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  1. Past hour
  2. Vern, are there court cases or samples to backup?
  3. I followed FAR 1.108(a) convention and used the following common dictionary meaning of buyer: 1. A person who makes a purchase. 1.1 A person employed to select and purchase stock or materials for a large retail or manufacturing business. https://en.oxforddictionaries.com/definition/buyer FAR uses the term buyer at least thirteen times - all seemingly consistent with one or more of the definitions above. In my judgement, FAR's use of the term buyer includes the general public, private sector, and government buyers. (Unless a specific use requires a different interpretation)
  4. thank you Vern!
  5. Today
  6. Mulligans only belong in a game of golf. Especially mine.
  7. All of you are welcome to be part of the solution. If anyone would like to share your best practices and have them considered for insertion in the Section 809 Panel's submittal to Congress or there is a part of DFARS or FAR that is completely impeding your abilty to get work done, please submit your recoommendations, including what you think the final change needs to look like, to https://section809panel.org/contact/ Be the change you want to see in the world!
  8. Retread: No to renegotiation. It was never that good an idea, it was hard, and you could never get it through Congress these days. Jamal: The CPRG says "prudent and competent buyer," not "reasonably prudent business person." I think of a government buyer as what I described above: "specially-trained agents of a particular kind of government." Government contracting personnel are not "typical" businesspersons. Commonplace "reasonable" and "prudent" person standards do not take the government buyer's unique role and public interest concerns into account. What a business person selling something thinks would be fair to the taxpayer is not necessarily what a contracting officer would think is fair to the taxpayer.
  9. Note the actual words used : "consider" is primarily subjective, in that it refers to the weighing of information the CO considers relevant in order to reach a supportable conclusion. A lack of information, or information in the wrong format, can also lead a CO to "consider" a price or fee unreasonable within the bounds of the FAR. The CO's job is not to make organizational-wide decisions; those calls are left to the politicals and their senior leadership. So of course if the CO can't make a determination in accordance with the FAR, higher-level concurrence is required to make an award. That's just normal oversight. Here's a perfect example: back in the day, I was negotiating a deal for a piece of gear for a Navy fighter jet. The contractor's yield rates on the main component were so abysmal that I couldn't abide allowing 100% of the scrap rate. Years later I found out that the reason for the low yields was the fact that the government data package we provided was "incomplete", i.e., the US acquired it using sources and methods of which I was unaware at the time....so not so 'unreasonable' after all, as it turned out.
  10. See FAR 15.404-1(a)(7), which refers you to the informational Contract Pricing Reference Guides (CPRG) for instruction and professional guidance. Here is what Volume 1, Chapter 0 states: What Is Reasonable? A reasonable price is a price that a prudent and competent buyer would be willing to pay, given available data on: Market conditions, your alternatives for meeting the requirement, price-related factors, noncompetitive acquisitions, non-price evaluation factors, and applying judgment to the determination. CPRG further provides that "…a price that is reasonable today may not be reasonable tomorrow." *it is noted that the CPRGs are not directive in nature
  11. Vern, some old mossbacks like me remember the Renegotiation Board. Would you be in favor of reviving it or something like it?
  12. If that is still the question, then the answer is simple: If there is a conflict between the Section H clause and FAR/DFARS, then FAR/DFARS take precedence unless the CO obtained approval to deviate from FAR or DFARS in accordance with FAR Subpart 1.4.
  13. thats our point, why is it costing the Govt so much! We got a quote from the contractor; ($750K) to provide FV for 20 delivery order ONLY!
