Determining Fair and Reasonable LPTA

I'm speechless.

Vern Edwards said:

I'm speechless.

Probably for the best.  😁

brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Brent,

Let's think this through for a moment - imagine all your circumstances were identical except you only received on offer in response to you RFP...what would you do in that situation?  Would it be possible for you to determine whether or not that single offer has a fair and reasonable price? 

Bob - this question should go in the Beginners Forum.

First, let me say I believe that you award to the LPTA because you have competitive pricing, someone disagreed.

Matthew, I would award to them if I can reasonably conclude that the offer was submitted with the expectation of competition.

See FAR 15.404-1(b)(2)(i).

If you received several proposals in response to your solicitation, you may reasonably assume that the lowest among them is reasonable.  Absent any reason to find otherwise, call it reasonable and move on.

Forget any talk about an expectation of competition in the lowest-price offeror's mind -- don't even go there -- you have real competition.

ji20874 said:

If you received several proposals in response to your solicitation, you may reasonably assume that the lowest among them is reasonable.  Absent any reason to find otherwise, call it reasonable and move on.

Even without knowing whether the other proposals were technically acceptable?

brent said:

First, let me say I believe that you award to the LPTA because you have competitive pricing, someone disagreed.

Matthew, I would award to them if I can reasonably conclude that the offer was submitted with the expectation of competition.

Brent,

Could you finish that line of thought?  Maybe the reason you're running into disagreement is because you're not adequately/fully explaining your position/argument...

Food for thought: Is "competitive pricing" the only way to determine whether or not a price is fair and reasonable?

brent said:

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Whether or not prices are fair and reasonable is a separate issue from 'How to LPTA.'  

Let's just focus on LPTA evaluation methodology. There are two typical methodology for LPTA. 

1. Rank responses by price.  Starting with the lowest price, determine if it's technically acceptable.  If yes, stop.  If no, proceed to the next lowest price and repeat.  This is most common methodology in the federal government.  I will die on this hill.  I have conducting training where I discussed this exact topic.  1102s across a dozen (civilian) agencies have said this is, by far, the most common way they 'evaluate.'  I have spoken to 1102s who have told me this is the *only* way they have ever done an evaluation under FAR 8.4 or 13.

2. Evaluate all responses for acceptability.  Select lowest price of the acceptable responses.  My GS-15 mandates use of this methodology for FAR 8.4/12/13 LPTA stuff, despite the protests of staff.

For LPTA Version 1, there is **most of the time** a reasonable assumption that several quotes/offers/responses/etc. received is sufficient competition for price reasonableness **most of the time**, regardless of whether the responses are technically acceptable or not. 

I would note, however, that if its not bordering on self-evident what 'technically acceptable' means, you probably don't want to do Method 1.

When I am pretending to be a CO (when the actual CO is out sick), I would not sign off on 'the expectation of competition' establishing price reasonableness if only one offer was received.  I would refer you to FAR 13-106-3 (a) (2), 15.404, etc.

Matthew Fleharty said:

Brent,

Could you finish that line of thought?  Maybe the reason you're running into disagreement is because you're not adequately/fully explaining your position/argument...

Food for thought: Is "competitive pricing" the only way to determine whether or not a price is fair and reasonable?

My position is that there is no good reason to disregard other proposed pricing in the MATOC pool, even if they all have not yet been determined technically acceptable.  I believed the competitive pricing in my situation determined fair and reasonable.  Someone disagreed.

Food for thought:  No, although it is preferred.

Generally, we do not include the prices of unacceptable offers in our price analysis. But in the original posting, there has been no finding of an unacceptable offer.  

In an ordering situation using LPTA, the price analysis can occur before the technical evaluation -- compare all the proposed prices received in response to the solicitation (amenable to FAR 15.404-1(b)(2)(i)), and rank offers from lowest price to highest price -- absent a reason for finding otherwise, one may generally assume that the lowest-price among many is a reasonable price.  If the lowest price seems reasonable based on competition, evaluate the low-price offer for technical merit.  In the original posting, the solicitation (under schedule contracts or multiple-award IDIQ contracts) said the agency would look for a technically acceptable offer starting with the lowest-price offer, and stop the technical evaluations when it finds one. 

This discussion might be helpful:

On ‎9‎/‎15‎/‎2018 at 1:50 AM, brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Yes, there are several price analysis techniques (see FAR 15.404-1( b )(2)).

LPTA is a source selection process (FAR 15.101-2). As a process, LPTA doesn't necessarily rely on an effective competition as effective competitions relate to price fair and reasonableness determinations.

You might help yourself by clearly explaining what you mean by technically acceptable. Are you talking about an evaluation factor rating; or as in legally acceptable, i.e., legally eligible for award. (The offeror or offer can be unacceptable for many reason, but not all reasons affect price. Remember, as a general rule, a solicitation requirement is "material" if failure to satisfy it would affect price, quantity, quality, or delivery.)

The Contract Pricing Reference Guide states when using proposed prices for comparison:

“any proposed price used as a basis for price analysis must meet the following general requirements: 
•The price must be part of an offer that meets Government requirements." (i.e., Do not use the price from any offer that you would not consider for contract award as a basis for price analysis, nor an offer from a firm that you have determined is nonresponsible.)

If you want to use the other offerors pricing as a comparison, you should ensure their pricing is acceptable for a comparative analysis. The CO has to ensure comparisons are valid or make adjustments as necessary.

Jamaal Valentine said:

You might help yourself by clearly explaining what you mean by technically unacceptable.

Jamaal, the original poster has never written about "technically unacceptable."  We do not want to conflate technically unacceptable with technically unevaluated.  In the original posting, the higher price offers are all technically unevaluated -- the lowest price offer is technically acceptable and has a reasonable price (based on comparison with other prices received from the solicitation, and inasmuch as there is apparently no reason to find otherwise and none of the comparisons are with unacceptable or nonresponsible offers).

On 9/14/2018 at 11:50 AM, brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Restating the question : Can the lowest price be considered fair and reasonable if you don’t know whether the price of any other offer reflects a price or cost to meet the contract requirements?  

We don’t know how straightforwardl or technically complex the solicitation technical requirements are, how much effort is required to evaluate an offer, whether the lowest priced offer is technically acceptable (i.e., did you evaluate one or more lower priced offers before you found the one you intend to award to) the range of pricing (e.g., a wide variation, closely priced, etc.) or how many offers were submitted (the extent of interest and competition involved). 

To me, it would depend upon an assessment of how confident you are that the competition reflects pricing to meet the contract requirements. Thus, it would seem obvious to me that some judgement is necessary for such a determination. Blind comparisons may not be meaningful, depending upon the nature and circumstances involved. 

You might realize, for instance,  that you need to evaluate the next one or two lowest priced offers and,  if technically o.k., you can assure yourself that you have reasonable price competition for comparison purposes. 

I think that a contracting professional is expected to use and provide good business judgement. Simply seeking the simplest cookbook recipes, for “one answer to fit all circumstances” doesn’t cut the mustard for me.

Brent,

Some people want you to violate your solicitation and continue to evaluate higher-priced offers for technical acceptability even after you have found one at a lowest price.  They are seemingly concerned that the price of your lowest-price offer might be too high, even though they know nothing about your acquisition.  They seem to think that the higher-prices offers you received are likely (or at least possibly) technically unacceptable or are from nonresponsible offerors, and want you to PROVE that is not so — only then, they say, can you decide that the lowest-price (and technically acceptable) offer’s price is not too high.  They want to eliminate all risk, rather than reasonably manage risk.

I believe that price analysis can be made by comparison with other prices received from the solicitation.  FAR 15.404-1(b)(2)(i) says so.  Inasmuch as there is apparently no reason to find otherwise and none of the comparisons are with unacceptable or nonresponsible offers, I’m okay with your decision to call the lowest-price technically acceptable offer’s price reasonable.  I say this because I am willing to trust you professionally and your knowledge of your acquisition.  I reject statements that your approach is a blind comparison.

Are you the contracting officer?  If so, I support your decision.  If you had some reason to find otherwise, you would have said so.  If you are not the contacting officer, and you are unable to persuade him or her that the lowest-price technically acceptable offer’s price is not too high, then he or she has to make some choices — do you open discussions with only this one offer to lower the price (without affecting the technical acceptability rating), or do you violate your solicitation and evaluate all or some of the higher-prices offers, or do you do some unnecessary work to show some other way to determine the lowest price is fair and reasonable, or do you cancel the solicitation and start over, or something else?  

I prefer common sense over pedantry.

All I was doing was answering the original question, as I rephrased it to what I thought he meant. 

Nobody here knows the context from the details not provided. 

“Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?” 

Can it be “considered fair and reasonable ?” Maybe legally yes, according to the stated solicitation  procedure, although one might not really know one way or the other, . Not enough context known.  It would certainly help if the government had an independent clue. It doesn’t take an acquisition professional to make such a declaration using that method. 

Does it make “common sense” as a generic answer to the stated question?  No.  It depends upon the facts and circumstances.  I’ve had LPTAs where none of the prices were affordable or fair and reasonable. Found out what it took to resolve and did it. You probably would too if you were spending your own  money.

joel hoffman said:

"Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?”

Joel, how about an answer like "YES, in the context of the original posting, provided the contracting officer has no reason to find otherwise"?

ji20874 said:

I believe that price analysis can be made by comparison with other prices received from the solicitation.  FAR 15.404-1(b)(2)(i) says so.

FAR 15.404-1(b)(2)(i) states, “Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).”

In other words, there must be adequate price competition to rely on a comparison of proposed prices.  “Adequate price competition” requires, in part that “Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement…” FAR 15.403-1(c)(1)(i) (emphasis added).  How can you know whether a competing offer satisfies the Government’s expressed requirement if you have not determined technical acceptability?  I do not agree that comparison of proposed prices establishes price reasonableness when only one offeror has been determined technical acceptable.  To do so ignores the requirement that there be “adequate price competition.”

