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It is inauguration day, and we are beginning a new chapter in America’s history. We’re expecting lots of government contracting changes in short order (beginning with repeals of some of the Obama Administration’s Executive Orders), so check in with us here on SmallGovCon regularly for updates.
As we honor our nation’s unparalleled tradition of peaceful transitions of power, it’s time for the SmallGovCon Week In Review. In this week’s edition, two commentators weigh in on the GAO’s denial of four protests of the major Alliant 2 GWAC, two major corporations are facing potential debarment stemming from alleged discrimination, Set-Aside Alert discusses how the new Trump Administration will affect small contractors, and much more.
- One commentator says that the GAO’s decision to deny four protests of GSA’s Alliant 2 GWAC could end up being a landmark ruling on lowest-price, technically acceptable contracts for services. [Federal News Radio]
- More Alliant 2: another commentator says the GAO’s decisions have ramifications beyond a potential $65 billion worth of IT services that it could bring to the federal government over the next 10 years. [Nextgov]
- Many small federal vendors are hopeful about the possibility of greater opportunities in defense procurement, and possibly fewer regulations to follow as a federal contractor. [Set-Aside Alert]
- Debarment from government contracting could be at stake for Oracle over an employee pay discrimination suit filed by the U.S. Department of Labor. [ZDNet]
- President Obama’s Executive Orders dealing with contractor work forces could face reversal now that Donald Trump is President. [Stars and Stripes]
- In a lengthy report, the GAO concludes that DoD needs clearer guidance when it comes to privately financed construction projects. [GAO]
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The Transactional Data Reporting (TDR) Rule requires vendors to electronically report the price that the federal government paid for an item or service purchased through GSA acquisition vehicles and other data elements. The rollout of TDR across all pilot schedules is now complete. If you accepted TDR willingly or unwillingly, it’s time to understand the reporting requirements.
When are the TDR Requirements Effective?
Upon acceptance of the TDR pilot bilateral mass modification, the requirement for providing a Commercial Sales Practice (CSP) disclosure to accompany modification requests will be eliminated. In addition, vendors will no longer be required to track price reductions granted to their Basis of Award (BOA) customer or category of customers. Price Reduction Clause liability for current contractors ends with acceptance of the TDR mass modification, which will be effective on the first day of the business quarter following acceptance of the modification.
In order to ease the transition from the current 72A reporting database to the TDR reporting module, the requirement for commencement of reporting will not begin on the date the modification is signed; rather, reporting will begin at the beginning of the next full business quarter as shown below:
Modification Accepted Requirements Effective July 1 – September 30 October 1 October 1 – December 31 January 1 January 1 – March 31 April 1 April 1 – June 30 July 1
If a current contractor accepts the modification during the last 15 days of a standard business quarter, reporting begins on the first day of the second business quarter following modification acceptance.
What Data Am I Required to Report?
The clause requires contractors to submit the following data elements:
- Contract Number
- Order Number or Procurement Instrument Identifier (PIID)
- Non Federal Entity, if applicable
- Description of Deliverable
- Manufacturer Name
- Manufacturer Part Number
- Unit of Measure (each, hour, case, lot, etc.)
- Quantity of Item Sold
- Universal Product Code (UPC), if applicable
- Price Paid per Unit
- Total Price Sold
Contractors should report Firm Fixed Price (FFP) orders as single line item representing the lump sum total for the order. For services time-and-materials (T&M) or labor hour orders, reporting should be done by labor categories and rates.
Manufacturer Name is not a mandatory field for service contractors in TDR, but Description of Deliverable is a mandatory field for both products and services. Service providers would place a brief description of the project or service offered in the Description of Deliverable field.
How Can I Complete the Reporting?
Contractors have multiple options to submit their sales data such as:
- Form entry – where you fill out a form in your web browser
- File upload – where you upload an excel or .csv template populated with your sales data
- Electronic Data Interchange / EDI
- Web Services / API
In summary, TDR data is reported monthly and there is a 30-day window to report after the end of the month. Your Industrial Funding Fee (IFF) must be paid quarterly. Contractors may, however, choose to remit IFF on a monthly basis when they report their sales if they prefer and must do so through the TDR system. For TDR Pilot contractors under Schedules 70 and the Professional Services Schedule, if TDR SINs are included on a contract alongside non-TDR SINs, the entire contract is subject to TDR terms and conditions, and CSP and PRC requirements are removed for the entire contract. Remember that participation in the TDR Pilot does not exempt the contractor from existing reporting requirements found elsewhere in the contract.
About the Author:
Julia Coon is GSA and VA Contract Consultant at Centre Law & Consulting. Julia works with the GSA/VA team in preparing new schedule proposals and post-award contract administration. She has experience in producing schedule renewal packages, various modification packages, small business subcontracting plans, and updates to GSA pricelists.
The post You’ve Accepted Transactional Data Reporting, Now What? appeared first on Centre Law & Consulting.
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Of all areas in contracting, the one often taken most for granted, yet of vital importance, is that of the prime contractor/subcontractor relationship. We all know how much the requirements, contractual specifications, terms and conditions, and funding on a prime contract flow down the supply chain, but this flowdown doesn’t just happen. Although some may argue it’s as easy as placing clauses into a subcontract, it more complex than that. Subcontracting can exponentially increase the complexity of whatever product or service is to be delivered to the ultimate customer.
