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1. Background: Government issues ID/IQ MAC contract for fixed price COTS equipment. The government specifies by performance criteria the types, quantities of equipment, and incidental support services, if any. Equipment descriptions are in terms of performance based specifications, brand name or equal, or brand name only requirements. The contract does not contain an OCI clause. · Deal Registration. Based on an Industry practice called “deal registration,” awardees on this ID/IQ MAC can "lock in" lowest pricing with a vendor before RFQ release as/if they gain knowledge of the requirement. The registration by its nature is very specific and is registered pre-RFQ. It guarantees the lowest price for that RFQ regardless of any existing agreement (e.g., reseller agreement). Information on the internet abounds on this industry practice. Provided below is one general description found at: http://searchitchannel.techtarget.com/definition/deal-registration "Deal registration is a feature of some vendors' channel programs in which a channel partner, often a VAR (value-added reseller) or SI (systems integrator), informs the vendor about a lead and is given priority for it. Once a lead is registered with a vendor, the partner usually has a set period of time to close the deal. During this time other channel members, or even the vendor's own sales team, are not allowed to negotiate a similar deal with that lead. Not all vendors offer deal registration, and some vendors offer it only to certain channel partners. Deal registration is usually put in place to lower the chance of channel conflict -- a situation in which channel partners have to compete against one another or the vendor's internal sales department. With a deal registration program in place, partners can work with a client without having to worry about another company trying to offer the same product at a lower price. Some vendors also offer to help partners in the selling cycle, and deal registration lowers the chance of the vendor stealing the lead once the partner has brought them into the discussion." Dell’s published deal registration criteria includes the following: "Deal Registration criteria for Dell includes the following: The deal is not the subject of an RFP, or similar tender process, that has been published; provided, however, that before such RFP, or similar tender process, has been published, the Partner shall be eligible to register the deal." http://partnerdirect.dell.com/sites/channel/Documents/DealRegistrationOfficialGuidelines.pdf · Scenario 1. Government issues RFQ for 100 quantities of Dell Laptop Model XX. MSRP is $2000 each. There are 5 MAC awardees. Company ABC registers the deal for 100 quantities of Dell Laptop Model XX and therefore locks in guaranteed lowest pricing from the OEM. RFQ is released. Dell’s quote to Company ABC is $1000/laptop; Dell’s response to the other 4 MAC offerers is that the deal has been registered and therefore will not offer a quote. · Scenario 2. Same as Scenario 1. The 4 offerers (who have various reseller agreements) request a quote from Dell. Dell does not inform the 4 offerors that the deal has been registered with Company ABC and provides quotes consistent with those agreements, which will at all times be higher than Company ABC's registered price of $1000. · Scenario 3. Same as Scenario 1. Because the deal is registered, Dell does not bother with the paperwork and does not offer quote. No explanations provided. 2. Issue: Although the contract does not contain an OCI clause, the Contracting Officer has cautioned awardees with regard to OCI issues given the competitive nature of this under an ID/IQ MAC. These deal registrations defeats the intent of a MAC. The very nature of deal registration means a prime must somehow have prior pre-RFQ knowledge of the specifics, which calls into question potential procurement integrity and OCI issues. Further, when only one bid is received, the RFQ is re-released and any subsequent rounds of competition is likely to generate either no bids or higher bids, leaving the Government with a false sense of competition. The Government ultimately receives lowest pricing regardless, but it was based on an offeror having an unfair competitive advantage. In order to afford fair opportunity, the government would have to prohibit deal registration, which would be a challnege to enforce since it is an industry practice. 3. Question: We plan to discuss this with the Contracting Officer, but wanted to get the experts to weigh in with any comments. In particular, does anyone believe this is an acceptable practice that should be allowed to continue, possibly in recognition of the fact that pohibition of this industry practice would be diffcult to enforce?

