Free Motion for Summary Judgment - District Court of Federal Claims - federal

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SUPPLEMENTAL APPENDIX

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS LA GLORIA OIL AND GAS COMPANY Plaintiff, v. THE UNITED STATES, Defendant. )

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No. 02-465C (Judge Hewitt)

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DECLARATION OF JOHN R. WALKER

1. Mynameis John Ro Walker and I am a contracting officer with the Defense Energy Support Center (DESC). I have been with DESC since 1983, except for a period from 19871989, whenI worked for the Naval Sea Systems Command. have been a DESC I contracting officer since 1989. 2. DESC its predecessor, the Defense Fuel Supply Center (DFSC), awarded La Gloria or Oil and Gas Company Gloria) a series of 6 contracts between 1993 and 1999 that are the (La subject of economicprice adjustment (EPA)clause claims. 3. These contracts were awarded in DESC'sdomestic bulk fuels program, were indefinite quantity-type contracts for one year, and called for the delivery of large volumes of fuel. 4. Many the solicitations fbr the domesticbulk fuels contracts provided that a portion of of the requirement was set aside for participation by small business concerns. A copy of a sample of the DESC clause implementingthe partial small business set aside, I237.07, is included in Defendant's supplemental appendix at 4. Prior to 1988, similar clauses were included in DESC's solicitations. Beginningin t 988, DESC solicitations included an evaluation

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preference of up to 10 percent for small disadvantaged business concerns, a copy of DES(; clause I237.05, whichimplemented this preference, is included in Def. Supp. App. at 5. Beginningin 1988 the solicitations also included DESC clause I237.06, which provided that a portion of the requirement was set aside for exclusive participation by small business concerns with preferential consideration for small disadvantagedbusiness concerns. A copy of that clause is at Def. Supp. App.6. 5. DESC's partial set aside clauses operated in substantially the samemanneras the standard FAR and DFARS clauses for partial small business set asides. After offers were received under the solicitations they wouldbe evaluated as if there were no set aside quantity. The set aside quantities would then be offered to small businesses based upon prices that DESC wouldotherwise pay under the solicitation had there been no set aside for supply of the location at whichthe set aside was placed, adjusted for transportation charges. In awardingthe set aside quantities, the contracting officer wouldnot furnish either the identity, or the amount the of offered price that DESC would otherwise pay. 6. The difference between the standard FARand DFARS clauses and set aside procedures and the set aside clauses and procedures used in DESC domestic bulk acquisitions was that set aside quantities were offered to small businesses and small disadvantaged businesses before awardof the basic quantities. If no small or small disadvantagedbusiness offeror was willing to accept the set aside quantities at the offered price, i.e., there wasa set aside "failure," the set aside quantities wouldbe added back to the basic quantities and awardedto the low offeror. The standard FAR and DFARS procedures provide that set aside quantities are offered after the basic quantities are awarded. Under the standard FAR DFARS and procedure, if there is a set aside failure, the quantities are not awarded under the basic acquisition, but are re2

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solicited under a newacquisition. The delay that wouldresult from re-solicitation could adversely affect the mission and readiness posture of military units dependentupon those requirements. As the clauses at Supp. App. 4-7 show, DESC has, for decades, had a FAR deviation authorizing the use of its clauses and procedures. I declare under penalty of perjury under the laws of the United States of Americathat the foregoingis true and correct. Executedon ~' "" "]~c~" t~ ~

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DLA60003-R-0C,51

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[211.200

(~DERIHG (/~R 19~) or ~ctfvitfea ~s~t~ fn ~e Scheme. S~h or~rs ~ ~ fs~u~ fr~ ~ate of Award ~hro~h 50

~r~rs ~ the f~vf~a{~ Septet 19~. (c) if

~f~

a ~[fve~

o~r

ts

co~ider~

"is~"

~ the

G~er~t

~s~ts

the

orde~

~n ~h¢ ~1[.

