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general_correspondence

s/w maintenance agreements and commerciality

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Don, I'm not an expert of the Federal Supply Schedule. I see the reference to "commercial supplies and services" both in FAR 8.402(a) & 38.101(a), but I don't see anything in the FAR to suggest that the commerciality decision by the GSA CO is conclusive as to all conceivable orders. It seems more likely that the GSA CO found the work to be generally commercial, and that each ordering activity should to be satisfied that the specific work ordered is commercial. While it seems very likely the ordering activity CO dropped the ball, aside from the nonschedule procedures previously discussed, it doesn't appear that the limitation on the use of the FSS to "commercial supplies and services" is statutory. There may be some other regulation or Executive Order that would prevent an individual deviation, but, let's not hang the government CO just yet. I assume, perhaps without foundation, that "commercial supplies and services" and "commercial items," should be used interchangably. If the basic contract was awarded under commercial item procedures, then, you would want to be sure that what you were buying was a commercial item. If you don't think the terms are interchangable, then at the very least you would want to make sure you could use commercial item procedures for your noncommercial item (FAR 12.102(g)).

I don't think so, Jacques. You're making things much too hard, and needlessly so. Your position is unreasonable.

GSA FSS contracts are for commercial items as defined in FAR 2.101 and are awarded pursuant to the rules in FAR Part 12. See GSAM 512.203(a) and 538.271(a). COs of other agencies get to order off of them pursuant to the procedures in FAR 8.4, and now 17.5 (as of FAC 2005-47). That's the law. Neither FAR 8.4 nor 17.5 requires that agency COs make independent determinations of commerciality when buying off FSS schedules. It is pointless for you to note that there is no express statutory grounds for schedules to be for commercial items. There are express statutory grounds for little about GSA's FSS program. People have work to do. The rules are complex enough as it is. You want COs and contractors to revisit GSA commerciality decisions? That's over-the-top. Assuming that the software and services are on GSA schedule and are not off-schedule items, they are commercial items. On to the next procurement.

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You want COs and contractors to revisit GSA commerciality decisions? That's over-the-top.

Vern, I don't want COs and contractors to have to revisit commerciality decisions. If what the ordering activity is ordering is obviously among those supplies and services that were contemplated at time of award of the GSA contract, then I think you can say with a straight face that the GSA CO must have considered the supply or service in question to be commercial. I am concerned, though, that, especially for services, there may be circumstances where the pricelist is so generic that both commercial and noncommercial services would appear to be within scope on their face. Only the ordering activity CO is in a position to assess whether that he is actually buying is a commercial item or not.

Certainly ordering activity COs are responsible for ensuring any order is within scope of the schedule contract. See the discussion on open market items in FAR 8.402(f). A reasonable reading of FAR 8.402(a) would suggest that part of that determination includes determining whether what is specifically being ordered is a commercial item. Maybe there is some flexibility here; maybe not. I tried in my last post to explore some possible flexibility.

Put in the context of this thread, either the software is a commercial item or it is not. If it is a commercial item, the CO could use the FSS. If it is not, then the CO probably improperly used the FSS. It does NOT follow, that because the CO used the schedule, the software MUST be commercial. You may argue that the CO should be estopped from claiming it is not, but that is a different discussion.

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As I understand what you are saying now, if the software and service are listed on the schedule, then the ordering CO can consider them to be commercial items; if they are not on schedule, then they are open market items and may or may not be commercial, in which case the ordering CO has to make a determination. If that's your position, then I think everybody here will agree with you.

You continue to be confused about FSS, however. You now say:

If it is a commercial item, the CO could use the FSS. If it is not, then the CO probably improperly used the FSS.

What are you talking about? Look--if the item is on a GSA Schedule, then GSA determined it to be commercial. There is no issue for the ordering CO. It is not a matter of if it's commercial, then the CO can order it off the schedule. If the item is on schedule the ordering CO can safely assume that the item is commercial. If the item is not on the schedule, it may or may not be commercial, but that is irrelevaht, because a CO cannot use a schedule to buy items that are not on the schedule. And by the way, it is not a matter of what was "contemplated" at the time of award of the schedule contract. It is a matter of what is listed on the contract.

Then you say:

It does NOT follow, that because the CO used the schedule, the software MUST be commercial.

I think what you meant is that if the CO issued an order against a schedule for an item that is not on the schedule, then it does not follow that that item is commercial. If that is what you meant, then I agree, but why couldn't you be clearer? If that is not what you meant, then what do you mean?

You're causing confusion instead of clearing things up.

