1 proposal over IGE

[faroutgeek]

After publishing RFI's and engaging industry I received 1 proposal that is double the IGE. This is a FFP award with multiple CLINs. Customer now does not have enough money and will not concur that IGE was off and wants to make some of the CLINs optional and accept the proposal. I have researched this topic and have asked others and it seems like I am being directed to re solicit. Customer does not want that either. Any suggestions? 

[joel hoffman]

1. Is the estimate above the SAT ? 

2. Is this for a commercial item? 

please clarify. 

So the customer insists that IGE is realistic -

3. what is this based upon?

4. Does customer have sources? 

5. Why would you simply accept the proposal and reduce the base scope If the price is unreasonable??  That makes no sense at first read. 

As a minimum, if you don’t resolicit,  Negotiate! If nothing else, if customer has sources for pricing (materials, services, ???,) , that might or might not be useful for negotiations - not enough info here to determine. 

[joel hoffman]

Deleted: Thread was moved from Contracting Workforce to Contract Award topic area. 

Edited August 12, 2020 by joel hoffman
Thread was moved to Contract Aaward

[ji20874]

1 hour ago, faroutgeek said:

After publishing RFI's and engaging industry I received 1 proposal that is double the IGE. 

Is that the only proposal you received?

1 hour ago, faroutgeek said:

Customer now . . . wants to make some of the CLINs optional and accept the proposal. 

For the CLINs that the customer wants to award, are those CLINs reasonably priced?  Or can they be made reasonable through negotiation?

You do not have to award all of the CLINs, unless you promised to do so in your solicitation or the offeror inserted an all-or-none provision in its proposal (see FAR 15.215-1(f)(5) for the principle -- the principle is solid, even if that clause is not included in your contract -- the principle is also on display in FAR 52.214-10(c) and 52.212-1(h)).

1 hour ago, faroutgeek said:

...it seems like I am being directed to re solicit...

You have to do what your boss tells you, right?  But if I were your boss, I would tell you to negotiate if I thought negotiations would be fruitful and if I did not think the solicitation was flawed.  [An example of flawed:  Did you allow a reasonable amount of time for submission of proposals?]

[C Culham]

18 hours ago, ji20874 said:

Is that the only proposal you received?

For the CLINs that the customer wants to award, are those CLINs reasonably priced?  Or can they be made reasonable through negotiation?

You do not have to award all of the CLINs, unless you promised to do so in your solicitation or the offeror inserted an all-or-none provision in its proposal (see FAR 15.215-1(f)(5) for the principle -- the principle is solid, even if that clause is not included in your contract -- the principle is also on display in FAR 52.214-10(c) and 52.212-1(h)).

You have to do what your boss tells you, right?  But if I were your boss, I would tell you to negotiate if I thought negotiations would be fruitful and if I did not think the solicitation was flawed.  [An example of flawed:  Did you allow a reasonable amount of time for submission of proposals?]

Let me depart from ji's comment just a tad bit. Re-soliciting is not required by the FAR.  Without good reason as ji notes it does not make sense.   What is resulting is the classic friction between the customer (in a general sense it is their project, their money) and a contracting myth that another RFP needs to be issued.  In the end I would educate the customer (ji's info) and let them have the discussion with the assumed "boss" that is directing you to re-solicit.   Their question to the "boss" should be on what basis do you think that re-solicitation is in the best interest of this specific procurement and let their discussion chart the action.

In part my comments are based on one fact that you have provided that more than one RFI ("RFI's") was issued and industry was engaged.  Bluntly it seems that the customer IGE is built towards available budget and not market conditions.

[joel hoffman]

23 hours ago, C Culham said:

Bluntly it seems that the customer IGE is built towards available budget and not market conditions.

Could be so.

But - the customer has supposedly defended the basis of the IGE or GE. I would suggest requesting the basis of that assertion.

If they have a good basis for their estimate, then I suggest it can be effective and applicable to your pre- negotiation objectives, including at least exploring the differences between the GE and the 100% higher proposal during negotiations. You should be interested in at least discovering why there is a 100% gap between the estimate and the proposed price.

The firm may be willing to lower its prices; maybe it misunderstood a requirement;  maybe the proposer saw something in the RFP that increased risk or prices; maybe the government can revise or correct the requirements; perhaps the parties can mutually figure out ways to get what you need at a lower cost.

If proposer knows it is the only one, the possibility of cancelling and getting competition might encourage them to negotiate...

Customer now says cut the scope of the base contract to match funding and just accept the submitted proposal.prices. As a minimum, that will require negotiations anyway won’t it? That appears to be a ridiculous approach if negotiations were limited to that objective,, based upon customer’s faith in its estimate.