(F~ 52.Z16-18)

(d) For pr~ f~ ~ ~d for ~ ~h~ Oof~ logI~I~{~ AQ~, the C~Iractor w~I~ ~ furnI~ with ~c~nl ~nIIt{~ "S~rc~ Id~t{f~c~Ii~ o~ O~r(~ Authorizer's. ~ This ~nt (~ for pl~i~ ~t {o~I~lut~ ~ or~r ~r tho c~trac~. Th~ ~nt wIl~ a{~o ~cat~ the ~t(vI~(I~} ~lhorlz~ ~o pl~ or~rQ ~rly pl~c~ price as ~id~ In the (OFSC ~Z.216-gF12)

the Goverr~nt

sha~( ~y the

C~tr~tor,

~ the

s~fs~f~

of

W@rf~oices

cr v~ers,

the

prices

~I ~he Gover~t ~a} The ~t ~e ~ the total contract price.

delfvePfes

arrmts It; or

~ |zL~; pros~c¢iw su~tractors su~troctor ~thoriz~

RI~ETR%rTION$~ SUBCONTRACTOR S~LES TO T~ G~EHT(JUL s~c¢or~ ~r o~he~ise ~=¢ In ~y ~e~, ~ic5 hss ~r dlr~tly to the Gover~¢ of a~ It~ or process (t~l~ing ~r this c~trsct or ~er ~ follou-m pr~ct[~ contract. (b) The pr~lbiti~ In (o) ~e ~ not p~ct~e the ¢~tractor by [a~ or r~ulat[on. c~tr~ct. (FAR c~er soft,are) frm a=sertln~ ~e or furnlsh~ rights that ~ the

ore other~ise

su~tracts u~er th(~

If this rattling ~rtially

docLment c~toins l~rtio| s~l[ bustness sol:-as|d~ lt~ in the Sch~ie~ the ~a[~tl~ prefere~e ~scri~d tn the clause t~ ~ ~[ic~le to the ~-set-~side ~rtt~ of those Its, or to the ~res~rv~ ~rti~ of it~ rese~ for c~tr~tl~ with the SBA ~r the 8(03 pronto.

1237.05 ROTICE OF EVALUATIO~PREFERENCEFOR ~HALL DIS~V~TA~D~SIHESS C~CERNS (DFSC AU6 I~} (OEVIATI~) (o) DEFINITIONS. The te~ "~[l dlsa~tag~ ~si~s8 (~B) c~cern~" as ~ in this cla~e, the m~ing set forIh In the REPRESERTATION5 cla~e of this c~trsct. SOB c~e~ ~st s~ly ~trot~ pr~t fr= an ~B prcf~r~ce. (b) EVALUATION PREFEREN~. (1) After all other evol~tt~ f~tors doscri~ In this solicitation ore a~ll~, offers will ewt~t~ ~ a~ing a factor of 10 ~ent to th~ price of a[[ offers, exc~t-(i) Offers fr~ SOB c~e~s t~aC have ~t ~alv~ the prefere~e; (iJ} Otherw(s~ ~ces~fu[ offers of ~{~gJb[e pr~t~ ~r th~ Tr~ Agre~nt~ Acl ~ben the threshold for a~llcntlon of the Act is (2) The 10 ~rcent f~tor will ~ a~ll~ ~ ~ ~ine it= ~ li~ Itm ~sis or to ~y gr~ of (¢~ ~ich award ~y ~ ~e. Other evaL=ti= factors descri~ in the so[icitoti~ will ~ a~ti~ ~fore a~licotion of ~rc~¢ factor. H~er~ tn no ~ ~y award ~ ~e to an ~B cavern at a prlca that exce~s fair ~rEet price (as ~te~in~ ~er F~ 19.B0~-2} by ~re than I0 ¢¢) ~AI~R OF EVALUATIO~ PREFERER~. ~n ~B ~y e[~t to waive the prefere~e, in ~ich case the I0 ~rc~ factor ut[l ~ a~ to I¢s offer for ow[~ti~ ~r~ses. [ ] Offeror ellis Io uotve the pr~fer~ce in ~ragra~ (b) (DF~C52.219-9F05)

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The foitc~{ng

clause ~ppt|es ¢o aet-~slde items. ~OTXI:;E OF PARTIAL SHALL BrJ$IHESS ~ET-ASXDE WITH PRE~E~TI~ ~DE~T~ F~ S~LL D~S~VAHTAG~ ~SI~ES~ C~RHS (DFSE ~G 1~) (D~IAT~

