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Timestamp: 2018-03-21 22:49:18
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Single Source Justification - Contract Administration - The Wifcon Forums and Blogs
By TC2012, August 19, 2015 in Contract Administration
TC2012 0
Construction project was awarded for remodeling and altering an existing facility. The specification includes a requirement for the contractor to design and install an expansion to existing brand name security system. The specification identifies the existing brand name system and provided detailed performance standards for the expansion of the brand name system.
1. The government did not prepare a brand name justification since the system was existing and it appeared redundant why the existing system needed to be expanded. Also, at this point the existing brand name system could not be changed by the government. Also, the government was not aware that only the brand name contractor was capable of designing and expanding the existing security system.
2. No protests were received either pre or post award related to the existing brand name provided in the specification.
3. Subsequent to contract award, the contractor presented an RFI indicating that it had just discovered that the brand name security system can only be expanded by the original security system manufacturer. The subcontractor indicated that it was allegedly qualified to install the system, but that it could not procure the required parts from the brand name manufacturer.
4. The contractor is requesting a contract modification in excess of $100,000 now to hire the brand name manufacturer to design and install the expansion to the existing security system. The contractor is basing its claim on the fact that the government failed to issue a single source justification for the existing security system. This fact somehow this mislead his subcontractor into believing it could perform the work and it was subsequently surprise that the system manufacturer was the only contractor capable of expanding the existing security system. The subcontractor also alleged that it bid approximately $20,000 to do this work and now finds the cost to be in excess of $100,000 and wants the government to pay the additional cost.
a. Does the FAR require a brand name justification when a project requires an expansion of an existing brand name security system?
b. Since none of the contractors protested the use of the brand name in the specifications, does this in any manner waive the liability assuming the regulatory sole source justification was required prior to issuing the solicitation?
c. Does the fact that the brand name justification entitled the contractor to an equitable adjustment to the contract since it claimed that it only bid the expansion at a cost of $20,000 and has now found the cost from the brand name contractor to be in excess of $100,000?
Thanks in advance for any idea comments or advice you may be willing to share.
The specification includes a requirement for the contractor to design and install an expansion to existing brand name security system. The specification identifies the existing brand name system and provided detailed performance standards for the expansion of the brand name system.
Is this a firm-fixed-price contract?
If the answer is YES to both questions, then the contractor has a problem that it needs to solve. No contract modification is warranted under the facts as explained here, as there is no error in the specifications and no contract clause has been triggered.
Does the contract include the contract clause at FAR 52.236-5, Material and Workmanship? If so, see para. ( a ). The contractor is responsible for solving its problem.
Q: Does the FAR require a brand name justification when a project requires an expansion of an existing brand name security system?
A: Yes, if you specify the Contractor can use brand name products for the expansion. "Where a single source is identified to provide a portion of a purchase because that portion of the purchase specifies a particular brand-name item, the [sole source justification] only applies to the portion of the purchase requiring the brand name" (FAR 13.106-1(B )(ii)).
Q: Since none of the contractors protested the use of the brand name in the specifications, does this in any manner waive the liability assuming the regulatory sole source justification was required prior to issuing the solicitation?
A: No, the agency must comply with federal law and regulations. Vendors participating during the solicitation may have lost the right to protest depending on whether the solicitation closed. Vendors that never saw the solicitation could protest within 10 calendar days of when they should have discovered the violation of law. "Protests based on alleged apparent improprieties in a solicitation shall be filed before bid opening or the closing date for receipt of proposals. In all other cases, protests shall be filed no later than 10 days after the basis of protest is known or should have been known, whichever is earlier" (FAR 33.103(e)).
Q: Does the fact that the brand name justification entitled the contractor to an equitable adjustment to the contract since it claimed that it only bid the expansion at a cost of $20,000 and has now found the cost from the brand name contractor to be in excess of $100,000?
A: As Ji mentioned, you have not provided all of the information necessary to make this determination. In addition to the information that Ji mentioned, I would want to know if the Contractor's proposal was included in the contract, and what it said concerning the expansion.