  14. Neil: What role do you think the GAAP play in determinations of the reasonableness of indirect costs?
  15. The government missed its Fiscal Year 2016 HUBZone goal by a country mile, and didn’t hit the 5% WOSB goal, either. But according to the SBA, the government deserves an “A” for its FY 2016 small business achievements. That’s some rather generous scoring, wouldn’t you say? On May 18 ,the SBA issued a press release announcing that the government had exceeded its 23% small business goal for the fourth straight year. The SBA’s report card gave the government an overall “A” grade for its achievements. Among individual agencies, 18 received grades of “A+” or “A,” four received a “B,” and one earned a “C.” No agency received a “D” or “F.” Exceeding the 23% goal is a good thing, and something we shouldn’t take for granted. It wasn’t that long ago that I was blogging about a string of failures in that regard. But are the FY 2016 results really “A” level work? Let’s take a look at some of the not-so-great specifics: Overall small business achievement was down significantly: from 25.75% in FY 2015 to 24.34% in FY 2016. Small disadvantaged achievement dropped too: from 10.06% in FY 2015 to 9.52% in FY 2016. After hitting the 5% WOSB goal in FY 2015, the government backslid. The FY 2016 result: 4.79%. HUBZone awards took another step backward: from 1.81% in FY 2015 to 1.67% in 2015. That’s right: the government barely exceeded half of the 3% HUBZone goal. Of the five prime contract categories tracked (small business, SDB, SDVOSB, HUBZone, and WOSB), only SDVOSBs saw an increase, and it was tiny: 3.98% in FY 2016 versus 3.68% the prior year. Things weren’t much better on the subcontracting side. There, although overall subcontracting achievement was up slightly over the prior year, the government missed its overall 33.7% goal, and also missed the HUBZone and SDVOSB goals by wide margins. The government exceeded its WOSB and SDB subcontracting goals, but achievement in both categories dropped versus FY 2015. I could go on. And you know what, I think I will. The Department of Energy, for instance, earned an “A” for its small business achievement, despite the fact that it mustered a mere 0.38% for HUBZones, versus a 3% goal. Oh, and the DOE also “achieved” 0.76% for SDVOSBs, versus a 3% goal. The DoD got an “A” despite missing its HUBZone and WOSB goals by considerable margins. The DOJ scored an “A” with a measly 1.05% to HUBZones. The State Department earned a coveted “A+” despite missing its HUBZone goal. And so on. The SBA published its FY 2016 Scorecard Grade Calculation Methodology, and I’m sure someone smart at math can give me the ins and outs of how the numbers work. But you don’t need a degree in statistics to think that a system is broken if it allows agencies (and the government as a whole) to earn high small business goaling scores for middling performance. In a world with so many women-owned small businesses, it is downright embarrassing for the government to miss its meager 5% WOSB goal. And with new tools available to make it much easier to contract with HUBZone firms (such as the ability to joint venture with non-HUBZones), it’s absurd that the government is moving backwards on its HUBZone achievement. Here’s what I think: neither the government nor any agency should get an “A” if it doesn’t meet every single one of its prime contracting goals, and an “A+” should be awarded only if every prime contracting and subcontracting goal is met. Additionally, the scoring methodology should take into account year-to-year performance; top scores should not be awarded if an agency is moving backwards. This stuff matters. If agencies can earn top scores despite missing major components of their goaling, why should they try to get any better? Why should the DOE care if it improves on its 0.76% HUBZone achievement, if it can tout an “A”? For that matter, what incentive is there for the government as a whole to hit its socioeconomic goals if it is awarded “A” grades for meeting only some of them? There’s been a lot of talk in the media about the way the SBA calculates goaling achievement. But the grades the SBA assigns are every bit as important as the numbers the SBA reports. And if you ask me, the FY 2016 grades are way off the mark. View the full article
