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We started a new page now so let me go get what I quoted before, from FAR 22.406.  I'll just restate it.

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FAR 22.406 Administration and enforcement.

* * * *

22.406-4 Apprentices and trainees.

(a) The contracting officer shall review the contractor's employment and payment records of apprentices and trainees made available pursuant to the clause at 52.222-8, Payrolls and Basic Records, to ensure that the contractor has complied with the clause at 52.222-9, Apprentices and Trainees.

(b) If a contractor has classified employees as apprentices or trainees without complying with the requirements of the clause at 52.222-9, the contracting officer shall reject the classification and require the contractor to pay the affected employees at the rates applicable to the classification of the work actually performed.

* * * *

22.406-6 Payrolls and statements.

(a) Submission. In accordance with the clause at 52.222-8, Payrolls and Basic Records, the contractor must submit or cause to be submitted, within 7 calendar days after the regular payment date of the payroll week covered, for the contractor and each subcontractor,

(1) copies of weekly payrolls applicable to the contract, and

(2) weekly payroll statements of compliance. The contractor may use the Department of Labor Form WH-347, Payroll (For Contractor's Optional Use), or a similar form that provides the same data and identical representation.

(b) Withholding for nonsubmission. If the contractor fails to submit copies of its or its subcontractors' payrolls promptly, the contracting officer shall, from any payment due to the contractor, withhold approval of an amount that the contracting officer considers necessary to protect the interest of the Government and the employees of the contractor or any subcontractor.

* * * *

22.406-7 Compliance checking.

(a) General. The contracting officer shall make checks and investigations on all contracts covered by this subpart as may be necessary to ensure compliance with the labor standards requirement of the contract.

(b) Regular compliance checks. Regular compliance checking includes the following activities:

(1) Employee interviews to determine correctness of classifications, rates of pay, fringe benefits payments, and hours worked. (See Standard Form 1445.)

(2) On-site inspections to check type of work performed, number and classification of workers, and fulfillment of posting requirements.

(3) Payroll reviews to ensure that payrolls of prime contractors and subcontractors have been submitted on time and are complete and in compliance with contract requirements.

(4) Comparison of the information in this paragraph (b) with available data, including daily inspector's report and daily logs of construction, to ensure consistency.

* * * *

22.406-8 Investigations

* * * *

22.406-9 Withholding from or suspension of contract payments.

...

(b) Suspension of contract payments. If a contractor or subcontractor fails or refuses to comply with the labor standards clauses of the Construction Wage Rate Requirements statute and related statutes, the agency, upon its own action or upon the written request of the Department of Labor, must suspend any further payment, advance, or guarantee of funds until the violations cease or until the agency has withheld sufficient funds to compensate employees for back wages, and to cover any liquidated damages due.

To also shine a light on the terms and conditions of federal construction:

  • FAR 52.222-9 noncompliance allows the buyer to change the contractor's actual costs at no change in the contract price;
  • FAR 52.222-8 noncompliance in conjunction with the FAR 52.222-6 Wage Determinations and FAR 52.222-7 allows the buyer to withhold payment, then suspend all payments;
  • FAR 52.222-10 incorporates the Copeland Act (29 CFR Part 3) into the contract;
  • FAR 52.222-12 encourages use of the very governmental Contract Termination procedures;
  • FAR 52.222-13 and -14 incorporate 29 CFR Parts 1 and 5 rulings and interpretations into the contract; and
  • Any of the above cited clauses in conjunction with FAR 52.222-11's flow-down provisions give the contractor the power granted to the buyer in the clause for purposes of resolving a similar noncompliance at the subcontract level.

Please, compare these for similar terms and conditions incorporated into contracts by FLSA and state laws.  I am genuinely curious, not 200% sure of myself - and willing to be convinced.

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2 hours ago, Voyager said:

I checked out FLSA and found the DOL WHD says this about it in a fact-sheet: “If the employer performs work on a federally financed project or a project in which the Federal government has provided assistance in financing the project, a different and somewhat stricter set of labor standards applies. Typically this would require that employees performing on such contracts be paid a ‘prevailing wage rate’.”

When I was a consulting engineer in the late 1970’s , we had some projects in Wisconsin for which the Farmers Home Administration provided a share of the funding. We were able to cleanly segregate the federally funded portion of the project with separate unit priced line items, for which all the federal labor rates and other labor requirements applied. This work was about 50% more expensive than the non-federal , identical line items, which used the State of Wisconsin prevailing wage rates.

