Applying Limitations on Subcontracting Only to Prime Contractor's Management Efforts

[ji20874]

Here's a thought -- since the LOS clause can only be accurately and finally assessed at the end of a contract period (when there is no remaining time for remedy), maybe the best way to enforce the clause is for the agency to debar a contractor who willfully failed to meet it or has a history of failing to meet it.

[Vern Edwards]

1 hour ago, ji20874 said:

when there is no remaining time for remedy

Why wouldn't there be time for a remedy? See 13 CFR § 125.6(g).

[ji20874]

10 minutes ago, Vern Edwards said:

See 13 CFR § 125.6(g).

Outstanding!  This citation provides for penalties for a contractor's violation of the Limitations on Subcontracting requirement of a set-aside contract. 

 

 

[joel hoffman]

See 13 CFR §125.6 (e)(4):

”(4) Contracting officers may, at their discretion, require the contractor to demonstrate its compliance with the limitations on subcontracting at any time during performance and upon completion of a contract if the information regarding such compliance is not already available to the contracting officer. Evidence of compliance includes, but is not limited to, invoices, copies of subcontracts, or a list of the value of tasks performed.”

It would be advisable not to wait until it is too late for the contractor to be able to comply with the limitations on subcontracting. 

[ji20874]

Joel,

Yes, that has already been pointed to in this thread.  But remember two things--

1.  It is not mandatory for the contracting officer to "require the contractor to demonstrate its compliance with the limitations on subcontracting; " rather, this is wholly discretionary on the contracting officer's part.

2.  If the contracting officer does require the contractor to demonstrate its compliance, he or she should allow the contractor to make its own demonstration -- however well-intentioned the contracting officer might be, he or she should not impose criteria for judging compliance in the solicitation or otherwise in advance of the demonstration.  At least, that's how I see it.

If the contractor's failure to comply with limitations on subcontracting is discovered after performance is complete, that is okay -- the citation provided by Vern provides for appropriate penalties, including debarment.

[joel hoffman]

2 hours ago, ji20874 said:

Joel,

Yes, that has already been pointed to in this thread.  But remember two things--

1.  It is not mandatory for the contracting officer to "require the contractor to demonstrate its compliance with the limitations on subcontracting; " rather, this is wholly discretionary on the contracting officer's part.

2.  If the contracting officer does require the contractor to demonstrate its compliance, he or she should allow the contractor to make its own demonstration -- however well-intentioned the contracting officer might be, he or she should not impose criteria for judging compliance in the solicitation or otherwise in advance of the demonstration.  At least, that's how I see it.

If the contractor's failure to comply with limitations on subcontracting is discovered after performance is complete, that is okay -- the citation provided by Vern provides for appropriate penalties, including debarment.

I guess I missed an earlier posting of paragraph (e)(4). Yes, “may” is, of course, discretionary, not mandatory.

I do wonder, if the government is totally passive during performance, whether an appeal of a serious penalty for non-compliance discovered after performance might be successful. Plus, if the government didn’t care enough about it or “have the time” to check compliance during performance, I suspect that it won’t have the time to deal with it afterwards. The stated penalties are significant.

At least that’s how I see it. 🤠

[joel hoffman]

My first meeting of my civil service career was with my GS—15 Area Engineer, Fred Jones. Mr. Jones described his expectations for contract administration. He stated that the primary job of a contract administrator is to require full compliance with the contract requirements- nothing less and nothing more. If you ignore something it becomes meaningless. 

[ji20874]

Joel,

I'm not calling for total passivity regarding LOS compliance -- however, I am concerned about sloppy and/or excessive zeal on the part of contracting officers, especially in a matter as fraught with complexity as LOS.

But YES, I believe that even if the government is totally passive during performance, and the matter arises after performance is completed, that the penalties are still enforceable.

[ji20874]

Besides, I never called for total passivity.

Rather, I have been saying all along that the contractor should be able to make its own case about LOS compliance, without well-meaning but immature contracting officers simple-mindedly declaring what constitutes compliance in the solicitation.

[WifWaf]

59 minutes ago, ji20874 said:

immature

59 minutes ago, ji20874 said:

simple-mindedly

I remember back when these descriptors fit me... earlier this month when I replied to this thread and proposed we solicit compliance demos in our RFPs.  Thanks to Wifcon, I was able to discuss that idea in a testing ground with my peers (and Vern).  The result of this collaborative process is best summed up by @Vern Edwards, and is shown for all to see now at the top of this webpage, right next to Joel's self-portrait!  Good job, team (and @joel hoffman) 

[Vern Edwards]

3 hours ago, joel hoffman said:

I do wonder, if the government is totally passive during performance, whether an appeal of a serious penalty for non-compliance discovered after performance might be successful.

