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Kathleen A. Kern

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FAR Part 5.

If I am soliciting only local sources to obtain services for Military locations overseas I do not need to post, synopsize or advertise. Is this true?

What regulation, law, agreement allows me to only solicit local sources?

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Linda,

Yes, I know FAR 5 very well and (12) is an exception.

My question may be going a bit into FAR 6, as well.

What gives us, the overseas KO, the authority to only solicit local sources - which is restricting competition -?

FAR 6.302-4 -- International Agreement? When we use 6.302-4 it must be supported with an agreement between the countries. What if it is not supported, I can not see where we just decide to use local sources?

Kathleen

(12) The proposed contract action is by a Defense agency and the proposed contract action will be made and performed outside the United States and its outlying areas, and only local sources will be solicited. This exception does not apply to proposed contract actions covered by the World Trade Organization Government Procurement Agreement or a Free Trade Agreement (see Subpart 25.4);

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Guest Vern Edwards

Are you using simplified acquisition procedures? If so, see FAR 13.104(B).

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Are you using simplified acquisition procedures? If so, see FAR 13.104(B).

Mr. Edwards,

Thank you for the reference but we do not use SAP.

These are contruction contracts, for military installations overseas.

Ranging in value, IDIQ, from US$15 - US$30M for a period not to exceed three (3) years, base yr with two (2) option yrs

and contracts for discreet projects not in excess of US$500K.

We have international agreements with some of the countries with regard to restrictions.

Others we do not.

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What gives us, the overseas KO, the authority to only solicit local sources - which is restricting competition -?

Regardless of who you solicit, are all responsible offerors permitted to compete?

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You have a choice to solicit only local sources or not. If you solicit only local, there's no need to publicize. Apart from international agreement, there might be good reasons to only solicit local sources - needs for permits, licenses, setting up local offices, etc., that either can't feasibily be done or the delays are unaccpetable. Whatever the reasons, you need to decide if it's feasible for other than local sources to bid. If there aren't then you publicize.

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When I was with the Army Corps of Engineers overseas (okay, it was 20 years ago), we had to advertise full and open, except where we had country to country agreements and where the host nation funded the FMS sales case. Then, I think we only had a preference for local firms, not reserved exclusively for locals.

When I was in Europe, it was our money and there was no exclusion that I was aware of.

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You have a choice to solicit only local sources or not. If you solicit only local, there's no need to publicize. Apart from international agreement, there might be good reasons to only solicit local sources - needs for permits, licenses, setting up local offices, etc., that either can't feasibily be done or the delays are unaccpetable. Whatever the reasons, you need to decide if it's feasible for other than local sources to bid. If there aren't then you publicize.

You say I have a choice and a few people here are also of that belief but I do not read the FAR, DFARS, AFARS or EFARS to say that because I am overseas, I only need to use local sources.

In FAR 5.201, if I keep to local sources, I do not have to synopsize or advertise and apparently not even post.

The rest of the FAR emphasizes the need to ensure full and open competition, ensuring that as Don said all responsible offerors are permitted to compete.

The reasons as you state are valid for soliciting only local sources but again I am looking for something that tells me that because I am overseas, I only need to solicit local sources. I see nothing that in the FAR that does this, again it does say when I am only going local I need not post, synopsize or advertize.

There is a void. We use FEDBIZOPPS for almost everything, even when we have an International Agreement (here we just state the restriction the contractor must follow) but when we use local, there is nothing.

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When I was with the Army Corps of Engineers overseas (okay, it was 20 years ago), we had to advertise full and open, except where we had country to country agreements and where the host nation funded the FMS sales case. Then, I think we only had a preference for local firms, not reserved exclusively for locals.

When I was in Europe, it was our money and there was no exclusion that I was aware of.

Where were you located?

I do not think the competition requirement has become more relaxed since then B)

I have searched the "books" - chapters 5, 6, 15, 25, Ad nausea.

Nothing that says overseas equates to local sources only.

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Guest Vern Edwards

Kathleen,

Have you asked your manager under what authority you are soliciting only local sources? Your attorney-advisor? What do they say?

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Kathleen,

Have you asked your manager under what authority you are soliciting only local sources? Your attorney-advisor? What do they say?

My manager states that everything will be posted, synopsized and/or advertised using FEDBIZOPPS.

When a restriction applies, we state this retriction and the authority in the announcement.

We have been doing this the three and one half years I have been here and in the other overseas locations I have worked.

My attorney-advisor is of the belief that we can go to local sources and not post, synoposize or advertise based on FAR 5.

If we post, synopsize or advertise, then we need an authority to restrict competition FAR 6; if we do not post, synopsize or advertise, then we can go only to local source. They are reading it as an exception.

