joel hoffman

Roy, the acquisition regulations provide scant coverage of the actual negotiation procedures, which doesn't surprise me. We went to various other classes on how to effectively negotiate. The agency would generally have some definition or other guidance concerning restrictions on FOUO. If this were a construction contract FAR 36.203 (c )does contain prohibitions on release of an overall government estimate. If the IGE is identified in the spreadsheets, which is normally one of the considerations in establishing a negotiation objective, even if not the basis of each objective, I believe that at one is not supposed to reveal it. "(c )Access to information concerning the Government estimate shall be limited to Government personnel whose official duties require knowledge of the estimate. An exception to this rule may be made during contract negotiations to allow the contracting officer to identify a specialized task and disclose the associated cost breakdown figures in the Government estimate, but only to the extent deemed necessary to arrive at a fair and reasonable price. The overall amount of the Government’s estimate shall not be disclosed except as permitted by agency regulations." Various DoD and component supplements and regulations contain other prohibitions and require an FOUO designation for the IGE. Not trying to overstate the importance of the IGE or even to say that it necessarily forms the basis of the PNO. However, I'm curious as to when your organization would send or show the spreadsheet for the objectives and what role the person has who would necessarily lay down all their cards in the middle of a poker hand. I've certainly identified specific details of my objectives at times during negotiations, but generally after talking through the various reasons for differences during negotiations. I don't think I ever layed down all my cards for the other party to peruse. Why would I do that? More important things to explore during a negotiation are the bases or sources for pricing or the technical approaches assumed. I'm not going to cover all negotiation techniques here, but furnishing the contractor with the Government's Objective Spreadsheets just sounds like a dumb idea. You are then negotiating the government's position rather than the proposal, which is what you are supposed to be negotiating.

Note that FAR Case 2007-012: Requirements for Acquisitions Pursuant to Multiple-Award Contracts (Interim) is Item II in Federal Acquisition Circular 2005-50, issued today, 16 March 2011 (see it on WIFCON Home page today) ". The language of the FAR Case includes this: "...Clarifies that ordering activities may seek a price reduction under FSS contracts at any time." Here is what 8.405-4 – Price Reductions previously said, in part, as of yesterday: "In addition to seeking price reductions before placing an order exceeding the maximum order threshold (see 8.405-1(d)), or in conjunction with the annual BPA review, there may be other reasons to request a price reduction. For example, ordering activities should seek a price reduction when the supply or service is available elsewhere at a lower price, or when establishing a BPA to fill recurring requirements." That seems to imply to me that if you can find a lower price somewhere else, you should seek price reductions and should be able to use that as some basis of reasonableness before buying off the FSS. Here is what the new 8.405-4 says, in pertinent part: "Ordering activities may request a price reduction at any time before placing an order, establishing a BPA, or in conjunction with the annual BPA review. However, the ordering activity shall seek a price reduction when the order or BPA exceeds the simplified acquisition threshold." Does that help at all?

Edited: Vern, I didn't disagree with that reasoning. But your argument only addresses a lump sum fixed price contract. My point in my previous post was only that there will probably be an allowability problem IF travel is billed at expense rather than as part of a lump sum CLIN or contract price. The KO has a problem with reasonableness of using business class fares. I've seen many service contracts with travel CLINS, wherein the amount of travel is unknown, which include a CLIN that provides for reimbursement of travel expenses. I don't know if that is the case here or not and neither does anyone else except the original poster. Per this thread, the KO appears to have problems with allowing reimbursement for business class travel. If travel is to be billed at cost, then the KO should put the contractor on notice now, before award. Then the parties will have to discuss it further, either before award or during performance. When the time comes to travel there is no presumption of reasonableness of the contractor's reimbursable costs, unless there was an advanced agreement or some other written indication in the contract (see FAR 31.201-3 (a) concerning determinable of reasonableness). Upon further thought, I don't agree with your argument if the fixed price contract includes a significant unit priced line item for travel (with estimated quantities that may vary), that are based in large part on the cost of airfare and the parties don't agree that the unit price is reasonable. If there will be some type of unit priced item for air travel, if the government and contractor don't agree on the unit price, the parties should negotiate this item . Fixed priced contracts may include unit priced items based upon some estimated quantity. The KO should negotiate at the unit priced item level when there can be significant variation in actual quantities. It would be a very poor business practice for a KO to only agree on the bottom line FFP contract price while ignoring unit prices for items that may well vary in actual quantity.

In my opinion, the contractor's argument is only valid for a lump sum payment. Where travel is billed at expense, there would probably be an issue of allowability. The KO has already said that the company policy would result in unallowable costs under FAR 31.205-46 ? with the caveat that he/she would be happy to consider the contractor's response to that argument. So the contractor is on notice that the KO probably wont allow reimbursement for premium travel.

