FAR | The Contracting Education Academy

August 2, 2011 By AMK

Do longer competitions bring better prices?

Defense Department contracting officers haven’t had enough competition to get a good price if a solicitation gets only one bid, according to a new proposed policy.

That’s how defense procurement officials are viewing solicitations for work that only receive one bid. They aim to tighten the Defense Federal Acquisition Regulation Supplement’s rules on how DOD gets a fair or reasonable price from a company. The proposal was in the July 25 Federal Register. Read the proposal.

The overall rulebook, the Federal Acquisition Regulation, leaves decisions on price competition up to the contracting officer. The standard of competition is fulfilled, if he or she “can reasonably conclude that the offer was submitted with the expectation of competition.”

Under DOD’s proposal, its contracting officers would no longer use that standard.

Contracting officers instead would have to re-compete the solicitation for at least another 30 days if they waited less than a month to receive bids and got only one.

If a competition was open for at least 30 days, the officers would have to determine prices to be reasonable through price or cost analysis or they can enter negotiations with the company that made the bid.

Officials wrote that they are pressing for the best price available.

“The purpose and effect of this rule is to promote real competition by ensuring that adequate time is allowed for receipt of offers, and ensuring that prices are fair and reasonable when adequate time has been allowed but nevertheless only one offer is received in response to a competitive solicitation,” they wrote.

The plan is based on recent memos from senior defense acquisition officials. DOD should not pay the contractor’s proposed price, even if the cost seems reasonable based on market research and having hosted a fair competition, according to an April memo from Shay Assad, then the director of defense procurement and acquisition policy and the current director of defense pricing.

DOD is under pressure to cut costs. Competition for contracts is one of the key points of major reforms laid out in the past year, along with controlling growth in costs, improving acquisition workforce’s know-how of buying services, and launching affordable projects.

Defense officials are taking comments on the proposal through Sept. 23.

— About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Washington Technology. Published 7/25/2011 at http://washingtontechnology.com/articles/2011/07/25/real-price-competition-proposal-dod.aspx?s=wtdaily_260711

June 21, 2011 By AMK

New ethics language needed for ‘at-risk’ federal contracts

Federal contracts that pose potential conflicts of interest, or possible misuse of insider information, should be addressed with new model language to be added to the Federal Acquisition Regulation, according to a proposal from the Administrative Conference of the United States that is slated for a vote on June 17.

The conference is an independent agency that advises on federal administrative and contracting rules. It is meeting in a plenary session on June 16 – 17 to vote on more than a dozen proposals regarding contracting, e-rulemaking and video conferencing.

In a 16-page document on the contractor ethics proposal released on its website, the conference defined two categories of contracts that would be addressed by new language promulgated in federal procurement rules by the Federal Acquisition Regulatory Council.

The model language would apply “when negotiating or administering contracts that pose particular risks of government contractor employee personal conflicts of interest or misuse of non-public information,” the proposal states.

To ensure that the model provision is not excessively burdensome or costly to contractors, the conference specified that it is to be applied only to Personal Conflict of Interest-Risk and Information-Risk Contracts.

The personal conflict of interest category is defined as including contracts that engage in the following activities involving inherently or nearly inherently governmental work:

Developing agency policy or regulations.
Providing “alternative dispute resolution services on contractual matters, legal advice involving interpretation of statutes or regulations, significant substantive input relevant to agency decision-making; or professional advice for improving the effectiveness of federal management processes and procedures.”
Serving as the primary authority for managing or administering a project or operating a facility.
Preparing budgets, and organizing and planning agency activities.
Supporting substantive acquisition planning or research and development activities.
Evaluating another contractor’s performance or contract proposal.
Assisting in the development of a statement of work or in contract management.
Participating as a technical advisor to a source selection board or as a member of a source evaluation board (i.e., boards designed to select or evaluate bids or proposals for procurement contracts).

In addition, the model language would apply to information-risk contracts, which are defined as contracts in which certain employees receive access to information relating to an agency’s deliberative processes, management operations or staff that is not generally released to the public.

It also applies to contracts in which certain employees will have access to trade secrets, non-public financial information, or other non-public information that could be exploited for financial gain, and contracts in which certain employees will have access to personally-identifying or other non-public personal information, such as Social Security numbers, bank account numbers or medical records.

