Kickstarter and the GCPC
Started by Don Mansfield · Jun 21, 2017 · 39 replies
- DOriginal post
Don Mansfield
Jun 21, 2017 · 8y ago
Do you think using the Governmentwide Commercial Purchase Card to fund a project on Kickstarter is prohibited by law (statute or case law), Executive order or regulation? If yes, please specify what you think would prohibit it.
- j
joel hoffman
Jun 21, 2017 · 8y ago
What goods or services are being purchased for the Government? Kickstarter is apparently a fundraising mechanism.
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Don Mansfield
Jun 21, 2017 · 8y ago
Assume that the Government is funding the development of a widget. However, there's a possibility that development will fail and the Government won't receive anything.
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Guest Vern Edwards
Jun 21, 2017 · 8y ago
So the government is using Kickstarter to fund the development of something for itself?
How much money are we talking about?
Have you read Kickstarter's charter? https://www.kickstarter.com/charter?ref=about_subnav
Does the money go to Kickstarter or directly to the developer?
- j
joel hoffman
Jun 21, 2017 · 8y ago
Quote
Does the money go to Kickstarter or directly to the developer?
According to WIKIPEDIA article (emphasis added):
Quote
Kickstarter applies a 5% fee on the total amount of the funds raised.[29] Their payments processor applies an additional 3–5% fee.**_[_**30] Unlike many forums for fundraising or investment, Kickstarter claims no ownership over the projects and the work they produce. The web pages of projects launched on the site are permanently archived and accessible to the public. After funding is completed, projects and uploaded media cannot be edited or removed from the site.[31]
There is no guarantee that people who post projects on Kickstarter will deliver on their projects, use the money to implement their projects, or that the completed projects will meet backers' expectations. Kickstarter advises backers to use their own judgment on supporting a project. They also warn project leaders that they could be liable for legal damages from backers for failure to deliver on promises.[32] Projects might also fail even after a successful fundraising campaign when creators underestimate the total costs required or technical difficulties to be overcome.[33][34]
My assumptions: The government is funding the development of a product with appropriated funds, with no contract and with supplemental funding by other donors. It is effectively a voluntary donation that is being or may be supplemented by other funding sources. Kickstarter is effectively charging the government twice - taking a 5% portion of the donation and charging a 3-5% fee on the Purchase Card. There are no supplies or services being purchased.
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Don Mansfield
Jun 21, 2017 · 8y ago
Vern Edwards said:
So the government is using Kickstarter to fund the development of something for itself?
No. Someone is using Kickstarter to obtain funding for the development of a widget. The Government sees the project on Kickstarter and wants to acquire the widget, so it provides funds. If development is successful, the Government gets the widget. If it's not, they don't.
Vern Edwards said:
How much money are we talking about?
Everything is below the micro-purchase threshold.
Vern Edwards said:
Have you read Kickstarter's charter? https://www.kickstarter.com/charter?ref=about_subnav
Now I have.
Vern Edwards said:
Does the money go to Kickstarter or directly to the developer?
See joel's post.
joel hoffman said:
My assumptions: The government is funding the development of a product with appropriated funds, with no contract and with supplemental funding by other donors. It is effectively a voluntary donation that is being or may be supplemented by other funding sources. Kickstarter is effectively charging the government twice - taking a 5% portion of the donation and charging a 3-5% fee on the Purchase Card. There are no supplies or services being purchased.
Why assume that there's no contract? The Government gets the product if development is successful, doesn't get it if it's not.
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Deaner
Jun 21, 2017 · 8y ago
Crowdfunding isn’t all that new, but it didn’t really get big until recently. I’d bet there isn’t anything specific that addresses the use of government credit cards for Crowdfunding projects.
The way crowdfunding normally works is when the project meets the funding goal, all the backers will have their credit cards charged, and then the project starts. So in your scenario, the project is funded, the GCPC is charged and then work begins. Would you consider that an authorized advanced payment?
