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Evaluation of conditional discounts (volume discounts)

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The Govt is asking for prices for 3 optional CLIN’s, 7, 8, & 9, each for the same thing.

We figure the first of them can be provided for $130, and the other 2 for $100 each.  But the Govt can exercise any of the CLIN’s them or none of them.

If we were to offer a prices like this, would the Govt say it is non-compliant?  Would they evaluate the price as $390 or $330?

CLIN 7,  $130

CLIN 8,  $130, discounted to $100 if CLIN 7 is also exercised.

CLIN 9, $130, discounted to $100 if CLIN 7 is also exercised.

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Thoughts –

You have not stated what the evaluation process will be for your scenario.   But consider this –

You run the risk of your offer/bid being found to have material defect with regard to pricing by adding a condition that is not stipulated in the contract line item schedule.   A conclusion of material defect in a bid for a sealed bid would result in a non-responsive bid.   A material defect for a response to an RFP under FAR part 15 and possibly an RFQ that uses FAR part 15 processes for evaluation would result in your offer being deemed unacceptable.   If an RFQ that uses price and/or other factors for evaluation and that is truly seeking a quote there is no material defect analogy and the agency could consider the quote and might review it in both the scenarios you have posed.

My comments are based on a read of your scenario with no specific references researched to support my view.   Hopefully my thoughts have given thoughts to consider as depending on the actual scenario, such as the evaluation process stated in the solicitation, how much money you are really talking about , has the agency stated that they may award without discussions, etc.,  reviewing applicable GAO protest decisions would be helpful way of trying to determine the risk of a determination of non-responsive or unacceptable based on conditional pricing. 

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20 hours ago, lotus said:

The Govt is asking for prices for 3 optional CLIN’s, 7, 8, & 9, each for the same thing.

We figure the first of them can be provided for $130, and the other 2 for $100 each.  But the Govt can exercise any of the CLIN’s them or none of them.

If we were to offer a prices like this, would the Govt say it is non-compliant?  Would they evaluate the price as $390 or $330?

CLIN 7,  $130

CLIN 8,  $130, discounted to $100 if CLIN 7 is also exercised.

CLIN 9, $130, discounted to $100 if CLIN 7 is also exercised.

See below, if this provision is applicable: 52.215-1 (c)(4)

Quote

“(4) Unless otherwise specified in the solicitation, the offeror may propose to provide any item or combination of items.”

i suggest asking the government to clarify if it is acceptable for you propose a discount. Might help to cite the above paragraph. 

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3 hours ago, C Culham said:

You run the risk of your offer/bid being found to have material defect with regard to pricing by adding a condition that is not stipulated in the contract line item schedule.   A conclusion of material defect in a bid for a sealed bid would result in a non-responsive bid.  

Sounds like if you were the Govt buyer, you'd toss the offer as non-compliant (non-responsive).

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18 hours ago, lotus said:

Sounds like if you were the Govt buyer, you'd toss the offer as non-compliant (non-responsive).

Lotus - First just to be specific where did I say "non-compliant".   I really suggest that word not be used.   Material defect that is either non-responsive or unacceptable.

With the above said I am not as poster here or would not as the CO make a determination without adequate information regarding the type of solicitation, the terms and conditions of the solicitation as they relate to offer submission and exactly how the offer is presented.  But there dang sure is a possibility that as a bid presented in the manner you have stated would be determined to be non-responsive.

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Lotus, I suggest that you ask your question of the government point of contact.  I indicated that FAR provision 52.215-1 (if applicable to your solicitation) states in part:

23 hours ago, joel hoffman said:
 

“(4) Unless otherwise specified in the solicitation, the offeror may propose to provide any item or combination of items.”

lotus, do you have a problem asking for a clarification? You can first ask if you can ask a confidential question - they can say yes or no. I can understand that you wouldn’t want your idea publicized. 

You have mentioned “offer” twice, so it isn’t an IFB, which usually involves much stricter formats. 

I don’t see that your proposal has any material defect. If the government doesn’t want to consider a discount for a combination of items, I think that they can ignore  the discount. Your prices are clear either way. 

Isn’t  your main question:, “Can I propose to provide any item or a discount for any combination of items, per 52.215-1 (c)(4)?” 