"~lt

disa~nzag~

~[~s

(~B)

c~e~,"

as ~ tn

this

cla~e,

arg~n{z~ti~

uh~ ~t~ the r~r~s of 13 CFR 12~.112 or 13 CFR 12~.113, (hi GERERAL.

res~c~lvoty,

in order

to ~ otigib[~

for

n .-.'.-.".-...'.'...'...'......" ".'.'-.'--.'--.'.".'.. "-'.". ".'.'.'.'.". ".'.".'.'.'.--'-'-'-'.'-.-. . .'.';'.':.'.- ¯ ...';.'~'.'."-'..'~.'.'.'.'.'.'' ""'.'.'."."-"':~'"':'"-'""............. ................. ~ :::.. ....... ~.~C~.~.ict~..~..=s~.=sf~..p~'....-..-.-.-.' ::: C2) Thop~lrtia[ ~LI bu=in~$sset-aslCte of the procuremcmt b~s~don a determltnatiori by the is ~C~at def~;e ~t~(i~ fncr~t offerod wilt progr~, or In the In~er~ thoro of ~ss~i~ that a fair ~rt(~ of

~ ~e us tho~h

~re ~ set-amlde. n~otiati~= uil[ ~ [(mit~ to

uiIt ~ c~ider~ o s~rate offer. Except as provl~ in ~ragra~ (e) ~[o~, ~=titte= not o~ar~ ~er the provl=t~ of s~rogra~ (c) SET-ASIdE A~D PR~DURE(Prefer~t(~ C~si~rot~ for (1] Offer~ fr~ ~ ~ ~[L ~sf~ c~er~ ~f{( ~ ~aI~t~

its offer~ price, ~g[~i~ uith the ~B c~em offer{~ the [o~st e~tuot~ price for that co,arm on the set-~ide ~rt(gn of ~h{s ~r~t ~it[ ~ ~ at the ~ce offer~ ~ the SOB c~e~ Tf that

evatuat~

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DLA600-95-R-O061

|237.06 CCont'd)

1251(F) c~atl~ c~ti~ of with

ANTI-EIC~BACK PROCEDURES (OCT "Kickback." ~y k(~ ~ich as use4 (n this clmJso, means ~ny money, f~, c~tssi~, cr~it, is pr~id~, d(~ctly or t~frectty, to aW prt~ C~tr~tor. gift, gratuity, thing of vat~, or pri~ C~trector

a W[~ contract or fn c~ctt~ with s s~troct relating to a pr~ c~tract. uPerson. '= ~s us~ in this ctouse~ ~s a co.ratio. ~rtn~rship. ~si~ss ~ss~latt~ of ~ kf~, trot. Jolnt-st~k c~, at [~ivf~aL. "Pri~ C~troct," us us~ {n th~ clause, ~ o contrect or c~troct~L ~t{~ enter~ ~nto ~ the Unit~ stot~ for the ~r~so of ~ta]nfng su~tfes, ~t~r(a[s, ~{~nt, or services of o~ .Pri~C~tractor," as ~ In th{s cite, ~ ~ ~muho has enter~ Into a pr~ contr=ct States. "Pri~ c~trattor ~LW~," as =M in thls c[o~e. ~ o~ officer, ~rt~r, ~toyee, or og~t of . pri~ Contractor. "5~ontr~ct." o~ ~ in thio cto~em ~ a c~t~t o~ c~t~tuo[ actl~ ~ter~ into by ~ prl~ ~ntroctor or s~ontroctor for the W~se of ~toini~ e~tl~. ~terials, ~i~nt. o~ ~ervices of o~ ki~ ~r o prt~ contract. ,,5~troctor," as ~ in this cte~e. (1) ~o~ ~ ~rs~. other thsn the prf~ Contrac~o~, ~o errors furnish or furnishes a~ s~lfes, ~to~la~s, ~i~t, or so.ices of ~y ki~ ~er a prl~ c~t~oct or a ~ter~ into In co~ti~ ~ith s~ prl~ c~troct; o~ (2) I~t~s ~y~rs~ ~o offers to furnl~ or fu~lshes s~ti~ to the prt~ Contractor or ~ higher tier sub.tractor. -S~trocto? E~loy~," ~s used ~ this clause, ~s ~y officer, ~rt~r. ~[oyee, or agent of The (1) {2) (3) to the ~it~ (b) Anti-Klck~ck Act of 19~ (~1U.S.C. 51-58) (the Act) prohibits a~ ~rson Providing or ~tt~ting to provl~ or offori~ to p~ovldo ~y klck~ck; Soticlti~, ~cceptlng, or ott~ti~ to =crept a~ kickback~ or Inci~ing, dir~tty or (~Ir~t[y, the ~t of ~ kick~k tn th~ c~tract price chocg~ States or in the contract price ch~rg~ by o su~tractor to a prI~ C~tractor or higher tier

