Minutes of the Commercial Products and Services Committee, September 8, 2005
Co-chair Carl Vacketta called the meeting to order at 12:15 P.M.
Handouts were as follows:
1. Agenda;
2. FAR final rule, Payment Withholding, 70 Fed. Reg. 43580 (July 27, 2005);
3. FAR interim rule, Definition of Information Technology, 70 Fed. Reg. 43577
(July 27, 2005);
4. DFARS final rule, Berry Amendment Memoranda, 70 Fed. Reg. 43073 (July 26,
2005);
5. Department of Labor, Service Contract Act Wage Determination OnLine Request
Process, 70 Fed. Reg. 50888 (Aug. 26, 2005);
6. FAR final rule, Documentation Requirement for Limited Sources Under Federal
Supply Schedules, 70 Fed. Res. 43578 (July 27, 2005);
7. Department of the Treasury notice, Renegotiation Board Interest Rate; Prompt
Payment Interest Rate; Contract Disputes Act, 70 Fed. Reg. 38253 (July 1, 2005);
8. Section comment letter dated August 10, 2005, FAC 2005-04, FAR Case 2004035, 70 Fed. Reg. 33659 (June 8, 2005), Submission of Cost or Pricing Data on
Noncommercial Modifications of Commercial Items;
9. Jess Bruner Fire Suppression, B-296533, Aug. 19, 2005;
10. United Paradyne Corporation, B-296609, Aug. 19, 2005;
11. Computers Universal, Inc., B-296536, Aug. 18, 2005;
12. Encompass Group, LLC, B-296602, B-296617, Aug. 10, 2005;
13. Sigmatech, Inc. B-296401, Aug. 10, 2005;
14. OTI America, Inc., B-295455.3, B-295455.4, Aug. 10, 2995;
15. CW Government Travel, Inc.-Reconsideration; CW Government Travel, Inc.; CI
Travel; The Alamo Travel Group; National Travel Service; Bay Area Travel;
Knowledge Connections, B-295530.2; B-295530.3; B-295530.4;
16. PPCSC/RAC BENNING JV 1, B-296239, July 19, 2005;
17. Metro Business Systems, LLC, B-296371.2, July 13, 2005;
18. Appeal of Geo-Marine, Inc., GSBCA 16247, August 17, 2005;
19. GSA Federal Acquisition Service and Agency-wide Support Functions, Phase II
Detailed Organizational Design, August 4, 2005;
20. Department of the Army memorandum, Proper Use of Non-Department of
Defense (Non-DoD) Contracts, July 12, 2005; and
21. Discussion draft dated August 2, 2005, Comments on the Statutory and
Regulatory Definitions of “Commercial Item.”
Carl thanked Steve Pitler for his great year (2004-2005) as a co-chair of the Committee.
Steve voluntarily resigned because of the high volume of work at his office; he will,
however, remain on the Committee as an active vice chair. Carl said that he was trying to
get Karen Evans (OMB) as a speaker on the Smart Buy Program.
Co-chair John Howell led an off-the-record discussion of past speakers at Committee
meetings. He said that he had tried to gather a panel from the Department of Veterans
Affairs (VA) at Hines IL: Mel Noel, Maureen Regan, etc. He has also considered Dee
Lee, Dominic Capriccio, Peter Levine, Trish Pierson, Robin Bourne, and an
appropriations guru from GAO; Donna Yesner suggested a speaker on TRICARE
legislation. The Committee’s consensus was to set up a VA panel to discuss procurement
of medical devices. Carl noted that it might be difficult to get speakers from Hines. He
could have a speaker on the telephone from DLA Piper’s Chicago office; Lauren Randall
will check into this. In answer to Herman Levy’s question as to why we would not
include pharmaceuticals in the discussion, Carl explained that pharmaceuticals are a
peculiar matter under the Veterans Health Care Act, the province of the Health Care
Contracting Committee.
Dan Mazella said that he understood that VA has schedules for regulated medical devices
and also for life sciences research equipment (not necessarily regulated products). John
also suggested that the Committee ask Hines to speak on prime vendor programs;
manufacturers enter into arrangements with VA to ship directly to customers. John
would like to have Mel Noel as a minimum but also would like to have Maureen Regan
and others, including George Patterson’s successor. VA, he said, is moving towards far
greater centralization than it has had. Jim Brown agreed to follow up with the VA
persons.
Co-chair Mike Mason reported on the status of the Committee’s responses to the
Acquisition Advisory Panel. Carl noted Mike’s “super job” in his appearance before the
panel. Mike reported that his working group is discussion the statutory origin of
governmentwide acquisition contracts (GWACs). The Committee made a presentation to
the Council on the definition of a commercial item in August. Carl recommended saving
the August 2 draft letter to Laura Auletta discussion the definition; it will have historical
value. Handout # 21.
