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Don Mansfield

Kickstarter and the GCPC

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The creator chose to use Kickstarter before the Government ever knew of the project. The Government learns of the project through Kickstarter and determines that the reward offered can directly benefit the Government.

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On ‎6‎/‎24‎/‎2017 at 7:11 AM, Vern Edwards said:

How does that make anything better?

I think Kickstarter may even agree here, assuming the Government is the sole funder.  If there are many other funders, it would be nice to spread the cost of widget development around. 

If different federal agencies were funding without each others' knowledge, would that tick off the budget people?  If the dollar amounts were large?  I don't think you get to know who the other funders are.

I have contributed to these before and I was one of many small funders.  Kickstarter was able to aggregate my contribution with many others and throw a large wad of cash at the "creators".  Aggregating lots of small contributions is Kickstarter's main purpose, I think.  I can also confirm the funders' credit cards get charged prior to work commencing, not after completion and delivery. The financing issue is a great one to raise. 

 

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4 hours ago, apsofacto said:

I think Kickstarter may even agree here, assuming the Government is the sole funder.  If there are many other funders, it would be nice to spread the cost of widget development around. 

Government would not be the sole funder. It's "crowdfunded". 

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Therefore augmenting appropriated funds to develop a product? Or sharing the development costs? Who owns the rights?  Etc. Many possible questions could be asked. . 

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35 minutes ago, joel hoffman said:

Therefore augmenting appropriated funds? 

Not if the Government only receives benefit comparable to its cost.

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Mr. Fleharty,

I would be surprised if it could not be done. It would be a lot of work, that's for sure. It would involve setting up a new GPC card program (totally separate from an appropriated fund GPC program, such as is done for Non Appropriated Funds (NAF) and Chapel funds). It would need business rules and make use of one of the contracted banks. This site discussing eligibility for SmartPay programs is linked here: 

https://smartpay.gsa.gov/content/about-gsa-smartpay#sa356

and this link below gives contact information for the GSA SmartPay Program Management Office: 

https://smartpay.gsa.gov/content/contact#sa608

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12 hours ago, Matthew Fleharty said:

Is anyone aware of any restrictions on the use of the Government Purchase Card when using Other Transaction Authority?

What do you mean by "use"? Use just to make payments or use to make the transaction and to make payments?

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Square peg into a round hole?  

Trying to fit Kickstarter requirements into those of the FAR would be "lot of work".  Already noted is the impact of FAR part 32 if the effort is below the SAT.  Thinking bigger brings into consideration FAR part 35 and even possibly FAR 31.205-18.

Cleary there is intent by the Federal government to be active in the world of R&D, some agencies are appropriated funds for this specific purpose.   Kickstarter would seem to fit.  I really wonder, at least at this point in time,  if it is more effort than it would be worth to make the FAR requirements align with Kickstarter to accomplish the effort.   Using the parameters of this this thread (micro-purchase level) and as already stated in this thread of sorts, why not just wait until Kickstarter is successful in creating something and then buy the dang thing? 

Of course there is the tried and true way of not wringing hands and just use the card, spend the money and wait for a possible end widget.  Easily said and easily done but for me the bigger consideration is well heck I (as the program area) did it (that is fund a R&D procurement) with a government card to Kickstarter for a micro-purchase, now I want to do if for something within the SAT as a single source or better yet do it for something over the SAT on a sole source basis.   Again the square peg into the round hole comes to mind especially when considering marrying FAR with that administrative and terms and conditions of Kickstarter.

Someday it will happen but I am thinking that the "lot of work" is going to encompass the entirety of the FAR principles from market research to the end game of an awarded contract as from my chair there is more to it than simply can the government purchase card be used.

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So - paying 8-10% in fees to Kickstarter (5% from proceeds to the intended recipient and 3-5% on the GPC at the time of purchase) is a good idea then?

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Carl,  Other Transaction Authority (OTA) has recently been revised and given a new statutory basis. Using OTA is not an attempt to make a prototyping project comply with the FAR and that is what makes it interesting. An OTA GPC transaction, if it could be done, would be outside the FAR, and may have other significant features, see one explanation at https://www.linkedin.com/pulse/section-815-other-transaction-agreement-prototype-mcmartin-esq-

All,

Are we taking the right path trying to:

Either shoehorn commercial vendors into compatible agreements with the federal government, (see https://www.digitalgov.gov/resources/federal-compatible-terms-of-service-agreements/)

Or

Render unenforceable the offending portion of common agreements that nevertheless may remain included in the stated terms of Supplier Agreements (see the 15 types of terms and conditions rendered unenforceable by the three classes GSA implemented in their 31 July 2015 Class Deviation: http://www.esi.mil/download.aspx?id=5726

Or providing for this extraordinary treatment given to commercial terms purchased via GPC out of government concerns that terms involving indemnification are incompatible with the Anti Deficiency Act, see FAR 13.202:

"13.202 Unenforceability of unauthorized obligations in micro-purchases.

Many supplies or services are acquired subject to supplier license agreements. These are particularly common in information technology acquisitions, but they may apply to any supply or service. For example, computer software and services delivered through the internet (web services) are often subject to license agreements, referred to as End User License Agreements (EULA), Terms of Service (TOS), or other similar legal instruments or agreements. Many of these agreements contain indemnification clauses that are inconsistent with Federal law and unenforceable, but which could create a violation of the Anti-Deficiency Act (31 U.S.C. 1341) if agreed to by the Government. The clause at 52.232-39, Unenforceability of Unauthorized Obligations, automatically applies to any micro-purchase, including those made with the Governmentwide purchase card. This clause prevents such violations of the Anti-Deficiency Act (31 U.S.C. 1341)."

