A Competition Revolution

I posted it because GAO said:

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Our Office has not previously considered the question of whether an agency may properly structure a solicitation using a “highest technically rated [ ] with a fair and reasonable price” evaluation scheme. Based on the arguments presented by protesters and our review of the relevant statutes and regulations we find that the protesters have not established that GSA’s source selection process, as defined by this solicitation, is improper.

You can view the excerpt here and download the entire protest at the end pf the excerpt.

In order to fully understand the importance of the decision, read Nash and Edwards, "Highest Technically Rated Offerors with Fair and Reasonable Pricing," The Nash & Cibinic Report, May 2016. If you want to read it and cannot get it, write to me through Wifcon and I will see that you get a copy. Read the entire Sevatec decision, not just an excerpt.

See also  a Court of Federal Claims decision that included issues concerning the similar source selection scheme for multiple award GSA contracts as in the Sevatec GAO Protest. GAO acknowledged that Protest on page 5 of the Sevatec Decision.

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We recognize that a challenge to the award decision in a similar procurement was made and that a similar evaluation scheme has been discussed at the Court of Federal Claims.   See e.g. Octo Consulting Group, Inc. v. United States, 117 Fed. Cl. 334 (2014).

OCTO CONSULTING GROUP, INC. Protestor, v. UNITED STATES, Defendant.

United States Court of Federal Claims.

No. 14-234C, August 13, 2014.

http://www.leagle.com/decision/In FDCO 20140815L40.xml/OCTO CONSULTING GROUP, INC. v. U.S.

In addition, Section 825 of the 2017 NDAA has added an exception under Title 10 USC to the requirement to include cost or price to the Government as a factor in the evaluation of proposals for award of certain MATOC or MADOC contracts, but price shall be considered in the task or delivery order awards. That doesn't necessarily limit such consideration to LPTA or a trade-off process, either. I didn't see where Title 41 was included here (for non DoD).

GSA pushes the envelope.  Here  and in the GAO protest, it seems like a reasonable approach for those GSA multiple award contracts.

The "highest technically rated [ ] with a fair and reasonable price" methodology makes a lot of sense for this situation and others like it where there will be further competition at the task order level.

Joel is being helpful, but the Octo decision is 37 pages of legalese, was decided on a slightly different basis and, in my opinion, does not have the same impact. It's historically interesting. Read it if you want to, but the important decision is Sevatec.

Matthew:

The highest technically rated with a fair and reasonable price method makes good sense even when there will not be further competition for task orders. It potentially permits nonprice proposal ranking based on tradeoffs among technical factors without consideration of price and then selection based on fairness and reasonableness of price without direct price comparisons among competitors. Think about it.

Vern Edwards said:

Matthew:

The highest technically rated with a fair and reasonable price method makes good sense even when there will not be further competition for task orders.

Agreed.

Vern Edwards said:

Matthew:

The highest technically rated with a fair and reasonable price method makes good sense even when there will not be further competition for task orders. It potentially permits nonprice proposal ranking based on tradeoffs among technical factors without consideration of price and then selection based on fairness and reasonableness of price without direct price comparisons among competitors. Think about it.

Yes, but the context of both the GAO and CFC Protests included discussion about how GSA intended for follow-on task order competitions to include some type of consideration of prices as part of their development and perhaps as part of their justification and reasoning for the "new" methodology. Of course, I'm not a lawyer but it seemed that GSA was explaining how price would supposedly be reasonably evaluated in subsequent order competitions.  I will reread and "think about it" further.

Joel:

Two things.

First, the COFC's Octo decision is irrelevant to the GAO's decision, which is all I care about. The GAO mentions Octo only in a footnote and only to acknowledge that the decision was about a "similar" evaluation scheme. It does not cite Octo precedentially.

Second, the GAO's holding does not rest on the expectation of future task order competitions. The holding is about what is potentially possible under CICA when an agency is not conducting a tradeoff competition.

The key part of the decision is in pages 6 -9 under the heading "Consideration of Price." Please read it carefully. I will not debate or discuss your speculations about context or what GAO was thinking when it rendered its decision. I will rely only on the language of the decision itself.

Bravo, GSA-- making contracting great again! This officially makes up for the fallout from the GSA Hot Tub Man Scandal! It's a new year, with new beginnings.

Within FAR Part 15, GSA decided they did not want to conduct the source selection using LPTA...and then decided they did not want to conduct a tradeoff, either. 

A bright mind at GSA read and thought about FAR 15.100: "This subpart describes some of the acquisition processes and techniques that may be used to design competitive acquisition strategies suitable for the specific circumstances of the acquisition" (emphasis added).

I wonder if there has to be some ceiling or cut off on awarding to the highest technically rated. What if the highest technically rated proposal far exceeds the government's bona fide needs? The solicitation would have to create some sort of boundaries that would pre vent this.

Vern Edwards said:

In order to fully understand the importance of the decision, read Nash and Edwards, "Highest Technically Rated Offerors with Fair and Reasonable Pricing," The Nash & Cibinic Report, May 2016. If you want to read it and cannot get it, write to me through Wifcon and I will see that you get a copy. Read the entire Sevatec decision, not just an excerpt.

Vern, the decision states

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Our Office has not previously considered the question of whether an agency may properly structure a solicitation using a “highest technically rated [ ] with a fair and reasonable price” evaluation scheme.

Are you buying that? Your article discusses a number of decisions where the GAO did consider that question and said that such a technique was not compliant with CICA. How is this decision consistent with those?

It seems that at the end of the day, you cannot buy more than you need and/or at more than you can afford- regardless if it is has the highest technical rating and is offered at a fair and reasonable price.

Without the follow on task order competitions you have no way to control this.

Don Mansfield said:

Are you buying that? Your article discusses a number of decisions where the GAO did consider that question and said that such a technique was not compliant with CICA. How is this decision consistent with those?

Hi Don,

Yes, I buy it. I cannot find a case or a decision in which an agency has previously tried such an approach to source selection. GSA and the GAO did a good job of distinguishing highest technically rated with fair and reasonable price (HTRRP) from the other methods on which they have ruled.

The credit for that approach and for arguing persuasively at the GAO goes to Todd Richards, the OASIS Project Manager, and his team at GSA. They were participants in the December Nash & Cibinic Roundtable and were as impressive a group of young professionals as I have ever met, and Todd is an Air Force contracting alumnus. It took courage for them to try this and excellence in execution to make it work.

I just spent an hour discussing this with Ralph Nash, and we think the approach and the decision are positively revolutionary. They key now is for people at the working level to conduct source selection to understand the key features of the HTRRP method and the principles that underlie the decision. Then the innovators at various agencies need to go to work to develop acquisition-specific variations and refinements.

Vern

This material from The Nash & Cibinic Report has been reproduced with the permission of the publisher, Thomson Reuters. Further use without the permission of the publisher is prohibited. For additional information or to subscribe, call 1-800-344-5009 or visit http://legalsolutions.thomsonreuters.com. The Nash & Cibinic Report is now available on Westlaw. Visit westlaw.com.

