Competitive becomes sole source action

What do you mean it's not "effective competition"? How do you define "effective competition"? Receipt of only one offer in response to a competitive solicitation does not turn a competitive procurement into a sole source procurement. See the definition of sole source in FAR 2.101.

https://dap.dau.mil/policy/Lists/Policy%20Documents/Attachments/3252/Improving%20Competition%20In%20Defense%20Procurements%20%2024%20Nov%202010%20USA006629-10-DPAP.pdf

Could the PCO put the option CLINs for production on contract with an NTE based on the prices included in the competitive proposal. Can a PCO then later get the required Certified CoPD to firm up the NTE option price prior to exercising the option so as to not create a UCA?

That sounds like a UCA to me. See DFARS 217.7401(d):

“Undefinitized contract action” means any contract action for which the contract terms, specifications, or price are not agreed upon before performance is begun under the action. Examples are letter contracts, orders under basic ordering agreements, and provisioned item orders, for which the price has not been agreed upon before performance has begun.

If you can get around the UCA issue, then I think your plan would comply with the DPAP memo.

By the way, I don't think the DPAP memo meant to use "effective competition" in a formal way, to create new terminology. I say that because there is already a definition of "effective competition" at FAR 34.001.

CPA, have you looked at FAR 15.403©(1)?

CPA, have you looked at FAR 15.403©(1)?

If you are referring to FAR 15.403-1©(1)(ii) then he cannot use that if he is in DoD, which is explained in the policy memo he linked. However, I'd tread carefully if you are trying to skirt that memo, they are monitoring effective pricing very closely. A push by your PEO to put it on contract shouldn't make you do a less thorough analysis of the costs/pricing provided. Of course, if you have the... willingness to push back at them, you should show them the memo and say that they are free to draft up a waiver letter for the HCA if they believe that they shouldn't need to comply with it. That would be an interesting conversation.

Agree with Vern, I'm pretty sure what you described trying to do would create a UCA for the production portion of your contract so you would have to comply with all of the regulations regarding them, and would probably just bring further attention to what you are doing because the reporting level to DPAP is $5 million dollars on UCAs.

Based on my past experience with DoD, if you do as DCarver suggests and tell the PEO that if they want you to seek a waiver they need to draft it, you'll get plenty of time for the required negotiations.

Of course, if you have the... willingness to push back at them, you should show them the memo and say that they are free to draft up a waiver letter for the HCA if they believe that they shouldn't need to comply with it. That would be an interesting conversation.

It would be a shameful conversation. Look, as a matter of professional practice I think it would be wrong for the CO to toss the question of waiver into the lap of the program office and tell them to draft the request. That is a matter for the contracting officer to decide and pursue. It's that kind of conduct that reduces COs to problem creators instead of problem solvers and leads program types to avoid and exclude them. It reduces their stature in the eyes of others. I would be ashamed to do it.

If I thought waiver was the right thing, then I would make the case and do the paperwork. If I didn't, no one would make the case or do the paperwork.

If the program office has a contracting problem, no matter what the reason, then the CO should try to solve it. If I were a program executive officer and you pulled that crap I would make sure you did not have a future in any organization of which I was in charge.

It would be a shameful conversation. Look, as a matter of professional practice I think it would be wrong for the CO to toss the question of waiver into the lap of the program office and tell them to draft the request. That is a matter for the contracting officer to decide and pursue. It's that kind of conduct that reduces COs to problem creators instead of problem solvers and leads program types to avoid and exclude them. It reduces their stature in the eyes of others. I would be ashamed to do it.

If I thought waiver was the right thing, then I would make the case and do the paperwork. If I didn't, no one would make the case or do the paperwork.

If the program office has a contracting problem, no matter what the reason, then the CO should try to solve it. If I were a program executive officer and you pulled that crap I would make sure you did not have a future in any organization of which I was in charge.

Sorry Vern, perhaps I should rephrase what I was intending. Surely I would never actually say that to the PEO him/herself, but lately things have gotten a bit absurd with expected timelines from program offices within the PEOs. You get a proposal and they expect you to have a contract next day while in reality the majority of the time they are the reason you are so far up against the timeline in the first place.

