“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”
--Lewis Carroll, Through the Looking Glass
When Better Buying Power (BBP) 1.0 was first issued in September 2010, then Undersecretary of Defense for Acquisition, Technology, & Logistics (USD(AT&L)) Ashton Carter used the word “tradecraft” when describing one of the five “areas” of BBP initiatives. The area was called “Improving Tradecraft in Services Acquisition.” The initiatives that were subsequently identified under this area were:
· Create a senior manager for acquisition of services in each component, following the Air Force’s example
· Adopt uniform taxonomy for different types of services
· Address causes of poor tradecraft in services acquisition
· Increase small business participation in providing services
“Tradecraft” was also used by current USD(AT&L) Frank Kendall in the 2015 Defense Acquisition Performance Assessment:
It would seem that both Carter and Kendall are using “tradecraft” to mean the knowledge and skills for a particular occupation. However, that’s not what “tradecraft” actually means, nor is it commonly used in that sense. According to Merriam-Webster online dictionary (www.m-w.com), “tradecraft” means “the techniques and procedures of espionage”. The Oxford English Dictionary (OED) online (www.oed.com), gave three definitions of “tradecraft” dating as far back as 1812:
In “’Tradecraft’ Infiltrates the Language” lexicographer Neal Whitman describes the resurgence of “tradecraft” in the language:
Whitman uses a quote from Agent Maya in the movie Zero Dark Thirty to illustrate its most common use:
The article continues:
Regarding the OED definition, Whitman explains:
While it would not seem out of the ordinary to hear this use of “tradecraft” on an episode of Downton Abbey, the broad meaning of the word is virtually dead in Contemporary English. “Tradecraft” has settled into semantic idiosyncrasy. While I’m not above purloining a word from another field if I find no other word as apt, there are plenty of words that could have been used to describe the particular BBP area (“skill”, “expertise”, and “proficiency” come to mind). As acquisition professionals, we have a hard enough time communicating in the language of acquisition without adopting words from other fields (no matter how cool they sound). The Plain Language Action and Information Network (PLAIN) advises us to “understand your readers and match your language to their needs” (see http://www.plainlanguage.gov/howto/wordsuggestions/index.cfm). When choosing words, the objective should be to communicate, not to impress. Even if “tradecraft” meant what the authors of BBP thought it meant, its obscurity would still have made it a poor choice.
Eavesdropping, making dead drops, drycleaning--that's tradecraft. Creating senior manager positions in charge of service acquisition, adopting a uniform taxonomy for different types of services, increasing small business participation in service acquisition--that’s not tradecraft.
I read a lot of rules—proposed rules, interim rules, final rules, second proposed rules, second interim rules, etc. In fact, I decided a year or so ago that I would read all new rules in the Federal Register that affect the FAR or DFARS (I’m only a few rules behind as of this writing). In my reading, I noticed a strange phenomenon that went unexplained in the Federal Register notices—the letters “P” and “S” were getting smaller. That is, citations to FAR parts and subparts were being changed from “FAR Part X” and “FAR Subpart X.1” to “FAR part X” and “FAR subpart X.1” (Notice the lower-case “p” and “s”). I wondered what was going on. Who decided that lower case “p” and “s” were now correct? Why wasn’t the FAR Council following its own rules in the FAR Drafting Guide or at FAR 1.105-2( c)(3) (recently amended—more on that later), which both showed the correct way to cite a part or subpart is with an upper-case “P” or “S.”
I also submit a lot of public comments. My comments usually are usually technical in nature—I don’t get into whether this or that policy is good or bad for the Government. They are usually of something like “If you mean this, then I suggest you say it this way.” As such, I started pointing out that use of the lower-case “p” in “part” and “s” in “subpart” was inconsistent with both the FAR Drafting Guide and FAR 1.105-2( c)(3). Yes, important stuff. I was convinced that there was some unreasonable bureaucrat in the labyrinthine review process of FAR rules who would arbitrarily withhold approval until the “p” and “s” were lower-case. All they had to do was simply read either the FAR Drafting Guide or FAR 1.105-2( c)(3) and they would be forced to relent, I thought.
Eventually, I found out that there was more to the story. The change from upper-case to lower-case could be traced back to the 2008 version of the Government Printing Office Style Manual. The manual contains an entire chapter of capitalization rules (Chapter 3). Rule 3.9 states as follows:
The list of examples following Rule 3.9 (or is it “rule 3.9”?) contains the entry “part I”. Chapter 4, which contains a list of capitalization examples, contains the entry “part 2, A, II, etc.; but Part 2, when part of title: Part 2: Iron and Steel Industry”. Ok, so there was no unreasonable bureaucrat to blame. However, the GPO Style Manual was inconsistent with both the FAR Drafting Guide and FAR 1.105-2( c)(3). “What a crisis!”, I thought.
This brings us to a technical amendment published in Federal Acquisition Circular 2005-60 (77 FR 44065) that formally amended FAR 1.105-2( c)(3) to illustrate the “correct” way to cite a part or subpart of the FAR:
Crisis averted. However, there still is a lot of text within the FAR that uses upper-case when referencing parts and subparts. These co-exist in the FAR with citations of parts and subparts that are lower-case. For example, FAR 4.1402( b ) starts with:
The very next paragraph, FAR 4.1402( c) states:
It’s fair to say that my prodding probably had something to do with the change in FAR 1.105-2( c)(3). However, in retrospect, I’m not sure that the desired result—consistency—was achieved.
It seems that every few months we see a new article, report, or hear testimony predicting a mass exodus of "experienced" 1102s from the Federal workforce. Citing workforce data, the conclusion that is commonly drawn is that a "crisis" will result. If we just look at numbers it would seem that this would be a reasonable conclusion. However, has anyone given any thought to the caliber of the 1102s that are leaving the Federal workforce and those that are entering? Do we really need one new 1102 for every 1102 that leaves?
Consider the fact that one must now have a college degree to even be considered for an 1102 position, whereas most of the "experienced" 1102s that will soon be leaving did not have to meet such requirements. Many "experienced" 1102s entered the Federal workforce as clerks, typists, secretaries, etc., and stuck around the organization long enough to move into an 1102 position. That's not to say that these folks did not work hard or that they don't deserve their positions. I'm sure each office has its own success story to share in this regard.