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Guest Vern Edwards

Kathleen,

Do you mean that they take FAR 5.202(a)(12) to be an exception permitting solicitation of only local sources?

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I don't believe FAR 5.202(a)(12) creates the authority to limit the solicitation for a requirement to local sources; it merely relieves the KO of the obligation to synopsize in those circumstances. Ms. Kern asks a valid question; if the KO in those circumstances makes a determination to limit to local sources, what is the authority to do so? I only found two GAO cases involving FAR 5-202(a)(12), and neither addresses this particular issue. One got close. Here are a couple of snippets out of Matter of: American Kleaner Mfg. Co., Inc., B-243901.2; B-243901.3 (1991):

The solicitation, as issued, required the delivery of the 1,000 pressure washers to the Port of Damman Railyard, Saudi Arabia. The RFP also provided for training in Saudi Arabia for Army personnel regarding the use and maintenance of the washers. Based upon the Army's determination that adequate competition existed in the area, the agency concluded that only local sources would be solicited for the requirement. A copy of the RFP was posted for public viewing at the issuing office in Saudi Arabia . . . The record shows that at the time the Army initiated the procurement in the war zone in Saudi Arabia, the contracting officer expected the competition to be limited to firms in that region and planned to solicit only local sources. Although delivery of the washers under the contract ultimately took place at Dover AFB (pursuant to the alternate delivery terms introduced for the first time in the Army's request for BAFOs), there is nothing in the record which shows that at the time the RFP was issued in Saudi Arabia the agency expected contract award and performance to take place anywhere other than in Saudi Arabia or that offers from other than local sources would be received. Thus, pursuant to the publication exception at FAR ? 5.202(a)(12), we have no reason to question the propriety of the agency's determination not to advertise the proposed contract action in the CBD.

Unfortunately, the protestor did not raise the specific issue of the KO's authority to make the initial determination to limit to local sources.

The requirement for full and open competition is satisfied if all responsible prospective sources are offered the opportunity to compete for a requirement (see FAR 2.101 - definition of "full and open competition"). It is possible that local sources, in an OCONUS setting, could be the only sources that are responsible under FAR Subpart 9.1 (for example, the host government's permitting or licensing requirements may make contemplating the use of anybody other than a local a moot point). But if the universe of responsible prospective sources includes non-locals, I am of the opinion that a decision to limit to local sources is an exception to full and open competition that must be justified under 10 USC 2304 and FAR Part 6. In either case, I would expect the contract file to be adequately documented to support the decision to stick with local sources.

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Where were you located?

I do not think the competition requirement has become more relaxed since then B)

I have searched the "books" - chapters 5, 6, 15, 25, Ad nausea.

Nothing that says overseas equates to local sources only.

I was in Riyadh, Saudi Arabia from 83-87, Kaiserslautern, Germany from 87-89 and in Dhahran, Saudi Arabia (actually all over the Arabian Penninsula) during the Gulf War in 90-91. We never restricted sources to locals, although we gave preference to or required a Saudi partner in the late 80's, near the end of the Saudi program. My memory fails me concerning the specifics, but it was near the end, when we were specifically trying to develop the Saudi construction industry. The Saudi program was a huge FMS case, and they paid for everything. Being their money, I'm sure that our Agreement included some provisions to aid the local industry.

If your (our?) Counsel is citing FAR Part 5 as justification for less than full solicitation, it appears that there is no special program or exemption established in your Area of Operations.

I don't think that Part 5 establishes any exemption in Part 6 for excluding sources.

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Kathleen,

Do you mean that they take FAR 5.202(a)(12) to be an exception permitting solicitation of only local sources?

In a way.

The "logic" is if we only go to local sources then we do not have to post, synposize or advertise using FBO - FAR5.202(a)(12).

If we use FBO to do any of the above, then we must go full & open or have an authority to restrict.

...

So, if you don't use FBO, you only need to use local sources. B)

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Guest Vern Edwards

Nothing in FAR 5.202 authorizes solicitation of only local sources. It's about exceptions to synopsis, not solicitation of quotes or offers. If your attorney-advisor thinks otherwise, you need a new lawyer.

Off hand, I can think of only FAR 6.302-4 and, perhaps, 6.302-7, and FAR 13.104(B) as bases for soliciting only local sources. (I have not checked agency FAR supplements.)

No one who has responded to you as yet has cited anything in the regulations, though we may have missed it. So the only way that I can think of for you to get to the bottom of this is to force the issue with your management by asking for the specific regulatory authority and then arguing if they cite something stupid, like FAR 5.202(a)(12). If I were a contracting officer expected to sign contracts for multi-million dollar construction projects awarded after soliciting only local sources, I would insist on knowing the authority for limiting solicitation in that way.