My intent from that was not to actually make them write the waiver request, because surely you would need an absurdly good reason to get one, but rather to show them that there is guidance from much further up that we should be doing a better job analyzing the cost/price. I probably made one too many assumptions in my response to CPAnalyst, but there is an absurd expectation of how fast a negotiation takes from the program offices within the PEOs lately, no matter how much you lay out to them early on how fast they shoudl expect it to take.

I was merely suggesting he not cave into such outside pressure, but do a thorough analysis on his proposal. If he truely does have a real deadline due to install dates being missed, etc. then there are other appropriate routes he could take to mitigate that.

Would anyone like to comment on what, if any, impact 41 U.S.C. 1707, http://www.law.cornell.edu/uscode/text/41/1707 has on the DPAP memo?

I wrote about it in the February 2011 issue of The Nash & Cibinic Report in an article entitled, "Agency Policy Memos: The Statutory Publication and Public Comment Rules Apply." 25 N&CR para. 9. I said:

On November 24, 2010, the Director of Defense Procurement and Acquisition Policy issued a policy memorandum entitled, _Improving Competition in Defense Procurement...._The memo's key sentence states: "To maximize the savings that are obtained through competition, contracting officers will no longer use the standard at FAR 15.403-1( c)(1)(ii) or (iii) to determine that the offered price is based upon adequate price competition when only one offer is received."

The effect of this policy, when only one proposal is received, is to (a) eliminate the adequate price competition exception to the requirement for submission of certified cost or pricing data or ( require application to the head of the contracting activity (HCA) for either a waiver of the requirement to negotiate with the one offeror or, pursuant to Federal Acquisition Regulation 15.403-1( c)(4), a waiver of the requirement for submission of certified cost or pricing data. It appears that the memo took effect immediately. Nothing in the memo indicates that the policy is temporary...

[T]he Director's decision to eliminate the adequate price competition exception when only one offer is received can be expected to have a significant effect beyond the DOD's internal operations and to increase the administrative costs of offerors and contractors. Therefore, the Director was required to publish a proposed rule or interim rule in the Federal Register and to seek public comment. We do not think that he can legitimately circumvent the statutory publication and comment requirements by saying that he is issuing “guidance,” since, on its face, the memo does not read like mere guidance. It is directive...

We recognize that agencies must cope with a terribly cumbersome and time-consuming process to publish proposed, interim, and final rules in the Federal Register, and we are sympathetic. Policy memos issued internally and without publication and comment must be an attractive alternative. But when a policy will have a significant impact on the public, federal statute requires public notice and comment, and respect for the law demands compliance by public officials.

I looked on the DPAP memo as being an internal matter to the Defense Department, but I appreciate the perspective in the above posting. The FAR already requires approval of the detemination "at a level above the contracting officer" (FAR 15.403-1( c )( 1 )( ii )( B )), and the DPAP memo puts that approval at the HCA level consistently across DoD. The burden of the memo is on contracting officers and HCAs, as it seems to me that an offeror has no claim or right to an affirmative determination under 15.403-1( c )( 1 )( ii ). Perhaps DoD contracting officers and their superiors were overstretching the elasticity of the principle and DPAP had to do something for the sake of better control of the taxpayer dollar.

But I don't like rule by letter, either, and I tend to think that the DFARS is the better place for DPAP to define "at a level above the contracting officer"..

The FAR did not require approval of the determination that adequate price competiton existed. FAR 15.403-1©(1) provided three alternative bases upon which an exemption from the submission of certified cost or pricing existed. ©(1)(ii) required such an approval, but if the circumstances listed in (i) or (iii) were present, no such higher level approval was needed. Further, the DPAP memo specifically states that contracting officers will not use the procedures at (ii) or (iii) but will use the procedures outlined in the memo instead. To say that requiring a contractor to disclose certified cost or pricing data when a FAR exemption is applicable does not exceed mere internal guidance and impose a burden on contractors is disingenuous.

It will be interesting to see the result if a contracting officer follows the DPAP guidance instead of the FAR and then attempts to get a price adjustment for defective pricing. Although I have not been able to find it, I remember a decision involving a case similar to this where the contracting officer required certified cost or pricing data when it was prohibited by the FAR and later tried to get a price reduction for defective pricing. I believe this was an ASBCA decision and the Board held that the contracting officer's actions were unauthorized. Thus, the government was not entitled to a price reduction.

