Does anyone have any experience with providing the overall budget profile for a given procurement as part of the RFP? We typically give "plug numbers" for things such as ODCs, but this would be a "plug number" for the overall yearly budget profile for the effort. Offerors could deviate from it so long as it is supported in their proposal (e.g., they could propose lower). Please let me know.

I have seen it done on large multi-year major systems acquisitions.

How did it go? Was it successful? Can I get more information (e.g, RFP)?

It's a very old practice in major systems acquisition, going back decades. Ask yourself these questions: Why are you including a budget or funding profile? How do you expect the offerors to use the information? In what way if any does the profile bind the government? What are the contractual implications if the actual profile turns out to be different? Could the contractor seek compensation for the effects of the changes on its operations? What if the profile was not developed in a reasonable way? Can you protect yourself with disclaimers?

Think like a contracting person. What are the contractual implications?

Below is an extract from a solicitation from about ten years ago (F04701-02-R-0500) for a few billion dollars -- that solicitation included a long-term budget profile in Table 564-5. The offerors knew it anyway, because they had access to the congressional budget charts...

Section 4–Preliminary Design Review (PDR) Life-Cycle cost Estimate (LCCE). The offeror shall submit a PDR LCCE in offeror format that is consistent with the proposed technical baseline and submit a basis of estimate/methodologies used for the PDR LCCE. The Government has provided a list of the Government’s ground rules and assumptions at L&M-540, which may be referenced here. The Government will provide a Summary WBS & Dictionary and may be referenced in the LCCE. The offeror shall provide a lower level WBS & Dictionary of all estimate accounts for entire scope of the NPOESS, including GFE, in accordance with estimating guidance. For any Government-furnished resources proposed by the offeror, the offeror shall describe the basis for assuming the availability of those resources, estimate the marginal cost of using such resources, and propose alternate sources to be used if the resources are not provided, and the cost of these alternate sources. The offeror shall provide justification if the estimate exceeds the CAIV targets (BY$02) or if the proposed contract funding requirements exceed the cumulative budget profile (TY$) shown in the figures below.

Table 564-4—Total Program CAIV Targets

..Cost Element (BY02$M).......Target

..O&S WBS......................1,094

..Acquisition (excludes O&S)...3,065

..Includes all costs from the start of EMD to the end of

..the Mission Life, except as specifically excluded.

..Excludes Government Program Office, EELV Standard Launch

..Services, EELV Mission Unique Integration, and Government

..O&S and Test & Evaluation personnel

Table 564-5—Cumulative Funding Profile

....................FY02...FY03...FY04...FY05...FY06...FY07...FY08...FY09

..Cumulative (TY$M)...49....407....868..1,340..1,830..2,348..2,690..3,052

..*Offeror's funding requirements shall be Substantially Compliant

..with this profile and any exceedence justified.

..Includes all costs from the start of EMD to the end of the Mission

..Life, except as specifically excluded.

..Excludes Government Program Office, EELV Standard Launch Services,

..EELV Mission Unique Integration, and Government O&S and Test &

..Evaluation personnel

@Vern: I am a Contracts person and we have discussed the questions you pose. And we have asked ourselves plenty of "clear" questions. My sensitivity is that we are in the soliciation development phase and I am trying to keep this a very broad topic at this point. We would have disclaimers in the RFP about the budget profile not binding us (plus we have the various availability of funds and limtiation of funds clauses that would take effect as necessary). I also cannot speak to the reasonableness of the Government budgeting cycle! haha

I am trying to see if I can compile some real-life lessons learned from folks out there to add to our ongoing analysis of this potential technique.

@ji20874: This is similar to another one I have seen. Looks like this is possibly from the Air Force? Were you a part of this? How did this actually work out during the evaluation and selection phase?

It worked out well. For a multi-billion dollar acquisition, multiple year cost-reimbursement contract, it would be a shame to disqualify or downgrade a contractor for guessing wrong on the out-year budget profile. And since our program had its own lines in the president's budget, well, smart contractors knew the budget profile anyway. So providing the budget profile as a given allows your evaluation to focus on more important technical and performance matters. In our case, we had two offerors and I think both of them came in pretty close to the budget profile.