Much thanks for the responses. At the very least, I wanted to confirm that I wasn't overlooking anything that may have spoken directly to this; by the responses, I think I have confirmed this is not addressed specifically or clearly in the FAR. The response from the GP experts to date is lacking the supporting rationale (specifically, FAR or similar reference) that I need to convince me of a path forward. I have attempted to research this issue for anything that could be viewed as precedent/precedence and have come up with nothing so far. Vern - to your question: The landlord is okay with either: a) leaving the leasehold improvements in place; or if removed, return to original condition. In my opinion (and pretty much everyone else familiar with this for the obvious), the salvage value is far less than the effort expended to de-install, transport, restore/rehab facility, and re-install. And I haven't even mentioned the fact that anyone contemplating re-use would have to accept that the items would be transferred on an "as is" basis with no warranty. Again, I cannot overstate my thanks for the responses.

Not being a GP expert, I have attempted to go through the property related clauses in the FAR and so far, references to plant or facility appear to be related to that owned by the contractor; there is little to nothing stated about leased facility. I'm not sure how relevant would be the distinction in this except that in this case, there is an expiration date to exit the facility; if this were a contractor owned facilty, there would not be a time constraint and therefore more time to work with the plant clearance officer if/as needed. (The lease stipulates the modifications if pre-approved can be left in place, or if removed, the facility must be returned to its original condition.) I have attempted to view this with the lease issue taken out of the equation, focusing on the specific items that were purchased and then installed (on the leased facility or premises). The contract contains the JUN 2007 version of 52.245-1. Examples: 1) Contractor takes out a large portion of a 14" thick wall in order to install a huge roll-up door to allow for movement of assets in/out of the facility. Is the contractor then required to de-install that door and return to the Gov't? De-installation and restoration would be significant in relative value. 2) Contractor installs fencing for security around the premises. De-installation is significant relative to value (in this writer's opinion). FAR 45.101 definitions for reference: “Nonseverable” means property that cannot be removed after construction or installation without substantial loss of value or damage to the installed property or to the premises where installed. “Material” means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end-item. Material does not include equipment, special tooling, special test equipment or real property. “Equipment” means a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale, and does not ordinarily lose its identity or become a component part of another article when put into use. Equipment does not include material, real property, special test equipment or special tooling. QUESTIONS: 1) While the JUN07 version of FAR Part 45 defines "nonseverable," it does not make any further mention of it. What constitutes "substantial" and if deemed substantial, any thoughts on the use of that to relieve the contractor of the need to go through the process defined in FAR Part 45 as to disposal? 2) Could the roll-up door and fencing fall into the category of "material" in that they became a part of the (leased) facility and therefore would not be returned? I am told they fall into the category of equipment. The costs on the Government side and contractor side (to vet this through the Plant Clearance Officer via SF1428, etc;de-install the items; transport/store; restore the facility, etc.) would far outweigh the value of the items (in this writer's opinion and to anyone who would conduct a site visit. Any sage advice would be most appreciated.

Thank you . However, my question was related to FAR Part 45 vice allowability of costs; specifically, what action is requried of the contractor with "asphalt," for example? I am told that it falls into the category fo Government equipment. FAR 45.101: “Material” means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end-item. Material does not include equipment, special tooling, special test equipment or real property. “Equipment” means a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. Equipment is not intended for sale, and does not ordinarily lose its identity or become a component part of another article when put into use. Equipment does not include material, real property, special test equipment or special tooling.

Question: In the context of FAR Part 45 and proper disposition of government property upon task completion, how should the contractor account for and dispose of the remnants of incidental construction "modifications" (fencing, etc.) to a leased space/facilty? Background: Contractor has been tasked to provide services on a cost reimbursable contract for which a facility lease is required (deemed incidental to the services). The costs for lease, maintenance, and "modifications" to the facility were proposed and direct charged to the task. In order to render the facility suitable for the services to be performed in the facility, modifications were required on the leased premises, such as an exterior fence (for security); roll-up doors (for large vehicles), concrete and asphalt work, electrical wiring, compressed air, etc..

Thank you Vern. The example that I have posed is when there is incidental UCOT, not necessarily continuous to where it is excessive, and in the case of the clause in my post, the contract(s) do bind the contractor to those hours; your comments are noted that this is not always the case. Can't thank you enough for providing your insights. Having researched this topic pretty extensively, the information you have provided helps me greatly.

