joel hoffman

You should be asking your lawyer and insurance company these questions. We dont know what insurance requirements are in your subcontract, what type of insurance you are referring to or what kind of coverage for the prime you are referring to. As to your second question, you didn't explain what coverage you provide concerning the prime. If the general contractor is requesting some form of protection under your policy then your policy is modified by endorsement. I'm guessing that this is what you are referring to. Again, it depends upon your subcontract requirement and the additional coverage provided. In the event of a loss under the policy, are you insuring the prime for your acts, acts of the prime or acts of the prime and others? Primes want to protect themselves from liability caused by subs. A prime doesnt want claims that will increase its experience modification factor, causing their workers compensation premium to increase. That's why you should talk to your legal advisor and insurance professionals about what coverage you need.

I have the same question as Don. Has the prime performed - and attached - its cost/price appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices, which helps the government evaluate the reasonableness of the proposal? Perhaps DCMA is waiting for this. It isnt the auditor's responsibility to perform cost or price analysis.

Understood. The suggestion of "you might want to consider.." is probably okay here. I should not have come across as condescending to the poster. There wasn't enough information in the original question to know if the poster had considered anything else and we dont know whether the circumstances warranted the opportunity or value to consider anything other than an award to a conforming offeror. The forum is widely read and a lot of people often take shallow issues as gospel for adoption to real world scenarios. I have noticed a huge tendency to cut and paste a single solution to most any situation. I am involved with some massive programs that required 100's of source selections and large task orders for construction and design-build construction. I found a tendency among some of the organization to not take advantage of the opportunity to negotiate for better performance or pricing, then complain about the end product. I wanted to address some of those other considerations other than making award based upon a conforming proposal, without regard to other possible pricing opportunites. My zealousness sometimes is reflected in my writing. Yep - there is no way of knowing in this situation whether or not that is necessary. It may be a straight forwad purchase of a service or supplies. I will also admit that I read into the question that the other proposal was lower priced but the emphasis or plan was to award without discussions. This might be perfectly acceptable or most practical for some types of acquisitions but not for all.

OK, truce - truce. Vern,please don't take this as personal. Some of the decisions you cited do refer to "evaluating" price. Some use the term "consider", which may or may not have a different connotation than "evaluate". The act of considering often follows an evaluation. HOWEVER - we don't necessarily disagree that one would be within the letter of the law for not "evaluating price" if the proposal is technically deficient. At the risk of repeating myself - just as you here have - I am advocating that the KO should consider more than simply meeting the minimum legal or regulatory requirements. You have certainly commented many times over the years about the importance of the contracting profession looking beyond simple legal sufficiency and that true professionals also exercise sound business judgement. From an agency perspective, I've seen and heard of numerous design-build projects, for instance, where the government awarded without discussions because they had an awardable - but mediocre - design proposal. Proposals with less than optimal features usually come back to haunt the Army or Air Force customer. They raise Heck, then we have to conduct after action reviews, answer the Generals and Colonels, etc. We must live forever with poor architecture or poor building systems, while nobody remembers the speed of the award or a low price. We actually have folks who think that they can't conduct discussions if they have an awardable proposal. Then everyone later bitches for years about what they get.

Vern, thank you for this decision. It validates my point, above. The government evaluated both the prices and the technical proposals, considered the merit and likelihood of obtaining a compliant proposal from the protestor and the likelihood that the price would increase in response to fixing the proposal. Then - it decided that discussions weren't required to obtain the best value. QUOTE: "The CO concluded that all proposals, except Mortenson's, required extensive revisions through discussions and that, based upon her experience, she expected that offerors' proposed prices would increase as a result of the revisions. The CO determined that there was no benefit in conducting discussions and recommended award to Mortenson." In the cited Stetten decision, the agency did evaluate the price of the non-conforming offer as well as the likelihood of a price increase. The GAO did not say that "the agency does not have to go on to evaluate the proposal's price." The GAO said that "the agency was not required to consider the firm's lower proposed price in its tradeoff decision."

