Can a Foreign Military Sales purchaser choose the contractor?

The Federal Acquisition Regulation (FAR) establishes a set of uniform acquisition policies and procedures to be used by all executive agencies of the USG. The FAR is the primary document governing contracting actions undertaken by the USG. Many of the FAR requirements originate in legislation created by Congress. One of the best-known laws governing contracting is the Competition in Contracting Act (CICA), which requires full and open competition in procurements. Similar to other federal regulations, the FAR is considered to have the force and effect of law. The current version of the FAR is publicly available online.

In the LOA, standard term and condition 1.2 states that the USG will follow the same regulations and policies when procuring for FMS as it does when procuring for itself. This condition in the LOA is referring to the FAR. The SAMM (which provides overall policy for the conduct of FMS) states FAR provisions applicable to the DoW will apply to FMS procurements.

As previously stated, the CICA requires the USG agencies to promote the use of full and open competition for procurements. This legislated requirement is detailed in Part 6 of the FAR, which discusses the contract competition. In a competitive procurement, the USG makes public notification of the intent to purchase. The USG electronically posts these notifications on the SAM.gov website. Per the FAR, all federal agencies are required to use competitive procurement procedures as the normal method of acquisition.

As an exception under certain conditions, the FAR permits procurement on a noncompetitive basis, which is officially known as “other than full and open competition.” In a noncompetitive procurement, the USG negotiates with a single source to the exclusion of all other potential sources. In order to use this exception to normal procurement procedures, a justification must be prepared to document the reasons why a noncompetitive procurement is required rather than conducting a competitive procurement. According to the FAR, noncompetitive procurements are permitted only when justification is provided based on one or more of the following conditions:

• The property or services required are available from only one responsible source and no other type of supply or services will satisfy agency requirements.
• The need for the supply or services is of an unusual and compelling urgency.
• Award of the contract to a particular source or sources is required in order to do the following:
• Maintain a facility, producer, manufacturer, or other supplier available for furnishing supplies or services in case of a national emergency or to achieve industrial mobilization.
• Establish or maintain an essential engineering, research, or development capability to be provided by an education or other nonprofit institution or a federally funded research and development center.
• Procure the services of an expert for use in any litigation or dispute.
• An international agreement or a treaty between the U.S. and a foreign government or international organization specifies a source.
• A statute expressly authorizes or requires that the procurement be made from a specified source.
• Disclosure of the agency’s needs would compromise national security.
• A head of the agency determines that it is necessary in the public interest to use procedures other than competitive procedures.

The LOA standard terms and conditions reflect the FAR preference for competition in contract awards as mandated by the CICA. LOA condition 1.2 states the USG is responsible for selecting the contractor to fulfill the LOA requirements. Additionally, condition 1.2 states the U.S. will select the contractor on the same basis utilized to make contractor selections to fulfill its own requirements. In other words, the norm for FMS contract awards is for the U.S. to use its competitive contract award process to select the contractor to fill the international partner’s requirement. The SAMM C6.3.4 states that competitive source selection will be utilized to the maximum extent possible in support of FMS.

Section 1.2 of the LOA standard terms and conditions permits the international partner to formally request a noncompetitive procurement be conducted on its behalf. Within the FMS community, an international partner’s request for procurement using other than full and open competition is commonly referred to as “sole source” when the contract to be awarded is expected to exceed the simplified acquisition threshold (FAR 2.101 and FAR part 6). Per the SAMM C6.3.4, an authorized official of the purchasing government may submit a written request, generally through the Security Cooperation Organization (SCO), that the Implementing Agency (IA) make the procurement from a specific organization or entity, or that competition be limited to specific organizations or entities. The Defense Attaché or comparable international partner’s representative in the United States may also submit these requests to the IA. An international partner’s other than full and open competition request should be submitted with the Letter of Request (LOR). Per SAMM C6.3.4, FMS customers need not provide a rationale for the request.