Contractor

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FAR Part 15 15.610 Written or oral discussion.

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(a) The requirement paragraphCo)of this section for written or oral discussion neednot be applied in acquisitions-(1) In which prices are fixed by law or regulation; (2) Of the set-aside portionof a partial set-aside; (3) In whichthe solicitation rtotified all offerors that the Government intends to evaluate proposalsand make awardwithout discussion, unless the contracting officer determinesthat discussions (other than communications conductedfor the purpose of minorclarification) are considered necessary (see 15.407 (d)(4)). Once Government the states its intent to awardwithout discussion, the rationale for reversal this decision sball be documented the contract file. in oral discussions with all responsible offcrors who,~submit proposNs wi~n ~c competitive r~ge. The content ~d extent of ~e discussions is a matter of the contracting officer's judgmen~ b~edon ~e particular facts of eachacquisition (but see paragraphs and (d) of this section). (c) (c) Thecontracting officer shall(1) Controlall discussions; (2) Advise offeror of deficlencles in its proposalso that the offeror is given an opportunityto satist) the the Government's requirements; (3) Attemptto resolve any uncertainties concerningthe technical proposal and other terms and conditions of the proposal; (4) Resolve suspectedmistakesby calling themto the offeror's attention as specifically as possible any without disclosing informationconcerningother offerors' proposals or the evaluation process (see 15.607 and Part 24); (5) Providethe offeror a reasonableopportunityto submitany cost or price, technical, or other revisions to its proposalthat may result fromthe discussions; and (6) Provide the offeror an opportunity to discuss past performance informationobtained from references on which the offeror bad not had a previous opportunity to comment. Names individuals providing of reference informationabout an offeror's past performance shall not be disclosed. (d) The contracting officer and other Government personnel involvedshall not engagein teclmical leveling (i.e., helpingan offeror to bring its proposalup to the level of other proposalsthrough successive roundsof discussion, such as by pointing out weaknesses resulting l~omth~ offeror's lack of diligence, competence, inventiveness in preparing the proposal). or (e) Thefollowing conduct mayconstitute prohibited conduct undersection 27 of the Office of Federal Procurement Policy Act, as amended LLS.C.423), and Subparl 3.104 to whichcivil and criminal (41 penalties and administrative remediesapply. (1) Technicaltransfusion (i.e., Government disclosure of technical informationpertaining to a proposal http://farsite.hill.af.mil/archivelFar/1990-37/15.htmt l 0D_5/2005

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that results in improvementof a competing proposal); or (2) Auction techniques, such as-(i) Indicating to an offeror a cost or price that it must meet to obtain further consideration; (ii) Advising an offeror of im price standing relative to another offeror (however, it is permissible inform an offeror that its cosl or price is considered by the Government be too high or unreafistic); to and !i (iii) Otherwise furnishing information about other offerors' prices.

.: -.?

