Source: https://www.dau.mil/aap/Pages/qlist.aspx?cgiSubjectAreaID=4&cgiStart=0&RefreshField=20
Timestamp: 2018-02-19 06:03:57
Document Index: 697329068

Matched Legal Cases: ['art 7', 'art 45', 'art 570', '§ 2805', '§ 18233', '§ 2805', '§ 2805', '§ 2805', '§ 18233', '§ 2805', '§ 18233', '§ 480', '§ 2805', '§ 480', '§ 2805', '§ 2805', 'art 36', 'art 31', 'art 15', 'art 7', 'art 7', 'art 6']

Home > Facilities Engineering (33 Q&A)
Are rental of space leases covered by the FAR? Posted:9/20/2017
Posted: 9/20/2017 4:23:00 PM
Scenario: The FAR requires commercial vendors to be registered in SAM before we can contract with them.
The General Services Administration (“GSA”) is the federal agency primarily responsible for owning, leasing, and managing real property on behalf of most other federal agencies, although some agencies (like the Department of Defense, Postal Service and Veterans’ Administration) handle some of their own real property needs. Leases are covered to a limited extent in the FAR, in several different ways. See FAR subpart 7.4 about equipment purchase versus leases and FAR part 45 (FAR 52.245-1), for the definition of Government property.
The specific regulations on leases are in the General Services Acquisition Manual, part 570. https://www.gsa.gov/real-estate/real-estate-services/leasing-overview.
Any company receiving appropriated funds needs to be registered in SAM
Can an ESPC contractor use an overseas design firm Posted:8/18/2017
Posted: 8/18/2017 2:58:00 PM
Scenario: We have been contacted by an ESPC contractor to assist in the design of a combined heat and power plant for a US Military base outside the US. The contractor wants our A/E firm to prepare the specifications and ensure the design requirements meet the UFCs. The ESPC contractor intends to use their design firm located in India for the detailed design. They will be giving this firm access to military base drawings and other information.
The regulations concerning Energy-Saving Performance Contracts are subject to a number of directives that are independent of the Federal Acquisition Regulations and agency supplements. For example, the location of the site can necessitate the inclusion of state and local requirements. Inclusion of host-nation requirements are also a consideration when the ESPC performance is outside the United States.
Since you are contemplating entering into a sub-contractor relationship, I recommend that you submit your written inquiry to the prime contractor who can forward the matter to the procuring contracting officer.
Prior year bill pay with current year fund. Posted:7/25/2017
Prior year bill pay with current year fund.
Posted: 7/25/2017 10:12:00 PM
Scenario: Working Capital Fund/NAVFAC did not request or bill for prior year until the next year.
No, current year funds cannot legally be used to pay a prior year bill (unless those prior year funds have been closed (i.e., cancelled)). Instead, funds from the same prior year and same appropriation that were used to make the original obligation (even if those funds are now in an expired status) should be sought to pay this prior year bill.
Title 31 of the U.S. Code established three separate time periods – each with specific requirements – for the liquidation of obligations made with appropriated funds (in other words, “paying old bills” from prior years). The three time periods are as follows: “current”; “expired”; and “closed” (wherein the funds are “cancelled”). To determine the proper fiscal year appropriation to cite when paying a valid invoice, three points have to be considered: (1) the fiscal year cited on the original obligation; (2) the number of years the specific appropriation is considered “current”; and (3) the date the invoice is received.
Current Time Period: When a valid, certified invoice or other “bill” from a vendor or supplier arrives at the paying finance office during the fiscal year(s) the appropriation is in a “current” status, determination of the fiscal year funds to be used for payment is relatively simple: pay the certified invoice with the fiscal year funds cited on the original contract or other obligation document. For example, assume your organization awarded a R&D contract in FY 2016 to pay for this NAVFAC/facility requirement and properly cited its FY 2016 RDT&E, Navy appropriation account, which is “current” for the two year period of FY 2016 and FY 2017. If the performing activity submits a valid invoice anytime during the two year period FY 2016-2017, the invoice should be paid out of the originally cited FY 2016 RDT&E, Navy appropriation, and “charged” to the specific fund citation as in the original obligation. (Note that FY 2017 RDT&E, Navy funds, while also in a current status, should not be used to pay this FY 2016 bill, as FY 2017 RDTE, Navy funds are available for bona fide needs that arise in FY 2017 and FY 2018 not FY 2016). As such, the use of FY 2017 RDTE, Navy funds in this situation would constitute a Bona Fide Needs violation.)
Expired Time Period: When a valid, certified invoice or other “bill” from a vendor or supplier arrives at the paying finance office during the fiscal year(s) the appropriation is in an “expired” status, determination of the fiscal year funds to be used for payment should be relatively simple but is often misunderstood: pay the certified invoice with the fiscal year funds cited for the original contract or other obligation document. For example, assume your organization awarded this NAVFAC/facility requirement contract in FY 2016 and properly cited its FY 2016 O&M, Navy appropriation account, which was “current” during the one year period of FY 2016, and, as in your situation, the contract had not yet been officially closed, and although the contractor did the contracted effort, for some reason had not submit an invoice for that effort until after 1 Oct 2016 (i.e., FY 2017). If the contractor submits an invoice against that contract during the five year period FY 2017 through FY 2021 when the FY 2016 funds are in an “expired” status, the invoice should be paid out of the originally cited FY 2016 O&M, Navy appropriation and, once funds are available, “charged” to the specific fund citation stated in the contract. Paragraph 100213F, Chapter 10, Volume 3 of the FMR says “the level of detail required to be maintained for expired accounts is the same as that required to be maintained for current accounts” in order to ensure proper administrative control of those appropriations.