Vern, as always, thank you for the substantive response. I agree that the CO for the contract(s) would be the ones to speak to the particular situation, but was curious to hear your insights from a broader perspective. On the ethical concerns raised by Congress, I would submit to that writer that earning profit on UCOT is not unfair in that there are other ways to compensate employees, through various benefits and bonuses for example. How each employer decides to motivate its workforce to satisfy its employees' needs as well as the customers' is indeed the challenge on private industry, who is not benefitted from the Government's insertion of itself into these types of matters. Rather, the competitive marketplace will do its part to weed out the contractor that overworks its employees, as they will lose those employees, which will impair their ability to compete and survive in the marketplace. If the work suffers because it "overworks" its employees, the government has avenues by which it can penalize the contractor, through low CPARs ratings or refusing to exercise an option for example, which are two of the most significant ways to affect a contractor's well-being and would theoretically cause self-correction. With that said, the quotes provided rather underscores my assertion that the concern of the Government (and therefore the clause with which I struggle in my original post) has to do with what the contractor proposes - when the contractor proposes UCOT, it is committing its workforce to UCOT, and its execution of the effort will be based on working its workforce X amount of UCOT hours. In such a case, it would be appropriate for the Government to evaluate the performance risk posed by that contractor, as opposed to the next competitor who did not propose UCOT (meaning, if the contract is awarded to them, execution will not require that their workforce work XX extra hours. But they "can" work extra hours should they elect to do so). When the contractor does not propose UCOT, but then performs some UCOT in execution, there should be no reason why the contractor should not get credit for those extra hours. I presume that there are a fair number of exempt civil service and military workers who work over 40 hrs/wk. It is actually what exempt people do to get a job done as professionals who do not necessarily clock out after 40 hours as non-exempt employees do. I do believe this clause was intended to address only those contractors who propose UCOT with the corresponding diluted rates to gain that competitive edge. Otherwise, the ramifications of this clause seem counter to what a professional is, tying that workforce to define in advance exactly how many hours will be worked and then penalizing initiative and motivation by the threat of a fee reduction if more hours are worked (at no additional cost to boot).

Not sure I understand the question, so please bear with me. In my humble opinion, the contractor did not agree to never work UCOT in execution; proposing UCOT would mean that the contractor is making a commitment upfront to deliver the proposed UCOT hours at a diluted rate. I'm having a difficult time understanding why the Government would care whether the contractor executes a task with or without UCOT if that contractor did not make a firm commitment by proposing it upfront (provided performance does not suffer)? As in my first post, if the salaried employee chooses to work 50 hours in a week to fulfill an unanticipated requirement, and the Gov't is charged for 40 hours, why shouldn't those extra 10 hours count toward the LOE? (When the LOE is tied to fee, this becomes particularly important.) Thank you.

In this scenario, the contractor's accounting system accounts for UCOT so that the Government would pay 40 hrs' pay for 50 hours delivered. The issue taken with the clause is that as written, it does not allow the contractor to count the extra 10 hours of work, which potentially affecting their ability to earn fee. This not only penalizes the contractor, but rather infringes on private industy on how the contractor chooses to manage its workforce to get the job done.

Please respond to this question under the "Contract Administration" topic area. This question was inadvertently posted under Subcontracts & Subcoontracts Management, so I have re-posted it under the appropriate topic of "Contract Adminsitration." I apologize for any inconvenience.

