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Policy Memo on TINA Sweeps - Referenced Spector Memo

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3 hours ago, Vern Edwards said:

I do not understand that argument. Does anyone?

As I said on my first post on this thread, I'm not making an argument and I'm not trying to convince (or even persuade) anybody. I'm sorry if that disappoints you (or anybody else). You and I have been down this road before and we are, I suspect, largely talking past each other. For example, I use the phrase "competitive advantage in the marketplace" and your response is that "if there is competition there is no requirement for cost or pricing data." Non sequitur. It's obvious that I'm not communicating well and I take responsibility for that.

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31 minutes ago, here_2_help said:

As I said on my first post on this thread, I'm not making an argument and I'm not trying to convince (or even persuade) anybody. I'm sorry if that disappoints you (or anybody else). You and I have been down this road before and we are, I suspect, largely talking past each other. For example, I use the phrase "competitive advantage in the marketplace" and your response is that "if there is competition there is no requirement for cost or pricing data." Non sequitur. It's obvious that I'm not communicating well and I take responsibility for that.

Welcome to the club.  😄

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1 hour ago, here_2_help said:

For example, I use the phrase "competitive advantage in the marketplace" and your response is that "if there is competition there is no requirement for cost or pricing data." Non sequitur.

@here_2_help  Non sequitur? What does not follow from what?

My statement that if there is no competition there is no requirement for cost or pricing data was not supposed to follow from your statement about competitive advantage, like a conclusion follows from premises. It was a statement in response to something that at least two of us found to be obscure. How can there be a competitive advantage if there is no competition? Why is it too hard for you to explain? When Retread asked for an explanation, you said you don't have to explain. Well, if that's your attitude, why participate in a discussion forum?

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 don't get that.

Defective pricing risk does not end on the date of price agreement. What ends on the date of price agreement is the obligation to submit available cost or pricing data. Risk remains until the contractor verifies that all cost or pricing data that were available before price agreement were, in fact, submitted, assuming that verification is possible. A post agreement sweep is done in order to try to find any cost or pricing data that were available before price agreement, and that should have been submitted, but that inadvertently were not. It is due diligence before signing a certificate and a contract, and as such it reduces (mitigates) the risk of defective pricing. Corporate executives owe it to their stockholders to protect their companies from defective pricing and possible false claims litigation and penalties. Would it be better to have found the data and submitted them before price agreement? Yes, but organizations, people, and processes are not perfect. Every executive must decide whether the sweep process is worthwhile in light of the risk.

If I have misunderstood you, you could straighten me out with an explanation. But your attitude seems to be that you'll say what you want and explanations be damned. Well, so be it.

As for Joel's club, he must mean the Club of Irrelevant Recollection and Chatter.

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Prime contractors continue to face some risk of defective pricing even after contract award.  See FAR 15.407-1(f)(2).

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On 6/15/2018 at 4:35 AM, 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. 

 

Vern asks the questions; “How can there be a competitive advantage if there is no competition? Why is it too hard for you to explain? 

How long do we assume stasis? Does anyone take issue with the idea that the ability to deliver a sole source solution is a competitive advantage for a business and is subject over time to pressures of the marketplace? Compettve advantage is a useful analytical tool and is in my view not misapplied here. 

Monopoly, competition, competitive  advantage, barriers to entry, the principle of substitution.... conceptually this is pretty basic B-School stuff.  Think patents, data rights and a myriad of other real world  situations...should we fail to recognize, or disregard the useful concept “competitive advantage” or perhaps insist that it be renamed before discussing the short run case of its limit (upper bound) which is monopoly or sole source? I don’t think so.

 

 

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FAR-flung, H2H mentioned two types of competitive advantage:  (1) "the ability to conduct effective, timely, TINA sweeps" and (2)  "Litigation avoidance as a competitive advantage in the marketplace."  If you have any idea what he was talking about in either case, maybe you can explain it to us mere mortals.

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Retreadfed,

These two ideas ((1) "the ability to conduct effective, timely, TINA sweeps" and (2)  "Litigation avoidance as a competitive advantage in the marketplace.") seem very clear to me and I am not sure why they may not seem clear to others.  My first guess is that treating them specifically will not help, but that discussing a possible difference in our viewpoints might.

