http://oversight.house.gov/wp-content/uploads/2013/03/FITARA.pdf

I was wondering if some of the senior members of this discussion board had any impressions of the proposed legislation. It is a bit different from the initial draft (Summary of changes found here: http://oversight.house.gov/wp-content/uploads/2013/03/FITARA_RevisionsSummary.pdf).

One piece of the proposed legislation is the introduction of the "fixed-priced technical competition" that I thought would be of interest to some (Sec. 503). I know that some find IT acquisitions dry as dirt, but IT procurement is something that every agency procurement division manages in some form or fashion, and the implications of this legislation fall beyond IT procurement.

Just interested in your impressions.

Jon Johnson

May this die a quiet death in committee. Section 503 is an interesting idea but Section 502 will cause more reporting which is what is ruining the career field and keeping us from doing good contracting.

jonmjohnson,

What is being proposed is essentially the opposite of LPTA. The GAO has consistently held that this technique is not compliant with CICA because, in their view, price must be a "significant" factor in source selection. See, for example, Electronic Design, Inc., B-279662.2. The problem is that CICA doesn't say that price must be a "significant" factor in source selection, which calls into question their interpretation. For a good analysis of this issue, see Postscript: Design-Build Contracting in the April 2006 issue of the Nash & Cibinic Report, in which the author criticized the Electronic Design decision as follows:

I believe Electronic Design is wrongly decided. First, the decision misstates the statutory requirement in stating that it requires that price be a 'significant evaluation factor.' The word 'significant' is not in the statute. The misstatement is apparently started in the Coastal Science decision and was repeated in the Boeing Sikorsky decision. It then appeared in a number of later Comptroller General decisions such as Checchi & Co. Consulting, Inc., Comp. Gen. Dec. B-285777, 2001 CPD ¶ 132, 43 GC ¶ 340; and Eurest Support Services, Comp. Gen. Dec. B-285813.3, 2003 CPD ¶ 139 (2001). In the latest decision on this issue, MIL Corp., Comp. Gen. Dec. B-29483, 2005 CPD ¶ 29, the Comptroller General dropped the word “significant” from its description of the rule--perhaps indicating that the misstatement has finally been recognized.

Second, I believe the Comptroller General view that price is a “nominal” evaluation factor when it is fixed in the RFP is based on faulty logic. An agency is performing just as valid a tradeoff to arrive at an award to the proposal with the best value when it fixes the price as when it allows the price to vary. In either case, the question is which proposal gives the agency the best technical performance for the price. If award to the lowest priced acceptable proposal meets the statutory requirement, it makes no sense to rule that the opposite system violates the statute.

From a policy standpoint, I see no problem with permitting an agency to define best value as best technical within a predetermined budget when purchasing IT. I wouldn't have a problem expanding such a policy to all acquisitions, either.

Don, what level of confidence do you have in the government's ability to adequatley define its IT requirements and to estimate a reasonable price for the contractor to meet those requirements?

Don,

The proposed statute does not provide for "best technical within a predetermined budget." That approach, within a budget, still allows offerors to propose a price lower than budget and the government to take price differences into account. The proposed statute would allow the government to state that in the RFP that "the award will be made using a fixed price technical competition, under which all offerors compete solely on nonprice factors and the fixed award price is pre-announced in the solicitation." Emphasis added. I see that as different than "within a predetermined budget." The proposed statute would eliminate price entirely as an evaluation factor in the award equation. Agencies would not have to determine whether the best technical solution is worth the price. They certainly could not say that the proposed price is too high or unrealistically low.

If you look at the “Explanation of Changes from 9/6/2012 DRAFT” seen here - http://oversight.hou...ionsSummary.pdf - it appears that the Oversight Committee does not see that approach set out in Section 503 to be a change from current law, regulation and practice:

“There is another source selection technique often used by the government and private sector characterized as “fixed price technical competition” or “bid to price.” Under this technique, the solicitation, based on independent cost estimates or request for information (RFI), would set a pre-determined award price and invite offerors to compete on non-price factors only (e.g., quality, past performance, and technical factors). Because the price is pre-set, the evaluation of proposals is much simpler and strictly based on technical evaluations. This technique is appropriate when the buyer has a good understanding of the requirements and the technologies involved and can therefore rely on the validity of its independent cost estimate, as further refined by the RFI.”