Mike noted the controversial matter of definition of a commercial item. Handout # 21,
pp. 15-16. The draft letter takes the position that the current commercial services
definition unnecessarily includes price reasonableness elements, and the letter
recommends removing them. The Council, however, expressed some concern that the
Committee’s recommendations in the draft letter lacked input from government
attorneys. Mike reported that the Committee working group tried to make its
recommendations as agreeable to all as possible. Nevertheless, the working group had
little government input; the Council asked for more pro-active effort to obtain
government input. John asked if the comments recommend statutory amendment; Steve
Pitler answered “Yes.” John also asked if the comments would require Council
imprimatur; Carl answered “Yes.” Carl then said to resubmit the draft for Rob Schaefer’s
signature and to try to obtain more government input.
Co-chair Paul Ebert observed that commercial companies (e.g., Oracle) are sellers as well
as buyers; their comments would be pertinent. Steve Pitler (Motorola) recalled a move to
raise the CAS threshold; industry is not monolithic. Carl agreed but noted that there is a
perception that the ABA is favorable to industry; the Committee should be sensitive to it.
He noted that the Council had Rob Burton as the vocal spokesperson for the Government.
Herman Caldwell emphasized the importance of government input. Paul and Carl urged
the working group to give more explanation of recommended positions and to aim for
completing a revised draft by the next meeting (October 12). Marcia Madsen is “pretty
sure” that Congress will extend the Panel’s report time to September 2006.
David Kessler then turned to the Section’s second area of responsibility, GWACs,
definition of information technology (IT), and the Berry Amendment. David reported
that the working group has tried to stick to the law-the origin of GWACs and similar
vehicles is shrouded in mystery. Some agencies, he noted, have abused the vehicles.
John said that he would be inclined to emphasize legal and regulatory aspects and to tread
easy on the need for such devices. Carl said that he believes that the second letter will be
less controversial than the one on definition of a commercial item; the Committee could
aim to submit the letter to the Council in mid-October.
Paul saw little substance in the definition of IT. In regard to the Berry Amendment, he
noted that service secretaries may make a determination of non-availability of a domestic
item but may not delegate their authority. Carl noted that the Committee has had
difficulty in obtaining definitions from the Government, especially consistent ones. The
Committee could find someone in the Government with authority to speak on the Berry
Amendment. Jim Brown suggested Army lawyers in the Natick and Philadelphia
installations, notably Mike McGonagle. Bill Crowley suggested Mike McGonagle, Dan
Dahlke, Paul Hoburg, Sean Bamford, and Bob Gorman as speakers on clothing, etc.
Otherwise, the Committee would have to rely on contracting officers.
Paul complimented Steve for his “great job” in preparing the Committee’s comments on
FAR interim rule, FAC 2005-04, FAR Case 2004-035, 70 Fed. Reg. 33659 (June 8,
2005); Submission of Cost or Pricing Data on Noncommercial Modifications of
Commercial
Items
(Handout
#
8).
Steve
summarized
the
comments. First, the $500,000 threshold figure for the requirement to furnish cost or
pricing data should be $550,000 because of the adjustment provision in 10 U.S.C. §
2306a(a)(7). Second, the 5% threshold for requiring cost or pricing data should be
clarified as applying to the cost to the Government (the contract price). Otherwise, the
provision could be construed as applying to the contractor’s cost as measured by FAR
Part 31.
John then turned to the decisions. In Jess Bruner Fire Suppression (Handout # 9), GAO
denied a protest against award of a contract “for regional fire engine support.” Bruner
contended that although it was a previous supplier of such services, the agency failed to
either “properly post the pre-solicitation notice and solicitation to the Federal Business
Opportunities (FedBizzOpps) Internet site or specifically solicit Bruner.” GAO noted,
however, that the agency posted a pre-solicitation notice on the FedBizzOpps website for
the Sierra Cascade Province; Bruner argued that the agency should have posted the notice
“on either the Forest Service’s Region Five website, or on the websites of each of the
provinces in which the services were required to be performed.” Nevertheless, GAO
found “that prospective vendors have an affirmative duty to make every reasonable effort
to obtain solicitation materials.” Bruner could have found each opportunity in the RFP
“by searching by geographic location.” John characterized the ruling as “a pretty
disturbing case.”
In United Paradyne Corporation (Handout # 10) GAO denied a protest against an Air
Force request for proposals for fuels management operations. Among other things, the
RFP required “that at least two contractor employees must handle a refueling task”; this
requirement was in accordance with Air Force Instructions. United Paradyne contended
that the requirement violated FAR 11.002(a)(2)(i) and FAR 37.602-1(b), which require
agencies to contract on a performance basis “to the maximum extent practicable”
[emphasis added]. Nevertheless, GAO found that the record provided “no basis to find
the agency’s requirement unreasonable or improper.”
In Computers Universal, Inc. (Handout # 11), GAO denied CUI protest of the
Department of Veterans Affairs’s “extension of a sole-source purchase order issued under
the awardee’s . . . Federal Supply Schedule contracts.” The VA “prepared a justification
of other than full and open competition supporting the sole-source award” so as to
“continue critical information technology support for the Navy Medical Center . . . due
to continuing solicitation protests.” John observed that on page 3 of the decision GAO
recognized that the Competition in Contracting Act requirement for competition unless
otherwise supported by written justification does not apply to orders placed against FSS
contracts. (10 U.S.C. § 2304(c)(1)) (2002). Nevertheless, FAR 8.405-6 places similar
requirements for sole-source orders placed against FSS contracts.