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7 hours ago, Voyager said:

Please, compare these for similar terms and conditions incorporated into contracts by FLSA and state laws.  I am genuinely curious, not 200% sure of myself - and willing to be convinced.

You do not have to be convinced but I appreciate the ability to respond. 

I understand where you are coming from yet I still believe your premise is off base.   Rather than address each of the terms and conditions you note which I would imagine all may not be in a contract say to build your house, consider this.   Service Contract Act.   While I understand there is a difference in such things as payrolls and basic records SCA does carry requirements unique to a Federal contract.  A read of FAR clause 52.222-41 will support my view.   Do you believe that a service contract, like janitorial, is not a commercial item contract, since SCA is required?  I do know that GSA for FSS fought the battle and lost wherein their commercial contracts require SCA and it seem that most if not all agencies put SCA in commercial item contracts.   

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On 9/20/2022 at 7:01 AM, Vern Edwards said:

@CaptJaxAccording to FAR 15.000, a negotiated contract is any that is awarded using other than sealed bidding, and Part 15 prescribes policies and procedures for both competitive and noncompetitive negotiated acquisitions. Thus, according to FAR 15.400, the policies and procedures in FAR Subpart 15.4 apply to your 8(a) negotiation, even if it's for a commercial service. See FAR 12.203(a):

Emphasis added.

The KO is the one who must sign the contract. See FAR 1.602-1(b). And see FAR 15.405(a): "Taking into consideration the advisory recommendations, reports of contributing specialists, and the current status of the contractor’s purchasing system, the contracting officer is responsible for exercising the requisite judgment needed to reach a negotiated settlement with the offeror and is solely responsible for the final price agreement."

Since the CO, not you, must put his name on the contract, and since he has decided what is appropriate, why not just do as you're told and stop your anonymous whining here.

When you work for someone, work for them.

Part of the  purpose of this post was to fine tune my understanding of FAR 19.808, FAR 12/13, and FAR 15.  Sometimes in the FAR a term or methodology  has specific meaning only in that FAR part, sometimes it has global meaning to all FAR Parts, sometimes you don't want to say words and phrases from one part or another as to not misconstrue what you are doing.  From my experience sometimes its good to ask how do you define a word, what does it mean to you.  I resolved an argument using that technique concerning an in-scope, out-of-scope mod issue where finance, engineering, and contracting all three had different definitions of what is in-scope. They didn't understand why the other person was saying it was out of scope where it was obviously in-scope by there definition, and were oblivious that different regs define scope differently. In this particular scenario, I have never seen anyone apply such a rigorous time consuming process to 8(a) sole source. I read the same FAR parts you posted above Vern, and thought it is a sole source, it is negotiated, the POM and PNM is a bit much but it doesn't prohibit doing that way.  I posted this to see if I was missing something such as FAR 15 negotiation action has this definition and meaning when using FAR 15, but if you do a sole source in FAR 13 or FAR 19.808 its the same general concept of documenting the negotiation action, but the how is less formal. Also as you stated in a  Sept 16, 2014, you reference good ole, Finlin-Complex decision in that GAO takes the the position that if you conduct a SAP by using FAR 15 procedures, then the GAO will apply FAR 15 protests rules. So if I write a POM/PNM and refer to revised proposals so forth would my file not be fully documented if I didn't carry out the rest of the FAR 15 procedures? Also the time required, and I will be called on the carpet to justify why I took so long to do this procurement later this week.  Customer don't care about this stuff.  They want an award. It's very difficult to explain why it took since March to award a simple contract in September because some reviewer thought it should be FAR 15 sole source complete with POM and PNMs, where all we did was ask for a price breakout.

I realize different CO's have different preferences.  My frustration is that this causes a lack of standardization and a blurring of the intent of the FAR. My policy has been tell me upfront what you want and I'll do it, to get on the same page with the CO especially in the beginning.  I also like to be aware of and understand the rules and applications to provide suggestions to make the process run more efficient, avoid protests, catch missing steps, ensure the file is properly documented, etc. I'm totally ok if the CO disagrees or wants go about a different way because your right the CO is signing it.  Part of my intent is separating what is the required by regulation from CO preference, not to bludgeon the CO with some regs showing where he/she is wrong. By this I want to say this is what is required, the CO may have this preferences, and this is how and what to ask to get clarification.  Some CO's is difficult to get a well articulated expectation or to even know what there expectations are, I have even come across some CO's so novice that they don't know their own preferences. It's very hard to work autonomously if there are no set this is how you do it procedures.  My stated acq plan was to use FAR 13.5 procedures to procure this 8(a) sole source using SAP methodologies which means memo the file the results of negotiation.  

