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I currently work for the Department of the Navy and have a customer who wants my agency to contract for a no cost award. It is a service being performed for the Navy (removal of used oil) that the contractor will then be able to clean and sell for their profit. There will also be a requirement for a COR as the Government has a responsibility to review/confirm that the vendor has all of the proper Federal and State licenses required along with other duties they will need to perform. I have been getting conflicting information about the correct way to proceed. I need to know if it should be done as a purchase order "P" or contract "C" award. The only thing we can evaluate is past performance and responsibility which leans toward it being a "C" award. If anyone has done one recently for the Navy, please let me know how you awarded it. Thanks in advance.

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Is this a competitive acquisition? From your description of predetermined “no cost” , it appears to be a sole source acquisition (with someone who is currently collecting used oil?). But then you described evaluation criteria. That seems to imply some type of competition. 

Do you know from a  market survey that nobody would buy used motor oil? 

looks like there is an administrative cost for a COR’s time and monitoring efforts. 
 

Just curious, I guess. There is administrative cost for a contractor, too, I suppose. 

 

 

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No recent experience but thoughts based on your initial post.

Conflict between "P" and "C" I am guessing is due to the fact that you have indicated "no cost".    In other words if the contract is awarded below the SAP then it would be a "P" and if the award is above then it would be a "C".   So if no cost then "P" but I truly suspect there will be some cost especially since I believe in your further research you will be placing standards on a contractor with regard to environmental compliance that would result in a cost.   Of course doing some market research on commercial entities that come and  pickup used oil will also be a key as to whether for example they charge a pickup fee, mileage for pickup, etc. etc.   I say this as now in retirement in the ranch shop we have used oil and there is a nominal charge by the person that picks up even though they then use in waste oil furnace at a larger facility.  

In both cases above you note that I used "contract" which a "P" is by definition of the FAR.  Or in other words "P" or "C" you have the same controls, requirements, terms and conditions, etc. that are enforceable against the contractor to ensure performance so yes a COR makes all the sense in the world even if a "P".

"P" versus "C" on evaluation?  They both can have evaluation of past performance and must have an affirmative determination of responsibility.  See FAR 13.106-2 which allows evaluation of past performance.   See FAR 9.103 where even a "P" potential contractor's responsibility must be determined.

On others doing something similar have you considered researching FedBizOpps.   In one minute I found the following.  Yep it is for performance outside the United States but I suspect with a little more effort I could find further examples of both solicitations and awards that would help in your quest.  

https://www.fbo.gov/index?s=opportunity&mode=form&id=a653c09c734698129c99b5f8562345df&tab=core&_cview=0

 

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1 hour ago, C Culham said:

 

Also @napolik provided this reference in a past Forum discussion that may be useful reading as well.....if truly a no cost contract.

https://www.gao.gov/decisions/appro/308968.htm

 

That's a good link. I was going to suggest analogs to be found in utility privatization contracts, but the link is more definitive in responding to the question.

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22 hours ago, Sherrie Walters said:

I currently work for the Department of the Navy and have a customer who wants my agency to contract for a no cost award. It is a service being performed for the Navy (removal of used oil) that the contractor will then be able to clean and sell for their profit. There will also be a requirement for a COR as the Government has a responsibility to review/confirm that the vendor has all of the proper Federal and State licenses required along with other duties they will need to perform. I have been getting conflicting information about the correct way to proceed. I need to know if it should be done as a purchase order "P" or contract "C" award. The only thing we can evaluate is past performance and responsibility which leans toward it being a "C" award. If anyone has done one recently for the Navy, please let me know how you awarded it. Thanks in advance.

I don't think what you're describing meets the definition of "acquisition" at FAR 2.101, because you wouldn't be using appropriated funds. If that's true, then the FAR doesn't apply. I'm not saying it couldn't be done, just that the contracting would not be regulated by the FAR.

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8 hours ago, Don Mansfield said:

I don't think what you're describing meets the definition of "acquisition" at FAR 2.101, because you wouldn't be using appropriated funds. If that's true, then the FAR doesn't apply. I'm not saying it couldn't be done, just that the contracting would not be regulated by the FAR.

I agree.  As I recall, the GAO has told us that the FAR doesn't apply to no-cost contracts, but CICA might.  Since the FAR doesn't apply, you need not use FAR-prescribed forms or clauses, and you can use any numbering scheme you want to.  The contract can be signed in accordance with agency regulations, even by a non-SF1402 contracting officer.

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I agree with Don and ji.  In addition, why are you doing this instead of having DLA do this?  This is part of DLA's mission.  Also, have you thought of the potential environmental (CERCLA) and other liabilities to which you might be exposed by doing this instead of having DLA which has experience in this type of work.  I know of a situation where DLA was found liable under the Federal Tort Claims Act for damages caused to a third party due to a disposal contractor improperly selling used oil to the third party.

