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Doke Testimony

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Did anyone else read the STATEMENT OF MARSHALL J. DOKE, JR. (PARTNER, GARDERE WYNNE SEWELL LLP DALLAS, TEXAS) BEFORE THE SUBCOMMITTEE ON CONTRACTING OVERSIGHT COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS, UNITED STATES SENATE, FEBRUARY 25, 2010?

There's a link to his testimony under the "News" header on the top right of the WIFCON homepage that you can use if the following link doesn't work:

http://hsgac.senate.gov/public/index.cfm?F...33-adffe3ccfa18

Mr. Doke is clearly a respected member of the procurement and legal community. However, with all due respect to Mr. Doke, I offer the following commentary of his testimony:

In his testimony, Mr. Doke placed significant emphasis on the ?minimum needs? doctrine. Mr. Doke?s testimony seemed to indicate that best-value source selections and trade-offs are completely inconsistent with the ?minimum needs? doctrine, and therefore such practices should be curtailed or abandoned entirely. His testimony included such remarks as:

?When a contract is awarded to a competitor whose price is higher than the price offered in an otherwise acceptable proposal, the difference between the lowest price and the contract award price is the price premium being paid for the other, non-price, evaluation factors. In other words, the price premium reflects how much more the Government is paying for evaluation factors such as additional years of experience, better reputation, more intrinsic value, etc. That price premium must be documented in the contract file, but there is no requirement, anywhere, that these price premiums be reported above the contracting officer level.?

He then goes on to say:

"Why should the Government pay a price premium for a contractor to perform more than satisfactorily? If the Government needs performance that is more than satisfactory, that must be because the Government has not properly defined what ?satisfactory? means in the specifications or statement of work."

He then concludes with this recommendation:

?I respectfully submit to this Subcommittee that no more important service to government contracting could be provided, right now, than merely IMPOSING A STATUTORY REQUIREMENT THAT PRICE PREMIUMS PAID FOR EVERY CONTRACT BE REPORTED ?UP-THE-CHAIN? TO THE DEPARTMENT LEVEL and aggregated at each level.?

Mr. Doke seems to be suggesting that ?Lowest Price Technically Acceptable? is the only type of procurement that we in the government ought to pursue (IAW the ?minimum needs? doctrine) unless we want to report our contract awards to our department heads so they can report to Congress.

So, let?s walk through a very simple scenario. Let?s say we have a requirement for widgets, and we in the government want to make sure we get reasonably reliable widgets. So we decide the reliability requirement is a Mean Time Between Failure of One Year. That is, we need them to work, on average, a year (minimum) before they fail. Mr. Doke appears to be suggesting?in all cases, best I can tell?that, given that we have documented the need for an MTBF of one year, we should procure the least expensive widgets that have an MTBF of at least one year, even if we can get widgets with an MTBF of two years for an additional $1.79 (the ?price premium?). To be fair, really what he?s saying is we can pay the extra ?price premium? for the superior product, but then we are required to report this through the chain so our Department Head can report it to Congress. To which I say, what good could possibly come of this? My guess is we?d probably need several DVDs for this list of contracts, and that?s just for DoD. So we capture all of this info (using already scarce resources) to meet this reporting requirement and then?POOF?it becomes official that there are, in fact, ?a bunch? of such contracts. Then what? A ?Lowest Price Technically Acceptable? mandate? I seriously doubt it. So what, then, do we hope to accomplish?

So, I?ve decided I?m filing the transcript of Mr. Doke?s testimony under ?Let?s make another rule to lessen the need for sound judgment, and see how that works.?

Does anyone feel the same as I do? Does anyone disagree? I have to be honest, I?m a bit miffed that Mr. Doke was invited to testify on this topic. What kind of procurement professional would ask rhetorically: ?Why should the Government pay a price premium for a contractor to perform more than satisfactorily?? Furthermore, the fact that someone of significant standing in the community honestly believes that ?no more important service to government contracting could be provided, right now? is completely demoralizing to me.

The good news is that there were three other panel members, and each of them offered cogent testimony. I personally found the testimony of Mr. Ralph C. Nash and Mr. Joshua I. Schwartz to be remarkably astute (and ?talk-about-it-over-beers? accurate), and I found the testimony of Mr. Steven L. Schooner to be a solid summary of some major issues (albeit slightly less hard-hitting than the testimony of Mr. Nash or Mr. Schwartz). So, if you only have time to read two of these transcripts, read Mr. Doke?s testimony, get angry, and then read Mr. Nash?s testimony.

Then tell the rest of us what you think.

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Mr. Doke wrote at greater length on the subject of his testimony in a July 17, 1995 special supplement to Federal Contracts Report. See Competition in Public Contracting: The Myth of Full and Open Competition . His article prompted much comment at that time. You can find it at:

https://www.acquisition.gov/comp/aap/docume...Competition.pdf.

When I read Mr. Doke?s longer article at the time of its publication, I pooh-poohed it. I no longer do. ?Best value? source selection -- the tradeoff process approach discussed at FAR 15.101-1 -- has become a major problem in government contracting and its use should be curtailed. It too often needlessly results in the payment of higher prices, costs, and fees and makes the contract formation process slower and more costly than it needs to be. I have practiced, studied, taught, and written about source selection for more than 30 years. I believe that most government acquisition personnel⎯COs and others⎯are not qualified by knowledge and skill to conduct ?best value? source selections effectively and efficiently in the taxpayer?s best interests.

PM63A4 asks what good could come of the Mr. Doke?s recommendation that Congress require decisions to pay a price premium to higher levels of agency management. He asks what we could we hope to accomplish.

