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Vern Edwards

Here is an eclectic and idiosyncratic list of some things I found on the internet that may be of interest to my literate and intellectually curious professional readers. All are available free online. If a link doesn't work, Google the title and look through the results.


? Acquisition in Transition: Workforce Oversight and Mission ? This is from the point of view of a private sector business association.

Acquisition in Transition: Workforce Oversight and Mission

? A Call to Revitalize the Federal Government ? This is from the think tank, Rand, and should be of interest to all in light of our new presidential administration's goals. A Call to Revitalize the Federal Government

? Making Contracting Work for the United States: Government Spending Must Lead to Good Jobs ? Contractor employee advocates speak. Making Contracting Work for the United States

? The Challenge of Contracting for Large Complex Projects: A Case Study of the Coast Guard's Deepwater Program ? This could have been a lot better, but it does discuss some of the difficulties of complex contracting. The Challenge of Contracting for Large Complex Projects


? DOD Instruction 5000.2, Operation of the Defense Acquisition System (2008) ? The lastest version of a perennial rewrite. In the immortal words of Newt in the movie "Aliens": "It won't make any difference." All the same, if you're in DOD you gotta read it. DOD Directive 5000.2

? Coast Guard's Major Systems Acquisition Manual ? A product, I think, of the Coast Guard's Deepwater experience. Should be of interest to all you major system contracting folk, of those who would like to be major system folk. Compare it to DOD 5000.2. Coast Guard's Major Systems Acquisition Manual


? Latin for Lawyers ? Not a grammar or language textbook. It's a wonderful glossary of Latin legal terms. It's hard to believe that this is free. Grab it while it still is. Latin for Lawyers

? The Reg Map: Informal Rulemaking ? A handy, one-page "map" of the process by which executive agencies promulgate regulations, including the FAR. A must-have for all contracting newbies. The Reg Map: Informal Rulemaking

? Reading and Interpreting Regulation and Statute ? Prepared by the National Association of Student Financial Aid Administrators, it's a brief description of the executive branch's rulemaking process. Handy for newbies. Reading and Interpreting Regulation and Statute

? The National Reporter System ? Can you decipher this: 60 F.3d 1572? Can you explain what "F.3d" refers to? If not, then you need this PowerPoint presentation from Thomson West, publisher of the Federal Reporter. The National Reporter System


A new book refers to the scholar/analysts of the Rand Corporation as "soldiers of reason." Here is a list of some classic reports and memoranda by Rand scholars from the heyday of systems engineering. These are interesting reading for anyone interested in the challenges of thinking rationally about problems of choice, including whether to nuke your enemies. See Soldiers of Reason: The Rand Corporation and the Rise of the American Empire, by Alex Abella.

? On the Limitations of Quantitative Analysis ? The title speaks for itself. On the Limitations of Quantitative Analysis

? The Compleat Strategyst: Being a Primer on the Theory of Games of Strategy ? A nontechnical book about the theory of games. I stumbled upon this in the technical library of the Aerospace Corporation when I was just a young contract specialist trainee. I went to the library after hearing the senior trainees talking about "the prisoner's dilemma" and discussing whether or not negotiation is a "zero-sum game." Great fun. The Compleat Strategyst

? Assessing Alternative Transportation Systems ? If you want to understand the underlying theory of the source selection process with which we are all so familiar, this is the publication to read. An early treatise about what is now called decision analysis. Discusses evaluation criteria, scoring, and weighting. Assessing Alternative Transportation Systems

? Squishy Problems and Quantitative Methods ? Fascinating. (Source selection is a "squishy" problem.) Squishy Problems and Quantitative Methods


? Encyclopedia of Ethical Failure ? Published by the Department of Defense Office of General Counsel (2006), it is an alphabetical listing of brief descriptions conduct by various idiots. It's occasionally hilarious. Personal favorite: Under the heading, Abuse of Position: "But, Judge, I didn't get anything." Encyclopedia of Ethical Failure

? Issac Newton's Principia Mathematica ? Just kidding. I wanted to see if you were paying attention. But I have been trying to read this for a long time, just so I can say that I have. So if you can explain how to decipher the diagrams, I would appreciate hearing from you. Principia Mathematica

? The Voysey Inheritance ? Have you heard of the Madoff scandal? (If not, what rock have you been sleeping under?) This is the original version of an early 20th Century play about just such a scandal. This is free. Amazon has an updated version by David Mamet, prepared for an off-Broadway revival of a few years ago, but you'll have to pay for it. The Voysey Inheritance

Vern Edwards

The Director of Defense Procurement has launched an initiative to simplify DOD's source selection process. Here is how he explained the intitiative in a recent PowerPoint presentation:

Problem/Process/End Game

Problem Statement: Source selections are getting increasingly more complex, requiring volumes of documentation to justify each selection decision, and yet the number of successful protests is on the rise.

Process: The Department must thoroughly analyze the source selection process, collect lessons learned, best practices and examine each Service and Agency selection process to understand this trend and identify the key elements of the SS process that will lead to success.

End Game: The research and analysis will provide the baseline to establish a joint source selection policy guide for successful source selections to ensure the best solutions for the warfighter, while also withstanding the legal scrutiny these source selections undergo.

Mission: The mission of the source selection Joint Analysis Team (JAT) is to thoroughly examine the current source selection process, identify the key elements of successful source selections and produce joint source selection guidance to improve the effectiveness, efficiency, and certainty of the source selection process and selection decisions.

The Director's objective is to issue joint guidance in July of this year. That's the good news. The bad news is that the Director is pursuing a rather bureaucratic course of action. He has assembled a large and high ranking "Joint Analysis Team" to "research" the problem, staffed with members of the Senior Executive Service and complete with a "secretariat" and an "executive steering committee." To see the organization chart, click on the following link:

Source Selection Joint Action Team Organization ChartDPAP JAT Organization Chart

One would think that he's planning to invade a foreign country, instead of develop guidance about how to simplify source selection.

Of course, this is not the first time someone has tried to simplify source selection. In December 1995, a previous Director of Defense Procurement launched an even more ambitious effort, which became known as the "FAR Part 15 Rewrite." Here is the announcement of the project in the December 8, 1995 issue of the Federal Register:

The Director of Defense Procurement, in concert with the Federal Acquisition Regulations Council, is sponsoring an initiative to rewrite the Federal Acquisition Regulation (FAR) Part 15, Contracting by Negotiation. The intent is to make Part 15 easier to understand and to eliminate policies, procedures, or requirements that impose unnecessary burdens on contractors or contracting officers. Regulatory requirements that are not required by statute, required to ensure adequately standardized government business practices, or required to protect the public interest will be considered for elimination. Innovative means of simplifying the procurement process and enhancing its efficiency will be considered for incorporation into the regulation. The rewrite team will use a number of fora to facilitate the exchange of ideas and information. Comments are solicited from both government and industry personnel, and notices of public meetings will be published in the Federal Register. To initiate the rewrite effort, interested parties are invited to present statements or provide suggestions on how to improve FAR Part 15 at a public meeting.

That project took almost two years. It was completed on September 30, 1997, with the publication of Federal Acquisition Circular 97-02. Here is how the Federal Register of September 30, 1997, announced the product of nearly two years of work:

This final rule modifies concepts and processes in the current FAR Part 15, introduces new policies, and incorporates changes in pricing and unsolicited proposal policy. In addition, the sequence in which the information is presented has been revised to facilitate use of the regulation. The final rule does not alter the full and open competition provisions of FAR Part 6. The goals of this rewrite are to infuse innovative techniques into the source selection process, simplify the process, and facilitate the acquisition of best value. The rewrite emphasizes the need for contracting officers to use effective and efficient acquisition methods, and eliminates regulations that impose unnecessary burdens on industry and on Government contracting officers.

Although accompanied by much ballyhoo at the time, I doubt that many working level people in acquisition remember the Rewrite or what it did. Agencies did not achieve much simplification. The now notorious process that the Air Force used to try to select a contractor to produce its new tanker was very much like the process it used in 1961-62 to choose the contractor to build the Tactical Fighter Experimental, TFX, which became the FB-111. A good place to start for the SESs in the Director's JAT would be to read the transcripts of the U.S. Senate's year-long, 1963 "TFX Contract Investigation," especially Part 1, in which over the course of five days Colonel Charles A. Gayle, the head of the Air Force's source selection team, described the evaluation process to the senators. Only the names have changed.

The Director shouldn't need a big team of high ranking people to suggest ways in which to simplify source selection, but he probably needs them to get buy-in from the services and defense agencies. Perhaps I can save them some time and effort. Here are just a few things that can be done:

1. The main way to simplify source selection is to keep the number of evaluation factors to a minimum. The more evaluation factors there are the more information the agency must ask for. The more information it asks for the more information it must digest and process. The more information it must digest and process the more people and/or time it will need to digest and process it.

2. Reducing the number of evaluation factors should eliminate the need for ratings or scores (adjectives, colors, and numbers). Ratings and scores are used to simplify more complex information about evaluation results. But assigning ratings or scores has become a problematical task, which has caused considerable confusion and trouble without being especially helpful. Eliminating it would simplify the source selection process. I can't go into this at length here, but see my article in the January 2009 edition of THE NASH & CIBINIC REPORT,
Postscript II: Scoring or Rating In Source Selection

3. One way to reduce the number of evaluation factors is to accept that in many cases there will not be a dime's worth of difference among the offerors in terms of significant nonprice considerations. Stop trying to drum up ever more particulate "discriminators," and accept the possibility that the decision might turn on price. In fact, seriously consider conducting more lowest-price, technically acceptable source selections. And
suggestion may shock you, but think about using (gasp) sealed bidding for low risk firm-fixed-price buys.

4. Another way to reduce the number of evaluation factors is to stop treating source selection as a systems engineering problem or a product or process design competition (
The offeror shall describe its proposed approach? , etc., etc
.), unless you're choosing an existent product. Instead, treat it as a process for choosing a business partner for what may be a long-term, complicated, and risky endeavor. Think of it as a kind of competitive due diligence preparatory to a merger or acquisition. But in order to do that you are going to have to convince program and technical personnel that those technical and management proposals are often just a waste of time, which is something that you should have done years ago. In order to do that you are going to have to explain it to your contracting officers, who should know it, but commonly don't.

5. In order to convince program and technical personnel that technical and management proposals are often a waste of time, explain that "proposals" are not the same as offers. Offers are specific promises, which, if accepted, will bind the promisor to do or refrain from doing some specific act. Proposals contain offers, but they also contain a lot of other stuff that is often little more than imaginative literature or a management class term paper. Many source selections are just voluminous blue book exams graded by a lot of people. Replace at least some of that written hoorah with oral presentations. Better yet, eliminate it entirely.

6. Stop with all the draft RFPs. That idea took hold in DOD in the 1970s, especially in the Air Force, rapidly spread to the civilian agencies after passage of the Competition in Contracting Act in 1984, and has since gotten entirely out of hand. A draft RFP can add a lot of work and time to the source selection process, only to be followed by a series of amendments to the final RFP, which the draft should have prevented. Draft RFPs should be rare.

7. And what's with all the solicitation amendments? Some acquisitions have produced 20 and more.Last year a defense agency released a draft RFP for support services on July 1, 2008, followed by the final RFP on August 28. Twenty days later it issued a significant amendment that was 72 pages long. About 19 days after that it issued a 260 page amendment. It appears that the award has yet to be made. A major step forward in process simplification would be to get control over the RFP preparation process. The first step in that direction is teach people to know what they're doing.

8. Do some simple, practical things. For instance, do not evaluate experience or past performance when the offerors are well known and none is a real stinker. Say in the RFP that you plan to evaluate experience and past performance, but that you reserve the right not to do so after receipt of proposals if all of the offerors are sufficiently well known to the government to make the evaluation unnecessary. That will save some paperwork and time. Consider reserving the right to treat experience and past performance as either comparative evaluation factors or as pass/fail responsibility factors, to be determined after receipt of proposals. (Intrigued? You ought to be.)

9.When you expect to receive a large number of proposals, use phased evaluation to narrow the field before conducting an evaluation in depth. Start with price, then consider experience and price, then consider experience, past performance, and price. In each phase, eliminate any firm that is not competitive enough to have a real chance of prevailing over the remaining competitors. Say in the RFP that if you receive what you consider to be a large number of proposals you will apply your criteria in phases. If you don't receive a large number, then forego the phased process and get on with the evaluation.

