Vern Edwards

The problem is that a no-cost contract is still a contract—an agreement that the courts will enforce. See ThinkGlobal, Inc. v. Dept. of Commerce, CBCA 4410, 16-1 BCA P 36489, Sept. 9, 2016: See the commentary by Prof. Ralph C. Nash, Jr., in "No Cost Contracts: Is The Government Liable For Breach Damages," The Nash & Cibinic Report, Nov. 2016. Why bother with a contract? Why not just write an informal agreement that the actor will perform the service at no cost to the government. Such an agreement is necessary in order to get around 31 USC § 1342. If all you know is contracts, every agreement looks like a contract. I see no reason for a contracting office to be involved in this matter.

Why do you need a contract? Do you plan to terminate the celebrity for default if you don't like their performance? Write an agreement to the effect that the celebrity will do it as a public service at no charge.

1. You must know what you want to know. (If you are not clear in your own mind, do not ask a question until you make yourself so. In so doing you might learn the answer to your question by yourself.) 2. You must write a clear, specific, and succinct question. (Write a wh-question. Think and work on it before you post. Craft it. Imagine the kind of answer you want and try to elicit that kind of answer. Don't post on the spur of the moment. Don't write compound questions. Use plain English. Don't use jargon, abbreviations, or acronyms. See "https://www.dummies.com/careers/find-a-job/interviews/ten-tips-for-asking-good-questions/.) 3. You must provide essential context if the question is prompted by an event or set of circumstances. (Describe the event or the circumstances—environment, background or settings that determine, specify, or clarify it and be prepared to provide more information promptly upon request. Ask the question first, then provide the context.) Bonus fourth "thing": 4. Government contracting is exceedingly complex, practitioners often disagree, and some (more than a few) don't know what they're talking about.

Well, if you're doing "highest-technically-rated with a fair and reasonable price" in a multiple-award acquisition, the best way to avoid the COC process is to not find any offeror to be nonresponsible, either on an actual or de facto pass/fail basis. Instead, say that a low score in comparison with other offerors may position the offeror outside the set of the highest-technically-rated and, therefore, not among the prospective awardees. During source selection planning, you must establish a rational procedure for determining the dividing line between the set of highest-technically-rated offerors and everyone else. But I would not establish a predetermined (before receipt of proposals) cut-off score. That might be considered arbitrary, "mechanical", or noncompetitive.

I know what termination liability is, but I have never heard of "special termination liability." For what it's worth, I could not find the phrase "special termination liability" anywhere in the FAR system, which includes the DFARS, in the DOD Financial Management Regulation, in any other policy document, in any board of contract appeals decision, or in any scholarly work pertaining to government contracts. However, I did find mention of it in a 1990 GAO (non-protest) decision, B-238581, Oct. 31, 1990, which referred to "special termination liability" in connect with a "special termination" clause in a contract for the B-1B Bomber program. You can find it online at the GAO website. If the solicitation includes the clause at 252.249-7000, then it may be that the solicitation should have said "special termination cost liability," which would make sense. It might be a typo or a careless word omission. That's what I would suspect. You'll have to ask the contracting officer who issued the solicitation for an explanation.

I presume that the acquisition is for a multiple-award contract. Is that correct? It appears that what you want to know is how to avoid having to refer offerors for a COC. Is that correct?

The DOD class deviation, which is based on the executive order, neither of which states an exception for commercial items.

An offeror cannot determine its own responsibility or nonresponsibility. Only a CO may do that. If a CO determines an offeror to be nonresponsible based on the offeror's own self-scoring sheet, and if that is the only thing keeping the otherwise successful offeror from receiving an award, then the CO would have to refer the matter to the SBA in accordance with FAR 19.602. I have not yet seen any bid protest in which a CO determined an offeror to be nonresponsible based on the offeror's own self-scoring sheet, but there may be one or more that I have missed.

Self-scoring is not an essential feature of the highest-technically-rated with a fair and reasonable price method of source selection.

@WifWafThat mishmash of sentences amounts to utter nonsense.

I don't understand that sentence, especially the part that begins "to ensure the consideration due from the buyer..." What do you mean by "the consideration due from the buyer"? Do you mean the price? Are you saying there are commercial contracts that include standard clauses that refer to OSHA requirements and that apply to the seller's operations? For instance, are you saying that there are commercial contracts that include clauses that incorporate OSHA Standard 1910, Subpart D, Walking-Working Surfaces? Why would a commercial buyer care about that?

According to an unofficial communication from DOD: "[T]here is no exclusion for commercial services." NASA has expressly applied the E.O. to commercial services. See Procurement Class Deviation 21-03A, Oct. 1, 2021, Updated Nov. 8, 2021, CLASS DEVIATION FROM THE FEDERAL ACQUISITION REGULATION (FAR) FOR EXECUTIVE ORDER 14042, ENSURING ADEQUATE COVID SAFETY PROTOCOLS FOR FEDERAL CONTRACTORS: Emphasis added. The attached clause reads as follows: You can find the entire text of the class deviation at https://www.hq.nasa.gov/office/procurement/regs/pcd/pcd21-03A.pdf. I do not know what other agencies are doing.

No. The Administrative Procedure Act (APA) is at 5 U.S.C. 551 et seq. 41 USC 1707, "Publication of proposed regulations," provides in part as follows: The rule-making provisions of the APA do not apply to matters pertaining to contracts. See 5 USC 553(a)(2). However, 41 USC 1707 requires that agencies follow the public notice and comment requirements of those procedures under certain circumstances.