If funds are not available in the original fund citation to cover the properly chargeable obligation to that line item, a funding realignment between programs within that fiscal year appropriation account would be accomplished (this is often referred to as an “upward obligation adjustment”). There are two references governing this situation. In accordance with U.S. Code, Title 31, Section 1553, during the period prior to the appropriation account going into the “closed” status that appropriation remains available for, “recording, adjusting, and liquidating obligations properly chargeable to that account”. Paragraph 061004, Chapter 6, Volume 3 of the FMR, states for payment during the expired time period, “(I)f funding is not available on that program but funding is available within the appropriation, a funding realignment between programs in that appropriation must be accomplished.” After the funding realignment is accomplished to provide sufficient funds to the original line item, the proper obligation would then be made against that originally cited line item and payment would ultimately be made out of that originally cited line when payment is appropriate. The net result of this funding realignment between programs within the appropriation account is that the payment for the “old bill” is paid from the original fund citation when the obligation occurred.
The originally cited appropriation account is used to pay that “old bill” because such funds are still available for necessary upward or downward adjustments to the original obligation amount and for expenditure purposes for the one year “current available” period plus the entire five year “expired” period. In other words, if the paying finance office receives a valid invoice anytime during the period the originally cited appropriation was considered “currently available” plus the five year period that appropriation was considered “expired”, the payment should be made out of the originally cited appropriation account.
Closed Time Period: When a valid, certified invoice or other “bill” from a vendor or supplier arrives at the paying finance office after that appropriation goes into the “closed” status (i.e., funds are “cancelled”), determination of which fiscal year funds should be cited for payment should be relatively simple but is also sometimes misunderstood: pay the invoice with currently available funds of the same appropriation account cited for the original contract or other obligation document. This is consistent with U.S. Code, Title 31, Section 1552(a), which states that after the five year expired status period, “the account is closed and any remaining obligated and unobligated balance is cancelled and thereafter shall not be available for obligation or expenditure for any purpose”. Section 1553(b) of Title 31 further states that “obligations and adjustments to obligations that would have been chargeable to that account prior to closing and that are not otherwise chargeable to current appropriations of the agency may be charged to current appropriations of the agency for the same purpose”. Within DoD, the requirements of Title 31 have been set forth in Chapter 10, Volume 3, of the FMR.
According to Chapter 10, Volume 3, of the FMR, there are specific restrictions on the use of currently available funds used to pay an invoice resulting from an obligation that cites a “cancelled” appropriation that has moved into the “closed” period. The total amount of charges to the current year appropriation account may not exceed the lesser of the following:
- Unexpended balance of the closed appropriation account; or
- Unexpired unobligated balance of the currently available appropriation account being charged; or
- One percent of the total original amount appropriated to the current appropriation account being charged.
Lastly, and as a best practice in general with issues pertaining to fiscal law, you should consult and work with your local comptroller and legal offices to ensure that the specific details of your particular situation are being legally addressed. Your local comptroller office should also be able to facilitate any “upward obligation adjustment” that might be required to pay this prior year bill (if you do not have additional prior year funds of that same appropriation type available).
Capital Improvement Posted:5/22/2017
Posted: 5/22/2017 10:32:00 AM
Scenario: A recent inspection said all ("construction") mroject folders should have a DD1354. My view is that only projects that involve capital improvement or inventory adjustment should need a DD Form 1354.
It is not the role of the Ask A Professor program to countermand guidance provided by organizational audits. If you disagree with the inspectors, your organization should follow the appeal process.
Referance FAR 52.211-11 Liquidated Damages Posted:1/30/2017
Referance FAR 52.211-11 Liquidated Damages
Posted: 1/30/2017 12:55:00 PM
Scenario: Working supply contract valued at 7K.
As you know from reading this particular clause, the Contracting Officer (KO) makes the determination of how much damages are assessed per day of delay. Unfortunately, there is no set formula to help the KO figure out what the daily damage amount should be. The amount is dependent on the circumstances of each acquisition assuming it applies at all.
FAR 11.501(b) states “the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery”. Without knowing the specifics of your contract it is not possible to speculate as to what damage the Government suffers from delinquent delivery and how that potential damage should be compensated.
A common example of Liquidated Damages relates to a construction type contract to build or renovate a barracks building. While the construction is occurring, the agency must pay for alternate living accommodations (i.e. a hotel) with the expectation being once the construction is complete there will no longer be a hotel bill to pay. The KO can easily tie that each day beyond the agreed upon completion date will result in an additional daily rate to pay for the hotel. That rate is than inserted in to the applicable Liquidated Damages clause as both the established harm (unplanned alternate living location) and the daily rate (the hotel charge) are easily and clearly determined.
As always, we encourage you to work with your contracting and legal office as well as referencing your agency specific regulations for any acquisition as we don't have all the facts or access to the contract files.
Can we use O and M to fund a repair that will be completed over 3 years? Posted:11/2/2016
Posted: 11/2/2016 5:34:00 PM
Scenario: We have a townhouse that needs a repair costing $500K. As it is below the MILCON threshold we want to use O&M funds however we have been told that if we use O&M the work has to be completed in 1 year but the SOW is 800 days.
The question asked revolves around the use O&M funds for a repair/construction project that will last longer than 1 year.
(a) The balance of an appropriation or fund limited for obligation to a definite period is available only for payment of expenses properly incurred during the period of availability or to complete contracts properly made within that period of availability and obligated consistent with section 1501 of this title.
This language indicates that O&M funds can be used for a requirement arising in the year the O&M funds are available. These funds can be expended beyond the fiscal year to pay for that requirement.