Saying that a price is based on adequate price competition if only one offer is received is covered by FAR 15.403-1( c )( 1 )( ii ). Underneath ( ii ), there is an ( A ) and a ( B ), and there is an "and" connecting them. FAR 15.403-1( c )( 1 )( ii )( B ) requires the determination to be approved at a level above the contracting officer.

The FAR **does**require approval of the determination that a price is based on adequate price competiton in the matter we're discussing (only one response when more were anticipated) -- we're in ( ii ) -- the FAR does not require higher-level approval for ( i ) or ( iii ).

ji20874:

I believe that you have misinterpreted the DPAP memo.

The last sentence in the first paragraph of the memo eliminates the use of the 15.403-1( c)(1)(ii) and (iii) exceptions entirely. They may no longer be used under any circumstances when only one offer is received, with or without higher level approval:

To maximize the savings that are obtained through competition, contracting officers will no longer use the standard at FAR 15.403-1( c)(1)(ii) or (iii) to determine that the offered price is based on adequate price competition when only one offer is received.

There is no provision in the policy letter for getting around that policy with higher-level approval. The HCA waiver discussed in the second paragraph of the memo applies only to the requirement to re-advertise and the requirement to negotiate. The HCA cannot waive the prohibition against using the ( c)(1)(ii) and (iii) exceptions.

I do not believe that DPAP has authority to issue that kind of policy without first following the public notice and comment procedure imposed by 41 U.S.C. 1707.

would other than certified cost or pricing data do the job, shouldnt take as long as Certified.

the said memo was clarified after its original release on April 27th 2011 titled "Improving Competition in Defense Procurements - Amplifying Guidance"

If a solicitation allowed at least 30 days for receipt of offers and only one offer was received, then the contracting officer shall not depend on the standard at FAR 15.403l©(ii) in detennining the price to be fair and reasonable. Rather, the contracting officer shall use price or cost analysis in accordance with FAR 15.404-1 to make that detennination. If the contracting officer believes that it is necessary to enter into negotiations with an offeror. the basis for these negotiations shall be either certified cost or pricing data or data other than certified cOst or pricing data. as appropriate. in accordance with FAR 15.403-1©. DFARS 215-403-1© and FAR 15.403-3( . The negotiated price should not exceed the offered price.

SUMMARY: DoD is issuing a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to address acquisitions using

competitive procedures in which only one offer is received. This rule implements a DoD Better Buying Power initiative. The revisions to this

rule are part of DoD's retrospective plan under Executive Order 13563 completed in August 2011.

II. Discussion and Analysis of the Public Comments

DoD reviewed the public comments in the development of the final

rule. A discussion of the comments and the changes made to the rule as

a result of those comments are provided as follows:

A. Summary of Significant Changes From the Proposed Rule

1. DFARS 215.371-1. A section on policy has been added at DFARS

215.371-1 to replace the proposed paragraph DFARS 215.371(a). The

policy statement is completely rewritten to shift the emphasis away

from whether the circumstances described at FAR 15.403-1©(1)(ii)

constitute adequate price competition, to an emphasis on the objectives

of the rule, i.e., to increase competition and, if only one offer is

received nevertheless, to make sure that the price is fair and

reasonable and that the statutory requirements for obtaining certified

cost or pricing data are met.

2. DFARS 215.371-2. A section has been added to address the efforts

to promote competition, similar to the coverage in the proposed rule at

DFARS 215.371©(1). In response to public comments, two FAR references

have been added to provide considerations on revising requirements to

promote competition (FAR 6.502( and 11.002).

3. DFARS 215.371-3 has been added to address the process for

obtaining fair and reasonable prices, replacing the proposed paragraph

DFARS 215.371©(2). The contracting officer is not required to obtain

further cost or pricing data if the contracting officer determines that

the offered price is fair and reasonable on the basis of cost or price

analysis and that adequate price competition exists, in accordance with

FAR 15.403-1©(1)(ii), or another exception to the statutory

requirement for certified cost or pricing data applies (see Truth in

Negotiations Act (10 U.S.C. 2306a) and FAR 15.403-4). Otherwise, the

contracting officer must obtain additional cost or pricing data, and

that data must be certified, unless an exception to the requirement for

certified cost or pricing data applies. The following table provides a

summary of the requirement for cost or pricing data and whether the

data must be certified, depending on whether the contracting officer

can determine the price to be fair and reasonable and whether an

exception to the requirement for certified cost or pricing data

applies.

http://www.gpo.gov/f.../2012-15569.htm

Yes, the summary of the final rule is very informative.

