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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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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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