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Lionel Hutz

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About Lionel Hutz

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  1. FAR 52.212-5

    Sorry. Just getting around to seeing this again. But the info does need to be filled in. See 52.104(d), which I also cited.
  2. FAR 52.212-5

    Take a look at FAR 52.102(a)(3)&(4), as well as FAR 52.104(d).
  3. IDIQ Decision

    The GAO Redbook says the following, "GAO has conducted several studies of year-end spending and has consistently reported that year-end spending is not inherently more or less wasteful than spending at any other time of the year. In one report, GAO suggested that year-end spending surges are really symptomatic of a larger problem—inadequate management of budget execution—and that the apportionment process could be more effectively used to provide the desired management." (Vol. 1, Ch. 5, p. 5-17.) Unfortunately, out of the five studies cited, four are from the 1980s and one dates from 1998.
  4. Thank you Vern! I understand that a trade off process would offer an "advantage" in that small business wouldn't have to be referred to the SBA for COC consideration. But, when comparing only an LPTA using "responsibility-type" evaluation factors to a Price only evaluation using Special Standards of Responsibility, it sounds like neither option provides an "advantage" over the other (with regard to SBA COC issues) because both would require referral to the SBA. Is that correct?
  5. The above discussion primarily compares "Special Standards of Responsibility" and evaluation factors used in a best value, trade-off source selection. I have a question about "Special Standards of Responsibility" vs LPTA evaluation factors, which are also evaluated on a pass/fail basis. Under Simplified Acquisition Procedures, assuming the discriminating factors that you want to evaluate are responsibility type factors (e.g. Experience, Adequate Facility, Required Certification) is there a benefit to choosing one type of evaluation over another, i.e., Price only evaluation with Special Standards of Responsibility vs LPTA? I have not dealt with Special Standards of Responsibility much, but it seems that the general process would be similar and the outcome the same. For DoD organizations, the FY17 NDAA requires a limitation on the use of LPTA be included in the DFARS. Would changing LPTA evaluation factors into Special Standards of Responsibility (to the extent you can) be a way of maintaining a similar source selection process without having to deal with the limitations, justifications, and other hurdles that may be implemented in the DFARS? I know we can’t really answer that last question until we see what the regs say. But if anyone has ideas on the matter, I’d be interested in hearing them. Thanks.
  6. Court Order and the FAR

    I'm not sure if the psych exam example you provided is the issue that you are facing. But if it is, I just wanted to point out that DOJ receives a special appropriation for the Fees and Expenses of Expert Witnesses. Further, "Funding allocated to this activity is also used to pay the fees of physicians and psychiatrists who examine defendants upon order of the court to determine their fitness to stand trial." (https://www.justice.gov/file/969041/download) I know that doesn't directly address the question you raised. But, if you are working with DOJ there should be an established process in that office. There is no exception that would remove this acquisition from the FAR. As others have noted, a micro-purchase using a GPC would be pretty darn quick. However, if the cost exceeds the micro-purchase threshold (or even SAT) the procurement can still be conducted quickly. A sole source contract for expert services can be awarded pursuant to the authority of FAR 6.302-3(a)(2)(iii) (“to acquire the services of an expert or neutral person for any current or anticipated litigation or dispute.”) If it is a recurring requirement, and you want to speed up the process, consider issuing a class J&A while maintaining a running list of qualified experts. For an example, see the SEC Division of Enforcement here: https://www.fbo.gov/index?s=opportunity&mode=form&id=f293c58f774e1e7b57e85d171881a1bb&tab=core&_cview=1
  7. Unreasonable Price

    Ah well, unfortunately, I do not have time for a proper response as an extra-long weekend is calling my name, and there is work yet to be done. I'll just say I disagree and return the courtesy of leaving you the last word. As always, thanks for the discussion!
  8. Unreasonable Price

