Don Mansfield

Regarding sections L & M, see FAR 15.002(a).

See FAR 4.703?

Ok. Here's what it says:

Nothing in this section shall be construed to preclude a contractor from duplicating or storing original records in electronic form unless they contain significant information not shown on the record copy. Original records need not be maintained or produced in an audit if the contractor or subcontractor provides photographic or electronic images of the original records and meets the following requirements:

(1) The contractor or subcontractor has established procedures to ensure that the imaging process preserves accurate images of the original records, including signatures and other written or graphic images, and that the imaging process is reliable and secure so as to maintain the integrity of the records.

(2) The contractor or subcontractor maintains an effective indexing system to permit timely and convenient access to the imaged records.

(3) The contractor or subcontractor retains the original records for a minimum of one year after imaging to permit periodic validation of the imaging systems.

Where is the requirement to "keep original hard copy records for one year before we can shred them and rely completely on the electronic copy"?

We are, however, required by FAR to keep original hard copy records for one year before we can shred them and rely completely on the electronic copy.

Cajuncharlie,

Where in the FAR is that requirement?

Vern,

Why do you say that the turbines were never in the possession (under the control of) of the contractor? RIR said the contractor has the ship at their facility.

RIR,

One last comment. If the contractor wants to argue that the turbine generators are GFP, they should know that they would then be responsible for performing all of the duties in FAR 52.245-1(f) for any property furnished to them for repair--documentation of receipt, identification, record-keeping, inventory, reporting, maintenance, closeout, etc. If the turbine generators are GFP for purpose of FAR 52.245-1(h), then they are GFP for the purpose of FAR 52.245-1(f)--the contractor can't have it both ways.

Vern,

Given the definition of GFP in the clause, I don't think that there's any question that property furnished to the contractor for repair is GFP. The question I was raising, which RIR just answered, is whether the Government "furnished" the turbine generators. The entire vessel was furnished to the contractor.

Carl,

You found the clause that I was asking RIR about. Paragraph ( c ) is what I remember. However, I suspect that the DFARS clause is not in RIR's contract because NAVSEA generally doesn't issue job orders against master agreements for ship repair. They award long-term multi-ship multi-option (MSMO) contracts that are combination CPAF/CPIF.

RIR,

1. Does the contractor have a Master Agreement for the Repair and Alteration of Vessels (MARAV) or Master Ship Repair Agreement (MSRA) with the Navy?

2. If yes to question #1, does the agreement include DFARS 252.217-7006?

3. If yes to #1 and #2, does the contract incorporate the MARAV by reference, or does the MARAV say that it applies to all future contracts for ship repair with that contractor? (i.e., Is there a way to bind the contractor to DFARS 252.217-7006 under your contract?)

If you can answer yes to all these questions, then pursuant to DFARS 252.217-7006( c ), the turbine generators are not to be considered GFP. As such, FAR 52.245-1(h) does not relieve the contractor from liability for loss, theft, damage, or destruction of the turbine generators.

The turbine generators are on board a ship that is being overhauled at the contractor's facility.

RIR,

Is there anything in the contract that says that the vessel is still under the Government's control, even if it is located at the contractor's facility? I have experience with NAVSEA contracts and I recall there being some clause to that effect.

OK. So what's your definition of possession?

If the receiver has control of the ball with both feet in bounds

I'll go with the Merriam-Webster online dictionary:

Possession

a : the act of having or taking into control b : control or occupancy of property without regard to ownership.

When the Navy furnished the turbines for repair, did the contractor have control over them?

I'm not sure that the Navy "furnished" the turbines for repair. If the contractor came on base and did on-board repair of the turbines, then I don't think the Navy "furnished" them.

What constitutes possession? How do you define it? What does it mean in the case in question?

The Government Property clause uses the word "possession" several times, but does not define it (nor does FAR 2.101). I think one can glean what is required in order for possession to be present from paragraph ( of the clause:

Property management.

