joel hoffman

OldHickory, while sellers may offer different prices or discounts, there may be limits or situations where it isn't considered legal. According to my 1980 and very likely outdated UCC Business Law textbook edition, there were laws that prohibit price discrimination between different buyers of commodities where the effect of such discrimination may be substantially to lessen competition or to restrain trade (e.g., the Sherman Anti-trust Act). I don't know whether such apparently wide discrepancies in prices offered to different buyers are legal or not. Collusion, restraint of trade or some other typing of price fixing might also be very difficult to prove. If you seriously suspect something or just want to know what type - if any- limits can be put on price discrimination in such cases, I'd advise you to contact a good business law lawyer for advice, regardless of what FAR says. As for government procurement personnel, they wouldn't have any direct way of knowing that those practices you described occurred. Unless reported to one of the (not always so highly competent criminal investigative agencies) - they probably won't know any more than you or me if they are improper or illegal trade practices. Then - the Department of Justice is busy enough not to bother with many instances where alleged illegal activities occurred, unless it is worth the effort and cost to pursue. After reading this thread, I went to my old textbook because I remembered my prof from that 1983 night class discussing certain illegal pricing practices that I had never even dreamed of. There may or may not have been be something improper going on. P.S. , I'm not a lawyer.

Vern, I wasn't speaking to you. I don't really care what you said 3 times either. I was trying to explain to Jan what I meant, after you kept repeating that it isn't relevant. Jan, this topic picqued my interest because of the requirement in the contract for all work to be covered by professional liability insurance. I don't know what GSA's policy is as an organization on requiring that type of coverage. It is protection for the design firm more than for the client. From my experience long ago in a consulting firm, we found that is extremely expensive and difficult for a small firm to obtain and maintain this type of insurance. It adds a significant share of design costs for a small firm, which must spread those costs over a smaller workload than that of a large firm. I don't think that it is a Federal requirement. It is possible that requiring such insurance might put small consulting firms at a disadvantage. I don't know what business the recommended subconsultant normally performs. You mentioned that the work involved "planning services" . That doesn't look so risky that it would normally merit the requirement for such insurance to protect the owner's interest. The contract already contains the contract clause "Responsibility of the Architect-Engineer Contractor". However, this contract requires such coverage of whomever that performs it. I don't think that the government could simply waive or change requirement.at this point without the consent of your firm. You can argue that to do so would alter the risk arrangement that was established in the contract by requiring it in the first place. The risk for errors by the subconsultant are the contractor's. Edited 2/23: So, you asked for options in your original post. In your second post, you said there aren't any other options than to say you can't breach the contract requirements. To summarize, I think that there is more than one option: 1. Your original option was to say no, because the contract requires the insurance and the subconsultant doesn't possess it. 2. Agree to hire the sub w/o insurance and accept any impacts, such as additional costs or liability over the original plan. Not advisable. 3. Agree to accept a change to the requirements waiving the required insurance, which might or might not effectively increase your firm's exposure for the risk of liability due to errors and omissions by the sub. 4. Take the position that the original requirement effectively provided some liability protection for the contractor and its subs. Such a change would increase your firm's risk exposure and the subconsultant's risk for cost or other liability due to errors and omissions by the sub. Therefore to accept such a change to the requirements is effectively out of scope. To do so. would first require mutual agreement as to any price or the terms and associated impacts , including but not limited to pricing the change for any direct cost impacts versus your otherwise planned performance method. 5. Find out if the subconsultant can obtain the insurance. I doubt it can do so for only one assignment but it might be able to. If it can, you can explain to the government what, if any, costs would be above and beyond your originally planned method of performance that would comply with the contract's requirements, if it still wants the specific person to do the job. 6. Possible other options(?)