In my experience, I have worked with "experienced" 1102s and I currently teach newbie 1102s. To generalize, the newbie 1102s are smarter, more motivated, and have more respect for the laws and regulations that govern their agency's acquisitions. Give me an office full of 1102s with less than 10 years of experience and we will work circles around an office of "experienced" 1102s with twice the staff. Our processes will be more streamlined, our employees more productive, and our acquisitions fully compliant with law and regulation.
Nothing is more discouraging than to hear stories of how newbie 1102s return to their offices after training, intent on making the necessary changes to ensure that their acquisitions comply with the FAR, only to effectively be told by "experienced" 1102s "I don't care what the FAR says, this is the way we've always done it and we're not about to change." I say good riddance to those folks.
To be fair, there are some "experienced" 1102s who are excellent--the Government will suffer when these folks leave. However, I would not place the majority of "experienced" 1102s in this category. When I hear about the impending exodus of "experienced" 1102s and the ensuing crisis, I'm reminded of a line from an REM song..."It's the end of the world as we know it...and I feel fine." How do you feel?
An interesting aspect of the new socioeconomic parity rules issued in Federal Acquisition Circular 2005-50 (see 76 FR 14566) is that we now have some scenarios where a contractor is better off not being a small business concern. The Discussion and Analysis section of the Federal Register notice contains the following statement:
This policy is implemented at the new FAR 19.203( c ). Further, the new FAR 19.203(d) states the following:
Thus, for acquisitions over the simplified acquisition threshold (SAT), an agency must first consider the 8(a), HUBZone, SDVOSB, and WOSB programs (the latter recently being added by FAC 2005-51). If a requirement can be satisfied under one of these programs, the agency must use one of these programs. The agency is free to choose which of the four programs to use. If a requirement cannot be satisfied under one of these four programs, then the agency must consider a small business set-aside. If the requirement cannot be met by means of a small business set-aside, then the agency may solicit offers on an unrestricted basis.
Let?s assume the following scenario. There?s a requirement over the SAT and under the threshold for a HUBZone sole source (currently $6.5 million for manufacturing and $4 million for other acquisitions) that can be satisfied by three potential offerors. We?ll call them Offerors A, B, and C. Offeror A is a HUBZone small business concern and Offerors B and C are plain old small business concerns. Pursuant to FAR 19.203( c ), the agency would be required to proceed with a HUBZone sole source, since the HUBZone program takes precedence over small business set-asides. Offerors B and C would not have a chance to compete for the requirement.
Now let?s assume the same scenario, except Offerors B and C are large businesses. In this case, the agency would not be required to proceed with a HUBZone sole source. Offerors B and C would have an opportunity to compete for the requirement, if the agency chose not to proceed with a HUBZone sole source. FAR 19.203 gives priority to HUBZone sole source over small business set-asides, but is silent on the relationship between a HUBZone sole source and full and open competition (ditto for 8(a) sole source and SDVOSB sole source). FAR 19.1306 simply states:
According to FAR 2.101, ?may denotes the permissive.? ?May? is also used at FAR 19.1406 regarding SDVOSB sole source awards.
It would be reasonable to infer that competitive 8(a), HUBZone set-asides, and SDVOSB set-asides take precedence over full and open competition, because the conditions permitting any of these would imply that the conditions for a small business set-aside were present. However, the same cannot be said for HUBZone or SDVOSB sole source. The conditions permitting either a HUBZone or SDVOSB sole source do not imply that the conditions requiring a small business set-aside exist.
So there you go. Sometimes you?re better off being large. It will be interesting to see if the FAR Council will leave things as they are when the rule becomes final. If they do, we can expect this to be the next great debate in small business program policy.
NOTICE: The table originally posted contained an error in Step 4 of the HUBZone Program Decision Table. The entries for "Yes" and "No" were reversed, which implied that a HUBZone sole source was only permitted below the simplified acquisition threshold. In fact, the opposite is true. This has been corrected.
I created a Small Business Decision Table to help navigate the new small business rules contained in the FAR. Note that there is a lack of clarity on some issues in the interim rule on Socioeconomic Parity (implemented at FAR 19.203) and, as a result, I had to make some assumptions until these issues are clarified (hopefully) in the final rule. Specifically, I assumed that when the FAR says that the contracting officer "shall consider" course of action A before proceeding with course of action B, that means that course of action A would be required if the conditions permitting both course of action A and B were present. For example, FAR 19.203( c ) states:
I interpret that to mean that if a contracting officer can satisfy a requirement using the 8(a), HUBZone, SDVOSB, or WOSB Programs, then she must do so?she has no discretion to bypass these programs and proceed with a small business set-aside because she thinks doing so would be in the best interests of the Government.
In public comments submitted to the FAR Councils, the Professional Service Council criticized the use of "shall first consider" at FAR 19.203( c ) as follows:
I would prefer that the FAR Councils not attempt to define "adequate consideration," but instead cut to the chase. If the intent is to require use of the 8(a), HUBZone, SDVOSB, and WOSB Programs if possible, then state the rule using unambiguous language. For example, FAR 19.203(d) states:
Nobody is going to argue over what that means.
Lastly, there is an error in FAR 19.203 in that it implies that the SBA rule that once a requirement is in the 8(a) Program it must stay in the 8(a) Program only applies over the simplified acquisition threshold. That's wrong?it applies regardless of dollar value. The SBA regulations make no such distinction regarding dollar value. I'm told that this will be corrected in the final rule.
WARNING: OMB issued a memorandum on July 10 directing executive agencies to temporarily disregard the two GAO decisions discussed below until a full review can be conducted. Until such a review is conducted, do not use the table.
