8(a) Sole Source POM/PNM and POP Commencement

1.  Sounds like construction to me.  See the definition of construction in FAR 2.101.

2.  Doesn't sound like a commercial service to me.  It seems the price was not based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions.  See the definition of commercial service in FAR 2.101.

3.  FAR Subpart 15.4 can easily reach to cover procurements under FAR Subpart 13.5.  The level of documentation should be appropriate to the circumstances.

4.  A contract's effective date certainly can differ from the contract's period of performance start date.

@CaptJaxReplacing doors on a building is construction, not services. I can't understand why you thought differently, and I can't understand why anyone would agree with you.

As to your first issue, what do you mean by "formal" negotiation? What's that? Have you read FAR 15.000, 15.002(a), 15.400, and 15.402?

As to your second issue, I don't understand what your KO was saying or their reasoning.

@CaptJax  Well I will pile on.....noting especially that everything depends on more specifics, so my comments are generalities!

It is probably construction but could handled as a commercial item rather than under FAR part 36.   You might enjoy this read - 

Pricing?  It looks like you have read the FAR on 8(a) so go back and re-read FAR 19.806.  And also look at FAR 19.807 I hope you are looking at Fair Market Price! 

POP...your KO is confused.

There is much more confusion with regard to FAR guiding principles versus what is happening in reality for you so I will just stop here.

One or two doors, perhaps. But not an entire PROJECT, at a remote site, requiring mobilization and per diem, costing over $500k. Especially if it includes removal, purchasing the doors,frames and hardware, removal and replacing the frames, trim and hardware. How is that a service, let alone a commercial service??  It’s construction. Is the 8(a) firm a construction contractor? Are there multiple trades involved? Surely more than $2500 of labor is involved. 

And I also agree with Vern and ji on the rest.

P.S. This is DOD, which had a policy that construction projects are seldom commercial services. I don’t know if the policy letter was rescinded.

I am just curious, why do you think FAR section 2.101 defines Commercially available off-the-shelf (COTS) item by parenthetically including "construction material"?

           (1) Means any item of supply (including construction material) that is–

                (i) A commercial product (as defined in paragraph (1)† of the definition of “commercial product” in this section);

                (ii) Sold in substantial quantities in the commercial marketplace; and

                (iii) Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace....

†Commercial product means—

           (1) A product, other than real property, that is of a type customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes, and–

                (i) Has been sold, leased, or licensed to the general public; or

                (ii) Has been offered for sale, lease, or license to the general public....

A brick is a construction material and is an item of supply.  A contracting officer can use a commercial item contract to purchase a brick.

A brick building is a matter of construction of real property.  A contracting officer cannot use a commercial item contract to build a brick building.

ji20874 said:

A brick is a construction material and is an item of supply.  A contracting officer can use a commercial item contract to purchase a brick.

A brick building is a matter of construction of real property.  A contracting officer cannot use a commercial item contract to build a brick building.

@ji20874 That makes sense.  So then, for instance, the Government could buy a few cubes of brick for their faculties personnel, who are federal employees, to build or repair a structure.

Guardian said:

@ji20874 That makes sense.  So then, for instance, the Government could buy a few cubes of brick so that their faculties personnel, who are federal employees, could use them to build or repair a structure.

Or buy thousands of common bricks as a commercial product… for either in-house use or as government furnished materials for construction contractor installation.

joel hoffman said:

Or buy thousands of common bricks as a commercial product… for either in-house use or as government furnished materials for construction contractor installation.

@joel hoffman Understood.  I got through school in part by working with brick masons, or as the Aussies might call them, "brickies."  They referred to a pallet of brick as a "cube," which contains around 500 bricks.  Cubes were typically made up of five individual straps.  But I understand your point; the FAR contemplates no limit to how many "bricks" the Government might purchase as a commericial item supply.

Guardian said:

@joel hoffman Understood.  I got through school in part by working with brick masons, or as the Aussies might call them, "brickies."  They referred to a pallet of brick as a "cube," which contains around 500 bricks.  Cubes were typically made up of five individual straps.  But I understand your point; the FAR contemplates no limit to how many "bricks" the Government might purchase as a commericial item supply.

Thanks for that explanation, Guardian. I learn something every day here.  🤠

joel hoffman said:

It’s construction.

Age old argument that has many that do not agree.   Case in point https://www.dsp.dla.mil/Policy-Guidance/FAQs/Commercial-and-Nondevelopmental-Items/ .

Q: What is a commercial item? 

• Standalone services offered and sold competitively, in substantial quantities, in the commercial marketplace based on established catalog or market prices for specific tasks performed and under standard commercial terms and conditions. Construction, research and development (R&D), warehousing, garbage collection, and transportation of household goods are examples.

In the specific case of this thread this stands out - OCONUS and 8(a). 

OCONUS   - Davis Bacon does not generally apply outside the 50 United States.   https://www.dol.gov/whd/programs/dbra/whatdbra.htm#:~:text=For example%2C Davis-Bacon prevailing,performed outside the 50 States

8(a) - 13 CFR 124 in like 18 places but consider this -

In order to be awarded a sole source or competitive 8(a) construction contract, a Participant must have a bona fide place of business within the applicable geographic location determined by SBA. This will generally be the geographic area serviced by the SBA district office, a Metropolitan Statistical Area (MSA), a contiguous county (whether in the same or different state), or the geographical area serviced by a contiguous SBA district office to where the work will be performed. SBA may determine that a Participant with a bona fide place of business anywhere within the state (if the state is serviced by more than one SBA district office), one or more other SBA district offices (in the same or another state), or another nearby area is eligible for the award of an 8(a) construction contract.

Now I am going to say it again but with my own personal emphasis  it might be construction but it could a commercial item!   It depends!

"It depends" is almost always right. 🙂

That said, I did not discern any hints in the original posting that the contract pricing was "based on established catalog or market prices for specific tasks performed and under standard commercial terms and conditions" -- in fact, to me it strongly suggested otherwise, given the cost analysis the original poster wanted to do.  For that reason, and knowing only what little the original poster said, it still sounds like construction to me.  Maybe there is more to the story?

C Culham said:

Age old argument that has many that do not agree.   Case in point https://www.dsp.dla.mil/Policy-Guidance/FAQs/Commercial-and-Nondevelopmental-Items/ .

Q: What is a commercial item? 

• Standalone services offered and sold competitively, in substantial quantities, in the commercial marketplace based on established catalog or market prices for specific tasks performed and under standard commercial terms and conditions. Construction, research and development (R&D), warehousing, garbage collection, and transportation of household goods are examples.

In the specific case of this thread this stands out - OCONUS and 8(a). 

OCONUS   - Davis Bacon does not generally apply outside the 50 United States.   https://www.dol.gov/whd/programs/dbra/whatdbra.htm#:~:text=For example%2C Davis-Bacon prevailing,performed outside the 50 States

8(a) - 13 CFR 124 in like 18 places but consider this -

In order to be awarded a sole source or competitive 8(a) construction contract, a Participant must have a bona fide place of business within the applicable geographic location determined by SBA. This will generally be the geographic area serviced by the SBA district office, a Metropolitan Statistical Area (MSA), a contiguous county (whether in the same or different state), or the geographical area serviced by a contiguous SBA district office to where the work will be performed. SBA may determine that a Participant with a bona fide place of business anywhere within the state (if the state is serviced by more than one SBA district office), one or more other SBA district offices (in the same or another state), or another nearby area is eligible for the award of an 8(a) construction contract.

Now I am going to say it again but with my own personal emphasis  it might be construction but it could a commercial item!   It depends!

So buying hundreds of thousands of dollars of new exterior doors and hardware (and probably frames and trim) to make repairs to a DoD building or buildings can be a “commercial service”?

On 9/13/2022 at 11:37 AM, CaptJax said:

After a huge debate with legal as to if this was a service or construction, my argument won that it was indeed a service.

FAR definition of construction: “Construction means construction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property. “

See this:

https://www.builderspace.com/is-construction-a-service-industry

and this: https://www.lawinsider.com/dictionary/construction-services

and this: https://blog.ifs.com/2017/05/construction-is-becoming-a-service-industry-to-be-a-winner-in-the-future-do-we-need-to-adapt/

and many others.

People, you'll never reach general agreement on the issue of whether construction is a "commercial service" as defined by FAR.

On 9/15/2022 at 9:37 AM, ji20874 said:

"It depends" is almost always right. 🙂

That said, I did not discern any hints in the original posting that the contract pricing was "based on established catalog or market prices for specific tasks performed and under standard commercial terms and conditions" -- in fact, to me it strongly suggested otherwise, given the cost analysis the original poster wanted to do.  For that reason, and knowing only what little the original poster said, it still sounds like construction to me.  Maybe there is more to the story?

I agree.
Even if there were established catalog or market prices for the labor to “replace a door”, I don’t think that they would be representative of the scale and scope of work for the project as described so far, and at a remote DoD, OCONUS location.