For all the attention placed on the customer and prime contract, all these same complex issues, and more, are placed on firms managing both ends of the subsequent subcontracting relationships at each successive tier. These firms may be competitors with each other in some respects, yet working for one another in other respects. Prime and subcontractors must develop tools and systems for tracking performance, compliance, and results—not only of themselves, but of each other. Creating these processes, systems, and documents defines their relationship and responsibilities. Determining the terms and conditions of what the prime needs—including what, how, where, and when—must be precisely articulated to ensure the sub delivers exactly what the prime customer asked for (as defined in the prime’s solicitation, the sub’s proposal, and subsequent (proper) communications).
Within both federal and commercial contracting, competitive pressures and expectations continue to dramatically increase. In most cases, everyone has increasing alternatives to go elsewhere if needed to get their requirements met. The prime customer, as we know, is obligated to flow down certain expectations, and to manage the increased pressures “downhill.” Within federal contracting, increased oversight and review of the managing of subcontracts or purchasing has increased from the contracting office to the Defense Contract Management Agency.
As in all things, this comes down to people. While many of these activities lend themselves to automation, much also requires the ever-growing need for professionals with interpersonal skills—particularly relationship building. Hard and so-called “soft” skills (or competencies) such as contract management, pricing, written and verbal communication, knowledge of technology, research, finance, marketing, or general business acumen—as well as adaptability to change—are competencies no firm can short-change in the people that ensure this is done internally, or in representing itself to the outside business world.
Subcontracting, supply chain, or purchasing managers; buyers, contract specialists, pricing specialists, estimators, or category managers—whatever the title, they are interrelated within the same overall profession. Whether on the buying or selling side, the prime or the subcontractor, the top-tier or several layers down the supply chain, this is as important a relationship and imperative a technical expertise as ever there was in how our economy is driven.
Within small businesses, it can be well argued that these activities are everyone’s responsibility. Whether it’s someone working in finance, information technology, law, or business development; even the CEO needs to understand and perform parts or all of these subcontract management functions.
So what are you waiting for? The business that you may help thrive or just survive may be your own. Good Luck!
Michael P. Fischetti
National Contract Management Association
NCMA invites you and your colleagues to attend SubCon Training Workshops—NCMA’s new training event for subcontracting professionals—March 30–31, 2017, in Dulles, VA; offering four workshops, each with six sessions to choose from. Participants can choose their own schedule or come for two full days of training and networking. Learn more at www.ncmahq.org/subcon17.
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In early 1977, Gordon Wade Rule (Rule) sat in a chair in a corner of a conference room at the Naval Material Command reading a document that I had prepared about his negotiations on the CGN-41, a nuclear-powered guided missile cruiser. Days earlier, I was among a group that was briefed by a staff member of Admiral Hyman Rickover (Rickover), the Director of the Naval Nuclear Propulsion Program. Although, the briefing was supposed to be about the CGN-41 negotiation, we were treated to a 3-hour lecture on how the Navy's shipbuilders were trying to "pin the rose" on Rickover. In this case, pinning the rose had nothing to do with the shipbuilders asking the Admiral to a prom.
When I began writing this blog entry, I had planned to include only the work I had done decades ago for the Chairman, House Committee on Armed Services. That work involved Rule's negotiation of Modification 31 to the contract that included the CGN-41, the eventual USS Arkansas. I wanted you to figure out if the modification that Rule signed was done in a manner that would allow it to survive a court test. It took 2 courts to decide that question so it wasn't as easy as it sounded. Unfortunately I read too much surrounding material and I realized that I was taking Rule's actions out of the context in which they happened back in the 1970s. So, I added a bit more information. You will see Rule as the contracting officer, Rickover as a program officer interfering with the contracting officer, Senator William Proxmire apparently acting for Rickover and himself, and Deputy Secretary of Defense William P. Clements, Jr. (Clements) trying to resolve the shipbuilding claims problem in any manner he could. You cannot choose sides on this one. All characters, including government agencies and shipbuilders, were trying to manipulate and influence anyone that became involved with the CGN-41. It seemed as if sides were drawn by identifying the enemy of an individual's enemy.
A Brief Introduction to the Shipbuilding Claims Era
In the early 1970s, cost overruns and shipbuilders' claims had become a major problem. By 1976, it had reached epidemic proportions with $1.9 billion in shipbuilder claims. The shipbuilders, the Navy, the Department of Justice, and Rickover were in a war. In the case of the CGN-41, Newport News Shipbuilding and Drydock Company was the industry player.
Clements wanted to settle the ship claims problem with the use of P. L. 85-804. A June 21, 1976, Business Week article explains his early effort. The excerpt below is a quote from the article entitled: The Shipbuilders Balk at 40 Cents on the Dollar. The article explained that Clements had planned to settle $1.9 billion of shipbuilding claims against the Navy for "between $500 million and $700 million" but that plan fell fiat with the Navy's shipbuilders. He explained that "the shipyards are giving me trouble." The article further described:Quote
On Apr. 30 Clements informed both the Senate and the House Armed Services Committees of his unusual plan to clear up long-pending claims, which he said are largely responsible for the "acrimonious and adversarial environment that now marks Navy-shipbuilders business relations." He promised the legislators a progress report on June 10. At the same time, he predicted privately that he would have the claims situation wrapped up by that date.
The settlements would be under terms of Public Law 85-804, enacted by Congress in the early 1960s to enable the Defense Dept. to modify contracts when it is in the interest of national defense. The law was amended in 1973 to require that Congress be notified prior to use of the law for any modification exceeding $25 million and be given 60 days to disapprove.
