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Don Mansfield

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Everything posted by Don Mansfield

  1. Thomas, The "too close at hand" rule applies when the agency has actual knowledge of an offeror's past performance, usually because the offeror is an incumbent contractor. When Offeror A alleges that Offeror B has performed poorly on a different contract, that does not make the agency knowledgeable of Offeror's B performance on that contract. All the agency knows is that Offeror A has alleged something, which the agency can pursue or disregard.
  2. Vern, You selectively quoted me and omitted my explanations. Thanks. My last post explained my position: By the way, you misread the FAR. You wrote: That's not what it says. The definition of "buying-in" is as follows: "...through unnecessary or excessively priced changed orders" is only given as an example of a method of increasing the contract amount after award. This definition does not say that it is the only method for increasing the contract amount after award, which is what your statement implies.
  3. Welcome to "Win the Government's Money!" The rules of the game are as follows: 1. You are a Government contractor and your goal is to make as much money as you can. 2. You are bidding on a contract that will cost you $1,000,000 to complete. 3. You must bid a single fixed-price to complete the contract. If you submit the lowest bid, you will win the contract. However, your bid price must be realistic or you will be found to be nonresponsible. 4. If you win the contract, your score will be your bid price minus $1,000,000. 5. After the winner has been decided, a random number will be chosen between $200,000 and $400,000. 10% of the random number selected will be added to the winner's score. Are you ready to play? If so, send me your bid through the messenger function by clicking on my name at the left. Don't post your bid here. You have until tomorrow at 11:00AM PDT to submit your bid. The results of the competition will be posted here. Good luck!
  4. Well, a stop-work order wouldn't make sense because there is no work to stop. Also, if you issue a stop-work order, then the contractor would be entitled to costs plus profit. If you do nothing, the contractor may request an equitable adjustment pursuant to the Government Delay of Work clause (assuming that clause is in the contract). However, they would only be entitled to costs (no profit).
  5. here_2_help, Understood. My point was that the savvy contractor in my example hasn't broken any rules. He's taking a calculated risk to reduce or forego an allowance for profit in his proposed price in order to win the contract. He does this because he expects there to be a lot of change orders and he knows that he is entitled to a reasonable profit on equitable adjustments. In an environment with intense competition where price is the dominant factor (or only factor) in deciding who gets the award, and the type of work lends itself to numerous contract changes (e.g., construction, ship repair), this is often a successful strategy. Such a strategy is a logical consequence of procurement practices that 1) place a dominant emphasis on price when selecting contractors and 2) provide for a reasonable profit when making equitable price adjustments to contracts as a result of changes. You and Vern seem to have equated such a strategy with submitting false claims. While contract administrators should be extra vigilant for false claims when administering a contract with a contractor who has proposed a low price, this does not necessarily mean the contractor is dishonest for employing the strategy that he did. Vern, I don't think that you understood what I was saying. Read the paragraph above.
  6. Is the contractor waiting on your decision before proceeding? If so, what work is there to stop?
  7. Right. But how does that disprove what I wrote? Each time the contractor gets an equitable adjustment, the $200,000 left on the table is reduced by the amount of profit in the equitable adjustment. Who said anything about falsely inflating estimates? Jail for taking advantage of the CO's incompetence? C'mon. Read Buying-In: An Improper Business Practice (18 No. 4 Nash & Cibinic Rep. ? 14).
  8. I see that you can copy and paste from the FAR, but you should probably take some time to understand it before doing so. FAR 3.501 doesn't prohibit the practice of buying-in. Read it. Further, buying-in does not mean that the contractor intends to submit fraudulently priced change orders, either. The fact that "buying-in" is discussed as an improper business practice in the FAR is questionable. In an article entitled Buying-In: An Improper Business Practice (18 No. 4 Nash & Cibinic Rep. ? 14) the author states: The author goes on to describe a qui tam FCA suit, U.S. ex rel. Bettis v. Odebrecht Contractors of California, Inc., 297 F. Supp. 2d 272 (D.D.C. 2004), where the relator unsuccessfully alleged fraud in the inducement (among other allegations) against a contractor for submitting a low bid even though it did not intend to perform at the bid price. The author concludes with: I think my savvy contractor can ward off any legal challenges with a mediocre legal defense team.