In addition to reviewing the international partner’s other than full and open competition request, SAMM C6.3.4.6 also recommends the request be forwarded to the applicable PCO for information and advice. Typically, the PCO will have previous experience procuring the same or a similar item or service. The DoW maintains data on past procurements and the performance of various vendors in fulfilling previously awarded DoW contracts. The USG may possess additional information indicating the international partner’s other than full and open competition selection may represent a financial or performance risk. In these instances, the PCO can inform the CM, who would provide this additional information to the international partner for further consideration.

Other than full and open competition requests typically specify a particular prime contractor. FMS partners may also request that specific subcontractors be utilized by the prime contractor. Requesting specific subcontractors limits the ability of the DoW to hold prime contractors to performance and cost parameters. Normally, the prime contractor is responsible for selecting and overseeing subcontractor work to ensure all contract milestones are achieved. When an other than full and open competition subcontractor is specified, the prime contractor will be required to use certain subcontractors. This removes the prime contractor’s ability to shift work away from under-performing subcontractors and could relieve the prime contractor from certain contract liabilities. If the FMS partner chooses to request specific subcontractors, the international partner should be advised of the additional risk, as they would bear the additional costs to correct any issues according to SAMM C6.3.4.4.

Per SAMM C6.3.4.5, approved other than full and open competition requests must be documented in an LOA note. The rationale for documenting this approval in the LOA is to ensure compliance with the FAR. The fourth FAR exception for noncompetitive procurement permits noncompetitive procurement based on an international agreement. For FAR purposes, the LOA is considered to be an international agreement. An LOA containing an approved other than full and open competition note permits the USG PCO to initiate a noncompetitive procurement at the international partner’s request while remaining in compliance with the FAR. A copy of the accepted LOA containing the other than full and open competition note should be forwarded to the applicable PCO to permit compliance with the FAR 6.3 requirements for noncompetitive procurements.

An other than full and open competition request may be considered after LOA acceptance. The same other than full and open competition review and decision process would occur. If approved, the accepted LOA would require an amendment to document the approval. If the other than full and open competition request is submitted by an official representative of the international partner known to have equivalent or greater authority than the official who signed the LOA, then the other than full and open competition note can be added to the LOA via a modification. LOA modifications are unilateral documents that can be immediately implemented upon issuance.

Approved sole source requests are documented within the LOA notes and serve as the basis for the USG contracting officer to negotiate on a non-competitive basis with the specific company identified in the LOA. The international partner can be involved in source selection by downselecting to the specified vendor or system requested in their sole source LOR while benefiting from the FMS system’s extensive expertise in contract negotiation, contract administration, quality control, inspection, acceptance, and audit functions.

Although most FMS other than full and open competition procurements originate with the international partner, noncompetitive procurements can originate unilaterally with the USG. In this situation, although the international partner did not have any specific desires for a particular vendor, the USG managers conducting the procurement may determine that the FMS procurement needs to be conducted on a noncompetitive basis. In this case, the USG managers must generate a written justification for the noncompetitive procurement based on one of the other FAR noncompetitive procurement exceptions (i.e., other than the international agreement exception).

Unless the LOA reflects an approved international partner request for procurement using other than full and open competition or the PCO has justified a noncompetitive award in accordance with another of the FAR exceptions, a competitive source selection process will be conducted. It is important for the international partner to recognize that the competitive process requires time to accomplish. International partners often question why it may take so long to deliver an item under FMS. Part of the item lead-time involves the period necessary to plan and conduct the competitive source selection process.

The federal government officially advertises federal contracting opportunities on the SAM.gov website. FMS requirements are also advertised on this website for interested vendors. The FAR, part 5, describes procedures for publicizing contract opportunities.

All procurements for FMS will be conducted in compliance with FAR and DFARS policy and procedures. As such, the potential does exist for certain FMS procurements to be set aside for special categories of businesses to exclusively compete. This is another example of the USG conducting FMS procurements in the same manner as it conducts procurements for itself. The FAR, part 19, describes this process.

Although procurements may be set aside, the FAR also requires contract awards be made to responsible contractors. A responsible contractor is one the government believes to possess the ethics, resources, capability, and capacity to successfully deliver the contract requirements in a timely manner.