Don Mansfield

DAMB,

That's not what the DoL guide says. The part about issuing a WD only if the place of performance is known applies to shipbuilding, not ship repair. For other than naval vessels, shipbuilding, alteration, and repair are covered by DBA. Ship maintenance is covered by SCA.

As far as what clauses to use, I don't know what civilian agency practice is. DoD must not have thought the clauses in the FAR were adequate for ship repair, which is why we have the clauses prescribed at DFARS 217.7104.

I don't have a problem with NAVSEA taking the position that they will treat their ship repair contracts as supply contracts as a matter of policy. What I have a problem with is the argument that ship repair, by its nature, is a supply rather than a service. The attorneys at NAVSEA used to insult my intelligence with such arguments as "Ship repair is a supply because the contractor is delivering a repaired ship to the Government." (Following that logic, the repair of anything would be a supply). As the GAO stated, it's illogical.

Acquisition is acquiring by "contract", which is defined at FAR 2.101 as follows:

“Contract” means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to) awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; and bilateral contract modifications. Contracts do not include grants and cooperative agreements covered by 31 U.S.C.6301, et seq. For discussion of various types of contracts, see Part 16.

Deaner,

See "What Transactions fall outside the FAR's coverage?" on page 5 of this report: http://www.fas.org/sgp/crs/misc/R42826.pdf.

DAMB,

Just because the Navy applies Walsh-Healy to its ship repair contracts doesn't mean that they treat those contracts as supply contracts for all purposes. As I stated before, the Navy reports ship repair contracts to FPDS as service contracts.

You asked:

In terms of non-DoD ships, recall the previous conversation regarding Davis Bacon; in summary, how can Davis Bacon be invoked where the repair location is unknown and how can a wage determination be selected for inclusion in the RFP. And recall what the DoL manual said about those cases. So where does that leave non-DoD agencies in terms of which type of labor law to enter into the contract?

According to the DoL Field Operations Handbook (Chapter 15, 15d11):

Shipbuilding, alteration, repair, and maintenance.

The building, alteration, and/or repair of ships under Government contract is work performed upon "public works" within the meaning of the Davis-Bacon Act. Wage determinations for shipbuilding under the D-B Act are issued only if the location of contract performance is known when bids are solicited. However, a Government contract which calls for the construction, alteration, furnishing, or equipping of a "naval vessel" (U.S. Navy and U.S. Coast Guard vessels) is subject to PCA. A contract which calls for maintenance and/or cleaning, rather than alteration or repair, of a ship or naval vessel is a service contract within the meaning of the SCA. (See FOH 13b11 and 14c06.)

Interesting stuff about NOAA. Thanks for sharing.

DAMB,

You had a reference, which is good. However, you'll notice that the reference doesn't say that ship repair is a supply--it just says that it is subject to the Walsh-Healy PCA. Having said that, the statement is not in accord with the GAO decision:

"Per 10 U.S.C. 7299, ship repair/overhaul is subject to the Walsh Healy Act (41 U.S.C. 35 et seq) which applies to contracts for supplies and equipment."

Here's what the GAO had to say about that:

"First, 10 U.S.C. Sec. 7299 does not refer to ship repair and the Coast Guard does not explain why a ship repair contract should be considered to fall under 10 U.S.C. Sec. 7299. Further, the purpose of that legislation was to make clear the view of Congress that contracts for the construction or alteration of vessels are subject to the Walsh Healey Act. See 42 Comp.Gen. 467, at 477, supra. The legislation does not relate to whether ship repair contracts are to be considered service or supply contracts. Also, in 42 Comp.Gen. 467, supra, we addressed the question of whether a contract for the alteration of a vessel should be governed by that portion of the Buy American Act pertaining to public works or to that section pertaining to supplies. The decision did not consider whether a ship repair contract is to be considered one for services or supplies."

The current version of 10 U.S.C. 7299 reads:

Each contract for the construction, alteration, furnishing, or equipping of a naval vessel is subject to chapter 65 of title 41 unless the President determines that this requirement is not in the interest of national defense.

Apparently, the Navy has not accepted the GAO's interpretation of 10 U.S.C. 7299 and continues to apply Walsh-Healy to ship repair. Fair enough. However, that does not mean that naval ship repair is a supply. In fact, the repair of supplies, systems, or equipment is listed as an example of a "service contract" at FAR 37.101. 10 U.S.C. 7299 exists because the Navy doesn't want to deal with Davis-Bacon, which applies to repair of other than naval vessels.

