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Policy Memo on TINA Sweeps - Referenced Spector Memo

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16 minutes ago, Retreadfed said:

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.

Right. The company will be wide open to the potential for defective pricing. Especially if a sweep takes a long time. Or even five days. By the time a sweep is done, it could be already be inaccurate with no way of knowing. But then you agree to price and sign the cert?

Sweeping after the agreement on price allows the contractor to apply a firm cutoff date for the sweep. That way the contractor can legitimately say whether cost or pricing data existed that was not disclosed prior to the agreement on price. And if new data exists, the Government is entitled to re-open negotiations. That stinks from a schedule standpoint, but it happens. And since no cert has been signed yet, the contractor isn't open to a defective pricing action.

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53 minutes ago, kevlar51 said:

Right. The company will be wide open to the potential for defective pricing. Especially if a sweep takes a long time. Or even five days. By the time a sweep is done, it could be already be inaccurate with no way of knowing. But then you agree to price and sign the cert?

Sweeping after the agreement on price allows the contractor to apply a firm cutoff date for the sweep. That way the contractor can legitimately say whether cost or pricing data existed that was not disclosed prior to the agreement on price. And if new data exists, the Government is entitled to re-open negotiations. That stinks from a schedule standpoint, but it happens. And since no cert has been signed yet, the contractor isn't open to a defective pricing action.

Gosh fellows. I have been involved in several negotiations in my time, and we always knew when we were close to agreement. Further, we were frequently sweeping with subKs and ourselves during negotiations, seeking to see if we should update our pricing. It was always good news when we could deliver a cost savings during negotiations, through updated pricing. The customers always liked that.

But please don't think I'm trying to persuade you of anything. You do you. By all means, proceed with your post-agreement sweeps, if that's what you feel you have to do. Take as long as you need.

Finally, your comments don't address the difference between the effective date of the CCCPD and the date of price agreement. Two dates; not one.

 

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1 hour ago, here_2_help said:

effective date of the CCCPD

H2H, I don't know what you mean by this.  The certificate requires two dates, the "as of" date, i.e., the date by which the cost or pricing data must be current complete and accurate, and the date the certificate is executed, i.e., signed by the contractor.  See the form of the certificate at FAR 15.406-2.

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2 hours ago, Retreadfed said:

H2H, I don't know what you mean by this.  The certificate requires two dates, the "as of" date, i.e., the date by which the cost or pricing data must be current complete and accurate, and the date the certificate is executed, i.e., signed by the contractor.  See the form of the certificate at FAR 15.406-2.

15.407-1 Defective certified cost or pricing data.

*****

(b)(1) If, after award, certified cost or pricing data are found to be inaccurate, incomplete, or noncurrent as of the date of final agreement on price or an earlier date agreed upon by the parties given on the contractor's or subcontractor's Certificate of Current Cost or Pricing Data, the Government is entitled to a price adjustment, including profit or fee, of any significant amount by which the price was increased because of the defective data.

 

The first date is the date of price agreement; the second date is the effective date on the CCCPD. The dates do not have to be the same. For example, if the date of price agreement was 1 June but the contractor's final sweep was 28 May, then the parties could agree that the certification date is 28 May ... and any new cost or pricing data that arises between 28 May and 1 June is irrelevant to a determination that the contractor defectively priced.

I don't know why this is hard. It doesn't have to be.

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Guest Vern Edwards

Holy cats! I go off to the eye doctor for a couple of hours and look what happens. Okay, well, I'll respond to some of the comments.

10 hours ago, Tony Bones said:

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. 

@Tony Bones Tony, the biggest defective pricing case in history was the Air Force's charge of defective pricing against United Technologies that resulted from the Great Aircraft Engine War procurement of the mid-1980s. DCAA wanted that case pursued. The Air Force refused. DCAA brought political pressure to bear and the Air Force caved and pursued the case. Here is what happened.

In 1998, the Air Force sought a price reduction of $299 million due to defective pricing. Then, in 1999, the Justice Department charged United Technologies with false claims based on the alleged defective pricing and sought treble damages, about $900 million.