I think not. The responsibility to comply rests with the contractor. The government undertakes no obligation to the contractor to monitor the contractor's compliance. The contract does not condition the contractor's compliance on a government duty to monitor.

Your GS-15 Mr. Jones made a nice speech to an impressionable young contract specialist. Most of us who have ever supervised contract specialists have made that speech at one time or another. He was passing gas. So were we.

[C Culham]

1 hour ago, Vern Edwards said:

I think not. The responsibility to comply rests with the contractor.

I just selected the final post on this approach to the LOS compliance as I do wonder?   Wonder what?   The general statement rests okay with me but what about a 8(a) set-aside, either sole source or competitive? I raise this question with regard to SBA/Agency Partnership Agreements.  It seems there is a different standard to adhere to, and I quote a few of the paragraphs from the DoD Agreement where it states the "The Department of Defense...."

"...shall retain responsibility for compliance with the limitations on subcontracting requirement and all applicable provisions of FAR § 52.219­ 14 and any of the U.S. Department of Defense regulations; 5. shall include provisions in all contract awards, modifications, options and purchase orders awarded or issued under the 8(a) BD Program that require Program Participants to comply with the Subcontracting Limitations, and shall conduct and document an assessment at the time of contract award of the Participant's ability to comply with the Subcontracting Limitations;..."

"...shall ensure that contracting officers and other warranted officials and their equivalents obtain training on their obligations under this P A and the subcontracting limitations of FAR § 52.219-14 and 13 C.F.R. § 124.510 and 125.6;...)

"...shall include monitoring and oversight provisions for all contract awards, modifications, options and purchase orders to ensure that all contracts comply with the performance requirements (Limitations on Subcontracting) of FAR § 52.219-14 and 13 C.F.R. §124.510 and§ 125.6;..."

 

[ji20874]

Carl,

Isn't all of that just blather for SBA to wash its hands of the matter and dump it on the agency?  The Defense Department does essentially nothing from that text, as far as I know -- and those obligations rest with the Department, not with individual contracting officers.  Let's not burden individual contracting officers any more than we must -- we need to be reasonable about these things.

WifWaf,

I'm glad the discussion has been helpful.  This is how we all learn.

[Vern Edwards]

48 minutes ago, C Culham said:

I just selected the final post on this approach to the LOS compliance as I do wonder? 

Wonder all you like.

[C Culham]

1 hour ago, ji20874 said:

Isn't all of that just blather for SBA to wash its hands of the matter and dump it on the agency?

 

1 hour ago, Vern Edwards said:

Wonder all you like.

Then gentlemen I expect to never see a negative comment on your parts regarding the 8(a) Program again.  

Said with the greatest respect with acknowledgement that any conversation regarding the FAR throughout Forum, a regulation, is pejorative.

I am concluding on....

There is nothing untorid here other than avoid responsibility and regulation, and then blame the system not the advisors charged to implement same.

Reference- FAR 19.809-2 

[Vern Edwards]

49 minutes ago, C Culham said:

Then gentlemen I expect to never see a negative comment on your parts regarding the 8(a) Program again.  

Said with the greatest respect with acknowledgement that any conversation regarding the FAR throughout Forum, a regulation, is pejorative.

I am concluding on....

There is nothing untorid here other than avoid responsibility and regulation, and then blame the system not the advisors charged to implement same.

Reference- FAR 19.809-2 

And there is nothing more boring than a moralist retiree citing a regulation as scripture.

[C Culham]

8 minutes ago, Vern Edwards said:

And there is nothing more boring than a moralist retiree citing a regulation as scripture.

At least I am in good company!

[C Culham]

The latest comments in this thread by Vern Edwards and ji20874 are a primary example of "You asked for it." and a failure to accept responsibility when "you" get it.

The history of the 8(a) partnership agreements will show that leading up to the mid-90's agencies were disappointed in their ability to quickly use the 8(a) Program.  Promoted by a Presidential regulatory reform initiative regulatory allowance for partnership agreements became a reality.  A reality based on the ideal of efficiency.

