Commercial items

Army Lawyer, Jan-Feb, 2003

There's Just No Comparison

In December 2001, Congress qualified the status of Federal Prison Industries, also known as UNICOR, (1) as a mandatory source by requiring the Department of Defense (DOD) to determine whether UNICOR products are comparable to products available in the commercial market. (2) On 26 April 2002, the DOD issued an interim rule implementing Congress's intent. (3) The rule requires contracting officers to conduct market research to determine whether UNICOR products are comparable to products available on the commercial market in terms of price, quality, and time of delivery. (4) The interim rule requires the contracting officer to purchase from UNICOR if the UNICOR product is comparable to private industry products that best meet the government's needs in terms of price, quality, and time of delivery. (5) Otherwise, the contracting officer is required to use competitive procedures to acquire the product. UNICOR is authorized to compete, and the contracting officer must consider a timely UNICOR offer. The comparability determination is solely within the agency's discretion. (6)

The Defense Acquisition Regulations Council (DARC) received more than forty comments on the interim rule from trade associations, federal agencies, and members of Congress. (7) "Most of the comments focused on the interpretation of [UNICOR's] waiver powers, the rule's effect on set-aside contracts, and the need for more clearly defined terms." (8) Due to the number of comments, the council did not estimate when it expects to issue a final rule. (9)

Try Door Number Two

The General Accounting Office (GAO) reviewed a comparability issue less than three months after the DOD issued the interim rule. In Federal Prison Industries, (10) the U.S. Marine Corps conducted market research to determine whether UNICOR furniture products were comparable in price, quality, and time of delivery. (11) The agency required installation of the furniture by 12 July 2002. UNICOR required ninety days lead time for delivery and three weeks for installation. The market research revealed that vendors on the General Services Administration's (GSA) Federal Supply Schedule (FSS) could meet the agency's delivery schedule at a lower price. The agency determined that UNICOR's products were not comparable, and the contracting officer conducted an FSS competition. (12)

"Competitive procedures" entailed vendors submitting e-mails verifying price and delivery time. The contracting officer did not issue a formal solicitation. UNICOR submitted a price higher than one FSS vendor and indicated that it could deliver and install the furniture by 8 July 2002 if the agency submitted a purchase order by 1 April 2002. Because funding for the project would not be obligated until late April 2002, the contracting officer determined that UNICOR's delivery terms failed to meet the agency's requirement. The contracting officer concluded that UNICOR's price and delivery terms were not comparable and issued a purchase order to a FSS vendor. (13) UNICOR challenged the contracting officer's finding and the competitive procedures the agency used to award the contract. The agency alleged that UNICOR's enabling statute required the arbitration board to resolve the dispute and moved to dismiss. (14)

The GAO agreed with the agency. UNICOR's enabling statute specifically vested the arbitration board with authority to resolve disputes involving price, quality, character, or suitability of UNICOR products. The GAO held that the board retained authority to resolve the dispute because the statute requiring the comparability determination did not specifically alter the board's arbitration authority. The new requirement applicable to UNICOR purchases did not exclude DOD purchases from the board's authority. (15) The GAO refused to decide whether the FSS competition complied with the statute's competitive procedures requirement until the arbitration board decides the comparability issue. (16)

Compare Past Performance, Too

The Civilian Agency Acquisition Council (CAAC) and the DARC proposed an amendment aimed at improving FPI's customer satisfaction, specifically its performance in delivery, price, and quality. (17) Federal customers would rate FPI's performance and compare its performance to private industry performance. The information will provide FPI with feedback and agencies with information for future source-selection determinations. (18)

Treat It like a Commercial Item

The DOD issued an interim rule on 6 December 2001 authorizing commercial item treatment for certain performance-based service contracts and task orders. (19) The interim rule requires the contract or task order to be a firm-fixed priced acquisition, have a value not exceeding five million dollars, specify each task the contractor must perform, define each task in measurable mission-related terms, and identify the specific end products or output the contractor must achieve for each task. The rule also requires the contractor to provide similar services to the general public at the same time and under similar terms and conditions as the contract or task order. (20)