Don Mansfield

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: Proposed Cost Most Probable Cost Offeror A $100 million $105 million Offeror B $103 million $110 million The offerors are equal concerning nonprice factors, so the award decision comes down to cost. Questions: 1. Assuming the contracting officer's determination of the most probable cost is flawless, do they have enough information to determine the best value? 2. If not, what additional information should they consider? I'm not interested in challenges to the hypothetical or critiques of the problem. If you think you need more information just ask.

Ok, thanks

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.

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?

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

No, the fee paid has nothing to do with incurred costs. All that matters is the percentage of work completed.

See FAR 52.249-6(h)(4)(i). Fee is paid based on percentage of completion of work.

I stand corrected.

I don't think overpayment is an ADA violation. ADA restricts obligation of funds in excess of appropriation.

If the vendor did not accept the order, there was no contract. The CO doesn't know that? Maybe show them FAR 13.004?

Why did the subcontractor do the work?

FAR 52.242-15 doesn't answer your question. It does not allow or exclude profit related to the costs incurred due to a stop-work order--it is silent. I think it's a matter of negotiation, not entitlement.

I would recommend contacting your Congressional representative and retaining an attorney.

Nice work @Guardian!

@Guardian I didn't see a question in your post, so I'm not sure what reaction you are looking for. I think your job is to terminate the contract. If that is too much for your conscience to take, tell your supervisor. Maybe they will be sympathetic. Good luck!

This thread suggests that there would be a market for "Sovereign Acts" insurance, which would cover losses on Government contracts caused by sovereign acts of the Government.

Yes. What would prohibit the contractor from proposing that, assuming the price was not higher than prices for comparable unrated orders?

Yes.

The DPAS regulations do not prohibit the contractor from doing this. Exactly. So you can't rely on DPAS regulations to say which costs a contractor can or cannot consider. The OP's question was asked and answered a long time ago. I'm reacting to your assertion that the DPAS regulations prohibit a contractor from considering anticipated cost increases on other contracts when pricing a rated order. When I asked why a contractor could not do this, you wrote: The cited regulation says nothing about what anticipated costs a contractor can or cannot consider when deciding what price to charge the Government for a rated order. It just says that the contractor can't charge a higher price than it does for comparable unrated orders. Period. If the contractor considers anticipated cost increases on other contracts when determining what prices to charge for comparable unrated orders, how would it violate DPAS if they did the same for rated orders? As long as they didn't charge higher prices, it wouldn't.

For any scenario you come up with, I will only need to know two things: 1. The price charged for the rated order; and 2. The prices charged for comparable unrated orders. Nothing else is relevant in determining whether the contractor is compliant with 15 CFR 700.13(a)(2).

That is not what I'm saying. Using your example, let's say the widget is priced at $2,500 for delivery in 90 days. A customer issues an unrated order requiring delivery in 30 days. Contractor says it will be an additional $700 to expedite. Parties agree to price $3,200. Contractor receives DX-rated order for widget requiring 30 day delivery. Contractor charges $3,200. Where's the DPAS violation in this scenario?

Answer my question, then I'll answer your question.

If the contractor prices the DX-rated order consistent with comparable unrated orders, how does that violate the DPAS regulation?

If the overall price for the DX-rated order was consistent with prices charged for comparable unrated orders, I don't think the contracting officer should be questioning any particular estimated cost. I don't understand where you and FASA are coming from. You seem to be worried about cost accounting. If a contractor wants to be profitable, they need to ensure that revenue exceeds expenses. If a customer wants their order expedited, they should expect to pay a premium. This should cover the increased costs to the contractor for expediting the order. Why should the Government get special treatment? I don't think the DPAS regulations provide this. I think the DPAS regulations just ensure that the contractor doesn't take unfair advantage of the Government. As long as their prices are consistent with comparable unrated orders, the contractor is not violating the DPAS regulations. By the way, I think that the subcontractor in the original scenario is out of luck. They already accepted the order.