Jump to content
The Wifcon Forums and Blogs

Recommended Posts

Hi Wifcon, 

I'm dealing with a requirement that my program office has determined to be non-commercial.  However, I'm skeptical.  That said, perhaps I'm overthinking, but trying to interpret the commercial item definitions is somewhat more difficult than I imagined.  The need is broadly for Economic Analysis and Support including a variety of economic analysis and support tasks including Benefit-Cost Analysis, Benefit Analyses, Cost Analyses, Industry Profiles, Cost-Effectiveness Analysis, Break-Even Analysis, etc... A second component of the need is Technical Assistance which includes Literature and Document Review, Peer Review and Expert Elicitation Support, Data Acquisition and Data Base Management, etc... 

Program's justification that this will not be a commercial item is as follows: "The nature of these technical support services do not lend themselves to being provided by ready-made or off-the-shelf commercial items or services, as they entail procuring labor hours and persons with specific areas of technical expertise to perform tasks and provide deliverable that often necessitate provision of technical direction over the period of performance, and cannot be defined and followed by the contractor without this kind of interaction and direction."

While I understand that the economic analysis and technical support are both likely to be tailored to the needs of our agency, I don't see why labor hour arrangements, need for persons with specific technical expertise, or even ongoing technical direction necessarily preclude this from being a commercial item.  In my view, stripping it down to the basic point of the definition:

"any item, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, and-

                (i) Has been sold, leased, or licensed to the general public; or

                (ii) Has been offered for sale, lease, or license to the general public;

... it seems like the kind of economic analysis and technical assistance we're requesting are services commonly offered to non-governmental entities.  Based on a source-sought notice, we received responses from several large research non-profits consulting firms who appear to be active across multiple sectors - not just the public realm.

Is there something to the program's statement that the labor hour arrangement may constitute a customization that makes this non-commercial or am I on the right track thinking this could qualify as commercial?  

Thank you in advance for any feedback.    

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

You are quoting the definition for a commercial "item" from (1) of the definition.  Have you read further to the definition of commercial "service" in (6)?

Following ji:

 "(6) Services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions. For purposes of these services-

                (i) "Catalog price" means a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or vendor, is either published or otherwise available for inspection by customers, and states prices at which sales are currently, or were last, made to a significant number of buyers constituting the general public; and

                (ii) "Market prices" means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors."

You must ask yourself does the combination of services you describe fall under this definition?

 

Link to post
Share on other sites

From another view with zero confirming research on my part.   Remember GSA FSS contracts are commercial item acquisitions.  Have you, or your program office in the market research effort taken a look at say Special Item No. (SIN) 520 and or 874 with regards to the service hours stated as being needed to determine if GSA considers them commercial item and has labor hour pricing on GSA FSS contracts?  If such exists in GSA it might go a long way in helping convince the program office that they are in fact seeking a commercial item(service). 

Link to post
Share on other sites
On 11/17/2020 at 3:19 PM, Constricting Officer said:

Following ji:

 "(6) Services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions. For purposes of these services-

                (i) "Catalog price" means a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or vendor, is either published or otherwise available for inspection by customers, and states prices at which sales are currently, or were last, made to a significant number of buyers constituting the general public; and

                (ii) "Market prices" means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors."

You must ask yourself does the combination of services you describe fall under this definition?

 

Thanks for the reply.  I'm still in a grey area a bit about the combination of all analysis and technical support tasks being commercially available or only a majority of them, but I'll have a discussion with my CO and the program.  Thank you. 

Link to post
Share on other sites
On 11/17/2020 at 11:08 AM, WifDan said:

Program's justification that this will not be a commercial item is as follows: "The nature of these technical support services do not lend themselves to being provided by ready-made or off-the-shelf commercial items or services, as they entail procuring labor hours and persons with specific areas of technical expertise to perform tasks and provide deliverable that often necessitate provision of technical direction over the period of performance, and cannot be defined and followed by the contractor without this kind of interaction and direction.

 

It seems like the program is wondering whether this would be a personal services contract, which is limited by FAR 37.104 and would require coordination with the civilian personnel office per paragraph (f).. This has nothing to do with whether it is or is not a commercial service. You may wish to look into that and form your own opinion. See, for example, 

(c)

(1)An employer-employee relationship under a service contract occurs when, as a result of (i) the contract’s terms or (ii) the manner of its administration during performance, contractor personnel are subject to the relatively continuous supervision and control of a Government officer or employee. However, giving an order for a specific article or service, with the right to reject the finished product or result, is not the type of supervision or control that converts an individual who is an independent contractor (such as a contractor employee) into a Government employee.

(2)Each contract arrangement must be judged in the light of its own facts and circumstances, the key question always being: Will the Government exercise relatively continuous supervision and control over the contractor personnel performing the contract. The sporadic, unauthorized supervision of only one of a large number of contractor employees might reasonably be considered not relevant, while relatively continuous Government supervision of a substantial number of contractor employees would have to be taken strongly into account (see (d) of this section).

