joel hoffman

Vern, 10-4, understood and agreed concerning Mikes question. As for pricing design-build MATOC's, there have been several GAO and at least one Claims Court case in which the price evaluation method was at least mentioned and not shot down. But the case law that you cited would appear to require some legislation to clearly allow price competition for follow on D-B tasks without the need for fixed or maximum unit-pricing.

Verrn, I do agree with you that one should not use a multiple award IDIQ contract for other than routine, small STRAIGHT construction jobs with repetitive work. It isn't necessary for individual, fully designed construction jobs that would require extensive take-offs and estimates to prepare a price proposal. There is nothing extra-special about that. Most all construction companies are capable of doing that. I should have said that earlier and have felt that way for sometime. I was focusing on design-build MATOCs and mistakenly included "construction". A Construction MATOC might possibly be justifiable in some type of contingency operation - but then there is the Commission on Wartime Contracting Report... I do feel that design-build MATOCS can be very useful for design-build projects, due to the various time and resource savings possible in not having to go through the 1st phase of identifying the most highly qualified firms for each project, if it is applied properly. Our organization requires Acquisition Plans for such MATOC's that get extensively reviewed from an acquisition planning perspective before they may be used. Large, time sensitive programs with many individual projects have been a good fit for this D-B acquisition approach. Design-build projects include many variables by their nature and firms not only compete for task orders on price but on their design, continuing past performance evaluations and often other management aspects, such as time and key subs and key personnel.

Vern, the Judge in the Tyler Construction v US case I cited earlier wrote in some detail why such design-build MATOC's can be necessary, reasonable and useful. The price competition would be the same as the 2 phase D-B concept already deemed acceptable.. I agree with the current requirements being adequate for simple, repetitive construction tasks.

Mike - speaking to a general audience, I'm not singlying you out.

No, Don. My argument is just the opposite. Sorry that I cant get my point across. The binding seed task order competition for the base contract pool award is spot on. The problem - as I have tried to describe over and over - is with locked in prices for follow-on task orders for major construction projects or for design-build task orders, with too many variables to lock in prices. Since the 2 phase D-B process in FAR 36.3 is favored by industry and is for the most part the only authorization for D-B in the FAR, its use of a pool of highly qualified contractors for pricing task order competition ought to fit well for task order pools.

Vern, I don't think the rule makes economic sense to use binding prices for follow-on task orders for construction ID/IQ's for projects other than routine, small jobs with repetitive, similar work. I guess we disagree then. I believe that there ought to be a carefully outlined exception for ID/IQ construction and design-build contracts projects where the scope of each task is unique or different. The process would use a seed task order with binding price competition for the base contract establishment, with follow-on task orders competed among the pool members . If it is practical to lock in any prices for subsequent task orders, that could be included, otherwise follow-on task order price or price and quality competition would be sufficient. The establishment of the Base Contract pool or pools would follow the 2 phase design-build procedures in FAR 36.3, wherein only the most highly qualified proposers short-listed in phase 1 of the base contract competition compete for the seed task order in phase 2 and for the base contract pool(s) on a Trade-Off Best Value basis. The seed task order prices are binding if awarded the seed task order. Otherwise, the proposed prices along with non-price factors are considered in the selection of the base award pool members, who then will compete for follow-on task orders. The design-build scenario is already established process in FAR and in industry for single award contracts. For D-B MATOC's the only difference would be in the price competition by not locking in prices for future tasks. By their very nature, Design-Build contracts allow enough flexibility that there will be design, scope, site, material selection, subcontractor selection, design criteria updates, market condition, new Davis-Bacon Act Project wage Decisions, etc. differences between each task order that would preclude locking in prices for future task orders. The major difference would be allowing its use for straight construction MATOC's - again only authorized for projects other than routine, small jobs with repetitive, similar work. Most of the same variables exist for individual construction projects as for design-build projects. Simply trying to administer the effects of individual DBA project Wage Decisions on contractually fixed unit prices is a monumental contract administration task that makes such pricing impractical, let alone all the other variables. I may try to pursue this through the Design-Build Institute of America. They were involved in development of the original D-B coverage in FAR and also have ties to Professor Nash.

