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ron vogt

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Posts posted by ron vogt

  1. Formerfed - that's definitely the safer course of action. But if your product lines have lots of Huawei et. al. equipment, you might need to start deciding what is prohibited and what is not. Also, I've gone through those GSA Q&As, and several other guides prepared by law firms, industry associations, etc, and none have offered a further definition. At this point maybe the best we're going to get is the reverse of the exception. 

    Bob - sorry, I don't see an answer in (f). All it does is use the term 'telecommunications equipment.' The word 'covered' simply refers to the companies, not a narrowing of the types of equipment.

  2. There may not be a separate TAA clause for services, but the TAA does apply to services, and the general TAA clause - 52.225-5 applies. FAR Part 25.4 addresses the TAA, including its applicability to services. For example, 25.402(a)(2) states that the country of origin of a service is the country in which the firm providing the services is established. The DFARS coverage is of course in 225.4.

  3. I quoted the AAP question as referring to a MIL-STD. The answer also called it that. I don't know whether that's a correct designation, but that's not important to the question.

    Even if a MIL-Spec called out inspection and packaging, why would that disqualify it from being a commercial item? The commercial item definition focusses on the characteristics of the item, not how it's inspected. Can't it be a commercial item and still require certain inspection and packaging procedures?

  4. in yesterdays' AAP, the questioner asked whether MIL-STD target paper could be a commercial item. The procuring buyer had said no, because the MIL-STD paper was stronger. However, there probably are thousands of varieties of paper, and this particular variety of target paper would seem to fit both types of modifications permitted under the commercial item definition: modifications that are made for any customer, and modifications unique for the government customer, but minor. In addition, target paper, even Mil-STD target paper, would certainly seem to be 'of a type' of paper.

    Putting aside this particular case, the AAP answer went much further. It said categorically that "No - It's either MIL-STD or commercial it cannot be both." I'm interested in opinions on whether this is correct. If something is manufactured to a MIL-STD, is it categorically excluded from being a commercial item? If so, why?

     

  5. In the 2016 National Defense Authorization Act, section 851 requires DoD to establish a central office to oversee commercial item determinations, and provides that a prior determination will serve as a presumption of commerciality for subsequent acquisitions. There are several other provisions regarding price information, flowdown, etc., but this may have the most impact.

  6. Just a thought --- not saying this is the answer.

    The contract is with GSA, not DoD. A product qualifies by meeting GSA requirements, including the TAA. Would that make GSA laws, regulations etc. apply, even if DoD buys from it?

    i would be interested in hearing from DoD buyers. Do you buy anything from a GSA contract, or do you intentionally screen for the listed FSGs?

  7. There appears to be an error in the online version of the DFARS at http://www.acq.osd.mil/dpap/dars/dfars/html/current/225_0.htm

    The online version of 225.003 states, in the definition of a qualifying country:

    Accordingly, the following are qualifying countries: United States. The following are qualifying countries:

    Australia

    Austria

    Belgium

    Canada

    The odd wording makes it look like a coding or a cut-and-paste error.

    Nevertheless, this is a serious error. The United States is NOT a qualifying country. For example, in the exception at 252.225-7009( c)(4) of the specialty metals clause, it could lead contractors to believe that their product is compliant by being manufactured in the US, whereas only a product manufactured in a qualifying country is eligible for the exception.

    This error is not repeated in the pdf or Word version, so it is likely only in the html version. You might want to check with your suppliers and your own production processes to make sure they are not relying on this. I have already come across one supplier that was.

    I have sent an email to DPAP, so I hope this will be corrected soon.

  8. Does my daughter's geometry book count? :P Fortunately that will be spread out over a semester.

    Read "When/After Worlds Collide" waaaay back. May do so again now.

    I keep a folder of 'best this' or 'best that' lists, recommended reading, articles on authors, etc. One article was on P.G. Wodehouse, so I decided to try a Wodehouse anthology - two novels and several short stories. Almost through now, and worth every page.

  9. Don,

    Thanks for the response. I think that we largely agree on most points, and that it wouldn't be productive to engage in one of those "you said this" and then" I said that" exercises. The BAA/TAA/BOPP topic is bad enough.

    Much of the ambiguity is the result of careless drafting of parts 25 and 225. Although you say you wouldn't infer anything from the difference in the prescriptions for -7021 and -7036, others would say that the prescriptions are written exactly as they were intended. I lean towards the "careless drafting" explanation, as do you I think, but the other interpretation isn't without foundation. BTW, I have a large collection of articles, briefing papers, etc, on all BAA/TAA topics, and I can assure you that the ambiguous terms are used interchangeably in them. One article stated that the definitions in the BAA and TAA are "almost inscrutable." Another stated that 'eligible products' overlaps 'designated products' but was broader, because it includes the Israeli Trade Act and the Civil Aircraft Agreement. I think you and I would both disagree with that.

    Ambiguities aside, here are the larger points that I think we agree on. Please feel free to correct this.

