elgueromeromero

The following is from the GSA OASIS 8(a) Sub-Pool On-Ramp RFP: For Mentor-Protege JVs, the SBA must approve the Mentor-Protege Agreement before the firm may submit an offer (reference 13 CFR 125.9(d)(1)(i), 13 CFR § 124.520(d)(1)(i)). For 8(a) Joint Ventures where all members are small under the applicable size standard per 13 CFR 124.513(e), the SBA must approve the JVA prior to award, not prior to submission of an offer. This requirement is causing a lot of heartache for 8(a) Mentor-Protege JVs. A lot of folks (including consultants and contracts attorneys) are saying that GSA is violating SBA rules in that they can't require approval of the 8(a) Mentor-Protege JV prior to submission of an offer because the regulations state that approval must happen prior to award. Of the 369 questions and answers provided in Amendment 04 Q&A, probably 20 of them were directly related to the above requirement. Admittedly, I also initially thought that GSA was going against SBA regulations with this requirement. Then I dug more into the regulations and now I actually think that GSA is correct. Here's why: GSA is essentially stating that 13 CFR § 124.513, which allows SBA approval of the 8(a) agreement prior to award doesn’t apply to 8(a) JVs formed under SBA’s mentor-protégé program, but rather 13 CFR § 124.520 and 125.9, which require approval of the JV agreement prior to submission of an offer, applies to 8(a) and SB Mentor-Protégé JVs. 13 CFR § 124.513 is almost entirely silent on Mentor-Protégés, whereas 13 CFR § 124.520 and 125.9 are specific to the Mentor-Protégé program. So the regulations contain two distinct requirements with respect to SBA's approval of joint venture agreements: If you're an 8(a) JV (meaning both or all members are 8(a) Participants) SBA approval of the JV agreement is required prior to award. If you're a Mentor-Protege 8(a) JV, SBA approval of the JV agreement is required prior to submitting an offer. Do you agree with this interpretation? If not, why?

Our consultant (who's a former DCAA auditor) is telling us that DCAA's interpretation of 52.216-8 Fixed Fee (Jun 2011) is that the contractor is required to withhold 15% of the fixed fee, that the 15% is mandatory, and if contractors don't do this, they'll be cited with an accounting system deficiency. She's consulted for several other contractors and said that one of them was recently cited with an accounting system deficiency for this very reason, which was fully supported by the DCMA ACO. My interpretation of this clause is that it does not impose any kind of obligation on the contractor. The clause does contain a requirement for the Contracting Officer to withhold a certain amount/percentage of the fee, and to release a certain amount/percentage as stated in the clause, but there’s no obligation for the contractor to withhold any of the fixed fee (i.e. underbill the Government on the fee). I think the contractor should bill the full amount of the fee and the Contracting Officer is responsible for withholding the required amount of fee from payment. If the contractor were to underbill the fee, there would be nothing for the Contracting Officer to withhold. If the Contracting Officer doesn’t do any withholding of the fee, that should be on the Contracting Officer, not the contractor. Our auditor then told me that DCAA pamphlet 7641.90 ("Information for Contractors") also states that it's the contractor's responsibility to withhold 15% of the fixed fee. I reviewed the manual and it doesn't actually state that, but rather refers back to FAR 52.216-8 and provides a sample voucher where the Contracting Officer has designated a 15% reserve for the fixed fee. I certainly don't view this sample voucher as direction or a requirement for the contractor to withhold/underbill 15% of the fee. While a withhold amount less than 15% is apparently almost unheard of, the FAR does state that the amount of the withhold is a subjective "not to exceed 15%, or $100,000, whichever is less, to protect the Government's interest", so the reserve technically could be a lower percentage, based on what the Contracting Officer feels is adequate to protect the Government’s interest. That DCAA could cite a contractor for not doing something that isn’t required by contract is very frustrating and concerning to me. The clause/regulation states as clear as day that the Contracting Officer is to withhold a reserve not-to-exceed (discretionary amount) 15 percent of the total fixed fee, which is why I’m surprised that DCAA could expect contractors to interpret that to mean that the contractor must voluntarily underbill the fixed fee by exactly 15% (a non-discretionary amount). And apparently if contractors don't do the mental gymnastics required to arrive at this same bizarre interpretation of the clause, DCAA will cite the accounting system as deficient and may even require repayment of the fee reserve that "should have been withheld". I should also mention that our company has had several CPFF contracts with both the DoD and EPA over the years and we've never been required to withhold a percentage of our fixed fee from billings and have also never had any portion of fee withheld by the Gov't. I'm not saying it shouldn't have been withheld (it should have), but it just hasn't happened. Am I missing something here?? Has anyone else had to deal with this?

