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There was an old forum topic about construction as a commercial item, but its focus was primarily on the contracting process and form of contract, areas that do not help my current hypothetical concern.

As a prime contractor on a Government job, we are subcontracting with our FAR-based approved purchasing system for construction on a fixed unit price basis, using a full set of FAR and company terms and conditions, including insurance, Davis-Bacon, Miller Act bonds, etc.

My main interest in calling some kinds of construction commercial is the TINA exception to the requirement for certified cost or pricing data, as described in FAR 15.403-1( b )(3) and ?( c )(3).

Examples include dredging and piledriving, added to current subcontract scope noncompetitively for work on a fixed and tight schedule in a congested area, not big money overall in the context of this prime contract or our subcontracts, but >$650K.

We have provided a strong price analysis as described in FAR 15.404-1( b )(ii), -(iii), -(v), and ?(vi), previous reasonable contract prices, $ per LF of piledriving or DY of dredging, our independent estimate, and market research, respectively. That?s not good enough for our esteemed client, who insists on certified cost or pricing data.

Our Contracting Officer is imposing a dichotomy that we don?t see: A job is either construction or a commercial item, but cannot be both.

We disagree but have said we will obey. Our custoer remains unconvinced by our pointing out that dredging and piledriving are, as we used to say, sold in substantial quantities to the general public. Many different kinds of non-federal customers are out there for dredging and piledriving, not only state or local governments but also yacht clubs, marinas, real estate developers, and even rich private individuals.

Are we all wet in thinking that construction can be commercial and TINA exempt?

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There was an old forum topic about construction as a commercial item, but its focus was primarily on the contracting process and form of contract, areas that do not help my current hypothetical concern.

As a prime contractor on a Government job, we are subcontracting with our FAR-based approved purchasing system for construction on a fixed unit price basis, using a full set of FAR and company terms and conditions, including insurance, Davis-Bacon, Miller Act bonds, etc.

My main interest in calling some kinds of construction commercial is the TINA exception to the requirement for certified cost or pricing data, as described in FAR 15.403-1( b )(3) and ?( c )(3).

Examples include dredging and piledriving, added to current subcontract scope noncompetitively for work on a fixed and tight schedule in a congested area, not big money overall in the context of this prime contract or our subcontracts, but >$650K.

We have provided a strong price analysis as described in FAR 15.404-1( b )(ii), -(iii), -(v), and ?(vi), previous reasonable contract prices, $ per LF of piledriving or DY of dredging, our independent estimate, and market research, respectively. That?s not good enough for our esteemed client, who insists on certified cost or pricing data.

Our Contracting Officer is imposing a dichotomy that we don?t see: A job is either construction or a commercial item, but cannot be both.

We disagree but have said we will obey. Our custoer remains unconvinced by our pointing out that dredging and piledriving are, as we used to say, sold in substantial quantities to the general public. Many different kinds of non-federal customers are out there for dredging and piledriving, not only state or local governments but also yacht clubs, marinas, real estate developers, and even rich private individuals.

Are we all wet in thinking that construction can be commercial and TINA exempt?

Please ensure that you include the Differing Site Conditions Clause, too. DSC are commonly encountered in dredging operations and in pile driving operations. And, I hope you will have some cost type basis to support the adjustments.

Another one to include is the standard Variations in Estimated Quantities Clause.

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Yes, we have the DSC and VEQ clauses, and all the rest that one might expect, want, or need.

Is there something I have missed that specifically prohibits calling construction, of a type not unique to federal customers, a commercial item?

FAR 2.101 doesn't. Is our esteemed customer just giving us "tribal lore" or is there some policy guidance that we haven't found?

(BTW miskeyed DY above but meant CY for cubic yards.

Somehow I seem to be doing better this evening on the HackBerry than I did with a full size monitor and keyboard.)

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Cajuncharlie,

The genesis of your client's position is probably an OFPP Memo that came out in 2003: http://www.cofpaes.org/Commercialitemrule.cfm

Note that the memo advises agencies not to use FAR Part 12 when acquiring new construction, except in rare circumstances. It acknowledges that certain types of construction could be acquired using FAR Part 12 procedures such as "routine painting or carpeting, simple hanging of drywall, everyday electrical or plumbing work, and similar noncomplex services, as well as for purchases of commercial construction material and associated ancillary services."

The memo never makes an unequivocal statement that construction is commercial or noncommercial per se.

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Guest Vern Edwards

There is nothing in the FAR that says, unequivocally, that construction is or is not a commercial item. There may be some agency policy statement, but I don't know. It's not worth arguing about.

