Exceptions to “Full & Open Competition”: GSA Schedule Contracting & GWACS
Federal Supply Schedule (FSS) Contracts
Under the GSA Schedules (also referred to as Multiple Award Schedules and Federal Supply Schedules) Program, GSA establishes long-term, government-wide contracts with commercial firms to provide access to over 11 million commercial supplies (products) and services that can be ordered directly from GSA Schedule contractors or through the GSA Advantage!® online shopping and ordering system.
In the event that the Government contracting officer fails to include a mandatory contract clause in a prime contract, the omitted clause will be “read into” and made applicable to the contract by operation of law under the Christian doctrine, enunciated in G.L. Christian & Assoc. v. U.S .
Commercial Item Acquisitions
To implement the Federal Government’s preference for acquiring commercial items, policies and procedures more closely resembling those of the commercial marketplace were added to the FAR.
For commercial item acquisitions, Government contracting officers are authorized to tailor all but a few of the standard FAR contract clauses in a manner that is not inconsistent with customary commercial practice for the item being acquired.
Codified a special process for disputes arising under a government contract between the Government and the contractor
Contractors must follow the mandated procedures of the CDA, or risk waiving or otherwise losing their right to proceed against the agency
The FAR implements the CDA through the standard “disputes clause”
The “Disputes Clause” Defines a Claim as:
“ A written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to [the] contract.”
Contractors Must Continue Performance Pending Resolution of a Dispute with the Government
Provides for treble damages and civil fines for the reckless submission of false claims for payment to the Government.
Also includes whistleblower (or qui tam ) provisions.
Improper Business Practices
The FAR contains several prohibitions and restrictions on actual (and sometimes only apparent) improper business practices, including:
Contractor gratuities to Government personnel, kickbacks, antitrust violations, agreements to pay contingent fees, prohibitions on placing unreasonable restrictions on subcontractor sales, and Organizational Conflicts of Interest (OCIs)
Remedies available to the Government include criminal and civil penalties, default termination of affected contracts, and suspension and debarment from Federal acquisitions.
Requires mandatory disclosure in writing to the Office of the Inspector General with a copy to the contracting officer whenever, in connection with the award, performance, or closeout of a contract or any subcontract, the contractor has credible evidence of:
Criminal law violations involving fraud, conflict of interest, bribery, or gratuity violations;
Civil False Claims Act violations; or
Mandatory Disclosure Rule provides for suspension or debarment penalty for knowing failure to timely disclose .
Recent FAR changes require companies to have an ongoing business ethics and compliance program and internal control system within 90 days of contract award (not required for small business or commercial item contracts).
Program requires companies to:
“ Establish standards and procedures to facilitate timely discovery of improper conduct in connection with Government contracts”;
“ Ensure corrective measures are promptly instituted and carried out”;
Assign responsibility at a sufficiently high level and provide adequate resources to ensure effectiveness of the business ethics awareness and compliance program and internal control system; and
Exclude principals “whom due diligence would have exposed as having engaged in conduct that is in conflict with the Contractor’s code of business ethics and conduct.”
Intellectual Property Rights – The FAR and agency supplements to the FAR contain complex provisions applicable to intellectual property rights
For example, unless the contractor takes steps to identify limitations on the Government’s rights to the contractor’s intellectual property ( e.g. , technical data), the Government may acquire “unlimited” rights to such property, meaning that the Government has the right to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so.
Revolving Door Restri ctions – Restrictions and/or limitations apply to post-Government employment activities of certain former Government employees
A Company Must be “Small” According to the SBA for Entry into any Small Business Program
Size Standards are Based on the North American Industry Classification System (“NAICS”), Which Establishes Standards for Various Types of Industries
Under the NAICS, Size is Based on Either:
1. Number of Employees: The number of employees of the concern (including part-time employees and the employees of domestic and foreign affiliates) based on number of employees for each of the pay periods over the past 12 months; or
2. Annual Receipts: Gross revenue averaged over previous three years.
The Federal Acquisition Streamlining Act of 1994 Established the Government-wide Goal for Participation by Small Business Concerns Owned and Controlled by Women at not Less than 5% of the Total Value of All Prime Contract and Subcontract Awards.
Normally, a self-certification process.
Benefits of Subcontracting with a Woman-Owned Business:
Although there are currently no set-aside procurement programs or incentives for contracting with women-owned businesses, the 5% procurement goal established by FASA means agencies have a strong incentive to look for qualified women-owned businesses when filling contractual needs.