Is this really true? Yes
Is this a firm-fixed-price contract? Yes
If the answer is YES to both questions, then the contractor has a problem that it needs to solve. No contract modification is warranted under the facts as explained here, as there is no error in the specifications and no contract clause has been triggered. Agree
Does the contract include the contract clause at FAR 52.236-5, Material and Workmanship? If so, see para. ( a ). The contractor is responsible for solving its problem. Yes, the contract contains FAR 52.236-5 and I agree. The specification is an edited UFGS specification for military security systems.
TC2012 writes, "The contractor is basing its claim on the fact the Government failed to issue a single source justification..." This seems to be an issue of contract administration, so the Part 6 discussion seems largely irrelevant. Reading between the lines, is the contractor claiming the Government had superior knowledge that use of OEM parts was inevitable in order to successfully perform, knew prior to award that the contractor intended to perform without using OEM parts, and didn't bring that to the contractor's attention?
Assuming there is nothing to the superior knowledge allegation, I recommend the Government in its conversations with the contractor focus on the language of the requirements documents, and how those requirements remain unchanged. Don't get caught up in conversations about "derived" requirements, and certainly don't give the contractor new direction. How the contractor meets the express written requirements of the contract is up to the contractor.
Agree with your statement concerning complying with regualtions, but the Contracting Officer did not see the sole source in the specification and failed to identify the system as a single source and it was identified only as the existing system. Also KO did not know at the time that the manufacturer was the only contractor capable of expanding the system.
This was not a proposal, rather a fixed price bid based on the specifications prepared by an A/E. The A/E clearly indicated in the specifications the manufacturer of the existing security system. The specification included the following paragraph:
Provide expansion of existing Name Brand (edited to remove name) Electronic Security Systems (ESS), including associated equipment and appurtenances. The design of the ESS
shall include devices and equipment used to detect intrusion, control access to restricted areas, detect and deny unauthorized entries within specific areas, provide surveillance and annunciate alarms. The ESS shall be designed to provide operational flexibility and reliable performance. The ESS shall be modular, allowing for future incremental expansion or modification of inputs, outputs, and remote control stations. Integrated system capabilities shall include but not be limited to Intrusion Detection, Automated Access Control, and Intercommunications. Each system shall be complete and ready for operation and provide for a fully integrated central station solution. Include materials not normally
furnished by the manufacturer with the ESS equipment as specified in Section 26 20 00 INTERIOR DISTRIBUTION SYSTEM.
The specification went on to provide required system performance requirements.
1.5.2.1 Installer's Qualifications
Prior to installation, submit data of the installer's experience and certified qualifications. Show that the installer who will perform the work has a minimum of 2 years experience successfully installing ESS of the same type and design as specified herein. Include the names, locations, and points of contact of at least two installations of the same
type and design as specified herein where the installer has installed such systems. Indicate the type of each system and certify that each system has performed satisfactorily in the manner intended for a period of not less than 12 months.
It appears the specification is written allow for competition as some would suggest how do you know that another security system installer was incapable of installing the expansion of the brand name security system. The government was not advised until the subcontractor discovered that he allegedly under bid and in fact could not get the necessary component to allow for the expansion. So the contractor wants the government to pay the extra $100,000 to have the name brand company design and install the expansion.
Hope this clears up some of the issues.
This seems to be an issue of contract administration, so the Part 6 discussion seems irrelevant. The facts above don't provide any insight as to what theory the contractor has identified that would entitle it to an adjustment. I recommend the Government in its conversations with the contractor focus on the language of the requirements documents, and how those requirements remain unchanged. Don't get caught up in conversations about "derived" requirements, and certainly don't give the contractor new direction. How the contractor meets the express written requirements of the contract is up to the contractor.
Agree with you comment and the government has focused on the specification requirements and told the contractor to comply with the specifications. The contractor claims he does not have to comply since the government failed to provide the single source justification. Will most like file a claim.
Disclaimer - I am not a lawyer. You NEED to consult your agency counsel.
There are lots of after award claims concerning brand name products. The claims decisions usually depend upon the exact wording of the contract.
You stated that there is no "protest" concerning the brand name specification. At any rate, it would appear to be too late now to protest a brand name requirement.
