joel hoffman

What type of contract is this (service, supply, construction, etc.) and what type of pricing arrangement (firm fixed- price, cost reimbursement, etc.)? Edited at 10:50 PM: If you check out your Inspection clause (one of the 52.246-XX clauses), depending upon the type of contract, they will generally allow the government the right to inspect any of the work at any time, including the work of subs. For cost reimbursement contracts there are Work Oversight clauses that allow the government to oversee the work. There are also Inspection requirements in construction contracts and some of the others that require the contractor to inspect its work and that of the subs. I would definitely request that the government coordinate its inspection visits of the subcontractor with the prime, as a courtesy to the prime, using the "no privity of contract with the subs" excuse plus there may be a possibility that the government agent might provide direction to the subcontractor outside the authority of the agent or that the contractor might be left out of the loop. If your contract has "partnering" or other similar procedures in it, this would be an appropriate topic to raise with the government. Legally, the government may make surprise inspections. This may be likely if the government feels that the prime may "tip off" the sub to cover up or hide problems.

Response edited on Monday evening (11:07 or so): Okay, I assume that you are talking about a construction contract and that the contractor must provide a commissioning agent. I also assume that the firm that you are inquiring about has provided A/E services in preparing the contract specs for commissioning. In that case, yes, there will be a professional conflict of interest. The firm who prepares the design should not be involved in the subsequent construction contract as a prime or a sub to the prime. This might be covered in state licensing laws and regulations. See also FAR 36.209 -- Construction Contracts With Architect-Engineer Firms. "No contract for the construction of a project shall be awarded to the firm that designed the project or its subsidiaries or affiliates, except with the approval of the head of the agency or authorized representative." It's late tonight, but I'm thinking that there are statutes covering this - there are also FAR provisions covering business ethics and conflicts of interest. If I get an opportunity tomorrow, I will do some further research. We (Corps of Engineers) generally write our construction and design-build contracts to require an commissioning agent independent from the contractor, installing firm or designer. There may be a clause in the A/E's contract that states this and/or a provision, clause or technical spec in the construction contract. I will do some more research. I haven't found an actual FAR clause which states that the A/E or its subs or affiliates cant be a subcontractor. Perhaps we have been using tech specs to prevent conflicts of interest. The Corps awards more building construction contracts than any other federal government agency that I am aware of. If you are writing construction contracts, I would recommend requiring a commissioning agent that is independent of the designer, constructor, test and balance firm or installer.

In addition, why don't you ask the customer to identify what each appropriation is for and why?

This contract or these contracts are "acquisitions from Hell" for all parties concerned. I felt like I was in Purgatory, trying to read it. Confusing terminology; long, tortuous paths taken to award base contracts and task orders; frought with litigation every step of the way!

I will certainly agree that management and contracting incompetence and inefficiency also occurs in the "private sector", if you consider major DOE and defense contractors, who's management and acquisition systems appear to me to be products of the government contracting system to be the private sector. If you think it is bad in government agencies, these people can make gov't bureaucrats look like models of efficiency! Many of these firms'business management side are well staffed with ex-military ("efficiency, what's that?") and ex-civil service programs and contracting types. It's particularly frustrating to deal with the ones whose primary business lines are predominantly cost reimbursement type contracts. My experience with several of these firms over the past 15 years has been that they won't generally break a rule to get the job done BUT often won't find a way to overcome challenges within the rules, either. We've often had to negotiate paths forward or lead them by the hand to find ways to overcome significant management or contracting problems. It's challenging for some of them to successfully perform firm, fixed-price contracts. They can't seem to or won't grasp the contractual differences in risk allocation. But it also occurs on their cost contracts. So - it aint just the government side who is subject to these type problems.