Initially, I read only the “Explanation of Changes”, and I assumed the Committe was describing sloppily a Cost As an Independent Variable approach I have used. However, the text of Section 503 does make it clear that the solicitation will set the contract price, not a price ceiling or a desired price:

19 SEC. 503. ADDITIONAL SOURCE SELECTION TECHNIQUE IN

20 SOLICITATIONS.

21 Section 3306(d) of title 41, United States Code, is

22 amended—

23 (1) by striking ‘‘or’’ at the end of paragraph

24 (1);

1 (2) by striking the period and inserting ‘‘; or’’

2 at the end of paragraph (2); and

3 (3) by adding at the end the following new

4 paragraph:

5 ‘‘(3) stating in the solicitation that the award

6 will be made using a fixed price technical competi-

7 tion, under which all offerors compete solely on

8 nonprice factors and the fixed award price is pre-an

9 nounced in the solicitation.’’.

This is quite a change.

I am not sure this is a good idea. This assumes the government knows more about its requirement than industry. This is an incorrect assumption, in my experience.

Retreadfed,

I honestly don't know enough about IT acquisition to have an opinion.

Vern,

What would be wrong with evaluating price on a go/no-go basis and awarding to the best offer from a technical standpoint (i.e., the opposite of LPTA)? Why shouldn't an agency be allowed to define best value in this way?

Don,

I didn't say there is anything wrong with it, but I have deep seated doubts about the business rationale and practicality of fixed price technical competition (FPTC).

I don't think you understand the legislation. You really have to look at how the legislation describes FPTC. FPTC would not entail evaluating price on a go/no go basis. It would not entail evaluating price at all. It would entail the government both specifying what is acceptable and setting the price. That raises all kinds of questions and adverse possibilities. For instance: There is already an implied warranty of specifications. See Administration of Government Contracts 4th, 272 - 296. Would FPTC give rise to an implied warranty of the price, as well? Might it improve the viability of an impracticability of performance defense? The government is barely able to evaluate prices. Does it have the ability to set prices, a daunting task even for business owners and managers? See Smith, Pricing Strategies: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures: "Pricing questions are perhaps the most vexing decisions facing an executive."

There are source selection issues, as well. We have a workforce that is not expert with the source selection methods we already have. Why introduce a new and untried concept? What is to be gained? If, as the proposed legislation says, offerors would compete "solely on nonprice factors," would agencies be prohibited from considering price realism and price reasonableness? Could agencies even discuss price with offerors? If an agency decided to amend the preset price by a significant amount, would it have to cancel the solicitation and start over? I'm sure that you can fashion confident and reassuring answers to those question, but neither of us can know the implications until they emerge in practice.

I could go on, but I won't. I am writing about this for the May edition of The Nash & Cibinic Report and have more thinking to do. But at this point I do not think that FPTC makes much sense. I don't see the point. I don't understand the rationale. I don't know what problem it would solve, and i don't see how it would improve the source selection process. If you think you know, please tell us.

Vern,

Good points. I don't see the benefit in having the Government set the price, either. If the legislation expressly permitted the evaluation of price on a go/no-go basis and then award to the best offer considering nonprice factors, then I think the same result could be accomplished.

What if multiple offerors provide equally acceptable technical proposals? Flip a coin to determine who gets the award since price won't be a discriminator?

It is a really interesting idea but I have no idea how sucessful it might be. Probably a good interim step is allowing a few test cases before putting it in legislation.

The background and summary implies that the government talks with industry before preparing a solicitation. This is to get a good idea of what industry can provide as well as prepare a solid monetary estimate. But I wonder how much and how effective that dialogue will be.

This probably will reduce protests as well

Vern,

As usual I think that you are spot on regarding the potential concerns and impact this legislation will have on the federal procurement community. I was hoping that more people would begin to pick up on and think about the acquisition content of this current legislation, and would love to get a copy of your Nash Report article.

But to your question "I don't know what problem it would solve." This is a matter of perception in IT procurement on the part of the program community. They see procurement as being part of the problem rather than part of the solution. The 1102 series has been watered/dumbed down (as you mention in your previous post on the 1102 contracting field), and this legislation further emasculates the position. With a FPTC competition the 1102 does very little when it comes to picking or chosing a vendor. Take price and negotiation out of the equation and there is nothing that remains for the CO to do other than process the paperwork and ensure that the technical evaluation has merit. I am oversimplifying but don't think I am too far off the mark here. I have been in meetings where program staff explicitly state that COs are a problem, and that they should simply listen to what they are told by the "SME." This is usually stated by a SME that lacks the E in the acronym. If the SME knew what they were talking about regarding the requirements (ie., thought everything through), he or she should be able to explain it in a way that the CO finds convincing (evidence based) and logical (major premise, minor premise, conclusion), and it should take too much time if they knew what they were talking about. Often the evidence comes from dubious sources and isn't presented with any assemblance of informal logic, thus the back and forth between them and the COs.

