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Vern Edwards

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  1. @WifWafYou are misinformed. Nothing in FAR Table 15-2 requires a contractor or subcontractor to use a cost-based approach to product pricing. It requires only that the contractor submit certified cost or pricing data and prescribes a format for doing so. FAR Table 15-2 does not require that the price be based on the certified cost or pricing data or set in a particular way. The certified cost or pricing data might indicate that the deliverable will cost $X to produce, but the contractor is free to set is price at $2X or $10X or $100X. TINA is a disclosure statute, not a pricing statute.
  2. Just add an additional line item to the order for the follow-on year.
  3. No TINA exception is predicated upon the seller's pricing strategy.
  4. @WifWafAre you saying that it's not possible that the government's cost-based pricing apparatus costs more than it's worth? And you are proposing that Congress revise the Contract Disputes Act of 1978 to eliminate appeal of a CO's final decision to the Court of Federal Claims and then to the Court of Appeals for the Federal Circuit and on to the Supreme Court? And you think those two courses of action would be simple? If your answers to the above three questions are yes, then I question your notions of probability and cost-benefit analysis.
  5. Why is the clause at FAR 52.233-1 named "Disputes"? The word dispute appears in the clause only four times and the word is not defined. The word claim appears 24 times and is defined in great detail. The clause is devoted to the procedure for the submission and certification of claims and to CO issuance of decisions on claims. The same applies to FAR Subpart 33.2. Why isn't it named "Claims, CO Decisions, and Appeals"? Wouldn't that be more descriptive of its content than "Disputes and Appeals"? Is a dispute a prerequisite to the submission of a claim? What constitutes a dispute? Is every disagreement between the parties a dispute? If not, what is the difference?
  6. Modern textbooks on product and service pricing describe three basic pricing strategies: cost-based, market-based, and value-based. The Contract Pricing Reference Guides describe cost-based and market-based pricing in Volume 1, Price Analysis, but do not describe value-based pricing. The choice of strategy is up to the seller. FAR Subpart 15.4 reflects a cost-based strategy, as does the DODIG attack on TransDigm. The DODIG has asserted that profit in excess of 15 percent of costs is "excessive". Is there any legal requirement that companies selling to the government take a cost-based pricing approach to product pricing and price negotiation? Is there any moral imperative that companies take a different approach to pricing when dealing with the government than with other customers? If no to Questions 1 and 2, is the government's application of policies grounded in cost-based pricing (e.g., TINA) overly broad? If so, when if ever should the government demand a cost-based approach? Is it possible that the government's cost-based pricing apparatus (requiring detailed cost proposals, TINA, proposal "audits," etc.) costs more than it's worth, as perhaps demonstrated by the outcome of the 10-year United Technologies defective pricing litigation? https://www.wiley.law/alert-3531 https://www.crowell.com/files/20190401-Defective-Pricing-and-FCA.pdf https://www.crowell.com/pdf/newsroom/GovtContractor_Bodenheimer_Oct06.pdf https://www.opn.ca6.uscourts.gov/opinions.pdf/15a0062p-06.pdf
  7. In principle, I think the costs of a company-initiated vaccine incentive payment would be allowable pursuant to FAR 31.205-13, Employee morale, health, welfare, food service and dormitory costs and credits, paragraph (a)(2) or (3). In my opinion, $100 or $200 would be reasonable, $1,000 would not. But that's subjective, debatable, and negotiable. I would expect it to be allocated as an indirect cost.
  8. Is the product sold in a competitive market? If so, maybe there are two questions: Not how much they can mark it up, but (1) how much can they sell it for and (2) how little can they make it for. See Car: A Drama of the American Workplace (1999), by Mary Walton. One of the best business books I've ever read. In fact, THE best.
  9. Outrage is fashionable Congress, and elsewhere. Maybe, instead of focusing on the contracting process, Congress should ask why the government buys and uses things that will need hard-to-get and pricey spare parts in a few years. How much longer are we going to need manned "fighter" aircraft and strategic bombers? ("Dogfight" means firing a missile at a plane that's still over the horizon.) How long will aircraft carriers last in a war with a major nation armed with hypersonic missiles? (Like China.) Do we still need airborne infantry divisions? (To make mass drops behind enemy lines? Really? Like Market-Garden in WWII, that great success?) How many of our "needs" are driven by necessity and how many by a desire for cultural preservation? Nostalgia?
  10. Contracting offices have been procuring housing/lodging services for military and civilian personnel for as long as I have been around, and I have been around for almost 50 years. Such acquisitions are not at all uncommon. Maybe it's time to put your personal experience as a "personnelist" behind you. Contracting contracts for whatever is needed.