I happen to agree with Vern Edwards' 16 December comments to the article: " by Vern Edwards (not verified) | December 16, 2009 Breaking the rules There were countless legal ways for Jane to have accomplished her mission. Her action was a reflection of her ignorance. She should lose her authority to use a government credit card and be given a letter of reprimand, so should her boss. It is one thing to "break all the rules" of the business world, when "rules" means standard practices. It is another thing entirely to break government laws and regulations. The Federal Acquisition Regulation expressly prohibits splitting orders in the way that Jane did. See 48 C.F.R. ? 13.003?(1)(2). A rule in the Code of Federal Regulations is not the same as a business "rule." This article was described at a popular website about government contracting. The authors are irresponsible and should publish a retraction." Where there is a will (and some knowledge of the available avenues to get the job done), there is a way. Anarchy would soon set in if everyone decided to "break the rules" whenever they don't know any other way to get the job done. What guidelines would determine when to and who can break the rules? Anytime one thinks that the job wont get done if "the rules are followed"? You cant tell me that having an administrative assistant use her government credit card and split the requirement into 2 transactions is the only way to be able to make a $4,000 training conference purchase! What basis did an administrative assistant have to determine that there was no other way to accomplish the requirement than her using her government credit card to make the purchase(s)? The author offers nothing to support his hypothesis that the mission couldn't be fulfilled any other way! What a poor example to make his point. P.S. I can Verify that Vern Edward wrote the above quoted comment!!

Great answer, Vern. You must be a very good mood today, because 1102 never really did clarify what she was asking.

Mdtpham, the work appears to be construction work to remove and replace (paint?) Non-skid surface in a Navy dry-dock. I'm not sure but think a drydock is a public work - however someone needs to verify that. Even if it is somehow classified as a service, I doubt that it is a "commercial service" that would be sold on a catalog pricing basis. The DOL considers painting work to be construction, not a service. See DFARS 22.401. Even though the products might be regular commercial products, it isn't a supply contract if the "work" is to remove and replace the non-skid, not just to supply the materials to the Navy for someone else to remove and install. Construction work is not usually considered to be a commercial item, especially if the specs are unique Military Specs. But I'm basing my opinion on the scant description you provided plus an assumption that a dry dock is a public work for labor classifications. Someone familiar with Navy work should probably comment. Let me ask you though - why would you consider this to be a commerical item as a service or supplies?

Well, I just read a protest over ammunition skids for the Navy, which were acquired as a commercial item but had to conform to "specified government drawings, Department of Defense (DoD) standards, and industry specifications and standards listed in the SOW... In this regard, the SOW identified the primary drawing (No. 3967AS100, major assembly), along with 11 revised drawings and four DoD standards." See protest of Deval Corporation at http://www.wifcon.com/cgen/402182.pdf I'm very skeptical that ammunication loading skids are commercial items, sold to the general public, if they are designed to DoD standards and design drawings. Who would purchase loading skids for aircraft weapons other than the Military? I looked up skids on the Internet and they are pretty specialized Military equipment. One of the primary intentions of acquisition reform was to get away from MILSPECS, MILSTANDARDS, etc., and acquire stuff that is available in the marketplace. I think that was the intent of designating commercial item acquisitions. But, due to the more simplified nature of commercial item acquisitions (i.e., allows shortcuts and allows uneducated buyers to put out commercial item acquisitions), it is being abused, in my opinion. Having read the decision, the agency did some strange things - like buying ammunition loading equipment designed to DoD specs and drawings as commercial items; also, stating that the respondents to the RFQ must show that they are qualified to weld the skid assemblies - but then saying that lack of experience would not be held against them! Looks like they mixed up the ideas of experience and past performance in their evaluation criteria. But I stray from your question. I've read a couple of protests lately that were commercial item or service acquisitions but just don't seem to fit the intent of commercial item acquisitions, as originally intended for the acquisition reform movement. But, hey - the DoD tried to buy C-130-J and C-17 aircraft as commercial items! I guess there are folks out there who will try to buy anything that way in order to simplify their job or for some other reason. My answer would be that it probably depends upon whether or not the "work" is something that is sold to the public. For example, do the MILSPECS or "military specs" make the "work" unique for the Military? What is the "work"?

We used award fees on some large, very complex construction contracts back in the 1980's in my organization. This was before there was any FAR coverage for FFP with AF. Of course, our award fee criteria was based upon performance beyond the contract minimum requirements in the areas of safety, quality management, schedule management and general ability to overcome adversity and other problems in order to achieve a safe, high quality project, finished on time.

