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SOW vs. Proposal


Sam101

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How is an offeror's proposal related to the SOW once the contract is awarded? Here's a simple example of what I'm not understanding:

Government requirement: Acquisistion support services for an agency in Washington, DC.

SOW: The contractor shall provide a senior level contract specialist to support the daily tasks of the agency's contracting division. This position is 100% remote telework and if requested to be on site for a site visit the government will reimburse travel costs.

Offeror A's proposal: Bob Smith will be the contract specialist and he lives in DC and here is his letter of commitment and resume.

Agency awards to Offeror A based on the perceived benefit that they will not have to pay for travel costs and the reliability that the CS is close by so no delays will occur in them being able to come on site to DC if need be.

A week after the contract is awarded Bob Smith moves to California and the contractor thinks that this is OK because the SOW says that this contract is 100% telework. If the government incorporates the proposal into the SOW or modifies the SOW to say the CS shall live in DC wouldn't that be an out of scope change to the RFP's SOW? And if the SOW is not modified then the government is not getting the benefit that they thought they would get when they were doing the trade off analysis. In terms of incorporating a proposal into an award, wouldn't that always be changing the SOW? Am I understanding correctly that when the government awards a contract that it just hopes that the contractor will perform in accordance with thier proposal but really the contractor is only required to perform what is written in the SOW and that it is not proper for the government to change the SOW right before award to make all the stuff in the proposal be incorporated into the award SOW because an unsucessful offeror can say that those changes are out of scope?

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One of the first things I learned from an experienced supervisor starting out is never routinely incorporate a proposal.  Rather he said takes the parts you want from the SOW and combine with pieces you like from the contractors proposal.  Then you develop a new SOW for the contract.

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If say a strength is defined as anything that exceeds the minimum requirement then all strengths are some additional things to the SOW which makes the SOW change in such a way that an amendment to the RFP would need to be done or the RFP would need to be recompeted if there are too many changes wouldn't it? I know the answer is no but I don't understand why the answer is no.

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"A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty"

Restatement of the Law, Second, Contracts 2d § 1.

A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

Restatement of the Law, Second, Contracts 2d §2.

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"An initial step in the [contract] interpretation process is the determination of whether the words of a contract are promissory words that bind a party using the words. See Restatement, Second, Contracts § 2...

Administration of Government Contracts, 5th ed., p. 154

“Over the years we have encountered agencies that have followed the pro forma practice of incorporating proposals into contracts by reference. We have warned them that this is not good practice because the language in the proposal may not be promissory in nature, with the result that the contractor will not be bound by it. Examples of such language are "we plan to" or "we intend to" provide something greater than required by the work statement. If the Government wants to hold the contractor to that commitment, it should rewrite the specification in the awarded contract to ensure that the higher level of performance is a firm contract requirement.”

“Promissory Language: A Key Factor in Awarding Contracts,” The Nash & Cibinic Report (Aug. 2104), by Ralph C. Nash, Jr., Professor Emeritus of Law, The George Washington University Law School

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"Words of promise which by their terms make performance entirely optional with the 'promisor' whatever may happen, or whatever course of conduct he may pursue, do not constitute a promise."

Restatement of the Law, Contracts 2d § 2 Illustrations, e.

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"A promise must be distinguished from a statement of opinion or a mere prediction of future events."

Restatement of the Law, Second, Contracts 2d § 2, Illustrations, f.

Incorporating a proposal into a contract does not make the entire proposal binding. Only words clearly of a promissory nature will be binding. Incorporating a proposal into a contract does not convert non-promissory language into promises.

Unfortunately, contracting officers today are not given even an elementary education in contract law.

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5 hours ago, Sam101 said:

@formerfed I heard that too but I'm not understanding how an agency wouldn't have to recompete that new SOW since it's not the same as the original requirement.

