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Question: Must the order NAICS code match the IDIQ NAICS code when the order work would otherwise come within the scope of work described by the IDIQ?

Situation (stated hypothetically): A multiple-award IDIQ, which was competed on a F&O, unrestricted basis, was assigned NAICS 123456. This was the preponderance NAICS; the description of work spans far outside of NAICS 123456. A prospective order is best described by NAICS 654321. It cannot reasonably be described by NAICS 123456. However, the order work clearly comes within the broad description of services stated within the IDIQ PWS. 

Analysis: FAR 19.303(a)(2) requires COs to "select the NAICS code which best describes the principal purpose of the product or service being acquired," but this does not resolve my question. GSA stated on its Interact blog that the order NAICS must match the Schedule NAICS, but it doesn't provide a reference for this rule. I know that for coding purposes in FPDS-NG, the order will need to carry the same NAICS, but I cannot find a firm rule as to why...

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9 minutes ago, Gordon Shumway said:

Hmmm... does it have to do with the small business size standard used in the initial competition?

The initial competition was unrestricted. 

7 minutes ago, Gordon Shumway said:

 

Question to your question @FrankJon , can you change the order NAICS in your contract writing system?

 

I'm not in a position to know this, but based on past operational experience, I doubt it. 

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9 minutes ago, FrankJon said:

The initial competition was unrestricted.

Yeah, based off of an analysis of small businesses (or lack thereof) under NAICS 123456.

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Gordon - I think I see where you're going. The original NAICS helped to define the scope of competition, potentially in this case by allowing large businesses to compete. If a different NAICS is now used at the order level, this could be unfair to potential and actual offerors at the IDIQ level. Utilizing a different NAICS is therefore outside of the scope of competition.  

Is this what you're saying?

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2 minutes ago, FrankJon said:

  Is this what you're saying?

Basically yes, my initial thought was that you are changing the rules at a point where the rules are set.

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If the parent IDIQ contract has only one NAICS code, then every order under that contract must use that NAICS code.  If the order work is within the scope of the parent IDIQ contract, it doesn't matter if the NAICS code precisely fits the work.  The purpose of the NAICS code is not to describe the work -- rather, the purpose of the NAICS code is to help. establishing the size standard that will apply in the acquisition for the parent IDIQ contract.

FAR 19.303 applies to parent IDIQ contracts, not to orders under IDIQ contracts.

For IDIQ contracts, 13 CFR 121.402(c) allows the NAICS to be assigned at the parent IDIQ contract level, or at the CLIN level -- however, I don'k many of our automated contracting writing systems will accommodate this regulatory flexibility.  Certainly, FPDS-NG does not recognize it, and forces the contract's single recorded NAICS code to every order.

Short answer -- if you are issuing a task order under an IDIQ contract, the order takes the NAICS code of the parent IDIQ contract -- you need not waste your time trying to find a NAICS code that fits better.

 

 

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11 hours ago, ji20874 said:

FAR 19.303 applies to parent IDIQ contracts, not to orders under IDIQ contracts.

 

ji20874 - As usual, you're getting me to think about a topic differently. But I need to ask, why doesn't FAR 19.303 apply to prospective orders? Put differently, why shouldn't every new requirement receive an independent NAICS analysis prior to determining strategy? By neglecting to do that, aren't we potentially impacting competition in other industries? 

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There are a number of soft reasons.  The purpose of the NAICS code is to allow offerors to represent themselves as large or small (FAR 19.101(b)(3)).  This occurs at the time of offer for the parent IDIQ contract.  The contracting officer includes the NAICS code (or sometimes, codes) in solicitations (FAR 19.303(a)(1)).  The FAR never uses "solicitation" in the context of an order under an IDIQ contract, so I try not to use that word in that context, either.  We understand that a contracting officer can ask for re-representation of size status for an order opportunity under multiple-award IDIQ contracts, but that re-representation is always based on the NAICS code assigned to the contract (FAR 52.219-28(c)), not an entirely new NAICS code.  To me, it just doesn't make any sense to try to apply a wholly new NAICS code to an order opportunity under multiple-award IDIQ contracts.

