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My computer will not allow me to grab a quote from my last post, but I did want to revise my question about design-build.

What I was attempting to ask is, whether or not there was less reason to open discussions for a design build solicitation that has minimal design requirements, versus a solicitation that has a full design, such as that found in traditional design bid build. The difference being the volume of detail provided between the two, and thus the associated potential for errors on either side (ambiguous specs or erroneous interpretation).

Thanks!

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Guest Vern Edwards

In regards to whether or not to conduct discussions, it seems like it is the common philosophy to award without discussions whenever possible, at least in many operational Air Force contracting squadrons and National Guard contracting offices. I was surprised to see that the Department of Defense Source Selection Procedures encouraged discussions, and even went as far as to say that they are the rule and not the exception.

I think that a significant number of contracting professionals, or at least those of us who are less experienced and unfamiliar with GAO case law, tend to shy away from discussions for the fear of a protest.

Bingo. That's precisely the case. Discussions can be trouble if the CO does not know what he or she is doing, and they do take more time, so most agencies are happy to award without them, which is too bad. Even if they do conduct discussions, most agencies severely limit the content of to communication of deficiencies, weaknesses, and the price amount (too high or too low). I have no hope of changing that.

I'll leave the design-build question for Joel, who is our local expert. But I will say this: the ultimate goal of contract formation is to produce a meeting of the minds and mutual assent. The question is whether face to face talk improves the "quality" of the agreement. I think it does, whether you have "full" specs or only partial. I do not think that paper communication is enough for complex undertakings between parties that are essentially strangers to one another. In many if not most cases the parties begin their relationship having no idea what they have gotten themselves into.

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1. We used to ask for the breakdown with the proposal but found that it was not effective to ask for it to be delivered with the proposal for the reasons explained above. It was very effective when we asked for it to be furnished within three working days of the proposal submission date. That allowed the proposers/offerors the chance to properly breakdown the information. We provided the format in the RFP. The reason we don't do that any more is that we don't always need the data. So we don't want to needlessly task proposers to automatically furnish it. We decided to reserve the right to ask for it. If you are strapped for time, it is certainly ok to require it to be furnished a couple of days after the proposal submission date.

2. I strongly encourage discussions for D-B contracts and task orders, including bargaining for better performance, finding solutions to price and technical problems, clarifying anything we think isnt clear, etc. I hate it when KO's and/or PM's try to avoid discussions for the sake of some unrealistic schedule or in the belief that we don't conduct discussions if we have a proposal "without deficiencies". In fact, I was chided by the Webmaster and by a very prominant WIFCON poster two months ago in another thread for not creating a Blog to expand on my viewpoint. I feel that, in design-build, discussions are almost always fruitful and that we should bargain for better performance if we arent completely satisfied with even a conforming technical proposal. Of course, that applies to solicitations that use the Trade-off method. In an LPTA, price is paramount consideration. We can't pay a dollar more for a higher priced proposal that offers anything more than compliance with the minimum RFP requirements.

3. A D-B solicitation using LPTA, usually includes a highly prescriptive, "full-criteria" level of preliminary government provided design. The D-B industry derisively refers to this as "draw-build". Those are typically where you will find more pricing problems that should require discussions. Those solicitations usually severely limit flexibility of the D-B firm. Most, if not all means, materials and equipment choices are prescribed or narrowly limited. If price is the most important factor, I'd think that the government would want to award within the budget.

4. In fact, I'd think that one price objective for any design-build project should be to award within the budget. When using the trade-off method with performance oriented (less design furnished by the government) design criteria are furnished, I feel that we should be looking for the best combination of qualifications and design quality within the budget - not the lowest price.

That's all for now. My wife is visiting me this weekend on my extended TDY assignment.

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Joel:

...The differences between you and me are fundamental and substantial. If that's not true, just say so

.