DoD did publish publish a proposed rule in the Federal Register "at 76 FR 44293 on July 25, 2011, to address acquisitions using competitive procedures in which only one offer is received. This rule was initiated to implement one of the aspects of the initiative on promoting real competition that was presented by the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L) in a memorandum dated November 3, 2010. This memorandum was further implemented by memoranda from the Director, Defense Procurement and Acquisition Policy, dated November 24, 2010, and April 27, 2011."

The Summary of the Final Rule can also be found at: http://www.gpo.gov/fdsys/pkg/FR-2012-06-29/html/2012-15569.htm

Perfect timing. Thanks Joel!

CPA, Actually, thank the Webmaster. I saw it on the Home Page yesterday.

Actually, thank napolik, who first posted notice of it in this thread.

I pulled the final rule from the Federal Register on 29 Jun 12 and furnished it to my supervisory contracting officers asking if we should implement it by adding the provisions IAW the prescriptions. I was told emphatically that until our HQ told us what to do, that we were not to take any action prescribed in the final rule. I find this amazing. The final rule is a final rule - the DFARS has been updated. We are a DoD agency. Now we have to wait until our HQ tells us to do what the DFAR update already tells us to do and until then, we are operating without the directions prescribed by the new provisions.

Well, leo, as we have seen in other threads, some COs cannot do anything without being told exactly what to do by their higher-ups. You are not one of those COs, so you feel frustrated. The higher-ups, having appointed those other COs, won't let them do anything without further direction. Remember this when you are in charge.

I pulled the final rule from the Federal Register on 29 Jun 12 and furnished it to my supervisory contracting officers asking if we should implement it by adding the provisions IAW the prescriptions. I was told emphatically that until our HQ told us what to do, that we were not to take any action prescribed in the final rule. I find this amazing. The final rule is a final rule - the DFARS has been updated. We are a DoD agency. Now we have to wait until our HQ tells us to do what the DFAR update already tells us to do and until then, we are operating without the directions prescribed by the new provisions.

That's what you get for asking.

Vern and Don - Absolutely correct in both of your responses. Frustration is often the product of the slow and encumbered process when various levels of review and application weigh in. What get's me riled up is that if, as of 29 Jun 12, we are not incorporating those provisions and procedures into our solicitations as applicable, we are in violation of the DFAR, and will be so assessed when we are inspected. I don't think I will ever be in charge that high up the acquisition chain - nor do think I want to be. I like being in the trenches doing the work, dealing with people and issues.

le01102,

You could put a memo (or better yet, a copy of the e-mail) with your HQ instructions not to comply into the contract file.

"Trenches" is not a good metaphor. Why would you want to spend the rest of your days in a trench? It recalls the static warfare of WWI. It's holding one's position.

Today's 1102s should be mobile, maneuvering, continuously seeking tactical advantage. Like Patton said on May 31, 1944, to the Third Army:

"I don't want to get any messages saying that we are holding our position. We're not holding anything, we'll let the Hun do that. We are advancing constantly, and we're not interested in holding onto anything... ."

leo:

Keep your copy of the DFAR final rule with an effective date of nearly 2 weeks ago and document it in your contract files where necessary. Write a handwritten note on it and explain that you checked with the "higher ups" who told you to wait until you were told by the "even higher ups." Be professional in your note and polite.

There is always the possibility that someone other than the "higher ups" will read your note and understand why it is there. There were times when I read such notes, understood the purpose of the note, ignored the author of the note, and directly went to and questioned the "higher ups."

Too much work. I say just ignore then and proceed in accordance with the rule. Upon review of your file they can take it out if they want to and you can document the file accordingly.

Too much work. I say just ignore then and proceed in accordance with the rule. Upon review of your file they can take it out if they want to and you can document the file accordingly.