Don, a point that I want to make is that the FAR and its supplements don't always provide enough detailed procedures and guidance in either the prescription language or the clauses to properly administer contracts. Many interpretations and applications of clauses result from Caselaw that isnt always fully discussed or addressed in the acquisition regulations. A Contracting Officer or specialist needs much more information that the quoted text of a clause to properly use it. Examples from this thread alone include : 1) The intracacies of bonding. The FAR as well as the clause only scratch the surface. Bonding isnt insurance. It is procured through sureties, which require some type of assets to back up the bonding. because the contractor must indemnify the surety against losses. Bid Bonds and open performane/payment bonds tie-up tie up a firn's bonding capacity. Bonding companies constantly request status information from our offices, which they use to track payments, performance and progress, etc. The clause doesnt specifically mention bonding for individual construction task orders. Bonding is generally required by the Miller Act to protect the government as well as laborers, suppliers and subcontractors. Those unpaid entities can't place a lien on Federal property like in private property or local government jurisdictions'. Requiring a contractor to keep bonds open on completed task orders would quickly erode a firm's bonding capacity. Refusing to release retainage on completed task orders might well also affect bonding. 2) There are government policies and procedures, separate from FAR and the Payment coverage in the clauses which are intended to require (at least in DoD) the government program offices to fiscally closeout contracts as soon as possible after acceptance and physical completion, because the funding is classified as Construction in Progress or "CIP". Excessive CIP is highly undesirable. The finance and accounting regulations are much more detailed than FAR or clauses. Another area where FAR is sparse on guidance is variations in estimated quantities of unit priced items. Paragraph 11.702 is woefully inadequate for construction contracts and misleading. Application of the VEQ clause for construction contracts is generally based upon caselaw for overruns and mostly various local expertise and specific circumstances for underruns. And many people seem to think thatt the VEQ clause at 52.211-18 is where the contract authorizes a variation between actual and estimated unit-priced quantities. It doesnt. The mechanism for measuring and paying for unit-priced items should be described in notes to the CLIN schedule or in a measurement and payment specification. The VEQ clause addresses adjustments to unit-prices and/or the contract time when the actual work involves quantities outside of a range of 85-115% of the estimated quantity. There are other similar areas. EDIT: Don Mansfield's 10 March 2011 BLOG entry provides other examples of instances where one must possess some knowledge beyond a strict reading of clauses or FAR. The FAR would be at least a foot thick if it were intended to be the only reference or instructions for Contracting officials.

Don, regardless of what FAR clause 52.228-15 (I assume you meant "52.228-15", not "52.228-16"), may or may not require, for contracts performed within the U.S., the Miller Act generally requires (28.102-1 -- General.): "(a)...performance and payment bonds for any construction contract exceeding $150,000, except that this requirement may be waived-- (1) By the contracting officer for as much of the work as is to be performed in a foreign country upon finding that it is impracticable for the contractor to furnish such bond; or (2) As otherwise authorized by the Miller Act or other law." Don, 1) How do you think a KO should handle bonding for task orders on a construction ID/IQ contract? Does the clause 52.228-15 pertain to individual task orders? See below example. 2) Would issuance of a task order increase the "contract price" for purposes of the aforementioned clause.? 3) If so, if the government requires a bond for a task order, would the contractor have to maintain the bond in the amount of the task order until the entire ID/IQ contract is closed, even after fully completing the task order? For the above questions, please assume an example: The minimum ID/IQ contract obligation was $100k. Task Order number 1 is issued for $5,000,000 with a requirement to provide bonds. After completing task order 1, government issues task order 2 for $4,000,000 with a requirement to provide bonds. By the way, regardless of what the Payment clause allows a KO to do, there are other policies and procedures which would discourage holding retainage on completed task orders. There are separate internal DoD requirements and policy for administering construction contracts and for managing appropriations. These policies stress timely and promp fiscal closeout of a project or "contract", so that the funding is not maintained as "construction in progress" status and for various other reasons. It would seldom be appropriate, in my opinion, to keep task orders open by withholding retainage until the entire ID/IQ contract is over. In addition, for MILCON, each separate project will have its own appropriation. Even for O&M funded task orders, funding may involve different fiscal years. We can't usually mix these funds for our use.

Based upon the information provided: 1. There is no breach of contract. It appears that the Navy is no longer responsible for providing the service. The government has the right to TFC under the terms of the contract. 2. FAR 19.506 (a) refers to a pre-award action.

Green, where are you? Did you deliberately ask an obscure question, then ignore the requests for clarification? Or did you obtain an answer somewhere else? Just wondering. Perhaps you weren't sure about what you were asking. I didn't know which perspective you were referring to - a contractor's internal accounting system or the government's accounting systems. The two respondents didn't know what you were asking about. It would be polite to reply with some type of clarification or "I'm not sure what I'm asking about", etc. For that matter, at least a "Never mind" would be okay, too. Thanks.

FAR, what do you mean by "assignment"? This thread concerns "novations". See FAR 42.12 for instance..

I use that story to illustrate that it is commendable and preferable to always look out for the taxpayers. Just don't be penny wise and pound foolish in doing it. Consider the cost/benefit ratio and risks involved. Maybe the effort, time and cost to keep 3 firms in the running isn't worth the possible savings here, maybe it is...

