Jump to content
The Wifcon Forums and Blogs

Recommended Posts

Hello everybody. I’m having struggle clearing  an issue. Any help would be appreciated.

I’m a non-US guy residing legally in Florida. On March 2018 i established a single owner LLC to compete for DLA contracts on dibbs. I’ve got duns and cage for my company and registered on SAM as required without any trouble. Then i made an agreement with an advanced manufacturing facility located overseas in a qualifying country to manufacture my orders. I exclusively bid for DLA contracts below $150,000. After a few unsuccessful bids, i’ve been awarded two contracts by DLA Troop Support. One of them was worth $126,500 (manual evaluation) and the other was $3600 (automated). I purchased the raw material paying thousands of dollars in cash. Just before starting the manufacturing process, my dibbs account has been locked for validation purposes and my two contracts have been cancelled with reason FAR 13.302-4(b).

I’ve sent all documentation in full required for validation check including the address and photos of the manufacturing facility. I paused the work at that period of time. After waiting for a month i received an email stating that my company is being precluded from bidding on dibbs just because i manufacture the items not in the USA but in a qualifying country. 

Then i prepared and sent an email including clauses about exceptions towards qualifying country products and contracting with qualifying country sources. I know that small businesses should supply domestic end products or buy from other small businesses within the USA. But also according to DFARS 225.872-1 and 252.225.7000 (b) (2) qualfying country end products are treated as domestic products because QC end products are exempt from BAA and balance of payments program. Not to mention dfars 252.225.7002 (b) stating that qualifying country sources or US sources cannot be precluded from competing for subcontracts.

If offering QC end products is a valid reason to preclude a company from bidding on dibbs, then why is there a QC products option on bidding page? I’m having a hard time understanding this. 

 Even after 3 or 4 emails, nobody answered my questions. I couldn’t reach anybody to tell my concerns clearly. I’m still waiting with raw material worth thousands of dollars. I asked the validation team and dla small business office to reconsider my company’s validation status based on rules and clauses i’ve mentioned above but they didn’t even write a single word about it. I don’t even know if my loss is going to be compensated or not. 

Sorry for writing such a long content but i wanted to make everything clear. Am i doing something wrong here? Or am i missing anything? All i want is unlock my dibbs account and get my cancelled contracts back if possible. I’ve invested all my money into this business. Can somebody show me a way to rectify this issue? Thanks in advance..

 

Share this post


Link to post
Share on other sites

Acquisitions less than the simplified acquisition threshold are automatically reserved (or set-aside) for small business concerns. If the solicitation includes the clause at FAR 52.219-6, it appears you are not complying with para. (d).  

BAA and TAA are irrelevant, as the set-aside takes precedence over these.

It seems you need to be bidding on acquisitions that are not set-aside for small business concerns AND are over the TAA thresholds — then, your items may be accepted on a non-discriminatory basis.  

If you bid on supply acquisitions that are not set-aside for small business concerns AND are under the TAA thresholds, then the BAA May apply and your items may be considered on a discriminatory basis (after adding 6% or 12% (by the FAR) or 50% (by the DFARS) to price evaluation).

If you bid on acquisitions that are set-aside for small business concerns, you fail under para. (d) or the clause at FAR 52.219-6 or similar paragraphs in other set-aside clauses.

 

Share this post


Link to post
Share on other sites
21 minutes ago, ji20874 said:

BAA and TAA are irrelevant, as the set-aside takes precedence over these.

This explains everything  Thank you . And what about the money spent on raw material? Is there any way to take it back? At least some of it..

 

 

Share this post


Link to post
Share on other sites

That’s between you and your supplier.  The Government owes you nothing, unless you have a basis for action under FAR 13.302-4(b)(2).

Share this post


Link to post
Share on other sites

One last question. As far as i know taa defines designated countries which are different from qualifying countries. Qualifying countries are specific to defense contracts. They have privilages within DLA solicitations including small business set asides. Does this change anything?

Share this post


Link to post
Share on other sites

Agencies using the DFARS use Balance of Payments.  

The clauses in each solicitation set the rules for that solicitation.  A solicitation with FAR 52.225-1, -3, or -5 will be subject to BAA or TAA (FTA or WTO GPA) rules.  A solicitation with FAR 52.219-6 or another set-aside clause will be subject to set-aside rules.  A solicitation with the DFARS BoP clause will be subject to balance of payment rules.  