The defective pricing case was pursued before the ASBCA and the Federal Circuit. The ASBCA initially found that United Technologies had committed defective pricing, but owed the Air Force nothing due to offsets. On reconsideration, the ASBCA found that United Technologies had not committed defective pricing after all. The Air Force appealed the ASBCA decision before the Federal Circuit. In 2006 the Federal Circuit affirmed the ASBCA's reconsideration decision. Eight years of litigation and legal fees. See:

  • United Technologies Corp., ASBCA 51410, 04-1 BCA ¶ 32556
  • United Technologies Corp., ASBCA 53349, 05-1 ¶ 32860
  • Wynne v. United Technologies Corp., 463 F.3d 1261(Fed. Cir. 2006)

The false claims charges were pursued independently in U.S. district court and before the 6th Circuit. In 2008, the district court found United Technologies liable for false claims damages in the amount of $657 million. United Technologies appealed to the 6th Circuit, which, in 2015, overturned the district court's judgement on the ground that the government had not proven damages and remanded the case to the district court to determine whether the government should have another chance to make its case. In 2016, the district court ultimately found that the government was entitled to $1,176,619. The parties let the matter drop. Eighteen years of litigation and legal fees. See:

  • U.S. v. United Technologies Corp., 626 F.3s 312 (Sixth Cir., 2011)

So, Tony, who cares that your shop, whatever shop that is, has only one or two people. What makes you think that what your shop does or does not think or would or would not do has anything to do with the government's decision to pursue of a defective pricing case? Powers other than yours have an interest and a say. You don't have to take my word for it. Everything that I wrote above is a matter of public record if you know how to read and research board and court decisions. DCAA was the hellhound on United Technologies' trail, not the Air Force.

BTW, the United Technologies case shows why contractors take precautions like sweeps.

Next:

10 hours ago, Tony Bones said:

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?

Well, Tony, my response is that judging from the memo, the government seems to be the party that's in a hurry. Why should a contractor give up its right to take its time and make sure that it can certify truthfully? If you won't agree to a cutoff date that precedes price agreement, you can just sit on your hands and wait until the contractor completes a sweep. Now here's the thing, paisano: The government enacted TINA in 1962 and has, from time to time, been very aggressive in pursuing contractors under it, especially since the spare parts pricing scandals of the mid-1980s. This aggressiveness, as illustrated by the United Technologies case, among others, has made them veeeeery nervous, and so they decided to protect themselves by conducting post agreement/precertification, precontract award sweeps. Just to make sure.

As for cutoff dates---smarter people than me have advocated them as an alternative to sweeps, and I think I cited some of them in one of my earlier post to Joel.

Now, the sum of my argument is as follows. The government wants contractors to obey the law. The law requires a contractor to submit accurate. complete, and current cost or pricing data to the contracting officer up until the time of price agreement. It is entirely possible that during the period of negotiations leading to price agreement the contractor, an affiliate, or a subcontractor may have been in possession of cost or pricing data that the contractor's negotiators did not know about and that the data holder did not recognize for what it was. For more than 30 years some contractor executives, who are at least as smart as Here_2_Help, have believed that after agreement, but before certifying and signing a contract, they should make one final check to try to sweep up any cost or pricing data that may have been laying around during negotiations but that were not submitted for one reason or another. Just to be safe. In most cases the contract won't be signed until the CO gets the certificate, and no liability attaches until a contract is signed in any event, so if the contractor finds some latent cost or pricing data they can hand it over to the government to consider before a contract is signed. That can avoid a whole lot of trouble.

Yet now DOD wants to intimidate contractors into signing a certificate of current cost or pricing data before they feel certain that they will be signing truthfully. Why? Because the government wants to speed up it's self-constipated processes. Any contractor thinking of going along when they're not comfortable about it should read some of the literature on defective pricing and some of the case histories.

Now here is some assigned reading. The literature on defective pricing is huuuuge. I'm taking the time to type out a few titles and quotes for you (and others) because I want my critics to have a clue. The following two articles were written in the late 1980s, about the time that contractors started to adopt the "sweep" procedure:

Overly, "Government Contractors Beware: Civil and Criminal Penalties Abound for Defective Pricing," Loyola of Los Angeles Law Review, April 1987:

Quote

Contractors seeking to do business with the government must be especially wary of the perils of defective pricing. Under the above criminal provisions, the Justice Department may be able to seek multiple indictments for the same defective pricing conduct. Submission of a false certification to the government may constitute a violation of 18 U.S.C. section 1001. The later submission of claims for payment, under such contract, may constitute false claims for money under 18 U.S.C. section 287. The Justice Department may also be able to allege a conspiracy under 18 U.S.C. section 371 on the basis that the claims being submitted are part of a contractor's scheme to defraud the government into paying an inflated contract price. If the contractor transmits its certification or contract claims by mail or wire, it could also be charged with mail or wire fraud under 18 U.S.C. sections 1341 or 1343. Finally, civil provisions of the False Claim Act (31 U.S.C. section 3729) may also apply to what in essence amounts to inadvertent defective pricing.