On January 11, 2017, the GAO published its decision in the matter of Sevatec, Inc.; InfoReliance Corporation; Enterprise Information Services, Inc.; Buchanan & Edwards, Inc., B-413559.3; B-413559.4; B-413559.6; B-413559.7, January 11, 2017. The attached article by Ralph Nash and Vern Edwards from the May 2016 issue of The Nash & Cibinic Report lays out the issues and the stakes. This is a decision of great potential significance, which offers ample opportunity for beneficial innovation in source selection. The article and the decision merit close attention by all professionals engaged in the conduct of source selections under the Competition in Contracting Act and FAR Part 15.

Vern Edwards will soon post a blog entry to explain the decision's significance and potential.

I'm surprised that this was the first time these procedures were used (or used and challenged) because, from an academic standpoint, Lowest Price Technically Acceptable (LPTA) and Highest Rated Technical Offer (HRTO) are the two, opposite ends of the best value continuum with Tradeoff occupying the space in between.  Nevertheless, after looking through educational materials currently available from DAU and other department sources, I see why: the Source Selection process that we're teaching the contracting community doesn't discuss HRTO (though I've yet to look at the CLCs).  See for example:

https://dap.dau.mil/acquipedia/Lists/Acquipedia Article/Attachments/3384/Best Value Continuum and Source Selection - June 30 2015.pdf

https://dap.dau.mil/acquipedia/Pages/ArticleDetails.aspx?aid=5201f734-3bce-4c5f-a5a3-47551df77ea5

I think it would be valuable for the FAR Council to update FAR 15.101 "Best Value Continuum" which currently only contains sub-sections for the Tradeoff Process (15.101-1) and LPTA (15.101-2) with a HRTO section (presumably 15.101-3) so that protests/challenges to the approach are less likely and so that acquisition professionals are more aware of the approach's existence and permissibility.  Thoughts?

Matthew Fleharty said:

Lowest Price Technically Acceptable (LPTA) and Highest Rated Technical Offer (HRTO) are the two, opposite ends of the best value continuum with Tradeoff occupying the space in between.

Exactly!!!! Brilliant observation.

Matthew Fleharty said:

I think it would be valuable for the FAR Council to update FAR 15.101 "Best Value Continuum" which currently only contains sub-sections for the Tradeoff Process (15.101-1) and LPTA (15.101-2) with a HRTO section (presumably 15.101-3) so that protests/challenges to the approach are less likely and so that acquisition professionals are more aware of the approach's existence and permissibility.  Thoughts?

Disagree. Disagree with extreme prejudice! The FAR councils should leave well enough alone. We've got too much regulation as it is. Professionals should read the decision and think. There is much more to be done. What was the method described in the Alliant 2 solicitation? What are the underlying principles of the GAO's decision? What adaptations and variations of HRRP (Highest Rated with Realistic Price) are legally permissible and practically appropriate for different source selections? We need more thought and experimentation.

Matthew Fleharty said:

I'm surprised that this was the first time these procedures were used (or used and challenged) because, from an academic standpoint, Lowest Price Technically Acceptable (LPTA) and Highest Rated Technical Offer (HRTO) are the two, opposite ends of the best value continuum with Tradeoff occupying the space in between.

That's right, but based on prior GAO decisions, it seemed as though GAO would find that HRTO wouldn't be compliant with CICA. Now we know that's not what those decisions meant.

Vern Edwards said:

There is much more to be done. What was the method described in the Alliant 2 solicitation? What are the underlying principles of the GAO's decision? What adaptations and variations of HRRP (Highest Rated with Realistic Price) are legally permissible and practically appropriate for different source selections? We need more thought and experimentation.

Let me add...can this be done IAW the Mandatory DoD Source Selection Procedures?

Don:

I don't know. You're the DAU professor. What do you think?

Every CO is going to have to decide what he or she can or cannot do under their agency's regulations and policies. I'm not providing any kind of consulting service in that regard.

The GAO has opened the door to a new and, in my opinion, better way to conduct some kinds of source selections. It's up to the people at the working level to take advantage. Or not. If anyone works for an agency that has policies that prohibit the use of HRRP, and if they think that method would work to their agency's advantage, then they should take a page from the Alliant team's playbook and get those policies changed.

Vern

P.S. The name of GSA's procedure was not "highest rated technical offer" (HRTO). It was "highest technically rated [offerors] with a fair and reasonable price." The award was not based on the technical rating alone. Price was a consideration.

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can this be done IAW the Mandatory DoD Source Selection Procedures?

Don,

In my view, DoD must modify the procedures to conform to the Section 825 of the 2017 NDAA and to the GAO Sevatec decision. But, we have a new Prez and SecDef en route. At least the Prez elect thinks we are paying too much for DoD supplies and services. 

We will see what we will see.

DOD's source selection procedures are what happens when regulation writers lose their minds. Instead of modifying the procedures, DOD should throw them out. That's why I told Matthew that we don't need the FAR councils to change FAR 15.101.

Won't happen unless the new Prez slashes the DoD workforce including DPAP. Even then, the SS procedures will probably stay.

Apart from the change in administrations, it is my assessment that the majority of contracting offices are incapable of writing and applying procedures that are legal, effective and efficient.

Vern Edwards said:

Disagree. Disagree with extreme prejudice! The FAR councils should leave well enough alone. We've got too much regulation as it is. Professionals should read the decision and think. There is much more to be done. What was the method described in the Alliant 2 solicitation? What are the underlying principles of the GAO's decision? What adaptations and variations of HRRP (Highest Rated with Realistic Price) are legally permissible and practically appropriate for different source selections? We need more thought and experimentation.

Would you at least agree that some clarification of the Best Value Continuum is warranted (regardless of whether or not my proposed clarification was the right way to go about it or not)?

Matthew Fleharty said:

Would you at least agree that some clarification of the Best Value Continuum is warranted (regardless of whether or not my proposed clarification was the right way to go about it or not)?

If by "some clarification" you mean something like an explanatory article for Contract Management, then my answer is yes. If you mean yet another official issuance, then my answer is no.

Vern Edwards said:

P.S. The name of GSA's procedure was not "highest rated technical offer" (HRTO). It was "highest technically rated [offerors] with a fair and reasonable price." The award was not based on the technical rating alone. Price was a consideration.

Very useful to explain how this is different from the Qualifications-based engineering style procurements.  Prices come in with the proposals, they are actual offers.  Appreciate that distinction very much . . .

Did the fact that GSA conducted a thorough cost/price analysis have any bearing on the outcome? What would have happened if GSA had instead conducted a simple price evaluation based on adequate competition?

The depth of analysis appears to be immaterial to the decision, yet GAO did make a point to directly quote the steps GSA took.

I am wondering if this is similar to our best-value-for-budget or build-to-budget efforts. Essentially, we award to highest rated offer (technical solution) that is affordable.

I will do some in-depth reading and thinking soon. (On travel)

FrankJon said:

Did the fact that GSA conducted a thorough cost/price analysis have any bearing on the outcome? What would have happened if GSA had instead conducted a simple price evaluation based on adequate competition?

Nothing in the decision indicates that the holding was based on the thoroughness of the agency's cost/price analysis. I will not speculate on what would have happened had the agency done anything differently in that regard.

Jamaal Valentine said:

I am wondering if this is similar to our best-value-for-budget or build-to-budget efforts. Essentially, we award to highest rated offer (technical solution) that is affordable.