To rephrase my earlier post above - others did provide an answer of sorts to the specific question of "the agency does not have to go on to evaluate the proposal's price, right?" However, even if you don't "have to" evaluate the proposal's price, I feel that the acquisition team is also charged with weighing more considerations and should try to obtain the "best value" to the customer and taxpayer. I assume you defined the best value in the acquisition approach chosen. In that case, you "should consider" whether the government might obtain a better price, if you evaluate the proposal price and find that it would provide a better value. Some considerations might include the time and cost to condusct discussions vs. expected benefit of discussions, the nature of the unacceptable aspect or aspects of the lower priced proposal, ease and likelihood of being able to obtain an acceptable proposal, etc. It might be also be feasible that there could be benefits to consider the ease and likelihood of correcting a higher priced proposal if it could result in lower prices upon discussions and the opportunity for a firm to correct deficiencies and revise its pricing. The discussion process might not be worth the effort, time and cost to conduct. Again, it really depends upon the circumstances. I didn't mean to come off as though I'm accusing you of getting away with something. I wished to emphasize that the acquisition team should be concerned with obtaining the best value, considering more than just being able to award without discussions. I don't know if your team has the perogative to take the time and effort to do that or if there would be any value in it. Maybe the unacceptable proposals arent worth messing with or there is no time to do it.

You stated that "there is no need to evaluate the reasonableness of its price or to compare its price to the prices of acceptable proposals." My reply, which I was working on before anyone else posted replies, was meant to advise that there are other considerations, which might mean that it may be advisable to review the pricing of tun acceptable proposals, even if not "required" to. I was not responding to your answer or anyone else's. In fact I hadn't even seen any when I first pushed the post button. Of course, only certain posters on this forum are entitled to "lecture" others on the professionalism expected of the acquisition workforce.

I assume that you are asking if one is permitted not to perform a price analysis or evaluation of specific, lower priced, technically unacceptable proposal, if award can be made at a fair and reasonable price to a conforming proposal. You may also be asking about not having to evaluate pricing of higher priced, technically unacceptable proposals. I believe that there has been previous discussion in this Forum confirming that the agency may have the perogative to use simplied evaluation procedures, such as starting with the lowest price proposal and checking for technical acceptability, then awarding, if it is determined to be fair and reasonable. And others have commented on the "can I get by with this" aspect of your question. Regardless of being able to get by with it, Is your responsibility simply make an award or to also obtain the "best value" for the customer and for the taxpayers, taking various considerations into account? I think both must be considered. This requires the exercise of business judgement, which contracting professionals are supposed to have and use. Some considerations may include the time and cost vs. expected benefit of any possible discussions, the nature of the unacceptable aspect or aspects of the lower priced proposal, ease and likelihood of being able to obtain an acceptable proposal, etc. It might be also be feasible that there could be benefits to consider the ease and likelihood of correcting a higher priced proposal that might also result in lower prices. Again, it really depends upon the circumstances. Below are some FAR principles and responsibilities of the acquisition team, led by the Contracting Officer or other source selection authority for your consideration. I have personally seen many instances where acquisition teams appear to overlook these principles in the quest to simply make an award. Beyond the "Can I get away with it to make an award" aspect, I think that the team is also charged with weighing all considerations and trying to obtain the "best value" to the customer and taxpayer, which you defined in the acquisition approach chosen. “FAR 1.102 -- Statement of Guiding Principles for the Federal Acquisition System. (a) The vision for the Federal Acquisition System is to deliver on a timely basis the best value product or service to the customer, while maintaining the public’s trust and fulfilling public policy objectives.” “FAR 1.102-1 -- Discussion. ...(b ) Vision. All participants in the System are responsible for making acquisition decisions that deliver the best value product or service to the customer. Best value must be viewed from a broad perspective and is achieved by balancing the many competing interests in the System.” “15.302 -- Source Selection Objective. The objective of source selection is to select the proposal that represents the best value.” “15.303 -- Responsibilities. …(b ) The source selection authority shall -- …(6) Select the source or sources whose proposal is the best value to the Government (10 U.S.C. 2305(b )(4)(B ) and 41 U.S.C. 253b(d )(3))." “15.306 -- Exchanges With Offerors After Receipt of Proposals.” ...(d) (2) The primary objective of discussions is to maximize the Government’s ability to obtain best value, based on the requirement and the evaluation factors set forth in the solicitation.”