I remember years ago, in dealing with end of year rush for projects in Panama that were subject to funds availability, seeing such voluntary discount offers included in proposals. 

The firms in Panama and our other Latin American locations , including both American Expats and local firms, knew that US Army SouthCom and the Air Force wouldn’t be able to determine and release O&M funding until the last day or two of the fiscal year.

The Mobile District of USACE Contracts was awarding contracts up to midnight. In later years, the Corps of Engineers came up with a procedure whereby our Division in Honolulu would make the last minute awards up to Midnight, Hawaii time. 

The DoD, as far as I am aware, no longer has much or any installations in Panama and I’m no longer involved with my old District. I’m  not up to date with current activities in Central and South America for DoD. 

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Guest Vern Edwards

Why not just submit two complete and separate offers, one with the discounts and one without?

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20 minutes ago, Vern Edwards said:

Why not just submit two complete and separate offers, one with the discounts and one without?

 

I thought about that, too. I would Second that idea, if allowable and affordable. 

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Guest Vern Edwards

It shouldn't entail more than filling in a different set of CLIN pages for the options, signing a new cover sheet, etc. Everything else will be the same. I doubt that the agency prohibited submitting more than one proposal. The thought probably never crossed their minds.

Anyway, that's what I'd do, assuming there is no express prohibition. Just make sure to send two complete and separate proposals.

Put an end to all the fretting.

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19 hours ago, Vern Edwards said:

It shouldn't entail more than filling in a different set of CLIN pages for the options

So there is the issue of the CLIN being FAR subpart 4.10 compliant as well as the fact that we are not talking about different quantities of a CLIN we are talking about how an offeror wants to price the CLIN.  The government, at least at this point, wants one price, the offeror wants to offer two prices for the same thing and quantity, contingent upon something happening.

I guess it would look something like this -

CLIN 7,  X Quantity - $130 each

CLIN 8,  X Quantity  - $130 each (To be exercised only if CLIN 7 is not)

CLIN 8A, X Quantity - $100 each (To be exercised only if CLIN 7 is Exercised)

CLIN 9,  X Quantity - $130 (To be exercised only if CLIN 7 is not)

CLIN 9A, X Quantity - $100 each (To be exercised only if CLIN 7 is Exercised)

By the way, again guessing on how the solicitation might be formatted, if a commercial item and FAR 52.212-1 is included in exact wording as found in the FAR multiple offers are encouraged and therefore allowed.

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On 9/30/2018 at 8:18 AM, C Culham said:

So there is the issue of the CLIN being FAR subpart 4.10 compliant as well as the fact that we are not talking about different quantities of a CLIN we are talking about how an offeror wants to price the CLIN.  The government, at least at this point, wants one price, the offeror wants to offer two prices for the same thing and quantity, contingent upon something happening.

I guess it would look something like this -

CLIN 7,  X Quantity - $130 each

CLIN 8,  X Quantity  - $130 each (To be exercised only if CLIN 7 is not)

CLIN 8A, X Quantity - $100 each (To be exercised only if CLIN 7 is Exercised)

CLIN 9,  X Quantity - $130 (To be exercised only if CLIN 7 is not)

CLIN 9A, X Quantity - $100 each (To be exercised only if CLIN 7 is Exercised)

By the way, again guessing on how the solicitation might be formatted, if a commercial item and FAR 52.212-1 is included in exact wording as found in the FAR multiple offers are encouraged and therefore allowed.

Do you think the CLIN's 8A and 9A, being not in the solicitation, would survive evaluation or be tossed as non-responsive (or non-compliant, or causing a material defect, pick your poison)?

 

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16 minutes ago, lotus said:

Do you think the CLIN's 8A and 9A, being not in the solicitation, would survive evaluation or be tossed as non-responsive (or non-compliant, or causing a material defect, pick your poison)?

Must not be a commercial item acquisition, if you are asking this.

If you don’t want to talk to the agency concerning 52.215-1 and your proposed  general approach, do you have a problem with submitting two complete and separate proposals?

 

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1 hour ago, lotus said:

Do you think the CLIN's 8A and 9A, being not in the solicitation, would survive evaluation or be tossed as non-responsive (or non-compliant, or causing a material defect, pick your poison)?