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Deaner
Jun 21, 2017 · 8y ago
It looks like Kickstarters does follow the reach funding goal then get paid model. Below is from there website.
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Funding on Kickstarter is all-or-nothing. No one will be charged for a pledge towards a project unless it reaches its funding goal. This way, creators always have the budget they scoped out before moving forward.
Quote
First, your backers' cards are charged and then after about two weeks funds will be sent to your bank account from our payments processor, Stripe. The rest is up to you.
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Don Mansfield
Jun 21, 2017 · 8y ago
joel hoffman said:
My assumptions: The government is funding the development of a product with appropriated funds, with no contract and with supplemental funding by other donors. It is effectively a voluntary donation that is being or may be supplemented by other funding sources. Kickstarter is effectively charging the government twice - taking a 5% portion of the donation and charging a 3-5% fee on the Purchase Card. There are no supplies or services being purchased.
joel,
Regarding the existence of a contract, here's what the site says:
Quote
Kickstarter provides a funding platform for creative projects. When a creator posts a project on Kickstarter, they’re inviting other people to form a contract with them. Anyone who backs a project is accepting the creator’s offer, and forming that contract.
Kickstarter is not a part of this contract — the contract is a direct legal agreement between creators and their backers. Here are the terms that govern that agreement:
When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they’ve satisfied their obligation to their backers.
Throughout the process, creators owe their backers a high standard of effort, honest communication, and a dedication to bringing the project to life. At the same time, backers must understand that when they back a project, they’re helping to create something new — not ordering something that already exists. There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised.
If a creator is unable to complete their project and fulfill rewards, they’ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:
- they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
- they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers;
- they’re able to demonstrate that they’ve used funds appropriately and made every reasonable effort to complete the project as promised;
- they’ve been honest, and have made no material misrepresentations in their communication to backers; and
- they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.
The creator is solely responsible for fulfilling the promises made in their project. If they’re unable to satisfy the terms of this agreement, they may be subject to legal action by backers.
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Jakemx56
Jun 22, 2017 · 8y ago
I could see this being a very good thing.... I cant find anything that forbids it so in my mind the FAR is silent so it gives the ability to fund the project....
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Todd Davis
Jun 22, 2017 · 8y ago
I think whether it is prohibited or not is based on the purpose. I would apply the definitions of a procurement contract versus a grant or cooperative agreement which are at 31 U.S.C. 6301 et. al. I would also apply the appropriate GAO decisions and court opinions if it became necessary. The GAO provided an interpretation of the Federal Grants and Cooperative Agreements Act in B-196872.
While it may not be applicable here, the GAO has also rendered decisions regarding the use of contracts versus agreements with "intermediaries" and when each is appropriate which are available here on Wifcon under the protest section at FAR 35.003 (e.g., B-406738.8).
Also, some agencies also have an "other transaction authority" instrument type available to them based on statute that are neither procurement contracts subject to the FAR or agreements within the definition at 31 U.S.C. 6301 et. al. One example of such an authority is 7 U.S.C. 6962a. Also see GAO decision B-412711 related to the use of other transaction authority.
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Don Mansfield
Jun 22, 2017 · 8y ago
Todd,
According to the terms and conditions (see my post above), the creator must complete the project and fulfill each reward. Assume that the Government would fund a project where the reward was the item being developed. The item would be for the direct benefit of the Government.
Wouldn't this be a procurement contract?
Note that at the time of the "pledge", there's no obligation by either party. The obligation is contingent on a future event (i.e., the creator receiving sufficient pledged funding). If this event occurs, the creator is required to perform in accordance with the terms and conditions and the GCPC is charged for the amount of the pledge.
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Guest Vern Edwards
Jun 22, 2017 · 8y ago
On 6/21/2017 at 9:06 AM, Don Mansfield said:
Why assume that there's no contract?
