I have a situation where a service is being transitioned to government performance from contractor performance. One part of the service was provided by a subcontractor and the government is not going to insource that work. The government is going out with a competitive procurement to establish its own contract with someone to provide this service. To change from that subcontractor (current incumbent) to another source would cause the government to incur a cost to alter various computer systems.

Would it be appropriate to include an evaluation factor (in the competitive procurement) that applied an estimated cost for changing the performance of the service from the incumbent to a new vendor ? Let?s assume, that it would cost the Government 50K to alter computer code that would allow it to use a vendor beside the incumbent. Is the Government allowed to include an evaluation factor that somehow says when comparing the price, all non-incumbents will have this 50K added to their pricing ? It would allow the Government to more accurately compare the expected cost of various offers.

I have a situation where a service is being transitioned to government performance from contractor performance. One part of the service was provided by a subcontractor and the government is not going to insource that work. The government is going out with a competitive procurement to establish its own contract with someone to provide this service. To change from that subcontractor (current incumbent) to another source would cause the government to incur a cost to alter various computer systems.

Would it be appropriate to include an evaluation factor (in the competitive procurement) that applied an estimated cost for changing the performance of the service from the incumbent to a new vendor ? Let’s assume, that it would cost the Government 50K to alter computer code that would allow it to use a vendor beside the incumbent. Is the Government allowed to include an evaluation factor that somehow says when comparing the price, all non-incumbents will have this 50K added to their pricing ? It would allow the Government to more accurately compare the expected cost of various offers.

What you want to do is okay in principle. You are entitled to consider total cost to the government. But you have to be careful about how you do it. First, I would not reveal the amount of the adjustment, because that would lend itself to gaming by the competitors, and someone might be able to make a case that the disclosure favored someone unfairly. (I don't know what form that argument might take, but why take the chance?) Second, you might find yourself confronting the argument that adding the same amount to all the non-incumbents' prices is unfair if, in fact, the cost associated with switching would not be the same for all competitors. That's a more complex argument and one not easily disposed of. Third, whatever adjustment you make to the non-incumbents' prices, you must be able to show that the amount is reasonable and not arbitrary. That might be hard to do.

So you can do it, but you'd better think it through.

Can the scope of the updating of programs, if needed, be included in the new contract as a performance requirement? Then, the additional cost, if any, should be reflected in the competitors' prices.

Vern,

Thank you for the reply. FYI, i did come across a case on this question. It is out of COFC, Arch Chemical, Inc. v. U.S. No. 04-1421C, (March 18, 2005). It was a pre-award protest by an incumbent who argued that the government's price/cost evaluation did not consider all the costs to the government and was therefore unreasonable. Court of Federal Claims agreed and essentially said that despite the government wanting more competition, excluding real costs it would face just to obtain more competition is unreasonable.

i would post the document if I knew how to up-load it to the site.

Thanks again.

Can you include the requirement to update the government's software systems, if necessary to be compatible with the contractor's systems in the contract? Sorry, I didn't see a response to my earlier question.