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Should Sealed Bidding Be Abolished?


bob7947

Should Sealed Bidding Be Abolished?  

18 members have voted

  1. 1. Should Sealed Bidding Be Abolished?

    • Yes
      5
    • No
      13

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  • Poll closed on 05/04/2018 at 09:00 PM

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Guest Vern Edwards
20 minutes ago, bob7947 said:

I thought sealed-bidding would be an easy kill.

It would have been if left to people who know the rules of competitive negotiation.

20 minutes ago, bob7947 said:

Look at it this way, simple negotiation that mirrors sealed bidding has been used succesfully for years. 

Common knowledge to those who have the background that will be lost when the curmudgeons have lost interest or died.

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Vern:

Quote

Bob wrote a crummy question to vote on. It's not clear whether "Should sealed bidding be abolished?" meant should its use be prohibited or should FAR Part 14 be deleted. 

I didn't use FAR Part 14 because I wanted the sealed bidding method of contracting and all terms associated with it abolished--beginning in the United States Code.  For example, I have hated the parts of the United States Code that require FAR 6.401(a).  It can be found in my initial post.  After the laws are changed, then a FAC issuance in the year 2043 will eliminate 6.401(a), FAR Part 14, its running dogs, and anything that mentions Sealed Bidding from FAR Part 52.  The FAC will make sealed bidding the name that no contract specialist may speak.  That may have resulted in a few blurbs to FAR Part 15 that would have added something I referred to as simple negotiations.  Hell, we could have called offerors' submissions bids for all I care.

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50 minutes ago, bob7947 said:

Vern:

So much for the low-hanging fruit.  I thought sealed-bidding would be an easy kill.  Maybe I should have started with two-step sealed-bidding. 

Look at it this way, simple negotiation that mirrors sealed bidding has been used succesfully for years.  I cannot prove that the use of simple negotiation instead of sealed-bidding reduces protests but it does allow the flexibility you mentioned.

I've been involved with two-step sealed bidding, too.  The only advantage that I miiiight concede to there is the public bid opening and pricing transparency. Using Part 15 source selection or the Two Phase Design-Build method is far superior to the two-step sealed bidding method.  The two-step sealed bid design-build family housing project that I worked on many (45) years ago preceded FAR or the one step or two-phase design-build methods.  The Air Force could only evaluate technical submissions for minimum acceptable compliance with the design criteria. They couldn't communicate any desires or dislikes. It was strictly go/no-go.  All the firms that spent their resources to rate a "go" were then competing for low price in step two.

The back to back duplex houses looked like barns, complete with board and batten T-111 siding and zero overhangs at the eaves.  

I could see ditching that method in FAR but there might be some other reason or application to keep it.  It is technically still allowed by FAR 36.104 for design-build projects (unfortunately).

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1 hour ago, bob7947 said:

So much for the low-hanging fruit.  I thought sealed-bidding would be an easy kill.

I am also very surprised at these results. I have never used FAR 14, but its irrelevance among the contracting workforce is evidenced by the fact that nobody bats an eye when consideration of sealed bidding is ignored completely in the contract file. For comparison, if the PMR Team were reviewing a file for a weapons system, it would ding the CO for failing to mention that the AbilityOne Program was considered. Yet ignore an entire FAR Part and it goes unquestioned. It's fascinating to me that there seems to be this unspoken agreement in our field that this is accepted practice. I don't mind it. I just think it's interesting.

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Gotta go to lunch but, actually there was a successful lawsuit by Weeks Dredging a few years ago that torpedoed attempts by USACE to change maintenance dredging from IFB to ID/IQ.  The USACE didn't meet the mandatory criteria for use of negotiated, competitive source selection in lieu of Part 14, IFB to establish the ID/IQ pool and exclude full and open completion for projects that would be issued as task orders.  I will provide reference later.

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Guest Vern Edwards

The case Joel referred to was Weeks Marine, Inc. v. U.S., (COFC) 79 Fed. Cl. 22 (2007).

