Source: http://www.wifcon.com/discussion/index.php?/topic/969-tm-schedule-task-orders-not-exempt-from-df-requirements/
Timestamp: 2017-10-21 21:38:50
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Matched Legal Cases: ['art 8', 'art 8', 'art 12', 'art 12', 'art 16', 'art 8', 'art 8', 'art 1', 'art 8', 'art 8', 'art 8', 'art 1', 'art 8', 'art 8', 'art 8', 'art 8', 'art 8', 'art 16', 'art 2', 'art 8', 'art 12', 'art 8', 'art 16', 'art 8']

T&M Schedule Task Orders Not Exempt From D&F Requirements - Schedules, GWACS, MACs, IDIQs - The Wifcon Forums and Blogs
By dwclemens, January 27, 2011 in Schedules, GWACS, MACs, IDIQs
dwclemens 0
On 1/19/2011 GSA posted the following FAQ and response at its new Interact blog for Multiple Award Schedules. It reads:
Question:Is a Determination and Finding under FAR 12.207( (ii) required when a time and materials order is placed under GSA schedules?
Answer: A D&F is not required. Follow the ordering procedures in FAR 8.405-1 and 8.405-2.
I believe that this response is incorrect, unsupported by the FAR, contradicts authoritative (FAR-based) GSA publications, and is contrary to clear regulatory intent.
In addition to FAR SubPart 8.4 requirements, FAR 12.207( (ii) requires the contracting officer to execute a determination and findings (D&F) for time-and-materials (T&M) type contracts that (a) no other type is suitable; ( includes a ceiling price in the contract or order that the contractor exceeds at its own risk; and (c ) authorizes any subsequent change in the ceiling price only upon another determination, documented in the contract file, that it is in the best interest of the procuring agency to change the ceiling price.
The FAR requirements are additive and not mutually exclusive, as GSA?s Multiple Award Desk Reference [summer 2010 Edition, page 17] makes clear when it says:
?NOTE: If other than a Firm Fixed Priced order is placed, include the basis for the determination to use a labor hour or time-and-materials order. (FAR 8.405-2(e)(7)(i) in addition to the differing D&F requirements at FAR 12.207( and 16.601(d)?
There is nothing in FAR 12.207 or FAR 16.601 stating that those D&F requirements do not apply to Schedule T&M Task Orders. In fact, the FAR Council made it even clearer in FAR Case 2009-043 (9/27/2010 Fed. Reg.) that the Schedule order T&M D&F requirements don?t simply stop at FAR 8.4 and that those D&F requirements from other parts of the FAR specifically do apply to Schedule T&M task orders.
FAR Case 2009-043 simply confirmed and ratified what GSA instructors have consistently taught Ordering Officers in the MAS Desk Reference and in other GSA training materials since the SARA panel addressed this issue back in 2006:
?The requirement for executing a determination and findings when acquiring commercial services on a time-and-material or labor-hour basis is not new? This proposed rule therefore builds on the existing Services Acquisition Reform Act (SARA) Panel recommendation to permit the use of time-and-materials and labor-hour contracts or orders when acquiring commercial services as long as a determination and findings is executed by the contracting officer consistent with FAR 12.207 and FAR 16.601 when ordering services under Schedules. Therefore, the determination and findings requirement is proposed to be added to FAR subpart 8.4 for Schedule orders to make it clear that contracting officers must execute, prior to placing the order, a determination and findings that a fixed-price order is not suitable. The FAR is proposed to be further revised as follows:
(2) Section 12.207( (4) is added as a cross-reference to 8.405-2(e) for determination and findings when using Federal Supply Schedules.?
FAR Case 2009-043 makes it clear there is nothing new here. Schedule T&M orders have never specifically been exempt from the FAR 12.207( D&F (and the FAR 16.601 D&F, although the FAQ is silent on that particular D&F) as GSA?s MAS Desk Reference points out.
(1) The ?ordering procedures in FAR 8.405-1 and 8.405-2? are silent when it comes to the FAR 12.207( (ii) D&F. What is the FAR reference for the recent GSA FAQ?s assertion that a FAR 12.207( (ii) D&F is not required for T&M task orders placed against the Schedule contracts?
