Evaluating Professional Employee Compensation when Cost or Price is not an evaluation factor

[joel hoffman]

48 minutes ago, C Culham said:

FAR 15.304 does not say there should be no price submission just that you do not evaluate cost/price for selection.  I would suggest that you need cost/price to ascertain that  a qualifying offer likely has fair and reasonable pricing.  

If you need cost/price to ascertain that a qualifying offer[or] likely has fair and reasonable pricing [in order to determine that it is a qualifying offeror, for award] - duh-  then you have evaluated pricing for selection.

48 minutes ago, C Culham said:

   I will say that if the GAO were to hold to your suggestion they would be an advocate for awarding multiple award IDIQ's with no pricing in them. 

That is correct. There is no “pricing” in the base ID/IQ. The price competition and pricing is at the order level. See 15.306(c) (ii) (B)

“  (B) If the contracting officer chooses not to include price or cost as an evaluation factor for the contract award, in accordance with paragraph (c)(1)(ii)(A) of this section, the contracting officer shall consider price or cost as one of the factors in the selection decision for each order placed under the contract.”

Carl, it is a qualification based selection (QBS). It’s not a “best value selection” and isn’t within the “Best Value Continuum”.

EDIT: There doesn’t necessarily have to be “pricing” in an ID/IQ. The USACE has been awarding design-build MATOCS for at least 15-17 years. When using the Two Phase D-B selection process, Phase 2 would typically be competed for award in a pool based upon a “seed task order”, One selectee would receive the first order. But the seed task order competition pricing isn’t incorporated into the base contract award for any selectee. All pricing is generally done at the individual task order level competition. The USACE also has construction MATOCs that are awarded similarly.

Here in this thread, the government goes a step further and awards based upon qualifications.

The weirdest aspect of awarding to qualified offerors is that the government has to award to ALL qualifying offerors.

[C Culham]

1 hour ago, joel hoffman said:

That is correct. There is no “pricing” in the base ID/IQ. The price competition and pricing is at the order level. See 15.306(c) (ii) (B)

1 hour ago, joel hoffman said:

The weirdest aspect of awarding to qualified offerors is that the government has to award to ALL qualifying offerors.

 

So how does a CO determine the caveat of fair and reasonable?  I guess at acquisition planning stage so now we have price competition before solicitation.  Lordy!

As confusing as awarding tens of contracts that will hardly get used.

1 hour ago, joel hoffman said:

There doesn’t necessarily have to be “pricing” in an ID/IQ.

So whats the basis for determing obligation of a minimum?

[Vern Edwards]

On 8/26/2021 at 3:59 PM, C Culham said:

So how does a CO determine the caveat of fair and reasonable?  I guess at acquisition planning stage so now we have price competition before solicitation.  Lordy!

@C CulhamSee FAR 16.504(a). An IDIQ contract must include a minimum and a maximum quantity, which may be expressed as a dollar amount. The amounts of the minimum and the maximum may be established in any reasonable way, and need not be the product of quantity times price.

Now see PL 114-328, Sec. 825 and 10 USC 2305(a)(3)(D). The statute and FAR 15.304(c)(1)(ii) eliminate the need to establish price reasonableness at the time of contract award. Price reasonableness is determined for each task order. But in order to declare that an offeror is a "qualifying offeror," the CO must first determine that there is no reason to believe that it would be likely to offer other than fair and reasonable pricing. See the statute, 10 U.S.C. 2305(a)(3)(D), and the definition of "qualifying offeror" in FAR 2.101.

Note that FAR FAR 15.304(c)(1)(ii)(A)(2) applies the new rule to contracts for services. It makes sense to eliminate advance pricing for IIDIQ contracts for services under which each task order will specify a different effort. This also eliminates the need to establish hourly labor rates for future pricing purposes.

If only the law and the FAR has been written to require award to a reasonable number of offerors, instead of to "each and all qualifying offerors."

[joel hoffman]

See for example: https://www.taftlaw.com/news-events/law-bulletins/new-rule-changes-evaluation-factor-requirements-for-multiple-award-contracts

[C Culham]

@Vern Edwards Thanks I do get it but am hung up on the "would be likely".   

[Vern Edwards]

1 hour ago, C Culham said:

I do get it but am hung up on the "would be likely". 