    1. Eligible countries are WTO GPA and FTA countries. Designated countries are those plus Caribbean Basin and least developed countries. Despite some usage of these terms that suggests otherwise, I believe this is the most reasonable interpretation.

    2. It's a common shorthand, but it's not accurate to talk about a TAA threshold. The TAA implements several agreements, which have different thresholds. The table in 25.402(b ) lists these. The highest is the WTO GPA threshold of $204k, which typically gets called the TAA threshold. I was guilty of that above and I should have been more clear.

    I'm not 100% sure about the next, so please comment:

    3. The "trade agreements" that the FAR and DFARS talk about are the WTO GPA and the FTAs. Products from these countries are eligible products. Products from Caribbean Basin countries and least developed countries are then "treated as eligible products.' (FAR 52.404 and 405). That's why the difference in the definitions of eligible and designated.

    However, I have to add that while DFARS 225.401-70 talks about the applicability of the "trade agreements" to the listed FSGs, it also talks about Caribbean Basin countries in the same paragraph. That shouldn't be there if the trade agreements are just the WTO GPA and FTA. Then again, maybe it's there because Car.Bas. and L.Dev. products get "treated as" eligible products.

    Finally, the BOPP. Reduced to its basics, it's just the BAA applied to products for use outside the US, although it doesn't apply below the SAT of $150k. In short, it requires the purchase of domestic or qualifying country products, and then when you reach an FTA threshold, products from those countries as well. Once you go above the WTO GPA threshold of $204k, the BOPP will apply only to the non-listed FSGs, and not to the listed FSGs because of the exception at 252.225-7501(a )(3).

    That's all. I think in the earlier exchanges we may have been talking past each other a bit. I hope this clears it up.

  10. Don, I fully agree that parts 25 and 225 are the most difficult to understand. It certainly doesn't help that they are written inconsistently, and that parts are internally inconsistent. Try figuring out the difference between eligible products and designated country products, and you'll go in circles. It's not surprising that a GAO study found that the wrong clauses were used in over 60% of solicitations and contracts. From personal experience, I can tell you that many COs just throw in all of the clauses in the hopes that they have covered everything, not realizing that the use of some excludes the use of others.

    Now, going back to your post #5, the "not exactly" part: I believe I have a small correction. -7036 is the clause you would use (or one of the alternates) when you are below the full TAA threshold, but over the various Free Trade Agreement (FTA) thresholds. -7021 is the full TAA clause, used when you are above the WTO GPA threshold of $204k.

    There are important differences between the two. For example, below the WTO GPA threshold, a domestic product is required, along with the appropriate FTA product. Above the threshold, a US-made product is acceptable. The difference, of course, is the 50% content requirement for domestic products. Another example is the purchase restriction of the TAA. It applies when you are over the WTO GPA threshold, but does not apply to the FTAs.

    Well, another minor correction: -7036 does not mention either eligible products or designated country products. -7021 allows designated country products, but does not mention eligible products. The word 'eligible' only shows up in the exception to the BOPP. This brings us back to the problem I mentioned above: the difference between eligible and designated.

    Well, OK, another. When applying the BOPP, I don't think that both the TAA and the BOPP could apply. First, the TAA is a law that covers the applicability of the WTO GPA, the FTAs, and other agreements such as the treatment of Caribbean Basin countries and least-developed countries. The exception to the BOPP is only for when the WTO GPA applies, which is when you are over $204k. Second, the WTO GPA is an exception to the BOPP, so you can't have both. That's why the -7021 clause is just entitled "Trade Agreements," and -7001 and -7036 have BOPP in the title.

    In the scenario under discussion in this thread, we are also looking at what it means to have "the trade agreements" apply. DoD only applies "the trade agreements" to the FSGs listed in DFARS 225.401-70. Does that mean collectively all agreements covered by the TAA, or just the FTAs? You could find arguments for both. For example, the prescription for -7036 (for FTAs), specifically says "for the items listed at 225.401-70," while the prescription for -7021, the full WTO GPA clause, does not. From this you would think that the restriction to the listed FSGs only applied to the FTAs. However, the text of the WTO GPA itself contains the exception to the listed FSGs for DoD.

    Which is it? Who can possibly know? Unfortunately it makes a difference in whether a product needs to be domestic or can just be US-made. It also determines whether the purchase prohibition applies or not.

  11. Adding the spares as a mod to the first subcontract probably makes the spares order subject to all subcontract requirements, even though I think there is a genuine issue as to whether the second order by itself would be a subcontract under a government contract. There is no government requirement for it; it is not required for the performance of the government contract; it is not a part of the prime contract scope or SOW. Without a government requirement for it in a prime contract, it falls short of the many definitions of a subcontract in the FAR. All there is is an expectation that the government will order them. In short, the prime is ordering them at risk before there is any government need for them. If the government never adds these to the prime contract, the prime is left on the hook for them.

