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This thread leads to the question as to whether FAR 19.001(b) is consistent with 15 U.S.C. 631 which states "It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order . . . to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises."  Note that the statute talks about "total purchases and contracts."  Nothing in the statute limits this policy to contracts to be performed in the U.S.  Also, see, 13 CFR 125.2(f) ( The contracting officer shall set aside any acquisition with an anticipated dollar value exceeding the Simplified Acquisition Threshold (defined in the FAR at 48 CFR 2.101) for small business concerns when there is a reasonable expectation that offers will be obtained from at least two small business concerns that are competitive in terms of quality and delivery and award will be made at fair market prices.)

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1 hour ago, Vern Edwards said:

Is the place of manufacture the place of performance?

Unless the Government is specifying place of manufacture, I don't see how "place of performance" could be interpreted as "place of manufacture" for purposes of applying FAR part 19.

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Have we changed the discussion from service contracts to supply contracts?

For purposes of set-aside and subcontracting plans for supply contracts, it might make sense to think of the place of delivery as the place of performance for FAR Part 19 purposes.  The contract is for delivery, and delivery (performance) occurs at the government agency's loading dock, right?  For supply contracts, as just mentioned, and especially for competitive supply contracts, we usually don't specify a place of manufacture in our solicitations.  I prefer to look at contract performance as where the contract specifies performance (or delivery), not where the contractor electively chooses to perform preparatory or back office tasks, or where it electively chooses to source its supplies and services.

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1 hour ago, ji20874 said:

Have we changed the discussion from service contracts to supply contracts?

For purposes of set-aside and subcontracting plans for supply contracts, it might make sense to think of the place of delivery as the place of performance for FAR Part 19 purposes.  The contract is for delivery, and delivery (performance) occurs at the government agency's loading dock, right?  For supply contracts, as just mentioned, and especially for competitive supply contracts, we usually don't specify a place of manufacture in our solicitations.  I prefer to look at contract performance as where the contract specifies performance (or delivery), not where the contractor electively chooses to perform preparatory or back office tasks, or where it electively chooses to source its supplies and services.

Careful....not sure the discussion is aligning with other elements of guidance.  https://fedspendingtransparency.github.io/whitepapers/place-of-performance/#:~:text=In contracting reporting instructions for,the service will be performed.

 

"In contracting reporting instructions for many years, the “place of performance” was the location of the principal plant or place of business where the supply items will be manufactured; where finished products will be taken from inventory; or, for services, the principal location where the service will be performed." 

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33 minutes ago, C Culham said:

Careful....not sure the discussion is aligning with other elements of guidance.  https://fedspendingtransparency.github.io/whitepapers/place-of-performance/#:~:text=In contracting reporting instructions for,the service will be performed.

 

"In contracting reporting instructions for many years, the “place of performance” was the location of the principal plant or place of business where the supply items will be manufactured; where finished products will be taken from inventory; or, for services, the principal location where the service will be performed." 

Carl,

At the time of contract reporting, you would know that information. It would either be specified by the Government or you would have a response to FAR 52.214-14 or 52.215-6. Unless the Government is specifying place of manufacture, you wouldn't know before soliciting offers.

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Carl,

Everyone understands there is some fiction here.  Here's another quotation from the link you cited:

Quote

For procurement, unless the place of performance is specified by the Federal Government, or awardees are required by specific terms and conditions of the award to specify their performance location(s), prime awardees are not required to identify the primary place of performance, and are free to actually “perform” on the award wherever they choose. In these cases, government users have historically used the prime awardee’s own location (as registered in their System for Award Management (SAM) record in the physical address data fields).

(my emphasis)

So, one location is coded in this post-award report while the contractor remains free to perform wherever it chooses.