I can send you the solicitation -- //deleted -- already sent//

I am trying to see if I can compile some real-life lessons learned from folks out there to add to our ongoing analysis of this potential technique.

Lessons learned about what? Including a budget profile in an RFP? Why do you want to include a profile in the RFP? What is the objective? Are you developing an RFP for a major system? Only when we know what you are trying to accomplish can we give you the benefit of experience. In my experience it didn't accomplish much of anything, since program requirements and funding profiles tended to change over time. At most all it did was facilitate the preparation of paper "technical" proposals that amounted to science fiction stories. In my experience, few contractors will tell you that they will need less money than you say you will have, when technical factors are most important in source selection. Nor will they tell you they need more. What they do is promise more for your money than they can deliver. That does not mean that a funding profile won't be helpful in your case. It depends on what you're trying to do.

ji20874:

Wasn't that the National Polar-orbiting Operational Environmental Satellite System development solicitation? You said, "It worked out well." In what sense did it work out well?

Weren't there so many cost-overruns and delays that the government cancelled the program? (Am I thinking about a different program? Do I have my facts wrong?)

This is from a GAO report about the program:

NPOESS—jointly managed by NOAA, the Department of Defense (DOD), and the National Aeronautics and Space Administration—is well into the development phase of its system life cycle and has experienced years of continuing cost overruns, schedule delays, and technical challenges. Due to these issues, the White House’s Office of Science and Technology Policy decided in February 2010 to disband NPOESS and, instead, to have NOAA and DOD undertake separate acquisitions.

This is from another GAO report about the program:

The program office has increased the NPOESS cost estimate by $1.2 billion, from $6.9 to $8.1 billion, and delayed key milestones, including the availability of the first NPOESS satellite--which was delayed by 20 months. The cost increases reflect changes to the NPOESS contract as well as increased program management costs. The contract changes include extension of the development schedule to accommodate changes in the NPOESS funding stream, increased sensor costs, and additional funds needed for mitigating risks. Increased program management funds were added for non-contract costs and management reserves. The schedule delays were the result of stretching out the development schedule to accommodate a change in the NPOESS funding stream. Other factors could further affect the revised cost and schedule estimates. First, the contractor is not meeting expected cost and schedule targets of the new baseline because of technical issues in the development of key sensors. Based on its performance to date, GAO estimates that the contractor will most likely overrun its contract at completion in September 2011 by at least $500 million. Second, the risks associated with the development of the critical sensors, integrated data processing system, and algorithms could also contribute to increased cost and schedule slips.

Emphasis added.

So how is it that including a funding profile in the development RFP "worked out well"? In what sense did it do so? What good did it do, given that the program was cancelled because of overruns and changes in funding?

Vern,

Yes, it was NPOESS, and yes, it worked out well -- "it" being the source selection process.

As is always expected, the budget reality over the years following the source selection didn't match the anticipated budget profile -- but that's normal and okay for major systems acquisitions -- providing the budget profile allowed offerors to compete on a level playing field, so to speak, with regard to funding predictions -- neither of them had to do so because we did it and took it off the table in the source selection. This is reasonable for a large cost-reimbursement contract covering many years where it is a fact that a contractor's efforts have to be limited by a year-by-year funding. indeed, it would have been foolish to let each offeror propose its own required budget profile and then evaluate them on the reasonableness or likelihood of their guessing.

Is it possible to have a perfect source selection and then to still have difficulties during contract administration. Yes, or course. You already know this. The fact that NPOESS had difficulties years after the initial source selection doesn't impute any fault to the source selection process.

As you emphasized, the delays were not because of any poor up-front source selection decisions; rather, [t]he schedule delays were the result of stretching out the development schedule to accommodate a change in the NPOESS funding stream.

One easily supposes that the same outcome would have befallen whatever offeror was selected -- after all, the funding stream is dictated by the Congress. All the more reason to provide the budget profile for an acquisition as large as NPOESS.