In a competitive acquisition, the parties may negotiate changes to a SOW to reflect what an offeror has proposed, as long as they don't relax any material requirement or otherwise make changes so great as would have affected the scope of the competition.

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The answer to your initial question may be how the contract is written regarding the proposal. For design-build construction contracts, the offerors usually propose preliminary design solutions for the performance based requirements. The USACE incorporates the technical and portions of the performance capability proposals into the awarded contract.

Here is the contract clause that we have taught in the USACE Design-Build Construction class and have successfully used for about 24 years. It was included in a model RFP for the Army Transformation program beginning in 2006 and used for tens of billions of dollars worth of design-build projects. It was incorporated into the USACE Acquisition Instructions in 2014. 

“52.236-5000 Design-Build Contract Order of Precedence.

The PCO shall insert the following clause in all design-build solicitations and contracts:

Design-Build Contract Order of Precedence (AUG 1997)

(a) The contract includes the standard contract clauses and schedules current at the time of contract award. It entails (1) the solicitation in its entirety, including all drawings, cuts, and illustrations, and any amendments, and (2) the successful offeror’s accepted proposal. The contract constitutes and defines the entire agreement between the Contractor and the Government. No documentation shall be omitted which in any way bears upon the terms of that agreement.

(b) In the event of conflict or inconsistency between any of the provisions of this contract, precedence shall be given in the following order:

(1) Betterments: Any portions of the accepted proposal which both conform to and exceed the provisions of the solicitation.

(2) The provisions of the solicitation.(See also FAR 52.236-21, Specifications and Drawings for Construction)

(3) All other provisions of the accepted proposal.

(4) Any design products including, but not limited to, plans, specifications, engineering studies and analyses, shop drawings, equipment installation drawings, etc. These are "deliverables”. “

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We also use a clause that requires the contractor to use those key personnel and any key subcontractors or outside consultants that were proposed in response to specific proposal submission requirements. The clause recognizes that as time passes, some key personnel might no longer be available. In that event the qualifications of the initially proposed key personnel become the new minimum requirement for proposed substitutes.

If specifically proposed key subs (as defined in the proposal submission requirements) are no longer available, then the evaluated qualifications of the original key subs are the new minimum requirements and the KO must approve a proposed substitution. Inasmuch as bid shopping might be a reason why a prime would want to substitute a key sub , the government could demand consideration for a proposed replacement.

In all instances any replaced key personnel or key subs would have been from those specifically proposed for the contract award.

We don’t always use key personnel as a discriminator in a D-B competition. However, I’ve learned over the years that even the premier design or construction companies, relying upon their experience and past performance records and having proposed an “A” team, all  to help win the competition,  can sometimes assign or substitute the “B” or “C” team to a government contract, if they can get away with it. 

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There's a 2015 ASBCA decision about a Corps of Engineers design-build contract that included the order of precedence clause that Joel mentioned above. It shows one of the things that can happen when an agency incorporates an offeror's technical proposal into a contract.

If you're interested, Google "ASBCA 57471". You should get a link to the board's decision about the appeal of MARCON Engineering. You want the decision dated May 1, 2015.

The decision is lengthy, but you only need to read the part about the drainage claim. Read the board's findings of fact numbered 33-37, which appear in pages 17-19, and the board's decision on the drainage claim, which appears in pages 39-46. Be sure to read footnote 9.

Lesson learned.

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Vern, the ASBCA 57471 drainage claim is dated May 1, 2015. I found it at https://www.asbca.mil/Decisions/2015/57471 MARCON Engineering, Inc. 5.1.15.pdf

Will read it now.

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Thanks for that example, Vern. I wish I’d known about that case when I was teaching the USACE Design-Build (D-B) class and when I insisted that the background material for the D-B Order of Precedence Clause be published along with the clause in USACE SOP’s . For various reasons unrelated to this ASBCA case, it took over 20 years to even get the various clauses published,**

However, each of the drainage claim lessons learned were consistent with the USACE D-B Course instruction.