(2) Does GSA's recent assertion on its blog that Schedule T&M task orders are somehow exempt from the requirements for the FAR 12.207( (ii) D&F contradict the statement (see extract in Section A above) appearing in GSA?s MAS Desk Reference and the clear regulatory intent of the FAR Council as shown in FAR Case 2009-043?
(1) There is nothing in the FAR, the GSAM, or the Schedule contract clauses stating that the D&F requirements of FAR 12.207( (ii) do not apply to T&M Schedule task orders. The assertion that Schedule T&M orders are somehow exempt from the Part 12 D&F requirements simply isn?t supported by anything in FAR 8.405-1 and FAR 8.405-2.
(2) GSA?s own MAS Desk Reference (2010) is correct when it clearly states that the FAR 8.4 requirements aren?t the only FAR requirements of concern to the Ordering Officer when it comes to the D&F for T&M Schedule task orders. The words ??differing D&F requirements?? in the MAS Desk Reference are of particular significance. Nothing in those Part 12 or Part 16 requirements sets up an exception for Schedule task orders. Even if somebody actually believed there was something (an implied exemption?) there to the contrary, FAR Case 2009-043 explicitly sets the matter to rest with respect to Schedule T&M orders.
Telling Ordering Officers that they need not be concerned with preparation of the FAR 12.207( D&F when it comes to their Schedule T&M task orders is not supported by the FAR, is contrary to GSA's FAR-based MAS Desk Reference, and contradicts five years of policy on T&M contracting. I've suggested to GSA that their unsupported (and unsupportable) FAQ response on their MAS Interact blog be immediately removed. Instead, the FAQ on the GSA blog can be best answered by extracting the language from page 17 of GSA's own current [summer 2010] MAS Desk Reference into a replacement FAQ response:
Answer: Yes, a T&M D&F is required. With respect to the T&M determination required by FAR 12.207( , T&M Schedule task orders are no different than other T&M contract actions. If other than a Firm Fixed Priced order is placed, include the basis for the determination to use a labor hour or time-and-materials order. (FAR 8.405-2(e)(7)(i) in addition to the differing D&F requirements at FAR 12.207( and 16.601(d).
[Of course, when FAR Case 2009-043 is effective, you will want to update the exact FAR references in the preceding suggested revised answer to conform exactly.]
A follow-up question to your discussion: If you place an FSS BPA in which task orders against the BPA will all be T&M or LH, should the ordering CO perform the necessary D&F at the BPA-level, or should each task order under the BPA have its own unique D&F?
Let me play devil's advocate for a second. Please explain the significance in FAR 12.207( (1)(ii)(A) of the language, "but see paragraph ( c ) of this section...". Para ( c ) mentions not only indefinite-delivery contracts, but at one point references Subpart 8.4.
What did the drafters have in mind when they chose to cross-reference para ( c ) here? Should the drafters have said, "but see subparagraph ( c )(3)"? Should we attach any significance to the fact that they did not? If you're willing to concede that the drafting isn't perfect, can't GSA just argue that the same phrase that appears in ( c )(2)--"Placement of orders shall be in accordance with Subpart 8.4 or 16.5, as applicable"--should also appear in ( c )(3)? Wouldn't you agree that if they had, and a schedule contract did not include fixed prices, no D&F would be required on the FSS order?
I agree with your result, but I'm not going to crucify a CO if he gets it wrong in reliance on GSA.
I'm not following you. I'm reading that FAR 12.207( (1)(ii)(A) says do a D&F for the contract. The exception under © says that you need to do a D&F at the task order level if the contract allows for both fixed price and T&M orders and you are doing a T&M order. Then c(3) goes on and says do the D&F for the IDIQ contract if it the contract only provides for T&M/LH orders.
Could a Schedule T&M/LH Determination & Finding Be Done as a Class D&F at the BPA Level?