Thanks for the correction, Vern. I knew as I typed that I should have verified the agency. I didn't specify the amount of losses was because there were numerous reasons for the waste and losses, not just our contracting "system" (and I'm not trying to single out contracting personnel here ). One of my points, probably lost in my tirade above, is that for design-build construction, the industry was able to get Congress to implement a more practical method to acquire design-build construction, similar to a pre-qualified ID/IQ pool that competes for task orders. Due to the impracticability of establishing fixed unit prices for some (non-recurring) construction and design-build IDIQ's, perhaps there is a way that some special authorization could be obtained to adapt the 2 phase process for such ID/IQ pricing. Its has been recently ongoing, whether technically legal or not. I know that several billion dollars of D-B task orders that have successfully been accomplished using such pricing methods. It should be codified if it works.

Mike, if it doesn't make sense and will cost the taxpayers more money or doesn't work for industry, then we should try to get the the laws and regs changed. The lawyers and judges only work with what is there - the judge even said so in one of the Cases that Vern referenced. If those in the acquisition business are really "business advisors", "business professionals" or whatever you aspire to be known as - then we shouldn't simply fit square pegs into round holes that waste money or end up being a poor solution. Several here have pointed out the severe limitations of trying to unit price future complex, non-repetitive projects for follow-on INDEFINITE DELIVERY construction or design-build contracts. Recurring work like fixing plumbing or painting perhaps, but not entire buildings that very in location, time, scope, market conditions, site conditions, etc. If it doesnt work then dont use an ID/IQ for construction. Above all, don't waste taxpayer money for the "convenience" of a task order contract if you are going to lock in pricing when it doesn't make economic sense to do so. Professor Ralph Nash has a lot of influence and ought to help make the case for something different where it is impractical to lock in pricing for future task orders. By the way - using price and other competition among highly qualified firms selected to be pool members mirrors the authorized and PREFERRED 2 phase design-build method in FAR 36.3. Its a good fit when a MATOC is used for the right reasons. There ought to be some support in the industry, like the Design-Build Institute of America. Professor Ralph Nash knows them and has a long relationship with them. It takes more than just knowing and blindly following the "rules"if they are dumb. It takes business judgement to do the right thing and a cry to fix broken contracting systems. The Comp Gen just this week came out , severely criticizing the government for sloppy contracting in Iraq and Afghanistan, wasting many tens of billions of dollars.

I said that there is a distinction between meaningless price evaluation on a sample, non-binding task order for a contract with recurring services and evaluating binding prices for an actual task order on a construction ID/IQ. And in the context of the (CW Government Travel Decision), it would make sense that the GAO expects the Government to evaluate prices for fees and other recurring costs for future services of a recurring nature as part of a meaningful price evaluation. It makes sense there that prices for recurring services could be evaluated. Indeed, on our Government travel services contract, the travel agency (Carlson Wagonlit Travel) is paid a fee of $14.50 for each travel ticket, whether it takes them 5 minutes or 20 minutes to arrange my travel. I said that on the other hand, it was also hard to argue about the Court's discussion in Magnum Opus Technologies, Inc. v. United States in the paragraph entitled "Competition for Task Orders is Not Sufficient to Establish Prices For the Options". The Decision also stated that competition for an actual task order wasn't adequate to evaluate future task order pricing within the base contract period. Finally, I said that the Magnum Opus Technologies case seems to conflict with 3 GAO Decisions that followed in the same year in which the GAO did indicate that the use of binding prices on seed task orders for construction ID/IQ base contracts constituted meaningful price evaluation.