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Page I ofl

52.219-7 Notice of Partial Small Business Set-Aside. As prescribed in 19.508(d), insert the followingclause: NOTICE OF PARTIAL SMALLBUSINESS SET-ASIDE (OCT 1995) (a) Definittons. "Small business concern", as used in this clause, means a concern,incluting its affiliates, that is independently owned operated, not dominant the field of and in operation in which it is bidding on Government contracts, and qualified as a" small business under the size standardsin this solicitation. (b) General.(1) A portion of this requirement,identified elsewhere this solicitation, has beenset aside in (2) Offers on the non-set-aside portion will be evaluated first.and award-willbe madeon that portion accordance with the provisions of this solicitation. (3) Theset-aside pennonwilt be awardedat the highest unit price(s) in the contract(s) for the non-setaside portion, "adjustedto reflect transportation and other costs appropriatefor the selected contractor(s). that. sub.mitt.e.d.r..esp0asive..o.f.fe..rs.pn ~.o..n.-set_-.,asi.de.porfion, the Negotiations be .conducted .the with (4) The contractor(s) for the set-aside portion will be selected from among small business concerns " the will concern that submittedthe lowest responsiveoffer on the non-set-aside portion. If the negotiations are not successful or if only part of the set-aside portion is award;edto that concern, negotiations will be conducted with the concern that submitted the second-lowest responsive offer on the non-set-aside portion. This process will continue until a contract or contracks are awardedfor the entire set-aside por.tibm (5) The Government reserves the right to not consider token offers or offers designedto secure an unfair advantage over:other offerors eligible for the set-aside portion. (c) Agreement. the set-aside portion of the acquisition, a manufacturer regmlar dealer submitting For or an offer in its ownnameagrees to furnish, in performingthe contract, only end items manufacturedor produced by small business concerns inside the United States, its territories and possessions, the Commonwealth Puerto Rico, the Trust Territory of the Pacific Islands, or the District of Columbia. of However, this requirementdoes not apply in connectionwith construction or service contracts. (End of clause) Alternate I (OCT 1995). When acquisition is for a product in a class for which the Small Business the Administration has determined that there are no small business manufacturers or processors in the Federal marketin accordancewith 19.502-2(c), delete paragraph(c),

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252.219-7006Notice of Evaluation Preference for Small DisadvantagedBusiness Concerns. As prescribedin 219.7003,use the followingclause: NOTICE OF EVALUATION PREFEI~NCE FOR SMALL DISADVANTAGED BUSINESS CONCERNS (JUN 1997) (a) Definitions. "Historically blackcolleges anduniversities," as usedin this clause, means institutions determined the Secretary of Educationto meetthe by requirements of 34 CFR Section 608.2. Theterm also meansany nonprofit research institution that wasan integral part of sucha collegeor university before November 1986. I4, "Minority institutions," as used in this clause, means institutions meeting the requirementsof Section 1046(3)of the HigherEducationAct of I965 (20 U.S.C. 1135d-5(3)).The temaalso include Hispanic-serving institutions as definedin Section316Co)(1) such Act (20 U.S.C. of 1059c(b)(1)). "Smalldisadvantaged business concern," as used in this clause, means a small business concern, owned controlIed by individuals whoare both and socially and economically disadvantaged,as defined by the Small BusinessAdministrationat 13 CFR Part I24, the majority of earnings of whichdirecttyaccrueto such individuals. This term also means small a business concern owned controlled by an economicalIydisadvantaged and Indian tribe or Native Hawaiian organization whichmeets the requirements of 13 CFR 124.112or 13 CFR 124.113, respectively. "UnitedStates," as used in this clause, means UnitedStates, its the territories and possessions, the Commonwealth of Puerto Rico, the U.S. Trust Territory of the Pacific Islands, or the District of Columbia. (b) Evaluation preference. (t) Offers will be evaluatedby addinga factor often percent to the price of all offers, except-(i) Offers from small disadvantaged business concerns, whichhave not waivedthe preference; (ii) Offers fromhistorically blackcolleges anduniversities or minority institutions, whichhavenot waived preference; the (iii) Otherwise successfuloffers of-(A) Eligible products under the Trade Agreements whenthe Act dollar thresholdfor applicationof the Act is exceeded;

