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FrankJon

Interplay Between FAR 8.4 and DFARS 212 for T&M D&Fs

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SITUATION: I work for the Department of Defense (DOD), and my office executes a healthy number of time-and-materials/labor-hour (T&M/LH) determination and findings (D&Fs). My leadership has decided, at legal counsel's suggestion, that the requirements of DFARS 212.207(b)(iii) can apply to all commercial T&M/LH D&Fs, including those done under the authority of FAR 8.404(h)(3). The upshot is that nearly all such D&Fs require Head of Agency (HOA) signature, since nearly all are defined under paragraph (6) of the "commercial item" definition. As you can imagine, this has created an administrative inconvenience. (The idea of delegating this approval authority to the Head of Contracting Activity (HCA) has been raised and rejected.)

QUESTION: My question can be phrased specifically or broadly: 

  • Specifically, should HOA signature on commercial T&M/LH D&Fs, in accordance with DFARS 212.207(b)(iii), be required when using FAR 8.4 procedures?
  • Broadly, where FAR 12 specifically instructs the reader to defer to FAR 8.4 on a topic, can DFARS 212 "override" FAR 12?

DISCUSSION: I suspect that the answer is "no" (acknowledging that my response is at least partially biased). Part of the challenge here is that for DOD employees, there are no less than 5 different regulatory parts that provide T&M/LH guidance. I will attempt to address each in a logical order in walking through my thinking on this:

  1. FAR 16.601(d) provides general guidance for a D&F, and directs the reader to FAR 12.207(b) for "further limitations" when purchasing commercial services.
  2. Diverting for a moment to FAR 12.102(c), this assigns precedence to FAR 12 over conflicting FAR parts when purchasing commercial items.
  3. FAR 12.207(b)(1) and (2) provide commercial item D&F guidance; however, 12.207(b)(4) states: "See 8.404(h) for the requirement for determination and findings when using Federal Supply Schedules." In my opinion, this language unambiguously intends for the reader to exclusively defer to 8.4 for T&M/LH D&F guidance when using 8.4 procedures. (Compare the language in (b)(4) to the "additional approval" language in (b)(3).) 
  4. Based on #3, there is no conflict as described under #2. FAR 12 defers to FAR 8 on this specific topic.
  5. As promised, 8.404(h) creates its own set of D&F requirements. Significantly, the highest stated approval authority here is HCA.
  6. Strangely, DFARS 208 is silent on the topic of T&M/LH contracts.
  7. DFARS 212.207(b), however, creates additional limitations when using T&M/LH contract types for commercial items. Specifically, (b)(iii) requires HOA approval when paragraph (6) of the "commercial item" definition applies.
  8. DFARS 216.201(d) provides additional limitations and guidance for T&M/LH D&Fs.

My opinion is that if DFARS intended to impact the FAR guidance to defer to FAR 8 in these situations, it should have unambiguously done so by addressing it under DFARS 208 (as it did under DFARS 212 and 216). The most compelling counter-argument I've heard is that this reading would nullify the intent of NDAA for FY 2008 (on which DFARS 212.207(b) is based), which views T&M/LH contracts with skepticism and attempts to limit their usage. I agree that it would have been odd for DOD to intend to allow for a FAR 8.4 T&M/LH loophole, but in effect I believe this is what it did by neglecting to address the topic under DFARS 208.

What say you, Wifcon community?

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1 hour ago, FrankJon said:

My leadership has decided, at legal counsel's suggestion, that the requirements of DFARS 212.207(b)(iii) can apply to all commercial T&M/LH D&Fs, including those done under the authority of FAR 8.404(h)(3).

I say that of all the things you said in your opening post, the above is the only thing that matters. Given your legal office's opinion and your boss's decision, why are you asking for our opinions? What difference would they make?

Have you considered calling the DAR Council and asking for clarification of the application of DFARS 212.207(b)(iii) to orders placed against Federal Supply Schedules? Their response might make a difference.

Why didn't they put the requirement in DFARS 208.4, to supplement FAR 8.404(h)(3)? I have no idea. It's a reasonable question. That's why you should call the DAR Council.

 

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Good morning Vern,

Appreciate the suggestion to contact the DAR Council. I was not aware that this was an option. 

My intent by posting was to initiate a discussion that might either support or undercut my belief. At best, I may be in a position to change the status quo in my office. At worst, I am scratching an intellectual itch. 

As you know, there is a lot of bad information in this industry. I learned within my first months on the job never to trust an opinion without verifying on my own.

I will pursue the DAR route, but I hope that won't preclude a discussion of ideas within this forum for posterity's sake.

Thank you. 

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Well, your question is a matter of regulatory interpretation. Unfortunately, you can argue the issue in a number of ways.