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Please forgive my obtuseness, but I seem to be missing a couple of points here. The software and maintenance are both on the schedule, but was the purchase made using the schedule? If so, it seems, well, folly not to construe the task order in context of the underlying contract which, as Mr. Edwards pointed out, is decisive. I don't understand from the thread whether the procuring activity is claiming that one or the other of the items is not commercial, and to what end? What is the contractor or the PCO trying to accomplish or avoid in terms of the order for maintenance that's being impacted by a commerciality determination?

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Vern,

I don't think the ordering activity PCO ever delegates his responsibility to ensure that what he is doing is consistent with law and regulation. By placing an order, the ordering activity PCO is concluding the order is within scope. To be within scope, you all have convinced me the item must be commercial. That ordering activity PCO would have to defend that decision should anyone be in a position to contest it. (Obviously, there are significant standing issues that severely limit the circumstances in which this could occur.) As a practical matter, the ordering activity PCO doesn't have to document his commerciality determination, and others may give weight to the GSA's implicit commerciality determination to the extent the specific item being purchased is on the schedule contract. However, the GSA's determination doesn't bind the ordering activity.

Look--if the item is on a GSA Schedule, then GSA determined it to be commercial. There is no issue for the ordering CO.

If all questions of scope of a FSS contract were easily resolved, then the whole "Get It Right" campaign from a few years ago would never have happened. Consider the GSA memo to Heads of Contracting Activities dtd 5 May 05, "Upcoming IG Reviews - Compliance Issues and Other Matters," at 7:

Out of Scope Work. In some situations it is not readily obvious whether a particular item is available under a vendor's schedule contract. In those cases where one cannot determine whether an order is within scope, call the schedule CO.

I took Don's suggestion regarding commercial items to suggest that only one result was possible: The software must be commercial. My point is that this result does not inevitably follow. Either the software is commercial, or the CO misused the FSS authority.

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Please forgive my obtuseness, but I seem to be missing a couple of points here. The software and maintenance are both on the schedule, but was the purchase made using the schedule? If so, it seems, well, folly not to construe the task order in context of the underlying contract which, as Mr. Edwards pointed out, is decisive. I don't understand from the thread whether the procuring activity is claiming that one or the other of the items is not commercial, and to what end? What is the contractor or the PCO trying to accomplish or avoid in terms of the order for maintenance that's being impacted by a commerciality determination?

Heretalearn

would it matter? if offered on what most experts herein are saying that GSA itmes are indeed commercial items, if ordered from the schedule or not is irrelevant.

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Jacques:

If we follow your argument to its logical conclusion, every CO contemplating placement of an order against a GSA schedule has an obligation to verify the GSA did everything right. That is not contemplated by the acquisition system and is ridiculous on its face. In any case, any CO placing an order against a GSA schedule contract is bound by the terms that GSA has negotiated with its contractor. As for being within scope, an order placed for an item that is on schedule is within scope by definition.

Since you are sticking to an absurd argument, I won't argue with you. As far as I'm concerned, you are simply wrong and I hope no one pays any attention to you, but that's up to them.

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Heretalearn:

general_correspondent is a contractor. I don't think he is planning to place an order against a GSA schedule. I think he is buying the software and wants to treat the buy as one for a commercial item. What he would like to do--I'm not sure--is rely on the fact that the software is on GSA schedule to argue that the maintenance services are commercial items. If the item is on schedule, as he claimed earlier, I think he has a good argument.

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What he would like to do--I'm not sure--is rely on the fact that the software is on GSA schedule to argue that the maintenance services are commercial items. If the item is on schedule, as he claimed earlier, I think he has a good argument.

Vern, isn't it just an argument, though? If what we have here is a prime contractor claiming an exemption from certified cost or pricing data for a subcontract, because the subcontractor has a FSS contract that includes arguably similar software maintenance services, the existence of the FSS contract doesn't bind the PCO in deciding whether the subcontractor's software maintenance qualifies as a commercial item and is therefore exempt.

If the software being supported here is a noncommercial item, wouldn't it be reasonable for the the government CO to ask the prime to explain how the software maintenance services qualify under the sixth heading of commercial item in Part 2?

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Vern, isn't it just an argument, though? If what we have here is a prime contractor claiming an exemption from certified cost or pricing data for a subcontract, because the subcontractor has a FSS contract that includes arguably similar software maintenance services, the existence of the FSS contract doesn't bind the PCO in deciding whether the subcontractor's software maintenance qualifies as a commercial item and is therefore exempt.

I think this is what I was trying to get at, albeit too obliquely. If a task order is placed against a supply schedule for a scheduled item, there shouldn't be any question as to commerciality. I've never seen anything to indicate whether a GSA determination of commerciality would bind an agency procuring other than through a schedule & so have assumed it wouldn't; but as a pragmatic matter, though I think it's a good argument on its face, I've tried it unsuccessfully a number of times.