Tguns, in response to your post #4, you said that you dont want to issue this action as a Termination for Convenience and that you want to issue a unilateral modification. It wasn't clear but you suggested that the Contractor doesnt want to deal with a TFC either. Then, I believe that it would be issued under the Changes clause as a deductive change. In reading the Changes Clause for Cost Reimbursement contracts at 52.243-2, with Alternate 1 or 2 for srvices, the contracting officer may make changes to "...(1) Description of services to be performed." And... "(b ) If any such change causes an increase or decrease in the estimated cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, the Contracting Officer shall make an equitable adjustment in the -- (1) Estimated cost, delivery or completion schedule, or both; (2) Amount of any fixed fee; and (3) Other affected terms and shall modify the contract accordingly." Note that fee adjustment would be part of the equitable adjustment for a decrease in the cost of services. It might not necessarily be the full 2/12 of the reduction in services though.

I didnt understand what your actual problem is. However, your method seems to add an appreciable amount of time to the project duration, especially for design-build projects, which are very time sensitive. Our organization typically issues the NTP after the awardee obtains and forwards acceptable bonds and the required proof of insurance for work on a government installation. The clock then starts ticking and the contract period includes all required submittals. The RFP should include a preliminary submittal register with ALL government idenified submitals and deliverables from the solicitation requirements. This will include identifying other pre-construction submittals, such as design and construction quality control plans, safety plan, stormwater runoff, erosion control and pollution prevention plans and other like requirements. Also includes any construction or design submittals already identified in the solicitation. The DB updates the Quality control plan and schedule to identify all tests and inspections required by Codes and/or the statement of work. The design-builder's designer of record is supposed to extend the submittal register with each design package. We dont "approve" desuigns. That is a "design-bid-build" concept stemming from the fact, that in design-bid-build, the owner (government) is responsible for the design and integrity thereof through completion and acceptance. In DB, the design-builder has that responsibility. Once we review the final design submission for a design package, and resolve all comments, if they are minor or easily correctable, the ACO or KO will send a letter releasing the design for construction.The DB must incorporate the corrections into the "released for construction" set of drawings and specs and we perform a backcheck for QA. There is no payment for construction or design completion until that is done. If your personnel arent doing their jobs, seems ike you should pull any ACO or COR authority they have until they get their act together. That includes authorization to proceed and any other "approval" authority.

Thanks, anoncon. 'M' - there are valid functional and operational justifications for escalators. I can't vouch for the current situation, but not everyone is as mobile as you probably are, plus escalators have a higher pedestrian capacity than elevators or stairs for heavy, between-floor traffic areas. And there are "green" elevator installations.

In addition to FAR 36.101 ( c ), do you plan on funding these contract line items separately, with appropiate funding? Will they be options, subject to funding? (By the way, the disabling of emoticons in the full editor doesnt' seem to always work)

I believe that USACE only reimburses DCAA for Civil Works (CW) funded or other non-Military funded audits. Most USACE construction funding is for Military work. There are few large CW projects these days but there are lots of smaller CW and work for others projects. Leo, unless DCAA has changed in the past 10-15 years, they still might not be well qualified to audit CW type construction contract actions that require use of the USACE Equipment Ownership and Operating Cost Manual for owned construction equipment (FAR 31.105(d)). The same goes for construction contract audits of firms which own their construction equipment but are primarily or exclusively using rented construction equipment on a project (same FAR reference) . After losing our internal CW auditors or for DCAA audits on some military projects that included contractor owned equipment, I always had to send DCAA an information paper that I developed for all construction contract audits within our District. The paper covered direct and indirect cost areas to look for and adjust when the USACE Owned Equipment rates were in the contract. It also discussed how to treat G&A and other proposed or claimed direct and indirect costs when rented equipment was being exclusively used. Many government negotiators weren't (aren't?) familiar with the details in FAR 31.105(d), either, which is part of the problem. DCAA always expected a detailed technical analysis, but much of this type detail is cost analysis - which would normally be performed after the audit. We were spoiled when we had our own CW auditors because they were familar with construction audits and associated cost details. One couldn't usually rely on DCAA to be as thorough as our auditors were. I know that some other organizations use the USACE Equipment Ownership and Operating Cost Manuals, too. The same problems with understanding and implementing FAR 31.105(d) may well be prevalent there, too. One of our former auditors is a WIFCON contributor. I think he would agree with me...