Now this is a blatant overgeneralization, but I am finding more evidence of the rule than exceptions. People want IT tools, but it is either their CISOs or COs that often seen as the roadblock for getting them. The FPTC portion of this legislation may clear at least one preceived hurdle for people who view IT procurement in this framework.

JJ

jonmjohnson:

Good points.

IT acquisition is plagued by the general problems arising out of IT program/project management in both government and the private sector, which are largely technical in nature and involve requirements definition, specification, management, and growth. Those problems are exacerbated by the government's Part 15 source selection/contract formation process, with its emphasis on price or cost competition. In my article, which I just sent to the editor, I recommend that if Congress is willing to forego price as a contractor selection criterion, then it should authorize the limited use of what I call a "budget-based architect-engineer selection process" instead of either the current FAR Part 15 process or the proposed FPTC process.

In the process I propose the government would describe its requirement and state its budget in a synopsis and then use an A-E selection procedure to choose a qualified contractor candidate for one-on-one negotiation of contract terms. Such negotiations would give the parties a chance to fully discuss all technical, price and other contractual issues without the constraints of the clarification/discussion/proposal revision process imposed by FAR Part 15. I believe that such a process, if conducted by competent people on both sides, would produce a better understanding of the challenges of the job and a better agreement within budget. The CO would have the lead role during contract negotiations. I say that if Congress is unwilling to give a full go-ahead for use of an A-E type process it should authorize some test programs.

Putting IT on the Brooks Act list makes some sense, if we admit that the safety-oriented justification for that list (and that legislation) is bunk. My frustration with Brooks Act procurements is that the technical evaluations become a little ridiculous because you can no longer say that one company is as good as another- you must find ever more fine discriminators between the two companies. PM has two more years of experience, or another certification, the company's past performance is ever so slightly more relevant for some reason. None of it means a higher likelihood of successful performance, but you need *something*.

I'd love a mix between the two, some sort of option to revert to considering price in the event of a technical tie.

Update 7/17/14: Changed "ever more find discriminators" to "ever more fine discriminators".

In my opinion, evaluation of price as a decisional factor in such procurements is, literally, stupid. It leads to unrealistic proposals and trouble and disappointment in the future. Only a member of Congress would think that the evaluation of price, or estimated cost and fee, or hourly rates as a decisional factor makes any sense in such procurements. Individually, some of them are very smart. Collectively, they're idiots.

Pick a qualified contractor, then negotiate price, etc., one-on-one. It's the only intelligent way to go.

Hi, Vern,

The Brooks Act approach works for engineering, and can work for IT. However, I have learned that the process has a few warts- primarily the virtual tie described in post #10. Then the evaluation process devolves into almost ridiculous parsing of the qualifications: who has the most years' experience, the most exquisitiely relelvant past performance, etc. (I edited post #14 to correct a typo on this subject- hopefully it is more clear now)

Another problem is that it allows the process to become more politicized due to the large amount of discretion the Subject Matter Experts have in source selection. They often have friends in the business and the IT field is pretty tribal (e.g. "SAP BAD! Oracle GOOD!"). User groups do this too, should not pick on SMEs exclusively.

If you have a marketplace with a contractor who is clearly superior to the others (even to our Subject Matter Experts) and an IT workforce of Vulcans who can evaluate qualifications in a manner free of animal spirits, then this process is perfect. Some CO's have this, and I think you are right that the CO should have the option to do this is he wants to- no process is perfect and options are a good thing.

What are everyone's thoughts about the humble T&M MATOC? You can learn as you go through the project, have blueprinting/design competitions between vendors, quit ordering from vendors whose performance slides during the term, and who knows what else. I have done many Brooks Act-type procurements, but no IT projects in this fashion. It seems promising so I am due for a heavy dose of T&M MATOC horror stories, likely beginning with post #17 . . .

This passage Joel Hoffman highlighted in a previous discussion remains:

SEC. 5504. ADDITIONAL SOURCE SELECTION TECHNIQUE IN SOLICITATIONS.

Section 3306(d) of title 41, United States Code, is amended--

(1) by striking ``or'' at the end of paragraph (1);

(2) by striking the period and inserting ``; or'' at the end of paragraph (2); and

(3) by adding at the end the following new paragraph:

``(3) stating in the solicitation that the award will be made using a fixed price technical competition, under which all offerors compete solely on nonprice factors and the fixed award price is pre-announced in the solicitation.''.

Not a fan. The Vernian solution described here is superior to the fixed-price technical competition. My misgivings about the Brooks procedures are minor- the problem which may be solved is major. My MATOC cage-match idea is more of a contract administration idea than a source selection idea anyway.