Don Mansfield

2 hours ago, joel hoffman said:

Of course, what happens when Federal Court case law contradicts an Executive Branch interpretation of the law? That will have to be adjudicated between the President and/or Attorney General and the Judiciary, won’t it?

Or what happens if an executive branch interpretation is rejected by a court in a future decision? Does the executive branch wait to hear from the President/Attorney General that they have changed their interpretation?

2 hours ago, joel hoffman said:

And, for good or bad, i chose not to be anonymous on this Forum. Some others have come over from the dark side over the years. (Right, Don? 😃)

Right. 

2 hours ago, Retreadfed said:

See, 41 U.S.C. 1707

I actually referenced that back on page 1. Hammurabis missed it.

1 hour ago, Hammurabis Heir said:

Where's the APA? We're discussing the following statutes, but are we ignoring the Administrative Procedure Act (APA)?

No, because the APA doesn't apply to the FAR System.

Comic contracts: https://contract-design.worldcc.foundation/comic-contracts?

Another thought. Let's say they strike something like "Contracting officers shall purchase supplies and services from responsible sources at fair and reasonable prices." FAR 15.402(a). Subsequent to that, an agency issues an internal policy that says "contracting officers shall purchase supplies and services from responsible sources at fair and reasonable prices." Is the agency's policy subject to the publication and notice requirements of 41 U.S.C. 1707?

I wonder if they will strike language that implements other agencies' regulations (e.g., SBA, DOL, etc.). I don't think striking such language from the FAR would affect the force of those regulations.

My point is that the acquisition bureaucracy is guilty of forcing the world into existing drawers instead of creating new ones. Whether there should be more than one drawer for "evaluation of cost-reimbursement proposals" is beside the point, but worthy of a separate discussion.

I recently finished reading Nexus: A Brief History of Information Networks from the Stone Age to AI by Yuval Noah Harari of Sapiens fame. There's a passage in a section titled "Bureaucracy and the Search for Truth" that I found insightful:

Quote

Bureaucracy literally means "rule by writing desk." The term was invented in eighteenth century France, when the typical official sat next to a writing desk with drawers--a bureau. At the heart of the bureaucratic order, then, is the drawer. Bureaucracy seeks to solve the retrieval problem by dividing the world into drawers, and knowing which document goes into which drawer.

The principle remains the same regardless of whether the document is placed in a drawer, a shelf, a basket, a jar, a computer folder, or any receptacle: divide and rule. Divide the world into containers, and keep the containers separate so the documents don't get mixed up. This principle, however, comes with a price. Instead of focusing on understanding the world as it is, bureaucracy is often busy imposing a new and artificial order on the world. Bureaucrats begin by inventing various drawers, which are intersubjective realities that don't necessarily correspond to any objective divisions in the world. The bureaucrats then try to force the world to fit into these drawers, and if the fit isn't any good, the bureaucrats push harder.

I see instances of this in acquisition policy: 

1. We need a drawer for "service requirements description," but we instead try to force that into the "supply requirements description" drawer. The result is performance-based contracting (i.e., buying services as if they were supplies).

2. We need a drawer for "evaluating competitive proposals for IDIQ contracts" that recognizes that price competition at the contract level is unnecessary if there will be price competition at the order level. The result is fictional price competitions at the contract level just to check a box.

3. We need a drawer for "software acquisition," but we only have supply drawers and service drawers, so there are debates over which drawer to use.

4. We need a drawer for "evaluation of competitive cost-reimbursement proposals" that recognizes that we are not dealing with fixed prices, but we instead hold cost estimate competitions and make tradeoff decisions as if the Government's determination of probable cost is what the Government will actually pay (without ever validating the accuracy of the probable cost).

Questions:

1. Do you see what I see?

2. If so, are there other examples you can think of?

I don't think that what we are seeing are FAR part 13 BPAs as contemplated in the FAR. The Government is not establishing "charge accounts", making calls, maintaining call logs, receiving "delivery tickets", receiving summary monthly invoices, etc. Now that agencies can use SAP up to $7.5 million (or $15 million in emergencies), there's a need for something like an IDIQ for simplified acquisitions. I think the type of agreements we are seeing are more BOAs than BPAs.

I think it's reasonable to consider what the cost to the Government is likely to be before awarding a cost-reimbursement contract. However, I don't think the Government does that. In practice, I think the Government is merely coming up with a point estimate that it deems realistic and uses it to make decisions as if it were a fixed price. I can see a contracting officer making an award to Offeror A in the original scenario and claiming that the Government would save $5 million. However, you can't credibly make that claim without mentioning the probability of that happening.

I think the Government has come up with a technique that seems reasonable to lawyers but would seem deficient to a professional cost estimator. If the Government is going to do a cost realism analysis, I think they need expertise in risk and uncertainty analysis to evaluate cost estimates. Contracting officers typically don't have that expertise, nor do price/cost analysts. DoD trains its cost estimating community in risk and uncertainty analysis, but I haven't heard of them ever assisting in cost realism analysis. 

Alternatively, maybe we shouldn't have offerors compete on cost estimates.

3 hours ago, joel hoffman said:

I addressed those questions earlier. 

Edit: I’ll let DOGE know when the answer to the quiz is revealed. 