Wifcon member Napolik, who has not responded to this because he's traveling and without a laptop, is one of the most knowledgeable people around when it comes to overseas contracting. If there is such authority, he should know it. I'll ask him to respond to you when he gets home.

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It has been over 10 years since I dealt with this issue regularly in Europe. I?ll confine my remarks to military construction because supplies and services have their own issues. Your authority to use local sources is in FAR 6.302-4 (B)(2): ?When a contemplated acquisition is for services to be performed, or supplies to be used, in the sovereign territory of another country and the terms of a treaty or agreement specify or limit the sources to be solicited.? Note that DOD, NASA, and the Coast Guard don?t have to do a formal J&A although DOD at least has its own procedures on documentation which I will get to.

Sovereignty is an important consideration when dealing with construction overseas. Unless we have invaded the country by force and established a base, we operate a base with the consent of the host country. What that means is that there will be an agreement to use that facility with terms and conditions on what we may do. Since it is on foreign soil we technically do not own that property and there are going to be constraints on what we can build there. Generally the host country will at least review and approve what is built there and may even insist on awarding any contracts themselves using their terms. The terms of agreement I have seen have at least a preference for local firms and generally a requirement to use them. Even if only a preference is stated, requirements for a work permit, visa, and customs issues may effectively limit the requirement to a local firm. This may be enough to invoke the International Agreement authority since DOD allows flexibility.

Here is the DFARS on this:

206.302-4 International agreement.

© Limitations. Pursuant to 10 U.S.C. 2304(f)(2)(E), the justifications and approvals described in FAR 6.303 and 6.304 are not required if the head of the contracting activity prepares a document that describes the terms of an agreement or treaty or the written directions, such as a Letter of Offer and Acceptance, that have the effect of requiring the use of other than competitive procedures for the acquisition.

The Air Force AFFARS modifies this as follows:

5306.302-4 International agreement.

© Limitations. The document referred to in DFARS 206.302-4© should be titled, ?International Agreement Competitive Restrictions (IACR).? The authority to prepare IACRs is delegated from the HCA to the contracting officer. The contracting officer shall include the IACR and a copy of the associated Letter of Offer and Acceptance in the contract file.

Note also DFARS PGI:

PGI 236.273 Construction in foreign countries.

(B) When a technical working agreement with a foreign government is required for a construction contract?

(i) Consider inviting the Army Office of the Chief of Engineers, or the Naval Facilities Engineering Command, to participate in the negotiations.

(ii) The agreement should, as feasible and where not otherwise provided for in other agreements, cover all elements necessary for the construction that are required by laws, regulations, and customs of the United States and the foreign government, including?

(A) Acquisition of all necessary rights;

(B) Expeditious, duty-free importation of labor, material, and equipment;

© Payment of taxes applicable to contractors, personnel, materials, and equipment;

(D) Applicability of workers' compensation and other labor laws to citizens of the United States, the host country, and other countries;

(E) Provision of utility services;

(F) Disposition of surplus materials and equipment;

(G) Handling of claims and litigation; and

(H) Resolution of any other foreseeable problems that can be appropriately included in the agreement.

FEDBIZOPPS is something I did not have to deal with then. I would not think it a good source if you are going to use only local contractors because I do not think many local nationals would follow it.

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What regulation, law, agreement allows me to only solicit local sources?

I'd like to suggest that there is no regulation, law, or agreement that explicitly allows you to solicit only local sources. (but see Larry's good posting above). My question is, do you need one? See B-237383, AAA Engineering & Drafting, Inc., (January 22, 1990) http://archive.gao.gov/decisions/140438.pdf: "An aqency may restrict a procurement to offerors within a specified geographical area if the restriction is reasonably necessary for the agency to meet its minimum needs."

If you have a reasonable basis to solicit only local sources, you can.

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Agree, concerning country to country agreements. However, Kathleen's chief counsel isn't referring to any such agreement to justify using only local sources. Hence my conclusion that there isn't one.

I agree that Part 5 is meant to refer to local solicitations under the presumption that the necessary exemption from full and open competition has been obtained

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My post #115 was in response to Larry Edwards' post #1, above

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I'd like to suggest that there is no regulation, law, or agreement that explicitly allows you to solicit only local sources. (but see Larry's good posting above). My question is, do you need one? See B-237383, AAA Engineering & Drafting, Inc., (January 22, 1990) http://archive.gao.gov/decisions/140438.pdf: "An aqency may restrict a procurement to offerors within a specified geographical area if the restriction is reasonably necessary for the agency to meet its minimum needs."

If you have a reasonable basis to solicit only local sources, you can.

The AAA case involved what the protestor regarded as an unduly restrictive specification, in that it required the services to be performed within a geographic area. It did not limit response to the solicition to only offerors within that area.