Mr. Doke raises a serious issue: Why should the Government pay for more than satisfactory? Referring to PM63A4?s scenario, if we need a widget that will work for one year, why should a country that is deeply in debt and unable to maintain and repair its own infrastructure without borrowing money from China pay a premium in order to buy an additional year that it says it does not need? Think about it: In many if not most cases, in the most expensive service procurements, we do not get substantive and verifiable premium value when we decide to pay a higher price. No. What we get is crafty proposals -- essays and sales pitches -- and jabbering about risk by people who can't define it, explain how it's measured, or explain the difference between risk and uncertainty. Mr. Doke's "professional wrestling" analogy is apt. There is a place for "best value," but it is being used much too often and with too little to show for it.

As for Professor Professor Nash?s testimony, I see nothing in it that contradicts Mr. Doke.

As for Professor Josh Schwartz?s testimony, read it carefully. He said:

[T]he deregulatory procurement reformers of the 1990s correctly emphasized that excessively tight regulation had hamstrung capable and devoted procurement and program managers in their efforts to secure good value for the government and federal taxpayers.

And then he said:

y the middle of the last decade, the single greatest problem facing the federal government acquisition system was the mismatch between the human resources needed to effectively use the acquisition tools that had been made available, and the actual size, experience level, and expertise of the existing acquisition workforce. This mismatch is an ironic fact, given that the deregulatory reformers of the 1990s had emphasized the need for empowerment of this very workforce.

In short, we've handed .44 magnums to people who are not skilled in the use of a revolver and asked them to put six rounds in the bullseye at 25 yards. Most of them can't hit the target, much less the bullseye. We shouldn't be surprised that they cannot handle a big tool like "best value" effectively.

Our country is broke and people are out of work, yet we give an overwhelmingly under-qualified group of people the discretion to pay premium prices for what is often intangible and unverifiable ?value.? At present, source selection decisions must meet only a legal standard of judgment, which is not as demanding as a business standard. I doubt if one-hundred out of one-thousand decisions to pay a price premium would meet the value standard of a prudent businessperson. I, too, think that there are too many reporting requirements, but I think that the one recommended by Mr. Doke would be a good one. It might force agency managers to think twice about their decisions.

I would go Mr. Doke one better. Not only would I require reporting of decisions to pay a price premium, I would require that every decision memorandum describe what, exactly, the government will receive for the margin of price difference that it will pay, and explain why that premium is worth it. Any decision to pay a premium for something intangible, like ?lower risk,? or ?better experience? or ?better past performance? would have to be approved in writing by an official at a management level above the SSA and bear that official's signature. I would go even further. I would also require a D&F to support the use of anything other than LPTA (see FAR 15.101-2) in any acquisition valued in excess of the simplified acquisition threshold as defined in FAR 2.101. That D&F requirement would include procurements conducted under FAR Subpart 13.5. Finally, I would provide by statute that only specially-trained and specially-appointed acquisition personnel be permitted to conduct ?best value?-style procurements valued in excess of $5 million.

I fully understand the reaction that this post will provoke among many if not most 1102s. I anticipate all of the objections based on workload and ?professional? standing. But I know the acquisition workforce well. It is a workforce that does not know its own rules, is incapable of conducting its operations efficiently, lacks essential skills, and is not effectively training its new hires. The time has come either to improve the quality of that workforce and its management or limit their discretion to obligate us financially and deepen our indebtedness. Read Mr. Doke?s testimony and his article. But don?t get angry. Think, instead.

PM63A4: Mr. Doke is, indeed, a highly distinguished and respected member of the acquisition community. So it is ridiculous for you to be ?miffed? that he was invited to testify. Why should you be miffed? Because you disagree with him? Mr. Doke has forgotten more procurement than most of us will ever know. His remarks should prompt deep thinking about ideas taken all too much for granted.

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Mr. Doke wrote at greater length on the subject of his testimony in a July 17, 1995 special supplement to Federal Contracts Report. See Competition in Public Contracting: The Myth of Full and Open Competition . His article prompted much comment at that time. You can find it at:

https://www.acquisition.gov/comp/aap/docume...Competition.pdf.

When I read Mr. Doke?s longer article at the time of its publication, I pooh-poohed it. I no longer do. ?Best value? source selection -- the tradeoff process approach discussed at FAR 15.101-1 -- has become a major problem in government contracting and its use should be curtailed. It too often needlessly results in the payment of higher prices, costs, and fees and makes the contract formation process slower and more costly than it needs to be. I have practiced, studied, taught, and written about source selection for more than 30 years. I believe that most government acquisition personnel⎯COs and others⎯are not qualified by knowledge and skill to conduct ?best value? source selections effectively and efficiently in the taxpayer?s best interests.

PM63A4 asks what good could come of the Mr. Doke?s recommendation that Congress require decisions to pay a price premium to higher levels of agency management. He asks what we could we hope to accomplish.

Mr. Doke raises a serious issue: Why should the Government pay for more than satisfactory? Referring to PM63A4?s scenario, if we need a widget that will work for one year, why should a country that is deeply in debt and unable to maintain and repair its own infrastructure without borrowing money from China pay a premium in order to buy an additional year that it says it does not need? Think about it: In many if not most cases, in the most expensive service procurements, we do not get substantive and verifiable premium value when we decide to pay a higher price. No. What we get is crafty proposals -- essays and sales pitches -- and jabbering about risk by people who can't define it, explain how it's measured, or explain the difference between risk and uncertainty. Mr. Doke's "professional wrestling" analogy is apt. There is a place for "best value," but it is being used much too often and with too little to show for it.