I try to maintain a purist approach that issuing orders under IDIQ contracts is really a matter of post-award contract administration, and all the pre-award stuff in the FAR regarding contract formation doesn't apply except as FAR Subpart 8.4 (for orders under schedule contracts) or FAR 16.505(b) (for orders under multiple-award IDIQ contracts) explicitly requires.

Another short answer:  Every new requirement doesn't receive an independent NAICS analysis -- every new contract does (FAR 19.303) -- but sometimes, we satisfy requirements without awarding new contracts.  In this context, an order under a multiple-award IDIQ contract is not a new contract.

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On 11/14/2017 at 5:17 AM, ji20874 said:

 The FAR never uses "solicitation" in the context of an order under an IDIQ contract, so I try not to use that word in that context, either.  

The GAO uses it. See HP Enterprise Services, LLC, B- 413888.2 (Comp.Gen.), 2017 CPD P 239, 2017 WL 3309908. The GAO has used the word in several task order "fair opportunity" protests.

See the definition of solicitation in FAR 2.101.

Quote

“Solicitation” means any request to submit offers or quotations to the Government. Solicitations under sealed bid procedures are called “invitations for bids.” Solicitations under negotiated procedures are called “requests for proposals.” Solicitations under simplified acquisition procedures may require submission of either a quotation or an offer.

FAR does use the term in the context of an order under an IDIQ contract. See FAR 16.505(a)(4)(iii)(A)(2).

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Thank you for your input, Vern. Do you have a strong opinion on the applicability of FAR 19.303 to new requirements that could be procured as orders under 16.505?

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I'll re-do my statement:  The FAR never uses "solicitation" in the context of the fair opportunity process for an order under a multiple-award IDIQ contracts, so I try not to use that word in that context, either.

In FAR 16.505(b)(1)(iii)(B)(1), the FAR uses "fair notice of intent to make a purchase" instead of solicitation.  In (b)(1)(iv)(A), the FAR uses "notice of the task or delivery order" instead of solicitation.  Indeed, the word solicitation appears nowhere in the lengthy procedures for the ordering process described in FAR 16.505(b).  I believe this is intentional.  What do you think?

To me, it makes sense for this to be intentional.  I suppose the FAR drafters knew what they were doing in this matter.  If they had used the word solicitation, they would have created real problems with the rest of the FAR.  For example, there are many places in the FAR where one reads that a particular clause is required "in all solicitations and contracts" or "in all solicitations and contracts exceeding the simplified acquisition threshold" and so forth.  The FAR drafters did not intend for these clauses to be included in the notices under FAR 16.505(b), so they didn't describe these notices as solicitations -- instead, they called them notices.

If a contracting officer does not understand this, and insists on describing these notices as solicitations, then he or she will have to comply with the FAR and insert all of those clauses where the prescribing language "in all solicitations and contracts" or "in all solicitations and contracts exceeding the simplified acquisition threshold" and so forth.  With this lack of understanding, the contracting officer will try to force a NAICS code analysis into every order opportunity, even though it will produce an unintended and even absurd outcome of issuing an order with a NAICS code not provided for in the parent IDIQ contract (and which the automated system will likely not accept), in violation of both the FAR and the small business regulations at 13 CFR.

Vern is correct that there is one use of the word solicitation in the context of brand-name justifications in FAR 16.505(a)(4) -- but for me, that one stray use does not overcome the complete and intentional absence of the word in 16.505(b).  But if it does, then you must take it to the logical conclusion:  your notice solicitation for an order opportunity must contain every clause or provision in the FAR where the prescribing language says "in all solicitations and contracts" or "in all solicitations and contracts exceeding the simplified acquisition threshold" and so forth.  And if you decide to do a new NAICS code analysis for an order opportunity because FAR 19.303 says solicitation, well, I don't know how you will get FPDS-NG and your own local automated system to accept a new NAICS code for the order.

For all these reasons, I support the FAR drafters in using the word notice instead of solicitation in the ordering processes described in FAR 16.505(b).

Having said all that, I am aware that many others do not see this distinction (perhaps including those who later added the word solicitation in 16.505(a)(4)).  Instead of the ordering process being seen as a matter of post-award contract administration (the original intention), we as a community have turned it into another convoluted and difficult pre-award process.  Insisting on doing a new NAICS code analysis for an order opportunity, because we insist on imposing the word solicitation in FAR 16.505(b) where it never appears and then seeing that FAR 19.303 uses the word solicitation, is an example.