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4 hours ago, ji20874 said:

For purposes of set-aside and subcontracting plans for supply contracts, it might make sense to think of the place of delivery as the place of performance for FAR Part 19 purposes.  The contract is for delivery, and delivery (performance) occurs at the government agency's loading dock, right?  For supply contracts, as just mentioned, and especially for competitive supply contracts, we usually don't specify a place of manufacture in our solicitations.  I prefer to look at contract performance as where the contract specifies performance (or delivery), not where the contractor electively chooses to perform preparatory or back office tasks, or where it electively chooses to source its supplies and services.

@ji20874What if the contract specifies inspection and acceptance at origin (see FAR 46.402 and 46.503), with delivery f.o.b. destination to a base in Africa (see FAR 47.302(c))?

I'm not challenging you, ji. I'm just asking for your view. Nor am I trying to answer Tzarina's question.

My point is that the concept and phrase "place of performance", which appears in 31 places in the FAR, is unclear in many circumstances, which can result in inconsistent policy application. I don't care that you are okay with that. That's your business. I'm interested only in showing that terms and phrases in the FAR that seem clear at first impression are often obscure or confusing upon inquiry.

That is my only point.

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@Don Mansfield

10 hours ago, Don Mansfield said:

How would you know, prior to receiving proposals, that you were going to hire contractors in the US who would 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?

Do market research. Issue an RFI prior before solicitation of offers and ask prospective offerors what approach they are likely to take. Also, consider what contractors did on past contracts. You wouldn't "know," but you might get a sense of the possibilities and likelihoods.

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1 hour ago, Vern Edwards said:

I'm interested only in showing that terms and phrases in the FAR that seem clear at first impression are often obscure or confusing upon inquiry.

I agree.  But I think that professionals can handle it.  As a general matter, I would rather have professional contracting officers handle each situation according to its facts and the best advice they can get rather than having back office policy people making more rules.  I would rather have contracting officers who professionally handle these matters than contracting officers who wallow in uncertainty.

 

1 hour ago, Vern Edwards said:

What if the contract specifies inspection and acceptance at origin (see FAR 46.402 and 46.503), with delivery f.o.b. destination to a base in Africa (see FAR 47.302(c))?

We're getting a long way from the original poster's question.  We've been talking about place of performance for FAR Part 19 purposes for services contracts.  If we're talking FAR Part 19 and supply contracts, it seems to me that the contractor performs when it delivers to the base in Africa.  If it is a DoD contract, DCMA's International Command has many overseas offices that can do inspection and acceptance at origin.

 

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1 hour ago, ji20874 said:

We're getting a long way from the original poster's question.  

The OP's question was based on a false premise. She interpreted FAR 19.000(b) as setting "place of performance" as the criterion for applicability of FAR Part 19. But FAR 19.000(b) does not mention place of performance. It says that Part 19 "applies only in the United States." That phrase is entirely obscure.

As for "professional contracting officers," I presume that different contracting officers will have various standards, so there is no standard.

My standard would be the late Gordon Wade Rule. A very high standard, indeed. I doubt that even five percent of today's contracting officers meet that standard (or have even heard of Rule). But then the word "professional" has lost all meaning in our society, because our society does not believe in standards. Everyone is gets a trophy.

Thanks for your response.

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2 hours ago, Vern Edwards said:

My standard would be the late Gordon Wade Rule. A very high standard, indeed.

How much, if any, do you think Mr. Rule’s legal training played in his knowledge, skills, and abilities?

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@Jamaal ValentineIt certainly helped, because legal training teaches you how to think. But you can learn to think without legal training. I think I can think, but I haven't been to law school.

You can learn to think by reading and by discussing things with people who know how to think and discuss.

BTW, I don't think I meet Mr. Rule's standard. But I aspire.

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On 2/16/2022 at 4:20 PM, Retreadfed said:

This thread leads to the question as to whether FAR 19.001(b) is consistent with 15 U.S.C. 631 which states "It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order . . . to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises."  Note that the statute talks about "total purchases and contracts."  Nothing in the statute limits this policy to contracts to be performed in the U.S.  Also, see, 13 CFR 125.2(f) ( The contracting officer shall set aside any acquisition with an anticipated dollar value exceeding the Simplified Acquisition Threshold (defined in the FAR at 48 CFR 2.101) for small business concerns when there is a reasonable expectation that offers will be obtained from at least two small business concerns that are competitive in terms of quality and delivery and award will be made at fair market prices.)

