Warranty Contract in lieu of IDIQ

[meganmarie5009]

My department supplies Multi functioning devices (MFDS) to different agencies on the East coast. We have a issue with supplying devices to a particular agency because of the testing that is required for the MFDs. We are in limbo with waiting for testing to be approved and as of now, we are estimating to have testing approved in mid 2024. In the meantime we have been issuing Method of Payment (MOP) Government Credit Card Sole Source Awards to one vendor in particular. These Sole Source orders act as a bridge from a 5 year option lease contract to a temporary 12-14 month contract. This system is not the best because with it being a MOP card order, all orders are under micro purchase and the backend issues of payment have been taking too much time for the government and the vendor. Not only that but the demand of the devices is much larger than micro purchase. We are not able to write a bridge contract to resolve this issue. Small business has advised that we could write this as a new vehicle. 

We have had a few meetings with the vendor to come up with a different contract vehicle for up to 3 years to cover the time between when testing is approved and whenever different vendors can bid and deliver these tested MFDs. There is an issue that the vendor supplying the devices currently is an 8(a) vendor but they lease the devices and the devices are maintained currently with a subcontractor. FAR 52.219-14 is an issue because the subcontract does more 50%  of the supply and service (maintenance). 

Some devices have now been leased for 5-6 years so there is a question if a lease would be appropriate because of the time that has passed on payment of the lease itself. The vendor has suggested a warranty contract. I have no experience in this vehicle type however, if there would only be a warranty on the required devices it would be a different vehicle and could bypass the 50% issue with FAR 52.19-14 possibly. Does anyone have any guidance of where in the FAR to start or experience they could share?

[C Culham]

So what in this previous discussion still applies and has not been remedied.

 

[meganmarie5009]

A route that my agency decided to go with for the majority of those issues was with a BOA order that is under SAT. This seems to have remedied the problem with all devices that do not fit under this specific testing. 

The problem resides with the devices that have the required testing are well above SAT and have a requirement for at least 2-3 years until the testing is resolved for businesses to be able to compete. A larger contract vehicle is required. 

[C Culham]

So commercial item?

If so the threshold becomes greater for use of SAP, correct?

And use of commercial practices is allowable.  Does market research indicate that the commercial marketplace uses the warranty contract vehicle?

Has SBA assist been sought on the limitation matter?  They have vested interest that stretches to the firms continued eligibility in the 8(a) program.  Their guidance to the firm might help.

Just thoughts, no experience, yet using FAR part 12 and SBA advice to greatest extent possible might get you there.

 

[formerfed]

On 6/7/2023 at 4:00 PM, meganmarie5009 said:

The vendor has suggested a warranty contract. I have no experience in this vehicle type however, if there would only be a warranty on the required devices it would be a different vehicle and could bypass the 50% issue with FAR 52.19-14 possibly. Does anyone have any guidance of where in the FAR to start or experience they could share?

If your 8(a) contractor can provide warranty services so that they provide over 50% of the value, you should be in good shape.   I’m not sure if I fully understand what you’re saying, but isn’t it a contract for both the devices and service including warranty?  Take Carls advice and talk with SBA.  Ask the  8(a) company for their SBA contacts and start the dialogue.  These kind of issues happen all the time in the 8(a) program.