I think there is a distinction between a sample task order and a binding prices for a task order. In the CW Government Travel Decision, there were no binding prices or rates for anything. Thus, there was no basis for any kind of meaningful price evaluation. The GAO did mention pricing of future task orders. Since the services to be provided were recurring, it seemed logical to me that the proposers should be required to provide rates for future tasks. However, it seems pretty difficult to overcome the discussion in Magnum Opus Technologies, Inc. v. United States (Filed Under Seal May 13, 2010 and Republished May 28, 2010) concerning "Competition for Task Orders is Not Sufficient to Establish Prices For the Options". http://www.uscfc.uscourts.gov/sites/defaul...STECH052810.pdf "...It has been established, however, that “[t]he statutory requirement that cost to the government be considered in the evaluation and selection of proposals for award is not satisfied by the promise that cost or price will be considered later, during the award of individual task orders.” CW Gov’t Travel—Reconsideration, 2005 WL 1805945, at *4; MIL Corp., 2004 WL 3190217, at *7 (“[T]here is no exception to the requirement set forth in CICA that cost or price to the government be considered in selecting proposals for award because the selected awardees will be provided the opportunity to compete for task orders under the awarded contracts.”); see also Serco, Inc., 81 Fed. Cl. at 493 (rejecting the Government’s task order competition argument and finding that the agency “gave price neither the weight it was entitled to under the Solicitation nor that which it must be afforded under CICA and the FAR”). The Air Force may not substitute competition at the task order level for compliance with the applicable laws and regulations." It would then seem from the Claims Court Case that 1) no option extensions for construction ID/IQ base contracts can be exercised unless they are meaningfully priced. 2) Construction ID/IQ's for other than basic recurring type construction work are almost impractical to price without some kind of common unit-price book with a price coefficient. However, that case seems to conflict with the 3 later GAO Protest Decisions I cited. 1. http://www.gao.gov/decisions/bidpro/403797.htm (B-403797, Tetra Tech Tesoro, Inc., December 14, 2010) 2. http://www.gao.gov/decisions/bidpro/4026522.htm#_ftnref1 (B-402652.2, AIC International, Inc., June 28, 2010) 3.http://www.gao.gov/decisions/bidpro/4026523.htm (B-402652; B-402652.3, Reliable Builders, Inc., June 28, 2010)

Since there is no need to make a guaranteed minimum for an IDIQ contract in the option years, why would such minimums have to be more than nominal? Why would an agency risk paying taxpayers' dollars for option year minimum guarantees that aren't required? Or are you also asking if the base year minimum guarantee must be more than nominal? Please clarify. Thanks.

"Learn", the use of sample task orders was discussed in the thread "Use of Illustrative Task Orders for Price/Cost Analysis", which you have already posted to. Are you asking something different than the original poster in that thread? Are you asking for specific Decisions concerning the adequacy or inadequacy of using binding fee/ profit rates and G&A or other markups as adequate price competition?

"Learn", its not that your method is right or wrong. I was just taught contract administration a certain way, which included having clear contract files and organized correspondence. Our office's procedures included use of serialized letters for correspondence that also identify the Contractor or Offeror, the contract, change order request or solicitation number and a clear subject for filing purposes. To me, its merely a matter of clean contract administration. I've seen sloppy contract files and I've seen very organized files. Believe me, when one is trying to use the official files to reconstruct the entire acquisition history for a protest or the entire contract history for a massive claim, the difference between organized, clean contract files and crappy filing systems and crappy contract administration procedures is immense in the number of hours needed to organize and review what occurred. It also helps the lawyers better understand the whole story in context and in chronological order of every event. I suppose that sending separate emails or letters involves additional effort and filing space or computer memory, which may be at a premium...