Of course, as others have mentioned, the OP does not have to evaluate all the offers as there are other ways to determine price reasonableness.  In fact, the prices may have already been found fair and reasonable.  This is a TO competition.  Brent, were ceiling prices established and found fair and reasonable when the contract was awarded?  If so, is there any reason those prices would not still be fair and reasonable?

On 9/14/2018 at 9:50 AM, brent said:

Awarding a competitive task order.  RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Can the lowest price be considered fair and reasonable when you do not know if the other offers are technically acceptable?

Suppose that you conduct an LPTA process and you've used the technique described and discussed in "STREAMLINING SOURCE SELECTION: A Labor-Saving Approach To Lowest Price Technically Acceptable Source Selection," The Nash & Cibinic Report (May 2009):

Quote

We are always looking for ways to streamline the source selection process, and I recently received a question that reminded us of one interesting way to do so. The question was this: When using the “lowest price technically acceptable” approach to source selection described in Federal Acquisition Regulation 15.101-2, may an agency select the lowest priced technically acceptable offer without evaluating the technical acceptability of all proposals received? For example, if an agency receives 20 proposals, may it identify the proposal with the lowest price, evaluate that proposal's technical acceptability, and, if the proposal is technically acceptable, award the contract without evaluating the technical acceptability of the remaining proposals?

We think the answer is yes, assuming that the agency is planning to award without discussions.

Suppose that you are a contract specialist and you conduct such an LPTA. I am your contracting officer and the source selection authority, and you come to me and say:

We got ten proposals. The lowest priced offeror is technically acceptable, so I recommend award to that firm. The price is $1,570,098.

Being a pedant, and believing that managing is teaching, I ask: Is the price fair and reasonable?

You say: Yes.

I ask: How did you reach that conclusion?

You say: Because it's lower than all the other prices.

How should I respond to that?

On ‎9‎/‎16‎/‎2018 at 10:19 AM, ji20874 said:

Jamaal, the original poster has never written about "technically unacceptable."

I should have typed technically acceptable. However, my understanding is that technically acceptable/unacceptable determinations are necessary if the OP wants to rely on a comparison of proposed prices. (At least two findings of acceptable as it relates to price comparisons, not necessarily other solicitation requirements)

What's interesting is the use of 'continuing' … does that mean they have to evaluate the lowest plus one more technically acceptable? The lowest technically acceptable plus one more technically acceptable?

Jamaal Valentine said:

What's interesting is the use of 'continuing' … does that mean they have to evaluate the lowest plus one more technically acceptable? The lowest technically acceptable plus one more technically acceptable?

No.

Vern Edwards said:

No.

I don't think it does either but, I still find the wording odd/interesting. (I presume it's a rephrasing)

On 9/15/2018 at 1:50 AM, brent said:

RFP stated that TO would go to LPTA and that only the lowest priced offer would be evaluated for TA (continuing until there is a TA offer, then stop).

Maybe the actual language offers more info. Maybe the drafter didn't intend the price analysis to rely on a comparison of proposed prices. Who knows?

For an interesting GAO protest decision involving this method of LPTA, see Environmental Restoration LLC, B-413781, 2017 CPD ¶ 15, Dec. 30, 2016.

Jamaal Valentine said:

I should have typed technically acceptable. However, my understanding is that technically acceptable/unacceptable determinations are necessary if the OP wants to rely on a comparison of proposed prices. (At least two findings of acceptable)

What's interesting is the use of 'continuing' … does that mean they have to evaluate the lowest plus one more technically acceptable? The lowest technically acceptable plus one more technically acceptable?

No.  I should not have  stated or conveyed that impression.

Strict technical acceptability of another proposal might not be necessary as long as one can make a relevant price comparison. 

Being able to make a relative price comparison would depend upon the context and complexity  of the competition and what you are buying. 

Of course, If you have any other price information, you may well not need to examine another proposal to see if it reflects what you are trying to acquire. 

Edit: For that matter, your method doesn’t prevent you from looking at (e.g., reading or scanning, etc.) a higher priced proposal to see if it’s associated price proposal is meaningfully comparable  to the lower priced one.

Here's how the CO determined price reasonableness in the decision I just cited:

Quote

EPA received proposals from ten offerors, including ER. The agency ranked the proposals from lowest-priced to highest-priced, and then conducted a price evaluation to assess the reasonableness of the prices submitted. Specifically, the agency compared the prices to the market average, as well as the independent government estimate....

Footnote 2: The agency calculated the market average by adding the offerors' total proposed prices, and dividing the sum by the total number of proposals received. COS at 1; AR, Tab 4, Revised Price Evaluation, at 1.

P.S. Don't confuse "technically acceptable" as used in FAR 15.101-2 with acceptable as defined by the GAO or with the criterion for adequate price competition in FAR 15.403-1(c)(1)(i).

The GAO says:

Quote

In a negotiated procurement, a proposal that fails to conform to the material terms and conditions of the solicitation is considered unacceptable and may not form the basis for award.

See Distributed Solutions, Inc., B-416394, 2018 CPD ¶ 279. That's an explanation of the concept of legal acceptability, but that's not necessarily what "technically acceptable" might mean in any given instance.

FAR does not define "technically acceptable," and agencies have defined it in various ways. It's possible for a proposal to be legally acceptable, but not "technically acceptable." It's also possible for a proposal to be "technically acceptable," but not legally acceptable. Agencies don't always do things in ways that make complete sense to us pedants.

Vern Edwards said:

Here's how the CO determined price reasonableness in the decision I just cited:

EPA received proposals from ten offerors, including ER. The agency ranked the proposals from lowest-priced to highest-priced, and then conducted a price evaluation to assess the reasonableness of the prices submitted. Specifically, the agency compared the prices to the market average, as well as the independent government estimate....

Footnote 2: The agency calculated the market average by adding the offerors' total proposed prices, and dividing the sum by the total number of proposals received. COS at 1; AR, Tab 4, Revised Price Evaluation, at 1.

I wonder what GAO would have decided if a prejudiced party specifically challenged the comparison of the market average concept. (The technical acceptability of some of the offer's was not evaluated - unknown; for competitive range purposes they were essentially treated as acceptable)

Jamaal Valentine said:

I wonder what GAO would have decided if a prejudiced party specifically challenged the comparison of the market average concept. (The technical acceptability of some of the offer's was not evaluated - unknown; for competitive range purposes they were essentially treated as acceptable)

A proposal might be technically unacceptable on grounds that have no bearing on price. The product of service offered might be perfectly acceptable, but the proposal is technically unacceptable on other grounds.

Vern Edwards said:

A proposal might be technically unacceptable on grounds that have no bearing on price.

True. Yesterday, I mentioned that the CO has to ensure offers are acceptable in the sense that the price comparisons are valid; or make adjustments as necessary.

Jamaal Valentine said:

I wonder what GAO would have decided if a prejudiced party specifically challenged the comparison of the market average concept. (The technical acceptability of some of the offer's was not evaluated - unknown; for competitive range purposes they were essentially treated as acceptable)

The GAO said in that particular decision that there was no prejudice in that evaluation scheme for the higher-priced proposers because the CO assumed they were technically acceptable.  So I suppose it would have to be the other firm in the competitive range to carry that flag?  Still, that firm was higher priced by definition . . .

Vern Edwards said:

A proposal might be technically unacceptable on grounds that have no bearing on price. The product of service offered might be perfectly acceptable, but the proposal is technically unacceptable on other grounds.

I agree. I should have said that long ago here.

Jamaal Valentine said:

True. Yesterday, I mentioned that the CO has to ensure offers are acceptable in the sense that the price comparisons are valid; or make adjustments as necessary.

I agree that the important aspect is that the price comparisons should be valid or that one could account for differences to make valid comparisons.

apsofacto said:

Still, that firm was higher priced by definition . . .

Yeah, I was thinking the same thing. It truly is hard to lose a protest but, can this treatment of price serve as a reasonable basis for award? Is there meaningful competition under CICA if an agency does not compare competing offerors' proposed prices in a certain meaningful way? I am going to reread Electronic Design, Inc., Comp. Gen. Dec. B-279662.2.

apsofacto said:

The GAO said in that particular decision that there was no prejudice in that evaluation scheme for the higher-priced proposers because the CO assumed they were technically acceptable.  So I suppose it would have to be the other firm in the competitive range to carry that flag?  Still, that firm was higher priced by definition . . .

Yes. Please note that my observations were not from a protest perspective. Higher priced offers would not be prejudiced by accepting a lower priced, technically acceptable offer.

My observations are limited to determining if the price of the otherwise apparent successful proposal is fair and reasonable.

Jamaal Valentine said:

Is there meaningful competition under CICA if an agency does not compare competing offerors' proposed prices in a certain meaningful way?

Jamaal,

All other things being equal, do you think that offerors would propose different prices under the two LPTA frameworks?

• Framework 1: Rank all offers by price; evaluate all proposals for technical acceptability; award to the LPTA
• Framework 2: Rank all offers by price; starting with the lowest priced proposal, evaluate proposals from lowest to highest until one is technically acceptable; award to the LPTA

Matthew Fleharty said:

Jamaal,

All other things being equal, do you think that offerors would propose different prices under the two LPTA frameworks?

• Framework 1: Rank all offers by price; evaluate all proposals for technical acceptability; award to the LPTA
• Framework 2: Rank all offers by price; starting with the lowest priced proposal, evaluate proposals from lowest to highest until one is technically acceptable; award to the LPTA

Matthew, if you don’t mind my interjection, I don’t think that they would propose different prices. Either way, the basis of award is LPTA, with a fair and reasonable price.

The price(s) that you are comparing the lowest LPTA to should be comparable as proposed or otherwise be able to be compared.

Matthew:

Generally speaking, no, but the framework or technique is not a chief concern. I am more concerned about someone comparing prices to offers which they have not evaluated nor determined are suitable for comparison. (Kinda reminds me of this time of year when people start exercising options: many practitioners compare prices of other contracts with similar titles without ever comparing technical requirements.)