FAR part 12 solicitation that utilizes 52.212-1 not tailored - Maybe depending on the FAR part utilized for evaluation.  

FAR part 13 solicitation asking for quotes and specifically being evaluated under FAR part 13 ideals -  less risk of being tossed.

FAR part 14 solicitation - most likely would not survive.

FAR part 15 solicitation - LPTA most likely would not survive.  Trade-off less risk of being tossed but still a maybe of not surviving.

In all cases as a multiple offer, if allowed by the specific solicitation, it would most likely survive. 

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See below 

 

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43 minutes ago, C Culham said:

FAR part 12 solicitation that utilizes 52.212-1 not tailored - Maybe depending on the FAR part utilized for evaluation.  

FAR part 13 solicitation asking for quotes and specifically being evaluated under FAR part 13 ideals -  less risk of being tossed.

FAR part 14 solicitation - most likely would not survive.

FAR part 15 solicitation - LPTA most likely would not survive.  Trade-off less risk of being tossed but still a maybe of not surviving.

In all cases as a multiple offer, if allowed by the specific solicitation, it would most likely survive. 

Carl, I’m curious. What does 52.215-1(c)(4) actually mean? See below 

And if “any combination” of items isn’t allowed, wouldn’t the solicitation “otherwise specif[y]” that? 

“(C)(4)   Unless otherwise specified in the solicitation, the offeror may propose to provide any item or combination of items.”

it appears to me that lotus was proposing combinations of items. 

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2 hours ago, joel hoffman said:

Carl, I’m curious. What does 52.215-1(c)(4) actually mean? See below 

And if “any combination” of items isn’t allowed, wouldn’t the solicitation “otherwise specif[y]” that? 

“(C)(4)   Unless otherwise specified in the solicitation, the offeror may propose to provide any item or combination of items.”

it appears to me that lotus was proposing combinations of items. 

Joel...It goes back to my earlier post.  My view is that it is not a combination of items it is contingent pricing on the items.  I guess others could read it as you do.

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Carl, I thought that lotus proposed a price for each item as (probably) required by the solicitation Instructions.  

Then lotus is offering discounted pricing for a combination of optional line item 7 plus one or both of the next two optional line items. 

The offered prices seem clear to me.

I would say that “unless otherwise specified in the solicitation”, lotus may propose  to provide a price for a combination or combinations of items. This is assuming that provision 52.215-1 is in the solicitation. 

Of course we don’t know whether it is in the solicitation or if it is applicable.  lotus doesn’t appear to want to clarify that point or indicate one way or the other if he/she has a problem with directly asking the agency responsible for the solicitation whether the proposed discounts for combinations would be acceptable.

The idea was suggested and endorsed  to submit two offers  - one with no discounting and the other with the combination discounts. No feedback from lotus.

Instead lotus is asking for your specific opinion of acceptability  of the discounted combination of award of line item 7 with one or both of the other two optional line items in an on-line discussion forum. 

if It isn’t clear one way or the other then I think that it would be smart to go directly to those who will decide whether or not you can propose that way. 

The awarded contract price will be determined by  what if any options are exercised at award. 

The price will be adjusted If the government later awards one or more of the optional line items.

i think that its pretty straight forward. But I’m not the one awarding the contract. So either ask or submit two separate offers, if that is allowable.

 

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11 hours ago, joel hoffman said:

I thought that lotus proposed a price for each item as (probably) required by the solicitation Instructions.  

Joel - My effort to explain once more my view.  Take it as you may as I fully understand what you are trying to say about the wording with my view that we are talking pricing of items that Lotus wants to provide not whether Lotus will provide an item or a combination of items as Lotus has already said that he/she wants to provide all of the items (combination).    Or in other words the offeror (Lotus) has decided to provide (and price) not just any item but a combination of items.  Yet the offeror wants to also provide contingent pricing on some of the items that it has combined, contingent pricing that does not seem to be allowed for in the current CLINs as described.  By description of  Lotus the Schedule that includes the CLINs does not carry an "if" that circles back to CLIN #7 it only, by Lotus's post, says that CLINs#8/9 are options that the government wants and needs to be priced.   Lotus wants its pricing to be dependent (contingent) on whether the government takes the #7 option something by my read so far of the scenario that the government has not said it wants with regard to pricing or pricing that is allowed by the solicitation.  The government wants a price for each option in case by example they do not want to take option #7 but option #8. 