Having known a few of the executives in major construction companies and in some large defense firms, I'd say, as Vern implied, that the courtesy cover letter or an executive summary might be useful in major procurements.

Don, this has been covered above in that 16.202-1 exempts a fixed price contract with an award fee from including a cost constraint, as stated in your opening post under this thread. FP Incentive and CP Incentive contracts are quite different than fixed price contracts that contain an award fee as a type of incentive for higher performance than just meeting the minimum requirements. I believe that the FPAF language is Johnny Come Lately, added later, but poorly integrated with FAR 16.4. This language in FAR 16.402-1(a) was in the January 1996 FAR: "Most incentive contracts include only cost incentives, which take the form of a profit or fee adjustment formula and are intended to motivate the contractor to effectively manage costs. No incentive contract may provide for other incentives without also providing a cost incentive (or constraint)." This language was not in FAR 16.202-1 at that time: "The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives." The FPAF language added to 16.202-1 apparently wasn't coordinated with the existing incentive contracts language above. The footnotes indicate that it was added by FAC 2001-13, effective 4/17/2003. I checked the FAC and it didn't describe the background for the added language.

Good God, Almighty! What exactly is it that you cannot understand about the information that I referenced/cited for you in your similar thread the past few days? When the courts and GAO say that it a fundamental principle in federal acquisitions that the proposal must conform to all material aspects of the solicitation in order to award, that means that you can't award a contract based upon a deficient proposal which doesn't comply with all material solicitation requirements.

Vern, I agree but I don't think that is what CG1 did.

Vern, I think my post is directly relevant to the original question. The government can tell contractor what is considered to be reasonable - stick with the rate cap that we negotiated and if you can't, come back to me first to discuss - or I won't pay you what I consider to be the excessive, unreasonable portion of the cost. Negotiations can be more than merely establishing the fixed fee and target cost. You can establish what you will consider to be a standard of reasonableness that the contractor will have to justify in order to get paid the additional cost for exceeding.

What were the terms of your subcontract concerning limits, if any, on costs? Did you have a limit? Did you provide a proposal to the prime to do the work? When did you tell the contractor what your incurred costs are or were?

I am in Atlanta without access to my FAR this weekend. But to those who say that it is up to the Contractor's discretion what costs they charge the government and expect to get paid for on a cost contract, that's baloney. Costs must be reasonable and allocable to the contract. Back in the 1990's, Congress changed the law and it is reflected somewhere in FAR 31.2 to clearly state that there is no presumption that a contractor's costs are reasonable and that it the burden of the Contractor to prove that they are. If the government negotiated a cap on escalation, the Contractor has plenty of notice of the standard of reasonableness established. In my opinion, the Contractor would then have to justify anything over the cap. I would expect the Contractor to ask before exceeding the cap. Many old timer Government folks may never have realized that the law and FAR were changed at least 15 years ago. I still hear the myth that any cost is presumed to be reasonable and that the Government is stuck. They then pass this incorrect thinking down to the next generation. The trick is to establish a clear understanding whenever possible at the outset or during negotiations of the standard of reasonableness. But simply to say that the costs charged are up to the discretion of the Contractor is wrong.

Nope, it's included in the same trade-off analysis. There is a separate price analysis of the proposals and a trade-off comparison analysis, like normally done..

What would be wrong with it? Because having to go to such overly complex lengths to implement a GAO decision shows how ridiculous that decision is. Why can't you just evaluate the possibility that any of the line item services might be extended for up to six months and assure that prices are still fair and reasonable,as part of the price analysis. Then during the tradeoff analysis evaluate to ensure that the value (both technical and price) would still provide the best value if the temporary extension(s) are needed. After all, the extension is purportedly designed to cover delays in awarding replacement contracts. Why get so elaborate? Chances are good that if the prices were reasonable and provided the best combination of price technical value, a six month extension wouldn't change the relative value of the winning proposal, would it? The only scenario I can think of where it might be questionable is if the best value was a lot more expensive than another proposal and you'd want to ensure that it still made sense and provided the best value for a longer period (including the extension. If price is the most important factor (best value tradeoff with price most important factor or LPTA), a six month extension wouldn't change the relative order of value of the proposals.

