Problem of the Day

[Don Mansfield]

Scenario: You are a contracting officer and you have a requirement for the purchase of an estimated $1 million worth of noncommercial supplies. The acquisition is in support of a contingency operation and the purchase is to be made outside the United States using simplified acquisition procedures (SAT=$1.5 million). None of the exceptions to requiring certified cost or pricing data at FAR 15.403-1(b) apply.  

[Gordon Shumway]

Don, this is great!!

[Matthew Fleharty]

I'm curious to hear the story behind why this became the Problem of the Day.

Also, will this be a recurring thing?

[Don Mansfield]

1 hour ago, Matthew Fleharty said:

I'm curious to hear the story behind why this became the Problem of the Day.

Also, will this be a recurring thing?

I'm adding a column to the DAU Provision and Clause Matrix that will indicate whether a provision or clause applies at or below the SAT. Yesterday I came across some prescriptions that were dependent on the acquisition exceeding the certified cost or pricing data threshold. Then, I envisioned this scenario.

I can't promise a problem every day. I'll post whenever I can think of a good one.

[Jamaal Valentine]

I wonder what the prescriptions are and if they intentionally turn on the threshold for obtaining certified cost or pricing data ($750,000) rather than actions that require certified cost or pricing data. The threshold is merely a value...applicability could be something else.

[Don Mansfield]

8 minutes ago, Jamaal Valentine said:

I wonder what the prescriptions are and if they intentionally turn on the threshold for obtaining certified cost or pricing data ($750,000) rather than actions that require certified cost or pricing data. The threshold is merely a value...applicability could be something else.

For examples of such prescriptions, see FAR 14.201-7(b)(1) & (c)(1), and 15.408(n)(2).

[Don Mansfield]

Looks like the "No" votes win in a landslide. My answer would be "yes", because the statutes (10 USC 2306a and 41 USC Chapter 35) would require certified cost or pricing data above $750,000. Unlike the FAR, the statute doesn't contain a prohibition for obtaining certified cost or pricing data below the SAT. FAR 15.403-1(a) states that:

Quote

Certified cost or pricing data shall not be obtained for acquisitions at or below the simplified acquisition threshold.

"Simplified acquisition threshold" is defined at FAR 2.101 as:

Quote

 

“Simplified acquisition threshold” means $150,000 (41 U.S.C. 134), except for–

(1) Acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack (41 U.S.C. 1903), the term means–

(i) $750,000 for any contract to be awarded and performed, or purchase to be made, inside the United States; and

(ii) $1.5 million for any contract to be awarded and performed, or purchase to be made, outside the United States; and

(2) Acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a humanitarian or peacekeeping operation (10 U.S.C. 2302), the term means $300,000 for any contract to be awarded and performed, or purchase to be made, outside the United States.

 

However, I don't think that is what the term means in the context of FAR 15.403-1(a). Regarding the application of definitions, FAR 2.101(a)(1) states:

Quote

 

A word or a term, defined in this section, has the same meaning throughout this regulation (48 CFR Chapter 1), unless—

(1) The context in which the word or term is used clearly requires a different meaning

 

Since applying the definition at FAR 2.101 would create a potential conflict with the underlying statute, I don't think we can interpret the term to mean "$1.5 million" when used at FAR 15.403-1(a). I would interpret it to mean "$150,000".

Also, the fact that you are using SAP in the scenario shouldn't matter. The statute applies when using "other than sealed-bid procedures". 10 USC 2306a states:

Quote

 

(a) Required Cost or Pricing Data and Certification.-(1) The head of an agency shall require offerors, contractors, and subcontractors to make cost or pricing data available as follows:

(A) An offeror for a prime contract under this chapter to be entered into using procedures other than sealed-bid procedures that is only expected to receive one bid shall be required to submit cost or pricing data before the award of a contract if-

(i) in the case of a prime contract entered into after June 30, 2018, the price of the contract to the United States is expected to exceed $2,000,000; and

(ii) in the case of a prime contract entered into on or before June 30, 2018, the price of the contract to the United States is expected to exceed $750,000.

 

So, that's my answer. Maybe one of the "no" voters can persuade me otherwise.

[here_2_help]

Don,

My answer "no" was based on 15.403-1(a), which prohibits obtaining certified cost or pricing data for acquisitions below the SAT.  The SAT is defined at 2.101. (The CAAC just issued a Deviation that gave civilian agencies permission to refine the SAT to meet the NDAA definitions, but that's not germane.)

