Evaluating Professional Employee Compensation when Cost or Price is not an evaluation factor

[Don Mansfield]

When using the authority to issue multiple-award contracts without evaluating cost or price (FAR 15.304(c)(1)(ii)), how are agencies dealing with the policy for evaluating professional employee compensation at FAR 22.1103? Assuming the acquisition meets the conditions in the provision prescription, do they--

1. Include the provision at FAR 52.222-46 in the RFP and say that it only applies at the order level?

2. Include the provision at FAR 52.222-46 in the RFP and require the submissions described in the provision as part of the proposal? 

3. Not include the provision at FAR 52.222-46 in the RFP for the initial contract, but include it in solicitations for orders?

4. Not include the provision in either the solicitation for the initial contract or solicitations for orders?

5. Do something else?

What do you think agencies should do?

[Vern Edwards]

11 minutes ago, Don Mansfield said:

What do you think agencies should do?

Evaluation of professional employee compensation is a "technical" evaluation factor. See 52.222-46(b):

Quote

The compensation levels proposed should reflect a clear understanding of work to be performed and should indicate the capability of the proposed compensation structure to obtain and keep suitably qualified personnel to meet mission objectives. The salary rates or ranges must take into account differences in skills, the complexity of various disciplines, and professional job difficulty. Additionally, proposals envisioning compensation levels lower than those of predecessor contractors for the same work will be evaluated on the basis of maintaining program continuity, uninterrupted high-quality work, and availability of required competent professional service employees. Offerors are cautioned that lowered compensation for essentially the same professional work may indicate lack of sound management judgment and lack of understanding of the requirement.

The evaluation must be done for the initial award, but, in my opinion, need not for task orders. Agencies must require submission of an employee compensation plan, as required by the provision, and evaluate the offeror's performance capability accordingly.

[Don Mansfield]

35 minutes ago, Vern Edwards said:

Evaluation of professional employee compensation is a "technical" evaluation factor.

I agree. However, I know of at least one contracting activity that doesn't perform the evaluation because it's listed under "Cost or Price Evaluation" in the DoD Source Selection Procedures (see 3.1.1.5). I suspect there are others.

[Vern Edwards]

39 minutes ago, Don Mansfield said:

I suspect there are others.

I suspect you are right.

[Vern Edwards]

BTW, price realism, as opposed to cost realism, is also a technical evaluation factor.

[Supes]

Maybe less relevant than you're looking for but I once asked a GSA Schedules CO how they evaluated 52.222-26, their office only checked that it was included with the schedule proposal. 

Personally, I'd say just evaluate it at the IDIQ level. If there's specific concerns at the task order level related to it for some reason, ask for more details as a technical factor. 

[Dave Murree]

Interested to know if you have seen an agency limit the number of awards on a MAC when cost is not evaluated on the initial award but is evaluated later at the task order level.  FAR 15.304(c)(1)(ii)(A)(3) "States that the Government intends to make an award to each and all qualifying offerors (see 2.101)."  When looking at 2.101 we find  "Qualifying offeror, as used in 13.106-1 and 15.304, means an offeror that is determined to be a responsible source, submits a technically acceptable proposal that conforms to the requirements of the solicitation, and the contracting officer has no reason to believe would be likely to offer other than fair and reasonable pricing (10 U.S.C. 2305(a)(3)(D))."  In other words, could a solicitation state something like "Only the the top three highest technically rated proposals will be considered as a qualified offeror"?

[joel hoffman]

20 hours ago, Dave Murree said:

Interested to know if you have seen an agency limit the number of awards on a MAC when cost is not evaluated on the initial award but is evaluated later at the task order level.  FAR 15.304(c)(1)(ii)(A)(3) "States that the Government intends to make an award to each and all qualifying offerors (see 2.101)."  When looking at 2.101 we find  "Qualifying offeror, as used in 13.106-1 and 15.304, means an offeror that is determined to be a responsible source, submits a technically acceptable proposal that conforms to the requirements of the solicitation, and the contracting officer has no reason to believe would be likely to offer other than fair and reasonable pricing (10 U.S.C. 2305(a)(3)(D))."  In other words, could a solicitation state something like "Only the the top three highest technically rated proposals will be considered as a qualified offeror"?

