Vern Edwards

Bulls...! It's not the presence of the MCAS that caused the problem. It was the failure of Boeing to put the FAA and pilots on notice about the MCAS and to require simulator training. They went out of their way not to put the FAA and pilots on notice and require simulator training. It was a business decision!!!!!!!!! The need for simulator training would have affected sales and pricing. The pilots of the crashed aircraft did not know what was happening to them. If you haven't read Flying Blind maybe you should.

I do not think you are suggesting unprofessionalism or opportunism. But I think your position is professionally unsound. I think it is unsound to believe that it's okay for two COs, based on FAR 19.000(b) and the same facts, to reach different conclusions about whether FAR Part 19 applies to a particular acquisition. It would not be okay because the applicability of FAR Part 19 is not a matter of judgment, it is a matter of policy compliance. Two COs with the same facts and applying FAR 19,000(b) should reach the same conclusion. What you think would be "okay" would indicate either (a) that one of the two COs is wrong on the facts or on the interpretation of 19.000(b), or (b) that FAR 19.000(b) is ambiguous. Neither would be okay. I think FAR 19.000(b) is ambiguous because "applies only in the United States and its outlying areas" is ambiguous. WHAT must be "in the United States"? The requiring activity? The CO? The contracting office? The agency? The place or some part of the place of performance? The majority of prospective offerors? WHAT? I think the rule is ambiguous. And I think it is intentionally ambiguous, because DOD is responsible for Part 19 and it disagrees with SBA about the applicability of Part 19. Ambiguous rules are not okay with me.

Here is Forkner's indictment: https://www.justice.gov/opa/press-release/file/1442191/download He sent an email to a colleague in which he said he lied to the FAA "unknowingly." Anyone who says such things in a company email deserves to be indicted, even if just for stupidity. The problem is that he never told FAA what he knew about MCAS:

@ji20874That statement is absurd if it pertains to determinations of the applicability of FAR Part 19 according to FAR 19.000(b). It's not okay that two COs looking at the same facts reach different conclusions about the applicability of Part 19. That statement would be okay if the applicability of FAR Part 19 to acquisitions were meant to be strictly one of CO judgment, such as the determination of price reasonableness or best value. But it's not. Given specific facts, FAR Part 19 either applies or it doesn't. The matter at hand, the applicability small business policy and FAR Part 19 to acquisitions, is a matter in which Congress is particularly interested and that has a large and politically potent constituency. COs don't make small business policy; COs execute small business policy. As of February 18 there were more open FAR cases about small business policy and programs than any other matter. One of them is FAR Case 2016-002, which concerns the applicability of FAR Part 19 outside the U.S., and about which OFPP has just objected (on February 17) to a draft final rule. According to the latest case status report the FAR councils and OFPP are "resolving issues." Perhaps what you meant by your statement is that COs should take advantage of the ambiguity of FAR 19.000(b) to make the decision that they and their colleagues or superiors prefer. That, at least, would make some kind of sense.

Read Flying Blind. You cannot understand Boeing, the FAA, and the 737MAX unless you do. Read the Wall Street Journal review here: https://www.wsj.com/articles/flying-blind-review-downward-trajectory-11638136648 Boeing's "brilliant" financial strategy made some rich people a lot richer, damaged its reputation, cost its airline customers a lot of money, and killed 346 human beings. I wonder if any of that has figured into their past performance evaluations, or will in the future.

Don't let the FAA off the hook.

See FAR 15.405, Price agreement, paragraph (a): Emphasis added.

There is no general requirement that there be a separate contract line item for other direct costs. One CLIN can include labor and ODCs.