@C CulhamDon't be hung up. Do what I do. When a reg doesn't makes sense to me—there's no official explanation and no case law interpretation—I decide what I want it to mean, what works in my circumstances. Then I construct an argument that supports my interpretation and "ride, boldly ride" seeking for El Dorado.

Would be likely = I think so, because they didn't give me any reason to think otherwise.

Easy, peasy.

[C Culham]

12 hours ago, Vern Edwards said:

I decide what I want it to mean, what works in my circumstances

No argument but an honest question.  Do you think FAR 1.102(d) fits in such situations where the FAR is conflicted?

I think it does.

[Vern Edwards]

9 hours ago, C Culham said:

Do you think FAR 1.102(d) fits in such situations where the FAR is conflicted? I think it does.

I don't. When FAR appears to be conflicted, I think the resolution is a matter of statutory and regulatory interpretation, subject to the canons of interpretation. 

See Scalia and Garner, Reading Law: The Interpretation of Legal Texts (2012), § 27, Harmonious-Reading Canon; § 28, General/Specific Canon; and § 29, Irreconcilability Canon.

If an agency thinks the FAR is ambiguous or conflicted and decides to proceed based on FAR 1.102(d), treating the matter as one of discretion, and if the agency's action is challenged in court, the court will interpret the regulation in accordance with the canons. It will not treat the matter as one of discretion granted by FAR 1.102(d) or 1.102-4(e).

BTW, the Court of Appeals for the Federal Circuit cited Reading Law in an opinion it issued this week, a link to which was posted on the Wifcon home page. It has been cited in 1,222 Federal court cases overall and in 618 appellate court cases.

[joel hoffman]

11 hours ago, C Culham said:

No argument but an honest question.  Do you think FAR 1.102(d) fits in such situations where the FAR is conflicted?

I think it does.

Yes, it does. The intent is clear. it is specifically addressed in both the law at 10 USC 2305(a)(3) (C) and in The FAR at 15.304 (c) that award will be made to each/all qualifying offeror(s); a qualifying offeror means “an offeror that—

(i) is determined to be a responsible source;

(ii) submits a proposal that conforms to the requirements of the solicitation; and

(iii) the contracting officer has no reason to believe would likely offer other than fair and reasonable pricing”;

“conforms to”, in plain language, means that it meets the requirements. It does not mean “exceeds” the requirements or is “on of the most highly rated offerors”.

It is also clearly stated in the law and in FAR that this is for the same or similar services where the government won’t evaluate price for award of the ID/IQ and the Federal Government shall consider cost or price in conjunction with the issuance pursuant to section 2304c(b) of this title of a task or delivery order under any contract resulting from the solicitation.

I noticed that the law is a bit ambiguous as to whether this exemption might apply to a delivery order contract: 

“(C )If the head of an agency issues a solicitation for multiple task or delivery order contracts under section 2304a(d)(1)(B) of this title for the same or similar services and intends to make a contract award to each qualifying offeror—…

FAR 1.102(d):

“(d) The role of each member of the Acquisition Team is to exercise personal initiative and sound business judgment in providing the best value product or service to meet the customer's needs. In exercising initiative, Government members of the Acquisition Team may assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority.”

Thus, the conditions necessary for discretion under 1.102(d)  to award only to a limited number of qualifying offerors are not present. You need to eliminate conflicting language and procedures in the solicitation. 

Note: I’m writing this during the time that Vern has responded. I haven’t read his response yet.

Edited August 28, 2021 by joel hoffman
Correction of reference “ 10 USC 2305(a)(3) (C)”

[Vern Edwards]

 

8 minutes ago, joel hoffman said:

Yes, it does.

@joel hoffmanIf by "Yes, it does" you mean that it becomes a matter of agency discretion pursuant to FAR 1.102(d), then I disagree with you, as should be apparent from my last post.

8 minutes ago, joel hoffman said:

I noticed that the law is a bit ambiguous as to whether this exemption might apply to a delivery order contract

The statute is not ambiguous about its application to delivery order contracts.

 

[joel hoffman]

Technically, Vern is correct because the correct, authorized procedures ARE addressed in both FAR and the law.  So I read 1.102 (d) to say that there is NO permissible authority to use procedures that are conflicting with the stated exception.

