Source: http://www.fluetlaw.com/blog/tag/commercial-items/
Timestamp: 2013-12-06 14:28:22
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commercial items Archives - GrowCon - A Blog for Government ContractsGrowCon - A Blog for Government Contracts
Tagged: commercial items
Daily Dump: 17 September 2013
By kstraw on Sep 17th, 2013 If you're new here, you may want to subscribe to GrowCon's RSS feed for the latest Government Contracts and Export Compliance news. Thanks for visiting!Here is today’s Daily Dump:
– After obtaining a maintenance services contract at Osan Air Base in Korea based on fraudulent misrepresentation regarding technician licenses, and being convicted of numerous crimes as a result, a contractor had the nerve to submit a claim for unpaid invoices. [Government Contracts Monitor]
– Click here for a Note on commercial item contracting and the reduced risks this method of contracting can introduce. [Foley & Lardner]
– A recent survey of small business contractors found that they are spending more time and money in preparing proposals, but are bidding on fewer opportunities. [GovWin]
Daily Dump: 3 May 2012
By Timothy P. Aiken, Esq. on May 3rd, 2012 Here is today’s Daily Dump:
– The Small Business Administration (SBA) is hosting a meet-and-greet event during National Small Business Week in late May in Washington, DC. [Market Watch].
– The Department of Defense sent Congress a legislative proposal that would abridge the definition of a “commercial item” to goods and services actually sold to the public, improving the government’s ability to oversee spending in government contracts. [Huffington Post].
Know What’s Out There: A Brief Primer on Market Research
By Adam Munitz, Esq. on Mar 12th, 2012 Every time the Government effectuates a regulatory change there is yet another opportunity to learn about the pre-existing regulation. On June 16, 2010, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council implemented an interim rule modifying the market research requirements of the Federal Acquisition Regulation (“FAR”). Their doing so presents government contractors, irrespective of their size, with an important opportunity to learn about market research and its importance in the federal acquisition process.
What IS “Market Research”? Like any buyer in a contracting relationship, the Government wants to ensure that its decisions are informed. The obvious difference for the Government is that its wallet is filled with taxpayers’ money, so every dollar counts. The requirements for market research, under certain circumstances, is the means by which the Government ensures that it is spending no more than it has to on procurement efforts, and that it is not ignoring alternative contracting opportunities that, while less obvious, are equally beneficial.
WHEN Must Agencies Conduct Market Research? FAR Subpart 10.001(2) establishes a series of circumstances when performing market research is required. First, agencies must do so “[b]efore developing new requirements documents for an acquisition by that agency[.]” This succinct clause is perhaps the most important of those that follow. The federal procurement process can easily deteriorate into a cumbersome, illogical circus if the requirements on which it is premised are not based on up-to-date information. Second, agencies must perform market research ”[b]efore soliciting acquisitions with an estimated value in excess of the simplified acquisition threshold[.]“ Per FAR Subpart 2.101(b), the simplified acquisition threshold is, generally, $150,000. However, whether or not agencies must conduct market research is not entirely dependent on the cost of the acquisition. On the contrary, per Subpart 10.001(2)(iii), agencies must conduct market research “[b]efore soliciting offers for acquisitions with an estimated value less than the simplified acquisition threshold when adequate information is not available and the circumstances justify its cost.” Thus, the availability of adequate information is the determining factor, rather than the cost of the acquisition. There are a variety of other circumstances under which agencies must conduct market research. The most interesting circumstance for small business owners is the requirement that, “[o]n an ongoing basis,” agencies must “take advantage (to the maximum extent practicable) of commercially available research methods in order to effectively identify the capabilities of small businesses and new entrants into Federal contracting that are available in the marketplace for meeting the requirements of the agency in furtherance of- (A) A contingency operation or defense against recovery from nuclear, biological, chemical, or radiological attack; and (B) Disaster relief to include debris removal, distribution of supplies, reconstruction, and other disaster or emergency relief activities…” FAR Subpart 10.001(a)(vi).
What FOR? FAR Subpart 10.001(a)(3) identifies how the results of market research should be utilized by federal agencies. Beyond “[d]etermin[ing] if sources capable of satisfying the agency’s requirements exist[,]” most of the remaining uses of market research focus on how agencies’ needs can be equally satisfied through cheaper means. More specifically FAR subpart 10.001(3) requires that agencies consider the use of commercial/nondevelopmental items or whether commercial items can be modified to suit agencies’ objectives and, among other things, that agencies “[e]nsure maximum practicable use of recovered materials…and promote energy conservation and efficiency[.]”