Benefits for Service Disabled Veteran Owned Businesses
Veterans Entrepreneurship and Small Business Development Act of 1999, Expanded the Eligibility for Certain Small Business Assistance Programs to Include Veterans:
Veterans Benefits Act of 2003 authorized agencies to award sole source or set-aside contracts to service disabled veteran owned businesses
Benefits of Contracting with a Veteran-Owned Companies:
Federal contracting agencies must establish and achieve a participation goal of 3% of the total value of all prime contract and subcontract awards for each fiscal year for small businesses owned and controlled by veterans with service-connected disabilities.
Native American, Alaskan & Hawaiian Objectives and Initiatives
Office of Native American Affairs is Devoted to Ensuring American Indians, Native Alaskans and Native Hawaiians Seeking to Create, Develop and Expand Small Businesses Have Full Access to Business Development and Expansion Tools Available Through the Agency's Entrepreneurial Development, Lending and Procurement Programs .
SBA has a particular interest in assisting small business and economic development in disadvantaged tribal areas.
Native American businesses increased 84% from 1992 to 1997.
Benefits of Contracting with Native American Businesses:
May permanently remain an 8(a) company, if otherwise qualified
Rebuttable presumption of socially disadvantaged status.
Subcontracting Plans for Large Business Federal Contractors
A Plan, Adopted by the Contractor, to Further the Government's Program Under the Small Business Act
Successful Offerors Under both Negotiated and Sealed Bidding Acquisitions that are Expected to Exceed $500,000 ($1M for construction) and that have Subcontracting Possibilities must Provide a Formal Subcontracting Plan
Percentage Goals for using Small Business Concerns, SDBs, Woman-owned Small Businesses
The name of the individual who will administer the offeror's subcontracting program;
A description of the efforts the offeror will make to ensure that small businesses have an equitable opportunity to compete for subcontracts;
Assurances that the offeror will include the clause at FAR 52.219-8 (Utilization of Small Business Concerns, SDB and Woman-owned Small Business Concerns);
Additional Assurances A recitation of the records the offeror will maintain
to demonstrate procedures adopted to comply with the plan
Problems Under Contractor Team Arrangements: The 50% Rule
A Concern May not be Awarded a Contract Under Subsection (a) of this Section as a Small Business Concern Unless the Concern Agrees That -
in the case of a contract for services (except construction), at least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern; or
in the case of a contract for procurement of supplies (other than procurement from a regular dealer in such supplies), the concern will perform work for at least 50 percent of the cost of manufacturing the supplies (not including the cost of materials).
“ A contractor and subcontractor are treated as joint venturers if the ostensible subcontractor will perform primary and vital requirements of a contract or if the prime contractor is unusually reliant upon the ostensible subcontractor. All requirements of the contract are considered in reviewing such relationship, including contract management, technical responsibility, and the percentage of subcontracted work.”
SBA determines the size status of a concern, including its affiliates, as of the date the concern submits a written self-certification that it is small to the procuring activity as part of its initial offer . . . which includes price.
Thus, under the traditional rule, it is irrelevant whether the contractor grows beyond the size standard, or is acquired by a large business, during performance of the contract.
Several exceptions to the traditional rule have been established.
Within 30 days of an approved contract novation, a contractor must recertify its small business size status to the procuring agency, or inform the procuring agency that it is other than small. If the contractor is other than small, the agency can no longer count the options or orders issued
Merger or Acquisition
Where a contract novation is not required, the contractor must, within 30 days of the transaction becoming final, recertify its small business size status to the procuring agency, or inform the procuring agency that it is other than small. If the contractor is other than small, the agency can no longer count the options or orders issued pursuant to the contract, from that point forward, towards its small business goals. The agency and the contractor must immediately revise all applicable Federal contract databases to reflect the new size status.
Final Rule including these provisions went into effect on April 20, 2009.
Long term contracts are contracts of more than 5 years, including options. Long term contracts may include Multiple Award Schedule (MAS) Contracts, Multiple Agency Contracts (MACs) and Government-wide Acquisition Contracts (GWACs).
A contracting officer must request that a business concern re-certify its small business size status no more than 120 days prior to the end of the fifth year of the contract, and no more than 120 days prior to exercising any option thereafter. If the contractor certifies that it is other than small, the agency can no longer count the options or orders issued pursuant to the contract towards its small business prime contracting goals. The agency and the contractor must immediately revise all applicable Federal contract databases to reflect the new size status.
A business concern that certified itself as other than small, either initially or prior to an option being exercised, may recertify itself as small for a subsequent option period if it meets the applicable size standard.
A contracting officer may require concerns to recertify their size status in response to a solicitation for an order. The SBA will determine size as of the date the concern submits its self-representation as part of its response to the solicitation for the order.
Blanket Purchase Agreement
The SBA does not consider a Blanket Purchase Agreement (BPA) a contract. Goods and services are acquired under a BPA when an order is issued. Thus, a concern's size may not be determined based on its size at the time of a response to a solicitation for a BPA.