Retreadfed

Also, see MCS Portable Restroom Service, B-299291, March 28, 2007, where the GAO upheld a protest when the agency applied a literal reading of a FAR provision that was inconsistent with statutory language and the SBA's regulations.

Vern, I should have been more precise in my question. It was directed to Desparado as the second paragraph in his/her initial post seemed to indicate some concerns in this regard. If (s)he did have such concerns, I hope your answer removes them.

Just an addemdum to what Carl stated, for revenue based size standards, size is usually determined by the contractor's average annual receipts for the last three fiscal years of the contractor as shown on the contractor's tax returns for those years. Also, what says you cannot or should not award a small business set-aside contract that exceeds the size standard for the NAICS assigned the procurement?

While a proper recommendation, the answer may be misleading unless you actually read the DoD memo. It states that actions that rely exclusively on 10 U.S.C. 2323 are to cease. It says nothing about actions that rely upon other statutory or regulatory authority. The 8(a) program is authorized by the Small Business Act which is contained in title 15 of the U.S. Code, and FAR 15.8. Therefore, similar lo the HUBZone program, the 8(a) program is still in effect for DoD as well as the rest of the executive branch.

I think RIR should still clarify the facts of her case so that we are sure of them. In any event, Vern addressed the general rule in regard to application of the cost principles under a cost reimbursement contract. As here-2-help indicated, GD challenged a retroactive application of the compensation cost principle to executive compensation before the Court of Federal Claims. Here is a link to that decision. http://www.uscfc.uscourts.gov/sites/defaul...ralDynamics.pdf

I'm not sure I follow your question, even as Vern has rephrased it. Are you saying the government has disallowed exec comp because it exceeded the cap established in 1998 or the cap that was in effect in the year in which the services were performed? The cap has been raised every year since 1999. In what year was the contract awarded and in what year was the accomplishment mod issued?

Thanks, Civ. From reading the OMB gjuidance, it indicates the publication requirement comes from the Act instead of an independent action on the part of OMB.

Vern, thanks for identifying the memo. Does anyone know where this publication requirement is in the Act? I have gone through what appear to be all the contracting provisions and cannot find it.

The government would not be entitled to a price reduction under the TINA clauses because the prime contract has not been defectively priced. However, you would have to look at the total facts in regard to what is the defective pricing. I have seen circumstances where defective pricing is also a CAS non-compliance. Thus, if the defective pricing in regard to the replacement subcontractor is also a CAS non-compliance, likely by the sub, the government may be entitled to a price reduction for a CAS non-compliance.

Joel, you are trying to apply logic to a government contracting question. You have been around long enough to know that logic and government contracting do not always go together. Remember, TINA is a statute. As such, it had to satisfy several constituancies before it was enacted. In this regard, here is what TINA says about this topic under discussion "The head of an agency shall require offerors, contractors, and subcontractors to make cost or pricing data available as follows: An offeror for a subcontract (at any tier) of a contract under this chapter shall be required to submit cost or pricing data before the award of the subcontract if the prime contractor and each higher-tier subcontractor have been required to make available cost or pricing data under this section." This statutory requirement has been implemented in 52.215-12 and 13. Also, what is in the FAR is the product of committee work. Thus, essentially you have a regulation prepared by a committee that implements a law prepared by committee. The product of all this is not always precise or logical. I am sure you are familiar with the expression that a camel is a horse designed by committee. I have stated all along, it does not make much sense to obtain cost or pricing data for a subcontract that will be awarded after agreement on price of a FFP prime contract. although I can see some justification for it if there will be a follow on contract and the actual cost of the present contract will be used in determining the reasonableness of the price of the follow on contract. However, that is what congress and the clauses clearly require.

