Selecting the right NAICS code can make or break your next procurement.

Picking the proper NAICS code is often one of those tasks that we as contracting professionals do but we do it almost routinely. Many times, not too much thought is put into it and we rely on those codes we are familiar with, especially if we deal in a small range of products or services. For instance, those who work in a contracting office that supports environmental services, there are only a few NAICS codes that are strictly for environmental remediation and support services.

However, choosing the right NAICS code can make a big difference. Think of what you do with that code. You use it to conduct market research. The results of that market research are used to determine contract type, whether the requirement is for a commercial item or service, and even whether or not you can set aside the requirement for small business. That in turn affects the amount of competition for the award as well as whether an unrestricted solicitation is made.

The contractor has limited appeals for your selection. The Small Business Administration's Office of Hearings and Appeals is the appeal authority. A small business contractor might appeal for one of two reasons (see page two of this linked newsletter): to limit competition to just themselves (or a very few) by getting a more restrictive size standard, or to expand the size standard to allow access to that requirement. Of course, a large business would want a very restricted NAICS code that would have fewer than 2 potential offerors which would allow for an unrestricted requirement.

So, choose your NAICS code carefully.

Contracting becomes a political issue

Using contractors to perform the government's work has become a political issue. Mrs. Clinton is calling on cutting 500,000 government contractor jobs. According to the article, this ups John Kerry's call to cut 100,000 contractors during the last election cycle.

Based on the reports, there wasn't a discussion of which, if any, government functions would be cut or if the federal workforce would increase to account for the lost contractor support.

Regardless, contracting issues are becoming issues of interest in political arenas. Stay tuned...

DFAR keeps up with T&M and Labor Hour changes

This Defense Federal Acquisition Regulation Supplement (DFARS) case is an update to payment options brought on by the the new FAR change (see below) to allow Time and Material (T&M) and Labor Hour contracts for commercial services.

There were three payment options specified in the FAR rule. The Defense Department narrows them to one. Here is how the DFAR case explained it:

DoD believes it is in the best interests of the Department to select, and make mandatory... requiring separate fixed hourly rates that include profit for each category of labor performed by the contractor and each subcontractor, and for each category of labor transferred between divisions, subsidiaries, or affiliates of the contractor under a common control.

That is the way DoD hopes to keep the final outcome of T&M and Labor Hour contracts to be as predictable and controllable (manageable???) as possible.

The DoD head of procurement has a good overview of this change on their DFARS site. There is even a chart comparing before and after use of T&M and labor hour contracts. Just scroll down the page a little to the heading, "Labor Reimbursement on DoD Non-Commercial Time-and-Materials and Labor-Hour Contracts (DFARS Case 2006-D030)."

Rules expand Time and Materials (T&M) plus Labor Hour contracts to commercial services

[This post includes an addition of information regarding T&M and Labor Hour contract D&Fs for contracts over 3 years]
Perhaps you noticed that the FAR got a revision (FAC 2005-15 dated Dec. 12, 2006) to allow T&M and Labor Hour contracts for commercial services. In their deliberations, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council worked to implement the Services Acquisition Report Act of 2003 (SARA). One of the provisions of SARA was to allow using T&M and Labor Hour contracts to purchase services that are commercial in nature.

This new change to the FAR keeps a decided preference for fixed price contacts for services.

Briefly, here is how to use these contract types to buy services (new FAR Part 12.207):

First, the contracting officer needs a determination and finding (D&F) that states a T&M or Labor Hour contract is the only type of contract appropriate for this requirement. Also, for IDIQ contracts, a similar D&F is needed for each task order. [The D&F has some specific requirements that need to be included, so be certain to check them out (FAR 12.207(b)(2)). Also, the D&F authority is HCA for contracts longer than 3 years (FAR 16.601(d)(1)(ii))]

Next, there must be a ceiling price beyond which another determination must be made.

Further:

• The contract must be a competitive award (or small business set aside)
• If using an "other than full and open competition" Justification and Approval (J&A), must have 2 or more offers/proposals or are placing an order under the fair opportunity procedures of a multiple award delivery order contract.

Keep this type of contract arrangement in mind and remember to properly justify its use and make the proper determinations.

FEMA searching for contracting expertise

The Federal Emergency Management Agency is having a job fair to fill 50 positions, 41 of which are for their Procurement Division. This Homeland Security agency is seeking to get up to a 95 percent hiring level, but has fallen short in the past.

Their procurement division has had its challenges. They hired a contractor to help in the short term right after Hurricanes Rita and Katrina, had to justify themselves before Congress, and were even impersonated by thieves.

They have a dynamic leader in Deidre Lee and are trying to get themselves together. Now, it seems, if you need a change, this might be a great time to move to FEMA.

Looking at the big picture of PBSA

The Procurement Round Table is a group of procurement folks who meet to try to make sense of federal contracting and how to make it better. Earlier this year, this group issued a white paper to the acquisition advisory panel, working on improving services acquisition.

The paper introduced the concept of "relational contracting" for discussion purposes. The other purpose of the paper is to help explain why services contracting is supposed to be performance-based but often is performance based in name only.

Looking at the members of the Round Table and the members of the AAP, there is a lot of overlap. Maybe they are just trying to encourage discussion amongst the rest of us.

So...what do you think?

Thanks to Mary Paige for pointing this white paper out to me.

Army seeks digital coaches

Just thought this was a cool requirement- digital coaches. If they can pull this off, it might be something that can transfer thoughout the Army, including contracting.

Iraq Study Group urges agencies to order civilians to Iraq (12/6/06)

Bipartisan panel urges agencies to order civilians to Iraq (12/6/06) The actual words in the article is "directed assignments." Since using civilians as contracting officers throughout the Army (and to a lesser extent the Air Force), you would have thought this would have come much sooner.

Thank goodness it didn't.

In case you missed this...

Just before the end of last fiscal year (September 28, 2006) new thresholds were established for micro purchase and others. The full text, in html, is here.