Clements intended to use this program to bypass traditional, drawn-out appeals board procedures and to wipe the slate clean of the massive extra dollar amounts demanded by shipbuilders to compensate them for such things as Navy-ordered design changes, late delivery of government-furnished equipment, and higher-than-anticipated inflation rates. But at midweek Clements was far short of his goal. The two shipyards with the bulk of the outstanding claims were reluctant to accept his offer of roughly 40¢ on the dollar in immediate cash.
A lot of money. Tenneco Inc.'s Newport News Shipbuilding & Dry Dock Co. filed the largest of the outstanding claims-some $894 million. After meeting Wednesday morning with Clements, Newport News President John P. Diesel said: "We have failed. We can't get together on money, and the Navy has not done a damn thing about changing contracting procedures."
After failing to reach a settlement himself, Clements called Navy management to his office for a meeting of the status of shipbuilding claims. Nothing had been accomplished by them either. He then focused on the CGN-41. The work on this ship had been stopped by Newport News because of issues it was having with the Navy. The contract was in court and work had started again under the condition that the Navy negotiated in good faith with Newport News to resolve the issues. The court's time limit for good faith negotiations was running out and something had to be done. Since the CGN-41 contract was in court, the Department of Justice was required to play a part in the review of any settlement proposed to the court.
This is where our story begins. I have added the dates on which the actions occurred so that you can follow. All facts are based on documents that I had reviewed in the 1970s or documents that I recently reviewed. I needed to limit the length of this entry so I added enough information to give you a flavor of the times. Sometime in the future, I may write a larger article. Rule was appointed as a special contracting officer on the CGN-41 to resolve the issues that the Navy and the Secretary of Defense could not accomplish. Undoubtedly he knew he was heading into a mighty storm that might harm him.
Contract Modification P00031 To CGN-41: Chronology of Events
July 13, 1976: Clements held a meeting to discuss Navy shipbuilding claims. Among those in attendance were:
- Deputy Secretary of Defense (Clements)
- Consultant to the Deputy Secretary of Defense
- Assistant Secretary of the Navy (Installations and Logistics) (ASN (I & L))
- Chief of the Naval Material Command (NAVMAT)
- Vice-Chief of the Naval Material Command (NAVSEA)
- General Counsel of the Navy, and
- Gordon Rule, Director, Procurement Control and Clearance Division, Naval Material Command. (Rule)
In regard to the Newport News claims, a member of the meeting quoted Clements as saying that he was "irrevocably committed to solving this problem; unlike Admiral Rickover." Clements then asked the Navy officials why they had not reformed the contract, indicating that if they would not, he would. He then stated that he wanted to see four changes incorporated in the CGN-41 contract: (1) a new escalation clause; (2) a new "changes" clause; (3) a new ceiling price; and (4) a new delivery date. (emphasis added)
During the meeting it was agreed that Rule would become negotiator for the CGN-41. He was to report directly to the Chief, NAVMAT and the Vice Chief, NAVMAT was to meet with Clements each day at 9:15 a.m to report on the progress of the negotiation.
July 14, 1976: Rule telephoned Newport News to explain that he had been assigned principal negotiator on the CGN-41 and requested a meeting.
July 15, 1976: Newport News was contacted by a consultant to Clements who explained Rule's authority. Rule and Newport News held their first meeting.
July 16, 1976: The Assistant Secretary of the Navy (Installations and Logistics) wrote to the Chief, NAVMAT informing him that the Chief would be responsible for the direct discussions between Rule and Newport News. Rule would be the principal negotiator and Rule would be assisted by NAVSEA and the Navy General Counsel, as required.
July 16, 1976: Rule sent a memo to Clements describing his first meeting with Newport News. As a note, he mentioned that he intentionally did not contact the Navy's Supervisor of Shipbuiliding, Conversion and Repair (SUPSHIPS), Newport News.
July 19, 1976: Rule sent a memo to the Deputy Commander for Contracts, NAVSEA asking for brief descriptions of what the Navy considered as key issues for negotiation and the Navy's negotiating position so he could develop his own negotiation position.
July 28, 1976: The Vice Chief, NAVMAT and a consultant to Clements held discussions with Newport News. Areas discussed were: when the CGN 41 problems would be solved, ceiling price, and escalation provisions.
August 10, 1976: Rule telephoned Newport News and requested a meeting in Washington on August 12,1976.
August 12, 1976: During a meeting in Washington between Rule and Newport News, Newport News left a general outline for negotiations.
August 12 and 13, 1976: The Vice Chief, NAVMAT asked Rule about the August 12 meeting so he could inform Clements. Rule explained that Newport News had delivered a proposal and he did not approve of it.
August 17, 1976: Rule telephoned Newport News and requested a negotiating session to be held on August 20, 1976.
August 19, 1976: The Deputy Chief of Naval Material (Procurement and Production) issued Rule an appointment as Contracting Officer with "unlimited authority with respect to negotiations with Newport News."
August 20, 1976: Negotiations were held between Rule and Newport News.