A source selection is a decision made at a point in time – we do as good a job with it as we can and then live with it.

Well, we disagree.

First, budget perturbations may be normal, but they're not okay.

Second, I don't know what the "perfect" source selection is in your mind, but as a former space systems contracting officer at SMC (I was a CO in DMSP and then in Space Defense in the 1980s), I can tell you that when what happened to NPOESS happens to a program, very little if anything was perfect, including the source selection. Among other things, any source selection that involves two DRFPs is far from perfect. Nor is any source selection perfect that involved 11 evaluation factors (under three areas) and many more subfactors. All that evaluation only to get that ultimate result. If you really suppose that the outcome would have been the same had you picked a different firm, then that tells me that all that source selection hoorah you guys went through was a waste of time. You could have done something simpler. But that's just my opinion.

My point is not to knock the NPOESS effort. My point is that putting the funding profile in the RFP did not accomplish much, especially since you say that the competitors knew it from other sources. To the extent that you guys used a funding profile to ensure that all offerors competed on the same basis, you adopted what had been almost standard practice in system development programs for many years before NPOESS. I don't know what it means to say that such an approach "worked out well."

Vern,

Draft RFPs are GOOD! I wish more programs did draft RFPs in honest efforts to communicate with industry. I disagree that having two draft RFPs must necessarily be seen as an indicator of a flawed source selection. I also disagree that difficulties in contract administration (especially difficulties caused by funding/appropriations changes years after contract award) must necessarily be seen as an indicator of a flawed source selection.

It's easy to knock NPOESS these days. I left the program office many years ago, and in retrospect and in consideration of the very real political and procedural challenges the program faced, I will still happily say that the source selection worked out well.

As I said, we disagree.

Draft RFPs are okay. They have uses. But we did major system procurements without draft RFPs for many years on programs that did not get cancelled for cost overruns and delays and that delivered systems that worked. The draft RFP was the bright idea of a commander of Air Force Systems Command, Alton D. Slay, in the mid-1970s. The idea caught on and got out of control. We used to do one DRFP, then two, which is one too many, and today we sometimes see as many as three. DRFPs take time and they cost money, and I defy anyone to prove empirically that they contribute significantly to program success. What they mainly do is give contractors a head start on proposal preparation. You did CAIV too, didn't you? I see that didn't work out so well, either. You never hear about it now. A useless "innovation" that was not well adapted to reality.

I did not say that trouble during contract administration "necessarily" is an indicator of a flawed source selection, but NPOESS was flawed because of too many DRFPs and waaaay too many evaluation factors. The source selection worked out well in the sense that you picked a contractor. But if you see source selection as the process of setting up a program contract for success, it was not so successful, was it?

I don't doubt that you did what you did well enough. I just don't think you should have done it that way. It should have been simpler. Much simpler.

No point in arguing about this. We'll never agree. Please, take the last word. I owe you that.

Vern,

I wish the process could have been simpler. But people have to work in the environments they are in, with the political and organizational realities of the time, to accomplish their mission at the time. Those are very real facts of life.

We all benefit from hard thinking and new ideas and careflly-studied approaches -- and we all benefit from talking among ourselves and sharing ideas. I just don't understand why it is so important to you to incorrectly insist that the source selection in 2002 was the reason for the NPOESS program's restructuring in 2010, other than to discredit the responses I made to the original poster. What was that original posting all about? Oh, a poster asked if anyone had experience with providing budget profiles in solicitations, and I provided an example in response to his request.

I was happy to oblige the original poster and provide an example, and to let him or her use the information, or not, as he or she feels best in his or her circumstances.

By the way, the NPOESS source selection I'm talking about had only four evaluation factors (mission capability, past performance, propopsal risk, and cost) -- two of these factors (mission capability and proposal risk) were not rated at the factor level but were broken down into four subfactors (system performance, segment design, SEIT & planning, and management & organization). There were no ratings below this level, so I don't know about the eleven evaluation factors you reference.

