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Legal Analysis Regulatory How much of FAR Part 15 applies to FSS buys?
Legal Analysis Regulatory How much of FAR Part 15 applies to FSS buys?
How much of FAR Part 15 applies to FSS buys?
| Legal Analysis - Regulatory |
Despite FAR language excluding FSS buys from FAR Part 15, some Part 15 rules apply to FAR Part 8.4, Federal Supply Schedule quotes.
Buying No. 2 pencils should not be nearly as complicated as buying missile-defense systems. The FAR recognizes this difference and makes it easy for agencies to buy items like pencils off the Federal Supply Schedule (FSS) set up under FAR Subpart 8.4 with a minimum of paperwork. The FSS lets an agency buy something off the schedule without issuing a statement of work and without using technical evaluation factors to determine the best value to the government. Price is generally the only factor that counts.
But if an agency wants to buy something more complex, the FAR requires an agency to use Part 15, negotiated procurements, a more complex process for more complex items, typically involving a request for proposals, technical evaluation factors, and requiring vendors to provide detailed proposals to be submitted for evaluation.As always, FAR gives us one on the right and one on the left, and then the need develops for one in the middle. It is only natural that agencies would want to buy items off the FSS and put the burden on the vendors to tell the agency would items it should buy. To help vendors do so, agencies would issue statements of work and evaluation factors to help carry out the FSS buy. These types of purchases look a lot like FAR Part 15 negotiated procurements: statements of work, evaluation factors, trade-offs of price and technical quality.Because these procurements use a more complicated process, they are more prone to mistakes. And when mistakes are made, GAO and the U.S. Court of Federal Claims (CFC) are available to hear protests of these purchases. Both GAO and the CFC have applied some of the FAR Part 15 negotiated contracting requirements to these FSS purchases, even though FAR 8.404(a) expressly makes Part 15 inapplicable “to BPAs or orders placed against [FSS] contracts.” GAO explains how and why it does so:Where, as here, the agency intends to use the vendors’ responses as the basis of a detailed technical evaluation and selection decision, the agency has elected to use an approach that is more like a competition in a negotiated procurement than a simple FSS buy, and the RFQ is therefore required to provide for a fair and equitable competition. ’CourtSmart Digital Systems, Inc. 2004 WL 816361, 5Accordingly, over the years, GAO and the CFC have applied some of the FAR Part 15 rules to FSS buys. Typically, GAO will make sure that, just like in FAR Part 15 procurements, the agency’s evaluation is reasonable and follows the terms of the solicitation.But not all the FAR Part 15 principles are followed in FSS buys. For example, the requirement of a debriefing in FAR 15.506 is not carried over to FSS buys. Where an FSS solicitation “did not specifically provide for a post-award debriefing, the post-award debriefing requirements found in subpart 15.506 are not applicable.” Systems Plus, Inc. v. U.S. 68 Fed.Cl. 206, (2005).In addition, in a protest of a Part 15 procurement, a protester can make two basic arguments: the decision was arbitrary and capricious, or the decision violated federal procurement regulations. However, in a Part 8 procurement, “the protester will not be able to prevail on the theory that the procurement procedure involved a clear and prejudicial violation of applicable statutes and regulations, because no applicable procedural regulations are contained in [FAR] Part 8.” Ellsworth Assocs., Inc. v. United States, 45 Fed.Cl. 388, 395-96 (1999).Meaningful discussions of FAR Part 15 do not apply to FSS quotesUsing FAR part 8.4, the General Services Administration (GSA) issued a Request for Quotations (RFQ) for information technology (IT) enterprise infrastructure support services for the Indian Health Service (IHS). Award would be made on the basis of best value to the government with several nonprice evaluation factors being significantly more important than price. After receiving quotes, GSA asked the vendors for further price reductions, which some, but not all, vendors provided.After GSA awarded the task order to CNI Information Technology, LLC, OPTIMUS protested, arguing that among other things, GSA failed to conduct meaningful discussions. According to the protester, when GSA went back to the vendors asking for further price reductions, it opened up discussions with all the vendors, discussions that had to involve not only price but also matters that OPTIMUS was technically weak.GAO disagreed. There is no requirement in FAR Part 8.4 that an agency soliciting vendor