Okay, so I assume nothing. Where's the contract? What does it say about delivery and rights?
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Don Mansfield
Jun 22, 2017 · 8y ago
Vern Edwards said:
Okay, so I assume nothing. Where's the contract? What does it say about delivery and rights?
From the Web site:
Don Mansfield said:
Kickstarter provides a funding platform for creative projects. When a creator posts a project on Kickstarter, they’re inviting other people to form a contract with them. Anyone who backs a project is accepting the creator’s offer, and forming that contract.
Kickstarter is not a part of this contract — the contract is a direct legal agreement between creators and their backers. Here are the terms that govern that agreement:
When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they’ve satisfied their obligation to their backers.
Throughout the process, creators owe their backers a high standard of effort, honest communication, and a dedication to bringing the project to life. At the same time, backers must understand that when they back a project, they’re helping to create something new — not ordering something that already exists. There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised.
If a creator is unable to complete their project and fulfill rewards, they’ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:
- they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
- they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers;
- they’re able to demonstrate that they’ve used funds appropriately and made every reasonable effort to complete the project as promised;
- they’ve been honest, and have made no material misrepresentations in their communication to backers; and
- they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.
The creator is solely responsible for fulfilling the promises made in their project. If they’re unable to satisfy the terms of this agreement, they may be subject to legal action by backers.
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Guest Vern Edwards
Jun 22, 2017 · 8y ago
That's not a contract. That's a description of a supposed contract. According to the site: "the contract is a direct legal agreement between creators and their backers." Then we get a third party's statement of the terms of the "direct" contract.
What law governs in the event of default? State? Whose state? Does the Disputes Act apply? If not, why not?
Come on! You're a contracts guy. Anticipate questions and challenges.
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Don Mansfield
Jun 22, 2017 · 8y ago
I'm not advocating for it. I just don't see what prohibits it.
The reason I posted this in the Section 809 forum is because I was a fly on the wall at the Panel's meeting on Tuesday and this issue was discussed. The speaker, a CCO from a Federal research lab, related a story about how one of the scientists at the lab had asked if they could use the GCPC to purchase items (i.e., the creator's rewards) on Kickstarter. She assumed that this was improper use of the GCPC. When one of the panelists asked why she thought it was improper, she deferred to another panelist (who happened to be the senior procurement executive of the speaker's agency). That panelist explained that it would violate the Anti-Deficiency Act, because the Government would not be guaranteed a deliverable. Everyone else on the panel seemed to buy that explanation and the discussion that followed was how appropriation laws would need to be changed to accommodate that particular use of the GCPC.
I don't see how not being guaranteed a deliverable would violate the ADA. The government awards a lot of contracts for R&D where there is no guarantee of a deliverable. The SPE believed that because R&D contracts require a final report, they meet the requirement for having a "deliverable" and thus, there would be no ADA violation. The SPE also thought that the Government could fund a Kickstarter project under grant authority.
The argument seemed half-baked. I was disappointed how the rest of the panelists accepted it with little debate. It may be prohibited to use the GCPC on Kickstarter, but it should take more convincing than it did.
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Guest Vern Edwards
Jun 22, 2017 · 8y ago
Don Mansfield said:
That panelist explained that it would violate the Anti-Deficiency Act, because the Government would not be guaranteed a deliverable.
Huh?
That panel is in big trouble. - M
Matthew Fleharty
Jun 22, 2017 · 8y ago
Don Mansfield said:
The reason I posted this in the Section 809 forum is because I was a fly on the wall at the Panel's meeting on Tuesday
I was there with the SMC team that morning, we must have just missed each other.
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Don Mansfield
Jun 22, 2017 · 8y ago
Matthew Fleharty said:
I was there with the SMC team that morning, we must have just missed each other.
Well, now you know where I work. Let me know the next time you come down.
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Guest Vern Edwards
Jun 22, 2017 · 8y ago
I want to know who it was who gave that Anti-deficiency Act answer.