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(B) Qualifying country end products (as defined in the Defense Federal Acquisition RegulationSupplement clause at 252.2257001, Buy American Act and Balance of PaymentsProgram); and (iv) Offers whereapplication of the factor would inconsistent with be Memorandtun Understanding other international agreementwith a of or foreign government. (2) Theten percentfactor will be applied on a line item by line item basis or to any group of items on whichawardmaybe made. Other evaluation factors describedin the solicitation will be appliedbefore applicationof the ten percentfactor. Theten percentfactor will not be appliedif using the preference wouldcause the contract awardto be madeat a price which exceedsthe fair marketprice by morethan ten percent. (c) Waiverof evaluation preference. A small disadvantaged business, historically blackcollege or university, or minorityinstitution offeror may elect to waivethe preference, in which case the ten percentfactor wiIl be added its offer for evaluation to purposes. Theagreementsin paragraph(d) do not apply to offers which waivethe preference. __ Offeror elects to waive the preference (d) Agreements. (I) Asmall disadvantaged business concern, historically black college university, or minorityinstitution offeror, which not waivethe did preference,agrees that in performance the contract, in the case of a of contract for-(i) Services,exceptconstruction,at least 50 percentof the cost personnelfor contract performance be spent for employees the will of
concerti.

(ii) Supplies, (other than procurement a regular dealer in such from supplies), at least 50 percent of the cost of manufacturing, excluding the cost of materials, will be performed the concern. by (iii) General construction,at least 15percentof the cost of the contract, excludingthe cost of materials, "Mll be performed employees the by of concern. (iv) Construction special trade contractors, at least 25 percentof the by cost of the contract, excluding cost of materials, will be performed the by employees the concern. of (2) Asmall disadvantaged business, historically black college or university, minorityinstitution regular dealer submittingan offer in its ownname agrees to furnish in performing this contract only end items manufactured produced or in

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the UnitedStates by small disadvantaged business concerns,historically black collegesor universities, or minority institutions. (3) Upon request, a historically black college or university or minority institution offeror will providethe Contracting Officer evidence that it has been determinedto be an HBCU MIby the Secretary of Education. or (Endof clause)

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252.219-7001 Notice of Partial SmallBusiness Set-Aside with Preferential Consideration for Small Disadvantaged Business Concerns. As prescribedin 219.508(d),use the followingclause: NOTICE OF PARTIAL SMALL BUSINESS SET-ASIDE WITH PREFERENTIAL CONSIDERATION FOR SMALL DISADVANTAGEDBUSINESS CONCERNS

fMA¥ 1995)
(a) Definitions. "Laborsurplus area," as used in this clause, means geographicalarea a identified by the Department Laboras an area of labor surplus. of "Laborsurplus area concern,"as used in this clause, means concernthat, a togetherwifli its first tier subcontractors, perform will substantiallyin labor surplusareas. "Perform substantially in labor sm~Ius areas," as used in this clause, meansthat the costs incurred underthe contract on accotmtof manufacturing, production, and performance services in labor surplus of areas exceed50 percent of the contract price. "Smallbusiness concern,"as used in this clause, means concern, a includingits affiliates, that is independently owned operated,not and dominant the field of operation in whichit is bidding on Government in contracts, andqualified as a smallbusinessunderthe size standardsin this solicitation. "Smalldisadvantaged business concern," as used in this clause, means a small business concern, owned controlled by individuals whoare both and socially and economicaIly disadvantaged,as defined by the Small BusinessAdministrationat 13 CFR Part 124, the majority of earnings of whichdirectly accrue to such individuals. This term also means small a business concern owned controlled by an economicallydisadvantaged and Indian tribe or Native Hawaiian organization whichmeets the requirementsof 13 CFR 124.i 12 or 13 CFR 124.113, respectively. "United States," as usedin this clause, means UnitedStates, its the territories and possessions, the CommonwealthPuerto Rico, the U.S. of Trust Territory of the Pacific Islands, or the District of Columbia. (b) General. Aportionof this requirement, identified elsewhere this solicitation, has in beenset-aside for awardto one or moresmall business concerns. After offers for the non-set-asideportion havebeenevaluated,negotiationswill be conducted the set-aside portion. for

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(I) Offers on the non-set-aside portion will be evaluated and awardmade in accordance the other provisionsof this solicitation. with (2) Theset-aside portion will be negotiated, in accordance with this ctause, with small business concernswhichsubmittedoffers on the nonset-aside portion. (c) Award the set-aside portion. of (1) Smallbusiness offerors on the non-set-asideportion will be selected for negotiationof the set-aside portionbasedon their standing-- first in terms of groupand then in terms of lowestresponsiveoffer on the non-setaside portion. (i) Group1 - Smalldisadvantaged business concernswhichare also labor surplus area concerns. (ii) Group - Smallbusiness concernswhichare also labor surplus area 2
concerns.

