IDIQ Decision

LucyQ said:

Is there anything we can do about it?

Yes, you can offer a lower price.

Don Mansfield said:

Yes, you can offer a lower price.

Touchè lol

You won't be able to compel the Government to make award.

It's curious that they went through negotiations with you (did you agree to a price?) and then decided against it. But it's far from unheard of, especially in the last two weeks of September.

kevlar51 said:

You won't be able to compel the Government to make award.

It's curious that they went through negotiations with you (did you agree to a price?) and then decided against it. But it's far from unheard of, especially in the last two weeks of September.

No, we didn't agree on price. Perhaps they knew it might take some time to finish negotiations and wanted to secure something else. I just wanted to know a reason for a chance at rebuttal. 

Thanks!

kevlar51 said:

It's curious that they went through negotiations with you (did you agree to a price?) and then decided against it. But it's far from unheard of, especially in the last two weeks of September.

I have a theory in search of evidence that more bad contracting decisions are made in September than in all the rest of the months of the year, combined.

here_2_help said:

I have a theory in search of evidence that more bad contracting decisions are made in September than in all the rest of the months of the year, combined.

This wouldn't be unique to government contracting.  See the following:

https://hbr.org/2017/08/the-end-of-quarter-sales-rush-costs-companies-money

here_2_help said:

more bad contracting decisions are made in September than in all the rest of the months of the year, combined.

As an auditor, would it be wrong to only review acquisitions made in September?  It may be statistically skewed but the weaknesses would certainly be identified.

jwomack said:

As an auditor, would it be wrong to only review acquisitions made in September?  It may be statistically skewed but the weaknesses would certainly be identified.

That wouldn't work - if you're trying to establish that acquisition outcomes for awards made in September are "weak" that requires a basis for comparison (worse than what?).  If you only review/sample acquisitions in September, you'll only be able to compare them to one another which wouldn't allow you to properly test the hypothesis.

Comparison to what is proper.  “Weakness” being a polite word for incompetence.

jwomack said:

Comparison to what is proper.  “Weakness” being a polite word for incompetence.

The problem with that line of argument is that "proper" is indeterminate. There are courses of action that everyone will agree are proper. There are courses of action that everyone will agree are improper. And then there are courses of action the propriety of which are at issue, with some thinking them proper and others thinking them improper. All you have to do to verify the truth of what I just wrote is read this Forum.

I think almost everyone will agree that many decisions made during the last month of the fiscal year are made in haste, and decisions made in haste are often suboptimal in terms of process and outcome.

On 9/22/2017 at 11:39 AM, here_2_help said:

I have a theory in search of evidence that more bad contracting decisions are made in September than in all the rest of the months of the year, combined.

I teach one such example in my design-build class, where the Air Force consciously WASTED $1.5 million on an $8 million award for construction of a dormitory at Hurlburt AFB in Florida back in September of 1994 or 1995, so that their  execution rate would look better. 

It was a fully designed IFB by The Army Corps of Engineers that was converted to an RFP because all bids were at least $1.5 million over the Programmed amount.  

After conversion and receipt of proposals from five of the seven original bidders came in,  I conducted discussions with the two lowest offerors who were most competitive.  The lowest price offeror, who I had great respect for, told me that the design was extremely inefficient and commercially impractical due to market conditions in Florida and the South East. After two recent hurricanes that year, the closest mason labor force and masonry subs available to team with the local prime were in North Carolina. The three story masonry framed dorm with face brick finish would require at least four  masonry sub mobilizations and demobs, plus travel and perform while on site, plus inflated masonry prices, which accounted for the entire $1.5 million overrun in their price. The president of the firm said they would drop their price $1.5 million if the government would change the RFP to make the contractor responsible for the structural design with performance specs for the frame and the requirement to match the look of the adjacent dorms that the new dorm design was based on.  He rattled off about four different feasible structural alternatives using matching brick veneer or even precast concrete panels using colored concrete and special brick faced form liners.  The contractor and our office both were experienced with the Design-build delivery method. 

We went back to the Air Force, recommending that proposed solution.  Since it was September 15th, the Air Force felt the risk of award later than 30 September would be unacceptable and said they would provide the additional $1.5 million for award, as designed. 

I was so incensed that I was able to require our District to not specify the structural solution on any design-build project for the Air Force for the next two years until I transferred to another Corps organization.  

After I left, the District went back to prescribing specific framing and materials for the Air Force and back to overrunning the PA on every Air Force project. 

It was a lesson learned that. As a part of the Army MILCON Transformation team,  I was able to assure that the model RFP used for billions of dollars of army design-build construction between 2006 and 2013, was written, using performance based design criteria for structural framing and for exterior materials.  

I'm still pissed off over that one (just one ) example of waste by the Air Force and others who have the pre-conception that the government must prescribe every architectural or structural requirement to meet the look and feel of their design theme.

We told the Air Force that we could make an award within the budget by 30 September but it fell on deaf ears.

joel hoffman said:

We went back to the Air Force, recommending that proposed solution.  Since it was September 15th, the Air Force felt the risk of award later than 30 September would be unacceptable and said they would provide the additional $1.5 million for award, as designed. 

I was so incensed that I was able to require our District to not specify the structural solution on any design-build project for the Air Force for the next two years until I transferred to another Corps organization.

So they didn't accept your recommendation and you think that was a bad decision. Given that this happened more than 20 years ago, we are unlikely to hear from the other side. This is a classic example of what I just wrote, "There are courses of action that everyone will agree are proper. There are courses of action that everyone will agree are improper. And then there are courses of action the propriety of which are at issue, with some thinking them proper and others thinking them improper."