I’m not a BoP expert, so I won’t speak directly to that topic.

Share this post


Link to post
Share on other sites

I’m curious as to whether you identified the country of manufacture in your proposal and if the clauses you referred to are in your two contracts with DLA. 

Share this post


Link to post
Share on other sites
17 hours ago, ji20874 said:

Agencies using the DFARS use Balance of Payments.  

The clauses in each solicitation set the rules for that solicitation.  A solicitation with FAR 52.225-1, -3, or -5 will be subject to BAA or TAA (FTA or WTO GPA) rules.  A solicitation with FAR 52.219-6 or another set-aside clause will be subject to set-aside rules.  A solicitation with the DFARS BoP clause will be subject to balance of payment rules.  

I’m not a BoP expert, so I won’t speak directly to that topic.

Thanks for your reply. I checked my contracts again. Since i'm bidding for DLA contracts below $150,000 only, none of them contain the FAR rules you mentioned. They all have "DFARS 252.225-7001, BUY AMERICAN AND BALANCE OF PAYMENTS PROGRAM APPLIES TO ALL QUOTES ABOVE THE MICRO-PURCHASE THRESHOLD written. Other clauses written at the bottom of the contract are:

252.225-7001   BUY AMERICAN AND BALANCE OF PAYMENTS PROGRAM—BASIC   (DEC 2016)   DFARS

252.225-7001   BUY AMERICAN AND BALANCE OF PAYMENTS PROGRAM—BASIC   (DEC 2016),   ALT I   (DEC 2016)   DFARS

252.225-7002   QUALIFYING COUNTRY SOURCES AS SUBCONTRACTORS   (DEC 2016)   DFARS

Doesn't this contract and its clauses justify me? Am i getting it wrong?

Share this post


Link to post
Share on other sites
9 hours ago, joel hoffman said:

I’m curious as to whether you identified the country of manufacture in your proposal and if the clauses you referred to are in your two contracts with DLA. 

Yes i always identify the qualifying country of manufacture in my proposals. I never tend to do anything against the law. And yes the clauses i referred exist in my cancelled contracts and even in other ones i've bid for. 

Share this post


Link to post
Share on other sites

Thank you , hallowed. I think you should to hire competent legal counsel.  You identified the country of manufacture.   The US Governmt appears to have accepted your proposal(s) as conforming in order to make two contract awards.  

EDIT: The government has a responsibility to reasonably evaluate the information that it required to be included in the successful contractors proposal before making an award - not wait until after award..

EDIT:You incurred cost in beginning performance, presumably after the award. 

EDIT:  You might have a possibility of a claim for cancellation costs under FAR 13.302-4, if you haven’t agreed. Can you return the materials with a cancellation fee, for instance?  

“(b) (2) If the contractor does not accept the cancellation or claims that costs were incurred as a result of beginning performance under the purchase order, the contracting officer shall process the action as a termination prescribed in paragraph (a) of this subsection.”

Share this post


Link to post
Share on other sites

Repeat: Suggest hiring competent counsel.  Hope you have notified government of costs expended in beginning performance. If not, suggest you do so immediately and suggest mentioning that you complied with the requirement to identify country of manufacture - - before they accepted your quote/proposal, and that they had the responsibility to evaluate it before awarding you the contracts. 

Merry Christmas. 🙏

Share this post


Link to post
Share on other sites

Thank you Joel. I appreciate your interest with my situation. Not only my awards are cancelled but also my company is precluded from competing by locking my dibbs account. I told them everything i mentioned here but nobody replied me and never had a word about laws and clauses. I’m not only trying to get my contracts back but also make them unlock my account to keep on competing.

Unfortunately i don’t have any chance to return the raw material. It’s kind of a rare type of alloy and i had a hard time finding it. I paid for it in cash and it’s now sitting in the warehouse. 

I wrote an email to DLA today and told them that the decision is inconsistent with dfars laws. What i performed was within the contract clauses. And asked them to re-review the contract clauses in detail and reconsider the decision.

DLA validation lead told me that the office of small business programs is responsible for restriction of my account because according to them my company couldn’t pass the validation due to the manufacturer’s location. My account will be unlocked if the office of SBP will confirm the validation and contact the dla validation team regarding access to my account. I wrote them about the issue with all info i’ve mentioned above. Waiting for replies from both offices. Hope they understand the mistake and allow me compete for contracts again. 