So, you’re basically saying that you intend to make awards of a base IDIQ contract to only three firms,  using a quality based selection (QBS) process, without regard to pricing, correct? 

FAR 15.304(c)(1) (ii) :

“In accordance with 10 U.S.C. 2305(a)(3), for DoD, NASA, and the Coast Guard—

                      (A) The contracting officer may choose not to include price or cost as an evaluation factor for award when a solicitation—

                           (1) Has an estimated value above the simplified acquisition threshold;

                           (2) Will result in multiple-award contracts (see subpart  16.5) that are for the same or similar services; and

                           (3) States that the Government intends to make an award to each and all qualifying offerors (see 2.101).”

Are you thus saying that this is for DoD, NASA or the Coast Guard and that only the top three technically rated offerors constitute “all qualifying offerors”? 

EDIT: The term “all qualified offerors” appears to me to require some criteria to determine the basis for qualification. I suppose there can be some subjective basis to determine if an offeror is “qualified” but how can  you limit “all” to a pre-determined universe of three? Was that the intent of the exception? “All” versus a pre-determined limit of three seems to arbitrarily restrict the intent of “all”.

Edited August 20, 2021 by joel hoffman
Questioning the basis to limit “all to a pretdetermined, arbitrary limit of three

[Don Mansfield]

10 hours ago, Dave Murree said:

Interested to know if you have seen an agency limit the number of awards on a MAC when cost is not evaluated on the initial award but is evaluated later at the task order level.  FAR 15.304(c)(1)(ii)(A)(3) "States that the Government intends to make an award to each and all qualifying offerors (see 2.101)."  When looking at 2.101 we find  "Qualifying offeror, as used in 13.106-1 and 15.304, means an offeror that is determined to be a responsible source, submits a technically acceptable proposal that conforms to the requirements of the solicitation, and the contracting officer has no reason to believe would be likely to offer other than fair and reasonable pricing (10 U.S.C. 2305(a)(3)(D))."  In other words, could a solicitation state something like "Only the the top three highest technically rated proposals will be considered as a qualified offeror"?

Hi, Dave,

I have not seen that and I don't think it would fly. 

Having said that, let's say an RFP for a MAC said that award would be made to all qualifying offerors, price or cost was not an evaluation factor, and the Government intended to conduct discussions (by using FAR 52.215-1, Alt. I). Could the contracting officer establish a competitive range and eliminate all but three offerors for purposes of efficiency? 

[joel hoffman]

Don. Are you conflating different methods to find a way to perform a qualifications based selection QBS? The original post referred to a specific, authorized exception to the requirement to evaluate prices for DoD, NASA, and the Coast Guard but appears to limit the required universe of “all qualifiying offerors” to the top three.

Now you are referring to a “competitive range” determination, using FAR 15 but with an exception to the otherwise required evaluation of price in 15.304 (c) (1) and 15.305 (a) (1) to consider during the competitive range determination in 15.305 (c). Case law has cited the requirement to consider price in the establishment of the competitive range (when price is required to be evaluated if there is no exception).

What is your basis for an exception to evaluating price and for evaluating price before determining a competitive range or award?

And why is the pre-determined limit of the competitive range the same as the number of intended awardees? 

[Vern Edwards]

20 hours ago, Dave Murree said:

Interested to know if you have seen an agency limit the number of awards on a MAC when cost is not evaluated on the initial award but is evaluated later at the task order level.  FAR 15.304(c)(1)(ii)(A)(3) "States that the Government intends to make an award to each and all qualifying offerors (see 2.101)."  When looking at 2.101 we find  "Qualifying offeror, as used in 13.106-1 and 15.304, means an offeror that is determined to be a responsible source, submits a technically acceptable proposal that conforms to the requirements of the solicitation, and the contracting officer has no reason to believe would be likely to offer other than fair and reasonable pricing (10 U.S.C. 2305(a)(3)(D))."  In other words, could a solicitation state something like "Only the the top three highest technically rated proposals will be considered as a qualified offeror"?

