Jump to content
The Wifcon Forums and Blogs

joel hoffman

Members
  • Content count

    3,090
  • Joined

  • Last visited

Everything posted by joel hoffman

  1. IDIQ Decision

    Vern, I don't really care what you think about my example or who I offend with that story . I know that we would have saved the taxpayers a million and 1/2 dollars and the customer were only concerned about an award by 30 September. And it has been typical of the Air Force to overprescribe every design build project that I have been involved with or reviewed since. The only design-build project that I was directly involved with that could not be awarded was a fire station at the same installation. The RFP included at least a 50 to 60% design solution in the RFP. The same customer again refused to budge an inch. Those have been very effective lessons learned that I've taught for over 20 years in our design build course and which reinforced our performance based design criteria approach in the Army Milcon Transformation Model RFP. The story gets the attention of almost every student in attendance. For the dormitory project, we could've issued a quick amendment with four pictures of the dorms to be matched, about three paragraphs of performance based structural design criteria and design references and a couple of pages of our standard design build contract requirements. Edit: I know for a fact that performance ratings for both the Air Force project managers and the Corps of Engineers project managers, at that time, were more heavily dependent upon their project award execution rate than the quality or cost of the projects that they were in charge of.
  2. IDIQ Decision

    We told the Air Force that we could make an award within the budget by 30 September but it fell on deaf ears.
  3. IDIQ Decision

    I teach one such example in my design-build class, where the Air Force consciously WASTED $1.5 million on an $8 million award for construction of a dormitory at Hurlburt AFB in Florida back in September of 1994 or 1995, so that their execution rate would look better. It was a fully designed IFB by The Army Corps of Engineers that was converted to an RFP because all bids were at least $1.5 million over the Programmed amount. After conversion and receipt of proposals from five of the seven original bidders came in, I conducted discussions with the two lowest offerors who were most competitive. The lowest price offeror, who I had great respect for, told me that the design was extremely inefficient and commercially impractical due to market conditions in Florida and the South East. After two recent hurricanes that year, the closest mason labor force and masonry subs available to team with the local prime were in North Carolina. The three story masonry framed dorm with face brick finish would require at least four masonry sub mobilizations and demobs, plus travel and perform while on site, plus inflated masonry prices, which accounted for the entire $1.5 million overrun in their price. The president of the firm said they would drop their price $1.5 million if the government would change the RFP to make the contractor responsible for the structural design with performance specs for the frame and the requirement to match the look of the adjacent dorms that the new dorm design was based on. He rattled off about four different feasible structural alternatives using matching brick veneer or even precast concrete panels using colored concrete and special brick faced form liners. The contractor and our office both were experienced with the Design-build delivery method. We went back to the Air Force, recommending that proposed solution. Since it was September 15th, the Air Force felt the risk of award later than 30 September would be unacceptable and said they would provide the additional $1.5 million for award, as designed. I was so incensed that I was able to require our District to not specify the structural solution on any design-build project for the Air Force for the next two years until I transferred to another Corps organization. After I left, the District went back to prescribing specific framing and materials for the Air Force and back to overrunning the PA on every Air Force project. It was a lesson learned that. As a part of the Army MILCON Transformation team, I was able to assure that the model RFP used for billions of dollars of army design-build construction between 2006 and 2013, was written, using performance based design criteria for structural framing and for exterior materials. I'm still pissed off over that one (just one ) example of waste by the Air Force and others who have the pre-conception that the government must prescribe every architectural or structural requirement to meet the look and feel of their design theme.
  4. Mandatory E-Payroll