The Financial Management Regulation (FMR) 7000.14-R Volume 3 Chapter 17 Section 170302 goes into great detail concerning the use of funds for unspecified Minor Military Construction - see below:
170302. Unspecified Minor Military Construction A. Projects that involve the acquisition of new construction, addition, expansion, extension, alteration, conversion, replacement, or installation of permanent or temporary facilities (except family quarters) are minor construction projects when:
1. The cost of the project does not exceed such amount as may be specified by 10 U.S.C. § 2805 for the Active Components and 10 U.S.C. § 18233a for the Reserve Components, and 2. The project has not been included in the budget request as a specific line item.
B. For other than family housing facilities, when the cost of a project is less than the amount specified in 10 U.S.C. § 2805, the project must be financed from unspecified minor construction appropriations; operations and maintenance (O&M) appropriations; research, development, test and evaluation (RDT&E) appropriations; working capital fund resources; or other resources, as appropriate. The funding source does not influence the financial statement capitalization requirements described in subparagraph 170602.A.
C. As of the date of this chapter, the dollar limits on minor construction are:
1. An unspecified minor military construction project will have an approved cost equal to or less than $3 million. (See 10 U.S.C. § 2805, as amended.) 2. For a military construction project intended solely to correct a deficiency that is life threatening, health threatening, or safety threatening, an unspecified minor military construction project may have an approved cost equal to or less than $4 million. (See 10 U.S.C. § 2805, as amended.) 3. Minor military construction projects for the Reserve Components are valued at less than $750 thousand. (See 10 U.S.C. § 18233a).
4. O&M Funds may be used to carry out an unspecified minor military construction project costing not more than $1 million. (See 10 U.S.C. § 2805, as amended.)
D. Project guidelines include:
1. Notwithstanding any other provisions for approval of minor construction projects, no project may be proposed to be accomplished under minor construction authority that previously has been deleted by the Congress from proposed military construction authorization legislation or otherwise disapproved of by the Congress.
2. Each project accomplished under the minor construction authority must result in a complete real property facility or improvement.
3. Each project must, to the maximum extent possible, be consistent with the appropriate installation master plan. Requests for project approval must fully disclose the relation of the project to the master plan and must detail further planned construction to the same or closely related facilities.
4. The planned acquisition of, or improvement to, a real property facility through a series of minor construction projects; that is, incremental type construction is prohibited.
E. Notification requirements include:
1. When a minor construction project costing more than amounts established in 10 U.S.C. § 18233a is undertaken, appropriate congressional committees must be notified prior to the start of the project. The project then may be carried out only after the end of the 21-day period beginning on the day the notification is received by the committees, or if earlier, the end of the 14-day period beginning on the date on which an electronic copy of the notification is provided in an electronic medium pursuant to 10 U.S.C. § 480. Funds cannot be obligated for construction until the committee approves the minor construction.
2. 10 U.S.C. § 2805 requires the Secretary concerned to notify, in writing, the appropriate committees of Congress of a decision to undertake an unspecified minor construction project costing more than $1 million. Notification must include the justification and estimated cost of the project. The project may be carried out only after the end of a 21-day period beginning on the date notification is received by the committees (or, if earlier, the end of the 14-day period beginning on the date on which a copy of the notification is provided electronically pursuant to 10 U.S.C. § 480).
F. Additional minor construction provisions include:
1. Planning and design costs are excluded from the cost determination for purposes of determining compliance with the amounts established in 10 U.S.C § 2805 for minor construction projects.
2. DoD Components are precluded from using materials, supplies, or items of installed capital equipment on their own minor construction projects on a non-reimbursable basis.
3. Prerequisites for establishing a minor construction project include identification of the required end result of the project and its correlation with the appropriate installation master plan.
4. It is not feasible to prescribe absolute criteria for determining what scope of work would, under all possible circumstances, properly constitutes a separate minor construction project. However, minor construction projects undertaken under the authority of 10 U.S.C. § 2805 must be consistent with the intent of the statute as to what constitutes a separate project.
I strongly recommend you consult with your Comptroller/BFM for specific guidance issued by the Navy.
Programmatic ESOH Evaluation PESHE Posted:5/20/2016
Posted: 5/20/2016 10:10:00 PM
Scenario: My office has an environmental management system - which covers most of our procedures, processes normative to a "facilities" headquarters organization. We also have acquisition program managers. Some of our weapons are stand alone, but many are mated to a facility - think in terms of the old coastal artillery fort. One, should we do PESHEs for deployed weapons systems - like missile base (which is both facility and weapon); like a radar site, ....
See the information at /Pages/NewsCenter.aspx?aid=334 for assistance.
SABER 750K Limit for Maintenance Or Repair Posted:1/27/2016
Posted: 1/27/2016 1:29:00 PM
Scenario: My customer is convinced that SABER Delivery Orders can go over the usual $750K limit so long as the Delivery Order is not for new construction, but for repair or maintenance. I have no found no guidance that supports this idea. FAR guidance tells me that any type of SABER work cannot exceed $750K, unless you want to fund it with MILCON funds as opposed to the usual O&M funds.
Readers, the following questions were discussed during off-line communication.
1. Is this construction inside the U.S. or outside the U.S.?
2. When was the SABER Contract signed? The year of contractual signature may be important.
3. Specifically, what does the contractual document indicate regarding the dollar values?
4. Next, is this question limited to repair and/or maintenance?
5. Is this for a Military construction Project, or could it be classified as an “Unspecified Minor Construction”?
These references were provided to the professionals asking the questions. Each contract/acquisition needs to be researched based on several factors that were discussed. Additionally, the $750,000 limit has been recently changed to $1 Million, and one needs to consider any funding conditions or levies that must be considered. There is a reference to a AFIT course of instruction (*WMGT 426 Saber Management Course*) that would also be helpful to Construction/Contracting Professionals.
FINAL ANSWER: This specific contract in question,- was written for $750,000. Read the contract!