Shirk et al., "Truth or Consequences: Expanding Civil and Criminal Liability for The Defective Pricing of Government Contracts," Catholic University Law Review, Summer 1988:

Quote

The same acts establishing liability under the Truth in Negotiations Act are increasingly giving rise to civil and criminal liability under the various federal false claims and false statements statutes. Not all violations of the Truth in Negotiations Act constitute violations of the false claims or false statements statutes. A scienter requirement, establishing the intent of the contractor to submit defective cost or pricing data to the government, must be shown to establish liability for false claims or false statements but the same element is not required to establish liability under the Truth in Negotiations Act. Nevertheless, the line between Truth in Negotiations Act violations requiring no element of intent, and false claims or false statements violations requiring an element of intent has been blurred significantly. False claims and false statements statutes which formerly required proof of specific intent to defraud or actual knowledge of false submissions now merely require proof of reckless disregard for or deliberate ignorance of the truth or falsity of a claim or statement.

Yikes!

This is from the early 1990s:

Godinich, Jr., "Expanding Criminal Liability for Fraud Arising from Defective Pricing of Government Contracts," Houston Lawyer, May/June 1993:

Quote

Congress has clearly expressed a desire to punish those who defraud the government and to insure the United States is compensated fully for the consequences of such fraud. The hard line attitude taken toward prosecuting and punishing government contract fraud in recent years is here to stay. Actions by contractors are now being treated as criminally fraudulent, and contractors can expect this to continue for the foreseeable future. Business and industry should recognize that a stronger commitment to investigation and punishment of fraud by the government is a reality and that effective internal policing is now essential to avoid the severe criminal sanctions at the government's disposal.

See also Bodenheimer, Litigation and Proof in Defective Pricing Cases, 15-3 Briefing Papers 1 (April 2015).

(David Bodenheimer was one of the contractor attorneys in the ASBCA litigation of the United Technologies case. He is also the author of Defective Pricing Handbook, 2017-2018 ed.)

And see Sanders, Apogee Consulting, TINA Sweeps and Defective Pricing (2017), in two parts:

http://www.apogeeconsulting.biz/index.php?option=com_content&view=article&id=1265:tina-sweeps-and-defective-pricing-part-1-of-2&catid=1:latest-news&Itemid=55

http://www.apogeeconsulting.biz/index.php?option=com_content&view=article&id=1266:tina-sweeps-and-defective-pricing-part-2-of-2&catid=1:latest-news&Itemid=55

Finally:

10 hours 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.

To quote an Army buddy of mine from Oklahoma, in words uttered in 1966 in Vietnam somewhere to the southeast of Pleiku: "You'd rather sandpaper a wildcat's ass in a telephone booth."

By the way, Tony Bones, rejecting or trying to diminish my argument on the basis of my current status as a small time contractor who never has to submit cost or pricing data and has nothing personal at stake is a case of the ad hominem fallacy. Argue against the argument, not the person making the argument.

Bada bing... bada boom.

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Guest Vern Edwards
3 hours ago, here_2_help said:

15.407-1 Defective certified cost or pricing data.

*****

(b)(1) If, after award, certified cost or pricing data are found to be inaccurate, incomplete, or noncurrent as of the date of final agreement on price or an earlier date agreed upon by the parties given on the contractor's or subcontractor's Certificate of Current Cost or Pricing Data, the Government is entitled to a price adjustment, including profit or fee, of any significant amount by which the price was increased because of the defective data.

The first date is the date of price agreement; the second date is the effective date on the CCCPD. The dates do not have to be the same. For example, if the date of price agreement was 1 June but the contractor's final sweep was 28 May, then the parties could agree that the certification date is 28 May ... and any new cost or pricing data that arises between 28 May and 1 June is irrelevant to a determination that the contractor defectively priced.

I don't know why this is hard. It doesn't have to be.

Some of the apparent confusion might be due to terminology. When the parties agree to insert a date on the certificate other than the date of price agreement, that date is called the "closing" or "cutoff" date. Nowhere in FAR Part 15 is it referred to as the "effective date." Here is the language of the certificate, from FAR 15.406-2(a):

Quote

This is to certify that, to the best of my knowledge and belief, the cost or pricing data (as defined in section 2.101 of the Federal Acquisition Regulation (FAR) and required under FAR subsection 15.403-4) submitted, either actually or by specific identification in writing, to the Contracting Officer or to the Contracting Officer's representative in support of ________* are accurate, complete, and current as of ________**. This certification includes the cost or pricing data supporting any advance agreements and forward pricing rate agreements between the offeror and the Government that are part of the proposal.