Depending on your point of view, two recent GAO decisions have either clarified or muddied our understanding of the rules pertaining to the order of priority for small business programs. In International Program Group, Inc., B-400278; B-400308, September 19, 2008, the GAO held that HUBZone set-asides take precedence over service-disabled veteran-owned small business (SDVOSB) set-asides and SDVOSB sole sources (a highly criticized decision). In Mission Critical Solutions, B-401057, May 4, 2009, the GAO held that HUBZone set-asides take precedence over the 8(a) program. In both cases, the GAO sought, and disagreed with, the SBA's interpretation of the relevant statutes.
Based on these two decisions, and the current rules that in FAR Part 19, I have created a table to assist in determining the order of priority for small business programs. Instructions and relevant references are provided in the table. The table assumes that the acquisition exceeds the simplified acquisition threshold.
Take a look and let me know if you have any questions or comments.
In a recent blog post, Steve Kelman took issue with GSA for the way they intend to evaluate past performance under the One Acquisition Solution for Integrated Services (OASIS) procurement (see “GSA is Saying What?"). Specifically, the evaluation scheme in the draft request for proposals (RFP) shows that GSA intends to weigh past performance with federal customers more heavily than past performance with nonfederal customers (the draft RFP is available for viewing on FedBizOpps). Kelman says that GSA’s approach is “not a good idea” and is hopeful that the OASIS program will “rectify this mistake.”
Kelman seems to acknowledge the uniqueness of the Government as a buyer and describes the accompanying problems as follows—
Further, Kelman states—
Kelman’s argument boils down to this—nontraditional Government contractors (what Kelman terms “commercial firms”) would be just as good, if not better, than traditional Government contractors (what Kelman terms “government-unique” contractors) at performing the work. That may be so, but it would be naïve to ignore the risk posed by an offeror with no Government contracting experience. Such an offeror will be faced with having to comply with a plethora of rules and regulations that would be new to them. In a blog post, Vern Edwards describes the situation as follows (see “Tips for the Would-be Clueless Contractor”):
As a buyer, there is value in an offeror having sold to you before—if for no other reason that the parties have a better idea of what to expect from each other. If this were not true, preferred supplier programs would not be so popular with the “commercial firms” that Kelman advocates for. If you are an extraordinarily unique buyer, like the U.S. Government, there is even greater value in an offeror that has sold to you before.
I don’t fault GSA for having a preference for offerors with more Government contracting experience. This is especially true given that the OASIS contracts will be noncommercial and will provide for orders on a cost-reimbursement basis. GSA did not make Government contracting as complicated for contractors as it is. If we want to criticize the procurement system, there’s plenty to talk about. But we shouldn’t react with feigned surprise and indignation when an agency is taking reasonable steps to operate within it.
It’s time we rethink our approach to the training problem. Our traditional approach is to dictate a blueprint of training classes that must be followed in order to obtain prescribed levels of certification. To put it in acquisition terms, we’ve been using a design specification. What if we were to use a performance specification instead? What might that look like? Before answering these questions, we should identify what it is we are trying to achieve with training.
The purpose of training is to make the trainee proficient in performing one or more defined learning objectives by means of specialized instruction and practice. A learning objective consists of three parts—an action, a condition, and a standard. For example, someone new to federal contracting will likely receive training to select FAR provisions and clauses (action) given a set of facts about an acquisition and access to the FAR (condition) (the implied standard would be “correctly”). It follows that if an individual already behaves in the prescribed way under the prescribed conditions to the prescribed standard, then training would be unnecessary for that individual—they’ve already attained the learning objective.
Under the “design specification” training model that we currently use, there is an implied assumption that an individual cannot attain the requisite learning objectives without following the prescribed blueprint of training classes. Further, there is no method of demonstrating the attainment of the requisite learning objectives prior to the prescribed training classes. As a result, everyone must take the required training classes, regardless of individual necessity. Considering the resources involved in carrying out such a program, this is an expensive proposition.
While the implied assumption of the “design specification” training model may prove true in some cases, a more reasonable assumption would be that some individuals need to follow the prescribed training blueprint and some do not. Those that do not would include those that have already attained the requisite learning objectives by other means and those that could without following the prescribed training blueprint. Thus, the challenge would be to identify those that don’t need a particular training class before requiring their attendance at the training class.
What if we borrowed the thinking behind performance-based acquisition and applied it to the training problem (i.e., a “performance specification” training model)? That is, instead of dictating how the workforce is to attain requisite learning objectives, we specify the requisite learning objectives (performance outcomes) and method of assessment, and let the workforce decide how they are going to attain them. Some workforce members may choose a program of self-study, others may study in informal groups, some contracting offices may develop their own ongoing training programs, etc. Still others may choose to follow the existing blueprint of training classes. Regardless of how one attains the requisite learning objectives, all are held to the same standard using the same method of assessment.
For an illustration of how such a model might look, consider the profession of actuarial science. Beanactuary.org contains the following description:
Like other top-ranked professions (such as law and medicine), one must pass a set of examinations to achieve professional status as an actuary. Unlike other professions, in actuarial science you’ll have the opportunity to work as an actuary while completing the examination process—employers often allow study time during working hours, pay exam fees, provide internships, and even award raises for each exam passed. Though, to get the best start on a rewarding career, many soon-to-be actuaries begin taking exams while still in college. Of those that do, most achieve associateship in three to five years. All candidates acquire a core set of knowledge from required preliminary exams. The preliminary exams and Validation by Educational Experience requirements are the starting points for an actuarial career.
To attain an “Associate of the Society of Actuaries” (ASA) designation from the Society of Actuaries, one must pass exams in probability, financial mathematics, models for financial economics, models for life contingencies, and construction and evaluation of actuarial models. In addition, there is one required e-Learning course and a required one-day seminar in professionalism. After attaining the ASA designation, one typically pursues a “Fellow of the Society of Actuaries” (FSA) designation within one of six specialties: corporate finance and enterprise risk management, quantitative finance and investment, individual life and annuities, retirements benefits, group and health, and general insurance. To attain the designation, the FSA candidate must take 3-4 more exams unique to the specialty, complete four e-learning courses, and attend a three-day case-based fellowship admissions course that requires each candidate to deliver an oral presentation on a topic within the field. In case you weren’t keeping track, that’s a total of four days of required attendance in classrooms to achieve the highest designation in the field. In contrast, DoD contract specialists must attend 32 days of classroom training to attain the lowest level of certification.