    If any reader here has access to the "higher level policy for [DoD electronic payroll systems?] that has previously undergone the public comment process", would you please identify or provide a link to that policy? That might help mccmark better frame his question(s) to the soliciting agency. Thanks. This Forum method of communications and information seeking Is like texting sound/word bites vs. direct oral conversation. It is available to a wide audience but I'm still unclear about what mccmark's real, underlying concerns are. One appears to be that the NAVFAC is allegedly requiring use of a third party payroll system in addition to their own payroll system. Mccmark hints that they have some type of electronic system, thus may or may not be concerned about having to directly furnish electronic payroll information submission. Another concern is having to provide some type of remote access to their payroll system for (certain? Only designated? Any? ) government personnel. Is this a concern for third party payroll system or any electronic payroll system used? It is obvious to me that the DOL would have minimum technical requirements for determining compliance with the Labor Laws and for audit or inspection capability. Remote access might be open to debate. Such policies might have already been addressed by "higher authority" subject to public comment. Information Security? Remote vs obtaining controlled on-site access? As for access, the FAR and probably DOL and statutes already require that and/or the contractor to provide the information and mention providing access to the KO, authorized reps of the KO and DOL - for certain official purposes. Then, there is the question of authority for the "clause" (?), as written.
  5. Mandatory E-Payroll

    If mccmark's thinks that the NAVFAC solicitation requires that his/her firm use a third party payroll service in addition to whatever the company's internal payroll system is, perhaps mccmark should seek clarification or confirmation of that interpretation, then decide what to do in response.
  6. Mandatory E-Payroll

    Don, Apparently they did. Try this link and see page two, in particular the comment that the issuance of the PIL was to implement higher level policy that has previously undergone the public comment process. That policy was not available at the URL nor was the USACE request that is referred to. And to correct my earlier comment, the USACE clause does not appear to require either internal or third party electronic payroll software. It describes the requirements for such a system or payroll service, if used. http://media.swf.usace.army.mil/pubdata/ec/Payroll/PIL_2011-09_Electronic_Software_for_DBA_Payrolls.pdf The NAVFAC clause on page 74 at the below apparently requires use of a "supplemental electronic Construction Wage Rate Requirements statute payroll processing system to process and submit certified payrolls electronically to the Government that are compliant with appropriate Construction Wage Rate Requirements statute payroll provisions in the FAR. The contractor shall be responsible for obtaining and providing all access, licenses, and other services required..." I don't know what the significance of the word "supplemental" is or if it requires use of a third party payroll service that complies with the technical requirements described in the (unnumbered) "clause". http://4xstt2e0qzc1aqemd10fd9da.wpengine.netdna-cdn.com/wp-content/uploads/2017/07/RFP_WITH_WAGE_DEC.pdf Just because one can't find any evidence that the NAVFAC "clause" went through the public review process, doesn't necessarily mean that NAVFAC didn't use some similar process to that used by USACE for approval to use it.
  7. Mandatory E-Payroll

    I think that the two agencies were (are) working to implement procedures to implement paperless contracting procedures, which have been mandated at some higher level by (?) . It's a good thing to have to allow public comment and feedback concerning the particular procedures, as discussed herein. It appears that the Corps isn't mandating the use of an independent payroll service. If the contractor does use an independent payroll service, then those requirements would kick in. As mccmark indicated above, it wasn't deemed necessary to publish the SCR for public comment. The NAVFAC version appears to mandate use of an independent payroll service, even where the contractor has an internal electronic payroll process. If that is intentional, why? From my experience, NAVFAC is much more prescriptive than USACE or the Air Force in specifying construction means and methods anyway, so why should I be surprised?
  8. Mandatory E-Payroll

    It funny to me how officials from those agencies whose policies and procedures are questioned in the WIFCON Forum generally don't defend or otherwise justify or explain their procedures . I also wonder whether a contract requirement that simply implements an existing requirement of a standard contract clause, , such as a special contract requirement which adopts a uniform approach for submitting otherwise required payroll information to a paperless contracting system, or how to make information available for audit or review must be published in the Federal Register, etc., etc., etc. I suggest that such formality could be a bureaucratic crock. However, perhaps such prescribed approaches should be put to the test as Vern mentioned. Concerning payroll information, the basic contract clause requiring submission of payroll information and for providing access to the basic payroll data has been in effect for decades. What's the difference between specific procedures for already required payroll submission into a paperless contracting system system and contract specifications for contract construction schedules that implement a general contract clause requiring submission of a construction schedule? I will guarantee that technical specs for construction schedules, prescribing specific scheduling procedures for the construction schedule required by the contract clause aren't published in the Federal Register.
  9. Mandatory E-Payroll