Vern, OK then. That's not true. You may not have read where I advocate meaningful discussions in posts #16, 18, 19, 22, 23, and 28 above.

You may recall in another thread that you challenged me a few months ago to write an article in a Blog. You said I should detai my views on the necessity to conduct meaningful technical and price discussions for construction and design-build source selections or task order competitions. I advocate emphasis on getting the best deal for the government. I complained about an observed reluctance of some PM's/KO's that is apparently widespread in various agencies to provide time for and to conduct discussions. When they do, they are sometimes shallow. In particular, I advocate conducting price discussions and/or conducting technical discussions when there is an otherwise awardable proposal that could be better. Such discussions are also appropriate for proposals that may be technically compliant but contain some objectionable or unneccessary features. I advocate bargaining for better performance. I described differences between pre and post 1997 versions of FAR Part 15, which encourage this approach.

The point I've constantly and consistently made in this thread, is that I have found it is more effective and efficient use of time to obtain and use the price breakdown information as part of the proposal price evaluation process - before establishing the competitive range and prior to discussions. It is also useful for determining which firms to include in discussions. Don't wait for negotiations to ask for it. I successfully used this approach for many years. It has been included in a Model RFP that has been used for billions of dollars worth of Army D-B MILCON projects since 2006.

...Also, if you want a price breakdown to "help define the areas of probably pricing differences," why bother with the supplemental price breakdown approach? Since you are concerned about needless delay, why delay getting the information? Why not ask for the breakdown with the proposal in the first place?.

You may have not read in posts #4, 7 and 28 where I explained that price breakdowns furnished at the time of proposal submission for construction and design-build projects are of little value - that it is more effective to allow proposers about 3 working days to submit it. I also said that this information isnt always necessary. In consideration of the effort and cost involved to industry to prepare this information, we decided to reserve the right to ask for it. We can easily and quickly obtain it if needed during the time set aside for proposal evaluation. If time is critical, then require in the RFP for proposers to submit it 3 working days after initial proposal receipt.

...Finally, you say: "We don't need to have an agency policy or regulation to comply with FAR." Where did that come from? I don't know what that means.

I was replying to your question in post number 17:

"Is the procedure described in an agency regulation, policy issuance, or manual? "

The procedure is compliant with the policies expressed in FAR 15.402 (a )(1), 15.403-1 (b ) , and 15.403-3, as I initially identified very early in this thread in post #7. There is no need to add supplemental agency policy to use such wording in an RFP.

Sorry that I overlooked your specific questions in your post #20. Perhaps you edited your original post - who knows.

I answered most of them already. Yes, provide a common cut-off in the letter/email requesting the supplemental breakdown. There were no compalints by industry during the years that I personally led the construction and D-B source selection process. We have Corps-wide feedback systems for requesting revisions to the Model RFP. I haven't seen any negative feedback on this practice since the RFP was published in 2006. If the GAO decided to take an intererest in it, I'm sure that we would respond appropriately, but we haven't been quaking in our boots about it. Proposers are not allowed to change their CLIN prices with the breakdown. Who is to say that they wouldn't manipulate the data if we first ask for it in discussions or with their proposals? We already know that the price breakdown data was of marginal value when it was submitted concurrently with the proposal. I had to explain why several times here.

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Thanks for the post Joel.

I do have one question for you. I apologize if I am asking you to repeat yourself.

Why the reluctance to request the breakdown with the initial proposal? What benefit does three additional days provide to the contractor? Isn't there proposal backed by sufficient estimation prior to submission? I were to receive a proposal and found out that the contractor was not in a position to also provide a complete breakdown at that time, I would be a little concerned.

I would like to hear you elaborate on this. Maybe I am just not fully understanding the detail of the breakdown or how the three days benefits the contractor.

Thanks!

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Micah, thanks for the prompt. I found the original post where I explained why price breakdowns furnished with the original construction or design-build price proposals weren't very meaningful. Here it is with some added clarification.