FAR and DFARS Part 36
AFFARS Informational Guidance (IG 5336.9201) Simplified Acquisition of Base Engineer Requirements (SABER)
10 U.S.C. 2802, Military Construction Projects
10 U.S.C. 2805, Unspecified Minor Construction
AFI 32-1032, Planning and Programming of Real Property Maintenance
AFI 32-9001, Acquisition of Real Property
AFI 32-1023, Design & Construction Standards
MP5316.504 Types of Contracts (Mandatory Procedures) dated March 2007
DOD 7000.14-R DOD Financial Management Regulation (FMR) (See paragraph 080504 of the FMR)
Additionally, there is a TWO week course for SABER Project Managers/Chiefs, and Contract Administrators on 25 Apr 2016 at Wright Patterson AFB that some professionals would find of interest. WMGT 426 Saber Management Course.
Air Condition replacement. Posted:12/8/2015
Air Condition replacement.
Posted: 12/8/2015 11:56:00 AM
Scenario: I have an action that is $6,000.00 to remove and replace an existing air condition unit at Norfolk where our office group (DLA, Document Services) is a guest of the navy. DLA will pay for the replacement and installation. I have a signed work permit signed by the NAVFAC MIDLANT authorizing the DLA to replace it at the Navy installation. This office (DLA Document Services) does not have an A&E contract for this location.
Normally the local contracting office would have market research associated with the local area as well as the necessary contractual instruments to fulfill the requirements for the local activity. However, when other activities are involved, such as your situation, there could be other arrangements. Therefore, the decision regarding which office fulfills the requirement is going to have to be resolved between your management and the management at the local contracting office.
US Military Personnel on FMS Cases Posted:9/25/2015
US Military Personnel on FMS Cases
Posted: 9/25/2015 4:52:00 PM
Scenario: DoD 7000.14-R, Chapter 7 discusses pricing of Military personnel services, I would like to know what specific reference discusses when it is appropriate/applicable to have a military asset work either on a case funded or admin funded position. The FMS case would be defined order lines for a defense article - launch and leave weapon w/no FMF or IMET or other special funding.
Question: When is it appropriate to use US military personnel on FMS cases? Are those billets only used at the SAF level?
In general, it is the joint responsibility of the DoD Component Security Assistance Implementing Activity (IA) and the acquisition command/program management office/organization that is assigned respond to a Letter of Request (LOR) and/or Price and Availability (P&A) request from a Foreign Military Sales (FMS) customer -- or actually perform FMS Letter of Offer and Acceptance (LOA) efforts for signed LOAs -- to determine whether DoD military and/or civilian personnel should expend hours in the performance of FMS activities. CIVPERS and MILPERS at all levels within a DoD Component may be tasked to perform FMS activities. Normally, the local command decides whether CIVPERS, MILPERS -- or some combination thereof -- provides the best alternative regarding performance of FMS activities. Such decisions should be based on which types of personnel are available and which are best qualified to perform whatever functions are necessary to perform the FMS activities. Use of MILPERS for FMS activities is not limited to the SAF level.
The FMR (DoD 7000.14-R) Volume 15, Chapter 7 070203 only provides basic MILPERS pricing guidance for FMS. Specific FMS pricing guidance -- including when and how to charge CIVPERS and MILPERS against FMS Admin or FMS LOA funds in pre-LOA and post-LOA signature circumstances -- may be found in the electronic Security Assistance Management Manual (eSAMM), Chapter 9, C.9.4.2 "Manpower in Support of FMS Programs".
The policies and procedures in the eSAMM in this area are complex, and subject to interpretation. Local commands should consult with Security Assistance experts in their chain-of-command regarding interpretation and application of this guidance within their DoD Component. For the Air Force, SAF/International Affairs is responsible for overall interpretation and application of eSAMM guidance in this area, but there are many Air Force Major Commands that also have Security Assistance experts resident within their organizations that may be able to assist individual acquisition program management organizations that require advice and assistance.
Antideficiency Act grey area clarification Posted:9/4/2015
Antideficiency Act grey area clarification
Posted: 9/4/2015 9:41:00 AM
Scenario: We are executing a contract to replace a roof for $275k. Prior to award, management contacted the vendor directly and received a proposal for "temporary" patch work ($24k) on the same roof in the interim. No contract was written and no funding authorizations or obligations certified prior to the same management official directing the vendor to proceed with the work. Now temporary work is complete and vendor is seeking payment. Technically, funds are available for "facility maintenance" but not specifically for this project.
Question: Does the above scenario violate the Antideficiency act, FAR, or any other US laws?
You do not have a violation of the Anti-deficiency Act. What you have is a person who is not a contracting officer directing a contractor to do $24k worth of work. Only a Contracting Officer can bind the government. What will have to be decided is whether the person who told the contractor to do the work will have to pay for the work or whether it will be ratified and the VA pays for the work.
Let's say the Contracting Officer had $20k of certified funds on the contract, but the contract was awarded for $24k. As long as you had the funds available for facilities maintenance you would not be anti-deficient. The keys is having funds available at the time of the action. In the example I just provided a mod would need to be written adding $4k of additional funds to the contract. In this example I am only explaining how it would not be an ADA violation, I am not saying this is how it should be done. The correct way is to originally have all $24K on the contract.
Communication with Offerors after Receipt of Proposals Posted:7/13/2015
Communication with Offerors after Receipt of Proposals
Posted: 7/13/2015 1:42:00 PM
Scenario: My office issued an RFQ against a GWAC "D" type contract. Vendors were required to submit technical information and pricing. The basis for award states price will be the determining factor for those offerors determined technically acceptable. During the initial evaluation, "all" vendors were determined technically unacceptable. We are considering going only to the low offeror based on the following: 1. An RFQ was issued. While simplified acquisition procedures were not used against this "D" type contract, an RFQ mirrors simplified acquisition procedures. 2. The low offeror did not have that many items to correct in their proposal.
