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Guest Vern Edwards

P.S. Don't confuse "technically acceptable" as used in FAR 15.101-2 with acceptable as defined by the GAO or with the criterion for adequate price competition in FAR 15.403-1(c)(1)(i).

The GAO says:

Quote

In a negotiated procurement, a proposal that fails to conform to the material terms and conditions of the solicitation is considered unacceptable and may not form the basis for award.

See Distributed Solutions, Inc., B-416394, 2018 CPD ¶ 279. That's an explanation of the concept of legal acceptability, but that's not necessarily what "technically acceptable" might mean in any given instance.

FAR does not define "technically acceptable," and agencies have defined it in various ways. It's possible for a proposal to be legally acceptable, but not "technically acceptable." It's also possible for a proposal to be "technically acceptable," but not legally acceptable. Agencies don't always do things in ways that make complete sense to us pedants.

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40 minutes ago, Vern Edwards said:

Here's how the CO determined price reasonableness in the decision I just cited:

EPA received proposals from ten offerors, including ER. The agency ranked the proposals from lowest-priced to highest-priced, and then conducted a price evaluation to assess the reasonableness of the prices submitted. Specifically, the agency compared the prices to the market average, as well as the independent government estimate....

Footnote 2: The agency calculated the market average by adding the offerors' total proposed prices, and dividing the sum by the total number of proposals received. COS at 1; AR, Tab 4, Revised Price Evaluation, at 1.

I wonder what GAO would have decided if a prejudiced party specifically challenged the comparison of the market average concept. (The technical acceptability of some of the offer's was not evaluated - unknown; for competitive range purposes they were essentially treated as acceptable)

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Guest Vern Edwards
9 minutes ago, Jamaal Valentine said:

I wonder what GAO would have decided if a prejudiced party specifically challenged the comparison of the market average concept. (The technical acceptability of some of the offer's was not evaluated - unknown; for competitive range purposes they were essentially treated as acceptable)

A proposal might be technically unacceptable on grounds that have no bearing on price. The product of service offered might be perfectly acceptable, but the proposal is technically unacceptable on other grounds.

 

Edited by Vern Edwards
To eliminate sarcastic remrk.
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1 hour ago, Vern Edwards said:

A proposal might be technically unacceptable on grounds that have no bearing on price.

True. Yesterday, I mentioned that the CO has to ensure offers are acceptable in the sense that the price comparisons are valid; or make adjustments as necessary.

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1 hour ago, Jamaal Valentine said:

I wonder what GAO would have decided if a prejudiced party specifically challenged the comparison of the market average concept. (The technical acceptability of some of the offer's was not evaluated - unknown; for competitive range purposes they were essentially treated as acceptable)

The GAO said in that particular decision that there was no prejudice in that evaluation scheme for the higher-priced proposers because the CO assumed they were technically acceptable.  So I suppose it would have to be the other firm in the competitive range to carry that flag?  Still, that firm was higher priced by definition . . .

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57 minutes ago, Vern Edwards said:

A proposal might be technically unacceptable on grounds that have no bearing on price. The product of service offered might be perfectly acceptable, but the proposal is technically unacceptable on other grounds.

 

I agree. I should have said that long ago here. 

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52 minutes ago, Jamaal Valentine said:

True. Yesterday, I mentioned that the CO has to ensure offers are acceptable in the sense that the price comparisons are valid; or make adjustments as necessary.

I agree that the important aspect is that the price comparisons should be valid or that one could account for differences to make valid comparisons. 

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13 minutes ago, apsofacto said:

Still, that firm was higher priced by definition . . .

Yeah, I was thinking the same thing. It truly is hard to lose a protest but, can this treatment of price serve as a reasonable basis for award? Is there meaningful competition under CICA if an agency does not compare competing offerors' proposed prices in a certain meaningful way? I am going to reread Electronic Design, Inc., Comp. Gen. Dec. B-279662.2.

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24 minutes ago, apsofacto said:

The GAO said in that particular decision that there was no prejudice in that evaluation scheme for the higher-priced proposers because the CO assumed they were technically acceptable.  So I suppose it would have to be the other firm in the competitive range to carry that flag?  Still, that firm was higher priced by definition . . .

Yes. Please note that my observations were not from a protest perspective. Higher priced offers would not be prejudiced by accepting a lower priced, technically acceptable offer.

My observations are limited to determining if the price of the otherwise apparent successful proposal is fair and reasonable.  