 

On 2/16/2022 at 11:30 PM, Vern Edwards said:

The OP's question was based on a false premise. She interpreted FAR 19.000(b) as setting "place of performance" as the criterion for applicability of FAR Part 19. But FAR 19.000(b) does not mention place of performance. It says that Part 19 "applies only in the United States." That phrase is entirely obscure.

As for "professional contracting officers," I presume that different contracting officers will have various standards, so there is no standard.

My standard would be the late Gordon Wade Rule. A very high standard, indeed. I doubt that even five percent of today's contracting officers meet that standard (or have even heard of Rule). But then the word "professional" has lost all meaning in our society, because our society does not believe in standards. Everyone is gets a trophy.

Thanks for your response.

My question was really to do with the specific situation but also for almost all agency contracts, which are "delivering services" outside the US, but the services are performed by contractor personnel who are located in the US and outside the US.   The COs are also based in the US and/or in overseas locations - sometimes both.  Do COs know that some services or a lot of services will be performed in both US and overseas locations?  In most cases, yes, because these are cost reimbursable contracts which require large US based recruitment efforts with some personnel traveling overseas and some not.  To Vern's point, FAR 19.000(b) does not say "performance", it just says "applies in the United States" and does not explain what this means.   The new proposed rule to explain that it means "discretional" application for contracts outside the United States, again means nothing.   What does "in the United States" mean?   The question is really about the small businesses in this industry.  The agency mostly takes the position that because the contracts are performed "almost entirely overseas" ( a term which is not defined) COs may use discretion in setting aside contracts, but are not mandated to do so under FAR 19 even if there are multiple small businesses capable of performing the work.   The small businesses disagree and would like to argue that there is no presumed exception for the agency's contracts.  The issue is not more rules, but clearer rules as to when US small businesses do not have to be considered and why.    

I am assuming that the agency's above interpretation of FAR 19.000 (b) "applies in the US" to include consideration of location of performance and the "entire" or not "entire" concept is due to the definition which relates to small business subcontracting plans.  FAR 19.702 (b)(3) sets the requirements for small business subcontracting plans under the authority of 15 USC 637(d) and states that the requirement for small business subcontracting plans does not apply " For contracts or contract modifications that will be performed entirely outside of the United States and its outlying area"

So there we have it - prime contract set-aside requirements only apply "in the US" and small business subcontracts requirement applies only for contracts "performed entirely outside the US and its outlying areas".    What does a pro-US small business CO to do?  Thank you all for an interesting discussion.

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39 minutes ago, Tzarina of Compliance said:

What does a pro-US small business CO to do?

Ideally, he or she makes a decision and life goes on.  Another contracting officer might have made a different decision with seemingly identical facts, and that is okay.

42 minutes ago, Tzarina of Compliance said:

The small businesses disagree and would like to argue that there is no presumed exception for the agency's contracts.

They may file protests if they disagree with the contracting officer's set-aside decisions.

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11 hours ago, ji20874 said:

Another contracting officer might have made a different decision with seemingly identical facts, and that is okay.

@ji20874That statement is absurd if it pertains to determinations of the applicability of FAR Part 19 according to FAR 19.000(b). It's not okay that two COs looking at the same facts reach different conclusions about the applicability of Part 19.

That statement would be okay if the applicability of FAR Part 19 to acquisitions were meant to be strictly one of CO judgment, such as the determination of price reasonableness or best value. But it's not. Given specific facts, FAR Part 19 either applies or it doesn't.

The matter at hand, the applicability small business policy and FAR Part 19 to acquisitions, is a matter in which Congress is particularly interested and that has a large and politically potent constituency. COs don't make small business policy; COs execute small business policy.