    mccmark, aside from the issue of authorization for the special contract requirement, are the above requirements [1] & [2] your specific problems with the non-numbered Navy Special Contract Requirement? I presume that the second [2] requirement would be a problem with the USACE Special Contract Requirement S-102, correct? I can see a problem with mandating use of a supplemental, third party payroll system. However, requirement [2] might be consistent with paragraph (c) of Clause 52.222-8, which extends beyond simply submitting weekly payroll info .The clause requires the contractor to make payrolls and basic records available for inspection, copying, or transcription by specifically designated or identified government employees. I think that the contractor could restrict access to such personnel, if that is technically possible in the software. There could certainly be an issue of requiring remote access to the information. Carl, the contractor isn't required to use the last four digits of the SSN for identity numbers of its employees on the weekly submitted payrolls . That is only cited as an example.
  10. In my profile pic,  I'm sitting on the covered but open hotel restaurant at Saba Rock Island, Virgin Gorda, in the BVI's. My wife and I have both long said that "If you find (me) missing, search for me at 18.5030° N, 64.3578° W".  It is one of our favorite places on the Earth. Behind me is a view of the Bitter End Yacht Club Resort.  Hurricane Irma essentially destroyed the Bitter End and heavily damaged the Saba Rock Hotel and Restaurant. Richard Branson's Necker Island is just North of Saba Rock Island. It is widely believed (but not substantiated) in the BVI's that GOOGLE co-founder, Larry Page, owns or leases Eustatia Island, which is another Island adjacent to Saba Rock.  We saw both of their super Yacht sailboats at the Bitter End over the years. Drool...

  11. Mandatory E-Payroll

    For USACE, the government isn't requesting electronic access to or reaching into the construction contractor's internal "system". The contractor inputs the data into the government's contract admin system program, "Resident Management System (RMS)" , via the contractor module or program, called "Quality Control System (QCS)". The cost is to be included in the contract price. I don't know what software NAVFAC is using to administer construction contracts. As stated above, it has been a valid requirement for construction contractors to submit payroll info to the government for decades. Rather than asking for information in a contracting forum, I suggest that the OP address his/her questions and concerns to NAVFAC. There may be valid security concerns or questions about the NAVFAC's approach but I would address them to NAVFAC.
  12. Mandatory E-Payroll

    Government construction contracts (including NAVFAC and USACE) have required submission of construction contractor and subcontractor payroll information containing some personal information for decades. Don can feel free to look for the required approvals to collect that info but it is IAW FAR, DOL regs and the applicable Labor Laws. I don't think that the employee's SSN is part of that data input but am not going to research that here. Think that employee addresses are required. For decades, it was paper based copies. The USACE maintained the paper copies as part of the official contract file, which weren't as secure, in my opinion, as the current electronic files are. We had drawers and boxes full of payrolls, which we had to review and use for employee labor interviews, verification of compliance with the DB minimum wage decisions. They were used for other CAB purposes - such as tracking overall labor hours for safety , and for verifying or estimating expended labor amounts and costs for changes, REAs or claims, evaluating self-performed labor, etc. The USACE is moving to or has moved to fully electronic contracting. The USACE contracts require the contractor to submit electronic payroll data to the USACE RMS (Resident Engineer Management System) software, using the Contractor "Quality Control System (QCS)"module/program. The contractor can use commercially available payroll software or their own developed payroll software as long as it can feed an Excel spreadsheet format, in the CQS module. The contract says, naturally, for the Contractor to include the cost in the contract price. RMS is a DoD and Army approved contracting software system for security purposes. As far as I know, only those USACE Contract Admin personnel with approved access to the contract in RMS can physically access or view the payroll information. However, it remains a part of the official contract file for whatever the prescribed retention period is. I'm not familiar with NAVFAC's electronic contract admin system and have not recently used the USACE RMS software.
  13. 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.
  14. 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.
  15. J&A Requirement