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1 hour ago, Don Mansfield said:

Another thought--if the used oil is worth something, why wouldn't the Navy want to sell it to the highest bidder?

That's what DLA does through its Reutilization component.  Having people do this who are not familiar with disposal of hazardous waste such as used oil is very risky business.

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I also wondered this morning why this is predetermined to be a no cost contract and if they have learned that nobody is willing to buy the motor oil. 

I would agree that DLA are the experts in this area.  

Waiting on Sherrie.  

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12 hours ago, C Culham said:

An extract from Carl’s, reference:

“Determining whether competition requirements apply to a particular procurement for a no-cost contract for property or services will depend on the agency involved. CICA does not apply to no-cost contracts of military agencies, see 10 U.S.C.§ 2303; Century 21—AAIM Realty, Inc., B-246760, Apr. 3, 1992, 92-1 CPD ¶ 345; Gino Morena Enterprises, B-224235, Feb. 5, 1987, 87-1 CPD ¶121, but it does apply to no-cost contracts of civilian agencies. See 41 U.S.C. § 253; Gourmet Distributors, B-259083, Mar. 6, 1995, 95-1 CPD ¶ 130. Federal Acquisition Regulation (FAR) requirements apply only to acquisitions by the government of supplies or services with appropriated funds. Fidelity and Casualty Co. of New York, B-281281, Jan. 21, 1999, 99-1 CPD ¶ 16; FAR, 48 C.F.R. §§ 1.104, 2.101. Consequently, the FAR does not apply to no-cost procurements conducted by either a defense or civilian agency.

“Regardless of the applicability of CICA or FAR, GAO’s jurisdiction to consider protests by interested parties challenging procurements conducted by federal agencies extends to all procurements for property or services. In the context of challenges to no-cost contracts for concession services at the National Parks, we have found that in some cases the procurement action was outside of our jurisdiction. Specifically, we have held that concession contracts that do not require the delivery of goods or services to the government (or that require the delivery of goods or services of only de minimis value to the government) are not contracts for the procurement of property or services within the meaning of CICA and do not fall within our Office’s bid protest jurisdiction. White Sands Concessions, Inc., B-295932, Mar. 18, 2005, 2005 CPD ¶ 62, recon. denied, B-295932.2, Apr. 12, 2005 (concession contract for the operation of a gift shop and snack bar at a National Park Service visitor center); Crystal Cruises, Inc., B-238347, Feb. 1, 1990, 90-1 CPD ¶ 141 at 2, aff'd, B-238347.2, June 14, 1990,
90-1 CPD ¶ 560 (concession permits for five cruise ship entries into Glacier Bay National Parkand Preserve). Where a contract authorizing the provision of concession services also requires the delivery of goods or services of more than de minimis value to the government, however, the contract is one for the procurement of property or services within the meaning of CICA, and, as such, is encompassed within our bid protest jurisdiction. Great South Bay Marina, Inc., B-293335, July 13, 2005, 2005 CPD ¶ 135.”

According to the reference, it appears that any proceeds from the sale of used motor oil would apparently go directly to the Treasury.

So there is probably little or no incentive for govt employees to compete such a procurement of such services as a sale of used motor oil. 

Never mind my questions. I understand. 
 

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Haha.  This is one of those instances where doing something quickly based on initial thoughts works out better.  That’s a no cost purchase order quickly done and forgotten.  Now since the OP asked, there are environmental issues, competition, spending money to have the oil removed with no offsetting revenue to the Navy, and processing an agreement and waiting many months for DLA to remove it to address.

Joel’s point that any revenue received goes to Treasury is always something to consider.  If the agency doesn’t have the authority, keeping money improperly supplements their appropriation.  Several agencies smartly work around that using an exchange/sale agreement.  Those that are in the business of seizing property for violating laws is a good example.  If they sell the property instead of keeping for their own use, the money goes to Treasury.  But if they specify something similar they might need in return, they can do a solicitation of exchanging the seized goods to the offeror providing the greatest number of specified items.  Seized weapons is an example.  The government can specify they want brand x make and model pistols and offer lots of assorted seized weapons to brokers.  The broker offering the greatest number of brand x pistols gets the business.  The agency gets rid of unwanted property, gets something of useful value in return, and there no real costs involved.

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Comments ignite me into action......this will be my last ignition for this thread.

 

Defense Materiel Disposition: Disposal Guidance and Procedures https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodm/416021_vol1.pdf?ver=2019-10-02-080613-750

And a little about DLA

https://www.dla.mil/DispositionServices/Offers/Disposal/HazardousWaste/HazWasteDisposal/

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Not to argue but one must delineate between disposal of used motor oil and oil contaminated with hazardous waste or with hazardous waste. 

