joel hoffman

Vern, OK then. That's not true. You may not have read where I advocate meaningful discussions in posts #16, 18, 19, 22, 23, and 28 above. You may recall in another thread that you challenged me a few months ago to write an article in a Blog. You said I should detai my views on the necessity to conduct meaningful technical and price discussions for construction and design-build source selections or task order competitions. I advocate emphasis on getting the best deal for the government. I complained about an observed reluctance of some PM's/KO's that is apparently widespread in various agencies to provide time for and to conduct discussions. When they do, they are sometimes shallow. In particular, I advocate conducting price discussions and/or conducting technical discussions when there is an otherwise awardable proposal that could be better. Such discussions are also appropriate for proposals that may be technically compliant but contain some objectionable or unneccessary features. I advocate bargaining for better performance. I described differences between pre and post 1997 versions of FAR Part 15, which encourage this approach. The point I've constantly and consistently made in this thread, is that I have found it is more effective and efficient use of time to obtain and use the price breakdown information as part of the proposal price evaluation process - before establishing the competitive range and prior to discussions. It is also useful for determining which firms to include in discussions. Don't wait for negotiations to ask for it. I successfully used this approach for many years. It has been included in a Model RFP that has been used for billions of dollars worth of Army D-B MILCON projects since 2006. You may have not read in posts #4, 7 and 28 where I explained that price breakdowns furnished at the time of proposal submission for construction and design-build projects are of little value - that it is more effective to allow proposers about 3 working days to submit it. I also said that this information isnt always necessary. In consideration of the effort and cost involved to industry to prepare this information, we decided to reserve the right to ask for it. We can easily and quickly obtain it if needed during the time set aside for proposal evaluation. If time is critical, then require in the RFP for proposers to submit it 3 working days after initial proposal receipt. I was replying to your question in post number 17: The procedure is compliant with the policies expressed in FAR 15.402 (a )(1), 15.403-1 (b ) , and 15.403-3, as I initially identified very early in this thread in post #7. There is no need to add supplemental agency policy to use such wording in an RFP. Sorry that I overlooked your specific questions in your post #20. Perhaps you edited your original post - who knows. I answered most of them already. Yes, provide a common cut-off in the letter/email requesting the supplemental breakdown. There were no compalints by industry during the years that I personally led the construction and D-B source selection process. We have Corps-wide feedback systems for requesting revisions to the Model RFP. I haven't seen any negative feedback on this practice since the RFP was published in 2006. If the GAO decided to take an intererest in it, I'm sure that we would respond appropriately, but we haven't been quaking in our boots about it. Proposers are not allowed to change their CLIN prices with the breakdown. Who is to say that they wouldn't manipulate the data if we first ask for it in discussions or with their proposals? We already know that the price breakdown data was of marginal value when it was submitted concurrently with the proposal. I had to explain why several times here.

Verbatim, In order to respond to your question concerning other possible, "more meaningful methods of satisfying this requirement", one must understand more about the scope of task orders to be used. By "general construction", are you referring to construction of broad types of buildings, site utilities, etc. ? If not, what type projects are you contemplating accomplishing as task orders? Are they mostly repetitive at a certain location? How big will task orders typically be? What is the geographical coverage of the possible task orders? In today's market, construction pricing is quite volatile and dynamic, unless one is talking about relatively routine, simple, repetitive type tasks at a single location. Thanks!

The GAO has expressed problems with using sample tasks when they are non-binding upon the offerors. Don mentioned this above. These have been discussed in other threads in the Forum. The GAO has also expressed problems with just using fixed unit prices and estimated quantities to compare overall price reasonableness because those quantities may not actually represent realistic labor mixes and quantities on real task orders. Apparently, GAO doesnt consider either of those methods by themselves to represent meaningful price competition. Many material prices experience considerable price fluxuation each month or quarter. Contractors and their subs dont normally pay catalog prices, they usually pay various discounts off list prices, which varies as the price of materials fluxuate up and down, delivery need dates, quantities, etc. The Government would be foolish to try to accomplish significant amounts of construction over extended periods using pre-determined, fixed prices for materials and labor (much of which varies, depending upon whether it is subcontracted, when it is subbed and who it is subbed to). Even the Job Order Contracting method with fixed multipliers for all prices that are covered in a database taken from an estimating cost data book (such as R.S. Means) is very difficult in real practice to make work fore anything other than very small construction projects.