The contractor should tell the government that the subconsultant doesnt currently possess professional liability insurance, which is a contract requirement. Plus, it should discuss any other concerns that it has concerning the issue. If the contractor is concerned about cronyism, unacceptable risks, the additional cost to hire this particular person versus self-performance or another qualified, insured person, or its original planned approach was different, or whatever other concerns it has. Let me rephrase why I said that whether or not the government should or could "encourage" or even require such an "encouraged" arrangement to hire a subcontractior that doesn't currently possess the required professional liability insurance is beyond the scope of this discussion. We don't have enough information to determine that. We don't know for certain whether or not the government's preference for the subconsultant is improper. The subconsultant might - or might not - be highly technically qualified to perform the service. We know that this person/firm - like many small firms performing architectural and engineering services - doesnt currently have professional liability insurance. This type of insurance is extremely expensive for any firm, let alone a small firm. It might - or might not - be possible for the "subconsultant" to obtain coverage to perform the services required by the contract. We know that whoever performs the service must have coverage per the terms of the contract. This will probably be within the cost of the subcontract, if subcontracted - or not. We don't know whether or not the contractor otherwise cares who performs the service or if the identified person is highly qualified - or not. She might be the best technical choice for the job - or not. She might have extensive knowledge and experience concerning the instant services - not. "For all we know", which is nothing, she might be somebody's aunt - or not. She might be more expensive than another choice to perform the services - or not. Using this person to perform the services without obtaining the professional liability insurance does potentially increase the prime contractor's liability exposure, which could be a problem - or not. The cost to obtain insurance, if available, might be cost prohibitive - or not. At first glance, it looks like the government doesnt have the right at this point to require the prime to hire somebody that doesnt have the insurance - as a change to the requirement, if it would increase the prime's liability exposure. There isn't enough information to tell other than that the current agreement requires such coverage.

Vern, I don't disagree with you. I was wondering how the requirement for professional liability insurance ended up in the A-E contract. As to whether or not the government should or could "encourage" or even require such an "encouraged" arrangement to hire a subcontractior that doesn't currently possess the required professional liability insurance, that is beyond the scope of this discussion.

Thanks, Jan. I couldnt find such a requirement in the FAR or GSAM. This is really more of a requirement to protect the interest of the contractor and its sub than that of the government. But definitely bring it to the attention of the government, which might be able to modify its requirement - or might not. Of course, not having such insurance might increase your firm's exposure to professional liability due to a sub's actions. Your firm might not be willing to assume this risk.

I agree that this is a topic to dicuss with the Government if they want this firm as a subcontractor. However, could you clarify a couple of points? I am assuming that your agreement with GSA that requires insurance requirements to flow down refers to government required liability insurance. Is this a service contract or an A-E contract? Where you referring to a clause that requires you to have liability insurance? ...professional liability insurance? What is the clause? Just curious, thanks.

Deefarrd, did the person explain what processes should or do apply to purchasing materials for such emergency surgeries? Are you questioning the legality of the Air Force Instruction? Do you know under what authority it was issued or are you just thinking that it appears to be illegal? Is it possible that the Air Force or DoD has approved some type of class waiver for such situations or that other statutory or regulatory authority might apply? Is there any documentation required to support the urgency of the acquisition? You said that you don't really see any other way and you didn't ask a question. What do you want to know? How is the actual purchasing done in such situations? I doubt that the Commander or doctor personally contacts a vendor and makes the purchase. Do they?