I wrote it up for The Nash & Cibinic Report's Dec. 2007 issue. Here is what I said:

THE DECISION TO USE NEGOTIATION INSTEAD OF SEALED BIDDING: Is It Entirely Discretionary?

by Vernon J. Edwards

In a case of first impression in a preaward bid protest about the terms of a solicitation, the U.S. Court of Federal Claims has held that the South Atlantic Division (SAD) of the Army Corps of Engineers violated the Competition in Contracting Act and Federal Acquisition Regulation 6.401(a) when it decided to use negotiation (“competitive proposals contracting”) under FAR Part 15 instead of sealed bidding under FAR Part 14 to procure dredging services and violated the Corps's FAR Supplement in deciding to use a multiple award indefinite-delivery, indefinite-quantity (task order) contract to procure those services. See Weeks Marine, Inc. v. U.S., 2007 WL 3277260 (Fed. Cl. Nov. 6, 2007). The court permanently enjoined SAD from using the solicitation to receive proposals or award a task order contract for dredging. While we doubt that this decision has far-reaching implications, we think that it raises red flags for our readers.

Using Negotiation Instead Of Sealed Bidding

In the two years preceding its new solicitation, SAD had used sealed bidding to award 141 contracts for dredging and shore protection, and it claimed that it had “excelled” in program execution using that strategy. But because SAD believed that the sealed bidding/single award approach was administratively costly and took too much time, it decided to use negotiation and multiple award task order contracts to speed up its process and reduce the administrative burden.

FAR 6.401, “Sealed bidding and competition proposals,” states:

Quote

(a) Sealed bids. (See [FAR] Part 14 for procedures.) Contracting officers shall solicit sealed bids if-- (1) Time permits the solicitation, submission, and evaluation of sealed bids; (2) The award will be made on the basis of price and other price-related factors; (3) It is not necessary to conduct discussions with the responding offerors about their bids; and (4) There is a reasonable expectation of receiving more than one sealed bid.

(b) Competitive proposals. (See [FAR] Part 15 for procedures.) (1) Contracting officers may request competitive proposals if sealed bids are not appropriate under paragraph (a) of this section. (2) Because of differences in areas such as law, regulations, and business practices, it is generally necessary to conduct discussions with offerors relative to proposed contracts to be made and performed outside the United States and its outlying areas. Competitive proposals will therefore be used for these contracts unless discussions are not required and the use of sealed bids is otherwise appropriate. 

This FAR section is little noticed today, and it may be that many if not most practitioners think that agencies may use negotiation at will. But the court's decision in this case should serve to remind them that FAR 6.401 implements CICA, 10 USCA § 2304(a), 41 USCA § 253(a), and that agencies must use sealed bidding when circumstances permit.

In deciding that SAD's use of negotiation instead of sealed bidding violated CICA, the court reached three conclusions: (1) the decision was inconsistent with CICA and the FAR, (2) SAD had successfully used sealed bidding in support of its programs in the past and had not demonstrated a need to change its method of procurement, and (3) SAD's acquisition plan did not adequately support the decision. It appears that SAD based its decision to switch to negotiated procurement on the first and second conditions for using sealed bidding, asserting that time would not permit the use of sealed bidding and that award would be based in part on nonprice factors--i.e., “technical capability” (access to the necessary equipment) and past performance. According to the court, SAD argued that sealed bidding was too time consuming and administratively costly, and that the use of a negotiated IDIQ contract would speed the contract award process. The court rejected those assertions as unfounded. SAD planned to give task order contractors 30 days to respond to task order opportunities. The court reasoned that the only time savings would be the elimination of the 15-day notice requirement of FAR 5.203, which the court said would be offset by the additional time required to evaluate task order proposals. As for consideration of factors other than price, the court said that a responsibility determination under FAR 9.104 would be sufficient for the consideration of such factors, especially since the dredging industry consisted of a small group of specialized firms with which SAD was already familiar because the firms worked mainly for the Corps of Engineers.

