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What is the intended applicability of the "Contracts For Materials, Supplies, Articles, and Equipment Exceeding $15,000" statute?"

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What is the intended applicability of the "Contracts For Materials, Supplies, Articles, and Equipment Exceeding $15,000" statute?" My confusion is based around the broadest statutory exemption located in FAR 22.604-1(a) where it says "Contracts for acquisition of the following supplies are exempt from the statute: (a) Any item in those situations where the contracting officer is authorized by the express language of a statute to purchase “in the open market” generally (such as commercial items, see Part 12); or where a specific purchase is made under the conditions described in 6.302-2 in circumstances where immediate delivery is required by the public exigency."  [I'm not concerned with the clear-cut exemptions in 22.604-1(b) through (d)]

Am I correct in thinking that any "open market" purchase is exempt from this statute, and that it need not be a commercial purchase?  For example, if I have a "sole source" non-commercial contract using the 6.302-1 other than full and open competition authority for the contractor to deliver a supply item, the statute would NOT apply because this is still an open market purchase, correct? An example of a purchase not in the open market would be an AbilityOne purchase using FAR 8.7, because we are required to utilize AbilityOne in 8.002(a)(1)(iv) before we are allowed to pursue an Open Market purchase pursuant to 8.004(b)? Or am I mistaken on either of those examples?

I think the second half of 22.604-1(a) adds to my confusion, since I do not understand why 6.302-2 is called-out specifically when use of any of the other 6.302 authorities would still allow for open market purchases. Perhaps my definition of open market is incorrect? I believe open market means that the company or companies you are entering into a contract with are independent companies part of the open market, and whether the actual purchase made is full and open competition or sole source is irrelevant. My example of AbilityOne would NOT be an open market entity because it is prescribed to be utilized by statute when they can supply your requirement, in contrast to a company you freely choose to do the work, or who wins a publicly posted solicitation.

I just want to make sure I am understanding the 22.604-1(a) exemption correctly, since it seems like it applies to a wide swath of contracts if I am interpreting it correctly, while the contents of the associate clause (52.222-20) seem like requirements you would want to include in a large number of contracts.  So the fact that you would not be including 52.222-20 in a large number of contracts based on my interpretation is concerning, and makes me question my understanding of the exemption.

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It's interesting to me that the FAR uses quotation marks around "in the open market," then cites to FAR 12 as an example. Here's what the statute states:

Quote

(a)Items Available in the Open Market.—

This chapter does not apply to the purchase of materials, supplies, articles, or equipment that may usually be bought in the open market.

https://www.law.cornell.edu/uscode/text/41/6505

I'm speculating, but my impression is that the FAR drafters did not know exactly what the statute meant by the quoted language, so they decided to give an example that they were sure about and keep it open to interpretation.

To your question, we do know at a minimum that anything that can be defined as "commercial" is exempted. So you have to look at the thing being purchased to determine commerciality in this case, not the source or program under which it's purchased, and compare it to the definition of Commercial Item at FAR 2.101. AbilityOne is a program. As far as I know, its suppliers, such as Skilcraft, only make commercial items, like clocks and pens (I don't know this to a certainty, but I'm pretty confident office supplies represent the vast majority of what they do). Just because a pencil says "Skilcraft" on the side doesn't mean it's not commercial. I don't know what you're buying under the AbilityOne Program, but I think there's a very good chance it's commercial, and thus you are exempted from the requirements of 41 U.S. Code § 6505.

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I think AbilityOne was a bad choice of an example, since I did not consider that they only sell commercial products, although that seems painfully obvious in hindsight. I chose them as an example because in FAR 8.002, 8.003, and 8.004, it essentially lists a series of mandated and then preferred sources that culminate in you being able to purchase in the open market when you get to 8.004.  So I was interpreting the mandatory sources in 8.002 s being NOT in the open market, since they are prescribed to be used by statute.  I did not consider the fact that AbilityOne likely only sells commercial items and is exempt from the "Contracts For Materials, Supplies, Articles, and Equipment Exceeding $15,000" statute, so it was a poor choice. I'm not sure off the top of my head what mandatory source would sell non-commercial items, but if we pretend there is one, lets substitute that into my initial post for clarification to all who may comment henceforth. 