As for Professor Professor Nash?s testimony, I see nothing in it that contradicts Mr. Doke.

As for Professor Josh Schwartz?s testimony, read it carefully. He said:

And then he said:

In short, we've handed .44 magnums to people who are not skilled in the use of a revolver and asked them to put six rounds in the bullseye at 25 yards. Most of them can't hit the target, much less the bullseye. We shouldn't be surprised that they cannot handle a big tool like "best value" effectively.

Our country is broke and people are out of work, yet we give an overwhelmingly under-qualified group of people the discretion to pay premium prices for what is often intangible and unverifiable ?value.? At present, source selection decisions must meet only a legal standard of judgment, which is not as demanding as a business standard. I doubt if one-hundred out of one-thousand decisions to pay a price premium would meet the value standard of a prudent businessperson. I, too, think that there are too many reporting requirements, but I think that the one recommended by Mr. Doke would be a good one. It might force agency managers to think twice about their decisions.

I would go Mr. Doke one better. Not only would I require reporting of decisions to pay a price premium, I would require that every decision memorandum describe what, exactly, the government will receive for the margin of price difference that it will pay, and explain why that premium is worth it. Any decision to pay a premium for something intangible, like ?lower risk,? or ?better experience? or ?better past performance? would have to be approved in writing by an official at a management level above the SSA and bear that official's signature. I would go even further. I would also require a D&F to support the use of anything other than LPTA (see FAR 15.101-2) in any acquisition valued in excess of the simplified acquisition threshold as defined in FAR 2.101. That D&F requirement would include procurements conducted under FAR Subpart 13.5. Finally, I would provide by statute that only specially-trained and specially-appointed acquisition personnel be permitted to conduct ?best value?-style procurements valued in excess of $5 million.

I fully understand the reaction that this post will provoke among many if not most 1102s. I anticipate all of the objections based on workload and ?professional? standing. But I know the acquisition workforce well. It is a workforce that does not know its own rules, is incapable of conducting its operations efficiently, lacks essential skills, and is not effectively training its new hires. The time has come either to improve the quality of that workforce and its management or limit their discretion to obligate us financially and deepen our indebtedness. Read Mr. Doke?s testimony and his article. But don?t get angry. Think, instead.

PM63A4: Mr. Doke is, indeed, a highly distinguished and respected member of the acquisition community. So it is ridiculous for you to be ?miffed? that he was invited to testify. Why should you be miffed? Because you disagree with him? Mr. Doke has forgotten more procurement than most of us will ever know. His remarks should prompt deep thinking about ideas taken all too much for granted.

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I've got a couple reactions. First, I'm not so sure that establishing "satisfactory" or defining minimums will save the government money. Before "best value" was used only with major systems and R&D, the government defined requirements in terms of minimum needs. Often those minimum needs were "gold plated" to ensure not getting junk. Now programs not need to worry about that as much.

The second reaction is I agree that "best value" is used way to much. I saw a solicitation recently for help desk services. The evaluation factors included such things as technical approach, corporate experience, qualifications of key presonnel, and management plan. I would say that all they need to pick a source is price and past performance. I wouldn't leave out past performance because I think it's important to consider how well a source has performed.

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Vern-

I didn?t mean to offend anyone with my previous post. Perhaps I wrongly attacked the messenger (in lieu of attacking his message).

One of my analysis teachers used to encouraging us by saying ?Think. Write it down. Repeat as necessary.? I?ve always thought you two were cut from the same bolt of cloth, and I want you to know that I did think before I wrote my initial post. And (I think) I get it, and what you?re suggesting may be right--I may be missing some (or all) of the subtleties of Mr. Doke?s argument.

I won?t comment on your remark about our country?s unemployment problems and/or our ability to compete with emerging nations like China, but I feel like I owe you and other readers an explanation of what I was thinking when I made my initial post. My gut feel was that Mr. Doke?s ?Minimum Needs" testimony was an attempt to establish a legal foothold to legally mandate an end to (or at least a curtailing of) what I?ll call ?requirements creep.? Is that about right? If so, I would humbly submit that this isn?t the way to solve that problem (and again, that there are other problems that need to be solved first anyway).

So, perhaps I?m stubborn, but I still disagree with the fundamental premise that ?no more important service to government contracting could be provided, right now? than to implement a change to stricter adherence to the Minimum Needs Doctrine.

What?s more important, you ask? The establishment, administering, and use of contracts with overlapping (or perhaps even, for all intents and purposes, identical) scope, for one. This, as you know, was one of the main points Mr. Nash and Mr. Schwartz highlighted in their testimony. As I alluded to in my earlier post, I believe this spawns much larger problems within federal procurement circles. So right or wrong, I would have rather had this subcommittee hear about this problem three times (i.e., once from Mr. Nash, once from Mr. Schwartz, and once from Mr. Doke, instead of hearing about it only twice, along with a problem associated with Minimum Needs). Just my opinion. Fair enough?

And yes, I'll read the article you included as a link in your post, probably later this week. I assume this is the work Mr. Doke mentioned in his testimony (or at least is representative of it), yes? And I?ll grant you that I should have at least scanned this article or one similar before posting. That being said, I don?t know that reading it will change my mind.

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My gut feel was that Mr. Doke?s ?Minimum Needs" testimony was an attempt to establish a legal foothold to legally mandate an end to (or at least a curtailing of) what I?ll call ?requirements creep.? Is that about right?

No. I don't think Marshall Doke was talking about requirements creep. I think he was talking about a system in which uinderqualified people are making decisions to pay more than necessary for the government to get its job done.