I think some others may treat the word string competitive advantage in serial fashion where I see it as a single term ( a composite or term of art). When treated as two separate words "competitive" remains a strict qualifier which then minimizes the word "advantage"..such a reading would lead one down a certain alley...I can visit that alley, but I know another one that has a certain advantage I'll now discuss (pun intended).   

Instead, I understand the composite of these two words "competitive advantage" to be a term itself; it is a valuable concept and an analysis tool...Valuable and specialized enough, I guess, to call it a "term of art."  For this reason I am unconcerned about using the term in the limit case of a single source...this because in many instances, this very limit case was a precise aim of the business' pursuit of a competitive advantage...and as a result is sometimes the short run result of a business' successful focus.  

If none of that helps them maybe we could next look at the various kinds of competitive advantage to see the term at work. There are many kinds of competitive advantage...I started with a mention of just two examples: patents and data rights both may form the basis on which a business may legally hold rights that exclude or limit the competition it faces in the marketplace.  I think it is one of the most valuable ideas for the proprietors of any business to know what sets their business apart in the marketplace in general and in an individual transaction in particular.  Of course there are other concepts, market forces, and constraints to consider, but competitive advantage is an important one .   

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On 6/14/2018 at 12:35 PM, here_2_help said:

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

Competitive advantage arises from certain qualities among companies that contend with one another for business. A particular quality is a competitive advantage for a company if it is a quality that will prompt customers to prefer it or its products to others.

Cost or pricing data must be submitted in non-commercial acquisitions when there will not be adequate price competition, prices set by law or regulation, or a waiver. It is in such acquisitions that timely sweeps might become a matter of concern. But such acquisitions usually occur when the customer is seeking a particular technical quality that outweighs all other prospective sources of competitive advantage. See e.g. FAR 6.302-1(a)(2)(i):

  • a unique or innovative concept,
  • a unique capability,
  • a concept or services not otherwise available; or
  • follow-on positioning.

In such cases the technical quality/source of advantage trumps all others.

Thus, in those cases in which cost or pricing data must be submitted and sweep delays might be an issue, the quality of being able to complete sweeps in a timely manner is outweighed by technical qualities and will not be a source of competitive advantage, at least not in the short term. Whether in the long term the customer would seek other sources in order to get faster sweeps is a matter of conjecture, but seems unlikely if the technical quality continues to be the only or principal source of competitive advantage.

If two or more companies could compete on the basis of their technical qualities, then the ability to complete sweeps in a timely manner would be irrelevant, because there would be adequate price competition, which would eliminate the need for cost or pricing data.

Companies that deal in the government market tend to know the sources of competitive advantage, and I doubt that DOD would have had to issue its memo if timely completion of sweeps were such a source.

I would be open to consideration of H2H's assertion about competitive advantage if he would make a persuasive argument, but he considers that to be beneath him or beyond his abilities. Based on what I am able to work out in my limited way, not only is it not "apparent" that the ability to complete sweeps in a timely manner is a competitive advantage, I cannot see how it would be so.

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Vern,

I would appreciate it if you would refrain from speculation regarding my motivation for declining to engage further in this discussion. Some might say that your last comment about my motives is in violation of Rule #1 of this Forum. Knowing you, I know it wasn't an intentional affront.

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Also, it is not clear to me as to over whom the contractor is gaining a competitive advantage.  A competitive advantage can arise in regard to a party with whom negotiations are being conducted.  The purpose of requiring contractors to submit certified cost or pricing data is to eliminate a supposed competitive advantage contractors have over the government in regard to the ability to make judgments concerning what would be a fair and reasonable price.  In the pre-award context, if cost or pricing data is not submitted until after agreement on price, the contractor may have a competitive advantage over the government in regard to whether the price agreed to should stand.  If the contracting officer believes negotiations should be reopened to allow the government to seek a lower price, there is little incentive, in the present case, for the contractor to agree.  Thus, the government can be faced with either accepting a price it believes is too high, or foregoing acquiring the supplies or services it needs.

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Quote

RULES:

1. No personal attacks on another individual user. Personal attacks DO NOT include a disagreement with another poster's views. Users understand that professional disagreement and professional argument are a part of the learning process. Personal attacks include such things as calling a poster ignorant, unprofessional, etc. These posts will be removed or edited as soon as they are seen.

