How to evaluate Travel as ODCs with a fill-in-the-blank NTE Ceiling Price?

[govt2310]

What are the best practices for structuring travel costs in a contract, and what are best practices for evaluating travel in price proposals?

I know this is a very broad question. Well, to try to narrow it, assume this is the scenario:

The contract type is FFP. The contracting agency is purchasing commercial services. The contracting agency does not know and cannot predict with any certainty the amount and frequency of possible travel. All that is known is that there might be "some" travel required during the life the contract, like a few days a year over a period of performance of 5 years. Travel is currently listed as an ODC, and Section B of the solicitation lists the pricing for travel as "NTE." The contracting agency does not want to define the NTE with a number. The contracting agency wishes to let the offerors/vendors define the NTE ceiling price in their price proposals.

The solicitation got posted and closed. The contracting agency received several proposals. Two of the proposals fail to provide an NTE ceiling price for travel at all. The rest of the proposals provide varying amounts for the NTE ceiling price. What should the contracting agency do to be fair to all offerors?

Also, in the future, would it be better for the contracting agency to simply take the initiative to set the NTE ceiling price for travel instead of leaving it to the offerors/vendors? Or how about this: can the contracting agency just develop an IGCE for travel, and then in its evaluations, just stick the travel IGCE in as an assumption for each of the proposals?

[joel hoffman]

Did the solicitation advise from where and whereto the travel will occur and for what possible purposes? If it is undefinable, how can anyone provide a meaningful or realistic NTE amount and how could anyone evaluate anything?

[govt2310]

Let's say the solicitation is for auditing services. The solicitation did not specify the travel from where to where exactly, but just said, travel may be required "throughout the United States." For example, it is impossible to determine in advance when and where an audit situation will occur, when the contractor's services will be needed, and for what part of the country.

Would it be best to just not evaluate it at all, or to just create an IGCE for est. travel costs, and just assume the costs will be the IGCE for all offerors?

[joel hoffman]

Let's say the solicitation is for auditing services. The solicitation did not specify the travel from where to where exactly, but just said, travel may be required "throughout the United States." For example, it is impossible to determine in advance when and where an audit situation will occur, when the contractor's services will be needed, and for what part of the country.

Would it be best to just not evaluate it at all, or to just create an IGCE for est. travel costs, and just assume the costs will be the IGCE for all offerors?

Based upon your description of travel, it appears to be indeterminate and that there would be no way to evaluate it, let alone compare NTE prices. Provide a plugged NTE estimated amount and state that it might change as needed, subject to availability of funding. It would also appear the the Government would have to order or at least approve travel during performance(?)

[govt2310]

Thank you. That sounds like a best practice for future solicitations.

But what about the scenario I described about, what if the solicitation has already gone out, proposals have been received, and they are being evaluated. Should the contracting agency just ignore the NTE ceiling price proposed by the offerors in their proposals?

[joel hoffman]

What did the solicitation say about price evaluation?

You said this is a solicitation for commercial services. Is it an RFQ? If it were a part 15 RFP, I'd suggest either discussions to discuss the alternate approach that I mentioned above then amend the solicitation and request revised proposals or - if nothing else needs to be discussed, you might consider skipping the discussions, amend the solicitation and request revised proposals. For commercial services, using a commercial acquisition approach, I suppose you can do something similar. Someone else may have some ideas.

[Guest Vern Edwards]

Let's say the solicitation is for auditing services. The solicitation did not specify the travel from where to where exactly, but just said, travel may be required "throughout the United States."

Unbelievable, yet all too believable.

[govt2310]

To Joel Hoffman: Thanks!

[jwomack]

Some offerors may be able to travel at a lower cost than others. For example, a contractor with one office in the middle of nowhere would have higher travel costs than a contractor with multiple offices located throughout the US near major airports. Amending the solicitation and providing some realistic sample travel locations for evaluation may be your best option. Of course this won't matter if cost is a relatively unimportant evaluation factor.

[govt2310]

To Joel Hoffman:

This is actually not my question - it is a question from a colleague. So I apologize if I got the fact pattern wrong. I just found out from my colleague, that this is a FAR 15 procurement. It is not categorized as FAR 12 commercial services.

You say we should amend the solicitation. If the solicitation has closed, proposals have been received, and the agency is now evaluating, how can the solicitation be amended? Does the agency amend the solicitation and reopen it, extending the date for receipt of proposals? Or is there a way to simply amend the solicitation and not reopen it, but limit the opportunity to submit revised proposals only to the original offerors who submitted timely proposals? I have never heard of doing it the latter way, and it does not seem to be in keeping with the principles of full and open competition.

[here_2_help]

jwomack,

I've noted this before on WIFCON, but when acquiring professional services, the cost of travel really isn't significant in comparison to the hourly billings. I know, everybody is very concerned about excessive travel costs these days, but I would hope we would all focus on the bigger cost items which is where the customer will receive (or not receive) the bang for its bucks.

Also, to your point that "a contractor with one office in the middle of nowhere would have higher travel costs than a contractor with multiple offices located throughout the US near major airports." Yes, certainly. But look at the trade-off you just made. The first contractor will have relatively higher travel costs, but it will also have one team that performs the work consistently. Whereas the second contractor will be performing the work with the local staff (to reduce travel costs), which will introduce variability and performance risk into the project, and may affect the desired outcome.