Maybe I'm biased because I was there, but I still see NPOESS as a source selection that worked out well, and I see the program's difficulties years afterwards as having no connection to the source selection.

uc2004,

I hope the information I shared with you was helpful. If you want to engage the community here on the pros and cons of providing an out-year budget profile in a solicitation, or invite other examples, you might want to start a new thread as I doubt anyone else is still reading this one.

In my current experience, I really wish our government customer had not put numbers in the RFP....

1. The numbers were projections and based on data from 2004-2006. By the time they went through the hooplas, reviews, proposals, and protests we're a good 5 years down the road. The data were pretty much worthless once you throw in ARRA and any looming budget issues.

2. It made the people who bid the contract quite lazy and they just backed into a number, rather than coming bottoms up to see what it what really take to do the job. "Throw in a little of this, a little of that" was the mentality I'm hearing at the time..rather than, "Why yes, to do this it is associated with this, and will take this resource and that this amount to accomplish"

Now we're trying desparately to keep integrity in the contract, but figure out what to help cut and save as the gov probably can't afford what they thought at the time and what was bid on and awarded.

I'd like to play wine pong for every time I hear "scalable" while discussing my contract...but alas, I'd be a drunken fool signing up to silly deals in no time.

Vern,

I just don't understand why it is so important to you to incorrectly insist that the source selection in 2002 was the reason for the NPOESS program's restructuring in 2010, other than to discredit the responses I made to the original poster. What was that original posting all about?

You don't read well. I never, not once, said that the source selection is why NPOESS was cancelled. What I said was that I didn't think the source selection was "perfect," and I was very specific in my reasons. When you proffered the NPOESS RFP as an example of the use of a funding profile, you might have said more about what happened to the program.

poisonivy,

I understand some of the pitfalls of providing outyear budget profile numbers in a solicitation for a multiple-year cost-reimbursement contract. It is only a projection, and an invitation for offerors to propose using the profile as a common starting point so a selection can be made. You said your program's numbers were "in the RFP" so maybe that means they were in Section L as an instruction to offerors? That would be good, because Section L is largely irrelevant once the contract is awarded. After the source selection is completed and the contract is awarded, the program needs to be managed on a day-to-day and year-to-year basis by new and real budget information, not the old and no-longer-meaningful Section L budget profile.

It is not true that Section L is largely irrelevant after award. If the government instructs an offeror to base its offer on information it provides in the RFP, it may be held responsible for any of that information that was inaccurate or misleading, or for any information that was not fully disclosed. See Cibinic, Nash and Nagle, Administration of Government Contracts 4th ed (2006) pp. 443-445. If you tell the contractor to plan based on a giving funding plan, a subsequent change in plan might be the basis for a claim for additional costs, profit, or fee, depending on the contract type and the facts.

It is hard to think of a budget profile published as Section L being later thought of as "inaccurate or misleading, or . . . not fully disclosed" when the purpose of posting it in the first place is to share as much as possible. But I'll be quiet and let you be in control. You are the master.

Hard to think? Why?

In my current experience, I really wish our government customer had not put numbers in the RFP....

1. The numbers were projections and based on data from 2004-2006. By the time they went through the hooplas, reviews, proposals, and protests we're a good 5 years down the road. The data were pretty much worthless once you throw in ARRA and any looming budget issues.

There you go. Think about that. Such cases almost always occur when the purpose was sharing.

uc2004 gave us no information about the requirement or the type of contract he's working on, which is why I asked questions and gave no examples. What I reacted to was your statement, "It worked out well." I happened to know about that program, because I have friends at SMC who were involved. That's why I asked you in what sense did it work out well. It's not my intent to pick on you, but I don't think it's fair to offer information to people without telling the whole story.

I don't blame what happened to NPOESS on your source selection. That would be ridiculous. Also, I asked you if I had the right source selection and you didn't saying anything until your last post to me. If I had the wrong one I wish you'd said something sooner. In any case, as I said above, I'm sure you did well with the source selection.