In effect for evaluation purposes with no other action by the government I suspect the government would either say hey we are going to only evaluate your pricing all at $130 or we are not going to evaluate at all because you have placed a contingency on your pricing.

Carry on as you will 52.215-1 is done in my view.

 

 

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Carl, a last thought. If provision 52.217-4 is in the contract, it may be simple enough to evaluate an offerors discounted prices, assuming that the government has enough funding to cover any or all of the options. 

Our organization’s policy (it may be in FAR or supplements) was to list the options by your priority preference, if funding is available. Accordingly, CLIN 7 should represent  the top priority. If there isn’t enough funds to award it, we would normally see what we could get with the funds available. I don’t know if that is the policy here. Simply speculating based upon my experience with evaluating options. 

 

52.217-4   Evaluation of Option Exercised at Time of Contract Award.

As prescribed in 17.208(b), insert a provision substantially the same as the following:

Evaluation of Options Exercised at Time of Contract Award (JUN 1988)

Except when it is determined in accordance with FAR 17.206(b) not to be in the Government's best interests, the Government will evaluate the total price for the basic requirement together with any option(s) exercised at the time of award.

(End of provision)

[53 FR 17860, May 18, 1988]

 

 

52.217-5   Evaluation of Options.

As prescribed in 17.208(c), insert a provision substantially the same as the following:

Evaluation of Options (JUL 1990)

Except when it is determined in accordance with FAR 17.206(b) not to be in the Government's best interests, the Government will evaluate offers for award purposes by adding the total price for all options to the total price for the basic requirement. Evaluation of options will not obligate the Government to exercise the option(s).

(End of provision

 

if 52.217-5 is in the solicitation, it becomes a bit trickier as the government might not know how much, if any more funding will be available to award later. In that scenario, it might not be possible to evaluate discounted pricing.

Of course, if 52.217-3 Evaluarion exclusive of options is included., then there is no evaluation of offered discounts.  

At any rate, I recommend asking the agency who owns the solicitation or submit separate proposals. We don’t know if they will or won’t allow the discounting. 

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2 hours ago, joel hoffman said:

enough funding to cover any or all of the options. 

Best quote I can use for my thought.   I am familiar with the noted 52.217 clauses.  I would not go to them for definitive reasoning on whether to accept the contingent pricing.  Why?  Because my understanding of the wording and use of clauses is to overcome (lack of better term on my part) the requirement for competition or not when awarding options not for the purposes of what is being discussed in this thread.

3 hours ago, joel hoffman said:

I recommend asking the agency who owns the solicitation or submit separate proposals

Agreed but I am a little leery about the first one.  Asking the agency could result in a non-answer and still leave the offeror wanting .  If there is a response that is yes, do it, my concern is that an idea that the offeror has for making their proposal in their eyes look more favorable may be offered to all offerors to do the same thing once the answer of yes go a head and do it is provided.

Submitting multiple responses is the best fit, as long as already noted, there is no prohibition in doing so.

PS - Throughout this thread I have avoided the conjecture of what is in the actual solicitation and attempted to deal in generalities because as noted -

On ‎9‎/‎29‎/‎2018 at 5:25 AM, C Culham said:

With the above said I am not as poster here or would not as the CO make a determination without adequate information regarding the type of solicitation, the terms and conditions of the solicitation as they relate to offer submission and exactly how the offer is presented. 

I think Lotus has enough to contemplate in moving forward.

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Assuming multiple proposals can be prepared (and it is reasonably likely given that only prices are changing),

The proposal offering 3 CLIN's at $130 each runs the risk of losing on price.

The proposal offering contingent discounts runs the risk of being tossed as non-responsive.

Even if asked, the Govt is unlikely to say in advance what it will do.  And if it did take a stance and publish it, it would expose a competitive idea that we'd prefer not be exposed.

But, look at the Evaluation of Options (JUL 1990 language Joel Hoffman brought up.  ... the Government will evaluate .... by adding to total price for all options. 