You've missed the point of the article. When Congress holds hearings it often engages in "political theater." When that is the case Congress is not interested in facts. It is interested in showing its outrage over what it thinks the public would be upset about. There are no blowhards in the world like members of the U.S. Congress when they're on TV or think they might be. That's not to say that TransDigm is entirely without fault. But as the article shows, DOD is also very much at fault. Anyway, none of this is new if you remember the great spare parts pricing scandal of the early 1980s. https://www.nytimes.com/1983/09/01/business/high-cost-of-military-parts.html https://www.oklahoman.com/story/news/1983/07/12/probers-criticize-500-hike-in-prices-for-tinker-parts/62838874007/ https://www.govexec.com/federal-news/1998/12/the-myth-of-the-600-hammer/5271/ https://www.nytimes.com/1984/09/12/us/lists-show-price-problems-persist-in-military-parts.html https://www.upi.com/Archives/1985/09/27/Credibility-of-contractors-damaged-by-spare-parts-scandal/9490496641600/

See "Politics at House Hearing Distract From Needed Pentagon Acquisition Reforms." https://www.heritage.org/defense/commentary/politics-house-hearing-distract-needed-pentagon-acquisition-reforms

The government is increasingly dependent on IT and AI for national security and other things and is afraid that the big guys will gobble up the little guys and kill competition. I think it's a legitimate concern. Time to review your Posner text on antitrust law and economics.

@Jamaal ValentineIt certainly helped, because legal training teaches you how to think. But you can learn to think without legal training. I think I can think, but I haven't been to law school. You can learn to think by reading and by discussing things with people who know how to think and discuss. BTW, I don't think I meet Mr. Rule's standard. But I aspire.

The OP's question was based on a false premise. She interpreted FAR 19.000(b) as setting "place of performance" as the criterion for applicability of FAR Part 19. But FAR 19.000(b) does not mention place of performance. It says that Part 19 "applies only in the United States." That phrase is entirely obscure. As for "professional contracting officers," I presume that different contracting officers will have various standards, so there is no standard. My standard would be the late Gordon Wade Rule. A very high standard, indeed. I doubt that even five percent of today's contracting officers meet that standard (or have even heard of Rule). But then the word "professional" has lost all meaning in our society, because our society does not believe in standards. Everyone is gets a trophy. Thanks for your response.

@Don Mansfield Do market research. Issue an RFI prior before solicitation of offers and ask prospective offerors what approach they are likely to take. Also, consider what contractors did on past contracts. You wouldn't "know," but you might get a sense of the possibilities and likelihoods.

@ji20874What if the contract specifies inspection and acceptance at origin (see FAR 46.402 and 46.503), with delivery f.o.b. destination to a base in Africa (see FAR 47.302(c))? I'm not challenging you, ji. I'm just asking for your view. Nor am I trying to answer Tzarina's question. My point is that the concept and phrase "place of performance", which appears in 31 places in the FAR, is unclear in many circumstances, which can result in inconsistent policy application. I don't care that you are okay with that. That's your business. I'm interested only in showing that terms and phrases in the FAR that seem clear at first impression are often obscure or confusing upon inquiry. That is my only point.

Is the place of manufacture the place of performance?

What's the place of performance for a supply contract? The place where the product is manufactured or the place of delivery? What's the place of performance of a cloud services contract? What's the place of performance for a call-center contract?

@ji20874They no longer have the permanent title, but most USAF HCA authorities are delegable. See Air Force MP5301.601(a)(i). Many are delegable down to the Chief of the Contracting Office. Four-stars almost always have discretion, or can get it with a phone call. Who needs more rules? But I prefer clear ones to vague ones. Saves time.

Who? Why? I've been a senior staffer in a four-star military command. In my experience senior people want to take discretion away from COs because they don't like the way the COs have used the discretion. Also, in my experience, most COs have not been truly expert in the matters they handle.

How about clearer rules? Remember, we live in a legally adversarial society, and litigation (protest) is costly, time-consuming, and energy-sapping.

Added thought: According to Andrew Abbott in The System of Professionals: An Essay on the Division of Expert Labor (Univ. of Chicago, 1988): On page 8: "[P]rofessions are exclusive occupational groups applying somewhat abstract knowledge to particular cases." On page 35: "The tasks of professions are human problems amenable to expert service." The keys, in Abbott's view, are knowledge and expertise (skill in application).

