Comment on FR Doc # E9-10351

Mr. Al Matera Director, Office of Acquisition Policy General Services Administration FAR Secretariat Washington, DC 20405 Re: FAR Case 2008-015 – Retainage on A/E Services Contracts Dear Mr. Matera: The Council on Federal Procurement of Architectural & Engineering Services (COFPAES) is the coalition of the nation’s leading practitioners in the architecture, engineering, surveying and mapping professions. Through our member organizations – the American Congress on Surveying and Mapping (ACSM), American Institute of Architects (AIA), American Society of Civil Engineers (ASCE), Management Association for Private Photogrammetric Surveyors (MAPPS), and National Society of Professional Engineers (NSPE) – COFPAES represents more than 300,000 practicing architects, engineers, surveyors and mapping professionals, including the vast majority of those that serve as contractors to the Federal government. COFPAES has for more than 35 years provided the unified voice of the A/E community on Federal procurement issues. COFPAES strongly supports a revision to the standard clause in FAR 52.232-10. We commend the FAR Council for initiating this proposed rule. FAR clause FAR 52.232-10 has been identified by the Small Business Administration, Office of Chief Council for Advocacy, as one of the more troublesome regulations for small business, through its regulatory review and reform (R3) process. COFPAES is grateful to the SBA Office of Advocacy for its leadership on this important issue. We support the proposed rule. Making retainage a discretionary, rather than mandatory, feature of a Federal A/E contract is a step in the right direction. We continue to question the origin of this clause. The Federal Register notice of May 5 fails to provide the statutory authority for this clause or for retainage on Federal A/E contracts. We also disagree with the finding that this rule will not have a “significant economic impact” on small business. Indeed, our experience is that the 10 percent retainage rule has a significant detrimental impact on small firms. Federal agencies regularly withhold 10 percent retainage in a manner that violates at least the spirit of the Prompt Pay Act. We have heard from members about tens of thousands of dollars in fees being retained for months, even years. This affects firm cash flow and profitability. All too often, private A/E (including surveying and mapping) firms provide deliverables to Federal agencies in a timely manner, in accordance with contract terms, conditions and schedules. However, there is a serious and dangerous lag time between “delivery” by the contractor and “acceptance” by the agency. During this lag time (again often months and sometimes years), 10 percent of the fee due to the firm was retained by the agency. This places the private firm (often a small business) in the position of providing an interest-free loan to the government. This is a costly and unfair practice. While outside the scope of this rule, COFPAES believes policies and procedures must be put in place to assure prompt and timely review and acceptance of deliverables by A/E contractors, particularly when a retainage is imposed. COFPAES believes that making retainage discretionary, rather than mandatory, is consistent with the spirit and intent of the “Brooks Act” (40 USC 1101 et. seq.), which provides for selection of A/E contractors on the basis of demonstrated competence and qualifications. Indeed, it is COFPAES’ view that retainage is not necessary on A/E contracts, given that firm’s past performance is such an integral part of Federal A/E selection. If a firm has a record of failing to meet delivery schedules, or requiring substantial and frequent revisions of their work, such a firm should not be deemed the most qualified in a qualifications based selection (QBS) process. Thus, if a firm has an excellent past performance record, including its compliance with accuracy requirements and schedules, retainage is not necessary. With regard to the specific proposal in FAR Case 2008-015 published in the Federal Register notice of May 5, COFPAES offeres the following suggested modifications: • ID/IQ (or MATOC and SATOC) contracts should be treated differently than firm fixed price/lump sum contracts by invoicing on acceptance of the deliverable under ID/IQ and on milestones in a Firm Fixed Price contract. Milestone payments should apply to ID/IQ task orders, as they do today. • As mentioned above, a standard (either time or performance, or a combination thereof) should be for the contracting officer’s technical representative’s (COTR) acceptance of a deliverable. An open-ended, indefinite period is grossly unfair to the agency regarding use of the A/E’s deliverable, and to the firm that is effectively extending credit to the government without interest. Alternately, interest should be paid to the firm from the date of submission of the deliverable. • The retainage should be negotiated on each contract; in an ID/IQ on each task order, just as profit is negotiated (See FAR 15.404-4). • Past performance on previous contracts shall be taken into consideration when negotiating whether retainage will be applied to a contract. A firm with an excellent record should not be penalized with a retainage clause. • The FAR should clearly distinguish A/E contracts from construction contracts. A/E services are NOT construction services. • The proposed rule loosely and inappropriately uses the term “design work”. The revision and the rule should apply to all types of A/E contracts, not just those for design. Today, the retainage requirement in FAR 52.232-10 is applied to all types of A/E contracts, not just those for design services. Thus, the relief from this proposed rule should similarly apply to all types of A/E services. As outlined in the Brooks Act and the FAR, A/E services are defined not just as design services, but A/E services (including surveying and mapping) “associated with research, planning, development, design, construction, alteration, or repair of real property.” There are numerous services the A/E community provides to the Federal government that are not solely design and are often independent of design. • The rule should require the contracting officer to release any excess retainage once the work is substantially complete. Currently, contracting officers "may" do so, but are not required. The rule should be changed from "may" to "shall" in this regard. Again, COFPAES is grateful this rule has been published. We once again commend the FAR Council and the SBA Office of Advocacy and stand ready to assist with any questions or any assistance we may provide in this rulemaking. If you have any questions, please direct them to John Palatiello, COFPAES Administrator, at the contact information below. Respectfully, Patrick Olson, PE, PLS, CP, Chairman Council on Federal Procurement of Architectural & Engineering Services (COFPAES) 1856 Old Reston Avenue Suite 205 Reston, VA 20190 (703) 787-4748 www.cofpaes.org