This is not a quiz with a right answer. I really am interested in how people react to the scenario. I think it’s a matter of judgment. I suspect that knowing the most probable cost of each offeror would be enough for most people. I'd like to know if I'm wrong about that.

@C CulhamI didn't mean to criticize your request for the relative importance of factors. I told you that you are free to make an assumption about what the relative importance was when answering.

3 hours ago, Josh Houston said:

I’d want to know what drove the increases in probable cost for each offeror. Adjustments of a few dollars apiece to various labor rates over a five-year stretch is one thing. Adjusting the cost of a single cost element that is critical to contract performance northward by hundreds of thousands of dollars because the offeror neglected to account for it or price it appropriately is a more concerning issue.

In the case of the latter example, this may already be baked into the technical evaluation. But the language of the scenario doesn’t make that clear.

1. Assume Offeror A's adjustment was due to a few dollars apiece over to various labor rates over five years and Offeror B's adjustment is due to a single cost element critical to performance that they forgot to account for. Now what is your answer?

2. If you assume the opposite, does your answer change?

I love the comics. They summarize the topics well. Great design overall.

Strangely, the words "realism" and "realistic" only appear in the title. It's more like a cost analysis handbook.

25 minutes ago, C Culham said:

Okay I will go away but I am in a quandry as to how you

And how the CO would

without knowing the evaluation factors other than cost or price, when combined, are significantly more important than, approximately equal to, or significantly less important than cost or price.  Best value is not a determination made on cost realism analysis alone something I do not is an assumption but supported by regulation and case law.

I don't agree, but let's not get sidetracked. I'm saying feel free to condition your answer with "Assuming nonprice factors are more important than cost..." or something similar.

41 minutes ago, joel hoffman said:

 

Ok, thanks. I don’t think the KO can justify any value in paying more when the non-price considerations are essentially equal and the most probable cost varies by $5 million and even the proposed cost estimates vary by $3 million.

Unless there is some provision in the solicitation for some type of price preference.  In that event, I’d be willing to call Elon Musk. We can’t afford to maintain the Status Quo deficit.

Thank you for your response 

2 hours ago, WifWaf said:

A Direct Costs-only version of the above table.  If this comparison shows that B's MPC is lowest, "best value" to the client will have to be with B.  The client gets more value for B since B's indirects are lower.

I don't follow. If B's direct costs were lower, wouldn't their indirect costs be higher?

Indirect costs = Total costs - Direct Costs

13 hours ago, joel hoffman said:

If there is no distinction in the non-price factors and we are to assume that the contracting officer's determination of the most probable cost is flawless, what basis would the KO have to award a potentially higher cost contract?

That's the question (in other words).

13 hours ago, joel hoffman said:

Missing information here might be past performance and experience track records of the competing firms for completing similar work and for controlling costs on CR contracts

Assume no distinction between offerors.

13 hours ago, joel hoffman said:

Are the “proposed costs” and “most probable costs” inclusive of fees? 

Ignore fees in this problem. 

14 hours ago, C Culham said:

They (who ever that is) need to know what the solicitation states about the relative importance of cost/price to the noncost/price factors/subfactors.

I don't see how that would be relevant at this point, but you can make an assumption if you'd like.

20 minutes ago, Vern Edwards said:

"Equal" in what?

There's no distinction between the offerors on nonprice factors. The best value decision comes down to cost.

I ask that you sit this one out.

Scenario: A contracting officer is evaluating competitive proposals for a cost-reimbursement contract. As part of the evaluation, they will have to perform a cost realism analysis of the offerors' cost proposals. The solicitation did not specify that the Government would use any particular method of cost realism analysis--it just said that the Government would conduct cost realism and may adjust proposed costs for purposes of evaluation. The solicitation stated that the Government would use the tradeoff process to determine best value.

The contracting officer receives two offers and determines the most probable cost for each. The results of their cost realism analysis are as follows:

25 minutes ago, Retreadfed said:

Yes, in the first instance.  However, if the parties cannot agree on a settlement, then the CO is entitled to make a unilateral determination as to what would constitute fair compensation, including fee using the guidance in the termination clause.

Ok, thanks 

44 minutes ago, Tzarina of Compliance said:

If the SWO was lifted, you would get an additional fee added to the suspension costs for equitable adjustment, why not in a termination reconciliation?

I can't explain the logic, but the Stop Work Order says to handle the increased costs in the termination settlement. The Termination clause says payment of fee is based on percentage of completion if the parties can't agree on a settlement. I don't see anything wrong with proposing additional fee and I don't think the contracting officer would be prohibited from including it in the settlement. However, I think you are asking about entitlement to the additional fee. If that's the case, I'm not seeing that entitlement.

25 minutes ago, Retreadfed said:

In you hypo, the SWO was not cancelled but the work covered by the SWO was terminated for convenience.  In that case, 52.242-15(c) applies and there would be no 49.114  adjustment for fee, however, there would be a cost adjustment that would determine the estimated cost of the contract which would be a ceiling on the amount of cost recovery under the contract.

What are you saying "no" to? Are you saying the contractor would be entitled to additional fee they would otherwise get if the SWO were lifted and performance continued? Or are you saying that the settlement of fee is negotiable?

1 hour ago, Tzarina of Compliance said:

So in the settlement you give up the additional fee you would otherwise collect for the SWO period if the SWO was lifted?

Yes, assuming the percentage of completion was unchanged during the SWO.