Mike, you ask a good question. I don't know if the standard of adequate price competition for multiple award construction ID/IQ's requires binding prices or unit prices for future task orders. But in the Decisions that I found, it appeared that the acceptable price competition was based upon one actual task order. I admit that I'm not a lawyer and don't have the technical skill, resources or time to do a full research study on what constitutes adequate price competition for construction ID/IQ's. However, I think the bottom line of the Competition in Contracting Act of 1984 concerning price competition is that price must be evaluated in every competitive source selection and that the Comptroller General and Courts seem to have decided what constitutes "adequate price competition" or at least what was acceptable in certain construction MATOC competitions. I'm not sure what you meant by "the simple fact that it's been done without anyone getting caught doesn't mean that it is CICA compliant." There have been some Decisions in which the method of pricing an actual "seed" (initial) task order with binding prices was apparently deemed to be acceptable price competition. I read both the Military and Civilian versions of "CICA" this morning and couldn't find any specific mention or description of adequate price competition requirements. Among other things, Competition in Contracting Act of 1984 requires "full and open competition", except as specifically permitted by statute. It says that the government shall establish rules for that. So, I went to FAR 15.3 Source Selection, to see what it says about price competition: 15.304 -- Evaluation Factors and Significant Subfactors. ...(c ) The evaluation factors and significant subfactors that apply to an acquisition and their relative importance are within the broad discretion of agency acquisition officials, subject to the following requirements: (1) Price or cost to the Government shall be evaluated in every source selection (10 U.S.C. 2305(a)(3)(A) (ii) and 41 U.S.C. 253a?(1)() (also see Part 36 for architect-engineer contracts);" OK, so what does 10 USC 2305(a), say about price evaluation? For the Military, 10 USC 2305(a)(3)(A) says: "(A) In prescribing the evaluation factors to be included in each solicitation for competitive proposals, the head of an agency— ...(ii) shall include cost or price to the Federal Government as an evaluation factor that must be considered in the evaluation of proposals;..." I also checked my Third Edition of Formation of Government Contracts by Nash and Cibinic. It basically says that there is little coverage of price competition for ID/IQ's in Statutes or in FAR. It discusses "adequate price competition" under FAR 15.403-1?. Various decisions have developed that "adequate price competition will be found where price is a substantial evaluation factor and is so evaluated" (see pages 1291-1293 or so). So, it appears that the Comp Gen and Courts have ruled what is adequate or meaningful price competition. I cited some construction ID/IQ decisions above where actual task orders with binding prices for those task orders were used for price competition on the basic award competition. The basis of price evaluation was challenged and the GAO considered the specifics in determining that the price competition was ok. In Decisions, the GAO has said that "sample task orders", unless they contain binding prices, do not constitute adequate price competition. In other decisions, they have discussed the inadequacy of evaluating price by simply comparing binding unit prices unless there is meaningful way to also compare expected quantities of those units to be required, between proposers. As for future task orders on multiple awards for construction, the FAR at 16.505 (b ) for orders under multiple award contracts and "Fair Opportunity" procedures prescribe that task orders are generally required to be competed among the pool members, at least for DoD procurements.

??? A letter (or email) sent to each separate pool contractor should contain that contractor's contract number, including the contract specific serial letter numbering. The body of the letter or email is the same but the name, address, contract number and serial letter number are contract specific. With today's word processors and email, I don't understand the problem but I may be missing something.

Want to learn, if you are referring to the opening post of this thread, I was under the assumption that it referred to requests for task order proposals to existing Multiple Award Task Order Contract pool members. Each pool member has their own contract number under a MATOC, am I correct? Do you send task order RFP's out by letter? I didn't find any prescribed method or format for MATOC task order proposal requests in FAR Subparts 16.5 or 4.16 ? Unique Procurement Instrument Identifiers or the corresponding DoD and Army Supplements, including the PGI. However, each Agency's Electronic contracting program may have detailed instructions and formats. There are instructions for the actual order issued to the winning contractor in the FAR and supplements.

