This column explores government contracting under the Federal Acquisition Regulations (FAR).
The FAR requires agencies to conduct market research before engaging in procurement. Agencies must describe their needs, gather information about the item, identify sources to meet their need, and identify applicable laws. Agencies have discretion with regard to the performance of research.
When a federal agency seeks to procure goods and services, it engages in a contract action. Generally, when an agency expects an action to exceed $25,000, it must disseminate it by sending a synopsis to the Federal Business Opportunities (“FedBizOpps”) website.
Agencies may communicate actions through print, advertising, and working with trade associations. Interested companies must request solicitations from the agency. The FedBizOpps notice is not a formal solicitation for proposals, and it does not create formal competition among firms.
Prime contractors and subcontractors are encouraged to use FedBizOpps to publicize subcontracting opportunities.
Agencies must try to obtain products in the most prompt and efficient manner possible and must develop procedures to enable fair competition. They must solicit sealed bids if there is sufficient time, the award is based at least in part on price, multiple bids are likely, and it is not necessary to communicate with the offerors about the bids.
Generally, the FAR requires “full and open competition,” but the requirement may be waived. It is excused if there are only a limited number of qualified sources, there is compelling urgency, some of the sources have special capabilities, or national security requires it.
If an agency alleges that competition would compromise its need, it may seek to use “sole source” acquisition. Because it is anti-competitive, its use for procurement is limited and disfavored. It can be justified where the contractor:
submits an unsolicited proposal describing a unique capability
previously produced highly-specialized equipment and an award to another vendor would duplicate cost
has unique intellectual property rights or resources or
produces the only compatible equipment or specialized spare parts.
Agencies must contract with vendors that they believe to be responsible and capable of performing. The FAR emphasizes responsibility because contracting officers tend to over-emphasize low price. If the vendor defaults or there are performance problems, the lowest bid could result in significantly higher total costs.
Contractors may demonstrate responsibility by substantiating: sufficient financial resources to perform; the ability to meet the performance schedule; a satisfactory performance record; business ethics and integrity; and the experience, capabilities, and facilities to perform.
If the contractor does not possess a required capability, it may show that it will exist when the contract is awarded. For example, it may submit a commitment letter showing that a lender will provide financing if the agency awards the contract.
If a joint venture offers to perform a contract, the agency may impute one partner’s characteristics to the combined enterprise. If an offeror has an affiliated entity that was deemed not to be responsible, the contracting officer must consider that, but such an affiliation will not necessarily preclude an award.
Before receiving proposals and awarding contracts, agencies can gather information about prospective contractors and pre-qualify them by conducting pre-award surveys. Products, manufacturers, and bidders that meet qualification requirements are placed on special lists. This can reduce evaluation time and defects.
After awarding a contract, the agency may require “first article testing.” This requires a contractor to supply preproduction models, first lots, and samples for review.
Agencies cannot deal with prime contractors and prime contractors cannot deal with subcontractors that are debarred or suspended.
Debarment is exclusion from government contracting. Under the FAR, contractors may be debarred for a variety of reasons including convictions, breaches, and drug violations. Where an agency proposes debarment, the contractor is entitled to certain due process protections.
The agency must notify the contractor, which may respond, appear with counsel, present and cross examine witnesses, and review evidence. A decision to debar a contractor must be supported by a preponderance of the evidence. Debarment can last up to three years (five years for drug violations), albeit it can be reduced for good cause. Suspension is similar to debarment, although the agency requires a lower quantum of proof to disqualify the contractor than with debarment.