Question: 1. If you give one vendor an opportunity to change their proposal, do you have to give them all an opportunity? 2. Does it matter if you are using simplified acquisitions procedures, GSA or GWAC contract?
There is a GWAC guide you might find very helpful. The GWAC ordering Guide of 14 April 2015 states, OCOs should evaluate proposals based on the methodology stated in the solicitation to maintain fairness in the Order process and mitigate protest risk. Either tradeoff or lowest price - technically acceptable evaluations are valid best value methods, and are authorized at the Order level.
In your situation you stated , "The basis for award states price will be the determining factor for those offerors determined technically acceptable." The problem now is the fact no one was technically acceptable and you want to do something different than what you told the vendors you would do. My recommendation is to hold discussion with everyone and request a revision and make award to the lowest priced technically acceptable , as you told the vendors you would do.
This answer is based on the information provided and you may want to consult with legal.
What Color funding can I use to purchaseBack-up Generators Posted:3/19/2015
What Color funding can I use to purchaseBack-up Generators
Posted: 3/19/2015 5:05:00 PM
Scenario: My program office is responsible for upgrading and installing new SATCOM facilities through-out the world. One of the requirements that goes with this is to ensure that the existing or new facilities will support the new terminals. One of these requirements is to provide backup power. My office has both 3080 and 3400 funds. these generators will be Real property installed equipment.(RPIE)
Question: My question is what color funding can I use to purchase generators and what regulation tells what I need to use?
It appears your question revolves around the use of Procurement funds or O&M funds to purchase backup generators which are as stated real property. The Federal Management Regulation Volume 2A Chapter 1 which explains the criteria for determining expenses versus investment costs which will direct you toward the use of Procurement funds or O&M funds.
C. Policy for Expense and Investment Costs
1. DoD policy requires cost definition criteria that can be used in determining the content of the programs and activities that comprise the Defense budget. The primary reasons for these distinctions are to allow for more informed resource allocation decisions and to establish criteria for determining which costs are appropriate to the various defense appropriations.
3. Costs budgeted in the Operation and Maintenance (O&M) and Military Personnel appropriations are considered expenses. Costs budgeted in the Procurement and Military Construction appropriations are considered investments. Costs budgeted in the Research, Development, Test and Evaluation (RDT&E), Base Realignment and Closure (BRAC), and Family Housing appropriations include both expenses and investments. Definitions for costs within the Defense Working Capital Funds are provided in Chapter 9 and in Section 010214.
f. Assemblies, spares and repair parts, and other items of equipment that are not designated for centralized item management and asset control and which have a system unit cost less than the currently approved dollar threshold of $250,000 for expense and investment determinations. This criterion is applied on the basis of the unit cost of a complete system rather than on individual I tems of equipment or components that, when aggregated, become a system. The concept of a system must be considered in evaluating the procurement of an individual end item. A system is comprised of a number of components that are part of and function within the context of a whole to satisfy a documented requirement. In
this case, system unit cost applies to the aggregate cost of all components being acquired as a new system.
g. Cost of incidental material and items that are not known until the end item is being modified are conditional requirements and are considered expenses because the material is needed to sustain or repair the end item.
h. Engineering efforts to determine what a modification will ultimately be or to determine how to satisfy a deficiency are expenses.
I. Facilities sustainment, O&M-funded restoration and modernization projects. Planning and design costs are excluded from the cost determination for purposes of determining compliance with the amounts established in 10 U.S.C. 2805 for minor construction projects; however, design costs are not excluded from capitalization.
2. Investments. Investments are costs to acquire capital assets such as real property and equipment. The following criteria shall be used to determine those costs to be classified as investments:
a. All items of equipment, including assemblies, ammunition and explosives, modification kits (the components of which are known at the outset of the modification), spares and repair parts not managed by the Defense Working Capital Funds, that are subject to centralized item management and asset control.
b. All equipment items that are not subject to centralized item management and asset control and have a system unit cost equal to or greater than the currently approved expense and investment dollar threshold of $250,000 (for working capital funds investment criteria see Volume 2B Chapter 9 section 090103C). The validated requirement may not be fragmented or acquired in a piecemeal fashion in order to circumvent the expense and investment criteria policy.
c. Construction, including the cost of land and rights therein (other than leasehold). Construction includes real property equipment installed and made an integral part of such facilities, related site preparation, and other land improvements. (See paragraph F below for special guidance concerning real property facilities.)
d. The costs of modification kits, assemblies, equipment, and material for modernization programs, ship conversions, major reactivations, major remanufacture programs, major service life extension programs, and the labor associated with incorporating these efforts into or as part of the end item are considered investments. All items included in the modification kit are considered investment even though some of the individual items may otherwise be considered as an expense. Components that were not part of the modification content at the outset and which are subsequently needed for repair are expenses. The cost of labor for the installation of modification kits and assemblies is an investment.
e. Supply management items of the Defense Working Capital Funds designated for weapon system outfitting, government-furnished material on new procurement contracts, or for installation as part of a weapon system modification or modernization, major reactivation or major service life extension.
f. Also considered as investments are support elements such as data, factory training, support equipment and interim contractor support (ICS), which are required to support the procurement of a new weapon system or modification.
Based on the FMR 7000.14-R guidance and the facts stated in your question it would appear that the use of Procurement funds is warranted; however, you need to review the budget documents as the request for the funding of those generators should have been in the budget documents and based on that evaluation you would use those funds for the purchase of the generators. As noted above there is a $250,000 threshold in which one can use O&M funds for purchases.
I would point out that you should check with your Comptroller for the final decision on the use of the correct funds as the certifying funds officer (the Comptroller) will have to ensure the correct funds are used for this purchase.
Is personal health insurance allowable for a one-person startup? Posted:1/15/2015
Is personal health insurance allowable for a one-person startup?
