Rather than adding to the already-too-long "Adequate Price Competition" thread, I am starting a new one.

My question is whether the price competition exception could ever be applied to a modification that exceeds the $550,000 threshhold. (Assume that there was adequate price competition for the original contract and no cost or pricing data was required.) Ordinarily I would say no, but I vaguely recall a comment on this issue in the other thread. Was it my imagination or did someone say that? If such an argument can be made, I would certainly like to hear it.

By speele on Thursday, October 25, 2001 - 01:55 pm:

The exceptions to cost and pricing data for a modification are listed in the clause 52.215-21, Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data - Modifications.

By Ron Vogt on Thursday, October 25, 2001 - 06:23 pm:

Thanks, but that doesn't help here. The exceptions in that clause only cover prices set by law or regulation, or a mod that does not change a commercial item to a noncommercial item.  My question is whether someone has come up with a creative theory that a mod could be considered to have adequate price competition also. Like I said, I thought someone said something like that in a thread.

By Nick Sanders on Friday, October 26, 2001 - 09:19 am:

It seems to be that where the SAME information (other than cost or pricing data or even cost or pricing data) was used to price the modification as was used to price the original cost proposal, and where no subsequent price negotiations took place, then one could construct an argument that the modification need not be supported by cost or pricing data, regardless of dollar value.

This situation would be analogous to what is described in FAR 15.403-2, where "the exercise of an option at the price established at contract award or initial negotiation does not require submission of cost or pricing data."

Granted, we are talking about very specific and limited circumstances, but I think its close to a set of circumstances that addresses the scenario you put forth. It requires that your modification be classified as an option -- but you asked us to be creative!

Nick

By joel hoffman on Friday, October 26, 2001 - 09:29 am:

Are you asking whether a mod, in which all work is to be done by sub(s), and where all sub proposals are covered by adequate price competition, requires cost or pricing data and certification at the prime level - or is it exempt because there was "adequate price competition" obtained at the sub level?

If you are, I'm pretty sure that the prime has to submit the C&P, clearly identifying the pricing obtained at the sub level. There just won't be any C&P breakdowns of the sub's proposals, even where they exceed the thresholds. Why - because this is considered factual data to support the prime's price to the Gov't - if the prime has another sub waiting for the mod to be issued, the original proposed sourcing could be considered defective pricing. happy sails! joel

Nick, modifications are not priced on the same basis as the original contract, whether the original contract price was sole source negotiated or competitively bid/negotiated. An equitable adjustment pursuant to the changes clause and most others is based on the cost effect of the change to the Contractor, in comparison to the Contractor's cost without the change. The original bid or proposal prices are not controlling (unless the change involves deleting wholly severable work - that is another long discussion - in such case, the orginal contract pricing for the severable item may be used for the deletion). There is no TINA exemption for mods, based on adequate competition for the original contract. happy sails! joel

By Philip on Friday, October 26, 2001 - 09:54 am:

Ron, et.al.
Consider the third method of supporting "Adequate Price Competition" under FAR 15.403-1(c)(1)(iii)

15.403-1 -- Prohibition on Obtaining Cost or Pricing Data.
(c) Standards for exceptions from cost or pricing data requirements --
(1) Adequate price competition. A price is based on adequate price competition if --
(iii) Price analysis clearly demonstrates that the proposed price is reasonable in comparison with current or recent prices for the same or similar items, adjusted to reflect changes in market conditions, economic conditions, quantities, or terms and conditions under contracts that resulted from adequate price competition.

This can be used if your are using the original competed price, or unit prices. I've used this method many times. You aren't actually competing but you are using "adequate price competition."

Philip

By joel hoffman on Friday, October 26, 2001 - 10:10 am:

Here is an example why you should obtain C&P from the prime, where all work is to be performed by subs.

I just remembered a situation in the mid 90's, where one of my field offices obtained certified C&P from the prime on a mod, which consisted of competitive quotes from subs to perform asbestos removal. The day after the mod was issued for about $990,000 , the prime issued a subcontract to the low bidder for about $300,000 to do the work. When I left that District, 2 years later, the US Attorney, CID, and OSI were still arguing about prosecution for fraud. Their incompetency prevented us from taking a rather straightforward defective cost adjustment. To this day, I believe someone in our field office was on the take. After reviewing the facts, I couldn't believe they were that naive or inept. Instead of simply unit pricing an unknown quantity of asbestos removal in the crawl space under a hospital, they took two or three samples and agreed on average estimated quantity of 6" deep for a lump sum quantity. It turned out that there was only a third of that quantity. happy sails! joel

By joel hoffman on Friday, October 26, 2001 - 10:13 am:

To clarify, my comments concern pricing of mods to construction contracts. Mods aren't supposed to priced on the basis of the original unit or CLIN prices, regardless of whether or not they were competitive, market prices. happy sails! joel

By joel hoffman on Friday, October 26, 2001 - 10:23 am:

Philip, I agree with your last post, as a possible exception to the C&P requirement. happy sails! joel

By joel hoffman on Friday, October 26, 2001 - 10:48 am:

Philip, Sorry, I was interrupted while preparing the above 10:23 post - I don't agree with your reasoning. The citation you used also requires the expectation of competition for the proposal, referring to a proposal for a competitive acquisition - not for a sole source mod to the contract. Otherwise, there would seldom be any possibility of obtaining C&P on mods to competitively negotiated contracts.

happy sails! joel

By Philip on Friday, October 26, 2001 - 12:24 pm:

Joel,
There is a duel use of Adequate Price Competition (method iii) here.
1) To support an exception to CP Data. (Not purpose of this discussion)
2) To support the price fair and reasonable based on Adequate Price Competition. (discussed further below) Alternate Reference FAR 15.404-1(b)(2)(ii))

To support the price F&R in this way you might have limited application, but it is usable. In Remedial Action contracts we have awarded, valued at ($4 Million +), pricing is based on unit prices of moving "dirt," "concrete piping," and other "stuff" contaminated by radioactive/mixed waste material.
In determining a modification price for increased quantities, the original competed price is used for comparison (price adjusted accordingly).
This method is allowed per the FAR clause, and the method is further supported by the Contract Pricing Reference Guide, Chapter 6, "Price Comparisons."
Like I said, limited application, but it can be done.
Philip

By Ron Vogt on Friday, October 26, 2001 - 01:29 pm:

Thanks everyone for your suggestions. I think Philip nailed it. We tend to think of adequate price competition as requiring 2 or more offerors, but I now see that 403-1(c)(1)(iii) allows a price comparison to other contracts that had adequate price competition. In the case of a mod, that would be the original contract if there were 2 or more offerors.
Problem solved.