Matthew Fleharty

I agree with everything you just said Vern, that's why I used the words "which, I agree, is still movement in the right direction"  in my previous response.

However, there seems to be another issue here with that no one has talked about.  Presumably, the Government does not want to exercise an option for production of whatever this is until they get the first article and test results (that makes sense) - but we all know delays happen.  So why not specify a period post-completion of Phase I (with better grammar than the 52.217-7 language) rather than hoping everything goes according to plan from the outset when establishing the option?  Or would you rather include a specific date and modify the contract's option if/when a delay occurs?

20 hours ago, Vern Edwards said:

If I were the CO I would change the option exercise deadline from a number of months to a specific date.

Aside from changing the grammar of the 52.217-7 clause (which, I agree, is still movement in the right direction), I don't see how that solution is any different from a risk of delays perspective.  It merely eliminates the need for someone to do math or call the grammar police to determine what the date is for the option deadline.

Is there any issue you're aware of with my previously proposed solution to use an option exercise deadline of X days/months after Phase I completion (or some other milestone)?

This is a great example where a little bit of thinking could have avoided wasting time and effort (and paperwork)...why not specify the option period for Phase II as "X days/months post completion of Phase I (or some other milestone)" given that delays on projects involving producing first articles and testing are a possibility?

10 hours ago, Contractor123 said:

If the option is dead...

If? 😑

What’s the basic rule governing how an option must be exercised?

What are the rules governing changes to a contract when it comes to the Competition in Contracting Act (CICA)?

I’m sure if you thought about those two questions in light of all the situational facts you have available that we don’t/won’t, you’d know what you could and couldn’t do and how to do it.

You didn’t post this in the beginner’s section so you should have some foundational knowledge about contracting (and options) - try thinking about it from that vantage point.

52 minutes ago, Contractor123 said:

In all the examples I saw, the base had expired so the contract had ended. My K is still active so perhaps the option  language can still be modified. 

That doesn’t answer the question: think about what options are and the rule(s) that govern them...

Since it’s the weekend, try pondering the following: What rule(s) about options or modifying contract options leads you to conclude that your situation is substantively different merely because a base period is active?

3 hours ago, Vern Edwards said:

Finally, what worries us most? Meeting the GAO's legal standards of evaluation or meeting sound business standards? 

Unfortunately, too much of the former at the expense of the latter... 😔

25 minutes ago, jayandstacey said:

I think we are assuming that these are %s that the CO has independently calculated.  To me, it points to the idea that more offeror info/discussions/research should be conducted to break the tie and determine the most likely cost.  

I could be wrong about this, but I feel like these are simple %s applied to complex scenarios.  To look to the future and say “there is exactly a 50/50 chance” between two outcomes in such a scenario seems either virtually impossible OR an admission that very little is known about the scenario.  

Are there real world contracting scenarios where a proposed cost may be A or B, and the chance of A or B is known to be an even 50%?  I sense the writers of the FAR clause didn’t think such things existed. 

(Edit- using my own drawbridge example from above, then let’s assume a third offeror “Smith” has a drawbridge that’s open 50% of the time, thus creating the scenario you ask about here...in that case, if I’m the CO, I think I realize that the FAR doesn’t cover everything, it can’t.  And I think I make the call that says “the tie goes to the runner” and I allow the Smith offer to be evaluated at the lower cost (with a higher ‘ding’ in the risk evaluation).  I document the file as such, and if any other offeror also has a true 50/50 cost, I treat them the same.  Having said that; I’d at least try to see if in fact the drawbridge is open EXACTLY 50% of the time, given the aging infrastructure and all that...)

(a little more editing:  I believe one of basic tenants of the FAR is that the Government is choosing.  Choosing awardees, requirements, evaluation factors, etc.  It is the job of the CO to choose in many situations.   Often there just isn’t room for a “tie”; the Government can’t buy the same tank from two different companies.  It has to choose one.  I believe this clause is an instance of that, suggesting that the CO reasonably determine the most likely cost and use that as the basis for evaluation.  It doesn’t leave room for a 50/50 because...it’s in the business of choosing.  It instructs the CO to find the most likely cost; 50/50 is not following the instruction.

Have I gone off the rails?  It’s late.)

Don’t fight the hypo - if based on extensive analysis a CO thinks two outcomes are equally likely, what then?

One more thought regarding the concept of probably cost and the words most likely:

What if the probabilities for a proposal were 50% and 50%? Since neither is technically most likely what then under @jayandstacey‘s standard for determining probable cost?

3 hours ago, Don Mansfield said:

Assume the method was reasonable. 

Well the I think that answers it then - I didn’t have resources handy to look up the reference, but Vern provides the reasonable standard used by the GAO to evaluate cost realism methodologies.  So the question is whether a method is unreasonable given what the solicitation states - in this case, I don’t think the expected cost estimate methodology I provided in my first post is unreasonable.

Are there any other methods you or others would use to estimate the probable cost in the given hypothetical?

I may be wrong, but I don’t think FAR 15.404-1(d) is so clear that the cost with the highest probability is necessarily the probable cost.  @jayandstacey honed in on the words most likely, which is an argument in favor of that point; however, that argument ignores the words best estimate.  An estimate that outright ignores, a 20%, 40%, etc. of cases is, arguably, an incomplete estimate regardless of how much probability the one most likely event captures.

