joel hoffman

Thanks, Vern. The basic problem in our discussion eight years ago was the result of certain government organizations not accepting a contract type (or any for that matter) that wasn’t specifically described in FAR part 16. As it turns out, my proposed Guaranteed Maximum Price (GMP) contracting method was already being used by GSA more than eight years ago for certain Construction Manager at Risk (CM@risk) programs . For GSA, the government would provide and be responsible for the design, which would be developed and finalized after hiring the CM@risk. In my scenario, for Design-build programs, the design-build contractor provides and is responsible for the design of the project after award. The GMP contracting method that I described is essentially the same as one approach that the Design-Build industry uses for many non-government programs and is promoted by the DBIA. The DBIA asked me, as a member of the DBIA’s Government Design-Build Programs Committee, to show how GMP could be used in appropriate circumstances for federal government design-build contracting.

I see from an 8 year old thread where I WAS aware of the GSA method used for (“construction manager”) CM@Risk construction contracts, where GSA was providing and responsible for the design. It uses a fixed-price incentive with successive targets FPI(ST) contract method, because the contractor doesn’t have control over the design development (maturity of the design) or design changes during design by the government. The “target price” equals the “ceiling price” as the guaranteed maximum price (GMP). For design-build projects, the contractor isn’t a construction manager at risk. The design-builder has sole responsibility for both design and construction. It is responsible to develop the design and responsible for the adequacy of the design. Therefore government provides and is responsible for the scope and design criteria. Therefore, it could be feasible for design-build to use FPI with Fixed Target rather than successive targets. The GMP is based upon the Target price equaling the Ceiling price. _____________________________ To answer Verns question above about what the naysayers said, I found the eight year old thread about the debate. I doubt that many or anyone would read it through. But I can summarize a couple of objections raised about using the method. For other than GSA’s CM@Risk procedures, the FPI method had never used a GMP based upon the target price. The typical FPI contracts were extremely over complicated. wifcon.com/discussion/index.php?/forums/topic/4083-must-a-fixed-price-incentive-contract-include-separate-target-and-ceiling-prices/page/3/ I don’t want to keep debating plus am no longer involved in the Design-Build Institute of America (DBIA) quest to implement GMP for federal design-build contracts under the regulations without seeking statutory revisions. General Zhukov said: “RFO :This update [to FAR Part 16] represents a deliberate shift from a restrictive to a permissive framework, empowering contracting officers to use novel and innovative contract structures ..." I meant to express pleasure that the RFO rewrite appeared to loosen restrictions on using contract types and methods other than those specific procedures described in the legacy FAR part 16.

When past performance (how well you performed) is correlated with relative project experience (what you performed), they can be valuable indicators of probable success .

Thanks, Mike. Looks like GSA is using a form of FPI with Successive Targets for GMP construction or design-build construction projects. Ha Ha to the naysayers!

Even though this is promotional, I have had some great experiences with our outsourced contracted, government construction estimating teams for complex estimating tasks.

Thanks, @General Zhukov. Hmm, a “guaranteed maximum price” GMP contract, using a variation or form of fixed price incentive with S.T. or F.T., like the approach that I debated several of you a few years ago in the Forum should now be “RFO FAR” allowable. It’s a common design-build construction delivery approach in industry. It would be suitable for large, complex projects where time is of the essence. It does require active government contract administration by personnel who are qualified in REAL management and oversight, not just inspectors and paper pushers. That level of “project controls”* approach and government team interaction with contractors’ design teams and design-build construction management personnel is crucial , especially so when fast track design-build is used, but is rare in my opinion and years of experience.. There are college majors for professional construction management but, to my knowledge, little or no professional recognition or Civil Service professional job series , unless they finally implemented it in the past decade. The engineer career field appeared to me to see it as a threat… I provided a paper to the Design-build Institute of America (DBIA) Government Programs advocate in the early to mid 2010’s, describing and outlining the method, which would be similar to their commercial GMP methodology. I think NAVFAC may have experimented with it around the time that I proposed it as a viable contract approach. *”project controls” is an industry term for managing and tracking costs, performance, quality control, design and construction schedules, acquisition of materials and subcontractors, etc.

I developed that method for USACE MATOC awards in coordination with Contracting, Office of Counsel and Program Directorates at HQUSACE level back in the mid to late 2000’s.

Ok, in refreshing myself over the FAR language regarding evaluating prices in the selection of MATOC awards, I remember that we were evaluating prices using the seed task order pricing in Phase 2 of a two phase design-build MATOC base contract awards. We were doing that irrespective of and prior to the exemption for DOD MATOCs in FAR (now under RFO 15.104 (b)(1)(A)(3) : “15.104 (b)(1)(A) Contracting officers may choose not to include price or cost as an evaluation factor for award when an RFP– (3) States that the Government intends to make an award to each and all qualifying offerors.” We did not state that “we would make an award to each and all qualifying offerors”. We short listed a number of firms in phase I to compete for up to a stated maximum number of awards in phase 2. We didn’t intend or guarantee that we would make an award to each and all phase 2 offerors . To my knowledge, the Corps of Engineers were never questioned or protested for not evaluating prices under this two phase approach. We determined that we were competitively evaluating prices under 15.304(b)(1) for the initial base contract awards when we used the initial (seed) task order award in establishing the MATOC pool(s) .

Yes, “sample task orders” do result in fictional (non-binding) pricing. Phase two, Competition for a construction or design-build construction “seed task order” would normally result in receiving prices that would bind an offeror, if they were awarded the seed task order. Therefore, we could evaluate pricing for selection of award of MATOC base contracts, even though the base contract wouldn’t include fixed prices. Subsequent task order competitions would generally result in price competition. I wrote two-phase Model RFP’s that were used USACE-wide for MATOC base contract competitions and another Model for task order competitions (for design-build and for some straight construction contracting). Too bad, this method wasn’t available government wide.

Task order pricing for construction MATOC’s may be based upon competition among pool members, rather than fixed contract level pricing. It is highly impractical to use fixed contract unit prices for ID/IQ task orders due to highly variable market conditions and individual scopes of work/locations.

I agree that firms may often not initially propose their best price in negotiated acquisitions. That’s why government buyers should negotiate and bargain for better prices. And I agree that many buyers/KO’s don’t want to negotiate or bargain for better terms/prices. In construction contracting, I found that many KO’s in my former Army Command don’t know how to analyze pricing , didnt know enough about construction contract pricing to analyze or to negotiate/bargain. Heck many of them across the Districts didn’t even know they COULD bargain!!

Bargaining for better performance. I had numerous KO’s argue that it’s their Districts’ policy that if some aspect of a proposal meets the minimum technical requirements - even if it is objectionable or barely acceptable that they aren’t allowed to discuss that aspect with an offeror. They said they would have to issue a change after award to get what they want!!! I’m certain that their supervisors from the pre- 1997 “FAR Part 15 rewrite” era never learned that bargaining for better performance was stressed in the rewrite”. So darned aggravating!!! To clarify, these were design-build construction RFP’s.

wow, that is great- if it actually happens!

It’s the ol’ “ostrich” (bury your head in the sand and hope for the best) routine.

We were able to sometimes request specific 8(a) firms and were successful at rejecting some firms offered by SBA before or after receiving proposals/negotiating.