We just had two sets of French doors replaced to our rear covered porch plus a green house window in the kitchen replaced with a sash type . The door company couldn’t quote an estimated price for removal or replacement without making a site visit. They had to determine the existing conditions, access restrictions, what would be necessary for new molding inside and out, with disclaimers for any damage to the interior walls, framing, exterior siding,  etc. They went back to the office and worked up the proposed labor hours and costs/price per set of doors. It was about two thousand dollars for the installation portion. The storm rated (residential) doors, hinges and frames, with impact glass were almost twice that. I bought and installed the hardware separately.

[If the exterior doors for the DoD will be for non-residential buildings, they will likely have to be fire rated and will be larger sizes than residential doors sold in the store at Lowes, etc. Hardware will be commercial grade. I’ve done some of these projects for DoD and for our church, which is a commercial building. It’s a whole different ball-game than residential construction.]

C Culham said:

OCONUS   - Davis Bacon does not generally apply outside the 50 United States.

Generally true.  There are exceptions but none that I am aware of for DoD O&M funded construction. However, both the states of Alaska and Hawaii are considered OCONUS. Of course, the OP didn’t elaborate.

Vern Edwards said:

People, you'll never reach general agreement on the issue of whether construction is a "commercial service" as defined by FAR.

I agree.  Yet, I still have to respond to what I believe to be questionable premise.

ji20874 said:

"It depends" is almost always right. 🙂

That said, I did not discern any hints in the original posting that the contract pricing was "based on established catalog or market prices for specific tasks performed and under standard commercial terms and conditions" -- in fact, to me it strongly suggested otherwise, given the cost analysis the original poster wanted to do.  For that reason, and knowing only what little the original poster said, it still sounds like construction to me.  Maybe there is more to the story?

So is not RSMeans a basis of market prices and can not standard commercial terms and conditions for construction contracts be found through market research?   

As to what the original poster is doing I would offer that whole scenario is a hot mess.

C Culham said:

I agree.  Yet, I still have to respond to what I believe to be questionable premise.

So is not RSMeans a basis of market prices and can not standard commercial terms and conditions for construction contracts be found through market research?   

As to what the original poster is doing I would offer that whole scenario is a hot mess.

1. RS Means is an estimating guide,  often based upon averages of data provided by contractors and/or other sources.

It is also based upon certain assumed variables, such as labor crew trade composition and certain assumed equipment usage. That should be adjusted for different means and methods, equipment types and resource restrictions, etc. , whether the work is self performed or subcontracted.

It must be adjusted for actual labor rates, material costs, job conditions, whether rental or owned equipment is used and their costs.

Mobilization, demob, general conditions, specific design and site or project conditions, union or non-union trade restrictions, overhead and G&A as applicable to the job.

Etc., Etc. Etc.

Do you ever wonder why all bids and proposals aren’t for the same price? 

The Air Force SABRE and Army JOC contracts that use Standard Price Books based upon RS Means and similar price books with a proposed general “factor” have traditionally been criticized by those contractors. They are too general and often not aligned  with actual means and methods, sub/vs. self-performed work, cost  price escalation/variations, etc. The contractors often try to show that there weren’t applicable activities in the price book, so would build activity costs in lieu of those in the price book.

For reasons, such as discussed above, that’s why - for other than small, simple   activities - for developing the pre-negotiation objectives, we used both cost and price analysis evaluation methods, including a technical analysis of means and methods, site conditions, available equipment and labor conditions, productivity, schedule, concurrent activities in the same spaces, and other considerations. 

2. “Standard commercial terms and conditions” for construction contracts vary widely based upon the source organization and interests.

And they aren’t written for contracting with the federal government with its established risk allocations between parties, delays, impacts,  social engineering requirements, legally defined differing site conditions,  safety requirements, installation requirements, etc., etc., etc.

I’ve seen few construction projects that didn’t require any changes in the drawings or specs or encountered conditions, and/or user desires. The commercial item provisions for making changes or various other mods require mutual agreement in order to effect the change. That isn’t really workable for other than very simple, small changes.

When Congress enacted FASA back in 1994, they did not address construction contracts, only contracts for supplies (goods) and services.

A $500,000 project to replace doors at a military installation is construction as addressed in FAR Part 36, NOT a service as addressed in FAR Part 37, and is not a commercial service as addressed in FAR Part 12, and it's dumb to suggest that it is. If you have to be told why, then you are just clueless.

The Office of Federal Procurement Policy waffled on this about 15 years ago and caused a lot of confusion. Some agencies undoubtedly conduct construction acquisitions under FAR Part 12, but it is improper. They get away with it because nobody complains.

Some work that fits the description of construction could be acquired as a commercial service, such as routine plumbing or electrical repairs. But not a $500,000 door replacement project.

Get real.

joel hoffman said:

I’ve seen few construction projects that didn’t require any changes in the drawings or specs or encountered conditions, and/or user desires. The commercial item provisions for making changes or various other mods require mutual agreement in order to effect the change. That isn’t really workable for other than very simple, small changes.

Ah but the commercial item provision on changes can be tailored.

Vern Edwards said:

Get real.

It would seem that the OP has proven reality.   The contract as noted by the OP is a commercial item  whether viewed by some as improper or not.

What has not been stated throughout this whole thread is for what reason or purpose the contract could not be a commercial item contract.  Not one reason why the contract as  a commercial item contract is a strategy that would not be in  the best interests of the Government and is addressed in the FAR,  law (statute or case law), Executive order or other regulation, that the strategy, is not a permissible exercise of authority.

C Culham said:

What has not been stated throughout this whole thread is for what reason or purpose the contract could not be a commercial item contract.  Not one reason why the contract as  a commercial item contract is a strategy that would not be in  the best interests of the Government and is addressed in the FAR,  law (statute or case law), Executive order or other regulation, that the strategy, is not a permissible exercise of authority.

Obviously, you don’t understand what you have or haven’t been reading. And the contract is for a “service” (commercial service). The described project isn’t a service, let alone “commercial service”.

Carl, you could argue with a lamp post, so I’ll bow out. Since you apparently think that using the R.S. Means numbers at face value represents established catalog prices or a basis of market prices, there’s no further need to debate.

Just now, joel hoffman said:

Obviously, you don’t understand what you have or haven’t been reading

I do understand.

Just now, joel hoffman said:

Since you apparently think that using the R.S. Means numbers

RS Means has as it basis market prices.

I will leave you with this as you bow out - 10 USC 3453

C Culham said:

What has not been stated throughout this whole thread is for what reason or purpose the contract could not be a commercial item contract.  Not one reason why the contract as  a commercial item contract is a strategy that would not be in  the best interests of the Government and is addressed in the FAR,  law (statute or case law), Executive order or other regulation, that the strategy, is not a permissible exercise of authority.

Emphasis added. Note that the phase "commercial item" is no longer in official use. We're talking about commercial product or commercial service.

@C CulhamOkay, I'll take a shot, even though I know that once you have made up your mind and committed yourself to a position, as you have in this case, you will never change it. I am really writing this for others. 

The reason the acquisition cannot be for a commercial service contract is because the work, as described by the OP, fits the FAR definition of construction. Here is the definition of construction from FAR 2.101, which applies throughout the FAR (see FAR 1.108(a) and FAR 2.000):

Quote

Construction means construction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property. For purposes of this definition, the terms "buildings, structures, or other real property" include, but are not limited to, improvements of all types, such as bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, cemeteries, pumping stations, railways, airport facilities, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, canals, and channels. Construction does not include the manufacture, production, furnishing, construction, alteration, repair, processing, or assembling of vessels, aircraft, or other kinds of personal property (except that for use in subpart 22.5, see the definition at 22.502).

A $500,000 project to replace weathered doors at a military installation (remove old doors and install new ones) would clearly require alteration and/or repair of real property. So it meets the FAR definition of construction. 

Is construction a commercial service? See the definition in FAR 2.101.

FAR Part 12 does not mention construction as a commercial service. FAR Part 36 says nothing about construction being a commercial service.

FAR does not define service, but it does define service contract at FAR 37.101, and that definition includes "Maintenance, overhaul, repair, servicing, rehabilitation, salvage, modernization, or modification of supplies, systems, or equipment," [emphasis added] but not of real property.

Is the agency buying commercial doors, and is the project the installation of a commercial product and thus a commercial service? I don't know. The OP did not describe the doors in detail. I don't know if the project involves doors of a single type and description or various kinds of doors. I don't know if they are special-order of commercial off-the-shelf. Given that the doors are for a military installation, I presume that they are heavy-duty doors, not the kind that go into ordinary houses. I don't know if the contractor will have to alter any door frames in order to install the new doors. I don't know what kinds of equipment the contractor will require.

However, FAR 2.101 defines a commercial product in part as follows:

Quote

(1) A product, other than real property, that is of a type customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes, and–

                (i) Has been sold, leased, or licensed to the general public; or

                (ii) Has been offered for sale, lease, or license to the general public...

I wonder if the doors in question are customarily used by the general public.

