Jump to content

Cost and Pricing Data


Recommended Posts

When the threshold is met, FAR indicates that the Contracting Officer must obtain cost or pricing data unless one of the exceptions in 15.403-1(B) applies. One of the exceptions is that prices agreed upon are based on adequate price competition. FAR further indicates that a price is based on adequate price competition if 2 or more responsible offerors, competing independently, submit priced offers that satisfy the Government?s expressed requirement, and 1) if award will be made to the offeror whose proposal represents the best value where price is a substantial factor in source selection, and 2) there is no finding that the price of the otherwise successful offeror is unreasonable.

Most discussions on the topic of cost and pricing data that I have read seem to only rely on the fact that there is competition to justify the exception. They seem to miss the fact that it needs to be ADEQUATE competition.

Regarding the requirement that the award must also represent the best value where price is a substantial factor in the source selection - There is a best value continuum and depending on where on that continuum the specific evaluation process falls, price may or may not be considered a substantial factor. Therefore, cost and pricing data may be needed.

Am I missing something? P.S. The FAR seems to leave the definition of "substantial" up to the discretion of the CO.

Link to comment
Share on other sites

The TINA exception from the requirement for certified cost or pricing data based on competition in 15.403-1(b )(1) is a contracting officer determination, using standards that are pretty well defined in 15.403-1( c)(1).

Whether price is a "substantial" factor in the source selection seems to deal with the exception more than the rule, imho. I cannot recall an instance where price was not a substantial factor, although there may be some out there. This would depend on the evaluation criteria in the solicitation, wouldn't it?

Link to comment
Share on other sites

Debbie, excellent post.

I would like to say also that you definitely are extremely wise when you state that the FAR leaves everything up to the KO. As it should,in my opinion.

Not every organization has the same resources, to look at the same level of information, in the same time frame; and everyone agency has varying levels of quality in their support functions. So in my opinion, it is good to give the KOs vast latitude in trying to make sense of their specific situation.

Let me divert you to the new definition in FAR 2 for "Data Other Than Certified Cost or Pricing." It is a DRASTIC change from the old vague definition of 'Information Other Than Cost or Pricing Data' and gives the KO even more lattitude to make sense. The change is so new, the DFARS and PGI did not catch up yet.

Stay away from looking too deeply into the FAR, it is a written by people that do not live the job, created by alleged academics that live in a dreamworld.

Link to comment
Share on other sites

Guest Vern Edwards

The concept of "substantial" has been discussed by the GAO See Serv-Air, Inc. -- Reconsideration, 58 Comp. Gen. 362 (1979), B-189884, 79-1 CPD ? 212, decided when the test for adequate price competition was more stringent than it is today. The GAO said:

ADEQUATE PRICE COMPETITION CAN STILL EXIST WHERE AWARD WILL NOT BE MADE TO THE OFFEROR WITH THE LOWEST PRICE, SO LONG AS PRICE IS A SUBSTANTIAL FACTOR IN THE PRESCRIBED EVALUATION CRITERIA AND MORE THAN ONE OFFEROR WAS IN THE COMPETITIVE RANGE...

WHILE SERV-AIR STATES THAT OUR DECISION MAKES THE ADEQUATE PRICE COMPETITION EXEMPTION DEPEND SOLELY ON THE FORMALITY OF WHETHER PRICE IS A STATED ?SUBSTANTIAL? EVALUATION CRITERION, IN FACT THE DECISION DEALT IN SOME DETAIL WITH THE ISSUE OF WHETHER PRICE HAD BEEN ELIMINATED AS AN EVALUATION FACTOR EVEN THOUGH IT WAS A STATED CRITERION. THE DETERMINATION OF WHETHER THERE IS PRICE COMPETITION FOR A PROCUREMENT IS A MATTER OF JUDGMENT TO BE BASED ON THE EVALUATION OF WHETHER THE CONDITIONS SET FORTH IN DAR ARE PRESENT. THE DETERMINATION IS MADE AFTER PROPOSALS ARE RECEIVED BUT PRIOR TO AWARD, SO THAT THE FACTUAL CIRCUMSTANCES MAY BE EXAMINED. 52 COMP.GEN. 346, SUPRA. DAR SEC. 3-807.1(B)(1).