10. Finally, keep source selection authority close to the program, or at least as close as possible. When you assign source selection authority to a general or flag officer or a presidential appointee, you'll get all the bureaucratic apparatus that comes with the rank, complete with multiple drafts of memos, briefings, and staff summary sheets. It did not save the Air Force's tanker source selection. Let the program manager choose the contractor and explain to her boss whom she chose and why as informally as possible. I know that is not appealing to the bureaucratic mind, but if you really want to simplify source selection, then simplify the "tell the boss" protocol as well.

Those are not the only things that can be done, but if you recommend those, and if agencies follow your recommendations, you will have accomplished a lot. Of course, you're not going to get real change as long as acquisition personnel learn source selection through OJT and cut-and-paste instruction. In the words of George Eliot, "We cannot reform our forefathers." Simplification won't come until we teach acquisition personnel the underlying concepts and theory of source selection, and the rules, so that they can throw off the costly and time-consuming methods developed by DOD during the late 1950s for weapons acquisition and develop more efficient methods of their own that work today.

Please feel free to print this out and pass it around. The worst it can do is add to the other stuff I've written about source selection simplification that nobody reads. No harm in that. Trust me⎯within six months to a year after you publish your July 09 guidance you are going to know exactly how I feel.

Vern Edwards

Bob posted a report on the homepage last week: The Challenge of Contracting for Large Complex Projects: A Case Study of the Coast Guard's Deepwater Program. It says that when the government hires a contractor to develop a system that is comprised of independent systems that must work together, the job is so complex and entails so much uncertainty and risk that the government cannot contract the way it does to buy simple things. It then says that before the government can fashion a suitable approach it must (1) have enough competent people, (2) understand the risks involved, and (3) learn about the special problems associated with the development of systems of systems.

In order to understand what the authors wanted to say, but didn't say especially well, we must understand systems of systems and the challenges that they pose to engineers and contracting officers.

Systems of Systems

Here is the definition of system in the Glossary of Defense Acquisition Acronyms and Terms, 12th ed. (Defense Acquisition University Press, 2005), p. B-159:

1. The organization of hardware, software, material, facilities, personnel, data, and services needed to perform a designated function with specified results, such as the gathering of specified data, its processing, and delivery to users. 2. A combination of two or more interrelated pieces of equipment (or sets) arranged in a functional package to perform an operational function or to satisfy a requirement.

Now here is the definition of system of systems, p. B-161:

System of Systems (SoS)
A set or arrangement of interdependent systems that are related or connected to provide a given capability. The loss of any part of the system will significantly degrade the performance or capabilities of the whole.

An aircraft carrier is a system. A carrier strike group is a system of systems. Go here for a description of a carrier strike group:

The Engineering Challenge

The components of a system of systems are themselves independent systems, each of which could work alone. In order to work together they must be functionally and physically integrated. Development takes place in an environment of changing political, social, and economic conditions, and sometimes rapidly evolving technology. Thus the development of a system of systems is awash in uncertainty and risk.

The engineering challenge was described in "System of Systems Engineering," by Keating, et al., Engineering Management Journal (Sept. 2003):

There seems to be little argument concerning present shortcomings in our abilities to deal with difficulties generated by increasingly complex and interrelated systems of systems. Beer's (1979) observation about complex systems still holds ‐ we are dealing with a jigsaw puzzle that is about five miles across and we are standing on the ground trying to see how to fit it together. Since Beer's observation unprecedented explosive growth has taken place in technology, artifacts produced by technology, and information access has risen exponentially. However, we seem no more able to address Beer's puzzle than when he identified it over 20 years ago. In fact, it appears that we now have a problem centered on integrating multiple five-mile diameter jigsaw puzzles that change as we try to fit the pieces together?

Traditional systems engineering approaches successfully addressed narrowly defined and well‐bounded problems. In fact, Schon (1986) suggests that engineering disciplines have been directed at clearly defined problems, relatively clear goals, and can be attacked from an established body of proven theory and knowledge. These conditions are no longer the rule, but the exception in rapidly evolving system of systems problem contexts. Increasing information intensity, contextual richness, and problem complexity all contribute to the need for evolving systems engineering to address emergent complex systems problems. The finite phases of traditional systems engineering blur with the demands of engineering a system of systems?

In traditional systems engineering, establishing goals (objectives) for the system have been assumed to be: (1) capable of definition, (2) fixed, and (3) unitary [single, explicit, agreed upon]. In effect, once explicit goals for the system were defined, they were fixed. Subsequent analysis could move forward, always having a fixed reference point in the system goals. While this might have been plausible in past systems engineering, it is no longer a given reality. On the contrary, SoSE [system of system engineering] environments are most likely characterized by ill‐defined and potentially tacit divergent goals (pluralistic) that are value laden, shifting, and incapable of being made entirely explicit. For example, two major contractors may be working on a joint standard, each with a set of tacit objectives having nothing to do with defined system performance goals, but more with desires of profitability and power. SoSE environments and approaches must be designed to consider and account for pluralistic dynamic system goals.

You can search for the complete article at:

The Contracting Challenge

The contracting challenge comes when the government hires a contractor to develop a system of systems, as it did for the Army's Future Combat System and the Coast Guard's Deepwater program. Such programs are ill-served by today's contracting rules, procedures, and culture, which are founded upon the expectation of more or less fully specified requirements and competitions based on proposed performance outcomes and price. That approach doesn't work well when the government wants to hire a contractor to determine the requirements and then design and produce the solution.

Contractors that are hired to develop systems of systems are called lead system integrators.

The Congressional Research Service has defined lead systems integrator as follows:

[A] contractor, or team of contractors, hired by the federal government to execute a large, complex, defense-related acquisition program, particularly a so-called system-of-systems (SOS) acquisition program.

Due to its experience with the Future Combat System and Deepwater, Congress now looks upon such contractors with suspicion. See the Congressional Research Service's August 20, 2008 report RS22631, Defense Acquisition: Use of Lead System Integrators (LSIs) ? Background, Oversight Issues, and Options for Congress. Find it at:

The relationship between the government and a lead systems integrator does not conform to the expectations of our FAR-based culture. The old-time, command-style ("the Contractor shall"), hold-their-feet-to-the fire approach doesn't work well when the contractor was hired to build the fire.

Contracting professionals write contracts so that programs can use taxpayer money, and in order to specify results and distribute risk. They are enablers. But when developing a system of systems it is impossible to fully specify all output at the time of contract award, and risks cannot be fully defined. So contracts are incomplete, with some things left to be stipulated in the future. Ironically, the contract must be incomplete so that the parties can be free to adapt as the program goes forward. The existing machinery for changing contracts is clunky and slow. If the contract isn't incomplete it will not enable the parties, it will hinder them, trip them up, and slow them down.

In order not to hinder the execution of large, complex programs, the contracting community must leave Planet FAR and develop policies, procedures, and contractual instruments that are suited to challenges of developing systems of systems. First, they must develop ways to select contractors without proposed prices or estimated costs for specified quality and delivery. (How do you conduct a quality/price competition for such work? The technical proposal is science fiction, the management proposal is an MBA candidate's fantasy, and the most you can do with price is to hold an hourly rate contest.) Second, they must write contracts that establish goals and relational protocols instead of results. Third, they must figure out how to fairly compensate contractors in the face of evolving needs, high levels of uncertainty, and ill-defined and ever-shifting risk. And fourth, they must rethink their ideas about quality assurance and the duties and authority of contracting officers' technical representatives.

Finally, contracting professionals must figure out how to evaluate and work effectively with the new breed of metacontractors⎯giant, complex entities that are themselves comprised of complex entities. An example is Deepwater's Integrated Coast Guard Systems, which is comprised of Northrop Grumman and Lockheed Martin⎯two titans, each with its own history, culture, skills, and objectives. We call them "teams," and they sometimes are. But sometimes they're just unhappy and unsuccessful partners in a marriage of convenience. We must figure out how to choose them competitively, how to establish an effective relationship with the chosen one, and how to keep the relationship on track.

Contracting pros have a lot of interesting and important problems to solve in order to be useful to their clients: the agency heads and the managers of our largest, most complex, and most important programs. More such programs are coming, and the need for better contracting support is critical. The contracting community must think things through and then persuade Congress to let them use better-adapted ways of doing business. Solving those kinds of problems will lead to better program execution, and to professional recognition, prestige, and advancement. Most importantly, it will contribute to our national security, success, and well-being.

You don't have to wait for authorization to get started. Observe. Read. Think. Discuss. Write. For a start, take a look at the article that Ralph Nash and I wrote for the Defense Acquisition Review Journal (Sept. 2007), "A Proposal for A New Approach to Performance Based Services Acquisition." Find it here: Defense Acquisition Review Journal.

Vern Edwards

A Little Mystery?

Let's give them something to talk about. A little mystery to figure out. -- Bonnie Raitt

Here's a little mystery (at least to me) about FAR's implementation of the Truth in Negotiations Act (TINA).

I. Background

Suppose that the government negotiated a $100 million firm-fixed-price contract after obtaining the submission and certification of cost or pricing data in accordance with FAR 15.403-4.

The contractor had planned to subcontract one part of the work and obtained a firm-fixed-price proposal from a prospective subcontractor in the amount of $20 million. The prospective subcontractor furnished cost or pricing data to the contractor. The contractor did a cost analysis. Based on that analysi and its negotiating history with the prospective subcontractor, the contractor decided that it could negotiate the proposed price down to $18 million. It added 10 percent for its overhead, which yielded a total subcontract cost of $19.8 million, which is what it included in its proposal to the government. The contractor submitted the prospective subcontractor's proposal, the prospective subcontractor's cost or pricing data, and the contractor's cost analysis of the prospective subcontractor's proposal as part of the cost or pricing data that it submitted to the government with its own proposal. After agreement on price the contractor certified the cost or pricing data, including the data from the prospective subcontractor.

The contractor was unable to make a deal with the prospective subcontractor after award, so it did the work itself. The total cost of its work, direct and indirect, was $17,000,000.

After contract award, DCAA conducted a TINA compliance audit and found that the prospective subcontractor's cost or pricing data had been defective. (DCAA was able to determine this because it discovered that the prospective subcontractor had submitted defective data as a prime contractor on other contracts.) DCAA calculated that the prospective subcontractor's defective data had increased the contract price by $3 million. The contracting officer concurred and notified the contractor that it would seek a price adjustment pursuant to the defective pricing clause, FAR 52.215-10, Price Reduction for Defective Cost or Pricing Data (OCT 1997).

Paragraph (a)(2) of the Price Reduction clause says that if the contract price was increased by any significant amount because of defective data from a prospective subcontractor, the price shall be reduced "accordingly." But paragraph (B) limits the reduction when the defective data came from a prospective contractor that did not receive a subcontract. Paragraph (B) reads as follows:

Any reduction in the contract price under paragraph (a) of this clause due to defective data from a prospective subcontractor that was not subsequently awarded the subcontract shall be limited to the amount, plus applicable overhead and profit markup, by which?

(1) The actual subcontract; or

(2) The actual cost to the Contractor, if there was no subcontract, was less than
the prospective subcontract cost estimate submitted by the Contractor

provided, that the actual subcontract price was not itself affected by defective cost or pricing data. [Emphasis added.]
II. "The Prospective Subcontract Cost Estimate Submitted By The Contractor"

In order to calculate the amount of the paragraph (B) limit we have to know what dollar amount to use as "the prospective subcontract cost estimate submitted by the Contractor." $20 million was the prospective subcontractor's proposed price, but as for the cost estimate submitted by the contractor there seem to be two possibilities: (a) $18 million, which was contractor's estimate of the direct subcontract cost, and (B) $19.8 million, which was its estimate of the total subcontract cost--the $18 million plus the 10 percent for the contractor's overhead. The clause simply says "cost," not direct cost or total cost. Obviously, the larger the amount used the higher the paragraph (B) limit and the greater the possible price reduction. So what is the right amount?

