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Policy Memo on TINA Sweeps - Referenced Spector Memo

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Another thought: If it's true that some negotiations are delayed for weeks or months because of TINA sweeps, why should all negotiations be held to a five-day rule?

Punish the sinners, not the innocent.

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Pepe, apology accepted.  It isn’t the negotiations that are delayed because of the sweeps , it’s the certification of the cost or pricing data after the price agreement. Of course, the results of the sweep could cause further negotiations, which is another problem cited by Assad in the memo. 

I would agree with industry that, if the government takes an inordinate amount of time to evaluate the proposal and schedule and/or conduct negotiations, particularly on modifications for change orders or other actions that are underway (letter contracts, for example),  the proposal could be overcome by events, thus not necessarily current or accurate.

It would then seem reasonable to me that there may be some situations where a post agreement sweep would be prudent and necessary...  But a sweep shouldn’t take as much or longer time than it would take to prepare the proposal. The proposal should reflect the best information available at the time that it is prepared and submitted. 

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2 hours ago, joel hoffman said:

The proposal should reflect the best information available at the time that it is prepared and submitted. 

Joel, are you saying proposals need to be based upon the cost or pricing data submitted to the government?

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1 hour ago, Retreadfed said:

Joel, are you saying proposals need to be based upon the cost or pricing data submitted to the government?

See Table 15-2—Instructions for Submitting Cost/Price Proposals When Certified Cost or Pricing Data Are Required

Also notice within Note 1 of the instructions:

Quote

As later data come into your possession, it should be submitted promptly to the Contracting Officer in a manner that clearly shows how the data relate to the offeror's price proposal. The requirement for submission of certified cost or pricing data continues up to the time of agreement on price, or an earlier date agreed upon between the parties if applicable.

I did say that the "proposal should reflect the best information available at the time that it is prepared and submitted." 

Edit:  I probably should have added that the proposal should be updated, if necessary to reflect the best information available during the time of negotiations. For example, if the proposal was based upon judgmental labor mix and quantities prior to the work but the work is completed prior to negotiations, if the actual labor costs are known or should be known, then they might be considered cost or pricing data rather than judgmental data. Similarly, if the proposal is based upon a proposed subcontract cost and the contractor has either negotiated a lower price or hired another subcontractor at a lower price, then the cost or pricing data should be updated prior to or during negotiations.  In my experience, the negotiators were familiar with what was happening in reality - even with the biggies, such as Raytheon. For construction - it is common for labor and productivity data to be tracked weekly or bi-weekly for company internal earned value management purposes. And yes - it was that way with the Raytheons, Bechtels and other medium to large construction companies.  On the projects that I was involved with on my last large program, our site project controls specialists were viewing and reviewing their site guys' data, weekly and attending their daily superintendents meetings, tracking schedule, productivity and other issues. 

I recognize that this is not necessarily a universal fact for all types of contracts and situations.  However, I think that Shay Assad is saying that it shouldn't require weeks or months after the agreement to perform a "sweep" to compare actuals, as of the date of agreement against proposed cost or pricing data.

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Guest Vern Edwards
17 hours ago, joel hoffman said:

The proposal should reflect the best information available at the time that it is prepared and submitted. 

That statement is as clear as mud.

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45 minutes ago, Vern Edwards said:

That statement is as clear as mud.

Agreed.  In my last post, I referred to the instructions in Table 15-2 for preparing the proposal and submitting cost or pricing and other than cost or pricing dTa. 

I then stated that I should have also added that the proposal should be updated, if necessary to reflect the best information available during the time of negotiations (after preparation and initial submission of the proposal),  referring to Note 1 of the FAR Instructions.  If you re-read the Assad Memorandum,  I think that you can see how the Note 1 instructions relate to the third paragraph in the Memorandum. 

The point is that the requirement to submit cost or pricing data continues up to the time of agreement on price, or an earlier date agreed upon between the parties if applicable. The contract clauses for submission of cost or pricing data refer to Table 15-2 , thus making it a requirement. 