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

    Does the solicitation limit the 20 items to the OEM?
  17. I need to find a fixed price incentive contract or similar cost incentive contract type that is allowable under the existing FAR for federal Design-Build contracting that provides for reimbursement of allowable costs, not to exceed a ceiling price or "Guaranteed Maximum Price" (GMP). The contract will provide for shared savings on the project if the actual costs are less than the ceiling price/GMP, through contract provisions for sharing of savings. In this scenario, the goal is to control costs within the target cost that is established at the price ceiling (GMP). The Question: Is there enough flexibility under the FAR in Parts 16.2 and 16.4, to use a fixed price incentive with Firm Target (FPIF) or similar contract type for a federal design-build construction project but with the "target price" plus the "target profit" in an FPI with "Firm Target" (FPIF) equal to the ceiling price? In other words, does the FAR specifically require separate "target" (cost plus profit) and "ceiling" (where ceiling price = cost plus profit)? Background : I'm presently working to develop guidance for federal agencies to use design-build with a “Guaranteed Maximum Price”, similar to the industry model described below. My goal is to be able to find a way to implement it consistent with the current federal statutes and the current FAR, without having to change either to implement it. D-B Industry Application: The Design-Build industry, e.g., Design-Build Institute of America (DBIA), Associated General Contractors (AGC), and the Engineers Joint Contracts Committee (EJCDC), have contract formats appropriate for design-build contracting. Their formats include, in addition to firm fixed price (the D-B industry term is "lump sum"), a form of "Cost-Plus with Guaranteed Maximum Price (Cost-Plus/GMP). This is a hybrid, combining the cost reimbursement features of a cost-plus contract with the cost certainty of a lump sum contract. The owner benefits by paying only the actual reimbursable costs of the work for the design-builder's performance and by knowing that its project will not exceed a pre-established price (adjusted, of course, for changes made by the owner or for other authorized adjustments under the contract). The GMP also offers both the owner and the design-builder the opportunity to realize savings on the project if the actual costs are less than the GMP, through contract provisions for sharing of savings. In commercial industry design-build practice, the use of a GMP contract structure is often used where the owner’s program is not defined well enough in scope and/or functional or technical requirements to be able to develop a budget or for the owner and industry to agree to a firm fixed price (FFP) for the project. Industry refers to FFP as “lump sum” pricing. The design-build contractor might be selected through some type of competitive best value process or through a qualifications-based selection (“QBS”) process. The owner and design-builder might work together to define the program more completely. The initial effort might be priced on a lump sum or cost-plus basis. The parties should establish a GMP for the project when the program is sufficiently established to make the GMP number realistic and meaningful. Federal Application: For federal design-build acquisition, design-build acquisition processes generally do not allow the use of QBS of the design-build contractor. The design-build contractor is normally selected using a competitively negotiated, best-value selection procedure, considering qualifications, usually design excellence, and price. Generally, federal government design-build build contracts are awarded as FFP contracts. In some instances, federal design-build with GMP contract approach may be more appropriate than the FFP pricing method, when there is already a defined programmatic scope and programmed amount of funding, but with only nominal design development and it is too early to be able to establish a firm fixed-price (FFP) without having to include considerable contingencies or risk in the FFP. It may be well suited for projects that are complex and difficult to adequately define a FFP at the outset and/or for projects that involve unusually high contingencies due to risks or unknown conditions, prior to considerable design development. Rather than paying a FFP for the full estimated contingencies, the GMP method can result in the government paying only for those actually encountered. Plus it incentivizes the design-builder to minimize, manage or avoid costs for such contingencies. Compressed time schedules available for RFP development, awarding and executing design-build contracts for large, complex projects are also a consideration for using design-build with GMP in lieu of FFP award. To be able to negotiate and establish a realistic GMP at the outset, the government must define its performance requirements for scope and quality up front, using a parametric/conceptual cost estimate. The design-build teams would also have to be able to conceptually estimate costs within that performance based requirements RFP format to develop their proposals. Is There an Applicable FAR