August 23, 1976: The Vice Chief, NAVMAT and Rule met with Clements to brief him on the August 20th negotiations. According to Rule, Clements' comment on the negotiations was "fine." After the meeting with Clements, Rule received a note from the Chief, NAVMAT to meet him in the Office of the Assistant Secretary of the Navy (Installations and Logistics). Among those attending were:
- Assistant Secretary of the Navy (Installations and Logistics),
- Chief, NAVMAT,
- Vice Chief, NAVMAT,
- Rule, Director, Procurement Control and Clearance Division, Naval Material Command,
- Commander, NAVSEA,
- Deputy Commander for Contracts, NAVSEA,
At this meeting, the Chief, NAVMAT ordered Rule to describe the results of the August 20 negotiations.
August 24, 1976: Rickover wrote to the Chief, NAVMAT that he had heard a rumor of a settlement on the CGN-41 between Rule and Newport News. Rickover commented point-by-point about the rumored settlement and said such a settlement "would show that the Government will not require Newport News to honor its contracts." Rickover recommended that anyQuote
settlement be referred formally to the Naval Sea Systems Command for review and comment by knowledgeable personnel directly responsible for the work in question. In this regard I [Rickover] will be glad to provide assistance based on my own knowledge of the events in question.
August 24, 1976: Senator William Proxmire wrote to the Attorney General, Department of Justice expressing concerns about Gordon Rule's views on the CGN-41 negotiations and telling the Attorney General:Quote
I understand that the Department of Justice has sole responsibility within the Government for approving out-of-court settlements involving Government matters under litigation. I assume that the Justice Department will review any such settlements proposed by the Navy in the CGN-41 case. However. in view of the importance of the CGN-41 case to the overall shipbuilding claims problem, I request that you direct the Navy to keep you fully informed of any negotiations and that you review any settlement offer to ensure that it is on sound legal ground and in the public interest before the Government becomes a party to it.
August 25, 1976: Newport News telephoned Clements and read a prepared press release. The consultant to Clements said he and Clements approved of the press release, an excerpt of which stated: "The parties have agreed to sign a definitive contractual document embodying the negotiated agreement for the construction of the CGN-41." Later that day, the Assistant Secretary of the Navy (Installation and Logistics) telephoned Newport News, informed them that he was perturbed by the Newport News press release and stated that the Navy would issue its own press release stating that agreement had been reached in principle but that the matter was to be reviewed by higher authority. On this same date the Navy issued a press release explaining an "agreement in principle" was being drafted for review and approval. (Emphasis added)
August 26, 1976: The Chief, NAVMAT sent Rickover a response to his August 24, 2016 letter stating:Quote
From your many, years in government service I know you realize that business sensitive negotiations should not be influenced by sources outside of the designated negotiating parties, and that a broadly distributed letter from you, such as reference (a) [August 24, 1976 memo from Rickover described above], cannot help but cause perturbation in the negotiating process, disrupting the efforts of the assigned negotiator.
The Chief, NAVMAT further wrote: For reasons such as this, you must stand apart from these negotiations unless the technical areas regarding naval nuclear reactors become involved.
August 27, 1976: Rickover responded to the Chief's, August 26, 1976 letter to him. In response to the wide distribution he used for his letter of August 24, 1976, Rickover explained that:Quote
I felt obliged to inform them of what I had heard. I am sure you are not implying that it is improper for me to call such matters to the attention of those responsible, and point out potential problems. To remain silent would be analogous to not warning my mother that she was about to fall off a cliff.
He used the same distribution list for this 6-page letter as he did in his August 24, 1976 letter.
August 30, 1976: Newport News met with Rule in Washington and delivered the first draft of Modification P00031.
The Chief, NAVMAT sent a letter to Rule explaining that, prior to a binding agreement on the CGN-41, the elements of the agreement must be submitted to the Chief, NAVMAT for review and approval. The review was to be conducted by the Vice Chief, NAVMAT, the Deputy Chief, NAVMAT (Procurement and Production), the NAVSEA Deputy Commander for Contracts; and the General Counsel for the Navy. Mr. Rule was to provide the proposed contract modification, the business clearance justifications, and other supporting papers for review prior to signature by the contracting officer.
Gordon Rule forwarded a draft memorandum to the Chief, Naval Material that summarized his negotiations with Newport News.
August 31, 1976: The General Counsel of the Navy noted the Rule draft memorandum and told Rule of the General Counsel's responsibility to review the summary of negotiations. Additionally, the General Counsel requested more information to support Rules' summary.
September 1, 1976: Rule sent a summary of his negotiations to the Chief, NAVMAT.
September 3 1976: In response to the August 31, 1976 memo from the Navy General Counsel, Rule sent him additional information supporting his summary of negotiations. He also provided a copy of the first draft of Modification P00031.
September 14, 1976: Members of Rule's and Newport News negotiating teams and DCAA auditors met in Washington to discuss provisions in the first draft of Modification P00031. DCAA was asked to review certain provisions of the proposed modification.
September 16, 1976: The Attorney General, Department of Justice, responded to Senator Proxmire's August 24th letter by writing:Quote
Your letter requests that I direct the Navy to keep me fully informed of any negotiations and that I review any settlement offer to insure that it is on sound legal ground and in the public interest. The Justice Department intends to review any proposal and/or papers before submission to the court. We would request the court to approve any settlement only if we are satisfied that it is on sound legal ground and in the public interest.
September 20, 1976: NAVSEA's Deputy Commander for Contracts and a member of the "review team" submitted his analysis of the first draft to the Vice Chief, NAVMAT. This analysis was not made available to Rule.
September 24, 1976: DCAA submitted its analysis of certain provisions of the first draft to a member of Rule's negotiating team.
