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Guest Vern Edwards
I believe that this contract model for construction has been court tested and there have been GAO protests. Apparently it passed the tests for price competition for award.

Joel:

If I understand you rightly, you are awarding IDIQ contracts for construction that contain no prices/rates whatsoever. Is that right? No labor rates and no overhead and G&A rates and materials handling rates?

You award the contracts based on the evaluation of a "seed" task, and then rely on competition among the contract holders for future pricing. Right?

And you believe that approach has been tested at the GAO for CICA compliance and passed. Right? But you can't cite any case.

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Joel:

If I understand you rightly, you are awarding IDIQ contracts for construction that contain no prices/rates whatsoever. Is that right? No labor rates and no overhead and G&A rates and materials handling rates?

You award the contracts based on the evaluation of a "seed" task, and then rely on competition among the contract holders for future pricing. Right?

And you believe that approach has been tested at the GAO for CICA compliance and passed. Right? But you can't cite any case.

"I'm" not personally awarding any such contracts. I can't cite any protests, though I am aware there have been protests. I don't know if the pricing mechanism was the specific subject of protest.

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Joel:

If I understand you rightly, you are awarding IDIQ contracts for construction that contain no prices/rates whatsoever. Is that right? No labor rates and no overhead and G&A rates and materials handling rates?

You award the contracts based on the evaluation of a "seed" task, and then rely on competition among the contract holders for future pricing. Right?

And you believe that approach has been tested at the GAO for CICA compliance and passed. Right? But you can't cite any case.

"I'm" not awarding any such contracts. I just checked with one of the Districts and they are using the see task order but not locking in rates or prices on their contracts, which have been in effect for several years. I was involved in developing the Programmatic two phase selection procedures, the standardized format for the base contracts and the technical format for follow-on task orders. I was not involved in developing the CLIN structure for the seed task orders or the pricing methods. The Centers of Standardization set up their own details for pricing contracts. As far as I know, the Centers of Standardization are using seed task orders for the major contracts.

Yes, there have been some protests involving the IDIQ competition. I don't know if they directly concern the pricing method. There was also a court case involving the organization's whole IDIQ concept for using Regional IDIQ's. I wasn't able to find that case yesterday. It is too early to call my non-East Coast contacts to verify their pricing scheme but I will call some later.

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FSCO: We issue SATOC contracts for up to $100 Million to execute SRM type work at military installations. As suggested earlier we typically use a seed T.O. We use the RS Means Cost Works for pricing materials, equipment, etc. Contractors submit their proposals based on the seed or sample T.O. and also propose a coefficient. The coefficient becomes part of the contract and the current version of RS Means is used to price all subsequent T.O.s.

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Guest Vern Edwards

I was able to find three decisions that described a procurement for an IDIQ contract for construction in which the only prices proposed were for a "seed" order. All predated the CW Government Travel decision cited by Jacques in Post # 2. In none of the three cases was pricing or price evaluation the protest issue.

One of the three protests was sustained on other grounds, see Blue Rock Structures, Inc., Comp. Gen. Dec. B-293134, 2004 CPD ? 63, February 6, 2004, in which the seed pricing approach is addressed in Footnotes 4 and 6. See also JCN Construction Co, Inc., Comp. Gen. DEc. B-293063, 2004 CPD ? 12, January 9, 2004, in which the seed pricing is described in Footnote 2; and C Construction Co., Inc., Comp. Gen. Decision B-291792, 2003 CPD ? 73, March 17, 2003, in which the seed pricing is described in Footnote 3. The prospective contracts were to contain no pricing, but in none of those cases did the GAO rule on the permissibility of the approach. In Footnote 6 to Blue Rock, the GAO expressly denied having giving any guidance on pricing in C Construction.

There may be more such "seed" decisions, in which it was said that the contract contained no pricing, but my research did not turn up any. If there are no cases in which the approach was found to be in compliance with CICA when the contract itself contains no pricing, then, in light of CW Government Travel, I say that compliance with CICA has not been determined. I think that the scheme described above by Louis is the more orthodox approach.