I am not suggesting that one has to or even should evaluate more than the lowest priced. It is allowable and often wise to only evaluate the LPTA and stop when that is deemed best value … however, LPTA need not and arguably should not--in some cases--rely on comparison of proposed prices when using that technique. 

In other words, I am suggesting that one shouldn't categorically assume that a comparison to proposed prices recieved in response to the solicitation is valid without taking a few actions (i.e., actively ensuring a valid basis for comparison exists).

What I was getting at with the question is: what is GAO's position, if any, on comparing proposal prices alone (in RFPs with non-priced factors) as a means of satisfying CICA, and as a reasonable basis for award. I recall reading something related in Electronic Design, Inc., Comp. Gen. Dec. B-279662.2. that may or may not be relevant.

Jamaal Valentine said:

I am more concerned about someone comparing prices to offers which they have not evaluated nor determined are suitable for comparison.

Yawp, agreed:  1.) Source selection  and 2.) finding the price fair and reasonable are two separate issues, and the EPA technique streamlines 1.) and complicates 2.) a little bit.

I'm following this discussion with interest since my employer makes a practice of technically evaluating all proposers in this scenario.  It seems like an inefficient use of time, so I'm happy to see EPA trying something different, and that it survived contact with the enemy. 

Regarding price reasonableness, though,  I suppose you could at least compare the prices in the competitive range, since they *were* evaluated technically.  I wonder why there was no mention of that?  May have been

Perhaps In the event of an award without discussion,  you could technically evaluate the lowest three to ensure the prices were truly comparable?  This would save you the trouble of evaluating proposers 4-10.

Jamaal Valentine said:

I am more concerned about someone comparing prices to offers which they have not evaluated nor determined are suitable for comparison.

@Jamaal Valentine

Why "concerned"? Agencies have done that for decades when using sealed bidding, in which there is no nonprice technical evaluation at all. There is no reason to be "concerned" unless someone describes the use of a specific method for determining fairness and reasonableness that is patently irrational or otherwise unsound under specific circumstances.

You are being very persistent at making a mountain out of a molehill with your "concern." I'm beginning to think that you don't understand the concept of fair and reasonable price. Each determination must be judged in its own circumstances and on own its merits. Your kind of foggy "concern" is what leads to general prohibitions against the use of methods that are perfectly reasonable when properly used.

If someone wants to charge me less for something that I consider acceptable than for something that I haven't considered at all, and if acceptable is all I want, then why shouldn't I consider that to be a fair and reasonable price?

Vern Edwards said:

Why concerned? Agencies have done that for decades when using sealed bidding, in which there is no nonprice technical evaluation at all. There is no reason to be concerned unless someone describes a method for determining fairness and reasonableness that is patently irrational.

Bingo.

On 9/14/2018 at 12:52 PM, ji20874 said:

In an ordering situation using LPTA, the price analysis can occur before the technical evaluation -- compare all the proposed prices received in response to the solicitation (amenable to FAR 15.404-1(b)(2)(i)), and rank offers from lowest price to highest price -- absent a reason for finding otherwise, one may generally assume that the lowest-price among many is a reasonable price.

The problem I have with this approach is that you don't know if you would be making an apples-to-apples comparison. You have received several offers to provide apples. You have confirmed that one such offer is for something that meets the criteria for being an apple. You don't know if the other offers are for things that meet the criteria for being apples. You have no evidence that they meet the criteria for being apples, but you also have no evidence that they don't. You're comparing apples to something in a quantum superposition of being both apples and not apples. Why would it be reasonable to assume that they are apples? Because you asked for apples and received several offers to provide apples?

Don Mansfield said:

The problem I have with this approach is that you don't know if you would be making an apples-to-apples comparison. You have received several offers to provide apples. You have confirmed that one such offer is for something that meets the criteria for being an apple. You don't know if the other offers are for things that meet the criteria for being apples. You have no evidence that they meet the criteria for being apples, but you also have no evidence that they don't. You're comparing apples to something in a quantum superposition of being both apples and not apples. Why would it be reasonable to assume that they are apples? Because you asked for apples and received several offers to provide apples?

So what is the possibility? That if I knew that the others, or some of them, weren't for apples I might think that there might be a better price out there for apples than the low one I got? Well, no one offered that price. What am I supposed to do, embark on an endless quest for the offer that might exist but that I didn't get? How long am I going to look for that offer while the guys are out in the boonies are waiting for fresh fruit? Spoken like a true desk ranger.

I conducted a competition for apples. I got an offer for apples that was lower than all the others. All the other offers I got were higher. I don't give a damn if they were for apples or coconuts. I announced a contest, I specified the rules, I conducted the contest in accordance with the rules, Game over.

Now, apples are an easy one to solve, because there's a public market for apples and I can call around. If the low price is too high I can cancel the solicitation and start over after I figure out what I did wrong the first time.

Quantum superposition my tookus.

Vern Edwards said:

What am I supposed to do, embark on an endless quest for the offer that might exist but that I didn't get?

Is comparison of proposed prices the only basis for establishing price reasonableness? Or are there others?

Vern Edwards said:

I conducted a competition for apples. I got an offer for apples that was lower than all the others. All the other offers I got were higher. I don't give a damn if they were for apples or coconuts. I announced a contest, I specified the rules, I conducted the contest in accordance with the rules, Game over.

Did you get adequate price competition?

To the naysayers of the "first LPTA discovered" method of starting with the lowest price and awarding to the first offeror that is technically acceptable (without evaluating other offers)...

Do your concerns vanish if the method includes evaluating at least two offerors? Find the LPTA, starting with the lowest price, and then stop when you found +1 offer that is also technically acceptable and higher in price?

Personally, PepeTheFrog likes the easy and fast "first LPTA discovered" method, but maybe the marginal cost of evaluating just one more offer will satisfy supervisors who are sticklers or skeptical. 

Don Mansfield said:

Why would it be reasonable to assume that they are apples? Because you asked for apples and received several offers to provide apples?

Yes, that seems reasonable. 

Don Mansfield said:

Vern Edwards said:

I conducted a competition for apples. I got an offer for apples that was lower than all the others. All the other offers I got were higher. I don't give a damn if they were for apples or coconuts. I announced a contest, I specified the rules, I conducted the contest in accordance with the rules, Game over.

Did you get adequate price competition?

Yes, under the FAR 15.403-1(c) definition of "adequate price competition." There are three options and the contracting officer should be able to apply one of the three.

PepeTheFrog said:

To the naysayers of the "first LPTA discovered" method of starting with the lowest price and awarding to the first offeror that is technically acceptable (without evaluating other offers)...

Not sure if you consider me a "naysayer", but as a selection method I don't see a problem with "first LPTA discovered". But that's not the issue we're discussing. The issue is whether the other proposed prices should be used as a basis of comparison in determining a fair and reasonable price.

PepeTheFrog said:

Yes, under the FAR 15.403-1(c) definition of "adequate price competition." There are three options and the contracting officer should be able to apply one of the three.

Ok, which one?

Let's not forget that the FAR is not a "how to" guide and it isn't definitive or exhaustive on how one determines prices fair and reasonable (emphasis added):

Quote

(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to the following:

Is it possible to make a reasonable argument that a LPTA proposal's price is fair and reasonable without knowing whether the other proposals are technically acceptable?  I think so, despite what the FAR may or may not say.

Next up in "how can we make more non-value added work for ourselves", someone is going to explain to all of us that to meet the standard of adequate price competition the Government must perform contractor responsibility determinations on the unsuccessful offerors in addition to the technical evaluations...

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 --

Don Mansfield said:

Is comparison of proposed prices the only basis for establishing price reasonableness? Or are there others?

Did you get adequate price competition?

See FAR 15.404-1(b):

Quote

(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to, the following:

(i) Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).

(ii) Comparison of the proposed prices to historical prices paid, whether by the Government or other than the Government, for the same or similar items. This method may be used for commercial items including those “of a type” or requiring minor modifications.

(A) The prior price must be a valid basis for comparison. If there has been a significant time lapse between the last acquisition and the present one, if the terms and conditions of the acquisition are significantly different, or if the reasonableness of the prior price is uncertain, then the prior price may not be a valid basis for comparison.

(B) The prior price must be adjusted to account for materially differing terms and conditions, quantities and market and economic factors. For similar items, the contracting officer must also adjust the prior price to account for material differences between the similar item and the item being procured.

(C) Expert technical advice should be obtained when analyzing similar items, or commercial items that are “of a type” or requiring minor modifications, to ascertain the magnitude of changes required and to assist in pricing the required changes

(iii) Use of parametric estimating methods/application of rough yardsticks (such as dollars per pound or per horsepower, or other units) to highlight significant inconsistencies that warrant additional pricing inquiry.

(iv) Comparison with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate arrangements.

(v) Comparison of proposed prices with independent Government cost estimates.

(vi) Comparison of proposed prices with prices obtained through market research for the same or similar items.

(vii) Analysis of data other than certified cost or pricing data (as defined at 2.101) provided by the offeror.

(3) The first two techniques at 15.404-1(b)(2) are the preferred techniques. However, if the contracting officer determines that information on competitive proposed prices or previous contract prices is not available or is insufficient to determine that the price is fair and reasonable, the contracting officer may use any of the remaining techniques as appropriate to the circumstances applicable to the acquisition.

(4) Value analysis can give insight into the relative worth of a product and the Government may use it in conjunction with the price analysis techniques listed in paragraph (b)(2) of this section.

Adequate price competition is irrelevant. I'm buying apples, a commercial item. The market for fruits is pretty large. And I live in Washington state. Everybody here knows the prices of apples. And cherries. And pears. And grapes. And watermelon. I can detrermine fairness and reasonableness through pleasure analysis.

Besides, we don't have to evaluate the other offers to know whether they're for apples. We can do a quick look to see that. We just don't have to evaluate them for whether they're acceptable apples.