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7 hours ago, ji20874 said:

In (b)(1)(iv)(A), the FAR uses "notice of the task or delivery order" instead of solicitation.  Indeed, the word solicitation appears nowhere in the lengthy procedures for the ordering process described in FAR 16.505(b).  I believe this is intentional.  What do you think?

To me, it makes sense for this to be intentional.  I suppose the FAR drafters knew what they were doing in this matter...

*  *  *

Vern is correct that there is one use of the word solicitation in the context of brand-name justifications in FAR 16.505(a)(4) -- but for me, that one stray use does not overcome the complete and intentional absence of the word in 16.505(b).

@ji20874

The notion that the FAR councils knew what they were doing is laughable. When the rule was first published they had no idea how multiple award contracting was going to be done.

What is your evidence that the omission of the word solicitation in 16.505(b) was intentional? Background in the Federal Register in either the proposed or final rule? Or is the assertion of intentionality merely a supposition on your part?

If an agency requests offers or quotes for a prospective task order, why isn't that request a solicitation as defined in FAR 2.101?

What if the agency refers to its request as a solicitation?

Why do you think the GAO uses the word solicitation in connection with requests for task order proposals?

Google <<solicitation for task order proposals>> and see what you get, then tell me what you think. Are all those agencies wrong? Misinformed? Ignorant?

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Vern,

So, then, you would assert that a notice (or solicitation) for a fair opportunity task order must include all the FAR clauses where the prescribing language says to include the clause in all solicitations?

By the way, I never said everyone else was wrong.  You are wrong to so suggest.  I said that I don't use the word solicitation to describe what the fair opportunity procedures calls a notice, because it makes sense not to, and that I believe the word solicitation was intentionally avoided.  Given a choice between believing the word usage was intentional or unintentional, it is far easier for me to believe it was intentional.  If there was no purposeful intent, then they almost certainly would have used the word solicitation.  But they didn't call it a solicitation -- they called it a notice.  Why do you think they did that?

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1 hour ago, ji20874 said:

Vern,

So, then, you would assert that a notice (or solicitation) for a fair opportunity task order must include all the FAR clauses where the prescribing language says to include the clause in all solicitations?

ji:

I would not assert anything at this point. I'm challenging your assertions.

I don't know what I think about the matter yet. But you have forcefully argued that the term solicitation does not apply to requests for task order proposals or quotes and that this inapplicability is intentional. You conclude that a CO thus need not do a FAR 19.303 NAICS code analysis when issuing a task order request. I think that we have to consider all of the premises underlying your argument before we can accept your conclusion. My questions to you reflect my doubts about your first premise.

I doubt that the FAR councils thought about the issue at all. When they first issued the rules in FAR 16.505(b) they did not anticipate post-award MATOC order set-asides a la FAR 19.502-4(c).

See FAR 19.303(a):

Quote

(a)(1) The contracting officer shall determine the appropriate North American Industry Classification System (NAICS) code and related small business size standard and include them in solicitations above the micro-purchase threshold. For information on size standards matched to industry NAICS codes, including the use of new NAICS codes, see also 19.102(a).

(2) The contracting officer shall select the NAICS code which best describes the principal purpose of the product or service being acquired. Primary consideration is given to the industry descriptions in the U.S. NAICS Manual, the product or service description in the solicitation and any attachments to it, the relative value and importance of the components of the procurement making up the end item being procured, and the function of the goods or services being purchased. A procurement is usually classified according to the component which accounts for the greatest percentage of contract value. A concern that submits an offer or quote for a contract where the NAICS code assigned to the contract is one for supplies, and furnishes a product it did not itself manufacture or produce, is categorized as a nonmanufacturer and deemed small if it meets the requirements of 19.102(f).

Emphasis added. FAR 19.303(b) says:

Quote

If different products or services are required in the same solicitation, the solicitation shall identify the appropriate small business size standard for each product or service.

What if, as appears to be FrankJon's case, the solicitation for the MATOC did not do that?

And what if the CO is now going to issue a request for a task order proposal for specific work best described by a different NAICS code than the one that represented the greatest percentage of contract value? And what if the CO plans to set that order aside for small businesses?