Not necessarily. Generally, see Congressional Research Service, Executive Orders: An Introduction, March 29, 2021. https://crsreports.congress.gov/product/pdf/R/R46738 See also Manheim and Watts, "Reviewing Presidential Orders," University of Chicago Law Review (Nov. 2019), 86 U. Chi. L. Rev. 1743: https://chicagounbound.uchicago.edu/uclrev/vol86/iss7/5/ For an in-depth discussion of executive orders and the force and effect of law, see Raven-Hansen, "Making Agencies Follow Orders: Judicial Review of Agency Violations of Executive Order 12,291," Duke Law Journal (April 1983), 1983 Duke L.J. 285. https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2836&context=dlj

Published today in Bloomberg Government"

Reuters: "From Boeing to Mercedes, a U.S.worker rebellion swells over vaccine mandates" https://www.reuters.com/world/us/boeing-mercedes-us-worker-rebellion-swells-over-vaccine-mandates-2021-11-02/

What's interesting is that in the same document DOD says: So the policy is that the parties must negotiate a fixed price to "reimburse" the contractor for indirect costs, even though they cannot anticipate costs with any reasonable degree of confidence. They came up with that policy because, as stated in the Federal Register, they didn't want to reimburse commercial item contractors for actual costs, since that would have imposed the cost principles in FAR Part 31, which wouldn't be very commercial. But they couldn't use a rate-based policy, because that would violate CPPC. If the prospect of an excessive or unfairly low "reimbursement" bothers you, one obvious solution is to negotiate a schedule of fixed prices for varying ranges in the amount of materials costs. Are there any other solutions?

Duplicate post deleted.

@Don MansfieldI had considered the use of a maximum, and that may be a solution. In any case, I think the idea of a single lump sum amount is problematical if there is a large degree of uncertainty about materials cost. The idea is to "reimburse" the contractor for indirect costs, or at least to approximate those costs. In my opinion, an amount that might be significantly disproportionate to the amount of actual materials costs cannot be fair and reasonable. I must point out that CorduroyFrog's opening post descried what he saw as a tendency to refuse any compensation for G&A on travel. This discussion about what to put in the blank of 52.212-4, Alt. I, (i)(1)(ii)(D)(2) does not address that issue. I don't know whether the problem is that COs are refusing to pay indirect costs specifically on travel or more generally. Thanks to Formerfed for his response to my question. One last thought about the clause. It says: "The Government will reimburse the Contractor for indirect costs on a pro-rata basis over the period of contract performance at the following fixed price..." I think that is ambiguous. The term "pro-rata" could be read as referring to the method for measuring the amount to be reimbursed, rather than the method of paying the reimbursement. Such a method would be a rate. But use of the phrase "fixed price" is contradictory. The entry "$0.10 for every dollar of actual materials cost" could a way to resolve that ambiguity, since $0.10 is a fixed amount. But a CO would have to be aware of the GAO's interpretation of the cost-plus-a-percentage-of-cost (CPPC) prohibition in order to avoid a prospective problem. For a description and analysis of the GAO's interpretation of CPPC as applied to indirect costs, See Mr. James White, Assistant General Counsel for Finance and Litigation, Office of the General Counsel, Department of Commerce, GAO decision B-252378, Sept. 21, 1993. In that case the rate applied was a percentage: "54 percent". Would GAO consider "$0.10 per dollar" to be a percentage?

@formerfedWhat worries me about a single fixed amount of $2,000—based on a materials cost estimate of $20,000 and a 10 percent G&A rate—is that we'd be using a T&M contract because we would not be sure of what work would have to be done and what the costs would be. What if it turns out that the contractor actually needs only $5,000 in materials? A "reimbursement" of $2,000 for indirect costs would be too much. In fact, it wouldn't really be a "reimbursement." What if the contractor actually spends $30,000 for materials? The $2,000 "reimbursement" would be too small. So why not fill in the blank with something like "$250 for materials costs up to $2,500; $500 for anything up to $5,000; $1,000 for anything up to $10,000," et cetera? In other words, why not provide for the possibility that actual materials costs might be less or more than estimated and thereby minimize any over or under payment? Another thought is to fill the blank with something like "$0.10 for every dollar of actual materials costs." That would be a fixed amount per materials dollar, which would provide for perfectly proportionate reimbursement of the 10 percent G&A rate with little or no risk of over or under reimbursement. But I suspect that scheme might be considered cost-plus-a-percentage-of-cost?

@formerfed Two questions: 1. Must the "fixed amount" be a single lump sum? 2. What would a "pro rated payment schedule" look like—to what would payment be proportional?

@C CulhamThis was my question: You did not answer it. Maybe I wasn't clear. What amount does the contractor insert? If there are many possibilities, choose one. Remember, it must provide for pro rata payment. Your answer need not come with a lot of palaver (explanation). One short sentence will do. If you like, assume a one-year T&M contract and that the estimate of materials costs at the time of award is $20,000.

I wonder: Does everyone understand how 52.212-4, Alt. I, paragraph (i)(1)(ii)(D)(2) is supposed to work? Does everyone understand: Emphasis added. If the contractor's G&A rate is 10 percent and it wants to recover that amount on materials costs under a commercial T&M contract, what "fixed price" schedule does the contractor insert in the blank? Ron Jordan (CorduroyFrog), what do you say?

Perfectly legal, if both parties can agree to the nature and amount of travel.

Thanks for letting me know. Now, delete your address. Very unwise to post it on the internet. Crummy example.