Don Mansfield

Get well, Bob.

3 hours ago, Neil Roberts said:

ok, just a clarification, the fact that "past performance" subject is in FAR does not mean an Agency can't "like it" and include it in a no cost contract, right?

Right

Folks were citing the FAR. My point was that the FAR is not relevant to the issue.

If the contract doesn't obligate appropriated funds, it's not acquisition and the FAR doesn't apply.

You have a requirement exceeding $25,000 for an item to be specially manufactured for the Government in accordance with a technical data package (TDP). There are several manufacturers that are capable of performing the contract and you anticipate issuing a competitive solicitation. The bill of materials in the TDP requires the use of some brand name components in the manufacture of the item.

FAR 11.105 states:

Quote

 

Agency requirements shall not be written so as to require a particular brand name, product, or a feature of a product, peculiar to one manufacturer, thereby precluding consideration of a product manufactured by another company, unless—

(a)(1) The particular brand name, product, or feature is essential to the Government's requirements, and market research indicates other companies' similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agency's minimum needs;

(2)(i) The authority to contract without providing for full and open competition is supported by the required justifications and approvals (see 6.302-1); or

(ii) The basis for not providing for maximum practicable competition is documented in the file (see 13.106-1(b)) or justified (see 13.501) when the acquisition is awarded using simplified acquisition procedures.

(3) The documentation or justification is posted for acquisitions over $25,000. (See 5.102(a)(6).)

 

Are you required to justify the use of the brand name components and post the justification? Assume the sum of the brand name components exceeds $25,000.

On 8/11/2024 at 9:19 AM, Vern Edwards said:

We have reviewed the regs. I disagree with the OP's legal advisor, who clearly does not know what they're talking about if they think FAR 16.102 precludes the use of an incentive on a T&M contract.

Additionally, I don't think using a noncost incentive would change the contract type from T&M to something else. For example, the contract type remains the same when using noncost incentives in firm-fixed-price contracts and fixed-price contracts with economic price adjustment. See FAR 16.202-1 and FAR 16.203-1(b). 

20 hours ago, Vern Edwards said:

I presume you are referring to this:

I do not think a cost constraint makes sense in the case of a T&M contract with an award fee incentive for employee retention.

The purpose of a cost incentive or constraint is to prevent the contractor from running up costs in order to pursue a performance incentive. That would not occur under a T&M contract with an award fee incentive on employee retention, because the contractor is paid for hours worked performing specific tasks at fixed hourly rates. The contractor is not entitled to payment for other work. I  suppose a contractor might try to retain employees by allowing them to work slowly in order to improve their wages by running up their hours. But I believe that proper government surveillance should be able to prevent such a scam. And the contractor might be threatened by possible whistleblowers.

Plus, T&M contracts have a ceiling price.

What do you think?

If the direct labor is not for the work required to increase retention (i.e., it's for performing the contract requirements), then I agree that you don't need a constraint.

On 8/9/2024 at 10:46 AM, Vern Edwards said:

See FAR 16.102(b).

Just add an annual award fee for employee retention (no base fee). Nothing in FAR prohibits, but check your agency supplement.

Wouldn't you want to put some type of constraint on hours or price, above which the incentive would no longer apply? For cost reimbursement contracts, a cost incentive or constraint is required if the contract is going to contain an incentive on something other than cost. Given the "best effort" nature of the T&M contract, I would think you'd want the same type of safeguard.

On 8/7/2024 at 9:53 AM, BrandonB said:

Further, Blk 14F of the DD1547 WGL is for subcontracts... my takeaway is that there are those of us out there that do justify fee on subcontractors as not excessive.

Do you think that, by definition, a charge of profit/fee on a subcontract is an excessive pass-through charge? That would be wrong.

Including the cost of subcontracts in Block 14 of the DD Form 1547 when developing your prenegotiation fee objective would be correct. I would only exclude it if the prime contractor's efforts provided no or negligible value. Alternatively, leave it as is and assign a lower-than-normal value for Management/Cost Control on the form.

8 minutes ago, GEO-PCO said:

A T&M/LH contract does include a negotiated fee.  My goal is to incentivize the contractor for recruiting and retaining talent during the course of the contract.    

Really? FAR 16.601(b) says:

Quote

 

Description. A time-and-materials contract provides for acquiring supplies or services on the basis of—

(1) Direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and

(2) Actual cost for materials (except as provided for in 31.205-26(e) and (f)).

 

17 hours ago, BrandonB said:

Proposed as a percentage derived from Weighted Guidelines.

The contractor used weighted guidelines to come up with their proposed fee?

I'm confused. Time-and-materials contract with fee? I thought the hourly rate included profit.

She said the services could not be ordered under an existing contract.

5 hours ago, BrandonB said:

Sample scenario- $10M subcontract is set up on a fully burdened T&M basis, hence the subcontractor profit is built in.  The prime wants to go ahead and charge fee on the  fully burdened $10M. 

Let's work on your scenario. Before charging fee, the prime has to negotiate fee with the Government--correct? This would start with the prime proposing an amount of fee. 

Is the contractor's proposed fee expressed as a percentage of its costs? Or just an amount that is independent of proposed costs?

14 minutes ago, lawyergirl said:

Hi Don:  Yes, client is DoD.

Good, now you only need HCA approval to use SAP (see DFARS 218.270(b)).

17 minutes ago, lawyergirl said:

I don't think the client is particularly looking at FAR 9.104-1 as part of the evaluation process, at least not that I have heard.