The date to be inserted in the space before the two asterisks is either the date of price agreement or an earlier date agreed upon by the parties. See this note to the certificate text:

Quote

** Insert the day, month, and year when price negotiations were concluded and price agreement was reached or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price.

And see FAR 15.406-2(c):

Quote

(c) The contracting officer and contractor are encouraged to reach a prior agreement on criteria for establishing closing or cutoff dates when appropriate in order to minimize delays associated with proposal updates. Closing or cutoff dates should be included as part of the data submitted with the proposal and, before agreement on price, data should be updated by the contractor to the latest closing or cutoff dates for which the data are available. Use of cutoff dates coinciding with reports is acceptable, as certain data may not be reasonably available before normal periodic closing dates (e.g., actual indirect costs). Data within the contractor’s or a subcontractor’s organization on matters significant to contractor management and to the Government will be treated as reasonably available. What is significant depends upon the circumstances of each acquisition.

In FAR 15.407-1 and FAR 52.215-10, the date on the certificate is referred to as the "as of date."

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H2H,  I was was wondering when you would chime in. Thanks for your viewpoint.

I am somewhat familiar with one of the companies that you once worked for.  😄

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Guest Vern Edwards
10 hours ago, here_2_help said:

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

It is true that defective pricing risk ends on the date of price agreement or on an earlier date agreed to by the parties. But the problem is latent data in the possession of someone on the contractor's side that was not recognized as such before price agreement. Remember, the liability for defective pricing is not limited by the personal knowledge of the contractor's negotiators. If anyone anywhere in the company had cost or pricing data prior to price agreement that was not submitted to the government, the contractor will have committed defective pricing. Moreover, some matter might arise at some point during price negotiations that make something cost or pricing data that was not cost or pricing data before the matter arose---perhaps a change to the statement of work. If others are not notified of the change, they might possess cost or pricing data before price agreement that they do not recognize as such before the contract is signed.

In short, I don't agree that post agreement sweeps are "essentially worthless." Moreover, a lot of very smart people have thought for more than 30 years that post agreement sweeps are a best practice. I'm not about to say that they're fools. Contractors conduct sweeps because they are risk averse. As I pointed out earlier, they don't seem to like them any better than the government. If they did not think sweeps were in their own best interests I do not think they would do them. A sweep is a precaution.

In any case, there would be fewer government complaints about sweeps if the government's internal processes weren't so constipated and slow. Physician, heal thyself. (Did Pepe already say that?)

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1 hour ago, joel hoffman said:

I am somewhat familiar with one of the companies that you once worked for.  😄

Given that I spent more than a decade in the E&C industry, and then several years consulting to that industry, I'm pretty sure you are somewhat familiar with more than one of the companies I once worked for.

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Guest Vern Edwards
20 hours ago, Tony Bones said:

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.

@Tony Bones Tony, going over my long response to you, it seems to me that I did not answer your question: "Why does [a cut-off date] make sense?" So, as punishment for your more snarkey remarks, I'm going to explain some more.

The best way to understand the argument for cut-off dates is to read Defective Pricing Handbook by David Bodenheimer. I'm looking at the 2012-2013 edition, Chapter 5, "Reasonable Availability of Cost or Pricing Data." There is a newer, 2017-2018 edition.

Here is as simple and short an explanation as I can write:

Contractor's must disclose cost or pricing data that are reasonably available to it for disclosure. You have to connect availability and disclosure. Data may exist within a company, but it takes time to identify and process it for disclosure. The process of going from identification to disclosure is not instantaneous. Bodenheimer refers to this time as "lag time." Here is an illustration and explanation from a famous 1967 defective pricing case:

Quote

We take up now what constitutes reasonable availability. The contracting officer found that in appellant's organization the time lag from receipt of a vendor's quotation and its posting or recording was two weeks to a month. The record indicates that the recognized method of checking prices under the make-buy structure was to examine ‘buy-cards' in the Purchasing Department and extract from them the latest purchase order prices or vendors' quotations. Thus a new price or quotation would not be available on the buy-card until two weeks to a month after the date of the purchase order or quotation. After the new data was entered on the buy-card the enormity of the task of rechecking all the pricing data involved in preparing such a complicated cost estimate would have prevented appellant from extracting the new pricing data as soon as it was entered on the buy-card. The record shows that 30 to 60 days was required for making a cost estimate on missile guidance sets, and there was not more reason for appellant rechecking pricing data on the make-buy structure than for rechecking the multitudinous other pricing data involved in preparing the cost estimate. The Government's own record of negotiations shows that consideration was given to cost experience through mid-August, which would seam to indicate that cost experience data after mid-August was not considered reasonably available by the Government negotiators.