(iii) Group - Othersmall disadvantaged 3 business concerns. (iv) Group4 - Othersmall business concerns. (2) Theset-aside portion will be awarded the highestunit price(s) in at contract(s) for the non-set-aside portion, adjustedto reflect transportation andother costs appropriatefor the selected contractor(s), except (i) Award the set-aside portion to a small disadvantaged of business concernwill be at the lowerof-(A) Theprice offered by the concernon the non-set-asideportion; ~) Aprice that does not exceedthe awardprice on the non-setaside portion by more than ten percent. (ii) When awardunderthe set-aside portion is to a concernoffering nonqualifying country endproduct and the highest unit price in the contract(s) is for a domestic qualifyingcountryendproduct, the setor aside price will be the higherof-(A) The highest awardprice for a nonqualifyingcountry end product underthe nonset-aside; or (B) A price which, whenadjusted by the BuyAmerican Act evaluationfactor, would equal the highest unit price in the contract(s). (iii) When awardunderthe set-aside portion is to a concernoffering domestic productandthe highest unit price in the contract(s) is for end nonqualifyingcountry end product whichwas evaluated using the Buy American evaluationfactor, the set-aside price will be awarded the Act at evaluatedprice of the non-qualifying country. (iv) When awardtrader the set-aside portion is to a concernoffering domestic productandthe highestunit price in the contract(s) is for end

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nonqualifyingcountry end product whichwas evaluated without the Buy American factor-Act (A) Andawardwas madeto a domesticor qualifying country offer at a price lowerthan the high contractprice, the set-aside price will be the highestunit price in the contract(s). (B) Andawardwas not madeto a domesticor qualifying country offer at a price lowerthan the high contract price, the set-aside price will be the lowerof-(1) Thehighest unit price underthe contract(s) as adjusted by BuyAmerican evaluation factor; or Act (2) Thelowest offered price for a domesticor qualifying country end product whichwasnot awarded under the nonset-aside. (v) Where Trade Agreements applies to the nonset-aside portion, the Act offers of eligibleproductswill be treated as if they werequalifyingcountry end products. (vi) Discountterms used in evaluationof the highest non-set-aside award price will applyto the set-aside award price. (3) If negotiationsare not successfulfor anypart of the set-aside portion, the set-aside will be dissolvedfor that part andthe requirement be wilt resolicited. (d) Tokenoffers. TheGovernment reserves the right to not consider token offers or offers designedto securean unfair advantage over other offerors eligible for the set-aside portion. (e) Eligibility for preference as a labor surplus area concern. Smallbusiness or small disadvantaged business offerors whichclaim preferencefor the set-aside portion as a labor surplus area concern, must list the labor surplusarea location(s)of offeror or first tier subcontractors, whichaccountfor morethan 50 percent of the contract price. Nameof Company: Street Address: City/County: State: (f) Agreements. (1) If awarded contract as a small disadvantaged a business-laborsurplus area concernor as a smallbusiness-laborsurplus area concern, the offeror

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(i) Will perform contract, or causeit to be performed, the substantially areas classified as labor surplusareas. (ii) If the contract is in excessof $25,000, will submit report to the a ContractingOfficer within 30 days after awardthat contains the following information-(A) Thedollar amount the contract. of (B) Identification of eachlabor surplus area in whichcontract and subcontractperformance taking or will take place. is (C) Thetotal costs incurred andto be incurred underthe contract eachof the labor surplusareas by the contractorandfirst tier subcontractors. (D) Thetotal dollar amount attributable to performance labor in surplusareas. (2) Amanufacturer regular dealer, whichclaims preferenceas a small or disadvantaged business and submitsan offer in its ownname,agrees to furnish in performing this contract only end items manufactured or producedby small disadvantagedbusiness concernsin the UnitedStates except, as providedin Section 8051of Pub. L. 103-139,and Section 8012 of Pub. L. 103-335,for contracts awarded during fiscal year 1994,and 1995, a small disadvantaged business manufacturer regular dealer or owned an Indian Mbe,including an Alaska Native Corporation, agrees by to furnish only end items manufactured producedby small business or concernsin the UnitedStates. (Endof clause)