Before you decide, take a look at FAR 15.407-1(f)(1), which says:

When a prime contractor includes defective subcontract data in arriving at the price but later awards the subcontract to a lower priced subcontractor (or does not subcontract for the work), any adjustment in the prime contract price due to defective subcontract data is limited to the difference (plus applicable indirect cost and profit markups) between
the subcontract price used for pricing the prime contract
, and either the actual subcontract price or the actual cost to the contractor, if not subcontracted, provided the data on which the actual subcontract price is based are not themselves defective.

III. "The Subcontract Price Used For Pricing The Prime Contract"

FAR 15.407-1(f)(1) uses the phrase "the subcontract price used for pricing the prime contract" instead of the phrase "the prospective subcontract cost estimate submitted by the Contractor." Why? Is the subcontract price "used for pricing the contract" the price proposed by the prospective subcontractor, which was $20 million, or the price that the contractor expected to pay, which was $18 million? It would not seem to be the $19.8 million, because that was not the prospective subcontract "price," but the total cost to the contractor, including its own overhead. The proposed $20 million was was the starting point for the contractor's cost analysis and the basis for the estimate of what it would pay. The government considered that proposal when it evaluated the reasonableness of the $18 million estimated by the contractor. So $20M was certainly "used" for pricing the contract. Or is it more reasonable to say that $18M was "the subcontract price used"? Which is right and why?

IV. Implications and Calculations

What are the implications?

Suppose that the contractor's overhead rate was 10 percent of direct costs and that its profit rate was 5 percent of total costs (direct + overhead). Using those rates we can try to calculate the paragraph (B) limit as follows:

Let L be the amount of the paragraph (B) limit, expressed in dollars. Then based on the language of the clause:

L= [(
- $17M) x 1.10] x 1.05,

is the prospective subcontract dollar amount,

$17M is the contractor's actual cost,

1.10 is the adjustment to add overhead, and

1.05 is the adjustment to add profit.

Obviously, the dollar amount of the limit will depend on the amount that we use for N. So we have to decide what dollar amount to use: $18M or $19.8M. Or is it $20M? In order to make that decision we must interpret the language of paragraph (B) of the Price Reduction clause. One would think that the decision must be based on the language of the clause, not the language in FAR 15.407-1(f)(1), because the clause is the language that the parties agreed to. Right? Should the contracting officer ignore FAR 15.407-1(f)(1)? If not, how should the contracting officer reconcile the differences in language?

Assuming that we must rely on the clause, it appears that our choice for "the prospective subcontract cost estimate submitted by the Contractor"
is either $18M or $19.8M. If the number is $18M, we can calculate the limit as follows:

L = [($18M - $17M) x 1.10] x 1.05

L = ($1M x 1.10) x 1.05

L = $1.1M x 1.05

L = $1,155,000

If the number is $19.8 million, we can calculate as follows:

L = [($19.8M - $17M) x 1.10] x 1.05

L = ($2.8M x 1.10) x 1.05

L = $3.08M x 1.05

L = $3,234,000

Note that the first outcome, a limit of $1.155M, would not permit the government to recover the entire $3M by which the contracting officer thinks that the contract price was increased due to defective data. Is that significant?

What if we use the $20 million that might be suggested by FAR 15.407-1(f)(1)?

L = [($20M - $17M) x 1.10] x 1.05

L = ($3M x 1.10) x 1.05

L = $3.3M x 1.05

L = $3,465,000

Think about it this way: If we have properly interpreted the FAR up to this point, then under the clause the possible values of N are: (1) $18 million and (2) $19.8 million. But under FAR 15.407-1(f)(1) the possible values are (1) $18 million and (2) $20 million. Either $19.8 million or $20 million will allow the government to recover the full $3 million price increase, while $18 million will limit the contractor's liability to $1.155 million, which is less than half of the amount of the overpricing. What bearing, if any, should that have on interpretation? Is it significant that only the $18 million is possible under both sets of language, or is that merely coincidental?

V. Summary

The clause uses the phrase "the prospective subcontract cost estimate submitted by the Contractor," but FAR 15.407-1(f)(1) uses the phrase "the subcontract price used for pricing the prime contract." What does each phrase mean in its own terms and what, if anything, is the significance of the differences in language?

Why limit the contractor's liability for defective pricing? What is the objective? What is the rationale? Why aren't those things explained in FAR Subpart 15.407-1? Are "cost estimate submitted" and "price used" supposed to be synonymous? What does "used for pricing" mean? Did the same person/people write the clause and 15.407-1(f)(1)? If so, why write them differently? If not, did the author of the newer language review the older language? Did anyone notice the differences in the language? Is so, why wasn't the language made to be the same?

So here's our problem: What number should we use for N? Why that number? What's the right answer? I have not found a case that interprets either paragraph (B) of the price reduction clause or FAR 15.407-1(f)(1), and the TINA experts that I've spoken with were unsure of the correct answer and didn't even hazard a guess. Am I being dumb? Have I read carelessly? Have I missed something obvious? Have I missed something that is not obvious? Has anyone else noticed this? Is there a case that I don't know about that clears everything up. Is my arithmetic correct?

Any ideas? I really don't have a clue.

Vern Edwards

I recently participated in a conference at which a former senior government official bragged about the bright young people that the government is recruiting into the contracting career field. Here is a story that might give you an idea about what a challenge it is going to be to retain the best of the new recruits.

My wife used to manage a contracting shop in a federal agency. One day she met a young student intern, whom I'll call "Molly Sue," who was working in another contracting shop. My wife was so impressed that she immediately tried to recruit her. Well, Molly Sue joined my wife's shop, and that young woman turned out to be a top-notch contract specialist. Now in her late twenties, she is smart, energetic, has an MBA, and is generally very impressive. This is a young woman who absolutely has to have a challenge.

Well, my wife left contracting to join her agency's IT organization, and she was soon joined by her young friend. Molly Sue had been working on the most complex IT contracts and had impressed the right people in the IT organization, including the Chief Information Officer. Looking for a challenge, Molly Sue decided to be recruited. Well, less than two years later, at the age of 28, Molly Sue was chosen to manage the biggest and most important information technology project in the agency, one that is crucial to the agency's future. Why did she get that assignment? Because she gets things done.

This all came to mind because Molly Sue just held an open house for her project, which was attended by all the bigwigs in her agency, including the agency head. My wife brought me a copy of the brochure that her young friend prepared, which describes the project mission, goals, and objectives, and identifies the project sponsors, which include several agency vice presidents and the deputy chief finance officer. Oh, and Molly Sue has arranged for interested parties to sign up for email announcements of project progress, upcoming events, and potential changes that might impact their work.

When I learned that Molly Sue had been offered the assignment I was concerned. I consider all IT projects to be "death march" projects, doomed to disappoint or even fail. (The failure rate among IT projects in government and industry is very high.) But so far so good. As she told me, "I'm still 50/50 on our targets but I'm sure we'll get there... somehow, someday, and exactly as planned." (Ah, youth. But it reminds me of Hannibal, standing in Gaul and looking at the Alps toward Italy: "We will either find a way or make one.") Assuming she succeeds, or even comes close, Molly Sue will probably be running the place in a few more years. Modestly, she attributes her success to her "awesome (i.e. technically capable, independent, with a high work ethic) team."

Our government obligates more than $400 billion per year on contracts, and Molly Sue is just the kind of person we want negotiating, awarding, and managing our biggest and most complex and risky contracts, like the one for the Coast Guard's Deepwater Program. But I regret to say that the job of contracting officer in most agencies just isn't challenging enough to keep people like Molly Sue interested for long.

But why not? America has a contracted-out government. Almost everything is being done under contract. So why aren't contracting people running the show? There are several reasons, but perhaps the main reason is that agency managers have conspired to turn contract specialists into technicians and data entry clerks instead of experts and key decision makers. I have been to meetings at agencies in which contractor consultants briefed agency higher-ups about acquisition strategy and source selection plans while the contracting officer sat quietly, providing little or no input. I have seen RFPs for major programs that were prepared by contractors. (I've even been hired by those contractors to help develop RFPs.)

This situation has been coming for a long time. In a 1987 report entitled, The DOD Contracting Officer: A Study of the Past, An Assessment of the Present, and Recommendations for the Future, an ad hoc committee of the American Bar Association's Section of Public Contract Law concluded as follows:

Given the importance of the contract in the acquisition process, the government official who presides over the contract should have the authority and status commensurate with the job. That official is called the contracting officer. The Committee believes the quality of that authority and that status are in jeopardy

Twenty-one years after that report, we have reached a low point in the status of the contracting officer. And until that status is raised to reflect the importance of contracting to our nation's objectives and security, we won't be able to keep the Molly Sues that the government attracts with its false advertising about the status and excitement of the contracting career field. They will go elsewhere as soon as they learn the reality of the contracting cubicle and that the biggest challenge they will face on a day-to-day basis is getting FPDS to accept their input.

But we're not going to see a change in contracting officer status until we get true leadership from contracting management and until the workforce shows that it can make a positive difference in how well contracts serve the nation. Until those things happen, enjoy the Molly Sues while you can. They aren't going to be around for long.

Vern Edwards

The rules of the contracting business can be Byzantine.

If you haven't read it already, read the GAO's decision in Pond Security Group Italia, JV, B-400149.3, December 22, 2008. Bob has posted it on the Wifcon home page.

The procurement was for security services at U.S. Army bases in Italy. The protester did not follow instructions in the RFP to provide a copy of an Italian license that was necessary to performance of the specified services. The protester had the license, but neglected to include a copy in its proposal. The government summarily rejected the proposal on the basis that the contractor was ineliglble for award. The award was to be made without discussions, and it appears that the contracting officer thought that to ask for a copy of the license after receipt of proposals would have constituted discussions. The protester complained that the government's rejection was unreasonable and that the government should have contacted it about the missing copy of the license.

Here is where it gets Byzantine.

The GAO held that the license requirement was a "definitive responsibility requirement" under FAR 9.104-2, and that asking for a copy of the license would not have constituted discussions. The GAO has long held that exchanges between the government and an offeror that pertain to the offeror's responsibility, rather than to the acceptability of its proposal, are not discussions. See, e.g., General Dynamics Ordnance & Tactical Sys., Inc., Comp. Gen. Dec. B-295987, 2005 CPD ? 114. (The U.S. Court of Federal Claims has adopted the same position.) Nevertheless, the GAO denied the protest, ruling that while the contracting officer could have asked for a copy of the license, he was not obligated to do so. (The Court of Claims might not have gone along with that position.)

The underlying logic of the GAO's position appears to be that discussions, as described in FAR 15.306(d), are conducted in order to give offerors a chance to improve their competitive position by revising their proposals to eliminate weaknesses and deficiencies and to generally make them better. Since exchanges of information about an offeror's responsibility would not give it a chance to improve the competitiveness of its proposal relative to the proposals of other offerors, such communications would not constitute discussions. Since such communications would not constitute discussions, the contracting officer had no obligation to tell the offeror about the missing copy of the license.

Responsibility factors are pass-fail (go-no go) factors. An offeror either has a license or it doesn't. An offeror either has a satisfactory performance record or it doesn't. An offeror either has an adequate production control system or it doesn't. An offeror need not be responsible at the time of proposal submission or contractor selection, only at the time of contract award, which might follow contractor selection by a considerable amount of time. See, generally, Cibinic and Nash, Formation of Government Contracts, 3rd ed., pp. 405 - 406. An offeror that is not responsible at the time of proposal submission need not be eliminated at that time, and may even be conditionally selected for award. In a couple of cases the GAO has prohibited an agency from prematurely eliminating an offeror due to nonresponsibility when there was a chance that the offeror could become responsible by the time of award. See CFE Services, Inc.; Department of the Navy-Request for Reconsideration, Comp. Gen. Dec. B-212077, 84-2 CPD ? 459. The GAO has even permitted agencies to delay an award for a reasonable period in order to give a prospective awardee a chance to become responsible. See New Life Group, Inc., Comp. Gen. Dec. B-247080, 92-1 CPD ? 463.

When considered on a pass-fail basis, responsibility factors are not used to compare one offeror to another, only to determine the eligibility of a prospective awardee. But responsibility-type factors can be used as traditional evaluation factors, as bases for comparing one offeror to another. See Capitol CREAG LLC, Comp. Gen. Dec. B-294958.4, 2005 CPD ? 31. Thus, an agency can compare two offerors on the basis of their performance records or production control systems and give one a more favorable evaluation than the other.