  16. Emphasis added. The highlighted statement, taken literally, is absurd. A proposed or quoted price is reasonable or it is not. The DOD memo cited and linked by Lionel Hutz is entitled, "Commercial Items and the Determination of Reasonableness of Price for Commercial Items" and is dated Feb. 4, 2015. It does not address determinations of price reasonableness in noncommercial acquisitions. Moreover, it does not explain the precise nature of Lionel's "reasonably prudent business person" standard. Read what the memo says carefully: Think about that. Think carefully. Do you agree? Lionel cited a Findlaw entry, "Standards of Care and the 'Reasonable Person'," but the entry does not support his assertion that the "reasonably prudent business person" standard used in tort and criminal law is "equally applicable" to contract law. It makes no mention of contract law. If you're going to say things like that you should cite an apt reference. See, instead, Dimatteo, "The Counterpoise of Contracts: The Reasonable Person Standard and the Subjectivity of Judgment," South Carolina Law Review (Winter 1997). https://www.cisg.law.pace.edu/cisg/biblio/dimatteo5.html The reasonable person standard applied in contract law is not identical with the reasonable person standards applied in tort and criminal law. From the Dimatteo article: Footnote omitted. In any case, pre-award determinations of price reasonableness are not matters of contract law, and FAR Part 15 makes no mention of any "reasonable person" or "reasonably prudent business person" standard for pre-award determinations of price reasonableness. The standard for post-award contractual determinations of cost reasonableness is stated in FAR 31.201-3 and is a matter of contract law and regulation. You can see FAR 31.201-3 applied in Kellogg Brown & Root Services, Inc. v. U.S., 742 F. 3d 967 (Fed. Cir. 2014). See also Kellogg Brown & Root Services, Inc. v. U.S., 107 Fed.Cl. 16 (2012). The interesting questions to be answered for the purposes of this thread are: What is to be the standard of price reasonableness in any given case? Is the standard of price reasonableness for the item constant or does it change with circumstances, including circumstances of need? (Is price reasonableness ever a function of the degree of need? If a given price is unreasonable in routine acquisitions, can it be reasonable in emergencies? If so, what of the concept of price gouging in cases of disasters?) Is the application of the standard of price reasonableness entirely subjective, or is there a threshold at which a price is reasonable or unreasonable to all? In cases in which cost analysis must be done, does price reasonableness necessarily turn on the relationship between estimated cost and proposed price? FAR does not answer those questions. The closest FAR Part 15 comes to providing guidance about a standard for price reasonableness is probably the following, from FAR 15.405(b): That does not strike me as especially helpful, and it does not seem applicable to the acquisition of commercial items. According to Lionel: Emphasis added. I emphatically disagree with both DOD's memo and the statement I highlighted from Lionel, because contracting officers are not "typical business persons." They are supposedly specially-trained agents of a particular kind of government, and our government's standards of prudence are not always the same as private sector standards. The government has responsibilities that "typical business persons" do not have (disaster relief) and buys many things that typical business persons do not buy (one year of test support services at Yuma Proving Ground; $400,000 flight helmets for F-35 pilots). The difference between contracting officers and typical business persons is shown in the following from the Contract Pricing Reference Guides, Vol. 1, I.2.1: Also, keep this in mind, from FAR 15.405(a): Bottom line: I think that a CO determination of fairness and reasonableness is subjective within what I'll call "publicly acceptable" boundaries. Despite the "solely responsible" phrase in FAR 15.405(a), a CO's determination cannot be entirely subjective, because it may be judged by critical persons with a special point of view, and a CO must think about what such persons' standards might be before biting the bullet. He or she must be prepared to respond to their objections with a coherent and reasonable explanation. As I mentioned in an earlier post, some government buyer thought that $400 was a reasonable amount to pay for baby formula. Now that the determination has come to light, a U.S. senator has some questions. Having said all that, it appears to me that most COs make determinations of price reasonableness without much difficulty or risk. But who knows what they'd say if asked to explain their determinations.
  17. Then change my name to Luke Skywalker!!!
  18. A writer using the alias of Emptor Cautus has written an article on Acquisition Reform. I provided a comment to the blog that states:
  19. Every now and then, we have the opportunity to enjoy writing that is well-crafted and about something that interests us. Here is such an opportunity. Take it!