Vern Edwards said:

Adequate price competition is irrelevant. I'm buying apples, a commercial item. The market for fruits is pretty large. And I live in Washington state. Everybody here knows the prices of apples. And cherries. And pears. And grapes. And watermelon. I can detrermine fairness and reasonableness through pleasure analysis.

For purposes of applying TINA it is. But in your scenario you want to hang your hat on FAR 15.404-1(b)(2)(i):

Vern Edwards said:

Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).

So I ask again, did you get adequate price competition in your scenario?

Don Mansfield said:

The issue is whether the other proposed prices should be used as a basis of comparison in determining a fair and reasonable price.

No. The issue is whether they can be used. And I think the answer is sometimes yes and sometimes no, depending on circumstances.

Don Mansfield said:

So I ask again, did you get adequate price competition in your scenario?

And I'm telling you, again, that adequate price competition is irrelevant. See FAR 15.404-1(b)(2)(I):

Quote

(2) The Government may use various price analysis techniques and procedures to ensure a fair and reasonable price. Examples of such techniques include, but are not limited to, the following:

(i) Comparison of proposed prices received in response to the solicitation. Normally, adequate price competition establishes a fair and reasonable price (see 15.403-1(c)(1)(i)).

Two sentences in (i). The first provides an example of a pricing techniques. The second makes an assertion: "NORMALLY, adequate price competition establishes a fair and reasonable price." The two together do not say that you can establish fairness and reasonableness through comparison of proposed prices ONLY IF you got adequate price competition.

Don Mansfield said:

PepeTheFrog said:

Yes, under the FAR 15.403-1(c) definition of "adequate price competition." There are three options and the contracting officer should be able to apply one of the three.

Ok, which one?

(i) If you evaluated the +1 offer that was the second lowest price and technically acceptable

(ii) If you use the "first LPTA discovered" method

(iii) If you compare it with current or recent prices

Vern Edwards said:

And I'm telling you, again, that adequate price competition is irrelevant. See FAR 15.404-1(b)(2)(I):

Two sentences in (i). The first provides an example of a pricing techniques. The second makes an assertion: "NORMALLY, adequate price competition establishes a fair and reasonable price." The two together do not say that you can establish fairness and reasonableness through comparison of proposed prices ONLY IF you got adequate price competition.

Amen!

Adequate price competition is a standard for determining if certified cost or pricing data is required.  That's all.  It is irrelevant for our discussion.

FAR 15.404-1(b)(2)(i) says comparison of prices received in response to the solicitation is a valid method of price analysis.  It doesn't say comparison of "technically acceptable" prices received in response to the solicitation.

ji20874 said:

FAR 15.404-1(b)(2)(i) says comparison of prices received in response to the solicitation is a valid method of price analysis.  It doesn't say comparison of "technically acceptable" prices received in response to the solicitation.

Moreover the list isn't exhaustive nor does the FAR contain a restriction to only use the listed techniques.

What does FAR 1.102-4(e) say again about sound business judgment?

ji20874 said:

Amen!

Adequate price competition is a standard for determining if certified cost or pricing data is required.  That's all.  It is irrelevant for our discussion.

FAR 15.404-1(b)(2)(i) says comparison of prices received in response to the solicitation is a valid method of price analysis.  It doesn't say comparison of "technically acceptable" prices received in response to the solicitation.

It's not "irrelevant for our discussion". Vern seemed to be hanging his hat on FAR 15.404-1(b)(2)(i) in his scenario and I wanted to know if it was because he thought he had adequate price competition or because of some other reason.

ji20874 said:

FAR 15.404-1(b)(2)(i) says comparison of prices received in response to the solicitation is a valid method of price analysis.  It doesn't say comparison of "technically acceptable" prices received in response to the solicitation.

No, FAR 15.404-1(b)(2)(i) doesn't say anything about the validity of any method. It just lists examples of methods that can be used to conduct price analysis. 

Back to your method of comparing the proposed price for a technically acceptable product/service to proposed prices for products/services that you haven't technically evaluated, is there any consideration of the comparability of the products/services that you haven't technically evaluated? Or do you assume that they are comparable?

Don Mansfield said:

Vern seemed to be hanging his hat on FAR 15.404-1(b)(2)(i) in his scenario and I wanted to know if it was because he thought he had adequate price competition or because of some other reason.

This thread has gotten so long that I don't remember when and where I quoted FAR 15.404-1(b)(2)(i), but I do remember quoting it.

There are two sentences in the subparagraph, I was thinking of the first, even though I quoted both. Apples are a commercial item. I would not look to see if I had adequate price competition because that concept and that rule do not apply to commercial items, so I would not know or care whether I'd had it. I do not see the second sentence as being inextricably linked to the first. I see the second sentence as saying nothing more than that if you have adequate price competition you can ordinarily rely on its existence to establish fairness and reasonableness of price. I don't read it to indicate in any way that the absence of adequate price competition means that competition was not effective in producing fair and reasonable prices.

The mere fact that something is mentioned in a regulation does mean it is pertinent to the issue at hand.

Vern Edwards said:

@Jamaal Valentine

Why "concerned"? Agencies have done that for decades when using sealed bidding, in which there is no nonprice technical evaluation at all.

As I stated previously, I am more concerned (as a matter of interest) about comparing prices to proposals that have not been evaluated for suitability for comparison. I don't think a prudent CO would agree to such an action without knowing the basis for suitability.

To be clear, I can envision many cases where it might make sense, but even then the comparability is presumed. For example, maybe the offers are close to the government estimate and the administrative cost of verifying the comparability may more than offset potential savings from detecting instances of overpricing. Heck, I have done it and have advocated for its use.

Nonetheless, if they wanted sealed bidding, then conduct sealed bidding. In the hypo here - there are non-price evaluation factors (technical) in the offerors' proposals. Futhermore, we both know there are preferential and procedural differences between sealed bidding and competitive proposals. With sealed bidding the government presumes the bidders accede to the solicitation as the model contract … that is not necessarily the case when accepting proposals that include technical offers.

Vern Edwards said:

If someone wants to charge me less for something that I consider acceptable than for something that I haven't considered at all, and if acceptable is all I want, then why shouldn't I consider that to be a fair and reasonable price?

I don't take exception to that. I am asking what your price reasonableness determination is based on in that scenario. You say you are being charged less, but compared to what? Something you haven't considered? Is less synonymous with fair and reasonable?

Don Mansfield said:

Not sure if you consider me a "naysayer", but as a selection method I don't see a problem with "first LPTA discovered". But that's not the issue we're discussing. The issue is whether the other proposed prices should be used as a basis of comparison in determining a fair and reasonable price.

This

Matthew Fleharty said:

Let's not forget that the FAR is not a "how to" guide and it isn't definitive or exhaustive on how one determines prices fair and reasonable (emphasis added):

Is it possible to make a reasonable argument that a LPTA proposal's price is fair and reasonable without knowing whether the other proposals are technically acceptable?  I think so, despite what the FAR may or may not say.

Sure it's possible. I don't think anyone here disagrees. Disagreeing would be silly: FAR even provides several techniques.

What is your reasonable argument? Does it involve or rely on comparison of proposed prices?

ji20874 said:

FAR 15.404-1(b)(2)(i) says comparison of prices received in response to the solicitation is a valid method of price analysis.  It doesn't say comparison of "technically acceptable" prices received in response to the solicitation.

FAR instructs us to use sound business judgment. The Contract Pricing Reference Guide, referenced in FAR Subpart 15.4, states not to use unacceptable offers in comparisons and GAO doesn't appear to support comparing pricing to unacceptable offers (Lifecycle Construction Services, LLC, B-406907, September 27, 2012).

So, if one chooses to rely on a comparison of proposed prices of unknown acceptability, esp. those including non-priced factors, sound business judgment still applies and should be documented pursuant to FAR 4.801( b )

The documentation in the files shall be sufficient to constitute a complete history of the transaction for the purpose of --

(1) Providing a complete background as a basis for informed decisions at each step in the acquisition process;

(2) Supporting actions taken;

(3) Providing information for reviews and investigations; and

(4) Furnishing essential facts in the event of litigation or congressional inquiries.

Brent,

I wonder if you have found the insight you sought when you started this thread?  As you can see, there is a difference of opinion here.  Need we continue, or do you have enough information to make up your own mind and inform your own practice?

Jamaal Valentine said:

FAR instructs us to use sound business judgment. The Contract Pricing Reference Guide, referenced in FAR Subpart 15.4, states not to use unacceptable offers in comparisons and GAO doesn't appear to support comparing pricing to unacceptable offers (Lifecycle Construction Services, LLC, B-406907, September 27, 2012).

@Jamaal Valentine Jamaal, you have misread the Lifecycle Construction Services decision. In that case the government determined that the protester's pricing coefficient was unrealistically low based on a comparison to the median proposed coefficient, which was determined on the basis of proposed coefficients that were too high. Lifecycle was a case of faulty price realism analysis, not faulty reasonableness analysis.

Quote

Rather than relying on the government’s estimate, the contracting specialist calculated the median of all 15 offerors’ coefficients for the Fort Bragg location, asserting that the median price was a better representation of “the cost the government can expect to pay for construction services.” Id. at 3 The median coefficient for Fort Bragg was materially higher than the government estimate, and resulted in Lifecycle’s Fort Bragg coefficient (which was [Deleted], as shown above) being evaluated as [Deleted] lower than the median. Id. Since Lifecycle and one other offeror submitted a coefficient for Fort Bragg that was more than 15 percent below the median, the contracting specialist concluded that those firms’ prices were “excessively low and may indicate a lack of understanding of the requirements.” Id. Four other offerors' coefficients were deemed excessively high. The analyst therefore concluded that only nine firms (not including Lifecycle) had submitted reasonable and realistic prices. Id. at 4.