While I generally agree with that view, I have some questions, starting with: What does "professional discretion" mean? What makes discretion "professional"? Is it the standing of the person exercising it? Is it the subject matter, regardless of who is exercising it? Is it the way in which discretion is exercised, regardless of the subject? If it is discretion exercised by a professional, then what is a professional? Uber calls its drivers "professionals": https://www.uber.com/us/en/ride/uberblack/ Is a profession anything someone does for a living? Is a professional someone who does something for a living, so that Uber drivers are professionals in the same way that physicians are professionals? Is a professional someone who is polite and decorous in the office, even though they are ignorant of and unskilled at their work? Is a truly and deeply knowledgeable and skilled person doing complex work extremely well unprofessional because they are impatient and do not suffer fools gladly or sympathetically? I'm not opposed to professional discretion. But are contracting officers really professionals? If so, what makes them so? Is it the fact of having been appointed. Is it the kind of work they do? Is it how well they do that work? FAR 19.000(b) is a declarative sentence that makes a statement about the implementation of policy. As a statement, it's true or false. In order for us to know whether it's true or false we have to know what it means. I don't know what it means. I think it is vague, because it is not clear about "applies only in" means. Should the implementation of a national policy depend on the discretion of individuals interpreting a vague instruction? Or should the policy be clear? When I read ji20874's post I found myself uncertain about its implications. On the one hand, I wanted to agree, but on the other hand, I found myself unable to do so without hesitation. I'm just stating the reasons for my uncertainty. If I were facing a problem about that required interpretation of 19.000(b) I would not ask strangers for guidance. I would do some background research, talk to respected colleagues, decide what I want to do, and then construct an argument that supports my plan and try to sell it to the powers that be. Absent clear direction, I wouldn't agonize over the decision. If it's wrong, someone will sort me out. Or maybe not.

See FAR 16.402 concerning formula incentive contracts. There are three formula incentive contract types: fixed-price incentive (firm target) FPI(F) fixed-price incentive (successive targets) FPI(S) cost-plus-incentive-fee (CPIF) Incentive contracts have been around for a long time. Since before WWI. The FPI(F) was used by the Navy in WWII for shipbuilding, but abandoned due to lack of audit resources. The CPIF has been around since at least the early 1950s. The FPI(F) and the CPIF were used during the 1950s. In 1961, Secretary of Defense Robert S. McNamara boosted them as an alternative to cost-plus-fixed-fee contracts and a way to control weapon development costs. Congress thought they were a scam, which is why they passed the Truth in Negotiations Act (TINA) in 1962. Originally, TINA would have applied only to formula incentive contracts. A lot has been written about the formula incentives. Studies have been made of them by Rand, Harvard, and the GAO. The general consensus among those who have studied them is that there is no evidence that they work as advertised. Perhaps the most comprehensive study was done by Professor John J. Kennedy of the Notre Dame School of Business in 1983 for the Air Force: Incentives and Cost Control. An earlier comprehensive study was done by Peck and Scherer of Harvard, The Weapons Acquisition Process: Economic Incentives (Harvard, 1962). Here's a link to the Kennedy study (484 pages). You can access and download it at https://apps.dtic.mil/sti/pdfs/ADA140930.pdf. Read that. Then return with questions, if you still have any.

Are you asking me to address whether incentive contracts have been effective?

That's because "senior" and "legal" ≠ knowledgeable. I have talked to very "senior" people and lawyers who were shockingly ignorant—not only of the regulations and case law, but of practical fundamentals. It's like putting people who have taken a couple of glider lessons at the controls of a 737MAX full of passengers and telling them to fly from LAX to BAH. A chief of a contracting office and a CO need the deep knowledge, ability, and confidence to improvise, adapt, and overcome.