According to the Memo, the contractor should provide current data to the extent possible prior to the settlement agreement, not take weeks or months afterwards to perform a sweep and resubmit. That is consistent with the instructions for Table 15-2, I think.  

 

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So do you all think Contractors will just delay official price agreement until they can verify their cost and pricing data is current, accurate, and complete?

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Guest Vern Edwards

Joel:

I'm not sure what you're trying to communicate.

18 hours ago, joel hoffman said:

The proposal should reflect the best information available at the time that it is prepared and submitted. 

It is not clear to me what you mean by "proposal," "reflect," "best,"  or "information."

By "proposal," did you mean the proposed price or something more?

By "reflect," did you mean made on the basis of, set on the basis of, derived from, or something else?

By "best," did you mean accurate, complete, and current or something else or something more?

By "information," did you mean cost or pricing data as defined by FAR, or something more?

In short, did you mean: A proposed price should be set on the basis of accurate, complete, and current cost or pricing data?

In your attempt to clarify your statement you have referred to or quoted the FAR. However, those references and quotes do not clarify what you meant by what you said.

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The five day deadline for sweeps is a mighty incentive for a major contractor to pursue in earnest their own Blockchain Accountability System, similar to the idea advanced earlier on Wifcon for DoD to consider for itself: 

 

If a contractor implemented their own blockchain accountability system, every dollar could speak for itself...the contractor could determine their cost data (every use of every dollar) in near real time with such breadth and granularity that audience & report purpose, not system functionality, could determine the nature of any report: whether that is accountability, management reporting, or audit functions.  

 

 

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Vern, at the time that I originally said that, I was reflecting on my experiences where contractors would simply submit proposals that were primarily based upon estimating guides, even during execution of the contract action or after completion. 

When I said reflect the best information available at the time of preparation, I meant that, to the extent that factual data is available,  the proposal should incorporate it. The contractor shouldn’t  wait until after agreement to determine the correct data and clean up the proposal.  I didn’t intend to mean that everything in the proposal is cost or pricing data. I agree that what I said was unclear. 

My original statement doesn’t address the heart of the memorandum and my expanding on it will only go deep down a rabbit hole. 

What I want to emphasize Is what I said in my response to Retread that I should have added. The Table 15-2 Instructions and,  in particular,  Note 1 of the Instructions tracks with what Assad is saying in his third paragraph of the Memorandum. He explains why he wants to put a five day limit on getting the Certification. The requirement to submit cost or pricing data continues up to the point of agreement on the price. 

Thus - it shouldn’t take weeks or months after the negotiated agreement to perform a sweep and come back with a certification to confirm or to provide updated cost or pricing data to discuss the price furthe. Either result delays the award or closure of the contract action. 

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1 hour ago, amthomf said:

So do you all think Contractors will just delay official price agreement until they can verify their cost and pricing data is current, accurate, and complete?

What is “official price agreement”?  There is a price agreement. Then the contractor is required to certify that the cost or pricing data that was submitted, as of the date of that agreement was current, complete, and accurate - as of that date (or other agreed date). The data might or might not have been relied upon to help determine the price.  There may also be data other than cost or price data that comprise all or part of the agreed price. 

I would guess that a price agreement isn’t “official” until the contractor provides the certification that it is current, complete and accurate as of the date. If it can’t certify that because something wasn’t , then the reasons have to be taken into account and the final price is adjusted or renegotiated, as necessary, so that the contractor can provide the certification. 

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I have always had a problem with the language referring to  submission of or submitting “certified cost or pricing data”. The certification usually doesn’t occur until after the data is submitted and after the price has been agreed upon.

One exception,  I suppose, might be where there has been no agreement and the price is all or part of a dispute claim.   

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Guest Vern Edwards

Joel:

I'm not going to ask you anything more, because all I get in return is a lot of nonresponsive chatter. You like the memo and I don't. It's clear that we're not going to get to the heart of the matter.

Vern

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Guest Vern Edwards
1 minute ago, joel hoffman said:

I have always had a problem with the language referring to  submission of or submitting “certified cost or pricing data”. The certification usually doesn’t occur until after the data is submitted and after the price has been agreed upon.

