FederalContractor

This thread is very helpful but a few years old, and I'd like to determine whether there has been any clarification on exactly how to calculate the existing "cost of contract performance incurred for personnel" standard at 13 CFR 125.6, with regard to contracts for services. I realize there is a proposed rule that will completely revise the way Limitations on Subcontracting is calculated, but it has not been made Final yet. Vern Edwards stated at the time that he had reviewed 250+ cases as well as other materials, and found nothing that spelled out exactly how the calculation should be done. Is this still the case, for the current regulation? I apologize in advance if a more recent thread already addressed this question, but I could not find it. Thank you!!

Thanks, Fred.

Thank you. It's good to see that has been fixed.

Sorry, I did not read far enough on that post. In any case, I do think that 8(a) sole-sources against GSA Schedules are pretty common. I wonder if I'm missing something here.

JI20874, I noted your prior post on 11 February 2014, in which you stated, "A sole-source (or "directed") 8(a) award by task order under a schedule is permissible. See 19.804-6." http://www.wifcon.com/discussion/index.php?/topic/2380-gsa-schedules-and-far-19000a3/ Can you clarify your comments? Has the law on 8(a) sole-sources under GSA Schedules changed very recently? For what it's worth, in practice I have seen agencies awarding 8(a) sole-sources against GSA Schedules very frequently. I'm unclear about the relationship between FAR 8.405-6 and other independent authority for 8(a) sole-source awards.

I have a question relating to the procedure for an 8(a) sole-source award against a GSA Schedule (such as GSA IT Schedule 70), for which the offeror is qualified as an 8(a) small business. My question is whether the Ordering Contracting Officer is required to submit an offer to SBA for each task order issued as an 8(a) sole-source on a GSA Schedule that was awarded to a vendor as an 8(a) small business. In my research, I noted FAR 19.804-6 (a), which states, “Separate offers and acceptances must not be made for individual orders under multiple award, Federal Supply Schedule (FSS), multi-agency contracts or Governmentwide acquisition contracts. SBA’s acceptance of the original contract is valid for the term of the contract.” This clause references Federal Supply Schedules, which would include GSA PES Schedule, and GSA IT Schedule 70, etc. Is my understanding correct, that if a vendor is classified as an 8(a) Small Business on their GSA Schedule, an Ordering Contracting Officer may issue 8(a) sole-source awards against this Schedule without submitting each order to SBA for acceptance?

As others have noted, a NAICS code appeal is possible, but the Contracting Officer is given pretty broad discretion on selecting a NAICS code. If the code selected is "reasonable," I think your chances of succeeding at OHA are low, even if another NAICS code is reasonable or arguably better.

SBA just confirmed that it's an error, and it is being corrected.

Retreadfed, I noticed that too. The editing error also made it into the 2014 annual edition of the CFR. I think I'll send a notice to Dean Koppel, who is the POC on that Oct. 2, 2013 Federal Register. Or would there be a better POC to correct this?

ji20874, I believe you're citing an older (2013) version of this regulation. If you look it up on eCFR (http://www.ecfr.gov/) the sub-paras (1) through (4) are absent under para (a). Also, see the 2014 edition of the CFR on http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR Direct link to section: http://www.gpo.gov/fdsys/pkg/CFR-2014-title13-vol1/pdf/CFR-2014-title13-vol1-sec125-6.pdf Compare this to the 2013 edition, which actually makes sense, and appears to be what you are citing: http://www.gpo.gov/fdsys/pkg/CFR-2013-title13-vol1/pdf/CFR-2013-title13-vol1-sec125-6.pdf

ji20874, the only restrictive language is in paras ( b ) and ( c ), which relate specifically to SDVOSBs and HUBZones. Para (a) is simply a lead-in to paragraphs ( b ) and ( c ), and ends with "Must agree that..."