That approach appears, from your scenario description to be incongruous and contradictory. How is an apparent double price of a seemingly valid and defended GE Fair and reasonable on its face, without at least negotiating and assuring that there is a meeting of the minds that both parties are pricing the same effort or products under similar assumptions? 

Doing further market analysis and finding alternate sources at lower prices has worked for me in the past. Firms who thought they had a monopoly dropped their prices when faced with the threat of competing. Works very well when high prices are from subs who thought they had a monopoly scenario.

Faroutgeek asked for suggestions. Those are some I’ve thought about

[faroutgeek]

 

1) Estimate is above SAT

2) Yes, commercial item / services

3) Customer claims they used historical pricing and work done prior with internal experts but not providing any additional information. Customer also does not want to solicit and instead just re-scope the requirement to bring it within the IGE. Can I do that and change the scope?

[joel hoffman]

4 hours ago, faroutgeek said:

 

1) Estimate is above SAT

2) Yes, commercial item / services

3) Customer claims they used historical pricing and work done prior with internal experts but not providing any additional information. Customer also does not want to solicit and instead just re-scope the requirement to bring it within the IGE. Can I do that and change the scope?

Not without negotiating. Changing the scope requires negotiating.

 In my opinion, it would be a very dumb thing,  a disservice to the taxpayers and a dereliction of the duty of a contracting officer to award a contract at fair and reasonable prices if one simply negotiates to re-cope and award as much of the proposed prices without first negotiating and assuring that the prices are fair and reasonable. See 15.4 Pricing Policy: (highlighting for emphasis)

”15.402   Pricing policy.

Contracting officers shall—

(a) Purchase supplies and services from responsible sources at fair and reasonable prices. In establishing the reasonableness of the offered prices, the contracting officer—

(1) Shall obtain certified cost or pricing data when required by 15.403-4, along with data other than certified cost or pricing data as necessary to establish a fair and reasonable price; or

(2) When certified cost or pricing data are not required by 15.403-4, shall obtain data other than certified cost or pricing data as necessary to establish a fair and reasonable price, generally using the following order of preference in determining the type of data required:

(i) No additional data from the offeror, if the price is based on adequate price competition, except as provided by 15.403-3(b).

(ii) Data other than certified cost or pricing data such as—

(A) Data related to prices (e.g., established catalog or market prices, sales to non-governmental and governmental entities), relying first on data available within the Government; second, on data obtained from sources other than the offeror; and, if necessary, on data obtained from the offeror. When obtaining data from the offeror is necessary, unless an exception under 15.403-1(b)(1) or (2) applies, such data submitted by the offeror shall include, at a minimum, appropriate data on the prices at which the same or similar items have been sold previously, adequate for evaluating the reasonableness of the price.

(B) Cost data to the extent necessary for the contracting officer to determine a fair and reasonable price.

(3) Obtain the type and quantity of data necessary to establish a fair and reasonable price, but not more data than is necessary. Requesting unnecessary data can lead to increased proposal preparation costs, generally extend acquisition lead time, and consume additional contractor and Government resources. Use techniques such as, but not limited to, price analysis, cost analysis, and/or cost realism analysis to establish a fair and reasonable price. If a fair and reasonable price cannot be established by the contracting officer from the analyses of the data obtained or submitted to date, the contracting officer shall require the submission of additional data sufficient for the contracting officer to support the determination of the fair and reasonable price.

(b) Price each contract separately and independently and not— 

(1) Use proposed price reductions under other contracts as an evaluation factor; or 

(2) Consider losses or profits realized or anticipated under other contracts. 

(c) Not include in a contract price any amount for a specified contingency to the extent that the contract provides for a price adjustment based upon the occurrence of that contingency.”

farout, from the information provided, neither you nor the customer appear to be able to determine that the offered prices are fair and reasonable without at least getting “data other than cost or pricing data” and negotiating prices - then negotiate a scope reduction, if still necessary.

Time is running. I suggest tackling this ASAP if funds expiration will be an issue.

Good Luck! 

[C Culham]

@joel hoffman. We have so much but so little.

"RFIs"...presumably more than one.

"Engaging industry"

"Commercial Item"

Competition was done!

While I understand your position could it be fair and reasonable has established and the agencies eyes are bigger than their stomach and the only negotiation is reduceing scope?

[ji20874]

Here is the crucial consideration:

On 8/12/2020 at 2:21 PM, ji20874 said:

For the CLINs that the customer wants to award, are those CLINs reasonably priced?  Or can they be made reasonable through negotiation?