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C Culham
Jun 23, 2017 · 8y ago
Don - Prohibited by regulation. It is a form of contract financing. Reference FAR 32.003 but as stated unless agency regulation otherwise permits.
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Guest Vern Edwards
Jun 23, 2017 · 8y ago
C Culham has made a good point. Kickstarter is expressly a financing platform. Its use would be an advance payment.
If the item being purchased is a commercial item, see FAR 32.202-2, "commercial advance payment." But I don't think that will do the trick.
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Don Mansfield
Jun 23, 2017 · 8y ago
C Culham said:
Don - Prohibited by regulation. It is a form of contract financing. Reference FAR 32.003 but as stated unless agency regulation otherwise permits.
That's a good reason.
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FAR-flung 1102
Jun 24, 2017 · 8y ago
Hmm...maybe there's still a way...
In DoD depending on department or agency notable exceptions to the advance payment using GPC are training and subscriptions. Those don't seem to get the job done. Chapel GPC programs fall entirely outside of the FAR...could Kickstarter be compatible with it? Could it fit their mission? I doubt it, but I don't know. I don't like to give up on an opportunity to do the government's business; So on to appropriated fund GPC...
I say, why fret about ADA before we have thiroughly considered what we are buying? What is our requirement? And what authority exists that allows advance payment? The DoD FMR is okay with advance payment on Copyrights and Patents (DoD FMR Vol 10, Ch. 4 , paragraph 040305). Isn't that what this is? We get lifetime rights to use? Is it an ADA violation if we buy a patent and it does not work as hoped? Or is it an ADA violation if we buy a patent that we never use? How is this different? At a fundamental level is not our requirement the permanent right to an opportunity, whatever that opportunity affords us? I think commercial transactions in the government's interest should be viewed with a strong bias toward commerciality, whatever that might mean. Sometimes we just don't know how not to act like a monopsony.
Now about using the card, the Air Force GPC, for example; some of the advance payment exceptions at DoD FMR Ch 4 are already permitted in the Air Force appropriated fund GPC guide (AFI 64-117). Their general prohibition on GPC advance payments is at paragraph 4.5.1.15. So, I say Ask. There is a waiver process near the beginning of the guide,; use it. The authority to make advance payments for copyrights and patents is already stated in FMR, so if I wanted to do it, I'd send a request above my operational unit through my MAJCOM Contracting Division to SAF/AQC for approval. I'd cite the FMR authority and describe the requirement and include any required functional area approvals required (I can't think of any for this one). If approved, I would also expect to have to elevate a request via eMail to adjust the merchant category code on the card account to allow the transaction to go through at the bank; my MAJCOM GPC Level 3 should be able to do that. From cardholder to SAF/AQC, the GPC waiver request could have eyes on by as few as 4 and as many as 7 or 8 levels of government, when a final decision is made...which kind of validates the original questioner's concern....
Or if GPC is not accepted by the vendor, which is a real possibility, a micro-purchase can be done via contract, which in DoD, unless in exceptional circumstances, requires a written determination by a general or flag officer or member of the SES IAW DFARS 213.370 (b) (1). Also, kind of validates the original questioner's concern, doesn't it?
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Guest Vern Edwards
Jun 24, 2017 · 8y ago
On 6/21/2017 at 6:21 AM, Don Mansfield said:
Assume that the Government is funding the development of a widget.
Then why not just fund the widget through normal Part 13 procedures? What's up with going through Kickstarter? How does that make anything better?
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Don Mansfield
Jun 24, 2017 · 8y ago
The creator chose to use Kickstarter before the Government ever knew of the project. The Government learns of the project through Kickstarter and determines that the reward offered can directly benefit the Government.
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apsofacto
Jun 26, 2017 · 8y ago
On 6/24/2017 at 7:11 AM, Vern Edwards said:
How does that make anything better?