How much tailoring of FAR 52.212-4 would be necessary in order to protect the government's interests. At what point would the CO have to do so much tailoring in order to protect the government's interests that the advantages of using FAR Part 12 would be lost?

Would the CO need to add coverage for bonds and liquidated damages, or should the CO forego such protections? What kinds of laborers would be needed? Would the Service Contract Act or the Davis-Bacon Act apply? What would your friends at the Department of Labor say? FAR 52.212-5 makes provision for including the SCA in contracts for commercial services, but not Davis-Bacon. What does that tell you? Would SCA wage determinations be appropriate for a $500,000 construction job. See Voith Hydro, Inc., B-401771, November 13, 2009, in which the protester complained that an acquisition being conducted under FAR Part 15 as construction should have been acquired under FAR Part 12:

Quote

The record reflects that the agency also contacted a representative of the U.S. Department Labor (DOL) to obtain DOL's views as to whether the provisions of the Service Contract Act, 41 U.S.C. sections 351–358 (2006), which generally covers services or maintenance work, or the Davis Bacon Act, 40 U.S.C. sections 276a–276a–7 (2006), which generally covers construction work, including alteration and repair work, were applicable to the solicitation. AR (B–401244.2) at 9; see Dismantlement and Envtl. Mgmt. Co., B–257632, Oct. 24, 1994, 94–2 CPD para. 151 at 3 n.3. The DOL representative found that RFP –0017 “did contain construction work and that the laborers involved would be covered under the Davis–Bacon Act, not the Service Contract Act.” AR (B–401244.2) at 9. The agency points out that it estimates that “in excess of [DELETED] labor hours” of “onsite” work will be required to complete the work required under RFP –0017, and that although certain service work will be required, “these services were not the majority of the work and were not severable from the work because the contractor that designs the systems must provide training on that system.” Id.

The agency also points out that the FAR sect. 2.101 defines “construction” in relevant part as “[c]onstruction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property,” and that “[f]or purposes of this definition, the terms ‘buildings, structures, or other real property’ include, but are not limited to, improvements of all types, such as ... dams [and] plants.” FAR sect. 2.101. The agency argues that in its view the dam, its power plant, and equipment installed therein, such as the generators and excitation system, fall within this definition of real property, and that such a view is consistent with the “Department of the Interior Real Property Financial Management Policy Guide,” which provides that “[r]eal property is defined as any interest in land, together with improvements, structures and fixtures, appurtenances, and improvements of any kind located thereon,” and specifically includes electrical utility systems and hydroelectric power generation within this definition. AR (B–401244.2) at 5; Tab G, Department of the Interior Real Property Financial Management Policy Guide, at 5.

FASA and FAR Part 12 were not written with construction in mind. Construction is defined in FAR and does not constitute a commercial service. Using Part 12 to buy construction would create more issues and problems than it would solve, except for very minor jobs, such as I mentioned in my last post.

I could go on, but I think I have made my point. Readers can take it or leave it. But, Carl, we all know that you will stand fast and to the death. So I'm not really writing for you.

In any case, after more than 28 years the policy makers have not seen fit to clear things up, and agencies will do as they like.

Vern Edwards said:

In any case, after more than 20 years the policy makers have not seen fit to clear things up, and agencies will do as they like.

I'm watching to see what will become of the Open DFARS Case 2019-D034, Preference for Commercial Construction Services, which has not had a status update since April 2021.

FAR-flung 1102 said:

I'm watching to see what will become of the Open DFARS Case 2019-D034, Preference for Commercial Construction Services, which has not had a status update since April 2021.

It was part of the FY2017 NDAA.

FY 2017!!!

It's clearly not a priority. They're probably having trouble defining "commercial construction service."

Vern Edwards said:

The reason the acquisition cannot be for a commercial service contract is because…

As a rule of thumb, I have in the past relied on the following reasoning.

Working on real property?  Then it’s construction, and it cannot be commercial because Wage Rate Requirements (Construction) - formerly known as the Davis-Bacon Act - applies at a $2,000 threshold.  The Act required terms and conditions that are noncommercial: most notably, the buyer must attach Wage Determinations to the contract and then enforce them.  The three definitions of commercial service in FAR are rendered inapplicable by these terms and conditions and non-catalog/market pricing.

Anyone not part of a union who has ever worked for a commercial construction company knows the term “prevailing wage job”, since it pays more than the commercial customers usually.

C Culham said:

RS Means has as it basis market prices.

I will leave you with this as you bow out - 10 USC 3453

Those aren’t market prices. The unit price line items require considerable adjustments and much more information is needed besides any applicable line items to establish a proposal price. 

The most usable part of an R.S. Means line item unit price is the productivity. And that’s only directly applicable if it matches crew composition and assumed equipment.

P.S. 10 USC 3453 concerns market research for commercial products and services. This isn’t a commercial service.

I have no doubt that the materials and supplies for door and hardware replacement are commercial products. The labor and equipment aren’t commercial services. It’s a construction project by definition, as Vern said.

On 9/17/2022 at 8:07 AM, Vern Edwards said:

Note that the phase "commercial item" is no longer in official use.

Agreed but why does that impact the discussion?

On 9/17/2022 at 8:07 AM, Vern Edwards said:

Okay, I'll take a shot,

On 9/17/2022 at 8:07 AM, Vern Edwards said:

fits the FAR definition of construction

Miss!  True but where in the FAR does it say you cannot use FAR Part 12 to procure construction.

On 9/17/2022 at 8:07 AM, Vern Edwards said:

Is construction a commercial service?

Emphasis added and by the way one source - RS Means.

"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; or

On 9/17/2022 at 8:07 AM, Vern Edwards said:

How much tailoring of FAR 52.212-4 would be necessary in order to protect the government's interests. At what point would the CO have to do so much tailoring in order to protect the government's interests that the advantages of using FAR Part 12 would be lost?

All of it could be except that which is statutorily required.   Here I would say that a full view of Forum discussions on use of FAR Part 12 there are several examples where folks have said that they would wholesale change 52.212-4.   My read of the FAR at part 12 is that there is clear intent to do so if market research provides that 52.212-4 should be change to meet commercial practices.

On 9/17/2022 at 8:07 AM, Vern Edwards said:

Would the CO need to add coverage for bonds and liquidated damages, or should the CO forego such protections? What kinds of laborers would be needed? Would the Service Contract Act or the Davis-Bacon Act apply?

Red herring.   Commercial practice, here I will reference the AIA General Conditions for Contract for Construction, provides a clear example regarding bonds and insurance.  With regard to both Davis Bacon and Service Contract that they are "prevailing" wage requirements.   Nothing I have found prevents the use of Davis Bacon in a FAR part 12 contract.   It applies when USDOL rules says it does but it is not indicative of having a contract defined as construction as you attempt to do.  In fact I would suggest that a service contract by definition could in fact have Davis Bacon requirements in the contract as well.  Reference FAR 36.1010(c). 

On 9/17/2022 at 8:07 AM, Vern Edwards said:

But, Carl, we all know that you will stand fast and to the death

As will you.

On 9/17/2022 at 8:07 AM, Vern Edwards said:

and agencies will do as they like.

Exactly and in the end I have found none that were taken to task (protest) for doing so.  Have you?

On 9/17/2022 at 8:53 AM, Vern Edwards said:

It was part of the FY2017 NDAA.

And reemphasized 2019 by my read.

On 9/17/2022 at 10:27 AM, Voyager said:

Anyone not part of a union who has ever worked for a commercial construction company knows the term “prevailing wage job”, since it pays more than the commercial customers usually.

What?  Are you saying that union rates only apply to Federal government contracts?    Union rates are part of  everyday ordinary trade.

On 9/17/2022 at 12:12 PM, joel hoffman said:

P.S. 10 USC 3453

"Pub. L. 114–328, div. A, title VIII, §876, Dec. 23, 2016, 130 Stat. 2311 , as amended by Pub. L. 116–92, div. A, title IX, §902(59), Dec. 20, 2019, 133 Stat. 1550 , provided that: "Not later than 90 days after the date of the enactment of this Act [Dec. 23, 2016], the Secretary of Defense shall revise the guidance issued pursuant to section 855 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92; 10 U.S.C. 2377 note) to provide that-

"(1) the head of an agency may not enter into a contract in excess of $10,000,000 for facilities-related services, knowledge-based services (except engineering services), construction services, medical services, or transportation services that are not commercial services unless the service acquisition executive of the military department concerned, the head of the Defense Agency concerned, the commander of the combatant command concerned, or the Under Secretary of Defense for Acquisition and Sustainment (as applicable) determines in writing that no commercial services are suitable to meet the agency's needs as provided in section 2377(c)(2) of title 10, United States Code [now 10 U.S.C. 3453(c)(2)]; and

"(2) the head of an agency may not enter into a contract in an amount above the simplified acquisition threshold and below $10,000,000 for facilities-related services, knowledge-based services (except engineering services), construction services, medical services, or transportation services that are not commercial services unless the contracting officer determines in writing that no commercial services are suitable to meet the agency's needs as provided in section 2377(c)(2) of such title [now 10 U.S.C. 3453(c)(2)]."

