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WIFCON readers,

I'm advising on an agency level IDIQ evaluation for professional engineering services. Prices to be on contract will be ceiling prices for various line items of professional labor, with task orders competed for upcoming requirements. The solicitation language makes line item price reasonableness important, but also has a balancing test that gives consideration of the line item prices in the context of the overall offered/evaluated price (line items x estimated quantities for each). That balancing test was intended to make sure no line item prices were excessive, but to allow for natural variation amongst offers above and below the mean (or median) without setting arbitrary cutoffs for line item pricing - with the notion that true outliers on a CLIN would be deemed a high risk, and result in offeror elimination. Total price to the Government was to be assessed through the lens of the overall offered price values. Both the evaluation of line item pricing and the evaluation of overall offered price had roles.

New players have come into the mix, and are debating taking a very hard line on CLIN level pricing, as opposed to just scrubbing the CLIN level for excessive prices - which in my view may nix the balancing test, potentially rendering the role of the overall offered price case meaningless, and I see risk in that. The expressed reason for the new take on what to do with CLIN level price evaluation is that the solicitation states CLIN prices will be reviewed for reasonableness. True, but that's true regardless of if that's stated or not, and has to understood in context of the overall price evaluation model so as to not upset the balancing test (to not render it meaningless). It seems to come down to two different views of what is reasonable for CLIN level prices in the award of a contract.

Any suggestions of what to say to or show (e.g., words, FAR or case law cites) folks to help them use jurisprudence in this matter - they seem stuck and the conversation is looping?

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Guest Vern Edwards

Loki:

I know that you did not intend to confuse us, but if you had written that post with that intention, I would say that you had written a masterpiece of obfuscation. In fact, every sentence is a mini-masterpiece. It is so good that I actually admire it. I read it over and over and with real pleasure. I'm not being sarcastic. It flows so well that when you get to the end you are in a state of ecstatic disorientation. You're almost dead before you realize that someone is killing you. You have a real future in writing speeches for politicians about sensitive issues. Everyone will say what a great speech they heard, but will not be able to say what it was about or what the politician's position was.

However, please do us a favor and rewrite it in plain English so we can help you, if possible.

With sincere admiration,

Vern Edwards

P.S. In addition to writing like that, can you speak like that before groups?

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I read your post twice and I still have no idea what you're asking.

The post does remind me of remarks a professor wrote on one of my papers - one I thought was a masterpiece of clarity and insight:

"Mr. napolik, your writing style calls to mind comments made by biographers on the writing style of Warren Harding: 'An army of words marching across the page in search of an idea'".

His remarks bruised my self esteem, but they were true. I was too close to the subject, and I mistakenly assumed the readers possessed my knowledge and perspective.

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I thought that I was following you, except for the idea of "scrubbing" the CLIN list(?). Then' you lost me when you mentioned the "new players" that are taking a "hard line" at the CLIN level. Please explain what you meant by "scrubbing" CLINs and how the new players specifically want to evaluate pricing.

I think that you recommended putting dummy estimated quantities in the schedule to be able to better visualize differences in maximum unit prices by multiplying the unit price by the dummy quantity. So, one can see a bottom line price difference as well as distinguish at the CLIN level. Now the "new players want to do something different... What, I don't know - please explain . Is that close?

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My take is that the crux of the question is the different new approach of putting more emphasis on line item price evaluation versus more emphasis on the bottom line.

I see a danger in getting so far down in the weeds as to lose sight of the main objective.

The main objective, FAR 15.405( b ) tells us, is, "The contracting officer's primary concern is the overall price the Government will actually pay."

That paragraph ends with, "...the contracting officer should not become preoccupied with any single element and should balance the contract type, cost, and profit or fee negotiation to achieve a total result -- a price that is fair and reasonable to both the Government and the contractor."

This sounds like it's all about people who can't see the forest for the trees.

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Cajuncharlie,

Unbalanced bidding is all about

The contracting officer's primary concern is the overall price the Government will actually pay
.

Suppose an offeror think they know more about the governments requirement for specific CLINs than the government does. Or suppose they want to gamble. That offeror might really bid a very high rate for the CLIN they think will be used more than the estimate and bid another CLIN very low for one that won't be used much. Their bottom line evaluated price might be competitive but if they got the award and their hunch turned out right, they get a windfall. So the OP is stuggling with how to best guard against this in the evaluation and it's all about what the government will actually pay.

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Cajuncharlie,

Unbalanced bidding is all about .

Suppose an offeror think they know more about the governments requirement for specific CLINs than the government does. Or suppose they want to gamble. That offeror might really bid a very high rate for the CLIN they think will be used more than the estimate and bid another CLIN very low for one that won't be used much. Their bottom line evaluated price might be competitive but if they got the award and their hunch turned out right, they get a windfall. So the OP is stuggling with how to best guard against this in the evaluation and it's all about what the government will actually pay.

In a unit priced contract, it is important to evaluate both individual unit prices and overall prices, unbalanced "bidding", included.