Onmeld, I didnt have time earlier to respond to your other issue of unbalanced pricing. Although you didn't ask a question, you identified as a possible issue and provided an opinion that it isnt necessary to document why its ok to award to a firm with unbalanced pricing. You said: "The provisions of 52.215-1 f(8) however are discretionary and only go to rejection of the proposal (which in this case we want to award on). If there is an explanation regarding the unbalace I believe we are OK to award (an would be OK even if we did not document an explanation)." I don't necessarily agree that it "would be OK even if [you] did not document an explanation." Please see 15.404-1 -- Proposal Analysis Techniques, (g) Unbalanced pricing. Subparagraph (2) of this paragraph REQUIRES the KO to analyze prices to determine if they are unbalanced. OK, you've done that. However, once unbalanced prices are found (OK, you did find unbalancing here) the KO SHALL consider the following in making the source selection decision and in determining the competitive range, if conducting discussions: "...(2) [All offers with separately priced line items or subline items shall be analyzed to determine if the prices are unbalanced]. If cost or price analysis techniques indicate that an offer is unbalanced, the contracting officer shall -- (i) Consider the risks to the Government associated with the unbalanced pricing in determining the competitive range and in making the source selection decision; and (ii) Consider whether award of the contract will result in paying unreasonably high prices for contract performance." Your KO SHALL "consider" the risks during the source selection and consider whether award will result in paying unreasonably high prices for contract performance. I believe that these considerations and resulting determinations or decisions should always be documented in the source selectiion documentation. In the event that there is a protest over unbalancing, I've seen (even in the last week or two in the WIFCON digest of protest decisions. See:(W.B. Construction and Sons, Inc., , B-405818; B-405818.2, January 4, 2012, which is summarized on WIFCON at http://wifcon.com/pd144042g.htm ) where the GAO or a Court sustained issues when the KO had no documentation of his/her considerations and reasoning and the GAO did not accept after the fact explanations of what the KO supposedly considered and determined during the competition. I'd also caution that, if this is a construction contract, in the event that the contractor defaults and the surety has to take over and complete the contract, the government can get into some serious trouble if it has overpaid the contractor due to unbalanced pricing or for other reasons. The surety normally must get by on the remaining unpaid contract balance from the government to complete the job, except for what extra losses and costs it can recover from the defaulted contractor. That is often like squeezing blood from a vampire's victim. I have seen cases over the years where the surety sued or claimed harm caused by owner negligence due to overpayments for overvalued work and the owner was required to reimburse the surety for those losses to help complete the remaining work. So, there may well be some risk to the government for unbalanced construction contract unit prices or for unbalanced lump sum prices in addition to the rather simple explanation provided in FAR 15.404-1. There is some discussion of unbalanced bidding in Nash and Cibinics' "Formation of Government Contracts" (mine is the Third Edition, which has been since updated). If this is an unbonded type contract, such as one for services or supplies, unbalanced pricing can increase the risk of total cost to the government for reasons beyond that explained in the FAR. If one overpays a contractor who later defaults, it will probably cost more than the remaining contract balance to get another firm to complete the defaulted contract effort. These are just some thoughts for you to consider.

It should be obvious but I would advise the person(s) evaluating pricing to determine or at least estimate if and how the unacceptable technical aspects of each of the other 4 proposals affected those price proposals. For example, If you are soliciting the quality level of a Caddy and someone proposed a Buick or a Chevy, that firm's pricing wouldnt really be representative of the specified requirement, would it? My caveat to you in using the pricing from the technically unacceptable proposals for your price analysis would be to determine the relevancy of those other prices to the specified requirements for pricing comparisons and consider that in the price analysis. You said that the solicitation says that the price evaluation is conducted separately from the technical evaluation, which is common. Even so, the price evaluators should normally have access to the technical proposals to be able to determine whether the prices seem representative of the proposed technical proposal. They should probably also be able to learn what technical deficiencies were found in order to facilitate that evaluation. You apparently have enough information to determine that the technically acceptable proposal is unbalanced. The usual danger is technical evaluators being prejudiced by the pricing rather than the price evaluators being prejudiced by the technical aspects. In fact, someone normally has to put all this together to determine whether the proposed prices are fair and reasonable per discussion throughout 15.404 and 15.405.

Its one thing to determine if a contractor has an adequate cost accounting system. From my experience, it would be sad if the government has to rely on contractor hired CPA's to review and verify incurred costs or even to review and/or audit proposals for new contracts or contract actions. There are differences between what are legitimate or legal accounting practices and what the cost principles and procedures in Part 31 and 31.2 allow that are often overlooked in proposals. Heck, the DCAA isnt even normally trained to spot these type cost duplications or non-allocable costs. For years, I had to provide the DCAA with standard pre-printed guidelines as part of my technical analysis input to the audit, identifying those points to address in auditing overhead and G&A rates. I'm not faulting the auditors because that is a specialized area but the DCAA as an Agency didnt pick up very well on construction contract auditing. I say that only because they require a lot of help from technical and cost analysts and they, as a group are often ignorant of the contractual cost aspects of proposals

Yes, see posts #6 and #7 abnove for a reason why one cannot just simply rely on a letter from a CPA stating whether the contractor's system is adequate. The CPA would have to show competency in that particular area.