Have a great week everyone!

On 9/15/2022 at 10:45 AM, joel hoffman said:

So buying hundreds of thousands of dollars of new exterior doors and hardware (and probably frames and trim) to make repairs to a DoD building or buildings can be a “commercial service”?

Yes. It's only doors not frames and trim.  The doors go on modular office building listed as equipment rather than real property.  Replacing doors that have become deemed unserviceable due to age and weather is an act of sustainment.  Army DA Pam 420-11 that provides work classifications between maintenance, repair and construction. Similarly Navy reg OPNAVINST 11010.20H, chapter 4(1)(c), dated 16 May 2014, provides that “sustainment” or “ST” is defined as, “the maintenance and repair activities necessary to keep a typical inventory of facilities in good working order.  ST includes regularly scheduled maintenance as well as cyclical repairs or replacement of components that occur periodically over the expected service life of the facilities (e.g., roof or HVAC replacement).”  The DA PAM 420-11 is attached with highlighted passages showing this is a service.  Door replacements are done by private households, local, state, and private business as well as federal government...its commercial service action performed by door installers.

DA PAM 420-11.pdf

CaptJax said:

Yes. It's only doors not frames and trim.  The doors go on modular office building listed as equipment rather than real property.  Replacing doors that have become deemed unserviceable due to age and weather is an act of sustainment.  Army DA Pam 420-11 that provides work classifications between maintenance, repair and construction. Similarly Navy reg OPNAVINST 11010.20H, chapter 4(1)(c), dated 16 May 2014, provides that “sustainment” or “ST” is defined as, “the maintenance and repair activities necessary to keep a typical inventory of facilities in good working order.  ST includes regularly scheduled maintenance as well as cyclical repairs or replacement of components that occur periodically over the expected service life of the facilities (e.g., roof or HVAC replacement).”  The DA PAM 420-11 is attached with highlighted passages showing this is a service.  Door replacements are done by private households, local, state, and private business as well as federal government...its commercial service action performed by door installers.

DA PAM 420-11.pdf 471.94 kB · 0 downloads

Thanks for the clarification, CaptJax! I concur.

The project is OCONUS. SCA or Davis Bacon Act does not apply.  There are no wage determinations issued by DOL because it is out of the agencies jurisdiction and not all US labor laws don't apply.

If the Government bought a cage whose purpose was to keep people inside based on the stated purpose I would reason that the cage is not a commercial items because only certain authorized agencies within the Government has the authority to lock people up.  If the Government bought doors that required a specification to some intel standard of sound attenuation and signal shielding and I would also reason that a door requiring those specs are not commercial off the shelf items either. Both of these scenarios arose and caused fierce debate. The cage and doors are mass produced and the stated purpose didn't matter according to the proponents of commerciality. They argued you can buy cages and doors from Grainger and other commercial vendors. My view is that those cages are not intended to incarcerate or deprive someone of their freedom (lawfully), but are to keep mail and inventory safe...in away I see that in that it keeps people out rather than in.  Doors: if the doors must meet some governmental guidance or reg that is definitely not an off the shelf.  These doors that are at the center of this post did have such as spec, but was found to be a copy and paste mistake from a previous request and not necessary to this purchase.  The doors are off the shelf exterior doors.  There is customization to install the door hardware such as egress and panic bar and door closure hardware.

C Culham said:

Miss!  True but where in the FAR does it say you cannot use FAR Part 12 to procure construction.

😂 Just call me Lamp-post.

CaptJax said:

It's only doors not frames and trim.  The doors go on modular office building listed as equipment rather than real property.

CaptJax said:

The doors are off the shelf exterior doors.

You might have introduced this information earlier in the conversation.

A problem clearly stated is a problem half solved.

CaptJax - there is nothing in the definition of a commercial product that requires it to be used for the same purpose as it is used commercially. The definition focusses on the product, not the intended use. Even if they have to meet some government requirement, they might still qualify under the 'modified' or 'of a type' parts of the definition.

ji20874 said:

You might have introduced this information earlier in the conversation.

A problem clearly stated is a problem half solved.

This made ME think!

@CaptJaxHere are your questions yet everyone piled on the construction- commercial item subject including me.   Yep finding the questions buried in the scenario might have caused the confusion but the problem it seems in the form of some questions were very possibly clearly stated.  Let me back track and offer the following.

Q.   Is it dangerous to use terms of clarification, discussions, POM/PNM, negotiation from FAR 15 applied to an 8(a) sole source for commercial services?  

A.  Yes I believe so in an 8(a) sole source.   Too much formality.  FAR subpart 19.8 only calls in the entirety of FAR Part 15 when doing a competitive 8(a).  May sound too simple but stick to FAR 19.8.   I am not saying the POM/PNM is not required as your agency policy may dictate and it just makes common sense to me as well.   Clarification and discussions  do not fit in my view.   You are just sitting down with the sole source and negotiating. 

Q. The term "negotiation" in the world of the FAR is it wholly owned by FAR 15?   

A.  In the case of the OP procurement see 19.808.     

Q.  I had a contract where the service could only be done during whale season, which is somewhat of a moving target; how could this POP commencement rule be so stringent?   

A.  I think FAR subpart 11.403 might help you answer the question yourself.

A key point is that the work is being performed on personal property, not real property. Ok, so commercial service or commercial product with installation. Since you are negotiating the price of a sole source contract, it would seem to me that part 15.4 negotiation procedures would be appropriate: 

“15.400 Scope of subpart.

This subpart prescribes the cost and price negotiation policies and procedures for pricing negotiated prime contracts (including subcontracts)…”

You can certainly ask for whatever level of price or cost breakdowns or backup information deemed necessary to determine whether the price is fair and reasonable. If you are going to negotiate the price, it makes perfect sense to develop pre-negotiation objectives (POM) and to document the negotiation (PNM). A POM is your outline plan for negotiations. I always developed pre-negotiation objectives, even if it was primarily a marked up proposal with notes.

Its really not that difficult.

C Culham said:

What?  Are you saying that union rates only apply to Federal government contracts?    Union rates are part of  everyday ordinary trade.

I'll defend the above if I have to - particularly in the realm of minor construction where union labor is perhaps not the norm -  but I'd rather stay on the offensive here and humor your argument.  Okay, so union rates are part of everyday trade.  Is the owner of a shopping mall developer (read: U.S. Government) hiring agents of the shopping mall (read: COs) to perform the following actions upon review of Turner Construction's certified payroll submittals?

Quote

FAR 22.406 Administration and enforcement.

* * * *

22.406-4 Apprentices and trainees.

(a) The contracting officer shall review the contractor's employment and payment records of apprentices and trainees made available pursuant to the clause at 52.222-8, Payrolls and Basic Records, to ensure that the contractor has complied with the clause at 52.222-9, Apprentices and Trainees.

(b) If a contractor has classified employees as apprentices or trainees without complying with the requirements of the clause at 52.222-9, the contracting officer shall reject the classification and require the contractor to pay the affected employees at the rates applicable to the classification of the work actually performed.

* * * *

22.406-6 Payrolls and statements.

(a) Submission. In accordance with the clause at 52.222-8, Payrolls and Basic Records, the contractor must submit or cause to be submitted, within 7 calendar days after the regular payment date of the payroll week covered, for the contractor and each subcontractor,

(1) copies of weekly payrolls applicable to the contract, and

(2) weekly payroll statements of compliance. The contractor may use the Department of Labor Form WH-347, Payroll (For Contractor's Optional Use), or a similar form that provides the same data and identical representation.

(b) Withholding for nonsubmission. If the contractor fails to submit copies of its or its subcontractors' payrolls promptly, the contracting officer shall, from any payment due to the contractor, withhold approval of an amount that the contracting officer considers necessary to protect the interest of the Government and the employees of the contractor or any subcontractor.

* * * *

22.406-7 Compliance checking.

(a) General. The contracting officer shall make checks and investigations on all contracts covered by this subpart as may be necessary to ensure compliance with the labor standards requirement of the contract.

(b) Regular compliance checks. Regular compliance checking includes the following activities:

(1) Employee interviews to determine correctness of classifications, rates of pay, fringe benefits payments, and hours worked. (See Standard Form 1445.)

(2) On-site inspections to check type of work performed, number and classification of workers, and fulfillment of posting requirements.

(3) Payroll reviews to ensure that payrolls of prime contractors and subcontractors have been submitted on time and are complete and in compliance with contract requirements.

(4) Comparison of the information in this paragraph (b) with available data, including daily inspector's report and daily logs of construction, to ensure consistency.

* * * *

22.406-8 Investigations

* * * *

22.406-9 Withholding from or suspension of contract payments.

...

(b) Suspension of contract payments. If a contractor or subcontractor fails or refuses to comply with the labor standards clauses of the Construction Wage Rate Requirements statute and related statutes, the agency, upon its own action or upon the written request of the Department of Labor, must suspend any further payment, advance, or guarantee of funds until the violations cease or until the agency has withheld sufficient funds to compensate employees for back wages, and to cover any liquidated damages due.