It also isn't clear whether or not it has been establisherd that no other security system product will meet the performance requirements and function properly with the exisiting system.
You indicated that the contractor is requesting a contract modification, which is in essence a request for equitable adjustment of $100k (or maybe a claim). That isn't a "protest". There is now a contract.
The last sentence of the Material and Worklmanship clause states "The Contractor may, at its option, use any equipment, material, article, or process that, in the judgment of the Contracting Officer, is equal to that named in the specifications, unless otherwise specifically provided in this contract."
You didnt clearly state whether or not the contract specifically stated that no substitutions will be allowed. From what you stated, it appears that the government "identified the existing brand name system" but then identified the detailed "performance standards" for the expansion. EDIT 8/20/2015: TC2012 initially included his/her responses within the quotes from the respondents, so I overlooked TC's clarifications.
Either way, the contractor and/or its sub should have familiarized itself with the solicitation/contract requirements to determine what would be necessary to design and install the expansion to be compatible with the existing, very clearly identified security system. To determine later that it inadequately bid the subcontract or contract work doesnt excuse it from familiarizing itself with the scope of work prior to bidding or proposing..
You stated that there is no "protest" concerning the brand name specification. At any rate, it would appear to be too late now to protest a brand name requirement. It also isnt clear whther or not it has been establisherd that no other security system product will meet the performance requirements and function properly with the exisiting system.
You indicated that the contractor is requesting a contract modification, which is in essence a request for equitable adjustment of $100k (or maybe a claim).
You didnt clearly state whether or not the contract specifically stated that no substitutions will be allowed. It appears that the government "identified the existing brand name system" but then identified the detailed "performance standards" for the expansion. Either way, the contractor and/or its sub should have familiarized itself with the solicitation/contract requirements to determine what would be necessary to design and install the expansion to be compatible with the existing, very clearly identified security system. To determine later that it inadequately bid the subcontract or contract work doesnt excuse it from familiarizing itself with the scope of work.
I have seen many examples where the contractor
I agree with everything you said. To clarify the specification did not state that only the brand name would be accepted. However, individuals experienced with military type security systems may have been able to predict prior to bidding that only the brand name installer or installers pre-qualified by the OEM would have the required expertise and experience necessary to expand the existing security system.
It is my opinion that this contractor is using the single source justification requirement as a basis to support his REA because he has discovered that the subcontractor bid is no good and he now has to hire a firm that knows how to design and install security system. Then he blames the government for not telling him that the OEM is the only one capable of expanding the existing system,
I disagree. I do not believe that FAR requires justification for specification of a brand name product in a construction specification unless it would of necessity create a sole source procurement for the construction contract itself or would otherwise restrict full and open competition or maximum practicable competition for the construction contract. If anyone has evidence (not mere assertion) to the contrary, please let me know.
In any case, even if it does, failure to prepare such a justification would not, in and of itself, support a claim such as the one described above. There would have to be more.
I do not believe that FAR requires justification for specification of a brand name product in a construction specification unless it would create a sole source procurement for the construction contract itself or would otherwise restrict full and open competition or maximum practicable competition for the construction contract. If anyone has evidence (not mere assertion) to the contrary, please let me know.
I completely agree, it doesn't make sense in construction unless the contract involved on the single source item or the system was a new system and required a specific manufacturer It would be necessary for all Contracting Officer to ferret out all reference to a brand name manufacturer of the existing system requiring modification, expansion or change. The Contracting Officer would then be required to then determine if contractors, other than the OEM, were able to modify, change or expand an existing facility system.
FAR 36.202 -- Specifications © When “brand name or equal” descriptions are necessary, specifications must clearly identify and describe the particular physical, functional, or other characteristics of the brand-name items which are considered essential to satisfying the requirement.