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Jacques:

First, I have been responding to your comments, which have not been about a contractor awarding a subcontract, but about a CO placing an order against an FSS schedule. Until I laid out the case for Heretalearn, you never said you were talking about a contractor making a subcontract award.

Second, general_correspondent said nothing about "arguably similar" items. He said that the services are on schedule. You write as if the items in question are not or may not be on schedule. Why? Why introduce an uncertainty into the discussion when the discussion is not founded upon any such uncertainty? If general_correspondent had said that the services he wants to buy are not on schedule, but are only similar to services that are on schedule, we would not be talking about this. Why insert an uncertainty where none exists?

What we should be doing here is trying to answer questions in the clearest possible way, not muddying the waters.

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Vern, I guess I'm willing to introduce the uncertainty because it seems inherent in the nature of Federal Supply Schedule contracting for services. The focus of a commerciality determination that General's PCO has to ultimately answer is focused on what is specifically being delivered. However, when a GSA CO awards a commercial services contract, the scope of that contract can be fairly broad. The GSA CO only has to satisfy himself that the services are generally commercial, not invariably commercial.

For sake of argument, take the uncertainty away: Is a CO on an unrelated contract bound by a different CO's earlier commerciality determination, even where the item is identical? I can't imagine.

Don't get me wrong: I'm not suggesting that the earlier determination is irrelevant. In fact, in seeking the FSS contract, the holder likely had to provide the GSA CO with information relevant to establishing the commerciality of the same or similar item in question. Presumably, it will be easy for the holder to make the same or similar showing now.

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Jacques:

Your stance is completely out of line with acceptable and standard acquisition practice. Completely. The GSA CO's decision is conclusive for all COs who would use the schedule contract. Your argument is not valid. I reject it without reservation.

Vern

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Jacques:

Your stance is completely out of line with acceptable and standard acquisition practice. Completely. The GSA CO's decision is conclusive for all COs who would use the schedule contract. You argument is murky and, as best as I can make it out, not valid. I reject it without reservation.

Vern

I must have been unclear in my recent posts. Mea culpa. Based on General's Post #31, I understand the facts to be as follows: A prime contract not awarded under the FSS has a subcontractor who also holds a FSS contract. That subcontract is between two private parties and was not awarded under the FSS. The subcontract is over $700,000. Presumably, no other exception to certified cost or pricing data applies other than the possibility that the subcontract is for commercial items. The sub argues to the prime, and the prime argues to the government, that the government PCO MUST find that the software maintenance services provided by the subcontractor are commercial items, because the sub offers the same or similar services under its FSS contract. Thus, the prime's price reasonableness evaluation can be based solely on price analysis. The government PCO has some reason to doubt this claim, because the software being supported is noncommercial, and wants the prime to further support why the item is commercial, and, if it can't, to perform a cost analysis.

Under these facts, I would assert the government PCO is not bound by any purported commerciality finding by a GSA CO.

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Jacques:

You must have been unclear in your last post? You have been serially unclear for several days. At this point and after many posts you state the obvious. This is what you are now saying, I think:

An agency contracting officer administering one of the agency's own contracts, and who is reviewing a prime contractor's determination that FAR 15.403-1( c)(3) applies to subcontracted items, is not bound by a commerciality decision made by a GSA CO with respect to an FSS contract for the same items.

If that is what you are saying, who would argue?

I'm not going to engage you further on this topic. Maybe someone else will.

Vern

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I must have been unclear in my recent posts. Mea culpa. Based on General's Post #31, I understand the facts to be as follows: A prime contract not awarded under the FSS has a subcontractor who also holds a FSS contract. That subcontract is between two private parties and was not awarded under the FSS. The subcontract is over $700,000. Presumably, no other exception to certified cost or pricing data applies other than the possibility that the subcontract is for commercial items. The sub argues to the prime, and the prime argues to the government, that the government PCO MUST find that the software maintenance services provided by the subcontractor are commercial items, because the sub offers the same or similar services under its FSS contract. Thus, the prime's price reasonableness evaluation can be based solely on price analysis. The government PCO has some reason to doubt this claim, because the software being supported is noncommercial, and wants the prime to further support why the item is commercial, and, if it can't, to perform a cost analysis.

Under these facts, I would assert the government PCO is not bound by any purported commerciality finding by a GSA CO.

Yes we are a Prime. We hold a letter from the CO allowing purchases off of GSA schedules. The subcontract is not over $700,000 however our customer is requiring us to make commerciality determinations at all dollar levels. We as the Prime, now have the conundrum of accepting valid, invalid, assertations from these suppliers, who may or may not care a whole lot about this paper work. The conundrum in my mind, not only for this specific procurement - is the aggregate of a lot of "roll up" subcontracts and suppliers, if we simply pass through the assertations of commerciality. On this procurement however, the software appears by nomenclature alone - to be strictly military. As we all know, a seller can "package" a product with military nomenclature, but when you peel the onion, you can see it can also be used in commercial applications. Herein lies the rub...we ask for sales data from these suppliers, usually in the form of redacted invoices to build a case for commerciality, but none of them are complying with this request. I personally do not see the issue with providing a redacted invoice, in fact, if I were a supplier, I would gladly do this in case of liability issues later on.