Note: I wrote this after reading Vern’s previous response while And while Vern posted his response to me above. 

[joel hoffman]

1 hour ago, Vern Edwards said:

 

@joel hoffmanIf by "Yes, it does" you mean that it becomes a matter of agency discretion pursuant to FAR 1.102(d), then I disagree with you, as should be apparent from my last post.

The statute is not ambiguous about its application to delivery order contracts.

 

To clarify, I meant that, conversely, it means that, per FAR 1.102(d), that it DOES NOT become a matter of agency discretion. 

The Statute at 10 USC 2305(a)(3) (C) does both refer to delivery order or task order contracts  but limits the exception to “for the same or similar services”. It doesn’t mention “or property”, as stated in its reference to 10 USC 2304(a) (d)(1)(B):

“(B) if the solicitation states that the head of the agency has the option to do so, to award separate task or delivery order contracts for the same or similar services or property to two or more sources.”

Please forgive me if my reference numbers are incorrect. I have to keep flipping between screens on an iPhone and scroll up and down and it’s darned difficult to decipher the paragraph numbering system. 

Edited August 28, 2021 by joel hoffman
Several typos and references and correction of reference to 10 USC 2305(a)(3) (C)

[joel hoffman]

58 minutes ago, Vern Edwards said:

The statute is not ambiguous about its application to delivery order contracts.

Vern, please clarify. You said earlier that the exception to evaluating price or cost for the award of MATOCs is only applicable to MATOCS “for the same or similar services”. Maybe my assumption that  delivery order contracts are for [non real] property is incorrect. 

[joel hoffman]

FAR 2.101 definition: “delivery order means an order for supplies placed against an established contract or with Government sources.”

 

[Vern Edwards]

@joel hoffmanHere is what I said:

Quote

Note that FAR FAR 15.304(c)(1)(ii)(A)(2) applies the new rule to contracts for services. It makes sense to eliminate advance pricing for IIDIQ contracts for services under which each task order will specify a different effort. This also eliminates the need to establish hourly labor rates for future pricing purposes.

I did not say exclusively to contracts for services, but that is probably what I meant at the time, because I was quoting from FAR 15.304, and in FAR services are generally distinguished from supplies.

But here is the statute, PL 114-328, Sec. 825, 

Quote

(C) If the head of an agency issues a solicitation for multiple task or delivery order contracts under section 2304a(d)(1)(B) of this title for the same or similar services and intends to make a contract award to each qualifying offeror...

Why assume that "same or similar services" in the statute refers to services as used in the FAR? (FAR does not define "services," only "service contracts.") Congress does not always adhere to FAR terminology (e.g., "property" instead of "supplies").

What if, reading Sec. 825 as a whole pursuant to the Whole-Text Canon, and applying the Harmonious-Reading Canon, a court were to interpret "same or similar services" as including the "service" of delivering property (supplies) on order?

This kind of thing is a matter for lawyers to argue and judges to decide in accordance with the canons of interpretation. A CO reading FAR 15.304(c)(1)(ii) and trying to decide whether it could be applied to acquisitions for delivery-order contracts should make an interpretation and justify it. If the CO thinks the FAR is ambiguous, and so cannot decide, they should ask for a legal opinion as to its proper interpretation. The CO should not say that the FAR is ambiguous or conflicting and then assert that FAR 1.102(d) grants them the discretion to decide as they see fit.

Make sense?

[joel hoffman]

1 hour ago, joel hoffman said:

“(C )If the head of an agency issues a solicitation for multiple task or delivery order contracts under section 2304a(d)(1)(B) of this title for the same or similar services and intends to make a contract award to each qualifying offeror—…

10 USC 2305(a)(3) (C) may be poorly worded. 

 

22 minutes ago, Vern Edwards said:

Here is what I said:

I did not say exclusively to contracts for services, but that is probably what I meant at the time, because I was quoting from FAR 15.304, and in FAR services are generally distinguished from supplies.

But here is the statute, PL 114-328, Sec. 825, 

Why assume that "same or similar services" in the statute refers to services as used in the FAR? (FAR does not define "services," only "service contracts.") What if, reading Sec. 825 as a whole pursuant to the Whole-Text Canon, and applying the Harmonious-Reading Canon, a court were to interpret "same or similar services" as including the "service" of delivering property (supplies) on order?