What if to attain level 1 certification in contracting, one had to pass exams in, for example: acquisition planning, contracting methods, contract types, socioeconomic programs, and contract administration, and attend a one-day seminar on ethics? After level 1, contract specialists would choose a specialty in which they would pursue Level 2 certification. Specialties would be, for example, major system acquisition, research and development contracting, construction and A/E contracting, service contracting, IT acquisition, acquisition of commercial items, contract administration, etc. To attain Level 2 certification, contract specialists would have to pass a series of exams unique to that specialty. For example, to attain Level 2 certification in service contracting, there would be exams on specification of service requirements, source selection for services, pricing services, and service contract administration. There could also be a Level 2 admissions course where the candidate would have to submit and present a paper on a topic related to their specialty.
If nothing else, use of the performance specification training model would cost less than the design specification model currently in use. I would go as far as to say that, on the whole, the workforce would be at least as competent as it is now.
What’s your opinion? We’d like to know.
Section 1331 of the Small Business Jobs Act of 2010 (Pub.L. 111-240) recognizes the significant opportunities that exist to increase small business participation on multiple award contracts and the ability of set-asides— the most powerful small business contracting tool—to unlock these opportunities. Under Section 1331, Federal agencies may: (1) set aside part or parts of multiple award contracts for small business; (2) reserve one or more awards for small businesses on multiple award contracts that are established through full and open competition; and (3) set aside orders under multiple award contracts awarded pursuant to full and open competition that have not been set-aside or partially set-aside, nor include a reserve for small businesses.
You can download the article "Section 1331 Authorities: A Primer" by clicking here.
I recently heard from a contractor regarding an experience he had with reverse auctions. A federal agency was conducting a reverse auction using FedBid and he decided to compete (FedBid, Inc., provides a service whereby federal agencies can conduct reverse auctions). Although he submitted several bids, he ultimately lost the reverse auction. When he checked to see who had won, he was surprised to see that the federal agency that was in need of the required items was the low bidder. In other words, the federal agency was submitting bogus bids in an effort to get the contractor to reduce his bid price. The federal agency then contacted him and offered to purchase the items from the contractor at his lowest bid price. Feeling that he had been duped, he told them to get lost.
The tactic employed by the federal agency, called phantom bidding, is not new. Many view the practice as unethical while others see it as a legitimate tactic. In regular auctions, the legality of seller participation in bidding varies from state to state. For those states that allow it, sellers typically must disclose that they reserve the right to participate in the bidding.
In any case, should the Federal Government be allowed to place phantom bids in reverse auctions? Would your answer be different if the disclosure of the practice was required prior to the reverse auction?
It's been almost 10 months since the FAR Council issued the last Federal Acquisition Circular (FAC). The streak of inactivity will be broken on November 6 when FAC 2005-96 will be published. The FAC contains a single rule that removes the Fair Pay and Safe Workplaces Rule. But that's not what makes the rule so remarkable. Item 16 of the FAC makes changes to the provision at FAR 52.204-8 as follows:
Notice something strange? See that link to a YouTube Video? That's really there. It's in both the html and pdf versions of the FAC. It is officially contained in the FAR. What is the video? I won't spoil it for you--click and find out.
When discussing the evaluation of competitive proposals with my students, I make a point of asking the following two questions (in order):
1. Are agencies required to evaluate proposals?
2. Are agencies required to rate proposals?
Usually, students respond affirmatively to question #1 and are able to support their answers by citing FAR 15.305(a), which states "An agency shall evaluate competitive proposals and then assess their relative qualities solely on the factors and subfactors specified in the solicitation." However, confusion sets in when I follow with question #2 and students read the very next sentence of FAR 15.305(a), which states "Evaluations may be conducted using any rating method or combination of methods, including color or adjectival ratings, numerical weights, and ordinal rankings." Clearly, the language regarding use of a rating method in conjunction with an evaluation is permissive, not mandatory.
"What's the difference?", "Why wouldn't you rate proposals?", "How do you decide who is the better value if you don't rate the proposals?" are typical student responses. These are all good questions.
Evaluation v. Rating
A good way to understand the difference between evaluation and rating is to look at a typical article in Consumer Reports (CR). Here?s an example of a summary evaluation of a new car?s ?Driving Experience? (model name omitted):
?Driving Experience? was one evaluation factor under the heading ?Road Test.? CR also evaluated ?Reliability?, ?Safety?, and ?Owner Satisfaction?, to name a few. According to the Web site, there were over 50 different tests and evaluations performed on the car. Presumably, this produced a mountain of data. However, the typical car buyer does not have the time to peruse the data, nor do they fully understand it. As such, CR established a 100-point scale and a set of predetermined criteria to translate test and evaluation results into scores on the scale. In addition, they partitioned the scale into quintiles and assigned an adjective to each (Poor, Fair, Good, Very Good, and Excellent). Using this rating method, the car described above received a score of 74 and an adjectival rating of ?Very Good.? In this case, CR used a combination of rating methods (numerical scoring and adjectival rating) to translate complex evaluation results into an easily consumable format for its readers.
But Teach, Why Wouldn?t you Rate Proposals?
First, it's not required. Besides that, the results of the evaluation may not be particularly complex. For example, let?s say I used price and performance risk as my evaluation factors in a source selection. Performance risk had two subfactors?past performance and experience. In the solicitation, I instructed offerors to submit a one-page write-up and customer point of contact for each of their relevant contracts. The evaluation of performance risk consisted of an assessment of the write-ups as well as interviews with the customer points of contact to validate the offeror?s claimed experience as well as to ascertain how well the offeror performed. The evaluators then wrote an evaluation of each offeror?s performance risk, documenting the relative strengths and weaknesses of each. Why would it be necessary to translate this information into a rating? How would this aid my decision-making? I?m not going to be faced with volumes of information.
Another reason I would avoid the use of ratings is when I was dealing with evaluators that didn?t understand them. In my experience, when ratings are used, ratings are all you get. I can recall receiving technical evaluations that had nothing more than the word ?Excellent? (when I used adjectival ratings) or ?95? (when I used a numerical rating). I wanted an evaluation and I got a rating.