Some COs think that you should get a certificate with the original proposal in case you want to accept it without negotiation.

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Vern, just please disregard what I said that you want me to amplify.  I wasn’t addressing the heart of the matter in that comment. 

In  my opinion, the heart of the matter is that, according to Assad, contractors should update available cost or pricing data after initial submission, if necessary, up to the time of agreement on price. That is consistent with the Instructions for Table 15-2, which are incorporated by reference in the applicable contract clause for submission of cost or pricing data. 

Edit: He apparently feels that, if contractors would do that, then it would avoid lengthy delays in obtaining the certicatiin after agreement. 

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Guest Vern Edwards

@joel hoffman

To me the issue is not whether sweeps extend lead time. They often do.

To me the issue is whether the policy of demanding certification within five days of price agreement, regardless of the circumstances and the risks of defective pricing, is sound. It's not. It's unsound, and its contrary to law to the extent that it effectively demands that contractors certify to the truth of something that they do not know to be true.

The assertion that a contractor's estimating system should enable it to certify with confidence within five days of price agreement, regardless of circumstances, is baseless.

I reject your opinion that the policy is a good one because you believe that the person who signed the memo knows what he's talking about, which belief is based on your limited personal experience with that person from many years ago and something you read in a magazine article.

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Since timing is (almost) everything might this rule to be certified within five days constitute "a new requirement for a certification"? If so, see FAR 1.107 Certifications:

"1.107 Certifications.

In accordance with 41 U.S.C. 1304, a new requirement for a certification by a contractor or offeror may not be included in this chapter unless—

(a) The certification requirement is specifically imposed by statute; or

(b) Written justification for such certification is provided to the Administrator for Federal Procurement Policy by the Federal Acquisition Regulatory Council, and the Administrator approves in writing the inclusion of such certification requirement."

 

 

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1 hour ago, Vern Edwards said:

@joel hoffman

To me the issue is not whether sweeps extend lead time. They often do.

To me the issue is whether the policy of demanding certification within five days of price agreement, regardless of the circumstances and the risks of defective pricing, is sound. It's not. It's unsound, and its contrary to law to the extent that it effectively demands that contractors certify to the truth of something that they do not know to be true.

The assertion that a contractor's estimating system should enable it to certify with confidence within five days of price agreement, regardless of circumstances, is baseless.

I reject your opinion that the policy is a good one because you believe that the person who signed the memo knows what he's talking about, which belief is based on your limited personal experience with that person from many years ago and something you read in a magazine article.

My belief didn’t  have a damned thing to do with something  I read in the article. I was looking up his exact title to refresh myself and the article simply explains where he is now and it cited his experience for others to understand that he knows the Defense Industry from his long time Industry experience  

I don’t know what you meant by limited experience with that person. Three years is not really “limited”.  

I understand your point of view. 

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Guest Vern Edwards
1 hour ago, joel hoffman said:

I understand your point of view. 

Good.

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On 6/12/2018 at 10:34 AM, joel hoffman said:

In  my opinion, the heart of the matter is that, according to Assad, contractors should update available cost or pricing data after initial submission, if necessary, up to the time of agreement on price. That is consistent with the Instructions for Table 15-2, which are incorporated by reference in the applicable contract clause for submission of cost or pricing data. 

There's unfortunately little incentive for the contractor to conduct multiple sweeps during the negotiation process, because no matter how many they perform during negotiation, they are still going to need to conduct a sweep after agreement on price and before certification. And if their sweep process is correct, it's not going to take any less time or be any less complete simply because they already performed sweeps along the way.

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On 6/8/2018 at 9:18 AM, joel hoffman said:

No celebrity worship here. 

I saw the article while refreshing my memory on what his official title was during the time. It provides some background on him,  the policy and industry perspective

You are a contractor and entitled to your opinion. I was a career government acquisition employee (technically still am as a re-employed annuitant when called upon for an assignment) and am entitled to my opinion concerning the policy. 

I don’t intend to debate you, as a contractor, about it. 