I still disagree with the fundamental premise that ?no more important service to government contracting could be provided, right now? than to implement a change to stricter adherence to the Minimum Needs Doctrine.

I don't agree with Marshall that a return to the minimum needs doctrine is the most important service to government contracting that could be provided right now.

What?s more important, you ask? The establishment, administering, and use of contracts with overlapping (or perhaps even, for all intents and purposes, identical) scope, for one. This, as you know, was one of the main points Mr. Nash and Mr. Schwartz highlighted in their testimony. As I alluded to in my earlier post, I believe this spawns much larger problems within federal procurement circles.

I don't agree with you, either. The proliferation and misuse of interagency contracts is a symptom of a larger problem--incompetence.

The most important service to be provided to government contracting right now is the proper training and development of the new generation of contracting practitioners. We need first rate practitioners, who will know when to use LPTA and when and how to use "best value" effectively and efficiently. I don't believe that Congress can fix what is wrong with government contracting by enacting more procedural legislation. You can't make incompetent people competent by writing more rules. What we need more than anything else is strong, uncompromising leadership within the executive branch.

Think about it this way: Last fiscal year contracting personnel obligated about $530 billion. If they could have reduced that amount by only 10 percent they would have saved us $53 billion. I wonder just what we got for the premium prices we paid through all that "best value."

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Thanks Vern. As always, I appreciate your thoughts.

Max Planck (1858-1947) once said ?A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it. In a sense, you teach that new generation the truth from the beginning.?

Unfortunately, I think what you say below about training our next generation of PCOs and buyers follows along the same train of thought. The problem with this, as I see it, is that this takes time and does not pay immediate dividends (i.e., workers must first be trained and get experience before they can become more efficient/productive). The training/expertise problem is compounded by the fact that a significant portion of government contracting expertise has disappeared in the last few years, largely due to retirements.

So, at the risk of sounding myopic, what, if anything, do you think we can do in the near-term while we wait for training to pay dividends? Is it worth trying to address one or more symptoms while we wait for the cure to take hold?

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I don't necessarily agree that the trade-off process doesn't provide a real benefit to the government that would justify the additional expense, at least in construction and design-build construction when higher quality systems, materials and finishes can be shown to have a lower life cycle cost and better contractors often will complete the project faster and with lower incidences of requests for equitable adjustments and less claims than during the IFB years. Those are real savings in collateral costs to the taxpayers.

Stressing best quality within the budget over stressing price on the Army MILCON program last year produced a significant overall increase in award of full scope within the budget compared with Legacy methods. We had the best record in years for scope and price, which effectively reduced costs by almost 16% overall.

However, I fully agree that many Contracting, Program and Technical personnel have little understanding of the complexities of the trade-off process. Since the leadership doesn't know much if any more than newbies, it will continue to present a great challenge to effectively "train the next generation" in the nuances of the trade-off process.

I also agree with Vern that the country is broke and we can't afford to purchase goods and services at Cadillac prices.

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Joel and PM63A4:

I don't necessarily agree that the trade-off process doesn't provide a real benefit to the government that would justify the additional expense, at least in construction and design-build construction when higher quality systems, materials and finishes can be shown to have a lower life cycle cost and better contractors often will complete the project faster and with lower incidences of requests for equitable adjustments and less claims than during the IFB years. Those are real savings in collateral costs to the taxpayers.

Let me address Joel's remarks first. I did not say that the tradeoff process cannot result in better value for the government. In the right hands, used for the right kinds of procurements, I believe that it can. Better construction materials and finishes are tangible things, which makes it relatively easy to determine if verifiably better product attributes are worth premium prices. I also agree that better construction contractors are worth more money, and the nature of the construction market and business makes it relatively easy to verify superior contractor capability.

Unfortunately, construction is a very small part of annual contract obligations. Much bigger is the amount spent on various "support" services, for which there are few if any verifiable tangible benefits to be found in "technical" proposals. It is very hard at the time of source selection to verify that received value will be worth premium prices.

Stressing best quality within the budget over stressing price on the Army MILCON program last year produced a significant overall increase in award of full scope within the budget compared with Legacy methods. We had the best record in years for scope and price, which effectively reduced costs by almost 16% overall.

I'll take your word about the success that you claim. But how do you know that you could not have had the same success using lowest-price technically-acceptable? I presume that you believe that you could not have, but how do you know? LPTA is not sealed bidding.

Now, PM63A4, your question:

[W]hat, if anything, do you think we can do in the near-term while we wait for training to pay dividends? Is it worth trying to address one or more symptoms while we wait for the cure to take hold?

All "we" can do is set the highest possible standards for ourselves and our colleagues and then strive to meet those standards and help our colleagues to meet them. Each and every one of you who works in a contracting office must do better and then keep raising the bar. "We" must be honest with ourselves and with each other about the level of our knowledge and skill and the state of our "profession", and then work to improve ourselves. "We" cannot expect much from trainees if we do not expect much from ourselves. "We" must make a commitment to ourselves and each other that if we ever become managers we will be better than the ones who now run the system. Some of us will do that. Most of us won't.

As for the current leadership: I don't expect much if anything. I don't believe speeches and announcements. I believe action and results. We have a new OFPP administrator. We'll see.

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I'll take your word about the success that you claim. But how do you know that you could not have had the same success using lowest-price technically-acceptable? I presume that you believe that you could not have, but how do you know? LPTA is not sealed bidding.

Vern, we could probably have saved money using LPTA. However, I think we would have accomplished it at the expense of the aforementioned higher than "minimum acceptable" material and systems quality, faster completion times and quality of contractors. We didn't have the resources that would have been necessary to develop the designs for each project to the extent necessary to fully prescribe high quality within the budget and we would not have been able to.have the benefit of industry being able to provide appropriate design solutions to fit local market conditions within the budget.