  9. FAR Case 2008-032 (Small Business Size Rerepresentation), which was part of FAC 2005-31, contained the following general statement in the Q&A section (74 FR 11823): Is that accurate? What do you think?
  10. Amazing. That is an actual case from CON 218. Are you doing a CON 218 assignment or is this a real situation?
  11. dwgerard, One of the factors to consider when evaluating contractor performance is the contractor?s history of reasonable and cooperative behavior. If a contractor had a record of submitting an excessive amount of meritless REAs and/or exorbitant pricing, then this should be considered when evaluating their past performance. Also, I sense that you have a problem with a contractor who "buys-in." I don't, and let me explain why. The Government's rules require that price be a "significant" factor in source selection. When using sealed bidding, it is the only evaluation factor (plus price-related factors). When awarding a fixed-price contract, the Government generally doesn't care what the contractor's cost of performance will be, unless the offered price is alarmingly low. The Government has another rule that provides for pricing equitable adjustments based on reasonable costs of performance. If a change order causes the contractor to incur a cost increase, the price will adjusted to account for a reasonable estimate of the cost increase, plus profit. If I'm a savvy contractor who knows these rules and wants to make money on a fixed-price contract where price was going to be a dominant factor in choosing who gets the award (and I anticipated a lot of change orders), wouldn't it make sense to offer a price as low as I could possibly stand (even below cost) in hopes that I could win the award and make up for any losses through equitable adjustments? Actually, I don't think you even have to be a savvy contractor. If I explained these rules to 10 strangers to Government contracting and asked them to come up with a strategy to make money, 9 out of 10 would probably choose to propose a low price in hopes that they would make up for any losses through change orders. Does this make them bad people? I'm familiar with the picture that you referenced. However, I don't see it as a statement against dishonest contractors, I see it as a satire of the Government's procurement rules.
  12. Vern, No, I haven't. I'll give GAO a call and let you know what happens.
  13. I contacted the chief of the contracting office that received the protest to clarify the facts of the TYBRIN case. He told me that CENTECH's proposal did not contain an express provision stating that it intended to perform less than 50% of the cost of the contract work. This was inferred from information contained in their cost proposal. Further, the work percentages that would be performed by the prime and subcontractors were not "accepted" by the Air Force in the sense that they became part of the contract (i.e., they were informational, not promissory).
  14. dwgerard, You wrote: I read this as decades of Government incompetence, not as an example of bad behavior on the part of the contractor. Why didn't the Government determine the contractor nonresponsible if it was lowballing its quotes? Why didn't the Government evaluate price realism to protect itself from this practice? If an offeror chooses to buy-in, what do you think the offeror has done wrong?
  15. I don't see a problem with it. Many agencies require offerors to have their past customers complete past performance surveys so this information can be used in source selections. Asking for a letter of recommendation would be the same thing.
  16. I don't agree that "The language of the decision clearly indicates that there was more to this than a conclusion derived from the analysis of numbers in a cost estimate." However, I will take your advice and contact someone knowledgable about the decision. I'll let you know what I find out.
  17. Vern, You wrote: Do you mean that there was a part of the proposal (other than the cost estimate) that stated that the offeror did not intend to perform 51% of the work, and that part of the proposal became part of the contract? If so, then I don't know how you reached that conclusion based on the passage you cited from the case. If that's not what you mean, then I don't know what you mean.