Vern, I don't really care what you think about my example or who I offend with that story . I know that we would have saved the taxpayers a million and 1/2 dollars and the customer were only concerned about an award by 30 September. And it has been typical of the Air Force to overprescribe every design build project that I have been involved with or reviewed since. The only design-build project that  I was directly involved with that could not be awarded was a fire station at the same installation. The RFP included at least a 50 to 60% design solution  in the RFP.  The same customer again refused to budge an inch. 

Those have been very effective lessons learned that I've taught for over 20 years in our design build course and which  reinforced our performance based design criteria approach in the Army Milcon Transformation Model  RFP. The story gets  the attention of almost every student in attendance.

 For the dormitory project, we could've issued a quick amendment with four pictures of the dorms to be matched, about three paragraphs of  performance based structural  design criteria and design references and a couple of pages of our standard design build contract requirements.

Edit: I know for a fact that  performance ratings for both the Air Force project managers and the Corps of Engineers project managers, at that time, were more heavily dependent upon their project award execution rate than  the quality or cost of the projects that they were in charge of.

joel hoffman said:

Vern, I don't really care what you think about my example or who I offend with that story . I know that we would have saved the taxpayers a million and 1/2 dollars and the customer were only concerned about an award by 30 September. And it has been typical of the Air Force to overprescribe every design build project that I have been involved with or reviewed since. The only design-build project that  I was directly involved with that could not be awarded was a fire station at the same installation. The RFP included at least a 50 to 60% design solution  in the RFP.  The same customer again refused to budge an inch.

Again, those are your opinions and we can't hear from the other side. And my point is that there are some issues on which reasonable people can disagree about what is "proper" in such situations.

Consider what you said:

joel hoffman said:

We went back to the Air Force, recommending that proposed solution.  Since it was September 15th, the Air Force felt the risk of award later than 30 September would be unacceptable and said they would provide the additional $1.5 million for award, as designed.

So they had two weeks to make your recommendations happen. What were those recommendations:

joel hoffman said:

The president of the firm said they would drop their price $1.5 million if the government would change the RFP to make the contractor responsible for the structural design with performance specs for the frame and the requirement to match the look of the adjacent dorms that the new dorm design was based on.  He rattled off about four different feasible structural alternatives using matching brick veneer or even precast concrete panels using colored concrete and special brick faced form liners.

That reads like the concept that needed some fleshing out, and the Air Force didn't think it could be done in time. They would have lost their funds and the project would have been delayed for who knows how long. They decided to proceed as planned. You think they made a bad decision, and maybe they did. You're entitled to your opinion, but I can see how reasonable people would disagree about what was "proper," which is my only point.

joel hoffman said:

And it has been typical of the Air Force to overprescribe every design build project that I have been involved with or reviewed since.

Again, your opinion. But how can we evaluate it? And by the way, Joel, design-build was a pretty new idea in Government construction in 1995. I was advising on design-build at that time, and a lot of organizations were having trouble letting go of design.

Cool off.

Vern , i was responding to H2H's opinion.

There was no legal requirement to award the AF MILCON project  by 30 September.  However, the biggest lesson learned was not to prescribe the structural system or specific exterior architectural materials.  

The Air Force was in the process of making D-B their default method at that time. D-B wasn't the issue. I suspect that the metrics for the personnel performance ratings of the individual decision makers were the underlying issues and motivation to make an award at any price within the Statutory limits by 30 September.

joel hoffman said:

There was no legal requirement to award the AF MILCON project  by 30 September.

Then I don't understand why you told us this:

joel hoffman said:

Since it was September 15th, the Air Force felt the risk of award later than 30 September would be unacceptable and said they would provide the additional $1.5 million for award, as designed.

Obviously, you haven't worked Air Force MILCON programs (5 year money) in a long time. One of their goals was to award all Current year MILCON projects by the end of the fiscal year. Even when Congress delayed authorization and appropriations til mid FY.  Everything would get backed up for September award along with the O&M funded projects.

Which kicks in the supply and demand factors. The seller is well aware of time pressures to award and the slew of solicitations. Which kicks in haste and stupid decisions.  

We could have made an award within two weeks. Why the heck would we convert the IFB to an RFP (FAR 14.404-1) , ask the bidders for price proposals and hold price discussions with them if we couldn't follow through with an amendment, revised price proposals and award? 

Our District was doing lots of negotiated design-build and construction acquisitions for both Air Force and Army then.

We could have easily done it within three to four weeks with an award one to two weeks into the next FY - to save $1.5 million?  But we could also have squeezed it in within two weeks with some concentrated effort and overtime.

In addition to handling the source selection and negotiation process, as a professional engineer, I could have written the revised technical requirements myself or could have suprervised  Engineering Division's efforts.  I often came up with design fixes during source selections. 

Our negotiated acquisitions didn't take longer than WWII.

joel hoffman said:

In addition to handling the source selection and negotiation process, as a professional engineer, I could have written the revised technical requirements myself or could have suprervised  Engineering Division's efforts.  I often came up with design fixes during source selections.

I guess the Air Force just didn't know it had such a prodigy handling its procurement.  If only you'd had similar skills of persuasion.  The USACE should have just kept you to itself.

Vern Edwards said:

I guess the Air Force just didn't know it had such a prodigy handling its procurement.  If only you'd had similar skills of persuasion.  The USACE should have just kept you to itself.

While tongue in cheek, anyone reading this should heed the lesson - without the authority to make the decision, a good idea will go to waste unless the you have the ability to convince the other party that the idea is, in fact, good.  You may have to try by speaking, writing, or briefing (and that medium will likely be chosen for you).  Practice those skills so that when you have a good idea, you'll be ready.  If for some reason you feel you're inadequate or unlikely to succeed (you may lack the trust or "political capital"), have the humility to find someone who is and let them help (by pitching the idea on your behalf, drafting the letter/email/document, or reviewing your work) so that the good idea is more likely to be accepted.