PRICE MUST BE STATED SUBSTANTIAL EVALUATION FACTOR AND MUST ALSO ACTUALLY BE A SUBSTANTIAL FACTOR IN THE EVALUATION. SERV-AIR SEEMS TO BE IMPLYING THAT 30 PERCENT WEIGHTING IS NOT A SUBSTANTIAL EVALUATION FACTOR. WE FEEL THAT IT IS SUBSTANTIAL, SINCE WE FOUND THAT ADEQUATE PRICE COMPETITION EXISTED IN 52 COMP.GEN. 346, SUPRA, AND COST WAS WEIGHTED ONLY 20 PERCENT IN THAT CASE.

REGARDING SERV-AIR'S CONTENTION THAT OUR DECISION MAKES THE BASIS FOR THE EXEMPTION THE SAME AS THE BASIS FOR AWARD OF MOST NEGOTIATED CONTRACTS AND THUS MANDATORILY INAPPLICABLE TO MOST NEGOTIATED CONTRACTS, WE FEEL THAT OUR DECISION MERELY RECOGNIZES THAT ADEQUATE PRICE COMPETITION OFTEN EXISTS IN A NEGOTIATED ENVIRONMENT, EVEN THOUGH AWARD IS MADE TO A HIGHER-PRICED, HIGHER TECHNICALLY RATED PROPOSAL. SINCE GOVERNMENT PROCUREMENT LAWS AND REGULATIONS REQUIRE MAXIMUM FEASIBLE COMPETITION, MANY PROCUREMENTS ARE COMPETITIVE, AND CERTIFIED COST OR PRICING DATA WOULD NOT BE NECESSARY IN APPROPRIATE CASES. OF COURSE, AS WE STATED ABOVE, THAT DETERMINATION IS A MATTER OF JUDGMENT TO BE BASED ON THE APPLICATION OF THE CRITERIA STATED IN DAR SEC. 3-807.1(B)(1) TO THE FACTS OF EACH PROCUREMENT AND THE COMPETITIVE ENVIRONMENT. SEE 53 COMP.GEN., SUPRA.

WE NOTE THAT, WHILE DAR SEC. 3-807.3(E) MAKES APPLICATION OF THE EXEMPTION MANDATORY WHERE ADEQUATE PRICE COMPETITION HAS BEEN DETERMINED TO EXIST AS SERV-AIR CONTENDS, THE JUDGMENTAL NATURE OF THAT DETERMINATION INTRODUCES A CONSIDERABLE RANGE OF DISCRETION INTO THE APPLICATION OF THE EXEMPTION.

Capitalization in original. There have been very few cases in which the GAO has found that price was not a substantial factor.

Link to comment
Share on other sites

When using the BAA process for selecting R&D proposals (FAR 35.016) or A&E selection procedures, price is typically not a substantial factor in source selection.

Don, I'd like to clarify that in A-E contracting, price is not competed. So price is not a "factor", except as described below. The Brooks Act procedures are a form of qualifications based selection (QBS).

The exemption from submission of cost or pricing data due to adequate price competition is not applicable to A-E contracts.

However, the price must still be fair and reasonable. If the parties cannot agree on what the government considers to be a fair and reasonable price, then we go to the next most highly qualified firm to negotiate a fair and reasonable price.

Link to comment
Share on other sites

There have been very few cases in which the GAO has found that price was not a substantial factor.

The issue isn't frequently raised in protests. It shouldn't be very surprising that a disappointed offeror would not want to claim that certified cost or pricing data should have been required. :) They would just argue that the apparent successful offeror's price was unreasonable, if they thought as much.

Link to comment
Share on other sites

Guest Vern Edwards

A related concept is price as a "significant" factor. There have been a few cases in which GAO has sustained a protest because price was not a significant factor. See, The MIL Corp., B-294836, 2005 CPD ? 29; Kathpal Technologies, Inc.; Computer & Hi-Tech Management, Inc. , B-283137.3, 2000 CPD ? 6; and Electronic Design, Inc., B-279662.2, 98-2 CPD ? 69.

If price is not a significant factor, it probably is not a substantial factor, either.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...