DAMB,

You asserted that ship repair contracts are considered "noncommercial supply." Who considers them noncommercial supply contracts and for what purpose? Before you answer, double-check whether you use an FSC code for supplies when you report ship repair actions to FPDS. Also, why is ship repair listed as a service at FAR 25.401? Read http://www.gao.gov/products/420843#mt=e-report. Here's an excerpt:

"It is most significant, in our view, that the Coast Guard makes no argument that the classification of such a repair contract as one for supplies is logical. We do not understand how it can be argued that as between the two categories-- supplies or services-- a contract for the repair of a vessel is classified as one for the vessel itself rather than for the repair services to be performed on that vessel. Since we think the solicitation was properly one for services, the protester's failure to complete the Small Business certification does not affect the responsiveness of the bid. BCI Contractors, Inc., B-232453, Nov. 7, 1988, 88-2 CPD Para. 451. We therefore conclude that the protester's low bid was improperly rejected and we sustain the protest."

Yes, you can factor in transportation costs as a price-related factor in your evaluation. See Volume 1, Chapter 5, Section 5.4, of the Contract Pricing Reference Guides regarding the use of transportation costs as a price-related factor. The example is written for a supply contract, but it is easily adaptable to your situation.

ji20874,

While you're at it, are you sure that the Government is liable for late payment interest if the lateness is caused by a soveriegn act of the Government (i.e., closure of the payment office)? Why wouldn't the sovereign acts doctrine apply?

subbby2005,

FAR 6.401(a) requires sealed bidding if the four conditions are met and the acquisition is subject to CICA:

Contracting officers shall solicit sealed bids if --

(1) Time permits the solicitation, submission, and evaluation of sealed bids;

(2) The award will be made on the basis of price and other price-related factors;

(3) It is not necessary to conduct discussions with the responding offerors about their bids; and

(4) There is a reasonable expectation of receiving more than one sealed bid.

So you don't have the discretion to choose between sealed bidding and negotiation. For each of your acquisitions subject to CICA, you need to ask yourself if the four conditions exist. If they do, you must use sealed bidding. If not, FAR 6.401( b ) says you may request competitive proposals.

Vern,

I couldn't agree more.

Government Folks,

Take heed of Vern's last post.

Vern,

In some cases, a stop-work order may be necessary. That's why I asked rios if the contractors would have been able to work even if the Government shut down. He said that some work could continue, some couldn't. If he wanted to stop the work that could have continued despite the shutdown, then a stop-work order would be necessary. For the work that couldn't continue, the Government doesn't have to issue a stop-work order or suspension of work.

rios,

I don't understand why you issued stop work orders for work that the contractor couldn't do because of the shutdown. You issue a stop work order if the contractor would have worked and you didn't want them to. When you issue a stop-work order under FAR 52.242-15, the contractor would potentially be entitled to an equitable adjustment in price and/or schedule. If the contractor can't work because of an act of the Government in its sovereign capacity (like a shutdown), the most the contractor would be entitled to is a schedule extension. There's something called the Sovereign Acts doctrine (Google it), which bars claims for increased costs caused by sovereign acts.

Why did you think you had to issue stop-work orders?

rios,

If you did not issue the stop-work orders, would the contractors have been able to work?

Are you trying to say that the work is outside the scope but under the terms of the existing contract?

Suspension of work? You realize that may entitle the contractor to any increased costs caused by the suspension.

All I have to say is that jail is too nice a place for COs who don't follow the FAR.

Why do you think you have to "use" a clause to make a bilateral contract modification? Let me guess, you're fretting over what to put in Block 13C of the SF 30.

Vern,

I'm still having trouble with your interpretation of FAR 1.401(f) (Strangely enough, it came up in my dream last night ). For argument's sake, I will accept the interpretation of FAR 1.401(f) that you wrote in an earlier post as follows:

Thus, a deviation under 1.401(f) is failure to incorporate a policy or procedure into an agency supp when such incorporation is required by law, i.e., 41 U.S.C. 1707, and by FAR 1.301( b ). Clearly, however, deviations that must be published in the agency supplements in accordance with 1.301( b ) are subject to the notice and public comment requirements of 41 U.S.C. 1707, and cannot take effect until published in the Federal Register as proposed or interim rules. Thus, DOD’s August 30 class deviation is unlawful.

In other words the "issuance" described at FAR 1.401(f) requires rulemaking, but has yet to go through the process. You say that such an issuance is unlawful. However, FAR subpart 1.4 and DFARS subpart 201.4 authorize agency heads to approve "deviations" as defined at FAR 1.401. I anticipate your response to be "Yes, but the agency head must first go through the rulemaking process." The problem is that if the issuance went through the rulemaking process, it would no longer be a deviation under FAR 1.401(f). As such, the agency head can't really approve a "deviation" as defined at FAR 1.401(f).

Am I understanding you correctly?