Does the GAO's "not discussions" rule about responsibility information apply when a responsibility-type factor is used to make comparative assessments? No. When responsibility-type factors are used as bases for comparing offerors to each other, or for determining the acceptability of a proposal as opposed to the responsibility of its offeror, then communication with an offeror about those matters might allow the offeror to improve its competitive standing relative to other offerors by revising its proposal to include more information. That kind of exchange of information would constitute discussions. See Global Associates Ltd., Comp. Gen. Dec. B-271693, 96-2 CPD ? 100, and AT&T, Comp. Gen. Dec. B-250516, 93-1 CPD ? 276.

FAR does not explain or even mention any of this, nor does any of the agency source selection guidance that I have seen. This is something you either know about or you don't. The only way to know about it is to be familiar with the GAO's case law. The way to do that is to study texts like Formation of Government Contracts, to read periodical analyses of decisions in publications such as The Government Contractor (weekly) and The Nash & Cibinic Report (monthly), to check websites like Wifcon, and to read decisions as they are published.

If you are a contracting officer and know these kinds of things you can fashion effective acquisition strategies for your agency, navigate around procedural obstacles, avoid mistakes, and get things done without breaking the rules. Such knowledge is contracting officer knowledge⎯not source selection authority knowledge, not program manager knowledge, not even agency lawyer knowledge. That's why a knowledgeable contracting officer is both necessary and important, and why knowledgeable contract specialists have a leg up when it comes to good assignments and promotions. Every program manager wants a contracting officer who knows the ropes and who can get the job done one way or another, without getting the program manager's name in the newspaper.

Knowledge is power.

Vern Edwards

Source selection is a rather straightforward problem, yet some agencies insist upon making a mess of it. They go out of their way to make their lives needlessly difficult when it comes to picking a contractor. Consider the case that I wrote about last Friday. NASA's problem, so beautifully exposed in the Wackenhut decision, is their antiquated approach to the source selection process. Their "mission suitability" factor, their wacky adjective-percentile-1,000 point scoring scheme, and their essay contest approach are outdated and ill-suited to the selection of service contractors in the modern world. They took more than a year to award a contract, then spent time and money fighting two protests, all so they could get to do it again because, for all the complexity and paper-intensiveness of their scheme, they couldn't explain their decision to a judge. At the heart of the problem is the selection of contractors on the basis of their essay-writing (excuse me, proposal-writing) ability.

The essay-writing contest approach to source selection was developed in the late 1950s and early 1960s by the DOD weapon system development organizations. Acquisition newbies have been learning to do source selection that way for decades through cut-and-paste on-the-job training. There is no valid rationale for it in the acquisition of services, and no practical justification. Agency acquisition personnel do source selection that way because that's the way they learned to do it from their predecessors and because they don't (or won't) ask themselves what they are doing, why they are doing it, and why they are doing it the way that they are doing it. They just keep on keeping on, despite all the evidence--and there is a lot of it--that what they are doing really doesn't work very well. (Yet those same people keep asking for "innovative" proposals from contractors.)

The underlying problem is that agencies do not provide decent instruction and guidance about the theory and practice of source selection. Read NASA FAR Supplement (NFS) Part 1815 and NASA's Source Selection Guide (June 2007). They are the artifacts of a stone age bureaucracy. There is no evidence in those documents that NASA has done any original thinking about the process of choosing contractors, about source selection decision-making, or about the acquisition of services. Study the past performance rating scale in NFS 1815.305(a)(2)(A) and the mission suitability rating scale in (a)(3)(A), and you'll wonder if they have done any thinking at all. What gobbledygook.

Consider the following "guidance" about tradeoff analysis in NASA's guide, Section, Trade-Off Analysis, third paragraph, pages 57-58 (http://ec.msfc.nasa.gov/hq/library/sourceselection/guide.pdf):

The best method to conduct a trade-off analysis is by examining the perceived benefits or risks in the technical portions of the proposals by focusing on significant discriminators and comparing that against the cost/prices of the proposals. After this comparison, the SSA should explain why the higher priced proposal merits the additional cost or why the lower priced proposal represents the best value to the Government. In all cases, the SSD needs to focus on the benefits or risks/detriments found in proposals rather than relying upon the points assigned at the factor or sub-factor level. This comparison is not expected to be a mathematical quantification of the trade offs that led to the decision. The SSA also should express a conclusion regarding which proposal provides a greater degree of benefit to the Agency. The conclusion should describe the degree of the difference between proposals and explain the technical and business judgment that justifies the difference. This process should isolate the significant discriminators between proposals.

That's it. That paragraph will be of little help to anyone seeking to understand the nature and process of tradeoff analysis. Read it carefully. What you have in that paragraph is a string of seven loosely connected and poorly ordered sentences, which, read closely, do not mean a heck of a lot and provide very little useful guidance. What of practical value does NASA expect anyone to learn about tradeoff analysis from that paragraph? My advice to NASA acquisition personnel is to throw away the NASA guide and, instead, read "Even Swaps: A Rational Method for Making Tradeoffs," by John S. Hammond, Ralph L. Keeney, and Howard Raiffa, in Harvard Business Review, March-April 1998, downloadable for $6.50 at hpsp.harvard.edu.

There are ways to do source selection simply, swiftly, efficiently, effectively, and defensibly. Start by throwing away the old guides and manuals. Then read a book⎯start with Decision Analysis for Management Judgment, 3d ed., by Goodwin and Wright (John Wiley & Sons, 2004), especially Chapter 3, Decisions involving multiple objectives: SMART⎯then think and use a little imagination. No matter how "large and complex" the acquisition, you're doing something wrong if it takes you more than 60 calendar days after receipt of proposals to make a decision.

All you contracting officers and would-be contracting officers: Read FAR 1.102-4(e), especially the last sentence. Now read the last sentence again.

Vern Edwards

Every now and then (actually, more often than that) an agency conducts a source selection in a way that stupefies me. Such is the case with NASA's $1.62 billion source selection for protective services at 14 NASA sites, such as the Kennedy Space Center. The contract was to be a firm-fixed-price, indefinite-delivery indefinite-quantity (IDIQ), for five years with five one-year options. It appears that an FFP task order was to be issued for each NASA site for which such services were to be acquired.

NASA published a sources sought synopsis on March 7, 2007. It published its presolitication synopsis on May 24. It issued its 2,600 page RFP, including a 72-page "performance work statement," on September 14, and amended it nine times. The RFP required offerors to submit proposals by November 30. The proposals were to include technical and management volumes, each of which was limited to 150 pages. In addition, offerors had to submit past performance, safety program, and pricing information.

The agency received five proposals, conducted discussions, and awarded the contract on May 20, 2008. One of the losers submitted a protest to the GAO on June 10, which the GAO denied on September 10. See Wackenhut Security Services, Inc., Comp. Gen. Dec. B-400240, 2008 CPD ? 184. The same protester then filed a complaint at the U.S. Court of Federal Claims on September 17. On December 15, Judge Susan G. Braden found for the plaintiff on the grounds that NASA had failed to explain and justify its proposal ratings, thereby violating the FAR and the Administrative Procedures Act. See Wackenhut Security Services, Inc. v. U.S., No. 08-660C, -- Fed. Cl. ---. The court granted injunctive relief by setting aside the contract award and ordering NASA to appoint a new source selection board and a new source selection authority. Those fresh faces must reevaluate portions of the offerors' final proposal revisions, make a new award decision, and send a copy of the decision memo to the court.

Why did NASA lose? The main reasons, in my judgment, are that (1) it developed a source selection plan that was needlessly complex and (2) it didn't maintain a good paper trail of its evaluation process. I haven't seen the source selection plan, but I cobbled it together by reading the NASA regulations, the RFP, and the two protest decisions. (I downloaded the RFP from Federal Business Opportunities: RFP No. NNX077040R, issued by the John F. Kennedy Space Center on September 14, 2007). The agency ran an essay writing contest, had too many evaluation factors and subfactors, and imposed absurd proposal requirements.

The offerors had to prepare technical and management volumes, limited to 150 pages each (8 1/2 by 11, one inch margins, 12 point font--no line spacing limitations). To give you a sense of the proposal requirements, as part of the technical proposal the offerors had to prepare two-page responses to seven scenarios like the following:

A 9-1-1 call reported a disgruntled employee has barricaded himself in an office on the 4th floor of a building. It is reported that the Subject was armed with a handgun and yelled out that he had a bomb. He has 4 hostages; no shots have been fired. Explain what action you would take as an emergency responder to defuse this situation and provide a safe rescue of the hostages and Subject.

Assumptions: You are the incident commander at the location. You have jurisdiction to conduct the full range of protective services operations. Federal agencies are available to you for assistance, however none can respond within 45 minutes.

Who would you involve in the response? What would be your tactics and strategies? Explain how your actions may have been different if shots were fired before, after, or during your response. Explain your after-action procedures.

You would have to be an idiot to have a law enforcement background and yet be unable to write a sensible two-page response to that scenario. If you are an idiot, you could hire a consultant to write it.

After the 14 pages of such scenario responses, offerors had to use the remaining 136 pages for such as the following:

The Offeror shall describe their overall technical approach for accomplishing the contract, PWS, and each of the task order requirements. Offerors shall demonstrate their understanding through a separate discussion for each task order by including, but not limiting the discussion to, the following:

a. Identify critical work functions, in relation to your identified critical skills provided as part of your staffing plan below, to be accomplished within this contract, PWS, and task orders and describe your approach for ensuring these critical functions are accomplished.

b. Demonstrate your understanding of the key performance characteristics of the contract and describe the key metrics you would use to measure these performance characteristics. In addition, describe the benefits to management insight that the metrics will provide.

c. Quality Management.

(i) Submit a Quality Control and Assurance Plan DRD.

(ii) Describe an overall approach for ensuring that personnel are appropriately

qualified and/or certified for their specific duties.

d. Specific Technical Understanding and Resources. Offerors shall demonstrate their understanding of the requirements and the specific labor resources needed to successfully perform the requirements of this contract and the task orders, utilizing their proposed technical approach.

e. Describe how Work Management and Control will be structured and accomplished, including all delegations of authority, to meet the contract requirements specified. Describe your process for receiving, scheduling, tracking, completing, and closing out work. Describe the mechanism you will use to match the correctly trained and skilled manpower to the work requirements.

After that the offerors had to use whatever pages were left for a staffing plan and for the following:

Describe the innovative techniques you plan to employ to maximize operational efficiencies and achieve contract stated objectives. Describe in detail specific plans, strategies, and practices for enhancing standardization and uniformity across NASA. Describe any innovations and operational efficiencies you plan to implement and gain. Provide rationale for proposed innovations.

(What is it with government acquisition people and the word "innovative"? They love that word. They use it all the time. If they treasure innovation so very much, why do they keep conducting source selections in the same old, dumb, labor-intensive, and time-consuming ways? Come on people! Where's your sense of irony!)

Remember that the technical volume was limited to 150 pages and that the PWS was 72 pages long. Now here is a paragraph from the PWS, to give you the flavor of the thing: Emergency Response Team

A. The contractor shall provide a team of security police officers who meet the enhanced physical standards for specialized teams found in NASA NPR 1620.2.

B. The team shall be trained in hostage and victim rescue, special tactics and planning, and the use of specialized equipment, firearms and other weapons.

C. The team shall be capable of an immediate on-site response to effectively and safely resolve a variety of critical security incidents including, workplace violence, active shooter, hostage situation, and terrorist aggression.

D. The team shall develop detailed plans for operations in critical/hazardous and public facilities.

E. When not training, these officers shall assume normal security police officer patrol duties as described in the Task Order; coming together as a team only as needed.

Think of how many of the 150 pages you could use to describe your approach to keeping a team ready for hostage rescue. And that's only one of at least 100 tasks. (Interesting work for a contractor, eh? Hostage rescue? With the rescuer chosen on the basis of an essay-writing contest and price?)

