C Culham

Vern ? I read your latest post to indicate that price standing is the only reason one might withdraw a bid, or a price proposal for that matter? Your view is too narrow. Two reasons have been noted for the guarantee, assure bonding capability and insuring the obligation of the bidder, and/or offeror, to honor their offering to the Government. The specific language of the SF-24, Bid Bond supports this reasoning as well. In a negotiated setting, just like sealed bidding, offerors attempt to withdraw their proposals for all kinds of reasons before and after discussions and full responsibility checks. I have experienced it and having the bid guarantee in a RFP situation to ?protect(ing) the Government ? as you note has been a distinct benefit. In my several experiences it was never affected but was strong reasoning and support that the contractor and the bonding company honor the proposal, especially in the situation of award without discussions. I agree that the strength of the bid guarantee could be questionable in instances where negotiations had occurred but as Joel already mentioned, and again by first hand experience, it was valuable leverage when, after negotiations and notice of award, the contractor attempted to withdraw. You have not provided me with any compelling argument for not requiring the bid guarantee inclusive of noting in other parts of the thread that ?others? and certain attorney?s agree with you. To these points of reference that you have provided I would simply offer that many others and apparently certain attorneys for the USACE in and outside of Huntsville, have concluded that a bid bond in a RFP arena is a good idea (Ref: EFARS and Search of www.fbo.gov produces many real cases where the guarantee is being requested). As to the name bid bond and or bid guarantee such an arguement is hollow in my view. It is clear that the name means nothing when the courts have enforced its intent against IFB's and RFP's. In the end , all things considered inclusive of cost to a offeror and in light of the Nash/Cibinic 2002 view on the matter, I am convinced that the decision to include a bid guarantee is in the best interest of the Government, in all most all cases, and for all parties to a proposed contract for that matter. Federal regulation and policy allows a CO/agency to make such a decision, or not, for the bid guarantee. So I am done as I believe we each have made our case with regard to the bid guarantee matter.

Boof - Not to split hairs but the question was really with regard experience and advice which took this thread to the bid guarantee side of the issue. On use I noted subtly it is not common at all. In my experience which I characterized as limited I estimate that I bonded something like 100 service contracts in a 38 year career as a CO. Bonding of the performance side was the primary reason for the majority but for some it was for the reason I already noted, Federal work on private property and a want to have the protections of payment and the performance bond rode along.

Joel - I understand Vern's points completely in that not only can bid guarantee requirements be waived but it makes no sense to obtain them for a negotiated procurement. I just disagree in general on the sensible part and my additional posts are to put forth my thoughts on why, just as Vern has. To your question I say common but note that state law provides variables with regard to use as well as the sophistication and want of the contractor. There are lots of examples of service work as remember the liens are not only for materials but the efforts of laborers, again dictated by state law.

Vern ? At the risk of taking this thread beyond its intent the following is offered with regard to your last post and with the idea that my view might just provide some additional insight to those following the thread. First to the bid bond and the security it offers to the Government. I know it is not your intent as you do mention ?responsibility? with regard to sealed bidding however for those reading your post it could be misconstrued that the Government has less ability to confirm a bidder?s ability to secure bonding in a sealed bid environment as compared to an offeror in a negotiated environment. In reality I would offer that the ability of the Government to do due diligence regarding the bonding as a responsibility matter in either solicitation situation is exactly the same. As Joel noted in his previous posts one could argue that even the bid bond is not an absolute guarantee of bonding ability, however requiring the bid bond clearly decreases the due diligence effort. Such issues as legally insufficient surety bonds being provided, individual sureties, and other guarantee alternatives complicate matters more but in the end a bid guarantee still provides value in my view. Understanding that you are advocating "following the rules?, or in this case regulations, I would offer that the FAR is written with specific intent to assist in the due diligence effort of determining responsibility of an offeror when it comes to bonding matters. To your reference with regard to Nash & Cibinic discussion of the value of payment bonds I can relate to lokimango?s dilemma of determining best interest of the Government. While the following is not specific to the example being discussed in this thread there is payment bond value with regard to civilian agency contracting. There are more than a few civilian agencies that perform work on private property. Examples are the USACE, USDA-NRCS, Indian Health Service, DOI-BLM, DOI-Bureau of Reclamation, and the list goes on. Specific experience with some of these agencies has shown that absent the payment bond the private landowners have been subject to commercial material and mechanics liens. As I noted in my earlier post the real cost to bonding acquired by a contractor is the bond premium they are charged. A surety bid bond cost to a contractor is minimal where they are either charged an annual fee (est. $250-$500) for all bid bonds or an individual fee (est. $25-$50) per bid bond written. No bid bond would be provided to a contractor unless they have demonstrated ability to secure surety performance and payment bonds which again circles back to point I have already made?.Asking for the bid bond is sensible and in the best interest of the Government when it comes to the confidence and protections it offers to all parties of the contract.