If i receive a negative feedback i’ll take your advice and hire a competent counsel. That will be my last and only chance left.

ji20874 and Joel.. Thank you very much for your help. I really appreciate your efforts. It means so much to me and changed the whole story on my behalf.

Merry Christmas 🙂

Share this post


Link to post
Share on other sites
2 hours ago, hallowed said:

Thank you Joel. I appreciate your interest with my situation. Not only my awards are cancelled but also my company is precluded from competing by locking my dibbs account. I told them everything i mentioned here but nobody replied me and never had a word about laws and clauses. I’m not only trying to get my contracts back but also make them unlock my account to keep on competing.

Unfortunately i don’t have any chance to return the raw material. It’s kind of a rare type of alloy and i had a hard time finding it. I paid for it in cash and it’s now sitting in the warehouse. 

I wrote an email to DLA today and told them that the decision is inconsistent with dfars laws. What i performed was within the contract clauses. And asked them to re-review the contract clauses in detail and reconsider the decision.

DLA validation lead told me that the office of small business programs is responsible for restriction of my account because according to them my company couldn’t pass the validation due to the manufacturer’s location. My account will be unlocked if the office of SBP will confirm the validation and contact the dla validation team regarding access to my account. I wrote them about the issue with all info i’ve mentioned above. Waiting for replies from both offices. Hope they understand the mistake and allow me compete for contracts again. 

If i receive a negative feedback i’ll take your advice and hire a competent counsel. That will be my last and only chance left.

ji20874 and Joel.. Thank you very much for your help. I really appreciate your efforts. It means so much to me and changed the whole story on my behalf.

Merry Christmas 🙂

Good luck to you in getting some reimbursement for your material costs, hallowed.  I am assuming that you are referring to two individual contracts under the simplified acquisition threshold that are single purpose (not ID/IQ or similar contracts using orders). 

To clarify, I don’t know whether or not your manufacturing sources meet the requirements of the contracts. If not, then I don’t think that your contract can be used to provide the materials. So you won’t be able to “get your contracts back”.

But if the government mistakenly awarded the contracts because they didn’t evaluate your identified source, they should not be terminated for cause or default.

Cancellation should be treated as no fault or “for convenience”. In addition, you should be able to recover your cost expended to begin performance. 

Share this post


Link to post
Share on other sites

@hallowed

A couple of thoughts to go along with what has been provided as advice so far.

Have you looked at what assistance an Association of Procurement Technical Assistance Center may be able to provide to you in sorting out the regulations and your rights regarding the cancelation?  If not you may want to research the assistance they can provide from the center nearest you.  An internet search on APTAC will get you started.  Much of their assistance is for free.

While you have a larger stake in the game than just the 2 purchase orders you were awarded and therefore I completely agree with seeking legal counsel however no on has mentioned the disputes clause or condition that should be in the contracts.  Suggest finding it and then follow up by reading about disputes in FAR part 33.  Doing so will give you a leg up in any further written communication you send DLAs way.

Share this post


Link to post
Share on other sites
21 hours ago, hallowed said:

I wrote an email to DLA today and told them that the decision is inconsistent with dfars laws. What i performed was within the contract clauses. And asked them to re-review the contract clauses in detail and reconsider the decision.

The problem doesn't seem to be your compliance with DFARS. Assuming these acquisitions were set aside for small business, the problem is your compliance with FAR 52.219-6. As ji pointed out, FAR 52.219-6 requires your products to be domestic (unless the nonmanufacturer rule was waived). Qualifying country end products are not domestic.

Share this post


Link to post
Share on other sites
3 hours ago, Don Mansfield said:

The problem doesn't seem to be your compliance with DFARS. Assuming these acquisitions were set aside for small business, the problem is your compliance with FAR 52.219-6. As ji pointed out, FAR 52.219-6 requires your products to be domestic (unless the nonmanufacturer rule was waived). Qualifying country end products are not domestic.

Don thank you for your reply. I’ve been following your posts for a long time and i was curious about your comment. Yes they were set aside for small business but contract clauses include qualifying country sources as subcontractors and BAA and BOP program. If qualifying country products are not allowed then why there’s a clause in the contract? And why there’s even an QCP option to specify on the online quote form? If this clause exists in the contract doesn’t it mean that you can benefit from it?