It is not similar. The decision turned in part on the agency's determination that award prices were fair and reasonable. FAR requires a determination of award price fairness and reasonableness. The fact that an agency can afford a price does not make that price fair and reasonable. Based on its past decisions, I do not think the GAO would have accepted a mere determination of affordability.

Vern Edwards said:

Based on its past decisions, I do not think the GAO would have accepted a mere determination of affordability.

Agreed. We always include a price fair and reasonbleness determination.

FrankJon said:

What would have happened if GSA had instead conducted a simple price evaluation based on adequate competition?

If you or anyone reading this is a Federal contracting frog: Do it! 

Explain to your leadership (after your management) how valuable and pivotal these changes can be, and then do it! (You might want to use a small, insignificant, or easily substituted requirement as your test case.)

If you are feeling froggy, jump, and then find a way to have a loser protest the method!

One of the big challenges now will be to develop appropriate adaptations of the "highest technically rated offerors with a fair and reasonable price" for single award non-IDIQ contracts.

I am thinking about an adaptation that I call “best qualified offeror with a fair and reasonable price.” This would be a form of qualifications-based selection, but with consideration of price as required by CICA and FAR 15.304(c)(1). I assume that everyone reading this has read the GAO's Sevetec decision and understand the principles on which the decision is based. 

Assume an acquisition for a fully-specified IT project or for five years of IT fully-specified support services. Assume that the acquisition is valued at about $50 million and that market research suggests that we’ll get between 10 to 15 responses to our solicitation. We would proceed as follows:

1. solicit information about offeror qualifications (experience, past performance, etc.) but not “narrative“ "technical" proposals or price proposals; we'll allow 30 days for submission;

2. evaluate offeror qualifications and rank offerors from best to worst (this step may entail making tradeoffs among nonprice factors); allow 30 - 60 days for evaluation;

3. identify the top two (or three, but not more) “best and most closely qualified” offerors;

4. solicit price proposals from the top two (or three) offerors; disclose the government’s budget; allow 30 to 60 days for submission;

5. evaluate price reasonableness; conduct discussions if necessary; allow 30 - 60 days for evaluation and discussion;

6. award to the best qualified offeror with a fair and reasonable price; no qualification/price tradeoffs.

One my objectives is to eliminate the cost of preparing  price proposals for all but the top two (or three) offerors while still getting adequate price competition and competitive pricing. I think that would be attractive to industry. Another objective is to reduce the government’s cost of price proposal evaluation.

We want adequate price competition so we won’t have to require submission of certified cost or pricing data. We want proposals from the top two (or three) also in case the best qualified offeror will not agree to a fair and reasonable price. Also, I am also concerned that the GAO would not go along with asking for a price from only the best qualified offeror. I worry that they think seeking only one price would not comply with CICA.

FrankJon said:

Did the fact that GSA conducted a thorough cost/price analysis have any bearing on the outcome? What would have happened if GSA had instead conducted a simple price evaluation based on adequate competition?

From a theory standpoint, I don't think one can satisfy the requirement of "adequate price competition" in a HTROFRP (highest technically rated offeror with a fair and reasonable price) environment because offerors are not competing on price, they are competing on based on technical ratings.  I suspect the GSA contracting team understood this and showed considerable foresight in fashioning the fair and reasonable price evaluation methodology in the manner they did.

One of the greatest benefits of this decision is the clarity it provides regarding our ability to evaluate in phases … e.g. non-priced factors first; and then price and price related factors from a smaller pool.

This has been widely rejected in some offices. The general belief was that price had to be considered in all phases.

Matthew Fleharty said:

From a theory standpoint, I don't think one can satisfy the requirement of "adequate price competition" in a HTROFRP (highest technically rated offeror with a fair and reasonable price) environment because offerors are not competing on price, they are competing on based on technical ratings.

Matthew: I think you need to reread FAR 15.403-1(c)(1) and then explain to us why there was not adequate price competition.

Vern Edwards said:

Matthew: I think you need to reread FAR 15.403-1(c)(1) and then explain to us why there was not adequate price competition.

Vern: I don't think the HTROFRP approach satisfies FAR 15.403-1(c)(1)(I)(A), particularly the requirement that "price is a substantial factor in source selection."  I think the consideration of price (which is what occurred in the HTROFRP approach to satisfy the CICA requirements) and price as a substantial factor in source selection are different.  The only substantial factor in source selection at play in HTROFRP is technical...I think those views are supported by the GAO's analysis regarding consideration of price on pg. 8 which states "The relatively low importance of price in an evaluation scheme that does not contemplate tradeoffs, as is the case here, is unobjectionable."

Maybe I'm wrong, I'm certainly always open to hearing other opinions on issues.  What are your thoughts Vern (and others)?

Matthew Fleharty said:

I don't think the HTROFRP approach satisfies FAR 15.403-1(c)(1)(I)(A), particularly the requirement that "price is a substantial factor in source selection."  I think the consideration of price (which is what occurred in the HTROFRP approach to satisfy the CICA requirements) and price as a substantial factor in source selection are different.  The only substantial factor in source selection at play in HTROFRP is technical...I think those views are supported by the GAO's analysis regarding consideration of price on pg. 8 which states "The relatively low importance of price in an evaluation scheme that does not contemplate tradeoffs, as is the case here, is unobjectionable."

That is why people are reluctant to innovate. There is always someone on some staff who is ready to find a reason why not. There is always someone ready to read a regulation as restrictively as possible.

FAR 15.403-1(c)(1)(i) says:

Quote

(1) Adequate price competition. A price is based on adequate price competition if—

(i) Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government's expressed requirement and if—

(A) Award will be made to the offeror whose proposal represents the best value (see 2.101) where price is a substantial factor in source selection; and

(B) There is no finding that the price of the otherwise successful offeror is unreasonable. Any finding that the price is unreasonable must be supported by a statement of the facts and approved at a level above the contracting officer....

FAR does not define substantial. What's your definition? Where did it come from? Why is it pertinent here?

My American Heritage Dictionary of the English Language 5th gives the following first defintiion of substantial: "Considerable in importance, value, degree, amount, or extent."

Why wasn't price considerable in importance in the Alliant 2 procurement?  GSA expressly stated that an offeror whose price was not fair and reasonable would not be selected for award: "Failure to establish fairness and reasonableness on any one of these aspects may result in disqualification for award." Why was price not substantial if a firm's price could result in its disqualification even if it was among the most higly technically rated? Why was price not "considerable in importance," especially in light of the fact that the fundamental purpose of all pricing procedures, including the submission of certified cost or pricing data, is to establish fairness and reasonableness?. See FAR 15.402(a).

Why do you say: "I think the consideration of price (which is what occurred in the HTROFRP approach to satisfy the CICA requirements) and price as a substantial factor in source selection are different"? Really? Even if price could result in the elimination of a highly technically rated offeror? Different how?

Why must you read the regulation as restrictively as possible, especially in light of the guidance in FAR 1.102? And what about FAR 15.403-1(c)(iii). How can we ever encourage people to innovate and take risks if they must continually contend with people who positively look for reasons not to try something? What's the motto: No can do?

Why look for reasons why not, Matthew? Why reach out for them? Why try to find them hiding in the closet? Tell me that you were just playing devil's advocate. Because if not, i'm disappointed.

