joel hoffman

"NAVY's $600 Toilet Seat The P-3C Orion antisubmarine aircraft went into service in 1962. Twenty-five years later it was determined that the toilet shroud, the cover that fits over the toilet needed replacement. Since the airplane was out of production this would require new tooling to produce. These on-board toilets required a uniquely shaped, molded fiberglass shroud that had to satisfy specifications for the vibration resistance, weight, and durability. The molds had to be specially made as it had been decades since their original production. The price reflected the design work and the cost of the equipment to manufacture them. Lockheed Corp. charged $34,560 for 54 toilet covers or $640 each.[1] President Reagan held a televised news conference in 1987, where he held up one of these shrouds and stated: "We didn't buy any $600 toilet seat. We bought a $600 molded plastic cover for the entire toilet system." A Pentagon spokesman, Glenn Flood stated, "The original price we were charged was $640, not just for a toilet seat, but for the large molded plastic assembly covering the entire seat, tank and full toilet assembly. The seat itself cost $9 and some cents.… The supplier charged too much, and we had the amount corrected."[2] The president of Lockheed at the time, Lawrence Kitchen, adjusted to the price to $100 each and returned $29,165. "This action is intended to put to rest an artificial issue," Kitchen stated.[1] References 1. ^ a b http://www.time.com/time/magazine/article/...iid=chix-sphere 2. ^ "But It Would Be Wrong" By: William Safire The San Francisco Chronicle Sunday, April 20th, 1986" Obtaining a multitude of unit prices for pricing up to five years out from one provider, when neither the products (evolving technology and prices) nor the vehicles that they will be installed on are static in nature , doesn't seem to be smart acquisition to me. The computer is just another example of the government paying 2-3 times more than just buying it at a computer store, since Don didn't like the $600 toliet seat example, which was well publicized back in the 1980's. The above is from Wikipedia.

Formerfed, I agree with you. Oh - please, Don. You obviously missed the point. As for wasteful contracting, you should be able to cite numerous examples. American Airlines managed to destroy my almost new government computer last June in a freight elevator accident at the Pensacola Airport. It took 4 months and about 4 offices for my organization to figure out how we could get reimbursed and how much the replacement would cost.AA would only reimburse me, not the government. Finally, I drafted a letter for my boss to sign, saying that I owed the government the cost of a new computer, so I could get AA to write me a check for a replacement. The new computer was $1530 through the government. I had also checked the local dealer, who would have charged me about $520 for the same exact computer. AA wrote the check for $1530 to me. I wrote a check to the government for $1530. The last I heard, they were still trying to figure out how to get the money into the correct account to purchase the new computer.I ended up with an old loaner.

With the limited ability to obtain the 4 objectives I outlined above, using procurement techniques that would be typically available to a good commercial company purchasing agent, its no wonder that the government buys $250 screws, $600 toilet seats (for toilets on C-5's that don't work anyway), and pays premium prices for electronics that are months to years behind market pricing trends. If a contracting office doesn't have the experience or time to smartly price services and materials, they won't have the time or knowledge to mod fixed price contract line items to take advantage of market conditions or to adjust for actual fleet composition. A simple method to obtain up to date, competitively priced equipment and installation, based upon the actual fleet, should be the goal here in my opinion.

"Can you hum a few bars" of the ASPR clause? I think I threw away my copy a few years ago do to space limitations.

It would seem to me that you'd want a contract vehicle that allows you to 1) have competition for orders, if there are sufficient sources 2) a pricing arrangement that doesn't require you to renegotiate unit labor and parts prices due to variations in vehicles over the course of one year or due to totally different vehicle types in future years 3) a pricing arrangement that you can automatically take advantage of latest technology and related market pricing 4) without having to settle for "average prices" for some hypothetical mix of vehicles or equipment that doesn't reflect actual usage.

Ashley, please don't apologize. I'm not criticizing you. I was reacting a comment that this should be condisered to be "Procurement 101" for those responding to your initial post and that an answer should have been provided based upon the level of information in your first post or two. Instead, it was apparent to me that we didn't have enough understanding of the market or the nature and variability of the requirement to provide definite answers. Just because a method was once used doesn't necessarily mean that it is the best or only way to get the work done. If scope and price will vary considerably both in the short and long term, I'd consider getting pricing as current to the actual requirement rather than lock into long term pricing based upon "averages" of different vehicle types, which may or may not represent what vehicles you get over the next 5 years or for equipment that is rapidly changing both in price and in technology.

