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Commercial Item - Simplified Procedures - Postaward Notice


brian

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Guest Vern Edwards

bremen:

FAR 52.212-1 and 52.215-1 say that the government will release "the overall evaluated cost or price." The problem is that the courts have raised a red flag to the effect that "constituent" or "line item" prices may be protected. If there is only one line item, and if the unit and quantity are known, then the overall price will reveal constituent or line item prices. In my opinion, if the CO plans to release constituent or line item price information he must put the offerors on notice of his intention and give them an opportunity to object.

carl:

I would not release a constituent or line item price that is "based on" a catalog or market price, because it might include an unpublished discount that the seller does not want disclosed to its competitors. I'm telling you again: commercial prices are not necessarily public prices. They may be confidential between seller and buyer. Really, Carl, that should be obvious to an experienced buyer or seller.

As for prices obtained through sealed bidding, I think the prices are public by statute and there is no issue.

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Guest carl r culham

Vern - Your most recent post regarding adding wording to a solicitation is sound business to me.

Clearly I am having a very hard time in making the connection you want to by applying FAR Part 15 to FAR Part 12 Commercial Item Acquisition when a FAR Part 12 solicitation has absolutely no reference, inclusive of provisions and clauses to FAR Part 15. The same applies to applying FAR Part 24 but I can get to the Exemption 4 matter through FOIA.

My problem I realize but I belieive I have presented what I believe to be good arguement even though you may characterize my offerings ( and I guess me) as being wacko and reckless. One of my cherished mentors from years ago that was active in the matter of creating FAR 12 might disagree with you as my intent is to support the Part's original intent. Someday maybe I will get motivated enough to post either anyother thread on the matter or even a blog but at this point I will simply leave the discussion for what it is worth.

Carl

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"Those of you who have claimed that commercial items are in some kind of special category in this regard, or that grounds maintenance prices cannot be trade secrets, and that it is ridiculous to refuse to release prices, do not know what you're talking about and should be ignored.

The Department of Justice has issued extensive guidance about what should be done prior to the release of possibly protected information, and that guidance is consistent with what I have been saying. See http://www.usdoj.gov/oip/foiapost/2005foiapost17.htm. That guidance spells out extensive steps to be taken prior to releasing such information:"

Vern, please quit stating that I have claimed that grounds maintenance prices cannot be trade secrets. I never said that and in fact told you that. I said that I doubt if they would be and further that nobody said that they were.

By the way, the guidance that you refer to is for steps to take in the event of a FOIA request for release of "such information". I dont think that Brian ever mentioned a FOIA request. Being that the Solicitation provision states that, in the event of a debriefing, the overall price will be disclosed, I would think that an offeror would have to put the government on notice that the contract price cannot be disclosed in a debriefing.

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Guest Vern Edwards

Carl:

You have not presented a good argument. FAR Part 15 and FAR Part 24 apply to procurements under FAR Part 12 pursuant to the express terms of FAR Part 12. I have pointed that out to you several times now. I'm sorry if you can't get it. As for your cherished mentor, I don't care what he or she might think about this. I care only about what FAR says and what the courts say.

Joel:

Vern, please quit stating that I have claimed that grounds maintenance prices cannot be trade secrets.

You took such a strong position against the idea that grounds maintenance prices might be trade secrets, with no explanation whatsover, that it amounted to an absolute denial. So I won't stop saying it until you admit that you have stated no grounds for your position.

My read of the DC Circuit's decisions is that the overall price must not be disclosed if such disclosure would reveal constituent or line item prices that warrant protection. The contracting officer cannot know whether they warrant protection without consulting the winner. That's my stand. A CO should not release such a price without first contacting the winner.

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Vern, the title of the thread refers to a FOIA request, which I obviously overlooked. Since the request for the info is a FOIA request, I agree that the KO should follow the outlined procedure you refer to. It is unbelievable that someone who expended the time and cost to participate in a competition had to resort to a FOIA request to find out who won a $25,000 lawn maintenance contract and what the price was.

Apparently the KO's boss eventually agreed with Brian, provided the answer and said "all you had to do was ask"...

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Guest Vern Edwards
Apparently the KO's boss eventually agreed with Brian, provided the answer and said "all you had to do was ask"...

Joel:

Brian's story about what happened to him is irrelevant, as is what is unbelievable to you. You don't know why the CO refused to release the information, and you don't know why the CO's boss eventually released it. I draw no conclusions from that story.

What is relevant is that, FAR notwithstanding, federal courts have found that some pricing information is protected in some circumstances and that release of the information in those circumstances is improper. FAR 15.506(d)(2) says to release the "overall" price, including "unit prices." FAR 15.506(e) says not to release trade secrets or commercial and financial information that is "privileged." FAR 52.212-1 and 52.215-1 say that the government will release "overall" prices, but make no mention of unit prices. Those provisions are as clear as mud. FAR says many things that the courts have declared to be wrong, and part of being a professional is being sufficiently up to speed to know when the courts have done so. Informed persons know that releasing "constituent" and "line item" prices is wrong in some cases and would violate the Trade Secrets Act.