“Managing Hazardous Waste as Used Oil. In general, the EPA does not consider used oils to be hazardous waste. ... The used oil rules at 40 CFR 279 are less burdensome than the hazardous waste regulations at 40 CFR 260-270.” 

see article at: https://www.lion.com/lion-news/february-2013/managing-hazardous-waste-as-used-oil

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Joel, I would not be sanguine about this.  If used oil is spilled on the ground or finds its way into a stream, it very quickly becomes a major problem.  Also, the Lion website contains this statement "A mixture of used oil and ignitable hazardous waste may be managed as used oil, as long as the mixture is not ignitable."  This statement relates to the FTCA case I mentioned in an earlier post.  In that case, DLA sold used oil to a vendor that was to dispose of it.  The vendor had an EPA license for disposition of certain wastes including used oil.  However, instead of disposing of the oil, the vendor sold it as fuel oil to commercial customers (businesses that used in in their business operations).  Because the oil was not ignitable, it severely fouled the buyer's furnaces.  When the buyer's found out the source of the oil, they brought an FTCA claim against DLA for failing to properly supervise the disposal of the oil.  The buyer's won their suit in court.

Because of all the risks involved in disposing of materials liked used oil, to me it is much better to have an agency that is experienced in this area do it instead of having some local office do this as an OJT exercise.

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4 minutes ago, Retreadfed said:

Joel, I would not be sanguine about this.  If used oil is spilled on the ground or finds its way into a stream, it very quickly becomes a major problem.  Also, the Lion website contains this statement "A mixture of used oil and ignitable hazardous waste may be managed as used oil, as long as the mixture is not ignitable."  This statement relates to the FTCA case I mentioned in an earlier post.  In that case, DLA sold used oil to a vendor that was to dispose of it.  The vendor had an EPA license for disposition of certain wastes including used oil.  However, instead of disposing of the oil, the vendor sold it as fuel oil to commercial customers (businesses that used in in their business operations).  Because the oil was not ignitable, it severely fouled the buyer's furnaces.  When the buyer's found out the source of the oil, they brought an FTCA claim against DLA for failing to properly supervise the disposal of the oil.  The buyer's won their suit in court.

Because of all the risks involved in disposing of materials liked used oil, to me it is much better to have an agency that is experienced in this area do it instead of having some local office do this as an OJT exercise.

I agree in principle with you, Retread. I just wanted to note that there is a difference. It is very expensive to dispose of hazardous wastes vs. used oil. 

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Poor Sherrie. Hasn’t come back.  I can imagine her reporting to her management and the program office of her findings here.  No, she can’t use a no cost PO or contract.  Instead DLA must come in, conduct an analysis, prepare a cost estimate, and establish an agreement with the Navy.  Oh, and by the way, the Navy must pay to have it all done and it all will take a while.

Sherrie was probably told to not ask questions here again.

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  • 3 weeks later...

All I want to thank everyone for the good advice and suggestions. For those who stated that this should be a DLA requirement, I agree. That being said, it is currently being done by DLA however they have stated they will no longer being doing this for my customer that's why it is now in my office. Will try to post the outcome. Thanks again!!! You guys rock!!!

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Well, if your office writes the contract, make sure you include text that puts full responsibility on the contractor, including that the contractor will indemnify and hold harmless the Government for all of its actions in handling, disposing of, or reclaiming the used oil.  

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Sherrie,  do you have access to an attorney who is familiar with CERCLA (Comprehensive  Environmental Response and Cleanup Liability Act)?  If so, I suggest that you contact him/her to discuss your potential liabilities as an arranger for disposition of the oil and what steps can be taken to mitigate that potential liability.

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@Sherrie Walters   Wow I know it is just oil but DLA passing off to your agency provides for some steep learning noting the couple of comments already offered.  One thought I have always passed along tongue in check is that plagiarism of others' contracts is not against the law.   Noting this I did a quick look at FBO.gov which I imagine you have done as well.   I found the following solicitation issued by DLA.  Yes it is for a larger scale effort but still might help in putting something together for just oil.   As whole there are clauses/terms and conditions that get to the thoughts passed along by ji and Retread.  The PWS has an indemnification/hold harmless statement and in a quick read provides ways to mitigate the concerns of Retread.   I might trust DLA's experience in how they have addressed each but my radar goes up just slightly and might drive me to see if I could find case law as in the end the government's sovereign immunity and how immunity  is limited in contractual matters by the Tucker Act comes to my mind.

Good luck with your effort.

https://www.fbo.gov/index.php?s=opportunity&mode=form&id=5e5ef1ad3bbabe8badf00806def09952&tab=core&_cview=1

DLA solicitatinSP450019R0014

 

 

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But be careful About turning used motor oil disposal into a RCRA hazardous waste disposal contract, unless the current contract with DLA includes specific oil sources that are treated as such. 
 

Huge difference in price and procedures...

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