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Everyone seems to be on board with 1 and 3 (substituting "information" for "evidence" in 3). For 2, I was simply trying to condense what Joel has been saying about his contracts, and that "review" means what he was saying about the pre-award evaluation. I can't comment further on it other than to say that the ability of a typical CO to recognize fraud doesn't make the statement invalid. I think there are some COs who are fully capable of suspecting when an SB is being used as a front on a set-aside contract.

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Vern, when I mean “monitor the contractor for compliance” I don’t necessarily mean calculate the exact Percentage. Construction contractors have to provide much more information to the government for progress payments and for other contract admin purposes than before April 1989. Each progress payment request  includes subcontract amounts and amounts earned, owed, paid or excluded from the payment request to each sub, for example.

The ACO office and contractor generally review the status of each Network Analysis System (schedule) activity before the contractor submits the invoice. The activities are coded to identify which resources (firms) are performing the activity work. Each activity is also coded to the applicable contract line item.  

The contractor separately has to identify all subcontractors that will be on-site. Thus, the government reps know who is performing the various work activities. 

As for a space launch complex at Vandenberg AFB, that would never be a set-aside or sole source SB contract.

I don’t really care whether you dismiss my opinion. If you have to ask for all the details, you don’t really know current construction contract admin procedures for organizations who are staffed and organized to execute construction programs or how it can be monitored during performance on a periodic basis.


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3 hours ago, joel hoffman said:

If you have to ask for all the details, you don’t really know current construction contract admin procedures for organizations who are staffed and organized to execute construction programs or how it can be monitored during performance on a periodic basis.

@joel hoffmanIf I don't know, isn't that all the more reason for you to answer my questions?

@Fara FasatAs you can see, Joel is not just talking about pre-award. He's an advocate of active in-process monitoring. The question is: Given the terms of FAR 52.219-14, why does in-process monitoring matter? What does a CO do with in-process information? What can a CO do with it? 

Can a CO terminate for default or suspend payment based on in-process information, while performance is underway, based on interim facts, when the SBA policy and the clause say that compliance will be determined as of the end of performance?

If the answer is no, if compliance must be determined at the end, then why not just wait until the end? That's one of the most important questions to arise from the SBA policy and the contract clause.

Have SBA and the FAR clause, by setting the agreed upon date of compliance assessment and prescribing a minimum $500,000 fine for failure to comply, effectively precluded anticipatory action by the CO? I have asked that question in one form or another several times. No one has answered.

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I am curious as to whether the SBA will actually assess any fines, after the water has already run over the dam, especially if an emerging business might not be able to pay a fine.

For construction, if the ACO can discern early on during performance that it doesn’t appear that the contractor intends to meet the LOS, the agency can contact the SBA for notification of possible non-compliance and for advice and assistance. The SBA is technically the Prime on an 8(a) contract, so should take appropriate action to warn and/or manage its sub.

The ACO and/or KO can proactively raise the issue with a  construction contractor early for notification and possible corrective action. The contractor can show that it is complying or respond on how it will comply.

As I have explained over the years at WIFCON, this is a real issue with construction contracts that are set-aside or reserved for sole source small businesses. We’ve seen all sorts of arrangements that are or appear to be fronts for non-eligible construction firms large and small or for some participants that take advantage of the opportunities.

This is nothing new. The construction industry has long complained to Congress about the problems.

For that matter, the problem isn’t limited to the Part 19 programs. We’ve long seen similar problems or the appearance of collusion in unrestricted construction acquisitions, too. That’s a discussion for another time. And there is a separate clause for self-performance on unrestricted construction contracts. L

My personal experience dates as far back back as 1971 in the Air Force at Castle Air Force Base. I was in the Base CE Engineering and Construction Branch in charge of the QA of Base awarded construction/maintenance and repair and custodial service contracts. We had several contracts where the second low bidder actually performed the work and we never met the actual prime contractor. 

It was a problem in 1980 when I went to work for USACE in the field.  It was a problem in 1989 when I was assigned to supervise the District Office section that negotiated all source sole source construction contracts and conduct all construction and some service contract source selections.we were able to avert numerous pre-award issues.

We also  provided policy and CAB oversight of all the construction ACO offices. I was also an ACO.

When I was assigned to Germany in the late 80’s, there were real issues with collusion between bidders/proposers and kickbacks to German government officials that eventually resulted in criminal prosecutions of several higher level government employees and contractors. 

Im just saying that this has been an important issue to us and to me over the years.

I see little value in not being pro-active.  I doubt that simply letting the SBA handle such issues by dumping the entire problem and solution on SBA will solve the problem.

Closing the barn door after the horse has left, maybe issuing a fine.

That ship has already sailed.  I doubt that it will solve the problem, which already occurred .

I ran out of cliches. 🤠



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21 hours ago, Vern Edwards said:

Note that the SBA must make that determination, not the agency contracting officer.


20 hours ago, ji20874 said:

This isn't merely a note -- this is a matter of crucial significance in this discussion.

Specific to Section 8(a)  the process as provided by the Small Business Act and implemented by regulation at 13 CFR 124 and the FAR provides for a prime (SBA) sub (Agency) relationship and yes SBA is responsible for making that determination.  However as allowed by the Act and regulation the SBA and Agency can and have entered into a partnership agreement where the Agency assumes the responsibility of the SBA in making the determination. 

The same stipulation on award is carried at Section 15(o) of the Small Business Act with regard to contract awards under Small Business set-asides authorized by Section 15(a) of the Act.   The stipulation is carried through to 13 CFR 121 and the FAR. 