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Random thoughts with no claim that they answer the “open market” question.

Consider the CFR rather than the statute….

41-CFR 50-201.1 The Walsh-Healey Public Contracts Act.

The Walsh-Healey Public Contracts Act, as amended ( 41 U.S.C. 35- 45), hereinafter referred to as the Act, was enacted “to provide conditions for the purchase of supplies and the making of contracts by the United States.” It is not an act of general applicability to industry. The Supreme Court has described it as an instruction by the Government to its agents who were selected and granted final authority to fix the terms and conditions under which the Government will permit goods to be sold to it. Its purpose, according to the Supreme Court “was to impose obligations upon those favored with Government business and to obviate the possibility that any part of our tremendous national expenditures would go to forces tending to depress wages and purchasing power and offending fair social standards of employment.” (“Perkins v. Lukens Steel Co.,” 310 U.S. 113, 128 (1940); “Endicott Johnson Corp. v. Perkins,” 317 U.S. 501 (1943).) To this end, the Act requires those who enter into contracts to perform Government work subject to its terms to adhere to specifically prescribed representations and stipulations as set forth in 41 CFR 50-201.1 pertaining to qualifications of contractors, minimum wages, overtime pay, safe and sanitary working conditions of workers employed on the contract, the use of child labor or convict labor on the contract work, and the enforcement of such provisions. Except as otherwise specifically provided, these representations and stipulations are required to be included in every contract “for the manufacture or furnishing of materials, supplies, articles, and equipment in any amount exceeding $10,000” which is made and entered into by an agency of the United States or other entity as designated in section 1 of the Act, hereinafter referred to as “contracting agency.” Contractors performing work subject to the Act thus “enter into competition to obtain Government business on terms of which they are fairly forwarned by inclusion in the contract.” (“Endicott Johnson Corp. v. Perkins, supra,” 317 U.S. at 507.) The Act also provides for enforcement of the required representations and stipulations by various methods. Certain exemptions from the application of the Act are provided in section 9 of the statute. Other exemptions, variations, and tolerances may be provided under section 6 of the statute by the Secretary of Labor or the President.

[ 43 FR 22975, May 30, 1978. Redesignated at 61 FR 40716, Aug. 5, 1996]

 

Consider this from the AbilityOne Program website…..

7. Where can Federal customers find the Procurement List and what are some examples of available products and services?

The complete Procurement List is available to view and download on the website of the U.S. AbilityOne Commission, which is www.abilityone.gov. Many AbilityOne common-use products included on the Procurement List are also clearly identified in the print and electronic catalogs of AbilityOne-authorized Federal and commercial distributors, such as GSA Advantage!™ (www.gsaadvantage.gov), GSA
Global Supply (www.gsaglobalsupply.gsa.gov), DODEMALL (https://dod-emall.dla.mil), and www.abilityone.com.

Current product lines include aircraft and vehicular equipment and supplies, clothing, textiles and individual equipment, food processing, packaging and distribution, hardware and equipment, office products (e.g. pens, binder clips, paper products, etc.), environmentally friendly and recycled products (e.g. biodegradable disposable cutlery), military-specific products (such as chemical protective over garments and cold weather infantry kits) and medical supplies (such as catheters and surgical masks). Services include contract 26 AbilityOne Procurement Guide for the Department of Defense Chapter 4: Frequently Asked Questions 27 management support (close-out), custodial, administrative services, contact centers, document management services, fleet management, food service, full facility management, grounds maintenance, healthcare environmental/hospital services, laundry services, secure mail/digital document services, and supply chain management. A list of AbilityOne Capabilities is provided in Chapter 3.

 Finally to replace "open market" while not defined with "commercial item" as  defined FAR term as its intended definition seems a slippery slope.   While in quick research I could not find something that would help it would seem that the USDOL will determine in the end what "open market" means.

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