When available via final rule of 13 CFR in June 1998 agencies were eager to obtain the agreements.  Reference - Federal Register / Vol. 63, No. 125 /Tuesday, June 30, 1998    The DoD by example entered into their first in May 1998 while SBA's final rule to further allow the agreements for other agencies was made official ,as noted,  in June of 1998.  Reference - DL 98-015, DFARS Case 98-DO11 dated/effective June 19, 1998.

 SBA twisted no agency's arm to sign the agreements and "wash their hands" of such things as monitoring 8(a) LOS, again agencies wanted the agreements and were and are willing signers of the "partnership".  

Now we have two individuals who have been very active in the acquisition world for a long time who I suspect were in their own ways catalysts for the partnership ideal yet now avow that they should have no role what so ever in 8(a) LOS monitoring , and for that matter LOS monitoring for any SB contact, as it is just too much.

Hogwash!   You are dang right I am moralist and I find it interesting that some who profess moralist ideals for some things easily state or imply sweeping  away responsibility for others especially when they asked for and profess they would follow it - "I wouldn't spend even one minute enforcing the clause unless compelled to do so by some higher power. " 

 

[Vern Edwards]

@C CulhamCarl, when did this thread become about the 8(a) Program? I have been writing about the limitations on subcontracting clause, FAR 52.219-14. My comment that you quoted about enforcing the clause was about that clause. I don't recall that clause even mentioning "8(a)".

I have said nothing about 8(a) or 8(a) partnership agreements in this thread or anywhere else since I returned to Wifcon. I don't even know what they are. I have not thought much or had much to say about 8(a) since I left the Small Business Administration more than 40 years ago. I haven't read the FAR coverage of 8(a) in many years. If I have mentioned it at all in any of my writings over the past 30 years it has been only in passing. I have not read those parts of 13 CFR that address 8(a). I cannot speak for ji20874, but I certainly have not been a catalyst of anything having to do with 8(a).

I'm worried about you, Carl. Did you get any sleep last night? Have you had a seizure? I ask only because you wrote this string of words:

1 hour ago, C Culham said:

You are dang right I am moralist and I find it interesting that some who profess moralist ideals for some things easily state or imply sweeping  away responsibility for others especially when they asked for and profess they would follow it - "I wouldn't spend even one minute enforcing the clause unless compelled to do so by some higher power. " 

That kind of writing is surely the product of apoplexy or some other mental disturbance, perhaps brought on by staying up all night reading in FAR Subchapter D. Lord knows—reading Part 19 or Part 25 alone will disturb even a good mind.

Please, get help.

[C Culham]

34 minutes ago, Vern Edwards said:

Carl, when did this thread become about the 8(a) Program?

The LOS is a clause that is specifically required in 8(a) contracts.  Guilt by association.  

 

41 minutes ago, Vern Edwards said:

My comment that you quoted about enforcing the clause was about that clause.

Enforcement of the clause applies to all contracts that include it.  You made a general statement that on its basis is not true and I showed you where in a polite way and you did not like that I did and returned to your sarcastic ways.  Sorry that I offended you but in truth administration of the clause is different for 8(a) when a 8(a) Partnership Agreement is in place, pure and simple. I might add that many are signed by folks like "Senior Procurement Executive" which in my view does make a difference on the validity of the partnership.

59 minutes ago, Vern Edwards said:

I don't even know what they are.

Hmmm so it is okay for you to plead ignorance of a regulation?  How does that play out with lets say the LOS clause when a contractor would claim same?   

I am surprised that in your vast and lengthy experience in government employee, consulting, teaching and extensive Forum experience that the partnership agreement regulation and use never was discussed.   

 

1 hour ago, Vern Edwards said:

I'm worried about you, Carl.

Not to worry Vern.  I am of sound mind and health and I can confirm so but alas I would refuse to sign a HIPPA release in your name so please take my word for it.   And I hope to continue to be so for a long time coming.   And please do not read into this discussion that I do not get any sleep.  I would love to do some analytics on your post times as I am thinking you are the one that can not sleep.

Beyond the hogwash I hope you have a great day gazing out your window at that stellar Cascade Range mountain!

[ji20874]

Carl,

I never called for total passivity.

Rather, I have been saying all along that the contractor should be able to make its own case about LOS compliance, without contracting officers simple-mindedly declaring what constitutes compliance in the solicitation far before performance occurs.

