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Kathleen A. Kern

Subpart 51.1 Contractor Use of Government Supply Sources

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I have a FFP BPA, 8(a).

The use of a GSA schedule by my prime (use of Government sources by Contractors) appears to be the only way to obtain the material required at the best price.

(The GSA firm WILL NOT provide GSA pricing to my Prime without a letter of authorization from me, the KO)

Does anyone have an idea why FAR would only permit authorization to use sources in the performance of cost reimbursement contracts or other types when the a substantial portin of the contractor's contracts are cost reimbursement?

I am just re-entering the world of using GSA contracts - bear with me on this one.

FAR 51 states " 51.101 -- Policy.

(a) If it is in the Government’s interest, and if supplies or services required in the performance of a Government contract are available from Government supply sources, contracting officers may authorize contractors to use these sources in performing --

(1) Government cost-reimbursement contracts;

(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-reimbursement nature; or..."

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You answered your own question. If the use of a GSA Schedule is the only way to obtain the best price, then why in a cost-reimbursement environment would the Government not want the contractor to use that? It saves them money.

Your BPA is setup for FFP, so your scope of work is sufficiently defined and you probably can't use the Cost reimbursement route. You have a BPA however, so you've technically only negotiated clauses and a general scope of work to be performed on a future contract, there is nothing binding you to use this BPA for this acquisition unless you've already awarded a contract off of it. If you know that you can obtain the supply/service at a lower price through GSA, why not just do the acquisition through GSA and avoid making a call off of the BPA to begin with?

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Yes, it is all about the cost savings, I understand this point.

My question, better stated (I hope) is:

Why can I ONLY give authorization in the cost reimbursement environment and not in the FFP, for example?

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My guess (and I'm sure Vern will correct me if I am wrong) is that it is because under a FFP it really doesn't matter to the gov't how much they pay for the items, since the price the gov't will pay is unchanged.

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I have also been reminded that the FAR may be talking to a competitive situation.

Mine is not.

Thank you for the input!

Where in Part 51, or in the clause prescribed by 51.107, does it mention anything about this only applies to competitive solicitations or contracts? I'd also ask you if you are in compliance with 16.702©(3), which states that any basic agreements shall not be used to restrict competition, since you are using a BPA in a non-competitive situation.

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Kathleen: It sounds as though you are negotiating with an 8(a) to procure commercial items that are on an FSS Schedule. Does this comply with the non-manufacturer rule (19.102 (f))?

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Guest Vern Edwards

My question, better stated (I hope) is: Why can I ONLY give authorization in the cost reimbursement environment and not in the FFP, for example?

The rule has been the same for a very long time. My recollection is that the rule was the same before the FAR took effect in April 1984. I have never known why.

I presume the reason is that that if a contractor with a fixed-price contract could buy things off a government FSS contract it could enjoy the benefit of government prices without having to pass on the savings to the government, which would make the government look silly. There are all kinds of reasons to argue with that thinking, but the rule is what it is. I doubt you'll find anyone who can give you a verifiable explanation. The explanation is probably somewhere in the archives de le temps perdu.

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