As of February 18 there were more open FAR cases about small business policy and programs than any other matter. One of them is FAR Case 2016-002, which concerns the applicability of FAR Part 19 outside the U.S., and about which OFPP has just objected (on February 17) to a draft final rule. According to the latest case status report the FAR councils and OFPP are "resolving issues."

Perhaps what you meant by your statement is that COs should take advantage of the ambiguity of FAR 19.000(b) to make the decision that they and their colleagues or superiors prefer. That, at least, would make some kind of sense.

 

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2 hours ago, Vern Edwards said:

Given specific facts, FAR Part 19 either applies or it doesn't.

Okay, then please tell the original poster if she must comply with set-aside and subcontracting plan rules for her procurement.

2 hours ago, Vern Edwards said:

Perhaps what you meant by your statement is that COs should take advantage of the ambiguity of FAR 19.000(b) to make the decision that they and their colleagues or superiors prefer.

No. Contracting officers should apply the text and common sense, obtain advice as appropriate, make reasonable and timely decisions, and conduct the acquisition in an honorable, efficient, and effective manner.

I'm wondering, Vern, about your choice of words -- are you thinking my comments are suggesting unprofessionalism or opportunism?

 

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14 hours ago, Tzarina of Compliance said:

My question was really to do with the specific situation but also for almost all agency contracts, which are "delivering services" outside the US, but the services are performed by contractor personnel who are located in the US and outside the US.

One can come up with some scenarios that make application of FAR part 19 tricky (like Vern has with cloud services), but I don't think applying FAR part 19 is that difficult in your specific situation. The contract will require performance outside the United States and its outlying areas. At the time of the set-aside decision, you don't know who the contractor will be, so you can't conclude that any work will be done in the United States or its outlying areas. All you can have is an expectation. Therefore, FAR part 19 wouldn't apply.

The dilemma you face is that the SBA regulations requiring set-asides explicitly say they apply regardless of place of performance. So, if the small businesses that are pestering you to set aside the contract decide to protest, they have a good chance of winning. Historically, the GAO and COFC have deferred to the SBA regulations when there is a conflict with the FAR.

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2 hours ago, ji20874 said:

I'm wondering, Vern, about your choice of words -- are you thinking my comments are suggesting unprofessionalism or opportunism?

I do not think you are suggesting unprofessionalism or opportunism. But I think your position is professionally unsound.

I think it is unsound to believe that it's okay for two COs, based on FAR 19.000(b) and the same facts, to reach different conclusions about whether FAR Part 19 applies to a particular acquisition.

It would not be okay because the applicability of FAR Part 19 is not a matter of judgment, it is a matter of policy compliance.

Two COs with the same facts and applying FAR 19,000(b) should reach the same conclusion. What you think would be "okay" would indicate either (a) that one of the two COs is wrong on the facts or on the interpretation of 19.000(b), or (b) that FAR 19.000(b) is ambiguous. Neither would be okay.

I think FAR 19.000(b) is ambiguous because "applies only in the United States and its outlying areas" is ambiguous. WHAT must be "in the United States"? The requiring activity? The CO? The contracting office? The agency? The place or some part of the place of performance?  The majority of prospective offerors? WHAT?

I think the rule is ambiguous. And I think it is intentionally ambiguous, because DOD is responsible for Part 19 and it disagrees with SBA about the applicability of Part 19.

Ambiguous rules are not okay with me.

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We have to play with the cards that are dealt.  Assuming, arguendo, that FAR 19.000(b) is ambiguous, then it is perfectly reasonable to imagine that two contracting officers might come to differing conclusions -- after all, that's the definition of ambiguous.  

I think maybe I am working in the world of reality and practicality with the text as it is written, and you're working in the ivory tower with the text as you think it should have been written   I have no objection to someone (maybe someone in the ivory tower) re-writing the text to remove any ambiguity.  But no purist or idealist has re-written the text yet, and contracting officers have work to do.  So YES, in the world of reality and practicality, I am okay with two contracting officers professionally and honorably coming to differing conclusions with the same text and seemingly the same facts.