I think Kickstarter may even agree here, assuming the Government is the sole funder. If there are many other funders, it would be nice to spread the cost of widget development around.
If different federal agencies were funding without each others' knowledge, would that tick off the budget people? If the dollar amounts were large? I don't think you get to know who the other funders are.
I have contributed to these before and I was one of many small funders. Kickstarter was able to aggregate my contribution with many others and throw a large wad of cash at the "creators". Aggregating lots of small contributions is Kickstarter's main purpose, I think. I can also confirm the funders' credit cards get charged prior to work commencing, not after completion and delivery. The financing issue is a great one to raise.
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Don Mansfield
Jun 26, 2017 · 8y ago
apsofacto said:
I think Kickstarter may even agree here, assuming the Government is the sole funder. If there are many other funders, it would be nice to spread the cost of widget development around.
Government would not be the sole funder. It's "crowdfunded".
- j
joel hoffman
Jun 26, 2017 · 8y ago
Therefore augmenting appropriated funds to develop a product? Or sharing the development costs? Who owns the rights? Etc. Many possible questions could be asked. .
- j
jwomack
Jun 26, 2017 · 8y ago
joel hoffman said:
Therefore augmenting appropriated funds?
Not if the Government only receives benefit comparable to its cost.
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Matthew Fleharty
Jun 26, 2017 · 8y ago
Is anyone aware of any restrictions on the use of the Government Purchase Card when using Other Transaction Authority?
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FAR-flung 1102
Jun 27, 2017 · 8y ago
Mr. Fleharty,
I would be surprised if it could not be done. It would be a lot of work, that's for sure. It would involve setting up a new GPC card program (totally separate from an appropriated fund GPC program, such as is done for Non Appropriated Funds (NAF) and Chapel funds). It would need business rules and make use of one of the contracted banks. This site discussing eligibility for SmartPay programs is linked here:
https://smartpay.gsa.gov/content/about-gsa-smartpay#sa356
and this link below gives contact information for the GSA SmartPay Program Management Office:
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Guest Vern Edwards
Jun 27, 2017 · 8y ago
Matthew Fleharty said:
Is anyone aware of any restrictions on the use of the Government Purchase Card when using Other Transaction Authority?
What do you mean by "use"? Use just to make payments or use to make the transaction and to make payments?
- C
C Culham
Jun 27, 2017 · 8y ago
Square peg into a round hole?
Trying to fit Kickstarter requirements into those of the FAR would be "lot of work". Already noted is the impact of FAR part 32 if the effort is below the SAT. Thinking bigger brings into consideration FAR part 35 and even possibly FAR 31.205-18.
Cleary there is intent by the Federal government to be active in the world of R&D, some agencies are appropriated funds for this specific purpose. Kickstarter would seem to fit. I really wonder, at least at this point in time, if it is more effort than it would be worth to make the FAR requirements align with Kickstarter to accomplish the effort. Using the parameters of this this thread (micro-purchase level) and as already stated in this thread of sorts, why not just wait until Kickstarter is successful in creating something and then buy the dang thing?
Of course there is the tried and true way of not wringing hands and just use the card, spend the money and wait for a possible end widget. Easily said and easily done but for me the bigger consideration is well heck I (as the program area) did it (that is fund a R&D procurement) with a government card to Kickstarter for a micro-purchase, now I want to do if for something within the SAT as a single source or better yet do it for something over the SAT on a sole source basis. Again the square peg into the round hole comes to mind especially when considering marrying FAR with that administrative and terms and conditions of Kickstarter.
Someday it will happen but I am thinking that the "lot of work" is going to encompass the entirety of the FAR principles from market research to the end game of an awarded contract as from my chair there is more to it than simply can the government purchase card be used.
- j
joel hoffman
Jun 27, 2017 · 8y ago
So - paying 8-10% in fees to Kickstarter (5% from proceeds to the intended recipient and 3-5% on the GPC at the time of purchase) is a good idea then?