Thanks, Help. I really appreciate your thoughts on this. And thanks for your contribution to this site. I can't tell you how many times I've found answers to these types of questions by coming here and reading your comments.

Yes, it's a CPFF and 52.216-7 will be included. The indirect rates aren't fixed--they're actually ceilings. The Gov't is calling them capped rates. I apologize if I said they were fixed or made it sound like they're fixed. So we can bill at our actual indirect rates up to the ceiling/caps. Hopefully that clears things up.

They're ceilings. The Gov't is calling them "capped rates". Yes, we will bill at our actual rates up to the NTE ceiling rates.

The proposed indirects are ceilings for proposal and billing purposes. So we can bill actual indirect rates but NTE the ceiling/capped indirect rates established in the contract. Does that clear it up?

Retreadfed, the indirects proposed by each offeror will be the established capped indirect rates for proposal and billing purposes on task orders should the offeror be awarded a contract.

I'm sorry, I misspoke. We aren't covered by the requirement for cost or pricing data as this is a competitive procurement. From what I understand, we also don't have billing rates. We have very few cost-reimbursement contracts so we calculate our rates on a contract by contract basis, and usually just end up using our most recent DCAA-accepted rates. What you're saying makes sense. However, our experience has been that Contracting Officers almost always want to see SOMETHING from DCAA, and our "accepted" rates letter from DCAA is what we typically provide. I think it gives the Contracting Officers a sense of security to see that DCAA has reviewed our rates and accepted them. The impression we get is that they expect our proposed rates to match what DCAA has accepted. But you're saying that we shouldn't rely on these rates as they likely aren't the most current, accurate, and complete data, which seems to make more sense given we don't have an FPRA. So back to my question, would you suggest that we forget about the rates we used in our initial proposal and that we update our rates for our final proposal revision to reflect" a current projection of future rates, based on anticipated costs and anticipated revenues"?

We used our 2016 incurred rates to come up with our estimated cost for a CPFF proposal. DCAA did an informal review (not a full-blown audit) of these rates and they were "accepted". It's been about a year since we submitted our proposal and we finally received notice that we've been included in the competitive range and we're now in negotiations with the Gov't. We now have DCAA-accepted 2017 incurred indirect rates, which have changed slightly from our 2016 rates. I don't know if we should use the 2016 rates that we originally used to estimate our cost for the proposal, or if there's some expectation or requirement that we update our rates to the more current 2017 incurred rates. The RFP and negotiations letter are both silent on this matter.

The costs obviously don't benefit other contracts, but my question is whether they somehow benefit the contract in question. If so, then I think we should be able to charge the costs as direct costs. If not, then I don't think they pass the test for allocability and we therefore can't bill them as direct costs. Am I missing something? Probably. That's why I came here.

We have several CR contracts. Yes, we have other contracts that are subject to the cost principles. The invoicing concerns in this situation are related to direct costs. I believe for actual full-blown audits, the costs are accounted for as indirect costs (not 100% sure on this). Our contract is silent on this issue. thank

The Government is auditing several previously submitted invoices (some paid, some pending payment) on our CPFF contract. They are requesting that we meet in person as they have several questions on our invoicing process and they claim to have found several discrepancies in some of our invoices. In the request for the meeting they stated that they don't think any costs incurred for travel or time associated with explaining and defending our billing processes and these discrepancies should be chargeable to the contract. Are these costs typically allowable? This seems to be sort of a gray area. I've reviewed FAR 31.2 and it seems to come down to whether these costs would meet the following test for allocability: (a) Is incurred specifically for the contract; YES (b) Benefits both the contract and other work, and can be distributed to them in reasonable proportion to the benefits received; or ?? (c) Is necessary to the overall operation of the business, although a direct relationship to any particular cost objective cannot be shown. ??