I agree with Vern, not because "it's too much work," but because when a final DFARS rule is published and effective immediately, then everyone subject to the DFARS is obligated to comply with it. FAR 1.602-1 says:

"1.602-1 Authority.

"(a) Contracting officers have authority to enter into, administer, or terminate contracts and make related determinations and findings. Contracting officers may bind the Government only to the extent of the authority delegated to them. Contracting officers shall receive from the appointing authority (see 1.603-1) clear instructions in writing regarding the limits of their authority. Information on the limits of the contracting officers’ authority shall be readily available to the public and agency personnel.

"(b ) No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met. [emphasis added]"

DFARS is one of the regulations that DoD contracting officers must comply with, so if you don't, then you may be operating outside the scope of your authority.

Vern and Navy Contracting:

So, although leo is correct, are you recommending that Leo risk a charge of insubordination?

Leo:

You wrote: "I like being in the trenches doing the work, dealing with people and issues." Been there, done that. Maybe I have found someone to take over this web site when I'm dead and gone.

Yes, I think leo should be insubordinate, for his bosses' sakes. He won't get in trouble for following the rules.

What really bothers me about documenting the file as you suggested is that it seems to be designed to show that the bosses broke the rules. I don't know why they told leo to hold up, but I don't like the idea of putting something in the file just to show that a colleague/boss was in the wrong. That probably does not make much sense, but I put a high premium on loyalty to even a dumb boss. For instance, if I worked at the Missile Defense Agenct I would have refused to talk to the IG about my boss's (allegedly) bad behavior. I'm told that he was very effective at his job, but harsh to subordinates. I wouldn't have gone against him just for that. I can take harsh.

Vern and Navy Contracting:

So, although leo is correct, are you recommending that Leo risk a charge of insubordination?

I believe in acting within the limits of my authority, and compliance with the regulations, as required by the FAR and my warrant. I would revisit the issue with management and explain why compliance with the rule is mandatory. I would not issue a solicitation or contract that was knowingly not in compliance with the FAR or DFARS.

Trenches aside, I like doing the day to day work. I am a retired US Army SFC - that may explain why I enjoy actually working for a living (a joke people!!). I have moved around - perhaps not as much as some but I have worked at several different offices learning much from each. Funny you mentioned Patton and 3d Army - I was in 3d Army 1990 - 1993 (yep - Desert Shield/Desert Storm). BTW - I'm not a "he".

While I have had to document my contract files on several occasions when I did not agree with a KO, I will not do so here. The entire back and forth is in e-mail traffic.

After yesterday's WIFCON discussion, I went back to my "chain" and asked that he reconsider his decision not to use the provisions, even though they are now plainly in the DFARS. He, once again, and this time with attitude, told me to wait until "policy" came down with implementation instructions. Other people were on that e-mail and they have read his instruction.

Are KOs so afraid to act on their own knowledge that they must wait until someone above them tells them what to do? I think Don is correct - I should not have asked and just started using the provisions.

Leo:

You said: "The entire back and forth is in e-mail traffic."

I would keep a paper document in addition to the electronic document. You may need it in the future.

Let's think this through. Has the boss asked anyone to sign a contract that is not compliant with regulation? Has the boss told anyone to issue a solicitation that does not comply? The only reason to document the file would be to explain why you did something improper. Being told to wait is not, in and of itself, improper. Signing a noncompliant contract would be improper. Issuing a noncompliant solicitation would be improper, but not as improper as signing a noncompliant contract, because the solicitation noncompliance could be remedied by amendment before contract award.

I admit that the boss's instruction is odd, but did anyone ask the boss if the higher ups had ordered everyone to wait for implementation guidance? Did anyone ask the boss what kind of guidance is expected? Did anyone ask the boss how long it would be before guidance comes down from on high? We're hearing only one side.

Vern:

Your said: "The only reason to document the file would be to explain why you did something improper."

If you are responding to my last note, you read too much into it. Leo could have a file in her desk for different things--including a hard copy of that e-mail exchange. If she ever needs to produce that piece of paper, it is available for her.

I agree. The boss may have a reason for waiting.

I agree that a personal desk file is a good idea.