responses prior to issuing a task order under an FSS contract conduct discussions with vendors regarding the contents of those responses … Under FAR sect. 8.405–2(c)(3)(ii), where, as here, an agency is placing an order under the FSS that exceeds the maximum order threshold, it is required to seek price reductions below the prices included in the vendors’ FSS price lists. The ’agency’s request for price reductions was pursuant to this requirement, and therefore did not constitute the opening of discussions, such that the agency was obligated to engage in meaningful discussions. OPTIMUS Corp., B- 400777, January 26, 2009, 2009 CPD ¶ 33, 2009 WL 440618. Price realism is not required of FSS buysIn a procurement of auditing services for the Centers for Medicare and Medicaid Services (CMS) under the FSS, an unsuccessful vendor argued that the government failed to do a proper cost-realism study. The agency evaluators used a cost-realism analysis on offerors’ proposals but the contracting officer used a reasonableness assessment. The protestor, Holloway, argued to the CFC that the cost realism analysis of the evaluation panel should be used but the court disagreed, focusing on the nature of the procurement:”A procurement taking place under the FSS program involves the selection of products and services from a list of eligible contractors whose pricing schemes have been pre-approved by GSA.” In this circumstance, because the GSA has already determined that the prices of supplies and services under FSS contracts are “fair and reasonable,” the ordering agency is “not required to make a separate determination of fair and reasonable pricing.”Holloway & Co., PLLC v. U.S., U.S. Court of Federal Claims No. 09-53C, May 07, 2009. Available at http://www.uscfc.uscourts.gov/sites/default/files/LETTOW.HOLLOWAY051409.pdfAmendments to the False Claims ActCongress has again stepped up efforts to deal with fraud in government contracting, amending the False Claims Act (FCA) to reverse court decisions that had limited the government’s rights under the FCA.Court decisions had let subcontractors escape responsibility for proven frauds. If a subcontractor submitted a false claim to a prime government contractor, the sub could violate the FCA only if the government could prove the sub intended to defraud both the prime and the government. In addition, prime contractors had been beyond the reach of the FCA if they defrauded an entity that used some government funds like Amtrak or government grantees, for example. Under the amendments, liability under the FCA attaches whenever a person knowingly makes a false claim to obtain money or property, any part of which is provided by the Government without regard to whether the wrongdoer deals directly with the Federal Government; with an agent acting on the Government’s behalf; or with a third party contractor, grantee, or other recipient of such money or property.The amendments address two problems unique to government contractors, government property and overpayments.Government property. If the Government had not first given someone a receipt for government property, that person could not violate the FCA for later failing to return the Government property. Now, where knowing conversion of Government property occurs, it makes no difference whether the person receives a valid receipt from the government.Overpayments. Before, if a government contractor failed to return a contract overpayment, courts were not always finding this to be a violation of the FCA although it could be a cause for debarment or suspension or a finding that the contractor was not responsible. The reason was that courts did not consider retention of an overpayment to be retention of a Government “obligation.” Now, not returning overpayments on government contracts may be an FCA violation. According to Congress, the new definition of “obligation” includes an express statement that an obligation under the FCA includes the retention of an overpayment. This new definition will be useful to prevent Government contractors—and others who receive money from the Government incrementally based upon cost estimates—from retaining any Government money that is overpaid during the estimating process.What about contractors using “provisional” rates for costs such as overhead or G&A that will later be set at actual rates following audits? The FCA is not violated by “a simple retention of an overpayment that is permitted by a statutory or regulatory process for reconciliation, provided the receipt of the overpayment is not based upon any willful act of a recipient to increase the payments from the Government when the recipient is not entitled to such Government money or property.”Senate Report 111-10. Available at http://thomas.loc.gov/cgi-bin/cpquery/R?cp111:FLD010:@1(sr010).
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