The evaluation findings were to be assembled into a goofy apparatus of "regular" strengths, significant strengths, "regular" weaknesses, significant weaknesses, adjectives, percentages, and numbers. ("Regular" strengths and "regular" weaknesses, I love it. You can't make this stuff up.) The protester was upset because although it got more points than the winner (1,788 to 1,760) and the same past performance rating (very good), NASA gave the contract to the other company because it's price was lower. Among other things, the protester complained that NASA was too generous in assigning points to the winner and that the point spread did not reveal the true superiority of its proposal over the winner's. Ordinarily, that would be a pretty weak protest, but NASA's problem turned out to be that it couldn't explain the winner's score to the judge.

(According to a comment in the court's decision, the protester's price was five percent higher than the winner's. The difference was significant in absolute terms. According to the GAO decision, the winner's final evaluated price was $1.186 billion. A five percent increase would make the protester's price $1.245 billion, a difference of $59.3 million.)

If an agency is going to conduct a source selection as an essay-writing contest, and no agency should, it better develop an auditable paper trail from the contents of each proposal through each evaluator through to any consensus findings through to the decision memorandum. I know that the GAO does not require agencies to maintain individual evaluator working papers or that individual evaluator findings track to consensus document(s) or to the final decision (see, e.g., Smart Innovative Solutions, Comp. Gen. Dec. B-400323.3, November. 19, 2008). But agencies had better maintain an audit trail anyway, because the Court of Federal Claims does not always go along with the GAO. In this case, the judge was troubled by her inability to track changes in scoring from evaluators' "preliminary worksheets" to their "final worksheets." During oral argument, the judge told the government's lawyers:

When [the Source Evaluation Board] began the technical evaluation [the winner's] score was [deleted], and it popped up to [deleted], moving it up to an [deleted] rating. There is not a word in any of those worksheets that justifies why that increase happened. Not a word...

So I have no basis in the record, from what I can see, to decide whether that jump in score, which was significant in terms of who received the contract, whether what they did was rational or not because there's no explanation. All we have is the scores...

So it makes me wonder what in the world happened? How did they get all those additional points and increase their rating, and why was none of that discussed?

Okay. Now we have the same problem, but to a lesser extent, in the small business factor score...

They get a [deleted] [point] increase in their rating, and yet when you look at the evaluation sheet--there's only one evaluation sheet, by the way, on that--not one word about why the scores change and based on what.

So I don't have an ability to say based on this record that what they did was appropriate on those two areas... [T]o me, those two flaws alone, aside from whatever else [the plaintiff has been] arguing, are really fatal.

Those SEB problems are fatal to the bid protest because of their significance in how the overall rating was presented to the source selection authority. Do you see?

They do now, Your Honor. Now they see that if they're going to run an essay writing contest they'd better (1) make sure that they know where and how each sheet of paper fits in the audit trail and (2) explain the logical progression from offeror statement to findings, ratings, or scores, and ultimately to source selection decision. And their premises had better be true and their logic valid.

So let's sum this up: NASA started this procurement sometime before May 27, 2007. It took almost six months to evaluate five proposals and to award a contract on May 20, 2008. It received two protests, and had the award thrown out by the Court of Federal Claims on December 15, 2008. It now must reevaluate parts of the proposals and make a new decision. A lot of time and effort down the drain and more to come.

That is mission failure, plain and simple.

An agency is not supposed to lose a protest of a $1.62 billion source selection because it did not adequately document the basis for its decision. That's just not supposed to happen. I do not doubt for even a moment that the NASA participants will argue that they did everything by the book and that the judge was out to lunch. Maybe she was. But out to lunch or not, if she's judging your protest you have to make a believer out of her.

Here's my take: Every source selection decision is a rhetorical challenge. When writing the decision memo, the SSA must argue that the decision is sound, i.e., consistent with law and regulation, the terms of the solicitation, and the dictates of reason. The SSA must thus persuade a fair but skeptical judge--whether the judge be the GAO, the Court of Federal Claims, Congress, the press, or the public. (Congress, the press, and the public won't be fair.) If the SSA fails to do that, then he or she has failed to do the job properly. Period. No excuse is acceptable. In any event, all excuses are pointless.

Who is to blame for this failure? Who is accountable? Or is it like in the Howard Jones song: "No one, no one, no one ever is to blame"?

Vern Edwards

Here are some quotes dating from 1950 about the role of the contracting officer, snipped from various board and court decisions and law reviews:

From: Penner Installation Corp. v. U.S., 116 Ct.Cl. 550 (1950):

Some contracting officers regard themselves as representatives of the [united States], charged with the duty of protecting its interests and of exacting of the contractor everything that may be in the interest of the Government, even though no reasonable basis therefor can be found in the contract documents; but the Supreme Court has said that in settling disputes this is not his function; his function, on the other hand, is to act impartially, weighing with an even hand the rights of the parties on the one hand and on the other.

* * *

It is a duty not easily to be discharged, we know. They are the Government's representatives, charged with the duty of seeing that the Government gets what it bargained for. Many contractors, on the other hand, bent upon making as much money as they can out of the contract, are constantly seeking ways out of doing this and doing that. Frequently, it is a constant battle-the contracting officer as the Government's representative, on the one hand, and the contractor on the other. To ask the contracting officer to act impartially when he must decide a dispute between the contractor and his employer is, indeed, putting upon him a burden difficult to bear. And yet the contract requires him to do so.

From: Perlak, The Military Extraterritorial Jurisdiction Act of 2000: Implications for Contractor Personnel, Military Law Review (September 2001), 169 MILLR 92:

If contractor employees are destined to support the modern battlefield or contingency environment, then the prerogatives of command and the imperatives of mission accomplishment must find their way into the contracting process. The role of the contracting officer in this environment must include the clear realization of commanders' intent, including crafting contracts with sufficient foresight and flexibility to meet that intent. Failing this, the substitution and use of contract support for traditional soldier functions will become a false economy that ultimately may degrade U.S. ability to prosecute wars and enforce peace.

From: Loeb, The Procurement Work Force? The Final Frontier?, Procurement Lawyer (Spring 1998), 33-SPG Procurement Law 18:

Although creation of the contract specialist position by the old Civil Service Commission in 1959 (and its recognition at about the same time in the private sector) did much to upgrade the image of the stodgy purchasing agent, it was only a small beginning. As early as 1955, the Commission on Organization of the Executive Branch of the Government (the Hoover Commission) was concerned primarily with practices that constrained the contracting officer and recommended strengthening the role of the contracting officer ?in the interest of more expeditious and effective buying.?

From: Ritenberg, Postscript: Mixed Workforce Questions, The Nash & Cibinic Report (November 2006), 20 N&CR ? 54:

At least in theory, there was once a clear line of demarcation between the respective roles of the Contracting Officer and the Program Office. This was expressed in two reports of the General Accounting Office as follows:

During contract performance, program offices are responsible for monitoring the performance of the contractor, providing technical assistance to the contractor that is required for contract performance, and notifying the contracting officer about any contract performance problems. Program offices are not authorized to change contract work, costs, or completion dates or to enforce [c]ontract provisions. Only contracting officers have the authority to do that. This concentration of authority in the contracting officer is an integral part of internal control within the contracting process.
(?Civilian Agency Procurement: Improvements Needed in Contracting and Contract Administration,? GGD-89-109, at 25 (Sept. 1989).)

Unauthorized commitments by program personnel may cause the Government to be bound by terms established by someone without the same concerns or professional standards of contracting officers. Program personnel are primarily responsible for carrying out the missions of the agency, rather than observing Federal laws and regulations concerning the procurement.
(?Unauthorized Commitments: An Abuse of Contracting Authority in the Department of Energy,? EMD-81-12, at 5 (Dec. 1980).)

From: Neal & Co., Inc. v. U.S., 945 F.2d 385 (Fed. Cir., 1991):

In enacting ? 605 of the Contract Disputes Act, Congress described the flexible role of the contracting officer:

While the objective may be to make the contracting officer the focal point for decisions, practicability dictates that the extent to which the contracting officer relies on his own judgment or abides by the advice or determination of others is dependent on a variety of factors, including ... the nature of the particular procurement....
t is impossible to generalize as to what the contracting officer's role should be in all situations....

From: Grumman Aerospace Corp. ex rel. Rohr Corp., ASBCA 50090, 01-1 BCA ? 31316:

The Government has also argued that it ?logically follows? that the conclusions a contracting officer reaches while analyzing the claim prior to writing a final decision are similarly entitled to no weight. We do not agree? We recognize in this regard that a contracting officer's testimony may be based on an independent examination of the events after the fact. This is not an uncommon role for a contracting officer and the evidence is entitled to be heard since it stems from the contracting officer's responsibility to independently evaluate the merits of the contractor's claim. We may, of course, give appropriate weight to the contracting officer's evidence.

From: Thornton, Fine-Tuning Acquisition Reform?s Favorite Procurement Vehicle, the Indefinite Delivery Contract, Public Contracts Law Journal (Spring 2002), 31 PUBCONLJ 383:

A consciousness-raising is needed to better define and appreciate the role of the Contracting Officer on the acquisition team. Only then can program managers, technical experts, and end users learn to accept that only specific work statements can be well managed. This includes an appreciation that bundled, nationwide work statements are impossible to manage effectively. Otherwise, the value a Contracting Officer adds to the process erodes and the whole procurement suffers. It is time to shift focus to identify tools and adopt policies that enable Contracting Officers to contain and remedy those troubles?

The use of task and delivery order contracts to execute interagency orders has been associated with the same kinds of abuses as indefinite delivery contracting. The common denominator is the receding role of the Contracting Officer and his or her ability to enforce rules intended to preserve competition.

From: Goodman, Legal Dilemmas in the Weapon Acquisition Process: The Procurement of the SSN-688 Attack Submarine, Yale Law and Policy Review (1988), 6 YLLPR 393:

A 1987 report of the Public Contract Law Section of the American Bar Association examined their role:

The role of the DoD contracting officer is changing from the traditional to a less well-defined position of diminished significance and shared authority . . . [T]he current acquisition environment blankets the contracting officer with oversight, laws and regulations . . . Such diffusion of authority can only mean a diminished role for the contracting officer which, extended to the ultimate conclusion, will result in no identifiable Government official at the operating level being responsible for efficient contracting practices or accountable for contracting failures.

Ad Hoc Comm. on the Role of the DoD Contracting Officers, The DoD Contracting Officer, 1987 A.B.A. Sec. Pub. L. Rep. 93, cited in Report on Acquisition Policy, supra note 136, at B-15.

From: Kurtis R. Mayer and Pamela Mayer d/b/a Mayer Built Homes, HUDBCA 83-823-C20, 84-2 BCA ? 17494:

In S. Rep. No. 95-118, 95th Cong., 2d Sess. 21-22 (1978), the concern of Congress over the role of the contracting officer was clear:

Section 5 describes explicitly the decisionmaking role of the contracting officer. Equally important is a thorough knowledge by the contractor of the role and authority that the contracting officer plays in the decisionmaking process of the agency he represents . . .. While the objective may be to make the contracting officer the focal point for decisions, practicability dictates that the extent to which the contracting officer relies on his own judgment or abides by the advice or determination of others is dependent on a variety of factors, including the officer's personal knowledge, capability, and executive qualities, as well as the nature of the particular procurement. With so many variables, it is impossible to generalize as to what the contracting officer's role should be in all situations.

From: Morgan, Identifying Protected Government Acts Under The Sovereign Acts Doctrine: A Question of Acts and Actors, Public Contracts Law Journal (Winter 1993), 22 PUBCONLJ 223:

The contracting officer may be omnipotent for purposes of the contract, but his authority is considerably more limited where the implementation of directions from higher authority is involved. To presume that all actions of the contracting officer which affect the contract are somehow acts of the government in its contractual capacity stretches reason beyond recognition.

From: Schultz, Proposed Changes in Government Contract Disputes Settlement: The Legislative Battle Over the Wunderlich Case, Harvard Law Review (December 1953), 67 HVLR 217:

It may well be that the early Government contracts with which the Supreme Court dealt were as freely bargained for as were the private contracts, and the Army engineer as independent as the private engineer, architect, or other expert. But with the phenomenal growth of Government contracting, the exclusive use of the standard form contract, and the changing role of the contracting officer from expert to Government agent, neither of these assumptions holds true.