I don't like the idea that the prices in government contracts may have to be withheld from the public. Years ago, at this website, I urged that Congress enact a law to the effect that all government contract prices are public information, except in the case of classified contracts. In the absence of such a law, you, Carl, and everybody else must accept the reality that the courts will protect some prices. (Your notion that prices might be protected from a FOIA request, but must be released during a debriefing, is absurd.)

Every contracting officer must understand that in some circumstances it is necessary to check with the winner before releasing its prices during a debriefing, notwithstanding the instructions in FAR Subpart 15.5 and personal opinions about what the public is entitled to know. COs who do not understand that, and who do not act accordingly, might be in for an unpleasant surprise. It shouldn't be that way, but it is. Your outrage at this situation, while perhaps understandable, is beside the point. Fools walk in...

COs should seek legal advice before releasing constituent or line item prices during a debriefing. If a contract contains two or more line items, then I see no problem with releasing the "overall" sum of line item prices. But if a contract contains only one line item, and if releasing the total line item price would enable others to ascertain the line item unit price, then the contracting officer should, in my opinion, refuse to release the price without the winner's concurrence, unless instructed to do so by higher authority. He or she should, instead, advise the firm being debriefed to submit a FOIA request, and explain why that must be the case despite the FAR debriefing provisions. FOIA requests should be processed in accordance with agency regulations.

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Vern, ok, I agree that case law will go beyond the wording in the FAR. I'm trying to make that point elsewhere but some are hung up on literal reading of FAR.

I think that the courts may have gone too far, tipping the balance against the interest of the public in favor of firms that simply want a competitive advantage for the next or follow-on contract, but so be it. It would seem pretty easy to claim "competitive harm" to keep anyone else from knowing the contract price, simply because there is a unit price. It would seem that the firm should have to show that someone can deduce the elements of internal company finances to demonstrate competitive harm.

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About 5 years ago, a contracting officer in my office awarded a contract for commercial services. Subsequent to award, an unsuccessful offeror, the incumbent, requested under FOIA release of the contract unit prices. As was the case in my agency, we notified the contractor whose pricing information was identified in the request. The contractor objected to its release asserting that it would reveal their confidential ?business strategy?.

Notwithstanding the assertion I was prepared to release the information based upon my knowledge of, and my experience with, FAR and FOIA. My attorney, and his boss, objected stating that their readings of court decisions supported the contractor?s assertion. The contractor hired a K street attorney to argue against release.

One thing led to another; the issue wound up at the Justice Department. The Justice Department attorney ruled that the unit prices could not be released based upon his interpretation of the court cases. I huffed and puffed. I employed some of the same ?logical? arguments I have seen in this thread. I even stated that I would use sealed bidding in the future to eliminate ?secrecy? in contracting.

All to no avail. He told me to read the court cases and get over it.

Until the court changes its mind or the Congress passes some legislation, I believe you cannot assume that contract pricing information, even commercial contract pricing, is releasable

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I used to be completely against withholding unit pricing information but I learned a lot since then. It's pretty easy for a company to find a lot about their competitors from unit pricing, especially with services. Companies share essentially the same labor pool. Everyone knows the going rate for a given labor category. Employees come and go and employers find out from exiting employees that it's often for "X more dollars that what I make now?. Similarly employers know what a potential hire makes when they offer more.

Given that competitors share a common knowledge on what everyone gets paid, unit pricing information shows the "wrap rate" or the "weighted rates." That's the compound effect of taking fringe benefits, overhead, G&A, and profit. While the identity of the individual components is not known, the bottom line effect is. Once a competitor?s wrap rate is known, it's easy to compute what they will propose the next time (assuming the competitor doesn't want to take a loss on a job or make a greater profit). As a submitter of data, I don?t what this disclosed and expect the government to protest my sensitive pricing from my competitors.

One argument for non disclosure is protecting the integrity and openness of the procurement process. But most procurements now, at least for the more significant ones, are done with price/cost being a small piece of the selection decision. So finding out pricing is just a small part of the source selection decision process. Besides, it usually is possible to provide the total contract amount without disclosing unit pricing.

So I changed my mind. If disclose of unit pricing also divulges trade secrets, it needs protection. Of course that places a greater burden on COs and adds time when a competitor wants to find out why they lost. If factors other than price are not important, the CO can use sealed bidding. That alerts sources than unit prices will be public information and offerors can decide to propose or not.

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From the cited article's description of the Army FOIA court ruling that line item pricing should be released:

"....[C]ontrary to its actions regarding his client's FOIA request, the Army had previously made Southern Coach's leasing contract, including its rates, available in response to a similar FOIA request by another competitor. Hecht said his client "had no problem" with that. But, the lawyer added, Southern Coach expects equal treatment regarding its own request for what should be a public record."

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