    I’d like to correct something I wrote earlier. I previously stated that “Price reasonableness is a subjective determination.” When I stated that, I meant that a determination of price reasonableness would vary depending on the facts and conditions of the acquisition. I still believe that; however, that is not the proper use of the term “subjective.” The reasonable person standard is an objective, not subjective standard. In an objective standard, the personal beliefs of the party are irrelevant. What matters is what a typical person exercising ordinary prudence would find reasonable. On the other hand, a subjective standard considers the actual beliefs of the party when deciding whether he or she acted reasonably. See the following article for a discussion of The Objective Theory of Contracts. (http://scholarship.law.tamu.edu/cgi/viewcontent.cgi?article=1301&context=facscholar) which states: The Dimatteo article cited by Vern also makes this same point when it states: Further, I agree that when dealing with professionals, the reasonable person standard is elevated to that of a reasonable professional in that field. A professional has skills and abilities superior to the average person and is expected to utilize those skills/abilities when appropriate. So, for example, a doctor that treats a person with a broken leg will be held to the standard of a typical doctor exercising ordinary prudence, not just a typical person. So, to summarize up to this point: There is not a limit on what can be considered a reasonable price in all acquisitions; it will vary depending on the circumstances. In addition, the whims and subjective beliefs of a contracting officer are NOT considered in determining whether a price is reasonable. Rather, the decision must be viewed from the objective standpoint of a reasonable person. And finally, because we are dealing with professionals exercising skill in their chosen profession, the reasonable person standard is elevated to the standard of a reasonable professional. It seems, the disagreement lies in whether the hypothetical “reasonable professional“ should be the more specific “typical contracting officer,” or the more general “typical business person.” First, with regard to determining price reasonableness, contracting officers are not generally accepted as having skills and abilities superior to business people in private industry, such that they should be considered separate or held to a higher standard. There are highly skilled, intelligent and educated people in both the public and private sector. It may appear that the two groups are at odds in determining price reasonableness if you compare the price at which a typical business person would like to SELL to that which a typical contracting officer would like to PAY. But that is the wrong comparison because the circumstances are not the same (sell vs pay). Rather, the question to be asked is, whether under the same circumstances, a typical business person would PAY the price being evaluated for the needed goods or services. In other words, is the Government getting a worse deal than the private sector would get in the same situation? I see no reason to believe contracting officers, as a class, have superior abilities and make better price reasonableness determinations such that they should be held to a higher standard. Next, the rights and duties of a contracting officer are not inherently greater than that of a private business person. The US Supreme Court stated, “When the United States enters into contract relations, its rights and duties therein are governed generally by the law applicable to contracts between private individuals.” Winstar v. United States, 518 U.S. 839, 895 (1996) (quoting Lunch v. United States, 292 U.S. 571 (1934)). When the Government wants to impose rules, obligations or standards on a contracting officer that are in addition to, or more strict than, the private sector (for example, restrictions on accepting gifts) it does so through specific statutes, regulations, and policy. Absent such a specific requirement, the actions of the Government and its contracting officers are governed by the law applicable to the private sector. Finally, the FAR already allows a contracting officer to rely on what a typical business person considers reasonable in the form of published market prices. See FAR 15.404-1(b)(2) (“The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include… (iv) Comparison with competitive published price lists, published market prices of commodities, similar indexes…”) There is no caveat that private industry market prices support a determination of price reasonableness only if they also pass another more stringent level of scrutiny. Based on this, I believe that a contracting officer can conclude that a price is fair and reasonable if he or she determines that typical business person, with ordinary prudence, in the same circumstances, would pay the price.
  9. Unreasonable Price