Programmatically, we stressed performance specifications, time and quality and allowed the proposers as much flexibility as we felt we could to meet or exceed the requirements within the budget. We would give the budget with price as the least important factor- as long as prices were within budget and competition tended to reign in prices.

Our legacy processes typically resulted in less than 100% scope at full budget. Programmatically, we were awarding somewhere around 85% on average of scope at 100% budget, which correspnds to exceedimg the budgeted cost per square foot by about 16% while obtaining less than full scope.

By awarding most projects for full scope within the budget, we saved close to 16% on on average per project on a program that was somewhere around 5-6 times larger than it was prior to the initiative

I can't prove that the state of the construction economy didn't also play a major role in meeting our goals (standardized design criteria and facility operational and functional requirements, 30% shorter acquisition cycle to turnover, 15% cost reduction, acheive full scope within budget, maintain or improve "quality", increase sustainability and environmental protection, use industry standards and performance requirements wherever possible instead of prescribing one design solution, etc.). I think that both the economy and the programmatic acquisition approach with a lot of dedication from hard-working project delivery teams accomplished essentially all those goals.

Could we have done the same thing in this economy with prescribed solutions, LPTA and other legacy processes? We had not been able to do it as well for many years before on a program about one sixth this size so I don't know.

I agree with your argument concerning the probable dubious value achieved using the tradeoff method for many typical service contracts. The pumped up proposals don't appear to be contractually binding anyway.

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Joel:

Vern, we could probably have saved money using LPTA. However, I think we would have accomplished it at the expense of the aforementioned higher than "minimum acceptable" material and systems quality, faster completion times and quality of contractors.

LPTA does not require that the Government accept what is "minimum acceptable." It requires that the Government accept what is specified acceptable and that it pay no more in order to buy more than that. The Government gets to specify the quality that it wants, whatever that is. Nothing in FAR says that the Government may specify only its minimum requirements. FAR 11.002, which states the policy for specifying requirements, says only that the Government must(1) specify its needs in a manner that will promote full and open competition and not include needless restrictions; (2) state its requirements in terms of functions, performance, and/or essential physical characteristics; and (3) specify requirements in a way that will promote the use of commercial items.

The issue before us in not what the Government may specify. The issue is: Once having specified its requirements, why should the Government pay a premium in order to buy something that exceeds its requirements. That's a good question, and any CO who decides to pay a premium ought to be able to say why he or she did it and what the Government will get for the money.

We didn't have the resources that would have been necessary to develop the designs for each project to the extent necessary to fully prescribe high quality within the budget and we would not have been able to.have the benefit of industry being able to provide appropriate design solutions to fit local market conditions within the budget.

Were these design-build procurements? If so, the "best value" probably made sense.

Programmatically, we stressed performance specifications, time and quality and allowed the proposers as much flexibility as we felt we could to meet or exceed the requirements within the budget. We would give the budget with price as the least important factor- as long as prices were within budget and competition tended to reign in prices.

Here is where you get yourself in trouble. Pretend I'm a cost-conscious senator. Why did you want something that would "exceed"s your requirements? Do you think it's okay to buy more than you need just because you have enough money? You don't believe in saving money? Would you be willing to say that before a congressional panel? I'm happy to buy more than I need with other people's money. What did you mean by what you said?

Our legacy processes typically resulted in less than 100% scope at full budget.

"Legacy processes" is nice bureaucratic jargon. what the heck processes are you talking about?

Programmatically, we were awarding somewhere around 85% on average of scope at 100% budget, which correspnds to exceedimg the budgeted cost per square foot by about 16% while obtaining less than full scope.

Are you saying that when using sealed bidding or LPTA you were able to buy only 85 percent of what you wanted for the money you had? Are you asserting that best value enabled you to buy 100 percent of what you wanted and more (stuff that exceeded the requirement) for the money you had, even though price was the least important evaluation factor and you didn't always award to the lowest-priced offeror? If that is what you are saying, then you have a credibility problem. You're going to have to explain that.

By awarding most projects for full scope within the budget, we saved close to 16% on on average per project on a program that was somewhere around 5-6 times larger than it was prior to the initiative.

I don't understand what that means. Please explain. What do you mean by "saved" and "5-6 times larger"? Saved from what? Larger than what?

I can't prove that the state of the construction economy didn't also play a major role in meeting our goals (standardized design criteria and facility operational and functional requirements, 30% shorter acquisition cycle to turnover, 15% cost reduction, acheive full scope within budget, maintain or improve "quality", increase sustainability and environmental protection, use industry standards and performance requirements wherever possible instead of prescribing one design solution, etc.). I think that both the economy and the programmatic acquisition approach with a lot of dedication from hard-working project delivery teams accomplished essentially all those goals. Could we have done the same thing in this economy with prescribed solutions, LPTA and other legacy processes? We had not been able to do it as well for many years before on a program about one sixth this size so I don't know.

In other words, you can't prove that the "best value" approach to source selection was the cause of your success. Maybe you didn't do as well in the past because the construction industry was booming for about 20 years and your staff wasn't as good, not because you used LPTA.

If COs are going to use best value, make price the least important factor, and pay higher prices than we could otherwise get, they should be required to explain their decision to use the process and their decision to choose other than the lowest-price technically-acceptable offeror. That's all I ask. I could do it if I made such decisions, and I'm no genius, so others ought to be able to do it. I don't think it's too much to ask.