I wasn't involved in the attempted persuasion.  Our PM's were the POC's and handled those communications with the customer's PMs . The contractor also told me later how wasteful and stupid he thought the customer's decision was.

joel hoffman said:

The contractor also told me later how wasteful and stupid he thought the customer's decision was.

And we all know that contractors are never wasteful and stupid. Or deceptive and dishonest.

You really don't know a darned thing about that acquisition or about that person. The man was known to be a straight shooter. Tough but truthful. We asked him why the price for the current dorm project was so much higher than the previous years' prices for the same design.  He told us why the contract, as designed, was not affordable. It was a cut and paste of earlier projects and didn't fit the market conditions at the time. He had built the last dorm project using the same design. There weren't  any local mason labor force or masonry subcontractors available due to recent hurricanes.  The structural framing and cladding design was very inefficient.   He asked us what really mattered to the Air Force. We learned that their  objective was that the new dorm must match the appearance of the other dorms. He told us how we could meet their underlying objective and committed to do that and to meet the budget. The man doesn't deserve your degradation.  Feel free to stop now. 

I didnt say the Air Force personnel were stupid.  I said that they made a wasteful and stupid decision. That decision needlessly cost the taxpayers 23% more than the programmed amount for the project - a $1.5 million dollar bust.  25% over the PA is the statutory limit for gosh sakes. There were seven bidders. His firm was local and he did lots of work at the bases in Florida. He was the low bidder and the only one who really knew the problem.   He was the only one willing to work with the government and the taxpayers to find a solution. 

The customer chose to meet a self imposed deadline for award to make their metric for timeliness of award look better, regardless of cost. The project had a duration of about 18 months and could have been awarded within 12-13 months into the 60 month period of availability of the funds for obligation. 

Believe it or not, some of us actually believe in serving both the mission and the taxpayers.

joel hoffman said:

You really don't know a darned thing about that acquisition or about that person.

I know only what you've told me, which is just your side of the truth.

joel hoffman said:

Believe it or not, some of us actually believe in serving both the mission and the taxpayers.

Sanctimony and self-righteousness.

here_2_help:

Quote

I have a theory in search of evidence that more bad contracting decisions are made in September than in all the rest of the months of the year, combined.

Some theories become nightmares in implementation.  

jwomack:

Quote

As an auditor, would it be wrong to only review acquisitions made in September?  It may be statistically skewed but the weaknesses would certainly be identified.

Before we start, we have to determine if September is different from any other month.  One easy preliminary effort is to compare contract actions and funds obligated for all months, for all agencies, and see if September is any different from another month.  If that effort shows that September is any different from the 11 other months, you're in trouble.  Here are some reasons:

1. Everyone (with newspaper knowledge only) knows that government wastes billions of dollars in September and you have to prove it or look like an ass, 
2. Your organization will want to staff your effort immmediately increasing your own project's costs, 
3. The staff you receive won't know the difference between a collie and a contract action,
4. If you are forced into a sampling strategy, you will lose control of the design of the work to some or all extent,
5. If you have to put boots on the ground, the boots will be in the wrong part of the world and travel money is scarce,
6. This looming disaster will consume 1 to 2 years of your career and you will be forgotten during that time,
7. Etc, etc, etc, and it only gets worse after 1 through 6.

With that in mind, the information system you use is your only friend (of course, eventually, you will have to validate the information in that system but that is another problem).  If you don't kow the difference between a collie and contract action, resign and find something else to do.  If you continue, you're dead meat. 

OK, you know what you are doing, make that information system sing and tell you everything it has in it.  If something comes up unexpectedly, you can make it explain.  The more detail the system provides, the better.  That information system might be manipulated to answer many of your questions, it may help limit the effort to something that is doable, such as reviewing September contract actions, contract awards, etc. only, or it may help you to kill this project if it is hopeless.  Your goal is to redesign your project into something that is humanly possible.  Forget any comparison of one month's actions to another.  There are too many variables when you consider 1 through 7 above.  If you are lucky,  you may identify a handful of contracting activites that you can focus on.  If you do that, you will have to explain why you did.  In the end, your project will have to have integrity, be fair, and have a use.  If it doesn't, fight to kill it.  With the information system supporting you, you will have a fighting chance at survival.

[NOTE:  I added a few words to my #1 above so readers will know that I was being facetious with the "Everyone Knows."]

There are three issues:

1. Does the government obligate a disproportionate amount of its annual appropriations during the last month of the fiscal year?

2. What constitutes a "wasteful" obligation?

3. Are end-of-year obligations any more "wasteful" than obligations made during the first 11 months of the fiscal year?

It's "common knowledge" that the answer to the first question is yes. There are differences of opinion about the answer to the second question and no generally accepted proposition. (What's "wasteful" is in the eye of the beholder.) And it's a common assumption that the answer to the third question is yes.

According to Curbing the Surge in Year-End Federal Government Spending: Reforming “Use It or Lose It” Rules, by Fichtner and Greene, a 2014 Mercatus Working Paper out of George Mason University, there is not a lot of empirical evidence in support of answers to questions 1 and 3. The authors of that study surveyed the literature and did their own analysis of some data. They looked at the U.S., at state governments, and at some foreign governments. They were especially interested in determining whether use-it-or-lose-it spending policies were contributing to unbalanced spending and waste and whether a carry-over or rollover policy would be better.

https://www.mercatus.org/system/files/Fichtner-Year-End-Spending.pdf

Some choice quotes, with footnotes omitted:

Quote

The “use it or lose it” phenomenon refers to the propensity of US government agencies to spend unused financial resources toward the end of the fiscal year out of fear that leftover resources will be returned to the Department of the Treasury, and will prompt future congressional budget cuts for the agency. While anecdotes and media stories of year-end spending surges are widespread, empirical support for year-end spending surges or the motivation behind them is significantly less available.