(1) The Contractor shall have a system to manage (control, use, preserve, protect, repair and maintain) Government property in its possession. The system shall be adequate to satisfy the requirements of this clause. In doing so, the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective control of Government property, consistent with voluntary consensus standards and/or industry-leading practices and standards for Government property management except where inconsistent with law or regulation. During the period of performance, the Contractor shall disclose any significant changes to their property management system to the Property Administrator prior to implementation.

(2) The Contractor?s responsibility extends from the initial acquisition and receipt of property, through stewardship, custody, and use until formally relieved of responsibility by authorized means, including delivery, consumption, expending, sale (as surplus property), or other disposition, or via a completed investigation, evaluation, and final determination for lost, stolen, damaged, or destroyed property. This requirement applies to all Government property under the Contractor?s accountability, stewardship, possession or control, including its vendors or subcontractors (see paragraph (f)(1)(v) of this clause).

(3) The Contractor shall include the requirements of this clause in all subcontracts under which Government property is acquired or furnished for subcontract performance.

My interpretation of the clause is that in order for possession to exist, the contractor would have to at least receive the property. Paragraph (f)(1)(ii) of the clause requires the contractor to document receipt. The implication is that the property was sent to the contractor by someone. Once received, the contractor would be responsible for its stewardship (tagging, keeping records, taking inventory, maintenance, reporting, etc.) until relieved in accordance with (f)(1)(vii) of the clause.

In the case in question, were the turbines received by the contractor? Was the contractor responsible for stewardship of the turbines? If we removed the turbines and sent them to the contractor (or sent the entire vessel to the contractor) and they received them, then they were in the contractor's possession. As such, the contractor would be responsible for their stewardship and relieved of liability for loss, theft, damage, or destruction of the property while executing their stewardship responsibility.

On the other hand, if we didn't send the turbines (or the vessel) to the contractor, then they could not have received them. The Government could not hold them accountable for stewardship responsibilities pursuant to FAR 52.245-1.

If a contractor comes to a Government office to perform onsite maintenance of a copy machine, I don't believe that the contractor has taken possession of the copy machine. I think the situation is similar to a contractor coming to a Navy base performing on-board repair of equipment on a vessel.

What about: "Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification."

Wouldn't the turbines be property furnished for repair?

If the Government gave the turbines (or the entire vessel) to the contractor, and the contractor had possession of them, then I think that the turbines would be property furnished for repair. If the vessel were on a Navy base and the contractor boarded the vessel to repair the turbines in place, then the turbines would not be property furnished for repair (i.e., the turbines were not given to the contractor nor did the contractor take possession of them).

In the decision that you cited (which I skimmed), I gathered that the contractor would take possession of Government property and perform repair/overhaul work on it at its facility:

Mr. Noak attached the greatest significance to the last four words of that line item, ?other Government Furnished Property,? and stressed the importance of the need to repair or overhaul the many items of Air Force ground support equipment while they are at the PDM contractor's facility.

If that was the case, then that was correctly referred to as GFP in the contract. Accordingly, the contractor would be responsible for performing the custodial duties of the Government Property clause.

I think that for an item to be GFP or CAP, the contractor must have possession of the item. If the contractor damages Government property that is not in its possession while performing work, FAR 52.245-1(h) does not relieve them from liability. Accordingly, costs of repairing the damage should not be excluded in the "Total Allowable Cost" computation if the contract includes the Incentive Fee clause.

FAR 52.245-1(h) states:

Unless otherwise provided for in the contract, the Contractor shall not be liable for loss, theft, damage or destruction to the Government property furnished or acquired under this contract, except when any one of the following applies?