The Government Accountability Office has decided at least 20 protests about this issue since the enactment of CICA in 1984 made it easier for agencies to use negotiation instead of sealed bidding. Agencies have usually justified the use of negotiation on grounds that they need to evaluate factors other than price and that they might need to conduct discussions before awarding the contract. The GAO considered the issue most recently in 1997, Enviroclean Systems, Inc., Comp. Gen. Dec. B-278261, 97-2 CPD ¶ 172 (use of negotiation to procure solid waste management justified on ground that discussions might be necessary). The GAO sustained a protest against the use of negotiation under CICA only once, in 1985, finding that the use of negotiation to award a cost-type contract to procure mess attendant services was unjustified, United Food Services, Inc., Comp. Gen. Dec. B-217211, 64 Comp. Gen. 880, 85-2 CPD ¶ 326. The GAO has rejected arguments that an agency's prior use of sealed bidding to successfully procure the same supply or service showed that the use of negotiation was unjustified, Comfort Inn South, Comp. Gen. Dec. B-270819, 96-1 CPD ¶ 225 (prior use of sealed bidding to procure lodging, meals, and transportation not material to reasonableness of decision to use negotiation); I.T.S. Corp., Comp. Gen. Dec. B-243223, 91-2 CPD ¶ 55 (prior use of sealed bidding to procure counseling services did not affect reasonableness of decision to cancel invitation for bids and use negotiation); KIME Plus, Inc., Comp. Gen. Dec. B-231906, 88-2 CPD ¶ 237 (prior use of sealed bidding to procure mess attendant services did not prevent cancellation of invitation for bids and conversion to negotiation). The GAO has also rejected arguments that agencies could make a responsibility determination instead of evaluating factors other than price, Carter Chevrolet Agency, Inc., Comp. Gen. Dec. B-228151, 87-2 CPD ¶ 584; Folk Construction Co., Comp. Gen. Dec. B-225560, 87-1 CPD ¶ 157 (responsibility determination not adequate substitute for technical evaluation when agency wants to assess relative merits of proposals based on traditional responsibility factors). The GAO clearly thinks that the choice of sealed bidding or negotiation is, for all practical purposes, entirely a matter of discretion. But at least one judge of the Court of Federal Claims thinks otherwise.

*   *   *

Agencies would be wise to learn from the Weeks case and to document in their acquisition plans the bases for their decisions, including any decision to use negotiation instead of sealed bidding, with evidence and analysis. Although we do not expect a swarm of protests over the use of negotiation instead of sealed bidding, the better part of wisdom is to be prepared. VJE

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Joel:

There would be no protests if Congress eliminated the consideration of sealed bidding before you negotiate.  You can look at my original post and see the numer of protests that are like weeks.

FrankJon:

Quote

nobody bats an eye when consideration of sealed bidding is ignored completely in the contract file. 

Consideration of it is required by law (CICA).  In the quote box is the version for civilian agencies.  The miliary version says the same thing.

Quote

(1) Use of sealed bids.—In determining the competitive procedures appropriate under the circumstance, an executive agency shall

          (A)solicit sealed bids if—(i) time permits the solicitation, submission, and evaluation of sealed bids; (ii) the award will be made on the basis of price and other price-related factors; (iii) it is not necessary to conduct discussions with the responding sources about their bids; and (iv) there is a reasonable expectation of receiving more than one sealed bid;  (emphasis added)

 

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16 minutes ago, bob7947 said:

Consideration of it is required by law (CICA). 

Bob - That's my point. Clearly it is a "required to consider" procedure. Yet the widely-accepted practice is to ignore it, while many other documentation requirements of questionable value are enforced.

20 minutes ago, Vern Edwards said:

Agencies would be wise to learn from the Weeks case and to document in their acquisition plans the bases for their decisions, including any decision to use negotiation instead of sealed bidding, with evidence and analysis. Although we do not expect a swarm of protests over the use of negotiation instead of sealed bidding, the better part of wisdom is to be prepared.