Haven't seen it, but who knows? Try it and let's see what happens. You might get by with it. 

It's an interesting phenomenon. Congress makes a rule: "You shall evaluate price." That rule proves to be inconvenient in some circumstances, so Congress makes an exception: "Well, you don't have to evaluate price if you're going to make multiple awards and give a contract to "each and all qualifying offerors."

It isn't long long before somebody tries to stretch or bend the exception. This comes to the attention of Congress after a while, which then changes the rule or makes another. I've seen it happen many times over the course of my 47 years in this business. That's  why the FAR (48 CFR Ch. 1), which started out being 1,220 pages long, is now 1,624 pages long and still growing—an historical average rate of about 10.9 pages a year over 37 years. That does not include the FAR supps.

Maybe this is an illustration of what David Graeber described as "The Iron Law of Liberalism" in his book The Utopia of Rules:

Quote

The Iron Law of Liberalism states that any market reform, any government initiative intended to reduce red tape and promote market forces will have the ultimate effect of increasing the total number of regulations, the total amount of paperwork, and the total number of bureaucrats [and contractor-furnished support staff] the government employs.

Rules spawn more rules. Emergent behavior.

[joel hoffman]

32 minutes ago, Vern Edwards said:

Rules spawn more rules.

They also spawn interpretations of rules. 

[joel hoffman]

I forgot that Dave said that a qualifying offeror is defined in part as one who “submits a technically acceptable proposal that conforms to the requirements of the solicitation. “ 

20 hours ago, Dave Murree said:

When looking at 2.101 we find  "Qualifying offeror, as used in 13.106-1 and 15.304, means an offeror that is determined to be a responsible source, submits a technically acceptable proposal that conforms to the requirements of the solicitation, and the contracting officer has no reason to believe would be likely to offer other than fair and reasonable pricing (10 U.S.C. 2305(a)(3)(D))."

That directly contradicts limiting “all qualifying offerors” to “only the top three highest technically rated proposals”. 

[Vern Edwards]

1 hour ago, joel hoffman said:

They also spawn interpretations of rules. 

Which sometimes are, in effect, new rules. Consider the GAO's interpretations of the requirement for discussions in source selection since it was first enacted as part of Public Law 87-653, on September 10, 1962, and read:

Quote

In all negotiated procurements in excess of $2,500 in which rates or prices are not fixed by law or regulation and in which time of delivery will permit, proposals shall be solicited from the maximum number of qualified sources consistent with the nature and requirements of the supplies or services to be procured, and written or oral discussions shall be conducted with all responsible offerors who submit proposals within a competitive range, price, and other factors considered....

From that short statutory passage we have gotten GAO and COFC interpretations and applications in hundreds of protest decisions and have ended up (so far) with FAR 15.306 and still  more protest decisions.

Emergent behavior in a complex adaptive system.

[joel hoffman]

1 hour ago, Vern Edwards said:

Which sometimes are, in effect, new rules. Consider the GAO's interpretations of the requirement for discussions in source selection since it was first enacted as part of Public Law 87-653, on September 10, 1962, and read:

From that short statutory passage we have gotten GAO and COFC interpretations and applications in hundreds of protest decisions and have ended up (so far) with FAR 15.306 and still  more protest decisions.

Emergent behavior in a complex adaptive system.

Right on! 

[ji20874]

Quote

 

The RFP provided that award would be made to all “qualifying offerors,” defined as offerors that received a pass rating for administrative and responsibility matters, an acceptable rating for an IDIQ Management evaluation factor, and a substantial confidence rating for past performance.

*   *   *

The protest is denied.

[Patriot Defense Group, B-418720.3, August 5, 2020]

 

This seems to show that the agency can define “qualifying” for a particular procurement.  The protester apparently didn't challenge the definition of "qualifying."