Vern - Sensible or not I think you are overlooking FAR subpart 28.101-1(a) and its last sentence. As Joel has already noted and based on practical experience where the situations he has generally covered I have had direct experience with, proceeding with a procurement that requires performance or performance and payment bonds without requiring the bid bond is in general not in the best interest of the Government. By experience having the bid bond provides a very distinct advantage in securing the performance/payment bonds on both sealed bid and negotiated procurements. I would suggest that the waiver capability of FAR 28.101-1© is rarely utilized and would be interested in knowing where the waiver has been utilized for other than the examples noted in 28.101-1© to your knowledge.

Vern - Joel's comments are generally the reasoning I would have expressed.

Vern - Yes, if the solicitation provides that the Governmnet may award without discussions.

From my experience I believe the FAR is written the way it is regarding payment bonds when performance bonds are requested is because when a firm applies for surety bonding they become eligible for and are in fact charged as if both are provided. Unless the industry has changed I think you could verify this by asking a bonding expert but to help support my experience note that the premium rate for a surety bond is entered only on the reverse of the required form SF-25, Performance Bond, there is no such block or requirement to include the rate on the reverse of the SF-25A, Payment Bond or for that matter the Bid Bond, SF-24. Essentially they come as a package and if you want the payment bond protection you might as well get the performance bond as the Government is in effect paying for it anyway.

FAR 28.103 should be read in concert with FAR references regarding bid guarantees as well when considering bonding for service contracts to give the full perspecitive. Those references are FAR 28.100 and FAR 28.101.

Based on some limited experience on requiring bonds on service contract work here are my thoughts? Annual Bonds ? Note coverage in FAR Part 28 regarding annual bid and performance bonds. You might encounter offerors that have these type of bonds in place however my experience has been where the service contractor has provided separate bonds. Bid Guarantee ? Highly suggest you require but note FAR coverage of where may not be in the best interest of the Government. IGE ? Remember to have the costs for bonding included in your IGE. I would error on a higher percentage 3.5 to 4.5% of contract value as experience on my part was that the bonding companies demanded a higher percentage of cost due to the fact that the firms they were bonding were thought to be in the higher risk category due to lack of bond experience by the firms. Payment provision ? Remember to cover in your contract terms and conditions how the bonding costs will be paid to the contractor. For my limited experience I borrowed the payment terms and conditions from the construction side (found usually in the specifications) and then adjusted for the service contract being used on. Assistance to offerors ? You might be throwing a curve ball at some offerors who have never had the experience in securing bonds. Can be a lengthy and confusing effort for a newbie. Consider possible longer solicitation period, or some other advance warning to industry that you will be requiring for work of the future so they can start their business processes to secure. Noted especially as your agency may be making this a usual practice and a firm has the where withal to secure annual performance bonds. For small businesses the SBA?s surety bond guarantee program could be a valuable reference ? http://www.sba.gov/about-offices-content/1/2891 General ? From my experience not much different than administering under a construction solicitation/contract with the biggest issue being that the part of industry that is your usual players may not be familiar with bonding and they will pose many questions. You might experience a higher degree of individual sureties or alternatives in lieu of sureties.

rd - Before this thread gets way out there I suggest some clarification. Reference is made to FAR 52.217-6. If this clause is in the contract then it is suggested that it is either a cost reimbursement or time and materials contract, yet FFP is also mentioned. So the question is what type of contract is in hand? Next, and to be blunt, was the contract forced on you at signing? It seems the issue you are now raising after the fact should have been understood and agreed to before your firm signed the contract! Or is your "contract" really a solicitation that is being responded to? In the end to help you sort out your concerns might take more than you can find in this forum as someone would need to look at your contract in total if you really now have a signed contract and understand the effort leading up to it before giving quality answers to your questions. If it is a solicitation the same is probably true too.

