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joel hoffman

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Posts posted by joel hoffman

  1. On 2/14/2024 at 6:36 AM, Sam101 said:

    It's good to know that, at least according to The Analysis Group, LLC B-401726,B-401726.2 that asking a quoter to remove a custom indemnity clause counts as discussions, I would have thought that this would count as a clarification, in terms of "hi, offeror, I noticed you forgot to remove the indemnity clause from your quote, you probably used a template that you use for commercial business to business contracts, please remove this clause, if you don't remove it, the government will ignore it anyways, actually, since the government will ignore it anyways, don't worry about it, I'm not asking you for a revised quote/proposal, I'm just letting you know that your custom indemnity clause will be ignored."

    For example, if the FAR Changes clause is in a solicitation, and the offeror has "any changes to the contract will be bilateral" in small print somewhere hidden in their proposal, not in the introductory letter's exemptions section, and the government awards a contract, this doesn't mean that the Changes clause gets overridden by the "any changes to the contract will be bilateral" just because that was part of the proposal.

    On 2/13/2024 at 3:25 PM, Sam101 said:

    I don't know if I ever received a quote with a hold harmless clause, but I have seen quotes with something like "the customer will pay $X amount if they cancel work within a certain number of days", and it's usually towards the end of a price quote, and I always just ignore it and pretend it's not there, since I only ask for a price in the price volume, and everything else is irrelevant.

    Even if the government awarded to SAIC and ignored the hold harmless clause, wouldn't that clause not apply anyways? What's the point of asking SAIC to remove it if it cannot legally be included in a government contract anyways? Like, why couldn't the government just realize that the hold harmless clause in SAIC's quote was just boilerplate text that they probably include in all of their commercial quotes that they forgot to remove it?

    I was under the impression that only FAR and agency clauses apply to a contract no matter that a quotation says.

    You mentioned several times that you “simply ignore” terms and conditions (in quotes or proposals)  that conflict with solicitation terms or that are otherwise objectionable.

    You can’t simply ignore in quotes and proposals terms and conditions that conflict with the solicitation or are otherwise objectionable. If you want to consider the proposal or quote for award, you need to call it to the vendors attention and have them remove the offensive or non-compliant language.

     There must be a meeting of the minds to form a contract.

    “FAR  12.213 Other commercial practices.

    It is a common practice in the commercial marketplace for both the buyer and seller to propose terms and conditions written from their particular perspectives. The terms and conditions prescribed in this part seek to balance the interests of both the buyer and seller. These terms and conditions are generally appropriate for use in a wide range of acquisitions. However, market research may indicate other commercial practices that are appropriate for the acquisition of the particular item. These practices should be considered for incorporation into the solicitation and contract if the contracting officer determines them appropriate in concluding a business arrangement satisfactory to both parties and not otherwise precluded by law or Executive order.”

    For example: "In reviewing protests challenging the evaluation of proposals, we examine the record to determine whether the agency’s judgment was reasonable and in accord with the RFP evaluation criteria. Abt Assocs., Inc., B-237060.2, Feb. 26, 1990, 90‑1 CPD ¶ 223 at 4. An offeror has the burden of submitting an adequately written proposal, and it runs the risk that its proposal will be evaluated unfavorably when it fails to do so. Recon Optical, Inc., B-310436, B-310436.2, Dec. 27, 2007, 2008 CPD ¶ 10 at 6. Furthermore, in a negotiated procurement, a proposal that fails to conform to the material terms and conditions of the solicitation is considered unacceptable and may not form the basis for award. Wolverine Services LLC, B‑409906.3, B-409906.5, Oct. 14, 2014, 2014 CPD ¶ 325 at 3-4."