Vbus -
Could a Schedule Ordering Officer properly craft a broadly written D&F at the Schedule BPA level (rather than for each individual Schedule task order) satisfying the current (1/28/2011) FAR 8.405-2(e), FAR 12.207( and FAR 16.607(d)(1) requirements and applying to all T&M/LH task orders under the Schedule BPA?
[Note: those are the current references for the FAR relating to the T&M/LH D&F. Those FAR citations could change when FAR Case 2009-043 becomes a Final Rule. That Final Rule will significantly revise FAR 8.405-2(e).]
There isn?t anything in the FAR specifically prohibiting a BPA-level T&M/LH Class D&F for Schedule task orders under a BPA. The FAR changes proposed by FAR Case 2009-043 are silent when it comes to something like a Schedule BPA D&F applicable to all T&M/LH task orders under that BPA. In cases where the FAR is silent and where I see no persuasive regulatory intent to the contrary, I typically embrace the important FAR Part 1 guiding philosophy that if an action isn?t prohibited by the FAR (or other regulations, policy, etc. - - things that can vary from one ordering agency to the next when it comes to Schedule ordering) and makes good business sense, then a Contracting Officer can feel free to do it. My favorite sentence in the whole FAR is: ?Rather, absence of direction should be interpreted as permitting the Team to innovate and use sound business judgment that is otherwise consistent with law and within the limits of their authority.? (FAR 1.102-4(e)) In support of that Contracting Officer would be the fact that the FAR creates ?Class D&Fs? (FAR 1.703) in order to obviate the need to prepare individual separate D&Fs when circumstances are similar. Note that the standard for a Class D&F is ?essentially identical justifications? (FAR 1.703). But will all the task orders under a particular Schedule BPA be ?essentially identical? enough for such an approach? Maybe. That is a question of fact that could turn on the scope of a particular BPA and the anticipated task order(s) details. If the facts were with them, I don?t see any reason why a CO with good writing skills couldn?t prepare a broadly written Class D&F applicable to every T&M/LH order under their Schedule BPA. Looking at the four required elements of the T&M/LH D&F in FAR 12.207( (i) through (iv), I can envision circumstances where it would be possible to write a convincing Class D&F at the BPA level.
While there is no FAR prohibition against a T&M/LH D&F at the BPA level, I could certainly understand how a more cautious Ordering Officer might feel the need to write a D&F for every T&M/LH task order under a Schedule BPA, particularly if there was an uncomfortable level of uncertainty at the BPA level or where the task orders would not have the ?essentially identical justifications? required for a Class D&F by FAR 1.703. That CO would also likely point back to the FAR 1.701 definition of D&F as something prepared ?as a prerequisite to taking certain contract actions.? That CO might reasonably conclude that issuing a Schedule BPA that doesn?t obligate a single dollar and might never be used is not a ?contract action? but, instead, the ?contract action? that actually triggers the D&F requirement in the first place is the issuance of the task orders when and if the Schedule BPA is used. (I purposefully will not open the ?BPA is not a contract? issue here, as there are other places on WIFCOM where there is appropriate discussion on that topic.)
Of course, there is a possibility that what emerges in the Final Rule from the rule proposed in FAR Case 2009-043 might have some additional relevant information. For all I know, Schedule BPAs could have been brought up and discussed in any submitted comments on D&Fs there, giving some (perhaps persuasive) additional information as to regulatory intent on this specific question. We will see. In the absence of something to the contrary emerging in the Final Rule, I cannot see any specific FAR-level regulatory impediment (and remember that ordering agencies can supplement the FAR with their own stricter requirements here) to a Class D&F applicable to multiple T&M/LH task orders with essentially identical justifications prepared along with a Schedule BPA.
I was just giving dwclemens a hard time. What I was trying to suggest is that if a FSS contract did not include fixed priced CLINs, then a D&F to support each order would not be required if the last sentence of FAR 12.207( c )(3) was identical to the last sentence of FAR 12.207( c )(2). I say this because I read the language, "but see paragraph ( c )..." in FAR 12.207( (ii)(A) in conjunction with FAR 12.207( c )(3) as not requiring a D&F on an order when the IDIQ contract does not include fixed priced CLINs.
