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Task Orders under MATOC, part 2


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Same basic scenario as part 1 -- MATOC IDIQ, work awarded by task order (TO).

Basic question: who can get awarded a TO?

Background info: Contracts are awarded to legal entities, like corporations. However the government requires its contractors to have a SAM registration, which is tied to a unique DUNS number and CAGE Code. Corporations can have multiple DUNS numbers, sometimes hundreds or even thousands, representing different business units within the corporation, conducting widely different business. For example, corporation ABC Inc has multiple divisions. Division DEF makes fighter aircraft; Division GHI performs IT services; Division JKL makes and sells safety products, and so on. Each Division has a unique DUNS number, a SAM registration, a unique CAGE Code, unique banking information in SAM, different NAICS Codes, etc.

Let's say Division MNO in ABC Inc proposes on and is awarded a spot on a MATOC IDIQ. Then a TO RFP comes out that MNO decides can be better performed by Division QRS. Can Division QRS propose on and get awarded a TO under the IDIQ that was awarded to Division MNO? After all, they are the same legal entity, ABC Inc.

My initial impression -- No. The IDIQ was awarded to a specific division of ABC Inc. While they are the same legal entity, the IDIQ was based on an evaluation of the capabilities, responsibility, etc, of Division MNO, not QRS. By the way, don't look to SAM for the answer. SAM is hopelessly schizophrenic. Some questions require you to answer as the whole corporation, and some require you to answer as the specific business unit. It's use of the phrase "Is your business or organization, as represented by the DUNS Number on this entity registration ... " doesn't help.

Interested in the forum's perspectives.

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I assume your answer is that the multiple-award contract holder is the specific division, not the whole legal entity. I think so too, but what makes me hesitate is that contacts are awarded to legal entities, not parts of one. Contracts typically say something like "This contract is between ABC Inc, doing business through its MNO business, and ...". If the company gets sued, the entire legal entity is liable no matter what division caused it.

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6 hours ago, Fara Fasat said:

"This contract is between ABC Inc, doing business through its MNO business, and ...".

So let's get to specifics then.  Is in your scenario this an actual fact of how the IDIQ was awarded?  I pose this question as your wording is what might be seen in the commercial market but for the Federal sector it is as @ji20874 has stated, the contract would be awarded to the specific division.

Overall the idea of "doing business as" or "doing business through" becomes a complicated legal matter as to who really is awarded the contract and use of legal counsel if such has occurred is highly recommended.

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Fara Fasat,

Your initial impression was sound.  Sometimes, that’s the place to stop.  If it happens in real life (if you’re on the Government side), or if you want to make it happen in real life (if you’re on the contractor side), Carl gives good advice to talk to your lawyers.  For me, in my practice as a contracting officer, if the multiple-award IDIQ contract holder was MNO (a subsidiary of ABC and sister to QRS), I would summarily reject an offer from either ABC or QRS — I would only consider an offer from MNO, the contract holder.

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ji: you've injected something not in the scenario -- a subsidiary. A subsidiary is an entirely different creature from a division. A subsidiary actually is a separate legal entity, with its own incorporation. If a contract (or TO) is awarded to a subsidiary, it will be in the subsidiary's name, not the parent ABC Inc. Let's keep this discussion on divisions.

Carl and ji: I did a sampling of contract files, and all use the name of the corporation, e.g. ABC or ABC Inc., in block 8 of the SF30. They were not awarded in the name of the Division that submitted the proposal. It appears that the government knows that the entity that is legally bound is the corporation, not just a division. So in response to your statement that "the contract would be awarded to the specific division.", I would have to say no, it was awarded to the corporation. I will add however that there is a block labeled "code" but the entries there are inconsistent. Sometimes it has the DUNS number of the division; sometimes the CAGE Code; and sometimes it is blank. 

Furthermore, in a SAM registration, the first few pages all ask for the name of the legal entity. It doesn't ask for a division name until several screens in, and even there it's optional.