On February 24, the source selection official prepared a source selection decision document, which reflected a price analysis similar to that discussed above. After comparing Lifecycle’s proposed coefficients to the government estimates, the source selection official concluded that “fair market pricing” would be established by comparison to the median of the 15 coefficients proposed for the combined Fort Bragg/Pope Air Force Base locations; that coefficient was [Deleted]. AR, Tab G, Source Selection Decision, at 3-4. In this regard, the source selection official noted that a “specialty” contract had recently been awarded to a firm that proposed a coefficient of [Deleted], and that the firm had failed to successfully perform that contract. Id. He also stated that he was aware that two successful contractors at Fort Bragg had coefficients of [Deleted] and [Deleted]. Id. Based on those considerations, the source selection official concluded that the coefficients proposed by Lifecycle and a second firm reflected a lack of understanding of the work, which meant that the firms “would not be able to execute task orders at the prices proposed.” Accordingly, Lifecycle’s proposal was not further considered for award. Id.

The source selection official determined that three of those eight (shown above as Offerors B, C, and D) had proposed coefficients that were more than 15 percent higher than the median coefficient, and concluded that they reflected “unreasonable pricing.” Id. at 6. He then selected the five remaining proposals for award. Id. at 6-7.

*     *     *

In reviewing protests challenging price realism evaluations, our focus is on whether the agency acted reasonably and in a manner consistent with the terms of the solicitation. Nova Techs., B-405982.2, May 16, 2012, 2012 CPD ¶ 172 at 9.

Based on our review of the record here, we conclude that the Corps unreasonably rejected Lifecycle’s proposal. We reach this conclusion, first, because the median was materially higher than the government estimate due to the inclusion of proposed prices that the agency, itself, determined were unacceptable, ineligible for award, and/or unreasonably high. That is, while the contracting officer and the source selection official assert that the median represented the “fair market pricing,” they also acknowledge that three of the price coefficients used to establish that benchmark were, themselves, unreasonably high, and several others were proposed by offerors/proposals that were determined to be unacceptable or ineligible for award. Accordingly, in our view, the median could not reasonably be relied upon as a valid benchmark for comparison. Further, even if the agency’s calculation of the median had been rational, the agency comparison to that benchmark did not consider the coefficients proposed for 12 of the 14 locations identified in the RFP. Nothing in the RFP advised offerors that the prices proposed for the locations other than the Fort Bragg/Pope Air Force Base area would not be meaningfully considered.

Footnotes omitted.

Price realism and price reasonableness are very different determinations. I do not interpret Lifecycle to stand for the simple proposition that you cannot determine price reasonableness by comparing a propose price to the prices of unacceptable proposals, and as far as I can see no commentator has interpreted the decision in that way. I know that in a couple of sentences the GAO seems to say that, but you have reading that decision too broadly.

It is true that the CPRG, Vol. 1, says that a CO should not use the prices of unacceptable proposals as a basis for comparison, but that guidance is not regulatory and is much too simplistic to be applied as you demand. It is true that you have to use sound business judgment, but as I have explained, sound judgment requires that you think more deeply.

Vern:

I understood the Lifecycle Construction Services decision was a protest about price realism, but I felt the concepts and references to reasonableness were illuminating. I agree with your previous post and don't accept the narrow CPRG guidance as a general proposition. However, when read as a whole, CPRG provides a more complete principle of adjusting prices to restore comparability. CPRG states that one should normally place less reliance on comparisons with other proposed prices when Government requirements permit offerors to propose different technical approaches to contract performance and gives this example:

Quote

[A] ceramic mug and a paper cup may both meet a requirement to hold 8 ounces of coffee, but that does not mean that $1.00 price for a paper cup is reasonable because it is less than a $5 price for a ceramic mug. Even if no other offeror is proposing to provide a paper cup, the key element of your price analysis should be to compare the paper cup offer with prices paid for similar paper cups.

CPRG is simply guiding readers to a reasoned analysis.

Quote

Comparing competitive offers is normally the easiest form of price analysis. It also tends to be the most valid, because you are comparing offers prepared for the same requirement under the same market conditions within the competitive market. However, the weight placed on this type of comparison depends on the circumstances of the acquisition. Place less weight on competitive prices (relative to other price comparisons) when:

Adequate price competition does not exist (regardless of the number of offers) - in which case the weight should be zero.

Having used a performance or functional specification, the apparent successful offeror's proposed approach is less comparable to other proposed approaches than (a) to work performed under prior contracts or (b) commercial contracts.

The deliverable in line for award is less comparable to other offered deliverables than to (a) those acquired under prior contracts or to (b) commercial contracts.

The apparent successful offer is significantly out of line with other offers.

The cost of the acquisition is substantial. The larger the dollar value of the contract, the more importance you should place on sizable differences in dollars between different types of comparisons (even if the differences are modest when expressed as percentages).

Matthew:

CPRG Vol. 1 goes as far as to say "[y]ou cannot make a determination of price reasonableness based on a price comparison with an offer that is technically unacceptable or an offer submitted by a firm that is not responsible." (Hopefully you aren't clairvoyant)

So, Jamaal, do you agree that a CO, when determining the fairness and reasonableness of the technically acceptable lowest price, can use comparisons with the prices in proposals that were not evaluated for technical acceptability, as long as the CO is open minded and judicious when making that determination and can explain the basis for his or her judgment, perhaps supplementing those comparisons with other price info when appropriate?

Yes or no.

Jamaal Valentine said:

What is your reasonable argument? Does it involve or rely on comparison of proposed prices?

Not one bit - it relies on an understanding of the competitive markets and the concept of fair and reasonable prices.  For one, the approach doesn't use technically unacceptable offers; that's important because you're presuming those offers are unacceptable...I believe, for these purposes, they're presumed "innocent until proven guilty."  After all, that's how the contractors approach the situation.  If they don't offer a solution that is technically acceptable and the lowest price they're going to lose business to someone who does.  If a determination of fair and reasonable pricing is concerned with too high of a price, I think, generally (because there are exceptions to every rule) it is perfectly reasonable and sound business judgment to consider the LPTA offeror of a competition as not too high (and, therefore, fair and reasonable) by virtue of having competed against the market for the contract.  The fact that you have X number of unevaluated proposals simply serves as evidence of the competitiveness of that market for the requirement.

As for all this talk about "adequate price competition normally establishing a fair and reasonable price," whether it is misplaced or not, compare the second standard  to the situation at hand:

• Adequate price competition (15.403-(c)(1)(ii): an expectation that two or more responsible offerors, competing independently, would submit priced offers even though only one offer is received...
• This situation: numerous offers are received, though only one offer is evaluated IAW the solicitation's procedures because it is the LPTA

If some are willing to hang their hat on "adequate price competition = a fair and reasonable price" why wouldn't they be equally okay doing so in a situation where one receives more than one offer, but only evaluates one?  I think the second situation is far more defensible than the first, regardless of how the FAR defines "adequate price competition" (frankly, it's too narrow...).

On 9/17/2018 at 6:47 AM, Vern Edwards said:

For an interesting GAO protest decision involving this method of LPTA, see Environmental Restoration LLC, B-413781, 2017 CPD ¶ 15, Dec. 30, 2016.

This was in my office, so if anyone has any questions on this, please let me know and I am happy to help.

Desparado said:

This was in my office, so if anyone has any questions on this, please let me know and I am happy to help.

I hope you know what you may have just done to yourself. 😁

No good deed goes unpunished.

PepeTheFrog said:

(i) If you evaluated the +1 offer that was the second lowest price and technically acceptable

(ii) If you use the "first LPTA discovered" method

(iii) If you compare it with current or recent prices

Assuming you are saying you can have adequate price competition using the "first LPTA discovered" method:

(i) Agree

(ii) Agree

(iii) Agree

Matthew Fleharty said:

Not one bit - it relies on an understanding of the competitive markets and the concept of fair and reasonable prices.  For one, the approach doesn't use technically unacceptable offers; that's important because you're presuming those offers are unacceptable...I believe, for these purposes, they're presumed "innocent until proven guilty."  After all, that's how the contractors approach the situation.  If they don't offer a solution that is technically acceptable and the lowest price they're going to lose business to someone who does.  If a determination of fair and reasonable pricing is concerned with too high of a price, I think, generally (because there are exceptions to every rule) it is perfectly reasonable and sound business judgment to consider the LPTA offeror of a competition as not too high (and, therefore, fair and reasonable) by virtue of having competed against the market for the contract.  The fact that you have X number of unevaluated proposals simply serves as evidence of the competitiveness of that market for the requirement.

Shouldn't you determine whether what you are comparing to the lowest priced offer is comparable? Or do you just assume that it is?

Don Mansfield said:

Shouldn't you determine whether what you are comparing to the lowest priced offer is comparable? Or do you just assume that it is?

Does one have to perform complete technical evaluations in order to know whether or not other offers (or pieces of information) are comparable?

I guess I'm just missing the complexity of the situation.  You have an IGE and a host of other offers received.  The lowest-priced offer is evaluated against the pass/fail technical acceptability criteria.  If it is technically acceptable, what do you really gain by reviewing the other 10 (or more in some cases) offers that come in?  This office used to do a fully tech eval on all the offers and when I took over I asked what value did they gain from this process.  The answer I received was, "None, but legal says we have to do it", so we developed language to support only reviewing until we have a technically acceptable offer and base the F&R determination on things like the other offers, the IGE, previous acquisitions for similar services and we cut down on our turn-around time dramatically.

Now, when we received several low offers that missed minor requirements and were therefore not technically acceptable, we established a competitive range based solely on price (with the number of offers received and the pricing, the cutoff point was evident).  This is when one protested and we defended and won.  I think sometimes we try to over-complicate something that can be simple.

Matthew Fleharty said:

Does one have to perform complete technical evaluations in order to know whether or not other offers (or pieces of information) are comparable?

Does it matter if they are comparable?  As long as the lowest price is technically acceptable and they can perform at that price, what do you gain by comparing to the other offers?

Matthew Fleharty said:

Does one have to perform complete technical evaluations in order to know whether or not other offers (or pieces of information) are comparable?

No.