@here_2_help I didn't speculate. I asserted. I think a speculation would have begun with something like, I wonder if...  (Can you personally attack an anonymous person?)

I asserted that you thought it was beneath you to argue or that you felt you didn't have a good argument. Those were reasonable assertions and should not be insulting. In any case, you're right. I did not mean to affront you. Just goad you. It didn't work, I see.

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On ‎6‎/‎14‎/‎2018 at 9:43 AM, Vern Edwards said:

@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:

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:

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.

Oy,

Well, it's only fair that I take some blame here.

When I wrote my initial post, I assumed everyone knew that cut-off dates made perfect sense for industry. The question should have been: "Why does a cut-off date make sense for the Government?*" and then, "*'Earlier Award Date' is not an acceptable answer." I would include this caveat because the price for that earlier award date probably isn't worth it.

If I was a contractor and the Government agreed to a cut-off date, my first thought would be, "I guess I'm in the market for yachts now?!" Perhaps that's why Mr. Edwards is promoting this idea? Do you need a yacht to fit in with all your contractor friends, sir? I mean, I have heard that people collect exotic animals to keep up with the extravagant purchases of their peers, so why not yachts? Or, maybe you have your eye on a certain, special giraffe?

Random Thought: If the business practices of private industry are as efficient as everyone says they are, I am surprised that lag times pose such a huge problem. I know, I don't understand what industry is like, do I? I cannot even begin to imagine how hard it is to be a business in the U.S., especially those that work with the DoD. Is it the cash flow? Is the financing too good? The Government certainly doesn't do enough to accommodate industry, that's for sure. 

What's your concern, Contractor Vern? The memo is toothless. Contractors aren't going to start certifying within five business days. However, the memo, flawed as it is, draws attention to an issue that can have a huge impact on schedule to award. The attention given to the issue in this memo has allowed my program to begin having constructive conversations with our contractors on how data sweep timelines can be reduced.

Maybe you're mad DPAP stated that maybe, just maybe, industry is responsible for some schedule delays? That schedule slips aren't always the Government's fault? Is that the problem? The outrageous idea that industry can have a negative impact on schedule, just like the Government?

I wonder. You are an interesting fellow, Vern.

Oh, and you spelled snarky wrong. There is no "e" in the word.

Ha, I'm just joking around with you Vern... I hope you know this. You're awesome and I had a lot of fun.

 

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On 6/18/2018 at 12:10 PM, FAR-flung 1102 said:

These two ideas ((1) "the ability to conduct effective, timely, TINA sweeps" and (2)  "Litigation avoidance as a competitive advantage in the marketplace.") seem very clear to me and I am not sure why they may not seem clear to others.

PepeTheFrog agrees

On 6/18/2018 at 2:00 PM, Retreadfed said:

Also, it is not clear to me as to over whom the contractor is gaining a competitive advantage.

its competitors

On 6/18/2018 at 1:16 PM, Vern Edwards said:

A particular quality is a competitive advantage for a company if it is a quality that will prompt customers to prefer it or its products to others.

This is true, but your definition is too narrow. A competitive advantage is also a condition or circumstance that puts a company in a favorable or superior business position. PepeTheFrog is surprised @here_2_help 's comment drew any criticism or questions.

-efficient, responsive, accurate financial systems (ability to conduct effective, timely TINA sweeps)

-internal legal, compliance, risk controls (litigation avoidance)

Both of these lead to competitive advantages. Both of these help with TINA sweeps and mitigate legal risk. The conditions that allow a company to conduct efficient TINA sweeps create competitive advantages. How is any of this controversial?

On 6/18/2018 at 1:16 PM, Vern Edwards said:

Based on what I am able to work out in my limited way, not only is it not "apparent" that the ability to complete sweeps in a timely manner is a competitive advantage, I cannot see how it would be so.

PepeTheFrog has much deeper faith in your imagination if you allow it to wander beyond the boundaries you set to state your case. The conditions that lead to a company's ability to complete sweeps in a timely manner is a competitive advantage, right? 

