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joel hoffman

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About joel hoffman

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    P.E., DBIA

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    Following God, Family, Sailing, Motorcycling, Hunting, Volleyball; Acquisition, Source Selections, Contract Administration, Construction, Design-Build Construction, mods, claims, TFD, TFC, project controls,

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  1. page limitations on proposals

    Vern's and Nash and Cibinic 1994 era articles were spot on and probably served as catalyst's for the "Streamling" efforts and for the 1996-1997 FAR 15 rewrite. If you think FAR 15 is bad now, you should have seen it before that. Unfortunately, many of those acquisition personnel either didn't understand the intent or the distinctions because they taught newer personnel certain pre-1997 FAR approaches and limitations that are misunderstood and passed on to this date. Frustrating.
  2. page limitations on proposals

    I didn't need to use page limitations in my solicitations for construction, services or design build. In the interest of brevity, consistency between proposals and to focus on the specific information that we wanted to evaluate, I developed forms for relevant experience and related past performance owner rating and contact reference, if necessary to verify (not pp questionnaires for them to get owner's references to fill out and return) for prime, designer and specific key trade subs; for prime's and D-B designer's (only specifically identified positions ) key personnel; for identifying prime's work to be self performed. We included an outline price breakdown (not cost breakdown) and reserved the right to ask for it in the event that we needed it for price analysis or confirmation of their understanding of the work. For D-B, we focused on certain specific concept design information and on the level of quality of certain proposed equipment and materials. For D-B drawings, we limited the info to some specific preliminary information. I asked for certain organizational and management approach info but not detailed plans or detailed planned approaches. Did not have a problem with excessively long or wordy proposals, or typical lists of every project that they had ever completed. The competing firms liked seeing the same forms and similar format for every construction and D-B solicitation.
  3. J&A Requirement

    Ok, then 6.302-1 appears to discuss your situation. Is a J&A a big deal?
  4. J&A Requirement

