joel hoffman

For your Reference: From “Government Contract Associates” LIMITATION OF COST AND FUNDS CLAUSES. https://govcontractassoc.com/limitation-of-cost-and-funds-clauses/

No.

Hey, Im not lying...😀

“Here to help” is a very apropos moniker...

I’m not arguing that it is necessary to identify the relative importance of all the factors. I think I explained to a professed “beginner” what is practically necessary. i also disagree with someone telling a beginner to “keep in mind the ideal of minimal”. What the heck does that mean????? You give them enough information to know what to do to meet or exceed your objectives.

It may not be “required” but some indication, for instance, as I have described above, is likely needed for the transaction to make sense. As I said, “best value” in both federal and non-federal contracting has a similar meaning. It involves both price and non-price considerations. You don’t have to explain your rationale for determining what is the best value to you in a store or catalog. You might well explain it while speaking with a sales rep or tech rep, though. However, when you are a public body conducting a competition - with little or no oral or other two way interaction- you need to give some idea of what is important to you (or to your customer). You can’t operate on an “I’ll know it when I see it basis”. You leave the service providers or suppliers clueless. If you are looking for a cookbook recipe, subpart 16.5 won’t provide it. One has to use some business judgement. There is a difference between how a clerk and a business person conduct business transactions.

The OP needs to provide more information in order to intelligently respond.

Then, if it isn’t affordable or where there is an insignificant difference in quality, or if it is not worth paying more, you aren’t locked into selecting a higher priced offer/quote. at least the firms aren’t left in the dark about your requirements owner’s desires. To me you have to apply some common sense approach to purchasing services or products. If you walked into an office or called someone providing services, you would certainly give them an inkling of what you are willing to consider, even if it is after they make you an offer. They would probably ask you anyway. When I go into supply houses, if they have more than one solution to my needs, they offer me choices. Ya gotta give them enough information to connect the dots. Acquisition ain’t Rocket Science.

Streamlined for sure plus this is under the SAT. I’m just saying that you can give them a clue of how they can win - what is important to the requirements owner. “Best value “ means that both price and non-price are considered. How will they be considered? If this WAS a source selection under Part 15 and IF you dont identify any relative importance between factors, they are considered equally important, GAO has said. You already mentioned it. So, I suggest that you figure out a simple way to phrase it to the fair opportunity competitors. If you want to “ reserve the right to pay a bit more (within your budget) for higher qualifications, provided that you consider it to be worth the difference in cost”, that should be adequate. You defined your idea of “best value”. How hard is that? To me, that simple language says to me that both price and quality are important to the requirements owner. Where prices are essentially the same, differences in the quality to be provided might make the difference. Where the quality to be provided between firms is essentially the same, then price would make the difference.

So, nkd9, you don’t think that you should explain to your contractors that, depending upon the price, you “might be willing” to pay [a little more?, some more?] than the lowest priced acceptable offer for one with more “ability to perform the work specific to this SOW including specific experience in the state where the work is to be performed”, if the higher capability is deemed to provide additional value to justify paying the difference? Seems to me that it would be fair to let the firms know what is important to the customer/requirement owner , as a basis for them to know how to compete. How important is the quality of the service to be provided to your requirement owner? My advice to you as a beginner is to look past the bare minimum FAR requirement and look at it from the viewpoint of someone deciding whether or not to compete for your requirement. If they are going to have to spend the time and resources to submit a quote or proposal, your expectations should be clear enough for them to try to meet and to compete with others. If the basis of selection is ambiguous, then they might not bother. Believe it or not, many firms want to know how to satisfy their customers. This is not a situation where the wares or services are displayed in a store setting where you simply pick and choose what the customer and you alone consider to be the best value. This a two way transaction where you define what you are looking for and commercial firms package their responses to fit your stated needs, for both quality and price.

Hopefully, the ID/IQ doesn’t use the term “source selection”. The term “best value” may or may not be explicitly defined in the contract. However, in commercial and many other government circles, it simply means that both price and other factors are considered, vs., for example, qualifications based selection, publicly opened bidding, etc. The term isn’t limited to Part 15, unless you specifically tie it to Part 15. I did not say that I didn’t have access to the FAR. I said I didn’t have time to read FAR 16.5. And my sweet wife is on my case for using too much data on our plan. There is no WiFi in the woods.🦌 I’ve been following WIFCON and the Forum for years during hunting season from tree stands at three different hunting Clubs. I used to actually work my government email and other tasks from tree stands on days off and weekends back up in the Huntsville, AL area. The Paint Rock (River) Valley was part of the end of the Appalachian Mtns. chain. Could only get a Verizon signal at a couple of my stands. 🦌

Thanks, ji. And thanks for the clarification concerning “trade-off”. I’m in a tree stand this morning. Didn’t take the time to read 16.5.

