DOD Class Deviation Further Complicates FSS Ordering

By Phillip Seckman On March 13, 2014, the Director of Defense Procurement and Acquisition Policy issued a Class Deviation that alters the way DOD will utilize Federal Supply Schedule contracts.  Effective immediately, prior to awarding an order against an FSS contract, DOD ordering activity contracting officers must independently make a determination that the FSS order price is fair and reasonable.  This requirement applies regardless of whether the order is for supplies, fixed-price services, or services requiring a statement of work.  One might read the class deviation to signal DOD’s lack of confidence that GSA is securing fair and reasonable pricing when negotiating and awarding schedule contracts.   The class deviation comes on the heels of other changes to the FSS ordering requirements in FAR 8.4.  Specifically, … Continue reading

FAR 52.236-1, Performance of Work by the Contractor (A Hard Clause for OCONUS Construction Contractors)

The US government, and in particular the DoD, has spent, and will continue to spend, millions of dollars on OCONUS construction projects.  Contracts have been awarded for building complete compounds in Djibouti, Africa, troop barracks in Afghanistan, and runways in Qatar.  Unsurprisingly, there’s no shortage of bidders for these projects – with their millions of dollars in revenue.  Many large US government contractors, as well as foreign construction firms, have competed over and over again for these projects.  Inasmuch as all of these construction projects are FAR based, the RFPs are substantially similar, containing identical clauses and provisions, even though, of course, the SOWs differ.  One clause consistently included in all of the respective RFPs, and which causes a great deal of angst for many … Continue reading

GAO Recommends Little Relief to Incurred Cost Submission Backlog

Guest Authors: Capital Edge Consulting ( The recent GAO report on the backlog of audits of Incurred Cost Proposals is unfocused.  The conclusion highlights the fundamental issue at hand in the statement, “DOD has fallen far behind in closing out its contracts, in part due to the large backlog of incurred cost audits that must be performed by DCAA…” The GAO’s “Recommendations for Executive Action” include recommending DCAA, “…assess whether its incurred cost backlog initiative is achieving the objectives of reducing the incurred cost audit backlog…”  With this suggestion, GAO is recommending DCAA engage in the same metric type exercise that landed it in hot water in 2009 (GAO Report 09-468, September 2009).  Clearly, the GAO’s recommendations lack substance on how to increase the rate of … Continue reading

DoD IG Critical of DCMA Proposal Audits

By Darrell Oyer, Darrell J. Oyer & Co.: In 2010 DOD issued guidance to contracting officers raising the contract value for requesting a proposal audit from $650,000 to $10 million for fixed-price contracts and from $10 million to $100 million for cost-type proposals. DOD transferred low-dollar proposal audits from the Defense Contract Audit Agency (DCAA) to the Defense Contract Management Agency (DCMA).  The change came in the wake of congressional criticism over the quality of DCAA’s audits. DCAA said this decision would allow it to redirect 132,133 audit hours to higher-dollar proposals [Editorial Note:  Sure]. A DOD Inspector General (IG) report has now concluded that this action could cost taxpayers as much as $249.1 million per year. According to the IG, DCMA’s Pricing and Negotiation … Continue reading

Eliminate Price Proposals?

By Darrell Oyer, Darrell J. Oyer & Company:  A recent article in the Federal Times suggests that DOD “should-cost” reviews be used as an alternative to contractor price proposals.  The rationale is that because should-cost review teams are led by senior government leaders and supported by the contractor’s senior management the resultant should-cost price is fair and reasonable. This approach would require a waiver from the Truth in Negotiations Act.  The author contends DOD’s should-cost reviews would provide more analysis into the reasonableness of the price than any proposal review team would be able to accomplish. For years some government personnel have envisioned a means to reach a fair and reasonable price without the need for a contractor price proposal.  One idea in the 1960’s was the … Continue reading

Department of Defense has an Active Suspension and Debarment Process

The Government Accountability Office (“GAO”) recently issued a report finding that the Department of Defense (“DOD”) had effective processes to refer contractors for potential suspension or debarment, but that DOD was not reporting a small number of discretionary actions. Suspension and Debarment, DOD has Active Referral Processes, but Action Needed to Promote Transparency, GAO-12-932 (Sept. 19, 2012). The GAO noted that in fiscal year 2011, DOD had the federal government’s largest procurement budget, totaling over $375 billion.  DOD used suspensions and debarments as tools to protect the federal government against nonresponsible contractors, such as those who had committed fraud.  A suspension is a temporary disqualification of a contractor from receiving new government contracts pending completion of an investigation and any legal proceedings. A debarment is … Continue reading

DOD To Impose Controls On Labor And Overhead Rates For Services Contracts

On July 31, 2012, the DOD issued Class Deviation 2012-O0012, Limitation on Amounts Available for Contracted Services.  This was a step to implement language contained in Section 808 of the 2012 National Defense Authorization Act (NDAA): “(1) establish a negotiation objective that labor rates and overhead rates in any contract or task order for contract services with an estimated value in excess of $10,000,000 awarded to a contractor in fiscal year 2012 or 2013 shall not exceed labor rates and overhead rates paid to the contractor for contract services in fiscal year 2010” The Professional Services Council (PSC) challenged the implementation of this provision on September 18, 2012 with a letter to the Undersecretary of Defense pointing out that the DOD implementation guidance did not … Continue reading

The Very Real Problem of Fake Parts

There is a booming business in making and selling counterfeit parts to the U.S. government. Most of it is of foreign origin, but some is not. These parts can affect consumer electronics, telecommunications, medical devices, automotive parts, critical infrastructure, aircraft, spacecraft and various military applications. Counterfeits can be complete false fabrications, re-marked or re-worked used chips and other electronic parts, etc. Whether they will work is often the wrong question – working, but not properly, can be worse than a complete failure, e.g., altimeters, blood sugar analysis, etc. The problem can lead to tainted supply chains which in turn lead to threats such as: To Data:  Unauthorized Access, Alteration, Theft To Communications: Interruption, Interference, Interception, Insertion To Systems:  Poor performance, Failure, Remote system disablement To Public Perception:  Safety of military systems and … Continue reading