Matthew Fleharty

4 minutes ago, Desparado said:

Wow, it seemed like I missed all the fun!    I guess once a poster is banned their old posts are deleted.  That's understandable but at the same time a shame. I would have liked to see their side of the story.

 

Don't worry, you didn't miss a thing - the company's remarks were incomprehensible.

11 minutes ago, LATVIAN CONNECTION LLC said:

you just edited out Bob the words .... and other parts of what Latvian Connection LLC just wrote.   

Yes, Bob did and if you read his reasoning it was because they were apparently in violation of the terms of use.  Try abiding by the rules of the forum by which you're participating...but in order to do that you'll have to read and understand them first.

2 minutes ago, Vern Edwards said:

They can assert such a "right," but asserting does not make it so. They should either withdraw their decision or be forced to persuade a court.

Agreed, though even rights asserted based on statute are still subject to review (hence the existing of our entire judicial system) - like you mentioned, I'm sure this will be pursued further based on Latvian's behavioral trend and I'm curious to see the results.  I just wanted to make sure everyone was on the same page with regards to the basis for GAO's action.

6 minutes ago, Vern Edwards said:

I don't care about what Latvian can or cannot do by right. That is for GAO to decide on a case by case basis. All I care about is whether the GAO is acting within its authority. Is its decision consistent with what the law requires it to do?

Vern,

From what I read in the GAO's decision, they did not rely on the statute as the basis to justify their action against Latvian (http://www.gao.gov/products/D14354#mt=e-report):

Quote

However, our Office necessarily reserves an inherent right to dismiss any protest, and to impose sanctions against a protester, where a protester’s actions undermine the integrity and effectiveness of our process.  PWC Logistics Servs. Co. KSC(c), B‑310559, Jan 11, 2008, 2008 CPD ¶ 25 at 12.  The inherent right of dispute forums to levy sanctions in response to abusive litigation practices is widely recognized and has been characterized by the Supreme Court as “ancient in origin,” and governed not by rule or statute, but by the control necessarily vested in a forum to manage its own affairs.  Roadway Express, Inc. v. Piper et al., 447 U.S. 752, 765 (1980). 

Vern's absolutely right - consider an analogous situation many people face when constructing a new home.  A person can estimate a budget based on "objectives" (# of bedrooms, square footage, etc.) without the "specifications" that will then be created after sitting down with a professional architect.  Moreover, the manner in which those "objectives" are met can even be constrained by the original estimate to prevent to work's cost from spiraling out of control.

SubK,

From what I've read, this issue has already been adequately addressed/answered in the other forum.  Furthermore, you fail to present a key piece of information in regards to whether or not FAR 52.222-43 is in the solicitation.  Finally, read the FAR language.  It states:

Quote

The Government may require continued performance of any services within the limits and at the rates specified in the contract.

If the -8 option is priced in the contract, ask yourself: wouldn't the exercise of that option be "within the limits and at the rates specified in the contract?"  Then as far as the rate adjustment is concerned, that depends on the FAR 52.222-43 clause as to what level of escalation should or should not be included in the option pricing; however, as Vern said in the previous thread, speak to the Contracting Officer regarding this solicitation...that is, after you fully understand the solicitation and compose a clear question (I'd advise against just dumping information and assertions from your colleagues as you did here).

In the future, I'd recommend you keep posts regarding the same topic consolidated so that individuals can know what has been already asked and answered.

1 hour ago, Vern Edwards said:

Anyway, you don't learn negotiation by reading, you learn it by watching a good negotiator in an actual negotiation and by negotiating with a good negotiator.

Or by practicing and receiving constructive feedback.  I wish the Government's required "in residence" acquisition training focused more on developing/honing skills like that rather than instructors parroting the FAR with the help of Powerpoint...but I digress.  Maybe when I can find some spare time I'll sit down and lay out my thoughts so I can have a constructive conversation with Don (and any others interested in the subject).

On ‎8‎/‎19‎/‎2016 at 8:07 AM, joel hoffman said:

I have some other recommendations for those who negotiate, but will save until the next opportunity

Joel,

I'm curious what recommendations you have on the topic of negotiations.  Some notable ones that I've read are Getting to Yes and Getting Past No by William Ury as well as The Art of Negotiation by Gordon Wade Rule (which can be found electronically here http://www.wifcon.com/pubs/artofnegotiation.htm though I'd love to find a hard copy...) and Don's recommended Crucial Conversations.  Any others would be quite welcome!

Also thanks to everyone who has contributed thus far!  I've already ordered most of the recommended books if they weren't part of my library already, though some of those texts Vern just referenced are pricey

46 minutes ago, here_2_help said:

I'm not going to post anything about that time when DCAA alleged that the company's account with Southern California Edison, to supply electricity for the entire plant, was a subcontract.