HOW is Market Research Conducted? A number of factors determine the intensity of the requisite market research: “urgency, estimated dollar value, complexity, and past experience.” FAR Subpart 10.002(b)(1). Essential here is that, under FAR Subpart 10.002(b)(1) the market research does not have to be brand new- rather, the “contracting officer may use market research conducted within 18 months before the award of any task or delivery order if the information is still current, accurate, and relevant.” The precise information for which contracting officers should search closely tracks the manner in which the market research should be used (see above). For example, under FAR Subpart 10.002(b)(i), market research should include information addressing “[w]hether the Government’s needs can be met by- (A) Items of a type customarily available in the commercial marketplace[.]” As for the techniques that contracting officers should use to conduct their market research, the FAR gives them a broad array of options, including “[c]ontacting knowledgeable individuals in Government and industry regarding market capabilities to meet requirements[,]” and “[r]eviewing the results of recent market research undertaken to meet similar or identical requirements.” FAR Subpart 10.002(b)(2)
The IMPACT of Market Research. The most important provisions of FAR Part 10 are arguably Subparts 10.002(c), (d)(1), and (d)(2). Each addresses a different possible outcome of the market research, and identifies the associated path forward. Under Subpart 10.002(c), “[i]f market research indicates commercial or nondevelopmental items might not be available to satisfy agency needs, agencies shall reevaluate the need in accordance with 10.001(a)(3)(ii) and determine whether the need can be restated to permit commercial or nondevelopmental items to satisfy the agency’s needs.” (Emphasis added). Under Subpart 10.002(d)(1), “[i]f market research establishes that the Government’s need may be met by a type of item or service customarily available in the commercial marketplace that would meet the definition of a commercial item at Subpart 2.1, the contracting officer shall solicit and award any resultant contract using the policies and procedures in Part 12.” (Emphasis added). FAR Part 12 focuses on the acquisition of commercial items. Lastly, under FAR Subpart 10.002(d)(2), “[i]f market research establishes that the Government’s need cannot be met by a type of item or service customarily available in the marketplace, Part 12 shall not be used. When publication of the notice at 5.201 is required, the contracting officer shall include a notice to prospective offerors that the Government does not intend to use Part 12 for the acquisition.” (Emphasis added). By prescribing specific actions based on the substance of the market research, the FAR ensures that such research be used for more than mere situational awareness, and that the contracting officer adjust his/her conduct based on such research.
Prime Contractor? Sorry, no luck (necessarily). At first glance, the requirement for market research seems only to apply to Government agencies. However, under FAR Subpart 10.003, “[t]he contracting officer shall insert the clause at 52.210-1, market research, in solicitations and contracts over $5 million for the procurement of items other than commercial items.” Accordingly, prime contractors must conduct market research where their contract values are over the $5 million threshold and are for non-commercial items.
The June, 2010 Change. As mentioned above, a June 16, 2010 interim rule modified the FAR’s market research requirement. Among other things, it added the requirement that agencies perform market research “[b]efore awarding a task or delivery order under an indefinite-delivery/indefinite-quantity (ID/IQ) contract…for a noncommercial item in excess of the simplified acquisition threshold…” 10.001(a)(2)(v).
Nervous? Don’t Be! It is unlikely that the market research requirement described herein would negatively impact your small business. First of all, FAR Subpart 10.001 contains a built-in reasonableness mechanism at Subsection (b), which stipulates that, “[w]hen conducting market research, agencies should not request potential sources to submit more than the minimum information necessary.” Furthermore, it is unlikely that, as a small business, you will be required to perform market research as a prime contractor under FAR Subpart 10.003. In fact, as suggested by the interim rule, “[t]he number of small businesses receiving such contract awards is estimated to be statistically insignificant.”
So What? As a small business owner, this provision is unlikely to directly impact you, as discussed above. It would directly benefit you if you manufactured the type of commercial items that may be selected for federal procurement after rigorous market research, but the chances that you do so are relatively slim. Indirectly, however, the FAR’s market research requirements should be encouraging, as they indicate a federally imposed willingness to make informed decisions. Ultimately, it is such a prejudice towards rational decisions that may protect you from a seemingly irrational market.
