An intern of ours, with a finance major, was reviewing the FAR and asked me how exactly we determine contractors to "Have adequate financial resources to perform the contract, or the ability to obtain them" in accordance with FAR Part 9. Seems like he really wants to apply his skillset there. Dawns on me that we don't really do anything to make that determination, most of what we do is commercial and we just assume vendors are able to perform. We've got some blanket language in our decision docs that the vendor is responsible IAW the standards set forth in FAR Part 9.104, check their entity registration and FAPIIS report, but that's about it. We don't actually request, or look up, any information regarding their financials/commitments/operational controls/etc regardless of dollar value. Now re-reading the section, it seems our office isn't doing our due diligence here. What do your offices do to actually determine contractors responsible under all these standards? 

When I was with DoD we used to require balance sheets and other data, Don provided a good answer here: http://www.wifcon.com/discussion/index.php?/topic/4097-reponsibility-determination-far-9104-3a/

Typically their technical proposal responses were used for much of the other criteria of responsibility.

 

A non-DoD office I was at used to request data on an SF 1407 for high dollar requirements and have them provide written confirmation that they met the other requirements for 9.104-1(b)(e)(f)&(g). Admittedly, for SAP/low dollar buys we would not perform a responsibility determination other than checking SAM for exclusions and require statements from the contractor that they certify they were able to perform.

DCAA used to perform "financial capability audits" fairly regularly, but I think those have gone out of style in recent years. Instead, the DCMA cost monitor typically requests financial statements. I don't know what DCMA does with them; I wonder who has the skillset to understand them.

It seems to me that the level of inquiry should match the circumstances.  You said we're talking about commercial items, right?  Well, if the item is on the shelf and ready for delivery, it seems very little inquiry into financial health is required, unless maybe the warranty is crucial.  If the item is custom manufacture, well, if the company is selling to others and delivering on time, that seems to indicate a healthy supply chain, and that seems to indicate adequate financial resources.  Please don't require a exhaustive analysis and exhaustive documentation when it really isn't required.

17 hours ago, ji20874 said:

It seems to me that the level of inquiry should match the circumstances.  You said we're talking about commercial items, right?  Well, if the item is on the shelf and ready for delivery, it seems very little inquiry into financial health is required, unless maybe the warranty is crucial.  If the item is custom manufacture, well, if the company is selling to others and delivering on time, that seems to indicate a healthy supply chain, and that seems to indicate adequate financial resources.  Please don't require a exhaustive analysis and exhaustive documentation when it really isn't required.

Thanks! Only request the minimum you need to evaluate them right? We do some commercial items but much of what we do is IT or professional services related commercial services, sometimes to the tune of a few hundred million over 5 years so. For the big stuff like a $200M professional services requirement, assuming we didn't use DCAA or DCMA or the like, in general what level of analysis do you think would be appropriate (balance sheets/income statements, promises from banks or partners, their own analysis of how they've got the resources)?

I know for publicly traded companies you can find a lot of this information without having to request it but for a private company, especially a small business, I wouldn't want to overburden them with requesting a ton of information. 

30 minutes ago, Supes said:

For the big stuff like a $200M professional services requirement, assuming we didn't use DCAA or DCMA or the like, in general what level of analysis do you think would be appropriate (balance sheets/income statements, promises from banks or partners, their own analysis of how they've got the resources)?

FAR pricing policy says to use all government resources first.  Ask your DCMA DACO if they can provide the CACO’s most recent financial capability review of the offeror’s parent company from the DCMA Financial Capability Group.  If there isn’t one available, read the DCMA Policy called Financial Analysis, and see if your pricers could apply anything from it for your purposes using the parent company’s publicly posted SEC filings (assuming they’re publicly traded).

DID your RFP require financial capability information from offerors?

13 minutes ago, WifWaf said:

FAR pricing policy says to use all government resources first.  Ask your DCMA DACO if they can provide the CACO’s most recent financial capability review of the offeror’s parent company from the DCMA Financial Capability Group.  If there isn’t one available, read the DCMA Policy called Financial Analysis, and see if your pricers could apply anything from it for your purposes using the parent company’s publicly posted SEC filings (assuming they’re publicly traded).

DID your RFP require financial capability information from offerors?

We really never request any financial capability information from offerors in any of our solicitations which I'm sure is part of the issue, we don't request it and don't evaluate for it. 

Another reference: Volume 4, Chapter 9 of the Contract Pricing Reference Guides.

<i>"Only request the minimum you need to evaluate them right?"</i>

I wouldn't use the word "evaluate" -- we're talking responsibility, which occurs after proposal evaluation.  We don't want to confuse any of our readers who cannot tell the difference.  Only request the minimum you need to satisfy yourself regarding responsibility.  And, don't require responsibility information as part of the technical proposal mixed in with all the evaluation factors information.

Remember, you only need responsibility information on the apparent awardee from the evaluation process.  You can ask for responsibility information after proposal receipt and after proposal evaluation, and you can talk to the apparent awardee about responsibility matters without inviting discussions as that term is used in FAR subpart 15.3.

@Supes

Maybe a help or maybe not but a read of some GAO decisions might help you align your thoughts on what you might or might not do.

Go to this link and scroll down to the topic area and give a read....

 

http://www.wifcon.com/pdbyfar.htm