Quote

In 1998, the US General Accounting Office (GAO)7 reported that the number of yearend spending surges had declined since 1980, when Congress and the GAO first looked at the issue. Among more than 3,200 Inspectors General reports, the GAO found only one that linked poor contracting practices with a high rate of year-end spending. However, the GAO cautions that its analysis is limited because of “agencies’ widespread reporting noncompliance” and “the absence of complete and accurate reporting” of agencies’ spending.

Quote

Panel member Robert D. Behn of Harvard University argues that year-end spending surges may in fact be “socially optimal” and doubts the assumption that they are inherently wasteful.

Quote

A 2009 International Monetary Fund report found that year-end spending surges are a “commonly observed phenomenon in government administrations.” Such surges have occurred in Canada, Taiwan, and the United Kingdom, to name a few countries.

Quote

Over the years and across departments, the trend of executive departments spending a disproportionately large amount of resources in the final month of the fiscal year is apparent, regardless of administration, party control of Congress, or delays in finalizing agency appropriations.

Quote

Significantly more literature exists on how to curb year-end spending than empirical analyses on the extent to which such spending is wasteful.

Anecdotal accounts of year-end waste do not prove any general proposition and are very often nothing but a one-sided expression of opinion. My own experience as a contracting officer and chief of a contracting office was to have a rush of procurements at the end of the FY, but I don't know whether that rush produced disproportionate amounts of obligation. It never occurred to me to record data in that regard. I obligated what I was asked to obligate when I could do it. Most were projects that had been sitting around waiting for funding and that happened because other projects fell through and left money on the table. Although I think it is reasonable to assume that a hurry-up procurement is more likely to be wasteful than a well-planned one, I cannot prove any general proposition in that regard. I can think of some procurements that I thought were wasteful despite being well-planned.

As contracting practitioners, we need to think this through before jumping on the bandwagon of unproven assertion and accusation.

Well said Vern.

On 9/21/2017 at 6:45 PM, LucyQ said:

We have an IDIQ with a set of NSNs. They wanted to add more NSNs and they had us submit a quote. After negotiation they said the price was too high and will not award. Is there anything we can do about it? I'm assuming they found the price to not be fair and reasonable but can we ask the exact decision why they won't award. If we don't agree with that decision, is there any way we can protest somewhere? This is under 10M and I guess it would have been a scope change because they would have added NSNs to the contract where they could then issue DO's under.

Wow. This thread has wandered so far off the Reservation  that we can't even SEE the Reservation anymore.

That happens sometimes.

Anybody willing to jump on the bandwagon of prohibiting use of UCAS in the fourth quarter of the government fiscal year?

About wandering "off the reservation." Here is the OP:

On 9/21/2017 at 3:45 PM, LucyQ said:

We have an IDIQ with a set of NSNs. They wanted to add more NSNs and they had us submit a quote. After negotiation they said the price was too high and will not award. Is there anything we can do about it? I'm assuming they found the price to not be fair and reasonable but can we ask the exact decision why they won't award. If we don't agree with that decision, is there any way we can protest somewhere? This is under 10M and I guess it would have been a scope change because they would have added NSNs to the contract where they could then issue DO's under.

That was covered in the first response:

On 9/21/2017 at 3:56 PM, Don Mansfield said:

Yes, you can offer a lower price.

Really, what more was there to say?

Then someone offered a general proposition:

On 9/22/2017 at 9:39 AM, here_2_help said:

I have a theory in search of evidence that more bad contracting decisions are made in September than in all the rest of the months of the year, combined.

And the the thread was off and running, although the route was circuitous because someone decided to tell a personal story that had no bearing on the general proposition. All in all, the response to the general proposition has been more interesting than the opening post.

here_2_help said:

Anybody willing to jump on the bandwagon of prohibiting use of UCAS in the fourth quarter of the government fiscal year?

No. Burn all bandwagons. If you need a UCA, do a UCA.

The GAO Redbook says the following, "GAO has conducted several studies of year-end spending and has consistently reported that year-end spending is not inherently more or less wasteful than spending at any other time of the year. In one report, GAO suggested that year-end spending surges are really symptomatic of a larger problem—inadequate management of budget execution—and that the apportionment process could be more effectively used to provide the desired management." (Vol. 1, Ch. 5, p. 5-17.)

Unfortunately, out of the five studies cited, four are from the 1980s and one dates from 1998.

See Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement, a oft-cited 2010 study of year-end spending conducted by two researchers for the National Bureau of Economic Research (NBER). The study was based on IT acquisitions between 2004 and 2009. It reached the following conclusion:

Quote

Many organizations have budgets that expire at the end of the fiscal year. Faced with uncertainty over future spending demands, these organizations have an incentive to build up a rainy day fund over the first part of the year. If demand does not materialize, they must rush to spend these resources on low quality projects at the end of the year. We test these predictions using data on procurement spending by the U.S. federal government. Using contract-level data on a near-universe of federal contracts, we document that spending in the last week of the year is 4.9 times higher than the rest-of-the-year weekly average. Using a newly available dataset that tracks the quality of $130 billion in information technology (I.T.) projects, we show that quality scores for year-end projects are 2.2 to 5.6 times more likely to be below the central value.

The reference to "quality" refers to the inherent value of the project for which the acquisition is being conducted, not to the conduct of the acquisition process.

The paper is interesting, but somewhat technical. Keep in mind that it is based entirely on IT acquisitions. Other studies of other types of acquisitions show that in some agencies the highest rate of obligation is during the first quarter of the fiscal year. That probably reflects annual obligations for kicking off large dollar severable support services.

Here is a link to a short nontechnical summary of the NBER study. In the summary you'll find a link to the complete study report, which is 67 pages long.

http://www.nber.org/digest/mar14/w19481.html

Heads up: There appear to be slightly different versions of this study report, some dated 2010 and some dated 2013. However, as best I can tell, they report the same conclusions.

