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FAR Part 51 Use of Government Sources by Contractors


Reno54

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I am trying to find out if anyone knows of any authorizations other than 51.101 which permits the Government to allow a contractor to purchase items from Government Supply sources. As I read 51.101 the contract must be a cost-reimbursement or one under the Javits-Wagner O'Day Act or a contract that requires protection of security classified info. I have two cases that do not meet any of those requirements. First case involves an item in the JOC unit price book that is significantly under priced and the other involves a case where after award of the task order the contractor's supplier is saying they need the letter of authorization from the Government in order to provide the discounted price they quoted on. This contractor sent some "sample" letters they had been provided in the past and one of those authorized skateboard equipment connected to the Design/Build Skateboard Park contract. I am having trouble imagining how that one met the requirements of 51.101. All that being said I would very much like to help both of these contractors but so far have not found a way issue the requested letter. Any thoughts/solutions would be appreciated.

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Hi Reno54. I have seen construction contracts that allow the contractor to order furniture, fixtures, and equipment (FF&E) from Government sources of supply (typically GSA FSS Schedules). This sounds like the example you have seen for the skate-board park equipment. The FF&E to be ordered and installed is modified into the contract at cost, plus an allowance for a handling & administrative rate. Letters citing which sources are authorized for use are provided to the contractor. Those letters are typically provided to the FSS vendors to cover any audits from GSA. FF&E items are not subject to additional bonding and are typically tax exempt, because they are not considered construction material or part of the construction cost.

The MACC contracts or instant contracts specifically authorize this process, and there was a class D&F executed for this practice. The D&F relies on 51.101(a)(2), "Other types of negotiated contracts when the agency determines that a substantial dollar portion of the contractor's contracts are of a Government cost reimbursment nature." A bit of a stretch in my opinion, but there it is.

A word of caution: If your contract doesn't authorize this practice, I wouldn't go there now as you may create a CICA problem by allowing the contractor to obtain "materials" at a lower cost than its competitors.

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I am trying to find out if anyone knows of any authorizations other than 51.101 which permits the Government to allow a contractor to purchase items from Government Supply sources. As I read 51.101 the contract must be a cost-reimbursement or one under the Javits-Wagner O'Day Act or a contract that requires protection of security classified info. I have two cases that do not meet any of those requirements. First case involves an item in the JOC unit price book that is significantly under priced and the other involves a case where after award of the task order the contractor's supplier is saying they need the letter of authorization from the Government in order to provide the discounted price they quoted on. This contractor sent some "sample" letters they had been provided in the past and one of those authorized skateboard equipment connected to the Design/Build Skateboard Park contract. I am having trouble imagining how that one met the requirements of 51.101. All that being said I would very much like to help both of these contractors but so far have not found a way issue the requested letter. Any thoughts/solutions would be appreciated.

I don't know the answer to the specific question of how to authorize contractor purchases from government supply sources. In the event that the government cannot provide the required documentation, there may be an alternative available, assuming that this would justifiably be in the government's best interests. The government might be able to modify the task orders to obtain an equitable adjustment for the government to purchase the items from the sources and provide to the two contractors as government furnished materials.

You indicated that one contract is a JOC contract with an item that is significantly under priced, using the JOC unit price book and the contractor's coefficient. The contractor is contractually bound, I assume, to honor the price on a JOC job order. However, you want to help the contractor out, if possible. I'm assuming that the government could purchase the item and furnish it. However, this would involve some government cost and resources for the deduct modification and procurement efforts. As part of the concept of being in the government's best interests, would the portion of the equitable adjustment representing the contractor's indirect cost and other markups reasonably cover such government costs? What other benefit is there to the government? Would this set a precedent for future job orders? JOC contract pricing might be low for some items and high for others, which supposedly balance out. Why are you trying to help out? [Edit: Velhammer posted while I was formulating my post and he/she has a good point concerning allowing the contractor to obtain "materials" at a lower cost than its competitors.]

Does the other situation involve another contractor on a negotiated task order? Its supplier "quoted" a discounted price for an item. After award, the supplier says it needs "the letter of authorization from the Government in order to provide the discounted price they quoted on."

[EDIT: The following only applies if the task order price was negotiated between the parties.] In this case, was the government negotiator aware of the basis that the item was quoted on during negotiations? If so, it would seem that the government should have known whether or not the supplier could actually purchase the item from a government source. If it can't, could this be a case of "mutual mistake"? Would that serve as justification to change the requirement from contractor furnished to government furnished and delete it by equitable adjustment for a credit? [EDIT: The same concerns apply if this was a competitive task order.] [Wife unplugged the computer before I could finish my post]

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Guest Vern Edwards
I am trying to find out if anyone knows of any authorizations other than 51.101 which permits the Government to allow a contractor to purchase items from Government Supply sources... I have two cases that do not meet any of those requirements. First case involves an item in the JOC unit price book that is significantly under priced and the other involves a case where after award of the task order the contractor's supplier is saying they need the letter of authorization from the Government in order to provide the discounted price they quoted on... I would very much like to help both of these contractors but so far have not found a way issue the requested letter. Any thoughts/solutions would be appreciated.

Help the contractors do what? Help them make a profit? Help them make a better profit? Why are you spending your time on that? They made a bargain. What benefit would the government get if you helped them change the bargain to their benefit? What would the other firms say who competed for the contract?

I don't know of any other authority for letting a contractor use government supply sources.

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