I'm not saying that "best value" was a bad choice in your case. I know you and know that you can do the job, and I know that you have sound judgment. Unfortunately, there are a lot of contracting officers who are not qualified to use the "best value" approach.

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To fully explain the MILCON Transformation program to you would take hours and a major article length narrative. We have several courses to explain the MT program and the design-build process and a web-site that contains the outline, Army goals and objectives.guidance, sample tools, policies, etc. I've been part of the team that developed our Programatic procdures and processes

Over the past 5 years to meet the Challenge.

How do we know that it works. The GAO is reviewing the program and results now to see how well it works.

The ARmy program last year was about $12 billion in comparison with traditional $2 billion with better results..Overall Corps programs were somewhere in the $22 billion range, not to quote - that is my recollection from the Chief's end of year report.

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In the 1995 article that Vern included in his previous post, Mr. Doke made the following recommendation:

?If Congress wants to reduce acquisition costs, attention should be directed toward improving competition.?

And

? Training should be provided for?those who define Government's needs in specifications?and for government technical personnel who evaluate proposals.?

Like you, Vern, I violently agree with this.

Mr. Doke then writes (consistent with his recent testimony):

?Congress should require all agencies to report each year all ?competitive? awards that were not-made to the offeror in the competitive range with the lowest price, and the amount of the difference.?

Mr. Doke doesn?t say what Congress should do with that information and/or what changes would ideally result from collecting this information, so I?ll conclude (after reading his article and his testimony and taking in Vern's hints) that he?s generally a proponent of 1) documenting exactly what we in the government need, and 2) using an LPTA approach to procure it. In essence, he?s trying to drive behavior away from ?best value? by adding reporting requirements for it, and anticipating that the average federal employee will respond by doing something other than "best value" (i.e., LPTA).

Now, I agree that we do needlessly ?complexify? things at times, and that ?best value? awards are sometimes accomplished when LPTA would suffice (and therefore be preferable). I also acknowledge that Mr. Doke?s recommendation would likely drive acquisition decisionmakers to an LPTA approach in these ?borderline? cases. But some things are truly complex, and in these cases, I would submit that ?best value? is often the preferred approach. Like it nor not, we in the government can?t be omniscient about every aspect of such procurements, so ?best value? clearly has utility in these cases. Requiring additional reporting for using this particular approach (and then getting other than what I?ll call ?the LPTA result?) seems arbitrary and not sensible. Furthermore, the reporting requirements levied on generally more complex, more costly programs that (correctly) use ?best value? will outstrip any value realized by driving (generally smaller) programs from ?best value? to an LPTA approach.

Bottom line: I still don?t see what major problem Mr. Doke?s recommendation would fix. The only benefit I see is it might drive the borderline ?Best-Value/LPTA? cases to be LPTA, which would save resources for these source selections and may result in a lower contract cost as well. If that?s what he is driving at, I would humbly submit that this is not a major problem in federal procurement (or at least it hasn?t been a major problem anywhere I?ve worked). Again, I acknowledge that it would pay dividends (if this is a major problem) by reducing the time/resources required for source selections and by guaranteeing that we in the government pay the lowest price for the goods we need. Unfortunately--and I probably shouldn?t say this--I wish this were a major problem. Quite frankly, I don?t know that this would make my ?Top 50.? There are much bigger problems and battles to fight.

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For what it?s worth, training personnel to do a better job documenting requirements might not fix any major problems either. Play along, and try this exercise:

1. Do all the research you want on cell phones and then write down the minimum requirements for your next cell phone.

2. Wait a couple of months.

3. Go to the cell phone store and see if you would really buy the least expensive phone that meets those requirements. (You said you needed 8 hours of battery life, but bought a phone that just came out for an extra $10 because it has 20 hours of battery life, has a $50 rebate, and is waterproof, etc.).

Now imagine trying to do the same thing for something as complex as a missile defense system, aircraft, tank, etc.

My point is no matter how well we in the government do our research, we can, in some cases, be surprised by what we find available and at what prices. And all the training in the world won't change this.

Going back to "best value" above, I acknowledge that such training has utility in that it would help us recognize when to do a "best value" award. However, it won't eliminate the need for "best value" (again, in those circumstances when LPTA isn't appropriate). And if we in the government conclude that we MAY be procuring something under these circumstances, I say we OUGHT TO use ?best value.? In fact, any mandate to use LPTA exclusively would strike me as similar to a mandate to use FFP vehicles for everything we procure. In a sense, it?s a declaration that everything we buy is simple and easy to define.

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Play along? The thought exercise that you have laid out could be resolved by a smart 11th grader. You could write an LPTA spec that says that in order to be acceptable proposed cell phone battery life has to be equal to or greater than the longest available in the marketplace at the time of proposal submission.l Anybody so dumb as to not be able to solve that problem is too dumb to do best value.

Nobody would advocate buying the development of a missile system, aircraft, or tank through LPTA. But keep in mind that in every major development that has gone haywire the contractor was chosen by the best value method. The Secretary of Defense is now withholding payment to Lockheed on the F-35 program due to unsatisfactory progress. The F-22 was cancelled due to poor program performance. So I dare mention the A-12?

Nobody has said anything about eliminating best value. I would do no more than limit its use. As for training, it might teach people how to write smart specs for LPTA. I don't mind discussing this with you, but don't waste my time with arguments based on absurd high-school level scenarios. It's insulting.