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FAR-flung 1102
Jun 28, 2017 · 8y ago
Carl, Other Transaction Authority (OTA) has recently been revised and given a new statutory basis. Using OTA is not an attempt to make a prototyping project comply with the FAR and that is what makes it interesting. An OTA GPC transaction, if it could be done, would be outside the FAR, and may have other significant features, see one explanation at https://www.linkedin.com/pulse/section-815-other-transaction-agreement-prototype-mcmartin-esq-
All,
Are we taking the right path trying to:
Either shoehorn commercial vendors into compatible agreements with the federal government, (see https://www.digitalgov.gov/resources/federal-compatible-terms-of-service-agreements/)
Or
Render unenforceable the offending portion of common agreements that nevertheless may remain included in the stated terms of Supplier Agreements (see the 15 types of terms and conditions rendered unenforceable by the three classes GSA implemented in their 31 July 2015 Class Deviation: http://www.esi.mil/download.aspx?id=5726
Or providing for this extraordinary treatment given to commercial terms purchased via GPC out of government concerns that terms involving indemnification are incompatible with the Anti Deficiency Act, see FAR 13.202:
"13.202 Unenforceability of unauthorized obligations in micro-purchases.
Many supplies or services are acquired subject to supplier license agreements. These are particularly common in information technology acquisitions, but they may apply to any supply or service. For example, computer software and services delivered through the internet (web services) are often subject to license agreements, referred to as End User License Agreements (EULA), Terms of Service (TOS), or other similar legal instruments or agreements. Many of these agreements contain indemnification clauses that are inconsistent with Federal law and unenforceable, but which could create a violation of the Anti-Deficiency Act (31 U.S.C. 1341) if agreed to by the Government. The clause at 52.232-39, Unenforceability of Unauthorized Obligations, automatically applies to any micro-purchase, including those made with the Governmentwide purchase card. This clause prevents such violations of the Anti-Deficiency Act (31 U.S.C. 1341)."
I have heard that remarkable paragraph termed a Chridtian Doctrine in reverse. It is not as broad as the other mechanisms above, in that it does not treat other types of terms such as automatic renewal or legal jurisdiction, and a host of others, but it does reveal the heavy hand of government; it is one of the new top down 70 percent solutions that will eventually replace most of the older top down 70 percent solutions. Whose job are the 30% solutions?
How many purchased don't happen for these reasons? For the most part we don't track what we don't buy and why we don't buy it. And what will be the trend? In a marketplace where bricks and mortar increasingly become a burden, might the government learn a lighter touch? ...we might then ask ourselves as a government: "Who will be around to do business with us the old fashioned way, if we don't learn a new way?
I have hope that eventually the digital natives will sort this out...
- C
C Culham
Jun 28, 2017 · 8y ago
FAR-flung 1102 said:
if it could be done
FAR - Thank you for the references. Interesting read inclusive of "Other Transactions” (OT) Guide for Prototype Projects, (OASD AT&L, August 2002)" which is stated to be the most current guidance regarding OTs. A complex mix of an "agreement" that is not considered a grant or cooperative agreement and an acquisition that is not a "procurement" subject to the FAR. In a quick read of both the linkedin discussion and the Guide your above quote especially rings true.
Noting a question in this thread by Matthew Fleharty it would appear that a Government purchase card could be used but by my read there would be the need for a supporting "agreement". I am of the conclusion that for the example used ins this thread, an expenditure of $3,500 or less, that the effort to comply with the whole of the OT Guide would be very exhausting.
Also I would add that if OT would fit most if not all of us would have trouble releasing ourselves from the FAR principles which again would not apply. Heck the Guide even provides mention of some that are terms at least borrowed from the FAR such as market research, competition, advance payments, etc. and I might add FAR you even go back and forth in trying to figure where something like Kickstarter really lands. More shoehorning?