We began in the late 1980's asking for a high level price breakdown with the proposals. But we found that the information often didnt make sense or add up to the CLIN prices. During discussions with a couple of the proposers' reps, they indicated to me that they dont have any problem with furnishing such information. However, they werent in a position to accurately break down the final numbers prior to proposal submission because they were still finalizing the pricing up to the last minute.

Construction contractors often hand deliver their pricing proposals separately from their bound technical pricing We've often observed the proposers' reps on cell phones outside the Federal Building, making last minute revisions to their pricing. Or they sometimes send in the price envelopes through FEDEX or equivalent at the last moment possible It takes time to breakdown pricing of each lump sum CLIN. Examples of CLINS may be: each separate, lump sum building as well as sitework and site utilities. For design-build, we often include a CLIN for the Design, where "design" is defined in the CLIN schedule notes.

The CLINs may be broken down into a government provided Work Breakdown Structure, such as building shell, mechanical, electrical, special features, architectural finishes, etc. Those WBS lines are further broken down into columns for total labor, total materials, total equipmentr, subcontracts and overall markups This isnt something that a proposer can just fill in at the last minute after finalizing its pricing. Price has to be hand delivered. Or it is run over to or picked up by FED EX, DHL, etc. It isn't particularly difficult to do, because the firms do this anyway in their spreadsheets. We dont ask for manhours, labor rates or crew sizes, individual material pricing, equipment lists, etc. The uniform format makes it easy to compare proposals and compare with the Government's IGE.

The contractor reps that I used to deal with suggested allowing proposers a couple of days to break down the information and provide it. They said that they would be able to greatly improve the quality of the info provided. We then changed our method to RFP language requiring that the price breakdown information be provided within three working days after the closing date for proposal receipt. We said no changes to the proposal prices or CLINs were allowed.That worked great for us. The quality of the information was indeed greatly improved.

However, on many occassions we didnt need the information. In those instances, we realized that we were making proposers sometimes go to extra effort and expense for no purpose. We then decided to reserve the right to ask for the information, if necessary. We ask for the information when there are questions concerning pricing. This has worked very well in helping to determine if we need to conduct price discussions. And it helps us find those areas of pricing disparity to probe during discussions. Discussions have been much more meanginful and productive. We've discovered how to eliminate or reduce contigencies for poorly crafted or risky requirements, unclear requirements, wasteful requirements, etc. Since the price analysis team conducts the price analysis concurrently with the technical teams' analyses, this doesnt really add much, if any time to the SS or task order evaluation process.

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Micah, you asked:

Thanks for the post Joel.

"..Isn't there proposal backed by sufficient estimation prior to submission? I were to receive a proposal and found out that the contractor was not in a position to also provide a complete breakdown at that time, I would be a little concerned."

Thanks!

They have the information but there are occassions where the boss tells the PM or estimator at the last minute to make across the board cuts, cuts to certain CLIN's, etc. Subs or suppliers may provide last minute price revisions. One cant easily go back and edit the price breakdown or even calculate the individual adjustments on the fly. They've got to get the proposal in.

The current construction bidding climate is cut throat - firms are taking huge cuts just to stay in business or to keep their business and management staffs. These are tough economic times for the design and construction industry.

By the way - I don't recommend using LPTA design-build projects, unless they are "draw-build" projects. And those probably shouldn't be issued as design-build, either.

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Guest Vern Edwards
The contractor reps that I used to deal with suggested allowing proposers a couple of days to break down the information and provide it. They said that they would be able to greatly improve the quality of the info provided. We then changed our method to RFP language requiring that the price breakdown information be provided within three working days after the closing date for proposal receipt. We said no changes to the proposal prices or CLINs were allowed.That worked great for us. The quality of the information was indeed greatly improved.