    If the spares order is done as a separate, independent contract to the supplier rather than as a mod, I think there's an argument that it can be done as a normal commercial order between buyer and seller -- no C or P data, no government flowdowns, nothing except the specs and the requirements for the products themselves. If the government eventually places an order with the prime for these items, there would be no subcontract because the prime already owns them and would deliver them out of inventory. Of course, the prime would need to include any specs necessary so that the prime could deliver a compliant product, such as the specialty metals requirement.

    Another way to look at it is -- if the government were to T for C the prime before it ordered any spares, would the prime be able to recover its costs for these spares in its T for C settlement? Probably not. Why should the government pay for something it never ordered? Similarly, why would it be a subcontract if it was done as a separate contract for things that were never in the prime contract?

  12. A topic that silences even this forum? :lol: Is B_ _ _ _ A_ _ _ _ _ _ _ _ the name that none dare speak? Is no one willing to stake their name and reputation on an answer?

    OK, here goes. First, the text of the law itself (10 USC 2533b) provides little help. It simply says there is an exception for purchases in furtherance of agreements with foreign countries.

    Next, the DFARS text and the clause do not appear to match. The text states: "The restrictions in 225.7003-2 do not apply to the following: ... (4) Items listed in 225.7003-2(a), manufactured in a qualifying country...." The items listed in 2(a) are the 6 major end items, aircraft, missiles, ships, etc. Replacing "items listed" with an item would make it read as follows: "The restrictions in 225.7003-2 do not apply to aircraft manufactured in a qualifying country. This sounds like the exception only applies to an end item manufactured in a qualifying country.

    But something happened on the way to the clause. The clause reads: "The restriction in paragraph ( B ) of this clause does not apply to -- ... (4) Items manufactured in a qualifying country." An end item is defined in the clause, but not an item. This would lead one to conclude that an item is different than an end item, and that the exception applies to any item manufactured in a qualifying country. This would mean that the uneven playing field was retained.

    Apparently others think so as well. DoD's FAQs on specialty metals, in questions 18, 20, and 23, indicate that the qualifying country exception applies to parts and components of end items. Articles written about the new law and regulations say the same thing. Finally, in the Federal Register notice of the final rule (74 FR 37626), in response to a concern about the uneven playing field created by the qualifying country exception (comment 9), DoD's response was basically 'it's not a big deal.'

    So I would have to conclude that the clause still allows an item manufactured in a qualifying country to use specialty metal from any source, while a US manufacturer of the same part could not. I wouldn't mind hearing a counter-argument, since this is a big problem for US manufacturers.

  13. True, but the point was not that those particular cases themselves are good guidance. They were just in the footnotes. The point was that the boards and courts will look to Customs and ITC cases for guidance on issues regarding substantial transformation and the country of origin. Personally, I go straight the Customs database of decisions, because of, as you pointed out, the dearth of guidance at the GAO. There are thousands of decisions and opionion letters by Customs. I downloaded the whole works so that I could search them all at once, which I don't believe you can do from their web site.

  14. This might help. In a 1994 Briefing Papers, the authors note the following:

    Famillarity with the rulings of the U.S. Customs Service is essential to anyone dealing extensively with the application of the TAA. The TAA requires the Secretary of the Treasury to provide for the prompt issuance of advisory and final determinations of product origins. [FN201] The Department of the Treasury has delegated the responsibility for making those determinations to the Customs Service. [FN202]. Bid protest forums have recognized the expertise of the Customs Service in the area. As noted above, the GSBCA accords great weight to Customs Service rulings in determining whether a particular manufacturing process constitutes "substantial transformation" for purposes of the TAA. [FN203] Likewise, the GAO has followed Customs Service precedent and. in at least one case, has requested an informal ruling from the Service on whether operations constituted substantial transformation. [FN204] The determinations of the Customs Service thus have assumed a new importance in federal procurement law.

    I know I have read GAO decisions with references to both Customs rulings and ITC cases. I just don't have them at my fingertips. When the need arises again in my job, I will do the research.

    For a useful guide, try the template that the EPA published when everyone was struggling with the ARRA Buy American requirement. About halfway down the page at this link http://water.epa.gov...ng/eparecovery/ are several guidance documents on the Buy American requirement. In them are a series of three questions that the EPA considers important in determining the country of origin. It's not perfect, but there's not much else out there.

  15. True, they may be incorrectly using that definition, but it doesn't necessarily mean that the products are not "US-made" for purposes of the TAA. To be US-made, the product simply needs to be substantially transformed in the US. There is no requirement with respect to the content. If they are saying that their product meets the "domestic" test for the BAA, then they are saying it is manufactured in the US as well as having 50% US content. While the "manufactured" test for the BAA is technically a different standard than the "substantially transformed" test under the TAA, few could explain what the difference is.

    For more on the "substantial transformation" test, I believe the GAO and other courts look to the rules and decisions of US Customs and Border Protection, and the decisions of the International Trade Court. The CBP rules of origin are at 19 CFR, and you can research CBP decisions on its website.

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