Background: Below is a clause that we are finding in various CPFF (LOE) solicitations. "Of the total staff-hours of direct labor set forth above, it is estimated that __ staff-hours are competitive time (uncompensated overtime). Competitive time (uncompensated overtime) is defined as hours provided by personnel in excess of 40 hours per week without additional compensation for such excess work. All other effort is defined as compensated effort. If no amount is indicated in the first sentence of this paragraph, competitive time (uncompensated overtime) effort performed by the contractor shall not be counted in fulfillment of the level of effort obligations under this contract." Hypothetical Scenario: RFP (CPFF) directs offerors to identify Uncompensated Overtime (UCOT) hours IAW FAR 52.237-10, describe the use of UCOT, and cautions against unrealistic rates. Contractor A does not intend to require their employees to work UCOT on a consistent or required basis; therefore, no UCOT hours are proposed. Consequently, the above LOE clause in the resultant contract states ??no UCOT hours performed will be counted in fulfilling the LOE.? During execution, an exempt employee works 50 hours in a particular week to meet a schedule. The clause as written would not allow the extra 10 hours to be counted toward total LOE, even though the Government receives the benefit of 50 hours of work for 40 hours pay. Contractor B proposes no UCOT. Question: Why is Contractor A prohibited from counting the UCOT hours in their LOE? Contractor A did not state that they will NOT work UCOT hours; they merely did not propose it formally which would then be binding. Based on my research, the Government?s concern with UCOT is to ensure contractors properly account for UCOT, and that the use of UCOT does not unduly introduce performance risk. If a contractor proposes UCOT of 50-hour workweeks and is awarded a contract, the Government would want to ensure that contractor deliver on those UCOT hours which presumably gave them a competitive edge and partly or largely formed the basis of their winning price. The fact that Contractor A chose not to propose any UCOT should not preclude the incidental performance of UCOT, and should not penalize the contractor. Would greatly appreciate expert opinion on this issue.

Background: Below is a clause that we are finding in various CPFF (LOE) solicitations. "Of the total staff-hours of direct labor set forth above, it is estimated that __ staff-hours are competitive time (uncompensated overtime). Competitive time (uncompensated overtime) is defined as hours provided by personnel in excess of 40 hours per week without additional compensation for such excess work. All other effort is defined as compensated effort. If no amount is indicated in the first sentence of this paragraph, competitive time (uncompensated overtime) effort performed by the contractor shall not be counted in fulfillment of the level of effort obligations under this contract." Hypothetical Scenario: RFP (CPFF) directs offerors to identify Uncompensated Overtime (UCOT) hours IAW FAR 52.237-10, describe the use of UCOT, and cautions against unrealistic rates. Contractor A does not intend to require their employees to work UCOT on a consistent or required basis; therefore, no UCOT hours are proposed. Consequently, the above LOE clause in the resultant contract states ??no UCOT hours performed will be counted in fulfilling the LOE.? During execution, an exempt employee works 50 hours in a particular week to meet a schedule. The clause as written would not allow the extra 10 hours to be counted toward total LOE, even though the Government receives the benefit of 50 hours of work for 40 hours pay. Contractor B proposes no UCOT. Question: Why is Contractor A prohibited from counting the UCOT hours in their LOE? Contractor A did not state that they will NOT work UCOT hours; they merely did not propose it formally which would then be binding. Based on my research, the Government?s concern with UCOT is to ensure contractors properly account for UCOT, and that the use of UCOT does not unduly introduce performance risk. If a contractor proposes UCOT of 50-hour workweeks and is awarded a contract, the Government would want to ensure that contractor deliver on those UCOT hours which presumably gave them a competitive edge and partly or largely formed the basis of their winning price. The fact that Contractor A chose not to propose any UCOT should not preclude the incidental performance of UCOT, and should not penalize the contractor.

Thank you Re: Q#1: The prime contract did not contain either FAR 52.215-12 or 52.215-13 at the time of basic contract award. (Sub was part of original team. Upon basic contract award, Sub was issued a Sub Agreement.) The KO just incorporated FAR 52.215-12 and 52.215-13. The task order in question would be an award under an existing Sub Agreement. Re: Q#2: Due to the proprietary nature of such data, a subcontractor would not provide C/P data to another contractor; if required, such data would only be provided to an independent auditor mutually agreed to by both parties, or directly to DCAA for an assist audit (unlikely given scarcity of resources). So, it seems some primes evade this issue by just requiring the Cert only, without the actual C/P data itself (which leads to your comment re: Q#3). Any insights/comments on this would be appreciated.