    See also, for example:
    https://courses.lumenlearning.com/suny-monroe-law101/chapter/elements-of-a-contract/

    ACCEPTANCE: 

    Acceptance by the offeree (the person accepting an offer) is the unconditional agreement to all the terms of the offer. There must be what is called a “meeting of the minds” between the parties of the contract. This means both parties to the contract understand what offer is being accepted. The acceptance must be absolute without any deviation, in other words, an acceptance in the “mirror image” of the offer. The acceptance must be communicated to the person making the offer. Silence does not equal acceptance.”

    With RFQ’s, the government makes an offer to the successful vendor. In the government’s offer to award, you could specifically identify the specific terms or conditions in the quote that you don’t accept.

    However, you may not know what the price or performance ramifications of objectionable or non-conforming terms of a quote are.

    Therefore you need to discuss and negotiate the final terms for the quote . It might result in a price reduction. It might result in a material change to the requirement if accepted that may affect other vendors prices.  It might result in a price increase that might affect the quoter’s relative ranking among other competitors.

     If you are a “beginner”, I hope your organization has an attorney who can advise you about the principles of mutual understanding, not ignoring non-conforming terms and conditions in a quote or proposal,  “meeting of the minds”, etc.

  2. 12 hours ago, Sam101 said:

    I agree.

    I remember a recent negotiation where I had to let multiple quoters know that their prices were too high, but I did not explicitly state the decease the government was looking for in terms of explicit dollar amounts, e.g., $200 or $500, I just said this:

    Quoter 1: Your price is moderately too high, please decrease.

    Quoter 2: Your price is significantly too high, please decrease.

    Quoter 1 decreased their price well and ended up getting the award, I don't remember by how much Quoter 2 decreased their price, but in any event, Quoter 1 got the award.

    I see your point, but just in general, not just in the government, but for businesses as well, I sometimes struggle to understand what "labor cost" means when it comes to performing "extra" tasks, in the sense that if workers are not performing these "extra" tasks, it's not a guarantee that they would spend their time doing something else that is useful to the business, or the government, i.e., the workers might be idle... if the works are idle, then what is the extra cost involved in them doing extra tasks? Is it better to pay workers for being idle?

    Well, you can look at it this way then. If you simply call the contractor and ask him to lower his price, versus taking all that extra time to cough up and process another couple hundred dollars and piss off or otherwise under impress your customer,  you have more time to goof off and be idle, not doing other work. 

  3. Sorry to drone on. I worked with a Korean American fellow contract administrator in Saudi Arabia on mods and claims for a large construction contract with a Korean contractor.

    I couldn’t understand why the contractor kept proposing higher labor rates for every mod action, long after our auditors found that they were inflated. We would have to adjust the rates and hours for every negotiation.  Then our contractor would agree to the lower amounts.

    Mr. Chong told me “You Americans are gullible and seem to accept everything at face value. We Koreans bargain for everything, even loaves of bread…” 🤪

    I still remember that 40 years later.

    Edit: One last thought. Do you notice that when you are buying a new or used vehicle from a car dealer, the sales person generally always asks you to “make an offer”, then takes it to the sales manager, who either accepts or rejects it? The sticker or window prices are effectively considered to be a quoted price. I haven’t ever been able to get a salesperson to offer me their best or even a lower price first.

    But the latest and expanding practice is now  “no haggle” pricing. I haven’t bought a vehicle under those pricing arrangements yet…

  4. 18 minutes ago, Sam101 said:

    Interesting.

    That's better than any dealing I ever had with car dealers, since it makes sense and is a reasonable demand. This one time I looked the car dealer straight in the eye, with a serious face, saying I will buy a $37,000.00 car today if they sell it to me for $27,000.00... they said no, and then I left.

    It occurred during the second semester of my night classes pursuing a second degree, in Business Administration - soon after learning what I mentioned earlier. We moved to Saudi Arabia about four months later and sold the car. Fortunately, new Hondas were almost impossible to find at dealers back in 1983. Demand greatly exceeded supply. I think we sold it for what we paid for it.

