Federal Contractors buying under FAR 51 Deviation

What is the FAR 51 Deviation? and When Does it Apply?

When determined to be in the best interest of the government, contracting officers may authorize contractors to use government sources of supply in the performance of cost-reimbursement contracts.

In addition, the GSA Senior Procurement Executive signed a class deviation that allows contracting officers to authorize all GSA contractors performing on a time-and-materials (T&M) or labor-hour (LH) basis to purchase ancillary supplies and services from Schedule contractors and/or to process requisitions through the GSA Global Supply Program.

This class deviation expires October 23, 2019.

Limitations and Criteria for Contracts/Orders

FAR Subpart 51.1 outlines the authority and procedures for both the federal contracting officer and government contractor.

This authority maintains the following limitations and criteria for contracts/orders:

  • Orders must be placed on a T&M/LH basis. A contract awarded or an order placed by the federal government to the buying contractor can be partially fixed price, but the portion of the contract/order for the items to be procured using the FAR 51 deviation must be T&M/LH.
  • When contractors place orders under the FAR Part 51 deviation authority, the contractor is not permitted to add a fee or markup to the items; the government must be invoiced for the goods at the awarded price.
  • Ancillary supplies/services support the overall contract/order. They are not the primary purpose of the work ordered, but are an integral part of the total solution offered. There are different and additional requirements associated with Special Item Numbers (SINs) on numerous Schedules that contain ancillary Repair and Alterations (R&A).
  • Contractor must issue orders according to the procedures in FAR 8.405-1, Ordering Procedures for supplies, and services not requiring a Statement of Work.
  • State and local governments cannot utilize the FAR 51 authority.

Why Use FAR 51 Deviation?

FAR 51 deviation benefits contractors and federal buyers by:

  • Allowing GSA contractors to provide a total contract solution and meet customers’ needs promptly because ancillary supplies and services are readily available from government sources of supply
  • Expanding upon existing benefits of GSA contract vehicles, such as streamlining procurements, making ordering easy, leveraging pricing, saving time, and using responsible contractors
  • Reducing agency procurement and contract administration costs
  • Providing agencies opportunities to increase use of small businesses
  • Encouraging competition among contractors to seek the best solution, resulting in cost savings to the government

Responsibilities

Federal Government

The federal government must follow the guidelines and procedures outlined in FAR 51.102 Authorization to Use Government Sources of Supply to allow contractors the ability to buy through Schedules.

These guidelines include, but are not limited to, the following:

  • Ensure you are using the authority appropriately.
  • Include applicable FAR clause 52.251-1 Government Supply Sources in RFQs/solicitations. The RFQ/solicitation should also specifically state that items offered and procured using the FAR Part 51 deviation authority must be proposed on a T&M/LH basis. However, the federal government should not mandate that the quote/proposal include such items.

  • Issue a written authorization to the buying contractor according to FAR 51.102 (d) and (e).
  • To promote competition, make sure the buying contractor complies with the written authorization and that the buying contractor has followed the ordering procedures in FAR 8.405-1. Verify compliance with FAR 8.405-1 by requesting evidence from the buying contractor that competition has been conducted, e.g., RFQ, quotations received, etc.
  • Include the supplies and services ordered by the buying contractor in the dollar amount reported to Federal Procurement Data System (FPDS-NG) in accordance with FAR 4.606.

Buying Contractor

Contractors placing orders must:

  • Identify and separate proposed ancillary items to be purchased under the deviation authority on the quotation/proposal and on the subsequent invoice
  • When purchasing from a Schedule contract, purchase items at the Schedule contract price (or lower). If the selling contractor provides items at lower than the contract price, the buying contractor must pass on the savings by invoicing the federal government accordingly. The buying contractor cannot mark up the items.
  • Ensure that the items procured under FAR 51 deviation authority are ancillary to the overall order/contract.
  • Give the selling contractor a copy of the written authorization from the federal government with each applicable order.
  • If the buying contractor is a Schedule contractor, ensure that the buying contractor’s Schedule contract number is on each order issued to the selling contractor.
  • Pay full amount to the selling contractor.
  • Submit documentation of the transmittal of full payment to the selling contractor when invoicing the federal government.
  • Follow applicable Schedule (FAR 8.405-1) program ordering procedures.

Get More Information

print Share Icon Last Reviewed 2018-09-07