  11. If the government wants better prices, it must do better requirements planning, market analysis, and strategizing, and it must educate and train a cadre of first rate price negotiators. New "cost data" laws will accomplish nothing. But Congress's only power is legislation, so laws are the only solutions it understands. And the top people in agencies, the political appointees, are afraid to say that, and are unable to propose a better alternative. It will do no good to give more cost data to people who lack market savvy, a long-term strategy, and negotiation table know-how. It will only overwhelm and confuse them. As William Munny told Little Bill, "Deserve's got nothin' to do with it."
  12. See GAO, Statement of William H. Sheley, Deputy Director of Procurement and Systems Acquisition Division before the Senate Committee on Armed Services, on Profit Limitation Statutes, April 2, 1980:
  13. @joel hoffmanIn your opinion. I do not know of any official definition of "excess profits" that applies to government contracts. Do you? I know that there has been no restriction on profits since expiration of the Renegotiation Act during the 1970s. And I do not know of any law that compels a firm to sell to the government at a price the government likes.
  14. How will additional data help the CO if the seller says, "You can have all the data you want. It won't change the price. No one else stocks the item you want. If you don't want it at that price, we won't stock anymore either"?
  15. Why should TransDigm have to "justify" its pricing? What law requires a prospective contractor to justify its prices?
  16. In the DODIG summary: Emphasis added. What is the FAR definition of excess profit?
  17. The chair of the House Committee on Oversight and Reform is proposing a new law, the "Fair Pricing with Cost Transparency Act." https://oversight.house.gov/sites/democrats.oversight.house.gov/files/Fair Pricing with Cost Transparency Act.pdf Here's a link to the DODIG report. Scroll to the bottom for a link to the full text. https://www.dodig.mil/reports.html/Article/1769041/review-of-parts-purchased-from-transdigm-group-inc-dodig-2019-060/ What do you think? Will a new law and more regulation fix the problem? If not, what would?
  18. See OMB memo M-21-03, Modernizing Access to and Consent for Disclosure of Records Subject to the Privacy Act. November 12, 2020. https://www.osec.doc.gov/opog/Privacy/memorandums/OMB_M-21-04.pdf Footnotes omitted. What agency issued the RFP? The certification requirement might not be legal. See 41 USC 1304(b)(1). The CASES Act, if that's what we're talking about, does not require certification by a prospective contractor. There is nothing in the FAR System about the CASES Act, and there is no open FAR Case about it. The only agency that has published a regulation in connection with it is the Bureau of Consumer Financial Protection, 86 Fed. Reg. 48900, September 1, 2021.
  19. Understood. It was a good find. Good job. This thread is a textbook illustration of how careful construction of a question and thoughtful answers improve the website.
  20. Atlantic Systems Group, Inc., GAO B-413901, January 9, 2017. That's a good decision, but the pertinent part is in three paragraphs. A more recent decision, which cites Atlantic, is Epsilon, Inc. GAO B-419278, February 2, 2021. It is based on a FAR 16.505 fair opportunity protest: So, the answer to the Tzarina's question likely depends on the wording of the RFQ.
  21. @Tzarina of ComplianceNow that is an interesting question.🙂 Unfortunately, it is one that the FAR does not answer directly in connection with FSS MAS orders. I don't have a ready answer for you. I think that the answer probably depends on the language of the MAS RFQ. The key question is whether it was reasonable for the quoter to think that the government would consider subcontractor past performance when assessing the quoter's qualifications? Does the RFQ mention subcontractors? Does the RFQ mention evaluation of subcontractors? Does it request references for subcontractors? Does it allude to subcontractors in connection with offeror qualifications? Does it mention FAR Section 15.305? The CO must look closely at the RFQ language, because that is what the GAO or the COFC will do if a quoter files a protest about subcontractor past performance, either because the government did or did not evaluate it. If the RFP does not mention the past performance of subcontractors, then the government might get away with not considering a sub's past performance. But it's an iffy matter. Ideally, the government should have thought about subcontractors when it issued its RFQ and said something about subcontractor past performance one way or the other. See CSI Aviation, Inc., GAO Dec. B-415631, Feb. 7, 2018, which suggests that the government's consideration of subcontractor past performance without saying that it would might be a problem. If the government has any doubts about the clarity of its RFQ in this matter, it should consider amending the RFQ to clarify its stance before making a decision. Better safe than sorry. That's the best I can do. Maybe someone else knows something that I don't.
  22. Emphasis added. @Tzarina of ComplianceGee whiz, let's get it straight, shall we? What's the question: Do we have to? or Can we? A MAS order would presumably be made pursuant to FAR Section 8.405. Presumably, 8.405-2. FAR 15.305(a)(2)(iii) is inapplicable. FAR 8.405-2(c) says you can evaluate experience and past performance. In short, Your Majesty, do as you please. You can evaluate the subcontractor's past performance. Or not. And let's work on our question-asking, Ma'am. ❤️
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