1. We used to ask for the breakdown with the proposal but found that it was not effective to ask for it to be delivered with the proposal for the reasons explained above. It was very effective when we asked for it to be furnished within three working days of the proposal submission date. That allowed the proposers/offerors the chance to properly breakdown the information. We provided the format in the RFP. The reason we don't do that any more is that we don't always need the data. So we don't want to needlessly task proposers to automatically furnish it. We decided to reserve the right to ask for it. If you are strapped for time, it is certainly ok to require it to be furnished a couple of days after the proposal submission date. 2. I strongly encourage discussions for D-B contracts and task orders, including bargaining for better performance, finding solutions to price and technical problems, clarifying anything we think isnt clear, etc. I hate it when KO's and/or PM's try to avoid discussions for the sake of some unrealistic schedule or in the belief that we don't conduct discussions if we have a proposal "without deficiencies". In fact, I was chided by the Webmaster and by a very prominant WIFCON poster two months ago in another thread for not creating a Blog to expand on my viewpoint. I feel that, in design-build, discussions are almost always fruitful and that we should bargain for better performance if we arent completely satisfied with even a conforming technical proposal. Of course, that applies to solicitations that use the Trade-off method. In an LPTA, price is paramount consideration. We can't pay a dollar more for a higher priced proposal that offers anything more than compliance with the minimum RFP requirements. 3. A D-B solicitation using LPTA, usually includes a highly prescriptive, "full-criteria" level of preliminary government provided design. The D-B industry derisively refers to this as "draw-build". Those are typically where you will find more pricing problems that should require discussions. Those solicitations usually severely limit flexibility of the D-B firm. Most, if not all means, materials and equipment choices are prescribed or narrowly limited. If price is the most important factor, I'd think that the government would want to award within the budget. 4. In fact, I'd think that one price objective for any design-build project should be to award within the budget. When using the trade-off method with performance oriented (less design furnished by the government) design criteria are furnished, I feel that we should be looking for the best combination of qualifications and design quality within the budget - not the lowest price. That's all for now. My wife is visiting me this weekend on my extended TDY assignment.

When I said "You don't conduct discussions until you determine where the differences are. Until then you don't have anything to discuss", i was referring to the timing of obtaining the price breakdown information. The original poster mentioned deciding to conduct discussions, which requires establishing a competitive range, then asking for the information either during discussions or just before discussions. I'm saying, ask for it during the price evaluation process, if needed - which is consistent with the guidance in the references in my post #7.

Vern, what on earth are you talking about? Where did I say that discussions are mainly for pointing out deficiencies and and for proposal revision in order to eliminate them? If i did, it was unintentional. I totally agree with you about the value of both technical and price discussions. I love discussions. I have used them to save millions of dollars on some source selections by finding mutually acceptable solutions, eliminating the need for contingencies , finding design alternatives, etc. The point I'm trying to make is that one goes into discussions with enough information to intelligently explore problem pricing areas. We develop a uniform format to ask for the price breakdown information during the price evaluation process to help define the areas of probable pricing differences or problems with the estimate or RFP. Then we look for possible problems with the requirements before going into discussions. It speeds up the process by being better prepared to conduct effective discussions. We first determine if there are problems that require discussions. One could liken this concept to researching various car models and options, researching prices, establishing your objectives - then go to the dealership and sit down to negotiate, vs. sitting down to discuss what's available and pricing with no advance preparation. Its the timing of obtaining the information that I addressed. We reserve the right to ask for it as a clarification in order to aid the price evaluation process. Its more effective having the information and having the opportunity to compare the proposals with each other and with the estimate than going into discussions cold. I indicated in post #7 where FAR Part 15 allows this in the source selection process. We don't need to have an agency policy or regulation to comply with FAR.