Measuring LOS compliance is fraught with complexity -- even the SBA cannot tell us how to do it, and even the SBA decided against any mandatory reporting scheme.  I think it is both reckless and foolish for a contracting officer to attempt to dictate how compliance will be measured in a solicitation.  I think it is both reckless and foolish for a contracting officer to over-zealously try to enforce the LOS based solely on his or her own understanding of what constitutes compliance.  If during performance or after performance, it appears that a contractor is not in compliance, appropriate inquiries can be made and there are remedies available.  

[Vern Edwards]

58 minutes ago, ji20874 said:

I never called for total passivity.

And here's what I said on September 22, more than a week ago:

On 9/22/2021 at 4:30 AM, Vern Edwards said:

After reading what everyone has said, here is where I stand:

If I were a CO administering a contract with subcontracting limitations I would do the following:

1. I would include a clause in the contract requiring that (1) before final payment the contractor state in writing whether they complied with the limitations and (2) provide a summary statement of the amount paid to each non-similarly-situated subcontractor. I think I could ask for that information pursuant to 13 CFR 125.6(e)(4), but I'm pretty sure I'll hear from Don about such an information request.
2. I would send a letter to the contractor at the performance midway point reminding them of the limitation and asking for written confirmation of receipt.
3. Upon receipt of the contractor's final confirmation, and assuming that there were no issues, I would sign a memo to file stating that I knew of no reason to think that the contractor had not complied.

That's as far as I would go absent reliable information about noncompliance or direction from above.

Yet here's Carl's accusation against ji20874 and me:

7 hours ago, C Culham said:

Now we have two individuals who have been very active in the acquisition world for a long time who I suspect were in their own ways catalysts for the partnership ideal yet now avow that they should have no role what so ever in 8(a) LOS monitoring , and for that matter LOS monitoring for any SB contact, as it is just too much.

In-progress monitoring cannot be determinative of compliance, because both 13 CFR 125.6 and the clause expressly state that compliance is to be determined at the end of performance. Any action taken against a contractor based on in-progress monitoring would likely be a government breach of contract unless, perhaps, it revealed that compliance would be impossible. But even then, contract changes and claims affecting subcontracted work could be a defense against assertions of contractor breach, at least pending final resolution.

All this moralistic accusation and fussing is a tempest in a looney teapot.

[Retreadfed]

20 minutes ago, Vern Edwards said:

In-progress monitoring cannot be determinative of compliance, because both 13 CFR 125.6 and the clause expressly state that compliance is to be determined at the end of performance.

Just for clarity, here is what 13 CFR 125.6(d) says about when compliance is to be measured:

The period of time used to determine compliance for a total or partial set-aside contract will be the base term and then each subsequent option period. For an order set aside under a full and open contract or a full and open contract with reserve, the agency will use the period of performance for each order to determine compliance unless the order is competed among small and other-than-small businesses (in which case the subcontracting limitations will not apply).

[Vern Edwards]

Just for clarity, here is what the contract clause, FAR 52.219-14, paragraph (f) says:

Quote

(f) The Contractor shall comply with the limitations on subcontracting as follows:

           (1) For contracts, in accordance with paragraphs (c)(1), (2), (3) and (6) of this clause—

          [Contracting Officer check as appropriate.] 

           □ By the end of the base term of the contract and then by the end of each subsequent option period; or

           □ By the end of the performance period for each order issued under the contract.

           (2) For orders, in accordance with paragraphs (c)(4) and (5) of this clause, by the end of the performance period for the order.

Emphasis added.

So by the terms of the contract, compliance is determined on the basis of amounts paid by the end of  those periods of time. In reality, however, if at the end of those periods of time there are outstanding requests for equitable adjustment or claims, compliance might not be determinable until they are settled or litigation has been completed. That could be years after the end of those periods.

[C Culham]

17 hours ago, ji20874 said:

I have been saying all along that the contractor should be able to make its own case about LOS compliance, without contracting officers simple-mindedly declaring what constitutes compliance in the solicitation far before performance occurs.

Throughout this thread I have understood your position and have not questioned it.  My most recent post prior to this one where I mentioned you did not take exception to your referenced position, what it did take exception to was the characterization of SBA's intent and the DoD's presumed position regarding administration of the LOS clause related to 8(a). 

I hope this clarification helps.

One thought to your position.  My read may not be like others but it seems you are addressing post award matters of the LOS.  Based my read I just want to give the reminder that LOS is matter of pre-award as well that reaches to COC/responsibility of the proposed awardee.  I mention this as I wonder if you ever concluded on what you think the answer to your first proposed question is?