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8 minutes ago, Jamaal Valentine said:

Is there meaningful competition under CICA if an agency does not compare competing offerors' proposed prices in a certain meaningful way

Jamaal,

All other things being equal, do you think that offerors would propose different prices under the two LPTA frameworks?

  • Framework 1: Rank all offers by price; evaluate all proposals for technical acceptability; award to the LPTA
  • Framework 2: Rank all offers by price; starting with the lowest priced proposal, evaluate proposals from lowest to highest until one is technically acceptable; award to the LPTA
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21 minutes ago, Matthew Fleharty said:

Jamaal,

All other things being equal, do you think that offerors would propose different prices under the two LPTA frameworks?

  • Framework 1: Rank all offers by price; evaluate all proposals for technical acceptability; award to the LPTA
  • Framework 2: Rank all offers by price; starting with the lowest priced proposal, evaluate proposals from lowest to highest until one is technically acceptable; award to the LPTA

Matthew, if you don’t mind my interjection, I don’t think that they would propose different prices. Either way, the basis of award is LPTA, with a fair and reasonable price.

The price(s) that you are comparing the lowest LPTA to should be comparable as proposed or otherwise be able to be compared. 

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Matthew:

Generally speaking, no, but the framework or technique is not a chief concern. I am more concerned about someone comparing prices to offers which they have not evaluated nor determined are suitable for comparison. (Kinda reminds me of this time of year when people start exercising options: many practitioners compare prices of other contracts with similar titles without ever comparing technical requirements.)

I am not suggesting that one has to or even should evaluate more than the lowest priced. It is allowable and often wise to only evaluate the LPTA and stop when that is deemed best value … however, LPTA need not and arguably should not--in some cases--rely on comparison of proposed prices when using that technique. 

In other words, I am suggesting that one shouldn't categorically assume that a comparison to proposed prices recieved in response to the solicitation is valid without taking a few actions (i.e., actively ensuring a valid basis for comparison exists).

What I was getting at with the question is: what is GAO's position, if any, on comparing proposal prices alone (in RFPs with non-priced factors) as a means of satisfying CICA, and as a reasonable basis for award. I recall reading something related in Electronic Design, Inc., Comp. Gen. Dec. B-279662.2. that may or may not be relevant.

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5 minutes ago, Jamaal Valentine said:

I am more concerned about someone comparing prices to offers which they have not evaluated nor determined are suitable for comparison.

Yawp, agreed:  1.) Source selection  and 2.) finding the price fair and reasonable are two separate issues, and the EPA technique streamlines 1.) and complicates 2.) a little bit.

I'm following this discussion with interest since my employer makes a practice of technically evaluating all proposers in this scenario.  It seems like an inefficient use of time, so I'm happy to see EPA trying something different, and that it survived contact with the enemy. 

Regarding price reasonableness, though,  I suppose you could at least compare the prices in the competitive range, since they *were* evaluated technically.  I wonder why there was no mention of that?  May have been

Perhaps In the event of an award without discussion,  you could technically evaluate the lowest three to ensure the prices were truly comparable?  This would save you the trouble of evaluating proposers 4-10.  

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Guest Vern Edwards
2 hours ago, Jamaal Valentine said:

I am more concerned about someone comparing prices to offers which they have not evaluated nor determined are suitable for comparison.

@Jamaal Valentine

Why "concerned"? Agencies have done that for decades when using sealed bidding, in which there is no nonprice technical evaluation at all. There is no reason to be "concerned" unless someone describes the use of a specific method for determining fairness and reasonableness that is patently irrational or otherwise unsound under specific circumstances.

You are being very persistent at making a mountain out of a molehill with your "concern." I'm beginning to think that you don't understand the concept of fair and reasonable price. Each determination must be judged in its own circumstances and on own its merits. Your kind of foggy "concern" is what leads to general prohibitions against the use of methods that are perfectly reasonable when properly used.

If someone wants to charge me less for something that I consider acceptable than for something that I haven't considered at all, and if acceptable is all I want, then why shouldn't I consider that to be a fair and reasonable price?

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4 minutes ago, Vern Edwards said:

Why concerned? Agencies have done that for decades when using sealed bidding, in which there is no nonprice technical evaluation at all. There is no reason to be concerned unless someone describes a method for determining fairness and reasonableness that is patently irrational.

Bingo.