1. I don’t know why the Corps District used the Uniform Contract Format Order of Precedence clause. The Standard FAR Order of Precedence clause is mandatory for the UCF. As We have taught since 1997 and I have explained several times in the WIFCON Forum, the UFC isnt suitable for construction and  especially for design-build construction contracts.The USACE is supposed to use MasterFormat, which is an industry standard format for construction contracts. Since D-B is technically a construction contract, we also use it for D-B. We teach NOT to ever use the FAR clause because it contradicts the wholistic concepts taught for Design-Build. The case narrative mentioned some MF section numbers, so I think that they didn’t use the UCF.

I suspect that someone who doesn’t know or understand design-build inserted that clause during the RFP preparation - which we also caution against.

2. We also stress in the course instruction and in the background for the clause that the D-B Order of Precedence clause also comes with additional responsibilities on the part of the source selection team and technical evaluator advisors. They must be familiar with the solicitation requirements. They must carefully read the preliminary design proposals. They must note any exceptions or patent conflicts between the proposal and the requirements. Any exceptions or conflicts must be documented,  discussed and resolved with the proposers during discussions. If the government is willing to accept the non-conforming aspects, then it must amend the solicitation but can’t simply “accept” conflicting proposal non-conformities. Discussions are the expected norm for D-B competitions. The government can’t simply rely the clause after award, if the due diligence above is not performed. I actually had students in my class say that they knew about conflicts “but assumed that the clause would cover the government after award”!! This case is a prime example of failure of the task order evaluation and selection team to understand or follow those basic principles, compounded by someone including the standard FAR Order of Precedence clause (NOT required and NOT to be used in MasterFormat construction or D-B contracts).

3. The government provided design-build “bridging” partial design documents. When this happens, there is all sorts of potential problems. The government generally can’t transfer design risk to the design-builder for the adequacy of government furnished design or design criteria, especially for latent defects. Here, there were both patent and latent apparent defects in the design criteria or government furnished design. The fact that the successful proposer addressed them in its proposal, necessitated discussions to resolve those that were patent.

4. Design-build requires close coordination between the government and contractor technical personnel during design-development and quicker responses on the part of the government than in traditional design processes not to slow down the D-B processes. Fast tracking was allowed and was part of the contractors proposal. Time is of the essence and is a  primary advantage and reason why D-B is selected for a project. None of that was evident here.  I won’t describe the processes but sufficient to say that there was little interaction and no proactive action evident.

This is a perfect example of “design-build done wrong”. The D-B Order of Precedence Clause was misused, compounded by contradicting it with the FAR Order of Precedence clause.

I apologize for the length of this post. However, the Decision that Vern Edwards referenced is 47 pages long and involved in-depth issues with much unstated background. The fact that the Decision apparently took many years to resolve, hints at the complexity of the scenario and issues.

**Note: It’s too detailed to fully explain here but D-B involves fundamentally different roles and responsibilities than A-E and Construction contracting for the traditional Design-Bid-Build acquisition method. The FAR is totally lacking coverage for the unique aspects of D-B. The Design Build Institute of America and others commented on that in 1996 when the Two-Phase D-B method was open for public Comment before incorporation into FAR in 1997. I knew the USACE attorney who was the DAR lead for Part 36 and for the Part 36.3 Two-Phase coverage. She told me that the Council determined that additional FAR coverage for D-B was beyond the scope of the rule and would require much more study and development. Truth was that neither she or anyone else on the FAR council knew enough about D-B to develop special FAR coverage of non-traditional roles and responsibilities. She did help us develop the PROSPECT course for D-B and learned a lot. She wanted to incorporate our material into the DFARs but 1) would require extensive coordination between Army, Air Force and NAVFAC. Also, the then Director of Contracting in USACE did not get along with the Engineering, Construction and Office of Council Directorates. It was virtually impossible to get something like that accomplished through Contracting under that Director. 2) our attorney developed cancer, which eventually killed her and 3) there was not much support for Design-Build in the Construction and especially Design community in USACE. It was foreign to them and a perceived threat to their traditional professional roles.