  20. Two things I would like to make clear to readers: 1. Price reasonableness (contracting officer) is separate from requirements definition (client, program manager, etc.). I have witnessed contracting officers overstepping their roles because of price related concerns. 2. Price reasonableness always considers the non-cost/price factors of the source selection. (e.g. the evaluation factors and significant subfactors that establish the requirements of acceptability including past performance)
  21. Jamal, I agree. When examining issues of “reasonableness” the law uses what is known as the “Reasonable Person” standard. It is most often associated with the law of Torts, but is equally applicable to contract law, when it is sometimes called the “reasonably prudent business person” standard. http://injury.findlaw.com/accident-injury-law/standards-of-care-and-the-reasonable-person.html When we talk about whether a price is reasonable, we are asking whether a reasonably prudent business person in a given situation would pay the price in question. This standard is reflected in the advice of the Director of Defense Pricing (quoted in my post above) when he states that the determination should be made from the point of view of “a reasonable businessman or business woman reviewing the data.” Under this standard, it is not be enough for the contracting officer merely to say, “The price is reasonable to me.” Nor is it required that the specific price be reasonable in all situations. Rather, the contracting officer must be able to say, “A typical business person, with ordinary prudence, in the same circumstances I am in, would be willing to pay this price.” When you see examples of unreasonable pricing, it is because it does not meet that criteria. Either, there are other equivalent options at better prices, or the government’s need is not great enough to pay the requested price and it is more prudent to simply go without. For example, under normal circumstances, a contracting officer is not going to be able to determine $10,000 to be a reasonable price for a coffee pot. It does not matter how much he or she subjectively loves coffee. Nor is it enough that an extravagant millionaire might purchase a $10,000 coffee pot as a luxury. There are many options when it comes to purchasing coffee pots, and a typical business person, with ordinary prudence under normal circumstances is not going to pay that price for a coffee pot. A good example in private industry is a television commercial. Without context, $4M for a 30 second commercial sounds unreasonable. And, if a local cable company demands $4M from Pepsi for a 30 second ad during a rerun of McHale’s Navy, it would be unreasonable. The need for any one ad is not that great, and there are other less expensive, equally effective opportunities to air commercials. A reasonably prudent business person would not pay that price. But if FOX demands $4M from Pepsi for a 30 second ad during the Super Bowl, it may be determined to be a reasonable price. The number of viewers plus the potential for ads to go viral and generate “buzz” make the return on that $4M purchase a much better deal. Considering prices at this year’s Super Bowl approached $5M, one might even think Pepsi was getting a good deal at only $4M. The product and price haven't changed, but the circumstances have. Tweak the scenario just a bit more and the price can become unreasonable again. Imagine a company that does not sell products to the general public and is operating at maximum capacity such that a Super Bowl commercial is not going to help generate sufficient revenue to justify the purchase. In that case, even the “bargain” rate of $4M is not a price that a typical business person with ordinary prudence would pay in those circumstances. Keep changing the circumstances, i.e., the data, and you can find multiple scenarios in which the same price for the same item is either reasonable or unreasonable from the point of view of an typical business person with ordinary prudence. If reasonableness of price did not depend on the specific facts of a procurement, then the Government could come out with a universal price list that capped the prices across all government contracts. The FAR recognizes the variable nature of the price reasonableness determination and puts that responsibility on the individual with the most knowledge of the circumstances of the procurement.
  22. Yesterday
  23. Cinnamon sticks and vanilla beans. Currently, for fresh produce, I pay four to five times the cost compared to the states. Not many people signup to bring a fruit-tray to bbqs or office parties. Growing up in Southern California I was spoiled … here, it's $4 for five small jalapenos, $20 for a watermelon, don't even think about mangoes, strawberries, or blueberries.
  24. Darth Vader to some.
  25. A Viking 'Heaven" - really Vern LOL Please know that many of us have "grown up" in contracting with you as our father figure; a wise man who challenged us, encouraged us and pointed us in the right directions. I could wax poetic, but I won't. I thank you, I will miss you, and WIFCON will miss you.