Mike, FAR 42.1503(e) was rewritten after the July 2006 version of FAR to be consistent with GAO Decisions and position that FAR 42.1503(e) did not limit past performance evaluation periods in source selections to 3 years. That section related to collection and maintenance of the info. It used to read that agencies could not retained to provide source selection information for longer than three years after completion of contract performance. I had a copy of a decision from sometime in 2006 or 2007 which nixed the limitation, because I was involved in a debate with some Contracting Officers who mistakenly cited 42.1503(e) as a prohibition on evaluating PP for construction past three years but I cant find it offhand. Not only did the GAO disagree, but FAR 36201© requires retainage of pp ratings for 6 years for responsibility determinations. I did a GOOGLE search under GAO FAR 42.1503(e) and found numerous articles or cites. One GAO paper indicated that the info must be kept for at least 3 years after end of performance, not that the government is limited to evaluating performance to 3 years. Dont have the time to look at every link and copy the info tonite, but you can do a GOOGLE Search and read for yourself

Try these two: Systems Management, Inc, Comp Gen B-287032.4, Apr 16, 2001, 2001 CPD, ? 85 Cortland Memorial Hospital, Comp Gen B285890, Ma4 5, 2001, 2001 CPD, ? 48

Don, that doesn't make any sense to me. You will be evaluating mutually exclusive options.

And do we evaluate prices only, the technical merits of using that firm for a bridge period , both price and technical (best value)?

Don, I don't know the criteria for evaluating options to include the possibility that the contract may be extended at the end of either the initial period or any subsequent period. I would think that if the proposal was the best value for any of the full option periods, it would be okay for less than a full period. Maybe a statement to that effect would suffice Then, the only question should be "What if the final option period is extended?"

Barry, Although I didn't find any cases direct to your point, I find several plus the FAR Requirement to support the fundamental principle that the proposal must not deviate in a matrial way from the RFP requirements. See WIFCON Protest page at http://www.wifcon.com/pd15_305.htm. Here are some cites and background: "In negotiated procurements, a proposal that fails to comply with the material terms[2] of the solicitation should be considered unacceptable and may not form the basis of award." Nordic Air, Inc., B-400540, Nov. 26, 2008, 2008 CPD para. 223 at 3." See also FAR 15.206 (d), which requires the government to amend the solicitation if a proposal of interest deviates from the stated solicitation requirements. If you are in contracting you should know this. "Although the concept of responsiveness or ?an unconditional promise to comply with the terms of a solicitation,? does not apply directly to negotiated procurements, offers must comply with the material terms and obligations in a SFO to merit consideration. Gardiner, Kamya & Assocs., P.C., 1995 WL 19599, B-258400, 95-1 CPD ? 191, *2 n.1. Stated inversely, ?[a] proposal that fails to satisfy a material solicitation term is unacceptable and may not form the basis for an award.? Integrated Business Solutions, Inc. v. United States, 58 Fed. Cl. 420, 428 (2003) (citing Marisco, Ltd., 1989 U.S. Comp. Gen. LEXIS 719, B-235773, 89-2 CPD ? 8; Minigraph, Inc.-Recon., 1990 U.S. Comp. Gen. LEXIS 1350, B-237873.3, 90-2 CPD ? 492). " (Tin Mills Properties, LLC v. U. S. and Glenmark Holding, LLC, No. 08-375C, July 15, 2008) "It is a fundamental principle in a negotiated procurement that a proposal that fails to conform to a material solicitation requirement is technically unacceptable and cannot form the basis for award. See TYBRIN Corp., B‑298364.6; B‑298364.7, Mar. 13, 2007, 2007 CPD para. 51 at 5." (The Boeing Company, B-311344; B-311344.3; B-311344.4; B-311344.6; B-311344.7; B-311344.8; B-311344.10; B-311344.11, June 18, 2008) (pdf) So, I suppose you could conclude that if you award a nonconforming proposal and there is a protest, you will most likely lose.