13 CFR 125.6 had previously been applicable to all small business concerns. However, I noticed that it has been amended in a way that makes its application very confusing. Section (a) references "small business concerns," but now section (B ) has been made specifically applicable to SDVO SBCs, and section ( c ) is applicable to HUBZone firms. There no longer appears to be a section generally applicable to small business concerns. Am I missing something?!? I've copied the applicable CFR section below for convenience. Your comments would be appreciated. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- §125.6 What are the prime contractor performance requirements (limitations on subcontracting)? (a) In order to be awarded a full or partial small business set-aside contract, an 8(a) contract, or a WOSB or EDWOSB contract pursuant to part 127 of this chapter, a small business concern must agree that: ( B ) An SDVO SBC prime contractor can subcontract part of an SDVO contract (as defined in §125.15) provided: (1) In the case of a contract for services (except construction), the SDVO SBC spends at least 50% of the cost of the contract performance incurred for personnel on the concern's employees or on the employees of other SDVO SBCs; (2) In the case of a contract for general construction, the SDVO SBC spends at least 15% of the cost of contract performance incurred for personnel on the concern's employees or the employees of other SDVO SBCs; (3) In the case of a contract for construction by special trade contractors, the SDVO SBC spends at least 25% of the cost of contract performance incurred for personnel on the concern's employees or the employees of other SDVO SBCs; and (4) In the case of a contract for procurement of supplies or products (other than procurement from a non-manufacturer in such supplies or products), at least 50% of the cost of manufacturing the supplies or products (not including the costs of materials), will be performed by the SDVO SBC prime contractor or other SDVO SBCs. (5) In accordance with §125.15(B )(3), the SDVO SBC joint venture must perform the applicable percentage of work. © A qualified HUBZone SBC prime contractor can subcontract part of a HUBZone contract (as defined in §126.600 of this chapter) provided: (1) In the case of a contract for services (except construction), the qualified HUBZone SBC spends at least 50% of the cost of the contract performance incurred for personnel on the concern's employees or on the employees of other qualified HUBZone SBCs; (2) In the case of a contract for general construction, the qualified HUBZone SBC spends at least 15% of the cost of contract performance incurred for personnel on the concern's employees; (3) In the case of a contract for construction by special trade contractors, the qualified HUBZone SBC spends at least 25% of the cost of contract performance incurred for personnel on the concern's employees; (4) In the case of a contract for procurement of supplies (other than procurement from a regular dealer in such supplies), the qualified HUBZone SBC spends at least 50% of the manufacturing cost (excluding the cost of materials) on performing the contract in a HUBZone. One or more qualified HUBZone SBCs may combine to meet this subcontracting percentage requirement; and (5) In the case of a contract for the procurement by the Secretary of Agriculture of agricultural commodities, the qualified HUBZone SBC may not purchase the commodity from a subcontractor if the subcontractor will supply the commodity in substantially the final form in which it is to be supplied to the Government. (d) SBA may use different percentages if the Administrator determines that such action is necessary to reflect conventional industry practices among small business concerns that are below the numerical size standard for businesses in that industry group. Representatives of a national trade or industry group or any interested SBC may request a change in subcontracting percentage requirements for the categories defined by six digit industry codes in the North American Industry Classification System (NAICS) pursuant to the following procedures. (1) Format of request. Requests from representatives of a trade or industry group and interested SBCs should be in writing and sent or delivered to the Director, Office of Government Contracting, U.S. Small Business Administration, 409 3rd Street, SW., Washington, DC 20416. The requester must demonstrate to SBA that a change in percentage is necessary to reflect conventional industry practices among small business concerns that are below the numerical size standard for businesses in that industry category, and must support its request with information including, but not limited to: (i) Information relative to the economic conditions and structure of the entire national industry; (ii) Market data, technical changes in the industry and industry trends; (iii) Specific reasons and justifications for the change in the subcontracting percentage; (iv) The effect such a change would have on the Federal procurement process; and (v) Information demonstrating how the proposed change would promote the purposes of the small business, 8(a), SDB, woman-owned business, or HUBZone programs. (2) Notice to public. Upon an adequate preliminary showing to SBA, SBA will publish in the Federal Register a notice of its receipt of a request that it considers a change in the subcontracting percentage requirements for a particular industry. The notice will identify the group making the request, and give the public an opportunity to submit information and arguments in both support and opposition. (3) Comments. SBA will provide a period of not less than 30 days for public comment in response to the Federal Register notice. (4) Decision. SBA will render its decision after the close of the comment period. If SBA decides against a change, SBA will publish notice of its decision in the Federal Register. Concurrent with the notice, SBA will advise the requester of its decision in writing. If SBA decides in favor of a change, SBA will propose an appropriate change to this part. (e) Compliance will be considered an element of responsibility and not a component of size eligibility. (f) 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 amongst small and other-than-small businesses (in which case the subcontracting limitations will not apply). However, the contracting officer, in his or her discretion, may require the concern to perform the applicable amount of work or comply with the nonmanufacturer rule for each order awarded under a total or partial set aside contract. (g) Work to be performed by subsidiaries or other affiliates of a concern is not counted as being performed by the concern for purposes of determining whether the concern will perform the required percentage of work. (h) Where an offeror is exempt from affiliation under §121.103(h)(3) of this chapter and qualifies as a small business concern, the performance of work requirements set forth in this section apply to the cooperative effort of the joint venture, not its individual members. (i) Where an offeror is exempt from affiliation under §121.103(B )(8) of this chapter and qualifies as a small business concern for a reserve of a bundled contract, the performance of work requirements set forth in this section apply to the cooperative effort of the small business team members of the Small Business Teaming Arrangement, not its individual members. (j) The contracting officer must document a small business concern's performance of work requirements as part of the small business' performance evaluation in accordance with the procedures set forth in FAR 42.1502. The contracting officer must also evaluatecompliance for future contract awards in accordance with the procedures set forth in FAR 9.104-6. [61 FR 3312, Jan. 31, 1996; 61 FR 39305, July 20, 1996; as amended at 64 FR 57372, Oct. 25, 1999; 65 FR 45835, July 26, 2000; 69 FR 25266, May 5, 2004; 69 FR 29208, May 21, 2004; 69 FR 29420, May 24, 2004; 70 FR 14527, Mar. 23, 2005; 70 FR 51248, Aug. 30, 2005; 72 FR 3040, Jan. 24, 2007, 72 FR 50041, Aug. 30, 2007; 73 FR 56948, Oct. 1, 2008; 78 FR 61143, Oct. 2, 2013]