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On 9/14/2018 at 12:52 PM, ji20874 said:

In an ordering situation using LPTA, the price analysis can occur before the technical evaluation -- compare all the proposed prices received in response to the solicitation (amenable to FAR 15.404-1(b)(2)(i)), and rank offers from lowest price to highest price -- absent a reason for finding otherwise, one may generally assume that the lowest-price among many is a reasonable price.

The problem I have with this approach is that you don't know if you would be making an apples-to-apples comparison. You have received several offers to provide apples. You have confirmed that one such offer is for something that meets the criteria for being an apple. You don't know if the other offers are for things that meet the criteria for being apples. You have no evidence that they meet the criteria for being apples, but you also have no evidence that they don't. You're comparing apples to something in a quantum superposition of being both apples and not apples. Why would it be reasonable to assume that they are apples? Because you asked for apples and received several offers to provide apples?

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Guest Vern Edwards
11 minutes ago, Don Mansfield said:

The problem I have with this approach is that you don't know if you would be making an apples-to-apples comparison. You have received several offers to provide apples. You have confirmed that one such offer is for something that meets the criteria for being an apple. You don't know if the other offers are for things that meet the criteria for being apples. You have no evidence that they meet the criteria for being apples, but you also have no evidence that they don't. You're comparing apples to something in a quantum superposition of being both apples and not apples. Why would it be reasonable to assume that they are apples? Because you asked for apples and received several offers to provide apples?

So what is the possibility? That if I knew that the others, or some of them, weren't for apples I might think that there might be a better price out there for apples than the low one I got? Well, no one offered that price. What am I supposed to do, embark on an endless quest for the offer that might exist but that I didn't get? How long am I going to look for that offer while the guys are out in the boonies are waiting for fresh fruit? Spoken like a true desk ranger.

I conducted a competition for apples. I got an offer for apples that was lower than all the others. All the other offers I got were higher. I don't give a damn if they were for apples or coconuts. I announced a contest, I specified the rules, I conducted the contest in accordance with the rules, Game over.

Now, apples are an easy one to solve, because there's a public market for apples and I can call around. If the low price is too high I can cancel the solicitation and start over after I figure out what I did wrong the first time.

Quantum superposition my tookus.

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1 minute ago, Vern Edwards said:

What am I supposed to do, embark on an endless quest for the offer that might exist but that I didn't get?

Is comparison of proposed prices the only basis for establishing price reasonableness? Or are there others?

3 minutes ago, Vern Edwards said:

I conducted a competition for apples. I got an offer for apples that was lower than all the others. All the other offers I got were higher. I don't give a damn if they were for apples or coconuts. I announced a contest, I specified the rules, I conducted the contest in accordance with the rules, Game over.

Did you get adequate price competition?

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Guest PepeTheFrog

To the naysayers of the "first LPTA discovered" method of starting with the lowest price and awarding to the first offeror that is technically acceptable (without evaluating other offers)...

Do your concerns vanish if the method includes evaluating at least two offerors? Find the LPTA, starting with the lowest price, and then stop when you found +1 offer that is also technically acceptable and higher in price?

Personally, PepeTheFrog likes the easy and fast "first LPTA discovered" method, but maybe the marginal cost of evaluating just one more offer will satisfy supervisors who are sticklers or skeptical. 

15 minutes ago, Don Mansfield said:

Why would it be reasonable to assume that they are apples? Because you asked for apples and received several offers to provide apples?

Yes, that seems reasonable. 

3 minutes ago, Don Mansfield said:
10 minutes ago, Vern Edwards said:

I conducted a competition for apples. I got an offer for apples that was lower than all the others. All the other offers I got were higher. I don't give a damn if they were for apples or coconuts. I announced a contest, I specified the rules, I conducted the contest in accordance with the rules, Game over.

Did you get adequate price competition?

Yes, under the FAR 15.403-1(c) definition of "adequate price competition." There are three options and the contracting officer should be able to apply one of the three.

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1 minute ago, PepeTheFrog said:

To the naysayers of the "first LPTA discovered" method of starting with the lowest price and awarding to the first offeror that is technically acceptable (without evaluating other offers)...

Not sure if you consider me a "naysayer", but as a selection method I don't see a problem with "first LPTA discovered". But that's not the issue we're discussing. The issue is whether the other proposed prices should be used as a basis of comparison in determining a fair and reasonable price.

5 minutes ago, PepeTheFrog said:

Yes, under the FAR 15.403-1(c) definition of "adequate price competition." There are three options and the contracting officer should be able to apply one of the three.