If not, then even though there may be union labor (assuming this equates to Wage Determination-based catalog/market pricing per FAR 2.101 definition of commercial service), the terms and conditions beyond pricing are not commercial.  And in that case you cannot get past the bold emphasis I place in the definition below:

C Culham said:

"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...

(ii) Market prices means...

Thanks C Culham,

I'm dealing with a KO who spent his entire career in FAR 15 and has not much familiarity with services.  So when FAR 19.808 mentions "negotiate" that triggers the full FAR 15 process of technical evaluation by an engineer, a cost analysis by a cost engineer, preparation of a POM, clearing the POM through legal for clearance to negotiate, meeting minutes documenting negotiation, and a PNM finalizing the negotiations.  We are replacing 21 doors. 

Would you consider the following a "negotiation":

1. Contractor rolled up pricing in a lump sum line item for base security, labor, etc:  I asked for a price breakout to understand the price and determine if its necessary and reasonable. I don't consider this a "negotiation"

2. Contractor found some efficiencies in reviewing its proposal for a breakout and returned a revised proposal with the breakout. I don't consider this a "negotiation"

3. Contractor shows a breakout from a subcontractor, and some assumptions of cost  the subcontractor made were not required for the subs work. When this was pointed out the contractor's sub removed the unnecessary costs.  The overall proposal went down as a result. I don't consider that a "negotiation" especially in this case.

I define a negotiation as when the Government's justification of terms and conditions such as quantities and prices don't align with the contractor's proposal and there is a wiggle room where an agreement can be reached.  It's not really that

I think I can guess where this work is being done, and it is an 8(a) sole source. So perhaps some reasons why it will cost almost $24,000 per door. ($500,000/21 ) . But it would seem that such a magnitude requires some level of detailed evaluation and price negotiations.  

A request for a breakdown of a lump sum line item isn’t considered negotiations. The contractor can certainly revise the pricing of the line item. If you discussed and agreed on the revised line item price, that is a price negotiation.

If you pointed out the unnecessary assumptions and cost in the subs’ proposal, that’s an element of both technical evaluation and negotiations.

CaptJax said:

I'm dealing with a KO who spent his entire career in FAR 15 and has not much familiarity with services.  So when FAR 19.808 mentions "negotiate" that triggers the full FAR 15 process of technical evaluation by an engineer, a cost analysis by a cost engineer, preparation of a POM, clearing the POM through legal for clearance to negotiate, meeting minutes documenting negotiation, and a PNM finalizing the negotiations. 

Would you consider the following a "negotiation":

1. Contractor rolled up pricing in a lump sum line item for base security, labor, etc:  I asked for a price breakout to understand the price and determine if its necessary and reasonable. I don't consider this a "negotiation"

2. Contractor found some efficiencies in reviewing its proposal for a breakout and returned a revised proposal with the breakout. I don't consider this a "negotiation"

3. Contractor shows a breakout from a subcontractor, and some assumptions of cost  the subcontractor made were not required for the subs work. When this was pointed out the contractor's sub removed the unnecessary costs.  The overall proposal went down as a result. I don't consider that a "negotiation" especially in this case.

I define a negotiation as when the Government's justification of terms and conditions such as quantities and prices don't align with the contractor's proposal and there is a wiggle room where an agreement can be reached.  It's not really that[.]

@CaptJaxAccording to FAR 15.000, a negotiated contract is any that is awarded using other than sealed bidding, and Part 15 prescribes policies and procedures for both competitive and noncompetitive negotiated acquisitions. Thus, according to FAR 15.400, the policies and procedures in FAR Subpart 15.4 apply to your 8(a) negotiation, even if it's for a commercial service. See FAR 12.203(a):

Quote

Contracting officers shall use the policies unique to the acquisition of commercial products and commercial services prescribed in this part i_n conjunction with_ the policies and procedures for solicitation, evaluation and award prescribed in part 13, Simplified Acquisition Procedures; part 14, Sealed Bidding; or part 15, Contracting by Negotiation, as appropriate for the particular acquisition.

Emphasis added.

The KO is the one who must sign the contract. See FAR 1.602-1(b). And see FAR 15.405(a): "Taking into consideration the advisory recommendations, reports of contributing specialists, and the current status of the contractor’s purchasing system, the contracting officer is responsible for exercising the requisite judgment needed to reach a negotiated settlement with the offeror and is solely responsible for the final price agreement."

Since the CO, not you, must put his name on the contract, and since he has decided what is appropriate, why not just do as you're told and stop your anonymous whining here.

When you work for someone, work for them.

For DoD, the PGI at 215.4 provides detailed procedures for evaluating and negotiating proposal's, including sole source commercial products and services. Plus there is a guidebook for pricing commercial purchases, including the requirement and general information on negotiating the acquisition. It’s pretty clear that evaluation, including price and technical/cost analyses where appropriate, preparing pre-negotiation objectives and documenting the negotiations are necessary.

https://www.acq.osd.mil/dpap/cpic/cp/docs/Guidebook_Part_B_Commercial_Item_Pricing_20180126.pdf

Voyager said:

I'll defend the above if I have to - particularly in the realm of minor construction where union labor is perhaps not the norm -  but I'd rather stay on the offensive here and humor your argument.  Okay, so union rates are part of everyday trade.  Is the owner of a shopping mall developer (read: U.S. Government) hiring agents of the shopping mall (read: COs) to perform the following actions upon review of Turner Construction's certified payroll submittals?

 Prevailing rate means that which is prevailing in a particular area.   Not all D-B rates are union.   By example if Turner Construction was building in Benton County Arkansas  based on your application of D-B being the basis for determining commercial services would the project be commercial?  If I think about it your premise does not make sense.   As to record keeping  requirements check out FLSA and let me know if it only applies to Federal contracts.  Overall the AIA standard that I noted before carries a term and condition that the contractor shall comply with applicable law, statute etc. in performing the work.   As a general rule of thumb your reasoning seems flawed to me. 

From a D-B wage determination emphasis added -  "A four letter classification abbreviation identifier enclosed in dotted lines beginning with characters other than ""SU"" or ""UAVG"" denotes that the union classification and rate were prevailing for that classification in the survey."

CaptJax said:

Would you consider the following a "negotiation":

You have received some other refined and general comments.   I will just add mine but as noted in other comments you are being driven to do something by a CO so I guess that is the rule.   But my view is this as dumb as it may sound.

I believe the negotiation of an 8(a) sole source begins at the very start where the agency begins dealing with SBA to identify an appropriate contractor to do the work and ends with a successfully agreed to contract.  On one hand dealing with SBA is sort of like ( a flimsy "like") clarification, and discussion to figure who is best for the work.  On the other hand, and I would agree not often used, is the fact that SBA is the prime supposedly, so when you start talking to them at the very beginning you are negotiating.

It has been a long while since I worked in the 8(a) arena but in the 15 years I did spend in it I always advocated for not making sole source complicated.   I do advocate for a well documented file however and if you have to hang an acronym on it then a POM and PNM it is.

One of Stephen R Covey’s “Seven Habits of Highly Effective People” is “Begin with the End in Mind”. All of Covey’s character based principles are great and can be applied to negotiated acquisition processes.

Be proactive

Begin with the end in mind

Put first things first

Think win/win

Seek to understand first, before making yourself understood

Learn to synergize

Sharpen the saw

But one needs a plan…🤠

C Culham said:

As to record keeping  requirements check out FLSA and let me know if it only applies to Federal contracts.  Overall the AIA standard that I noted before carries a term and condition that the contractor shall comply with applicable law, statute etc. in performing the work.

I checked out FLSA and found the DOL WHD says this about it in a fact-sheet: “If the employer performs work on a federally financed project or a project in which the Federal government has provided assistance in financing the project, a different and somewhat stricter set of labor standards applies. Typically this would require that employees performing on such contracts be paid a ‘prevailing wage rate’.”

Also, it’s time for a sanity check.  In our hypothetical commercial construction contract, who enforces the FLSA and applicable state laws: the mall cops (an inside party to the contract ;), or the DOL (an outside party)?

Voyager said:

Also, it’s time for a sanity check.

Oh I get it and I have had this argument thrown at me before.   Throw a dang term and condition in a contract that you as the owner (dare I say CO) feels that they have no enforcement power over.  If so why put in at all?   I guess when you build a house and your contract requires the contractor to comply with all state and local laws and codes and the contractor fails to do so you will just say "whatever" and move along!   Or, wait will you take contractor to task, even ask for a change in price if they don't.     Sanity check is correct and your suggestion is insanity.

We started a new page now so let me go get what I quoted before, from FAR 22.406.  I'll just restate it.

Quote

FAR 22.406 Administration and enforcement.

* * * *

22.406-4 Apprentices and trainees.

