Garvey on Monday, June 24, 2002 - 10:36 am:
We are wanting to issue a
two-phase design build solicitation. In this two-phase
solicitation only three offerors will be selected to submit for
the second phase. Upon completion of the evaluations of the
second phase, and award of the contract to the offeror with the
best value proposal, we would like to provide the two
unsuccesful offerors a stipend. This is to defray costs incurred
in submitting a proposal. I have searched FAR and DFAR and found
nothing regarding a stipend for sumbitting a proposal and not
being the successful offeror. Is the practice of giving a
stipend within regulations and if so can you advise where I may
find related information to stipends
on Monday, June 24, 2002 - 10:45 am:
I'm having a bit of trouble with
exactly what you are trying to do. I have an uncomfortable
feeling you are mixing apples and oranges here by your use of
"two-phase design build" and "two-phase solicitation" together.
These are two different concepts. Can you explain just what it
is you are doing?
formerfed on Monday, June 24, 2002 - 10:54 am:
I think I understand what you are after. I've seen this used
before but stipend isn't the right way to go. What you might
want to do is pay each offeror "X dollars" to deliver a product.
From these products, one will be selected for ultimate award.
What you need to do is determine if paying for costs incuured
enhances competition and ultimately benefits the government. In
other words, will you receive proposals just as benefical
without paying. If not, you end up buying something and the
government selecst the best of the three somethings to move into
the next phase.
bob antonio on Monday, June 24, 2002 - 11:37 am:
Here is an earlier thread about
joel hoffman on Monday, June 24, 2002 - 11:38 am:
Shirley, please see my guidance
You can download it as a Word File, so the links/bookmarks
within the document will work better. Ignore the dialog box,
which asks you for a password.
Please refer to Part 9 for the general guidance. Samples of RFP
Section 00110 (Proposal Submission Requirements) and 00120
(Proposal Evaluation Criteria) for a 2 phase design-build
project (FAR 36.3) with stipends, are in Parts 10 and 11,
Stipends aren't covered by FAR, one way or the other. I have the
latest info available, within the Corps of Engineers. If you
want to contact me, I'd be willing to discuss. I'm in the COE
e-mail directory. happy sails! Joel Hoffman
Vern Edwards on Monday, June 24, 2002 - 11:42 am:
Actually, some agencies do pay a
stipend for the preparation of proposals during the second phase
of a two-phase design build competition. The Army paid a stipend
during a two-phase design build for part of the Pentagon
renovation. The RFQ said:
"During Phase Two, design, technical and price proposals will be
requested from the two to five most highly qualified offerors
selected during Phase One. It is the Government's intention to
offer a stipend for the development of the Phase Two proposal.
The stipend will be paid 30 daysafter Phase Two proposal
The RFQ may be found at:
This is not uncommon in larger design-build projects. The
practice is also used in the commercial sector. Go to http://www.google.com
and search for <"design-build" AND stipend> and you will find
many references to the practice.
joel hoffman on Monday, June 24, 2002 - 11:48 am:
Shirley, my guidance idicated
that USACE was in the process of developing policy guidance on
the use of stipends. Please note that the USACE attorney, who
was going to issue the guidance, recently passed away, after a
long illness. So, I think that the USACE guidance is on hold,
I understand that several Districts have tried stipends, at
least once. I thought Louisville did, but maybe not, since you
are asking. I think that Tulsa- yes, Alaska - yes,
Albuquerque(?), Seattle(?) and Sacramento(?) have used it. happy
on Monday, June 24, 2002 - 11:52 am:
Formerfed, that is the problem
I'm having with the concept. What you seem to be refering to is
a design contract followed by a design selection and a build
contract. That is not uncommon. It is done with weapon systems
I have no problem at all in a selection of three best proposals
for a design phase (probably cost contract) ending with an
evaluation of designs and production capabilities for a single
contractor to produce in a follow on (probably fixed price)
That is one thing. It is definitely not what I get from
reading the original message. There I get the impression there
is to be some sort of downselect process to award a single
design and build contract (unknown type) in which the
agency wants to pay the bid and proposal cost of only the
final three. Losers of the first round get nothing. One reason I
think this is not the other case is that there is not much
reason to ask such a question for that case. The model is fairly
clear to anyone who investigates.
I think there are real issues with the concept perhaps being
considered. My issues lie with both economy to the government
and fairness to the offerors of the first round and not in the
final three. It sounds like someone has heard of design/build
approaches as outlined above and has a "new" idea. One I think
has gone wrong.