I commend your efforts or instincts to try to negotiate a better deal for the US Taxpayers. But I had really had similar questions in my mind last evening as the other two gentlemen. I wondered if there was some reason why the other two firms couldn't become technically acceptable and/or if they couldn't all competitively lower their prices if you went back to all three or at least two of the three. It depends upon the specifics (how close the pricing is, what it would take to become technically acceptable, etc.). Since this is an LPTA acquisition, I'm assuming that getting the best possible price for a product or service that simply meets your requirement is your objective. So if two or all three firms could supply a product or service that meets your minimum requirements, why not negotiate with more than one? Of course, I don't know the specific facts, here. In theory, if the other two firms are technically incapable of becoming compliant or price competitive, it might be possible to establish a competitive range of one and ask for a better deal. However, that might be risky, too. There's a possibility that the firm might not only refuse to reduce its price but could possibly withdraw or raise its price. Maintaining price competition is generally preferred, where practical. Reminds me of the time that our secretary called up and negotiated Walmart down 10 cents for three 59 cent Magic Markers for marking concrete test cylinders. That would have been okay I suppose, but she had physically sent the lab boys downtown in a pickup truck to check prices of at least three stores, then come back and tell her, first!! I'm not equating your efforts with that folly - it just brought back memories of the $100 or more effort by 3 people and expense, including 2 trips to the local town in a government pickup truck, to buy three markers for $0.49 for a savings of $0.10. Then she used a "Form 44" that cost the government an average of (so I'm told) $75 to process and pay for the markers. Even if she had allowed them to use the petty cash fund, she would have made them come back to get it. I don't guess any of them thought to simply call 3 stores, if that was really necessary (it wasn't)...

I tend to agree with Cajuncharlie and Vern. We don't know what is specifically in each contract or who or what caused you to improve on the software. I think that the best thing to do is discuss with the appropriate authorized government representative(s) how to allocate between the two contracts, and if that is appropriate. As has been said herein, do document the discussions. Recommend confirming the discussions in writing by correspondence or with the invoice(s). It would seem to me that those in the government who wrote the contracts "should" know how such work should be charged. Collaberation with the appropriate government persons should probably resolve your questions. Good luck.

Have you thought of the possibility that your firm might have to pay back the Government any improperly paid, expired funds? I don't know whether that could happen... For some naive reason, I always assumed that someone in the government (F&A) knows the status of funds when they are obligated or made available for obligation or someone at the Finance and Accounting Offices would check prior to actual payment of invoices. Most funds expire at some point for obligation or payment purposes. In our organization, I believe that we have internal controls to hopefully prevent obligating expired funds.

OOOh. That is an old design-build guidance document that I posted on my former office's website many years ago. No, it wasn't the Air Force National Guard website. It is the Huntsville Engineering and Support Center, US Army Corps of Engineers - Chemical Demilitarization Directorate. At the time, the Corps had no official design-build guidance and the design-build proponent at HDQTRS asked me to post stuff on our website. It was a pretty sorry state of affairs when an organization doing billions of dollars worth of construction - much of it by design-build - didn't have any "Official" design-build SOP's. I don't know if the forms are current. I'll try to find the most current ones when I get time.

I just noticed this form. It looks like one that I developed back in the mid-1990's for compliance with Clause 52.219-14, Limitations on Subcontracting on construction contracts. Was this from the Air National Guard website? By the way, I updated this form, circa 2005. Plus I developed separate forms for Hub-Zone (same clause) and unrestricted construction contracts, subject to clause 52.236-1 Performance of Work by the Contractor.

See The Wifcon Blog. Secretary of the Air Force just announced it. Boeing was apparently more than 1% lower in total evaluated price than EADS. No other details yet. $3.5 billion with options for production... "Boeing is the clear winner. " EDIT: Sorry about the typo in the title of this thread. I meant to type "Tanker".

I still can't access these URL's and don't know what they contained. Vern, do you or anyone else know Where they can be viewed? What were the subjects or jist?

Are you asking about underruns of estimated quantities of unit priced items or some combination of overruns and underruns that results in a net underrun, etc.?

Retread, there was a recent thread where Lacylu more or less explained the scenario. It had to do with changing overhead or accounting procedures after award. I don't know why she started a new thread here.

Woop, in your example, the fee is directly proportional to the amount of incurred cost, up to the maximum cost limitation. What is the difference?

HA HA HA HA HA HA! LOL, , etc... I liked that!!! Unfortunately, that person is spending the US Taxpayers' money, plus money that the government does NOT have and that my kids and grandkids might be expected to pay back someday. That is sobering, isn't it?

Sigh... I should have known better. "And now... The Rest of the Story!" ... Or most of it... Err, refer to another thread for more details...

Whoop, I think that scenario is a form of cost plus percentage of cost, which could motivate a firm to expend the most money possible within the cost ceiling. I do agree with you that a decrease in actual cost with a fixed fee would result in a higher return on costs, but there is nothing inherently wrong with that. Zoom, Zoom, Zoomie71.

I agree with Vern. If there was no formal or constructive government change to the scope of work or other contract requirements, there would be no basis for a change in the fee. Here, I am assuming that only the firm's G&A rate has been adjusted due to an internal or external audit or general business conditions.