She did help us write most of the clauses for D-B that are now USACE policy. I think that Ralph Nash probably knew her (Laura Meeker, Esq.). I had much respect for and miss her.

 

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It’s now 24 years since 1997 and the USACE only recently began the daunting task of trying to get the non-traditional Design-Build roles and responsibilities incorporated into at least the DFARS. Those of us who developed the wholistic approach to D-B and who are/were members of the DBIA are all gone now. I have repeatedly begged that the in-depth background information that was passed down be published and considered by those currently heading up that effort.

They are only doing it now because President Trump ordered all agencies to justify and reduce their regulations. Now USACE has to justify why they have coverage for D-B that is lacking in the FAR. I’m not even sure that anyone can explain why,  let alone the background, history or nuances involved.

 

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@joel hoffmanWell, let's keep the focus on the issue of incorporating  proposals. Technical proposals are usually read by technical personnel, who usually know less about contract law than contracting officers, who often know very little. Moreover, as the board pointed out in the MARCON decision, technical personnel sometimes evaluate proposals negligently. 

For that reason, incorporating even a part of a proposal, much less an entire proposal, into a contract is a perilous course of action, unless the contracting officer is a first-rate professional who knows how to do it safely.

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11 hours ago, Vern Edwards said:

@joel hoffmanWell, let's keep the focus on the issue of incorporating  proposals. Technical proposals are usually read by technical personnel, who usually know less about contract law than contracting officers, who often know very little. Moreover, as the board pointed out in the MARCON decision, technical personnel sometimes evaluate proposals negligently. 

For that reason, incorporating even a part of a proposal, much less an entire proposal, into a contract is a perilous course of action, unless the contracting officer is a first-rate professional who knows how to do it safely.

Vern, it is an design-build industry standard practice and absolutely essential to integrate the contractor’s technical proposal into a fixed price design-build contract. You are correct that unless the contracting officer - as well as the entire acquisition team -knows how to do it, it is a perilous course of action.

If they don’t know how to do it, don’t use design-build. 

EDIT-added this paragraph:

In the instant case, if the Contracting Officer knew anything about the evaluation process and the the order of precedence clause, they didn’t train the evaluation team and convey what I discussed above to them. And, since they incorporated the FAR Order of Precedence Clause - prescribed specifically for UCF contracts- not for MasterFormat contracts, I doubt if they knew anything about the DB Order of Precedence Clause, because they are contradictory. They definitely should not have used the UCF format for a design-build contract. The MasterFormat 2004 and earlier version had long been USACE policy in the EFARS, which I know hadn’t been kept up to date by the afore mentioned Director of Contracting.

That’s why we began teaching design-build in 1995, first as a three day seminar co-taught by government design-build practitioners and the contractor project manager, all of whom were the leads for the Sparkman Center at Redstone Arsenal in the early 1990’s. We developed a formal,  five day course in 1996-1997 and have taught the life cycle acquisition course (from acquisition planning to building commissioning and project turnover)  to thousands of Corps and other agency employees since  early 1997. Attendees represent every facet of the life cycle of the DB acquisition process, including customers, facility users and regulatory officials - even some contractors and private  A-E’s. We especially want each team member to know how they influence or affect the other phases of a D-B project. 

I last taught the course in 2016, so can’t vouch for it now but the lead instructors for the course were seasoned design-build practitioners and we tried to integrate industry “best practices” to the extent possible,  considering that there are legal and regulatory distinctions plus the authorizing legislation anticipated firm fixed price D-B contracts. Several of us are DBIA members and are “DBIA Designated Design-Build Professionals” (TM DBIA). 

Edited by joel hoffman
Added a paragraph, as noted.
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