Posted: 1/15/2015 10:12:00 AM
Scenario: I intend to add a new subcontractor to the base IDIQ we hold with an A/E firm. This subcontractor is a one man operation. He wants to include his health insurance as an allowable overhead expense. In addition, this individual does not intend to work full time. He, and the A/E firm holding the IDIQ, estimate he will work approximately 20 hrs per week on this contract or 50% of full time. He does not intend to pursue any other business. He still wants to recoup 100% of his overhead. My position is he should recoup overhead at 50% if 50% is the amount of time he intends to work. If he wants to recoup 100% of his overhead than he should find more business and work full time.
Question: Question 1: Is the health insurance expense allowable? I feel it is different than a group health insurance plan a corporation would hold for it's employees. In that case, in my opinion, it is a necessary cost of doing business. In the current scenario, I do not feel that the cost is beneficial to or caused by doing business with the government. This individual would have health coverage regardless. Question 2: Should he be able recoup 100% of his overhead if only working 50% of full time?
Since we do not have all of the facts pertaining to your requirement, solicitation/contract or contractor(s), the following answer is based solely on the background and question provided. As we do not have access to the contract folder or particulars that apply to this situation, we highly recommend you consult the Contracting Officer and possibly the Legal Office.
Because selection of firms is based upon qualifications on A&E contracts, the extent of any subcontracting is an important negotiation topic. In addition, when you evaluate offeror labor rates, remember that employee compensation includes more than just wages. Many elements of compensation such as pensions, savings plan benefits, incentive bonuses, and health insurance typically appear in indirect cost accounts. As a result, compensation analysis is a complex task that requires in-depth understanding of the firm's compensation package and accounting procedures.
For Construction and Architect-Engineer Contracts, FAR 31.105(b) states that except as otherwise provided in 31.105(d), the cost principles and procedures in Subpart 31.2 shall be used in the pricing of contracts and contract modifications in this category if cost analysis is performed as required by 15.404-1(c).
According to FAR 31.201-2, the factors to be considered in determining whether a cost is allowable include the following: (1) reasonableness, (2) allocability, (3) standards promulgated by the Cost Accounting Standards Board (CASB), if applicable, otherwise, generally accepted accounting principles and practices appropriate to the particular circumstances, (4) terms of the contract, and (5) any limitations set forth in this subpart of FAR.
In general, a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. Reasonableness of specific costs must be examined with particular care that may not be subject to effective competitive restraints. No presumption of reasonableness shall be attached to the incurrence of costs by a contractor. If an initial review of the facts results in a challenge of a specific cost by the contracting officer or the contracting officer's representative, the burden of proof shall be upon the contractor to establish that such cost is reasonable.
Fringe benefits are allowances and services provided by the contractor to its employees as compensation in addition to regular wages and salaries such as the cost of vacations, sick leave, holidays, employee health insurance, and supplemental unemployment benefit plans. Subcontractors also provide the compensation to its employees. In your background provided, it appears that the subcontractor states that he is self-employed. As an independent contractor, this contractor obtains health insurance for himself.
According to the Internal Revenue Service (IRS), subcontractors who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in
each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. Further, the earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
You also mention in your background that both the subcontractor and prime contractor estimate that the subcontractor estimates that he will work approximately 20 hours per week on this contract. If the subcontractor costs are based on health insurance included in its fully burdened rate, than you are paying based on the time allocated to the contract. Fully-burdened labor rates include all direct and indirect costs associated with providing the required skill. At the least, you will need to ensure that the government is not being charged for the health insurance costs for the subcontractor employee via BOTH the fully burdened rate and then charged again via the subcontractor in another applied indirect overhead. The same holds true if the prime contractor includes health insurance costs in an overhead rate and applies it to subcontractor costs that already include health insurance for that self-employed independent contractor. In other words, the subcontractor employee health insurance costs cannot be charged twice, once in the fully burdened rate and again in an indirect overhead applied elsewhere. If the subcontractor's client, the prime, misclassifies the subcontractor as an employee, they may be required to pay back taxes, and provide employee benefits, workers' compensation, unemployment, and more.
MILCON Information Assurance Requirements Posted:12/8/2014
MILCON Information Assurance Requirements
Posted: 12/8/2014 3:32:00 PM
Scenario: New MILCON Project which will house Industrial Control Systems, Medical Equipment, and will have other controlled access areas. I am a part of USACE and we are attempting to develop a MILCON requirements checklist (high level) with embedded IA requirements built into our contract langauge for MILCON efforts.
Question: Is there a checklist or applicable milestone entry/exit criteria that exists for IA requirements when building a new MILCON facility?
(1) I was unable to find a checklist or applicable milestone entry/exit criteria for IA requirements when building a new MILCON facility. However, there are several aspects to your question that need to be (and were) clarified.
(2) The term "Information Assurance" has now been changed to "Cybersecurity" effective March 2014 by DODI 8500.01 and DODI 8510.01. To accomplish cybersecurity requirements the Risk Management Framework (RMF) and it's process must be used. So information technology, such as Control Systems and Medical Equipment you mentioned, may need to be assessed through this RMF process. There should be requirements in your Request for Proposal (RFP) for the contractor to support requirements to meet the RMF.
(3) Question also mentioned controlled access areas in a MILCON facility. If a contractor is building a new MILCON facility, this facility will need to be checked/approved/certified by an Army civil engineering organization. They will focus on all aspects building itself. The controlled access area will also require and additional check/approval by someone in a Program Security Officer (PSO) position. They will focus specifically on the controlled access area. There is no overall checklist, but there are key requirements and deliverables from a cybersecurity, controlled area and MILCON perspective that should be addressed in your RFP.