    Edit: I discovered in Saudi Arabia that the European versions of new Hondas and other car and small truck brands cost a whole lot less than in the US. I could have bought a used, classic  Rolls Royce for about $10,000 in 1987. But it was too much trouble to arrange shipping and import modifications and tariffs, etc. plus we were relocating to Germany. 🤪

    (I could also have bought a slightly used, late model D-9 Caterpillar dozer in Riyadh for about $10,000 - 35,000 Saudi Ryals - too.🤠)

  5. 3 minutes ago, Sam101 said:

    Right, but when all the stars align, the government can end up staring at a document from the GAO stating "the protest is sustained, on the grounds that the government engaged in improper discussions".

    “It depends upon the conditions”. If there are one or more reasonably competitive offers/quotes in the running, it may make sense to negotiate/bargain with them. 

    But, let’s live in fear of a protest and play it “safe”. 
     

  6. I bought my first new Honda Accord back in 1983. I learned afterward when the bank sent me the loan papers and conditions that the first payment was due 60 days later. That meant that I was initially paying an extra month’s interest plus residual interest on that interest for the remaining 36 month period. I went back to the dealer to claim breach of the written sales contract and the advertised loan.

    The dealer said that was the bank’s terms, not theirs. I replied that the dealer was, in effect, an agent for the bank, so they and the bank were both liable for false advertising. I then went to the bank and told the bank manager the same thing. The bank rewrote the loan agreement to make the first payment 30 days after my purchase.

  7. 16 hours ago, Sam101 said:

    But maybe I would say "no money no contract" and ask the end user to add $200 to the requisition and award to the first quoter.

    If you are a beginner, let me suggest that you learn how to negotiate and bargain and then practice it. And learn how to respond to QUOTES. 

    It likely takes more of time, effort and labor cost for you and the other government organizations, offices and personnel to contact the end user to demand $200 more  to award a purchase order, then have the end user request the funds, someone process and send the funds to your organization, then your organization processing them - than to call (oh no! “Talk” to them?) or even to email them to bargain for a $200 reduction or discount.

    I was told several times by contractors that they often don’t initially quote or propose their bottom line best price, especially when subcontractors are involved, depending upon the level of expected competition, market conditions, etc.

    Why request “quotes” if you don’t think that you have the ability to bargain for better price and/or terms and conditions. The GOVERNMENT is the party that makes an offer to the vendor, after all! 

    AND don’t ever ignore a cancellation penalty or any other objectionable term or condition in either a quote or condition!!

    15 hours ago, Sam101 said:

    and I always just ignore it and pretend it's not there, since I only ask for a price in the price volume, and everything else is irrelevant.

    It may be a standard term or commercial condition but it’s a conditional quote or offer. When the government responds to a quote, it’s making the offer to the vendor to form a contract…

    Yes, “it depends upon the situation”.

    Edit: I learned in a Business Law college course over 40 years ago and in negotiation courses and readings that almost everything is negotiable, especially quoted prices and terms and conditions and even printed and posted sticker and price tags. You can bargain for better terms and prices - even if the quote or offer otherwise meets “acceptable” evaluation criteria.

  8. 7 hours ago, Andrea S said:

    Perhaps I should clarify, just in case. They want to send the solicitation and specifications in draft form, as in labeled draft, then making changes before sending the solicitation and specifications to request a proposal. 

    12 hours ago, Andrea S said:

    Last week the customer sent me the roll up of the draft solicitation and the draft plans and specifications and asked us to forward the drafts to the contractor to arrange a site visit.

    What reaction to the draft solicitation and draft plans and specifications does the customer expect from the proposed contractor?

    Is it simply in order to provide general information during the site visit?

    In the mid 2000’s, for the last two of nine DoD Chemical Weapons Demilitarization Plants*,  the government shared draft solicitations with the very limited universe of interested contracting teams and sought their feedback. Then we  conducted one on one meetings with each of them before finalizing the RFP’s.

    There were no plans and specs for those draft solicitations or for the final RFP.