Thanks, Carl, for your post and reference.

The clause states in part (taking the liberty to substitute "subcontractor" in place of "offeror"): "The subcontractor, upon request by the Contracting Officer [or Contractor, if that is applicable], shall submit and negotiate a subcontracting plan." The plan discusses "planned" subcontracting, right? The sub wasn't required or requested to submit a plan at subcontract award and wasn't requested to submit one while the mods were being issued. If the request came after there were no further subcontracting opportunities, as stated, then how can the sub be in non-compliance or breach?

I agree. Subcontracts are usually subject to state laws. Hire lawyers who deal with contract law at the various states' level.

Please note that my comments above concerning the "Equity Principle" were only in response to FAR Fetched's post above it. He/she said: "The Corps' message to Martin was "we want you to perform the additional work specified in the modifications, but you are still in default because the completion date (already passed) remains the same. Unreal." I wasn't addressing who is to blame for the actual delay in the instant case. I was addressing a situation where the government believes that a contractor is behind schedule due to its substandard performance and the government changes or adds work during that period. The government should add excusable but non-compensable performance time under the equity principle for the time necessary to perform the additional or changed work, as long as it doesn't further delay completion of the original work. According to the instant decision, the government was apparently responsible for the delays. In that event the delays would be not only excusable but compensable.

Yes, from the perspective of reading the instant case, the government's position case appears to be "unreal". I do want to emphasize that this isn't the USACE's policy as an Army Command. For many years, I taught a principle in classes and in our District's policy that I learned while working for the Middle East Division of USACE in Saudi Arabia. It is called the "Equity Principle". That principle is an exception to the "leave them where you found them" principle if the government directs a change after the contract completion period, while a delinquent contractor is still working to complete the current contract work. The equity principle provides for an excusable, non-compensable time extension for change work directed after the completion date that will be, is being performed or was performed concurrently with other contract work for which the contractor would otherwise be charged liquidated damages due to its own fault. The Equity Principle essentially holds that the government should not take advantage of a firm because they are already late in completing the project. In addition, the contractor is not entitled to a compensable time extension for the concurrent period because it is already expending those type costs in completing the current contract work. If the contractor can show however, that the change increases its direct or indirect costs for the unchanged, incomplete work or if the change requires additional indirect costs, then it would be entitled to an adjustment for those additional costs.

I'm curious why an undefinitized contract action (letter contract) is necessary to award a contract for 2 siteworks and the first building. Please explain what the status of the design is for those features of work and why some other course of contracting action isn't feasible. Thanks. Hey, as a minimum, you could award a fixed price contract for sitework on both sites then follow up with solicitations for the buildings. I'm relatively certain from what you said that the sitework could easily be split out from one or both designs. I could finalize notes on drawings within a day or two to denote the limits of the construction for a sitework only contract. Sitework could include clearing and grading or it could also include site utilities. It's not rocket science to break out such work from an ongoing design.

I thought that the excavation and site work design for the second building was finished. In that event, you could add this portion of the design for the second building - or what portion of the sitework is ready - to the solicitation for the first building, as a separately funded bid item. You would have to consider whether or not this would help expedite the availability of the site for constructing the second building, without slowing down the sitework for the first building. Fast-tracking sitework while the building is still under design can often shorten the overall construction time for a building project. That is a major advantage of fast-tracking on design-build projects. Sitework often takes much time and can push the subsequent building construction into inclement weather conditions (e.g., winter or rainy season). That, in turn, raises costs for cold weather construction. A head start on site work can reduce overall costs. Economy of scale by being able to simultaneously work two close or adjacent sites under the first contract might be achievable - or might not be economical. You can save one mob and demob, as well as the administrative time and expense of starting sitework on two separate contracts. You can also shorten the overall completion time on the second contract. That results in less site overhead. I can't state for certain without knowing the nature of the 2 siteworks or the scope. If combining the 2 sitework efforts under one contract isn't doesn't provide any schedule advantage for the second project or slows down the sitework for the first project, then I'd agree with Vern that going out with a stand-alone sitework contract ahead of the building contract might be a good idea. Depends upon your reasons for expediting the 2nd sitework effort. A separate contract might involve additional fixed, overhead and mob/demob costs, though.