American Bosch Arma Corp., ASBCA 10305, 65-2 BCA ¶ 5280. Of course, today's computer systems reduce the time lag.

Bodenheimer identifies two kinds of lag time, "availability lag time," which it the time required to compile and disclose data, and "organizational lag time," which is the time required to locate, identify, and process data existing in other parts of a large corporation. Cut-off or closing dates are supposed to take such lag times into account. How long a lag time should be allowed? That is a matter for negotiation.

Keep in mind that the definition of cost or pricing data is very broad. It includes more than accounting data:

Quote

“Cost or pricing data” (10 U.S.C. 2306a(h)(1) and 41 U.S.C. chapter 35) means all facts that, as of the date of price agreement, or, if applicable, an earlier date agreed upon between the parties that is as close as practicable to the date of agreement on price, prudent buyers and sellers would reasonably expect to affect price negotiations significantly. Cost or pricing data are factual, not judgmental; and are verifiable. While they do not indicate the accuracy of the prospective contractor’s judgment about estimated future costs or projections, they do include the data forming the basis for that judgment. Cost or pricing data are more than historical accounting data; they are all the facts that can be reasonably expected to contribute to the soundness of estimates of future costs and to the validity of determinations of costs already incurred. They also include, but are not limited to, such factors as—

(1) Vendor quotations;

(2) Nonrecurring costs;

(3) Information on changes in production methods and in production or purchasing volume;

(4) Data supporting projections of business prospects and objectives and related operations costs;

(5) Unit-cost trends such as those associated with labor efficiency;

(6) Make-or-buy decisions;

(7) Estimated resources to attain business goals; and

(8) Information on management decisions that could have a significant bearing on costs.

Emphasis added.

Not all of those data are going to be readily identifiable as cost or pricing data and processable as such through accounting IT systems. Look particularly at items (3), (4), (7), and (8).

So cut-off and closing dates are an accommodation. You can agree to a reasonable cut-off or closing date in recognition of a reasonable lag time or you can wait for the results of a sweep. It's up to you. Choose.

The government has no authority, legal or moral, to force a contractor to sign a certificate before it feels reasonably certain that it will be telling the truth. It's not a matter of giving up the government's "right" to data and getting something in return. For the government it is a matter of deciding how much uncertainty to accept when negotiating a price. For the contractor it is a matter of how much risk to take of defective pricing litigation and even fraud prosecution.

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Vern, I don’t see the relevance of the American Bosch Arma case from the mid- 1960’s era, keeping in mind that the circumstances occurred even before the year of the decision.  

A valid question would be whether or not contractors can reasonably establish estimating and accounting systems that can provide data to managers and project controls personnel in real time or near real time, etc. to provide current cost or pricing data to a contractor’s negotiation team and to the government’s contract administrators. 

I think the memo may be aimed at forcing improved estimating and accounting systems and management practices. 

Many (most?) pricing actions in design and construction contracts that would involve cost or pricing data occur on larger contracts.  Contractors  who are qualified to win such contracts now days are likely to have internal earned value management systems for managing costs, estimating and quantity takeoff’s, production, productivity, etc. It is essential not only for cost contracts but for FFP contracts, as well. 

The major systems contracts that I worked on not only included hundreds of millions of dollars of design and construction (FFP or cost reimbursement on different projects) but even more hundreds of millions of dollars of cost major services to test, systemiize train and operate major chemical weapons disposal plants. So, modern earned value management systems are used in design, construction, and services these days, whether or not they are required by the contract. 

In order to speed up acquisition times, It may be time to force the issue. 

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Guest Vern Edwards
1 hour ago, joel hoffman said:

Vern, I don’t see the relevance of the American Bosch Arma case from the mid- 1960’s era, keeping in mind that the circumstances occurred even before the year of the decision.  

The relevance of the quote from American Bosch is illustrative. The quote sheds light on the concept of lag time. I would have thought you could see the relevance of that illustration, but apparently not.