Matthew Fleharty said:

Not one bit - it relies on an understanding of the competitive markets and the concept of fair and reasonable prices.  For one, the approach doesn't use technically unacceptable offers; that's important because you're presuming those offers are unacceptable...I believe, for these purposes, they're presumed "innocent until proven guilty."  After all, that's how the contractors approach the situation.  If they don't offer a solution that is technically acceptable and the lowest price they're going to lose business to someone who does.  If a determination of fair and reasonable pricing is concerned with too high of a price, I think, generally (because there are exceptions to every rule) it is perfectly reasonable and sound business judgment to consider the LPTA offeror of a competition as not too high (and, therefore, fair and reasonable) by virtue of having competed against the market for the contract.  The fact that you have X number of unevaluated proposals simply serves as evidence of the competitiveness of that market for the requirement.

As for all this talk about "adequate price competition normally establishing a fair and reasonable price," whether it is misplaced or not, compare the second standard  to the situation at hand:

• Adequate price competition (15.403-(c)(1)(ii): an expectation that two or more responsible offerors, competing independently, would submit priced offers even though only one offer is received...
• This situation: numerous offers are received, though only one offer is evaluated IAW the solicitation's procedures because it is the LPTA

If some are willing to hang their hat on "adequate price competition = a fair and reasonable price" why wouldn't they be equally okay doing so in a situation where one receives more than one offer, but only evaluates one?  I think the second situation is far more defensible than the first, regardless of how the FAR defines "adequate price competition" (frankly, it's too narrow...).

For DoD, the first situation is not applicable per DFARs and PGI implementation of “Better Buying Power “policy.

Vern Edwards said:

So, Jamaal, do you agree that a CO, when determining the fairness and reasonableness of the technically acceptable lowest price, can use comparisons with the prices in proposals that were not evaluated for technical acceptability, as long as the CO is open minded and judicious when making that determination and can explain the basis for his or her judgment, perhaps supplementing those comparisons with other price info when appropriate?

Yes or no.

Yes, of course. (I believe I said as much in my first post)

Matthew Fleharty said:

If a determination of fair and reasonable pricing is concerned with too high of a price, I think, generally (because there are exceptions to every rule) it is perfectly reasonable and sound business judgment to consider the LPTA offeror of a competition as not too high (and, therefore, fair and reasonable) by virtue of having competed against the market for the contract.  The fact that you have X number of unevaluated proposals simply serves as evidence of the competitiveness of that market for the requirement.

It sounds like you are saying you believe competition [generally] = fair and reasonable price … without any analysis or comparisons. This has been discussed here previously:

The number of proposals received is evidence of competition, but not necessarily effective competition. This is especially true when dealing with proposals that include technical offers that may vary.

Jamaal,

There is a difference between can and does...I caveated my statement for that very reason, don’t try to put my position in a box I didn’t build. I also didn’t say that you don’t need any analysis...it’s just a different kind of analysis (market based rather than comparison based).

Can someone tell me what "fair and reasonable price means"?

Matthew Fleharty said:

Jamaal,

There is a difference between can and does...I caveated my statement for that very reason, don’t try to put my position in a box I didn’t build. I also didn’t say that you don’t need any analysis...it’s just a different kind of analysis (market based rather than comparison based).

I included your caveat of generally. (a paraphrase of FAR's 'normally') Your post and references to adequate price competition = a fair and reasonable price are clear.

Matthew Fleharty said:

As for all this talk about "adequate price competition normally establishing a fair and reasonable price," whether it is misplaced or not, compare the second standard  to the situation at hand:

• Adequate price competition (15.403-(c)(1)(ii): an expectation that two or more responsible offerors, competing independently, would submit priced offers even though only one offer is received...
• This situation: numerous offers are received, though only one offer is evaluated IAW the solicitation's procedures because it is the LPTA

If some are willing to hang their hat on "adequate price competition = a fair and reasonable price" why wouldn't they be equally okay doing so in a situation where one receives more than one offer, but only evaluates one?  I think the second situation is far more defensible than the first, regardless of how the FAR defines "adequate price competition" (frankly, it's too narrow...).

What is unclear is what you mean by market based because you also seemed to rely on the other prices (with unknown merits of comparability) as evidence of an effective competition. 'By virtue of competing against the market'? That is overly simplistic and doesn't consider several basic considerations such as a mistakes and defective, vague, or ambiguous solicitations or otherwise ineffective competitions.

If you are simply saying that the LPTA can be determined fair and reasonable without a comparison of other proposed prices - most of us are. You even said as much earlier. If not, what is your market-based analysis based on if not comparisons (comparisons to market prices, propsed prices, catalogs, IGEs, etc.)? Maybe you didn't mean it's not comparison based.

Lastly, you answered Don's last question with a question. I would like to know what your actual answer is to his specific question. (It's a key question)

Don Mansfield said:

Shouldn't you determine whether what you are comparing to the lowest priced offer is comparable? Or do you just assume that it is?

Retreadfed said:

Can someone tell me what "fair and reasonable price means"?

Yes---a price the buyer is willing to pay and the seller is willing to accept.

Nuthin’

Joel, I think it's time for us to give it a rest. Don't you agree?

Vern Edwards said:

Joel, I think it's time for us to give it a rest. Don't you agree?

Actually, yes.  I was just curious about the specific circumstances, which I suppose I should have inquired about at the beginning. I didn’t want to reopen the endless debate  I will ask Brent privately.

Jamaal Valentine said:

What is unclear is what you mean by market based because you also seemed to rely on the other prices (with unknown merits of comparability) as evidence of an effective competition. 'By virtue of competing against the market'? That is overly simplistic and doesn't consider several basic considerations such as a mistakes and defective, vague, or ambiguous solicitations or otherwise ineffective competitions.

Jamaal, apologies if what I wrote was unclear, but I thought my answer to your question:

On 9/17/2018 at 5:35 PM, Jamaal Valentine said:

What is your reasonable argument? Does it involve or rely on comparison of proposed prices?

With:

Matthew Fleharty said:

Not one bit...

Was as clear as possible; however,  you're fixated on the concept of comparison of proposed prices while I was stating another way of analysis to determine the price fair and reasonable separate from relying on comparison of proposed prices (technically evaluated or not).  If you'd like to discuss it, you know how to get in touch with me, but an answer to your questions here would only result in repeating myself.

We don’t really know the reason for or the specific meaning of the original question.

From a protest standpoint , it probably is defendable, as cited herein. The higher priced offers weren’t in line for award, so they aren’t interested parties in an award protest.

If the question is “Can we do it? “ , it’s now too late for the pool members to protest the terms of the award decision.

The task order competition said that this is how award would be made. 

If the question concerned the business sense of simply saying that the price is fair and reasonable because it is the lowest priced offer, then it might depend upon the fuller context of the situation, as was discussed herein.

joel hoffman said:

The higher priced offers weren’t in line for award, so they aren’t interested parties in an award protest.

Unless they are protesting the conduct of the process and they would be in line for award if the protest were sustained. The No. 2 might protest that the No.1 was improperly determined to be technically acceptable.

Arrrgggh! Why am I still reading this?

Vern Edwards said:

Yes---a price the buyer is willing to pay and the seller is willing to accept.

If that is what a fair and reasonable price is, what is all this arguing about?  It seems as if folks here are looking for a "magic formula" to tell them what price is fair and reasonable., i.e., what they would be willing and able to pay for what they are buying.  Also, nobody other than Vern has defined what it is that they are talking about.  Is there a common understanding of what this term means in the FAR or are folks here making up their own definition as they go along without sharing that information?

Retreadfed said:

If that is what a fair and reasonable price is, what is all this arguing about?  It seems as if folks here are looking for a "magic formula" to tell them what price is fair and reasonable., i.e., what they would be willing and able to pay for what they are buying.  Also, nobody other than Vern has defined what it is that they are talking about.  Is there a common understanding of what this term means in the FAR or are folks here making up their own definition as they go along without sharing that information?

 Well, what you are willing to pay also depends upon how important price is in the selection process. If you’re going to use the lowest price technically acceptable method, then I suspect that price is extremely important and probably the most important factor. So the customer might be looking for the lowest  amount of money to spend for the effort. Or the project may be under funded. Who knows? We didn’t have any context For this scenario.

joel hoffman said:

Well it also depends upon how important price is in the selection process. If you’re going to use the lowest price technically acceptable method, then I suspect that price is extremely important and probably the most important factor. So the customer might be looking for the lowest  amount of money to spend for the effort. Or the project may be under funded. Who knows? We didn’t have any context to the acquisition.

I wouldn't say that price is, "probably the most important factor" since the proposals must first be technically acceptable.  It's just that the government isn't willing to pay more for a higher quality or more innovative approach.

Desparado said:

I wouldn't say that price is, "probably the most important factor" since the proposals must first be technically acceptable.  It's just that the government isn't willing to pay more for a higher quality or more innovative approach.

How would price be equal to the non-priced factors in practice?  If two or more technically acceptable offers from responsible offerors are found, the lowest fair and reasonably priced offer wins.  You can’t pay a penny more to get a better technical offer.

And there are “likely” more than one other-than-price factors. 

If there are more than one non-price factors and if price is “equal” to all of them when considered together as “technical” , then price would have to be the most important factor. 

One doesn’t usually describe a weighted comparison between price and non-priced factors when using the LPTA method.

But the reality is that you are looking for the lowest, fair and reasonably priced offer that meets your minimally acceptable criteria from a responsible offeror.

Its a step beyond best value trade off with price as the most important factor.

I think very little (if any) of the disagreement on this forum dealt with "what is a fair and reasonable price?" - the objections came from "can you properly prove it IAW the FAR"

Joel - With the methodology I implemented in my office, the "If two or more technically acceptable offers from responsible offerors are found, the lowest fair and reasonably priced offer wins." does not apply since we don't look at any additional offers once one is found technically acceptable (starting with the lowest price and working our way up).

There are several non-price factors, but all of them are on a pass/fail basis to determine technical acceptability.

In practice, technical is the most important up to the point of acceptability, then price is the most important.

Des, in a source selection, it is necessary that the proposal be technically acceptable. Your method is not different in that respect.