 

Quote

 

The solicitation contemplated the award of 40 multiple-award, indefinite‑delivery, indefinite‑quantity (IDIQ) contracts.

*   *   *

The protest is denied.

[Strategic Services and Solutions, B-415716.38, December 4, 2019]

 

This seems to show that an agency can cap the number of awards.  There were several protests to this acquisition – but as far as I can tell, none of them challenged the “40” planned awards.

 

Granted, both of these were post-award protests, so maybe the question is still open.

[Vern Edwards]

I think that if an agency were to state in the solicitation that it was going to cap the number of awards, such that some "qualifying offerors" would not receive a contract, the GAO or COFC might find a post-award protest to be untimely. Not sure.

Ordinarily, I don't that there is any question that an agency can cap the number of awards. The issue is whether they can do that if the CO invokes FAR 15.304(c)(1)(ii)(A)(3).

In any case, neither of the protests cited by ji20874 appear to have been based on FAR 15.304(c)(1)(ii)(A)(3), unless I missed it.

[joel hoffman]

47 minutes ago, ji20874 said:

The RFP provided that award would be made to all “qualifying offerors,” defined as offerors that received a pass rating for administrative and responsibility matters, an acceptable rating for an IDIQ Management evaluation factor, and a substantial confidence rating for past performance

The protest is denied.

[Patriot Defense Group, B-418720.3, August 5, 2020]

47 minutes ago, ji20874 said:

This seems to show that the agency can define “qualifying” for a particular procurement.  The protester apparently didn't challenge the definition of "qualifying."

I read the Patriot Defense Group protest decision. The Air Force’s definition of qualifying offer appears to be consistent with the definition of qualifying offerors in 2.101 and 15.304. 

There is a big difference between “all offerors” meeting standards of acceptability vs. limiting consideration to the top three most highly rated offerors. 

[joel hoffman]

I read the Strategic Services and Solutions, JV protest decision. As mentioned, it was a post award protest and did not appear to be a protest of the limit of 40 awards or of the basis of award. 

[joel hoffman]

22 minutes ago, joel hoffman said:

I read the Strategic Services and Solutions, JV protest decision. As mentioned, it was a post award protest and did not appear to be a protest of the limit of 40 awards or of the basis of award. 

It does illustrate that an agency can apparently make up it’s own rules in a solicitation and if nobody protests the terms prior to time for receipt of proposals , they might get away with it. 

[Don Mansfield]

1 hour ago, Vern Edwards said:

In any case, neither of the protests cited by ji20874 appear to have been based on FAR 15.304(c)(1)(ii)(A)(3), unless I missed it.

The Patriot Defense Group decision was based on the same authority--it just wasn't implemented in the FAR at the time. From footnote #2:

Quote

The agency did not request, or otherwise evaluate, proposed costs or prices, as this procurement was conducted in accordance with Section 825 of the National Defense Authorization Act (NDAA) for Fiscal Year 2017, Class Deviation 2018-O0006. That authority, which was issued pursuant to 10 U.S.C. § 2305(a)(3)(C), provides that when issuing a solicitation that will result in multiple-award contracts issued for the same or similar services, entities subject to Title 10 of the U.S. Code may exclude price or cost as an evaluation factor for the contract awards, if the solicitation states that the government intends to make an award to each and all qualifying offerors.

What I find interesting about this case is that offerors needed to get a score of "Substantial Confidence" for past performance to be technically acceptable. The protester, who was a small business concern, was eliminated because they only received a score of "Limited Confidence". Since the past performance evaluation was essentially go/no-go, why didn't the CO refer the matter to the SBA for a CoC? 

[Don Mansfield]

5 hours ago, joel hoffman said:

Are you conflating different methods to find a way to perform a qualifications based selection QBS?

No, I'm only asking in the context of FAR part 15 competitive negotiation.

5 hours ago, joel hoffman said:

What is your basis for an exception to evaluating price and for evaluating price before determining a competitive range or award?