Why are the taxpayers paying for the select few and not everyone
here? Why are we perhaps encouraging offerors to throw something
together on the off chance they will get into the "stipended"
round where they can do their real work with extra pay? No, the
message should be "This is a test, put your best effort forward
the first time" without reservations.
Then look at the contractor view. Suppose there are five
responding in the first round. Two get nothing and watch the
other three get a second bite with a "stipend." How about four
originals with one shut out of the "stipended" second chance?
Then what about three originals who get to do it all over again
with a "stipend." That last would be a nice article for the
newspapers. I could write a zinger after a three and three!
Want to create some issues and problems? Such a scheme sounds
like a good approach.
Vern Edwards on Monday, June 24, 2002 - 12:17 pm:
I believe that Shirley is talking about the two-phase
design-build selection process that is authorized by statute and
described in FAR Subpart 36.3? That process is used for
construction acquisitions. Are you familiar with that process?
joel hoffman on Monday, June 24, 2002 - 12:43 pm:
Anonymous, the 2 phase
design-build proposal process (FAR 36.3) is now a common
practice (since 1997), although payment of a stipend is even
more recent and is rare within the Fed Government for
design-build. Both practices are consistent with D-B industry
practices. Check out the Google search and you will see other
Federal and State Governments now doing this.
P.S. , there is little cost involved in preparing a phase 1
qualifications proposal. No stipend is paid for a phase 1
proposal, because it doesn't involve the cost of preparation of
design or cost proposals. Phase 1 results in a shortlisting of,
usually, 3-5 firms for phase 2, where design and price proposals
are submitted by the shortlisted firms. This was an industry
proposed change to FAR, back in 1996. The stipend is to offset
some of the design proposal cost and to encourage innovation in
design proposals. Industry requested provisions for stipends to
be included in the 2 phase legislation and in FAR 36.3, but it
wasn't, for various reasons. I knew the COE attorney involved in
the drafting of the legislation and FAR coverage. happy sails!
on Monday, June 24, 2002 - 04:49 pm:
Maybe I got hung up on wording.
Maybe coffee hadn't kicked in. I read the question as quite
possibly considering a scheme in which companies would propose
for a design and build contract with the government paying a
stipend for what might be considered best and finals from a
final three. I consider, perhaps wrongly, that to be an
different animal from "two-phase design-build selection process
that is authorized by statute and described in FAR Subpart 36.3"
I find what I thought I read here to be a problem, for reasons I
described, even if not in violation of any rule or law. It is
different, in my view, to select three finalist based on
descriptions of their approach, capabilities and experience with
perhaps even a sample sketched out design concept - just as
described in 36.303-1(a). Those would then begin fleshing out
their concepts under a cost, cost sharing, stipend or any other
mutually acceptable scheme. In short, they are beginning some
real work that at some point, perhaps rather quickly, will form
the basis for a final selection. I find that fair, fully
acceptable and a fairly common practice.
I suppose some might call or consider 36.303-2(a) nothing more
than BAFO under another guise. I see a difference. I think the
difference is that a useful Phase Two needs to go
considerably further than just adding the usual "technical and
price proposals." I suppose FAR 36.303-1 and 36.303-2 could
almost be read as doing a quickie and then a BAFO, but that to
me would be a misapplication.
For me it is then fair to all to pay all or a portion of the
costs that give the government a much sounder basis for a final
decision by what is really going part way into performance. As
Joel mentions, cost can be significant there. I'd be interested
in other views on this difference.
joel hoffman on Monday, June 24, 2002 - 05:08 pm:
In my last post, I neglected to
say that the drafters of the 1996 Clinger-Cohen FARA legislation
and FAR 36.3 coverage for the 2 phase shortlisting procedures
declined to address stipends because they 1) didn't want to
encourage or discourage the practice 2) felt that the practice
was already legal and 3) didn't want to get bogged down in the
details of stipends.
In summary, Stipends are legal. Stipends aren't necessary for
phase 1. Phase 1 industry efforts consist of submission of
relatively simple qualifications proposals. Stipends are
intended to help offset the sometimes high costs of preparing a
design proposal in phase 2 of the competition.
As Vern's suggestion of a "Google Search" indicates, stipends
are becoming more common in Federal Design-Build acquisitions,
as bolder agencies have demonstrated. Stipends are a viable
approach when an agency expects design-builders to expend a
considerable sum in preparing a competitive design proposal. We
have to do something to maintain industry interest and
competition. Most design firms don't have the deep pockets to
fund efforts to win design competitions and won't play our game
long, without some relief.