In my opinion, there is no value added to the source selection or task order evaluation process by deciding to conduct discussions to see if there really is a need to conduct further pricing discussions. It adds time and extra effort to the process, which may not be necessary. Asking for information, in essence as clarifications, allows the government to focus attention on those areas that stand out as significant differences between offerors/proposers and between offerors/propers and the government's estimate. Sometimes we discover busts in the IGE and sometimes we discover problems with the government's requirements. If we need to conduct discussions, we are are more informed and more prepared to explore those areas. I've sat in on discussions where this wasn't done and the government team looked like dummies. Then extra time was spent asking for and getting the information necessary to evaluate and continue discussions.

Here is current wording excerpted from Section 00 22 20, "PHASE 2 DESIGN-BUILD SELECTION PROCEDURES AND BASIS OF AWARD" in the Army Corps of Engineers' Model RFP. The Model RFP was developed in 2006 for use on Design-Build contracts for Army MILCON projects as part of the $60 Billion plus MILCON Transformation/BRAC Program. This program involved up to 6 times the normal Army MILCON workload for several fiscal years. A representative Corps-Wide acquisition committee (including Contracting, Attorneys and Engineers) developed this Section of the RFP. It was vetted through Contracting and legal channels, with input from industry in the 2005-2006 timeframe. The Model RFP was directed for use on all USACE Army D-B projects for consistency. I can't vouch that it has been used on all projects but it has been used on hundreds of D-B projects since 2006. We used similar wording as below in Mobile District for D-B and for straight construction RFP's as far back as 1992. Similar wording has been used in the USACE Design-Build PROSPECT Course "Design-Build Construction" since its inception in 1996. The Model RFP has optional versions for One Step D-B under 10 USC 2862, Two-Phase (FAR 36.3), a Two-Phase version for initial award of Multiple Award ID/IQ (MATOC) Base Contracts and a version for follow-on task orders on MATOC's. I've not heard any feedback that there are problems with this approach to reserving the right to request price breakdown information. We have a feedback system for lessons learned and a Criteria Change Request program. I have been a member of the team that developed and maintains the Model RFP since 2005. "8.1.1.1 Submission Requirements: Submit the properly filled out and executed SF 1442, along with the CLIN Schedule, containing proposed line item and total pricing, as well as the proposed contract duration. See instructions in Section 00 21 00, “Instructions to Offerors”. Supplemental Price Breakdown. If deemed necessary to evaluate the price proposals, the Government’s will request a Phase 2 price breakdown of the Contract Line items in a sealed envelope marked “Phase 2 Price Breakdown Information”, in Excel format. The Government will provide details on where and how to send the breakdown. This information will not be needed sooner than three working days after the proposal submission due date. This information may be required for the initial Phase 2 proposal and, if requested, for any revised proposals. This information is not an opportunity for an Offeror to revise its non-price or price proposal." "8.2.2.2 Evaluation Criteria: ... If deemed necessary, the supplemental price breakdown information will be used to assist the Government in performing the price evaluations described above."