I don't mean to pick on you. But, again, my point is that an undue focus on travel costs may distract from the bigger picture, which (in this scenario) is acquiring services to meet the customer's needs.

Hope this helps.

[joel hoffman]

To Joel Hoffman:

This is actually not my question - it is a question from a colleague. So I apologize if I got the fact pattern wrong. I just found out from my colleague, that this is a FAR 15 procurement. It is not categorized as FAR 12 commercial services.

You say we should amend the solicitation. If the solicitation has closed, proposals have been received, and the agency is now evaluating, how can the solicitation be amended? Does the agency amend the solicitation and reopen it, extending the date for receipt of proposals? Or is there a way to simply amend the solicitation and not reopen it, but limit the opportunity to submit revised proposals only to the original offerors who submitted timely proposals? I have never heard of doing it the latter way, and it does not seem to be in keeping with the principles of full and open competition.

Yes, you can amend it and limit opportunities to only those who responded initially. I don't think that this would be a major change that would affect the scope of competition.

The problem is that the tthe industry apparently doesnt have enough information to estimate travel - frequency, origination or destination. So you cant evaluate such pricing. I don't know what the RFP said about evaluating price, whether travel costs are included in the bottom line pricing for evaluation, the relative importance of price for award purposes, etc. It appears that a plugged NTE price is appropriate.

Now, if there is something specific you want to know about how the firms would price or charge for travel, then you could conduct discussions and seek such information. But if it affects the evaluation, you will have to amend the RFP to reflect that before seeking, final revised proposals. Not knowing all the facts leads me to say that you should discuss details with the contracting officer, not me.

If you are in Contracting, you should be familiar with the Part 15 processes for communicating with offerors, including conducting discussions, etc. If not, I suggest you discuss it with Contracting. However, if Contracting are the ones who decided to require pricing, they probably need to figure out how to solve the apparent problem, now.

[govt2310]

To Joel Hoffman:

Thank you!

[jwomack]

H2H,

So when acquiring professional services, we no longer need to evaluate the cost of travel since it "isn't significant in comparison to the hourly billings"? What if one offeror could successfully perform with no travel costs while a competitor would require $25,000 in travel costs? Just because the cost may be insignficant in comparison to hourly billings, that doesn't mean it is an insignficant cost factor.

Consistency - I can think of numerous scenarios in which consistency of contractor personnel would/should be irrelevant. You mention tradeoffs. I didn't see anything in the orginal question stating tradeoff analysis was being performed. Nor that consistency was more important that cost.

My "focus" was only on travel costs because that is what the original question was about.

Your points are well taken and may apply in many scenarios, but maybe a bit myopic.

[Retreadfed]

You say the travel will be priced on an NTE basis. Exactly what do you mean by that? Will the travel be covered by a separate CLIN that is cost reimbursement? A fixed price CLIN with travel costs paid on an actual cost basis up to a specific amount, but not subject to a Limitation of Cost clause? What do you mean by this statement?

[govt2310]

To Retreatfed:

I meant travel is a separate CLIN, an ODC, with a NTE ceiling proposed by the offeror in its proposal.

[Retreadfed]

I still don't know what that means. Is the CLIN a cost reimbursement CLIN subject to the Allowable Cost and Payment clause and the Limitation of Cost clause? Is it a fixed price CLIN? If it is fixed price, what will be the basis for payment? What exactly is it that you are dealing with? Are you dealing with how you want the CLIN priced, how to evaluate the pricing or both?

[here_2_help]

jwomack,

When I posted, "I don't mean to pick on you," that was intended to be a signal that I was trying to speak to a larger audience. It was intended to defuse any defensiveness on your part.

I see that I failed in that regard.

Sorry!

H2H

[Guest Vern Edwards]

What are the best practices for structuring travel costs in a contract, and what are best practices for evaluating travel in price proposals? ... The contracting agency does not know and cannot predict with any certainty the amount and frequency of possible travel. All that is known is that there might be "some" travel required during the life the contract, like a few days a year over a period of performance of 5 years.

If the government can't or won't tell offerors how often they'll have to travel, where they'll have to go, and how long they'll have to stay, then offerors cannot intelligently propose travel costs. Demanding that they do so and then trying to evaluate competitively proposed travel costs in such a case would be unfair and, frankly, stupid.

If you can't specify travel, don't make offerors propose travel costs. Instead, make travel a cost-reimbursement no-fee line item CLIN and specify the travel budget in the solicitation, so it will be the same for all offerors and won't have to be evaluated. Provide for the CO to increase the travel budget unilaterally at his or her discretion.

Alternatively, provide for travel to be fixed-priced on an ad hoc basis during the course of performance, as travel requirements become known. That would work sort of like IDIQ, except that it is not pre-priced. You'd have to write a clause for that. Don't evaluate travel costs during source selection.

Alternatively, if you don't want to do cost-reimbursement and feel that you absolutely have to evaluate travel costs, then (a) establish "standard trip" CLINs of one day, two days, etc., varied by destination, if necessary, ( specify estimated quantities for each CLIN, and ( c) tell offerors to propose standard trip fixed unit prices and total amounts. Then evaluate travel as part of the total fixed price. There is some risk in that for the offerors, but it would be manageable.

[govt2310]

Thanks, Vern!

[Penny Policy]

I agree with Vern's last post. Travel is a reimbursable item iwht no fee. The contractor has to submit receipts with their invoice at rates that do not exceed the JTR, VOL II (for Civiliians). Penny