Also i guess i should benefit from BAA and BOP program too, which states: if the contractor certified in its offer that it will deliver a qcp, the contractor shall deliver a qcp or, at the contractor’s option, a domestic product. 

And as far as i know, with the final rule effective by June 30, 2016 the SBA eliminated the nonmanufacturer rule for acquisitions between $3500 and $150,000 which simply means small businesses may supply from large businesses and/or non domestic products.

If there weren’t any aforementioned clauses in the contract i would have understood the reason to be precluded. But under these conditions i don’t get it. This is what i understand from all these clauses. I don’t know maybe you’re right. Hiring a professional will be my best choice i guess. 

Share this post


Link to post
Share on other sites
4 hours ago, C Culham said:

@hallowed

A couple of thoughts to go along with what has been provided as advice so far.

Have you looked at what assistance an Association of Procurement Technical Assistance Center may be able to provide to you in sorting out the regulations and your rights regarding the cancelation?  If not you may want to research the assistance they can provide from the center nearest you.  An internet search on APTAC will get you started.  Much of their assistance is for free.

While you have a larger stake in the game than just the 2 purchase orders you were awarded and therefore I completely agree with seeking legal counsel however no on has mentioned the disputes clause or condition that should be in the contracts.  Suggest finding it and then follow up by reading about disputes in FAR part 33.  Doing so will give you a leg up in any further written communication you send DLAs way.

Thanks for your reply. I’ve read about disputes and terminations. I’ve contacted the related departments to compensate my loss. I’ll wait and see.

Share this post


Link to post
Share on other sites
41 minutes ago, hallowed said:

If qualifying country products are not allowed then why there’s a clause in the contract? And why there’s even an QCP option to specify on the online quote form? If this clause exists in the contract doesn’t it mean that you can benefit from it?

Good questions. I can see why you are confused.

There aren't different versions of the clause at DFARS 252.225-7001--Buy American and Balance of Payments--one for small business set-asides and one for unrestricted acquisitions. I doubt the DAR Council even considered that option when creating the clause. That's probably because the FAR/DFARS Foreign Acquisition Committee is different than the FAR/DFARS Small Business Committee and there's no committee to make sure the different parts are coordinated. It doesn't occur to them that a small business competing for a set-aside could interpret a solicitation containing DFARS 252.225-7001 as permitting the delivery of a foreign product. 

1 hour ago, hallowed said:

And as far as i know, nonmanufacturer rule doesn’t apply for acquisitions between $3500 and $150,000 by which the SBA permits small businesses to supply from large businesses and/or non domestic products.

The nonmanufacturer rule doesn't apply between the micro-purchase threshold and the simplified acquisition threshold. However, a small business must still provide a domestic firm's product. An SBA waiver of the nonmanufacturer rule permits a small business from providing any firm's product--including a foreign product.

FAR 13.302-4(b) says that the contracting officer's notice of cancellation is supposed to request the contractor's written acceptance of the cancellation. Did the notice request this? If so, how did you respond? If you refuse the cancellation or claim that you incurred costs, the CO is supposed to handle it like a termination. 

Share this post


Link to post
Share on other sites
36 minutes ago, Don Mansfield said:

Good questions. I can see why you are confused.

There aren't different versions of the clause at DFARS 252.225-7001--Buy American and Balance of Payments--one for small business set-asides and one for unrestricted acquisitions. I doubt the DAR Council even considered that option when creating the clause. That's probably because the FAR/DFARS Foreign Acquisition Committee is different than the FAR/DFARS Small Business Committee and there's no committee to make sure the different parts are coordinated. It doesn't occur to them that a small business competing for a set-aside could interpret a solicitation containing DFARS 252.225-7001 as permitting the delivery of a foreign product. 

The nonmanufacturer rule doesn't apply between the micro-purchase threshold and the simplified acquisition threshold. However, a small business must still provide a domestic firm's product. An SBA waiver of the nonmanufacturer rule permits a small business from providing any firm's product--including a foreign product.

FAR 13.302-4(b) says that the contracting officer's notice of cancellation is supposed to request the contractor's written acceptance of the cancellation. Did the notice request this? If so, how did you respond? If you refuse the cancellation or claim that you incurred costs, the CO is supposed to handle it like a termination. 