Link to post
Share on other sites

Dont know if this will be an ID/IQ contract with labor-hour task orders or straight labor hour contract.

12.207 Contract Type 

”...(b)(1) A time-and-materials contract or labor-hour contract (see Subpart 16.6) may be used for the acquisition of commercial services when—

(i) The service is acquired under a contract awarded using—

(A) Competitive procedures (e.g., the procedures in 6.102, the set-aside procedures in Subpart 19.5, or competition conducted in accordance with Part 13);

(B) The procedures for other than full and open competition in 6.3 provided the agency receives offers that satisfy the Government's expressed requirement from two or more responsible offerors; or

(C) The fair opportunity procedures in 16.505 (including discretionary small business set-asides under 16.505(b)(2)(i)(F)), if placing an order under a multiple-award delivery-order contract; and

(ii) The contracting officer—

(A) Executes a determination and findings (D&F) for the contract, in accordance with paragraph (b)(2) of this section (but see paragraph (c) of this section for indefinite-delivery contracts), that no other contract type authorized by this subpart is suitable;

(B) Includes a ceiling price in the contract or order that the contractor exceeds at its own risk; and

(C) Prior to increasing the ceiling price of a time-and-materials or labor-hour contract or order, shall—

(1) Conduct an analysis of pricing and other relevant factors to determine if the action is in the best interest of the Government;

(2) Document the decision in the contract or order file; and

(3) When making a change that modifies the general scope of—

(i) A contract, follow the procedures at 6.303;

(ii) An order issued under the Federal Supply Schedules, follow the procedures at 8.405-6; or

(iii) An order issued under multiple award task and delivery order contracts, follow the procedures at 16.505(b)(2).

(2) Each D&F required by paragraph (b)(1)(ii)(A) of this section shall contain sufficient facts and rationale to justify that no other contract type authorized by this subpart is suitable. At a minimum, the D&F shall—

(i) Include a description of the market research conducted (see 10.002(e));

(ii) Establish that it is not possible at the time of placing the contract or order to accurately estimate the extent or duration of the work or to anticipate costs with any reasonable degree of confidence; 

(iii) Establish that the requirement has been structured to maximize the use of firm-fixed-price or fixed-price with economic price adjustment contracts (e.g., by limiting the value or length of the time-and-material/labor-hour contract or order; establishing fixed prices for portions of the requirement) on future acquisitions for the same or similar requirements; and

(iv) Describe actions planned to maximize the use of firm-fixed-price or fixed-price with economic price adjustment contracts on future acquisitions for the same requirements.

(3) See 16.601(d)(1) for additional approval required for contracts expected to extend beyond three years.

(4) See 8.404(h) for the requirement for determination and findings when using Federal Supply Schedules.

(c)(1) Indefinite-delivery contracts (see Subpart 16.5) may be used when—

(i) The prices are established based on a firm-fixed-price or fixed-price with economic price adjustment; or

(ii) Rates are established for commercial services acquired on a time-and-materials or labor-hour basis.

(2) When an indefinite-delivery contract is awarded with services priced on a time-and-materials or labor-hour basis, contracting officers shall, to the maximum extent practicable, also structure the contract to allow issuance of orders on a firm-fixed-price or fixed-price with economic price adjustment basis. For such contracts, the contracting officer shall execute the D&F required by paragraph (b)(2) of this section, for each order placed on a time-and-materials or labor-hour basis. Placement of orders shall be in accordance with Subpart 8.4 or 16.5, as applicable.

(3) If an indefinite-delivery contract only allows for the issuance of orders on a time-and-materials or labor-hour basis, the D&F required by paragraph (b)(2) of this section shall be executed to support the basic contract and shall also explain why providing for an alternative firm-fixed-price or fixed-price with economic price adjustment pricing structure is not practicable. The D&F for this contract shall be approved one level above the contracting officer. Placement of orders shall be in accordance with Subpart 16.5.

(d) The contract types authorized by this subpart may be used in conjunction with an award fee and performance or delivery incentives when the award fee or incentive is based solely on factors other than cost (see 16.202-1 and 16.203-1).

(e) Use of any contract type other than those authorized by this subpart to acquire commercial items is prohibited”

Link to post
Share on other sites
8 hours ago, Neil Roberts said:

It seems like the program is wondering whether this would be a personal services contract

While the Beginners Forum Neil has raised a very good point especially when the program states "without this kind of interaction and direction.".  

Noting this takes the OP down a rabbit hole of much more thought than just commercial item. But, as to commercial item even though a personal service contract does not mean it cannot be a commercial item contract as well as I see no exclusion in FAR Part 12 or 37 nor the definition of Commercial Item at FAR Part 2 that states a service that is defined as personal in nature by the FAR can not be a commercial item procurement. 

