fair and reasonable | The Contracting Education Academy

January 26, 2017 By AMK

GAO ruling lets GSA buy the USDA steak, not the mystery meat

The General Services Administration (GSA) may have just put the first nail in the coffin that eventually will bury the widespread use of lowest-price, technically acceptable (LPTA) contracts for services.

The Government Accountability Office’s decision to deny four protests of GSA’s Alliant 2 contracts for IT services could end up being a landmark ruling that is that first nail.

“Lowest-price technically acceptable has been disfavored among contractors for putting price over innovation. Now we have protesters who in essence claim that cost was only nominally and improperly considered in the Alliant 2 evaluation,” said Barbara Kinosky, managing partner of Centre Law & Consulting LLC. “We have seen DoD move away from LPTA. This is the first major requirement coming out of a civilian agency that is clearly saying, ‘Contractors, we are looking for smart over cheap. Give us the USDA steak, not the convenience store mystery meat.’ I am confident this is a trend we will now see more of since GSA has taken the lead in the technology area where we definitely need to excel.”

Keep reading this article at: http://federalnewsradio.com/reporters-notebook-jason-miller/2017/01/gao-ruling-lets-gsa-buy-usda-steak-not-mystery-meat/

August 26, 2016 By AMK

DoD’s new proposed guidance on commercial item pricing no longer includes ‘market based pricing’

The Department of Defense (DoD) has reversed course on its proposed preference for “market-based pricing” and is instead now proposing rules under which it would use “market pricing” to determine whether prices are fair and reasonable.

While the terminology is similar, the legal difference is significant.

Last year, we reported on DoD’s proposed guidance on commercial item pricing. The August 2015 proposed guidance implemented section 831 of the NDAA for FY 2013, which required DoD to establish standards for determining the adequacy of pricing information and when uncertified cost data is required. Among other things, this 2015 proposed rule introduced “market-based pricing” as the preferred method for determining a fair and reasonable price for commercial items in the absence of adequate competition. It defined market-based pricing as the pricing that non-governmental buyers in the commercial marketplace pay for an item. Contracting officers could presume that an offeror’s price for a particular item was “market‑based” if non-government buyers purchased 50% or more of the item’s sales volume.

The proposed rule proved controversial, however.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=520638

August 1, 2016 By AMK

IG: GSA wastes millions due to pricing problems in computer resale program

Despite years of efforts to streamline multiple award schedules used by information technology resellers, the General Services Administration (GSA) has been offering many identical items at varying prices, said an inspector general’s report released last week.

“GSA’s ability to obtain competitive, market-based prices may be impaired when IT schedule resellers have no/low commercial sales and when the Price Reductions clause is modified to exclude certain sales,” the report said, warning of “millions of dollars in unnecessary costs to the government.”

IT resellers typically buy computers and software in bulk and then add value through customization before selling the adopted product to agencies or commercial customers.

Keep reading this article at: http://www.govexec.com/management/2016/07/ig-gsa-wastes-millions-due-pricing-problems-computer-resale-program/130191

April 12, 2016 By AMK

Establishing GSA order pricing may become more complicated

As commercial item contracts, GSA Schedules are subject to streamlined acquisition procedures intended to make the procurement process more efficient. One of the biggest advantages the Schedules offer ordering agencies is pre-negotiated pricing that has already been determined to be fair and reasonable.

Over the past several years, concern about pricing variability among the same or similar items on different schedule contracts led some agencies to publicly question whether they could rely on rates negotiated by the General Services Administration (GSA).

In March of 2014, the Department of Defense (DoD) issued a class deviation to FAR 8.404(d) requiring its contracting officers to make their own determination that GSA order prices were fair and reasonable using the proposal analysis techniques under FAR 15.404-1. NASA quickly did the same.

With federal procurement policy, where DoD goes, other agencies frequently follow. It isn’t surprising then that a new FAR case (2015-021) came out a year later proposing to overwrite 8.404(d) to match the language in the class deviations. If this FAR case makes it through the rulemaking process, it means that ordering agencies will have to complete a fair and reasonable price evaluation for all GSA schedule orders.

At the very least, agency contracting officers will be required to “obtain appropriate data, without certification, on the prices at which the same or similar items have previously been sold and determine if the data is adequate for evaluating the reasonableness of the price.” GSA’s contracting officers already do this when negotiating schedule pricing.

Keep reading this article at: https://www.govloop.com/community/blog/establishing-gsa-order-pricing-may-become-complicated/

February 17, 2014 By AMK

A fair and reasonable approach to contract reform

For all its significance, you would expect to hear it mentioned more often. However, the term “fair and reasonable” is sprinkled throughout the Federal Acquisition Regulation and dramatically affects government outcomes. Its interpretation ultimately affect how billions are spent, jobs are created, stock prices are valued, products or services are delivered, disputes are settled, and other laws and regulations work together to meet government mission.

Government contracting can create various forms of dispute, litigation, and protests, but this occurs after the contracting officer makes a determination as to whether, for example, supplies and services are coming from responsible sources at fair and reasonable prices. Source selection officials, attorneys, auditors, program managers, agency senior executives, and others all play important roles, but the beauty of the process is in shielding contract decision-makers from external influence, either irrelevant or political. A “fair and reasonable” determination is not made in a vacuum and involves far more than arriving at the cheapest price. Instead it should be in writing and includes other “factors” that together comprise a proper assessment of the propriety of a contract award. Despite much guidance, nothing obviates the need for an independent, fair and reasonable determination based on the totality of information and expertise available.

Keep reading this article at: http://www.federaltimes.com/article/20140210/BLG06/302100006/A-fair-reasonable-approach-contract-reform

The General Services Administration (GSA) may have just put the first nail in the coffin that eventually will bury the widespread use of lowest-price, technically acceptable (LPTA) contracts for services.

The Department of Defense (DoD) has reversed course on its proposed preference for “market-based pricing” and is instead now proposing rules under which it would use “market pricing” to determine whether prices are fair and reasonable.

Despite years of efforts to streamline multiple award schedules used by information technology resellers, the General Services Administration (GSA) has been offering many identical items at varying prices, said an inspector general’s report released last week.

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