Here's a typical anecdotal, sensationalist report that was published in the Washington Times in 2015. This is the kind of thing that the public reads and judges you on.

Federal agencies end fiscal year with shopping spree: $8,788 in hand sanitizer, $33,000 in toilet paper among last-minute buys

http://www.washingtontimes.com/news/2015/oct/1/golden-hammer-federal-agencies-end-fiscal-year-wit/

Vern Edwards said:

No. Burn all bandwagons. If you need a UCA, do a UCA.

No problem.

As soon as you hold COs and PMs personally liable for failing to definitize in accordance with statute. Otherwise, I'm not going to burn that bandwagon.

here_2_help said:

No problem.

As soon as you hold COs and PMs personally liable for failing to definitize in accordance with statute. Otherwise, I'm not going to burn that bandwagon.

Because the failure to definitize in accordance with statute is always solely the fault of the COs and PMs...

This is the type of reactionary behavior that, if it catches on and snowballs, would result in poor acquisition policy (though I'll gladly eat these words if you provide a sound argument for your "bandwagon").

You can't hold COs personally _liable (_or responsible), because they must rely on others in their own and the contractor's organization during the definitization process in order to reach a settlement. COs lead the government definitization team, but they don't have dictatorial powers. And unilateral decisions will probably lead to litigation.

Definitization may involve more than just price and time settlements. There may be unresolved technical issues. It is not just a matter of processing paperwork.

COs should not be judged on the basis of outcomes that they cannot control through their personal performance.

Vern Edwards said:

You can't hold COs personally _liable (_or responsible), because they must rely on others in their own and the contractor's organization during the definitization process in order to reach a settlement. COs lead the government definitization team, but they don't have dictatorial powers. And unilateral decisions will probably lead to litigation.

Definitization may involve more than just price and time settlements. There may be unresolved technical issues. It is not just a matter of processing paperwork.

COs should not be judged on the basis of outcomes that they cannot control through their personal performance.

So since everybody is responsible, then nobody is responsible. I'm not buying it for a second. Who has the Certificate of Appointment?

The statute says what the statute says. If the CO and PM are not willing to comply then they shouldn't issue a UCA. If they do so then it's on them to comply with the statute.

And please do not give me that hoary line about how somehow the contractor didn't do something and now everybody gets to blame the contractor for not doing their jobs. If the contractor submits a definitization proposal then it's fulfilled its responsibility and everything else is on the government team.

***

Hey, look at that reservation way over there!

here_2_help said:

As soon as you hold COs and PMs personally liable for failing to definitize in accordance with statute.

here_2_help said:

The statute says what the statute says. If the CO and PM are not willing to comply then they shouldn't issue a UCA. If they do so then it's on them to comply with the statute.

By "the statute" I presume you are referring to 10 U.S.C. § 2326, "Undefinitized contractual actions: restrictions." By "comply" I presume you are referring to the limitation on obligation of funds in paragraph (b) and the time limits in paragraphs (b)(1) and ( (f).

If so, please cite the specific language of the statute that says a CO or a PM is to be held "personally liable" for failing to comply with those requirements or that requires an agency head to hold them personally liable. Please cite anything anywhere in the statute that requires a CO or a PM to be "personally liable" for anything.

And what do you mean by "personally liable"? Liable in what way? What is the nature of the liability to which you would hold them?

Please be specific, H2H, since you obviously think it's important and since any such policy could be detrimental. You are making the argument, so you owe it to us to explain how you reached your conclusion about personal liability.

here_2_help said:

If the contractor submits a definitization proposal then it's fulfilled its responsibility and everything else is on the government team.

***

Hey, look at that reservation way over there!

I guess that means the contractor has no responsibility to negotiate in good faith, provide timely counter offers, etc.  This is the same garbage I heard once in negotiations:

• Contractor: "We submitted a proposal with cost and pricing data, so the price is the price." 
• Government: "Well, we analyzed your proposal/data and found these mistakes in your proposal.  We also disagree with the analysis in these BoEs.  Therefore, we think the fair and reasonable price is actually lower than what you proposed."
• Contractor: "Well, we put a lot of time into that proposal and we submitted cost and pricing data, so the price is the price."
• Government: "Well, we would like to discuss our findings, ask some questions, and work towards reaching agreement on what a fair and reasonable price is..."
• Contractor:  "What more do you want from us?!  It's all in the proposal and the data.  The price is the price."

I suspect you know this, but just in case, when a UCA is in place, the two parties have yet to reach an agreement on the full terms and conditions of the contract (that's why it is called an "undefinitized contract action").  Now this is the part where you seem to be on an island with your bandwagon: when two parties have not reached an agreement, both parties have the responsibility to negotiate in good faith until they reach an agreement (or agree to go their separate ways).  A CO/PM cannot do that on their own and it is naïve to think otherwise...by it's very nature, an agreement requires a responsible/authorized individual from each party and the CO/PM only represent one of the two parties (think of it as a mathematical equation: Government Concurrence + Contractor Concurrence = Agreement).  The qualifying proposal will probably have errors and will certainly have areas that the Government takes exception to - when that happens, if we accept your proposition, the contractor would have no responsibility to engage the Government in discussions over their findings and disagreements.  How is that productive?  Agreement would be impossible, so...on this island with your bandwagon, it seems contractors would merely submit qualifying proposals and then Contracting Officers, "with the approval of the head of the contracting activity, [would] determine a reasonable price or fee...subject to Contractor appeal as provided in the Disputes clause" (DFARS 252.217-7027( c ))...I'm not sure that's preferable to the status quo, but you've yet to provide a sound argument as to why that would be better than negotiations (even when they experience a delay in reaching agreement) or why prohibiting UCAs in the fourth quarter or holding COs and PMs personally liable are good policies.