From: Wall, Surviving Commercial Pricing Rules, Public Contracts Law Journal (Summer 1994), 23 PUBCONLJ 553:

Arguably, since the passage of the Truth in Negotiations Act in 1962, the law which has had the most impact on pricing U.S. Government contracts was the Inspector General Act of 1978. The principal reason is that this Act fundamentally changed the relationships between the contracting officer, contract auditor, and contractor.

To some, the Act's implementation has confused the role of the contracting officer, who is supposed to be the U.S. Government's independent decision maker, and the role of the contract auditor, who is supposed to be the contracting officer's financial advisor. For instance, prior to the Inspector General Act, the contracting officer was unencumbered (perhaps too unencumbered) in deciding upon the disposition of an auditor's finding. Now the contracting officer must adhere to special policies and procedures? .


Note the high expectations of some of the writers, and the idealist image of the contracting officer. Are they matched by reality?

Vern Edwards

Sometimes, when I'm teaching a class, and after I've had a couple of days with the students and know them a little, I play a game with myself: I pretend that I've been asked to assemble a small, elite contracting office to do demanding work under pressure. I then look over the students and ask myself which of them I would choose. Here, in no particular order of importance, is an incomplete list of the qualities, skills, and knowledge that my ideal contract specialist candidate would possess.

Personal Qualities. It may be that people are born with these qualities to some extent, but I think that you can develop them in yourself if you work at it.

An energetic and inquiring mind. I want someone who is never content to simply follow instructions, but wants to know the why of everything and won't accept "Because I said so," or "Because that's the best (usual, standard, generally accepted) way to do it." I want someone who is not content to be told, but who wants to figure things out and to understand. I want someone who would not ask me (or a co-worker) what a word means or what the rule is, but who would at least try to look it up first.

Feistiness. The ideal candidate will stand up for what he or she believes, but knows the difference between standing up and arguing for the sake of arguing or out of bullheadedness. I want someone who is willing to fight, but who knows when the fight is over and will shake hands, win or lose. No grudges, please. Please don't apply if, when you lose an argument with the boss, you complain to others about how mean or unreasonable the boss is.

Independence. The ideal candidate does not have to be handheld through every step in a process. I don't want someone who shows up at the boss's door every five minutes to ask what to do next.

Diligence. I want a person who does what needs to be done when it needs to be done, without having to be reminded or prodded, and who persists until its done and done right.

Discretion. Discretion is more than "common sense." Discretion includes tact, good judgment, caution, modesty, and self-restraint. It includes knowing when to act without instructions and when to seek instructions before acting, and knowing when to talk and about what, and when to keep quiet.

Honesty. The ideal candidate knows that it's just as important to be honest with oneself as it is to be honest with others.

Integrity. The ideal candidate sticks to principles, even at personal expense, but isn't a blockhead about it. I want someone who insists on doing the right thing, but not someone who dials the IG hotline when anyone disagrees with his or her notion of what the right thing is. A person with real integrity knows the difference between an objectively ironclad principle (all bribes are wrong) and a subjectively debatable principle (the proper standard for unusual and compelling urgency).

Self-confidence and mental toughness. This is the sine qua non of a contract negotiator. I want someone who not only doesn't get upset when put on the spot, but who actually gets a kick out of it, someone who is not only willing to take the heat, but who even enjoys it. There's no crying in contracting.

Humor. The ideal candidate laughs at herself as easily or more easily than she laughs at others. I want someone who can see the humor in a desperate situation, but not someone who makes a joke out of everything. Sly, dry wit is welcome, if used with restraint, but not ostentatiously dry wit, which is tiresome. Funny and sarcastic are not the same thing.

Acquired Skills. All of the following are things that a person can learn to do. For interns, I have provided some references to books about some of the skills.

The ability to reason logically. We all do that more or less naturally, but the ideal candidate is self-conscious about it and strives to be rational, to develop valid arguments, and to evaluate arguments based on logical principles. See Informal Logic: A Pragmatic Approach, 2d ed., by Douglas Walton (Cambridge, 2008) and Logic and Its Limits, 2d ed., by Patrick Shaw (Oxford University Press, 1997).

The ability to read analytically. Reading, interpreting, and applying the Federal Acquisition Regulation is not as easy as most people seem to think it is, yet a contract specialist must be able to do it and do it well. The level of of FAR reading difficulty falls somewhere between a college political science textbook, which almost everyone can understand, and Hegel's The Phenomenology of Spirit, which hardly anyone can understand (no matter what they claim). My favorite difficult FAR passage: the cost principle at FAR 31.205-6, Compensation for Personal Services. If you can read that and pass a test about what it says and means, then you're good. If you can read it, pass the test, and suggest other interpretations, then you're my kind of contract specialist.

The ability to write well. To test for this skill I'd give a candidate a problem in equitable price adjustment and tell him to determine the proper amount according to the facts and established case law. I'd then give the candidate one hour to type a one-page explanation of the basis for his determination. I'd evaluate the explanation for grammar and punctuation, and for the ability to write a coherent explanation of the answer given. Note: My model for good writing is George Orwell. See his essays Books v. Cigarettes (1946), The Complete Works of George Orwell, and Politics and the English Language (1946), The Complete Works of George Orwell, which are polemical, and The Moon Under Water (1946), Essays and Journalism which is a fine piece of imaginative descriptive literature. A fun piece is Some Thoughts on the Common Toad (1946), The Complete Works of George Orwell. If you can learn to write even half as clearly as Orwell you need never be unemployed. The ability is in very short supply.

The ability to speak extemporaneously. A candidate must be able to stand up in front of strangers and people who are opposed to his or her point of view and speak clearly, coherently, confidently, and persuasively about something that he or she is supposed to know.

The ability to listen actively. See Wikipedia. Listening actively saves a lot of time and may prevent needless disputes and litigation.

The ability to negotiate. The ideal candidate can make a deal with a contractor or with other agency personnel. Anyone who has the qualities and skills listed above can learn to negotiate⎯to bargain, to haggle, to engage in a rational (or intentionally irrational) exchange of views in order to make a deal. Some people are better at it than others. There are hundreds of books about negotiating. Take your pick. They all have something useful to say.

A reasonable facility with mathematics. Some contracting problems entail more than simple arithmetic. You might need simple statistics, but you probably won't need trigonometry or calculus. Wouldn't hurt, though. Library of Math

The ability to design efficient and effective contracting processes. Some would say "the ability to innovate." To me, it's nothing more than the ability figure out how get things done without wasting time and resources. The ideal candidate, when confronted with a tough challenge, says: I'll figure something out.


A candidate must possess the level of basic knowledge that is necessary to work at the pay grade that he or she wants. I don't believe in paying the salary while the person learns the basics of the job. (But time must be provided to learn the particulars.) A candidate must know the rules that govern the job that he or she has been hired to do. The rules include the FAR and other official "shall," "shall not," "may," "may not," "should," and "should not" statements. When I say "know the rules," I mean know what the rules say and what they mean, which, in some cases, requires familiarity with case law.

The candidate must know other things as well, such as:

How our government is organized and how it works, for example: (a) how laws are enacted and published, (B) how regulations and policies are promulgated and published, and ( c) how public and private controversies are settled or adjudicated.

How funds are appropriated, managed, obligated, and expended. See the GAO's Principles of Federal Appropriations Law (the "Redbook").

How the industries and firms that sell what is to be bought produce, price, and distribute their products and services.

How the markets in which the buying is done are structured, regulated, and behave.

So much for my game. Contract specialists who possess all of those qualities, abilities, and knowledge are hard to come by. In fact, I don't always qualify. If you're a boss and you find such persons, someone will try to take them away from you, so you had better offer interesting and challenging work, interesting coworkers, clerical support, and a decent place to work.

Of course, if you think that contracting is about sitting in a small cubicle, staring at a monitor, and klacking away at a keyboard, just ignore me.

Vern Edwards

In a chapter of his new book, Reforms at Risk: What Happens After Major Policy Changes Are Enacted (Princeton University Press, 2008), Associate Professor Eric M. Patashnik of the University of Virginia recounts the tale of the acquisition reforms of the 1990s⎯ the Federal Acquisition Streamlining Act of 1994, the Clinger-Cohen Act of 1996, the FAR Part 15 Rewrite; increased use of credit cards, GSA schedules, and commercial items. He argues that the reforms made acquisition less contentious and adversarial and more efficient, and improved contractor performance, but that they are threatened and being rolled back by excessive oversight from Congress and inspectors general, university law professors, and greedy protest lawyers.

The acquisition reform laws of the 1990s were themselves genuine achievements, but what did they achieve? It?s clear that some of the acquisition reforms, especially the use of credit cards, multiple-award task order contracts, and GSA schedule contracts, have had an enormous effect on government contracting. But they have also led to unwise choices and outright violations of laws and regulations, and it is far from clear that they have led to better value for the taxpayers. Is GSA schedule pricing "fair and reasonable"? Is the increased use of time-and-materials contracts cost effective? Did the change in the rule about establishing the competitive range in source selection, which was part of Clinger-Cohen, lead to speedier and less resource intensive source selections that produce better decisions? Did the rule that requires agencies to evaluate past performance actually lead to better contractor performance or did it merely add more paperwork to the source selection process and provide fertile grounds for protests? We don?t really know, because the reformers didn?t provide for data collection and analysis. Reform changed things, but it is not entirely clear that the changes were entirely for the better. In any case, they didn?t help FEMA respond effectively to Hurricane Katrina.

The truth is that the reforms provided opportunities for greater efficiency and better results, but that agencies have not taken full advantage of those opportunities. Fear of protest and criticism has been part of the problem, but professional incompetence has been a bigger part. For instance, as I predicted in a 1995 article in The Nash & Cibinic Report, "The New Rules for Multiple Award Task Order Contracting," contracting officers have not taken full advantage of the liberal rules for issuing task orders under multiple award IDIQ contracts. They have instead conducted mini-Part 15 source selections, complete with formal solicitations, written technical proposals, evaluation boards, competitive range determinations, discussions, and final proposal revisions. They even do that when conducting simplified acquisitions and placing orders against GSA contracts. This has made the use of multiple-award IDIQ contracts and simplified acquisition procedures needlessly costly, time-consuming, and labor intensive. Even so, contracting officers have too often misused, mismanaged, and abused task order contracts, which has prompted reactionary legislation and regulation.

The one thing that reform did not do, but that was critical to improving acquisition operations, was prepare contracting officers and contract specialists to take full advantage of them. We still have the half-baked classroom training and the poor quality cut-and-paste on-the-job training that we had before the reforms. Moreover, we have burdened ?professional? contracting personnel with clerical duties, such as preparing synopses, maintaining files (electronic and otherwise), and reporting to FPDS. As a result, we have contracting officers who do not know the regulations and how to do things legally, or how to design efficient acquisition processes that produce better results without breaking the rules. They do what they don't have to do and don't do what they should.

Enacting new laws and publishing new source selection regulations was not enough. Contracting officers cannot use them to full advantage because they do not understand the fundamentals, which are not addressed in the laws and regulations. In fact, had contracting officers understood those fundamentals, many of the new laws and regulations would not have been necessary. Prof. Patashnik claims that before reform "good people were trapped in bad administrative systems." The truth is that those people created those systems.

My personal hero, James M. Gavin, who commanded the 505th Parachute Infantry Regiment and then the 82d Airborne Division during World War II, speaking of his men to Dick Cavett in a television interview, said: ?Nothing was too good for them. Nothing was too much to ask of them.? He was a tough leader, first out of the door in the 82d?s combat jumps and deeply respected by his paratroopers. Gavin insisted upon demanding training and top-notch performance. And until we get acquisition leaders who think that way about contracting officers and lead accordingly, the real threat to acquisition reform will be the contracting workforce.

Vern Edwards

Now that President?Elect Obama has announced his intention to launch a massive public works program to fight the recession, we can look forward to more entries in the perennial debate about whether or not Congress should repeal the Davis-Bacon Act, 40 U.S.C. ? 3141 et seq., 29 C.F.R. Part 5, and FAR 22.403-1 and 22.404.

Davis-Bacon, enacted in 1931 and applicable to construction contracts priced at more than $2,000, principally provides as follows:

? 3142 (a) The advertised specifications for every contract in excess of $2,000, to which the Federal Government or the District of Columbia is a party, for construction, alteration, or repair, including painting and decorating, of public buildings and public works of the Government or the District of Columbia that are located in a State or the District of Columbia and which requires or involves the employment of mechanics or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics.

