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Alaska Native Corp - Out of Scope Modification

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I need a sanity check, please. I have a sole source award to an ANC 8(a) for maintenance, logistics, & repair to complex law enforcement equipment. One of the project offices supported under the contract needs a tower at one of its stations relocated by order of the state due to a highway reconfiguration project. This involves a historical landmark in a city at sea level -- which presents challenging contruction/excavation issues and this ANC would have to subcontract out all of the new work.

The contract has 4 more option periods, but the contract ceiling will be reached in the next 6 months. There are highly critical IG & GAO reports out regarding the award of this contract. It is a performance-based CPAF.

I say the construction project is clearly out of scope. The PMO wants to have the ANC manage the construction project, eventhough the PMO can't provide sufficient requirements, and the ANC originally said the project was too risky for them. Now procurement wants to seek SBA approval and modify the contract for the new work or award a separate contract to the ANC for this construction work.

My questions:

1. Given the laws regarding sole source awards to ANCs, is scope really an issue since there were no competitors?

2. The contract ceiling will be reached soon without this additional work, again does this matter in the ANC world?

3. If the modification is appropriate, aren't constuction appropriate performance measures required and additional funds for the award fee pool?

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One big criticism of the 8(a) program is agencies abuse it. That prompted setting dollar thresholds for required competition and eliminated the mid to large size non-competitive awards. But that doesn't apply to Native American owned companies and that's why the number of awards is rapidly in creasing.

What you're talking about seems to set your agency up for complaints. You said several things that bother me:

The contract is for "maintenance, logistics, & repair to complex law enforcement equipment"

"One of the project offices .....needs a tower at one of its stations relocated by order of the state..... involves a historical landmark in a city at sea level -- which presents challenging construction/excavation issues" - that doesn't seem like maintenance , logistics or repair

"ANC would have to subcontract out all of the new work" which implies they don't do construction

" contract has 4 more option periods, but the contract ceiling will be reached in the next 6 months"

"There are highly critical IG & GAO reports out regarding the award of this contract"

So you have a cost reimbursement contract with a likely cost overrun that your IG and GAO are critical of. A project office wants to add a construction job that the contractor has to subcontract our completely probably because they don't do that kind of work and aren't experiened enough. I think your agency is setting themselves in a very vulnerable position.

The answer to your question is yes, you could do it. Certainly the contractor won't object. They get more fee for the work. SBA won't object. But why don't just do another contract? If I were the CO, I wouldn't want to answer to the IG, GAO, or Congressional staffers on why I signed the modification.

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One big criticism of the 8(a) program is agencies abuse it. That prompted setting dollar thresholds for required competition and eliminated the mid to large size non-competitive awards. But that doesn't apply to Native American owned companies and that's why the number of awards is rapidly in creasing.

So you have a cost reimbursement contract with a likely cost overrun that your IG and GAO are critical of. A project office wants to add a construction job that the contractor has to subcontract our completely probably because they don't do that kind of work and aren't experiened enough. I think your agency is setting themselves in a very vulnerable position.

The answer to your question is yes, you could do it. Certainly the contractor won't object. They get more fee for the work. SBA won't object. But why don't just do another contract? If I were the CO, I wouldn't want to answer to the IG, GAO, or Congressional staffers on why I signed the modification.

I agree. Thanks for the sanity check. The CO has told them this as well, but the CO is the last person they listen to. I suspect the PMO doesn't want to do a new contract because they would have to put together requirements and an IGCE and evaluate proposals. By modifying the existing contract, they can throw a few dollars over the fence and walk away (until the deadline approaches). Just maybe the CO's management will show some support and leadership.

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My two cents worth:

You stated, "I say the construction project is clearly out of scope. The PMO wants to have the ANC manage the construction project, eventhough the PMO can't provide sufficient requirements, and the ANC originally said the project was too risky for them. Now procurement wants to seek SBA approval and modify the contract for the new work or award a separate contract to the ANC for this construction work. "

On top of what formerfed stated, the above has me concerned as well. If they feel it's too risky, and they've gone on record with that, a change order sets everyone up for failure. If they have problems, they point to the Government. If we have problems, they point to the Government.

If I was in your shoes, I'd be doing everything possible to treat this as a new, stand alone requirement.

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I think the ANC was upset about their last award fee and this issue came along at the perfect time. There's still a chance someone will back the CO up on this.

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Guest Vern Edwards
My questions:

1. Given the laws regarding sole source awards to ANCs, is scope really an issue since there were no competitors?

2. The contract ceiling will be reached soon without this additional work, again does this matter in the ANC world?

3. If the modification is appropriate, aren't constuction appropriate performance measures required and additional funds for the award fee pool?

1. Given the laws regarding sole source awards to ANCs, is scope really an issue since there were no competitors?

Yes, scope is an issue. If the construction job is out-of-scope (and it sounds like it is), then the CO must go through all the steps of a new procurement, including the 8(a) selection/evaluation/offering process described in FAR 19.804, and the SBA must accept in accordance with FAR 19.804-3. Moreover, 13 CFR ? 124.503 provides as follows:

© Sole source award where procuring activity nominates a specific Participant. SBA will determine whether an appropriate match exists where the procuring activity identifies a particular Participant for a sole source award.

(1) Once SBA determines that a procurement is suitable to be accepted as an 8(a) sole source contract, SBA will normally accept it on behalf of the Participant recommended by the procuring activity, provided that:

(i) The procurement is consistent with the Participant's business plan;

(ii) The Participant complies with its applicable non-8(a) business activity target imposed by ?124.509(d);

(iii) The Participant is small for the size standard corresponding to the SIC code assigned to the requirement by the procuring activity contracting officer; and

(iv) The Participant has submitted required financial statements to SBA.

Also, you would need an independent Government cost estimate in accordance with FAR 36.203. The program office cannot get around this by modifying the existing contract.

(2) If an appropriate match exists, SBA will advise the procuring activity whether SBA will participate in contract negotiations or whether SBA will authorize the procuring activity to negotiate directly with the identified Participant. Where SBA has delegated its contract execution functions to a procuring activity, SBA will also identify that delegation in its acceptance letter.

(3) If an appropriate match does not exist, SBA will notify the Participant and the procuring activity, and may then nominate an alternate Participant.

2. The contract ceiling will be reached soon without this additional work, again does this matter in the ANC world?

Yes, it matters. But, presumably you would increase the ceiling if you decide to enlarge the scope of the contract.

3. If the modification is appropriate, aren't constuction appropriate performance measures required and additional funds for the award fee pool?

You would need to add construction clauses. However, you could add the construction project as an FFP CLIN, without award fee. I would not use an award fee incentive on a relatively small construction project. In my opinion it would be absurd to do so.

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Buyerman: The CO has an unlimited warrant, "without further limitation."

Vern: Thanks so much, my CO will appreciate it. I think he had a moment of self doubt. The pressure is intenifying because the construction has to be completed by next Spring and the PMO has done nothing but try to get the CO's position overruled by the new HCA.

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