Thus the contractor is relieved from liability if the Government property was either 1) furnished by the Government (GFP) or 2) acquired by the contractor (CAP). It doesn't relieve the contractor from liability for loss, theft, damage, or destruction of all Government property (i.e., Government property that is neither GFP nor CAP). I don't see how, in RIR's situation, the turbine generators were furnished by the Government (assuming the contractor did not take possession of the turbine generators or the vessel itself). They were obviously not acquired by the contractor. Yes, the turbine generators are Government property as defined by the clause and stated in the NAVSEA clause. However, the NAVSEA clause doesn't say that equipment on the vessel is Government-furnished property. Here's what the clause says:

For purposes of paragraph (h) of the clause entitled "GOVERNMENT PROPERTY" (FAR 52.245-1) in addition to those items of property defined in that clause as Government Property, the following shall also be included within the definition of Government Property:

(1) the vessel;

(2) the equipment on the vessel;

(3) movable stores;

(4) cargo; and

(5) other material on the vessel

The definition of Government-furnished property at FAR 52.245-1 is:

?Government-furnished property? means property in the possession of, or directly acquired by, the Government and subsequently furnished to the Contractor for performance of a contract. Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification. Government-furnished property also includes contractor-acquired property if the contractor-acquired property is a deliverable under a cost contract when accepted by the Government for continued use under the contract.

Furnish is not defined in the clause or the FAR. An online legal dictionary (www.thefreedictionary.com) defines furnish as--

1. To equip with what is needed, especially to provide furniture for.

2. To supply; give: "The story of Orpheus has furnished Pope with an illustration" (Thomas Bulfinch).

If the contractor never takes possession of the turbine generators, I don't see how it could be argued that the Government "furnished" them.

Did you mean FAR 52.245-1 Government Property (DEVIATION) (June 2007)?

napolik,

That works for me.

Merry Christmas!

I believe the FAR gives you the discretion to set it aside so long as you anticipate receiving at least two quotes from qualified small businesses holding the schedule under which the competition will be held. I have not surveyed the Schedules and the business sizes of the holders, but I believe there are more than two small businesses holding each one.

I also believe that Part 8 gives you the discretion to refuse to set it aside.

If you wish to set the competition, you use the authority of FAR 8.405-5(a). If you do so and you receive fewer than three quotes, then you prepare the justification required by FAR 8.405-1(d)(3)(ii) saying that there were more that 2 small businesses holding the schedule, that you posted the requirement on eBuy for all the SBs to see, but that you only received two quotes. This explanation satisfies the requirement to explain clearly efforts you made to obtain quotes from at least three schedule contractors.

If you decide not to set it aside, I believe you are justified in doing so given the non-mandatory nature of FAR 8.405-5 and the use of the verb ?may? in FAR 8,405-5(a)(1).

While the FAR gives you the ?discretion? to solicit all businesses and not to set aside FSS requirements for small business, your agency small business partisans may pressure you to do so. This is particularly true if agencies are not meeting their SB goals.

napolik,

That's not how I read FAR 8.405-1(d)(3)(ii) or FAR 8.405-2( c )(3)(iii)(, which state--

The ordering activity contracting officer shall?

Provide the RFQ to as many schedule contractors as practicable, consistent with market research appropriate to the circumstances, to reasonably ensure that quotes will be received from at least three contractors that can fulfill the requirements. When fewer than three quotes are received from schedule contractors that can fulfill the requirements, the contracting officer shall prepare a written determination to explain that no additional contractors capable of fulfilling the requirements could be identified despite reasonable efforts to do so. The determination must clearly explain efforts made to obtain quotes from at least three schedule contractors.

If you expected quotes from two (and only two) small business concerns and you limited competition to small business concerns, then I don't think that you would be compliant with FAR 8.405. I see no reason to qualify the bolded sentence above with "unless setting the order aside for small business, in which case two is sufficient."

I don't see how you could comply with FAR 8.405 if you set-aside a FSS order and only expected quotes from two small business concerns.

According to a recent SBA IG report, the SBA's position is that FAR Part 19 applies to contracts awarded in the United States, regardless of where they are performed. From the report:

In addition, Management's response advises that SBA has actually rendered an interpretation that under the FAR, the Small Business Act applies to contracts awarded by contracting offices located within the United States, but where contract performance takes place overseas." However, Management believes that most agencies are likely taking the position that the Act does not apply to contracts performed and/or awarded overseas. We believe this response does not give adequate consideration to the fact that Congress has charged SBA, not procuring agencies, with authority to interpret the Small Business Act and to establish the goaling guidance. The SBA Administrator appears to have sufficient authority to define which government contracts should be included in the goaling calculations.