That does not make sense. They develop the breakdown after they set the price? So they do not build the price up from scratch? It sounds to me that they develop a post hoc rationalization of something they developed in some other way. The breakdown does not reflect a cost buildup, but an after-the-fact allocation of costs. You say the quality of the information was greatly improved. How so? Content or format? I can see format changing for the better, but not content, unless the content is created after the fact.

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The content was improved. We provided the format. They didnt have the time to edit all their data, plus cross reference and match our format.They concentrated on pricing in accordance with their formatted estimating systems.

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Guest Vern Edwards

If their estimating systems produced the content, why didn't they have enough time to edit and format it the way you wanted it? Was it because you did not give them enough time? And in what way was the content "improved" after their estimating systems produced it? Did they improve it or embellish it? Improve it or doctor it?

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We arent asking for a cost proposal. Contractors have their own estimating systems, formats and technical approaches, which may or may not conform to the layout of the government's format. when pricing is dynamic up to the last minute, it just cant be swiftly broken out and transferred over to another format.

Whatever. I've had my say.

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Guest Vern Edwards

I'm not arguing with you about discussions.

I think what you have said about your procedure is interesting, because it may tell us something about the nature and merits of the cost breakdowns you receive. What you said suggests to me that the breakdowns you receive do not necessarily reflect how the prices are developed, how they were built up from scratch. It may not shed full light upon the cost estimating process. What you have said suggests that the breakdowns are, at least in some measure, after-the-fact rationalizations of the proposed prices.

If you claimed that giving the offerors more time to submit the breakdowns allows them to merely reformat their information, that would be one thing. But you say that it allows them time to give you better content, and that strikes me as something else. I'm not sure what. My understanding of your use of the word content may be faulty, I don't know, and I don't know if it matters with respect to source selection procedure, but if raises interesting questions about the procedure that you are using to understand the prices that you receive. I am not saying that the procedure is unsound.

I understand, however, that you do not want to talk about this anymore.

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Micah, you are welcome.

Vern, I'm trying to say (not very well) giving the offerors more time to submit the breakdowns allows them to reformat their information. We aren't asking for a cost proposal. Contractors use their own estimating systems, methods and procedures.

Also, subs and suppliers routinely submit prices that cover several of the specific "lines" that we are interested in. Its hard enough for a proposer's team to sort this out among different CLINS, let alone break it down into our specific format. That's all I'm trying to say.

And yes, sometimes we discover unbalancing between CLIN's through examination of the breakdowns that may or may not be deliberate. Having discussed that with proposers, I feel that, due to the time pressure to get the price proposal finalized and submitted on time, theysometime incorrectly break out their subs' and suppliers' quotes between CLINs or allocate to the wrong line on our format within the same CLIN . This reminded me of occassions where, during discussions, proposers would sometime thanks us for catching those errors and they re-allocated the costs to the correct CLIN's in the revised offers.

I guess that I could sometimes spot these apparent errors or unbalancing from my background in construction contract admin and experience in negotiating mods, claims and new sole source acquisitions. Contractor's estimating systems and formats dont always mirror those used by our estimators. In addition, the estimators and the various proposers dont necessary use the same "make or buy" approaches (some self perform things that other subcontract out and they use different construction approaches). Some allocate specific work between different subs. Our estimators base their estimates on a certain approach that might not be the same as the industry. I guess that's why they are called "estimates" and why there are differences between bottom line prices.

Again - we aren't asking for detailed cost proposals - only high level price breakdowns of the CLIN''s to help us see where they put the money. It's a lower level price analysis but not a cost analysis.

I'm rusty now at cost and price analysis. However, I have been on a long term TDY assignment to negotiate a very large acceleration mod that includes settling the time impact of numerous changes and other causes. I've had to dust off and use my technical, cost and price analyses hats once again...

Hope that helps clarify why it is better to allow the proposers a couple of days to sort out their price breakdowns. Please believe me when I say the price breakdowns made much better sense after we started doing that. Dont read too much into ulterior motives, etc.

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