How do you decide who is the better value if you don't rate the proposals?
The answer is the same way that you would if you did rate proposals?by performing a comparative assessment of proposals against all source selection criteria in the solicitation. A source selection authority (SSA) relies on ratings to make their source selection decision at their peril. See, for example, Si-Nor, Inc., B-282064, 25 May 1999, where the source selection authority based her decision to award to a higher-priced offeror on the fact that the offeror had a higher past performance rating. One of the reasons the protest was sustained was because the SSA did not describe the benefits associated with the additional costs, as required by FAR 15.308. ?Because they had a higher rating? will typically fail to meet this requirement.
So we shouldn?t use ratings?
Not necessarily. The point is that you have discretion to use or not use ratings. Most people don?t know why they use ratings other than the fact that it?s traditional where they work. The decision to use (or not use) ratings should result from thoughtful deliberation, not a successful copy and paste from your office mate?s old source selection plan. A wise man once said ?Tradition is the hobgoblin of mediocre minds.?
There seems to be a closely held belief by some in the Federal contracting community that the FAR requires the contracting officer to perform a price analysis before awarding any contract. CON 111 used to contain the following statements:
A number of my colleagues, both practitioners and instructors, would agree with those statements. Further, I have had a number of students pre-programmed by their contracting offices to believe that price analysis is always required.
What does the FAR say?
Subparagraphs a(2) and a(3) of FAR 15.404-1 discuss the requirements for the performance of price and cost analysis:
Note that a(2) qualifies the requirement for price analysis with the language "when cost or pricing data are not required." To interpret a(2) to mean that price analysis is always required would render meaningless the qualifying language in the statement ("when cost or pricing data are not required"). Such an interpretation would be inconsistent with the fundamental principle that statutes and regulations must be read and interpreted as a whole, thereby giving effect to all provisions. See Waste Mgmt. of North Am., B-225551, B-225553, Apr. 24, 1987, 87-1 CPD ? 435 at 5.
Subparagraph a(3) sets forth the requirement for performing cost analysis (i.e., when cost or pricing data are required) and contains the statement that "Price analysis should be used to verify that the overall price offered is fair and reasonable." Does this statement require price analysis when cost or pricing data are required? To answer this, we need to review the definitions of "should" and "shall" in FAR 2.101:
Thus, when cost or pricing data are required, the contracting officer is 1) required to perform cost analysis and 2) expected to perform price analysis unless it's inappropriate for a particular circumstance. That's different than stating that the contracting officer must perform both price and cost analysis when cost or pricing data are required. The implicit acknowledgement that price analysis could be inappropriate in a particular circumstance (and thus, not required) contradicts the assertion that price analysis is always required.
Why the Confusion?
I'm not sure why some folks think that price analysis is always required. Perhaps they haven't read the FAR carefully. I recently had my students read subparagraphs a(2) and a(3) and asked them whether it was true or false that price analysis was always required. They were split about 50% true 50% false. When I had the students who answered "False" re-read a(2) and a(3), I was able to get the split to about 15% true 80% false and 5% I don't know. I can live with that.
A more likely reason behind the existence of this myth is that an uncomfortably large number of people in our field do not know what the FAR says because they do not read it. Instead, they are guided by, and they repeat, rumors.
If the preconceived notions that our students are bringing to the classroom is any indication, there's a good deal of myth-information being spread regarding indefinite-delivery indefinite-quantity (IDIQ) contracts. The one belief that I want to focus on today deals with obligating the contract minimum upon award of an IDIQ contract.
This belief usually stems from a fundamental misunderstanding of the difference between creating and obligation and recording an obligation. The difference is explained in Chapter 7 of the GAO Redbook (p. 7-8):
When a contracting officer awards an IDIQ contract, she has obligated the Government to purchase the contract minimum. She has created an obligation. When that same contracting officer cites a long line of accounting (containing the appropriation citation) and a dollar amount on the award document, she has recorded an obligation (when she distributes the award document to her accounting office, they will record the obligation in the agency's books).
Let's say that the contracting officer awards the IDIQ contract, but does not record the amount of the Government's obligation on the award document. What has happened? An obligation has been created, but has not been recorded. Is there a problem with that? (Yes, go back and read the bolded sentence in the citation that I provided above). The problem is that the contracting officer has caused her agency to violate the ?recording statute,? 31 USCA ? 1501, which sets forth the criteria for recording an obligation as follows:
In the second example I provided, there exists a binding document that meets the criteria of (1)(A) and (B.) (the IDIQ contract), but no obligation would have been recorded. The agency would have underrecorded its obligations. That's bad. Chapter 7 of the GAO Redbook (p. 7-6) states the following regarding under- and overrecording of obligations:
I always urge my students to take a course in Federal Appropriations Law at some time in their career--the sooner the better. Unlike Federal Acquisition Law, where the acquisition team is permitted to "assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority", there is very little flexibility when it comes to applying the rules Federal Appropriations Law.
Some of you were confused when I classified the following statement as myth-information in the Federal Contracting Myths thread:
Let me explain where I was coming from.
In April of 1994, OFPP used a variation of the word neutral with the term "past performance" in a Federal Register notice soliciting comments on their proposed pilot program to increase the use of past performance information in source selections. The notice stated:
In November of 1994, the Federal Acquisition Streamlining Act (FASA) (Public Law 103-355) amended 41 USC 405 to include a new subsection (j) implementing the Government's policy of considering past performance in source selections. (j)(2) contains the following language:
The FAR Council attempted to "plain language" the statute when it came time to implementing the new policy. In a proposed rule implementing the past performance information policy, FAR 15.608(a)(2)(iii) contained the following statement:
When the final rule came out in March 1995 (FAC 90-26), the proposed rule was changed to read as follows:
The background statement of the FAC stated that the final rule "clarifies that firms lacking relevant performance history shall receive a neutral evaluation for past performance." (60 FR 16718-01) However, since there is no discussion of the comments received in response to the proposed rule, it is unclear why the proposed rule needed clarification.