Joel, the proposal for the replacement subcontract is not cost or pricing data. What is cost or pricing data are the facts that would relate to negotiating a fair and reasonable price for that subcontract. Your position invalidates FAR 52.215-12 except for cost reimbursement and possible FPI contracts. However, that clause is also required to be inserted in FFP contracts if the contractor was required to submit cost or pricing data. Per that clause and TINA, subcontractors are required to disclose cost or pricing data before award of the subcontract. The clause and TINA do not restrict this obligation only to subcontract actions that could impact the pricing of the prime contract. I don't understand your logic on this. FAR 52.215-12 requires the prime contractor to obtain cost or pricing data from subcontractors. That clause can only become effective after the prime contractor and government have agreed on price and the prime contract has been awarded. As I understand what you are saying, because pricing data that does not affect the negotiation of the price of the prime contract, that data cannot be considered cost or pricing data. If that is the case, what is a prime contractor required to obtain from subcontractors to be in compliance with 52.215-12 and to give meaning to the clause?

Joel, you are missing the point. I have never said the prime needs to submit the sub's cost or pricing data to the government in Midas' situation. The issue has always been whether a prime has to obtain cost or pricing data from a subcontractor when the criteria Vern identified are present and the subcontract will be awarded after agreement on price between the prime and government. In the situation described by Midas, and even your painting subcontractor, if the subcontract will exceed $650K, does not fall within one of the three exemptions for disclosure of cost or pricing data, and the prime contract contains 52.215-12, then as a matter of contract and consistent with TINA, the prime must obtain cost or pricing data from the sub. The prime does not have to disclose that cost or pricing data to the government or certify it as its own. If you read 52.215-12 and 13, you can come to no other conclusion. If the prime does not obtain cost or pricing data post award in circumstances similar to Midas', the prime will be in breach of its contractual obligations. I have already said I don't think it makes much sense to obtain cost or pricing data from a sub after agreement on the price of the prime contract in the case of a FFP prime contract. However, there is some logic to doing so for cost reimbursement and FPI contracts as evidenced by FAR 15.407-1(f)(2). Under this latter section, the government is permitted a cost disallowance if the data submitted by the sub after prime contract award is defective.

Joel, so far as I can tell, none of the sources you are relying upon dealt with the issue we are discussing. To the extent they do not, they are irrelvant. Let's test your theory with a hypothetical situation. A prime contractor intends to use a specific subcontractor in performance of a contract. The prime has received a quote from the potential sub prior to agreement on price with the government. The prime discloses cost or pricing data provided by the sub to the government as part of the primes cost or pricing data. After agreement on price between the prime and government, the prime and sub continue to negotiate to definitize the subcontract. The prime and sub reach agreement on the price of the subcontract 30 days after the prime and government reached agreement on price. In this situation, should the prime require the sub to provide cost or pricing data relating to the quote after the prime and government agreed on price? Should the prime require the subcontractor to certify that the cost or pricing data it submitted in regard to the subcontract? If so, what would be the cut-off date by which that data should be current, complete and accurate? Assume the prime contract is FFP.

Joel, I think Vern has addressed this question in the proper context. Your latest reply still is not looking at the question of what is cost or pricing data in the proper way. You appear to assume that data cannot be cost or pricing data because it will not affect the price of a prime contract. However, it appears you have not consdiered 15.407-1(f)(2) in arriving at your conclusion. Further, the defintion of cost or pricing data does not limit such data to only those facts that have an impact on the price of the prime contract. In this regard, FAR 2.101 defines cost or pricing data as consisting of "all facts that, as of the date of price agreement or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price, prudent buyers and sellers would reasonably expect to affact price negotiations significantly." Note that the date of agreement on price does not mention the prime contract. Additionally, the price negotiations that may be impacted by the "facts" is not limited to negotiations of the prime contract price. There is no indication that the "parties" refers to the government and prime contractor. In short, there is nothing in the definition of cost or pricing data that indicates cost or pricing data are only those facts that would impact the price of the prime contract.

Joel, simply explain why 52.215-12 does not apply to Midas' situation? Why is this situation not covered by the phrase "any subcontract?"