Yes, but - We do know that there is a recurring requirement. The cost of both labor and parts will vary by vehicle type, which is unknown until there is a delivery from GSA. It will apparently vary each time there is an order and vehicle brands and models will change year by year. The equipment and materials will vary over time. Emergency vehicle lighting systems are being updated as lighting and electronics technology changes. Solid state electonic lighting is in an extreme mode of change right now. For instance, pricing of LED chips has rapidly changed in only the last two months and the technology and availability of LED chips and applications is in hyper change per a briefing by a Phillips Lighting representative that I attended yesterday. We all know that computers are constantly being updated. We don't know the size or magnitude of a typical order or the magnitude of the program. We don't even know how many dealers there are who can perform the work. Based on that number of unknowns, I would wonder why we would lock in any price or firm for 5 years...

Please also note that information dribbled in regarding the nature of the requirement and how much is known about industry capability as late as day 2 of this thread. As part of acquisition planning, one should consider market research. Information concerning admittedly limited knowledge of local capabilities came in shortly before a post claiming astonishment at why the thread was still active on day 2.

It seems to me that if this were Procurement 101, we'd have a rough idea of how many vehicles we expect to outfit and roughly how much it costs per vehicle before locking in on a solution that would establish a 5 year (didn't find that out til later posts) requirements type contract A requirement contract would eliminate competition and lock in some pricing that we expect a shop to be able to competitively estimate for up to 5 years. Seems like we'd want to ensure that this is the most practical/economical/smart approach before selecting a contract type. We also don't know what type of vehicles, brand, number, etc. of vehicles will even be produced, let alone purchased by GSA over the next 5 years. The only thing we know is that lights, sirens and computers (which constantly change) are included in an outfitted vehicle plus there will be a need to upgrade and repair such items.

Thanks for the imput, all. I began this thread to inquire whether I was overlooking something. The responses indicate that I was on the right track. I met the brand new lead KO for the office which was involved in the protest this afternoon. She confirmed that price can't be both the least important factor and equal to all non-price factors in combination. Since nobody else discussed why GAO didn't comment on the apparent conflict in the RFP, I'm giving GAO the benefit of doubt. it wasn't relevant to the Protest. So, I assume that there is no need to address it, which would open the door to further basis for protest. GAO will probably avoid providing fodder...

Ashley, approximately how much does a typical fit-out cost per vehicle? Roughly how much is expected per year?

My point is that you can make price equal to the other two factors, when combined. You can make price significantly less important than the other two factors when combined. But you can't do both at the same time. In the case above, the overall stated comparison between price and non-price factors conflict with the relative importance of the three individual factors. If price is the 3rd most important factor, it can't be equal to the other 2 more factors in combination. The cited project is design build. The two non-price factors are performance capabilty and the proposed design. The latter is distinct from "capability".

Sorry - not in office. How much is "larger"?

Since you have "talked to a few companies" there should be competition available, I assume. Why would you limit it to a single award ID/IQ (requirements type?)? If you get only 3-5 vehicles at a time, it appears that Carl's idea of a BPA arrangement with competition each time might have merit, I'm guessing that it doesn't cost over 100k each time to outfit a small number of vehicles for instance, 20k per vehicle times 5 equals 100k. Then you could write a FFP purchase order for the work. Am I way off on the top price for outfitting a vehicle with a light bar, siren and computer set up or repairing same?

Of course, the FMS customers and host nations are the reason for the legitimate objection. I used to live over there.

In what capacity are you considering using a contractor? ...Technical advisor? ...A voting evaluation team member?

Don't get too deep in trying to figure this out. Last night, I spoke with a senior KO in the office that conducted the Source selection, who indicated that the criteria are probably a mistake and who seemed to agree with me that you can't make price both the least important factor and the most important factor at the same time. This wasn't the responsible KO. I still don't quite understand why GAO didn't question the contradiction. I suppose it is because this wasn't a relative issue in the Protest. I know some of the folks in one of the protesting firms. I suspect they don't have a clue either.