Formerfed and anonymous, does that make the concept of
"stipends" clearer to you? happy sails! joel
joel hoffman on Monday, June 24, 2002 - 05:37 pm:
Anon, I just read your 4:49 post.
According to my attorney, who chaired the FAR 36 committee (and
the 36.3 writeup, as well as representing DOD during the
drafting of the legislation), the intent of the legislation was,
as the norm, not to have the phase 1 offerors prepare any actual
preliminary designs. Rather, the drafters intended phase 1 to
resemble the Brooks Act A-E selection procedures.
Although "technical approach" submission information is allowed
to be requested, FAR 36.303-1 also states that no detailed
design or technical information is allowed. "Technical
approach", was intended mean the approach that the offeror would
take to execute design and construction of the project.
I did challenge my attorney, stating that the actual FAR
language concerning technical approach didn't clearly state
their intent to prohibit any preliminary design in phase 1. She
admitted that the wording could be interpreted to allow the
Government to request some very minor preliminary design work in
Phase 1, but highly discouraged such practices, based on the
sentiment of industry during the legislative process.
As the process has evolved since 1997, I don't know of any case
where we asked for preliminary design in phase 1, at least on
Corps of Engineers projects. It is generally useless to develop
and submit a very preliminary design, without expending
extensive efforts/costs to validate the design feasiblity,
practicality and cost boundaries of you preliminary design. That
defeats the purpose of the 2 phase procedures.
However, if one were acquiring an unusual, unconventional or
rather unique facility, such as a monument, one could utilize
the 2 phase procedures, asking for some simple sketches of the
concept. You'd still risk losing the offeror in phase 2, if
their more developed phase 2 design proposal development of an
over-optimistic phase 1 concept exceeds the available budget.
happy sails! joel hoffman
on Monday, June 24, 2002 - 07:31 pm:
JOel, I too would discourage even
a sample or "preliminary" design in phase one. My reasons
probably differ. I've seen too many cases in which people
exposed to proposal levels of such things fall in love
with the sample or model. Some even want to try to incorporate
those into the contract! Education doesn't seem to help much
Just out of curiosity do you see my issue if Shirley's agency
had been contemplating a "stipended BAFO" instead of the FAR
36.3 model? Perhaps I'm drawing a line where there is none. I
don't think so, but am interested in views.
joel hoffman on Monday, June 24, 2002 - 08:09 pm:
Anon, by a "stipended BAFO", do
you mean full fledged design development, something like a
fighter plane competitive prototype design or something in
between that and a quicky BAFO?
For design-build construction, we don't go that far. Users can't
afford much and don't want to pay much for design proposals,
plus one can reasonably price construction projects with a
modest degree of phase 2 conceptual design development,
depending upon the project requirements. We found from
experience that we were asking for much more proposal info than
necessary to reach a mutual understanding about scope, price and
I'll admit I've no experience with a stipended BAFO! happy
on Monday, June 24, 2002 - 08:41 pm:
Joel, "stipended BAFO" is my
invention here. What I thought was being contemplated was
absolutely not the classic design build. I may have misread, but
several signs in the original post led me to believe the agency
was thinking of a full initial proposal, downselect to three and
then another round. That is why I initially said "I have an
uncomfortable feeling you are mixing apples and oranges here by
your use of "two-phase design build" and "two-phase
To me the 36.3 process means you select finalist based on your
assessment of general capabilities. You let them demonstrate by
doing some fairly costly real design work and then select the
demonstrated best capability. It is reasonable to defray
some of that expensive demonstration that is to your long term
I thought Shirley's agency was possibly doing the full proposal,
with technical and cost proposals that are not part of a phase
one, downselecting and then chipping in on a conventional best
and final. From my viewpoint that would be a distortion to say
the least of the 36.3 process. I think the reasons I gave
earlier apply to such a distortion and not to the legitimate
joel hoffman on Monday, June 24, 2002 - 11:27 pm:
I understand, Anon. However, I'm
pretty sure that Shirley's organization will be handling a
conventional 2 phase D-B acquisition, because I teach D-B with
one of Shirley's contemporaries. Her District is one of the
better ones at D-B. They just haven't included a stipend, yet.
I'm fairly certain that their client, the Air Force, is
requesting payment of stipends on an acquisition. happy sails!
Garvey on Tuesday, June 25, 2002 - 10:54 am:
We will be using the guidelines
in FAR 36 for a two phase design build. I believe Joel has the
clearest understanding of what I was asking.