Don, here is what confuses me. If a solicitation is a small business set aside,  it means no entity other than a small business may participate. And if you put dfars 252.225-7001 and 252.225-7002 into a contract it means that these clauses apply to participating entities which will obviously be small businesses only. Full meaning: participating small businesses may use a qc source as subcontractor. This creates a different situation than what you’ve mentioned. 

About the cancellation notice: no it didn’t request anything. Just cancellation based on far 13.302-4(b). No other info. I’ve contacted the issuing office stating that i’m not accepting the cancellation and demanded for compensation of my loss. Waiting for their reply. If i get a negative feedback i’ll hire someone competent.

Share this post


Link to post
Share on other sites

@hallowed,

When interpreting a contract under the common law, one must interpret it as a whole--not individual sections or clauses. See NVT Techs., Inc. v. United States, 370 F.3d 1153 (Fed. Cir. 2004), stating at 1159:

Quote

Contract interpretation begins with the language of the written agreement. Foley Co. v. United States, 11 F.3d 1032, 1034 (Fed. Cir. 1993). When interpreting the contract, the document must be considered as a whole and interpreted so as to harmonize and give reasonable meaning to all of its parts. McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1434-35 (Fed. Cir. 1996). An interpretation that gives meaning to all parts of the contract is to be preferred over one that leaves a portion of the contract useless, inexplicable, void, or superfluous. Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991).

The problem with your interpretation (i.e., the contract permits delivery of a foreign product) is that it renders FAR 52.219-6(d) meaningless. If we read FAR 52.219-6(d) and DFARS 252.225-7001(c) together, I think that the FAR clause is placing further restrictions on the source of the product.

Share this post


Link to post
Share on other sites
15 hours ago, Don Mansfield said:

@hallowed,

An interpretation that gives meaning to all parts of the contract is to be preferred over one that leaves a portion of the contract useless, inexplicable, void, or superfluous.

So when you say i have to comply with far 52.219-6, you are leaving both dfars 252.225-7001 and 252.225-7002 written in the contract useless/void. And that’s damaging the integrity of the contract.

What’s the purpose of putting a clause in a SMALL BUSINESS ONLY contract, if participants aren’t allowed to benefit from it or another clause already makes it void/ineffective.

Don’t you think it’s meaningless?

Share this post


Link to post
Share on other sites

hallowed,

If a contract has one clause that forbids something and a second clause that forbids something else, then both things are forbidden (even though either one of the things might have been allowed under one clause operating alone).

It is well-established practice that a set-aside clause’s very stringent requirement for a domestic product takes precedence over more loosely-written clauses that might seem to allow otherwise.  That’s normal with standardized clauses that are written for routine incorporation.  But if there ever is a doubt about two seemingly contradictory clauses, a question to the contracting officer before submission of offers might clear it up.  

Share this post


Link to post
Share on other sites
1 hour ago, ji20874 said:

hallowed,

If a contract has one clause that forbids something and a second clause that forbids something else, then both things are forbidden (even though either one of the things might have been allowed under one clause operating alone).

It is well-established practice that a set-aside clause’s very stringent requirement for a domestic product takes precedence over more loosely-written clauses that might seem to allow otherwise.  That’s normal with standardized clauses that are written for routine incorporation.  But if there ever is a doubt about two seemingly contradictory clauses, a question to the contracting officer before submission of offers might clear it up.  

Still seems so meaningless as to why an inapplicable clause exists in a contract. I’ve received 8 awards in total. All of them must have been granted after evaluating the offer i guess, including the last two. I don’t know what made the difference to preclude me until the last ones. Would it take 6 awards to recognize that my company is not legitimate? If QC products were the problem they should have warned me before. I’ve never changed the way i quoted. They must have seen the origin of my products before. Seems like an unfair decision to me. 

 

 

Share this post


Link to post
Share on other sites

Maybe you were just lucky for the other six?  

I recommend being careful in raising the other six awards — an investigator might look into them and you might face a false claim matter (submitting an invoice for a product that does not conform to contract requirements) if any of those six were set-asides.

Anyway, we’re here for learning, not argument.  Happy new year!

Share this post


Link to post
Share on other sites

As i’ve mentioned before i haven’t received a written acceptance request with cancellation notice. Just an SF30 form signed by the officer noticing that my purchase orders are cancelled and the award is decreased to zero. Seems like an inadequate document. Do i have any rights arise from this other than the regular dispute process?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


×
×
  • Create New...