I'd love to see/hear the rationale behind DCAA's allegation, if that's something you could share.

I'm currently on the hunt for new reading material and I figured while I try to help myself, why not help others.  For those also looking for something to read related to contracting, a list that I have found helpful compiled by Vern can be found here (www.wifcon.com/anal/RecommendedReading.pdf).  Similarly, I'm sure other members of this community have books that they share when asked for recommendations, but haven't taken the time to compile a list (I'm guilty myself) so I'd like to ask the Wifcon members for a simple, easy request:

Provide just one recommendation for a book that would be beneficial for a contracting professional to read.  I'll start:

My recommendation is Thinking, Fast and Slow by Daniel Kahneman (https://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555).  In a career field where making sound decisions is a critical trait, one should understand how the mind works, how it can deceive us, how to recognize those situations, and how to adjust accordingly.  What you'll learn from this book is as useful (if not more) in life as it is in contracting.

What's yours?

11 hours ago, AA Scholar said:

What are your interpretations of FAR 44 and subcontractor as it would apply to this case of the use of "consultants"?

The full definition of "subcontractor" at FAR 44.101 reads:

Quote

“Subcontractor” means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor.

Consulting could meet that definition - "a...firm that furnishes...services to...a prime contractor" - the services in this case being consulting.  "Furnish" has a few definitions, American heritage dictionary defines it as "to provide" (https://ahdictionary.com/word/search.html?q=furnish) - based on that definition, "to provide"/"furnish" services would not necessarily require the production of a tangible item or deliverable.

What argument do you want to make and what can you use to support it?

16 hours ago, Vern Edwards said:

Are we thinking business people, or are we such rule-obsessed drones that we can't reason our way to a determination of fairness and reasonableness without the help (or constraint) of a regulatory standard? 

Fair enough, but one day I'd like to have an in depth conversation regarding when definitions/standards should be required and when they shouldn't.  As someone who has been through and watched this career field and the regulations governing it evolve, I think I could learn a lot if you could spare the time for discussion.

I think my final point is that when we're assessing whether competition was had or not, that reasoning seems to draw on similar criteria as contained in the definition of "adequate price competition."  Don't worry any further - I promise I won't point any buyers using simplified acquisition procedures to the "adequate price competition" standard, but many (if not all) of those components will come up while using business judgment to reason through the issue of whether competition could have resulted in a fair and reasonable price - I'll just find some business text instead.

4 minutes ago, Vern Edwards said:

Yeah. So? Adequate price competition has to do with the requirement to obtain certified cost or pricing data. Period. That requirement does not apply to simplified acquisitions.

All you FAR Part 15 people who want to apply that concept to simplified acquisition have been led astray and become demented.

Vern,

I'm definitely not a FAR Part 15 person - I cringe every time I see a commercial acquisition that meets the requirements of FAR 13.5 go the FAR Part 15 Source Selection route...

What I am is someone that likes to have a standard or definition to base a position on - I've agreed with you that the applicability is inappropriate as currently written; however, given what those standards state, I think they could potentially have use outside of the a prohibition on obtaining certified cost or pricing data.

2 minutes ago, Vern Edwards said:

There is no official definition. However, ordinary usage suggests that competitive quotations or offers are those openly solicited from more than one source, i.e., those solicited from firms that know that other firms are being solicited, as well.

That sounds a lot like FAR 15.403-1(c)(1)(ii)...

Quote

(ii) There was a reasonable expectation, based on market research or other assessment, that two or more responsible offerors, competing independently, would submit priced offers in response to the solicitation’s expressed requirement, even though only one offer is received from a responsible offeror and if --

    (A) Based on the offer received, the contracting officer can reasonably conclude that the offer was submitted with the expectation of competition, e.g., circumstances indicate that --

    (B) The determination that the proposed price is based on adequate price competition and is reasonable has been approved at a level above the contracting officer; or

• (1) The offeror believed that at least one other offeror was capable of submitting a meaningful offer; and

  (2) The offeror had no reason to believe that other potential offerors did not intend to submit an offer; and

16 minutes ago, Jamaal Valentine said:

Matthew:

We also have the Contract Pricing Reference Guide, Volume 1, Price Analysis. Official guidance to supplement or compliment FAR 13.106-3.

What is important in price competition is comparing quotes or offers. Comparing them to each other, the IGE, the market, etc. Price competition or adequate price competition alone do not establish fair and reasonable prices … the price analysis does.

Completely understand that analysis is what drives the determination of fair and reasonable prices (refer to my first post in this thread) - I'm discussing the (or a potential) basis/standard for that determination.