To further complicate things, D&B assigns unique DUNS numbers to different locations of the same division. In my company we maintain SAM registrations for different locations of the same division, because they have different addresses and points of contact even though the rest of the information is the same. Those locations (we call them branch offices of the division) have been awarded contracts for work in their location, but the award document states the corporation, ABC Inc.

ji -- on what grounds would you reject a TO offer from a different division? The award says ABC Inc and you're getting an offer from ABC Inc. I still think that a TO should only go to the division that submitted the proposal for the IDIQ, but is that just a common understanding or is there a legal basis for that? To put a practical face on this, what if a different division was more capable of handling a particular TO? When you reject them, their response is "The IDIQ was awarded to ABC Inc, I'm ABC Inc., you can't reject me"

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Subsidiary, division, it doesn't matter.  For me, in my practice as a contracting officer, if the multiple-award IDIQ contract holder was MNO (a subsidiary division of ABC and sister to QRS), I would summarily reject an offer from either ABC or QRS — I would only consider an offer from MNO, the contract holder.  I don't need a legal basis -- FAR 16.505(b)(1) asks me to consider contract holders, not all their kinfolk, and that's sufficient basis for me to reject the offer.  If ABC or QRS objects to my action, they would declare the legal basis in their protest, and my attorneys would advise me after studying the protester's legal argument.  Speaking of all the kinfolk, how am I supposed to know that they are the same family -- am I supposed to read all of the incorporation documents and so forth?  No, that is a wholly unreasonable demand to put on a contracting officer. 

Imagine my real name is John Smith, and I have a registered DBA as Jane Doe.  If I set up a bank account in Jane Doe's name, then I need to use Jane Doe as my name when I use that account.  If I walk up to the teller and present John Smith identification, I would expect the teller to turn me away.

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Corporations have the ability to contract as specified in their corporate charter and bylaws.  If a corporation gives a division the ability to contract in its own name, that division will be the contractor.  If the corporation requires all contracts to be issued in its name, the corporation would be the contractor. 

In the former case, only the division named as the contractor could submit proposals for work under that contract.  On the other hand, if the corporation is the contractor, it would seem that any division of the corporate contractor could submit a proposal in the name of the contractor and perform the work so long as this is consistent with company policy.  In this case, although the work would be performed by a division, the corporate contractor would remain responsible for contract performance.

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OK, this got interesting. Now here is a practical example of how it could make a difference. 

Same as before -- IDIQ contract. MNO gets an award. Now a TO comes along that is a CAS-covered TO. Division MNO is not compliant and does not have a disclosure statement. Division QRS does, so it wants to submit a proposal for the TO, and will sub some of the work to MNO. And yes, between the two of them, they can do all the work in the TO.

Assume Retreadfed's case -- that the contractor is the corporation. Can they do this, or can the government refuse to accept the proposal? 

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7 hours ago, Fara Fasat said:

OK, this got interesting. Now here is a practical example of how it could make a difference. 

Same as before -- IDIQ contract. MNO gets an award. Now a TO comes along that is a CAS-covered TO. Division MNO is not compliant and does not have a disclosure statement. Division QRS does, so it wants to submit a proposal for the TO, and will sub some of the work to MNO. And yes, between the two of them, they can do all the work in the TO.

Assume Retreadfed's case -- that the contractor is the corporation. Can they do this, or can the government refuse to accept the proposal? 

Then MNO can't get the TO and shame on the government for not identifying up front the idea that CAS coverage might, would, could or will apply at the order level..

 

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14 hours ago, Fara Fasat said:

The work it would take would meet the definition of a commercial item and is exempt from CAS. 

Wait a minute....you already said this "Now a TO comes along that is a CAS-covered TO."  

You are twisting yourself into knots to find a way to award a TO to a named firm that was not awarded the parent IDIQ contract.   My view - It should not happen and question whether current electronic award systems would even allow it.   Division has no privty to the parent contract from the governments view.   Division's proposal on TO rejected.    Corporation should be the one making the offer that's it.    At award the Corporation can farm to anyone they want (even a division) and based on specifics  it would be up to the CO to decide if the farming is subcontracting or not.

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Dribbling out details and drooling different scenarios as the conversation develops.

Doesn’t the CAGE/DUNS have to match that of the official contractor? 

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1 hour ago, joel hoffman said:

Doesn’t the CAGE/DUNS have to match that of the official contractor? 

As I understand the hypothetical situation, the corporation is the contract holder.  If that is the case, the TO would be issued in the name of the corporation.  For a TO that is subject to full CAS coverage, the corporation would have to be compliant with the CAS. 

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