I think the point you tried to make is that modern IT systems can reduce lag time. I agree.

 

Edited by Vern Edwards
To remove evidence of my frustration with Joel.

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My point is that information lag time in the sixties has much less relevance in comparison with the capabilities of today’s information management and project management systems used in Industry and commerce. 

Edit: The above comment was in response to:

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Hi joel hoffman, 
Vern Edwards has posted a comment on a topic, Policy Memo on TINA Sweeps - Referenced Spector Memo 
 
Vern Edwards said:
29 minutes ago, joel hoffman said:

Vern, I don’t see the relevance of the American Bosch Arma case from the mid- 1960’s era, keeping in mind that the circumstances occurred even before the year of the decision.  

The relevance is the illustration of the concept of lag time. I would have thought you could see the relevance of that illustration, but apparently not.

The rest of your post is more of your personal experience stuff and irrelevant musings, which I don't find interesting or persuasive in this discussion.

34 minutes ago, joel hoffman said:

The major systems contracts that I worked on not only included hundreds of millions of dollars of design and construction (FFP or cost reimbursement on different projects) but even more hundreds of millions of dollars of cost major services to test, systemiize train and operate major chemical weapons disposal plants. So, modern earned value management systems are used in design, construction, and services these days, whether or not they are required by the contract.

Of what use is that kind of chatter?

I have considerable personal experience with TINA, but I don't cite it to make my arguments. My personal experience has led me to feel a certain way about TINA and defective pricing, but I don't think my experience supports my argument. All you keep doing is stating the purpose of the memo and then writing something about something you worked on. Well, the purpose of the memo is clear on its face, and I don't not find that purpose, or your personal experience, to be justification for the policy.

 

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15 hours ago, Vern Edwards said:

Physician, heal thyself. (Did Pepe already say that?)

Yes, great frogs think alike.

18 hours ago, Vern Edwards said:

government wants to speed up it's self-constipated processes

😆🤣😅 Consider this phrase stolen! Great description of federal acquisitions and contracting. 

 

For everyone reading this thread and thinking about TINA sweeps...

Consider what it's like to have skin in this game, which precludes federal employees. PepeTheFrog is talking about the contractor employees who are responsible for defective pricing and false claims issues. 

You're the Director of Important Things at Giant Defense Contractor (GDC) and you certify cost and pricing data for GDC. Consider the cases Vern Edwards shared, and consider the immense risk and liability with certifying. You preside over five divisions in five different states, and you're now told that your TINA sweep must be five days. Does that change your opinion of this memo? (Even if Shay Assad, one person who used to have skin in this game and now sits in a federal employee position at Department of Defense, wrote the memo?)

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9 minutes ago, joel hoffman said:

My point is that information lag time in the sixties has much less relevance in comparison with the capabilities of today’s information management and project management systems used in Industry and commerce. 

Edit: The above comment was in response to the email notification that I just read. I didn’t see the above edit by Vern but my point is the same. 

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Hi joel hoffman, 
Vern Edwards has posted a comment on a topic, Policy Memo on TINA Sweeps - Referenced Spector Memo 
 
Vern Edwards said:
29 minutes ago, joel hoffman said:

Vern, I don’t see the relevance of the American Bosch Arma case from the mid- 1960’s era, keeping in mind that the circumstances occurred even before the year of the decision.  

The relevance is the illustration of the concept of lag time. I would have thought you could see the relevance of that illustration, but apparently not.

The rest of your post is more of your personal experience stuff and irrelevant musings, which I don't find interesting or persuasive in this discussion.

34 minutes ago, joel hoffman said:

The major systems contracts that I worked on not only included hundreds of millions of dollars of design and construction (FFP or cost reimbursement on different projects) but even more hundreds of millions of dollars of cost major services to test, systemiize train and operate major chemical weapons disposal plants. So, modern earned value management systems are used in design, construction, and services these days, whether or not they are required by the contract.

Of what use is that kind of chatter?

I have considerable personal experience with TINA, but I don't cite it to make my arguments. My personal experience has led me to feel a certain way about TINA and defective pricing, but I don't think my experience supports my argument. All you keep doing is stating the purpose of the memo and then writing something about something you worked on. Well, the purpose of the memo is clear on its face, and I don't not find that purpose, or your personal experience, to be justification for the policy.

 

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51 minutes ago, PepeTheFrog said:

For everyone reading this thread and thinking about TINA sweeps...