(a) The contracting officer shall review the contractor's employment and payment records of apprentices and trainees made available pursuant to the clause at 52.222-8, Payrolls and Basic Records, to ensure that the contractor has complied with the clause at 52.222-9, Apprentices and Trainees.

(b) If a contractor has classified employees as apprentices or trainees without complying with the requirements of the clause at 52.222-9, the contracting officer shall reject the classification and require the contractor to pay the affected employees at the rates applicable to the classification of the work actually performed.

* * * *

22.406-6 Payrolls and statements.

(a) Submission. In accordance with the clause at 52.222-8, Payrolls and Basic Records, the contractor must submit or cause to be submitted, within 7 calendar days after the regular payment date of the payroll week covered, for the contractor and each subcontractor,

(1) copies of weekly payrolls applicable to the contract, and

(2) weekly payroll statements of compliance. The contractor may use the Department of Labor Form WH-347, Payroll (For Contractor's Optional Use), or a similar form that provides the same data and identical representation.

(b) Withholding for nonsubmission. If the contractor fails to submit copies of its or its subcontractors' payrolls promptly, the contracting officer shall, from any payment due to the contractor, withhold approval of an amount that the contracting officer considers necessary to protect the interest of the Government and the employees of the contractor or any subcontractor.

* * * *

22.406-7 Compliance checking.

(a) General. The contracting officer shall make checks and investigations on all contracts covered by this subpart as may be necessary to ensure compliance with the labor standards requirement of the contract.

(b) Regular compliance checks. Regular compliance checking includes the following activities:

(1) Employee interviews to determine correctness of classifications, rates of pay, fringe benefits payments, and hours worked. (See Standard Form 1445.)

(2) On-site inspections to check type of work performed, number and classification of workers, and fulfillment of posting requirements.

(3) Payroll reviews to ensure that payrolls of prime contractors and subcontractors have been submitted on time and are complete and in compliance with contract requirements.

(4) Comparison of the information in this paragraph (b) with available data, including daily inspector's report and daily logs of construction, to ensure consistency.

* * * *

22.406-8 Investigations

* * * *

22.406-9 Withholding from or suspension of contract payments.

...

(b) Suspension of contract payments. If a contractor or subcontractor fails or refuses to comply with the labor standards clauses of the Construction Wage Rate Requirements statute and related statutes, the agency, upon its own action or upon the written request of the Department of Labor, must suspend any further payment, advance, or guarantee of funds until the violations cease or until the agency has withheld sufficient funds to compensate employees for back wages, and to cover any liquidated damages due.

To also shine a light on the terms and conditions of federal construction:

• FAR 52.222-9 noncompliance allows the buyer to change the contractor's actual costs at no change in the contract price;
• FAR 52.222-8 noncompliance in conjunction with the FAR 52.222-6 Wage Determinations and FAR 52.222-7 allows the buyer to withhold payment, then suspend all payments;
• FAR 52.222-10 incorporates the Copeland Act (29 CFR Part 3) into the contract;
• FAR 52.222-12 encourages use of the very governmental Contract Termination procedures;
• FAR 52.222-13 and -14 incorporate 29 CFR Parts 1 and 5 rulings and interpretations into the contract; and
• Any of the above cited clauses in conjunction with FAR 52.222-11's flow-down provisions give the contractor the power granted to the buyer in the clause for purposes of resolving a similar noncompliance at the subcontract level.

Please, compare these for similar terms and conditions incorporated into contracts by FLSA and state laws.  I am genuinely curious, not 200% sure of myself - and willing to be convinced.

Voyager said:

I checked out FLSA and found the DOL WHD says this about it in a fact-sheet: “If the employer performs work on a federally financed project or a project in which the Federal government has provided assistance in financing the project, a different and somewhat stricter set of labor standards applies. Typically this would require that employees performing on such contracts be paid a ‘prevailing wage rate’.”

When I was a consulting engineer in the late 1970’s , we had some projects in Wisconsin for which the Farmers Home Administration provided a share of the funding. We were able to cleanly segregate the federally funded portion of the project with separate unit priced line items, for which all the federal labor rates and other labor requirements applied. This work was about 50% more expensive than the non-federal , identical line items, which used the State of Wisconsin prevailing wage rates.

Voyager said:

Please, compare these for similar terms and conditions incorporated into contracts by FLSA and state laws.  I am genuinely curious, not 200% sure of myself - and willing to be convinced.

You do not have to be convinced but I appreciate the ability to respond. 

I understand where you are coming from yet I still believe your premise is off base.   Rather than address each of the terms and conditions you note which I would imagine all may not be in a contract say to build your house, consider this.   Service Contract Act.   While I understand there is a difference in such things as payrolls and basic records SCA does carry requirements unique to a Federal contract.  A read of FAR clause 52.222-41 will support my view.   Do you believe that a service contract, like janitorial, is not a commercial item contract, since SCA is required?  I do know that GSA for FSS fought the battle and lost wherein their commercial contracts require SCA and it seem that most if not all agencies put SCA in commercial item contracts.

On 9/20/2022 at 7:01 AM, Vern Edwards said:

@CaptJaxAccording to FAR 15.000, a negotiated contract is any that is awarded using other than sealed bidding, and Part 15 prescribes policies and procedures for both competitive and noncompetitive negotiated acquisitions. Thus, according to FAR 15.400, the policies and procedures in FAR Subpart 15.4 apply to your 8(a) negotiation, even if it's for a commercial service. See FAR 12.203(a):

Emphasis added.

The KO is the one who must sign the contract. See FAR 1.602-1(b). And see FAR 15.405(a): "Taking into consideration the advisory recommendations, reports of contributing specialists, and the current status of the contractor’s purchasing system, the contracting officer is responsible for exercising the requisite judgment needed to reach a negotiated settlement with the offeror and is solely responsible for the final price agreement."

Since the CO, not you, must put his name on the contract, and since he has decided what is appropriate, why not just do as you're told and stop your anonymous whining here.

When you work for someone, work for them.

Part of the  purpose of this post was to fine tune my understanding of FAR 19.808, FAR 12/13, and FAR 15.  Sometimes in the FAR a term or methodology  has specific meaning only in that FAR part, sometimes it has global meaning to all FAR Parts, sometimes you don't want to say words and phrases from one part or another as to not misconstrue what you are doing.  From my experience sometimes its good to ask how do you define a word, what does it mean to you.  I resolved an argument using that technique concerning an in-scope, out-of-scope mod issue where finance, engineering, and contracting all three had different definitions of what is in-scope. They didn't understand why the other person was saying it was out of scope where it was obviously in-scope by there definition, and were oblivious that different regs define scope differently. In this particular scenario, I have never seen anyone apply such a rigorous time consuming process to 8(a) sole source. I read the same FAR parts you posted above Vern, and thought it is a sole source, it is negotiated, the POM and PNM is a bit much but it doesn't prohibit doing that way.  I posted this to see if I was missing something such as FAR 15 negotiation action has this definition and meaning when using FAR 15, but if you do a sole source in FAR 13 or FAR 19.808 its the same general concept of documenting the negotiation action, but the how is less formal. Also as you stated in a  Sept 16, 2014, you reference good ole, Finlin-Complex decision in that GAO takes the the position that if you conduct a SAP by using FAR 15 procedures, then the GAO will apply FAR 15 protests rules. So if I write a POM/PNM and refer to revised proposals so forth would my file not be fully documented if I didn't carry out the rest of the FAR 15 procedures? Also the time required, and I will be called on the carpet to justify why I took so long to do this procurement later this week.  Customer don't care about this stuff.  They want an award. It's very difficult to explain why it took since March to award a simple contract in September because some reviewer thought it should be FAR 15 sole source complete with POM and PNMs, where all we did was ask for a price breakout.

I realize different CO's have different preferences.  My frustration is that this causes a lack of standardization and a blurring of the intent of the FAR. My policy has been tell me upfront what you want and I'll do it, to get on the same page with the CO especially in the beginning.  I also like to be aware of and understand the rules and applications to provide suggestions to make the process run more efficient, avoid protests, catch missing steps, ensure the file is properly documented, etc. I'm totally ok if the CO disagrees or wants go about a different way because your right the CO is signing it.  Part of my intent is separating what is the required by regulation from CO preference, not to bludgeon the CO with some regs showing where he/she is wrong. By this I want to say this is what is required, the CO may have this preferences, and this is how and what to ask to get clarification.  Some CO's is difficult to get a well articulated expectation or to even know what there expectations are, I have even come across some CO's so novice that they don't know their own preferences. It's very hard to work autonomously if there are no set this is how you do it procedures.  My stated acq plan was to use FAR 13.5 procedures to procure this 8(a) sole source using SAP methodologies which means memo the file the results of negotiation.

On 9/19/2022 at 10:31 AM, CaptJax said:

Yes. It's only doors not frames and trim.  The doors go on modular office building listed as equipment rather than real property.