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I think that there are many situations where the trade-off approach with price as most important factor would drive lower prices than LPTA. In situations where there are significant differences between products, a slightly cheaper but significantly less capable product wins in LPTA, whereas in the trade-off, the proposer of the less capable product, assuming that it knows the competition, may be motivated to reduce its price significantly to ensure that the buyer doesn't select the more capable product. Example might be the B 767 tanker, which (according to Nothrup-Gruman/Eads: NGE) doesn't really offer much more refueling capability than the present B707 era (1950's) tankers vs. the larger Airbus KC-45, based on the A-330, which I think was more expensive. Both firms know their competition's capability. Boeing knows Northrup-Grumman/EADs' prices from the earlier Protest but the Air Force refused to provide Boeing's prices to NGE. I haven't read the new criteria, but NGE says they are going to pull out because the criteria is stacked toward Boeing. So I suspect that the criteria is heavily weighted toward price with both planes meeting the minimum technical criteria.

Also at present, the Army requres high level approval to use LPTA per the AFARs/Army Source Selection Manual.

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A big disadvantage of LPTA is that we normally can't pay $1 more for a better or more capable product or service, including those which offer a lower life cycle cost but cost more up front.

The biggest advantage to me of LPTA is the relative ease of evaluation and selection. But the method doesn't necessarily guarantee or result in the lowest price that the buyer could otherwise get using trade-off process.

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A big disadvantage of LPTA is that we normally can't pay $1 more for a better or more capable product or service, including those which offer a lower life cycle cost but cost more up front.

The biggest advantage to me of LPTA is the relative ease of evaluation and selection. But the method doesn't necessarily guarantee or result in the lowest price that the buyer could otherwise get using trade-off process.

Joel, what are you talking about? Under LPTA you can pay a higher purchase price in order to get a product that offers a lower life cycle cost. Try reading FAR 15.101-2(a):

The lowest price technically acceptable source selection process is appropriate when best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price.
Emphasis added.

See too 15.101-2(B)(1):

Solicitations shall specify that award will be made on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors.
Emphasis added.

Lowest EVALUATED price. The lowest EVALUATED price can include life cycle cost. LPTA does not have to be based on the lowest proposed product price. LPTA is not sealed bidding. See FAR 14.101(e):

Contract award. After bids are publicly opened, an award will be made with reasonable promptness to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, considering only price and the price-related factors included in the invitation.
Emphasis added.

In sealed bidding you consider "only price and price-related factors." In LPTA you consider technical acceptability and "evaluated price." See the discussion of LPTA in Competitive Negotiation: The Source Selection Process, 2d ed., by Cibinic, Nash, and O'Brien, page 231:

Award may also be made to the technically acceptable proposal with the lowest discounted life-cycle cost. Hawaiian Tel. Co., Comp. Gen. Dec. B-187871, 77-1 CPD ? 298; University Sys., GSBCA 10600-P, 90-3 BCA ? 23,085.

In other words, you can conduct LPTA as lowest life-cycle-cost technically-acceptable. All you gotta do is explain what you're doing in your RFP. Of course, people who don't know this probably don't know how to determine life-cycle cost.

See A.B. Dick Co., Comp. Gen. Dec. B-211119, 83-2 CPD ? 360:

The RFP was issued on May 24, 1982, for delivery of a maximum of 160 word processing units. The first 26 units were to be firm orders delivered the first year with an option of an additional 134 units over 4 years. The RFP advised that award would be made to the firm providing a technically acceptable product at the lowest overall cost to the Air Force, a determination which would include a lifecycle cost evaluation...

The contracting officer performed an evaluation of price proposals and Compucorp was determined low offeror at a total evaluated price including life-cycle costs of $1,541,587... .

Emphasis added. The protest was denied.

Ignorance is the plague of our "profession." God save us from the doctor who cannot cure us because he was taught differently, because because he never did it that way, because he didn't know he could do it that way, etc., etc., etc. Ignorance is the disease of the 1102, and almost everyone is dying of it.

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Here's an LPTA. Consider:

THE RFP WAS ISSUED ON JULY 19, 1979 AND PROVIDED FOR AWARD OF AN INDEFINITE QUANTITY, INDEFINITE DELIVERY TYPE CONTRACT ON A FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT BASIS. AWARD WAS TO BE MADE TO THE RESPONSIVE, RESPONSIBLE OFFEROR WITH THE LOWEST PRESENT VALUE COST TO THE GOVERNMENT OVER THE 108-MONTH EVALUATED SYSTEMS LIFE. CONTRACT AWARD WAS MADE TO CENTEL ON DECEMBER 3, 1980.

IN GENERAL TERMS, GSA SOUGHT THROUGH THIS PROCUREMENT TO OBTAIN AN AUTOMATIC, COMPUTER CONTROLLED TELEPHONE SYSTEM. SUCH A SYSTEM CONSISTS OF INDIVIDUAL TELEPHONES OR ?STATIONS? CONNECTED BY WIRES (LINES) TO CIRCUIT BOARDS WHICH ARE IN TURN CONTROLLED BY ONE OR MORE COMPUTERS AND THEIR ASSOCIATED SOFTWARE. THE COMPUTER, SOFTWARE AND CIRCUIT BOARDS ARE CALLED A CBX (COMPUTER BRANCH EXCHANGE) OR SOMETIMES A PABX (PRIVATE AUTOMATIC BRANCH EXCHANGE). CBXS ARE IN EFFECT SOPHISTICATED ?SWITCHES? WHICH COMBINE THE CAPABILITIES OF A COMPUTER TO PROCESS INSTRUCTIONS WITH THE CAPABILITY OF RAPIDLY PERFORMING A LARGE NUMBER OF SWITCHING FUNCTIONS.

Capitalization in original. Emphasis added.