Vern,

Would you say that anything meeting one of the definitions of "deviation" at FAR 1.401 would be required to go through rulemaking?

Vern,

What you wrote about the outdated cross-reference to FAR 1.301( a ) is reasonable, but I still think you are reading something into FAR 1.401(f) that isn't there. Your interpretation essentially adds the bracketed words below:

The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a)[, but should be].

I see no reason to interpret FAR 1.401(f) other than literally. The fact that DPAP does not commonly refer to such issuances as deviations is not persuasive. Common usage and understanding of words and terms often differs from FAR definitions. A COR is commonly understood to NOT be a "contracting officer", but the FAR definition includes CORs. A request for equitable adjustment is commonly understood to be different than a "claim", but the FAR definition includes REAs. I see the definition of "deviation" at FAR 1.401(f) as another one of these instances. Nonetheless, I will see if I can get a clarification from the DAR Council.

As far as your assertion of noncompliance with 41 U.S.C. 1707, I have no argument with that. However, this is not unique to the most recent class deviation. Almost all class deviations conclude with something to the effect that "this deviation remains in effect until incorporated into the FAR [or DFARS] or is otherwise rescinded." Neither is this practice unique to the issuance of class deviations. DPAP has a history of issuing policy memos that mandate compliance prior to the rulemaking process. Remember the "Only One Offer" policy that essentially eliminated the exception to the requirement for certified cost or pricing data if only one offer was received and there was adequate price competition? That was issued as "amplifying guidance." DPAP even has a procedure for coding policy memos that contain policy to be incorporated into the regulations. The practice of implementing policy by memo and worrying about rulemaking later is standard and has been for as long as I can remember.

Noncompliance with 41 U.S.C. 1707 is pervasive. Just turn to Section H of the nearest Government solicitation. You will undoubtedly find homegrown contract clauses that meet the criteria for rulemaking in the statute, but never actually went through the rulemaking process. Several Navy activities recently issued "Tripwires" policies, which impose all kinds reporting burdens on contractors, without complying with 41 U.S.C. 1707 (or the Paperwork Reduction Act, for that matter). NDIA wrote a letter to Frank Kendall about it. It's a problem.

If an agency goes through rulemaking, then it does not need a FAR deviation.

Vern,

I don't understand that comment. Some deviations require rulemaking, some don't. Agency supplements contain deviations that have been through rulemaking. For example, DFARS 201.301( a )(1) states:

DoD implementation and supplementation of the FAR is issued in the Defense Federal Acquisition Regulation Supplement (DFARS) under authorization and subject to the authority, direction, and control of the Secretary of Defense. The DFARS contains—

(i) Requirements of law;

(ii) DoD-wide policies;

(iii) Delegations of FAR authorities;

(iv) Deviations from FAR requirements; and

(v) Policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors.

[bold added].

I provided an example of such a deviation in my prior post.

You are correct that the DFARS PGI is not an agency acquisition regulation. That is why the DFARS PGI meets the definition of "deviation" as described at FAR 1.401( f ):

The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a).

Vern,

No. FAR subpart 1.4 does not authorize agency heads to disregard 41 U.S.C. 1707. If the deviation has "a significant effect beyond the internal operating procedures of the agency" or has "a significant cost or administrative impact on contractors or offerors", then 41 U.S.C. 1707 would require the deviation to go through rulemaking. An example of such a deviation would be DFARS 225.105( b ), which deviates from FAR 25.105( b ):

"Use an evaluation factor of 50 percent instead of the factors specified in FAR 25.105( b )."

Retread,

Yes, DFARS PGI meets the definition of "deviation" at FAR 1.401(f).

FAR 1.401(f) covers issuance of agency-specific rules that are (a) not in FAR and ( b ) are not to be incorporated into the agency's FAR supplement. Apparently, such issuance would deviate from 1.301(a). But according to the cover letter transmitting and requiring the inclusion of the new clause, it will be incorporated into the DFARS. So FAR 1.401(f) does not apply.

What's the deviation? Deviation from what?

FAR 1.401(f) doesn't say anything about rules that are not "to be" incorporated into the agency's FAR supplement. It uses present tense:

"The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated into agency acquisition regulations in accordance with 1.301(a)."

Whether the deviation was issued properly (i.e. without rulemaking) is a different issue. I don't see that as having any effect on whether the issuance itself is a deviation. When the policy gets incorporated into the DFARS, it will no longer be a deviation under FAR 1.401(f).

There's no prohibition on using sealed bidding procedures to award an IDIQ contract. In fact, you are required to use sealed bidding procedures if the conditions at FAR 6.401(a) are met (assuming FAR part 6 applies to your acquisition).

I don't think FAR 1.401(f) covers it.

Why not?