In Encompass Group LLC (Handout # 12), GAO denied a protest ”that solicitations for
linens and blankets should not be set aside for small business concerns” for lack of “small
business manufacturers of bulk fabric from which” the goods are made. The VA was
purchasing not bulk fabric, but goods requiring transformation of bulk fabric. Under 13
C.F.R. 121.406(b)(2) “a firm that transforms the bulk fabric into end items such as sheets,
pillow cases or blankets could qualify as a manufacturer.” GAO found that the VA from
market research was reasonable “in concluding that it would obtain two or more offers
from small business manufacturers.”
In Sigmatech, Inc. (Handout # 13) GAO sustained a protest against “bundling of system
engineering and support services with other requirements . . . where agency failed to
perform bundling analysis or satisfy the requirements of [FAR 7.107(a), (b);
10.001(c)(2); and 19.202-1].” In OTI America, Inc. (Handout # 14), GAO denied the
protest against elimination from competition on a multiple award contract for electronic
passport covers. The request for proposals provided for four stages of testing. At Stage
2, OTI twice failed material solicitation requirements; the agency downselected OTI.
GAO held that “the agency had a reasonable basis for eliminating OTI from the
competition.”
In CW Government Travel, Inc. (Handout # 15), GAO sustained in part and denied in part
a protest against the terms of a solicitation. The solicitation, among other things, did “not
require offers to propose binding prices” and provided for a sample task evaluation that
did not require demonstration of “ability to meet all of the” performance work
statement’s requirements. It sustained the protest as to the former; “the RFP [did] not
provide a meaningful basis to consider offerors’ proposed costs to the government.”
GAO denied the protest as to the latter on the ground that the protester did not provide a
basis for concluding that the evaluation scheme was unreasonable.
In PPCSC/RAC BENNING JV 1 (Handout # 16) GAO denied the protest against the
terms of a solicitation for design and construction of prefabricated modular structures.
The protester, a HUBZone small business, contended that the agency “had improperly
characterized the acquisition as one for construction, instead of supply, and had failed to
set aside the procurement for small businesses.” Also the protester contended that the
evaluation factors focused on construction experience. In response to the protest, the
agency divided the procurement into two parts and added the appropriate supply clauses.
At a GAO conference the agency proposed to conduct “a new market survey to determine
whether there [was] a reasonable expectation of receiving offers from at least two
HUBZone small businesses capable of performing the work”; GAO dismissed the protest
as to non-set aside. Nevertheless, GAO upheld the agency’s use of “applicable supply
and construction clauses” as consistent with FAR 36.101(c). GAO found that although
supply work made up the higher dollar value of the procurement, the focus on
construction experience in the evaluation scheme was reasonable; construction was the
more critical aspect of the project.
In Metro Business Systems, LLC (Handout # 17), GAO denied a protest against award of
a purchase order for copiers place against a FSS contract. The agency conducted “market
surveys” of five vendors; nevertheless, it did not specifically disclose five agency
“critical needs,” including “LAN [Local Area Network] compatibility and security
features.” MBS contended that the agency did not advise it of the “critical needs.” GAO
noted that the agency issued the purchase order against a FSS contract and therefore did
“not shift to vendors the burden of selecting items to propose.” Under FAR 8.405-1(c)
“an agency ‘may consider, among other factors’ past performance, special features,
trade-in considerations, and delivery terms in selecting among competing vendors.”
[emphasis supplied]
In Geo-Marine, Inc. (Handout # 18) the GSBCA denied an appellant motion for summary
relief. The agency terminated Geo-Marine’s task order for cause under FAR 52.249-8,
based on the contractor’s “failure to adequately monitor the AHAS [Avian Hazard
Advisory System], to take appropriate action to immediately rectify problems with the
web site, to archive data, to export files to the BAM [Bird Avoidance Model], to
incorporate the latest version of the BAM, to incorporate a new instrument route, and to
provide technical assistance and information to support investigations.” Geo-Marine
contended that “the termination for cause should [have been] converted to a termination
for convenience” for lack of a cure notice. The agency contended that it was not required
to do so; the GSBCA noted the common law right to terminate for anticipatory breach,
exercise of which does not require a cure notice. In this case the agency contended that
all Geo-Marine employees who could “operate and maintain the AHAS“ left the
company and that “Geo-Marine’s legal actions discouraged the employees from
returning.” The GSBCA held that Geo-Marine did not establish “that its actions
amounted to something other than an anticipatory repudiation” and therefore was not
entitled to summary relief.
John also noted the Department of the Army Memorandum re Proper Use of Non
Department of Defense (Non-DoD) Contracts dated July 12, 2005 (Handout # 21).
The meeting adjourned at 1:47 P.M. The next meeting (Wednesday, October 12) will
discuss the request of the Council to set up a monthly telecast for Continuing Legal
Education (CLE).
Respectfully submitted,
Herman D. Levy