1 hour ago, ji20874 said:

Matthew,

This thread is about FAR Part 13 acquisitions, not Part 15 acquisitions.

Isn't FAR 13.106-3(a) is all we need for FAR Part 13 acquisitions?

Forum discussions are about whatever is being discussed by the members at the time - I don't think my posts or questions have taken the original question and discussion to a point that is completely unrelated.

Is FAR 13.106-3(a) all you need for FAR Part 13 acquisitions?  "Whenever possible, base price reasonableness on competitive quotations or offers."  What are competitive quotations or offers?  Can you point me to a definition?  For example, if a requirement is solicited and only one quote is received, is that a competitive quotation that could serve as the basis for price reasonableness?  Why or why not?

On the other hand, the standard for "adequate price competition" (referenced in FAR 15.404-1(b)(2) price analysis techniques to determine a fair and reasonable price which are remarkably similar to your FAR 13.106-3(a) reference) actually sets standards that make sense (already explained in my previous post).  I've already conceded to Vern's point that because it states "offers" it should not be applied to simplified acquisitions when quotes are received...my point/question is shouldn't there be such a standard for "competition" that is consistent regardless of whether quotes or offers are solicited and why couldn't it be the one for "adequate price competition?"

5 hours ago, Vern Edwards said:

 

A careful reading of FAR 15.403-1(c)(1) suggests that there is a legitimate issue whether you can have adequate price competition, in the sense in which that term is used in FAR, based on quotes, since the FAR refers to adequate price competition expressly and solely in the context of offers and FAR Part 2 makes a clear distinction between offers and quotes. Moreover, if I rightly recall, the only mention of adequate price competition in FAR 15.404-1 is in a single sentence in subparagraph (b)(2)(i), which is a rather weak basis for applying it to simplified acquisitions, which, I believe, are not mentioned anywhere in 15.404. Not once.  

Does the government solicit quotes very often in acquisitions valued in excess of $750,000. I suspect not, but I don't know. I doubt it. If not, then why bother changing the criteria in 15.403-1(c)(1)? 

 

Vern,

Since "adequate price competition" as a term is included under FAR 15.404-1(b)(2)(i), I'd argue that it is relevant even on FAR Part 15 acquisitions below $750,000 when performing price analysis and comparing proposed prices received in response to the solicitation.  If you don't meet the standards of adequate price competition, the use of that technique to determine price reasonableness would be improper. 

Quote

(1) Adequate price competition. A price is based on adequate price competition if --

     (i) Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement and if --

          (A) Award will be made to the offeror whose proposal represents the best value (see 2.101) where price is a substantial factor in source selection; and

          (B) There is no finding that the price of the otherwise successful offeror is unreasonable. Any finding that the price is unreasonable must be supported by a statement of the facts and approved at a level above the contracting officer;

Outside of the FAR Part 15 specific language of "offers" and "source selection" (bolded and underlined above) the rest of the words/information contained in the standard for "adequate price competition" is quite useful in answering the question "When might the Government have a fair and reasonable price resulting from competition?"  Here's a partial breakdown as I see them:

• Two or more offerors that are:
• (a) Responsible
• (b) Competing independently
• (c) Satisfying the Government's expressed requirement
• Price is a substantial factor
• No finding that the price of the otherwise successful offeror is unreasonable.

Those are sound standards that could easily be applied to simplified acquisitions, but apparently should not (at least not by reliance on the FAR) due to the use of the word "offers," which you correctly pointed out, and the distinction between "offers" and "quotes" in FAR 13.004.  Now, as someone who stresses the importance of definitions, since "competition," "adequate price competition" or a similar term is not defined in FAR Part 13 or FAR 2.101, where should contracting professionals go when basing price reasonableness for simplified acquisitions off of competition to answer the question "when might the Government have a fair and reasonable price resulting from competition?"  Surely they can answer the question through reason, business judgment, and sound logic (and, in doing so, will likely make many of those same points bulleted above), but I think if a similar definition or standard existed that included quotes (or just didn't exclude them) that would be beneficial.

Hope you enjoyed the fair and, as always, thanks for an engaging and educational discussion.

27 minutes ago, Vern Edwards said:

I can hear them now, arguing if you could ever have adequate price competition based on quotes, since 15.403-1(c)(1) mentions only offers.

Fair point Vern, I withdraw my disagreement regarding the application of the standard for "adequate price competition" to simplified acquisitions; however, in that case, should there be a definition in FAR 2.101 for "adequate price competition" that captures both quotes and offers?

I hope if you were my boss you wouldn't assign me to working contract closeouts...