Just to see if your views are consistent, should members of the contractor's team be held personally liable for failure to submit a qualifying proposal IAW the definitization schedule?

Moreover, on large and complex contracts, especially development contracts, technical, schedule, and budget issues might arise during the period between issuance of the UCA and submission of the definitization proposal. Such matters will have to be worked out and may delay the submission of a proposal. Such matters might arise between submission of the proposal and the date set for commencement of negotiations, or even during negotiations.

Persons who have negotiated complex UCA definitizations are familiar with those problems.

Purely anecdotal, but it's been years since I saw a true UCA. Large contractors I've worked with tend to shy away from them and have established rather strict internal approval requirements. I imagine it's tough for a CO to put one in place for similar reasons. Both sides of the table seem to think that a UCA is a huge advantage for the other party--Gov't sees it as a license for the contractor to run costs up and contractors see it as a license for the Gov't to kill their profit on the backend.

Since these stricter internal requirements have been put in place, I don't see UCAs. I instead see lots of ATPs, NTPs, Letter Contracts, At-risk-orders, etc.  Basically come up with anything you want. Just don't call it a "UCA" because that has to get signed off up top.

kevlar51 said:

I don't see UCAs. I instead see lots of ATPs, NTPs, Letter Contracts....

Emphasis added.

I'm pretty sure that letter contracts are UCAs. See DFARS 217.7401(d).

Vern Edwards said:

Emphasis added.

I'm pretty sure that letter contracts are UCAs. See DFARS 217.7401(d).

Please don't use facts and citations to prevent my decent into disgruntled oldmanhood.

Understood, as one old guy to another.

On 9/27/2017 at 7:34 PM, Vern Edwards said:

All in all, the response to the general proposition has been more interesting than the opening post.

  Touche'...

One other legitimate UCA circumstance where "no one was at fault" was what we had to deal with in the 1990's:  defense contractors constantly being bought/sold /merged, which caused havoc in the negotiation process.  You could hardly crack a proposal open before it was pulled back because guys like GE Aerospace became Martin Marietta became Lockheed Martin over a time frame measured in months (test gear for the F-14 IRST in my case, i.e., not even terribly complicated).  All of whose C&P data required some level of DCAA blessing before we could conclude negotiations.  Hence, a UCA until the CAS issues were resolved.

Adam Smith's fault I suppose?

(I, for one, don't believe there is any relationship between UCAs and FY-end spending.)

Admittedly I did not read all of the referenced documents in this thread word for word but in a scan one thing it appears not discussed is that  many agencies have instituted cut-off dates way before the end of the fiscal year.  I too remember the day of hurry up to beat midnight on either June 30 and then Sept 30 but now the hurry up is sooner.

One but not the perfect example I found this in my search.   Many agencies demand similar dates so that all end of FY obligations occur in early September or even August.  The example here suggests the same ideal while not coming out and saying it.  Noted, and I may be too cynical, but a SAP that is open market  has to be in to acquisition 6 months ahead of the end of a FY?    Oh the tangled web that the acquisition community has made for itself!

https://www.va.gov/officeofacquisitionoperations/customers/cutoffDates.asp

As my office assigns the 50 reqs that we just received this morning, I must chuckle.  We have accepted over 500 orders since our cut off of Sept 15th.  How can you stop the requests when the funds are not released until September.  We just got Congressional Notice on about a billion $ Thursday night. Of course they were ready for award already and awaiting the funds  but still there is a lot of work to finalize the award in the system.   We plan to be here till midnight like every year.

You know how contractors have to certify things like accurate, current & complete cost or pricing data? Or that the indirect costs in the final billing rate proposal are free of expressly unallowable costs?

I'm proposing that every UCA issued from now on must contain a certification, signed by the CO and one level higher, that the UCA is NOT being issued because of concerns about expiring funds, and that the signatories agree that they will use best efforts to definitize the contract within the statutory limits. Under penalty of perjury.

Would that be too overwhelming of a step? Or is the status quo just fine with everybody?

On 9/29/2017 at 10:15 AM, REA'n Maker said:

One other legitimate UCA circumstance where "no one was at fault" was what we had to deal with in the 1990's:  defense contractors constantly being bought/sold /merged, which caused havoc in the negotiation process.  You could hardly crack a proposal open before it was pulled back because guys like GE Aerospace became Martin Marietta became Lockheed Martin over a time frame measured in months (test gear for the F-14 IRST in my case, i.e., not even terribly complicated).  All of whose C&P data required some level of DCAA blessing before we could conclude negotiations.  Hence, a UCA until the CAS issues were resolved.

Adam Smith's fault I suppose?

In the 20 year-old anecdote that you put forward to justify the status quo, the fault was the CO. Instead of negotiating the CO relied like a crutch on DCAA to tell them what to do. ("... C&P data required some level of DCAA blessing before we could conclude negotiations.") No, it didn't. The CO was under no obligation to request field pricing assistance. That was a choice. And it was obviously a poor one.

here_2_help said:

In the 20 year-old anecdote that you put forward to justify the status quo, the fault was the CO. Instead of negotiating the CO relied like a crutch on DCAA to tell them what to do. ("... C&P data required some level of DCAA blessing before we could conclude negotiations.") No, it didn't. The CO was under no obligation to request field pricing assistance. That was a choice. And it was obviously a poor one.

Where do you get this idea that the CO is some almighty with unilateral authority to do whatever he/she pleases?  The CO is only a CO because he/she has a certificate of appointment from some higher authority - usually in the case of UCAs, that higher authority is also the CO’s clearance authority and the CO has to obtain that individual’s approval prior to definitizing the contract action (per the regulations, local procedures, AND to keep his/her certificate of appointment and job).  That clearance authority typically requires field pricing assistance whenever the DFARS PGI says the CO should obtain it.  So foregoing field pricing assistance isn’t necessarily a choice the CO can make on his/her own.

here_2_help said:

You know how contractors have to certify things like accurate, current & complete cost or pricing data? Or that the indirect costs in the final billing rate proposal are free of expressly unallowable costs?