 I have heard that remarkable paragraph termed a Chridtian Doctrine in reverse.  It is not as broad as the other mechanisms above, in that it does not treat other types of terms such as automatic renewal or legal jurisdiction, and a host of others, but it does reveal the heavy hand of government; it is one of the new top down 70 percent solutions that will eventually replace most of the older top down 70 percent solutions. Whose job are the 30% solutions? 

How many purchased don't happen for these reasons? For the most part we don't track what we don't buy and why we don't buy it. And what will be the trend? In a marketplace where bricks and mortar increasingly become a burden, might the government learn a lighter touch? ...we might then ask ourselves as a government:  "Who will be around to do business with us the old fashioned way, if we don't learn a new way?  

I have hope that eventually the digital natives will sort this out...

 

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1 hour ago, FAR-flung 1102 said:

if it could be done

FAR - Thank you for the references.  Interesting read inclusive of "Other Transactions” (OT) Guide for Prototype Projects, (OASD AT&L, August 2002)" which is stated to be the most current guidance regarding OTs.   A complex mix of an "agreement" that is not considered a grant or cooperative agreement and an acquisition that is not a "procurement" subject to the FAR.   In a quick read of both the linkedin discussion and the Guide your above quote especially rings true.

Noting a question in this thread by Matthew Fleharty it would appear that a Government purchase card could be used but by my read there would be the need for a supporting "agreement".  I am of the conclusion that for the example used ins this thread, an expenditure of $3,500 or less, that the effort to comply with the whole of the OT Guide would be very exhausting.

Also I would add that if OT would fit most if not all of us would have trouble releasing ourselves from the FAR principles which again would not apply.  Heck the Guide even provides mention of some that are terms at least borrowed from the FAR such as market research, competition, advance payments, etc. and I might add FAR you even go back and forth in trying to figure where something like Kickstarter really lands.  More shoehorning?

Learning and adapting the new ways is a must but trying to separate from the old ways when doing seems to be hang-up!     

PS - To Joel -

22 hours ago, joel hoffman said:

So - paying 8-10% in fees to Kickstarter (5% from proceeds to the intended recipient and 3-5% on the GPC at the time of purchase) is a good idea then?

Like any transaction to which the Federal government enters into with a commercial source, yeah maybe but it depends on the situation.  Dodge of your question I do not think so as sometimes something makes economic and administrative sense and sometimes it does not.

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Dang, FAR-flung 1102, thanks for that post. I don't pay much attention to micro-purchases and had not noticed FAR 13.202. Very interesting. How do you enforce a clause that was not included in a transaction? I guess 13.202 is notice to the world. Read your FAR, vendors!

For general information, FAR 13.202 and 52.232-39 were added by interim rule on June 21, 2013, FAC 2005-67, 78 FR 37686. According to the FAC, the rule was added in response to a Department of Justice memo, "The Anti-Deficiency Act Implications of Consent by Government Employees to Online Terms of Service Agreements Containing Open-Ended Indemnification Clauses," dated May 12, 2012, https://www.justice.gov/file/20596/download. That memo prompted a memo from OMB (almost a year later), "Antideficiency Act Implications of rtain Online Terms of Service Agreements," dated April 4, 2013, https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2013/m-13-10.pdf.

The interim rule was finalized on December 31, 2013, FAC 2005-72, 78 FR 80382. The public comments and FAR council responses are interesting. This exchange is my favorite:

Quote

Comment: The respondent expressed concern that this rule could lead commercial companies to forego doing business with the Government. Not all contractors may be able to accept the risk re-allocation effected by the interim rule, according to the respondent.

Response: The interim rule became effective on June 21, 2013. The objective of the rule is to clarify that the inclusion of an open-ended indemnification clause in a EULA, TOS, or other agreement, is not binding on the Government unless expressly authorized by statute and specifically authorized under applicable agency regulations and procedures, and shall be deemed to be stricken from the EULA, TOS, or similar legal instrument or agreement. Since the interim rule was published, the Councils have received no indications that the scenario envisioned by the respondent has come to pass. No change is made in the final rule.

So in the slightly more than six months since publication of the interim rule the FAR councils noticed no change in conduct on the part of commercial firms. I wonder how many of them even knew, much less managed to change the terms of their online licenses.

And then there's this one:

Quote

Comment: The respondent suggested two alternatives. The first was for the Department of Justice to definitively indicate that agency disclosures are not required for (and contracting officers will not be prosecuted for) ADA violations stemming solely from open-ended indemnifications contained in commercial EULAs and TOSs so long as, once discovered, the Government negotiates with the licensor directly to limit the attendant open-ended risk. The other alternative was for the Government to retain the clause from the interim rule with a cap on licensors' liability at the amount of appropriated funds directed to the particular purchase.

Response: This type of additional guidance would not be included in the FAR. Development of this additional guidance is outside the purview of the Councils. No change is made in the final rule.

:lol:

The only way for the Government to go commercial is to go commercial. Throw out the acquisition laws and the FAR when buying commercial items and buy stuff just like everybody else.

Never happen. Government is government.

 

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Vern:,

You're welcome and you're probably correct about the future of government...though that doesn't stop me from trying to work toward something a little better than what we have now.

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I would recommend against getting involved with Kickstarter unless you know the person asking for funds personally. A few years ago I was burned for a not insignificant amount when the person that posted the kickstarter failed to deliver anything, even though the project received full funding. It's been a growing problem with kickstarter.

If the project does receive the required funding, it will be eventually be available for purchase (typically at a much higher price). That's the time when I'd consider purchasing it on behalf of the government.

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