Mike, I dont know whether NAVFAC used a 2 phase Design-Build process for the MAC awards discussed in the cited Decisions above. But they used a seed task order with pricing for the award of the Base Multiple Award Contracts (MAC) and award of the first task order. The GAO did address this initial price competition in at least 2 of the Decisions that I referred to. Is there any major difference between initial price competition using a seed task order and price competition on subsequent task order competitions? Perhaps the only difference is the intensity of the price competition in phase 2. There are more firms competing for MATOC Base Contract awards than will be selected for the pool or pools. I don't know what the GAO would have said is different between the initial task order price competition and follow-on task order price competition. The Corps of Engineers has been using the 2 Phase D-B method in FAR 36.3 for award of Multiple Award Task Order (MATOC) Base contract pools, using a the first task order (seed task order) in phase 2 of the competition for several years. This price competition is similar to what NAVFAC is using and which the GAO addressed as adequate price competition. Please note that each construction or design-build task order is generally different from the others, either in scope, location, point of time or under different market conditions (material price and availability, labor mix and availability/pricing, equipment choice and availability, subcontractor availability and/or pricing, amount of competition, etc. Construction pricing in this era is highly volatile. I don't think there is any advantage for the owner to lock in pricing or even maximum pricing for an indefinite delivery - indefinite quantity construction or design-build contract. It would be very high risk for a contractor to compete for award of the seed task order, while at the same time having to lock itself in to maximum pricing for subsequent task orders. Those are two opposing pricing conditions for construction. I could see it working for supply or service type MATOC's, but not for construction. Why would firms aggressively price/compete for the seed task order with not to exceed unit prices of some sort at the risk of not being able to cover itself on future task orders of varying scope and market conditions? The Army's Job Order Contract program is a case on point. JOC contracts have traditionally used fixed mark-up coefficients that are applied to unit-priced activities in a Government provided unit-price book. Those unit-price books are essentially a form of "Means Estimating Guides" (or other similar estimating books). For years, we've had problems making that pricing system work. The single award contracts featured aggressive competition for award generally with coefficients of less than 1. This results in pricing lower than the unit-price book, which doesn't include mark-ups for general conditions, JOC office site full-time management costs, bond or profit. Then, for the next several years, the contractor often tries its best to maintain that the actual job orders don't align with the unit-price book activities, so that it can spot price as much of the work as possible. Or, if it begins to loose significant amount of money, performance and quality drop, sometimes in the apparent hope that the Army won't exercise the next option period. These have traditionally been no fun to administer at the Installation level or even for the local Corps offices when they are asked to step in and award job orders. The weekly publication Engineering News Record has almost weekly price reporting for numerous market areas. They will report various construction commodities and trade labor costs, tracked monthly. There are wide swings up and down on a monthly basis. Construction is a very high risk business. An owner that wants to lock in prices or even maximum prices is shooting itself in the foot, in my opinion. I feel that we ought to let task order competition work... ID/IQ's were developed (I think) for manufactured goods and for services, not for construction. I don't think you can practically price construction ID/IQ's the same way as as for goods and services.

For construction and design-build contracts, the combined technical and proposal risk rating factors works fine. I think having yet another rating system just complicates the source selection process even more for those type acquisitions. As it is, we use a separate performance risk rating scheme for past performance. And now, DoD requires a 2 step rating process for past performance. First step is a degree of relevancy assessment with the performance risk assessment in step 2.

Not enuff info 2 answer intelligently. Try adding mor...

For general information, the clause 52.211-10 -- Commencement, Prosecution, and Completion of Work can be worded to accommodate a completion period that was included in the accepted proposal. On construction or design-build contracts and task orders which we allow proposers to propose the contract duration, we fill in the clause , worded something similar to the following: "Commencement, Prosecution, and Completion of Work (Apr 1984) The Contractor shall be required to (a ) commence work under this contract within XX__ calendar days after the date the Contractor receives the notice to proceed, (b ) prosecute the work diligently, and (c ) complete the entire work ready for use not later than the number of calendar days after receipt of the Notice to Proceed that were proposed in the Contractor's accepted proposal, not to exceed YY calendar days. The time stated for completion shall include final cleanup of the premises. (End of Clause)". We also identify the maximum number of days that the firms may propose in the CLIN Schedule and include a Line Item for the contract duration. Contract duration is then included as an evaluation subfactor with evaluation criteria.