Vern,

I'm just taking the information in front of me and analyzing it - I'm certainly not firm in my position, just trying to drive a discussion on the issue.  I find merit in your argument that disqualification could certainly meet the test of substantial; however, I quoted the court who decided the case in reaching my conclusion which I still think conflicts with the definition you provided.  Consider the juxtaposition between the two:

• Definition: "Considerable in importance" 
• GAO: "Relatively low importance of price..."

Can one have both "considerable" and "relatively low" at the same time?

As an aside, I don't tend to try to find the most restrictive interpretation - I also find value in determining the least restrictive, but a better exercise, and what I hope we're doing through this conversation/debate, is arriving at what is the most likely interpretation.

For what it's worth, I think Matthew raises an interesting and valid point of discussion (which is, after all, the purpose of message boards).

In Sevatec, price could not have been less of a factor. F&R determination is the bare minimum. If this meets the meaning of the word "substantial" in FAR 15.403-1(c)(1)(i), that renders this use of the word superfluous. Isn't it more likely that the drafters meant something by using this word? Am I missing something?

I don't try to anticipate GAO or court interpretations unless there is case law on the matter. What I do is decide what I want to do, build an argument in support, and then try to anticipate and deal with counterarguments.

You must distinguish between price as a substantial factor when determining the existence of (a) adequate price competition and (b) the GAO's requirement that price be a substantial factor as required by the GAO's interpretation of CICA. I know of no definitive interpretation or guidance with respect to the former. Although the terminology is the same, the underlying legal requirement is not.

I think substantial as used in FAR 15.403-1(c)(1) means nothing more than sufficiently influential to affect an offeror's pricing decision.

Vern Edwards said:

I think substantial as used in FAR 15.403-1(c)(1) means nothing more than sufficiently influential to affect an offeror's pricing decision.

I like this interpretation/definition.

EDIT: Would the process identified in the solicitation for assessing the fairness and reasonableness of price be what influences offerors' pricing decisions?  Could/should one expect different results if the promulgated technique is comparison of proposed prices received in response to the solicitation versus a more detailed analysis as used by the GSA team?

This was an interesting read...

So then what is a Government contracting scenario where price is not influential?

FrankJon said:

In Sevatec, price could not have been less of a factor.

Sure it _coul_d have. It could have been no factor at all.

FrankJon said:

F&R determination is the bare minimum.

What's wrong with "bare minimum"? Bare minimum doesn't mean not substantial. Even the minimum of something can be substantial. Think minimum altitude for a combat parachute operation.

FrankJon said:

So then what is a Government contracting scenario where price is not influential?

FrankJon said:

If this meets the meaning of the word "substantial" in FAR 15.403-1(c)(1)(i), that renders this use of the word superfluous.

That's an empty statement. The purpose of certified cost or pricing data is to provide a basis for determining fairness and reasonableness when there is no other basis for doing so. If you can determine fairness and reasonableness without cost or pricing data based on price analysis, then your are don't need certified cost or pricing data. See FAR 15.403-1(c)(iii).

FrankJon said:

Isn't it more likely that the drafters meant something by using this word?

I don't know. What did they say when you asked them? How shall we establish the degree of likelihood?

Another negativist speculator.

FrankJon said:

So then what is a Government contracting scenario where price is not influential?

Architect-engineer selections under FAR Subpart 36.6.

Broad agency announcements pursuant to FAR 35.016.

Sole source procurements.

Matthew Fleharty said:

Would the process identified in the solicitation for assessing the fairness and reasonableness of price be what influences offerors' pricing decisions?  Could/should one expect different results if the promulgated technique is comparison of proposed prices received in response to the solicitation versus a more detailed analysis as used by the GSA team?

I think that the influence of price competition on competing firms is most intensive in sealed bid procurements, in which price is the only evaluation factor and low price wins. Price competition doesn't get more intensive than that. So that's one extreme end of the price competitin spectrum.

I think that a case in which there will be 60 awards and no direct price comparisons provides the least intensive price competition. It's the other end of the price competition spectrum. Pricing is still competitive, and the competition still influences offerors, but the competition is not as intensive as in sealed bidding. 

But least intensive doesn't mean that price is not a substantial factor when the RFP says that a price that is not fair and reasonable might be disqualifying. A competitor cannot be sure what "fair and reasonable" will mean to the buyer or what the buyer's standards of fairness and reasonableness will be. In such a situation an offeror must be concerned about not asking for "too much," so competition will be influential, which is all that I think is required.

Remember that when talking about adequate price competition all we're talking about is justification for not demanding submission of certified cost or pricing data. FAR 15.403-1(c) is very liberal in that regard. Look, too, at FAR 15.402(a)(3).

Gordon Shumway said:

This was an interesting read...

Gordon! How are you, old friend? Give my best to Bob and Flo Shumway. How's the weather over in Melmac? Have you received any royalties for the many Internet memes bearing your likeness? PepeTheFrog is owed a king's fortune.

FrankJon said:

So then what is a Government contracting scenario where price is not influential?

Also, small business innovation research (SBIR) awards.

A better question is: Why do some contracting frogs (usually, Government employees) think a detailed and constricting statute or regulation must be required to make an intelligent decision about spending a budget? Statutory and regulatory straight-jackets about "evaluating price" are poor substitutes for competence, confidence, experience, critical thinking skills, and intelligence. If the contracting frog needs its webbed hands held to make decisions about pricing of a contract, is the contracting frog a contracting professional?

Vern Edwards said:

What's wrong with "bare minimum"?

Agreed. "Fair and reasonable." Will poor spending decisions be solved by burdensome statutes and regulations? Or is it more reasonable that individual or systemic failures should be punished or publicized? Are FOIA, GAO, Inspectors General, and the few remaining media outlets with integrity a better deterrent for malfeasance than all of the words in FAR Subpart 15.4?

Vern Edwards said:

A competitor cannot be sure what "fair and reasonable" will mean to the buyer or what the buyer's standards of fairness and reasonableness will be. In such a situation an offeror must be concerned about not asking for "too much," so competition will be influential, which is all that I think is required.

Agreed. Some Federal frogs are fantasizing that businesses might submit proposals, expecting 10+ competitors, and not be concerned with price competitiveness. Think it over, naysayers and those with no business experience!

On 1/14/2017 at 0:04 PM, PepeTheFrog said:

Gordon! How are you, old friend? Give my best to Bob and Flo Shumway. How's the weather over in Melmac? Have you received any royalties for the many Internet memes bearing your likeness? PepeTheFrog is owed a king's fortune.

Pepe! All is well, thank you for asking. I always enjoy your thorough responses on this message board, you are a great resource for us tadpoles.

On 1/12/2017 at 3:25 PM, Vern Edwards said:

I just spent an hour discussing this with Ralph Nash, and we think the approach and the decision are positively revolutionary. They key now is for people at the working level to conduct source selection to understand the key features of the HTRRP method and the principles that underlie the decision. Then the innovators at various agencies need to go to work to develop acquisition-specific variations and refinements.