With very few exceptions, a precondition to any contract award is that the prospective contractor meets the standards at FAR 9.104-1. This is not about evaluation factors (although your answer will affect evaluation). If the client will be happy as long as the contractor meets the general standards of responsibility, then evaluation and award can be short and sweet. But if the client wants to apply criteria to determine which one of the multiple prospective contractors is best, then evaluation and award will take longer. 

18 minutes ago, Fara Fasat said:

I will say that we have already had a prime tell us that they wanted to see sales and price information for a commerciality determination, pointing to the new provision.

Wouldn't they need that evidence to determine that the product in question was "sold, leased, or licensed to the general public"?

18 minutes ago, Fara Fasat said:

I won't argue your last paragraph. I think "shall submit" and "including prices" means prices are now required. You don't.

I didn't say the provision did not require submission of "prices at which the same product or service or similar products or services have been sold in the commercial market"--it clearly does. We part ways when you say that contracting officers will necessarily use that information to determine commerciality.

13 minutes ago, lawyergirl said:

2. Do the services facilitate defense against or recovery from cyber attack?  Yes.

That's good. You can use SAP under FAR 13.500(c)(2). Is the client part of DoD?

10 minutes ago, lawyergirl said:

3. Assuming they proposed a fair and reasonable price, would any contractor that met general responsibility standards at FAR 9.104-1 be sufficient?  Not sure what this means.  Can you please clarify?

Let's say you have 10 prospective contractors that meet the general responsibility standards at FAR 9.104-1 and they have all proposed a fair and reasonable price, do you care which one gets the contract?

On 8/7/2024 at 10:00 AM, Fara Fasat said:

So back to my questions: is all of the price information in 252.7010(b)(1)(ii) now required for a commerciality determination, as DoD says? Is that a departure from the past 30 years, where price information was not required for the commerciality determination? Remember, 252.7010 applies to all acquisitions, not just major weapons systems.

I think your assumption--that pricing information has not been required for the commerciality determination--is flawed. Consider the definition of commercial service:

Quote

Commercial service means—

(1) Installation services, maintenance services, repair services, training services, and other services if—

(i) Such services are procured for support of a commercial product as defined in this section, regardless of whether such services are provided by the same source or at the same time as the commercial product; and

(ii) The source of such services provides similar services contemporaneously to the general public under terms and conditions similar to those offered to the Federal Government;

(2) Services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions. For purposes of these services—

(i) Catalog price means a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or vendor, is either published or otherwise available for inspection by customers, and states prices at which sales are currently, or were last, made to a significant number of buyers constituting the general public; and

(ii) Market prices means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors; 

 

Wouldn't one need to know "prices at which the same product or service or similar products or services have been sold in the commercial market" to determine if a source was proposing terms and conditions similar to those offered to the Federal Government?

Wouldn't one need to know "prices at which the same product or service or similar products or services have been sold in the commercial market" to determine whether a service was based on market prices?

In some cases, pricing information is relevant to determining commerciality. In some cases, it's not. How a contracting officer uses pricing information to support a commerciality determination--if at all--will depend on what criterion they use to support a positive determination.

Now if you are going to claim that the provision language inserted in the final rule now requires DoD contracting officers to use pricing information in all commerciality determinations, bless your heart. I wish you luck in convincing anyone that's what it means. 

1. Can the services be ordered under an existing contract?

2. Do the services facilitate defense against or recovery from cyber attack? 

3. Assuming they proposed a fair and reasonable price, would any contractor that met general responsibility standards at FAR 9.104-1 be sufficient?

So do you accept that--according to DFARS 234.7002(d)--pricing data are not relevant for determining commerciality for major weapon systems?

Take a look at DFARS 234.7002(d). Do you see anything about prices?

In any case, the provision requires submission of pricing information. It doesn't limit what the Government can use it for.

I recently started watching YouTube videos of First Amendment auditors. They will typically go to a public place--like a post office--and start filming, which they have a right to do. Like moths to a flame, public employees will begin harassing them and telling them they can't film. If in a post office, the auditors will point out their right to record is stated on the regulations posted on the wall of the building. This is usually not enough to convince the now agitated public employees, so they call the cops. When the cops come, they start telling the auditors that they can't record video because it's upsetting people--some even threaten arrest. The auditors respond by saying that their first amendment rights take precedence, which is correct. If in a post office, the auditors will also add that the cops don't have jurisdiction on Federal property. Ultimately, the auditor will typically demand to speak to the cops' supervisor. The supervisor shows up, explains to their cops and the public employees that the auditors are exercising their Constitutional rights and there's nothing the cops can do. The auditor thanks the supervisor and goes back to recording. But everyone is still pissed at the auditor.

After watching a number of these videos, I realized that Federal contracting is no different. There are a lot of folks at the working level who don't know the rules and operate based on gut instinct. Even when confronted with their own ignorance, they are not always willing to admit fault or change their ways. The cops in the videos are like many contracting officers--they have no clue about the limits of their authority. The supervisor is like the rare person in the contracting office who actually knows the rules.

https://youtube.com/@bayareatransparency1722?si=qAGgXPA_g808gDyR

Given the explanation in the final rule, I read this as--

1. Information that is adequate for determining commerciality, and

2. Information that is adequate for evaluating the reasonableness of price.

Two different sets of data for two different purposes. The first set does not include pricing information.

I think you are assuming that your interpretation is the only reasonable one.

4 hours ago, RJ_Walther said:

Gift link to the interview in the NYT for anyone without a subscription: https://www.nytimes.com/2024/08/04/opinion/neil-gorsuch-supreme-court.html?unlocked_article_code=1.Ak4.fvM3.rfbqIIMR864H&smid=url-share 

Thanks!