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Guest Vern Edwards

I should add that the question of whether a multiple award IDIQ contract must contain prices in order to be in compliance with CICA is an old one. At one time, long ago, both Professors Nash and Cibinic argued at their annual Roundtable that prices are not essential. Clearly, there can be price competition among contract holders for task orders and such competition might produce fair and reasonable prices. I am not opposed to such an approach and think it makes a lot of sense in some circumstances. The question is: Will it withstand protest? Also, in light of FAR 17.207(f), the absence of prices might make the exercise of options an issue.

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Guest Vern Edwards

Thanks, formerfed. I think it likely that there are a number of such contracts. Like I said, I think they make sense in certain circumstances. I don't think competitive prepricing of such contracts in always necessary. I have complained about the silliness of hourly rate pricing in MATOCs since 1995. Still, the question is, given GAO's interpretation of CICA (which Prof. Nash has disputed), there is a question of the viability of such an approach.

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Vern, would one be able to conclude based on FAR 16.505(B)(3) that pricing is not required in the base IDIQ? The language reads:

"(3) Pricing orders. If the contract did not establish the price for the supply or service, the contracting officer must establish prices for each order using the policies and methods in Subpart 15.4."

It is in the context of multiple award IDIQs so I assume would only be viable in that context

Also, if there would be an issue with evaluating the options (which I see your concern) then you could just award the base IDIQ with no options and have a period of performance for 5 years, or less depending on your needs.

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I was able to find three decisions that described a procurement for an IDIQ contract for construction in which the only prices proposed were for a "seed" order. All predated the CW Government Travel decision cited by Jacques in Post # 2. In none of the three cases was pricing or price evaluation the protest issue.

One of the three protests was sustained on other grounds, see Blue Rock Structures, Inc., Comp. Gen. Dec. B-293134, 2004 CPD ? 63, February 6, 2004, in which the seed pricing approach is addressed in Footnotes 4 and 6. See also JCN Construction Co, Inc., Comp. Gen. DEc. B-293063, 2004 CPD ? 12, January 9, 2004, in which the seed pricing is described in Footnote 2; and C Construction Co., Inc., Comp. Gen. Decision B-291792, 2003 CPD ? 73, March 17, 2003, in which the seed pricing is described in Footnote 3. The prospective contracts were to contain no pricing, but in none of those cases did the GAO rule on the permissibility of the approach. In Footnote 6 to Blue Rock, the GAO expressly denied having giving any guidance on pricing in C Construction.

There may be more such "seed" decisions, in which it was said that the contract contained no pricing, but my research did not turn up any. If there are no cases in which the approach was found to be in compliance with CICA when the contract itself contains no pricing, then, in light of CW Government Travel, I say that compliance with CICA has not been determined. I think that the scheme described above by Louis is the more orthodox approach.

As I read CW Government Travel, the issue was that there wasn't any meaningful price evaluation as part of the selection for contract award. In the case of seed task orders, there are prices that are binding, if selected for the seed task order. The other base contract awardees would also have to provide fair and reasonable prices in order to be selected for base contract award.

Louis's method of using an estimating guide with a factor multiplier is similar to the single award construction task order contracts using SABRE and JOC methods.

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Guest Vern Edwards

The price is binding for the seed order, true, but the contract itself is not priced. What about the other orders? They could individually or cumulatively amount to much more than the seed order.

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Guest Vern Edwards
Vern, would one be able to conclude based on FAR 16.505(B)(3) that pricing is not required in the base IDIQ? The language reads:

"(3) Pricing orders. If the contract did not establish the price for the supply or service, the contracting officer must establish prices for each order using the policies and methods in Subpart 15.4."

FSCO:

When awarding an IDIQ contract for services, the contract itself may contain hourly rates to be used for pricing purposes, but which do not, in and of themselves, establish the prices of orders. To establish the price, estimated cost, or ceiling price of an order one would have to determine which labor categories to use and how many hours of each. FAR 16.505(B)(3) cannot be read to permit the award of IDIQ contracts without binding prices or rates.

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Ah, I see. I did not read it that way.