 

 

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On 9/19/2022 at 10:31 AM, CaptJax said:

Yes. It's only doors not frames and trim.  The doors go on modular office building listed as equipment rather than real property.

Emphasis added. Then it's not a service contract. It's a supply contract. See FAR 2.101:

Quote

Supplies means all property except land or interest in land. It includes (but is not limited to) public works, buildings, and facilities; ships, floating equipment, and vessels of every character, type, and description, together with parts and accessories; aircraft and aircraft parts, accessories, and equipment; machine tools; and the alteration or installation of any of the foregoing

Emphasis added. If the doors are standard and require only minor modifications, then you could conduct the procurement under FAR Part 12 as one for commercial products.

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1 hour ago, CaptJax said:

Part of the  purpose of this post was to fine tune my understanding of FAR 19.808, FAR 12/13, and FAR 15.  Sometimes in the FAR a term or methodology  has specific meaning only in that FAR part, sometimes it has global meaning to all FAR Parts, sometimes you don't want to say words and phrases from one part or another as to not misconstrue what you are doing.  From my experience sometimes its good to ask how do you define a word, what does it mean to you.  I resolved an argument using that technique concerning an in-scope, out-of-scope mod issue where finance, engineering, and contracting all three had different definitions of what is in-scope. They didn't understand why the other person was saying it was out of scope where it was obviously in-scope by there definition, and were oblivious that different regs define scope differently. In this particular scenario, I have never seen anyone apply such a rigorous time consuming process to 8(a) sole source. I read the same FAR parts you posted above Vern, and thought it is a sole source, it is negotiated, the POM and PNM is a bit much but it doesn't prohibit doing that way.  I posted this to see if I was missing something such as FAR 15 negotiation action has this definition and meaning when using FAR 15, but if you do a sole source in FAR 13 or FAR 19.808 its the same general concept of documenting the negotiation action, but the how is less formal. Also as you stated in a  Sept 16, 2014, you reference good ole, Finlin-Complex decision in that GAO takes the the position that if you conduct a SAP by using FAR 15 procedures, then the GAO will apply FAR 15 protests rules. So if I write a POM/PNM and refer to revised proposals so forth would my file not be fully documented if I didn't carry out the rest of the FAR 15 procedures? Also the time required, and I will be called on the carpet to justify why I took so long to do this procurement later this week.  Customer don't care about this stuff.  They want an award. It's very difficult to explain why it took since March to award a simple contract in September because some reviewer thought it should be FAR 15 sole source complete with POM and PNMs, where all we did was ask for a price breakout.

I realize different CO's have different preferences.  My frustration is that this causes a lack of standardization and a blurring of the intent of the FAR. My policy has been tell me upfront what you want and I'll do it, to get on the same page with the CO especially in the beginning.  I also like to be aware of and understand the rules and applications to provide suggestions to make the process run more efficient, avoid protests, catch missing steps, ensure the file is properly documented, etc. I'm totally ok if the CO disagrees or wants go about a different way because your right the CO is signing it.  Part of my intent is separating what is the required by regulation from CO preference, not to bludgeon the CO with some regs showing where he/she is wrong. By this I want to say this is what is required, the CO may have this preferences, and this is how and what to ask to get clarification.  Some CO's is difficult to get a well articulated expectation or to even know what there expectations are, I have even come across some CO's so novice that they don't know their own preferences. It's very hard to work autonomously if there are no set this is how you do it procedures.  My stated acq plan was to use FAR 13.5 procedures to procure this 8(a) sole source using SAP methodologies which means memo the file the results of negotiation.  

 

 

Based upon my experiences, I don’t know why It would have taken since March to do this action even with asking for breakdown, evaluation and POM/negotiation and PNM. 

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1 minute ago, Vern Edwards said:

I do. It's being done by people who don't know what they're doing.

I was going to say “there’s no way…” but I toned it down.

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Just now, Vern Edwards said:

Why? Tell the truth.

🤪

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It took forever to solicit because people couldn't figure out if it was a construction or service. It took a week to get pricing. Now it's taking forever to figure out how its to be documented, and the proper content of that documentation.  It's really not so much the CO, its the legal office commenting on the file each time its being reviewed and wanting to see something different. I did a similar action in 2019 in about 30 days using the SAP 13.5 because its at 250K.  It is not a commercial supply. The service element exceeds the supply amount. 

Thanks for your help and commentary. 