Interesting questions posed by napolik. Continuing the hypothetical I would suggest the questions posed should be rephrased with "contracting officer/Army legal counsel"?

Cajuncharlie provides an additional point but a simple perception of the facts for a yes/no answer in such a complicated matter seems off base to me. If, for instance the current IDIQ was awarded in a multiple award scenario, could not the old and new agree to holding the IDIQ contract in their negotiations? Or, could not the requirement to adhere to the IDIQ T&C?s for a single novated order be memorialized in the novation agreement and a related modification? Many other scenarios could be painted as well. The detailed facts of the purchase/sale agreement, MOU, etc between the old/new leading to the requested novation and the facts of the contracts, inclusive of the order, the Government holds will be the determining factors for approval or not of a novation request. From personal experience novation strategies go haywire because the old/new firms fail to give ample consideration to matters of Government contracts during their negotiations and then ask the Government to pound the square peg into the round hole after the fact. Adequate advance planning and addressing Government contracts specifically by the old and new in their purchase/sale agreement/MOU helps tremendously.

Maybe...with this response based on a couple of premises as supported by the FAR. An order is considered by some to be a "contract" in its own right per FAR Part 2 definitions. A novation (request by contractor for a successor in interest) may or may not be recognized by the Government based on the facts and the best interest of the Government. Ref: FAR Part 42.12 If such a request by the contractor is supported with facts and if such facts supported adequately that the IDIQ and the order are separately recognized for the purposes of successor in interest it just might fly through the various ACO, CO, and legal reviews necessary for the Government to honor the request. I would hazard a guess that the real problem would come with how to adjust each through the electronic systems that are used today in handling the contract accounting and payment processes. In the old days of stubby pencils it could get accomplished but in current times an unusual change (at least one I have never heard of) might confuse the systems of today.

As supplement to my first post I did a little more research albeit again limited. I have this feeling that the requirements of FAR 5.303/DFAR 205.303 are in some way connected to the responsibilities of the Competition Advocate (ref: FAR 6.5) and his/her duties FAR 6.502 and as such again include FSS. Not 100 percent sure but there seems to be some correlation and the Advocate for DoD is in DPAP. The separate reporting requirements of (20)5.303 seem to support the duties and responsibilities but the dollar threshold of 6.502((2)(vii) does not mesh.

Don ? My view noting that I am not a DFAR expert. Any further posts could well change my view. The reporting requirement of DFAR 205.303(a)(i) is a supplement to FAR 5.303. As such FAR 5.303(a) provides 3 exclusions from this reporting requirement none being FSS. In my limited research capabilities I did find communication internal to the Marines that raised the same question in August of 2010 that indicated further clarification was going to be sought through Navy to the DAR Council. Further research on my part indicated that the NMCARS has not had any clarifying language added. Additionally, a memo issued on the DoD side in July 2011 which addressed reporting deficiencies by DoD with regard to the DFAR requirement did not address the FSS matter either. Link to the memo - http://www.acq.osd.mil/dpap/policy/policyv...998-11-DPAP.pdf Finally with regard to your point to FAR 5.303(a)(3) as generally excluding FSS I read the cite differently. It states that awards under 5.202(a)(1) are exempt. This cite regards national security and I see no mention of FSS. Overall conclusion on my part, while there is confusion as it is apparent the question is still coming up a direct read of the FAR and the DFAR supplement tells me that FSS awards shall be reported.

This previous thread might help answer your question. http://www.wifcon.com/discussion/index.php?showtopic=1174

In my experience you would look to agency regulation and/or policy for the requirement.