 

[joel hoffman]

So it appears that the suggestions still appear to be to first negotiate fair and reasonable line item pricing and then negotiate the base contract scope for what you can afford t o award within available funding

EDIT: As an afterthought,  each line item might or might not be severable  or non-related to others for cost purposes. For instance, there might be spread/distributed fixed costs. Reducing the scope might or might not produce 100% savings of those line items to be deleted or reduced in scope. . 

 

 

 

 

 

Edited August 16, 2020 by joel hoffman

[formerfed]

faroutgeek,

Try to understand basics of the cost estimate yourself.  Market Research training promotes you don’t need to be a technical expert to understand basics in planning and conducting an acquisition.  Google makes us all experts.  Talk with your program person and ask for a high level explanation of the requirement.  Look at the prior RFIs.  Ask for a quick briefing on how the cost estimate was developed.  Then do more research on your own.  Talk with some vendors too and especially those responding to the RFI. 

One big problem throughout the government is contracting people don’t understand program needs and program people don’t understand contracting needs.  Take some simple steps to bridge that gap.

Armed with that information and understanding, talk with your sole offeror.  Explain their price is double what you think it should be.  Listen and analyze what they say.  Come up with a mutually acceptable approach.  Negotiate as Joel suggested.  If that fails or as an alternative, go back to companies you think might be capable and talk with them.  Find out what it takes for them to participate.

Good luck

[joel hoffman]

I don’t know if FAR 15.402 is applicable to this commercial services acquisition. I think so in that it exceeds the SAT.

18 hours ago, formerfed said:

faroutgeek,

Try to understand basics of the cost estimate yourself.  Market Research training promotes you don’t need to be a technical expert to understand basics in planning and conducting an acquisition.  Google makes us all experts.  Talk with your program person and ask for a high level explanation of the requirement.  Look at the prior RFIs.  Ask for a quick briefing on how the cost estimate was developed.  Then do more research on your own.  Talk with some vendors too and especially those responding to the RFI. 

One big problem throughout the government is contracting people don’t understand program needs and program people don’t understand contracting needs.  Take some simple steps to bridge that gap.

Armed with that information and understanding, talk with your sole offeror.  Explain their price is double what you think it should be.  Listen and analyze what they say.  Come up with a mutually acceptable approach.  Negotiate as Joel suggested.  If that fails or as an alternative, go back to companies you think might be capable and talk with them.  Find out what it takes for them to participate.

Good luck

Before talking with your proposer (I agree with formerfed) require the firm to provide information for you, to also arm yourself with,  before negotiating and for the proposer to establish the basis of its commercial service pricing on catalog or market prices of commercial services it sells to the general public and/or the government.

For example, see HUD’s “QUICK GUIDE TO COST AND PRICE ANALYSIS FOR HUD GRANTEES AND FUNDING RECIPIENTS” found at https://www.hud.gov/program_offices/cpo/grantees/cstprice#whenCost

“Could there ever be a situation where I don't have price competition, and I don't have to perform a cost analysis? 

Yes. There are two situations:

The price can be established on the basis of catalog or market prices of commercial products or services sold in substantial quantities to the general public. A product is considered to be "sold in substantial quantity" when the regular sales volume is large enough to constitute a real commercial market. Services are considered to be "sold in substantial quantity" when the contractor/vendor customarily provides them, using his/her regularly employed personnel and using equipment (if any is needed) regularly maintained solely to provide the services.
or
The price is set by law or regulation.“

Of course, there will likely be some differences between costs to provide services to commercial clients and to USGovernment agencies, due to government requirements and conditions, SCA, etc. The proposer should be able to describe the basis of its pricing here.

Here is another guide from the Federal Transportation Administration at https://www.transit.dot.gov/funding/procurement/third-party-procurement/costprice-analysis.

A note about using Catalog Pricing- Service providers and suppliers quite often discount their catalog prices. The proposer should explain its discounting policies, so don’t rely solely on the fact that there are catalog prices.

After evaluating what the proposer provides, as Formerfed said, listen to what the offeror says in explaining its pricing.

And - from the words of many authors, “Everything is negotiable”. 

I’d advise not to mention cutting scope to match the budget until you negotiate their best prices. Then, you will find out if the proposer will want to or have to increase prices to recover any costs that are spread over all lump sum or line item prices. 

EDIT: The possibility of re-competing the acquisition could be an effective negotiating tool, if the proposer is reluctant to reduce its pricing because it knows or thinks that it is the only firm involved. Use all the bargaining tools available to you. 

 

 

Edited August 18, 2020 by joel hoffman