Consider what it's like to have skin in this game, which precludes federal employees. PepeTheFrog is talking about the contractor employees who are responsible for defective pricing and false claims issues. 

You're the Director of Important Things at Giant Defense Contractor (GDC) and you certify cost and pricing data for GDC. Consider the cases Vern Edwards shared, and consider the immense risk and liability with certifying. You preside over five divisions in five different states, and you're now told that your TINA sweep must be five days. Does that change your opinion of this memo? (Even if Shay Assad, one person who used to have skin in this game and now sits in a federal employee position at Department of Defense, wrote the memo?)

It should be apparent that the ability to conduct effective, timely, TINA sweeps is a competitive advantage. That has always been the case, but the recent Assad memo should make it blindingly clear.

Litigation avoidance as a competitive advantage in the marketplace. Think about it.

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46 minutes ago, PepeTheFrog said:

PepeTheFrog is talking about the contractor employees who are responsible for defective pricing and false claims issues. 

Pepe, I'm glad you brought this up.  Much of the earlier discussion here has focused on the contractor.  However, the individual signing the certificate has personal exposure for false statements, and other potential criminal activity.  DoJ loves procurement certificates because it gives them a person to put the squeeze on in regard to potential corporate liability.  (Years ago, congress passed a law requiring agencies to eliminate unnecessary procurement certifications.  I had to review certifications that were of interest to my agency.  The DoJ attorney working the issue for DoJ specifically mentioned that DoJ wanted to minimize the number of certifications that were eliminated because it reduced its opportunity to have a person to go after.) You can't put a corporation in jail, but you can put a person in jail.

As for Vern's point about aggressive auditors or prosecutors, I once had an assistant U.S. attorney working a procurement fraud case tell me that he did not care if he was right or if he was wrong in regard to the case, the only thing he cared about was if he won.

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9 minutes ago, here_2_help said:

It should be apparent that the ability to conduct effective, timely, TINA sweeps is a competitive advantage. That has always been the case, but the recent Assad memo should make it blindingly clear.

Litigation avoidance as a competitive advantage in the marketplace. Think about it.

H2H, you are going to have to explain this.  The requirement to submit certified cost or pricing data only applies when there is not adequate price competition.  That exception is getting narrower because of DoD unilateral action in the DFARS and the 2017 NDAA.  So I'm not sure what you mean when you refer to a competitive advantage?  Are you talking about competitive advantage in regard to other contractors or do you view conducting timely, effective sweeps as a competitive advantage in regard to the government?

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Guest Vern Edwards
1 hour ago, joel hoffman said:

My point is that information lag time in the sixties has much less relevance in comparison with the capabilities of today’s information management and project management systems used in Industry and commerce. 

IT management and project management systems have reduced lag time for firms that have them. It has not eliminated it.

But do you think that all DOD contractors that must submit cost or pricing data have such systems? Do you think that all subcontractors that must submit cost or pricing data to the prime have such systems? What percentage of them do? Boeing and Lockheed and such are not the only contractors who are affected by DOD's new policy. I'm not worried about them, because they'll tell DOD to stuff it.

Anyway, the author of the Defective Pricing Handbook, 2017 - 2018 ed. thinks there is still lag time, especially with respect to subcontractors, and he cites American Bosch as an illustration. Pardon me for taking his word for it.

16 minutes ago, here_2_help said:

It should be apparent that the ability to conduct effective, timely, TINA sweeps is a competitive advantage.

I don't know about competitive advantage. If there is competition, then there is no requirement for cost or pricing data. Cost or pricing data is required when there is no competition. Much of DOD's problem with sweeps is in connection with definitization of mods. In any case, I called around this morning to ask some people about their thinking about post-agreement sweeps. The people I spoke with considered them essential, because many subcontractors are not sophisticated or diligent about updating their cost or pricing data while the prime is negotiating. They are especially concerned about being charged with false claims.

10 minutes ago, Retreadfed said:

I once had an assistant U.S. attorney working a procurement fraud case tell me that he did not care if he was right or if he was wrong in regard to the case, the only thing he cared about was if he won.

I have always maintained that the motto of the Department of Justice is that they don't have to win the case in order to punish the contractor. They can just litigate them to death. They seem to have a bottomless budget with which to do so.

Anyway, I'm not going to waste time with Joel anymore, because he's a government retiree.

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4 minutes ago, Vern Edwards said:

The people I spoke with considered them essential, because many subcontractors are not sophisticated or diligent about updating their cost or pricing data while the prime is negotiating.