The (lowest fair and reasonable) Price is the discriminator between acceptable proposals for award in an LTPA.  Thus - guess what? Price is the most important  factor.

Industry will tell you this. In fact, industry tells us (and it is true) that price is THE most important individual factor when we say “price is approximately equal to all factors other than price when combined”.  

You will see this stated often in GAO decisions: 

“ It is a fundamental principle in a negotiated procurement that a proposal that fails to conform to a material solicitation requirement is technically unacceptable and cannot form the basis for award.”

(/legacy/reg/05a164d485c52b5f.html)

(Sorry, I can’t edit the text size on my iPhone).

We don’t need to quibble over this.

Joel -  The way I was interpreting what you were saying was basing an assumption that all proposals were technically acceptable, which obviously is not the case. 

I still contend that when reviewing proposals to determine the award that guess what? Technical is the most important to the point of being acceptable.... then lowest price.

We may simply have to agree to disagree on this minor point.

Matthew Fleharty said:

I think very little (if any) of the disagreement on this forum dealt with "what is a fair and reasonable price?" - the objections came from "can you properly prove it IAW the FAR"

This discussion has focused on techniques for determining if a price is fair and reasonable.  My question is if you cannot define what fair and reasonable is, how do you know that you have it regardless of the techniques you apply?  Is this something like Justice Stewart's explanation of pornography in that "I can't define it but I know it when I see it"?

Retreadfed said:

This discussion has focused on techniques for determining if a price is fair and reasonable.  My question is if you cannot define what fair and reasonable is, how do you know that you have it regardless of the techniques you apply?  Is this something like Justice Stewart's explanation of pornography in that "I can't define it but I know it when I see it"?

You can find a more pertinent example in the oral arguments for Kingdomware Technologies, Inc. v. United States, No. 14-916 (2016) where Chief Justice Roberts says:

Quote

These terms imply a lot of discretion: What's fair? What's reasonable? What's best value?  The idea that that's going to operate as a significant restraint on the requirement that the VA locate veteran businesses seems a real stretch to me.

Desparado said:

Joel -  The way I was interpreting what you were saying was basing an assumption that all proposals were technically acceptable, which obviously is not the case. 

I still contend that when reviewing proposals to determine the award that guess what? Technical is the most important to the point of being acceptable.... then lowest price.

We may simply have to agree to disagree on this minor point.

Des, I wasn’t saying that all proposals are technically acceptable. If there are more than one, then lowest price is the discriminator for award..

Let me put it another way by asking you a couple of questions. 

Am I correct in assuming that you don’t want to pay a dime more for a better product, better service, better reputation, better approach, shorter completion, etc., as applicable to your LTPA method?

If yes, then, would it be fair to guess that you are likely looking to award to a firm that will give you the best available price, not an average price?

You are probably hoping that there will be some reasonable number of interested firms who will robustly compete price-wise, knowing full well that they don’t intend to provide any more than what you are asking for. , Someone may have some approach that allows them a competitive advantage that might also benefit you but that’s not what you are looking for . 

Your standard for “fair and reasonable” is probably different than it would be if you were willing to pay more for some added value. 

I don’t think that it is that complicated.

I do think that good business practice should involve some idea or sense of what someone would or “should” expect to pay under the market conditions and solicitation provisions, if possible. 

For DoD, I think that is one aspect of their “Better Buying Power initiatives. After all, old Shay Assad was in a huge Defense Industry firm.

Agreed on all points.  This is why we start with the lowest priced proposal and when we get to one that is technically acceptable, we stop.  No other proposals are reviewed. 

We determine F&R on several factors (IGE, past contracts for similar purchases, bid abstract, etc).

Again, I don't think we really feel differently about the process.  I just had an issue with the statement that price is the most important factor.  In reality, if all proposals were technically acceptable, you'd be right.... but since they aren't, technical is the most important up to acceptability, then price. 

If we wish to continue the conversation, we probably should do so privately as I'm sure others are tired of seeing me say the same thing over and over again.

Competitive RFPs have requirements for stating the relative importance of factors … this is based on 10 U.S.C. 2305(a)(2) and implemented in places like FAR 15.203, 15.304, etc.

If the relative importance is unstated the factors are presumed approximately equal. That's not to say that price cannot or will not be the discriminator as technical offers approach or are deemed equal (in this case - acceptable).

Here are a couple definitions of Fair and Reasonable Price (CPRG offers another):

https://thelawdictionary.org/fair-and-reasonable-price/

https://www.dau.mil/acquipedia/Pages/ArticleDetails.aspx?aid=1ae4716b-d8f3-4839-9785-adbd19d5a26f

Jamaal Valentine said:

Competitive RFPs have requirements for stating the relative importance of factors … this is based on 10 U.S.C. 2305(a)(2) and implemented in places like FAR 15.203, 15.304, etc.

If the relative importance is unstated the factors are presumed approximately equal. That's not to say that price cannot or will not be the discriminator as technical offers approach or are deemed equal (in this case - acceptable).

Here are a couple definitions of Fair and Reasonable Price (CPRG offers another):

https://thelawdictionary.org/fair-and-reasonable-price/

https://www.dau.mil/acquipedia/Pages/ArticleDetails.aspx?aid=1ae4716b-d8f3-4839-9785-adbd19d5a26f

Jamaal, just to clarify, the LPTA method is outlined in 10 USC 2305 (a)(4)(B). There is no relative importance of factors assigned in this method. It is described in FAR 15.101-2

The  relative importance of factors including price and non-priced is required for the Trade-off process. See 15.101-1 for that specific requirement.

joel hoffman said:

Jamaal, just to clarify, the LPTA method is outlined in 10 USC 2305 (a)(4)(B). There is no relative importance of factors assigned in this method. It is described in FAR 15.101-2

The  relative importance of factors including price and non-priced is required for the Trade-off process. See 15.101-1 for that specific requirement.

Joel:

Do you read your citations as exceptions to 10 U.S.C. 2305(a)(2), FAR 15.203, 15.304, etc.?

Logically, we weigh the relative importance when using the tradeoff process … in LPTA there aren't any significant differentiators in technical so price is the final discriminator ceteris paribus. However, LPTA factors are of equal weight when combined - this does not mean that individual factors or subfactors are equal. (See Chenega Federal Systems, LLC., B-414478, June 26, 2017)

"Ceteris paribus"?

I'm impressed.

Jamaal Valentine said:

Joel:

Do you read your citations as exceptions to 10 U.S.C. 2305(a)(2), FAR 15.203, 15.304, etc.

Logically, we weigh the relative importance when using the tradeoff process … in LPTA there aren't any significant differentiators in technical so price is the final discriminator ceteris paribus. However, LPTA factors are of equal weight when combined - this does not mean that individual factors or subfactors are equal. (See Chenega Federal Systems, LLC., B-414478, June 26, 2017)

Jamaal,, if every non-price factor in an LPTA acquisition must be rated “acceptable” for a technically acceptable rating,  then each technical factor is equally important.  Yes, indeed - see Chenega Federal Systems LLC. 

They are not individually “weighted”. By weighted, I mean either numerically or percentage weighted or differentiated using statements of relative importance. 

Where does Far 15.101-2 discuss any comparison between factors.? 

Yes, I think that the LPTA acquisition method is an exception to the statutory rule that if not otherwise stated, the relative importance between cost and other than cost factors when combined are equal. That is under FAR 15.101-1 for  trade-off competitions.  

FAR 15.101-2 says, instead, that “Solicitations shall specify that award will be made on the basis of the lowest evaluated price of proposals meeting or exceeding the acceptability standards for non-cost factors.”

It is not possible for technical acceptability to be equally important as price in a competitive selection of the successful proposer with LPTA, when more than proposer is rated technically acceptable (or exceeding acceptable standards) .  The discriminator for selection between technically acceptable offers is price . I don’t know how to make it any clearer than that. 

Lowest evaluated price wins. Industry knows it. Again, read Chenega, for example.  

Actually, I suppose they can only be equal if all technically acceptable propiosals are equally priced. Then, I don’t know what would be the final discriminator.  Even when we provided a ceiling price in construction or design-build construction competitions when using LPTA, the competitors would usually propose some number that was lower or nominally lower than the ceiling price.

Retreadfed said:

If that is what a fair and reasonable price is, what is all this arguing about?  It seems as if folks here are looking for a "magic formula" to tell them what price is fair and reasonable., i.e., what they would be willing and able to pay for what they are buying.  Also, nobody other than Vern has defined what it is that they are talking about.  Is there a common understanding of what this term means in the FAR or are folks here making up their own definition as they go along without sharing that information?

Above all, the question of the "fairness and reasonableness" of prices is about whether the price is too high for the taxpayers to pay. The earliest official use of the phrase "fair and reasonable price" that I have been able to find through quick research is in a decision of the U.S. Court of Claims, Parish v. U.S., 1 Ct. Cl. 57, Oct. 1, 1865, concerning the price paid for cavalry horses. I quote the entire decision here for your amusement:

Quote

Mr. A. L. MERRIMAN for claimant.

Mr. J. J. WEED, Assistant Solicitor, for the government.

Opinion

PECK, J., delivered the opinion of the Court.

The petitioner represents that in the month of September, 1861, he received an order from one McKinstry, chief quartermaster at the city of St. Louis, in the State of Missouri, as follows: “You are authorized to purchase for a regiment of cavalry, to be called the McKinstry Guard, to be raised in Central Illinois, eleven hundred and fifty-eight horses, at prices not to exceed $110 each. They must be rigidly inspected by a board appointed by the colonel of the regiment previous to being received. To be delivered at Peoria, Illinois.”

That he purchased the horses at the price named, and they were delivered to and accepted by the proper officers, for which he received from the quartermaster of the regiment vouchers amounting in all to the sum of $127,380. That these vouchers were afterwards submitted to a commission held at St. Louis, appointed by the then commander of that military district, and presided over by the then Captain (now Major General) Philip Sheridan, which commission approved the vouchers, as did also the chief quartermaster of the military department at the time, who was General R. Allen.