    Jamal, I agree. When examining issues of “reasonableness” the law uses what is known as the “Reasonable Person” standard. It is most often associated with the law of Torts, but is equally applicable to contract law, when it is sometimes called the “reasonably prudent business person” standard. http://injury.findlaw.com/accident-injury-law/standards-of-care-and-the-reasonable-person.html When we talk about whether a price is reasonable, we are asking whether a reasonably prudent business person in a given situation would pay the price in question. This standard is reflected in the advice of the Director of Defense Pricing (quoted in my post above) when he states that the determination should be made from the point of view of “a reasonable businessman or business woman reviewing the data.” Under this standard, it is not be enough for the contracting officer merely to say, “The price is reasonable to me.” Nor is it required that the specific price be reasonable in all situations. Rather, the contracting officer must be able to say, “A typical business person, with ordinary prudence, in the same circumstances I am in, would be willing to pay this price.” When you see examples of unreasonable pricing, it is because it does not meet that criteria. Either, there are other equivalent options at better prices, or the government’s need is not great enough to pay the requested price and it is more prudent to simply go without. For example, under normal circumstances, a contracting officer is not going to be able to determine $10,000 to be a reasonable price for a coffee pot. It does not matter how much he or she subjectively loves coffee. Nor is it enough that an extravagant millionaire might purchase a $10,000 coffee pot as a luxury. There are many options when it comes to purchasing coffee pots, and a typical business person, with ordinary prudence under normal circumstances is not going to pay that price for a coffee pot. A good example in private industry is a television commercial. Without context, $4M for a 30 second commercial sounds unreasonable. And, if a local cable company demands $4M from Pepsi for a 30 second ad during a rerun of McHale’s Navy, it would be unreasonable. The need for any one ad is not that great, and there are other less expensive, equally effective opportunities to air commercials. A reasonably prudent business person would not pay that price. But if FOX demands $4M from Pepsi for a 30 second ad during the Super Bowl, it may be determined to be a reasonable price. The number of viewers plus the potential for ads to go viral and generate “buzz” make the return on that $4M purchase a much better deal. Considering prices at this year’s Super Bowl approached $5M, one might even think Pepsi was getting a good deal at only $4M. The product and price haven't changed, but the circumstances have. Tweak the scenario just a bit more and the price can become unreasonable again. Imagine a company that does not sell products to the general public and is operating at maximum capacity such that a Super Bowl commercial is not going to help generate sufficient revenue to justify the purchase. In that case, even the “bargain” rate of $4M is not a price that a typical business person with ordinary prudence would pay in those circumstances. Keep changing the circumstances, i.e., the data, and you can find multiple scenarios in which the same price for the same item is either reasonable or unreasonable from the point of view of an typical business person with ordinary prudence. If reasonableness of price did not depend on the specific facts of a procurement, then the Government could come out with a universal price list that capped the prices across all government contracts. The FAR recognizes the variable nature of the price reasonableness determination and puts that responsibility on the individual with the most knowledge of the circumstances of the procurement.
  10. Unreasonable Price

    There is no hard and fast definition. U.S. Supreme Court Justice Potter Stewart once famously penned (about defining pornography), "I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it…" I think the FAR and GAO have taken a similar approach with the definition of a fair and reasonable price. See, for example, Matter of Nutech Laundry & Textiles, Inc., B-291739, February 10, 2003: Here you can see GAO essentially saying, it is up to a contracting officer to determine whether a price is reasonable, unless they think it is unreasonable. While they may render a decision on a case by case basis, they do not try to establish the outer boundaries of reasonableness. Even the Director of Defense Pricing, when discussing price reasonableness in the context of a Commercial Item purchase, does not establish a bright line rule. He writes, http://www.acq.osd.mil/dpap/policy/policyvault/USA007164-14-DPAP.pdf On the one hand, it would be nice to have more guidance, but on the other, the more you define and establish hard and fast definitions, the more you limit the discretion afforded to a contracting officer.
  11. Unreasonable Price

    Don, Ha ha. Believe me, I know that consistency is not a strong suit of the FAR Council. My statement was a reflection of a cannon of statutory and regulatory construction. See pages 15-16 of this CRS Report for Congress (pdf pages 19-20) (https://fas.org/sgp/crs/misc/97-589.pdf) : And I don't know that there is an organization more dysfunctional than Congress, yet that is how Courts and administrative bodies statutes and regulations. Yes, sometimes cannons of construction are legal fictions. But if the Courts and GAO use them, they're good enough for me. Finally, I'll just add one last quote from GAO: Granted, that is just one case. But it is a protest in which GAO examined the language of FAR 15.402(a), noted that it said "contracting officer," and concluded that it is a "fundamental requirement" that applies to "a government agency."
  12. Unreasonable Price