To the discussion as a whole.   The view of subcontracting limitation determination by a CO at pre-award has not changed.   That view has been articulated and demonstrated through the various quotations of the GAO found in this discussion thread and I would add that the COFC has taken essentially the same stance.  Post award the new language has shifted the measure of determination from cost of performance to amount paid.  I would like to say it is a simple shift but I do wonder after a 7 page WIFCON discussion.

In the end there are two red face tests.   The first is for the small business who if it fails to address internally the LOS matter where their offer could face protest (think here GAO, COFC, SBA OHA) and at post award liability that could extend to such things as the penalties prescribed under the CFR, the FCA, 18 USC and/or suspension and debarment.  The latter being much more rare than protests but all the same have occurred.   The second is for the CO who overlooked the LOS pre-award  and a protest is sustained (another rare occurrence) and at post award where an investigation shows that a SB with intent did not subscribe to the LOS and the CO turned a blind eye (very likely another rare occurrence).

All said it is up to the CO to determine their degree of review of the matter of LOS.   In the view of again 7 pages of discussion it is my belief that an education has occurred that would give a CO a better understanding of LOS to help them gauge the level of degree they might employee in their everyday efforts of offer review and contract award.

As to long standing problems I will simply endeavor to do what I have always done and hope that it helps just a little bit but as I age I am not sure my efforts have been worth it.   


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On 10/9/2021 at 7:08 AM, C Culham said:

Post award the new language has shifted the measure of determination from cost of performance to amount paid.  I would like to say it is a simple shift but I do wonder after a 7 page WIFCON discussion.

Emphasis added.

Carl, It's good that you wonder. (That's praise.) Wondering is a good thing.

To those who think this thread is too long, please blame me. But I think I am doing what a contracting professional should do when reading a new clause. I'm trying to foresee possibilities and think how to handle them proactively and effectively, to think how I might write a solicitation and contract so as to minimize misunderstanding and conflict, if possible, and to think how not to waste human resources. Except for distractions caused by some war stories, I think this has been a good thread for firing up the critical thinking neurons.

In seeking to simplify the limitations on subcontracting Congress and the SBA have created new complications. 

Consider one possible application of FAR 52.219-14(d), which might provide, in part:


The Contractor shall comply with the limitations on subcontracting... By the end of the base term of the contract...

I searched the FAR, 48 CFR Chapter 1, for "base term." I found it in only three places. Guess where: 19.505, 19.809-2, and 52.219-14. I searched the DAU online glossary of acquisition terms and did not find it. I couldn't find it in Black's Law Dictionary or the new edition of The Government Contracts Reference Book.

To what does "the base term of the contract" refer? What part of a contract written in the Uniform Contract Format specifies its "base term"? Section F, which is entitled "Deliveries or performance"? 

What if a contract does not use the phrase "base term"? When I hear or read "base term" I think of a contract for 12 months of severable services with 12-month options. What if a contract is not for that kind of service? What is the "base term" of a construction contract? Of an R&D contract? Of a software development contract?

The phrase "base period" appears in FAR, without official definition, in 8.404, 9.104-3, 16.601, and 52.219-9. It uses and explains the phrase in the context of 31.203 as follows: "A base period for allocating indirect costs is the cost accounting period during which such costs are incurred and accumulated for allocation to work performed in that period."

I found the phrase "base term of the contract" used in only seven board of contract appeals decisions and two Court of Federal Claims decisions. The most recent such decision was in 2011. In every instance the phrase was used without explanation or specific reference to the contract. I have explained elsewhere in this forum that the term "period of performance" is unofficial and often unclear in use. I explained in a recently published Briefing Paper that contracts with multiple line items might have multiple "performance periods" or dates of delivery. If so, which one would be the "base term"? What if the line items were severable (divisible)?

Does "the amounts paid"... "by the end" mean that you count only those payments made or due as of the last day of the base term? What about amounts paid weeks, months, or even years later, after final settlements? Could a contractor avoid a violation by delaying final settlements with and payments to "not similarly situated" subcontractors?

What about outstanding contractor claims for equitable adjustment seeking money and/or time? Compliance or noncompliance might well depend on the outcome of such claims. Many such claims have taken years to settle after a CO's final decision.

To those who think that the foregoing are nothing but petty quibbles, I remind them that such quibbles are the very corpuscles in the life blood of law. Think of the quibbles we've had in this country over the phrases "a well regulated militia" and "the right of the people to keep and bear Arms." If the FAR councils thought more about prospective petty quibbles they might write better clauses.

We have only scratched the surface in analyzing FAR 52.219-14 and the regulations that it implements. I much prefer analytical discussions to answering basic questions. But I dislike war stories about what someone did when in the long long ago. They are not relevant to this discussion. Congress did not authorize limitations applicable to all small business set-asides until 2013. Before that they applied only to special small business programs, like 8(a).

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This topic has been going on so long the original clause under discussion was replaced in September with one of the most significant re-writes I've ever seen.

But as a contractor, my issue was  that a service contract is constantly in flux simply because of that one big annoyance in contracting: people.  They come and go, meaning the prime/sub workshare changes from month to month.  So the best you can do is manage it over the long-term.  Simply picking a point in time to evaluate the workshare is the definition of arbitrary and could certainly be viewed as capricious in certain circumstances.

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52 minutes ago, REA'n Maker said:

This topic has been going on so long the original clause under discussion was replaced in September with one of the most significant re-writes I've ever seen.

We have been discussing the current (September 2021) version of the clause since September 18.

If this topic is too long for you, why are you reading it? Why did you make it longer?

Don't complain about the length of a discussion. Complain about the quality. If you complain about the quality, be specific, so we can decide if you have a good point or are just full of beans. That way, if you have a good point, we can try to improve the discussion.

52 minutes ago, REA'n Maker said:

...a service contract is constantly in flux... the prime/sub workshare changes from month to month.

What kind of service contract? What you described is not true of all service contracts. Be specific!

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