About the Author: Alice Lipowicz is a staff writer for Washington Technology – June 13, 2011 – http://washingtontechnology.com/articles/2011/06/13/admin-conferences-proposes-new-language-for-at-risk-federal-contracts.aspx?s=wtdaily_140611

May 3, 2011 By AMK

DOD to negotiate prices more aggressively

Defense Department officials have told acquisition employees to fight for lower prices on contracts, even when there’s only one bidder.

In an April 27 memo, DOD officials gave more guidance to their acquisition offices on bargain for lower prices, as the department aims for more competition and lower spending in general. One area to find that savings is by negotiating lower prices from a contractor.

The initiative started last November, when defense officials told contracting officers to cancel a solicitation if it’s been in the market for less than 30 days and only one bid has come in. After the cancellation, they have to send out another solicitation for an additional month. If there’s still only one bidder, the contracting officer has to work to get a lower price than proposed.

Shay Assad, director for defense procurement and acquisition policy, wrote in the new memo that officers should not pay the contractor’s proposed price, even if the cost seems reasonable based on market research and having hosted a fair competition.

Instead, Assad wants officers to make sure the final price, which both sides agree to, is fair and reasonable in and of itself. He tells them to do careful analysis of the price and cost. Then the government needs to bring their analyses to the negotiating table to discuss pricing. Read the Federal Acquisition Regulation on contract pricing.

However, the new order means finalizing contracts will take more time, despite overly busy acquisition offices.

“I recognize that implementation of this policy may have the unintended consequence of increasing the contracting community’s workload, but given today’s scarcity of resources we need to ensure effective competition to the maximum extent possible,” Assad wrote at the end of the memo.

DOD officials have been under heavy pressure to make spending cuts. In 2010, Defense Secretary Robert Gates and Ashton Carter, undersecretary of defense for acquisition, logistics, and technology, issued a 23-point memo on acquisition reforms.

Competition for contracts is one of the key points of Gates and Carter’s reforms, along with controlling growth in costs, improving acquisition workforce’s know-how of buying services, and launching affordable projects.

– About the Author: Matthew Weigelt is acquisition editor for Federal Computer Week – posted at http://fcw.com/Articles/2011/04/28/Defense-Department-contract-competition.aspx?p=1 on Apr. 28, 2011.

March 18, 2011 By AMK

New GSA acquisition chief calls for government-contractor cooperation

The General Services Administration’s new acquisition chief is calling for greater cooperation and communication between the government and its industry contractors, echoing a familiar refrain from members of the Obama administration’s procurement team in recent months.

In an interview last week with Government Executive, new GSA Chief Acquisition Officer Mindy Connolly said the two sides should have better dialogue in the lead-up to contract awards and during the process of implementing Federal Acquisition Regulations. GSA, like all contracting agencies, is required to develop a vendor communication plan for its workforce and the public by June 30.

“If we want to have a government that is leaner and more transparent and ready for the 21st century, anything we can do to reduce that burden on industry is really to our advantage,” said Connolly, whose first day on the job at GSA was Feb. 28.

The administration has made it a priority of late to myth-bust the perception that contracting officers should not meet with vendors for fear of causing contract delays, or committing potential ethical violations.

Last month, Dan Gordon, administrator of federal procurement policy at the Office of Management and Budget issued a 13-page memorandum that addresses 10 of the most widely held misconceptions, including communicating with a bidder could result in a competing firm filing a protest.

Connolly has experienced the often arcane world of federal contracting from two perspectives, administering awards in both the public and private sectors. She has awarded contracts at NASA, Customs and Borders Protection, and the Treasury Department and was the Transportation Security Agency’s first contracting officer. She previously served as chief of contracting for Bureau of Land Management’s Western Region and held similar roles in industry, most notably as a contracting manager for Honeywell Defense and Space Electronics.

At GSA, Connolly plans to work with industry to clarify the impact of FAR rules so that industry is not left struggling for answers.

“Because of my experience both in government acquisition and in industry acquisition as the government customer, my interest is that it works better,” she said. “It works pretty well, but there are opportunities for it to work better through communications and doing a little different planning in our rule-making.”

Most recently, Connolly served as a senior procurement policy analyst at OFPP, where she led the office’s natural resources’ division on contracting policy matters, including implementing White House requirements for sustainable procurements and green building design.

She helped draft Obama’s October 2009 executive order requiring agencies to set a 2020 greenhouse gas emissions reduction target, increase energy efficiency, reduce fleet petroleum consumption, and “leverage federal purchasing power to promote environmentally responsible products and technologies.”