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On 9/13/2022 at 11:37 AM, CaptJax said:

The issue of this post is applying correct negotiation procedures.  At the dollar amount given a formal IGE was not required, I call it a Government Estimate.  The proposal disagreed with the Government Estimate, and the Government Estimate was at best a guess based on previous pre-COVID contracts.   There was no formal Government Estimate, no formal technical PDT team, just an environmental engineer reviewing the technical. 

CaptJax, it would have been good for us to know that the doors were for modular buildings (personal property) not for real property facilities and that there are only 21 doors involved.

That would have greatly shortened the speculation and debate about construction vs. commercial service vs. commercial supply, and other details.

At face value, without more detail, it looks like the cost works out to something like $28k per door, other costs greatly exceeding the cost of a door, metal, wood, security type or whatever.

But I think that the point made is that, for a sole source 8(a), negotiated supply, service or construction contract, subpart 15.4  “prescribes the cost and price negotiation policies and procedures for pricing negotiated prime contracts (including subcontracts)”.  The procedures and required documentation aren’t really that complex. They allow for asking for whatever level of price breakdown you need to understand the basis of pricing.

You said “a formal IGE was not required, I call it a Government Estimate.  The proposal disagreed with the Government Estimate, and the Government Estimate was at best a guess based on previous pre-COVID contracts.   There was no formal Government Estimate, no formal technical PDT team, just an environmental engineer reviewing the technical.”

To me, your described scenario of the remoteness, an emerging SDB, sole source contractor, the scant scope description, with little more than a rough order of magnitude estimate indicates that more than a cursory review was necessary .

What basis was there to make even a price analysis comparison?

Anyone with a working familiarity with R.S. Means should realize that it requires some customization for a specific project and that material prices  definitely must be customized and investigated. Was there competivtive pricing from suppliers? Shipping prices? Etc.

I negotiated or supervised negotiation of many sole source contracts, plus mods, claims, REA’s over my career.  That includes overseas and Central and South America.

I always prepared pre-negotiation objectives to prepare for and negotiate the action. Then I  documented the negotiation for the KO and for the record.

Except for complex claims and REA’s, which required significant study of the situation to determine merit and determine a position, It didn’t take very long to evaluate, prepare the POM, negotiate and document the negotiation.

There are many valid reasons for the SBA stating that we must “negotiate” sole source 8(a) proposals. One critical reason is that we don’t want the 8(a) firm to fail. We want to make sure that the contractor fully understands the scope and complexities - especially where it must mobilize and import a workforce and materials, etc. to a “remote”, OCOUS installation. We should be sure that it has adequately priced the work.

I’ve  honestly never seen a situation involving construction type work, let alone on a remote military installation, where we could just cut an 8(a) contractor loose on a project,  without more than normal contract admin and field oversight/assistance (frankly - hand holding).  You stated that there are government disagreements over the requirements, too. That may involve customer meddling during execution.  

On 9/13/2022 at 11:37 AM, CaptJax said:

Is it dangerous to use terms of clarification, discussions, POM/PNM, negotiation from FAR 15 applied to an 8(a) sole source for commercial services? I believed I was doing FAR 13.5 so I neither clarified or discussed with the contractor; the nature of the exchange was to understand the line items of cost; to clarify if you will. 

I believe that the “new” KO is correct. You don’t have a good basis to even do a good price analysis comparison. You want to minimize problems and disagreements later or have the project “go to hell in a hand basket”. Possible problem resolutions require a good record of the acquisition process.

Good luck with the project, CaptJax! 🤠

Edited by joel hoffman
Didn’t realize I had posted earlier
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Thanks Joel,

*The delay in revealing the structures was kind of on purpose, that's the field people let me know information, but from the DA PAM alone it doesn't matter if real property or personal property, you can replace doors and windows as service repair.

This is a series of contracts at a remote military installation OCONUS.  The contractor as performed successfully three previous 8(a) contracts of a similar repair type nature. We use this 8(a) because it holds the high level security level clearance to go into this area. We had the past three contracts from which the Government Estimate was made. The project was around $500k. These contracts were awarded with a different CO who had a lot more experience with supplies and services as well as a bit construction. We analyzed the proposal, called the contractor, got it in line with budget, then used a price fair and reasonable memo to document it, and these contracts were slightly over the SAP $250K to $800K range. We did not have any issue with doing it that way, which is the way I generally conducted 8(a) sole sources using SAP/FAR 12. FAR 13.5 raises the threshold of commercial items and services and adds specific documentation applicable above the SAT.  The main cost drivers is the logistics and coordination with getting equipment, tools, and people to the worksite, hooking doors to the base security system; not so much the doors or installation itself. 