FAR Out: Suspension and Debarment . . . No Holds Barred
By Adam Munitz, Esq. on Feb 6th, 2012 On July 5, 2011, the Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”) issued a final rule on suspension and debarment. Six months later, this rule remains of vital importance to all government contractors.
A Little History. Section 2455(a) of the Federal Acquisition Streamlining Act of 1994 stipulates that, “[r]egulations shall be issued providing that provisions for the debarment, suspension, or other exclusion of a participant in a procurement activity under the Federal Acquisition Regulation…shall have government-wide effect. No agency shall allow a party to participate in any procurement or nonprocurement activity if any agency has debarred suspended, or otherwise excluded (to the extent specified in the exclusion agreement) that party from participation in a procurement…activity.” Importantly, Subsection (c)(1) defines “procurement activities” as “all acquisition programs and activities of the Federal Government, as defined in the Federal Acquisition Regulation.” Section 815 of The National Defense Authorization Act (“NDAA”) for FY 2010 amended the definition of “procurement activities” to include the following sentence: “Such term includes subcontracts at any tier, other than subcontracts for commercially available off-the-shelf items…except that in the case for commercial items, such term includes only first-tier subcontracts.”
Let’s Back Up- What is Suspension/Debarment? Under Federal Acquisition Regulation (“FAR”) Section 9.4, federal agencies are authorized to temporarily restrict contractors and/or their representatives from contracting with the U.S. government (suspension), or restrict such activity for a finite period of time, which is generally at least three years (debarment). There are a number of malfeasances that merit such harsh administrative action; those justifying suspension can be found at FAR Subpart 9.407-2 and those justifying debarment can be found at FAR Subpart 9.406-2. The key takeaway, however, is that BOTH suspension and debarment can be imposed for any “cause of so serious or compelling a nature that it affects the present responsibility of the contractor or subcontractor.” FAR Subparts 9.406-2(c) (debarment) and 9.407-2(c) (suspension). This ground for administrative action is extremely broad, and grants federal suspension and debarment officials a remarkable degree of discretion. This should come as no surprise, as FAR Part 9.4 is ultimately intended to compel government contractors to engage in ethical business practices, rather than just punish unethical contractors in retrospect.
Expanding the Scope. Prior to the issuance of the FY 2010 NDAA, Section 2455(a) only mandated that contractors and higher-tier subcontractors check the suspension/debarment status of their first-tier subcontractors and that they report the suspension or debarment of first tier subcontractors contractors to the contracting officer before entering into subcontracts with such contractors. Section 815 of the FY 2010 NDAA expanded the scope of this reporting requirement, so that ANY suspended/debarred subcontractor must be reported in advance, regardless of their position in the supply/services chain. The subject rule modifies this slightly, by only applying the requirement to subcontracts in excess of $30,000. The effect, however, is the same: as of July 5, 2011, suspended/debarred contractors, regardless of the tier in which they perform, must be reported to the contracting officer by prime contractors and higher-tier subcontractors (for efforts in excess of $30,000).
The Commercial/COTS Exception. As usual, there are exceptions to the foregoing rule for commercial items. Specifically, for the procurement of commercial items, the monitoring and checking requirements are only applicable to first-tier subcontractors. Furthermore, the expanded scope is inapplicable to subcontracts for commercially available off-the-shelf items (“COTS”).
So What? If you are a government contractor and are involved in the provision of non-commercial goods or services, regardless of your size, this modification has dramatically expanded the scope of your monitoring and reporting requirements. While this may seem unduly burdensome, you should welcome this enhanced regulation. First, procurement fraud and other malfeasances will undeniably be detrimental to the goods or services you are providing, regardless of the scope or the level on which such miscondcut occurs. Second, this modification forces your business to be proactive in avoiding sanctioned individuals/entities that will eventually be uncovered as performing on government contracts irrespective of their suspended/debarred status. Government investigation of such misconduct is robust, and it is not a question of if investigators will learn of this participation, but rather when. From this perspective, it is better to report and reconcile involvement by suspended/debarred contractors before they have been engaged than to overcome such a hurdle half-way through, or towards the end, of a procurement effort. It is not your business’ fault that a lower-tier subcontractor was suspended/debarred, and this modification helps ensure that you remain faultless and in the clear.
Daily Dump: 6 December 2013
Daily Dump: 3 Decemeber 2013
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