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I have read the threads on this forum in regard to the application of FAR 19 to acquisition of services which are to be performed overseas.   I have also read all the linked decisions and the recent proposed rule to clarify FAR 19 application (https://www.govinfo.gov/content/pkg/FR-2019-08-12/pdf/2019-16957.pdf) which basically says COs CAN set aside contracts performed overseas but do not have to.  

The question I have is still not answered though, or this may be the issue with my intelligence limitations 😞 .  How does one determine "performance outside the US", not even mentioning "entirely outside the United States"  - what is "performance" for this purpose?  In a services acquisition under cost type contracts, performance - i.e. delivery of actual services - may be overseas or benefiting overseas contracting activity, but the services are purchased from personnel hired in the United States and posted overseas, plus the indirect cost pools are for personnel who are located in the United States.  So, if I have a contract which is to be performed under Foreign Assistance Act in, lets say, Egypt, and I am hiring contractors in the US, who then go and hire personnel in the US and send them to Egypt and also maintain a home office in the US which is paid for by indirect costs.  Let's say all the costs that are actually "incurred" overseas for the performance are about 30% of the contract and the rest are "incurred" in the US.  Is the contract performed overseas?  If there is a definitive thread on this that exists, grateful for a link.  Thanks!

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If the contract is for janitorial services, for example, the key is the location where the floor sweeping and toilet scrubbing will occur.  If the covered building is in Greece, then performance occurs entirely outside the United States.  It is irrelevant where the company's headquarters is -- it is irrelevant where the janitors are recruited -- it is irrelevant where the cleaning products are sourced -- it is irrelevant if the company has a U.S. branch office -- it is irrelevant if the payroll function is in the U.S.

At least, that's my take on it.

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Yes and it would seem stupid to me to apply set asides and subcontracting goals and plans  for such a contract. 

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1 hour ago, ji20874 said:

If the contract is for janitorial services, for example, the key is the location where the floor sweeping and toilet scrubbing will occur.  If the covered building is in Greece, then performance occurs entirely outside the United States.  It is irrelevant where the company's headquarters is -- it is irrelevant where the janitors are recruited -- it is irrelevant where the cleaning products are sourced -- it is irrelevant if the company has a U.S. branch office -- it is irrelevant if the payroll function is in the U.S.

At least, that's my take on it.

Okay, so if the contract is for provision of technical assistance to the Government of Greece and the contractor provides technical experts deployed to Greece to assist Greek Government but hires and pays them in the US, and the compliance aspect of the contract, accounting, subcontract management, executive oversight, program management etc., is handled in the home office by 30+ people, all charged to the Government through indirects.  Is the contract performed overseas? In its entirety?

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If the service contract is for janitorial services for a building in Greece, and the contractor deploys U.S. citizen janitors to Greece to sweep the floors and scrub the toilets but hires and pays them in the US, and the accounting, subcontract management, executive oversight, program management etc., is handled in the U.S. home office by 30+ people, all charged as indirects, I would still say performance is entirely outside the U.S.  This remains true even if the contractor sources the brooms and brushes and cleaning liquids in the U.S.  All the floor sweeping occurs in Greece, and all the toilet scrubbing occurs in Greece, right?  

The purpose of the sample service contract is to sweep floors and scrub toilets in Greece.  At least, that's my take on it.  Are you seeing things differently?

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2 hours ago, Don Mansfield said:

I don't think the FAR or SBA regulations provide definitive criteria for determining place of performance, so I would interpret it the way ji does (i.e., to the advantage of the CO).

What we lack is a definition of what constitutes "contract performance." If a contractor is building something in Afghanistan, but is purchasing materials, inspecting them, packing them for shipment to the worksite, and loading them on an aircraft or vessel in the United States, is that work part of "contract performance"? If so, where was the place of contract performance and what are the policy implications?

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But - what If the solicitation and contract don’t require the contractor to purchase materials, inspect them, pack them for shipment to the worksite, and load them on an aircraft or vessel in the United States?