September 27, 1976: Newport News delivered a second draft of the modification to Rule and Rule requested DCAA to review the draft.
[September 28, 1976: Clements wrote a letter to the Attorney General, Department of Justice, commenting on the August 24 letter of Senator Proxmire. In regard to Rule, he wrote:Quote
Senator Proxmire in his letter suggests that Mr. Gordon Rule is not impartial and that he might not act in the Government's interest but would so act as to undermine the Government's ability to enforce contracts. This is a serious charge by the Senator and defames both the character and competence of Mr. Rule. As I have indicated, it was at my suggestion that Mr. Rule was appointed by the Navy as the senior negotiator in the CGN-41 matter. I know Mr. Rule's background and work experience during his years as a Navy procurement official, and I am familiar with his current work as the CGN-41 negotiator. I consider Senator Proxmire's remarks regarding Mr. Rule ground-less, ill-tempered and unworthy of a member of the U.S. Senate.
In regard to the Department of Justice's review of the CGN-41 negotiation, he said: "Let me assure you that we in DoD have no intention to by-pass or withhold from your department any information which you determine that your department needs in connection with legal proceedings under the court order."
September 28, 1976: DCAA submitted its analysis of the second draft to Rule.
October 4, 1976: NAVSEA submitted its estimate of the cost of the draft modification. Rule rejected the NAVSEA estimate.
October 5, 1976: Rule submitted a memorandum to the Chief, NAVMAT for his approval. It included the estimated dollar impact of his negotiated settlement. For those in contracting, it would be similar to a negotiator's memorandum. The Navy General Counsel sent its analysis of the information supplied by Rule to the Attorney General. In the memorandum, Rule noted that a member of his negotiating team could not complete an analysis he requested because of interference from Rickover and his staff. However, he was able to devise a workaround to complete his cost estimate of the modification for the Chief's review and approval.
October 7, 1976: Newport News carried a third draft of the proposed modification to Rule. The cover letter from Newport News attached to the modification said "I have executed the enclosed modification on behalf of the company and request you immediately return a fully executed copy."
Rule took a copy of the cover letter to the Chief and Vice Chief, NAVMAT in the afternoon. He returned to his office and received a letter from the Chief, NAVMAT telling him that neither he nor his review group had a copy of the proposed modification that accurately reflected the results of Rule's efforts. Final review had not been completed and the proposed modification could not be consummated before the review was done.
According to Rule, he thought about the CGN-41 negotiation effort all afternoon after he met with the Chief and Vice-Chief, NAVMAT. He explained in a deposition that he:Quote
could see what was happening to this whole negotiated settlement. I knew the object of the negotiation. I knew why I had been picked to negotiate a settlement pursuant to the order of the court, which I had done. I could see the Rickover-Proxmire, et al., influence at work everywhere.
And I decided those things all-those things all ran through my mind-I wasn't unmindful of the roadblocks and the lack of cooperation that I had gotten and was getting from the office of General Counsel. When my Contracting Officers statement was turned over to the Office of General Counsel for their review, they then asked me for substantiating documents. I gave them those documents . . . . They were requested by Admiral Lascara [Vice Chief, NAVMAT] to please not write anything until we can get together and discuss this: Let's at least discuss it. Rule had said one thing. Now, review it and let's get together and discuss it before you write anything. They never did. They wrote a 85-page document. They had lawyers working their butts off. They wrote an 85-page document and turned it over to the Department of Justice. And I don't know what it says today. They won't tell me. These are my own lawyers that are supposed to be helping me. They've never told me what was in there. Well, on the 7th of October when these things ran across my face, before my eyes, I said: Something's got to be done. I'm a Contracting Officer. I've got the authority. Now-I'm going to sign the goddam thing. And I signed it.
October 8, 1976: The Vice Chief, NAVMAT called Rule into his office at 8:22 a. m. He gave Rule a letter dated October 7, 1976 that explained that he did not have authority to sign the modification. Rule explained he had signed it and the Vice Chief requested Rule to give him all signed copies. Rule refused but said he would give them to Clements. The Vice Chief then left for his 9:15 am meeting with Clements. Rule returned to his office dictated a transmittal letter imposing two conditions upon the modification and gave Newport News a copy. The Vice Chief, NAVMAT called Rule into his office and told him that the Undersecretary of the Navy would keep all executed copies of the modification but Rule told him that he already had signed it. He returned to his office, signed the transmittal sheet, and handed it to Newport News at 10 A. M. Shortly afterward at 11:50 a. m., Rule was notified that his appointment as contracting officer was rescinded.
March 8, 1977: The District Court for the Eastern District of Virginia ruled that:Quote
There was a meeting of the minds of the parties on August 20, 1976; there is adequate consideration to support this compromise agreement; and failure to provide cost of pricing data does not invalidate the agreement. We find that Deputy Secretary of Defense Clements, who initiated the negotiation efforts, has approved the compromise agreement.
February 27, 1978: The United States Court of Appeals, Fourth Circuit ruled thatQuote
We vacate this order [District Court's above] because we conclude that the parties' negotiators did not settle the case orally and because the Attorney General, whose approval was essential, rejected the terms that were ultimately reduced to writing.
I always thought that the FAR Matrix was a good idea that was poorly executed. To begin with, it's notorious for containing errors. Second, most of the entries in the "Principle Type and/or Purpose of Contract" columns are "A", Required when applicable, which means you have to look up the prescription anyway. Lastly, the matrix isn't going to tell you if your agency deviates from the FAR prescription, which DoD does a lot. As such, I created a matrix that I think overcomes these problems.