You may be coming at it from a position opposite of dwclemens, believing no D&F is required for an order against a FSS contract that only includes T&M CLINs. Maybe the requirement isn't as clear as I thought it was. I don't know if such a beast exists, but assuming it does, I guess I would ask you, how can you claim the exception to a D&F on the order basis applies, given the structure of FAR 12.207( c ) and that the subparagraph you're relying upon makes no reference to Subpart 8.4?
Are there any FSS contracts that only allow for the issuance of orders on a time-and-materials or labor-hour basis? If there were, I could see not having to do a D&F when issuing orders under such contracts based on 12.207( c )(3).
What impact FAR 8.405-2(e)(7)(i) (the ordering activity shall document the rationale for using other than a firm-fixed price order)? Is it your position that the exception to the D&F requirement in FAR 12.207 so clearly exempts FSS orders that an ordering CO does not have to comply with the above requirement in Part 8? Alternatively, do you think the ordering CO does have to comply with Part 8, but the documentation isn't a D&F (a la Subpart 1.7)? This reminds me of the determintion vs. D&F discussion from earlier.
While I think FAR 12.207 can be reasonably read to require a D&F for a FSS order, in practice, it likely doesn't make any difference.
It's not my position that FAR 12.207( c ) exempts FSS orders. The way I read FAR 12.207( c )(3) is that the D&F would only be required for the basic contract. However, that paragraph applies to indefinite delivery contracts that only permit T&M/LH orders. If such a FSS contract existed, then I couldn't argue that failure to execute a D&F for a T&M/LH order under such a contract was noncompliant. The omission of FAR Subpart 8.4 from ( c )(3) makes it seem that there are no such FSS contracts, which prompted my question.
The documentation at FAR 8.405-2(e)(7)(i) is not related to the D&F requirement at FAR 12.207( c ). Two different things.
Don, we attach different significance to the omission of FAR Subpart 8.4 from ( c )(3).
With Pub. L. 108-136, sec. 1432, FASA sec. 8002(d)(2)( (i) (codified at 41 USC 264 note) provides, "A time-and-materials contract or a labor-hour contract may be used...only if the contracting officer for such procurement...executes a determination and findings that no other contract type is suitable." This change in law is implemented in FAR 12.207 with FAR Case 2003-027. Someone who doesn't believe the D&F reaches the order level would likely emphasize the word "contract," while someone who believes the D&F mandate reaches the order level would emphasize the word, "used."
In the proposed rule for FAR Case 2009-043, the background notes, "Currently, neither FAR 12.207 nor FAR subpart 8.4 explicitly mentions the requirement for the contracting officer to execute a determination and findings when placing orders against Schedules under FAR subpart 8.4." The D&F "requirement is proposed to be added to FAR subpart 8.4 for Schedule orders to make it clear that contracting officers must execute, prior to placing the order, a determination and findings that a fixed-price order is not suitable." Do the drafters consider it a new requirement or a clarification of an existing requirement? (Does it matter? I'm not sure what the drafters say today about their intentions yesterday is particularly helpful.) The FAR Case wasn't explicit, and neither was DFARS Case 2007-D021, which tried to make the "heightened" D&F requirements for commercial items apply to noncommercial items.
GAO-09-579, Contract Management: Minimal Compliance with New Safeguards for Time-and-Materials Contracts for Commercial Services and Safeguards Have Not Been Applied to GSA Schedules Program (June 2009), notes:
On March 6, 2009, we requested a legal opinion from GSA on the applicability of FASA section 8002(d), as amended by section 1432 of SARA, and the implementing FAR section 12.207( D&F requirement to the GSA schedules program. In its April, 15, 2009, response, GSA stated that the statutory language of FASA is not explicit and is unclear regarding applicability of the FASA provisions to the GSA schedules program, and therefore concluded that applicability is uncertain with regard to T&M commercial services contracts and orders under the program.