And the customer can provide their recommendations with rationale to the KO.

Its not a “source selection”, it’s a task order competition. Avoid using the term “source selection”. in the commercial world, “best value” means both price and other factors are considered, not just price or not just qualifications. Try to limit your vernacular to something like that. Yes, make clear the relative importance of the three factors being considered for award. You aren’t limited to the rote language for the relative importance in Part 15 unless you invoke those specific procedures. Good luck.

In case it isn’t evident, I get riled up when the government doesn’t have the knowledge or skips vital processes such as field pricing support and audits of proposals to award task order or contracts- especially cost reimbursable awards, with full knowledge of the intended plan. Then the government observes - or worse, fails to observe - the execution, letting the. contractor expend costs in execution of its plan. Then the KO thinks it can rely upon auditor’s opinion of what is “fair and reasonable” approach to deny approval of those same costs. Its not the contractors fault or responsibility that DCAA or the KO don’t have the necessary resources to properly review a clearly stated cost and method proposal before accepting it under the guise that it is fair and reasonable. In a cost reimbursement contract, when a cost principle is not in question, after plenty of opportunity for “initial review”, the government should advise, object or just plain tell the contractor that it’s spending is too high - during performance. The government has some contractual and good faith responsibilities too!!!

Sure they can audit after approval of an invoice. However, can they make a determination for the government that a cost is unreasonable, simply based upon a standard or requirement that doesn’t apply to the contract? They can question a cost. In this case, the basis of those questioned costs was proposed, evaluated, negotiated and, presumably accepted. From the other thread by the OP under contract pricing: “1) we negotiated the ODC/TDY/Hazard Rates with the government with our proposal, and costs were accepted by the Contracting Officer to be fair and reasonable before the contract was let. 2) the DSSR does not apply to our contract.  3) FAR 31.205-6 -- Compensation for Personal Services (f) Bonuses and Incentive Compensation.......as these costs are considered, in our opinion, to be incentive pay in order to get people to deploy to the parts of the world they do...” “1)...In negotiations with the government we made perfectly clear how we pay for hazard, incentive, etc pay, and provided the plans and policies to back this up. We even showed that other companies charge much higher %'s. 2) The Contracting Officer already negotiated this pricing structure with us.” If the contracting officer (KO) had no independent basis of estimate (I.e., had no clue) as to what would constitute fair and reasonable incentive/hazardous duty compensation for contractor employees, the KO should have sought out field pricing support from DCAA or other qualified cost/price analysts during the proposal evaluation and pre-negotiation procedures in accordance with FAR Part 15.4. For a second bite of the apple, the KO could have also consulted with others during negotiations, before determining that the proposed price was fair and reasonable, Here, I’m guessing that the KO did not express reservations or any disagreement with the proposed compensation approach during negotiations of the overall proposal. So, DCAA is questioning incurred costs by expressing an OPINION of what it considers to be a reasonable limit or comparison for incentive/hazardous duty contractor employee compensation. For purposes of answering the basic question in this thread, as others have stated, if the KO won’t voluntarily release any information concerning the relevant portions of the record of negotiations, I believe that the contractor can obtain access to it if it submits a claim. I recommend face to face (recorded, if possible) meeting with the KO to confirm that the government both understood and did not take any exception to the proposed compensation basis prior to awarding the task order and during execution of the task order, while the costs were being expended with the understanding that they were “fair and reasonable”. Yes, under 31.201-3 (a), “...[if] an initial review of the facts results in a challenge of a specific cost by the contracting officer or the contracting officer's representative, the burden of proof shall be upon the contractor to establish that such cost is reasonable. And the cost principles in FAR 31.205 also apply. It appears that the contractor met its burden and fulfilled it’s part of the bargain. Assuming that 31.205-6 or other CONTRACTUALLY APPLICABLE cost principles aren’t in question here, how many “initial reviews” is the government allowed and when are they REASONABLY allowed? Is it REASONABLE for the government to re-formulate an OPINION of what would be a reasonable compensation plan late in the game - after opportunities and prescribed procedures for “initial review” by the appropriate personnel, explained in the Federal Acquisition Regulations , allow and require the KO to determine that the contractor’s PROPOSED compensation plan is fair and reasonable? The KO awarded the task order with the full knowledge of the proposed compensation plan and the KO or its authorized representative were or should have been well aware of the costs being expended for that effort with the mutual understanding and agreement that this was fair and reasonable. The DCAA expressed an opposition OPINION, based upon non-applicable comparison criteria.