Vern, is there a possible correlation between this issue and the points you are making in another discussion here concerning small business programs?  I am thinking specifically about small business subcontracting programs.

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Guest Vern Edwards

Retread:

No correlation intended or that I'm aware of.

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Guest Vern Edwards

Gee, I guess DOD is going to have to revise its Contract Pricing Reference Guides, Volume 4, Chapter 5:

Quote

Contractor Sweeps. Defective pricing could result, if any person in the contractor's organization knew that cost or pricing data submitted by the offeror were not accurate, complete, and current, when price negotiations were concluded and price agreement was reached or (if applicable) on another agreed-upon date. For example, defective pricing could occur if a subcontract buyer knew that a subcontractor intended to revise its proposal downward by $50,000, and failed to advise others in the prime contractor's organization.

To assure compliance with TINA requirements, many contractors have instituted programs for conducting extensive reviews of available cost or pricing data after negotiations are complete, but before submitting the Certificate of Current Cost or Pricing Data.

These reviews are commonly known as "sweeps."

The objective is to identify any new or revised data required to assure that all cost or pricing data are accurate, complete, and current.

The offeror then submits the new or revised data to the Government with the Certificate of Current Cost or Pricing Data.

In some cases, offerors have taken several months to complete a sweep for a single contract.

If a contractor requires more than 30 days to submit a Certificate of Current Cost or Pricing Data, the delay could indicate serious flaws in the contractor's estimating system. Consider the potential for such flaws as you analyze future cost proposals. I wonder if the memo should have been published in the Federal Register as a proposed change to the DFARS.

I wonder on what basis they shortened the time to five business days. I wonder if business days means government business days or industry business days. I wonder if the memo should have been published in the Federal Register. See 41 USC 1707:

Quote

(a) Covered policies, regulations, procedures, and forms.--

(1) Required comment period.--Except as provided in subsection (d), a procurement policy, regulation, procedure, or form (including an amendment or modification thereto) may not take effect until 60 days after it is published for public comment in the Federal Register pursuant to subsection (b) if it--
(A) relates to the expenditure of appropriated funds; and
(B)(i) has a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure, or form; or
(ii) has a significant cost or administrative impact on contractors or offerors.
(2) Exception.--A policy, regulation, procedure, or form may take effect earlier than 60 days after the publication date when there are compelling circumstances for the earlier effective date, but the effective date may not be less than 30 days after the publication date.
(b) Publication in Federal Register and comment period.--Subject to subsection (c), the head of the agency shall have published in the Federal Register a notice of the proposed procurement policy, regulation, procedure, or form and provide for a public comment period for receiving and considering the views of all interested parties on the proposal. The length of the comment period may not be less than 30 days.
(c) Contents of notice.--Notice of a proposed procurement policy, regulation, procedure, or form prepared for publication in the Federal Register shall include--
(1) the text of the proposal or, if it is impracticable to publish the full text of the proposal, a summary of the proposal and a statement specifying the name, address, and telephone number of the officer or employee of the executive agency from whom the full text may be obtained; and
(2) a request for interested parties to submit comments on the proposal and the name and address of the officer or employee of the Federal Government designated to receive the comments.
(d) Waiver.--The requirements of subsections (a) and (b) may be waived by the officer authorized to issue a procurement policy, regulation, procedure, or form if urgent and compelling circumstances make compliance with the requirements impracticable.
(e) Effectiveness of policy, regulation, procedure, or form.--
(1) Temporary basis.--A procurement policy, regulation, procedure, or form for which the requirements of subsections (a) and (b) are waived under subsection (d) is effective on a temporary basis if--
(A) a notice of the policy, regulation, procedure, or form is published in the Federal Register and includes a statement that the policy, regulation, procedure, or form is temporary; and
(B) provision is made for a public comment period of 30 days beginning on the date on which the notice is published.
(2) Final policy, regulation, procedure, or form.--After considering the comments received, the head of the agency waiving the requirements of subsections (a) and (b) under subsection (d) may issue the final procurement policy, regulation, procedure, or form.
 

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1 hour ago, Retreadfed said:

H2H, you are going to have to explain this.

Actually, no. I do not have to explain it.

As a hint, you might consider looking at the quote to which I was responding. I requoted it to show the context of my statement. If the context is not clear then there's nothing else I can do.

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Guest Vern Edwards
On 6/13/2018 at 9:57 AM, here_2_help said:

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.

I do not understand that argument. Does anyone?

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