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Multiple Awards - firm requirement

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Can I award multiple contracts for a firm, known requirement (as opposed to an ID/IQ).

The requirement consists of 3 phases. Phase 1 is the initial design, Phase 2 is the final design/development, and Phase 3 is limited production units.

Phase 1 is the base requirement and Phases 2 and 3 are Option Items.

Can I issue multiple contracts for the base requirement - the initial design. Then I would select one vendor to exercise Option 1, the final design, and Option 2, the production units.

The RFP/contract would include criteria for selection of the vendor that is awarded Options 1 and 2.

This is an R&D effort.

The FAR only discusses multiple awards with respect to ID/IQ type requirements.

Does mulitple award of an know requirement violate procurement regulations?

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I don't know of anything that would prohibit such an approach.

Why do you think you would need to include criteria in the RFP/contract for selection of who gets awarded Options 1 and 2?

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I don't know of anything that would prohibit such an approach.

Why do you think you would need to include criteria in the RFP/contract for selection of who gets awarded Options 1 and 2?

I believe including the "down selection" critieria would demonstrate the we are being fair in determining the best design alternative. The criteria I expect to use would include both subjective and objective criteria.

Thanks for your comments.

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Guest Vern Edwards

The issuance of multiple awards for known requirements is not illegal and the approach has been used often in R&D to produce two initial designs. An excellent recent example is the Global Position System OCX program. (Google: GPS OCX). In that program two contractors were awarded "Phase A" contracts for initial designs. The government is now evaluating proposals from the two firms for the award of the final design/production contract. However, Phase B was not an option in the Phase A contract.

In your case, since the first phase is for initial design, I presume that the final design and productions options would be unpriced at the time of the award of the initial contract. If so, then you must comply with FAR Part 6 before exercising the unpriced options. See FAR 17.207(f). See too the GAO's letter to Ms. Margaret A. Willis FAR Secretariat General Services Administration, B-225165, Jan. 16, 1987, and the GAO's letter to the Honorable Caspar W. Weinberger The Secretary of Defense, B-217655, April 23, 1986. The question is whether you can limit the competition for the options to the two contractors selected initially. It may be that you would either have to prepare a J&A of some kind or conduct a full and open competition. If you conduct a full and open competition, it would be difficult for any firm other than the two contractors to compete, but that might not keep someone from trying.

Various "downselect" approaches have been used in the past. I like them. I like your idea. But to the best of my knowledge the technique that you describe--using unpriced options for the later phases and then limiting the unpriced option competition to the winners of the initial contract--has not been tested in a protest at the GAO or the Court of Federal Claims. That would not stop me from trying it, however. Just announce in the synopsis for your initial contract that you plan to limit the option competition in that way and then wait to see what kind of response you get.

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Vern,

FAR 17.2 doesn't apply to contracts for R&D. See FAR 17.200:

17.200 Scope of subpart.

This subpart prescribes policies and procedures for the use of option solicitation provisions and contract clauses. Except as provided in agency regulations, this subpart does not apply to contracts for (a) services involving the construction, alteration, or repair (including dredging, excavating, and painting) of buildings, bridges, roads, or other kinds of real property; ( b ) architect-engineer services; and ( c ) research and development services. However, it does not preclude the use of options in those contracts.

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Hi vern, thanks for the information. I am doing some research on the GPS dual award contract.

I am also attempting to confirm that my requirement truly is an R&D requirement. The technology may be proven (for the most part) but the design associated with packaging this technology to meet our requirements is what is driving this procurement. So is packaging proven technology really R&D - my first thought are "no'.

Either way I am still considering multiple awards because I believe we will get the best product that meets our needs.

R/ Npt Acq

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Another example is Integrated Wireless Network (IWN). It was a joint effort by Justice, Treasury and DHS. It was done in three phases. The first used the advisory multi-step process to narrow down potential offerors based upon qualifications and high level technical approach. The second phase allowed for the award of two of more contracts for the design and prototyping of a device. The final phase called for one or more contracts for operational testing in a segment of the country. Offerors were required to propose pricing for both phase 2 and 3 but had the ability to adjust phase 3 prices based on their experiences form performing phase 2.

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.

NptAcq,

the way I understand the D part of R&D, when a manufacturer develops a new and improved widget, that's product development. R&D is pretty broad.

.

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Another example is Integrated Wireless Network (IWN). It was a joint effort by Justice, Treasury and DHS. It was done in three phases. The first used the advisory multi-step process to narrow down potential offerors based upon qualifications and high level technical approach. The second phase allowed for the award of two of more contracts for the design and prototyping of a device. The final phase called for one or more contracts for operational testing in a segment of the country. Offerors were required to propose pricing for both phase 2 and 3 but had the ability to adjust phase 3 prices based on their experiences form performing phase 2.

Thanks for the information. So multiple contracts were awarded and there were individual procurement efforts for each phase - correct. This is a little different than my proposed approach of using one procurement and including options for each phase. I will consider the benefits of procuring each phase separate as opposed to using options.

Your response is appreciated and very helpful.

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.

NptAcq,

the way I understand the D part of R&D, when a manufacturer develops a new and improved widget, that's product development. R&D is pretty broad.

.

Got it - thanks. I re-read the "development" definition in FAR and had the same thoughts as you. I appreciate you commenting and confirming what I thought to be an accurate interpretation of the definition of Development.