Apparently, the FAR Council thought that the rule needed even further clarification and proposed the following definition of a neutral evaluation in the first proposed FAR Part 15 Rewrite:
However, this only muddied the waters. The background of the second proposed rule provides the following explanation:
The second proposed rule also contained a valiant attempt to define a neutral past performance evaluation as follows:
This language failed to clarify anything, so in the final rule the FAR Council said the heck with it, let's just parrot the statute:
This final rule gave us the rule as it is stated now at FAR 15.305(a)(2)(iv):
So the FAR Council took the language of the statute, attempted to clarify it by introducing the term "neutral past performance evaluation", tried again to clarify it by defining "neutral past performance evaluation", confused a lot of people, then gave up. "Neutral past performance" was removed from the FAR over 11 years ago after a brief and infamous appearance. Despite this fact, it remains popular in the federal contracting vernacular.
First, I'd like to thank everyone that contributed to my thread seeking myth-information in federal contracting. I culled another 20 pieces to add to the seven that I was able to come up with. If you come across any or are able to think of any more, please add to the thread or send me a message.
Second, I'd like to comment on something that Retreadfed wrote in the aforementioned thread:
While I hadn't thought about it, I like the distinction that Retreadfed made. Myth-information exists due to ignorance of the rules. If you want to read about stupidity, there's an excellent compilation of it in DoD's Encyclopedia of Ethical Failures (don't miss the 2008 update).
Now, back to the point of this entry. Vern Edwards contributed the following nugget to the misinformation thread:
No doubt this belief is the result of overlawyering and/or taking the "better safe than sorry" approach to source selection. Let's take a look at what the FAR says concerning this subject. FAR 15.201(f) states:
As you can see, the scope of the information that must be shared with all offerors when it is shared with one offeror prior to receipt of proposals is much narrower than "anything that you say." However, it is common practice at some contracting activities to record every question received and answer provided regarding an RFP (no matter how mundane) in an amendment and issue to all prospective offerors (the better safe than sorry approach). While such an approach is compliant, it is not required and makes for long amendments and the excessive provision of information.
Regarding what can be said during discussions, FAR 15.306(d)(1) states:
Tailored. This necessarily means that you are not required to discuss the same areas with each offeror. In Trident Sys., Inc., Comp. Gen. Dec. B-243101, the rule was stated as follows:
Exchanging information with offerors involves thoughtful judgement and discretion. Unlike some other areas of contracting, it is not a mechanical exercise governed by a simple mandatory rule. Those who shy away from using their judgment and discretion (probably to avoid criticism) are always in search of mandatory rules (even if none exist) such as "During a source selection, anything that you say to one offeror you must say to all other offerors." This contributes to the persistence of myth-information. Don't be one of those people.
The myth about communication being 93% nonverbal probably didn't start in the contracting field, but we are partly responsible for its spread. This is especially true when it comes to the subject of contract negotiation. The course manual for CON 100 used to state that communication was 90% nonverbal as a matter of fact. A speaker at a recent conference that I attended used a figure of 93% in a presentation on contract negotiation. The current Contract Pricing Reference Guides contain a variation of this claim in a chapter titled "Nonverbal Communication" (Volume V, Chapter 5):
Whenever this claim is made, it's almost always accompanied by a statement that it is supported by "research", but what "research"?
Well, there actually was a research study done in 1967 that found that 93% of communication was nonverbal...under very specific conditions. The following excerpt from The Virtual Handshake explains just what the study found:
Mehrabian's exact words appear in a description of his book "Silent Messages" -- A Wealth of Information About Nonverbal Communication (Body Language):
For a thorough debunking of this myth, see Contributions of Different Modalities to "Content".
Nonverbal communication is important in a contract negotiation. Eye-rolling usually communicates disagreement. A long sigh usually communicates frustration. Busting out laughing at the other party's counteroffer can be an effective way of communicating your intent to consider it. However, unless the parties intend to discuss their emotions in lieu of contract terms, they shouldn't go in to the negotiation thinking that 93% of the message they are sending is nonverbal. If they do, they'll find themselves focusing too much on the form of the negotiation instead of the substance.
As contracting professionals, we all need to do our part to stop the spread of this common communication myth.
I have recently noticed an interesting phenomena regarding how the term "statement of work" is being used and understood in practice. If what many of my students are being taught in their contracting offices is any indication, "statement of work" (SOW) has come to mean a work statement that is not performance-based--the opposite, if you will, of a "performance work statement." Why is this happening? The definition of "performance work statement" (PWS) at FAR 2.101 could not be more clear:
A PWS is an SOW--an SOW for performance-based acquisitions.
In researching the origin of this phenomena, I came across the "A COR's Guide to Statements of Work, Performance Work Statements, and Statements of Objectives". Citing nothing, the author asserts the following regarding SOWs:
The guide goes on to explain the difference between the SOW and the PWS:
Sigh. Believe it or not people were charged for this misinformation--the fine print of the guide says that it is part of a subscription service. Ironically, the article refers the reader to the "Seven Steps" library, which also contains the DoD Handbook for the Preparation of Statement of Work (SOW) (MIL-HDBK-245D). Paragraph 3.1 of the Handbook contains the following description of the purpose of the SOW:
The truth is that some SOWs are performance-based, some are not. We refer to those that are as PWSs.
"You can't be distracted by the noise of misinformation."
In my career as a contracting professional and now an educator, I have come to appreciate the growing body of misinformation in Federal contracting. Contracting misinformation is pervasive. You can see it in the popular press, periodicals dedicated to the contracting profession, in posts at the Wifcon forum, internal policy memoranda at a Government agency, etc. As I'm writing this, somewhere a senior contracting professional is imparting misinformation on a newbie, and the newbie is believing him.
A certain amount of misinformation is understandable in Federal contracting, given the volumes of regulations and case law that govern Federal acquisition. I can accept that (it keeps me employed). However, certain contracting misinformation seems to resist any efforts to eradicate it. This class of misinformation has its origins in the operational contracting offices of the Federal Government and is usually created in the form of rules that have no basis in law or regulation, but sound like they do (especially when spoken by senior contracting professionals, legal counsel, or contract policy office personnel). It is this class of misinformation that is most aptly described as contracting "myth-information."