Further, see (for example) 52.215-12 -- "Before awarding any subcontract expected to exceed the threshold for submission of certified cost or pricing data at FAR 15.403-4 … the Contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing), in accordance with FAR 15.408, Table 15-2 … unless an exception under FAR 15.403-1 applies.”) You do a lot of hand-waving trying to redefine the SAT but I, for one, am not persuaded. The SAT is defined and that's good enough for me. If the SAT was $1.5 million based on the circumstances (as your problem stated it was), then obtaining certified cost or pricing data is prohibited. Period. You cannot hand-wave away a regulatory exception.

If we are going to argue conflict between statute and regulation, then effective 18 June 2018, FAR 15.403-4(a)(1) (“The threshold for obtaining certified cost or pricing data is $750,000.”) is flat-out wrong.

 

[Don Mansfield]

help,

Your interpretation creates a conflict between FAR 15.403-1(a) and FAR 15.403-4(a), which states:

Quote

The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies. However, if the contracting officer has reason to believe exceptional circumstances exist and has sufficient data available to determine a fair and reasonable price, then the contracting officer should consider requesting a waiver under the exception at 15.403-1(b)(4). The threshold for obtaining certified cost or pricing data is $750,000. Unless an exception applies, certified cost or pricing data are required before accomplishing any of the following actions expected to exceed the current threshold or, in the case of existing contracts, the threshold specified in the contract--

In the scenario, the amount of the contract will exceed $750,000 and none of the exceptions in FAR 15.403-1(b) applies.

[here_2_help]

Don,

Agreed but the exception at 15.403-1(a) is still there. I can't help it if rule-makers forgot it. In fact, it's such an important exception that it has a place all to itself; it's not lumped in with the other exceptions at  15-403-1(b). It's place of prominence makes me think it may supersede the other language, though of course I have no support for that belief.

[Guest Vern Edwards]

I agree with H2H.

FAR 15.403-1(a) is clear.

Quote

(a) Certified cost or pricing data shall not be obtained for acquisitions at or below the simplified acquisition threshold.

A CO must not to demand certified cost or pricing data "at or below" the SAT ("shall not"). That is an absolute prohibition, not an exception to the requirement for submission. At or below the SAT you don't need an exception to a requirement, because there is no requirement. You never get to FAR 15.403-4.

According to FAR 2.101, the SAT in Don's case is $1.5 million.

Here is Don's scenario:

On 3/14/2018 at 3:12 PM, Don Mansfield said:

Scenario: You are a contracting officer and you have a requirement for the purchase of an estimated $1 million worth of noncommercial supplies. The acquisition is in support of a contingency operation and the purchase is to be made outside the United States using simplified acquisition procedures (SAT=$1.5 million). None of the exceptions to requiring certified cost or pricing data at FAR 15.403-1(b) apply.  

So Don's prospective acquisition is below the SAT.

I see no conflict between 15.403-4 and 15.403-1(a). When reading the regulation in this case you stop after reading 15.403-1(a). Again, the prohibition in that paragraph is absolute. There is no reason to read on to 15.403-4. There is no reason to look for an exception. Why bother?  There is no requirement. You've been told that under no circumstance are you to require submission of certified cost or pricing data.

[Don Mansfield]

Vern,

How would that be compliant with the statute?

[Jamaal Valentine]

What if you were doing sealed bidding under SAP?

[Guest Vern Edwards]

18 hours ago, Don Mansfield said:

How would that be compliant with the statute?

@Don Mansfield

By being compliant with the regulation that implements the statute.

The FAR councils are charged with interpreting and implementing statutes, not individual contracting officers. The FAR councils interpreted the statute and promulgated a regulation.

In this case FAR 15.403-1(a)(1) strikes me as very clear. A CO has no authority, under any circumstances, to require the submission of certified cost or pricing data in acquisitions at or below the SAT. Since there is no requirement and no authority, one need not seek an exception to any requirement.

Moreover, see FAR 15.403-4(a)(2), which says, in pertinent part:

Quote

(2) Unless prohibited because an exception at 15.403-1(b) applies, the head of the contracting activity, without power of delegation, may authorize the contracting officer to obtain certified cost or pricing data for pricing actions below the pertinent threshold in paragraph (a)(1) of this subsection, provided the action exceeds the simplified acquisition threshold. 