Let’s imagine we had a third contractor, we’ll call him Bob.  The probability of Bob’s cost being $100M is 51%.  There’s a 49% chance that the cost will be $200M.

While $100M is technically more likely than $200M, does $100M represent the best estimate of the potential cost of a contract with Bob?

I’m traveling so I’m without my usual resources - if someone could point to particular case law I’d be curious to know how this matter has been adjudicated.

I don’t think that’s helpful in deciding between the two - if the RFP merely stated that I think a Contracting Officer could make an argument for either approach estimating the “probable cost.” Neither seems entirely unreasonable to me.

The expected cost of Edwards’ offer is $104M (($100M * 0.8) + ($120M * 0.2)).

The expected cost of Hoffman’s offer is $108M (($100M * 0.6) + ($120M * 0.4)).

However, whether one uses expected cost calculations like the two above or the most probable cost (which for both offers is $100M) depends on the language in one’s RFP.

This is basically the BAA approach, but for "innovative commercial items, technologies, or services."  If you read FAR 35.016 you'll notice a lot of the language in the Class Deviation is lifted word for word from there.  Since proposals are not necessarily evaluated against each other, there are concerns of affordability (i.e. a proposal can be technically sound with a fair and reasonable price yet not affordable).

@Tony Bones Stop trolling - clearly you have a bone to pick with Vern, so pick it elsewhere (i.e. you can send direct messages if you must)

If a company could gain a competitive advantage by performing faster TINA sweeps, wouldn't one (or more) have done so by now?

Robert Cialdini’s books on persuasion (Influence and Pre-suasian) are great reads.

40 minutes ago, PepeTheFrog said:

PepeTheFrog knows your position about deception in negotiation, but quoting or using Henry Kissinger to strengthen your side is not a sound strategy.

Is that so?

On ‎5‎/‎29‎/‎2018 at 5:50 PM, PepeTheFrog said:

Do you think Henry "Realpolitik" Kissinger used deception in negotiation?

4 hours ago, MV2009 said:

So instead of focusing on the utopia state, let’s focus on reality and what to do to identify deception when it occurs.

People who think that the reality is that the other side (government or industry) is out to deceive you are not doing themselves or our profession any favors because it drives overly adversarial behavior.  I’m not advocating naivety, but the default view that the other side is routinely using such tactics is destructive and will influence/bias your own behavior during negotiations (and not for the better).

I don’t subscribe to the notion that deception is necessary. One common example that some on this forum have claimed is deception is this: starting at a lower position than what you’re willing to settle at and when challenged apparently those negotiators know of nothing to say other than “I can’t go any higher” or “my boss won’t let me go any higher” (omg! Deception!). Well, how about a different statement: “Based on the information I have at the moment, I do not believe a higher (or lower) price is warranted.” That’s not even toeing an extremmely broad line of deception that some have offered and it accomplishes the same purpose. Just think and communicate properly.

Deceit is nothing more than a tactic - an unnecessary and dangerous one at that.

49 minutes ago, MV2009 said:

failing to acknowledge that deception routinely occurs in sole source negotiations would make me wonder about the individual’s ability to negotiate a good deal. Firms do it rountinely.

Is that so? Can you support your assertion/opinion with something more than either conjecture or anecdotes?

Page 213 of the book from Kissinger:

”What the negotiator has to have, there has to be a channel in which the two sides can tell each other, at a minimum, what their thinking is, because you spend a lot of time in high office on the intentions of other countries.  These other countries tell you accurately what their intentions are, and if you develop enough confidence in that, it facilities that process of decision making.  Of course it’s possible that they fool you and it’s possible that they tell you something, but they can do it only once, and then they’ve destroyed the channel.”

Doesn’t sound like Kissinger considers deception a fundamental part of negotiation...

1 hour ago, bremen said:

I do not want motivated employees, I want disciplined ones.  Motivation is fleeting, ephemeral, and elusive.

I’d want both - I don’t understand how or why motivation and discipline are mutually exclusive.

35 minutes ago, sdvr said:

Late to party here , but wouldn't it be 20% ? This is like a coin flip, the probability doesn't increase or compound as it goes through each appeal. Combining them assumes the results are connected.

This is exactly why I showed the long form explanation...see above.

33 minutes ago, Tony Bones said:

That said, I really wish I had the chance to negotiate with a Vern Edwards back in the day... it is so easy to rile him up.

I'm sure you do

Why do you assume Vern is riled up?  I didn't see any ALL CAPS, insults, emojis, or exclamatory punctuation in any of his posts.

Though maybe he used too many periods by properly punctuating his sentences:

https://newrepublic.com/article/115726/period-our-simplest-punctuation-mark-has-become-sign-anger

6 hours ago, here_2_help said:

The prime contractor is responsible for execution risk on the contract. If the subcontractor doesn't perform the warranty work, who does the government hold accountable? Not the subcontractor ...

When costs are incurred, they are recorded into allowable and unallowable categories. The contractor uses profit on allowable work to pay for its unallowable costs. When you deny the contractor profit on its costs then you are not allowing the contractor to cover its unallowable costs. I'm not in favor of such a situation.

I thought that if subcontractors do not perform the warranty work (or work generally), prime contractors have some sort of recourse to hold the subcontractor(s) accountable...

Why wouldn’t it just be a case of “accountability” rolling downhill?

I’m not persuaded either.