I don't disagree with the idea of conducting discussions to determine if pricing is unreasonable. However, I do suggest reserving the right in the RFP to ask for price breakdown information if necessary to help the government evaluate price proposals. This isnt discussions because we don't allow the proposers to revise their proposals. We have done this for over 20 years without a problem on hundreds of solicitations. We began in the late 1980's asking for a high level price breakdown with the proposals but found that the information often didnt make sense. During discussions with a couple of the proposers' reps, they indicated that they dont have any problem with furnishing such information. However, they werenty in a position to accurately break down the final numbers prior to proposal submission because they were still finaalizing the final pricing up to the last minute. They suggested allowing proposers a couple of days to break down the information and provide it. We then asked in the proposal for the price breakdown information to be provided within three working days after the closing date for proposal receipt. That worked great for us. However, on many occassions we didnt need the information and were making proposers go to extra effort for no purpose. We then decided to instead reserve the right to ask for the information, if necessary to help evaluate the price proposals. We ask for the information when there are questions concerning pricing. This has worked very well in helping to determine if we need to conduct price discussions. This technique has greatly increased our ability to prepare for price discussions ahead of time. We don't always decide to go to discussions. With this information, we can first decide if we need to conduct discussions and focus on those areas prior to discussions, instead of dragging proposers in, wasting everyone's time trying to find the areas where we needed more information to evaluate proposal reasonableness. I've been in those kind of discussions, which sometimes make us look like idiots in the eyes of the proposers. It was embarassing. Krusem asked "...what recourse does a contracting officer have, if any, when all proposals exceed the government's estimate, and the government believes its estimate is valid (correctly priced)." I think that the method I described has worked very well for us over the years. I'm not aware of any legal issues that have arisen using the method. Our attorney's at first were concerned that this was some type of split proposal, but agreed that it was okay as long as we don't allow proposal price revisions with the breakdown information. The proposers have never complained to my knowedge and the techniques have been effective.

You don't conduct discussions until you determine where the differences are. Until then you don't have anything to discuss.

I advocate including language reserving the right to request price breakdown information (information other than cost or pricing data) in RFP's, if necessary to determine that prices are fair and reasonable and teach including wording to that effect in my design-build construction class. However, even if you dont reserve the right, I believe that you can request information other than cost or pricing data, if necessary to determine that a price is fair and reasonable. See 15.402 (a )(1) and 15.403-1 (b ) , and 15.403-3. I don't necessarily agree with hutch_05's suggestion that you "[t]ell the contractors in the comp range their price is high in comparison to the IGE. Then request a revised proposal that includes a cost breakdown..." -- at least for construction or design-build acquisitions. Hutch might be right on for supply or services acquisitions, especially for commercial items that are widely sold. However, I would ask for "price" breakdowns, not detailed "cost" breakdowns. You may not have enough information at this point to request revised proposals. I would advise asking for the information and provide a higher level outline pricing format that you can use to compare proposal price breakdowns with each other and with the IGE to explore areas of price differences before conducting discussions. This will usually allow us to pinpoint areas of significant differences. Then conduct discussions to try to determine the reasons for the price differences. I have found situations where poorly written or ambiguous specs caused confusion, specs were written around one supplier or manufacturer or where subs or primes have thrown in contingencies due to something that we can solve or change. Sometimes, we have unreasonable requirements that could be modified. We have even found alternate manufacturers that would meet our requirements, which busted up some proprietary pricing by suppliers (the original supplier to a prime construction contractor reduced their price by several million dollars in one case) . This is LPTA. Therefore, proposers will often sharpen their pencils due to competition. Inflated pricing may be less likely than misunderstandings, or prescriptive specs, etc.in such cases. It often ticks off proposers when the government simply requests better pricing under the assumption that our estimate is correct when we haven't bothered to find out why the industry pricing is higher than our estimate. Plus, I like discussions anyway.

Except under limited circumstances, which are discussed in the GAO Redbook or in financial regulations, annual funds generally expire for the purpose of an obligation at the end of the fiscal year or period for which they were appropriated. It doesnt generally matter that the contracting office was unable to make the award beofre the expiration of the funds.

A performance specification specifies a desired end result, without unnecessarily specifiying the means, methods or materials to achieve those results. Performance specifications also normally include means to verify or for the contractor to substantiate that the specified level of performance has been achieved. The CSI (Construction Specifications Institute) and other organizations provide like definitions of performanceformance specifying. A level of effort specification "prescribes" the means and/or methods to be used to achieve or attempt to achieve some result. Thus, they are a form of prescriptive specifying. I agree with Vern.

What are you contracting for? I've often led or participated in discussions concerning pricing in competitive acquisitions for construction and design-build contracts but won't go into details unless that is what your acquisition concerns. Suffice to say that you can explore areas of differences in pricing, discuss scope and pricing issues and seek price reductions, clarify and/or revise unclear, incorrect or excessive requirements, seek alternative solutions to meet your requirements, where appropriate. Discussions can be a very effective means of achieving two way exchanges of information.

