. That's not to say that these folks did not work hard or that they don't deserve their positions. I'm sure each office has its own success story to share in this regard.
    In my experience, I have worked with "experienced" 1102s and I currently teach newbie 1102s. To generalize, the newbie 1102s are smarter, more motivated, and have more respect for the laws and regulations that govern their agency's acquisitions. Give me an office full of 1102s with less than 10 years of experience and we will work circles around an office of "experienced" 1102s with twice the staff. Our processes will be more streamlined, our employees more productive, and our acquisitions fully compliant with law and regulation.
    Nothing is more discouraging than to hear stories of how newbie 1102s return to their offices after training, intent on making the necessary changes to ensure that their acquisitions comply with the FAR, only to effectively be told by "experienced" 1102s "I don't care what the FAR says, this is the way we've always done it and we're not about to change." I say good riddance to those folks.
    To be fair, there are some "experienced" 1102s who are excellent--the Government will suffer when these folks leave. However, I would not place the majority of "experienced" 1102s in this category. When I hear about the impending exodus of "experienced" 1102s and the ensuing crisis, I'm reminded of a line from an REM song..."It's the end of the world as we know it...and I feel fine." How do you feel?
  10. Don Mansfield
    I recently heard from a contractor regarding an experience he had with reverse auctions. A federal agency was conducting a reverse auction using FedBid and he decided to compete (FedBid, Inc., provides a service whereby federal agencies can conduct reverse auctions). Although he submitted several bids, he ultimately lost the reverse auction. When he checked to see who had won, he was surprised to see that the federal agency that was in need of the required items was the low bidder. In other words, the federal agency was submitting bogus bids in an effort to get the contractor to reduce his bid price. The federal agency then contacted him and offered to purchase the items from the contractor at his lowest bid price. Feeling that he had been duped, he told them to get lost.
    The tactic employed by the federal agency, called phantom bidding, is not new. Many view the practice as unethical while others see it as a legitimate tactic. In regular auctions, the legality of seller participation in bidding varies from state to state. For those states that allow it, sellers typically must disclose that they reserve the right to participate in the bidding.
    In any case, should the Federal Government be allowed to place phantom bids in reverse auctions? Would your answer be different if the disclosure of the practice was required prior to the reverse auction?
  11. 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.
  12. Don Mansfield
    NOTICE: The table originally posted contained an error in Step 4 of the HUBZone Program Decision Table. The entries for "Yes" and "No" were reversed, which implied that a HUBZone sole source was only permitted below the simplified acquisition threshold. In fact, the opposite is true. This has been corrected.
    I created a Small Business Decision Table to help navigate the new small business rules contained in the FAR. Note that there is a lack of clarity on some issues in the interim rule on Socioeconomic Parity (implemented at FAR 19.203) and, as a result, I had to make some assumptions until these issues are clarified (hopefully) in the final rule. Specifically, I assumed that when the FAR says that the contracting officer "shall consider" course of action A before proceeding with course of action B, that means that course of action A would be required if the conditions permitting both course of action A and B were present. For example, FAR 19.203( c ) states:

    I interpret that to mean that if a contracting officer can satisfy a requirement using the 8(a), HUBZone, SDVOSB, or WOSB Programs, then she must do so?she has no discretion to bypass these programs and proceed with a small business set-aside because she thinks doing so would be in the best interests of the Government.
    In public comments submitted to the FAR Councils, the Professional Service Council criticized the use of "shall first consider" at FAR 19.203( c ) as follows:

    I would prefer that the FAR Councils not attempt to define "adequate consideration," but instead cut to the chase. If the intent is to require use of the 8(a), HUBZone, SDVOSB, and WOSB Programs if possible, then state the rule using unambiguous language. For example, FAR 19.203(d) states:

    Nobody is going to argue over what that means.
    Lastly, there is an error in FAR 19.203 in that it implies that the SBA rule that once a requirement is in the 8(a) Program it must stay in the 8(a) Program only applies over the simplified acquisition threshold. That's wrong?it applies regardless of dollar value. The SBA regulations make no such distinction regarding dollar value. I'm told that this will be corrected in the final rule.
  13. Don Mansfield
    An interesting aspect of the new socioeconomic parity rules issued in Federal Acquisition Circular 2005-50 (see 76 FR 14566) is that we now have some scenarios where a contractor is better off not being a small business concern. The Discussion and Analysis section of the Federal Register notice contains the following statement:

    This policy is implemented at the new FAR 19.203( c ). Further, the new FAR 19.203(d) states the following:

    Thus, for acquisitions over the simplified acquisition threshold (SAT), an agency must first consider the 8(a), HUBZone, SDVOSB, and WOSB programs (the latter recently being added by FAC 2005-51). If a requirement can be satisfied under one of these programs, the agency must use one of these programs. The agency is free to choose which of the four programs to use. If a requirement cannot be satisfied under one of these four programs, then the agency must consider a small business set-aside. If the requirement cannot be met by means of a small business set-aside, then the agency may solicit offers on an unrestricted basis.
    Let?s assume the following scenario. There?s a requirement over the SAT and under the threshold for a HUBZone sole source (currently $6.5 million for manufacturing and $4 million for other acquisitions) that can be satisfied by three potential offerors. We?ll call them Offerors A, B, and C. Offeror A is a HUBZone small business concern and Offerors B and C are plain old small business concerns. Pursuant to FAR 19.203( c ), the agency would be required to proceed with a HUBZone sole source, since the HUBZone program takes precedence over small business set-asides. Offerors B and C would not have a chance to compete for the requirement.
    Now let?s assume the same scenario, except Offerors B and C are large businesses. In this case, the agency would not be required to proceed with a HUBZone sole source. Offerors B and C would have an opportunity to compete for the requirement, if the agency chose not to proceed with a HUBZone sole source. FAR 19.203 gives priority to HUBZone sole source over small business set-asides, but is silent on the relationship between a HUBZone sole source and full and open competition (ditto for 8(a) sole source and SDVOSB sole source). FAR 19.1306 simply states:

    [bold added].
    According to FAR 2.101, ?may denotes the permissive.? ?May? is also used at FAR 19.1406 regarding SDVOSB sole source awards.
    It would be reasonable to infer that competitive 8(a), HUBZone set-asides, and SDVOSB set-asides take precedence over full and open competition, because the conditions permitting any of these would imply that the conditions for a small business set-aside were present. However, the same cannot be said for HUBZone or SDVOSB sole source. The conditions permitting either a HUBZone or SDVOSB sole source do not imply that the conditions requiring a small business set-aside exist.
    So there you go. Sometimes you?re better off being large. It will be interesting to see if the FAR Council will leave things as they are when the rule becomes final. If they do, we can expect this to be the next great debate in small business program policy.
  14. 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.
  15. 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.
  16. 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.
  17. 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.
  18. 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.
  19. Don Mansfield
    There seems to be a closely held belief by some in the Federal contracting community that the FAR requires the contracting officer to perform a price analysis before awarding any contract. CON 111 used to contain the following statements:

    A number of my colleagues, both practitioners and instructors, would agree with those statements. Further, I have had a number of students pre-programmed by their contracting offices to believe that price analysis is always required.
    What does the FAR say?
    Subparagraphs a(2) and a(3) of FAR 15.404-1 discuss the requirements for the performance of price and cost analysis:

    Note that a(2) qualifies the requirement for price analysis with the language "when cost or pricing data are not required." To interpret a(2) to mean that price analysis is always required would render meaningless the qualifying language in the statement ("when cost or pricing data are not required"). Such an interpretation would be inconsistent with the fundamental principle that statutes and regulations must be read and interpreted as a whole, thereby giving effect to all provisions. See Waste Mgmt. of North Am., B-225551, B-225553, Apr. 24, 1987, 87-1 CPD ? 435 at 5.
    Subparagraph a(3) sets forth the requirement for performing cost analysis (i.e., when cost or pricing data are required) and contains the statement that "Price analysis should be used to verify that the overall price offered is fair and reasonable." Does this statement require price analysis when cost or pricing data are required? To answer this, we need to review the definitions of "should" and "shall" in FAR 2.101:

    Thus, when cost or pricing data are required, the contracting officer is 1) required to perform cost analysis and 2) expected to perform price analysis unless it's inappropriate for a particular circumstance. That's different than stating that the contracting officer must perform both price and cost analysis when cost or pricing data are required. The implicit acknowledgement that price analysis could be inappropriate in a particular circumstance (and thus, not required) contradicts the assertion that price analysis is always required.
    Why the Confusion?
    I'm not sure why some folks think that price analysis is always required. Perhaps they haven't read the FAR carefully. I recently had my students read subparagraphs a(2) and a(3) and asked them whether it was true or false that price analysis was always required. They were split about 50% true 50% false. When I had the students who answered "False" re-read a(2) and a(3), I was able to get the split to about 15% true 80% false and 5% I don't know. I can live with that.
    A more likely reason behind the existence of this myth is that an uncomfortably large number of people in our field do not know what the FAR says because they do not read it. Instead, they are guided by, and they repeat, rumors.
  20. Don Mansfield
    WARNING: OMB issued a memorandum on July 10 directing executive agencies to temporarily disregard the two GAO decisions discussed below until a full review can be conducted. Until such a review is conducted, do not use the table.
    Depending on your point of view, two recent GAO decisions have either clarified or muddied our understanding of the rules pertaining to the order of priority for small business programs. In International Program Group, Inc., B-400278; B-400308, September 19, 2008, the GAO held that HUBZone set-asides take precedence over service-disabled veteran-owned small business (SDVOSB) set-asides and SDVOSB sole sources (a highly criticized decision). In Mission Critical Solutions, B-401057, May 4, 2009, the GAO held that HUBZone set-asides take precedence over the 8(a) program. In both cases, the GAO sought, and disagreed with, the SBA's interpretation of the relevant statutes.
    Based on these two decisions, and the current rules that in FAR Part 19, I have created a table to assist in determining the order of priority for small business programs. Instructions and relevant references are provided in the table. The table assumes that the acquisition exceeds the simplified acquisition threshold.
    Take a look and let me know if you have any questions or comments.
  21. 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.
  22. 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?
  23. 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.
  24. Don Mansfield
    Myth-Information:

    When discussing the evaluation of competitive proposals with my students, I make a point of asking the following two questions (in order):
    1. Are agencies required to evaluate proposals?
    2. Are agencies required to rate proposals?
    Usually, students respond affirmatively to question #1 and are able to support their answers by citing FAR 15.305(a), which states "An agency shall evaluate competitive proposals and then assess their relative qualities solely on the factors and subfactors specified in the solicitation." However, confusion sets in when I follow with question #2 and students read the very next sentence of FAR 15.305(a), which states "Evaluations may be conducted using any rating method or combination of methods, including color or adjectival ratings, numerical weights, and ordinal rankings." Clearly, the language regarding use of a rating method in conjunction with an evaluation is permissive, not mandatory.
    "What's the difference?", "Why wouldn't you rate proposals?", "How do you decide who is the better value if you don't rate the proposals?" are typical student responses. These are all good questions.
    Evaluation v. Rating
    A good way to understand the difference between evaluation and rating is to look at a typical article in Consumer Reports (CR). Here?s an example of a summary evaluation of a new car?s ?Driving Experience? (model name omitted):

