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    Can the Government direct a prime contractor to subcontract with specif vendors because they hold propriatry data rights to sofware being used in order to act as the software integrator? (This is not a directed source/mandatory source of supply question). Could the Government require via thier PWS that a prospective Prime enter into teaming aggreements with specific vendors? Due to data rights, we must have some teaming with specific contractors, regardless of which one/who acts as the prime.


    Answer

    The following response is based solely on the question and
    background information provided. As we do not have all of the facts
    particular to your contract, program, and situation, we highly recommend, as
    applicable, you consult your leadership, contracting officer and/or Legal Office for
    guidance.
     
    This question has come up a few times in previous AAP submittals and
    portions of my response are drawn from those previous AAP questions in addition
    to my own thoughts and research.  As you are probably already aware, there is no
    specific directed source discussion in the FAR or DFARS; however, there is
    some allowance for the Contracting Officers to have go/no go authority over
    the prime's choice for a subcontractor.  FAR 44.201-1 states " The
    contracting officer may require consent to subcontract if the contracting
    officer has determined that an individual consent action is required to
    protect the Government adequately because of the subcontract type,
    complexity, or value, or because the subcontract needs special surveillance. These can
    be subcontracts for critical systems, subsystems, components, or services."
    With that in mind, it is logical that Contracting Officers may direct that
    particular sources be used by a prime if it is in the Government's best
    interest.  In addition, the terms of the "Consent to Subcontract" clause
    allow you to ensure that your "directed source" mandates are being followed during
    contract performance.
     
    Once you have determined that directing the source is the best acquisition
    strategy for your situation, thorough and thoughtful documentation
    explaining that the directed source(s) is in the Government's best interest is
    critical. Several GAO and IG reviews have relied on CO documentation to establish that
    limiting a prime to a particular source or sources was an appropriate course
    of action in the acquisition planning phase of the pre-solicitation process
    (see DOD IG report D-2000-129, GAO-04-206, ," December 2003).  Your decision
    to specify sources should include the following:
    - documentation that establishes that a specific contractor is the only
    source that can accomplish the mission, and mitigate catastrophic risk or loss to
    the mission.
    - thorough research to include SBA discussions and coordination to ensure
    your source limitations are defensible;
    - a thorough strategy  on how the competition can be conducted without an
    unfair competitive advantage to one or more sources since they will be using
    the same subcontractor(s)/team members.  Special terms to keep the
    competition equitable may be required. For example, how you are going to evaluate price
    in relation to the subcontractor cost.  Will you consider the directed source
    cost in evaluation of price for purposes of award or strictly evaluate based
    on exclusion of directed source proposed amounts.  The latter might be
    considered given that the prime is not given a choice or an opportunity to
    seek a competitive price for this area of the contracted effort.
    - legal advice regarding the impact to competition with respect to CICA.
    You might consider using the criteria at FAR 6.302-1, Only One Responsible
    Source and No Other Supplies or Services will Satisfy Agency Requirements in your
    documentation.  At least one Court of Federal Claims decision was lost by
    the Government because of failure to document their directed source decision
    according to the FAR Part 6 criteria even though Part 6 applies only to
    Government-to-prime relationships (see COFC, GOOGLE, INC. and  ONIX
    NETWORKING CORPORATION,  v. THE UNITED STATES, and SOFTCHOICE CORPORATION, 4 Jan 11);
    - an assessment and strategy that accounts for the possibility that one or
    more directed sources may not desire to enter into an agreement with more
    than one potential prime
    - approval at the appropriate level within your agency which could be at a
    higher level than the approval for the Acquisition Plan;
     
    Relative to whether you require teaming agreements, I believe this is a
    matter of semantics.  If you are requiring that specific sources be used to
    perform the entirety of contract, those sources will have to work with each other
    and/or another offeror to determine who will be the designated prime upon
    which contractual performance is ultimately responsible.  The teaming
    agreement will be the instrument that codifies the prime/sub relationships
    and not  necessarily a document the Government requires unless determined
    necessary to show that the directed sources are in place and all are willing
    to be bound to a subcontract by the prime.
     
    Regarding your question on whether to include the requirement in your PWS, I
    would recommend instead, a Section H, Special Contract Requirements clause.
    The PWS should be reserved for delineating the technical requirements of
    your effort, while the basic contract establishes the overall terms and
    conditions for performing the contract -- in this case, directing some portion of the
    effort to specific source(s).  In crafting such a clause, you will specify
    the sources and cross reference to the applicable PWS paragraph to ensure it
    is clear where the directed subcontractor is mandated.  It should also be
    clear that, under the terms of the contract, the prime maintains the
    ultimately responsible for acceptable performance of the contract and that a
    subcontractor's status as a directed source does not alleviate the prime
    contractor of their contract performance responsibilities.   For purposes of
    your solicitation, you will want to include criteria for selection of award
    (Section M) that addresses whether the competing offerors have an agreement
    that will allow them to meet the Section H directed source clause
    requirement.
     

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