As a service to my profession, I will attempt to bust some of the more popular contracting myth-information that I have heard. I've created my own list of myth-information and am collecting more from participants in the Wifcon discussion forum (thank you to those that have contributed). I'll try to debunk at least one myth per blog entry. If you think you have heard some contracting myth-information and would like to share with others, please contact me and I will include it in the blog. Think of the blog as a clearinghouse for busted contracting myth-information.
Did you ever wonder about the type of debate that goes on before an acquisition rule becomes final and is incorporated into the Federal Acquisition Regulation System? This information can be found in the Background section of the final rule when it appears in the Federal Register. I make a point of reading this section whenever a new rule comes out because it tells the story behind the rule?who the rule is going to affect, who is happy about the rule, who is upset about the rule, who thinks it should be scrapped, what the rule makers were thinking when they created and revised it, etc. This section is also a valuable reference when you are trying to interpret a rule in the FAR System that is unclear or ambiguous.
Typically, the comments received range from pointing out errors in the rule to blatantly self-serving statements from private parties either praising the wisdom of the rule or explaining how the rule will inevitably bankrupt small business concerns, cost the Government more money, and lead to a widespread malaise in the country. The rule makers' responses to the comments range from nonresponsive or evasive to well-written explanations of why the comment is or is not valid (I've generally had good responses to comments that I have submitted for consideration).
DoD recently issued a final rule revising the existing rules on the restriction on the acquisition of specialty metals (DFARS Case 2008-D003). The rule contained a straightforward definition of "high-performance magnet" in the new clause at DFARS 252.225-7009, Restriction on Acquisition of Certain Articles Containing Specialty Metals, as follows:
Apparently, the Background statement pertaining to this definition that accompanied the interim rule drew criticism from a number of interested parties. The comments received went so far as to suggest that the definition, as written, would pose a threat to national security:
DoD's response to these comments brought me back to high school physics class (God bless you, Mr. Michel). Here is an excerpt:
I don't know if that is right. However, I did learn a new word (anisotropy) and I now know something about the magnetic properties of rare earth metals and transition elements that I didn't know before.
You may ask: "what good is knowing this?" Other than trying to make someone think that you are smarter than you actually are, there may be no value. However, as evidenced by the discussion in the Background section of the rule, there was a great deal of deliberation about the final definition. A contracting officer may encounter situations where he or she needs to apply the new rule and knowing that the definition of "high-performance magnet" is very narrow will help.
Take a look at the Background section of an acquisition rule the next time one comes out (FAC 2005-036 was just issued last week). Not only will it add some life to the rule as it appears in the regulation, you may learn something.
In TYBRIN Corporation, B-298364.6; B-298364.7, March 13,2007, the GAO held that an offeror's cost estimate that indicated that it would not perform 51% of the contract work on a small business set-aside rendered the offer unacceptable, even though the offeror did not explicitly take exception to the solicitation's limitation on subcontracting clause (FAR 52.219-14) and the SBA granted the offeror a certificate of competency. The GAO reasoned as follows:
As a result, the Air Force reopened discussions with offerors and sought revised proposals. This action was unsuccessfully challenged in the Court of Federal Claims (see The Centech Group, Inc., v. U. S. and Tybrin, Inc., 07-513C, Filed December 7, 2007, Refiled December 13, 2007) and unsuccessfully appealed to Court of Appeals for the Federal Circuit (The Centech Group, Inc., v. U. S. and Tybrin Corporation, No. 08-5031, February 3, 2009).
Thus, it would seem that we have a general rule that if information in a cost estimate indicates that an offeror will not comply with a material term of a solicitation, then the offeror has implicitly taken exception to that term of the solicitation, which would make their offer unacceptable (or nonresponsive).
However, in Group GPS Multimedia, B-310716, January 22, 2008, the opposite conclusion was reached. In that case, the successful offeror submitted a cost estimate that contained a proposed labor rate that was below the labor rate stated in the Department of Labor Wage Determination (the contract would be subject to the Service Contract Act). The protester argued that this gave the awardee an unfair price advantage. The GAO held as follows:
This raises several questions. Why wouldn't a cost estimate that contains proposed labor rates below the SCA-minimum labor rates render an offer unacceptable, but a cost estimate that shows an offeror performing less than 51% of the contract work on a small business set-aside would? In neither circumstance does the cost estimate indicate compliance with a material term of the solicitation (the Limitation on Subcontracting clause and the Service Contract Act, respectively). Yet, we have different results. Is compliance with the Limitation on Subcontracting clause a special case? If so, why? Or is proposed compliance with the SCA (as evidenced in a cost proposal) a special exception to the rule? If so, why?
In January 1944, the Office of Strategic Services, a wartime intelligence agency and predecessor to the modern Central Intelligence Agency (CIA), issued Strategic Services Field Manual No.3 (Simple Sabotage Field Manual) to its agents to aid the Allied war effort in Europe. The purpose of the classified document was to explain the technique of simple sabotage, outline its possible effects, and present suggestions for inciting and executing it. It introduced the concept of simple sabotage as follows:
The manual goes on to describe two types of simple sabotage: destructive and nondestructive. Regarding the latter type, the manual explains that—
The manual has a section titled “Specific Suggestions for Simple Sabotage” that provides suggestions for how to execute simple sabotage for different targets. There are suggestions on how to innocently start fires in buildings, set off automatic sprinklers to ruin warehouse stock, change sign posts at intersections and forks, dilute gasoline with water, wine, or urine so it won’t combust, and other Dennis the Menace type hijinks. What seemed most familiar were the suggestions under “General Interference with Organizations and Production.” Here are a few:
The manual was declassified in 2008, but I suspect it fell in to enemy hands long before that. The question is, though, why is the enemy targeting Federal contracting offices?