Emphasis added. Then it's not a service contract. It's a supply contract. See FAR 2.101:

Quote

Supplies means all property except land or interest in land. It includes (but is not limited to) public works, buildings, and facilities; ships, floating equipment, and vessels of every character, type, and description, together with parts and accessories; aircraft and aircraft parts, accessories, and equipment; machine tools; and the alteration or installation of any of the foregoing

Emphasis added. If the doors are standard and require only minor modifications, then you could conduct the procurement under FAR Part 12 as one for commercial products.

CaptJax said:

Part of the  purpose of this post was to fine tune my understanding of FAR 19.808, FAR 12/13, and FAR 15.  Sometimes in the FAR a term or methodology  has specific meaning only in that FAR part, sometimes it has global meaning to all FAR Parts, sometimes you don't want to say words and phrases from one part or another as to not misconstrue what you are doing.  From my experience sometimes its good to ask how do you define a word, what does it mean to you.  I resolved an argument using that technique concerning an in-scope, out-of-scope mod issue where finance, engineering, and contracting all three had different definitions of what is in-scope. They didn't understand why the other person was saying it was out of scope where it was obviously in-scope by there definition, and were oblivious that different regs define scope differently. In this particular scenario, I have never seen anyone apply such a rigorous time consuming process to 8(a) sole source. I read the same FAR parts you posted above Vern, and thought it is a sole source, it is negotiated, the POM and PNM is a bit much but it doesn't prohibit doing that way.  I posted this to see if I was missing something such as FAR 15 negotiation action has this definition and meaning when using FAR 15, but if you do a sole source in FAR 13 or FAR 19.808 its the same general concept of documenting the negotiation action, but the how is less formal. Also as you stated in a  Sept 16, 2014, you reference good ole, Finlin-Complex decision in that GAO takes the the position that if you conduct a SAP by using FAR 15 procedures, then the GAO will apply FAR 15 protests rules. So if I write a POM/PNM and refer to revised proposals so forth would my file not be fully documented if I didn't carry out the rest of the FAR 15 procedures? Also the time required, and I will be called on the carpet to justify why I took so long to do this procurement later this week.  Customer don't care about this stuff.  They want an award. It's very difficult to explain why it took since March to award a simple contract in September because some reviewer thought it should be FAR 15 sole source complete with POM and PNMs, where all we did was ask for a price breakout.

I realize different CO's have different preferences.  My frustration is that this causes a lack of standardization and a blurring of the intent of the FAR. My policy has been tell me upfront what you want and I'll do it, to get on the same page with the CO especially in the beginning.  I also like to be aware of and understand the rules and applications to provide suggestions to make the process run more efficient, avoid protests, catch missing steps, ensure the file is properly documented, etc. I'm totally ok if the CO disagrees or wants go about a different way because your right the CO is signing it.  Part of my intent is separating what is the required by regulation from CO preference, not to bludgeon the CO with some regs showing where he/she is wrong. By this I want to say this is what is required, the CO may have this preferences, and this is how and what to ask to get clarification.  Some CO's is difficult to get a well articulated expectation or to even know what there expectations are, I have even come across some CO's so novice that they don't know their own preferences. It's very hard to work autonomously if there are no set this is how you do it procedures.  My stated acq plan was to use FAR 13.5 procedures to procure this 8(a) sole source using SAP methodologies which means memo the file the results of negotiation.

Based upon my experiences, I don’t know why It would have taken since March to do this action even with asking for breakdown, evaluation and POM/negotiation and PNM.

joel hoffman said:

I don’t know why It would have taken since March to do this action even with asking for breakdown, evaluation and POM/negotiation and PNM.

I do. It was done by people who didn't know what they were doing.

The story of our times.

Vern Edwards said:

I do. It's being done by people who don't know what they're doing.

I was going to say “there’s no way…” but I toned it down.

joel hoffman said:

... but I toned it down.

Why? Tell the truth.

Just now, Vern Edwards said:

Why? Tell the truth.

🤪

It took forever to solicit because people couldn't figure out if it was a construction or service. It took a week to get pricing. Now it's taking forever to figure out how its to be documented, and the proper content of that documentation.  It's really not so much the CO, its the legal office commenting on the file each time its being reviewed and wanting to see something different. I did a similar action in 2019 in about 30 days using the SAP 13.5 because its at 250K.  It is not a commercial supply. The service element exceeds the supply amount. 

Thanks for your help and commentary.

On 9/13/2022 at 11:37 AM, CaptJax said:

The issue of this post is applying correct negotiation procedures.  At the dollar amount given a formal IGE was not required, I call it a Government Estimate.  The proposal disagreed with the Government Estimate, and the Government Estimate was at best a guess based on previous pre-COVID contracts.   There was no formal Government Estimate, no formal technical PDT team, just an environmental engineer reviewing the technical.

CaptJax, it would have been good for us to know that the doors were for modular buildings (personal property) not for real property facilities and that there are only 21 doors involved.

That would have greatly shortened the speculation and debate about construction vs. commercial service vs. commercial supply, and other details.

At face value, without more detail, it looks like the cost works out to something like $28k per door, other costs greatly exceeding the cost of a door, metal, wood, security type or whatever.

But I think that the point made is that, for a sole source 8(a), negotiated supply, service or construction contract, subpart 15.4  “prescribes the cost and price negotiation policies and procedures for pricing negotiated prime contracts (including subcontracts)”.  The procedures and required documentation aren’t really that complex. They allow for asking for whatever level of price breakdown you need to understand the basis of pricing.

You said “a formal IGE was not required, I call it a Government Estimate.  The proposal disagreed with the Government Estimate, and the Government Estimate was at best a guess based on previous pre-COVID contracts.   There was no formal Government Estimate, no formal technical PDT team, just an environmental engineer reviewing the technical.”

To me, your described scenario of the remoteness, an emerging SDB, sole source contractor, the scant scope description, with little more than a rough order of magnitude estimate indicates that more than a cursory review was necessary .

What basis was there to make even a price analysis comparison?

Anyone with a working familiarity with R.S. Means should realize that it requires some customization for a specific project and that material prices  definitely must be customized and investigated. Was there competivtive pricing from suppliers? Shipping prices? Etc.

I negotiated or supervised negotiation of many sole source contracts, plus mods, claims, REA’s over my career.  That includes overseas and Central and South America.

I always prepared pre-negotiation objectives to prepare for and negotiate the action. Then I  documented the negotiation for the KO and for the record.

Except for complex claims and REA’s, which required significant study of the situation to determine merit and determine a position, It didn’t take very long to evaluate, prepare the POM, negotiate and document the negotiation.

There are many valid reasons for the SBA stating that we must “negotiate” sole source 8(a) proposals. One critical reason is that we don’t want the 8(a) firm to fail. We want to make sure that the contractor fully understands the scope and complexities - especially where it must mobilize and import a workforce and materials, etc. to a “remote”, OCOUS installation. We should be sure that it has adequately priced the work.

I’ve  honestly never seen a situation involving construction type work, let alone on a remote military installation, where we could just cut an 8(a) contractor loose on a project,  without more than normal contract admin and field oversight/assistance (frankly - hand holding).  You stated that there are government disagreements over the requirements, too. That may involve customer meddling during execution.  

On 9/13/2022 at 11:37 AM, CaptJax said:

Is it dangerous to use terms of clarification, discussions, POM/PNM, negotiation from FAR 15 applied to an 8(a) sole source for commercial services? I believed I was doing FAR 13.5 so I neither clarified or discussed with the contractor; the nature of the exchange was to understand the line items of cost; to clarify if you will.

I believe that the “new” KO is correct. You don’t have a good basis to even do a good price analysis comparison. You want to minimize problems and disagreements later or have the project “go to hell in a hand basket”. Possible problem resolutions require a good record of the acquisition process.

Good luck with the project, CaptJax! 🤠

If CaptJax comes back again, I hope he follows Joel's example of breaking his entries into short paragraphs rather than writing lengthy blocks of text, which can be difficult to read online.

Thanks Joel,

*The delay in revealing the structures was kind of on purpose, that's the field people let me know information, but from the DA PAM alone it doesn't matter if real property or personal property, you can replace doors and windows as service repair.

This is a series of contracts at a remote military installation OCONUS.  The contractor as performed successfully three previous 8(a) contracts of a similar repair type nature. We use this 8(a) because it holds the high level security level clearance to go into this area. We had the past three contracts from which the Government Estimate was made. The project was around $500k. These contracts were awarded with a different CO who had a lot more experience with supplies and services as well as a bit construction. We analyzed the proposal, called the contractor, got it in line with budget, then used a price fair and reasonable memo to document it, and these contracts were slightly over the SAP $250K to $800K range. We did not have any issue with doing it that way, which is the way I generally conducted 8(a) sole sources using SAP/FAR 12. FAR 13.5 raises the threshold of commercial items and services and adds specific documentation applicable above the SAT.  The main cost drivers is the logistics and coordination with getting equipment, tools, and people to the worksite, hooking doors to the base security system; not so much the doors or installation itself. 