I agree with Mr. Edwards. Understanding the features of the HTRRP method and the principles that underlie the decision are absolutely key to refining this strategy. Having a strong understanding of both will allow those at the working level to clearly articulate a business case to those who hold the decision making authority within a contracting shop. Going to battle against those who default to "we've always done it this way (tradeoff/LPTA)" will be one of the biggest challenges to advancing this new approach. 'Innovation' does seem to be the new hot topic in acquisition, but few actually put their money where their mouth is. Equally as important will be to recognize what parts of the specific approach GAO did not rule on. The decision clearly delineates several areas that were not protested, which should be fully understood when attempting to recreate something similar.

There is no doubt that the HTRRP method is a game changer. I am excited to see the acquisition community push the boundaries and refine it further. Bravo zulu GSA!

The key to understanding what GSA did and what the GAO decided is to think in terms of the best value continuum mentioned in FAR 15.101. Remember that "An agency can obtain best value in negotiated acquisitions by using any one or a combination of source selection approaches."

Since the enactment of the Competition in Contracting Act (CICA) in 1984 the GAO has consistently held that under the statute and FAR price has to be a significant factor in source selection.

Traditionally, before the GAO's Sevatec decision, there were two main types of source selection procedure in use: (1) tradeoff analysis and (2) LPTA. See FAR 15.101. With respect to those two types of procedures the GAO has consistently ruled that in order for price to be a significant factor in a source selection the government must directly compare the prices of competing offerors. Why? Because the procedures themselves require direct comparisons in order to determine relative lowness or to make tradeoffs. Any price evaluation procedure that did not involve direct price or cost comparisons made price only a "nominal" factor, which violated CICA and FAR.

Sevatec recognizes that FAR 15.101 permits the use of a third type of procedure: "highest technically rated offeror(s) with a fair and reasonable price" (HTRFRP). Under that procedure agencies need not compare offerors prices. Why? Because the procedure itself does not call for it. An agency using an HTRFRP type procedure may select the highest technically rated offeror if it has a fair and reasonable price. It need not compare that offeror's price with the prices of other offerors, because a determination of fairness and reasonableness can be made without such comparisons. Price is significant because an offeror cannot win if its price is considered to be too high.

Think of it this way: We know that when using an LPTA type procedure an agency must compare prices. It may then identify the offeror with the lowest price and determine whether its proposal is technically acceptable without evaluating the other offerors' technical proposals. See Environmental Restoration LLC, B-413781, Dec. 30, 2016. If the the technical proposal of the offeror with the lowest price is technically acceptable, then the game is over.

Well, when using an HTRFRP type procedure an agency must compare offerors' technical proposals. It may then identify the offeror that is the highest technically rated and determine whether its proposed price is fair and reasonable without evaluating the other offerors' price proposals. If the highest rated offeror has a fair and reasonable price, then the game is over.

In short, LPTA and HTRFRP are at opposite ends of the best value continuum. Moreover, there is more than one way to conduct an HTRFRP source selection. That's where innovation comes into play.

Vern Edwards said:

Price is significant because an offeror cannot win if its price is considered to be too high.

Vern,

I don't see why you need to make that argument. When the GAO responded to the protester's assertion that price was not a significant factor when using HTRFRP and was therefore inconsistent with prior decisions, they didn't say "Yes, it is consistent and here's why..." They essentially said "we were talking about the tradeoff process when we said that." After reading both Sevatec and Electronic Design, Inc., I think that the position they took in Electronic Design, Inc. et. al.--that price must be a "significant" factor in source selection--was overly broad.

Just for clarity's sake - CICA does not require price to be a significant factor, just a consideration (41 U.S. Code § 3306):

Quote

(c) Evaluation Factors.—

(1)In general.—In prescribing the evaluation factors to be included in each solicitation for competitive proposals, an executive agency shall—

(A) establish clearly the relative importance assigned to the evaluation factors and sub-factors, including the quality of the product or services to be provided (including technical capability, management capability, prior experience, and past performance of the offeror);

(B) include cost or price to the Federal Government as an evaluation factor that must be considered in the evaluation of proposals; and

(C) disclose to offerors whether all evaluation factors other than cost or price, when combined, are—

(i) significantly more important than cost or price;

(ii) approximately equal in importance to cost or price; or

(iii) significantly less important than cost or price.

Additionally, based on paragraph (c)(i), if other factors are significantly more important than cost or price, then wouldn't it follow that cost or price is not a significant factor in those circumstances?

Matthew Fleharty said:

Additionally, based on paragraph (c)(i), if other factors are significantly more important than cost or price, then wouldn't it follow that cost or price is not a significant factor in those circumstances?

No. It's just that the other factors are more important. Relative importance and the significance of a factor are two independent concepts.

Matthew Fleharty said:

Just for clarity's sake - CICA does not require price to be a significant factor, just a consideration (41 U.S. Code § 3306):

Correct. The notion that price be a "significant" factor is the GAO's historical interpretation of the statute.

Don:

Thanks for sharing your opinion.

Vern

Gordon Shumway said:

No. It's just that the other factors are more important. Relative importance and the significance of a factor are two independent concepts.

I can agree with that as a permissible argument, but I don't think my previous argument is wholly without merit.  The definitions of significant (from The American Heritage Dictionary) are:

Quote

1.

a. Having or expressing a meaning: Are the markings on the stone significant?

b. Having or expressing a covert or nonverbal meaning; suggestive: a significant glance.

2. Having or likely to have a major effect; important: a significant change in the tax laws.

3. Fairly large in amount or quantity: significant casualties; no significant opposition.

4. Statistics Of or relating to observations or occurrences that are too closely correlated to be attributed to chance and therefore indicate a systematic relationship.

For definition #2, could one fashion evaluation factors whose relative importance resulted in cost or price not "having or likely to have a major effect" on the selection decision?  For definition #3, I think "amount of quantity" could speak directly to the relative importance of the various evaluation factors.

I will grant, however, that I need to go do some more reading on the cases where the GAO used the "significant factor" rule to fully understand their position on the issue.

Matthew Fleharty said:

Just for clarity's sake - CICA does not require price to be a significant factor, just a consideration.

Don Mansfield said:

Correct. The notion that price be a "significant" factor is the GAO's historical interpretation of the statute.

Wrong. You must interpret a statute as a whole and not seize upon isolated words and sentences. When read as a whole, 10 USC 2305 and 41 USC 3306 clearly indicate that price must be significant. You appear to have an unfortunate tendency, Matthew, to land on a single word and set up house.

First, significant means only that price must be important enough to make a difference. It would make no sense to say that price has to be a consideration and then conclude that it need not be significant.

Second, for an interpretation of CICA, see SERCO INC.; CGI Federal Inc.; STG, Inc.; Artel, Inc.; Advanced Technology Systems Inc.; Apptis Inc.; Nortel Government Solutions, Inc.; and The Centech Group, Inc. v. United States, 81 Fed. Cl. 463 (March 8, 2008) at 491:

Quote

Long ago, Congress rejected the notion of giving contracting officers the authority to ignore price considerations in negotiated procurements. See Schoenbrod v. United States, 187 Ct.Cl. 627, 410 F.2d 400, 402–03 (1969); see also Paul v. United States, 371 U.S. 245, 252–53, 83 S.Ct. 426, 9 L.Ed.2d 292 (1963). Any final question in this regard were put to rest by the Competition in Contracting Act of 1984, Pub.L. No. 98–369, 98 Stat. 1175, which unambiguously requires:

"In prescribing the evaluation factors to be included in each solicitation for competitive proposals, [the agency] ... shall include cost or price to the Federal Government as an evaluation factor that must be considered in the evaluation of proposals."