    Does the solicitation limit the 20 items to the OEM?
  5. ji, sorry- that wasn't necessarily directed at you. What is your opinion about whether or not an FPI contract necessarily must have separate target and ceiling for the application addressed above? If yes, why? What costs must be absorbed by the D-B contractor within the ceiling price?
  6. ji, If that's all you think the discussion is about, then you have confirmed my conclusions. The FAR says very plainly that fixed price contracts that provide for an adjustable price may include a ceiling price, a target price (including target cost), or both. For application of a pre-determined formula-type cost incentive, the contract includes a target cost, target profit or fee and a profit or fee adjustment that is within the constraints of a price ceiling. The basic question is why and when you would set the target price equal to the ceiling price for a construction or design-build contract, rather than setting it lower than the ceiling price. Other than telling me "that's the way we've always done it", I want to know why the ceiling price must be higher than the target price for a construction or design-build contract that is awarded, due to time constraints, before various questions or concerns or before a reasonable FFP can be determined. I explained why the type of costs that you'd be asking the contractor to eat a share of in a design-build contract would be payable in either a cost or FFP contract type. The object is to incentivize the contractor to manage the unknowns after award and control and reduce the overall cost to the government. A GMP icost incentive does that and allows the parties time to collaberate together to address and mitigate contingencies. And it "hasn't always been done that way". I'm busy preparing for a hurricane but will try to find a POC in DAU or GSA to answer Vern's question of which projects have used a GMP using FPI.
  7. I've been a bit remiss by not emphasizing that the federal design-build with GMP project delivery method - just like the industry model - provides the flexibility for the parties to definitize Firm Fixed-prices for all or part of the project after award, during project execution. This greatly simplifies contract administration, especially for the owner but also the design-builder, who can then focus on internal design and construction management. The design-builder will track their actual costs, anyway as part of their own traditional project controls, construction and earned value management. The cost savings Incentive would still apply if the FFP comes in under the GMP. It is apparent to me that the lack of input here by other forum members indicates that they don't really care about the topic and/or likely don't have much, if any, clue about design-build, the business side of construction or when such a pricing method would be useful for the government. The industry is pushing for a way to do this but isn't going to go to the effort and expense to sponsor FAR revisions if nobody in the government would understand when or how to use it. The D-B Industry's current primary interest focus is on promoting the use of "Quality Based Selection" of design-build teams in government and commercial D-B , then using what they term "Progressive Design-Build", in lieu of selecting the design-builder using Best Value (FFP). In Progressive Design-Build, the owner may select a D-B team to define or help define its "program" (scope, budget and program schedule), then develop the performance criteria for functional and technical design, then design and build the project. The method would use an evolutionary contracting process, through a series of options that would be negotiated as the project progresses. The industry also advocates using sole source negotiated GMP for Progressive design-build pricing purposes. All that is beyond the scope of the GMP method being discussed here.
  8. We can continue later, Vern. But while I am thinking about it and before I lose my train of thought (one of my problems these days) , the types of contingency costs that you would suggest the government make the design-build contractor share between a target and separate ceiling would be otherwise reimbursable in a cost reimbursement construction contract and would probably be included in a FFP contract price, if you could even get a design-builder to agree to one. The GMP method would only be appropriate for the limited instances where it is too early or otherwise too risky to be able to achieve a reasonable FFP when the owner needs to award a contract to meet its schedule for occupancy. The cost plus methods would result in the government paying for all risks and inefficiencies that are allowable. The FFP, if even possible, would have the government pay for the risks included plus a markup on those costs, regardless of whether they are actually encountered. Some otherwise unallowable costs might be included in a competitively negotiated price, too. The GMP includes contingencies - but only costs that are otherwise allowable would be reimbursed. The cost savings share incentive encourages the contractor to manage and avoid or mitigate expending those costs. It allows both parties more time to address and mitigate risks. The government benefits from the time gai8ned to award and start project execution. The government also gains extra time after award to collaborate with the design-builder in addressing , avoiding and mitigating risks. It saves paying some costs it otherwise would have paid in a firm fixed price at the outset. I think that someone would have to justify to me why the construction contractor must be required to share those costs between separate target and ceiling that iotherwise would have been allowable under a different pricing method . I think that H2H also mentioned the difference between paying for risk in an FPP contract whether or not the costs are avoided later. Yes, something like the Monte Carlo simulation should be used in pricing risk. I am making some contacts to find out where GSA has used their GMP method.