And what if some contractors that were small businesses under the "principle purpose" NAICS code in the MATOC solicitation are not a small business under the NAICS code that governs the specific work to be done under the task order?

Which of the contractors are small businesses for the purpose of that task order? Don't you have to know the appropriate NAICS code in order to answer that question? Doesn't the CO have to tell the MATOC contractors which of them can be considered under the task order set-aside? Doesn't he or she have to do a NAICS analysis in order to tell them? Can he or she award the task order set-aside to a contractor that is not a small business for that particular work?

I'm not ready to make an argument, and I'm not going to answer any questions about an assertion that I did not make.

I'll understand if you don't want to answer the questions that I put to you.

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I conclude that a contracting officer need not/cannot do a new NAICS code analysis for a task order because the NAICS code analysis was already done for the parent IDIQ contract, and the order opportunities must use the NAICS code(s) established in the parent contract.

I do understand why you won't answer the questions I put to you.

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13 minutes ago, ji20874 said:

The order opportunities must use the NAICS code(s) established in the parent contract.

Based on what do you say that? Can you cite a regulation?

What if the solicitation for the MATOC did not comply with FAR 19.303(b)?

Have you read 13 CFR § 121.402(c)?

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I asked ji20874 on what basis he asserted, "The order opportunities must use the NAICS code(s) established in the parent contract." I have found one answer to that question. See NAICS Appeal of: Dellew Corp., SBA No. NAICS-5837, 2017, 2017 WL 2618804, June 9, 2017,  a decision of SBA's Office of Hearings and Appeals. The decision cites earlier SBA OHA decisions.

I don't believe the decision is necessarily the last word on the matter, but it reinforces the potential importance of agency compliance with FAR 19.303(b) when issuing a solicitation for award of a MATOC. See also 13 CFR 121.402(c)(1). While COs must assign a single NAICS code to the solicitation, they must identify the NAICS code(s) associated with any work that is not part of the principal purpose. That could be done through CLIN structure or by annotating the statement of work.

Small business offerors reviewing a solicitation for award of a MATOC might want to inquire whether the NAICS code assigned to an RFP represents all of the work to be ordered or only the principal purpose work. See FAR 19.303(c).

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This discussion has been very interesting to me. My initial question, whether the order NAICS must match the IDIQ NAICS, turned out to be a simple one. The answer is clearly yes. But ji read between the lines and realized that the deeper question is whether a NAICS analysis should be performed at the order level. Beyond Vern's and ji's points, I continue to discuss this subject around the office and gain additional viewpoints.

I agree with Vern, in theory, that the regulations lead one to the conclusion that a new NAICS analysis must be done for each requirement, including prospective orders, prior to determining the acquisition strategy. Assuming that the IDIQ has appropriate NAICS codes associated with "non-principal" work, in accordance with 13 CFR 121.402(c)(1)(2), then performing a NAICS analysis at the order level would not hinder the CO's ability to use an IDIQ that otherwise matches the scope of the prospective order. (Even if a non-IDIQ NAICS would indeed be a better fit for a prospective order, there would hopefully be sufficient overlap between the "ideal" and the "possible" that the CO could make a compelling case to use the IDIQ.)

Nevertheless, in practice, I believe that this issue will continue to be a messy one. First, FPDS-NG simply does not play well with the CFR guidance on this. If I were to solicit an order as a set-aside under a "non-primary" NAICS code, I might get a more accurate pool of small businesses competing for the work than if I had solicited the order under the primary NAICS; however, the winner would still be reported under the primary NAICS code. Thus, the situation could arise whereby a company that is "small" for solicitation purposes is "large" for award purposes, and vice versa. Second, there seems to be no shortage of "best in class" MACs and GWACs that disregard the CFR rule to divide the contract into multiple NAICS codes. For instance, on SEWP, the Government can by laptops under NAICS 541519. I haven't looked recently, but I believe that NASA would cite the VAR exception if asked to defend this choice. But, of course, that would be absurd for laptops--a small business reseller will not be providing any added value via services. If something goes wrong with the laptops within the warranty period, it's the manufacturer who will be assisting. I'm not suggesting that NASA's decision in itself justifies anyone else circumventing the CFR guidance, but at a certain point, practices are so prevalent that they become norms.