See Southwestern Bell Telephone Co.; Northern Telecomp, Inc., Comp. Gen. Dec. B-200523, March 5, 1982. They were buying more than just ordinary things. The protest was denied.

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Joel, what are you talking about? Under LPTA you can pay a higher purchase price in order to get a product that offers a lower life cycle cost. Try reading FAR 15.101-2(a):

Emphasis added.

See too 15.101-2(B)(1):

Emphasis added.

Lowest EVALUATED price. The lowest EVALUATED price can include life cycle cost. LPTA does not have to be based on the lowest proposed product price. LPTA is not sealed bidding. See FAR 14.101(e):

Emphasis added.

In sealed bidding you consider "only price and price-related factors." In LPTA you consider technical acceptability and "evaluated price." See the discussion of LPTA in Competitive Negotiation: The Source Selection Process, 2d ed., by Cibinic, Nash, and O'Brien, page 231:

In other words, you can conduct LPTA as lowest life-cycle-cost technically-acceptable. All you gotta do is explain what you're doing in your RFP. Of course, people who don't know this probably don't know how to determine life-cycle cost.

See A.B. Dick Co., Comp. Gen. Dec. B-211119, 83-2 CPD ? 360:

Emphasis added. The protest was denied.

Ignorance is the plague of our "profession." God save us from the doctor who cannot cure us because he was taught differently, because because he never did it that way, because he didn't know he could do it that way, etc., etc., etc. Ignorance is the disease of the 1102, and almost everyone is dying of bit.

Vern, I prepared a response, but my personal laptop isn't recognizing the wirelss card, the desktop bit the dust this morning and I can't transfer the data to my government laptop due to Army security restrictions. And I'm not going to retype it all on this BB, which also has to be replaced, because it decides itself when to lock up in the middle of typing. I'll post it when I get things going here.

Of course you are right that the government COULD include a life cycle analysis in the price evaluation. I actually knew that but it has been so long since I have personally worked with LPTA (Army hasn't wanted us to use it for many years and officially discouraged it in 2004) that I forgot it.

I should have indicated that wekd have to incoporate some type of Life cycle cost analysis or other price or cost evaluation in order to be able to pay $1 more...

My post will discuss some impracticalities of doing this in all situations where we'd want to be able to select better products or systems.

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You don't need to point out any impracticalities to me. Save your breath, unless you want to educate others.

I don't say that "best value" is never a good idea. Nor do I say that LPTA is always a better way to go. I say only that "best value" is used excessively and needlessly by people who don't know how to use it, which results in longer procurement administrative lead times and higher prices without real value. I therefore conclude that its use should be curtailed in order to bring more procedural balance to acquisition that would reduce lead times and costs to the taxpayers. All I pointed out in my last post is that you were wrong to say you that under LPTA you cannot pay a higher purchase price to get lower life cycle cost. People who are not qualified to do best value are not going to be qualified to do lowest-life-cylcle-cost technically acceptable either.

I don't think that you and I disagree, except to the extent that you believe that LPTA is an inherently inferior procedure.

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Vern, it is also possible in an IFB to manipulate various criteria as price related factors and use a "total evaluated cost method" to determine the lowest bidder.USACE did this about 16 years ago but it was controversial, unpopular with industry and a bit cumbersome. It survided the Protest process but went by the wayside. I recall that we used factors such as average time growth with a bid daily compensable time extension rate, average cost growth with a bid overhead and bond rates, etc., then added these factors to the construction bid price to determine the lowest "total evaluated cost" to determine the winner.

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Vern, it is also possible in an IFB to manipulate various criteria as price related factors and use a "total evaluated cost method" to determine the lowest bidder.USACE did this about 16 years ago but it was controversial, unpopular with industry and a bit cumbersome. It survided the Protest process but went by the wayside. I recall that we used factors such as average time growth with a bid daily compensable time extension rate, average cost growth with a bid overhead and bond rates, etc., then added these factors to the construction bid price to determine the lowest "total evaluated cost" to determine the winner.

That's interesting and true, I'm sure, but it has no bearing on LPTA.

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That's interesting and true, I'm sure, but it has no bearing on LPTA.

Vern, I was responding to your statement "In sealed bidding you consider "only price and price-related factors." In LPTA you consider technical acceptability and 'evaluated price.' " It appeared that you were trying to make a distinction between "price and price-related factors" and "evaluated price". I wanted to mention that price and price-related factors in an IFB can be considered in the "evaluated price".

I don't think that we necessarily disagree about LPTA. I used to use LPTA and liked it. In fact, our situation with the trade-off process on our projects for a favorite DoD Service back in the 1990's was very frustrating. At one point I convinced our KO to use LPTA until they would quit demanding a "Cadillac desire" on a "Yugo Budget" for every project. Turns out that the client installation would have our A/E or in-house designers stack the scope of work and include a bunch of options and/or betterment options. Then they insisted that we stress a desire to obtain the best contractor team on construction and design-build projects. We actually ran off some of the best national contractors for several years because we discovered that the budget was so slim that all we could afford were the lowest-priced, minimally acceptable contractor teams, construction products and/or design solutions. With LPTA, we often ended up with the best technical qualifications as well as the lowest price. And the typical dirt-bags didn't bother to propose!

At least we were being honest with industry and they appreciated the candor.

I am just trying to point out that LPTA doesn't necessarily guarantee a lower price than the trade-off process when it is clear that price is the most important factor. And it often isn't easy to perform life cycle cost analysis. I won't bother with the details that I wrote about but didn't post.

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Joel:

In sealed bidding "price" is bid price. But I agree that "price related" factors can include some life cycle costs as determined by the government.

Vern

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