The order states 95 percent of all new nonweapons contracts meet sustainability requirements, including being water and energy-efficient and safe for the environment, and containing recycled materials.

Connolly’s job is to take the broad-ranging policy for environmentally preferable products and services and sustainable technologies and make it executable through regulations in the FAR.

“Each agency would be able to look at how they can put [directives] into their specifications, or requirements for products,” she explained. “Some things are easy, like office paper. Other things are more challenging like a building, or a lease.”

– By Robert Brodsky – GovExec.com – March 14, 2011

February 19, 2011 By AMK

OFPP zeroes in on acquisition workforce

With much of the focus on contracting reform aimed at communication between government and industry, some government officials want to make sure front-line contracting feds aren’t overlooked.

Dan Gordon, administrator of the Office of Federal Procurement Policy (OFPP), said the acquisition workforce isn’t equipped to manage the large number of government contracts. His office wants to change that.

“Our number one priority is strengthening the acquisition workforce,” Gordon said Thursday at a government-industry forum sponsored by AFFIRM in Washington.

Gordon said over the past 15 years the government has been on an unsustainable path of increased contracting and a flat acquisition workforce.

“Putting that tsunami of spending onto an acquisition workforce that had shrunk and wasn’t getting the investment and training was a recipe for problems, and we’ve had a good number of problems,” Gordon said.

The Office of Management and Budget announced Feb. 3 the first year-over-year decline in contract spending since 1997. Gordon said that trend is positive, but on its own won’t be enough to solve the problem with the acquisition workforce.

Last year the president’s budget proposal requested more than $150 million to invest in the acquisition workforce. This year’s request is slightly smaller at around $140 million.

Gordon said despite general support from the Hill, he isn’t optimistic either request will be met.

However, Gordon said agencies can help the existing acquisition workforce by improving internal communication. He said poor communication within agencies leads to significant problems with contract design.

“We have our IT shops that are often focused on sophisticated IT solutions,” Gordon said. “We have the program shops – the people who actually need what the contract is for – who may not be explaining to the IT people what they need properly. We have a contract shop that doesn’t define requirements. They just listen to make sure they’ve got requirements that make sense in terms of ‘will this be a competitive situation’, but contract people can’t define requirements. They need input from the program people and the IT people to do that.”

Gordon also said he wants to increase training for the acquisition workforce. One of OMB’s goals in scaling back contract spending was to reduce the number of high risk contracts such as time-and-materials and labor-hours contracts.

But Gordon said selecting the appropriate type of contract isn’t always simple. Even though fixed-price contracts are considered the safe type of deals, cost-reimbursement agreements make more sense.

“We’re not telling agencies to go fixed-price no matter what,” Gordon said. “Sometimes is just a matter of looking. Have we come far enough that we can define our requirements and switch to fixed price? Then we should. But we shouldn’t switch to fixed price without thinking.”

Gordon said insufficient contract management personnel also is a significant challenge. He said agencies have increased the number of 1102 series positions between 7 – 12 percent but he wants to see even more hiring — especially of contracting officer’s technical representatives (COTRs).

He said when agencies don’t have a COTR, they end up contracting out project oversight instead of doing it themselves.

“Of course we need contractors, but contractors support us in the federal government, which means that we have to be in charge,” Gordon said. “There are too many situations where there is no federal employee that has oversight of what’s going on, or there aren’t enough federal employees so that they maintain control. That is an unbalanced, unhealthy situation.”

But Gordon emphasized the important role of contractors and encouraged agencies to increase dialog with vendors. OMB and OFPP recently launched a mythbusting campaign to educate the federal workforce about rules around contracting.

Gordon said existing Federal Acquisition Regulations (FAR) allows for broad communications but agencies don’t understand the rules. He said he wants to create an environment in which acquisition officers are comfortable sharing information with industry in order to improve contracts.

“Share information,” Gordon said. “We benefit from that information being shared. We’re not doing it as a favor to industry — we’re doing it to make the procurement system work better. Refusing to share information is foolish, counterproductive, and causes the government to lose.”

Gordon said he conducts monthly calls with senior procurement executives to listen to challenges they face and ideas they have about the educational campaign.

Next month, OFPP will hold a working group of federal acquisition professionals to help design an online community of practice.

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