Vern and Joel - Good information. Thanks for sharing. 

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Vern:

Weeks appears to have been overturned by the Federal Circuit.

I've got to read it yet.

Quote

Weeks Marine, Inc. v. United States, No. 07-700C (Fed. Cl. Nov. 16, 2007) (“Amended Final Judgment”). For the reasons set forth below, we hold that the solicitation does not violate § 2304(a) and does not lack a rational basis. We therefore reverse the Amended Final Judgment insofar as it enjoins the Corps from proceeding with the solicitation. In all other respects the Amended Final Judgment is affirmed.

I'm going to take an old man nap before I read this.  

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Guest Vern Edwards

The Federal Circuit did not overrule the Court of Claims's interpretation of the law, but held that the Corps had made its case for using negotiation instead of sealed bidding and made a rational decision. See Weeks Marine, Inc. v. U.S., 575 F.3d 1352 (Fed. Cir. 2009).

From Headnote 9:

Quote

Decision of the Army Corps of Engineers to issue solicitation for proposals for indefinite duration indefinite quantity (IDIQ) multiple-award task order contracts (MATOCs) for dredging, which employed a negotiated format rather than the previously-used competitive sealed bidding format, had a rational basis; Corps asserted IDIQ MATOCs would allow Corps to pick more qualified contractors, reduce procurement time, lower administrative costs, reduce need for emergency procurements, facilitate use of small businesses, and promote national security, each of Corps's reasons for its action was a legitimate procurement objective, and Corps supplied a reasoned chronicle of its risk assessment.

 

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  • 4 years later...

I have been at various procurement offices within DHS for 17 years. I have friends at other procurement offices (civilian agencies).  None of us have EVER used FAR Part 14 or even heard of anyone else using sealed bidding.  I really am just curious.  Who is still using sealed bidding?  I would like to pick their brain.

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On 1/25/2023 at 7:34 PM, PolicyNerd said:

I really am just curious.  Who is still using sealed bidding?

Just go to sam.gov and search in business opportunities for "sealed bids." I just found 596 results.

The very first one indicates that West Point is using sealed bidding to buy packing and crating services. Bids are due Feb. 14. Letterkenny Munitions Depot is using sealed bidding to buy repairs at its munition center. Bids are due March 15. The Federal Highway Administration is buying bridge repair. The State Department is buying carpet for the American Consulate in Dubai. The Army is buying digital display board maintenance and repair. Veterans Affairs is buying an exam/procedure chair. The Department of Energy is using sealed bidding. The Department of Veterans Affairs. The National Park Service.

The Federal Bureau of Prisons and the State Department are using it a lot. So is the Army.

And almost everybody is using sealed bidding to buy construction of some kind or other.

There is no good reason to ban sealed bidding. It works just fine as it is.

Competitive negotiation, on the other hand, needs a major overhaul. It's awful. But I don't think that the agencies that use it understand what needs to be done.

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Never had a problem with sealed bidding during my Active Duty AF time or during four following years as City Engineer and as a consulting engineer.

I grew to hate IFB’s for construction during my first three years with USACE because we had several dirtbag contractors who gave us fits from the get-go.

The Contracting Office was either unable or unwilling to do what it would take to  get rid of them.

They kept winning the smaller construction jobs. I dreaded attending the post award conferences with those contractors…

We virtually rid ourselves of the dirt bags when I returned from 6 1/2 years overseas (using RFP’s) to the same District.

My District was no longer using IFB’s for other than dredging projects. The dirtbags couldn’t win a best value competition, where past performance was an important factor.

And the ornery but competent contractors soon became cooperative and reasonable enough to get along with. Some of them would even smile during the post award, pre-construction conferences. 🤠

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On 1/25/2023 at 7:34 PM, PolicyNerd said:

Who is still using sealed bidding?

Well I would hope that it is being considered, whether formally, or informally, and in either case this is applied!  I added the emphasis.

