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Showing all cost details in FFP bids

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I have an existing IDIQ contract with a Government Customer. The Government Customer issues RFQs FFP, if approved a Delivery Order is added under the existing vehicle. The point of contention is the level of detail required to deem a FFP quote ?acceptable? ? the customer will not consider the quote without showing a WBS, estimated Labor (each person and hours), Travel estimates, G&A etc.

Of course I can simply not bid on the work, but obviously we want the work. The problem is trying to make profit when I?m required to show the same level of detail I would in a Cost Plus environment.

Do I have any leverage to push back? I?m sure I?m missing something in describing the issue, but any help is appreciated.

Can the Government require this level of detail in a FFP bid?

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Delivery orders are associated with supply contracts. Is this a supply, service , construction or other type contract?

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I have an existing IDIQ contract with a Government Customer. The Government Customer issues RFQs FFP, if approved a Delivery Order is added under the existing vehicle. The point of contention is the level of detail required to deem a FFP quote “acceptable” – the customer will not consider the quote without showing a WBS, estimated Labor (each person and hours), Travel estimates, G&A etc.

Of course I can simply not bid on the work, but obviously we want the work. The problem is trying to make profit when I’m required to show the same level of detail I would in a Cost Plus environment.

Do I have any leverage to push back? I’m sure I’m missing something in describing the issue, but any help is appreciated.

Can the Government require this level of detail in a FFP bid?

As a practical matter, you have very little leverage, if any. There is little that you can do except try to persuade the government that it does not need the information it is asking for to determine price reasonableness. FAR 15.402(a) and 15.403-3(a)(1) discourage contracting officers from asking for more information than they need, but it is up to each of them to decide how much information they need. It makes no difference that you are submitting a fixed-price quote. I doubt that you will achieve much to your advantage by going to the CO's boss.

If you can't stand the government's demands you can refuse to submit a quote, assuming that you can do so under the terms of the contract.

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The problem is trying to make profit when I?m required to show the same level of detail I would in a Cost Plus environment.

FFP implies a greater risk than cost reimbursable. I would build up the price estimate recognizing the contigencies I face and risks. Your level of effort naturally will be higher. If you can do it for less, your profit is higher.

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Thanks for the replies guys as it unfortunately echoes what I've assumed. Anything short of a Law that says I can't provide a certain level of detail will make me pushing back look like we're just trying to hide more profit.

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Thanks for the replies guys as it unfortunately echoes what I've assumed. Anything short of a Law that says I can't provide a certain level of detail will make me pushing back look like we're just trying to hide more profit.

Formerfed, if your pricing reflects greater risk, then I suggest identifying how those risks are considered in the proposal breakdown. My savvy contractors don't call it "contingency" or simply jack up the profit percentage. They include risk factors and often do Monte Carlo analyses which consider probabilities of single or mutiple problems or events occurring. To me there is a difference between simply adding a contingency factor and considering risk probabilities and taking them into account.

This might be more difficult for some service type contracts. Depends upon the specific project and location.

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duplicate post.

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Formerfed, if your pricing reflects greater risk, then I suggest identifying how those risks are considered in the proposal breakdown. My savvy contractors don't call it "contingency" or simply jack up the profit percentage. They include risk factors and often do Monte Carlo analyses which consider probabilities of single or mutiple problems or events occurring. To me there is a difference between simply adding a contingency factor and considering risk probabilities and taking them into account.

This might be more difficult for some service type contracts. Depends upon the specific project and location.

What savvy contractors do you work with that "often" do Monte Carlo analyses? What kinds of projects are they doing?

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What savvy contractors do you work with that "often" do Monte Carlo analyses? What kinds of projects are they doing?

Several large and/or complex service, R&D and construction projects with Bechtel, Parsons, Fluor, Washington Group (URS), etc. These firms live with DCAA auditors, CAS coverage, etc. Some were ID/IQ contracts with all three types of work.

EDITED April 2015: We used the Army's "Alpha Contracting" method in the development and negotiation of some of the SATOC task order proposals for the Chemical Demilitarization Projects at Bluegrass Kentucky and Pueblo, CO. Thus, there was wide disclosure of the pricing methodology.used to develop the proposals, including the risk factors and their reasonableness.