You said "I guess I was not thinking about scope in terms of hours but in terms of the additional work being requested due to the unknowns that remains in scope of the PWS." Notwithstanding your choice of terms, which is confusing, a basic question is "are you increasing the actual 'scope of work' that is described in the contract?" I can see a possible scenario where the government described the scope of work that was/is(?) described in the "PWS" in the RFP, the contractor may have proposed a certain level of effort that it said it would provide to perform that scope of work and then the government included that level of effort into the contract as a requirement to assure that the contractor would actually provide it. Is your scenario similar to this? Then a question would be was the final intent of the contract to perform a level of effort in order to tackle (pursue completion of ) the necessary work or is it to complete the work that is decribed in the contract? I agree with Vern that you talk to a competent person in your own organization about this. I don't think that you described the actual scenario well enough for anyone to provide a definitive answer.

Then it appears to be a negotiated agreement between a first and second tier sub as to share of their work between them and nothing more.

There may be more to this than first meets the eye. Please explain further: Is this an agreement to team as part of a prime contract proposal or bid process or has the prime contract already been awarded? Please advise me if I am correct in assuming that 1) the subcontractor is asking for a guarantee of "at least 20% of the [contract] work" and 2) the "contract manager" works for the prime? If the prime contract isnt awarded, is the percentage of subcontracting to small business a factor in the selection process? Finally, why does the contract manager say "that the provision would violate the prohibition against contingent fees and the anti-kickback act"?

Had to check out of hotel and drive to work... Yes, I agree. [EDIT: As I Did say and agree] DoD uses an evaluation of past performance in its assessment of their level of confidence that the contractor will successfully perform the contract. The DoD agencies cant "rate" past performance on a pass/fail basis when using the trade-off approach. The DoD policy discusses evaluation of offerors with no relevant past performance history. [EDIT: Please See my edit to post #10 above. My initial reference to PP ratings was with respect to "Contractor Performance Evaluations" , not to source selection performance evaluations. There is a rating system used for evaluating the relevance of the past performance evaluations/ratings to the instant acquisition in step one. Step Two is a confidence assessment, which takes into account the quality of past performance as well as the relevancy of the information.]

Thank God only DoD has to use that system for their Past Performance evaluations. I only described them as examples in response to 2 different questions. In DoD the pass/fail evaluation of PP iis limited to LPTA. The DoD guide describes how they rate a firm with no PP.

The thread initially concerns rating Past performance on a pass/fail basis under a trade-off source selection. The DoD would only do that under an LPTA approach. DoD would otherwise rate PP under a 2 step comparative approach for a Trade-off approach, as described in the DoD Manual. The second question asked how a firm with no past performance is rated wnder a pass/fail system. That is described in the 2 step LPTA acceptable/unacceptable approach.

[EDIT: Please note that I didnt make any mention above of "rating" past performance during the source selection. The past performance ratings that I referred above to are those associated with evaluations of contractor performance and in the performance reports. We use such previously prepared reports, as well as evaluations by references or other documentation of past performance assessment in the private sector to evaluate the relevancy and quality of past performance to be used in step 2 confidence assessment. I don't know if service and supply contracts use "ratings" in their contractor performance evaluations. The evaluation of relevancy of past performance uses "Past Performance Relevancy Ratings"] It is DoD's form of a past performance evaluation system. It is based upon a level of confidence that the contractor will successfully perform the contract. Both the Trade-Off and LPTA processes use a 2 strep process, which are described (though not in depth or clearly in my opinion) on pages 16-19 of the Manual . For step 1, the evaluators determine the relevancy of the past performance information to the instant contract scope. In the LPTA method, the first step only uses the Relevant or Non-Relevant ratings. From page 17: "The SSP shall clearly identify the treatment of relevancy within past performance evaluation." From page A-2: ,"The criteria to establish what is recent and relevant shall be unique to each LPTA source selection. Therefore, the solicitation shall establish the criteria for recency and relevancy in relation to the specific requirement being procured. In establishing what is relevant for the acquisition, consideration should be given to what aspects of an offeror’s contract history would give the most confidence that the offeror will satisfy the current procurement." In the second step, only an "acceptable" or "unacceptable" level of confidence is assigned for past performance per Appendix A. Also refer back to the body of the document for more background. That's what DoD agencies are now required to uss for their PP evaluation. I cited it as an example in response to FSCO's question. The acceptable rating in Appendix A states: "Based on the offeror’s performance record, the Government has a reasonable expectation that the offeror will successfully perform the required effort, or the offeror’s performance record is unknown. (See note below.)" And: "Note: In the case of an offeror without a record of relevant past performance or for whom information on past performance is not available or so sparse that no meaningful past performance rating can be reasonably assigned, the offeror may not be evaluated favorably or unfavorably on past performance (see FAR 15.305 (a)(2)(iv)). Therefore, the offeror shall be determined to have unknown past performance. In the context of acceptability/unacceptability, “unknown” shall be considered “acceptable.”