 

Vern as a Contractor - really Joel - that is ridiculously minimizing to Vern's decades as Contracting professional with the Federal Government, his many published articles, his sage advice on this site, not to mention his impact on many of us currently succeeding as 1102s.  I am, quite frankly, surprised at your post.

 

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1 hour ago, kevlar51 said:

There's unfortunately little incentive for the contractor to conduct multiple sweeps during the negotiation process, because no matter how many they perform during negotiation, they are still going to need to conduct a sweep after agreement on price and before certification. And if their sweep process is correct, it's not going to take any less time or be any less complete simply because they already performed sweeps along the way.

Vern and I have debated this issue (privately) in the past. I maintain that post-price agreement sweeps are essentially worthless because they don't mitigate defective pricing risk, which ends on the date of price agreement. Accordingly, I assert that a contractor must perform its final sweep just before the final price agreement is reached, and that date becomes the effective date of the Certificate of Current Cost or Pricing Data.

As to "incentive" -- would a Level 3 CAR on the Estimating System provide adequate incentive? I would think that it would.

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On ‎6‎/‎12‎/‎2018 at 10:59 AM, Vern Edwards said:

@joel hoffman

To me the issue is not whether sweeps extend lead time. They often do.

To me the issue is whether the policy of demanding certification within five days of price agreement, regardless of the circumstances and the risks of defective pricing, is sound. It's not. It's unsound, and its contrary to law to the extent that it effectively demands that contractors certify to the truth of something that they do not know to be true.

The assertion that a contractor's estimating system should enable it to certify with confidence within five days of price agreement, regardless of circumstances, is baseless.

I reject your opinion that the policy is a good one because you believe that the person who signed the memo knows what he's talking about, which belief is based on your limited personal experience with that person from many years ago and something you read in a magazine article.

I agree that five business days is aggressive. However, on my current program it takes 60 days or more for the contractor to certify, which is a significant amount of time. While I understand the contractor's reasons for conducting a sweep, our defective pricing shop has approximately one (maybe two?) individuals, so the likelihood of us opening a defective pricing case against the contractor is approximately nil. Sure, we would pursue this option if there was a particularly egregious incident, but the likelihood of that happening is, again, approximately nil.

One of my concerns about the five business days is the Government's loss of leverage in negotiating a downward adjustment to price. Once the contract is awarded, the contractor would use their usual tactics to make sure this doesn't happen.

Some of Vern's previous comments mention a cut-off date. Yes, that is the contractor's preferred way of speeding up this process, which explains why Mr. Edwards would advocate for this (Yes, Mr. Edwards, I know you used to work for the Government and know everyone better than anyone else; we get it. Going after Joel for his biographic information is a bit disingenuous, since you are constantly bringing up who you know... no offense, I just think you're being a bit unfair to him) However, I don't think a cut-off date makes sense at all. If the Government is going to give up its right to current data that could impact negotiations/final price, what do we get in return other than a faster award? Why should we compensate the contractor for their business deficiencies? Why does this make sense? I am curious, because I have never heard a good argument for a cut-off date. Yet, here we are. If anyone can make the case, it's Mr. Vern Edwards. Despite my earlier teasing, I respect you a ton, and I'm interested to hear what you have to say.

That said, I really wish I had the chance to negotiate with a Vern Edwards back in the day... it is so easy to rile him up.

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33 minutes ago, Tony Bones said:

That said, I really wish I had the chance to negotiate with a Vern Edwards back in the day... it is so easy to rile him up.

I'm sure you do

Why do you assume Vern is riled up?  I didn't see any ALL CAPS, insults, emojis, or exclamatory punctuation in any of his posts.

Though maybe he used too many periods by properly punctuating his sentences:

https://newrepublic.com/article/115726/period-our-simplest-punctuation-mark-has-become-sign-anger

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1 hour ago, here_2_help said:

I assert that a contractor must perform its final sweep just before the final price agreement is reached,

H2H, how is the contractor to know when price agreement will be reached?  Just because negotiations are to take place on a certain date, does not mean that agreement on price will be reached on that date.

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