Finding individuals or an entity with such individuals to perform"Benefit-Cost Analysis, Benefit Analyses, Cost Analyses, Industry Profiles, Cost-Effectiveness Analysis, Break-Even Analysis, etc... A second component of the need is Technical Assistance which includes Literature and Document Review, Peer Review and Expert Elicitation Support, Data Acquisition and Data Base Management, etc..." can be found in the market place at "market prices" as per the FAR Part 2 definition I suspect.

More importantly to the OP's question really why doesn't the program area want the procurement to be a commercial item?  I pose this with sincerity.  If in fact market research supports that the needs are commercial item in nature FAR Part 12 coupled with FAR Part 10 essentially directs the agency to procure the need via commercial item procedures.  Doing so offers lots of advantages from doing solicitation of the need possibly using simplified acquisition procedures to tailoring the terms of the solicitation/contract based on commercial practices.   If in fact the needs are non-commercial as supported by market research then agency and the program office is driven directly to a more complex solicitation/contract.

I, like the OP, am skeptical of the program area's conclusion ofhow and most importantly why they reached it.

Link to post
Share on other sites

Since WifDan described the intended approach as “labor-hour” contract, I suspect that there probably aren’t “market prices”  to perform the various "Benefit-Cost Analysis, Benefit Analyses, Cost Analyses, Industry Profiles, Cost-Effectiveness Analysis, Break-Even Analysis,...Technical Assistance which includes Literature and Document Review, Peer Review and Expert Elicitation Support, Data Acquisition and Data Base Management, etc..." 

The time to perform, present and follow up these various tasks may likely depend upon specific scenarios, specific study subjects, amount of interaction with the customer, etc.

Thus, the need to use labor-hour pricing methods with fixed hourly rates but estimated  number of labor hours of various types. Or perhaps extended period or periods of labor-hour employees, continuously performing various studies, etc.

From 16.601 “Time-and-materials contracts”,  substituting “labor-hour” for “time-and-materials”  

“(c) Application. A [labor-hour] contract may be used only when it is not possible at the time of placing the contract to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence. See 12.207(b) for the use of [labor-hour] contracts for certain commercial services.”

 

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

“labor-hour” contract

 

19 hours ago, joel hoffman said:

that there probably aren’t “market prices”

Joel - I think you are confusing the matter by your second noted statement.

As you note the OP is already of the conclusion that the procurement entails procuring labor hours or persons and as FAR Part 2 definition of Commercial Item  provides a labor hour rate can be commercial item market price.   FAR Part 2 excerpt of commercial item definition means "means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors."

So one could  call up a management analyst and ask..."What do you usually charge as an hourly rate for a benefit cost analysis?" 

Likewise I can go to here and find where another agency has determined many professional services hours or persons that could perform the long list of needs the OP has stated at hourly rates and determined same to be commercial items   https://www.gsaelibrary.gsa.gov/ElibMain/searchResults.do?searchText=541611&searchType=allWords&x=0&y=0 

And

Find 2224 price lists like this.....https://www.gsaadvantage.gov/ref_text/GS35F540GA/0VSGQD.3RITP4_GS35F540GA_GS-35F-540GA-11-6-2020-478592.PDF

Or go here 

https://www.gsaelibrary.gsa.gov/ElibMain/sinDetails.do?executeQuery=YES&scheduleNumber=OASIS&flag=&filter=&specialItemNumber=OASIS+POOL1

And find 96 price lists noting that there are 7 Pools in OASIS.

Link to post
Share on other sites

Carl, I was simply responding to the statement that there are probably “market prices” for those type tasks. I doubt that but I didn’t review the GSA BPAs, etc. There are simply too many variables to consider in pricing individual tasks, as described in the original post . 

Yes, there are commercial services contracts with established labor hour rates. A labor rate isn’t a market price  for a task or activity.

As for using a commercial services contract, there are certain conditions and limitations for using labor hour tasks and/or contracts.

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

Carl, I was simply responding to the statement that there are probably “market prices” for those type tasks. I doubt that but I didn’t review the GSA BPAs, etc. There are simply too many variables to consider in pricing individual tasks, as described in the original post . 

Yes, there are commercial services contracts with established labor hour rates. A labor rate isn’t a market price  for a task or activity.

As for using a commercial services contract, there are certain conditions and limitations for using labor hour tasks and/or contracts.

Alright Joel I am going to leave it here as I still believe your "I doubt it" response is a continued confusion of "market price".   

By example I procure a cost benefit analysis at a firm fixed price competitively awarded that contains several CLINS for the effort by different expertise at an hourly rate, with variation in quantity or not.  The market price by definition is the unit prices for each of the CLINS.   Even if I was bold enough to seek the effort on a lump sum FFP it still is a market price.   Now I have a labor hour or T&M contract with several CLINS the unit prices again are the market price.  And so on......

FAR Part 2 - "Pricing means the process of establishing a reasonable amount or amounts to be paid for supplies or services."

FAR Part 2 -  ""Market prices" means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors."

FAR Part 15 - "Price means cost plus any fee or profit applicable to the contract type."

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...