Contract Type(s)? I have found that the federal “Fixed Price Incentive” contract types under FAR 16.403 (FPIF and FPIS) most closely resemble the industry Cost-Plus/GMP approach. The industry model is described in the DBIA Manual of Practice, in Document Number 510, Design- Build Contracting Guide, Chapter 5, “Lump Sum versus Cost-Plus/Guaranteed Maximum Price”. Both the industry Cost-Plus/GMP and the Federal design-build with GMP using the FPI approach require the design-builder to perform and complete the contracted scope within the contractually agreed maximum price, within the agreed time. Both provide for reimbursement of certain, allowable costs. The Challenge: The current challenge in adapting the FPI for federal design-build with GMP is to be able to use a single target cost/profit and ceiling price – not a lower target within a HIGHER ceiling. I think so, but need some advice or definitive support for my position. The classic FPIF with a lower target doesn't align with the industry model. It encourages a lower quality target design and construction level and may penalize the contractor for encountering unknowns or other non-controllable contingencies, rather than providing positive incentives to the contractor for mitigating, managing or avoiding risks and NOT consuming the contingency allowance. It is also much more cumbersome to manage and administer than a simple GMP ceiling. The industry has already demonstrated a willingness to accept the risk for exceeding the GMP/ceiling, using its existing GMP contract type. The design-builder is the single point of responsibility for design and construction. When D-B is properly used with government furnished performance criteria for means, methods, functional and technical design requirements, the D-B contractor has more ability to control the cost of work in design-build to meet the owner's quality, scope and functional requirements. The classic FPI model with separate target and ceiling price may be appropriate for complex, dynamic government developmental manufacturing programs (like developing and initial production or prototype production of airplanes, ships, missiles, etc.). It may also be appropriate for hiring a construction contractor during development of government furnished design for a complex facility, such as a hospital, etc. It isn't necessarily appropriate for Design-Build construction with a single source for both design and construction. Applicable FAR coverage: I found several pertinent FAR references for FPI contracts under: 16.201(a ); 16.204 (Fixed-price incentive contracts); 16.401 (General), 16.402, 16.403, 16.403-1, "Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both.": A fixed price incentive with a single target/price ceiling (GMP) is consistent with the following: With a target equaling the ceiling price (the GMP), the profit is automatically affected when the contractor's actual cost exceeds the target: When the target and ceiling are the same (the GMP), they are within the constraints of the ceiling price. The government doesn't pay any more than what it bargained for and the contractor absorbs any cost overrun, affecting its profit: The GMP method meets this: The GMP method meets this : Paragraph d. (2) (ii) is the only paragraph in contract clause 52.216-16 Incentive Price Revision—Firm Target that would require some tailoring for the GMP with the target cost plus target profit equal to the ceiling GMP. Inasmuch as the paragraph provides for KO fill in anyway, it would be relatively simple to say something like "No adjustment - the target cost plus target profit equals the price ceiling." ______________________________________________________________________________________________ Note: [FAR Cost Reimbursement Incentive Type is not the Same as Industry Cost-Plus/GMP As a matter of semantics, the cost reimbursement incentive contract types under the Federal Acquisition Regulations have a different meaning than an industry “Cost-Plus/GMP” contract. The federal cost-plus (referred to as “cost reimbursement”) FAR contract types also provide for reimbursement of contractually allowable costs. However, the cost ceiling limitation is initially established as an estimate to complete the contract scope of work effort. The contractor is expected to make its best effort to complete the work within the cost ceiling. The government will not reimburse allowable costs that exceed the cost ceiling limitation. If the contractor cannot or does not complete the work within the cost ceiling limitation, the government would have to decide whether to provide additional funding to proceed beyond the cost limitation There are also legal and regulatory restrictions or prohibitions against the use of a federal Cost-Plus contract type for DoD Military construction and for some other Federal construction contracts.]
  18. 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?
  19. 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.
  20. 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.
  21. 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.
  22. 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.
  23. 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.
  24. 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...
×