That sentence, to me, reinforces the absoluteness of the prohibition in FAR 15.403-1(a)(1).

The prohibition against requiring certified cost or pricing data at or below the SAT dates to as least as far back as 1995 and the implementation of the Federal Acquisition Streamlining Act. The 2017 change to the statutory definition of the SAT to include a SAT for contingency operations outside the U.S. that is higher than the threshold for requiring certified cost or pricing data was not accompanied by any change to FAR 15.403-1(a)(1). As far as I am concerned, that puts an end to any debate. FAR says what it says.

Should the FAR councils have changed FAR 15.403-1(a)(1) in light of the increase in the SAT for contingency ops? I don't know and I don't care. That was for them to have figured out. I'll work with the regulation that I have unless and until told to do differently.

I believe that my interpretation of FAR 15.403-1(a)(1) is consistent with the plain language of the regulation. If a regulation that implements a statute is ambiguous, a CO might look to the statute as an aid to interpretation, but not to contradict plain language. In this case I see no ambiguity and no justification for saying that my interpretation conflicts with the statute. If a CO thinks a regulation conflicts with statute, or that his or her interpretation might conflict with statute, he or she should seek guidance through appropriate channels.

As an aside, your interpretation would render the idea of a "simplified" acquisition procedure practically meaningless, since there is nothing simple about the procedures associated with the submission and consideration of certified cost or pricing data. Such procedures slow procurement, an especially important concern in the case of contingency ops, for which requests for certified cost or pricing data would potentially cancel out any benefits were undoubtedly expected from the increase in the SAT.

So my answer to your problem and question is No.

Let me know if I have missed something or you discover any official and authoritative interpretation to the contrary.

[Guest PepeTheFrog]

On 3/16/2018 at 12:52 PM, Don Mansfield said:

Since applying the definition at FAR 2.101 would create a potential conflict with the underlying statute, I don't think we can interpret the term to mean "$1.5 million" when used at FAR 15.403-1(a). I would interpret it to mean "$150,000".

Also, the fact that you are using SAP in the scenario shouldn't matter.

One reason for contracting officers to follow the FAR (rather than interpret statutes and their relationship to the FAR) is to avoid discussions like this. Contracting officers can barely interpret (read) and follow the FAR. Sadly, it's almost laughable to expect them to competently interpret (read) statutes and harmonize them with regulations. 

The fact that you are using SAP is less important than the fact that the scenario involves a dollar figure below the SAT.  

PepeTheFrog says don't ask for certified cost and pricing data. 

Don Mansfield, PepeTheFrog thinks that rather than challenging seemingly conflicting acquisition statutes and regulations, you are inching towards challenging the grotesque and frightening rise of the Administrative State and the unconstitutional power of the Executive Branch agencies, which exhibit legislative, executive, and judicial authority. PepeTheFrog is more interested in that discussion. Why should Executive Branch agencies have their own fake "courts" and be able to write regulations? Even if you think having an agency for Education or Environment or Health or Agriculture is a good idea, why have only one agency at the nationwide level? Why not have decentralized test cases in different states? It's almost like the Founding Fathers had these ideas about decentralization, states' rights, negative rights, individual liberty, and real-life experimentation of systems of government via federalism and it all got flushed down the toilet over the years...

[Don Mansfield]

10 hours ago, Vern Edwards said:

By being compliant with the regulation that implements the statute.

So if I'm compliant with FAR 33.208 regarding the payment of interest on claims, then I'm compliant with the Disputes statute? 

You don't have to answer that.

[Guest Vern Edwards]

Stick to the topic that you chose, which is the requirement for certified cost or pricing data. In any case, we have relevant court decisions about interest on claims. I am not aware of any such decision(s) pertaining to requiring certified cost or pricing data for the kind of acquisition that you posed to us.

[Don Mansfield]

Vern,

Your argument was premised on the notion that being compliant with a regulation that implements the statute would make you compliant with the statute. I provided a counterexample--I didn't change the topic.

[Guest Vern Edwards]

18 hours ago, Don Mansfield said:

So if I'm compliant with FAR 33.208 regarding the payment of interest on claims, then I'm compliant with the Disputes statute?

@Don Mansfield Okay, I'll answer your question. Yes.