Learning and adapting the new ways is a must but trying to separate from the old ways when doing seems to be hang-up!
PS - To Joel -
joel hoffman said:
So - paying 8-10% in fees to Kickstarter (5% from proceeds to the intended recipient and 3-5% on the GPC at the time of purchase) is a good idea then?
Like any transaction to which the Federal government enters into with a commercial source, yeah maybe but it depends on the situation. Dodge of your question I do not think so as sometimes something makes economic and administrative sense and sometimes it does not.
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Guest Vern Edwards
Jun 28, 2017 · 8y ago
Dang, FAR-flung 1102, thanks for that post. I don't pay much attention to micro-purchases and had not noticed FAR 13.202. Very interesting. How do you enforce a clause that was not included in a transaction? I guess 13.202 is notice to the world. Read your FAR, vendors!
For general information, FAR 13.202 and 52.232-39 were added by interim rule on June 21, 2013, FAC 2005-67, 78 FR 37686. According to the FAC, the rule was added in response to a Department of Justice memo, "The Anti-Deficiency Act Implications of Consent by Government Employees to Online Terms of Service Agreements Containing Open-Ended Indemnification Clauses," dated May 12, 2012, https://www.justice.gov/file/20596/download. That memo prompted a memo from OMB (almost a year later), "Antideficiency Act Implications of rtain Online Terms of Service Agreements," dated April 4, 2013, https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2013/m-13-10.pdf.
The interim rule was finalized on December 31, 2013, FAC 2005-72, 78 FR 80382. The public comments and FAR council responses are interesting. This exchange is my favorite:
Quote
Comment: The respondent expressed concern that this rule could lead commercial companies to forego doing business with the Government. Not all contractors may be able to accept the risk re-allocation effected by the interim rule, according to the respondent.
Response: The interim rule became effective on June 21, 2013. The objective of the rule is to clarify that the inclusion of an open-ended indemnification clause in a EULA, TOS, or other agreement, is not binding on the Government unless expressly authorized by statute and specifically authorized under applicable agency regulations and procedures, and shall be deemed to be stricken from the EULA, TOS, or similar legal instrument or agreement. Since the interim rule was published, the Councils have received no indications that the scenario envisioned by the respondent has come to pass. No change is made in the final rule.
So in the slightly more than six months since publication of the interim rule the FAR councils noticed no change in conduct on the part of commercial firms. I wonder how many of them even knew, much less managed to change the terms of their online licenses.
And then there's this one:
Quote
Comment: The respondent suggested two alternatives. The first was for the Department of Justice to definitively indicate that agency disclosures are not required for (and contracting officers will not be prosecuted for) ADA violations stemming solely from open-ended indemnifications contained in commercial EULAs and TOSs so long as, once discovered, the Government negotiates with the licensor directly to limit the attendant open-ended risk. The other alternative was for the Government to retain the clause from the interim rule with a cap on licensors' liability at the amount of appropriated funds directed to the particular purchase.
Response: This type of additional guidance would not be included in the FAR. Development of this additional guidance is outside the purview of the Councils. No change is made in the final rule.

The only way for the Government to go commercial is to go commercial. Throw out the acquisition laws and the FAR when buying commercial items and buy stuff just like everybody else.
Never happen. Government is government.
- F
FAR-flung 1102
Jun 29, 2017 · 8y ago
Vern:,
You're welcome and you're probably correct about the future of government...though that doesn't stop me from trying to work toward something a little better than what we have now.
- K
KeithB18
Jul 11, 2017 · 8y ago
I would recommend against getting involved with Kickstarter unless you know the person asking for funds personally. A few years ago I was burned for a not insignificant amount when the person that posted the kickstarter failed to deliver anything, even though the project received full funding. It's been a growing problem with kickstarter.
If the project does receive the required funding, it will be eventually be available for purchase (typically at a much higher price). That's the time when I'd consider purchasing it on behalf of the government.