41 U.S.C. § 253a(c)(1)(B). The legislative history of CICA indicates that this provision, as well as others designed to promote competition, were designed not only to allow the Federal government to obtain the “best products,” but to do so at the “best prices”—to avoid paying “$436 for an ordinary claw hammer ... where it can be bought for $7.” H.R. Rep. 98–1157, at 18 (1984); see also S. Rep. 98–50, at 32 (1983) (noting that “price” should have a “significant bearing on the selection for award”). “Congress intended for competition to affect the amount of money that the Government pays for goods and services,” two well-known commentators have stated, and “any competitive process that does not require firms to compete on the basis of the amount of money that they want, and, in which differences in the amount of money sought cannot affect the outcome of the competition, is not consistent with that intention.” Vernon J. Edwards and Ralph C. Nash, “Price as a ‘Significant’ Evaluation Factor: Has the GAO Misinterpreted CICA?,” 20 No. 8 Nash & Cibinic Rep. ¶ 40 (hereinafter “Price as a Significant Evaluation Factor”).

Giving effect to the statute and its legislative history, the FAR ordains that “[p]rice or cost to the Government shall be evaluated in every source selection.” FAR § 15.304(c)(1); see also Northrup Grumman Info. Tech., Inc., 2005 C.P.D. ¶ 45, 2005 WL 735939, at *9 (2005). Following this lead, GAO has repeatedly held that price must be a “significan tevaluation factor;” that it must be given “meaningful consideration.” See, e.g., MIL Corp., 2005 C.P.D. ¶ 29, 2004 WL 3190217, at *7 (2004); Eurest Support Servs., 2003 C.P.D. ¶ 139, 2001 WL 34118414, at *6 (2001); RTF/TCI/EAI Joint Venture, 98–2 C.P.D. ¶ 162, 1998 WL 911892, at *8 (1998); H.J. Group Ventures, Inc., 92–1 C.P.D. ¶ 203, 1992 WL 48487, at *3 (1992); see also Price as a Significant Evaluation Factor, supra (surveying cases). It follows, a fortiori, that price can neither be a nominal evaluation factor nor relegated to the role of being a mere consideration in determining whether a proposal is eligible for award. See Lockheed Missiles & Space Co., Inc. v. Bentsen, 4 F.3d 955, 959–60 (Fed.Cir.1993); MIL Corp., 2004 WL 3190217, at *7; Electronic Design, Inc., 98–2 C.P.D. 69, 1998 WL 600991, at *5–6 (1998). These are not minor distinctions—an evaluation that fails to give price its due consideration is inconsistent with CICA and cannot serve as a reasonable basis for an award. See MIL Corp., 2004 WL 3190217, at *7; Boeing, Sikorsky Aircraft Support, 97–2 C.P.D. ¶ 91, 1997 WL 611539, at * 10 (1997).

Matthew Fleharty said:

For definition #3, I think "amount of quantity" could speak directly to the relative importance of the various evaluation factors.

You might want to walk that one back a bit.

Matthew Fleharty said:

For definition #2, could one fashion evaluation factors whose relative importance resulted in cost or price not "having or likely to have a major effect" on the selection decision?

Itt sounds like you're sliding back into a tradeoff mentality. Also, this one hypothetical example you switched to is significantly different from your earlier point:

Matthew Fleharty said:

if other factors are significantly more important than cost or price, then wouldn't it follow that cost or price is not a significant factor in those circumstances?

Vern Edwards said:

Now all can see why innovation is so hard.

How Things Can Remain the Same

Inaction. Stagnation. When you discover a "green light" or opening for a new, efficient, common-sense form of contracting, think of reasons not to use it, especially in the mindset of the traditional methods not in question. Use your creative powers to get to "No!"

How Things Can Change

Upon discovering a "green light" or opening for a new, efficient, common-sense form of contracting, think of ways to repeat, extend, and spread its use:

On 1/13/2017 at 0:43 PM, Vern Edwards said:

am thinking about an adaptation that I call “best qualified offeror with a fair and reasonable price.” This would be a form of qualifications-based selection, but with consideration of price as required by CICA and FAR 15.304(c)(1).

Field implementation: Sell your new methods to your Federal leadership, with an emphasis on resources and time saved, and risks avoided:

Gordon Shumway said:

clearly articulate a business case to those who hold the decision making authority within a contracting shop. Going to battle against those who default to "we've always done it this way (tradeoff/LPTA)" will be one of the biggest challenges to advancing this new approach.

Professional reinforcement: Write and publish articles about the new methods, advocate their benefits, and socialize the new methods so the contracting profession no longer considers it "controversial" or "new." Get the ideas in the right frogs' heads. Did anyone notice that the article Vern Edwards wrote in the Nash & Cibinic Report (about price) was quoted by a Federal judge in the SERCO decision? That wasn't the first time, nor will it be the last time.

Proselytizing and advocacy: After the ideas are in the right frogs' heads, these frogs will start talking about it at NCMA, NDIA, and other organizations. Nobody wants to be "behind the times."

Legal and policy entrenchment: GAO and Federal courts will test and hopefully uphold the new methods. Eventually, your Federal attorneys will roll over and realize it's here to stay. The policy wonks will either stop fighting it, or maybe formally recognize it in guidance memos or other policy. Vern is totally against a FAR revision, but as a reality, not an ideal, that's not out of the question later on. Eventually, Congress might meddle and try to take credit for the new methods, but will at least provide rock-solid statutory protection, albeit unnecessary. 

Eventually, the new method will be routine (in appropriate source selections), and you will be embarrassed if you have not heard about it.

PepeTheFrog said:

Professional reinforcement: Write and publish articles about the new methods, advocate their benefits, and socialize the new methods so the contracting profession no longer considers it "controversial" or "new." Get the ideas in the right frogs' heads.

YES!

We have enough staffers and lawyers telling us that we can't do this or that. It distresses me when first rate field people and professors spend their time nitpicking commentary instead of coming up with and promoting adaptations and improvisations.

Appreciate the feedback and the references Vern.  I don't intend to parse words here or inhibit the usage of the HTRFRP process, I'm quite excited by its prospects; however, I'm curious: should some consideration be given to the fact that those prior decisions were made in an environment where the Best Value Continuum was thought to consist of LPTA through Tradeoff? I think so, which is why I'm trying to understand the potential difference (if any) between something being a "significant factor" and something being "meaningfully considered."

I'm not trying to hit the brakes here and not embrace HTRFRP or other acquisition improvements...but I know others will so I'd like to discuss the issues surrounding developments like these as much as possible so I'm prepared with credible arguments to move us forward.  Apologies in advance if my relative youth or lack of experience is inhibiting the process.