In this case a brand-name item is not considered essential to satisfying the requirement, rather the specification included only the manufacturer of the existing security system. A bidder would need to know the manufacturer of an existing system in order for it to determine if it had adequate expertise to perform the required expansion or alteration to the existing system. All who submitted bids had a choice to bid and not to bid based on their own capabilities to comply with the specified performance requirements. A single source justification would logically not be required if the government elected not to restrict competition. The government in this case assumed that there may be a contractor with capabilities to perform the required expansion other than the OEM. I believe it is better to error on the side of not restricting competition by stating that the OEM is the only company capable of expanding the existing system. In this case the government allowed for full and open competition and it was not until the market revealed that only the OEM was capable of satisfying the expansion of the existing security, that it became a single source. Competition setting the restriction and not the government. Anyone disagree with this premise?
TC, if it is possible, would you please edit your earliers posts to separate your replies from the quotes of the posters that you are replying to? Thanks.
Fixed, thanks. It makes it hard to follow. My bad.
Yes, I dont necessarily agree that the government couldnt know that nobody else could design and provide the security system expansiion. You hired an A/E firm, presumably with some expertise in specifying security system requirements, who may have been aware of the existing system's technical requirements and how they are sold. In addition, the government had to prepare an independent government estimate, so should have some knowledge or have done some market research.
However, not withstanding what the government's knowledge was, a specialty subcontractor who bids to design and install a security system that must tie into an existing system - in my opinion - has the professional responsibility to be competent, aware of the existing conditions and of the scope of work necessary to design and integrate the extended system into the existing system. You can study Nash and Cibinic's "Administration of Government Contracts" under the discussion of Risk Allocation, Impractibility of Performance and Mistake, etc. to see that the firm that purports to be competent to design and install a system has the responsibility to become familiar with the market and technical requirements to successfully perform the specified task. I don't think that this is rocket science or pushing the state of the art...See also FAR clause 52.236-3, Site Investigation and Conditions Affecting the Work.
Joel, I agree the A/E should have advised the KO. However, we must first find an A/E who knows enough or should have been advised by KO to provide notification of a single source installer. Equally, referencing FAR 52.236-3 The contractor by submitting its bid acknowledges that it has taken steps reasonably necessary to ascertain the nature and location of the work, and that it has investigated and satisfied itself as to the general and local conditions which can affect the work or its cost, including but not limited to (1) conditions bearing upon transportation, disposal, handling, and storage of materials; (2) the availability of labor, water, electric power, and roads;(3) uncertainties of weather, river stages, tides, or similar physical conditions at the site; (4) the conformation and conditions of the ground; and (5) the character of equipment and facilities needed preliminary to and during work performance. Further, the Contractor also acknowledges that it has satisfied itself as to the character, quality, and quantity of surface and subsurface materials or obstacles to be encountered insofar as this information is reasonably ascertainable from an inspection of the site, including all exploratory work done by the Government, as well as from the drawings and specifications made a part of this contract. Any failure of the Contractor to take the actions described and acknowledged in this paragraph will not relieve the Contractor from responsibility for estimating properly the difficulty and cost of successfully performing the work, or for proceeding to successfully perform the work without additional expense to the Government.
Okay. Bottom line is that the government did identify the brand of the security system, the performance requirements for the system and the installer requirements. That is consistent with 36.202 ( c ). The subcontractor doesn't even appear to be a qualified installer, let alone qualified to design the extension. If it was, it would have known the brand name restrictions and would have priced the job accordingly.
I think that you work for USACE. Unless we have completely lost our legal competence, which I doubt, then Office of Counsel should be able to research applicable case law. Tying into existing security and other specialized building systems is done frequently. It isn't unusual to have to meet the restrictions of a proprietary building system when adding to or altering an existing building configuration. The specialty sub should have known that and such responsibility is imputed to the prime.
TC, I forgot to mention that this was apparently an IFB, not a negotiated source selection. You mentioned the word "bid" at least twice above. The government wouldn't have any specific knowledge of the specialty sub's qualifications or lack thereof nor its price. I'll bet that there isn't a separate line item for the security system in the bidding schedule. Am i correct?
Everything above is correct. I feel the contractor is trying to cover itself with the excuse that the government did not issue a sole source justification and therefore, we are off the hook to provide what the specifications require.