So, Vern, can you help the original poster?  Must she apply the set-aside and subcontracting rules to her acquisition?  That's a YES or NO question.  I answered NO based on the facts she shared, and you see my answer as professional unsound, so I am assuming your answer is YES, although you are avoiding giving that answer.  

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3 hours ago, ji20874 said:

Assuming, arguendo, that FAR 19.000(b) is ambiguous, then it is perfectly reasonable to imagine that two contracting officers might come to differing conclusions -- after all, that's the definition of ambiguous.

That's true, John. It is reasonable to expect that ambiguous policies lead to multiple interpretations, inconsistent applications, and litigation. Professionals should NOT be "okay" with that, and they should not be silent about it.

3 hours ago, ji20874 said:

I think maybe I am working in the world of reality and practicality with the text as it is written, and you're working in the ivory tower with the text as you think it should have been written 

Ivory tower? Really, Mr. Inman? That's an insult. A serious insult.

Well, kiss off. My writings have been widely read and cited and many of my practical ideas and teachings have been adopted. Shall we compare publications, mentions, and citations, "professor"?

3 hours ago, ji20874 said:

So, Vern, can you help the original poster?

Yes.

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On 2/21/2022 at 12:41 PM, Don Mansfield said:

One can come up with some scenarios that make application of FAR part 19 tricky (like Vern has with cloud services), but I don't think applying FAR part 19 is that difficult in your specific situation. The contract will require performance outside the United States and its outlying areas. At the time of the set-aside decision, you don't know who the contractor will be, so you can't conclude that any work will be done in the United States or its outlying areas. All you can have is an expectation. Therefore, FAR part 19 wouldn't apply.

The dilemma you face is that the SBA regulations requiring set-asides explicitly say they apply regardless of place of performance. So, if the small businesses that are pestering you to set aside the contract decide to protest, they have a good chance of winning. Historically, the GAO and COFC have deferred to the SBA regulations when there is a conflict with the FAR.

I thank you @Don Mansfield and @Vern Edwards very much for continued engagement and I am definitely one of those who is not okay with ambiguous rules, especially when they very clearly affect people's livelihoods or fair competition.   I wonder if the revised FAR 19 rule "clarification" will respond to the ABA comments that you all shared (thank you!) and reconcile the SBA's "regardless of place of performance" rule with "applies only in the United States" language.  

Would be most grateful if you all hear something on this and share here.  Many thanks again!  

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26 minutes ago, Tzarina of Compliance said:

Would be most grateful if you all hear something on this and share here.  Many thanks again!  

In the latest report on open FAR cases, dated February 18, 2022, the status of FAR Case 2016-002, "Applicability of Small Business Regulations Outside the United States," was stated to be as follows:

Quote

02/17/2022, OFPP identified draft final rule issues. OFPP, FAR and DAR staff resolving issues.

Perhaps one of the issues is the ambiguity of FAR 19.000(b).

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On 2/22/2022 at 2:53 PM, Vern Edwards said:

In the latest report on open FAR cases, dated February 18, 2022, the status of FAR Case 2016-002, "Applicability of Small Business Regulations Outside the United States," was stated to be as follows:

Perhaps one of the issues is the ambiguity of FAR 19.000(b).

Thank you!  Watching this...

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  • 1 month later...
On 2/22/2022 at 11:53 AM, Vern Edwards said:

Perhaps one of the issues is the ambiguity of FAR 19.000(b).

This has been all cleared up by the FAR Councils. From today's Federal Register

 

Quote

 

8. Clarification Needed

a. Change Not Clear

Comment: One respondent stated the proposed rule is not clear regarding what is meant by “applying” FAR part 19 to overseas acquisitions. The respondent requested the rule state whether application referred to where the contracting officer is located or where contract performance will take place.

Response: The final rule does not change the way FAR part 19 applies in the United States and its outlying areas. The rule is written to provide maximum flexibility to contracting officers to apply FAR part 19 outside the United States and its outlying areas.

 

So we all know what this means now, right?

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