Parkerr, I do not have access to the FAR or the Federal statutory Code tonite - sorry, Vern. However, the answer to your question might be a lack of coordination back in the rewrite of FAR Part 15 in the Fall of 2006. Prior to the rewrite, the LPTA method was discussed under a separate subparagraph from the "Best Value" FAR coverage. As part of the acquisition reform rewrite process, the FAR Council pulled LPTA under the "Best Value Continuum" with the Tradeoff Process at one end of the "Continuum" and the LPTA process at the other. I may be wrong, but don't have the present FAR or 1996 version available (I am TDY) for comparison or to check the current paragraph organization or numbering. Going back to your original post in this thread, I do remember recently checking my FAR comparison book between the 1996 and 1997 language regarding having to separately identify the relative order of importance of each factor in addition to stating the overall importance of price and non-price. The 1996 version more clearly expressed this requirement. I don't know why they revised that specific language. as I compared the old and new language, I wondered at the time why they edited out the more clear wording. Maybe it was just part of "acquisition streamlining" to save print and what they thought were extra words.

Formerfed, I didn't provide the chronology, but the PEO responded to industry as I explained above. We made price significantly less important than the technical factors. The Army wanted to reduce building cost by 15% and to obtain full authorized scope within the programmed amount (PA). We had been averqaging about 85% of dcope within the PA. Achieving full scope in itself would effectively result in about 18% reduction. Obviously, when faced with cost cutting manadate, the Installations were concerned about maintaining quality of construction. I won't go into great detail on how we reduced costs. (Using performance based design-build, standardized source selection critria and methods, standardized design criteria, using Centers of Standardization for each major facility type, maximizing use of commercial design and construction standards, standardizing and streamlining design-build contract execution, etc.). We identified the contract cost limitation, included an aggressive upper limit on contract duration and made quality and further time reductions the most important factors. So, if we could get full scope within the PA with a much shorter schedule than pre-MT, we didn't need to emphasize further cost emphasis. Overall, the program is a success. Last year, our Army workload was about 6 times greater than normal program and we awarded over 99 percent of the program within the overall MCA and BRAC budget. The example I cited in the GA0 is a deviation from the published MILCON Transformation approach. In addition, it is seemingly in contradiction with itself.

I would like to add that it appeared to me from the scenario that this is a competitive acquisition. Far Fetched mentioned "bid". Thus, I presumed that a TINA exception would apply. But - I don't know for sure.

napolik, yes - of course, as the non-price factors move toward equality, then price will tend to become the discriminator in the trade-off decision. That's not what I'm referring to here. I agree with Vern's first post. Although Army can't use point scoring for technical or price, Vern's illustration makes the same "point" (no pun intended). I've seen this in 2 recent GAO Decisions and am amazed that GAO didn't notice the contradiction. If such as "august" group didn't pick up on this, I figured that I am somehow missing something. I'm beginning to think more and more that many people don't seem to have a clue how the trade-off process really should work. We as the Program Executive Ofiice for Army MILCON program execution, developed a mandatory source selection model for all Army design-build MILCON projects, in concert with a team of contracting officers and lawyers, a few years ago. We initially and purposely made price the fourth most important factor out of five factors in an attempt to make design quality, performance capability and contract duration the most important competitive factors within the budget. We also stated that price was significantly less important than the non-price factors when combined, but that price had to be both fair and reasonable and be within the contract cost limitation. We also said that additional quality would have to justify paying additional cost beyond a fully conforming proposal, etc. We said that price was more important than the fifth factor, the extent of SB/SDB subcontracting participation. This factor had mandatory requirements and annouced goals anyway. In essence we were saying that we didn't care about more extensive SB/SDB involvement than the goals if it would increase the cost beyond the budget. Thus, if all higher rated factors were essentially equal, the extent of SB/SDB participtation would become the discriminating factor. The contracting community complained because they said they didn't know how to apply this in a trade-off comparison between proposals. Furthermore, the feedback was that they didn't know how to do a trade-off and selection where price wasn't either the most important factor or "equal to the non-price factors". Note that being the most important factor or being equal to all the other factors seems to be saying the same thing. So, to mollify the community, our headquarters said to make price the least important factor, but still within the budget, price significantly less than non-price, etc. The reasoning was th it "would be easier to evaluate", so to speak. I've been recently told that some of our regions have started using language like that described in the GAO protest. I wonder, what do they mean? Do they even know what they are saying? I don't.