As I stated above, I think that - simply by the wording of the requirement - the total cost of contract performance for labor in the denominator would include the prime's G&A on those costs, including both prime and subcontracted labor. If one were negotiating the cost of the contract or any mod involving subcontracted labor, the contractor would apply some form of it's G&A rate to the other costs to determine the total contract cost for labor. Although it might be nice to have a cookbook formula, I don't think it is necessary.

Correcting myself above:: "The question appears to be whether, in addition to the subcontractor's cost of performance incurred for labor (which includes direct and indirect labor costs per 13 CFR 125.6( e)(2), does the "cost of the [prime] contract" for the sub's labor include the prime's G&A cost?" In addition to what I said above it seems to me that the subcontract labor's share of the prime's G&A* would be a cost that is incurred for labor on the contract. *when a prime normally charges G&A to subcontracts

I haven’t gotten into the fray earlier as far as trying to answer the question and I'm not commenting on the AAP program. I haven’t had the time to do full research. I don't KNOW the answer to the specific question asked, which seems to concern limitations on contracting for services. The question appears to be whether, in addition to the subcontractor's cost of labor (which includes direct and indirect labor costs per 13 CFR 125.6( e)(2), does the "cost of the [prime] contract" for the sub's labor include the prime's G&A cost? I used to develop and maintain the methodology for my organization to determine compliance with the Limitations on Subcontracting clause's limits on subcontracting for construction contracts and I coordinated it with the SBA regional office back in the 1990's. Compliance for general construction does include G&A on the contractor's share of the work (less the cost of material**) as well as its G&A on the rest of the work (less materials) for sake of comparison - if the prime normally charges G&A on subcontract costs in its accounting system***. I brought it up because I question why the philosphy of determining the prime's share of a services contract cost for a labor comparison should be different than determining the prime's share of the cost of the construction contract, less materials. I think it would be logical to include G&A on subcontracts - again, if the prime contractor normally charges G&A to subcontracts - because that would be part of the contract cost for having the sub perform that labor, using similar logic as on a construction contract. However, I haven’t researched case law on it. Including the prime's G&A, if normally charged in its accounting system on subcontracts, would increase the contract's cost for subcontracted labor, thus probably making a sub's comparable labor more expensive than if it were prime's labor. So what? That's consistent with logic used in a construction contract comparison. Of course, contracting rules aren't always logical. ** The reason materials were excluded for construction was that primes often try to take credit for self performance by buying materials for subcontractors to install. But that is another discussion. *** I have dealt with some construction companies that don't charge G&A to subcontracts. Some of these firms also do a lot of A-E and other service contracting.

KME, if that's part of the proposal and if it makes sense, why wouldn't you want to accept it? Could you do it as an advance agreement?

A "Proposal Strength", in my experience and as you stated above, is a evaluation term. One cannot necessarily incorporate all "strengths" into the contract because many are intengible. For instance, "strong experience" or "extensive, relevant experience" that was evaluated as a "strength" cannot be incorporated into a proposal. Similarly, a "high confidence" past performance rating may be considered a "strength" but one cant incorporate it into the contract. A narrative that exhibits a strong, clear understanding of a contract requirement under a factor that is rated as a "strength" isnt something that one would stictly incorporate per se nor can one strictly enforce it. It may be an intangible benefit and might serve as ammunition in a dispute over contract interpretation. And occasionally, we don't want and/or can't afford and/or just dont want to pay for some offered features that exceed the minimum requirements. We use the term "betterments" to describe TANGIBLE features in a proposal that meet or exceed the contract requirements which the government accepts in the final proposal. A betterment is something offered in the proposal that could be a stated government desirable/preferred feature or a contractor initiated feature. Sometimes government preferences are actually listed as option CLINs. We have used this terminology in design-build acquisitions since the late 1980's in my organization (in source selections and in task order competitions since the 1990's) where we evaluate proposed preliminary designs and quality of offered materials and building systems and in some competitively negotiated construction acquisitions where quality of materials or systems were factors in the selection. We incorporate the technical proposals into the contract and use a contract term/condition/special contract requirement to establish an order of precedence after award. Betterments become the new contract minimum requirement, followed by the solicitation requirements, then the rest of the accepted proposal, in the event of a conflict discovered after award. And yes, we are supposed to evaluate proposals and have the duty to reasonably ensure that the proposal complies with the miniumum solicitation requirements in order to make an award.