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@PepeTheFrog Pepe, all you have done is repeat H2H's assertion without making an argument in its support accompanied by evidence or based on sound theory. It is not enough to say that something or other is a competitive advantage, you must explain on whom the advantage it works and how it works. 

Some of you people think you can just say stuff and claim it's true without making an argument in support. Well, you can, but you won't get away with it as long as any of us can think and are willing to spend (or waste) time arguing with you. I'm not going to waste more time on this side issue. Go back and read my post of Monday at 10:16AM and then respond. That, or although it might seem early, perhaps it's time for you to hibernate.

Actually, to take H2H's approach, you don't have to do anything, but please don't waste our time with more yakkity yak.

(Tony, Did I spell yakkity right? Help!)

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4 minutes ago, Vern Edwards said:

all you have done is repeat H2H's assertion without making an argument in its support accompanied by evidence or sound theory

Yeah, well, you know, that's just, like, your opinion, man. PepeTheFrog challenged your definition of competitive advantage, proposed another more inclusive definition, and offered conditions that lead to better TINA sweeps and litigation avoidance. PepeTheFrog did a little bit more than repeat. 

Does it go without saying that your post was accompanied by evidence and sound theory? "Sound theory," huh? Sounds like a topic for discussion.

5 minutes ago, Vern Edwards said:

you must explain on whom the advantage it works and how it works

its competitors

(these are obvious, but you asked)

faster response times

less overhead costs

less chance of negotiating a bad deal

more contracts in a faster amount of time

less lawsuits, fines, penalties, other bad consequences from litigation

Even in your narrow definition for competitive advantage, over time, this stuff leads to an ability to provide greater value, offer lower prices, or produce better products or services than other competitors. But you knew that! 

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I'm still having trouble figuring out where the competitive advantage comes in in those situations where certified cost or pricing data are required.  In those situations there are no viable competitors over whom to gain an advantage.

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Static vs. Dynamic Analysis

Snap Shot vs. Moving  Picture

Long Run vs. Short Run Considerations

Transactional vs. Strategic Analysis

That last distinction includes opportunity for recognition that a business can better succeed over its competitors over time.  Are we willing to consider what happens over time? 

Vern, it seems to me you are sticking to an analysis of the transaction and not what happens to the business over time. Why do so?

I do so because I want insight into what keeps a business competitive and in business.

When looking for analysis tools I’m not quick to exclude tools and techniques that may help. I’m looking to learn something I don’t already know...broadening my considerations, reversing or revising the assumptions and playing with definitions are all part of the tool box. I want a big tool box. 

It seems that making and advocating Policy positions is different...that’s where we narrow our considerations considerably; we use a few quality tools.  Policy requires decisions and advocacy and by implication, if not in fact, choosing winners and losers...hopefully with the opportunity for feedback and revision, since the feedback loop is the most important part of any iterative process. 

 

 

 

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On 6/22/2018 at 9:54 PM, FAR-flung 1102 said:

Vern, it seems to me you are sticking to an analysis of the transaction and not what happens to the business over time. Why do so?

@FAR-flung 1102 

Frankly, I have no idea what you are talking about.

Edited by Vern Edwards
Change addressee.

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Vern, I think this one’s to me not FrankJon...

2 hours ago, Vern Edwards said:

@FrankJon Frankly, I have no idea what you are talking about.

Yep,it’s a conceptual thing. I m saying that something is missing. Like a lot of stuff, the missing parts may not be obvious until and unless we see what the thing can’t do.  

My point is that the view of competitive advantage that you have subscribed to scarifices or gives up something else which  may be very valuable...This need not be the case. 

I have tried to describe the term’s other implications, but I have failed. I’m not fatigued, but I’m not effective either. 

Thank you all for entertaining these thoughts. 

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@FAR-flung 1102How weird. You string together a series of loosely connected phrases and sentences like a Timothy Leary and then say that you've tried to describe something. It's Friday night and that makes it all right so what have you got to lose? Is that it? You have to work hard to develop an idea and communicate it to others. You are not putting in the work. I have not entertained any of your recent thoughts in this thread, because you have been incoherent.

Get some rest. Try again later.

Edited by Vern Edwards
Change addressee.

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@Vern Edwards, you're moving too fast. Though I'm sure I've done something since Friday that would provoke your criticism, posting in this thread was not one of those things.

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