Yes, I understand this. I was thinking more in terms of what should have been included in our subcontract when I cited this. Our subcontract includes a laundry list of FAR clauses and says to flowdown "to the extent applicable". We'd like to avoid scaring off a small company providing a commercial item with a bunch of unnecessary FAR clauses. If our subcontract gives us the discretion to flow down clauses "to the extent applicable" , couldn't we justify that the only "applicable" clauses in our subcontract that should be flowed down to our subs are those that are included in 52.244-6, since those clauses are the only clauses that are really applicable to a subcontract for a commercial item?

Correct, we have a subcontract with a company who holds the prime federal contract. There are a number of clauses listed under the "flowdown" section of our subcontract with the prime, but this section states that they are to be flowed down "to the extent applicable". So because we don't have privity of contract with the federal agency, and because the prime didn't include 52.244-6 in our subcontract, we should ignore FAR 44.402(b) and basically go through all of our clauses and flow down all that include a "shall include in all subcontracts" prescription (as applicable)? So we'll end up including clauses that wouldn't normally be flowed down to a commercial item subcontract, such as 52.225-13 Restrictions on Certain Foreign Purchases, for one example.

Background We were issued a subcontract from a 1st-tier federal subcontractor to perform construction work. FAR 52-244-6 was not included in our subcontract. Now, we're about to issue a commercial subcontract and we're wondering if we should include the flowdowns listed in 52-244-6 that should have been in our subcontract. There are other clauses listed in our subcontract, but in light of FAR 44.402(b), I think that only the clauses listed in 52-244-6 need to be flowed down to any subcontract for commercial items/services. Question Should we flow down the clauses in 52-244-6 in our commercial subcontract even though that clause isn't in our subcontract, or do we need to go back to the company that issued the subcontract to us and ask that they modify it to add FAR 52-244-6? Or are we not obligated to flow down any FAR clauses?

Is there any regulation, legal precedent, or OCI issue that would preclude a contractor from receiving two awards under the same IDIQ contract and then subsequently competing for task orders under the IDIQ? Background: The Gov't issues an IDIQ that consists of two pools: Small Business and Unrestricted. The RFP states that some task order competitions will be set aside for the SB pool, and others will be Unrestricted, and that the Gov't anticipates a total of 10 contracts will be awarded (5 SB and 5 Unrestricted). The RFP goes on to state that for the Unrestricted task order competitions, the SB IDIQ contract holders may compete against the Unrestricted IDIQ contract holders. Let's say there's a LB contractor who submits a proposal for the Unrestricted pool, and then also submits for the SB pool under a SB Mentor-Protege arrangement. Also, let's say the Protege under this Mentor-Protege arrangement will be a named team member/subcontractor under the LB contractor's Unrestricted contract. Is there any issue here with regard to OCIs, limiting competition, collusion, etc? If the LB had a good reason to want to submit a proposal from both the Mentor-protege entity and the LB entity for an Unrestricted task order competition, is there anything that would preclude it from doing so? Thanks in advance.

Scenario: The Gov't issues a solicitation for a FFP MATOC that requires offerors to provide "ceiling rates" for several labor categories, some of which are SCA-covered. The solicitation includes a sample task with an SCA WD applicable to the location of the work for the sample task. The solicitation states that future task orders will be performed at other locations but does not include any other WDs or identify the locations of future tasks. Question: How have you seen this handled with respect to pricing the SCA-covered labor categories? Are offerors expected to propose SCA rates high enough to cover any potential WD? That could be a big range if, for example, the sample task will be performed in San Antonio, TX but with the potential for future tasks to be performed somewhere like San Diego, CA. This pricing strategy would of course cover the contractor's risk, but wouldn't make a lot of sense with regard to being price competitive. Can the Gov't award a task order with SCA rates higher than the "ceiling" rates in the awardee's contract if there's a future task order RFP that includes a WD with rates that exceed the SCA rates in the contract?

Thanks, Vern! That's what I needed. I appreciate it.

I was trying to refresh my memory on A-E contracts, and specifically, FAR 52.236-23, and I found the following from the CON 243 course materials under the section titled FAR 52.236- 23, Responsibility of the Architect-Engineer Contractor: "For the Government to recover any costs caused by the A-E, there are certain things that the government must prove. Some of the more important issues are: There must be proof that there was, in fact, a design error or omission There must be proof that the error or omission was a result of the firm's negligence. Negligence is defined...(goes on) There must be proof that the government suffered damages as a result of the error or omission. The Government also has a responsibility to mitigate any damages it incurs as a result of the error or omission. There must be proof of "no proximate cause." This means that the error or omission by the A-E firm (and the associated damages) are solely the responsibility of the contractor and no action by others contributed to the additional costs to the government. Regarding the last part about "no proximate cause"--does anyone know where this info comes from? If so, can someone please provide a reference to the applicable regulation or case? I can't seem to find anything in the FAR or case law that supports this statement, and it's relevant to a situation we're dealing with. BTW, I tried submitting this question to DAU's "Ask a Professor" since I'm specifically asking about info from their course, but for some reason couldn't get the question to submit.