FAR 15.304(c)(1)(ii)(A).

5 hours ago, joel hoffman said:

And why is the pre-determined limit of the competitive range the same as the number of intended awardees?

It's not predetermined in the scenario I presented.

[ji20874]

35 minutes ago, Don Mansfield said:

Since the past performance evaluation was essentially go/no-go, why didn't the CO refer the matter to the SBA for a CoC?

I had a similar thought, but I fault the protester's attorney for not raising that question.  That's what attorneys are for, and if you're going to protest, you might as well protest something that has a chance of winning.

[joel hoffman]

1 hour ago, Don Mansfield said:

7 hours ago, joel hoffman said:

What is your basis for an exception to evaluating price and for evaluating price before determining a competitive range or award?

Don replied: “FAR 15.304(c)(1)(ii)(A).”

 

16 hours ago, Don Mansfield said:

Having said that, let's say an RFP for a MAC said that award would be made to all qualifying offerors, price or cost was not an evaluation factor, and the Government intended to conduct discussions (by using FAR 52.215-1, Alt. I). Could the contracting officer establish a competitive range and eliminate all but three offerors for purposes of efficiency? 

No, it would be contradictory to FAR 15.304(c)(1)(ii)(A) which states that award will be made to all qualifying offerors. That is a form of technically acceptable proposal from qualified offerors.  

52.215-1, Alt 1 allows the government to limit the consideration to those most highly rated proposals for the sake of efficiency. And it mentions both price and technical standpoint for a competitive range determination.

Limiting the competition  or consideration for award to an efficient number of the “most highly rated” proposals is fundamentally different,  contradictory and irrelevant to a process which requires the government to make award to ALL qualifying offerors. They are mutually exclusive processes.

“Alternate I (Oct1997). As prescribed in 15.209(a)(1), substitute the following paragraph (f)(4) for paragraph (f)(4) of the basic provision:

(f)(4) The Government intends to evaluate proposals and award a contract after conducting discussions with offerors whose proposals have been determined to be within the competitive range. If the Contracting Officer determines that the number of proposals that would otherwise be in the competitive range exceeds the number at which an efficient competition can be conducted, the Contracting Officer may limit the number of proposals in the competitive range to the greatest number that will permit an efficient competition among the most highly rated proposals. Therefore, the offeror's initial proposal should contain the offeror's best terms from a price and technical standpoint.”

 

[Don Mansfield]

23 minutes ago, joel hoffman said:

 

No, it would be inconsistent with FAR 15.304(c)(1)(ii)(A) which states that award will be made to all qualifying offerors. That is a form of technically acceptable proposal from qualified offerors.  

52.215-1, Alt 1 allows the government to limit the consideration to those most highly rated proposals for the sake of efficiency. And it mentions both price and technical standpoint for a competitive range determination.

Limiting the competition  or consideration for award to an efficient number of the “most highly rated” proposals is fundamentally different,  contradictory and irrelevant to a process which requires the government to make award to ALL qualifying offerors. They are mutually exclusive processes.

“Alternate I (Oct1997). As prescribed in 15.209(a)(1), substitute the following paragraph (f)(4) for paragraph (f)(4) of the basic provision:

(f)(4) The Government intends to evaluate proposals and award a contract after conducting discussions with offerors whose proposals have been determined to be within the competitive range. If the Contracting Officer determines that the number of proposals that would otherwise be in the competitive range exceeds the number at which an efficient competition can be conducted, the Contracting Officer may limit the number of proposals in the competitive range to the greatest number that will permit an efficient competition among the most highly rated proposals. Therefore, the offeror's initial proposal should contain the offeror's best terms from a price and technical standpoint.”

 

Ok, but if you are using FAR part 15, then the contracting officer is required to include the provision at FAR 52.215-1. This provision advises offerors that the Government reserves the right to limit the competitive range for purposes of efficiency. 

Are you saying that if the RFP states award will be made to all qualifying offerors, the Government no longer has this right?