I don't know why the agency wants cost or pricing data, but there is a nice response--full compliance. Simply give the agency every scrap of paper you can get your hands on or create pertaining to cost or price. Everything. Absolutely everything. (Presumably, you've nothing to hide.) Include payroll records and Davis-Bacon payroll submittals from your company and subcontractors going back several years and old price quotes and purchase orders for materials. Include every old cost estimate you ever made. Make sure to follow the instructions in FAR 15.408 about identifying and organizing it, but deliver the stuff in box loads, the more boxes the better. Deliver it all at one time to the contracting officer's office (six-by-six cubicle, more likely). Do not warn the CO about what's coming. If possible, deliver it unannounced. Don't hang around to chit-chat. Deliver it and leave.

Most contracting officers don't know cost or pricing data when they see it and don't know what to do with it when they get it. Give it to them and let them wallow in it. This will not only protect you from accusations of defective pricing, but it will befuddle all but top notch contracting officers and price analysts, and there aren't many of those. Make sure to update the data from time to time pending and during negotiations as more becomes available from various sources. When appropriate, revise your price along with the updates.

A company did that to me when I was a young and stupid contracting officer, and I never forgot the lesson, which is that cost or pricing data won't tell you what is a fair and reasonable price. It will only give you something to argue about and slow negotiations. I'll never forget the sound of that company negotiator chuckling as he left the stuff in my office entry. (Even I was laughing.)

The funny part about TINA is that cost or pricing data has no effect on the price that an offeror can ask for. Keep that in mind.

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There is nothing in the FAR that says, unequivocally, that construction is or is not a commercial item. There may be some agency policy statement, but I don't know. It's not worth arguing about.

I don't know why the agency wants cost or pricing data, but there is a nice response--full compliance. Simply give the agency every scrap of paper you can get your hands on or create pertaining to cost or price. Everything. Absolutely everything. (Presumably, you've nothing to hide.) Include payroll records and Davis-Bacon payroll submittals from your company and subcontractors going back several years and old price quotes and purchase orders for materials. Include every old cost estimate you ever made. Make sure to follow the instructions in FAR 15.408 about identifying and organizing it, but deliver the stuff in box loads, the more boxes the better. Deliver it all at one time to the contracting officer's office (six-by-six cubicle, more likely). Do not warn the CO about what's coming. If possible, deliver it unannounced. Don't hang around to chit-chat. Deliver it and leave.

Most contracting officers don't know cost or pricing data when they see it and don't know what to do with it when they get it. Give it to them and let them wallow in it. This will not only protect you from accusations of defective pricing, but it will befuddle all but top notch contracting officers and price analysts, and there aren't many of those. Make sure to update the data from time to time pending and during negotiations as more becomes available from various sources. When appropriate, revise your price along with the updates.

A company did that to me when I was a young and stupid contracting officer, and I never forgot the lesson, which is that cost or pricing data won't tell you what is a fair and reasonable price. It will only give you something to argue about and slow negotiations. I'll never forget the sound of that company negotiator chuckling as he left the stuff in my office entry. (Even I was laughing.)

The funny part about TINA is that cost or pricing data has no effect on the price that an offeror can ask for. Keep that in mind.

Vern,

Unless I'm misreading the original post, Cajuncharlie is a prime contractor and is looking to issue a subcontract without obtaining cost or pricing data by using the exemption for commercial items. Apparently, his Government contracting officer refuses to provide consent because he has taken the position that construction services cannot be commercial items. (I know that's speculation, but that's what it sounds like to me.)

My point is that if I've correctly understood the situation, then the contracting officer won't be inconvenienced by boxloads of data, it will be Cajuncharlie's purchasing/negotiating team. Moreoever, the proposed subcontractor may be getting advice that it should not (or cannot) sign a CCCPD because it is not capable of providing accurate, current, or complete cost or pricing data. (I know I'm speculating again about that last part. But there must be a reason that Cajuncharlie wants to avoid requiring the subK to provide the data, and that seems like a good possibility.)

If I'm right in my speculations, then requiring Cajuncharlie to obtain cost or pricing data from the proposed subK might be tantamount to directing that another source be used. Certainly it will delay the subcontracting process and may impact the schedule. There may be additional costs incurred by Cajuncharlie's company.

I don't know all the circumstances, and I've created a chain of speculation that could certainly be all wrong--but if it were me, I would attempt to comply, including going to another source if my original subK balked at providing the data. Then I might consider submitting a claim for disruption and/or delay, based on the contracting officer's arbitrary and unreasonable withholding of consent and/or direction to obtain cost or pricing data when the contracting action was exempt from the requirement to do so.

Hope this helps.

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Yes, we are the prime, suffering from a flood of onerous paperwork demands from an inexperienced Contracting Officer who requires more than the FAR or the contract does.

In this case, we had reached agreement with our subcontractor, subject to Contracting Officer's consent, and had submitted our package requesting consent, so the main requirement for us, and the additional delay, was to get the CCCOPD from the sub, pass it along to the Government, and wait for a consent letter. Our package had enough "information other than cost or pricing data" from the sub, and we had done and submitted enough homework to be confident that our price analysis was strong and well-supported.