My own thought is this:

First, DFARS 212.207(b)(iii) adds a requirement with respect to T&M contracts that does not appear in the FAR. Since orders are contracts as defined in FAR 2.101, that requirement would appear to apply to the issuance of orders.

Second, DFARS 212.207(b)(iii) does not conflict with FAR 8.404(h), it merely adds something that is not there. That is the function of a FAR supplement--to add something that is not in the FAR.

Third, "commercial items" is a more general topic than issuing orders against a GSA FSS contract. Since the rule is placed in a discussion of a more general topic--commercial items--one might consider its application to be to commercial items generally.

Fourth, one consideration is the apparent fact that the rule in DFARS 212.207(b)(iii) was promulgated in order to control CO decisions to use T&M pricing in the purchase of commercial items. If that's the purpose of the rule, and if an order against an FSS contract is a contract as defined by FAR, and if the issuance of such an order for a commercial items entails such a decision, then why shouldn't such a decision about such an order fall within its scope? Or, to put it another way, why should such a decision not fall within its scope?

Finally, should we make any inference based on the fact that the DAR Council did not add the requirement to DFARS 208.4? One rule of regulatory interpretation is to read the regulation as a whole and integrate its parts. Since DFARS 212.207(b)(iii) does not conflict with FAR 8.404(f)(3), and the rule otherwise appears to be of general applicability to commercial items, I think the most reasonable conclusion is that it applies to orders for commercial items under GSA FSS contracts.

Only the DAR Council can tell you what they meant when they promulgated it. Have you taken a look at the Federal Register publications of the proposed and final rule to see if there is any explanation. The final rule will tell you who to call for clarification and provide their phone number.

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4 hours ago, FrankJon said:

My opinion is that if DFARS intended to impact the FAR guidance to defer to FAR 8 in these situations, it should have unambiguously done so by addressing it under DFARS 208 (as it did under DFARS 212 and 216).

The changes made to DFARS 216.601 were not a result of Section 805 of the FY 2008 NDAA. They were made about a year earlier to provide for the same level of review for both commercial and non-commercial DoD time-and-materials contracts. See DFARS case 2007-D021 (73 FR 70912-01, November 24, 2008). This does not support the argument that the DAR Council intended to apply the D&F requirements imposed by the FY 2008 NDAA to orders for commercial items under multiple award contracts, but not orders under FSS contracts.

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Thank you both for your input. Your interpretations make sense to me. In addition, I sent an email to the DAR Council, and will report back here if I hear anything definitive. 

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Please do. I'm interested in what they have to say.

It would be interesting if they said that the rule does not apply to GSA FSS orders. I checked the interim rule, the corrected interim rule, and the final rule, and they shed no light on the matter.

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Well, I received back two responses from DPAP/DARS, which appear to support my initial position (but are probably just vague enough to allow for alternate interpretations).

In my first email, I stated:

I am seeking an opinion on the applicability of the determination requirement of DFARS 212.207(b)(iii) to acquisitions accomplished using FAR 8.4 procedures. The issue seems to have been left ambiguous in the DFARS due to the fact that DFARS 208 is silent.

 

DPAP/DARS response:

 

FAR 8.404(h)(3)(ii) requires execution of a determination and finding before issuing a time-and-materials (T&M) or labor-hour order under a Federal Supply Schedule (FSS).  Since this requirement is located at the FAR level for FSS T&M orders, there is no need to repeat the guidance in the DFARS.

I then wrote back for clarification, pointing out that, at a minimum, the requirement for HOA approval in DFARS 212 is in addition to the requirements of FAR 8, not duplicative. DPAP/DARS response:

The response provided was intended to point you to the regulatory coverage that seemed pertinent to the information provided in your initial question - pointing out there are separate standards for award of a DoD time-and-materials (T&M) commercial contract at DFARS part 212 from those for issuing a task order under an existing Federal Supply Schedule (FSS) contract pursuant to FAR 8.4. 

 

For award of T&M contracts for commercial services, FAR 12.207(b) specifies the minimum content for the determination and findings and approval thresholds.  For award of commercial T&M contracts within DoD, the coverage at DFARS 212.207(b)(iii), supplements the requirements at FAR 12.207, implementing the National Defense Authorization Act for FY 2008, which imposed the standard for award of a commercial T&M contract within DoD to be approved by the head of the agency. 

 

[Emphasis added.] The POC then goes on to discuss non-commercial requirements under 16 and 216.

 

I wish she had specifically stated that DFARS 212 does not apply to FAR 8 in order to definitively answer the question, but as things are, I do feel comfortable referencing this response as a basis for making a case against my agency's current procedures. I do not believe that the DAR Council intended DFARS 212.207(b)(iii) to influence FAR 8.404(h)(3)(ii).

 

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