For the good of the order a read of 41 USC 253b© and 41 USC 23059b)(5) suggest strongly that the Postaward notice does go to all regardless of the communication with them prior to award. The FAR wording could be clarified. Links to the respective USC's. http://frwebgate.access.gpo.gov/cgi-bin/us...1&TYPE=TEXT http://frwebgate.access.gpo.gov/cgi-bin/us...7&TYPE=TEXT

Some folks posting to this thread are confusing the authorities of Ability One, NIB, NISH and the Committee as stated not only in the FAR for exceptions (and reallocations) but in reality each entities role overall for JWOD. All are different and have separate roles. I suggest a closer read of FAR 8.7 by some of the posters for the conclusions they are making as it is wrong as well as suggest all posters read the following including Leo. http://www.abilityone.gov/abilityone/laws_...ing_memo19.html

H2H - I could not agree more on the "framing". Vern is correct that Leo can just follow process (ref: FAR 8.7)as well in which case, however the matter is framed by the Government, the central non-profit agency will have the final say. You would expect the central non-profit agency to provide the assistance necessary to bridge the gap or provide an exception (Ref: FAR 8.706).

Might want to take a look at FAR 8.712© too

You also have not mentioned the Government IGE in your scenario. Did the Government adjust its IGE for the follow-on procurement to reflect that the contractor was now going to provide all the stuff? If so how did the IGE handle it versus how the contractor is proposing its cost/prices? Seems a strange statement to contend the Government "does not have the funds" as I would not believe that the Government expects the contractor to provide the stuff for free! Government pays either way, don't they? Without details but based on guessed good past performance and other track record of the firm I suspect their affordability contention could be bridged with an appropriately priced proposal and good PR that educates a bank on what Ability One is all about (and possibly assignment of claims) for securing a loan to purchase the equipment, materials and supplies. Overall I would suggest that rather than jumping to trying to remove the requirement you and the firm should be working together further to make this work.

?Must a subcontract initially under $25K that is subsequently modified ever be reported?? Yes. Why? A read of the FAR and the clause suggests your interpretation of ?initial? award is off track. Applicability of the reporting requirements applies to ?all contracts with a value of $25,000 or more, except classified contracts and contracts? (Ref: FAR 4.1401(a)). Likewise the clause itself requires reporting ?any modifications to these subcontracts that change previously reported data?. Read together both the FAR and the clause suggests nothing about ?initial? awards and in my view a subcontract of less than $25K that was not reported because of its value that is subsequently modified to above $25K ?must? be reported. Additionally I would suggest that proper contract administration by the Government and prime, especially with regard to modifications of subcontracts, would require changing of the data. The Government has many ways for monitoring this reporting including the responsibility to viewing data reported in fsrs.gov for accuracy and if I were a CO and found a subcontract not reported that I knew was over $25,000 I would direct the prime to report the sub. Other requirements ,such as reporting in esrs.gov of subcontract awards in certain instances, provides another check and balance for both the prime and the Government to report in fsrs.gov properly. ?So, why do not all contractors award subKs for $1 then modify them to the true value, to avoid the reporting requirements? ? Here is a quick list that relate to posts already made in this thread. ALL may or may not be applicable but remember the net for not reporting subcontract awards properly could be widely cast especially if a contractor was knowing trying to ?play? the system as you suggest. Making false statements, 18 U.S.C. 1001; False Claims Act, 18 U.S.C. 287; Mail/Wire Fraud, 18 U.S.C. 1341; 1343; Conspiracy to Defraud Govt., 18 U.S.C. 286; Major Fraud Act, 18 U.S.C. 1031; False Claims Act, 31 U.S.C. 3929-33; Anti-Kickback Act, 41 U.S.C. 51 to 58; and Forfeiture of Fraudulent Claims Act, 28 USC 2514.

You may find this GAO decision of interest with regard to the discussion you are having within your office. Decision - B-302358, Bureau of Customs and Border Protection--Automated Commercial Environment Contract, December 27, 2004 Link - http://www.gao.gov/decisions/appro/302358.htm