In the GAO decisions, they are looking for binding prices only in the context of the evaluation. This is to ensure that the evaluation of cost to the Government is reasonable. They haven't stated that the prices need to be binding on the entire IDIQ.

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Guest Vern Edwards
Ah, I see. I did not read it that way.

In the GAO decisions, they are looking for binding prices only in the context of the evaluation. This is to ensure that the evaluation of cost to the Government is reasonable. They haven't stated that the prices need to be binding on the entire IDIQ.

I'll agree with that. Good luck with your procurement.

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Ah, I see. I did not read it that way.

In the GAO decisions, they are looking for binding prices only in the context of the evaluation. This is to ensure that the evaluation of cost to the Government is reasonable. They haven't stated that the prices need to be binding on the entire IDIQ.

I think I said that earlier. At any rate, I finally found the US Court of Federal Claims case I was looking for in the WIFCON Archives. It is Tyler Construction Group vs. US. No. 08-94C, August 14, 2008. Tyler challenged the Army Corps of Engineer' use of ID/IQ contracts for construction.

Bob Antonio has summarized it at http://www.wifcon.com/pd16_501_2.htm

You can read the decision at: http://www.wifcon.com/cofc/08-94c.pdf.

There was some discussion about the pricing arrangement in that prices were only good for the first task order but it did not specifically address the debate in this current WIFCON thread. It would seem that the Court saw the pricing method because it seemed to examine the RFP in detail.

"...Plaintiff points out that the procurement is not for a quantity of buildings (the solicitation only specifically identifies the first task order?the construction of a single basic training barracks) and does not intend the price offered for the first task order to apply to future barracks projects, much less to the other projects identified in the solicitation... "

The Court rejected all of the Plaintiffs arguments.

"Defendant, we conclude, is correct on all counts. We are aware of no law, statute, or regulation that prohibits the use of an IDIQ contract for the procurement of construction services, and the various provisions of the FAR offer little insight into whether ?construction? is included in or excluded from ?supplies or services.? We must therefore conclude that FAR ? 1.102(d)?providing procurement officials with the authority to use innovative approaches to satisfy the government?s procurement needs so long as such approaches are not otherwise addressed in the FAR or prohibited by law?governs the instant procurement. We find that the solicitation represents the sort of innovation envisioned by that section and, with its identification of both a contract dollar value and a general scope of work, constitutes a permissible exercise of IDIQ contracting authority..."

I know that this contract was put out before we developed a standard template for our ID/IQ , MATOC's. We developed that template during the period of the litigation and have since refined it. The template now specifically describes the general scope of work of the Base Contract in the "Instructions to Offerors" and a broad description in the "Summary of Work" section. Then the seed task order includes a detailed "Task Order Statement of Work".

I havent looked at the actual WIFCON thread yet but will do so to examine whether it specifically addressed the task order pricing method used.

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Guest Vern Edwards

Since the case does not resolve the issue at hand, why write about it at such length? Is there something we are supposed to see that I have missed?

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Since the case does not resolve the issue at hand, why write about it at such length? Is there something we are supposed to see that I have missed?

The case specifically mentioned the price evaluation method but it apparently wasn't an issue to the Court. I tried to quote the discussion about pricing from the Plaintiff's perspective and the only Court response to that point. But the Decision is only a summary anyway.

I found one WIFCON thread concerning the Tyler Construction decision. It only lightly touches on the topic of price evaluation. http://www.wifcon.com/discus/messages/8524...html?1223661612. A couple of posters wondered about the method of pricing only the seed task order.

Here is an earlier thread but it doesn't discuss the pricing technique: "Can MATOCS be used in Construction New buildings?" http://www.wifcon.com/discus/messages/8522...html?1208524248

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  • 3 months later...

Protests of NAVFAC Competition for MAC (MATOC) with Seed Task Order Pricing in Guam

1. Here are two new GAO Decisions on competition for Base Contract awards, which used price competition on a seed task order as the method for evaluating pricing in the initial IDIQ base contract awards. Both protesters initially alleged that the agency had ignored price in its determination of best value. The agency persuasively rebutted this allegation in its reports with documentation demonstrating that both the source selection board and the source selection authority had considered price in their trade-off determinations.