EDIT (adding context):  I think I'm getting hung up by the following two paragraphs from the Sevatec decision (emphasis added):

Quote

Based on the facts before us, we find nothing improper about the agency’s price evaluation. As explained by the agency, this procurement does not involve a tradeoff and the agency’s price evaluation will consist of determining the fairness and reasonableness of multiple aspects of the highest rated offerors’ proposed rates. Those decisions cited by the protesters where our Office has found that considering only the reasonableness of an offeror’s price proposal is an insufficient consideration of price, involved post-award protests under solicitations that used tradeoff source selection processes, not present here.10 See e.g. Kathpal Techs., Inc.; Computer & Hi-Tech Mgmt., Inc., supra.

In a tradeoff source selection process, the agency cannot so minimize the impact of price as to make it merely a “nominal evaluation factor” because the essence of the tradeoff process is an evaluation of price in relation to the perceived benefits of an offeror’s proposal. FAR § 15.101-1(c). The solicitation here expressly states that there will be no tradeoffs in the source selection. RFP at 250. Source selection will be made based solely on a “highest technically rated [ ] with a fair and reasonable price” evaluation scheme, with no comparison of an offeror’s price relative to the benefits of the proposal. Id. The relatively low importance of price in an evaluation scheme that does not contemplate tradeoffs, as is the case here, is unobjectionable.

PepeTheFrog said:

You might want to walk that one back a bit.

Why?  In a point scoring system where the amounts are transparent (assuming that is the technique used), wouldn't the difference/significance be readily apparent?

I'd like to hear your thoughts on the issue, but humans can't read frogs' minds so I'll need your assistance to understand your point.

"Significant,""meaningful," and "substantial" all mean the same to me, and the meaning is not complex. They mean that proposed prices must be evaluated in a way that makes offerors think that they will increase their chances of winning by sharpening their pencils and by not charging "too much."

Whatever method of price evaluation an agency chooses must do two things: (1) conform to the terms of the solicitation and (2) convince offerors that they must sharpen their pencils so as to not ask for what the buyer will think is "too much." In a negotiated procurement that does not mean lowest price or lowest evaluated price, but a price that a reasonable buyer would think is fair for what is being offered.

Price cannot be evaluated in a way that will not affect offeror thinking and proposal preparation. Any such method would be price evaluation in name only. That is, it would make price a nominal consideration.

Matthew Fleharty said:

Why?  In a point scoring system where the amounts are transparent (assuming that is the technique used), wouldn't the difference/significance be readily apparent?

The point scoring system was applied to the technical ratings, not price. Dissecting the differences in the allotted amounts wont help you address your concerns about the 'significance' of price.

Vern Edwards said:

Price cannot be evaluated in a way that will not affect offeror thinking and proposal preparation. Any such method would be price evaluation in name only. That is, it would make price a nominal consideration.

Winner winner chicken dinner!

Matthew Fleharty said:

For definition #3, I think "amount of quantity" could speak directly to the relative importance of the various evaluation factors.

Matthew Fleharty said:

PepeTheFrog said:

You might want to walk that one back a bit.

Why?  In a point scoring system where the amounts are transparent (assuming that is the technique used), wouldn't the difference/significance be readily apparent?

First, the reason PepeTheFrog said to walk it back a bit is because you relied on "Fairly large in amount or quantity" as the contextual definition of "significant," after you already identified "Having or likely to have a major effect; important" as the appropriate choice. Why consider the numerical meaning of "significant" in this context?

Second, why consider the numerical meaning when you're discussing the relative importance of evaluation factors?

Third, you didn't say anything about a "point scoring system where the amounts are transparent" in your earlier statement. This assumption appeared later. This is called "moving the goalposts." Make an assertion. Once refuted, reform your assertion and act as if the refutation was therefore invalid. In a posh accent (Upper Received Pronunciation), "Bad show, old boy!"

There is another Wifcon poster who was rightfully spanked (several times) for doing that repeatedly, and PepeTheFrog does not want you to follow suit. It irritates old frogs.

Vern Edwards said:

Now all can see why innovation is so hard. Here we have two of the smartest people on the board, Matthew and Don, wasting their time trying to do... what, exactly? Here we have an important and useful development, and the two of them devote their energies to sniping. They are are both wasting your time with such posts, but if that's their idea of having fun and making a contribution, so be it. If you want to quibble with Serco, please call Judge Allegra.

Vern,

Check your blog entry titled "Innovation: How Not To Go Down In Flames". Specifically,

Quote

In my experience, many, maybe most, working level proposals for innovation fail, because the initiators didn’t know what they were in for, didn’t understand the need for intelligence and tactical planning, and made a poor presentation. They wanted to beneficially change their agency’s behavior, but they didn’t know how to go about it in the right way.

Anyone attempting to try this new approach needs to have answers to the types of questions that Matthew is asking--they need to know what they are in for. Your accusations of sniping and wasting people's time are unwarranted.

Matthew Fleharty said:

Additionally, based on paragraph (c)(i), if other factors are significantly more important than cost or price, then wouldn't it follow that cost or price is not a significant factor in those circumstances?

For clarity -- All evaluation factors other than cost or price, when combined, are (significantly more important than; approximately equal in importance to; or significantly less important than) cost or price.

Personally, I think price could still be significant in your scenario. (Just not significantly more important than the other factors combined)

I think you raise valid questions those in the field are likely to face.

Don Mansfield said:

Anyone attempting to try this new approach needs to have answers to the types of questions that Matthew is asking--they need to know what they are in for. Your accusations of sniping and wasting people's time are unwarranted.

Don;

What do I gotta do? What DO I gotta do?

First, what everyone should know is that I spent an hour on the phone this afternoon with you and another hour with Matthew and we've discussed the questions that you both have asked. I think Matthew is satisfied. I don't know about you.

Second, I have already explained the meaning of "significant factor" in this thread. Moreover, I arranged for Bob to provide a link to the article that Nash and I wrote and that the GAO consulted, and there is the article that we wrote cited in Serco. What more can I do? Did you read what we've written? Where and how does it fall short? The GAO understood us. Judge Allegra understood us. Pepe understands. Gordon Shumway understands.

Third, the GAO decision strikes me as pretty clear, and I simply cannot understand the difficulty that you're having in understanding how the GSA's procedure made price a significant factor.

I don't think it's too much for me to ask that people go off somewhere by themselves and do some thinking.

Vern,

I didn't know I stood accused of sniping and wasting people's time when we spoke.

What do you think I don't understand?

Don:

I have edited two posts to remove my unjust criticisms of you and Matthew. They were the product of frustration. Sorry.

Now, have you thought up any procedural adaptations that people might use? Do you have any critique of the one that I suggested?

For those of you who have not seen the Alliant 2 solicitation, the contracting officer is John Cavadias of GSA, formerly of the Marine Corps. In developing the RFP John tailored the approach developed by Todd Richards, who conducted the OASIS GWAC acquisition discussed in the Court of Federal Claims decision in Octo Consulting Group, Inc., 117 Fed. Cl. 334 (2014), the case discussed in the article written by Prof. Nash and myself to which Bob provided a link early in this thread.

Both Todd and John had to battle skeptics in their agency in order to try something new. We owe them a debt of gratitude for their persistence. They have shown the kind of professional creative drive that we need more of. Much more. And they have given us something new using a tool already at our disposal, FAR 15.101, and without writing regulations and policy letters.

If you have followed this thread you have seen how hard it is to overcome embedded thinking and how persistent skepticism and the tendency to find restrictions in regulations and case law can be both frustrating and discouraging.