If an unsuccessful offeror received the "NO" answer above, the offeror would almost surely be successful in a protest to the GAO. So I think the a CO in this situation would have something to be afraid of. I actually work for a contractor now but I was a CO previously. There were at least 3 occasions where I received an email proposal just minutes after the deadline. I didn't accept them based on the FAR rules and GAO precedent, but I can tell you that many COs I've worked with in the past would have (and have) accepted proposals in those situations based on the "Government Control" exception. Sometimes the offeror sent a delivery receipt that the CO relied on and other times it was more of "meh, I'm sure they sent it on time, it's just that emails take so long to get through our darned Government servers." No one on the source selection team ever checks the time the proposals were received in the CO's inbox, and unsuccessful offerors never seem to question it. Should they though? Why haven't they? Possibly because it's a contentious question that hints at protest and signals distrust in the integrity of the source selection process? I don't know, but if a contractor loses a contract after putting in hundreds of hours and thousands of dollars of effort in preparing the proposal, wouldn't they at least want to make sure that the successful offeror submitted the proposal on time? In my opinion, when an offeror's proposal shows up even one minute later than the deadline in the RFP, it's no different than an offeror failing to provide a required bid bond for a construction RFP. Almost every CO would throw out an offeror for the bid bond issue, but I'll argue that many would not throw out a contractor when their proposal is received "just a few minutes" after the deadline.

“Was the awardee’s proposal received in the contracting officer’s inbox by 3:00 pm EDT”? Do you think that’s a relevant question about whether source selection procedures were followed? If not, apart from being honest, what’s to prevent a CO from accepting a late proposal if they aren’t required to disclose that information?

I agree. Agreed. But should the GAO or COFC decisions influence the CO's decision? I think it can be a problem. For one thing, the disagreement between the GAO's interpretation and that of the COFC could encourage forum shopping with respect to protests. It could also put COs in a tough situation where following the FAR and GAO precedent could still result in a painful and likely successful COFC protest. Finally, I think late proposal rules should be consistent and objective rather than a subjective process based on COs' differing interpretations of the rules (potentially influenced by COFC and GAO). I agree with the GAO that FAR 52.215-1(c)(3)(ii)(A)(1) becomes a nullity if the Government Control exception were to apply to electronic proposals and that the clause should be read and interpreted as a whole. I'm a little torn as to whether the Government Control exception SHOULD apply to electronic proposals. But if so, then FAR 52.215-1(c)(3)(ii)(A)(1) should be deleted/removed. What are your thoughts on my second question?

I’ve been reading several GAO decisions regarding electronic proposals where contractors emailed proposals prior to the RFP deadline but the proposal didn’t show up in the CO’s inbox until after the deadline and the GAO ruled that the proposals was late based on FAR 52.215-1(c)(3)(ii)(A)(1). I’ve also read the COFC decisions where they disagree with the GAO in that the “Government Control” exception does apply to electronic submissions. Speaking from experience, I know that Contracting Officers interpret and handle this differently. In these situations, some would accept the proposal and some would reject it. It’s basically a crapshoot. So, here’s my questions: 1. Based on the disagreement between the GAO and COFC regarding the “Government Control” exception, how should a CO interpret the FAR rules regarding late electronic proposals? 2. As part of a post-award debriefing for an RFP that required electronic submission of proposals, can the contractor receiving the debrief request evidence of the time of reciept of the successful offeror’s proposal, or would this have to be requested through FOIA? I would think that if timely submitted, the CO would have no reason not to provide this. If, however, the CO is not willing to provide that information, there’s a possibility they could be trying hide something. Again, I’ve personally witnessed CO’s accepting late (according to FAR and GAO) emailed proposals where the proposal comes in a few minutes after the deadline. I personally think this is actually fairly common, based on my experience as a CO and working for a contractor.