This kind of thing is a matter for lawyers to argue and judges to decide in accordance with the canons of interpretation. A CO reading FAR 15.304(c)(1)(ii) and trying to decide whether it could be applied to acquisitions for delivery-order contracts should make an interpretation and justify it. If the CO thinks the FAR is ambiguous, and so cannot decide, they should ask for a legal opinion as to its proper interpretation. The CO should not say that the FAR is ambiguous or conflicting and then assert that FAR 1.102(d) grants them the discretion to decide as they see fit.

Make sense?

It made sense to me that it appears to be ambiguous and I think from your post that you might agree that it is ambiguous.

The reference at 10 USC 2304a(d)(1)(b) allows multiple contract awards for  delivery order or service contracts “for the same or similar services or property”. 

The exception at 10 USC 2305(a)(3) (C) applies specifically to contracts for “the same or similar services”.

[Vern Edwards]

28 minutes ago, joel hoffman said:

It made sense to me that it appears to be ambiguous and I think you might agree that it is ambiguous.

I do not think it's intrinsically ambiguous. It seems ambiguous only in light of what we know from extrinsic texts, i.e., the FAR.

Look, the statute expressly says:

Quote

 

If the head of an agency issues a solicitation for multiple task or delivery order contracts under section 2304a(d)(1)(B) of this title for the same or similar services and intends to make a contract award to each qualifying offeror—

“(i) cost or price to the Federal Government need not, at the Government’s discretion, be considered under clause (ii) of subparagraph (A) as an evaluation factor for the contract award...

The statute refers to "delivery order contracts" six times. In order to insist that under FAR the exception applies only to task order contracts (services) and not to delivery order contracts (supplies) you have to ignore part of the plain language of the statute, all on the basis of only one word.

Good luck with that kind of argument, but feel free to insist.

[joel hoffman]

[I wrote this post while Vern wrote his immediate preceding post and doesn’t respond or refer to it]

Heck, during my participation on the DBIA** Federal Contracting Practices committee for the past several years, we are often asked to review and comment on proposed legislation. The proponents of such legislation and the legislative committee staffers often don’t really understand the full context or ramifications of what they are writing. In some cases, the final legislation backfired on the original proponents’ intent due to numerous, often conflicting reviewer responses or opinions.

I asked some of our DBIA committee members as well as the DBIA staffer if we reviewed the proposed legislation to allow an exemption to the requirements to evaluate cost and pricing and to include pricing in the MATOC award where it isn’t practical and/or competitive establishment of pricing at the task order level is more appropriate.

The DBIA and the Design-Build industry promote, where appropriate, as a “best practice”,  the concept of “Qualification Based Selection” of the most highly qualified DB team or teams (no pricing and little or no preliminary design) as distinguished from “Best Value selection (where they refer to the term “best value” as meaning selection based upon both technical/qualifications and price).

The legislation as enacted doesn’t fit their concept of QBS and none of us remember if we reviewed and provided feedback on it.
 

**DBIA is the Design-Build institute of America. Membership includes personnel from public: State, local and Federal government agencies, private owners, A/E firms, construction contractors, specialty subcontractors and suppliers,  integrated design-build firms, college students and various Universities.

Edited August 28, 2021 by joel hoffman
Explain that this post doesn’t respond to Vern’s post immediately preceding it.

[joel hoffman]

4 hours ago, Vern Edwards said:

I do not think it's intrinsically ambiguous. It seems ambiguous only in light of what we know from extrinsic texts, i.e., the FAR.

Look, the statute expressly says:

The statute refers to "delivery order contracts" six times. In order to insist that under FAR the exception applies only to task order contracts (services) and not to delivery order contracts (supplies) you have to ignore part of the plain language of the statute, all on the basis of only one word.

Good luck with that kind of argument, but feel free to insist.

I thought it applied to both until your earlier mention in this thread that it was for services. Then,  I noticed where one section at 10 USC 2304 mentioned awarding multiple delivery order or task order contracts for both “the same or similar services or property”  and then the other at 10 USC 2305 limited the exception  to contracts for “the same or similar services”.

It makes sense that it could work for supplies and makes even more sense to use the exception for supplies. Why establish (maximum) prices in an ID/IQ for supplies that may include long term pricing for numerous items and where pricing is volatile/fluid?