  26. There is a long-standing Air Force publication that some of you may know about entitled, The Tongue and Quill, Air Force Handbook 33-337. I think it's pretty good. There is a good discussion of email in pages 134 - 142. http://static.e-publishing.af.mil/production/1/saf_cio_a6/publication/afh33-337/afh33-337.pdf
  27. In the 1973 futuristic mystery thriller Soylent Green there’s an exchange between Detective Thorn (Charlton Heston) and Hatcher (Brock Peters): Det. Thorn: Ocean's dying, plankton's dying . . . it's people. Soylent Green is made out of people. They're making our food out of people. Next thing they'll be breeding us like cattle for food. You've gotta tell them. You've gotta tell them! Hatcher: I promise, Tiger. I promise. I'll tell the Exchange. Det. Thorn: You tell everybody. Listen to me, Hatcher. You've gotta tell them! Soylent Green is people! We've gotta stop them somehow! Acquisition Reform is like Soylent Green, it’s people. I don’t mean the Congresscritters, like Representative Thornberry and Senator McCain, and their Committees. I don’t mean the Administrator of the Office of Federal Procurement Policy, whoever he or she may turn out to be. I don’t mean the acquisition and procurement policy wonks in the Pentagon and elsewhere. This past week (i.e., 14 – 20 May 2017) was a big week for the professional acquisition reformers: The Advisory Panel on Streamlining and Codifying Acquisition Regulations issued the “Section 809 Panel Interim Report” (May 2017). Read the 60 page report, and formulate your own opinion if it will fix the problems in Government acquisition. Frankly, I think it will take more than getting rid of the $1 coin requirement, but I could be wrong. Representative William McClellan "Mac" Thornberry introduced H.R. 2511 “To amend Title 10, United States Code, to streamline the acquisition system, invest early in acquisition programs, improve the acquisition workforce, and improve transparency in the acquisition system.” The short title on that would be ‘‘Defense Acquisition Streamlining and Transparency Act’’. (sic) Read the 80 page resolution, and formulate your own opinion if it will fix the problems in Government acquisition. [If we have Representative Thornberry, can Senator McCain be far behind? (Or, is that FAR behind?)] A (moderately) reliable source has told me that the Department of Defense will be leaving Better Buying Power behind, now that Mssrs. Carter and Kendall are gone. But, wait, acquisition reform has not been abandoned. Apparently, it will go on, but now as “Continued Acquisition Reform.” Presumably that will be abbreviated as “CAR.” Continued Acquisition Reform should not be confused with Continuous Acquisition Reform nor Continued Acquisition Reform, nor Continuous Process Improvement, for that matter, those would all be bygone days. The professional acquisition reformers have time and again passed legislation and issued regulations to “fix” the acquisition process. This fiscal year (2017) Title VIII (i.e., Acquisition Policy, Acquisition Management, and Related Matters) of the National Defense Authorization Act (NDAA) had 88 sections. The year before, 77 items. And, yet, Representative Thornberry and Senator McCain believe there is a need for a lot more acquisition reform legislation this year. Title VIII has included over 500 sections over the last ten years, but we still need more. What we have at issue here is what is referred to as the Law of the Instrument. Although he was not the first to recognize the Law, Abraham Maslow is probably the one best remembered for articulating it, "I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail." For those of us on the receiving end of the Congressional output that would be, “I suppose it is tempting, if the only tool you have is a legislation, to treat everything as if it were a bill." I suspect, although I cannot be positive, that most, if not all, of the folks doing the legislating have never had to use the Federal Acquisition Regulation (FAR) to buy anything. If they had, they would not be nearly so cavalier in tossing around statements about how bad the acquisition process is, and how more legislation is the answer. Will such legislation solve the acquisition problem? According to the Honorable Frank Kendall the answer is a resounding “NO.” But, in all fairness, it’s not just them. Since we last had a reissuance of the FAR in March 2005, the FAR Council has brought us 95 Federal Acquisition Circulars (FACs) to update and expand the FAR. Since we last has a reissuance of the Defense Federal Acquisition Regulation Supplement (DFARS) in January 2008, the Defense Acquisition Regulations Council has brought us 211 Defense FAR Supplement Publication Notices (DPNs). With all of that, there are still dozens of open FAR and DFARS cases yet to be heaped on our plate. Although legislation may have been a major root cause of much that