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Guest Vern Edwards
Hi vern, thanks for the information. I am doing some research on the GPS dual award contract.

I am also attempting to confirm that my requirement truly is an R&D requirement. The technology may be proven (for the most part) but the design associated with packaging this technology to meet our requirements is what is driving this procurement. So is packaging proven technology really R&D - my first thought are "no'.

Either way I am still considering multiple awards because I believe we will get the best product that meets our needs.

R/ Npt Acq

There are many definitions of "research and development." There is no definition of "research and development" in FAR, but here are definitions for "research" and for "development" taken from FAR Parts 2 and 35:

?Basic research? means that research directed toward increasing knowledge in science. The primary aim of basic research is a fuller knowledge or understanding of the subject under study, rather than any practical application of that knowledge.

?Applied research? means the effort that (a) normally follows basic research, but may not be severable from the related basic research; (B) attempts to determine and exploit the potential of scientific discoveries or improvements in technology, materials, processes, methods, devices, or techniques; and © attempts to advance the state of the art. When being used by contractors in cost principle applications, this term does not include efforts whose principal aim is the design, development, or testing of specific items or services to be considered for sale; these efforts are within the definition of ?development,? given below.

?Development,? as used in this part, means the systematic use of scientific and technical knowledge in the design, development, testing, or evaluation of a potential new product or service (or of an improvement in an existing product or service) to meet specific performance requirements or objectives. It includes the functions of design engineering, prototyping, and engineering testing; it excludes subcontracted technical effort that is for the sole purpose of developing an additional source for an existing product.

Here's another definition, this one from the DAU Glossary of Defense Acronyms and Terms:

Research, Development, Test and Evaluation (RDT&E) Budget Activities (BAs) Consists of all efforts funded from an RDT&E appropriation (USD©). Coincident with the transmittal of the President?s Budget (PB), the USD© provides the DoD Oversight Committees of Congress a listing of all RDT&E Programs called the ?R-1 Form.? There are seven RDT&E Budget Activities (BAs) as shown below:

? BA 1: Basic Research

? BA 2: Applied Research

? BA 3: Advanced Technology Development (ATD)

? BA 4: Advanced Component Development and Prototypes (ACD&P)

? BA 5: System Development and Demonstration (SDD)

? BA 6: RDT&E Management Support

? BA 7: Operational Systems Development

And another from yet another source:

"Research and development" means those efforts described by the Research, Development, Test, and Evaluation (RDT & E) budget activity definitions found in the DoD Financial Management Regulation (DoD 7000.14-R), Volume 2B, Chapter 5.

Here's a definition from a DFARS clause:

Research means a systematic investigation, including research, development, testing, and evaluation, designed to develop or contribute to generalizable knowledge. Activities that meet this definition constitute research for purposes of 32 CFR Part 219, whether or not they are conducted or supported under a program that is considered research for other purposes. For example, some demonstration and service programs may include research activities (32 CFR 219.102(d)).

Here's one from the Nuclear Regulatory Commission:

Research means any scientific or technical work involving theoretical analysis, exploration, or experimentation.

From the Dept. of Energy FAR supp.:

Research means all basic, applied, and demonstration research in all fields of science, medicine, engineering, and mathematics, including, but not limited to, research in economics, education, linguistics, medicine, psychology, social sciences statistics, and research involving human subjects or animals.

Here's the one from 15 USC ? 638, which is entitled, "Research and Development":

the term "research" or "research and development" means any activity which is (A) a systematic, intensive study directed toward greater knowledge or understanding of the subject studied; (B) a systematic study directed specifically toward applying new knowledge to meet a recognized need; or © a systematic application of knowledge toward the production of useful materials, devices, and systems or methods, including design, development, and improvement of prototypes and new processes to meet specific requirements

Here's the one from 42 USC ? 2014:

The term "research and development" means (1) theoretical analysis, exploration, or experimentation; or (2) the extension of investigative findings and theories of a scientific or technical nature into practical application for experimental and demonstration purposes, including the experimental production and testing of models, devices, equipment, materials, and processes.

There are undoubtedly many more.

Using proven technology in the development of a design might be research and development, or research, or development, depending on which definition applies and the facts of the case.

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Thanks for the information. So multiple contracts were awarded and there were individual procurement efforts for each phase - correct. This is a little different than my proposed approach of using one procurement and including options for each phase. I will consider the benefits of procuring each phase separate as opposed to using options.

Your response is appreciated and very helpful.

There was just one IWN solicitation. It provided for two or more contract awards for phase 2 (design and prototyping). At the conclusion of that, the government would evaluate the results and proceed with phase 3 which were awarded to one or more of the contractors under the second phase. It was similar to exercise of options except that the contractors could negotiate new pricing based upon their actual experiences from the preceeding work.

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There was just one IWN solicitation. It provided for two or more contract awards for phase 2 (design and prototyping). At the conclusion of that, the government would evaluate the results and proceed with phase 3 which were awarded to one or more of the contractors under the second phase. It was similar to exercise of options except that the contractors could negotiate new pricing based upon their actual experiences from the preceeding work.

I think having the latitude to pricing for the 3rd phase was a great approach. I am going to consider this approach. If the requirement is truly a design/development/production effort, I don't see how a contractor can propose fixed prices for production items that they have not even designed or developed yet.

Thanks for you input.

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