2. The first one is B-402652.2, AIC International, Inc., June 28, 2010 at the following link:

http://www.gao.gov/decisions/bidpro/4026522.htm#_ftnref1

?B-402652.2, AIC International, Inc., June 28, 2010

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.

Decision

Matter of: AIC International, Inc.

File: B-402652.2

Date: June 28, 2010

David P. Ledger, Esq., Cabot Mantanona LLP, and Shelly L. Ewald, Esq., Watt, Tieder, Hoffar & Fitzgerald, LLP, for the protester.

David A. Rose, Rose Consulting LLC, for Guam Pacific International, LLC, an intervenor.

Richard Huber, Esq., Department of the Navy, Naval Facilities Engineering Command, for the agency.

Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest challenging evaluation of protester's proposal is denied where record shows evaluation was reasonable and consistent with solicitation.

DECISION

AIC International, Inc., of Hagatna, Guam, protests the rejection of its proposal and the award of contracts to Guam Pacific International, LLC (GPI), of Barrigada, Guam, and Overland Corporation, of Ardmore, Oklahoma, under request for proposals (RFP) No. N40192-10-R-2800, issued by the Department of the Navy, Naval Facilities Engineering Command, for the award of multiple contracts for new construction, renovation, and repair of government facilities on Guam. The protester argues that the evaluation of its proposal was unreasonable.

We deny the protest.

BACKGROUND

The RFP, which was set aside for small businesses, provided for the award of up to five indefinite-delivery/indefinite-quantity design/build contracts to the offerors whose proposals were determined to represent the best value to the government, with technical factors of significantly greater weight than price in the determination of best value. Technical factors (of equal weight) were offeror and lead design team experience; past performance; safety; workforce housing and logistics (WH&L); and technical approach (to performance of a specified seed project). Price was to be evaluated on the basis of pricing for the seed project.?

??In its initial protest, AIC also complained that the agency erred in awarding to GPI and Overland without investigating whether the firms were unusually reliant upon--and thus, for size determination purposes, should have been treated as affiliated with--their large business subcontractors. The agency requested, and we granted, dismissal of this argument prior to submission of the agency report. In addition, the protester initially alleged that the agency had ignored price in its determination of best value. The agency persuasively rebutted this allegation in its report with documentation demonstrating that both the source selection board and the source selection authority had considered price in their trade-off determinations, and AIC abandoned this argument.?

3. See also: B-402652; B-402652.3, Reliable Builders, Inc., June 28, 2010 at http://www.gao.gov/decisions/bidpro/4026523.htm

?In addition to the arguments that we address below, RBI argued in its initial protest that the agency had ignored price in its determination of best value. The agency persuasively rebutted this allegation in its report with documentation that demonstrated that both the SSB and the SSA had considered price in their trade-off determinations.?

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  • 1 month later...

Here is another new GAO Decisions on competition for Base Contract awards, which used price competition on a seed task order as the method for evaluating pricing in the initial construction IDIQ base contract awards.

http://www.gao.gov/decisions/bidpro/403797.htm (B-403797, Tetra Tech Tesoro, Inc., December 14, 2010)

This protest (NAVFAC in this case) ought to confirm that this is acceptable for price competition for construction type base ID/IQ awards. This doesn't necessarily have any correlation to ID/IQ's for services.

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  • 7 months later...

I know this was debated a while ago, but I'm having discussions about this same topic now - specifically for construction contracts. The problem I see with the cited GAO decisions about seed or sample projects is that they are discussing whether they are valid price evaluation techniques for the BASE contract, but do not address whether not having binding pricing for the subsequent task orders is valid. While I do think that getting pricing from multiple award IDIQ contractors helps ensure price competition, I don't see how it complies with CICA. I'm very aware how pre-pricing construction work is difficult for IDIQs, but don't think "difficult" or even "impossibility" is an exception to CICA.