See Appendix A, pages A-2 through A-3 at the reference I provided above for example. http://www.jacksonkelly.com/jk/pdf/S0327133.PDF

Charlie might be thinking of the Department of Defense Source Selection Procedures, dated 4/4/2011. In its quest for uniformity, the DOD Guide prescribes use of uniform rating systems for the non-price factors and subfactors when using the Trade-Off Process. The DoD's procedures for the trade-off process don't allow the use of a Go/No-Go or Pass/Fail rating system for Past Performance. Although use of acceptable/unacceptable criteria might be allowed for some technical factors with the Trade-off process, the Past Performance factor is further distinguished from the other non-price factors. It is a "confidence assessment" of the offeror’s probability of meeting the solicitation requirements, using a two step evaluation procedure. The first step considers how relevant the past performance information is to the instant acquisition. More relevant past performance ratings have "more influence on the past performance confidence assessment than past performance of lesser relevance." The second aspect of the past performance evaluation is to determine how well the contractor performed on the contracts. Both steps use prescribing rating systems. See the Manual at: http://www.jacksonke...df/S0327133.PDF

I guess I didnt really answer your question about getting the price/cost analysis done. Are you with the contracting agency or with the customer? The contracting agency should have the resources to evaluate proposals. Did they mention anything about the prime having to perform the analyses mentioned above.

That is excellent input from Vern. You were asking about some options available to determine fair and reasonableness of subcontract using cost/price analysis under a Prime Contract subject to TINA (certification required)? I dont know what type of contracting or contract action you are dealing with. I can explain some of my real life experience with negotiating construction contracting for new sole source contracts or modifications, where DCAA audits of primes and/or subs were involved. I don't know DCMA's policies and procedures, though. They might be quite different and the following may not be directly applicable to your situation. Your action might not even require negotiation. The audit can be more effective if a prime has performed some type of realistic cost analysis - which would hopefully include a technical analysis of the sub's approach to the required effort. The DCAA audit is often much more effective if the government contracting agency performs and provides a technical analysis (see 15.404-1 (e )) with the audit request. The Technical analysis may utilize the results of the prime contractor analyses, if provided. The technical analysis may question the technical approach, question the need for or reasonableness of various aspects of the proposal, estimated manhours or equipment, materials, etc. The technical analysis may also steer the auditor toward certain aspects of the proposal that need some price verification or investigation of price basis. Inasmuch as DCAA has limited resources, the more help we can provide may maximize their effectiveness. The neat thing I liked was that the DCAA often incorporated our analysis into the audit, which were reflected in the unsupported or questioned costs identifed in the audit. OKAY - once we get the results of the audit, the government estimate, the technical analysis and any other analysis - THEN we would perform or finalize our cost and price analysis of the proposal in developing the government's pre-negotiation objective, taking into account the proposal, analyses, audit, etc. There is a lot of gobblygook in FAR Supart 15.4. It never has been clear. When it was rewritten in 1997, it was intended to reduce the burden on industry somewhat and to streamline some requirements. It still isnt clear.