What if this can be done within the local  country or any other country and the award isn’t restricted to only US contractors?

In other words, if place of performance isn’t restricted during the soliciting stage, then does Part 19 apply?

I wouldn’t think so. There are a whole lot of host countries who would not appreciate restricting award of a contract to US based contractors. In fact DoD has Host Nation Agreements with many countries that host US Forces. 

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Service Contract Act only applies to services performed in the US and specified territories (see definition of United States at FAR 22.1001).

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7 hours ago, Neil Roberts said:

Neil, what is this DoD FAR Supplement in reference to concerning this thread? Tzarina is asking about application of Part 19 to, for example, a technical assistance contract to the Government of Greece, performed in Greece or for services performed in Egypt. 

For DoD, see 225.7201 Policy:

“10 U.S.C. 2410g requires offerors and contractors to notify DoD of any intention to perform any part of a DoD contract outside the United States and Canada that—

(a) Exceeds $750,000 in value; and

(b) Could be performed inside the United States or Canada.

Parent topic:  SUBPART 225.72 —REPORTING CONTRACT PERFORMANCE OUTSIDE THE UNITED STATES”

 

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Hi Joel. I would say one government contract definition view of how "performance outside the United States" is seen.

As a side comment, not quite sure to me whether the post is about "performance outside the United States," acquisition of services which are to be performed overseas," or "contract performed overseas," which are used in this post.

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On 2/7/2022 at 8:52 AM, Tzarina of Compliance said:

So, if I have a contract which is to be performed under Foreign Assistance Act in, lets say, Egypt, and I am hiring contractors in the US, who then go and hire personnel in the US and send them to Egypt and also maintain a home office in the US which is paid for by indirect costs.  Let's say all the costs that are actually "incurred" overseas for the performance are about 30% of the contract and the rest are "incurred" in the US.  Is the contract performed overseas?  If there is a definitive thread on this that exists, grateful for a link.  Thanks!

@Tzarina of Compliance, FAR 52.219-xx clauses in a prime contract are the requirements for the contractor related to FAR Part 19. Is your concern about those requirements? Which one? Or are you a contracting officer concerned about something else in FAR Part 19, and if so, can you refer to the specific paragraph section that includes the requirements (and words) you are concerned about there?   

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5 hours ago, Neil Roberts said:

@Tzarina of Compliance, FAR 52.219-xx clauses in a prime contract are the requirements for the contractor related to FAR Part 19. Is your concern about those requirements? Which one? Or are you a contracting officer concerned about something else in FAR Part 19, and if so, can you refer to the specific paragraph section that includes the requirements (and words) you are concerned about there?   

The questions are:  should this be a set-aside under FAR 19 and if its not a set aside does it require a Small Business Subcontracting Plan (over $750K)?    The contract is to provide technical assistance to the Government of let's say Egypt, in creating financial management system which can be used by various departments of the Egyptian Government.  The expected offerors will be US based contractors, who will perform the work in Egypt with the back office support, compliance etc., in the United States.   70% of the contract costs are incurred in the US to pay salaries of both personnel posted to Egypt, and personnel supporting the effort in the US, indirect costs, etc.    The Agency's position is that since all of its contracts are performed overseas, they do not have to (but can) offer set-asides or require small business subcontracting plans.    My question is not to the point of the FAR 19 and whether or not it should be used more often in contracts which are performed overseas.  

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On 2/7/2022 at 10:18 PM, Vern Edwards said:

What we lack is a definition of what constitutes "contract performance." If a contractor is building something in Afghanistan, but is purchasing materials, inspecting them, packing them for shipment to the worksite, and loading them on an aircraft or vessel in the United States, is that work part of "contract performance"? If so, where was the place of contract performance and what are the policy implications?

In services contracting, this is the issue. If the work is performed both in the US and overseas, what percentage makes it "performance overseas" for mandatory SB considerations?