For example, would anyone ever consider competing elevator maintenance services for a single "seed" building, and then say that we'd limit competition to the best offerors for any other buildings in a six-state area even though we have no binding pricing for those other buildings? I'd think not, so why is it okay for construction?

Mike

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Guest Vern Edwards

Why can't you have binding pricing for such contracts? Tell the offerors to propose rates that will be the maximum that can be charged, but that when competing for task orders they may propose lower rates. That is a pretty common technique.

If your point is that not having binding pricing is not compliant with CICA, what do you make of cost-reimbursement contracts?

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I know this was debated a while ago, but I'm having discussions about this same topic now - specifically for construction contracts. The problem I see with the cited GAO decisions about seed or sample projects is that they are discussing whether they are valid price evaluation techniques for the BASE contract, but do not address whether not having binding pricing for the subsequent task orders is valid.

Mike

Mike, I dont know whether NAVFAC used a 2 phase Design-Build process for the MAC awards discussed in the cited Decisions above. But they used a seed task order with pricing for the award of the Base Multiple Award Contracts (MAC) and award of the first task order. The GAO did address this initial price competition in at least 2 of the Decisions that I referred to.

Is there any major difference between initial price competition using a seed task order and price competition on subsequent task order competitions? Perhaps the only difference is the intensity of the price competition in phase 2. There are more firms competing for MATOC Base Contract awards than will be selected for the pool or pools. I don't know what the GAO would have said is different between the initial task order price competition and follow-on task order price competition.

The Corps of Engineers has been using the 2 Phase D-B method in FAR 36.3 for award of Multiple Award Task Order (MATOC) Base contract pools, using a the first task order (seed task order) in phase 2 of the competition for several years. This price competition is similar to what NAVFAC is using and which the GAO addressed as adequate price competition.

Please note that each construction or design-build task order is generally different from the others, either in scope, location, point of time or under different market conditions (material price and availability, labor mix and availability/pricing, equipment choice and availability, subcontractor availability and/or pricing, amount of competition, etc. Construction pricing in this era is highly volatile. I don't think there is any advantage for the owner to lock in pricing or even maximum pricing for an indefinite delivery - indefinite quantity construction or design-build contract. It would be very high risk for a contractor to compete for award of the seed task order, while at the same time having to lock itself in to maximum pricing for subsequent task orders. Those are two opposing pricing conditions for construction. I could see it working for supply or service type MATOC's, but not for construction. Why would firms aggressively price/compete for the seed task order with not to exceed unit prices of some sort at the risk of not being able to cover itself on future task orders of varying scope and market conditions?

The Army's Job Order Contract program is a case on point. JOC contracts have traditionally used fixed mark-up coefficients that are applied to unit-priced activities in a Government provided unit-price book. Those unit-price books are essentially a form of "Means Estimating Guides" (or other similar estimating books). For years, we've had problems making that pricing system work. The single award contracts featured aggressive competition for award generally with coefficients of less than 1. This results in pricing lower than the unit-price book, which doesn't include mark-ups for general conditions, JOC office site full-time management costs, bond or profit.

Then, for the next several years, the contractor often tries its best to maintain that the actual job orders don't align with the unit-price book activities, so that it can spot price as much of the work as possible. Or, if it begins to loose significant amount of money, performance and quality drop, sometimes in the apparent hope that the Army won't exercise the next option period. These have traditionally been no fun to administer at the Installation level or even for the local Corps offices when they are asked to step in and award job orders.

The weekly publication Engineering News Record has almost weekly price reporting for numerous market areas. They will report various construction commodities and trade labor costs, tracked monthly. There are wide swings up and down on a monthly basis. Construction is a very high risk business. An owner that wants to lock in prices or even maximum prices is shooting itself in the foot, in my opinion. I feel that we ought to let task order competition work...

ID/IQ's were developed (I think) for manufactured goods and for services, not for construction. I don't think you can practically price construction ID/IQ's the same way as as for goods and services.

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Guest Vern Edwards

Mike:

Please clarify your question. I understood you to ask whether a competition that does not result in prices that are binding for future task orders satisfies CICA. Is that the question?

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