For this award I asked for a break out of cost because the contractor had prices so rolled up in lump sum lines items I couldn't make sense of the prices; contractor had $15,000 for one door and there was nothing really special about these doors. When the costs were unfurled there as a good account for the all costs; everything made sense.  The Contractor noticed some efficiencies to reduce the price when breaking out the costs; I didn't request it, he just noticed it and revised. The proposal was within budget. To me this was just breaking out a proposal; not a negotiation. There was no need for a negotiation because the costs were necessary, realistic, reasonable, and within budget. So I prepared a price fair and reasonable memo explaining the fair and reasonableness of the costs using FAR 13 basis for reasonableness, then presented to the CO for review and award.  Each line cited on a previous contract, knowledge of previous contracts, and other reasonable basis common sense and logic. The CO initially like it and it was sent to peer review where the peer reviewer asked for a POM/PNM.  I prepared a POM/PNM which satisfied the reviewer. Legal look at it and blasted an email to everybody how it didn't have position, objectives, or what was negotiated and why even though I converted the PF&R memo to show those elements; that took two weeks of iterations.  It took me a long time because the POM/PNM had tables and a border around the document that would get screwed up and do other weird things. The Government Estimate was under the contractor proposal by 12% in overall price, but labor differed by 40%. This was due to the Government Estimate leaving out pre-deployment preparation work and getting people, equipment, and materials on site.  When you account for these items the 40% differences vanishes.  We got embroiled into a word smith battle with legal on this PNM. I didn't want to use words like discussions, such as discussion were held on blah, during discussions the following topics were discussed, the the Government compared to the Independent Government Estimate and found the IGE omitted these costs...this is how the PNM now reads, it is 100% FAR 15 procedures, which now does it match the pre-solicitation planning documents.

I might be wrong with my 8(a) approach. My hunch is that among these various offices there are those who hold different definitions and interpretations, and I posted this to gain greater insight. 

I noticed that there are concepts in contracting such as fair and impartial. Fair and impartial is specified out in a rigorous formal way in FAR 15 and a precise vocabulary is used when exchanging communications with offers such as clarification, discussion, and negotiation. it sees we make it a point to not use these terms when using other FAR parts to keep it clearly separate from FAR 15, but are not given precise words to describe what we are doing so we tend to make up words that mean kinda the same thing like Government Estimate is an informal wag for IGE when an IGE is not required. Maybe my observation is wrong in renaming things and the same formality is carried over from FAR 15 to all FAR parts, particular if you open any kind of communication with the contractor you need a POM first in case if the conversation rolls into revised offers or negotiations.

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4 minutes ago, CaptJax said:

Fair and impartial is specified out in a rigorous formal way in FAR 15 and a precise vocabulary is used when exchanging communications with offers such as clarification, discussion, and negotiation.

That is not true. There is nothing "precise" in that vocabulary, as shown by hundreds of bid protest decisions. The distinction between clarification and discussion has been the issue in many bid protests, and has been addressed in the contracting literature for more than 20 years. See: "Clarifications vs. Discussions: The Obscure Distinction, by Professors Cibinic and Nash, The Nash & Cibinic Report (June 2000) and "Postscript X: Clarifications vs. Discussions," The Nash & Cibinic Report (October 2020), in which Prof. Nash wrote:

Quote

Perhaps the longest running issue we have addressed in the REPORT is the distinction between clarifications and discussions. See Clarifications vs. Discussions: The Obscure Distinction, 14 N&CR ¶ 29, and Postscripts at 15 N&CR ¶ 41, 16 N&CR ¶ 13, 17 N&CR ¶ 20, 18 N&CR ¶ 2, 21 N&CR ¶ 45, 23 N&CR ¶ 46, 26 N&CR ¶ 11, 27 NCRNL ¶ 48, and 32 NCRNL ¶ 54. In the last Postscript we discussed the narrow interpretation of the clarification rule that has been used by the Government Accountability Office (in contrast to the broader interpretation of the Federal Circuit). We now have a decision, Dawson Solutions, LLC, Comp. Gen. Dec. B-418587, 2020 CPD ¶ 216, 2020 WL 4284125, illustrating this narrow interpretation and also demonstrating how it can be unfairly applied.

 

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Ok, thanks, CaptJax, for the ”rest of the story”, so to say.  