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DF$C-N(A. Harvey/q6570,'fk)

6 January 1986

SUBJECT: Reecznmendetlon C~n£e Bese ReferenceDate for EPA Reference~ to Tied to PetroleumM~rkQtlnBMonthly D~SC-PD 1. The current procedureof adjustingprices on the domestic bulk proBram has a major drawback,is c~rrentlyworde~, clause B19.33, Part A, (f) states: r Tho term ~base referenceprice means the ref~m~e price ¯ that will be establishedwhen the PetroletznMarketing..... Monthly Imb!ieationbecomes avail~b!~ for the~hEh prior to the month In which Best Bad Final offers are due. For example,if Best and Final offers are due in-~prll,the ' base reference price would be based on the~rch data of the PetqpleumMark~%~n ~0n.t~.ly,s specifiedSales Prices of B PetroleumProducts~T~bY~s whleh would 6enerallybe published in mid-June. 2, Since the Best and Final offe@s are submittedbefore the base referenceis known, o_fferorsmust guess at the relationship betweentheir offeredprice and thereference,In order to compensatefor this unknown factor offerors must implicitlyincreasetheir price. Whether offerorswould admit to this is an ~nterestin~ questionIn !~g~btof the Initial~entenceIn The contractorrepresentsthat the unit prices set forth in this contractdo not includeany contlnEenhyaRlo~anceto cover the possibilityof i~creasesin the referenceprlce(s) in the C~ntractor's bid or proposal. ,

3. Yet our analysisof the movementof the PHM as comparedto other references as used for interim price adjustmentsindicatesthat the P~ may have moves as much as one or two cents per gallon,out of step with such interimreferences. This situationis not 9nly difficultfor offerors,it providespotentially misleadin~indications for DFSC. ~. It ~s the reco~,.endatlo~ this office tba~ the base referc~eed~te used of on domesticbulk solieltatlons changedso that offerorswill know exactly be the base referenceprice to.whlchtheir best and final price is tied, Th~Is, .. the best and final offer price would be tied to a known final EPA referenceand s known interim EPA reference.For exm~ple,if the best and final date were

18

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SUBJECT: Recommendation Change Base ReferenceDaLe for EPA Re~erence~ to Tied to Pet.roleum November15~h, the £inal base Ep.A referencewo~Id be PMM for Augus~and the interimba~e referencewould be the pOb!icmtlons(S) 5ts~ed In B19,33 F~rt BS for the montho~ JUlyo

CHRISTOPHERLEE Direotor .-..'.Re~emreh & Analysim

i9

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DFSC-N (L.Ervin/4657B/me) SUBJECT: Economic~e

2 December 19B7

Adjustment in the Domestic Bulk Program

TO:

DFBC-D/~)

i. At the recent prenegotiation briefing for the current East/Gulf domestic bulk procurement, discussion among DFSC-D, -P, and -N concerned the means of price escalation used in the domestic programs, OFSC~Noffered to provide last spring ~or General Griffitho paper and related b~ck-up materia|. The enclosed r~terial includes the decision

2. The decision problem concerns the use of an administratively cumbersome method of price adjustment which results in contractor complaints and problems in billing and payments by DFSC. The paper discussed four options, including keeping the then current interior/final adjustment system, modifying it to reduce offer price uncertainties~ or moving to ~inal-only escalators based on prices published in trade journals. The interested directorates, DFSC-C, -G, -N, and -P; unanimously recorr~nendedOption II, a modificationof the then curre~ system. General Griffith accepted Option II for use beginning with last summer's Inland/West procurement. At that time~ he stated his desire t.hat OFSC mou~nt,~:~y ~ ~dm iourn~l-based escalation mnd ~md that the

3.. The original decison package included the decision paper and the back-up materi~l at Tabs A through C. The research paper at Tab D ~as produced prior to th~ meeting with General Griffith and was discussed at that meeting.

CHRISTOPHER LEE Director Office of Market Research and Analysis

cc : DFSC-C DFSC-G DFSC-P/PZ

2O