    The Program Executive Office and partnering government agency teams considered the industry input when finalizing the RFP’s. The Systems Contracts at those two sites were for design, construction, systemization, pilot operations, final operations and closure, using task orders. Both Systems contracts were in the order of $2-3 billion.

    *These last two plants are under the Assembled Chemical Weapons Alternatives (ACWA) Program Executive Office.

  9. Thanks for reminding me, Carl. This is another reason not to use the term “discussions” with Part 13 , simplified acquisition methods.

    See 52.215-1 (a): “…Discussions are negotiations that occur after establishment of the competitive range that may, at the Contracting Officer’s discretion, result in the offeror being allowed to revise its proposal.”

    I can’t believe that contracting officials don’t know how to, orally or in writing, communicate with vendors, without referring to the term “discussions” or following the cookbook, Part 15 discussion procedures…

  10. 1 hour ago, Sam101 said:

    I understand the convention of not using the term "discussions" in FAR 13, but I don't understand why it's a convention, why can't it be called "FAR 13 Discussions"?

    Because you are still referring to the term “discussions” which is formally detailed in Part 15. Call it anything you want to. I recommend one of the synonyms. I like “bargaining” .

    bargaining implies the ability to give-and-take.  

  11. I thought that the earlier thread was pretty clear.

    Per the explanations and conditions in the earlier thread, If you want to negotiate commercial terms or prices with one or more quoters that are reasonably competitive,  you can do that.

    Remember, a “quote”, is not an “offer”. The government can negotiate with one or more quoters and can make an “offer” or an offer to award to a quoter.

    Why call it “discussions” if you don’t have to?

    And yes, document the file.

     

  12. 13 minutes ago, ji20874 said:

    I think OP is talking about negotiating a new contract -- he or she has not inquired about changing or modifying an on-going contract. 

    ji, my post above was only in response to Don’s last question. The contractor asked for an adjustment and they both agreed to it.

    As for a new contract for the same conditions, the contractor can easily handle it in new proposed hourly rates in agreement with its labor force. He doesn’t have to identify any travel reimbursement taxes in the new rates. They would just be higher. 

  13. If government changed the location and working conditions, it is a change.  If it affected the labor availability or willingness to travel without a raise to cover increased employees’ expenses, I could then consider that  the government change impacted the contractors cost due to the changed working conditions. If the contractor was just being a nice guy, then maybe no impact.

    In my opinion, an after the fact profit adjustment couldn’t really be justified as “higher risk “, if the risk didn’t occur and it was contractor voluntarily reimbursing employees for taxes paid to be a “good guy”.

    But if the parties agreed that the unburdened amount of the employees aditional requests for relief  would suffice as an impact settlement, that could work.

  14. 1 hour ago, Neurotic said:

    Thanks for the responses. My agency does not have an issue with reimbursing the contractor. The government created the requirement/conditions for the cost to happen. My original question goes to the treatment of the cost since the cost principles make this cost unallowable. The contractor (and at this point we don't see any other way) wants to include the tax differential cost in the profit of the T&M CLIN. I was asking if anyone had dealt with this type of cost and how they accounted/paid the contractor for it. 

    Actually, the cost might well be allowable if the contractor proposed higher wages/salary for the follow on contract. But if the situation can be handled by simply adjusting profit, ok.

    A percentage of travel reimbursement costs may not be huge. If travel is by commercial carriers,  hopefully the contractor will directly pay for tickets.

    (Going deer hunting. Enjoy your day)

  15. 1 hour ago, ji20874 said:

    Joel, because OP is talking about the negotiation for a new contract (and not about administration or the existing contract), your last comment about change of scope seems inapt.

    My last post only addressed the initial contract, as if the contractor is seeking reimbursement…

    The initial post didn’t differentiate, between the first contract and the follow on contract.

    The initial responses questioned adjustments to the existing contract price.

    On 2/7/2024 at 6:28 AM, Neurotic said:

    No, nor the vendor or the agency foresaw the extended TDY. The pandemic created the situation during contract performance. The original POP ended so the agency is negotiating a follow on contract (although first time through my desk). The conditions for extended TDY continue.   