For this award I asked for a break out of cost because the contractor had prices so rolled up in lump sum lines items I couldn't make sense of the prices; contractor had $15,000 for one door and there was nothing really special about these doors. When the costs were unfurled there as a good account for the all costs; everything made sense.  The Contractor noticed some efficiencies to reduce the price when breaking out the costs; I didn't request it, he just noticed it and revised. The proposal was within budget. To me this was just breaking out a proposal; not a negotiation. There was no need for a negotiation because the costs were necessary, realistic, reasonable, and within budget. So I prepared a price fair and reasonable memo explaining the fair and reasonableness of the costs using FAR 13 basis for reasonableness, then presented to the CO for review and award.  Each line cited on a previous contract, knowledge of previous contracts, and other reasonable basis common sense and logic. The CO initially like it and it was sent to peer review where the peer reviewer asked for a POM/PNM.  I prepared a POM/PNM which satisfied the reviewer. Legal look at it and blasted an email to everybody how it didn't have position, objectives, or what was negotiated and why even though I converted the PF&R memo to show those elements; that took two weeks of iterations.  It took me a long time because the POM/PNM had tables and a border around the document that would get screwed up and do other weird things. The Government Estimate was under the contractor proposal by 12% in overall price, but labor differed by 40%. This was due to the Government Estimate leaving out pre-deployment preparation work and getting people, equipment, and materials on site.  When you account for these items the 40% differences vanishes.  We got embroiled into a word smith battle with legal on this PNM. I didn't want to use words like discussions, such as discussion were held on blah, during discussions the following topics were discussed, the the Government compared to the Independent Government Estimate and found the IGE omitted these costs...this is how the PNM now reads, it is 100% FAR 15 procedures, which now does it match the pre-solicitation planning documents.

I might be wrong with my 8(a) approach. My hunch is that among these various offices there are those who hold different definitions and interpretations, and I posted this to gain greater insight. 

I noticed that there are concepts in contracting such as fair and impartial. Fair and impartial is specified out in a rigorous formal way in FAR 15 and a precise vocabulary is used when exchanging communications with offers such as clarification, discussion, and negotiation. it sees we make it a point to not use these terms when using other FAR parts to keep it clearly separate from FAR 15, but are not given precise words to describe what we are doing so we tend to make up words that mean kinda the same thing like Government Estimate is an informal wag for IGE when an IGE is not required. Maybe my observation is wrong in renaming things and the same formality is carried over from FAR 15 to all FAR parts, particular if you open any kind of communication with the contractor you need a POM first in case if the conversation rolls into revised offers or negotiations.

CaptJax said:

Fair and impartial is specified out in a rigorous formal way in FAR 15 and a precise vocabulary is used when exchanging communications with offers such as clarification, discussion, and negotiation.

That is not true. There is nothing "precise" in that vocabulary, as shown by hundreds of bid protest decisions. The distinction between clarification and discussion has been the issue in many bid protests, and has been addressed in the contracting literature for more than 20 years. See: "Clarifications vs. Discussions: The Obscure Distinction, by Professors Cibinic and Nash, The Nash & Cibinic Report (June 2000) and "Postscript X: Clarifications vs. Discussions," The Nash & Cibinic Report (October 2020), in which Prof. Nash wrote:

Quote

Perhaps the longest running issue we have addressed in the REPORT is the distinction between clarifications and discussions. See Clarifications vs. Discussions: The Obscure Distinction, 14 N&CR ¶ 29, and Postscripts at 15 N&CR ¶ 41, 16 N&CR ¶ 13, 17 N&CR ¶ 20, 18 N&CR ¶ 2, 21 N&CR ¶ 45, 23 N&CR ¶ 46, 26 N&CR ¶ 11, 27 NCRNL ¶ 48, and 32 NCRNL ¶ 54. In the last Postscript we discussed the narrow interpretation of the clarification rule that has been used by the Government Accountability Office (in contrast to the broader interpretation of the Federal Circuit). We now have a decision, Dawson Solutions, LLC, Comp. Gen. Dec. B-418587, 2020 CPD ¶ 216, 2020 WL 4284125, illustrating this narrow interpretation and also demonstrating how it can be unfairly applied.

Ok, thanks, CaptJax, for the ”rest of the story”, so to say.  

You should still be negotiating the prices for  these non-competitive jobs, especially if they are distinct new contracts, IMO. I’m glad that you have a good contractor to work with.

Doesn’t matter whether services or construction. FAR 15.4 is the only applicable part of FAR 15 for a sole source price negotiation. 

The below quote is one example why it’s good to evaluate and negotiate the price (very good-you asked for information necessary to evaluate the makeup of the proposal and the price reasonableness). I don’t know if you could have discovered this on your own after evaluating the breakout.

No need to reply to me.

Again, looks like you appear to have a good contractor. 🤠

CaptJax said:

The Contractor noticed some efficiencies to reduce the price when breaking out the costs; I didn't request it, he just noticed it and revised.

A Korean colleague of mine in our construction office in Saudi Arabia once told me that he can’t believe that Americans are so gullible as to take every proposal at face value. He said that Koreans negotiate everything,  including a loaf of bread. Remember the souks in  Monty Python’s “The Life of Brian”? 🤪

CaptJax said:

We got embroiled into a word smith battle with legal on this PNM.

joel hoffman said:

Doesn’t matter whether services or construction. FAR 15.4 is the only applicable part of FAR 15 for a sole source price negotiation.

So as the thread fades into the sunset I have some final thoughts which come to me in part based on the quoted highlights.

Forgotten by legal and in the context of a 8(a) sole source is FAR 19.8, and here I will add 13 CFR 124 as well as the Small Business Act must be considered.    I will not bore you with quotes but I highly recommend that for the future CaptJax may well want to refer the likes of legal to references in the FAR, CFR 124 and the Act to "Fair Market Price" and how estimating such plays a big role in the price agreement of an 8(a) sole source.  In fact I could see a PNM (FAR 15.406-3) that highlights references from each. 

As I did early on I would suggest that when it comes to 8(a) sole source while FAR 15.4 has a role that role must be woven with appropriate principles of FAR 19.8, associated regulation and statute.   

I will be bold and suggest that for the particular project that is the subject of this thread that the POM might be one and the same as the current fair market price estimate.

C Culham said:

So as the thread fades into the sunset I have some final thoughts which come to me in part based on the quoted highlights.

Forgotten by legal and in the context of a 8(a) sole source is FAR 19.8, and here I will add 13 CFR 124 as well as the Small Business Act must be considered.    I will not bore you with quotes but I highly recommend that for the future CaptJax may well want to refer the likes of legal to references in the FAR, CFR 124 and the Act to "Fair Market Price" and how estimating such plays a big role in the price agreement of an 8(a) sole source.  In fact I could see a PNM (FAR 15.406-3) that highlights references from each. 

As I did early on I would suggest that when it comes to 8(a) sole source while FAR 15.4 has a role that role must be woven with appropriate principles of FAR 19.8, associated regulation and statute.   

I will be bold and suggest that for the particular project that is the subject of this thread that the POM might be one and the same as the current fair market price estimate.

I negotiated or supervised negotiation of and worked a bunch of 8(a) construction contracts over the years. Our experience was that the proposals were sometimes very high in comparison to other, competitive prices for the same or similar work (fair market prices). There were several reasons for this.

One reason was because other small business construction contractors local to the applicable installations or geographical area were often opposed to outside firms or set-asides for special status firms. They could and would subtly or overtly “influence” local subs and supplier pricing to the 8(a) firms for construction materials and subcontracts. As a result, an 8(a) firm had to search for subs and suppliers further away or submit the higher quotes, when the locals would quote

8(a) construction firms were usually emerging and had less experience than the well established firms. The performance risks were often greater for such firms.

A few 8(a) firms took advantage of the special, non-competitive contracting opportunities.

A few firms were pressured into or otherwise participated in “front” arrangements, where key subs were, in fact doing one or more of activities, such as:   financing the project m, managing the job, “renting” equipment with operators”, furnishing supervisors and other key personnel,  and were in shadow control of the job.

The DFARS used to use a 10% margin above  other prices as a yardstick for determine fair and reasonable pricing. That was repealed years ago. It’s now more subjective and job specific.

I think that the SBA’s reference to awarding at fair market prices is to motivate the small and small disadvantaged (etc.) business concerns to propose reasonable prices and to allow the agency to reject seriously unreasonable proposals.

We rejected proposals and arrangements that were apparent fronts for other firms and occasionally where the prices were way too high after negotiations. We worked closely with the SBA to replace those proposed firms or arrangements.

Do you know where I can look to see if a POM /PNM for a sole source for a $22 Million Service contract needs CUI markings?*

ejct said:

Do you know where I can look to see if a POM /PNM for a sole source for a $22 Million Service contract needs CUI markings?*

"Controlled Unclassified Information"

Your agency/department should have a CUI contact that should answer your question that you can find here (see link). The linked website should help you further as well.  Note the "Contact the Agency" in the right hand side bar.

https://www.archives.gov/cui/registry/category-detail/procurement-acquisition.html