    Vern, We can agree to disagree. No problem. I enjoyed the discussion, thanks! My comments that follow are not directed at you or anything you have written. Cheers!
  13. Unreasonable Price

    Don, I understand and respect both yours and Vern's position. But, I think it is a stretch to say that the context of FAR 15.402 "clearly requires a different meaning" to the definition of contracting officer. In fact the express granting of waiver authority to the HCA in the FAR provisions you cited argues against your interpretation. Clearly the FAR Council knows how to grant the HCA authority to waive specific FAR requirements. If the FAR meant for the HCA to be able to waive the requirement of 15.402(a), it would have so stated in language similar to that you identified.
  14. Unreasonable Price

    The FAR says that a person with authority to enter into contract is a contracting officer. (FAR 2.101) Your basketball analogy is not accurate because it assumes (correctly) that there are other people that can be athletic but not play basketball. But that is not the case with contracting officers. People other than contracting officers cannot award contracts. The FAR states that “Contracts may be entered into and signed on behalf of the Government only by contracting officers.” (FAR 1.601) The word “only” couldn’t be any clearer. It does not say “Contracts may be entered into and signed on behalf of the Government only by contracting officers and other people with contracting authority.” When the boundaries of a group (contracting officer) are defined limited by a single characteristic (authority to contract), then the presence of that single characteristic (authority to contract) means the individual fits in that group. To paraphrase Vern’s analysis, in the context of the FAR definitions, all Agency Heads are contracting officers, but not all Contracting Officers are Agency Heads. Whether or not the Federal Circuit distinguishes between the terms “Agency Head” and “Contracting Officer” under the Contract Disputes Act (“CDA”) is a red herring. I agree that that in the context of the CDA, the term Contracting Officer does not include an Agency Head. But we are not dealing with the CDA. The CDA is a different statute with, contrary to your assertion, different definitions. Let me put the relevant portions one after the other, so the difference is clear. First the FAR definition: The FAR definition of a contracting officer is a person with authority to contract. It doesn’t matter how they got that authority. The FAR makes clear that an official can be a contracting officer by virtue of being in a designated position (FAR 1.601(a)), or by being appointed in accordance with Agency regulations (FAR 1.603). Next the CDA definition: This definition is clearly limited to those who have contracting authority arising out of their “appointment in accordance with applicable regulations.” It does NOT include those whose contracting authority arise out of the nature of their position, i.e., Agency Head or other high-level designated position. So, in Morton v. US, when the Federal Circuit held a restriction on an Agency Head does not apply to a contracting officer, it is because the CDA defined those terms to be mutually exclusive. No so in the FAR where the definition of contracting officer encompasses Agency Heads and other high-level designated officials. Based on this I conclude the FAR clearly and expresses contemplates that a contracting officer is anyone that has contracting authority and that the FAR 15.402(a) restriction applies to all contracting officers. Vern, I have to be honest, I’m not sure what you are talking about here. I never mentioned HCA’s in my post. Unless the HCA has deviation authority, he may not authorize payment of an unreasonable price (under FAR Part 15) regardless of whether he is a contracting officer or not. I’m glad that Vern agrees there is no express statutory or regulatory language that authorizes a contracting officer to pay an unreasonable price contrary to FAR 15.402(a). What if agency regulations are silent on the matter, as many (most?) are. Under Vern’s scenario, the mere fact that a contracting office has “referred” a stalemate to a higher authority has satisfied the regulatory requirement. Notice, the regulation does not require that the higher authority “resolve” or “dispose of” anything. It doesn’t even mandate documentation of the disposition, only that it “should” be documented. Does it make sense that a contracting officer, who himself cannot award a contract at an unreasonable price, can authorize another contracting officer under him to award the contract? “I can’t award the contract at that price. But, because you are one level below me and you asked me, sure go ahead, no problem. Just make sure you document it. Or not, if you can’t, no big deal.” I agree completely! But sometimes the academic issues are the most interesting.