See the full report here.

I don't agree with "(or 4 with a valid justification)." When acquiring major systems in DoD, ACD&P funds are used in the Technology Development Phase, which is post-Milestone A (see DoDI 5000.02). If a program is past Milestone A, then an Analysis of Alternatives has been completed and a materiel solution has been approved. From DoDI 5000.02:

TECHNOLOGY DEVELOPMENT PHASE

a. Purpose. The purpose of this phase is to reduce technology risk, determine and mature the appropriate set of technologies to be integrated into a full system, and to demonstrate CTEs on prototypes. Technology Development is a continuous technology discovery and development process reflecting close collaboration between the S&T community, the user, and the system developer. It is an iterative process designed to assess the viability of technologies while simultaneously refining user requirements.

Pre-Milestone A (Materiel Solution Analysis Phase) DoD is looking for innovative ideas to address a broadly defined need. A BAA is helpful in soliciting such ideas. However, once the materiel solution has been selected, the focus is on maturing the technology for incorporation into a system. As such, I don't see how the use of a BAA would be appropriate, given the FAR specifically excludes use of the BAA for efforts "focusing on a specific system or hardware solution."

The 1102,

There's a principle of statutory construction called expressio unius est exclusio alterius, which means "when one or more things of a class are expressly mentioned others of the same class are excluded." So if the FAR says that a BAA may be used for X, Y, and Z, then it cannot be used for A, B, or C. The FAR does not need to expressly state that a BAA cannot be used for A, B, or C.

If you're in DoD, the DoD Financial Management Regulation (DoD 7000.14-R), Volume 2B, Chapter 5, provides descriptions of the different types of RDT&E budget activities (see DFARS 235.001). In my opinion, advanced technology development (Budget Activity 3) is appropriate for a BAA--the description states "The results of this type of effort are proof of technological feasibility and assessment of subsystem and component operability and producibility rather than the development of hardware for service use." Contrast this with Advanced Component Development and Prototypes (Budget Activity 4), which states "Efforts necessary to evaluate integrated technologies, representative modes or prototype systems in a high fidelity and realistic operating environment are funded in this budget activity. The ACD&P phase includes system specific efforts that help expedite technology transition from the laboratory to operational use." I think that the "that part of research not related to the development of a specific system or hardware procurement" excludes ACD&P.

I have experience with BAAs and when I was unsure what type of effort something was (basic research, applied research, development) I would look to the type of funding that was being used to fund the effort. If it came from budget activities 1, 2, or 3, it was generally appropriate for a BAA.

Vern,

No, I don't know of any such cases off the top of my head.

Why does it matter that the underlying contract still be in effect in order to exercise an expired option? Let's say an agency has a contract with sequential options and the CO fails to exercise one of the options on time. Why couldn't the CO exercise the option late (assuming the contractor is ok with it) and argue that she is just accepting an offer after it has expired?

I cannot think of anything wrong with extending the deadline for exercising an option.

Vern,

What if the deadline for the option exercise had passed? Do you think the parties could modify the contract such that the deadline would occur at a future date?

If your answer is no, then why do you think it would be ok for the parties to modify the option exercise date prior to its occurrence?

Interesting. Thanks for sharing.

Don I believe logic suffers from the "false analogy fallacy".

H2H

Please clarify.

I will offer the opinion that using FAR to interpret CAS violates 41 U.S.C. 1502.

That is a remarkable assertion. So when we interpret the term "commercial item" at 48 CFR 9903.201-1( b )(6), where it states that commercial items are generally exempt from CAS, we should not use the definition at FAR 2.101 because doing so would violate 41 U.S.C. 1502? If so, then what definition of "commercial item" should we use?