Joel, I agree that getting cost or pricing data after award of a contract may be wasted effort in some circumstances, e.g. when the prime contract is firm fixed price. However, wasted effort is not an excuse for not following the statute or contract requirements. In regard to the latter point, FAR 52.215-12, which is a contract clause states "efore awarding any subcontract expected to exceed the threshold for submission of cost or pricing data . . . the Contractor shall require the subcontracor to submit cost or pricing data." Obviously, because this is a contract clause it can only apply after the price of the contract has been agreed upon between the prime contractor and government. This clause does not limit its application to certain contract types or subcontracts contemplated at the time of contract award. FAR 15.407-1(f)(2) also permits a cost disallowance under contracts other than FFP and FP(EPA) where payments to subcontractors are higher than they would have been in the absence of defective subcontractor cost or pricing data, regardless of when the subcontract was awarded. That is because the "Government has a continuing and direct finaicial interest in such payments that is unaffected by the intial agreement on prime contrac price." Finally, the definition of cost or pricing data does not restrict cost or pricing data to only facts that would affect the price of the prime contract. It simply refers to the "parties" and "buyers and sellers." Based upon all of this, I don't see how you arrive at the conclusion that cost or pricing data are not required for subcontracts awarded afte agreement on the price of the prime contract.

Joel, here is an extract from 10 USC 2306a. Based on this language, why do you say this is not a TINA issue and that the prime is not required to obtain cost or pricing data from the sub in this case? An offeror for a subcontract (at any tier) of a contract under this chapter shall be required to submit cost or pricing data before the award of the subcontract if the prime contractor and each higher-tier subcontractor have been required to make available cost or pricing data under this section

Why do you need to restructure the plan?

Don, the SBA is probably right in regard to HUBZone set-asides. There is a statutory basis for that program that is distinct from the DoD requirements. Further, HUBZone procurements do not have a facial race based component or aspect. Thus, the strict scrutiny analysis applied in Rothe does not apply to such procurements. As regards the 8(a) program, it would be subject to strict scrutiny. However, the arguments against its constituionality are significantly different from those made in Rothe. Specifically, there is no price adjustment factor for 8(a) contractors. Instead, none 8(a) contractors, including other SDBs, may be excluded from a procurement reserved for an 8(a) award. Therefore, the reasoning in Rothe is not applicable to the 8(a) program.

I have to take some exception to Don's assertions regarding line item pricing. The court has never held that such pricing is automatically exempt from disclosure. Instead, its position is summarized in this extract from the CCC decision We reaffirm today what we have held twice before: Constituent or line-item pricing information in a Government contract falls within Exemption 4 of the FOIA if its disclosure would ?impair the government?s ability to obtain necessary information in the future? or ?cause substantial harm to the competitive position of the person from whom the information was obtained.? Thus, before line item pricing can be withheld, the government must determine that one of these two results will occur. Similarly, in a reverse FOIA action, the party seeking to enjoin release has the burden of proof in regard to making one of these showings. As for Carl's idea about a protest, what is to be protested? Look at the GAO protest regs to determine what can be protested. I don't see where a contracting officer's failure to disclose this information is protestable to the GAO.

With what agency are you deallng and what clauses dealing with rights in software were in the "enhancement" contract?

I don't know the specifics of the notice you quoted, but the 2009 NDAA contained a provision that imposes on all agencies the competition requirements formerly imposed on DoD by section 803 in regard to orders under multiple award contracts, including GSA Schedule contracts. The FAR has not implemented this provision yet, but the notice may be an attempt at implementation prior to formal FAR coverage.

Or another example of when the councils did not think things through when they promulgated a regulation.

Vern, I need some clarification of your position in regard to what is the appropriate defintiion of a subcontract in this instance. FAR 52.203-13 contains one defintion of a subcontract. On the other hand, 52.244-6 simply says the term subcontract includes transfers of commercial items between related entities. Because 52.244-6 is a clause required by Part 44, would not the defintion of subcontract in Part 44 supplement the definition of subcontract in the clause? In that case wouldn't the definition from Part 44 and what is in 52.244-6 determine when 52.203-13 is to be included in a subcontract for a commercial item? To me, although the two defintions are quite similar, 52.244-6 would require 52.203-13 to be included in a broader category of subcontracts than 52.203-13 because 244-6 does not contain any limitations on the size or duration of contracts in which the clause is to be inserted.

The DFARS "clause" is not a contract clause, but a solicitation provision.