In a remarkable statement issued today, the Government Accountability Office (GAO) apologized to the Department of Defense for what it called "decades of unwarranted and unsubstantiated criticism." The admission came in the wake of the release of a March 2009 GAO report titled Defense Acquisitions: Assessments of Selected Weapon Programs that claims that for 2008 programs, research and development costs are now 42 percent higher than originally estimated and the average delay in delivering initial capabilities has increased to 22 months.
"Who knows if any of that stuff is true" said the author of the study. "We write these reports years in advance when there are no data. Last month, I completed documenting my 'findings' for a 2010 report on DoD's mismanagement of 2009 stimulus funding." He added, "From what I do know of DoD, they are a stellar organization."
GAO also recanted recent Congressional testimony that stated:
"That was a gross mischaracterization and we regret those statements. Truth be told, DoD's weapon system programs, in particular the Future Combat Systems program, are models of responsible program management. They represent the Federal Government at its best" said the GAO.
When asked what motivated today's statement, a GAO spokesperson responded that "we can't keep up with the demand for this type of criticism. The DoD-bashing crowd is insatiable. It's getting to the point where we are ignoring some real problems in other agencies, like NASA", an obvious reference to the recent expose of former astronauts at the space agency.
GAO had painted DoD as a largely dysfunctional, overinflated, and wasteful bureaucracy in numerous reports dating back to the 1970s. One retired GAO auditor, who now runs a Web site dedicated to Federal contracting, added some insight: "DoD wasn't half as bad as what we wrote about them, but nobody wanted to hear it."
DoD has yet to formally respond to the GAO's apology.
The end of the fiscal year is always a good time to start brush up on fiscal law?particularly the bona fide needs rule. Contracting offices may soon face questions of fiscal law that have already been answered in Volume I, Chapter 5, of Principles of Federal Appropriations Law (GAO Red Book).
One interesting case of fiscal law, which you won't find in the Red Book, deals with funding undefinitized contract actions (UCAs) that cross fiscal years. Consider the following scenario:
A DoD activity issues a UCA in late fiscal year 2009 with a not-to-exceed price of $1,000,000. In accordance with DFARS 217.7404-4(a), the agency obligates $500,000 of the not-to-exceed price (the DFARS limit is currently 50% of the price ceiling, or 75% if the agency is in receipt of a "qualifying proposal"). The agency does not get around to definitizing the UCA until early FY 2010. When they do, the contracting officer and the contractor agree to a final contract price of $950,000. The unfunded balance is $450,000 (assuming actual costs prior to definitization were $500,000).
Assuming the contract is funded with annual appropriations, which fiscal year's appropriation must be charged to fund the additional $450,000?
Believe it or not, fiscal year 2010 funds must be used. A number of people that I have spoken to are befuddled by this, because they believe that the definitizing contract modification would be fulfilling a bona fide need of FY 2009, which would thus require the use of FY 2009 funds. However, this is incorrect.
The Comptroller General answered this question in Obligating Letter Contracts, B-197274, September 23, 1983. In that case, a procurement official from the Department of Justice requested guidance on how to fund letter contracts that crossed fiscal years. Agency practice had been to record an obligation for the amount of the price ceiling and include a clause that limited the liability of the Government to 50% of the price ceiling. In other words, they would overrecord their obligation. The procurement official described his dilemma as follows:
The Comptroller General responded as follows:
Following the initial example, the $450,000 to be added to the contract when the definitizing contract modification is executed covers a bona fide need of fiscal year 2010. This need was originally a bona fide need of FY 2009, but it went unsatisfied within the time period available for new obligations. As such, the bona fide need was carried forward to FY 2010.
UCAs have become a hot topic in contracting, particularly in DoD. In response to a GAO report that found a significant number of UCAs still undefinitized beyond the 180-day window imposed at DFARS 217.74, the DFARS was recently revised to include more rules pertaining to UCAs. However, I never saw any discussion about how to fund UCAs that cross fiscal years (maybe everybody already knows the rule ). Based on the GAO report, I'm willing to speculate that a good number of UCAs are left undefinitized until the fiscal year following their issuance. For UCAs funded by annual appropriations, I wonder what fiscal year's funds are being obligated when the UCAs are definitized. My guess is, in most cases, the same fiscal year's funds that were obligated for the UCA.
I always thought that the FAR Matrix was a good idea that was poorly executed. To begin with, it's notorious for containing errors. Second, most of the entries in the "Principle Type and/or Purpose of Contract" columns are "A", Required when applicable, which means you have to look up the prescription anyway. Lastly, the matrix isn't going to tell you if your agency deviates from the FAR prescription, which DoD does a lot. As such, I created a matrix that I think overcomes these problems.
A few things about the matrix:
It contains every provision and clause in the FAR, DFARS, and in DoD Class Deviation memoranda.
It doesn't have any "Principle Type and/or Purpose of Contract" columns except for a Commercial Items column.
It contains the actual prescription of the provision or clause. For readability, I removed the number and title of the provision or clause in the block and just wrote "use this provision..." or "use this clause..." The identifying information for the provision or clause is already contained in the row.
For DoD, it contains additional instructions for the use of FAR clauses that is contained in the DFARS or in a class deviation. This information appears in bold. If you work for a civilian agency, just ignore what's in bold.
In the "IBR" column (Incorporation by Reference), there are no "N" entries for "no", with the exception of the provisions and clauses prescribed at FAR 52.107. This may cause some people to freak out, so I'll explain. FAR 52.102(c) states:
Thus, if the FAR Matrix contained a "Y" in the IBR column, my matrix will also contain a "Y". If the FAR Matrix contained an "N" in the IBR column, or the provision or clause came from the DFARS or a DoD class deviation, then my matrix will contain a "Y*". The key at the top of the matrix contains an explanation for the "Y*" entry. If you're wondering how to incorporate a provision or clause that contains fill-in material or something the offeror must complete, see FAR 52.102(a) and FAR 52.104(d).
You can see the matrix on the DAU Acquisition Community Connection. I'm open to suggestions for making it better. Also, I would like to think that it doesn't contain any errors. However, if you spot one please let me know. As an incentive, I will add your agency's provisions and clauses (the ones in Title 48 of the CFR) to the matrix if you point out a mistake.