How about a separateLy funded option or CLIN in one contract?

Vern, I started to contact her on January 5th, out of curiosity. However, I don't use the program and am not one who is especially concerned about it one way or the other. I don't know whether or not the test program at 13.5 results in the best deal for both the taxpayer and the customer. I don't know what, if any, concerns that the policy makers and/or Congress had about the program. Once all the detailed posts here with various opinions and degrees of speculation started coming in, I realized that I apparently don't know enough about it to know what to ask her. Those that have a vested interest in the program (or their designated internal POC) should be able to call the POC, however. The folks at DoD are really just people. I've called them and corresponded with them before. I've even asked for and obtained archive background material from old DAR and FAR Cases from them for use in some current USACE policy initiatives. They are usually pretty friendly. If you aren't with DoD, they might refer you to the GSA POC. I've also called GSA points of contact listed in some FAR Cases. Sometimes they politely referred to the DAR Council rep or reps for certain FAR cases or other actions and sometimes directly answered my questions.

Sorry - I was babysitting grandchildren for my daughter yesterday, then got wrapped up with the 2012 BCS Title game for the rest of the day and night. ROLLLLLLLLLL TIDE! In addition to what Vern provided, please see FAR 5.205(d) and applicable supplements thereto: "(d) Architect-engineering services. Contracting officers must publish notices of intent to contract for architect-engineering services as follows: (1) Except when exempted by 5.202, contracting officers must transmit to the GPE a synopsis of each proposed contract action for which the total fee (including phases and options) is expected to exceed $25,000. (2) When the total fee is expected to exceed $15,000 but not exceed $25,000, the contracting officer must comply with 5.101(a)(2). When the proposed contract action is not required to be synopsized under paragraph (d)(1) of this section, the contracting officer must display a notice of the solicitation or a copy of the solicitation in a public place at the contracting office. Other optional publicizing methods are authorized in accordance with 5.101(." For Army Corps of Engineers' A-E Contracting, there is also a publication (Engineering Pamphlet 715-1-4) entitled "Competing for Architect-Engineer Contracts Awarded by the U.S. Army Corps of Engineeers". See page 4 for more discussion of the announcements, although some information may perhaps out of date (2004). http://140.194.76.129/publications/eng-pam...-1-4/entire.pdf

Just curious - has anyone here tried to contact the POC mentioned in the DOD memo and find out what really happened concerning non-renewal? Does Congress have concerns with it that DoD decided not to mess with it? Has anyone called the POC to explain the less than $1 million programming validation problem, which may have skewed the available data? Lots of speculation in this thread. Seems like asking the point of contact might yield some answers for those concerned about the expiration.

Just a question: are there multiple manufacturers and/or suppliers? If so, would a BPA arrangement for competition work? Would that allow you to keep price competition fresh over a three year period? I don't think so. Did you read 12.207( c)? It discusses ID/IQ contracts for commercial items.

"(3) The contractor or subcontractor retains the original records for a minimum of one year after imaging to permit periodic validation of the imaging systems."

Folks, if your agencies are under DoD, I suggest that all of you or someone in your agencies quickly contact the POC identified in Mr. Ginman's memo at: http://www.acq.osd.mil/dpap/policy/policyv...339-11-DPAP.pdf. If you are not under DoD, I also suggest contacting her ASAP to obtain the POC for non-Defense agencies (probably in GSA). The suspense for input to DoD is 27 January. DO something - don't just complain about possible mass mis-coding of acquisition methods.