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Formerfed, if your pricing reflects greater risk, then I suggest identifying how those risks are considered in the proposal breakdown. My savvy contractors don't call it "contingency" or simply jack up the profit percentage. They include risk factors and often do Monte Carlo analyses which consider probabilities of single or mutiple problems or events occurring. To me there is a difference between simply adding a contingency factor and considering risk probabilities and taking them into account.

This might be more difficult for some service type contracts. Depends upon the specific project and location.

I would not discuss risk analysis or disclose pricing contingencies in a cost proposal unless asked to do so.

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I would not discuss risk analysis or disclose pricing contingencies in a cost proposal unless asked to do so.

There's another point of view that says all risk analyses and/or contingency analyses must be disclosed if the pricing action is subject to TINA. I don't agree with that point of view. But I can tell you that the Department of Justice does. I believe SAIC paid at least $2.5 million to settle the False Claims suit.

Here's one link to the story.

http://legacy.signonsandiego.com/uniontrib...s_1b11saic.html

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There's another point of view that says all risk analyses and/or contingency analyses must be disclosed if the pricing action is subject to TINA. I don't agree with that point of view. But I can tell you that the Department of Justice does. I believe SAIC paid at least $2.5 million to settle the False Claims suit.

Here's one link to the story.

http://legacy.signonsandiego.com/uniontrib...s_1b11saic.html

If TINA applies, the only safe course of action for an offeror is to disclose everything. Absolutely everything. The decisional law on the definition of cost or pricing data is extremely complex, so much so that an offeror simply cannot rely on its own interpretation of the definition in FAR 2.101. A "common sense" or "plain language" approach to the definition is unreliable. See Morrison and Bodenheimer, Defective Pricing (Federal Publications, Inc., 2007). A better coping tactic is to overwhelm an agency with information. Give them every scrap of information you can get your hands on that is even remotely related to pricing. While the agency is going through the data, update it as soon as new data become available. Ninety-nine times out of 100 an agency will not know what to do with all the information and will not be able to make heads or tails out of it. Set any price you want, but disclose everything. When in doubt--disclose.

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There's another point of view that says all risk analyses and/or contingency analyses must be disclosed if the pricing action is subject to TINA. I don't agree with that point of view. But I can tell you that the Department of Justice does. I believe SAIC paid at least $2.5 million to settle the False Claims suit.

The instructions in FAR Table 15-2 state the following:

C. As part of the specific information required, you must submit, with your proposal, cost or pricing data (that is, data that are verifiable and factual and otherwise as defined at FAR 2.101). You must clearly identify on your cover sheet that cost or pricing data are included as part of the proposal. In addition, you must submit with your proposal any information reasonably required to explain your estimating process, including?

(1) The judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data; and

(2) The nature and amount of any contingencies included in the proposed price.

Given that instruction, why would a contractor disclose some risk analyses and/or contingency analyses, but not others?

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The instruction says to disclose contingencies, which I interpret to mean monetary amounts. The "nature" of a contingency might include things like scrap and waste. Risk is not a contingency. Risk is a measure of harm that would result from the occurrence of an event with a known probability distribution. In most cases the probability distribution and projection of harm will have been determined subjectively, making it a judgement, not a fact. A contingency is an amount used to cover a risk, in whole or in part. Telling offerors to disclose "judgmental factors" and contingencies is not the same as telling them to disclose the underlying risk analysis. Risk is a judgment factor, but the measure of risk is, in and of itself, a judgment, which is not covered by TINA.

However, as I said, the definition of cost or pricing data is so complex that, in my opinion, it is very risky to withhold information on the ground that it is judgmental, not factual. One simply never knows what a court or board might decide, and as Morrison and Bodenheimer have pointed out:

[T]he term “cost or pricing data” has been broadly construed. It has included not only a contractor's historical costs, but also in some instances:

- judgments,

- projections, and/or

- estimates

either as facts in and of themselves and/or with respect to their factual content.

If TINA (FAR 15.403-4) applies--my advice is to disclose everything, whether or not you think it's cost or pricing data.

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...If TINA (FAR 15.403-4) applies--my advice is to disclose everything, whether or not you think it's cost or pricing data.

I would like to add that it appeared to me from the scenario that this is a competitive acquisition. Far Fetched mentioned "bid". Thus, I presumed that a TINA exception would apply. But - I don't know for sure.

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