Design Build Posted:5/9/2014
Posted: 5/9/2014 7:58:00 AM
Scenario: Project to upgrade waste water treatment plant was 100% designed in 2009. The project is now planned for construction, however it is possible some of the codes and plans are out of date.
Question: Can this project go out as a design build if all we want is the plans updated? Does it qualify as a design build if we already paid for the design once?
This does not sound like a design-build project as envisioned by FAR 36.3 in so far as you indicate the agency desire to use the 100% design already produced and simply have the contractor “update the design” since regulations may have changed in the past 5-6 years (and therefore grandfathering rules will not apply).
You have a classic case of lost design where the agency desire is to recover the sunk costs.
Your dilemna revolves around professional design liability and the government’s ability (or lack of ability) to force a construction contractor to accept that professional liability without compensation. The original designer produced a set of plans and specifications, was paid for that work and in the interim has moved on to other projects since the government did not use that product. Now 5-6 years later, requiring a D-B firm to utilize someone else’ design forces them either to re-design (or at least re-work the calculations to access the risk) or accept the liability of an unknown design.
1) Contract an A-E firm under the Brooks Act to update the design and contract the construction using normal means.
2) go with a design-build contract stating that the current design is a “concept” and accept the fact that a contractor may choose to use it or not use it.
MILCON expenditure thresholds Posted:3/14/2014
MILCON expenditure thresholds
Posted: 3/14/2014 9:49:00 AM
Scenario: An $11.8M MILCON was awarded and there are changes orders. In looking around for the maximum amount that can be spent on change orders, I was told it is $2M or 125%, which ever is smaller. The only documentation that I find mentions that but on repair construction projects or minor MILCON.
Question: Which Air Force regulation states the $2M or 125% threshold for change orders when it comes to large MILCON projects?
AFI 65-601, Budget Guidance and Procedures deals with MILCON in Chapter 9. Paragraph 9.4.3.2. says:
Cost Increases. Adjust project financing consistent with congressional authorization and the reprogramming criteria in DoD FMR 7000.14-R, Volume 3, Chapter 7. Chapter 7 of DoD FMR 7000.14-R has the complete details on all reprogramming requirements and restrictions for Military Construction and Military Family Housing DoD 7000.14-R Financial Management Regulation Volume 3, Chapter 7. Paragraph 070302 says:
Determining Reprogramming Actions Requiring Prior Notification and Approval of Congressional Committees
The following definitions, procedures, and criteria shall apply.
A. Reprogramming Base. The specific dollar amount for any project or effort that has been jointly approved for appropriation by the Committees on Appropriations. In instances where a prior approval reprogramming request for a project or effort has been jointly approved by the Committees on Appropriations, the amount approved becomes the new base for any future increase or decrease via below threshold reprogramming actions or prior approval reprogramming requests.
B. When Prior Approval Reprogramming is Required. Prior approval Reprogramming is required for the following:
1. For any increase exceeding 25 percent of the Reprogramming base or $2.0 million, whichever is less, to military construction projects, family housing new construction projects, or family housing improvement projects (exceeding $2.0 million base value).
Customer/Owner comments and effect change Posted:2/27/2014
Customer/Owner comments and effect change
Posted: 2/27/2014 6:14:00 PM
Scenario: In a two phase design build contract, the DB and the end-users meet at different stages to agree on award designs.
Question: After award design reviews, what rights ("teeth") would end-users have to comment and effect change on the detailed arrangements and fit out of medical departments?
To engage or not engage (the end user)
The decision to use design-build or design-bid build method as well as the identification of required features of the final facility should always involve the end user.
However, once the acquisition plan (FAR 7.105), Source selection plan, and RFP have been completed, additional customer interface becomes increasingly unhelpful – particularly when that interface includes changing the original requirements or design parameters. It is particularly difficult to build a facility that meets a moving requirement.
D-B vs D-B-B
The design build approach is unique and only allowable if this particular requirement does not fit the traditional Brooks Act contract Construction contract method (Design-Bid-Build - FAR 36.1). It would be a good idea to involve the end user in the decision on approach.
When using a 2 phase approach only those “most highly qualified offerors” are advanced to the second phase (FAR 36.3). The up or down vote to advance is not an end user decision: this is up to the contracting officer.
During the selection and award process of a Design-Build construction contract, the firms that have been brought forward to Phase Two will produce a design concepts and other technical requirements to be evaluated.
FAR 36.303-2(a) Phase Two of the solicitation(s) shall be prepared in accordance with Part 15, and include phase-two evaluation factors, developed in accordance with 15.304. Examples of potential phase-two technical evaluation factors include design concepts, management approach, key personnel, and proposed technical solutions.
The end user may be included in the technical evaluation board and should be involved in the evaluation of the design concepts. However, the award decision remains with the formally designated Source Selection Authority (SSA) who must follow the RFP and source selection plan. The SSA’s final decision will be based on a combination of technical, price and past performance factors as identified in the source selection plan and promulgated in the RFP.
Like every contract, once awarded, only the contracting officer can modify the, design requirements or the terms and conditions. The end user has no business meeting directly with the contractor unless that meeting is coordinated and controlled by the contracting officer. Many a contract gone wrong that has fallen into this trap.
Like all design and construction contracts this medical facility will have a series of design reviews – squatters’ session, 30% design, 60%, 90%, and final. At each stage, comments and corrections should be solicited but also controlled by the contracting officer.
As the project moves from one design stage to the next, certain aspects of the final facility are “locked” and the customer’s desire to change design parameters transitions from difficult in the beginning to altogether impossible by the end. Although hard to say, sometimes “I heard your requested change but we can’t do that” is the unpopular but correct answer.
The original listing of furniture, finishes and equipment (FFE) was established early on and may even form the basis of the design. When the end user changes the equipment, this can have ripple effects across the electrical, mechanical, or even structural systems. Changing the physical layout of a work space may impact the floor plan and even the life safety codes (fire egress pattern) making the building un-certifiable.