Can someone please explain how price can be the third most important factor in descending order of importance but price is equal to all non-price factors in overall importance? I can't seem to envision where, if design and performance capability are both more important than price, then price = both of the more important factors... Industry has repeatedly told our agency that when we state that price = all the other factors combined, then price must be the most important individual factor. In a recent protest (Clark/Caddell Joint Venture, B-402055, January 7, 2010), the protest decision stated the following: "Under the RFP, proposals were to be evaluated for ?best value? on the basis of the following evaluation factors listed in descending order of importance: ?design technical,? performance capability, and price. RFP at 4 and 5. The two non-price evaluation factors when combined, were equal to price. See FAR 15.304 -- "Evaluation Factors and Significant Subfactors" for the requirement to describe relative importance of each factor and ALSO state the relative importance of price with respect to all evaluation factors other than price, when combined. "...(d) All factors and significant subfactors that will affect contract award and their relative importance shall be stated clearly in the solicitation (10 U.S.C. 2305(a)(2)(A)(i) and 41 U.S.C. 253a((1)(A)) (see 15.204-5( c)). The rating method need not be disclosed in the solicitation. The general approach for evaluating past performance information shall be described. (e) The solicitation shall also state, at a minimum, whether all evaluation factors other than cost or price, when combined, are -- (1) Significantly more important than cost or price; (2) Approximately equal to cost or price; or (3) Significantly less important than cost or price (10 U.S.C. 2305(a)(3)(A)(iii) and 41 U.S.C. 253a?(1)( C))." Some people erroneously argue that "price or cost" is not a "factor". However, "price or cost" is discussed as a factor under 15.304 ( c). The folks who argue this with me are confused because they only evaluate technical factors, not price. They assume that since price is evaluated differently than the technical factors and by different people that it isn't a "factor". 15.304 ( 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( c)(1)() (also see Part 36 for architect-engineer contracts); (2) The quality of the product or service shall be addressed in every source selection through consideration of one or more non-cost evaluation factors such as past performance, compliance with solicitation requirements, technical excellence, management capability, personnel qualifications, and prior experience (10 U.S.C. 2305(a)(3)(A)(i) and 41 U.S.C. 253a( c)(1)(A)); and (3) (i) Except as set forth in paragraph ( c)(3)(iii) of this section, past performance shall be evaluated in all source selections for negotiated competitive acquisitions expected to exceed the simplified acquisition threshold. (ii) For solicitations involving bundling that offer a significant opportunity for subcontracting, the contracting officer must include a factor to evaluate past performance indicating the extent to which the offeror attained applicable goals for small business participation under contracts that required subcontracting plans (15 U.S.C. 637(d)(4)(G)(ii)). (iii) Past performance need not be evaluated if the contracting officer documents the reason past performance is not an appropriate evaluation factor for the acquisition. (4) The extent of participation of small disadvantaged business concerns in performance of the contract shall be evaluated in unrestricted acquisitions expected to exceed $550,000 ($1,000,000 for construction) subject to certain limitations (see 19.201 and 19.1202). (5) For solicitations involving bundling that offer a significant opportunity for subcontracting, the contracting officer must include proposed small business subcontracting participation in the subcontracting plan as an evaluation factor (15 U.S.C. 637(d)(4)(G)(i))..." (P.S., I disabled moticons but they still appeared in my preview post. I had to add a space...)

Several large and/or complex service, R&D and construction projects with Bechtel, Parsons, Fluor, Washington Group (URS), etc. These firms live with DCAA auditors, CAS coverage, etc. Some were ID/IQ contracts with all three types of work. EDITED April 2015: We used the Army's "Alpha Contracting" method in the development and negotiation of some of the SATOC task order proposals for the Chemical Demilitarization Projects at Bluegrass Kentucky and Pueblo, CO. Thus, there was wide disclosure of the pricing methodology.used to develop the proposals, including the risk factors and their reasonableness.

duplicate post.

Formerfed, if your pricing reflects greater risk, then I suggest identifying how those risks are considered in the proposal breakdown. My savvy contractors don't call it "contingency" or simply jack up the profit percentage. They include risk factors and often do Monte Carlo analyses which consider probabilities of single or mutiple problems or events occurring. To me there is a difference between simply adding a contingency factor and considering risk probabilities and taking them into account. This might be more difficult for some service type contracts. Depends upon the specific project and location.