A few things about the matrix:
- It contains every provision and clause in the FAR, DFARS, and in DoD Class Deviation memoranda.
- It doesn't have any "Principle Type and/or Purpose of Contract" columns except for a Commercial Items column.
- It contains the actual prescription of the provision or clause. For readability, I removed the number and title of the provision or clause in the block and just wrote "use this provision..." or "use this clause..." The identifying information for the provision or clause is already contained in the row.
- For DoD, it contains additional instructions for the use of FAR clauses that is contained in the DFARS or in a class deviation. This information appears in bold. If you work for a civilian agency, just ignore what's in bold.
- In the "IBR" column (Incorporation by Reference), there are no "N" entries for "no", with the exception of the provisions and clauses prescribed at FAR 52.107. This may cause some people to freak out, so I'll explain. FAR 52.102(c) states:
Agency approved provisions and clauses prescribed in agency acquisition regulations, and provisions and clauses not authorized by Subpart 52.3 to be incorporated by reference, need not be incorporated in full text, provided the contracting officer includes in the solicitation and contract a statement that—
(1) Identifies all provisions and clauses that require completion by the offeror or prospective contractor;
(2) Specifies that the provisions and clauses must be completed by the offeror or prospective contractor and must be submitted with the quotation or offer; and
(3) Identifies to the offeror or prospective contractor at least one electronic address where the full text may be accessed.
Thus, if the FAR Matrix contained a "Y" in the IBR column, my matrix will also contain a "Y". If the FAR Matrix contained an "N" in the IBR column, or the provision or clause came from the DFARS or a DoD class deviation, then my matrix will contain a "Y*". The key at the top of the matrix contains an explanation for the "Y*" entry. If you're wondering how to incorporate a provision or clause that contains fill-in material or something the offeror must complete, see FAR 52.102(a) and FAR 52.104(d).
You can see the matrix on the DAU Acquisition Community Connection. I'm open to suggestions for making it better. Also, I would like to think that it doesn't contain any errors. However, if you spot one please let me know. As an incentive, I will add your agency's provisions and clauses (the ones in Title 48 of the CFR) to the matrix if you point out a mistake.
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An article in today's (Sept. 27, 2016) Wall Street Journal, "Amazon's Newest Ambition: Competing Directly with UPS and FedEx," the paper reports that Amazon is creating its own delivery system in response to rising shipping costs. An interesting comment:Quote
To constrain rising shipping costs, the online giant is building its own delivery operation, setting up a clash with its shipping partners...
Amazon’s goal, these people say, is to one day haul and deliver packages for itself as well as other retailers and consumers—potentially upending the traditional relationship between seller and sender...
Inside the company, executives describe, in the words of one senior official, how Amazon “is building a full-service logistics and transportation network effectively from the ground up.”
Amazon’s push into the shipping sector reflects a willingness among today’s powerful tech companies to defy the traditional constraints of business and leap into new ones.
This seems to be a departure from the business model that developed in the 1980s and 1990s, in which a business identifies and focuses on its core competencies and outsources everything else. https://www.caycon.com/blog/2012/10/focus-on-core-competencies-and-outsource-the-rest/
There has even been talk about outsourcing core competencies. http://www.supplychain-forum.com/documents/articles/Premus & Sanders.pdf
Goodness knows, the military has been accused of doing core competencies during the wars in Afghanistan and Iraq. https://www.brookings.edu/articles/outsourcing-war/
The government has pursued the outsourcing model (in its governmental way) for three decades now, and not without problems, as reflected in the misguided foray into "performance-based" contracting. Outsourcing has been administratively costly and time-consuming and has produced somewhat dubious results.
Does the article about Amazon and its comment about the willingness of powerful tech companies to defy traditional business constraints suggest that we might be witnessing the return of an old business model within some industries?
We've had the revolution. Are we seeing the beginnings of reaction? Has the cycle come full circle? Or are we just seeing a bold move by a bold entrepreneur, the kind of thing the government can't do.
Say, isn't the OFPP Administrator going to Amazon? Maybe some of you should check to see if she's accepting resumes.
Had you ever speculated on why April Fools’ Day seems to be such an important day for federal acquisition? After all, consider some of the regulatory and policy issuances on that day:
The Federal Acquisition Regulation (FAR) became effective on April Fools’ Day (1984).
The Federal Aviation Administration became exempt from the FAR on April Fools’ Day (1996).
The Office of Federal Procurement Policy (OFPP) memorandum on “Protests, Claims, and Alternative Dispute Resolution (ADR) as Factors in Past Performance and Source Selection Decisions” was issued on April Fools’ Day (2002).
Army Federal Acquisition Regulation Supplement (AFARS) Revision #25 was issued on April Fools’ Day (2010).
FAR Case 2010-015 on the Women-Owned Small Business (WOSB) Program was published in the Federal Register on April Fools’ Day (2011).
No doubt a little research would provide a number of additional examples.
Frankly, if it were me, April Fools’ Day would probably be the last day that I would pick for issuing important regulations or policy statements. That is one day that I would avoid like the plague. [Note: The last statement is not technically correct, I would go to greater extremes to avoid the plague than to publish an acquisition policy or procedure on April Fools’ Day.] Why not just wait a day, and avoid all the innuendo and snickering? After all, consider, April has 29 other days that are perfectly suitable for issuing regulations, policies, procedures, guidance and information.