I'm proposing that every UCA issued from now on must contain a certification, signed by the CO and one level higher, that the UCA is NOT being issued because of concerns about expiring funds, and that the signatories agree that they will use best efforts to definitize the contract within the statutory limits. Under penalty of perjury.

Would that be too overwhelming of a step? Or is the status quo just fine with everybody?

No. The status quo is not fine. I propose the repeal of 10 U.S.C. § 2326. It should never have been enacted. It is nothing but Congressional micromanagement of the Executive Branch, and it is entirely ridiculous in terms of its underlying expectations and timeframes. Congress itself has made routine compliance impracticable through its legislative malpractice.

If you want to complain about something, complain about Congress's perennial failure to authorize appropriations and appropriate funds in a timely manner.

here_2_help said:

In the 20 year-old anecdote that you put forward to justify the status quo, the fault was the CO. Instead of negotiating the CO relied like a crutch on DCAA to tell them what to do. ("... C&P data required some level of DCAA blessing before we could conclude negotiations.") No, it didn't. The CO was under no obligation to request field pricing assistance. That was a choice. And it was obviously a poor one.

Those assertions are not just false, they're absurd. The decision to get field pricing support is not merely a matter of CO personal choice when definitizing large UCAs.

I deeoly respect your knowledge of government contract costs and pricing, but it has failed you in this matter. You clearly do not understand bureaucratic and programmatic practice within government contracting activities. You're in over your head in this topic, and there's no reason to further entertain or debate your ideas about it.

Vern Edwards said:

Those assertions are not just false, they're absurd. The decision to get field pricing support is not merely a matter of CO personal choice when definitizing large UCAs.

I deeoly respect your knowledge of government contract costs and pricing, but it has failed you in this matter. You clearly do not understand bureaucratic and programmatic practice within government contracting activities. You're in over your head in this topic, and there's no reason to further entertain or debate your ideas about it.

You are right. I don't understand them. All I have to go on is the FAR. I accept that's limited knowledge but what else can I go on, since I'm not a government employee?

"The contracting officer is responsible for evaluating the reasonableness of the offered prices. ... The contracting officer may request the advice and assistance of other experts to ensure that an appropriate analysis is performed. ... The contracting officer should request field pricing assistance when the information available at the buying activity is inadequate to determine a fair and reasonable price."

I don't see any imperatives in the quote above. In my opinion, the FAR language gives the CO discretion. If agency policy takes away that discretion, then that's a problem. If the CO has discretion but uses it poorly, that's a problem

Further, I accept my modest proposals in this thread may seem absurd to contracting professionals ... but we have to start somewhere. I would start by empowering the CO and then holding the CO accountable. I realize the PM has a critical role to play, so I would hold the PM accountable as well.

We have to start somewhere. Saying that we need to start with Congress, all 535 of the legislators, is just as absurd as anything I've posted.

Vern, I accept that you are done debating these points. Honestly, I never expected to gain any serious traction. Acquisition reform is too hard because the system is too complex and the practitioners are too entrenched in the way it's always been done.

here_2_help said:

I don't see any imperatives in the quote above. In my opinion, the FAR language gives the CO discretion. If agency policy takes away that discretion, then that's a problem. If the CO has discretion but uses it poorly, that's a problem.

here_2_help said:

I would start by empowering the CO and then holding the CO accountable. I realize the PM has a critical role to play, so I would hold the PM accountable as well.

Our two proposals may be absurd, but they're absurd for different reasons. Yours is absurd due to content. Mine is absurd due to process.

I just do not think that you appreciate the complexities of the issues that can arise during definitization of a UCA.

I once negotiated large dollar value letter contracts for development of spacecraft ground systems and other projects. The dollar values were such that some needed approval by a three-star, four-star, or even Secretary of the Air Force. Some of my PNMs and other file documents had to be reviewed by local contract review committee and JAG and sometimes by headquarters contract review committee and JAG. The idea that I could or would perform cost analysis and conduct negotiations without getting field pricing support would have been rejected out of hand by all levels of review.

Furthermore, you must understand that field pricing support can be a political issue involving with CACOs, ACOs, and DCAA. They might have issues of their own with the contractor (FPRAs and other transactions) that must be coordinated with contracting officers in various contracting activities. To leave them out would be unacceptable at many levels. The FAR is not the only consideration. Go to DPAP's webpage and read some of the policy documents.

Your proposal would cover contracts for which definitization proposals can be enormous--hundreds of millions to billions--with very large and complex companies that wield extraordinary market and political power, such that no CO could perform a decent cost analysis without field pricing support. 

The issues in such transactions are often multi-faceted and complex. It is naive to think that COs are little dictators who can act entirely on their own. They might be such on small dollar contracts for run of the mill stuff. But large, programmatic transactions have bureaucratic implications that you do not seem to understand or acknowledge. To say that COs who rely on DCAA are weak and rely on crutches when they don't have to is just not fair. It indicates that you don't understand what goes on in the real world of real organizations. Really, I'm dumbfounded by some of the things you are saying about CO responsibility with respect to UCAs. Many of the COs handling them are top of the line, top notch people. The very best. They are not missing deadlines because of negligence.

I was late on a few UCAs in my time, and I always had a good reason for it. If a CO is negligent or incompetent, then they should be disciplined or replaced in the normal course of management. But to recommend that they should be "personally liable" (whatever that means) when they miss a deadline is to recommend flat out bad policy.