By the way, for the curious, the Alliant 2 solicitation is still available online. For potential innovators, Sections L and M are worthy of close study.

https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=a5b0c3c435e4a0450b9f169a2be362f2&_cview=1

Better hurry. I don't know how much longer it will be there.

Thanks, Vern. 

I haven't thought up any adaptations of my own. As far as the one you suggested, I don't see how the GAO could find fault in it and stay consistent with Sevatec.

Vern Edwards said:

If you have followed this thread you have seen how hard it is to overcome embedded thinking and how persistent skepticism and the tendency to find restrictions in regulations and case law can be both frustrating and discouraging.

I've re-read the thread and I haven't found a single post saying that your proposed adaptation is prohibited by statute or regulation, makes bad business sense, or is otherwise improper. When you proposed your adaptation, you wrote:

Quote

We want adequate price competition so we won’t have to require submission of certified cost or pricing data.

Both Matthew and FrankJon gave you feedback on your assumption that adequate price competition could exist in your scenario, but not whether your proposed technique could be used. 

I understand that you are excited by this and want to spread the word, but you are overstating the amount of resistance you are getting in this thread.

Don Mansfield said:

I understand that you are excited by this and want to spread the word, but you are overstating the amount of resistance you are getting in this thread.

No, I'm not. Measures of intellectual resistance are subjective. One type of resistance is the inability to stay on point. Another type is questioning a decision before reading and thinking deeply.

Some of the discussion here has been along the lines of

Salviati: "Do you think that's a beautiful mule?"

Simplicio: "Which is a mule's mother, the donkey or the horse? Or can it be either? Is a donkey the same as a burro?"

But thanks, Don, for your concern for my sanity.

Vern

I have read the discussion and beyond regarding the subject of this thread only wish that I was still in a CO chair to give this idea and its proposed variant  Vern Edwards has mentioned in this discussion a try.   The full dialog that occurred was very helpful in helping how one would approach in using.  Very valuable to the counsel I have the occasional opportunity to provide to those that do sit in a CO chair today.

In my career I handled procurements that bordered or eclipsed the $50 million mark but by and large they were much smaller and from my view the application of the approach (and as tweaked) have great opportunity for even the smaller procurement.  It may be karma but when a post appeared on this thread today -  /threads/3838-sps-pd2 – I thought to myself finally the missing link has been found to the idea I posted back in June of 2016.  I do not claim ownership to the idea as it has been discussed by many but now there is a way to actually make it work!

A perfect way to start 2017…………………………………

I heard from shall7 privately this morning and congratulate him for doing the hard work of writing an article and getting it published in a prestigious magazine. I look forward to reading his piece.

On 1/17/2017 at 10:55 AM, Vern Edwards said:

The key to understanding what GSA did and what the GAO decided is to think in terms of the best value continuum mentioned in FAR 15.101. Remember that "An agency can obtain best value in negotiated acquisitions by using any one or a combination of source selection approaches."

        "One of the big challenges now will be to develop appropriate adaptations of the "highest technically rated offerors with a fair and reasonable price" for single award non-IDIQ contracts."

Agree this is a big challenge and am excited by it.  It will be interesting to see how the GAO handles a protest to a task or delivery order that attempts to utilize the  HTROFRP methodology; perhaps noteworthy that such orders typically are not considered "negotiated acquisitions" like the Alliant 2 acquisition subject of the Sevatec decision.

Looking forward to thinking more critically about the strategy laid out in Vern's post from Friday 12:43pm in this thread and ways that we can make that or something like it work; thank you for that post Vern.  Part of the challenge is not only to develop an adaptation that is consistent with GAO's positions in Sevatec, but further convincing the budget-conscious program manager with the requirement and the funding that traditionally favors LPTA that in a single-award environment it is in the Government's best interests to use HTROFRP and award to the HTRO whose fair and reasonable price may be much higher than the other two offerors that were also highly rated (but not highest rated) and who also quoted fair and reasonable prices...of course such decisions regarding what value to assign non-price and price have always been and always will be a part of acquisition strategy.

I was wondering if a FP LOE acquisition would be appropriate for this method. If you imagine a requirement to perform a study for a fixed budget, you could embed a trade off evaluation under a highest rated technical approach by using e a combination of skills and number of hours (technical evaluation) and fair and reasonable price. Say you get four offers for a $200,000 FPLOE study:

Most Skilled for 100 hours at $200/hour

2nd Most Skilled for 160 hours at $125/hour

3rd Most Skilled for 250 Hours at $80/hour

Least Skilled for 200 hours at $100/hour

All rates are determined to be fair and reasonable. Who wins?

If your highest rated technical evaluation looked only at skill level then the Most Skilled Offer should win. If your highest rated technical evaluation looked at both skill level and hours then you could conceivably award to anyone. It seems that a tradeoff methodology could still exist even in a highest rated technical approach, and probably could never be completely eliminated.

As another observation, all prices need to be fair and reasonable in all situations, even those in a LPTA award to those in a best value award

SchruteBeets said:

It will be interesting to see how the GAO handles a protest to a task or delivery order that attempts to utilize the  HTROFRP methodology; perhaps noteworthy that such orders typically are not considered "negotiated acquisitions" like the Alliant 2 acquisition subject of the Sevatec decision.

For task orders/delivery orders under 16.505, we are using a different standard of competition ("fair opportunity"). Although the contracting officer "may exercise broad discretion in developing appropriate order placement procedures," one must be cautioned not to structure such selections like a FAR Part 15 source selection. Why make life harder than it has to be?! Innovation in the area of order submission requirements is a wide open field that few seem inclined to tackle... I've seen far too often FAR Part 15 Section L & M's copy and pasted into order RFPs. I guess those 1102s don't already have enough work to do...

Whynot said:

If your highest rated technical evaluation looked only at skill level then the Most Skilled Offer should win. If your highest rated technical evaluation looked at both skill level and hours then you could conceivably award to anyone. It seems that a tradeoff methodology could still exist even in a highest rated technical approach, and probably could never be completely eliminated.

If it's not clear how one would be determined the highest rated technical approach, wouldn't your evaluation criteria be flawed?

Whynot said:

As another observation, all prices need to be fair and reasonable in all situations, even those in a LPTA award to those in a best value award

Under LPTA, the government is still obtaining "best value."

In case anyone missed it on the homepage:

/legacy/a/4b0e91de957e6124.pdf

I am obviously quite late to this thread but I wasn't turned on to this approach until I was lucky enough to have Mr. Nash teach a portion of a class I attended in April. (He was really enthusiastic about it.)  I am planning on using it for a rather large IT services procurement (~$300M over five years)*, but predictably enough, I'm encountering significant bureaucratic pushback up to the SPE level. I provided the Sevatac to the relevant people and have described the benefits of the approach. But I'm getting a lot of  "we've never done this before" and "what do the lawyers think" and "this sounds risky." Has anyone at the working level used this yet? And if so, how did you convince the bureaucracy to go along? I certainly haven't given up the fight, but experience from others would be helpful!

* Some additional details: Planning on using 8.4 and issuing 2 BPAs.  Previous contract used 8.4 and tradeoff process for a single award service contract.