"6.401 Sealed bidding and competitive proposals.

Sealed bidding and competitive proposals, as described in parts  14 and 15, are both acceptable procedures for use under subparts  6.1, 6.2; and, when appropriate, under subpart  6.3.

      (a) Sealed bids. (See part  14 for procedures.) Contracting officers shall solicit sealed bids if-

           (1) Time permits the solicitation, submission, and evaluation of sealed bids;

           (2) The award will be made on the basis of price and other price-related factors;

           (3) It is not necessary to conduct discussions with the responding offerors about their bids; and

           (4) There is a reasonable expectation of receiving more than one sealed bid.

 

      (b) Competitive proposals. (See part  15 for procedures.)

 

(1) Contracting officers may request competitive proposals if sealed bids are not appropriate under paragraph (a) of this section.

           (2) Because of differences in areas such as law, regulations, and business practices, it is generally necessary to conduct discussions with offerors relative to proposed contracts to be made and performed outside the United States and its outlying areas. Competitive proposals will therefore be used for these contracts unless discussions are not required and the use of sealed bids is otherwise appropriate."

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On 1/25/2023 at 7:34 PM, PolicyNerd said:

I would like to pick their brain.

In reconsideration, a "war story".  Granted a number of years ago...

Agency needed a species study in an area for an EIS.   Specifically various ferns ( there was a scientific term that I can not remember) and a specific salamander.    They wanted to lump all together but protocols were different.  And for the ferns the program office thought only full fledged botanists (almost PhD's but not quite were required to tell the difference in the multiple ferns present), for the salamanders they had a card with a picture that would specifically id the salamander of concern with admission that a young adult with some sense and good eyesight could id.   Eventually the needs were split, the fern contract went RFP and took like 250 days to award after receipt of proposals, the salamander went IFB, in like 30 days after bids received.   Two different contracts awarded to two different firms, both completed satisfactorily.   Of course the salamander one was done sooner and helped in the course of time to ensure timely completion of the EIS.   The fern one and its completion to include in the EIS pushed the envelope. 

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I conducted competitive negotiations with all bidders several times when the KO cancelled the IFB after the public bid opening and converted the acquisition to a negotiated acquisition pursuant to FAR 14.404-1 (e).

_____________________________________
“14.404-1 Cancellation of invitations after opening.

…(e) Under some circumstances, completion of the acquisition after cancellation of the invitation for bids may be appropriate.

(1) If the invitation for bids has been cancelled for the reasons specified in subparagraphs(c)(6), (7), or (8) of this subsection, and the agency head has authorized, in the determination in paragraph (c) of this subsection, the completion of the acquisition through negotiation, the contracting officer shall proceed in accordance with paragraph (f) of this subsection.

…(f) When the agency head has determined, in accordance with paragraph (e)(1) of this subsection, that an invitation for bids should be canceled and that use of negotiation is in the Government’s interest, the contracting officer may negotiate (in accordance with part  15, as appropriate) and make award without issuing a new solicitation provided-

           (1) Each responsible bidder in the sealed bid acquisition has been given notice that negotiations will be conducted and has been given an opportunity to participate in negotiations; and

           (2) The award is made to the responsible bidder offering the lowest negotiated price.”

________________________________

Understandably, the low bidders were very unhappy each time,  because their price , as well as the others’ prices were revealed.

But they hung in there each time, usually slightly lowering their price and eventually being awarded the contract.

The highest bidders and some others would drop out. Usually the two or three bidders next to the lowest, submitted proposals in case the low bidder decided to drop out.

My recollection is that there were valid reasons for the differences between the low bidder’s prices and the governments IGE. It didnt seem to be industry misunderstanding of the project scope or requirements. 

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Based on my thankfully limited experience, the government could avoid protests simply by communicating better with disappointed vendors.  I've been told on more than one occasion that if the government had responded in good faith to vendor post-award requests for debriefing, they wouldn't have needed to file a protest to find out why they lost.

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