On the other hand, GSA has a task order checklist that states compliance with all three (FAR 8.405-2(e)(7), 12.207( , and 16.601(d)) is required for FSS orders. In a 28 Aug 09 memo, "Upcoming Inspector General (IG) Reviews - Compliance Issues and Other Matters," GSA's David Drabkin wrote (at 10), "For any contracts or task orders (issued against a GWAC, MAC, or MAS) utilizing a T&M contract type, the CO must prepare a D&F pursuant to FAR 16.601(d) or FAR 12.207( & ( c ), as applicable." (Wasn't that helpful?) Whatever ambiguities may exist under the present implementation, hopefully FAR Case 2009-043 will resolve them. What follows, then, is probably much ado about nothing.
Since July of 2009, the rule has been pretty clear at the Commerce Department.
The only exception from a requirement for a D&F appears in FAR 12.207( c )(3). It implicitly does not require a D&F on an order where the basic contract does not include other than T&M CLINs. I would suggest that implicit in the reference only to Subpart 16.5 is that the scope of ( c )(3) is limited to orders placed in FAR 16.5. Admittedly, to have to look to the exception in ( c )(3) requires interpreting "contract" in FAR 12.207( (1)(ii)(A) (executes a D&F for the contract) to reach the order creating the agency's obligation, which Part 2 certainly permits. Obviously, I'm drawing a lot of inferences, but I think they are reasonable ones.
Coming at it from the opposite direction, one could argue that the only requirement for a D&F on a per order basis appears in FAR 12.207( c )(2), and that the requirement for a D&F only applies at the ordering vehicle (basic contract) level. However, I think that ignores the fact that FAR 12.207( (1)(ii)(A) refers to ? as creating an exception from the general rule requiring a D&F (not the other way around), and the whole structure of FAR 12.207( c ). It also ignores the fact that the ordering agency has no contract until it places the order. The background in FAR Case 2003-027 also does not support such an interpretation when it says,
With respect to the contents of the required D&F, OFPP advised the Councils that the rationale supporting use of a T&M or LH contract for commercial services must establish that a T&M or LH contract is being used under the same conditions where the private sector would commonly rely on these arrangements--namely, where it is not possible at the time of placing the contract or order to accurately estimate the extent or duration of the work or to anticipate costs with any reasonable degree of certainty.
The FAR Case notes a number of commenters objected to the requirement for a D&F on a per order basis. While the FAR Case does not discuss our exact facts, the response to the criticisms was, essentially, "While the Councils recognize these additional requirements may be more burdensome, the Councils believe the additional requirements are needed to encourage the preference for the use of fixed price contracts for commercial items."
I agree the determination in Part 8 and the D&F in Part 12 are two different things. Certainly the GAO report referenced above views the differences as significant. However, if a CO can make the determination required by FAR 8.405-2(e)(7)(i) (documenting the rationale for using other than firm-fixed price order) then odds are good he can make the determinations required in FAR 12.207( (2)(i)-(iv) (including that no other contract type authorized by this subpart is suitable). The Part 8 determination isn't made in a vacuum--it is made in the context of Part 16, which provides that T&M may only be used when no other contract type is suitable. FAR 16.601(d)(1). Admittedly, the determination requirement in Part 8 does not reach orders not requiring a SOW, which is the primary reason the interpretation of FAR 12.207 matters. However, if the FAR Case 2009-043 remains in its present form, it will also only apply to orders requiring a SOW, so I guess I'm out of luck.
Maybe I'm letting my skepticism of the Federal Supply Schedule get the better of me; but I'm certainly not going to go out of my way to interpret a rule to shift accountability away from the ordering activity to a FSS CO. Further, given the method for determining an order to be within scope of a FSS contract, I have my doubts that a FSS CO could very often say that, for any order within scope of the contract, only T&M is practicable.
LRock 0
What about T&M Task Orders issued under an established IDIQ T&M contract where the D&F was done at the contract level. I suppose you could do a Class D&F and explicitly state that the D&F on the base contract will flow down to all Task Orders; however, what if a class D&F was not done and just a D&F pursuant to 1.704. Would that automatically flow down to the Task Orders?
Following 16.601(d) for every single Task Order under an established IDIQ T&M Contract just seems redundant and unnecessary if a D&F has already been done on the base contract and approved prior to award.