DuplicTw

I’ll have to find some time to review my Nash and Cibinic books. Here is my take on it. The contract doesn’t restrict compensation to that for government employees. The contractor expressly proposed and explained its planned approach. The government had clear knowledge of that plan. The government evaluated and accepted the proposed approach. The KO has the responsibility to determine whether or not the proposed approach was fair and reasonable before awarding the task order. The government apparently did not seek field pricing support from DCAA during proposal review. There may not have been any negotiation before award - at least concerning the proposed compensation and incentive plan. Edit: I reread the other thread. The OP did mention that the incentive and hazard allowances were negotiated and agreed upon. The contractor executed its plan accordingly. The government made no objection to the reasonableness during contract performance. Another agency now decides to redefine what is reasonable after the fact, based upon an inapplicable cost ceiling - that wasn’t in the contract. Can the government redefine what is fair and reasonable after the fact, based upon the other agency’s later judgement of what is fair and reasonable? Should the contracting office have obtained DCAA field pricing assistance and input prior to accepting the proposal? FAR contemplates that. It used to be standard practice in our organization to obtain audit support for non-competitively negotiated contract actions. This is a perfect example of why field pricing support should be sought and provided. Should those performing cost and price analysis be qualified and/or seek advice as necessary? Where fair and reasonable isn’t specifically defined in the contracti, it is supposedly based upon judgement. I don’t think that the government can get away with redefining it after performance by basing it upon something that wasn’t contractually binding or even mutually known or raised until after performance. i may be wrong.

Yes, indeed, if that level of detail, in fact, was captured in price negotiation memorandum. From the description provided I’m not even sure that there were any negotiations before award. Regardless, as H2H has stated, the PNM information should be discoverable in a claim. In another thread, sprice11 stated the DCAA was applying restrictions or comparisons with DSSR rates, which are not applicable to the contract. I think that this is a continuation of or related to the other thread. http://www.wifcon.com/discussion/index.php?/topic/4647-dcaa-using-dssr-rates-as-cap-for-hazardous-duty-pay/&tab=comments#comment-44500 I am getting the sense that the government award team did not object to the methodology nor incentive package that the contractor proposed and the contracting officer awarded the contract or task order. Now, DCAA has raised the DSSR issue during its invoice reviews. I may be wrong.

Neil, that Protest was cited and discussed earlier in this thread. There are some distinctions between Symvionics and this solicitation. There, the RFP was amended so that it wasn’t a pass-fail requirement to have a purchasing system that has been previously APPROVED or provable that it would pass a review and approval process to be eligible for award.

sprice11, I should have said that I would Not willingly release my pre-negotiation objectives if part of the PNM as is now part of that format (more bureaucratic repetition by requiring a PNO then requiring it to be repeated in the PNM). At any rate, from the limited information provided, I empathize with your situation. I think you are indicating that there were no oral negotiations, you submitted a detailed prooosal indicating how you were going to pursue the effort, somebody theoretically performed a price and cost analysis and then the KO simply acccepted it. Now they are questioning the methodology or the amount of the incurred costs, based upon review by DCAA. That pre-award ineptitude no longer surprises me, unfortunately. In Cost reimbursent contracts, your responsibility is to make a “best effort” to complete the effort within the budget and time allotted but you don’t guarantee that. at any rate, you supposedly told them how you were going to pursue the effort, etc., etc., you performed consistent with it, nobody questioned the reasonableness of approach or the amounts during performance and now the DCAA is questioning the reasonableness but not necessarily the allowability of the elements (?). i agree with H2H. Good luck.

Now days, when price negotiation memoranda contain details of the prenegotiation objectives, I would say that somebody’s going to have to legally force me to turn over a copy of the overall price negotiation memorandum. And then I would redact out my prenegotiation objectives. In this instance, it appears that the contractor wants to know what the contracting officer thought was fair and reasonable.

I agree H2H. I started to post this morning with similar questions, then decided that the only question that OP asked was whether they could obtain a copy of a PNM for some unclear objective. Years ago we provided copies and asked contractor to sign those over $100,000 (when threshold was $ 100k). That was our local District’s policy. It should be noted that our pre-negotiation objectives were always separate documents and often consisted of marked up proposals for small changes. My next District used memoranda of agreement or memoranda of understanding to document mutual understandings and agreements. I used those throughout my subsequent career. We don’t know what was “negotiated”, whether competitive or non-competitive, what the auditors are questioning, etc. For instance, Is it pricing or costs? Post awRd, pre-award, incurred costs, questioned costs, unsupported costs, etc.? If they are questioning a negotiated cost, then they would probably be questioning the KO’s basis of settlement. Of course the KO would have determined something to be fair and reasonable - probably the overall settlement. It may have involve the contracting officer non-concurring with some of the audit results, prior to negotiations. Who here can know?

To clarify, I did not say to exercise an option inproperly. With the government shut down, the original poster has no means to “exercise” anything unilaterally.The suggestion has been made to bilaterally modify the contract. For the amount of time that this discussion is been going on, they could’ve started that process. If this is a DOD contract, there are a couple of different exceptions to full and open competition that could be used to support a bilateral modification to add the option