  9. No justification to anybody is not true for DoD. . Use of FPI for any application requires approval. Use of any ceiling price that "departs" from 20% delta will require appropriate justification, whether 3-5% or 0%. Of course, expecting a target price for a construction project to be established at least 20% below the programmed amount for 100% scope would be asinine. Whether it is 3-5% or 20% , requiring a construction contractor to pay 30-50% of the risk of contingencies/uncertainties by putting it on the right side of the target is unrealistic expectation. This isn't the same application of FPI, as "you know" it has been used for. Since at least 95% of design and construction in the US market is performed by other than the US Government, it generally doesn't involve something as complicated as inventing or developing new classes of ships, airplanes, complex weapons systems, etc. Construction contractors base the estimates for their FFP prices on historical construction costs that include normal events and less than perfect execution, then add for some escalation. They also consider risks for contingencies that might or might not occur. The owner's estimate of "fair and reasonable costs" also consider historical costs and some allowance for level of escalation plus risk. There are risks that the contractor can't always control, such as skilled labor availability, material cost escalation, subcontractor availability and market conditions that would affect buyout prices, etc. What would you expect the contractor to eat 30-50% of the cost of? Reimbursement is already limited to those costs which are reasonable and allocable, etc.
  10. GSA is using FPI with GMP similar to this proposed use. They are using FPIS and developing a single target-ceiling GMP. So, it is being done already, whether or not you knew about it. There is less uncertainty for design-build application than for CM@risk project delivery system. The CM is hired early in the design stage and the government has hired a separate designer. I see a high probability that the target/ceiling may change during the owner's design development. The construction manager has no control over the design development. But they are able to refine the GMP. In design-build, the same firm is responsible for providing the integrated design and construction services. Much more collaboration with much less uncertainty. Thus FPIF should be possible and appropriate for most projects - again with a single target/ceiling.
  11. Gosh, I think we adequately discussed this. The short of it is - 1) There is no government sponsor, 2) the FPIF method with target= ceiling (then defining that in the solicitation as the GMP) is similar to the industry's "Cost-Plus/GMP", with the understanding that their vernacular simply means that the owner will reimburse certain defined allowable costs for completing the project - not to exceed the ceiling/GMP. That's the same as the federal "FPI" version. The "I" incentive operates essentially the same in both forms. My question is WHY does it seem to you that the FPI approach is a halfway measure? Why isn't the existing FPIF contract type and incentive revisions clause 52.216-16 suitable for the specific application of D-B described herein , when the clause is slightly edited (as I showed in a previous post is specifically allowed)? It appears to me to operate essentially the same as the commercial GMP contract, subject to standard FAR operatives for such as determining allowable costs. Unfortunately, you apparently don't have access to the DBIA Standard Agreement and DBIA specifically prohibits me from sharing it "for educational purposes" or any other purpose other than to a D-B client that I may be working for. The FPI should exclude the indirect/overheads that DBIA includes in the fee ( fee = profit only). In my opinion, the DBIA treatment of those costs is too ambiguous to put into the "fixed fee". They are included in the fee in the DBIA contract for commercial privacy reasons. Construction companies vary widely in how they are organized and how they treat costs as direct or indirect costs. The FAR is very strict on mixing fixed costs and reimbursable costs for construction contracts (e.g., 36.208 Concurrent performance of firm-fixed-price and other types of construction contracts). To me, it would be very challenging for the government to determine if direct and indirect costs have been totally separated or classified within the fixed fee or within the reimbursable costs. The possibility of paying twice or of inconsistent treatment of direct and indirect costs is difficult to avoid where there is no visibility of what costs are included in the fixed fee. The only FAR change that might be recommended is to clarify that the target price can be set to equal the ceiling price and when that could be appropriate. I think that the DFARS at 216.403-1 and the PGI at 216.403-1 already cover how an organization can vary from the 'one size fits all' " 120 % ceiling and 50/50 share ratio "point of departure". Its ridiculous to assume that a Design-Build contract - when used under the circumstances in the "Guidance" - would have to have a ceiling price that is 20% more than the target - as though it were an ACAT 1 Acquisition Program for a nuclear submarine or aircraft carrier or the dad-gummed Air Force Tanker. The PGI describes the requirements for D&F approval for any Incentive type contract and how to analyze risk, etc.in establishing a ceiling price. The Budgets for federal construction projects don't include other than a low percentage for contingencies. The various FAR References that provide flexibility (including the instructions for the FPIF Incentive Clause) have already been quoted herein. At least two people from DAU, Vern Edwards and an attorney from my client organization have indicated that it doesn't appear that the target and ceiling can't be the same in an FPIF. For the most complex straight construction projects, using various forms of Construction Manager at Risk project delivery method, the successive targets form has been used with success. By the way, I must read the info at the above site that I just noticed...
  12. Contractor’s Email Leads to Lost Contract, Denied Protest

    "Throwing its weight around"? Come on! The company made up its own terms, disguising them as a capability boast.
  13. D&F Signature Authority over $1Billion

    I think perhaps the President...
  14. Vern - The publication 510 has been restructured into numerous other documents. Only members can download the documents. The Standard Form of Agreement for the Cost-Plus/GMP method, Document 530 , is still there. I am searching for the discussion on how and when to use it in the current publication list. Have asked the staff to assist. EDIT: AHA! The Pub 510 chapter 5.0 on Lump Sum vs. Cost-Plus/GMP has been absorbed into the general instructions for the Standard Form of Agreement. It is available only for members as a download. Unfortunately, I cannot transfer, copy or reprint it under the license agreement. It is only available for members as a download. The new citation for that which I cited earlier as Publication 510, "Lump Sum vs. Cost-Plus/Guaranteed Price" is "(Specific Instructions For) Document No. 530, Standard Form of Agreement Between Owner and Design-Builder - Cost Plus Fee With An Option For A Guaranteed Maximum Price (2010 Edition)" Darned. Sorry.