Comparison of Major Contract Types
For example, on Monday, April 25, 2016, the Defense Acquisition University/Defense Systems Management College updated the Acquisition Community Connection with a revised version of its Comparison of Major Contract Types (i.e., Comparison of Major Contract Types - April 2016). [For those who would like a direct link: https://acc.dau.mil/CommunityBrowser.aspx?id=214513.] The new version better aligns with the terminology in the Contract Pricing Reference Guides, updates the charts on the reverse, and adds a chart on “Achieving a Reasonably Challenging but Achievable (RCA) Target Cost,” one of topics discussed extensively in the new Guidance on Using Incentive and Other Contract Types.
Over the years, various versions of the “Comparison” have been fairly popular (i.e., 94,863 Page Views and 80,840 Attachments Downloaded. Although, given the number of personnel in the Defense Statutory Acquisition Workforce Contracting Career Field, 29,690 as of the 2nd quarter of 2015, those Lifetime Activity numbers may not be all that high, relatively speaking.
The April Fools’ Day Announcements for 2016
So, it can be done. However, this April Fools’ Day (2016) Defense Procurement and Acquisition Policy (DPAP) elected to issue two important pieces of procedures/guidance to the Defense Statutory Acquisition Workforce:
Guidance on Using Incentive and Other Contract Types (April 1, 1016).
Department of Defense Source Selection Procedures (SSP) (April 1, 1016).
Both documents have their warts. For instance, the Guidance incorrectly identifies one of the two statutory references for limitations on negotiation of price or fee. The good news is that thee one applicable to the DoD was identified correctly. Running the Spelling and Grammar checker one last time would not have been amiss.
Warts aside, the results of this Better Buying Power (BBP) are somewhat disappointing. The Specific Action in the USD(AT&L) memorandum “Implementation Directive for Better Buying Power 2.0 - Achieving Greater Efficiency and Productivity in Defense Spending” was, “Director, DP will provide a draft policy guidance document on the use of incentives in contracting to the BSIG for review by July 1, 2013. The starting point for this document will be the DoD and NASA Guide, “Incentive Training (sic) Guide,” originally published in 1969.”
For those of you unfamiliar with the Incentive Contracting Guide, it was the last of a number of such guides published in the 1960s. That particular version of the Guide was 252 pages. By comparison, the new Guidance is 41 pages. About 40 % of the Guidance is devoted to negotiation of fixed-price incentive (firm target) (FPIF) contracts in a sole-source environment a discussion of Reasonably Challenging but Achievable Target Cost (RCA), which go hand-in-hand. The coverage for Time and Materials/Labor Hour (T&M/LH) Contracts amounts to a paltry nine (9) lines. Ask yourself these two questions, “How many sole-source FPIF contracts does the Department award? If ‘T&M is the least preferable contract type,’ where should the emphasis have been placed?”
For those of you who need guidance on structuring multiple incentive contracts the DOD and NASA Guide: Incentive Contracting Guide 1969 may be a better bet than the new Guidance. The good news is that it is still available on the Defense Acquisition University’s Acquisition Community Connection. [For those who would like a direct link: https://acc.dau.mil/CommunityBrowser.aspx?id=189615.]
The updated Source Selection Procedures are more than 505 longer than the previous version. The Procedures would have benefited from fact checking, copy editing and proof reading. Another warts issue.
Warts aside, for those of you who will be involved in DoD source selections that meet the thresholds in the Procedures, you will want to give it a thorough read. Among other things, you will see some new descriptions of adjectival ratings and a new source selection procedure in APPENDIX B, “TRADEOFF SOURCE SELECTION PROCESS: SUBJECTIVE TRADEOFF AND VALUE ADJUSTED TOTAL EVALUATED PRICE (VATEP) TRADEOFF.” The latter came about as the result of USD(AT&L) memorandum “Implementation Directive for Better Buying Power 2.0 - Achieving Greater Efficiency and Productivity in Defense Spending.” Under the heading of Better define value in “best value” competitions there was a Specific Action, “Director, DP will review the ‘Process Manual’ developed by the joint Service team led by the Air Force and present a recommendation for adoption with any recommended changes to the BSIG by July 1, 2013.” You need to read the entire section to understand the direction. No doubt you will see a good deal of discussion about VATEP percolating up.
Understand that although the Guidance and Procedures were issued on April Fools’ Day, they are no joke. Read them carefully, and implement them wisely.
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The long-standing principle that the federal government had the same implied duty of good faith and fair dealing as any commercial buyer was put in jeopardy by a 2010 decision of the U.S. Court of Appeals for the Federal Circuit, Precision Pine & Timber, Inc. v. U.S., 596 F.3d 817 (Fed. Cir. 2010). There a panel of the court adopted a narrow rule seemingly limiting application of the principle to situations where a government action was “specifically targeted” at the contractor or had the effect of taking away one of the benefits that had been promised to the contractor. Although the decision concerned a timber sales contract not a procurement contract, when I wrote it up in the May 2010 Nash & Cibinic Report (24 N&CR ¶ 22), I expressed the fear that the reasoning would be subsequently applied to procurement contracts.