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2 hours ago, Tzarina of Compliance said:

In services contracting, this is the issue. If the work is performed both in the US and overseas, what percentage makes it "performance overseas" for mandatory SB considerations?

I’m assuming that indirect costs and support are performed by in-house company personnel who support multiple contracts (hence “indirect”) and who are not contractors. Is that correct?  Are the personnel accepting, packing and shipping materials directly charged to the contract? 

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4 hours ago, Tzarina of Compliance said:

The Agency's position is that since all of its contracts are performed overseas, they do not have to (but can) offer set-asides or require small business subcontracting plans.

The dust has not settled on this issue. The FAR Councils' rationale for concluding that set-asides are discretionary overseas is not supported by the facts. See the ABA's comments submitted in response to the proposed rule for FAR Case 2016-002: https://www.regulations.gov/comment/FAR-2016-0002-0025

If I were you, I would go along with the agency's position unless the final rule comes out making set-asides mandatory regardless of place of performance.

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13 hours ago, Tzarina of Compliance said:

In services contracting, this is the issue. If the work is performed both in the US and overseas, what percentage makes it "performance overseas" for mandatory SB considerations?

For a scholarly (and lengthy) discussion of this topic written by an Air Force JAG officer, see Malone, Only in America! (and its outlying areas): the conflict between the SBA regulations and the FAR, and the importance of not burdening overseas and contingency contracting agencies with a requirement to execute U.S. small business set-asides73 A.F. L. Rev. 151 (2015).

https://www.afjag.af.mil/Portals/77/documents/Law Review/AFD-150827-031.pdf?ver=twfkmKgqzZ8GV3eXzAKo1g%3d%3d

You'll have to scroll down to the article.

See also Mansfield, "SMALL BUSINESS PROGRAMS: Do They Apply Outside The United States?", The Nash & Cibinic Report, September 2015. (Yes, our Don Mansfield.)

Since I don't think anyone has mentioned it, see Latvian Connection, LLC, Comp. Gen. B-408633, Sept. 18, 2013.F

https://www.gao.gov/assets/b-408633.pdf

See also Maersk Line, Limited, Comp. Gen. B-410280, Dec. 1, 2014.

https://www.gao.gov/assets/b-410280.pdf

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On August 12, 2019, 84 Fed. Reg. 39793, the FAR councils issued a proposed rule entitled, "Federal Acquisition Regulation: Applicability of Small Business Regulations Outside the United States." The proposed rule would change FAR 19.000(b), According to the background statement:

Quote

Section 19.000, Scope of part. This section is amended to clarify that, unless otherwise noted in FAR part 19 (such as for subparts 19.6 and 19.7), contracting officers shall apply this part in the United States and its outlying areas and may apply this part outside the United States and its outlying areas. Additionally, the section is amended to specify that offerors participating in any FAR part 19 procurement are required to meet the definition of "small business concern" at FAR 2.101 and the definition of "concern" at FAR 19.001.

The proposed text of 19.000(b) is as follows:

Quote

Amend section 19.000 by revising paragraph (b) to read as follows:

19.000 Scope of part.

(b)(1) Unless otherwise specified in this part (see subparts 19.6 and 19.7)-

(i) Contracting officers shall apply this part in the United States and its outlying areas; and

(ii) Contracting officers may apply this part outside the United States and its outlying areas.

(2) Offerors that participate in any part 19 procurement are required to meet the definition of "small business concern" at 2.101 and the definition of "concern" at 19.001.

The comment period ended on October 11, 2019.

According to the FAR councils' semiannual regulatory agenda dated January 31, 2022, they plan to issue a final rule in March 2022. They did not indicate what the rule will say.

For those of you who want more background, the Federal Register RIN is 9000-AN34.

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This, from the article that Vern provide the link to, is an immediate “Bingo!” For me.