On ‎11‎/‎17‎/‎2017 at 8:58 AM, Vern Edwards said:

when issuing a solicitation for award of a MATOC.

As an aside, Vern, I'm curious about your use of the acronym "MATOC" throughout this thread. This is the first time I've seen someone use it outside of a construction context. Do you commonly use this to describe any task order contract?

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I don't think that a new NAICS analysis needs to be done for each requirement. I think that you must comply with both FAR 19.303 and 13 CFR 121.402(c), which requires a complete NAICS code analysis for all prospective work before the contract solicitation is issued. After than, you simply assign the appropriate NAICS code on an order-by-order basis.

See 13 CFR 121.402(c).

Quote

(c) Multiple Award Contracts (see definition at § 125.1).

(1) For a Multiple Award Contract, the contracting officer must:

(i) Assign the solicitation a single NAICS code and corresponding size standard which best describes the principal purpose of the acquisition as set forth in paragraph (b) of this section, only if the NAICS code will also best describe the principal purpose of each order to be placed under the Multiple Award Contract. If a service NAICS code has been assigned to the Multiple Award Contract, then a service NAICS code must be assigned to the solicitation for the order, including an order for services that also requires some supplies; or

(ii) Divide the solicitation into discrete categories (such as Contract Line Item Numbers (CLINs), Special Item Numbers (SINs), Sectors, Functional Areas (FAs), or the equivalent), and assign each discrete category the single NAICS code and corresponding size standard that best describes the principal purpose of the goods or services to be acquired under that category (CLIN, SIN, Sector, FA or equivalent) as set forth in paragraph (b) of this section. A concern must meet the applicable size standard for each category (CLIN, SIN, Sector, FA or equivalent) for which it seeks an award as a small business concern.

(2)(i) The contracting officer must assign a single NAICS code for each order issued against a Multiple Award Contract. When placing an order under a Multiple Award Contract with multiple NAICS codes, the contracting officer must assign the NAICS code and corresponding size standard that best describes the principle purpose of each order. In cases like the GSA Schedule, where an agency can issue an order against multiple SINs with different NAICS codes, the contracting officer must select the single NAICS code that best represents the acquisition.

(ii) With respect to an order issued against a multiple award contract, an agency will receive small business credit for goaling only if the business concern awarded the order has represented its status as small for the underlying multiple award contract for the same NAICS code as that assigned to the order, provided recertification has not been required or occurred for the contract or order.

See also 13 CFR 121.402(e):

Quote

(e) An unclear, incomplete or missing NAICS code designation or size standard in the solicitation may be clarified, completed or supplied by SBA in connection with a formal size determination or size appeal.

As you can see, you may not use just a "principal purpose" NAICS code and size standard for a MATOC or MADOC unless that NAICS code and standard will apply to all orders. Otherwise you must include a NAICS code and size standard for each kind of work for which orders will be issued. Each order is then issued with its own NAICS code and size standard. That has been the law since December 2013. See also FAR 19.303(b).

In the one SBA OHA case that I cited, a small business contractor appealed the decision to apply the principal purpose NAICS code used in the contract solicitation to an order to which it did not apply. The OHA dismissed the appeal, saying that in light of the facts the order had to use the same NAICS code as the was used for the contract, because the MATOC solicitation had included only a principle purpose NAICS code and the appellant had missed the deadline for appealing. I think that the OHA ruling was unjust and that it may not have complied with the law, but the appellant did not appeal that decision.

As for "MATOC", I have used that acronym on occasion for other than construction contracts, although the most common use is in connection with construction contracts. The ASBCA has used it mainly in connection with construction contracts, but also for ship repair. I've found a COFC decision in which it was used for software development. Search FBO and you'll find it used for many kinds of contracts, including R&D:

Quote

3. Description of Supplies/Services:
This Contract provides for the transition of the research, development, test, evaluation, production and fielding support services for Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) services provided to the Army under a Navy C4ISR award while the RDRL-CI's Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance, and Reconnaissance (C5ISR) Multiple Award Task Order Contract (MATOC) undergoes Source Selection.

You might be interested to know that according to a Westlaw search, the acronym MATOC does not appear anywhere in the FAR System, Title 48 of the CFR, neither does the term "multiple award task order contract."

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