[Retreadfed]

4 hours ago, Vern Edwards said:

Okay, I'll answer your question. Yes.

Vern, can you expand upon your answer and give an explanation.  For everyone's benefit here is what the statute says about when interest begins to accrue

Interest on an amount found due a contractor on a claim shall be paid to the contractor for the period beginning with the date the contracting officer receives the contractor’s claim, pursuant to section 7103(a) of this title, until the date of payment of the claim.

[Guest Vern Edwards]

Why do I have to explain?  Don brought it up! I knew this would happen if I answered his question.

Okay, Retread has quoted the statute. Now, here's FAR 33.208:

Quote

(a) The Government shall pay interest on a contractor’s claim on the amount found due and unpaid from the date that—

(1) The contracting officer receives the claim (certified if required by 33.207(a)); or

(2) Payment otherwise would be due, if that date is later, until the date of payment.

See the issue? If a CO complies with that, has she complied with the statute?

[Retreadfed]

I see the issue, and my answer to Don's question about compliance and your second question would be my favorite answer, it depends. This topic is of particular interest to me as I was involved in the Albericci-Eby (hopefully I have spelled it correctly have all these years) appeal to the Fed. Cir.

[Don Mansfield]

23 hours ago, Vern Edwards said:

@Don Mansfield Okay, I'll answer your question. Yes.

Really? So, assuming the date "payment would otherwise be due" is later than the date the CO received the claim, the CO would be compliant with the Disputes statute if they paid interest starting on the date "payment would otherwise be do"?

Yes or no is sufficient--you don't need to explain.

Also, just so I'm clear on your position--you believe, as a general proposition, that compliance with the regulation implementing a statute ensures compliance with the statute. Do I have that right? 

Again, yes or no is sufficient--you don't need to explain.

[Guest Vern Edwards]

I've answered your poll question and explained my answer. That's all the answer and explanation I'm going to give.

[joel hoffman]

22 hours ago, Retreadfed said:

I see the issue, and my answer to Don's question about compliance and your second question would be my favorite answer, it depends. This topic is of particular interest to me as I was involved in the Albericci-Eby (hopefully I have spelled it correctly have all these years) appeal to the Fed. Cir.

Retreadfed may be referring to J.S. Alberici Construction Co., Inc. & Martin K. Eby Construction Co., Inc., ENGBCA No. 6179, 97-1 BCA ? 28639.  Or, perhaps: Caldera v. J.S. Alberici Const. Co., 153 F.3d 1381, 1383 (Fed.Cir.1998).  See further below 

 

 

On ‎3‎/‎20‎/‎2018 at 12:03 PM, Vern Edwards said:

@Don Mansfield Okay, I'll answer your question. Yes.

 

On ‎3‎/‎20‎/‎2018 at 6:31 PM, Vern Edwards said:

Why do I have to explain?  Don brought it up! I knew this would happen if I answered his question.

Okay, Retread has quoted the statute. Now, here's FAR 33.208:

See the issue? If a CO complies with that, has she complied with the statute?

See this 2011 thread which discussed the conflict between the FAR and the Contract Disputes Act concerning when interest accrual on the payment of a claim begins. 

http://www.wifcon.com/discussion/index.php?/topic/994-usc-takes-precedence-over-the-far/

I didn’t search the Forum archives further but, in the Original Post in that thread, FAR Fetched referenced an earlier discussion thread (SEE MY NEXT POST FOR THE LINK TO THE EARLIER THREAD)

 

In the above thread link, FAR Fetched referred to a post that Vern made in the earlier thread, stating in part:

Quote

Vern Edwards said: 

4. The FAR cites at least 18 titles of the United States Code that also govern acquisition in some way and that, in some cases, take precedence over the FAR in the case of a conflict.

 

 

Vern also mentioned in the linked thread the case that Retreadfed appears to be referring to as well as to an article which he wrote in the February 2009 edition of The Nash & Cibinic Report: 

 

Quote

The most extensive discussion of the conflict is in the Corps of Engineers Board of Contract Appeals decision in J.S. Alberici Construction Co., Inc. & Martin K. Eby Construction Co., Inc., ENGBCA No. 6179, 97-1 BCA ? 28639. The FAR councils have never changed FAR to reflect the decisions, which I wrote about in the February 2009 edition of The Nash & Cibinic Report, in A mystery: when does interest begin to accrue on a contractor?s claim?