change activity, we can probably offer some of our “thanks” to the President, OMB, OFPP, GAO, Boards of Contract Appeals and Courts. Admittedly, now and again, a good idea actually gets slipped into the regulations. [Note: The number of FACs and DPNs issued in 2017 was artificially suppressed as a result of Executive Order 13771 – Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs. The two councils (i.e., FAR Council, Defense Acquisition Regulations Council (DAR Council) and the Civilian Agency Acquisition Council (CAA Council)) withheld publication of a large number of cases while policies and procedures were “sorted out.”] [Note: Refer to Augustine’s Laws, Law Number XLIX: Regulations grow at the same rate as weeds.] And, if that were not enough, we have institutional acquisition reform (e.g., policy letters, memoranda, directives, instructions, guidebooks, handbooks, manuals). Everyone seems to want to get into the act in one way or another. It is interesting to note, however, that the “perpetrators” of this institutional acquisition reform do not see it in the same light as acquisition reform legislation. But, I recognize the lesson that King Canute was trying to teach when, in the apocryphal anecdote, he had his throne taken to the sea and ordered the tides not to come in. They did anyway. Legislators will legislate, it’s what they do. Regulators will regulate, it’s what they do. Policy makers will policymake, it’s what they do. None of them will willingly give up their rice bowls. Let’s get back to Soylent Green. Better Buying Power (BBP)? The Honorable Mssrs. Carter and Kendall were responsible for BBBP, in all its iterations. Did that rise up from the trenches? Or, was it handed (or pushed) down from above? Isn’t this a bit like the pot calling the kettle black? If you will permit the adding of a single letter to a line of Hamlet by William Shakespeare, "The laddy doth protest too much, methinks." [Note: Refer to Augustine’s Laws, Law Number L: The average regulation has a life span one-fifth as long as a chimpanzee's and one-tenth as long as a human's, but four times as long as the official's who created it.] Well, whichever way you look at it (i.e., upside, downside, sidewise) it is all more work for the acquisition professionals that must do the daily work of buying supplies and services for the Government. If you want to have an idea of how all of this acquisition reform weighs us down, then take a look at William Blake’s illustration “Christian Reading in His Book” for John Bunyan’s The Pilgrim's Progress. It will depend on how many pixels the image you find has, but it looks to me that he is reading the FAR. Who are the Soylent Green? Not the policymakers, but the people in the trenches, doing the hard work of acquisition on a daily basis, day in and day out, week in and week out, month in and month out, year in and year out. The contract specialist, contract negotiator, contract administrator, cost or price analyst, purchasing agent or procurement analyst just trying to get the job done. These are, for the most, part the unsung heroes and heroines of acquisition reform. These are the ones who, through innovation and personal initiative reform that acquisition process, one acquisition at a time. And, if we are lucky, or clever, are able to pass successes along to others. As acquisition professionals, we must pass on our successes, and failures, to others, so that they may join in the fruits of success, and avoid the pitfalls of failure. You cannot count on “Lessons Learned,” alone. How often do lessons learned go unread and unlearned? You cannot count on “Best Practices,” alone. How often do best practices, go unread and unpracticed? Share with others. Share quickly. Share often. Share wherever you can. A final thought. The absolute final thought. I’m sorry, I can’t help myself. I don’t care about King Canute: Don’t legislate. Don’t regulate. Just leave us alone to do our work as best we can.
  28. See "Military healthcare paying more than $400 for a $46 can of baby formula," http://www.wcnc.com/news/health/military-healthcare-paying-more-than-400-for-46-can-of-baby-formula/441585928, dated May 21, 2017. See also "Is there any reason for the outrageous price of cinnamon sticks? An Investigation," https://theoutline.com/post/930/why-are-cinnamon-sticks-so-expensive Interesting discussion about pricing on Amazon: "Thread: Why Do Some Sellers Charge Impossibly High Prices?" https://sellercentral.amazon.com/forums/thread.jspa?threadID=185839 There are many stories of outrageous commercial prices, which is something to think about now that the HASC plans to force the government into buying from online commercial sources like OfficeMax,Grainger, and Staples. http://breakingdefense.com/2017/05/thornberry-reform-bill-directs-pentagon-to-just-buy-commercial-products-online/
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