"(B) The minimum wages shall be based on the wages the Secretary of Labor determines to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the civil subdivision of the State in which the work is to be performed, or in the District of Columbia if the work is to be performed there."

The Act was written by two Republican members of Congress (that's right, Republican): Representative Robert Bacon of Long Island and Senator James J. Davis of Pennsylvania, who were prompted to do so out of fear that low cost black labor would undercut the wages of white workers in competitions for government construction work. See: Bernstein, The Davis-Bacon Act: Let?s Bring Jim Crow to an End, Cato Institute, 1993, http://www.cato.org/pubs/briefs/bp-017.html. It has inspired an extensive popular and scholarly literature. There are two main schools of thought: (1) The Davis-Bacon Act is an out-of-date law that inflates the cost of government construction projects and discriminates against low-skilled non-union workers. (2) The Davis-Bacon Act is essential to the protection of workers on government construction projects.

It?s easy to find expressions of the anti-Davis-Bacon school of thought. See, e.g., the 1995 article posted to the Heritage Foundation website: Four Reasons Why Congress Should Repeal Davis-Bacon, by Mark Wilson, http://www.heritage.org/Research/GovernmentReform/bu252.cfm. See also Bringing Home the Davis-Bacon, by Ivan Osorio, at the American Spectator website, http://spectator.org/archives/2005/09/13/b...the-davis-bacon.

For a recent scholarly and extensively documented critical analysis, see Glassman, et al., The Federal Davis-Bacon Act: The Prevailing Mismeasure of Wages (2008), available at http://www.beaconhill.org/BHIStudies/PrevW...080207Final.pdf. In that study the authors conclude:

?Since its creation in 1931, the Davis-Bacon Act has required the Department of Labor to calculate and enforce a ?prevailing wage? for workers employed on federally funded construction projects. We find that the WHD [Department of Labor, Wage and Hour Division] employs unrepresentative survey and measurement methods that produce wages estimates that are biased upward. Moreover, the burden of calculating prevailing wages is beyond the ability of the WHD, despite recent increases in resources. The methods used by the WHD to calculate the prevailing wage produce estimates that are biased upward, resulting in a 9.91% overpayment on all federally funded construction projects, costing taxpayers $8.6 billion annually. The BLS [bureau of Labor Statistics], another branch of DOL, also routinely calculates wages for hundreds of occupations. We find the BLS methodology to be much stronger and timely leading to more accurate wage measurements than under the WHD methodology.

?The ideal solution would be to repeal the DBA. However, if it is the wish of voters and taxpayers that construction workers get the wage that prevails in the community, rather than the wage that workers might get if contractors brought in outside labor, then the government should make an accurate determination of the prevailing wage. To this end, the WHD should utilize the BLS survey data to determine the prevailing wages.?

See also, Bernstein, The Shameful, Wasteful, History of New York?s Prevailing Wage Law, George Mason University Civil Rights Law Journal, Spring 1997:

?Davis-Bacon and New York's prevailing wage law had a devastating effect on the employment of African-Americans in the New York construction industry. Prevailing wage requirements meant that there was no economic benefit to hiring non-union labor on public-works projects. As a result, contractors hired the generally more highly-skilled unionized workers. Moreover, because they had to pay the same wages regardless of who they hired, contractors working on large-scale federal construction projects found it most economically efficient to recruit construction workers directly through AFL union locals, which in many cases were overwhelmingly or exclusively white because of discriminatory membership policies. [FN39] By hiring union members, contractors could also avoid politically-motivated investigations into their wage practices. Because the construction craft unions had few or no African-American members, union contractors rarely hired African-Americans for skilled positions.? Footnote omitted.

It seems to be harder to find expressions of the pro-Davis-Bacon point of view, but see Davis-Bacon Under Attack, Beware Stealth Strategies, from the April 2002 edition of the IBEW Journal, available at http://www.ibew.org/articles/02journal/0204/p12.htm.

A well-documented ?working paper? in support of Davis-Bacon was published by the Economics Department of the University of Utah, Losing Ground: Lessons from the Repeal of Nine ?Little Davis-Bacon Acts?, which assesses the effects of the repeal of state versions of the federal Davis-Bacon Act. The authors summarized the possible effects of repeal as follows: lost wages for construction workers, a slight increase in construction employment, lost income tax revenues, increased construction overruns, a less skilled labor force, slowed economic gains by minority workers, and increased work-related injury rates. To see the report, go to: http://www.faircontracting.org/NAFCnewsite...osingground.pdf. Unfortunately, the authors? objectivity might be considered compromised by the fact that the working paper was funded by the International Union of Operating Engineers and the AFL-CIO.

For a nakedly political take on the benefits of Davis-Bacon and the evils of repeal, see the remarks of Representative Owens in the Congressional Record, 142 Cong. Rec. H5996-01, June 6, 1996. Here is a sample:

?Unfortunately, the House Republicans, the Republican majority here in this House, is driven by antiunion hysteria, which I do not understand. There is some kind of contract with an unscrupulous group of contractors, I think, in the case of Davis-Bacon, because they will not let up.

?Certain House Members keep going and they refuse to recognize the facts. They come from areas that are certainly not paying very high wages. If you look at the Davis-Bacon wages of the areas that many of the Republican majority Members come from, you will find that they are very low wages and sometimes close to minimum wages. And they cannot really complain about Davis-Bacon driving up the cost of local construction. But the facts do not seem to matter. There is a kind of hysteria determined to reverse the fair and equitable standards that Davis-Bacon has established.?

It is unlikely that Davis-Bacon will be repealed by a Congress controlled by Democrats or suspended by a Democratic presidential administration. (The law permits the president to suspend its provisions in a national emergency. President Bush did so after Hurricane Katrina.) But my intent here is not to advocate retention or repeal of Davis-Bacon or the other prevailing wage law, the Service Contract Act of 1965, as amended, but to point out that government contracting policy is as much a matter of politics as it is good business sense. Maybe more so. Indeed, money, government contracts, and politics are inseparable. Even the presumably objective needs determination/requirements specification process⎯determining what we buy and from whom⎯is political. See Kotz, Wild Blue Yonder: Money, Politics, and the B-1 Bomber (1988) and Sorenson, The Politics of Strategic Aircraft Modernization (1995). And need I mention the struggle over the Air Force?s tanker program? (And over the Army?s M-9 pistol? And over the Army?s black berets?) This is not going to change. Ever.

Money, politics, and public contracts have gone together since the days of Periclean Athens, when citizens and politicians complained about fraud, waste, and abuse in the construction of the Parthenon and other public works during the 5th century, BCE. See Professor Loren J. Samons II?s discussion of ?Public Finance: Democracy and the People?s Purse? in Athenian democracy in What?s Wrong with Democracy (2004), pp. 72-99. Ancient Athens will seem remarkably familiar to readers of today?s headlines.

Vern Edwards

How about a contracting think tank?

I recently sat on a panel with Professor Emeritus Ralph Nash and Associate Professor Steve Schooner of The George Washington University Law School, and Paul Dennett, a former administrator of the Office of Federal Procurement Policy, to discuss the state of government contract administration. The consensus was that the government does not have enough people to do as good a job of contract administration as it should be doing and that the people who do it need more training. There is nothing very remarkable about that consensus, the same opinions have been expressed by nearly every observer and critic of government contracting over the past 20 years.

There is a long list of contract administration functions in FAR 42.302, but the key issue seems to be quality assurance, inspection, which FAR 2.101 defines as follows:

??Inspection? means examining and testing supplies and services (including, when appropriate, raw materials, components, and intermediate assemblies) to determine whether they conform to contract requirements.?

The critics are concerned about whether the government is getting what the contractors have promised to deliver, or, to put it another way, whether the government is getting what it is paying for. There are other concerns as well, for example: whether contractors are complying with cost accounting standards and cost principles, are fulfilling their obligations under contract clauses that implement the socio-economic programs in FAR Subchapter D, are complying with security requirements, and, generally, are obeying the laws. And there are concerns about organizational conflicts of interest, the implications of ?blending? contractor and government employees, and about contractors performing inherently governmental functions.

Now, inspection of supplies (goods) is well understood, and there are countless books on quality assurance for manufactured items and raw materials. But the government spends more on services than on supplies these days, and the inspection of services confronts us with many unsolved problems and unresolved issues. When a service produces a tangible artifact that is, in and of itself, adequate evidence of the quality of the service, then quality assurance can be handled much as it would in a contract for supplies. Thus, the quality of equipment repair services can be determined by examining and testing the items that the contractor claims to have repaired, and the quality of grounds maintenance services can be determined by examining the grounds. But how do we perform quality assurance when a service produces no tangible artifact, or no artifact that is, in and of itself, adequate evidence of the quality of the service, or when the work does not entail observable physical activity on the part of the contractor's employees? There are many such services.

Consider, for example, contracts for the services of security guards who perform entry control at government facilities. A government inspector can see people lined up at the entrance, showing their identification to the guards, and the guards looking at it and at the belongings people place in the X-ray devices. But the service work is taking place in the guards? heads, and that work cannot be observed directly. A guard may look at the identification or appear to do so, but does she see it, does she think about what she sees, and does she make the right decision based on what she sees? The government can perform tests in which it tries to get people with bad identification and contraband past the guards, but such tests have to be random. Even if the guards catch the test subject, the government cannot be sure that the guards are not letting others in who should not be admitted. Random sampling is not adequate when performance must be perfect, yet 100 percent inspection is not practical. When work takes place in peoples? heads and the output is an undocumented thought, what do you examine and test?

What about contracts for analytical services? Again, the work takes place in the heads of the service employees. Studies and reports, in and of themselves, are not adequate evidence of the quality of the underlying thought processes. While an expert reader might detect obvious errors of fact or reasoning, other errors might go undetected, and disagreements with the conclusions of the service provider are not necessarily indicative of poor quality work.

Under time-and-materials contracts, it is common practice for contracting officers to require contractors to submit their invoices to a contracting officer?s representative (COR or COTR) for ?approval.? But what does ?approval? signify? Conformity of the work to contract requirements is not a condition of payment. In any case, work under many such contracts produces no tangible artifact that is, in and of itself, evidence of the quality of the contractor?s work. As a general rule, when contract performance yields no such tangible product, the sight of a contractor employee at his or her desk does not warrant a conclusion that the employee was ?working? at the moment of observation, only that the employee was present.

In addition to the intangibility of much service output and the government's inability to directly observe the contractor's work, there are problems associated with widely dispersed locations of performance and side-by-side performance of the same duties by government and contractor personnel.

These crude examples reflect just some of the problems that are unique to service contracts. My point is not that there are no solutions to these kinds of problems or that no one has solved any of them. My point is that in many cases the government (1) has not explicitly recognized the problems, (2) has not worked systematically ether to find solutions that others have developed or to develop its own, (3) has not widely reported any solutions that it may have developed, and (4) has not developed appropriate training with respect to the problems for government quality assurance personnel. The advocates of performance-based contracting would have government inspectors use statistical quality assurance methods⎯random sampling and AQLs, methods that were developed for manufacturing. But services do not produce identical units of output. Every output is a somewhat unique response to a somewhat unique set of circumstances. We don?t strive to reduce variability in the output. In fact, we want the output to be varied as appropriate. Statistical inferences based on random sampling might not be valid for such services. In any case, Military Standard 105, Sampling Procedures and Tables for Inspection by Attributes, which described the random sampling and AQL procedures used for many services contracts was canceled because it does not reflect current thinking about quality assurance processes. It has been replaced in part by MIL-STD-1916, DOD Preferred Method for Acceptance of Product. The foreward to that document says:

?Sampling inspection by itself is an inefficient industrial practice for demonstrating conformance to the requirements of a contract and its technical data package. The application of sampling plans for acceptance involves both consumer and producer risks; and increased sampling is one way of reducing these risks, but it also increases costs. Suppliers can reduce risks by employing efficient processes with appropriate process controls. To the extent that such practices are employed and are effective, risk is controlled and, consequently, inspection and testing can be reduced? This standard complies with the DoD policy of eliminating acceptable quality levels (AQL's) and associated practices within specifications.?