Ok, which one?

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Let's not forget that the FAR is not a "how to" guide and it isn't definitive or exhaustive on how one determines prices fair and reasonable (emphasis added):

Quote

(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to the following:

Is it possible to make a reasonable argument that a LPTA proposal's price is fair and reasonable without knowing whether the other proposals are technically acceptable?  I think so, despite what the FAR may or may not say.

Next up in "how can we make more non-value added work for ourselves", someone is going to explain to all of us that to meet the standard of adequate price competition the Government must perform contractor responsibility determinations on the unsuccessful offerors in addition to the technical evaluations...

Quote

(1) Adequate price competition. A price is based on adequate price competition if --

  • (i) Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement and if --

 

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Guest Vern Edwards
49 minutes ago, Don Mansfield said:

Is comparison of proposed prices the only basis for establishing price reasonableness? Or are there others?

Did you get adequate price competition?

See FAR 15.404-1(b):

Quote

(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to, the following:

(i) Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).

(ii) Comparison of the proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items. This method may be used for commercial items including those “of a type” or requiring minor modifications.

(A) The prior price must be a valid basis for comparison. If there has been a significant time lapse between the last acquisition and the present one, if the terms and conditions of the acquisition are significantly different, or if the reasonableness of the prior price is uncertain, then the prior price may not be a valid basis for comparison.

(B) The prior price must be adjusted to account for materially differing terms and conditions, quantities and market and economic factors. For similar items, the contracting officer must also adjust the prior price to account for material differences between the similar item and the item being procured.

(C) Expert technical advice should be obtained when analyzing similar items, or commercial items that are “of a type” or requiring minor modifications, to ascertain the magnitude of changes required and to assist in pricing the required changes

(iii) Use of parametric estimating methods/application of rough yardsticks (such as dollars per pound or per horsepower, or other units) to highlight significant inconsistencies that warrant additional pricing inquiry.

(iv) Comparison with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate arrangements.

(v) Comparison of proposed prices with independent Government cost estimates.

(vi) Comparison of proposed prices with prices obtained through market research for the same or similar items.

(vii) Analysis of data other than certified cost or pricing data (as defined at 2.101) provided by the offeror.

(3) The first two techniques at 15.404-1(b)(2) are the preferred techniques. However, if the contracting officer determines that information on competitive proposed prices or previous contract prices is not available or is insufficient to determine that the price is fair and reasonable, the contracting officer may use any of the remaining techniques as appropriate to the circumstances applicable to the acquisition.

(4) Value analysis can give insight into the relative worth of a product and the Government may use it in conjunction with the price analysis techniques listed in paragraph (b)(2) of this section.

Adequate price competition is irrelevant. I'm buying apples, a commercial item. The market for fruits is pretty large. And I live in Washington state. Everybody here knows the prices of apples. And cherries. And pears. And grapes. And watermelon. I can detrermine fairness and reasonableness through pleasure analysis.

Besides, we don't have to evaluate the other offers to know whether they're for apples. We can do a quick look to see that. We just don't have to evaluate them for whether they're acceptable apples.

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6 minutes ago, Vern Edwards said:

Adequate price competition is irrelevant. I'm buying apples, a commercial item. The market for fruits is pretty large. And I live in Washington state. Everybody here knows the prices of apples. And cherries. And pears. And grapes. And watermelon. I can detrermine fairness and reasonableness through pleasure analysis.

For purposes of applying TINA it is. But in your scenario you want to hang your hat on FAR 15.404-1(b)(2)(i):

9 minutes ago, Vern Edwards said:

Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).

So I ask again, did you get adequate price competition in your scenario?

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Guest Vern Edwards
38 minutes ago, Don Mansfield said:

The issue is whether the other proposed prices should be used as a basis of comparison in determining a fair and reasonable price.

No. The issue is whether they can be used. And I think the answer is sometimes yes and sometimes no, depending on circumstances.

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Guest Vern Edwards
8 minutes ago, Don Mansfield said:

So I ask again, did you get adequate price competition in your scenario?

And I'm telling you, again, that adequate price competition is irrelevant. See FAR 15.404-1(b)(2)(I):

Quote

(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to, the following:

(i) Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).

Two sentences in (i). The first provides an example of a pricing techniques. The second makes an assertion: "NORMALLY, adequate price competition establishes a fair and reasonable price." The two together do not say that you can establish fairness and reasonableness through comparison of proposed prices ONLY IF you got adequate price competition.

 

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