I was a Contracting Officer on construction contracts for over 25 years and I am aware how GC's attempt top cover their backside when they screwed up and find out they have a bad bid price from a subcontractor. I don't see a tie between the sole source justification and subsequent compliance with a non-defective specification after contract award. It is my opinion that if the contractor did not protest the sole source issue within 10 days after award, it becomes a dead issue and the GC is required to comply with the specifications.
Joel, yes this was an IFB and the bid was lump sum. The security system was included in the lump sum bid and a separate price breakdown was not requested. The government would not have any idea of what firms were bidding on the security system. This was a subcontractor who bid to an electrical subcontractor.
Good luck, TC. Looks like a problem between the sub and its sub that they are trying to push over to the govt.
TC, I didn't directly address your thought that it is better to not restrict competition if there is a possibility that someone other than the brand name supplier of the existing system can interface with the existing system. I agree as long as we clearly identify the existing system and describe the performance criteria. From the info provided it appears that a prospective qualified, specialty sub should be able to determine if it can assemble a team to design and install a system that can interface with the existing system.
What you showed above is not unusual from projects I have seen.
Another thought: Low bid project award criteria begets low bid prime and subs. The prime may well have only been looking at the bottom line price, not the capabilities of its sub here.
Let's put this into perspective. The actual dollar amount involved ($120k vs. $20k) here is relatively small so the prime may not have put much thought into the complexity of the security system. Such a relatively small dollar amount of scope probably wouldn't have warranted any special attention by the government as an RFP evaluation criteria, either (had this been an RFP instead of an IFB) .
I don't think that the government was negligent here from the limited information we are aware of.
I think perhaps the key to this issue may be found in FAR 52.236-5 -- Material and Workmanship. In a construction contract a brand name may be inserted provided it also provides the required salient features or performance requirements of an acceptable system. The inclusion of the existing brand name security system without a single source justification set a standard of the existing system quality and advises potential bidders of the brand name of the existing security system. The specifications did not specifically indicate that the brand name was the only product that could possibly be used. Rather, the specs indicated that was the brand of the existing system and provided performance criteria for the expansion of the existing security system. Bidders had the latitude of installing a complete replacement security system, provided the system complies with the required performance criteria. I am certain the cost to replace the entire security system far exceeded the cost to expand the existing system.
( b ) The Contractor shall obtain the Contracting Officer’s approval of the machinery and mechanical and other equipment to be incorporated into the work. When requesting approval, the Contractor shall furnish to the Contracting Officer the name of the manufacturer, the model number, and other information concerning the performance, capacity, nature, and rating of the machinery and mechanical and other equipment. When required by this contract or by the Contracting Officer, the Contractor shall also obtain the Contracting Officer’s approval of the material or articles which the Contractor contemplates incorporating into the work. When requesting approval, the Contractor shall provide full information concerning the material or articles. When directed to do so, the Contractor shall submit samples for approval at the Contractor’s expense, with all shipping charges prepaid. Machinery, equipment, material, and articles that do not have the required approval shall be installed or used at the risk of subsequent rejection.
( c ) All work under this contract shall be performed in a skillful and workmanlike manner. The Contracting Officer may require, in writing, that the Contractor remove from the work any employee the Contracting Officer deems incompetent, careless, or otherwise objectionable.
Yes. Plus what I said. It doesn't matter whether or not this is the only way to perform. You gave the contractor enough info to determine how to proceed. The boards and courts have charged the contractor with certain responsibilities to familiarize themselves with market conditions - especially where the scope involves design-build and extensions of design. Your lawyer can do the research.
Clarification a1 - do you require brand name or equal for the expansion? Part 15 (Part 6), Part 14 (Part 6), Part 13, and Part 16.5 all reference brand name justification requirements (no justifications for brand name or equal as used is 52.236-5, and Part 11).
Clarification b1 - You seem to be asking if the contractor's absence of a timely protest waives the liability. What liability are you referring to?
Clarification c1 - If you rephrase this perhaps you can get an answer that will help you. As-is, any answer is based on an assumption of what this question means.
In order to get, truly, helpful responses we have to ensure we ask clear questions. After all, the answers given are in response to the question asked. If the question is wrong the answer is sure to follow (even if answered correctly, you just answered the wrong question correctly).