So if it is to evaluate the total price for all options, and there are conditional discounts as described, then it appears that Govt would evaluate the option prices using all of CLIN's as if they were exercised,  (e.g. prices of $130 + $100 +$100).  That is unless somebody cries "not in the Government's best interest."  Is it likely somebody would do that?  (It probably matters only if the discounts make the price lower than a competing price.)

Evaluation of Options (JUL 1990)

Except when it is determined in accordance with FAR 17.206(b) not to be in the Government's best interests, the Government will evaluate offers for award purposes by adding the total price for all options to the total price for the basic requirement. Evaluation of options will not obligate the Government to exercise the option(s).

(End of provision

 

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1 hour ago, lotus said:

So if it is to evaluate the total price for all options, and there are conditional discounts as described, then it appears that Govt would evaluate the option prices using all of CLIN's as if they were exercised,  (e.g. prices of $130 + $100 +$100).  That is unless somebody cries "not in the Government's best interest."  Is it likely somebody would do that?  (It probably matters only if the discounts make the price lower than a competing price.)

 

...and also may depend upon how much funding is available for awarding options.  If there is enough to award #7 and at least one other, then the discounted prices could be applicable and attractive/competitive. 

Good luck.   

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13 hours ago, joel hoffman said:

and also may depend upon how much funding is available for awarding options.  If there is enough to award #7 and at least one other, then the discounted prices could be applicable and attractive/competitive. 

Good luck.

Agreed with a little twist.   Funding availability changes.  The government might award an option at award but also might wait until the 11th hour of the option availability to exercise said option.  By experience there were many times where options were added to solicitation/contracts with the hope and I might even say knowledge that additional funding will come down the line at some later date.   That said I have also seen options used based on premise that the government knows it has the money but does not know it will want the option items.

13 hours ago, joel hoffman said:

Is it likely somebody would do that? 

Anything is likely but using the scenario as offered I do not see it being likely in this particular situation.

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On 10/2/2018 at 4:18 PM, lotus said:

Even if asked, the Govt is unlikely to say in advance what it will do.  And if it did take a stance and publish it, it would expose a competitive idea that we'd prefer not be exposed.

We don’t know but I am assuming that the solicitation has been issued and that Provision 52.215-1 is included. 

If you are asking whether alternative proposals are allowed and/or if proposers can propose on any combination of items, specifically using your bidding strategy, you may request that it not be disclosed because it would reveal your confidential business strategy. Cite FAR 15.201 “Exchanges with industry before receipt of proposals”, paragraph (f) and quote or highlight the prohibition against revealing your confidential strategy:

“(f) ...After release of the solicitation, the contracting officer must be the focal point of any exchange with potential offerors. When specific information about a proposed acquisition that would be necessary for the preparation of proposals is disclosed to one or more potential offerors, that information must be made available to the public as soon as practicable, but no later than the next general release of information, in order to avoid creating an unfair competitive advantage. Information provided to a potential offeror in response to its request must not be disclosed if doing so would reveal the potential offeror's confidential business strategy, and is protected under  3.104 or subpart 24.2. When conducting a presolicitation or preproposal conference, materials distributed at the conference should be made available to all potential offerors, upon request.”

You may feel them out first by advising that you have a competitive idea, that you want to know if it will be acceptable under Provision 52.215-1 (c) (4)  and that you want to know if they will will keep it confidential and not publish it. 

If the solicitation hasn’t been issued, I believe that you may ask for a one on one meeting with the KO under 15.201 (c) (4).  I’ve been involved with such meetings with potential offerors several times. The potential proposer’s strategy was kept confidential. The ground rules were agreed upon at the outset. 

Of course, not all contracting shops are knowledgeable or willing to engage in anything out of the simple or ordinary solicitation procedures or their comfort zone. 

There is also a possibility if you describe your specific strategy that you might alert the government that the way the options are presented,  proposers might have to duplicate fixed expenses in all the optional Clins if only one option can be awarded and if it isn’t the first option listed. They might want to fix that by clarifying the priority of the options,  by informing proposers where to include the fixed expenses, or by allowing discounts for multiple awards of options.  

In that event, you’d lose your bidding advantage but wouldn’t have to duplicate those expenses...

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