I do not think the FAR unequivocally states that by offering a item or service on GSA makes it a commercial item. In fact, what I have been researching I find it strongly can be argued, but never flat out confirms it to be so.

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Now I understand your issue.

Isn't the bottom line determining cost/price reasonableness? If so, you have an order/subcontract based upon a GSA Schedule contract. The GSA CO has already determined the price to be fair and reasonable. You don't need to be concerned about commerciality.

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We hold a letter from the CO allowing purchases off of GSA schedules.

Is THIS purchase off the FSS?

I do not think the FAR unequivocally states that by offering a item or service on GSA makes it a commercial item.

As to the relationship between the FSS and commerciality, I would offer the following: The GSA must only include items in a schedule contract it believes are commercial. GSAM 538.271(a) ("MAS awards will be for commercial items as defined in FAR 2.101.") I would suggest that the ordering activity must ensure that any modifications to the item (supply or service) are likewise within scope. Any modification that would result in the supply or service no longer qualifying as a commercial item would be out of scope.

In the absence of an order, each contract, and any determination surrounding it, stands on its own. If a CO is considering placing an order under the schedule, and that CO doesn't believe the item is commercial, he shouldn't use the schedule.

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Yes we are a Prime. We hold a letter from the CO allowing purchases off of GSA schedules... I do not think the FAR unequivocally states that by offering a item or service on GSA makes it a commercial item. In fact, what I have been researching I find it strongly can be argued, but never flat out confirms it to be so.

general_correspondence:

You are making your life needlessly difficult. If you are ordering the software or the maintenance services off a GSA schedule contract pursuant to the authority of FAR Subpart 51.1 and FAR 52.251-1, as authorized by your CO, then you are the "ordering activity" and the software or services are commercial items. FAR does not have to make an unequivocal statement. Why? BECAUSE GSA SCHEDULE CONTRACTS ARE CONTRACTS FOR COMMERCIAL ITEMS. READ THE CONTRACT! You don't have to make an independent determination of commerciality if you are ordering off a schedule contract. In fact, you have no authority to make an independent determination of commerciality unless you decide to forego use of the GSA contract, in which case you are on your own.

I don't know many more ways to try to get through to you (and others) to make that point. To me, it does not seem especially complicated.

I can see now that the system has become so screwed up that some people are paralyzed by doubt even when confronted by a simple problem with a simple solution. How do people get anything done if they are spending so much time on such simple stuff? What on earth do they do when confronted by a hard problem?

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general_correspondent:

You are making your life needlessly difficult. If you are ordering the software or the maintenance services off a GSA schedule contract pursuant to the authority of FAR Subpart 51.1 and FAR 52.251-1, as authorized by your CO, then you are the "ordering activity" and the software or services are commercial items. FAR does not have to make an unequivocal statement. Why? BECAUSE GSA SCHEDULE CONTRACTS ARE CONTRACTS FOR COMMERCIAL ITEMS. READ THE CONTRACT! You don't have to make an independent determination of commerciality if you are ordering off a schedule contract. In fact, you have no authority to make an independent determination of commerciality unless you decide to forego use of the GSA contract, in which case you are on your own.

I don't know many more ways to try to get through to you (and others) to make that point. To me, it does not seem especially complicated.

I can see now that the system has become so screwed up that some people are paralyzed by doubt even when confronted by a simple problem with a simple solution. How do people get anything done if they are spending so much time on such simple stuff? What on earth do they do when confronted by a hard problem?

Vern, what is your proof that an item on GSA schedule is a commercial items?

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Now I understand your issue.

Isn't the bottom line determining cost/price reasonableness? If so, you have an order/subcontract based upon a GSA Schedule contract. The GSA CO has already determined the price to be fair and reasonable. You don't need to be concerned about commerciality.

Former,

fair and reasonable prices is not same as a commercial item? Please explain.

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Vern, what is your proof that an item on GSA schedule is a commercial items?

Are you kidding? Have you read my posts in this thread?

I have explained it already and I won't do so again. I really don't care if you want to agonize about this needlessly and spend time doing your own determination. Better yet, simply decide that the items are not commercial items and proceed accordingly. Go ahead, it's your time and money to waste.

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Former,

fair and reasonable prices is not same as a commercial item? Please explain.

The GSA KO makes a determination that Schedule pricing is fair and reasonable.

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