Do you want to see how complex the issues can be? Read United Technologies Corp. - Pratt & Whitney Aircraft Group, Government Products Division, ASBCA 27830, 90-2 BCA ¶ 22772. Thirty-eight pages that'll make your head spin. The decision section begins: "The dispute between the parties involves their failure to definitize fully a letter contract. In pricing these contracts, they could not agree whether independent research and development as well as bid and proposal costs (IR & D/B & P) allocable to this contract were subject to the advance agreement ceilings between the United States Department of Defense and appellant."

Below is proposed Section 823 from the next NDAA.  It must go to conference before it is passed so this is only a possibility.  This may be of interest.  

---------------------------------------------------------------------------------------------------------------------------------

SEC. 823. LIMITATION ON UNILATERAL DEFINITIZATION.

     (a) Limitation.—Section 2326 of title 10, United States Code, is amended—

          (1) by redesignating subsections (c), (d), (e), (f), (g), (h), and (i) as subsections (d), (e), (f), (g), (h), (i), and (j) respectively; and

          (2) by inserting after subsection (b) the following new subsection:

     “(c) Limitation On Unilateral Definitization By The Contracting Officer.—The following limitation applies to all undefinitized contractual actions with a not to exceed value of $50,000,000 or greater:

          “(1) If agreement is not reached on contractual terms, specifications, and price by a date certain, as required under subsection (b)(1), the contracting officer may not unilaterally definitize those terms, specifications and price over the objection of the contractor until—

               “(A) the head of the agency approves the definitization in writing;

               “(B) the contracting officer provides the written approval to the contractor; and

               “(C) the head of the agency notifies the congressional defense committees of the approval.

       “(2) The contract modification unilaterally definitizing the action shall not take effect until 60 calendar days after the congressional defense committees have been notified under subparagraph (C) of such paragraph.”.

     (b) Conforming Regulations.—Not later than 120 days after the date of the enactment of this Act, the Secretary of Defense shall revise the Department of Defense Supplement to the Federal Acquisition Regulations to conform with the amendments made by subsection (a).

From last year's NDAA (the DFARS does not currently reflect these changes):

Quote

SEC. 811. MODIFIED RESTRICTIONS ON UNDEFINITIZED CONTRACTUAL ACTIONS.

    Section 2326 of title 10, United States Code, is amended--
            (1) in subsection (e)--
                    (A) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B);
                    (B) by inserting ``(1)'' before ``The head''; and
                    (C) by adding at the end the following new paragraph:
    ``(2) If a contractor submits a qualifying proposal to definitize an undefinitized contractual action and the contracting officer for such
action definitizes the contract after the end of the 180-day period beginning on the date on which the contractor submitted the qualifying
proposal, the head of the agency concerned shall ensure that the profit allowed on the contract accurately reflects the cost risk of the
contractor as such risk existed on the date the contractor submitted the qualifying proposal.'';
            (2) by redesignating subsections (f) and (g) as subsections (h) and (i), respectively;
            (3) by inserting after subsection (e) the following new subsections:
   ``(f) Time Limit.--No undefinitized contractual action may extend beyond 90 days without a written determination by the Secretary of the
military department concerned, the head of the Defense Agency concerned, the commander of the combatant command concerned, or the Under Secretary of Defense for Acquisition, Technology, and Logistics (as applicable) that it is in the best interests of the military department, the Defense Agency, the combatant command, or the Department of Defense, respectively, to continue the action.

``(g) Foreign Military Contracts.--(1) Except as provided in paragraph (2), a contracting officer of the Department of Defense may not enter into an undefinitized contractual action for a foreign military sale unless the contractual action provides for agreement upon contractual terms, specifications, and price by the end of the 180-day period described in subsection (b)(1)(A).
     ``(2) The requirement under paragraph (1) may be waived in accordance with subsection (b)(4).''; and
            (4) in subsection (i), as redesignated by paragraph (2)--
                    (A) in paragraph (1)--
                          (i) by striking subparagraph (A); and
                          (ii) by redesignating subparagraphs (B), (C),
                      and (D) as subparagraphs (A), (B), and (C),
                      respectively; and
                    (B) in paragraph (2), by striking ``complete and meaningful audits'' and all that follows through the period and inserting ``a meaningful audit of the information contained in the proposal.''.

Industry lobbyists have been hard at work.

On 9/30/2017 at 2:20 PM, here_2_help said:

In the 20 year-old anecdote that you put forward to justify the status quo, the fault was the CO. Instead of negotiating the CO relied like a crutch on DCAA to tell them what to do. ("... C&P data required some level of DCAA blessing before we could conclude negotiations.") No, it didn't. The CO was under no obligation to request field pricing assistance. That was a choice. And it was obviously a poor one.

"Shall" does not imply "choice": 

15.403-4  Requiring certified cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. chapter 35).

(a)(1) The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies.

Nor is it a 20-year-old "anecdote"; it is a 100% valid and relevant scenario to this day, particularly in DoD.

The CO did make many, many judgement calls based on imperfect information, as was his job.  I myself was very adept at explaining in a PNM how DCAA misinterpreted a specific cost treatment; I was the one having the ongoing negotiations after all, and DCAA had only one shot at it. But spit-balling is not an option when procuring a developmental item/major system.    

Perhaps you didn't understand the core point: the CO could do nothing about a contractor who pulled back a negotiated Part 15 proposal due to the fact that the contractor could not certify the C&P data (or even GAAP for that matter),  i.e., they didn't have a priced proposal on the table.   The fleet wasn't going to wait to deploy until the bean counters worked their magic, and negotiating with yourself is generally considered poor trade-craft... 

(PS - If any CO "relied like a crutch on DCAA", they'd spend their entire career hopping around on one leg. )

So, absent some additional conditional qualifier such as "when", what Is the imperative meaning of the term "shall" followed by "only if"?

Take the example given, what all is the Contracting Officer required to refrain from doing and/or do by the language found at FAR 15.403-4 (a)(1)?