  18. In TYBRIN Corporation, B-298364.6; B-298364.7, March 13,2007, the GAO held that an offeror's cost estimate that indicated that it would not perform 51% of the contract work on a small business set-aside rendered the offer unacceptable, even though the offeror did not explicitly take exception to the solicitation's limitation on subcontracting clause (FAR 52.219-14) and the SBA granted the offeror a certificate of competency. The GAO reasoned as follows: As a result, the Air Force reopened discussions with offerors and sought revised proposals. This action was unsuccessfully challenged in the Court of Federal Claims (see The Centech Group, Inc., v. U. S. and Tybrin, Inc., 07-513C, Filed December 7, 2007, Refiled December 13, 2007) and unsuccessfully appealed to Court of Appeals for the Federal Circuit (The Centech Group, Inc., v. U. S. and Tybrin Corporation, No. 08-5031, February 3, 2009). Thus, it would seem that we have a general rule that if information in a cost estimate indicates that an offeror will not comply with a material term of a solicitation, then the offeror has implicitly taken exception to that term of the solicitation, which would make their offer unacceptable (or nonresponsive). However, in Group GPS Multimedia, B-310716, January 22, 2008, the opposite conclusion was reached. In that case, the successful offeror submitted a cost estimate that contained a proposed labor rate that was below the labor rate stated in the Department of Labor Wage Determination (the contract would be subject to the Service Contract Act). The protester argued that this gave the awardee an unfair price advantage. The GAO held as follows: This raises several questions. Why wouldn't a cost estimate that contains proposed labor rates below the SCA-minimum labor rates render an offer unacceptable, but a cost estimate that shows an offeror performing less than 51% of the contract work on a small business set-aside would? In neither circumstance does the cost estimate indicate compliance with a material term of the solicitation (the Limitation on Subcontracting clause and the Service Contract Act, respectively). Yet, we have different results. Is compliance with the Limitation on Subcontracting clause a special case? If so, why? Or is proposed compliance with the SCA (as evidenced in a cost proposal) a special exception to the rule? If so, why? Any ideas?
  19. Then I don't know why we disagree. My position was that the FAR permits the approach that Vern proposed and does not require that the solicitation state anything special (other than what's required by FAR 15.101-2). Whether or not it's a good idea to announce your intent to use the Economical LPTA approach is a different issue.
  20. Vern, You may have already considered this, but FAR 15.305(a)(3) only requires an assessment of each offeror's ability to accomplish the technical requirements of the solicitation when the tradeoff process will be used: If this requirement applies to LPTA, then why would it specify "when tradeoffs are performed"?
  21. I don't understand your argument. Are you saying that FAR 15.101-2 precludes the use of an Economical LPTA unless such an approach is stated in the solicitation? Or are you saying that you think it's a good idea to state that you are using the Economical LPTA approach in the solicitation?
  22. In a remarkable statement issued today, the Government Accountability Office (GAO) apologized to the Department of Defense for what it called "decades of unwarranted and unsubstantiated criticism." The admission came in the wake of the release of a March 2009 GAO report titled Defense Acquisitions: Assessments of Selected Weapon Programs that claims that for 2008 programs, research and development costs are now 42 percent higher than originally estimated and the average delay in delivering initial capabilities has increased to 22 months. "Who knows if any of that stuff is true" said the author of the study. "We write these reports years in advance when there are no data. Last month, I completed documenting my 'findings' for a 2010 report on DoD's mismanagement of 2009 stimulus funding." He added, "From what I do know of DoD, they are a stellar organization." GAO also recanted recent Congressional testimony that stated: "That was a gross mischaracterization and we regret those statements. Truth be told, DoD's weapon system programs, in particular the Future Combat Systems program, are models of responsible program management. They represent the Federal Government at its best" said the GAO. When asked what motivated today's statement, a GAO spokesperson responded that "we can't keep up with the demand for this type of criticism. The DoD-bashing crowd is insatiable. It's getting to the point where we are ignoring some real problems in other agencies, like NASA", an obvious reference to the recent expose of former astronauts at the space agency. GAO had painted DoD as a largely dysfunctional, overinflated, and wasteful bureaucracy in numerous reports dating back to the 1970s. One retired GAO auditor, who now runs a Web site dedicated to Federal contracting, added some insight: "DoD wasn't half as bad as what we wrote about them, but nobody wanted to hear it." DoD has yet to formally respond to the GAO's apology.
  23. Within the context of applying the rules of the FAR, there is generally no difference. However, the difference could be significant in a different context.
  24. In the context of FAR Part 44, I don't think that there's a significant difference. Part 44 uses approval when discussing contractor purchasing systems and consent when discussing subcontracts. The Government Contract Reference Book defines approval as "a contracting officer's written notification to a contractor that the Government agrees with a proposed course of conduct" and subcontract approval as "the contracting officer's written consent for the contractor to enter into a particular subcontract." Outside of Part 44, I don't know of the words having necessarily distinct contractual significance.
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