I'm curious to know how the Competition in Subcontracting clause, FAR 52.244-5, is actually applied or enforced. The qualification, "consistent with the objectives and requirements of the contract" seems to leave a lot of room for interpretation, presumably at the prime contractor's discretion. If a contractor includes a proposed subcontractor's resources, past performance and qualifications in their proposal, and an award is made partially on that basis, wouldn't this be a substantial factor in considering the "objectives and requirements of the contract"? The prime contractor would not be expected to perform a post-award competition for subcontracting at that point.

Joel makes a good point. While I wouldn't condone getting sloppy or complacent, it's worth noting that I've never seen any Contracting Officer or other government officials aggressively enforcing the Limitations on Contracting clause as it is literally written, or taking militant positions on some of the more ambiguous issues surrounding this clause. If you are in fact performing a majority of the work, and can demonstrate it, I'm not terribly concerned about you getting hammered on technicalities regarding the Limitations on Subcontracting clause. Of course there are other important reasons to properly allocate your costs that concern DCAA, not related to the Limitation on Subcontracting clause.

RetreadFed, I understand your points. The footnote may be nothing more than very misleading dicta. If that's the case, there was really no reason for GAO to reference the Defense Authorization law in its decision at all, it serves no purpose. That would be unfortunate if that's the case. I look forward to further clarification on this in the future.