So where does that leave those DOD folks who have sampling and AQLs built into their Quality Assurance Surveillance Plans? Anyway, how much should a contracting officer deduct from contract payment for that one instance out of ten thousand in which a guard let someone get in with a gun?

If you wonder where I?m going with all of this, here it is: Why don?t we have a contracting think tank to work on these kinds of issues and problems? The existing think tanks that occasionally address contracting issues, like Brookings and Rand, focus on what I call ?macro? issues⎯Does outsourcing reduce costs? How much outsourcing should the government do? What work should the government outsource? What we need is a think tank that takes on day-to-day practical issues, such as the ones I described above, and publishes its findings and recommendations for chief acquisition officers, senior procurement executives, heads of contracting activities, chiefs of contracting offices, and contracting officers. I don?t mean a policy shop. Goodness knows, we don?t need yet another policy shop. No, I mean a place where smart people spend their time thinking about ways to do contracting better than we do it now and publishing their thoughts.

Contracting is a $400 billion per year business. Per year! We have about 28,000 people working at it. When you think about all of the handwringing over a one-time $700 billion stimulus package and a one-time $25 billion rescue for the auto industry, you have to wonder why we are not rounding up first rate minds and putting them together to systematically identify contracting issues and problems and to find solutions that everyone can use.

Goodness knows⎯there would be a lot to think about.

Vern Edwards

In my last post I used the terms ?mentor? and ?mentoring.? I tell my students that when they use a word or term they must make sure that they know what it means and what they mean by it. Well, what?s good for the student is good for the teacher. As I read my own post I asked myself: What do I mean by mentor and mentoring? What does a mentor do? How does he or she do it?

The word mentor comes from Homer?s Odyssey. Mentor is the name of an old friend of Ulysses (the Roman name for Odysseus), the King of Ithaca, who has been away from home for 20 years, fighting at Troy and wandering the world, trying to get home. Ulysses?s wife, Penelope, and young son, Telemachus, are besieged by men who think Ulysses is dead and who want to marry Penelope and assume the throne. When Ulysses left for the Trojan War, he asked Mentor to guide his son while he was away. When Prince Telemachus decides to search for his father and prays for advice, Minerva (the Roman name for Athena, the goddess of wisdom), disguises herself as Mentor and gives this advice, as stated in the prose translation by Samuel Butler:

?As he thus prayed, Minerva came close up to him in the likeness and with the voice of Mentor. ?Telemachus,? said she, ?if you are made of the same stuff as your father you will be neither fool nor coward henceforward, for Ulysses never broke his word nor left his work half done. If, then, you take after him, your voyage will not be fruitless, but unless you have the blood of Ulysses and of Penelope in your veins I see no likelihood of your succeeding. Sons are seldom as good men as their fathers; they are generally worse, not better; still, as you are not going to be either fool or coward henceforward, and are not entirely without some share of your father's wise discernment, I look with hope upon your undertaking. But mind you never make common cause with any of those foolish suitors, for they have neither sense nor virtue, and give no thought to death and to the doom that will shortly fall on one and all of them, so that they shall perish on the same day. As for your voyage, it shall not be long delayed; your father was such an old friend of mine that I will find you a ship, and will come with you myself. Now, however, return home, and go about among the suitors; begin getting provisions ready for your voyage; see everything well stowed, the wine in jars, and the barley meal, which is the staff of life, in leathern bags, while I go round the town and beat up volunteers at once. There are many ships in Ithaca both old and new; I will run my eye over them for you and will choose the best; we will get her ready and will put out to sea without delay.?

?Thus spoke Minerva daughter of Jove [Zeus], and Telemachus lost no time in doing as the goddess told him.?

There is an extensive literature about mentoring in business, including both popular and scholarly books and articles. So you can find Coaching and Mentoring for Dummies, by Marty Brounstein (2000) and ?Toward A Conceptualization of Mentoring,? by Anderson and Shannon, in Journal of Teacher Education, Vol. 39, No. 1, pp. 38-42 (1988), and many more.

Although some authorities use the terms mentoring and coaching synonymously, others make a distinction between them, perhaps the most common being that a coach is usually also a boss while a mentor is a senior colleague without supervisory responsibility. A coach is interested in the prot?g? (also called the apprentice? or the ?mentee?) as part of the team, while the mentor is interested in the prot?g? as an individual. In both cases the objective is to help the prot?g? to develop as a professional. It appears that the mentor-prot?g? relationship is presumed to be more personal than the coach-prot?g? relationship. For an interesting discussion about the debate over differences between mentoring and coaching, see Coaching and Mentoring: Practical Methods to Improve Learning, by Parsloe and Wray (2000).

It appears that a mentoring approach might be more Socratic in nature than a coaching approach. Coaching may be more instructive or even directive. A mentor might not tell a prot?g? what to do or how to do it, preferring instead to prompt the prot?g? to learn by thinking and researching. If a prot?g? went to a mentor with a question like: ?How do I choose the evaluation factors to include in a source selection plan?? or ?What evaluation factors should I include in the source selection plan?? a mentor might respond with a series of questions designed to provoke thought. ?Let?s think this through: Let?s begin by asking ourselves: ?What do we mean by value?? What is evaluation?? ?What, exactly, are you going to evaluate?? ?So, what is an evaluation factor?? And so forth. In the face of a prot?g??s mistake, a mentor might prompt the prot?g? to analyze what happened and to figure out why it was a mistake of fact or judgment.

Some young people may not have the patience for a Socratic approach to mentoring. In order to be a good mentor, one must have a good prot?g?, someone who wants to learn how to figure out what to do and how to do it, not someone who wants to be told what to do and how to do it. A good prot?g? does not go to the mentor every five or ten minutes with another question⎯What should I do next? A good prot?g? would never ask (or should be taught never to ask) what a word or term means. And a good mentor does not answer a question if he or she can get the prot?g? to find the answer through research and study. Handing out answers won?t help a prot?g? develop into an independent professional, someone capable of solving problems. It creates a dependency. A good mentor does not hand-hold the prot?g?, and a good prot?g? does not want hand-holding. (This can be a problem when a person is assigned to be a mentor and told whom to mentor.) A mentor can only be as effective as the prot?g? is willing.

Unless the mentor takes a directive approach, he or she is not responsible for the prot?g??s work. The prot?g? is responsible for that. The mentor guides, but does not lead or control. A coach does that. (When U.S.C. coach Pete Carroll tells his quarterback to pass, he means pass, dammit.) In the Odyssey, it is Telemachus who decides to go looking for his father. Minerva gives advice about preparations for the voyage, but she doesn?t take the helm. (Think Yoda and Luke Skywalker.)

Clearly, a mentor must be someone who is playing at the top of his or her game. After all, the first mentor was a goddess. A mentor for contracting interns must be wise, a first rate journeyman contract specialist, and a first rate communicator. He or she must be someone with skills and the ability to facilitate the development of those skills in others. How many such people are out there, I wonder? (And what does an office do if it doesn?t have one?)

If my notions about mentors and mentoring are ?right,? and if a mentor is a patient guide rather than a supervisor, then mentoring can be time-consuming. It?s more like cooking in a crockpot than in a microwave. And that might make ?true? mentoring problematical in an office in which the boss sees an intern more as a working body, a workload resource, than a work-in-progress. In my view, mentoring is not a workload management process; it is an approach to professional development.

Of course, my notions of mentors and mentoring may be too narrow, or even completely out to lunch. Maybe mentoring is something else. But I can only say what I mean at this point in time. Others who use the term and advocate mentoring should say what they mean. Then we?ll know what we're talking about.

Vern Edwards

Last week, at the 2008 Nash & Cibinic Report Roundtable, several panels addressed the issue of the quality of the acquisition workforce. The good news is that agencies are hiring some first rate interns. That?s also the bad news. We are bringing in some really smart and eager people, but we are not ready for them?to educate and train them and to prepare them to take over in the future. We are putting those bright new people into the hands of people with whom we are not entirely satisfied, into chaotic office environments that are leadership-free zones, and into an inadequate classroom training establishment. We are not ready for them, and that is a potential catastrophe, because the very best of them will not stick around if we don?t get our act together to make contracting work challenging and rewarding.

Smart people want to work with competent, inspiring people, people who know their field and who are excited and energized about their work, people who know how to mentor and develop the newcomers and are eager to do so. I have spoken with many terrific interns who were attracted to contracting by the sales pitch about being ?business advisors,? only to find that they are grinding away in a chaotic environment in which no one seems to be playing at the top of their game and working with people who spend most of their time clacking away at a computer keyboard instead of ?advising? anybody. If, when I was recruited, I had worked in the kind of office that I so often see today, I would not have stayed in the contracting field.

We need a tightly structured and closely monitored government-wide OJT system, government-wide mentoring guidelines and standards, and an entirely new classroom curriculum⎯a curriculum that emphasizes the basics. Look at the 2009 DAU Catalog course descriptions for CON 100 through CON 353, http://www.dau.mil/catalog/cat2009/catalog2009.pdf, pp. 35-46. Where among the Level I courses are the courses entitled: Introduction to Acquisition Functions and Processes, Introduction to Needs and Requirements, Introduction to Contract Types, Introduction to Contractor Selection and Contract Award, Introduction to Contract Pricing, Introduction to Commercial Pricing Practices, Introduction to Service Contract Pricing, Introduction to Contract Management? What do we have instead? We have: ?Shaping Smart Business Arrangements,? ?Mission-Support Planning,? ?Mission-Planning Execution,? ?Mission-Performance Assessment,? and ?Mission-Focused Contracting,? propagandistic bull----. CON 100, Shaping Smart Business Arrangements, is the very first course. The newbies get a grand total of four days in which to learn how to ?describe? and ?explain? various things, except how to research, understand, and apply the Federal Acquisition Regulation. And don't tell me that the content is there, even if the course titles are goofy, because it's not.

Look at the content of CON 235, Advanced Contract Pricing, which is on catalog page 42. (There is no Basic Contract Pricing.) Here are the course objectives:

Objectives: Those who successfully complete this course will be able to:

? Use inferential statistics and hypotheses testing;

? Analyze the relationship between two or more variables, describe that relationship using regression analysis, and defend the appropriateness of the model;

? Perform cost-risk analysis to support pre-negotiation objectives;

? Integrate quantitative techniques in a cost/price estimate;

? Conduct market research on a given procurement item; and

? Conduct a price analysis of a commercial item as broadly defined by Federal Acquisition Regulation criteria.

Now I ask you: What percentage of contract specialists are using inferential statistics, hypothesis testing, or regression analysis, say, even once a year? How many readers think that you can teach the average person in our innumerate society, who has not already passed a basic course in statistics, how to do all of the things listed in the course objectives in ten days, which is the length of the course? Can you show the average student how its done? Yes. Can you teach the average student how to do it? No. In any case, why do we want to teach them those things? If we want them to learn those things we should send them to college courses in probability and statistics and regression analysis. But we aren't developing social scientists, we're supposedly developing contract specialists. Instead or regression analysis (i.e., learning curves), why aren?t we teaching them how to calculate the annual cost of one service employee, including wages, fringe benefits, taxes, and insurance, and how to use that information to calculate the annual cost of a workforce comprised of X such employees. Why aren't we teaching them how various commercial sectors set the prices of their products and services? (Why aren't we making them read: Power Pricing: How Managing Price Transforms the Bottom Line and The Price Advantage?)

I could go on forever about the inadequacies of the DAU curriculum, and DAU thinks that I have. They developed a briefing about me for their Board of Visitors. One criticism of me was that, ?When all you have is a hammer, everything looks like a nail,? which I admit got a laugh out of me. There are good people teaching at DAU, people who know that DAU must change in order to be truly effective. The DAU curriculum is only a symptom, not a cause. It is a symptom of the lack of clear thinking, vision, and competent leadership in the acquisition community. Lacking those things, intern programs will ultimately fail to do anything more than put butts in chairs in front of computers, except for those very few in which first rate mentors are systematically at work. Unfortunately, there aren?t nearly enough first-rate mentors, which is why the new hiring efforts are tragic. We?re wasting our most precious possession: Our future.

If you agree, write to the Obama transition team, http://change.gov. I know, I know. But at least that?s doing something.