    ?Driving Experience? was one evaluation factor under the heading ?Road Test.? CR also evaluated ?Reliability?, ?Safety?, and ?Owner Satisfaction?, to name a few. According to the Web site, there were over 50 different tests and evaluations performed on the car. Presumably, this produced a mountain of data. However, the typical car buyer does not have the time to peruse the data, nor do they fully understand it. As such, CR established a 100-point scale and a set of predetermined criteria to translate test and evaluation results into scores on the scale. In addition, they partitioned the scale into quintiles and assigned an adjective to each (Poor, Fair, Good, Very Good, and Excellent). Using this rating method, the car described above received a score of 74 and an adjectival rating of ?Very Good.? In this case, CR used a combination of rating methods (numerical scoring and adjectival rating) to translate complex evaluation results into an easily consumable format for its readers.
    But Teach, Why Wouldn?t you Rate Proposals?
    First, it's not required. Besides that, the results of the evaluation may not be particularly complex. For example, let?s say I used price and performance risk as my evaluation factors in a source selection. Performance risk had two subfactors?past performance and experience. In the solicitation, I instructed offerors to submit a one-page write-up and customer point of contact for each of their relevant contracts. The evaluation of performance risk consisted of an assessment of the write-ups as well as interviews with the customer points of contact to validate the offeror?s claimed experience as well as to ascertain how well the offeror performed. The evaluators then wrote an evaluation of each offeror?s performance risk, documenting the relative strengths and weaknesses of each. Why would it be necessary to translate this information into a rating? How would this aid my decision-making? I?m not going to be faced with volumes of information.
    Another reason I would avoid the use of ratings is when I was dealing with evaluators that didn?t understand them. In my experience, when ratings are used, ratings are all you get. I can recall receiving technical evaluations that had nothing more than the word ?Excellent? (when I used adjectival ratings) or ?95? (when I used a numerical rating). I wanted an evaluation and I got a rating.
    How do you decide who is the better value if you don't rate the proposals?
    The answer is the same way that you would if you did rate proposals?by performing a comparative assessment of proposals against all source selection criteria in the solicitation. A source selection authority (SSA) relies on ratings to make their source selection decision at their peril. See, for example, Si-Nor, Inc., B-282064, 25 May 1999, where the source selection authority based her decision to award to a higher-priced offeror on the fact that the offeror had a higher past performance rating. One of the reasons the protest was sustained was because the SSA did not describe the benefits associated with the additional costs, as required by FAR 15.308. ?Because they had a higher rating? will typically fail to meet this requirement.
    So we shouldn?t use ratings?
    Not necessarily. The point is that you have discretion to use or not use ratings. Most people don?t know why they use ratings other than the fact that it?s traditional where they work. The decision to use (or not use) ratings should result from thoughtful deliberation, not a successful copy and paste from your office mate?s old source selection plan. A wise man once said ?Tradition is the hobgoblin of mediocre minds.?
  25. Don Mansfield
    If the preconceived notions that our students are bringing to the classroom is any indication, there's a good deal of myth-information being spread regarding indefinite-delivery indefinite-quantity (IDIQ) contracts. The one belief that I want to focus on today deals with obligating the contract minimum upon award of an IDIQ contract.

    This belief usually stems from a fundamental misunderstanding of the difference between creating and obligation and recording an obligation. The difference is explained in Chapter 7 of the GAO Redbook (p. 7-8):

    [bold added].
    When a contracting officer awards an IDIQ contract, she has obligated the Government to purchase the contract minimum. She has created an obligation. When that same contracting officer cites a long line of accounting (containing the appropriation citation) and a dollar amount on the award document, she has recorded an obligation (when she distributes the award document to her accounting office, they will record the obligation in the agency's books).
    Let's say that the contracting officer awards the IDIQ contract, but does not record the amount of the Government's obligation on the award document. What has happened? An obligation has been created, but has not been recorded. Is there a problem with that? (Yes, go back and read the bolded sentence in the citation that I provided above). The problem is that the contracting officer has caused her agency to violate the ?recording statute,? 31 USCA ? 1501, which sets forth the criteria for recording an obligation as follows:

    In the second example I provided, there exists a binding document that meets the criteria of (1)(A) and (B.) (the IDIQ contract), but no obligation would have been recorded. The agency would have underrecorded its obligations. That's bad. Chapter 7 of the GAO Redbook (p. 7-6) states the following regarding under- and overrecording of obligations:

    I always urge my students to take a course in Federal Appropriations Law at some time in their career--the sooner the better. Unlike Federal Acquisition Law, where the acquisition team is permitted to "assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority", there is very little flexibility when it comes to applying the rules Federal Appropriations Law.
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