13 hours ago, Vern Edwards said:

Great post, Charter Party! I agree about "adequate price competition." It's an official term associated with Truthful Cost or Pricing Data (formerly, Truth in Negotiations), which is a statute and a regulation that does not apply to simplified acquisition and a term that does not appear in Part 13.

Vern,  I somewhat disagree.  The statement I quoted, FAR 15.404-1(b)(2)(i) uses the term "adequate price competition" in the context of price analysis (and then references you back to the definition of "adequate price competition" which is, admittedly, under the FAR section for Prohibition on Obtaining Certified Cost or Pricing Data).  Still, it's association with price analysis, the consistency between the price analysis techniques/standards at FAR 13.106-3(a) and FAR 15.404-1(a), and the statement in FAR Part 13 at FAR 13.003(g) which authorizes "any appropriate combination of procedures in Parts 13, 14, 15, 35, or 36..." leads me to conclude that if I'm trying to determine a fair and reasonable price based on competition IAW FAR 13.106-3(a), since FAR Part 13 does not provide an explicit standard for what meets that standard, it is appropriate to use the standard for "adequate price competition" from FAR Part 15.

20 minutes ago, Whynot said:

However, FAR 6.302-1(c) clearly states that brand name acquisitions are not full and open competition regardless of the number of sources solicited. As such, I do not think it appropriate to make a price reasonableness statement in the file that says prices were determined reasonable based on competition.

The lack "full and open competition" does not mean that you cannot determine a fair and reasonable price based on "competition."

I agree with the general sentiment that liberal arts majors should be more welcome in this career field.  As much as I love my Economics degree, the time I spent in high school and college competing in speech and debate has served me infinitely better as a contracting professional than any statistics, business, or economics class has.  I could crunch numbers, build models, and understand ratios all day long, but if I can't convincingly reason, debate, and critically think when I'm sitting across the table from a contractor (or a clearance official), what good are those perfect numbers and what odds do I have in successfully negotiating that position?

1 hour ago, ji20874 said:

Aparently, the contracting officer was satisfied, and that is what matters.

I disagree - if a contracting officer made an unreasonable determination, or no determination at all, that matters.

3 hours ago, CharterParty said:

Would quotes from two different authorized distributors for the same BN/OEM item be sufficient price analysis to meet the threshold of FAR 13.106-3(a)(1)?  

Maybe...FAR 15.404-1(b)(2)(i) states "Normally, adequate price competition establishes a fair and reasonable price" (emphasis added...you can reference the definition for adequate price competition at FAR 15.403-1( c )(1)).

I add the emphasis because there are situations where adequate price competition would not result in a fair and reasonable price - for example, let's imagine a requirement for widgets that has a Government estimate, based on market research, of $50k.  The requirement is solicited via a RFQ for 3 days and results in 2 offers for $100k and $150k (let's assume we meet the definition of adequate price competition mentioned previously).  Now ask yourself, is $100k a fair and reasonable price?  Maybe, maybe not.  Any good contracting officer/professional would need to consider the totality of the circumstances and then do some thinking to make the proper determination.  Consider the following:

• The prices quoted are inconsistent with the Government estimate...why is that?
• The prices quote by the offerors are 40% different...why is that?
• Why did the Government receive only two quotes?  Did market research indicate a large number of potential suppliers for the requirement or a few?  Or, did the short solicitation response time limit other offerors' abilities to participate?
• Was the requirement clearly explained in the solicitation and adequate understood by the offerors?

I could go on and on.  Point being, Vern is absolutely right when he states "it depends."

Final point - you stated you're doing reviews.  It sounds like this may be a case of a poorly documented contract file.  I'd stress the importance of making sure that individuals document their business judgment (even if it seems apparent) for this very reason - a decision needs to be able to be readily understood and needs to be reasonable...even for SAP purchases.

1 minute ago, Vern Edwards said:

Make sense?

Yes, we're on the same page.  Thanks!

As for DTMD's question, I think a scenario would help explain the funding requirements as I see them:

If the minimum order specified in the contract is $120,000 and the plan is to place an order for $120,000 and incrementally fund $10,000 per month, that would not meet the requirements previously posted; however, if the plan is place a minimum order for $240,000 and incrementally fund by at least funding $120,000 when the order is placed, then incremental funding may be permissible (I say may because I don't know your agency's procedures, the type of contract, or funds at hand).

28 minutes ago, Vern Edwards said:

Think of it this way: What we call "incremental funding" is really incremental obligation. In order to understand that, read the Limitation of Funds clause, FAR 52.232-22, paragraph (f).

Does that mean my characterization of the issue at hand is incorrect?  I've just looked at obligations and funding as two separate issues and, to your point, see FAR 52.232-22(f) as conditioning the extent of each parties' obligation, but I understand how functionally it creates incremental options as you discuss.