That is correct, but not since mid 2007 or so. After critiquing some of the answers for a few years back in the late 1990's and early 2000's, I was asked by AAP if I would be willing to take over the A&E and Construction Contracting Topic Area. Since I had direct access to numerous resources at that time, I agreed. One must be careful about complaining if one isnt willing to help fix something. It was like ignoring the old military adage - "Never volunteer!" Some times the questions are as inane or obscure as the answers. I usually tried to contact the questioner and obtain more details and also find out which service they worked for. Many of the answers were partly or fully dependant upon a specific Branch's policies or supplements. At any rate, I asked the current site moderator to review this thread...

You asked: "Am I wrong to believe that a government clause, even at agency level, should reflect more care and precision in choice of words?" Answer: Probably not. Qualification: You didnt identify the clause or provide the wording of it.

Sorry, Voxx, I misread your post concerning 52.212-4 ( c). However, you did say "For unilateral changes I just check box B (which claims that 43.103(b ) is the authority" Because the FAR Changes Clause is not used in such commercial contracts, where is the general authority to issue "unilateral changes" to such contracts other than modifications addressed in or alluded to in various paragraphs under 52.212 Terms and Conditions? Some of those situations might require bilateral agreement to change the contract's terms and conditions.

Voxx, I don't see how "52.212-4 -- Contract Terms and Conditions -- Commercial Items. ( c) Changes" authorizes any unilateral changes. There may be other terms such as Disputes or Novations or name changes. However, I dont think that silence concenring possible other changes in ( c) actually authorizes unilateral changes under that term in ther clause. That paragraph authorizes changes in terms or conditions via bilateral agreement.

"52.212-4 -- Contract Terms and Conditions -- Commercial Items. ( c) Changes. Changes in the terms and conditions of this contract may be made only by written agreement of the parties." What gives you the right to issue a unilateral modification under this term of a commercial contract?

While Don may be technically right concerning when cost analysis is "required", it might be "necessary" for the government to perform cost analysis even when certified cost or pricing data are not required. See FAR 15.404-1(a)(4) for example: "(4) Cost analysis may also be used to evaluate data other than certified cost or pricing data to determine cost reasonableness or cost realism when a fair and reasonable price cannot be determined through price analysis alone for commercial or non-commercial items." In addition, for DOD, there is an open DFARS Case 2011-D013 "Only One Offer", which is still winding its way through. It is referenced on the WIFCON Rules and Tools page. It mentions the possible need to perform cost analysis on non-competitive offers below the TINA thresholds. I dont know if it would specifically apply to modifications. Regardless, if one is modifying a cost type contract, I think that it would often be prudent to perform cost analysis techniques on such proposals regardless of the TINA thresholds.

mdtpham, I'm not saying that site work for 2 new projects couldn't be added to an existing contract by means of a bilateral supplement agreement. I am curious how such work could be directed as a "change order " under the Changes clause. It is possible that the work could be added via a bilateral, out-of-scope modification, after meeting the requirements for an exception to full and open competition. Perhaps there was a misunderstanding concerning the terms used. As for "unpriced change orders", this is discussed under DFARS, 243.204-70 Definitization of change orders, not under DFARS 217.74. Many offices incorrectly refer to unpriced changes as "UCA's" from old 217.74 language from years ago.