     

    On 2/7/2024 at 6:25 AM, Neurotic said:

    Contractor meaning a large business enterprise. The rate (assume you meant profit) increase is to get compensated for the tax differential, basically circumvent cost principles to get reimbursed for the add cost.  

     

    On 2/2/2024 at 12:10 PM, Neurotic said:

    The contractor is seeking reimbursement of the these taxes. 

    To repeat- my post this morning only refers to the initial contract, if the contractor is seeking reimbursement. Neither side anticipated that the employees would have to go on extended TDY when the contract price was negotiated and permanent relocation or replacement of existing personnel wasn’t practical.

    I previously said that, if the initial contract anticipated or required extended TDY then there would be no grounds for an adjustment.

  16. Assuming that Neurotic is government employee:

    22 hours ago, Neurotic said:

    No, nor the vendor or the agency foresaw the extended TDY. The pandemic created the situation during contract performance. The original POP ended so the agency is negotiating a follow on contract (although first time through my desk). The conditions for extended TDY continue.   

    I would consider the extended TDY to be a change of scope. If it was originally known at the time of negotiating the contract, the contractor could have increased the wage/salary rates “to attract or retain employees” who didn’t know they would be working on extended TDY. The contractor might be willing to simply accept an adjustment w/o all the markups…

  17. On 2/2/2024 at 12:10 PM, Neurotic said:

    I'm looking to see whether anyone has come across a similar situation and how they incorporated this type of cost into a contract. Tying anything (cost or Profit) to an indefinite quantity (hours) contract is likely not the best option business-wise. Any suggestions are welcomed as well. For what is worth, the Gov reimburses its own employees for this additional income tax. Thanks 

    Apparently, upon some research of the tax code references, if the Contractor would directly pay vendors for long term lodging, the employee would still be taxed. If so, my suggestion would still be for the contractor to determine what wages or salaries would be necessary to attract and retain long term TDY employees.

    Example: 

    Many years ago (circa 1981),  my Corps of Engineers District Office negotiated a FFP construction contract for a new recreation area on the then under construction Tennessee-Tombigbee Waterway in Alabama with an 8(a) firm from the St Louis area.

    The firm proposed using its own, home based construction trade labor at much higher than the prevailing local, rural Alabama wage rates, which I remember considered daily lodging and per diem expenses for its permanent trade labor. The agency agreed with that approach.

    I was then working in a Tenn-Tom Resident Construction Office that administered the contract.  We reviewed the weekly payrolls to verify that all those employees were indeed TDY from the St. Louis area. To my amazement, they were!

    ————————————————-
     

    As an aside, that St Louis based contractor is still in business to date and was recently hired for a major, several mile long, forced main sewer line replacement project in Mobile Alabama for the Mobile Area Water and Sewer System (MAWSS). 

  18. On 2/3/2024 at 4:04 PM, Retreadfed said:

    This seems like a personal problem for the employees that is to be resolved between the employee and contractor.  Why is the government getting involved?  

    Yes it is likely a matter between the employees and employer.

    If the scope of the project anticipated or required long term TDY, the employer should have been aware of the taxation and planned for it, if they thought there would be a problem with retention or dissatisfaction by the workforce.

    It appears that the original poster hasn’t been back since posting Friday at noon*. So, without further details, readers are left to ask for further clarifications and to speculate. Several questions by us were asked on Friday and on Saturday afternoon.  

    *Edit: Still evident at 0915 CST on Monday morning.

    **Edit. Add:

    Upon rereading the initial post, it’s not clear to me now (Sunday morning) whether initial contract negotiations are ongoing or the contract has been negotiated and awarded.

    If still under negotiation, the contractor could adjust the proposed wages or salaries to attract or retain employees that would be TDY. If awarded, I see no contractual basis for an adjustment (assuming that the location and length of assignments should have been known or otherwise anticipated. 

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