“…V. AN EXPANSION OF SMALL BUSINESS SET-
ASIDE REQUIREMENTS TO EXTRATERRITORIAL PROCUREMENTS NOT ONLY CONFLICTS WITH THE
FAR, BUT ALSO WITH OTHER U.S. STATUTES AND INTERNATIONAL AGREEMENTS ..................................................... 179 A. U.S. Statutes and Treaties Should Control Over the Regulatory
Interpretation of the Small Business Act ........................................... 179
B. A Worldwide Application of Small Business Set-Asides Will
Conflict with Statutes and Agreements Governing the Presence
of U.S. Armed Forces in Other Countries ......................................... 180
C. Applying Small Business Set-Asides to Overseas
Procurements Will Also Conflict with the Letter and Spirit of
Valid, Enforceable International Executive Agreements................... 184    

1. The FAR Exempts From Certain U.S. Laws and Policies [of]
Countries with which the United States Has Entered into
Executive Agreements ................... 185”

EDIT: For example, the 1965 USACE “Engineer Assistance Agreement” (EAA) and subsequent Memoranda Of Agreement (MOA’s) with the Kingdom of Saudi Arabia, various Status of Forces Agreements (SOFAs)  and Various Foreign Military Sales (FMS) Agreements and other agreements that covered work in Central Latin America and South America come to mind.

Edited by joel hoffman
Added some examples that I was familiar with
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Everyone: Go back and look at the Czarina's question.

Quote

How does one determine "performance outside the US", not even mentioning "entirely outside the United States"  - what is "performance" for this purpose? 


It's reasonably clear.

I wrote this for publication 9 years ago:

Quote

Some statements in the FAR seem clear until the time comes to apply them. Consider this from FAR Part 19, “Small Business Programs,” at FAR 19.000(b):

"This part, except for [FAR] subpart 19.6, applies only in the United States or its outlying areas."

What does “in the United States” mean? Who or what has to be “in the United States?” The Contracting Officer? The contractor? Performance of the work? All three? Does FAR Part 19 apply if the CO is in the United States but the work will be done in Bahrain? What if the CO is in Bahrain but the work will be done in the United States? The FAR contains many such mysterious passages.

 I wonder if the upcoming final rule will clear things up. I doubt it. Look at the proposed 19.000(b).

What part of what is necessary to deliver supplies or services constitutes the "performance" to which 19.000(b) refers? In the absence of clear regulatory or tribunal guidance, a CO must reason the matter through, then construct an argument to support their conclusion. 

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1 hour ago, Vern Edwards said:

For a scholarly (and lengthy) discussion of this topic written by an Air Force JAG officer, see Malone, Only in America! (and its outlying areas): the conflict between the SBA regulations and the FAR, and the importance of not burdening overseas and contingency contracting agencies with a requirement to execute U.S. small business set-asides73 A.F. L. Rev. 151 (2015).

https://www.afjag.af.mil/Portals/77/documents/Law Review/AFD-150827-031.pdf?ver=twfkmKgqzZ8GV3eXzAKo1g%3d%3d

You'll have to scroll down to the article.

See also Mansfield, "SMALL BUSINESS PROGRAMS: Do They Apply Outside The United States?", The Nash & Cibinic Report, September 2015. (Yes, our Don Mansfield.)

Since I don't think anyone has mentioned it, see Latvian Connection, LLC, Comp. Gen. B-408633, Sept. 18, 2013.F

https://www.gao.gov/assets/b-408633.pdf

See also Maersk Line, Limited, Comp. Gen. B-410280, Dec. 1, 2014.

https://www.gao.gov/assets/b-410280.pdf

Thank you so much, Vern.   I am looking for some discussion on this, so this is exactly the reading I am looking for, also per your last - I was hopeful with the new FAR 19 "Clarification", but it does not look like they are clarifying this part.   This agency's industry has a lot of small and emerging businesses, so I am trying to learn more about how the process works for them.    I am not trying to go against any guidelines etc., but I am trying to find out how do I determine when to apply the small business subcontracting requirements and set asides.  "Using discretion" in this case seems to affect a lot of businesses.   I will gratefully read all the links you shared and thank you all again.   Happy Valentine's Day!  🙂❤️ 

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