Carl, good read! You specifically answered Van's question. I overlooked the clause because it is in FAR Part 11 and because I'm forgetful. I think I stated why it is necessary but forgot about the clause itself. This mandatory clause is specifically intended to identify the period of performance or a specific completion date in the solicitation and contract. The KO doesn't have the discretion to exclude it. How long can it take to issue a quick amendment and get revised proposals? There is still over a month left in the fiscal year. Here is the clause 52.211-10 -- Commencement, Prosecution, and Completion of Work: "As prescribed in 11.404(, insert the following clause in solicitations and contracts when a fixed-price construction contract is contemplated. The clause may be changed to accommodate the issuance of orders under indefinite-delivery contracts for construction. Commencement, Prosecution, and Completion of Work (Apr 1984) The Contractor shall be required to (a ) commence work under this contract within _________ [Contracting Officer insert number] calendar days after the date the Contractor receives the notice to proceed, (b ) prosecute the work diligently, and (c ) complete the entire work ready for use not later than ______________.* The time stated for completion shall include final cleanup of the premises. (End of Clause) * The Contracting Officer shall specify either a number of days after the date the contractor receives the notice to proceed, or a calendar date. Alternate I (Apr 1984). If the completion date is expressed as a specific calendar date, computed on the basis of the contractor receiving the notice to proceed by a certain day, add the following paragraph to the basic clause: The completion date is based on the assumption that the successful offeror will receive the notice to proceed by_______________[Contracting Officer insert date]. The completion date will be extended by the number of calendar days after the above date that the Contractor receives the notice to proceed, except to the extent that the delay in issuance of the notice to proceed results from the failure of the Contractor to execute the contract and give the required performance and payment bonds within the time specified in the offer." And DUH!!! Even more like a hammer that should be dropped on my head: "11.401 -- General. (a) The time of delivery or performance is an essential contract element and shall be clearly stated in solicitations..."

Van, I'm done editing the above posts - Mea culpa! Mea culpa! Mea maxima culpa!

vmathews - I edited my above response as well as this one while you were viewing the thread - sorry. Speaking of progress payments - how does the government even determine whether or not to hold retainage from a progress payment to protect its interests - or that of the surety providing bonds (assuming that bonds are required). Not including a required completion period also puts the surety at higher risk, too. The surety might not be able to track timely progress either.

I think that the KO's course of action is wrong for a construction contract. The RFP is fatally flawed in that there is no common criteria to even compare the basis of pricing, without a required completion period. There is nothing to enforce for required time of completion. Contract performance or lack of timely progress is simply unenforceable. Why does it take a GAO decision to see that? There is discussion in Nash and Cibinics' Formation of Government Contracts, Third Edition about improper specifications that are unclear or ambiguous with cases starting on page 361, with numerous Decisions cited. Failure to establish a performance period wasn't specifically mentioned. However - how can you compare the basis of pricing? How can you enforce timely performance without any requirement? Construction is much different than a supply or service contract. Progress payments are involved - the government is at risk for progress payments made to a contractor, vs. paying for a service or or supply after delivery or performance. When or how do you quickly determine that the contractor's performance is unacceptable or if it has defaulted? The amendment could establish the completion period. Or the government could establish a maximum completion period acceptable to the government and allow the offerors to propose a period not to exceed that period. Then, you will need to establish evaluation criteria and advise the proposers what the government's time objective is and what its relationship to price is. Does the government want the most economical time period within the maximum allowed? (probably) Is a shorter period desirable or critical from a time aspect? (Probably not important to the government if you didn't include the period in the original RFP). Is time more or less important than price, as long as the price is within the budget? Will a shorter period that is lower in price than a proposal with a longer period be considered valuable (I'd say yes)? Or you could simply allow the offerors to propose the period without a stated limit. That would be trickier and require some thought about objectives and evaluation criteria. Or - you could provide a "target" maximum period and allow proposers to justify a longer proposed period, again with evaluation criteria. Simply to award a construction contract without discussions or without amending the RFP to establish a legally enforceable period of performance is NUTS!

The problem with the Government formally "ending the acceleration" is that it could make the Government responsible for managing the schedule, determining when the Contractor is back on schedule, then immediately sending notification to stop the acceleration efforts. The Government would have to have near "real time" schedule information, which is almost impossible even for a sophisticated contractor to maintain. Construction contractors don't update the progress schedule daily, except on huge jobs with critical schedule constraints, such as a Nuke or Fossil Fuel Generating Plant shutdown or the like. Most jobs that fall behind schedule don't even have that sophisticated project controls capability. That's often part of the schedule delay problem in the first place. The Government would have to have near immediate access to the schedule by a qualified project controls, schedule specialist - which most government offices don't have. Keep the Contractor responsible for getting back on schedule and for substantiating that it is back on schedule. It can manage its own costs, resources and processes that way. If the Government doesn't agree that the project is back on schedule it can reassert its authority to direct continuation of acceleration efforts.