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The AAA case involved what the protestor regarded as an unduly restrictive specification, in that it required the services to be performed within a geographic area. It did not limit response to the solicition to only offerors within that area.

I'm arguing that there is no express statutory authority described in acquisition regulation that permits other than full and open competition solely on the basis of locality, and that if you have a requirement that can only be fulfilled by contractors in a certain geographic area, include that geographic limitation in your requirements/SOW and solicit as a full and open competition. If Kathleen has an International Agreement with a host country that her office will only contract with local sources, then as Larry describes, the authority at 10 USC 2304( c)(4) or 41 USC (253( c)(4) may apply. But absent that agreement, she should be soliciting on a full and open basis and describing the requirement for a local source in her solicitation.

Government contracts include plenty of requirements that "limit" competition that don't require statutory authority to include in a solicitation. You may require a contractor's facility to have a Secret clearance, which you know will eliminate some firms from being able to compete for that contract. Does that mean you need to justify contracting without providing full and open competition?

My point in citing AAA was that if you include a geographic limitation in your solicitation and it is challenged as being unduly restrictive, GAO will look only to see if there is a reasonable basis for the requirement. Like any contract requirement, if the geographic limitation is legitimate, then it will withstand a protest.

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Vbus,

You make some good points and I agree with you. I assume this may be the view of Kathleen's lawyer as well.

My limited experience with overseas construction is just what Larry Edwards said with comments:

"Sovereignty is an important consideration when dealing with construction overseas. Unless we have invaded the country by force and established a base, we operate a base with the consent of the host country. What that means is that there will be an agreement to use that facility with terms and conditions on what we may do. Since it is on foreign soil we technically do not own that property and there are going to be constraints on what we can build there. Generally the host country will at least review and approve what is built there and may even insist on awarding any contracts themselves using their terms. The terms of agreement I have seen have at least a preference for local firms and generally a requirement to use them. Even if only a preference is stated, requirements for a work permit, visa, and customs issues may effectively limit the requirement to a local firm."

In addition, often there is licensing and other agreements that can take alot of time to complete that effectively rules out offerors. For example, one one project I was involved with, the country rules said any non-national source had to enter into a partnership with a local company. That process took seberal months.

In any event, if the nature of these issues are valid, they are are requirments that any offeror must meet. They may effectively restrict competition to only local sources. In that case, the action doesn't need posted in FBO. But I don't see that as requiring a D&F or JOFOC.

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General comment to all:

I appreciate the input you have provided concerning this topic and welcome additional discussions, please.

Your information has given me areas to further research and re-read, as we all know the FAR, et al are not always the easiest to interpret.

My position remains this:

Full and open competition is the goal of Federal Procurement because it has been determined that use of this method provides the best and most effective and hopefully efficient use of public funds.

Yes, many of you have mentioned situations where competition will be limited by other than an authority, whether it be security issues or a country requirement (e.g. all firms in Kuwait must be Kuwaiti owned - been there ;) ) or so remote that the possibility of non-locals proposing would be slim and there are many others. I have been in contracting a long time and if I have learned anything from former bosses, mentors, co-workers is that transparency is not an option - it is mandatory. There is nothing that says you cannot state the difficulties that contractor may face when attempting to propose on a requirement, such as geography, security, country specific business conditions, in the announcement. You are not limiting competition; you are just letting the firms know the situations they may encounter and to me FBO is required (exceptions noted).

We all have been in situations where a customer has needs and wants that we try to fulfill and when we see areas in the FAR that do not say "you shall not do", we do. We cannot forget, above all this, to think about what we are doing. I have a very difficult time reading the FAR to allow actions contrary to whole sections that cite U.S.C.'s as a requirement, e.g. "10 U.S.C. 2304 and 41 U.S.C. 253 require, with certain limited exceptions (see Subpart 6.2 and 6.3), that contracting officers shall promote and provide for full and open competition in soliciting offers and awarding Government contracts."

For me, especially since the development of internet advertisement (FBO), to place a solicitation, pre-solicitation notice, synopsis or posting as compared with what we did in the mid-80's (anybody remember what we used to do??) requires little additional effort/cost and has actually been a great tool for those locations where physically providing documents is often difficult or delayed by the post. Locations without internet connection are the exception. It just takes a little bit of educating your contractor.

I will close with a few statements made to me by 1102's and legal advisors concerning this topic:

"Full and open competition is only meant to help small businesses and we do not have socio-economic programs overseas."

"If I go to two (2) sources, I have full and open competition according to the FAR."

"Who are we hurting by only going to local sources? - in fact we are helping the local economies."

"If we use FBO, then we are held to the minimum publicizing and response time. If we don't use it, we aren't bound by them."

I have a question. Has anyone ever read that if we advertise in a local newspaper, this eliminates the need to use FBO?

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