My fear was realized in a construction contract case, Metcalf Construction Co. v. U. S., 102 Fed. Cl. 334 (2011). In that decision, the judge described eggregious conduct on the part of the government officials that would have been held to be a breach of the implied duty of good faith and fair dealing under many earlier cases. However, the judge held that under the Precision Pine standard, the contractor had not proved that the actions were specifically targeted at the contractor. In the February 2012 Nash & Cibinic Report (26 N&CR ¶ 9), I criticized this decision but stated that I believed that even if the decision was affirmed on appeal, most contracting officers would not take this as a signal that the proper way to administer contracts was to abuse the contractor.
Fortunately, a panel of the Federal Circuit has reversed the decision, Metcalf Construction Co. v. U. S., 2014 WL 519596, 2014 U.S. App. LEXIS 2515 (Fed. Cir. Feb. 11, 2014). The court held that the lower court had read Precision Pine too narrowly and that “specific targeting” was only one example of the type of conduct that could constitute a breach of the implied duty of good faith and fair dealing. Importantly, the court also rejected the government’s argument that this “implied duty” only could be found when it was footed in some express provision of the contract. The court concluded that the correct rule was only that the express provisions of a contract had to be examined to ensure that they had not dealt with the conduct of the government; for if they had, they would override the implied duty.
This leaves us in a tenuous position with regard to the views of the Federal Circuit. We have one panel in Precision Pine stating a narrow rule, another panel in Metcalf Construction stating the traditional rule, and a third panel in Bell/Heery A Joint Venture v. U.S., 739 F.3d 1324 (Fed. Cir. 2014), ruling in favor of the government because the contractor had not alleged facts showing that the government had “engaged in conduct that reappropriated benefits promised under the contract” (which is part of the Precision Pine reasoning). Thus, it is difficult to state where the judges of the Federal Circuit stand. Hopefully, the court will agree to take either Metcalf Construction or Bell/Heery to the full court for an en banc review of the issue.
I’ve never been sure why the Department of Justice has so vigorously argued that the government should not be held to the same standards of conduct as a commercial buyer. Of course, persuading the courts and boards that a narrower standard should be applied to the government is a way to win litigated cases. But, in my view, encouraging abusive or non-cooperative conduct hurts the government as much as it hurts its contractors. I have taught for many years that in the long run the government benefits from actions that show industry that it is a fair contracting partner. A line of published judicial decisions that demonstrates that the government is not such a partner is one more of the many messages that tell companies they should sell to the government only when they can find no other customer. Surely, this is not the message that government agencies in need of products and services on the commercial marketplace want to convey to companies that can provide those products and services.
Many years ago when I came to Washington to work in the field of government contracting, I concluded that there was one major advantage to being on the government side of the negotiating table. That advantage was that I was under no pressure to extract money from the contractor by unfair bargaining or unfair contract administration. To me fairness was an integral part of the job of a government employee. I still believe it and teach it. Thus, no matter what the outcome of the good faith and fair dealing litigation, I will continue to urge government employees that fair treatment of contractors is the only way to go.
Ralph C. Nash
When I get older, losing my hair
Many years from now . . . .
When I'm Sixty-Four
John Lennon, Paul McCartney
Shortly after we celebrate our country's independence on July 4, 2013, Wifcon.com will end its 15th year on the internet. With much help from the Wifcon.com community, I've raised a growing teenager. When I started, I was 49 and my hair was so thick that I often shouted ouch or some obscenity when I combed it. Wifcon.com has existed in 3 decades and parts of 2 centuries. During that period, I've updated this site for every work day--except for the week or so when I called it quits. I remember the feeling of relief. I thought it was over. However, many of you convinced me to bring it back. Yes, just when I thought I was out, many of you pulled me back in.
As I mentioned in an earlier post, someone once told me that Wifcon.com was my legacy. I once had great hopes for a legacy. Perhaps, a great saxophone player belting out a solo in front of thousands of fans and seeing them enjoying themselves. Instead, here I sit in my solitude looking for news, decisions, etc., to post to the home page. For many years, my dog Ambrose kept me company. Now, my dogs Blue Jay and Lily stare at me and look for attention. With my sights now set realistically, I accept that Wifcon.com is my legacy. It's the best I could do.
Every now and then, I receive an e-mail from someone thanking me for Wifcon.com. They tell me how it helped their careers. These e-mails keep me and Wifcon.com going.
Send me a postcard, drop me a line,
Stating point of view
Indicate precisely what you mean to say
Yours sincerely, wasting away
Give me your answer, fill in a form
When I'm Sixty-Four
John Lennon, Paul McCartney
The thoughts in these e-mails won't let me quit. I still search each night for something to add to the site in hopes that it will increase your knowledge. If I find something new, I still get excited. Often, it feels like a self-imposed weight around my neck. What started as a release for my imagination has evolved into a continuing and daily addition to the contracting community. In the evenings, it is as if I'm Maillardet's automaton. I head over to my office, sit before the computer, and update. Then I send the updated pages to Virginia where it is accessed from around the world. Maybe I'm addicted to Wifcon.com; maybe I was born with the Wifcon.com gene.
If you haven't added the numbers, I'm 64 now. Wifcon.com and I are showing our age. I can comb the top of my head with my fingers. The ouches and other obscenities caused by my once thick hair are gone. A recent upgrade to the discussion forum requires that I turn the "compatibility mode" off on my browser. In that mode, I realized that Wifcon.com is ugly. I have current software for the needed future redo of this site.
I am Wifcon.com; Wifcon.com is me. It is my legacy and my albatross. As always, thank you for your support.
You'll be older too,
And if you say the word,
I could stay with you.
When I'm Sixty-Four
John Lennon, Paul McCartney