The contracting officer controls this process from award through occupancy.
Two Phase Design Build Posted:2/27/2014
Two Phase Design Build
Posted: 2/27/2014 12:53:00 PM
Scenario: Requirement: Firm fixed price contract to build a New Bed Tower for a hospital in Tampa FL Contract Method: Two Phase Design Build or Design Bid Build with Two Phase being the 1st choice. Issue: Staff want to order the most current equipment as late as possible in a Two Phased design build contract.
Question: How can a design builder accommodate the ability for the customer to order the most current medical equipment at a certain percentage of design (60, 70, 80 etc,)? Can it be done and what is the best Procurement Method to utilize?
FAR 36.3 identifies the procedures for awarding a 2 Phase Design build project. However this subpart does not address your customer interface question. Please remember that in the federal version of Design-Build, the designer is a subcontract to the prime construction contractor and in ths case the government gives away much of the design "control" to the contractor. In a design-Bid Build version, the designer is the prime contract selected using the Brooks Act and is a direct agent of the government. Both techniques have benefits and faults.
To be sure, the medical staffs will want to delay procuring medical equipment as late as possible to ensure they have the most current models at grand opening: understandable and laudable goal for the medical staffs. However their desires to keep up with the absolutely most current technology makes the design and build phases of this project a moving target – one that is nearly impossible to achieve. This will have a significant impact on your ability to complete the project. At some point it has to become fixed so bricks and mortar can be placed.
Once designed, the floor plan, electrical load distribution, HVAC, etc, are difficult to change and once built, adjustments can sometimes require major re-work in order to accommodate these customer requested changes. Valid changes they may be, these new requirements will require re-work, will involve “lost work” (work demolished even before it is completed or used), new schedules and contract modifications.
How late in the design review process can these new requirements be accommodated? As a practical matter the ability to influence the final configuration of the structure without disruption (and at a relatively low cost) diminishes rapidly after the 30% design review. The conceptual design (squatters session) identifies the general flow and size of the facility. Typically by 30 percent design the floor plans are complete, but none of the mechanical/electrical will have been started. Changes should be relatively easy to accommodate in this phase
By the 90 percent design review, the structure is locked; as are the electrical and mechanical systems. Changes of any significance cannot be made without correspondingly difficult choices, significant amounts of re-design and a large potential for re-work. If using a fast track methodology this problem becomes even more acute since once the foundation is in the ground, it is not moving and your ability to change the shape of the final structure is an historical event.
Highly recommend engaging your client early and often. Keeping everyone on the team informed of the progress and breaking points where aspects of the final project become fixed will help manage the expectations.
This is done in several phases. You should insist on a written acquisition plan. See FAR Part 7 egardless of wWritten or conecaptual, during the Acquisition Planning phase you should pay attention to the development of the particular the elements of FAR part 7.105(a). A poorly defined description will undoubtedly end up with a contract that is not connected with the requirement.
Contract award should be followed by a post award kickoff meeting and multiple design reviews. Insist on customer participation and buy in by the decision makers.
The Changes Clause that should be included in your construction contract is 52.243-4 and the wording of this clause allows for the in-scope modifications you may encounter in spite of your best efforts.
The late additions/modifications are very likely to be out of scope customer requested changes. You will need to address these new requirements following the exceptions to full and open procedures described in FAR Subpart 6.3.
The Brooks Act and Equally Qualified A-E Contractors Posted:1/8/2014
The Brooks Act and Equally Qualified A-E Contractors
Posted: 1/8/2014 11:45:00 AM
Scenario: I am a Contracting Officer for the US Coast Guard procuring Architect-Engineering services utilizing an IDIQ contract. Four (4) of the contractors listed on the IDIQ submitted their qualifications. The technical evaluation criteria consisted of six (6) factors. Upon completion of the evaluation, the two (2) best contractors had the same qualifications resulting in a tie. My coworker attended the DAU CON243 Architect-Engineer Contracting course in November 2013 in Washington, DC. She said that according to the instructor a request for proposal can be obtained from both equally qualified contractors and award be made based on low price.
Question: When using an IDIQ for Architect-Engineering services, can equally qualified companies be compete based on price under the Brooks Act?
I am not sure of the context regarding the instructor's discussion regarding the use of price. If they presented the material in CON 243 as indicated in your AAP question, then I respectfully disagree.
The Brooks Act is a unique process that was codified in public law for the specific purpose of discerning the most highly qualified designer and it does not allow the government to utilize price as a selection criteria.
In practical terms, we want to have the best hospital designers designing our hospitals and so we don’t have to endure hospitals designed by airfield designers … and vice versa.
Two firms ending up with precisely the same number of architect/engineer capabilities, each person having graduated from the same colleges, having taken the same classes, and achieved the same licenses and specialties from the same states; all of them having been in responsible charge on the same number of projects of the exact age and complexity for precisely the same period of time leading to the identical years of experience …
I am afraid that the possibility of two firms precisely equal in all relevant aspects is so remote that it is the definition of the term impossible. There is a discriminator in there somewhere.
Your conundrum represents one of two potential problems. 1) The SSA is unwilling to choose or 2) the SOW is so generic that virtually anyone could qualify.
The Brooks Act procedures are as follows:
Only after this selection is completed do we engage in a negotiation on price and then only with the most highly qualified firm.
“Sec.904. (a) The agency head shall negotiate a contract with the highest qualified firm for architectural and engineering services at compensation which the agency head determines is fair and reasonable to the Government. In making such determination, the agency head shall take into account the estimated value of the services to be rendered, the scope, complexity, and professional nature thereof.”
If that first negotiation is unsuccessful, then we will begin negotiations with the second most highly qualified firm and so on down the list.
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