But with this customer, a subcontract price that's noncompetitive is not fair and reasonable, regardless of FAR Subpart 15.4, unless and until it has gone through the same kind of cost analysis that this customer routinely does in excruciating detail. In their eyes, any other method of determining noncompetitive subcontract price reasonableness is not only suspect; it's wrong. And they always want a CCCOPD in the absence of competition, again regardless of FAR 15.403-4

In a "partnering" meeting (I still don't know the words to "Kumbaya") we discussed price reasonableness, commercial items, and other subjects with the Contracting Officer, each of us making our thoughts clear, without reaching resolution of widely divergent views. Our views were so unconventional as to constantly assure compliance with our approved purchasing system and FAR Subpart 15.4. The customer constantly disagreed, questioned everything but our ancestry, and always wanted more. As we were winding up, the Contracting Officer, recapitulating, said, "So we are agreed that dredging is not a commercial item." My boss was floored. I spoke up before he did, and said, "We do not agree but we will obey." And we have.

We went right back to our sub and told them we had talked to the customer and they must submit a CCCOPD, which they did, although it took time to get a letter out, get the certificate back, raise a letter and send it to the customer, and get a consent letter back. (We do important things such as these on letterhead with a "wet" signature, not relying on email other than as a means of quick transmittal, followed up by the original.)

The overall result of all this is indeed delay and disruption to an already tight project schedule whose end date is fixed. There is no question in our minds that numerous changes on the project have resulted in acceleration of the work effort, although the customer almost certainly disagrees; and the constant demand for more and unnecessary paperwork not only means more delays, but also is another factor driving up cost at a time when our CPAF project is squeezing every penny.

There are other changes for which we preparing the whole nine yards of proposals in the format from FAR Table 15-2, with a file dump from our approved accounting system. We had not thought to include copies of time sheets, invoices, etc. Will have to chew on that suggestion for a while. With this bunch, though, it seems the more detail we give them, the happier they are, the more they have to chew on, and the longer it takes them to respond, while the fast-track project schedule goes down the tubes, but of course it is all our fault since we didn't give them enough time to review a complex consent request.

Hope this sounds more like venting than whining, but that's how it is in the real world, and maybe the newbies can benefit from some of these war stories from the trenches. Rookies, take heed. Your federal customers often remain bereft of practical business sense, blissfully ignorant of the consequences of their actions, and unaffected by any real understanding of the FAR, particularly 1.602-2( b ).

Appreciate all the help with the musical question, "Is there anything that clearly says construction cannot be a commercial item for the purposes of an exception from TINA cost or pricing data requirements?" So far, it looks like there is not.

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Appreciate all the help with the musical question, "Is there anything that clearly says construction cannot be a commercial item for the purposes of an exception from TINA cost or pricing data requirements?" So far, it looks like there is not.

If this is a DOD customer, I assume you read the earlier discussions concerning construction asa commercial item, so you'd have read the DOD acquisition chief's position that construction should "rarely be" considered a commercial item for DoD contracts. But that doesn't definitively rule out construction as a commercial item .

For small jobs, mobilization, demobilization and spoil sitework could comprise a large share of costs, in addition to actual dredging costs, if the dredge has to be shipped very far (unless we are talking about a little dredge, located in the local area. So I imagine there are many other costs than a cost per cubic yard. Unit prices usualy depend upon he specific dredging conditions. There are many variables involved.

Small pile driving jobs can be very simple and easily estimated bycomparing with local costs per foot or per pile or can be complex, depending upon lengths and subsurface conditions.

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Guest Vern Edwards

Speculation aside, I assumed that this was all part of a mod and that the prime would have to submit cost or pricing data, including cost or pricing data from the sub. Apparently, this is not a mod scenario, but just the prime seeking consent to subcontract. The subcontract will be awarded non-competitively and the government wants the prime to get cost or pricing data from the sub.

Look--either the requirement for subcontractor cost or pricing data applies or it doesn't. Does the prime contract contain the clause at FAR 52.215-12 or 52.215-13? If so, does the subcontract exceed the TINA threshold? If so, then I presume that the prime wanted the government to apply the exception at FAR 15.403-1(B)(iii)--the price analysis exception. Apparently, the contracting officer didn't do so. Now the prime is hoping that it can persuade the contracting officer that the commercial item exception applies.

I don't understand the complaint. If the subcontract meets all of the criteria in FAR 15.403-4 for the submission of subcontractor cost or pricing data, and if the prime is obligated to obtain it, and if the contracting officer has determined that none of the exceptions in FAR 15.403-1 apply, then the prime should shut up and get the data. If the government is demanding the data when FAR 15.403-1 prohibits it from doing so, then the prime has a legitimate complaint. It can either go along with the government or refuse and file a claim.

The complaining sounds more like whining than venting, but maybe I still don't understand the situation.

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