You should still be negotiating the prices for  these non-competitive jobs, especially if they are distinct new contracts, IMO. I’m glad that you have a good contractor to work with.

Doesn’t matter whether services or construction. FAR 15.4 is the only applicable part of FAR 15 for a sole source price negotiation. 

The below quote is one example why it’s good to evaluate and negotiate the price (very good-you asked for information necessary to evaluate the makeup of the proposal and the price reasonableness). I don’t know if you could have discovered this on your own after evaluating the breakout.

No need to reply to me.

Again, looks like you appear to have a good contractor. 🤠

1 hour ago, CaptJax said:

The Contractor noticed some efficiencies to reduce the price when breaking out the costs; I didn't request it, he just noticed it and revised.

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A Korean colleague of mine in our construction office in Saudi Arabia once told me that he can’t believe that Americans are so gullible as to take every proposal at face value. He said that Koreans negotiate everything,  including a loaf of bread. Remember the souks in  Monty Python’s “The Life of Brian”? 🤪

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5 hours ago, CaptJax said:

We got embroiled into a word smith battle with legal on this PNM.

 

4 hours ago, joel hoffman said:

Doesn’t matter whether services or construction. FAR 15.4 is the only applicable part of FAR 15 for a sole source price negotiation. 

So as the thread fades into the sunset I have some final thoughts which come to me in part based on the quoted highlights.

Forgotten by legal and in the context of a 8(a) sole source is FAR 19.8, and here I will add 13 CFR 124 as well as the Small Business Act must be considered.    I will not bore you with quotes but I highly recommend that for the future CaptJax may well want to refer the likes of legal to references in the FAR, CFR 124 and the Act to "Fair Market Price" and how estimating such plays a big role in the price agreement of an 8(a) sole source.  In fact I could see a PNM (FAR 15.406-3) that highlights references from each. 

As I did early on I would suggest that when it comes to 8(a) sole source while FAR 15.4 has a role that role must be woven with appropriate principles of FAR 19.8, associated regulation and statute.   

I will be bold and suggest that for the particular project that is the subject of this thread that the POM might be one and the same as the current fair market price estimate.

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16 hours ago, C Culham said:

 

So as the thread fades into the sunset I have some final thoughts which come to me in part based on the quoted highlights.

Forgotten by legal and in the context of a 8(a) sole source is FAR 19.8, and here I will add 13 CFR 124 as well as the Small Business Act must be considered.    I will not bore you with quotes but I highly recommend that for the future CaptJax may well want to refer the likes of legal to references in the FAR, CFR 124 and the Act to "Fair Market Price" and how estimating such plays a big role in the price agreement of an 8(a) sole source.  In fact I could see a PNM (FAR 15.406-3) that highlights references from each. 

As I did early on I would suggest that when it comes to 8(a) sole source while FAR 15.4 has a role that role must be woven with appropriate principles of FAR 19.8, associated regulation and statute.   

I will be bold and suggest that for the particular project that is the subject of this thread that the POM might be one and the same as the current fair market price estimate.

I negotiated or supervised negotiation of and worked a bunch of 8(a) construction contracts over the years. Our experience was that the proposals were sometimes very high in comparison to other, competitive prices for the same or similar work (fair market prices). There were several reasons for this.

One reason was because other small business construction contractors local to the applicable installations or geographical area were often opposed to outside firms or set-asides for special status firms. They could and would subtly or overtly “influence” local subs and supplier pricing to the 8(a) firms for construction materials and subcontracts. As a result, an 8(a) firm had to search for subs and suppliers further away or submit the higher quotes, when the locals would quote

8(a) construction firms were usually emerging and had less experience than the well established firms. The performance risks were often greater for such firms.

A few 8(a) firms took advantage of the special, non-competitive contracting opportunities.

A few firms were pressured into or otherwise participated in “front” arrangements, where key subs were, in fact doing one or more of activities, such as:   financing the project m, managing the job, “renting” equipment with operators”, furnishing supervisors and other key personnel,  and were in shadow control of the job.

The DFARS used to use a 10% margin above  other prices as a yardstick for determine fair and reasonable pricing. That was repealed years ago. It’s now more subjective and job specific.

I think that the SBA’s reference to awarding at fair market prices is to motivate the small and small disadvantaged (etc.) business concerns to propose reasonable prices and to allow the agency to reject seriously unreasonable proposals.

We rejected proposals and arrangements that were apparent fronts for other firms and occasionally where the prices were way too high after negotiations. We worked closely with the SBA to replace those proposed firms or arrangements.

 

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