EDIT: I have long felt that locking in maximum prices for supplies at the contract level is somewhat problematic. A contractor has to establish competitive prices but cover itself for long or even short term term pricing under ever changing market conditions.

The government buyer’s perspective may only be that those published prices  must be “fair and reasonable” or they might have some visibility of the sales prices of some past purchases, not knowing the specific circumstance of the earlier purchases. They might have no other familiarity with current pricing. That is evident to me from many posts in the WIFCOM Forum.

 

[Vern Edwards]

9 minutes ago, joel hoffman said:

It makes sense that it could work for supplies and makes even more sense to use the exception for supplies. Why establish (maximum) prices in an ID/IQ for supplies that may include long term pricing for numerous items and where pricing is volatile/fluid? 

I can think of many instances in which it  makes no sense to evaluate price (as opposed to estimated cost) in complex acquisitions. What we really need is a change to the requirement in FAR 15.304(c)(1)(i) to evaluate price in "every" source selection. We need freedom to use qualifications-based contractor selection, with one-on-one negotiation of contract terms, including price, with the prospective selectee.

There are many kinds of acquisitions in which head-to-head price competition is absurd.

The idea of seeking price competition in every competitive negotiated acquisition through solicitation of competitively-priced proposals is an outdated 19th Century holdover. Even the new FAR 15.304(c)(1)(ii) exception presumes such price competition for task orders. It is a needlessly costly procedure.

 

[joel hoffman]

3 hours ago, Vern Edwards said:

I can think of many instances in which it  makes no sense to evaluate price (as opposed to estimated cost) in complex acquisitions. What we really need is a change to the requirement in FAR 15.304(c)(1)(i) to evaluate price in "every" source selection. We need freedom to use qualifications-based contractor selection, with one-on-one negotiation of contract terms, including price, with the prospective selectee.

There are many kinds of acquisitions in which head-to-head price competition is absurd.

The idea of seeking price competition in every competitive negotiated acquisition through solicitation of competitively-priced proposals is an outdated 19th Century holdover. Even the new FAR 15.304(c)(1)(ii) exception presumes such price competition for task orders. It is a needlessly costly procedure.

 

I agree with you, except I don’t have a problem with price competition in a MATOC fair opportunity task order competition. I have little faith in the competency of the Federal work force to effectively negotiate or bargain for good prices or for better performance.

Many KO’s are not subject area experts for various acquisitions-especially for engineering, construction or, in particular,  for design-build processes, unique differences between design-bid-build and D-B and for the technical design aspects of a proposal.

Heck, many car dealers are now eliminating negotiable pricing (“no haggle pricing”, etc.  prices). Furniture markups are ridiculously high and there are perpetual, almost meaningless  “sales”.

I’ve noted before in the Forum where a Korean, fellow construction contract administrator told me to just “use your imagination” when I would ask any questions about our Korean contractors’ change order proposal pricing.

He said that Americans are “too trusting” and reluctant to negotiate prices. He said Koreans don’t accept any prices at face value and “negotiate for everything, including a loaf of bread”.

I’m convinced that many KO’s have little knowledge or perspective about even “bargaining” and “bargaining for better performance” which is now mentioned and emphasized in FAR 15.306(d), (d)(2) and (d)(4) as part of the 1996-1997 FAR 15 rewrite. I’ve been told by numerous KO’s that we can’t discuss objectionable or undesirable aspects of an offeror’s proposal if they meet the minimum requirements because it is “technical transfusion” (not usually) or “technical leveling” (no longer specifically prohibited). Those are both legacy terms from FAR Part 15 prior to 1997, where discussion regarding discussion emphasized the “do nots” rather than the “do’s”. Younger KO’s are learning out dated legacy practices by others.

My D-B contracting teaching counterparts do not mention or emphasize bargaining and teach avoiding getting into much price discussions. Geez!

Just my opinion.

[joel hoffman]

…And based upon observation, bolstered by a recent class on the traits and characteristics of the different generations of Americans, there seems now to be a preference to text or otherwise communicate by other than oral face to face or even telephonic means. Letter writing is becoming rare. 

Just my opinion.

[C Culham]

10 hours ago, Vern Edwards said:

I don't

Thank you