And yes, I realize that the unit prices are maximums that will be competed in actual orders.

I still don't understand what point the original poster is trying to make.

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Cajuncharlie,

Unbalanced bidding is all about .

Suppose an offeror think they know more about the governments requirement for specific CLINs than the government does. Or suppose they want to gamble. That offeror might really bid a very high rate for the CLIN they think will be used more than the estimate and bid another CLIN very low for one that won't be used much. Their bottom line evaluated price might be competitive but if they got the award and their hunch turned out right, they get a windfall. So the OP is stuggling with how to best guard against this in the evaluation and it's all about what the government will actually pay.

It was not necessary, imho, to again raise the specter of unbalanced pricing, which had already been mentioned.

I was good to see that your post ended with the same point I was making.

As the Moody Blues said, it's A Question of Balance.

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My take is that the crux of the question is the different new approach of putting more emphasis on line item price evaluation versus more emphasis on the bottom line.

I see a danger in getting so far down in the weeds as to lose sight of the main objective.

The main objective, FAR 15.405( b ) tells us, is, "The contracting officer's primary concern is the overall price the Government will actually pay."

That paragraph ends with, "...the contracting officer should not become preoccupied with any single element and should balance the contract type, cost, and profit or fee negotiation to achieve a total result -- a price that is fair and reasonable to both the Government and the contractor."

This sounds like it's all about people who can't see the forest for the trees.

Not sure what the problem is but one must examine both the forest and the trees in this situation.

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I couldn't help myself. Loki, Is this your scenario?

WIFCON readers,

WIFCON readers,

I'm advising on an agency level IDIQ evaluation for professional engineering services.

We are evaluating proposals under a solicitation for an IDIQ contract for services.

Prices to be on contract will be ceiling prices for various line items of professional labor, with task orders competed for upcoming requirements.

The contract will have loaded labor rates. The contract will be multiple award and task orders will be competed.

The solicitation language makes line item price reasonableness important, but also has a balancing test that gives consideration of the line item prices in the context of the overall offered/evaluated price (line items x estimated quantities for each).

The price of each loaded labor rate is being evaluated. Also, the total price of the contract is being evaluated by multiplying the proposed labor rates by our estimated number of hours for each labor category.

That balancing test was intended to make sure no line item prices were excessive, but to allow for natural variation amongst offers above and below the mean (or median) without setting arbitrary cutoffs for line item pricing - with the notion that true outliers on a CLIN would be deemed a high risk, and result in offeror elimination.

My plan was to evaluate both labor rates and total contract price so that our price evaluation is complete. I believe that although an offeror may propose some labor rates that are higher than Government estimates and perhaps higher than the average of all offerors, having higher rates on a few labor categories doesn't mean that the offer doesn't represent the best value. I believe that only when evaluating labor rates and total contract price can our price evaluation be complete.

Total price to the Government was to be assessed through the lens of the overall offered price values.

So again, total contract price is being evaluated.

Both the evaluation of line item pricing and the evaluation of overall offered price had roles.

And to restate, our price evaluation will include evaluating labor rates and total contract price.

New players have come into the mix, and are debating taking a very hard line on CLIN level pricing, as opposed to just scrubbing the CLIN level for excessive prices - which in my view may nix the balancing test, potentially rendering the role of the overall offered price case meaningless, and I see risk in that.

Some in my office have commented that we should only evaluate labor rates and not total contract price. These individuals feel that we should not consider offers where the offeror proposed any labor rates that are determined to be too high. I believe to automatically "throw out" an offer that contains one or more labor rate that is deemed "too high" doesn't allow for the possibility that the offer as a whole represents the best value.

The expressed reason for the new take on what to do with CLIN level price evaluation is that the solicitation states CLIN prices will be reviewed for reasonableness.

The reason that some in my office have the opinion that we should only evaluate labor rates is because that's what our solicitation states.

True, but that's true regardless of if that's stated or not, and has to understood in context of the overall price evaluation model so as to not upset the balancing test (to not render it meaningless).

It is true that the solicitation states that the Government will evaluate labor rates. I believe that does not mean that we can not / will not also evaluate total contract price.

It seems to come down to two different views of what is reasonable for CLIN level prices in the award of a contract.

So there is disagreement in my office on how to perform the price evaluation. Some believe we should evaluate only labor rates. I believe that we should evaluate labor rates and total contract price.

Any suggestions of what to say to or show (e.g., words, FAR or case law cites) folks to help them use jurisprudence in this matter - they seem stuck and the conversation is looping?

Any thoughts?

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FAR 15.405( b ) as noted in Post #7 above. Can the "new players" who want to throw out proposals based on line item pricing without looking at the bottom line reconcile their proposed approach to the requirements of FAR 15.405( b )? If their argument is the solicitation does not talk about overall price evaluation, only line item price evaluation, therefore they can't do overall price evaluation, they are out of compliance with this portion of the FAR, which applies to all solicitations, regardless of whether expressly stated in the solicitation. Offerors are presumed to know the basic ground rules, as are the Government folks.

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