The prices charged for the horses, it is alleged, were reasonable, and were not above their general market value. These vouchers were transferred by petitioner to Messrs. Sturgis & Son, of Chicago, for collection, who presented them for payment at the office of the Quartermaster General, at Washington, and received thereon $105 per horse, making the sum of $121,590. That a deduction was made from the face of the vouchers without any just cause, pretence of fraud, or authority. By reason of which, petitioner claims that he has a right to recover the sum of $5,790, the amount deducted and withheld.

The allegations of the petition are sustained by the evidence. The case, as presented, shows that the horses were purchased and accepted by the government. It is also shown that they were equal to the required standard.

On the 13th of March, 1862, the Quartermaster General (M. C. Meigs) addressed the following letter to the Third Auditor: “The account of Joseph W. Parish (five enclosures) for 1,158 horses furnished the McKinstry Guard, and amounting to $114,180, having been examined and recommended for payment by the military commission at St. Louis, is respectfully referred to you for settlement in certificates of indebtedness.” On the 22d of the same month General Meigs also wrote to the same officer as follows: “I respectfully transmit herewith five accounts, in duplicate, in favor of J. W. Parish for 1,158 horses furnished the McKinstry Guard, (11th Illinois cavalry,) at $110 each. The accounts are approved, and payment in certificates of indebtedness is recommended.” On the 5th of April following, Quartermaster General Meigs again wrote to the Third Auditor as follows:

“In transmitting, on the 22d of March last, with my approval, the five accounts in favor of Joseph W. Parish for 1,038 horses for the McKinstry Guards, at $110, I was governed by the action of a military commission approving those accounts, the authority under which the purchases were made, and the apparently reasonable price charged for the horses.

“Since then, however, I have received the final report made by the Commission on War Claims, at St. Louis, a printed copy of which is herewith enclosed; wherein, on page 28, a special reference is made to Parish's claim. On account of the developments made by this commission, I now desire to withdraw my approval of Parish's account so far as the price charged is concerned, and recommend that said account be allowed to the extent of one hundred and five dollars for each horse, that being the price allowed in other cases by the Commission on Claims in the western department for cavalry horses, subject, however, to a reclamation of five dollars on each horse (120) charged for at $110 in the account referred to and paid by Major Miller.”

The latter communication caused the Auditor to withhold from claimant the sum he now seeks to recover. Do the facts stated justify the retaining of the five dollars on each horse? We think they do not. Parish had already submitted his claim and vouchers to one commission, which had given an approval. By it the price paid for the horses had not been pronounced unreasonable, nor was any exception taken as to their quality.

The subsequent report by another commission, (before which neither Parish nor his accounts appeared,) stating that $105 was a fair allowance for horses, does not authorize the government to deduct from the price it had agreed to pay Parish, since it nowhere appears that he had conducted himself in bad faith, or that the price he demanded was unreasonable. The special reference made to this claim by the second commission is not in this record, and we are not advised as to what it is.

There is abundant proof to show that the horses were purchased by Parish in the expectation that he would receive the sum of $110 for them from the government, and that this was a fair and reasonable price.

The refusal to pay the full price agreed upon is unauthorized, and does not seem to have any reason, but only caprice, for its foundation. Why the action of the second commission or its opinion is better or more to be trusted than that of the first, is not explained. The claimant submitted his vouchers to the commission presided over by General Sheridan, and they received its approval. It is not shown how or why they were considered by a second commission; nor was the claimant required by any law or reason that we know of to submit his vouchers to the gauntlet of all the commissions that might be devised for that or any other purpose; but, apart from all commissions of investigation, he may rely upon the rectitude of his conduct and his contract, exacting as much compliance as he gave, or upon the actual value of the property sold and delivered.

There is no imputation upon the fairness of the conduct of the claimant, and he should recover.

We direct a judgment in his favor for the sum of $5,790.

Emphases added.

I found this reference to fair and reasonable price in an opinion of the U.S. Attorney General dated April 9, 1937, entitled, "Right of Douglas Aircraft Co. To Contract Price For Airplanes Furnished Army", 39 Op. U.S. Atty Gen. 23:

Quote

Section 10 of the Air Corps Act, however, provides a different method for the procurement of aircraft from that provided by the general procurement statutes. The provisions of that section here pertinent are as follows:

SEC. 10. (a) That in order to encourage the development of aviation and improve the efficiency of the Army and Navy aeronautical matériel the Secretary of War or the Secretary of the Navy, prior to the procurement of new designs of aircraft or aircraft parts or aeronautical accessories, shall, by advertisement for a period of thirty days in at least three of the leading aeronautical journals and in such other manner as he may deem advisable, invite the submission in competition, by sealed communications, of such designs of aircraft, aircraft parts, and aeronautical accessories, together with a statement of the price for which such designs in whole or in part will be sold to the Government.

‘(b) The aforesaid advertisement shall specify a sufficient time, not less than sixty days from the expiration of the advertising period, within which all such communications containing designs and prices therefor must be submitted, and all such communications received shall be carefully kept sealed in the War Department or the Navy Department, as the case may be, until the expiration of said specified time, and no designs mailed after that time shall be received or considered. Said advertisement shall state in general terms the kind of aircraft, parts, or accessories to be developed and the approximate number or quantity required, and the department concerned shall furnish to each applicant identical specific detailed information as to the conditions and requirements of the competition and as to the various features and characteristics to be developed, listing specifically the respective measures of merit, expressed in rates per centum, that shall be applied in determining the merits of the designs, and said measures of merit shall be adhered to throughout such competition. All designs received up to the time specified for submitting them shall then be referred to a board appointed for that purpose by the Secretary of the department concerned and shall be appraised by it as soon as practicable and report made to the Secretary as to the winner or winners of such competition. When said Secretary shall have approved the report of said board, he shall then fix a time and place for a public announcement of the results and notify each competitor thereof; but if said report shall be disapproved by said Secretary, the papers shall be returned to the board for revision or the competition be decided by the Secretary, in his discretion, and in any case the decision of the Secretary shall be final and conclusive. Such announcement shall include the percentages awarded to each of the several features or characteristics of the designs submitted by each competitor and the prices named by the competitors for their designs and the several features thereof if separable.

‘(c) Thereupon the said Secretary is authorized to contract with the winner or winners in such competition on such terms and conditions as he may deem most advantageous to the Government for furnishing or constructing all of each of the items, or all of any one or more of the several items of the aircraft, or parts, or accessories indicated in the advertisement, as the said Secretary shall find that in his judgment a winner is, or can within a reasonable time become, able and equipped to furnish or construct satisfactorily all or part, provided said Secretary and the winner shall be able to agree on a reasonable price. If the Secretary shall decide that a winner can not reasonably carry out and perform a contract for all or part of such aircraft, parts, or accessories, as above provided, then he is authorized to purchase the winning designs or any separable parts thereof if a fair and reasonable price can be agreed on with the winner, but not in excess of the price submitted with the designs.'

Emphasis added. By the way, what we might see in that is the origin, or one of them, of the modern FAR Part 15 source selection process.

Okay, one more. The first mention of "fair and reasonable price" by the Comptroller General was in a 1923 decision, 2 Comp. Gen. 503, Feb. 14, 1923. Capitalization as in original.

Quote

WHERE THE MINDS OF THE CONTRACTING PARTIES DO NOT MEET, THE ONE INTENDING THE PRICE STATED TO BE THE PRICE PER HUNDRED WHILE THE OTHER TREATS IT AS THE PRICE FOR THE ENTIRE LOT CONSISTING OF SEVERAL HUNDRED, NO CONTRACT RESULTS, BUT IF THE SUPPLIES ARE FURNISHED AND ACCEPTED, PAYMENT MAY BE MADE ON A QUANTUM VALEBAT BASIS, THE LOWEST BID SUBMITTED BEING PROPER FOR CONSIDERATION FOR THE PURPOSE. 26 COMP. DEC., 286, AFFIRMED.

PHILADELPHIA ELECTRIC AND MANUFACTURING CO. APPLIED OCTOBER 13, 1922, FOR A REVIEW OF SETTLEMENT W-NO. 572,317 OF SEPTEMBER 21, 1922, WHEREIN ONLY $195.45 WAS ALLOWED ON ITS CLAIM FOR $514.65 ON ACCOUNT OF CROSSARMS FURNISHED FOR THE SIGNAL CORPS, UNITED STATES ARMY, UNDER PURCHASE ORDER NO. 101801, DATED APRIL 14, 1922, AN ERROR IN ITS PRICE AS BID BEING ALLEGED BY CLAIMANT.

* .    * .    *

BIDS HAD BEEN SOLICITED ON TWO ITEMS DESIGNATED AS ITEMS 10 AND 11. ITEM 10 WAS FOR 200 CROSSARMS 3 1/4 INCH BY 4 1/4 INCH BY 4 FEET LONG, AND ITEM 11 WAS FOR 500 LIKE CROSSARMS, 6 FEET LONG. OF THE 4-FOOT CROSSARMS 100 WERE TO BE DELIVERED AT SOUTH BROOKLYN, N.Y., AND 100 AT SAN FRANCISCO, CALIF. OF THE 6-FOOT CROSSARMS 200 WERE TO BE DELIVERED AT SOUTH BROOKLYN AND 300 AT SAN FRANCISCO.

* .    * .    *

THE GOVERNMENT RECEIVED 499 OF THE 500 CROSSARMS ORDERED AND, THERE BEING NO BINDING CONTRACT COVERING THE TRANSACTION, SHOULD PAY A FAIR AND REASONABLE PRICE THEREFOR. THE LOWEST BID SUBMITTED ON THIS LOT WAS 72 CENTS EACH OR $360 FOR THE ENTIRE LOT. THIS MAY BE ACCEPTED AS A FAIR AND REASONABLE PRICE. ACCORDINGLY CLAIMANT WAS ENTITLED TO $359.28 FOR THE 499 CROSSARMS DELIVERED.

UPON A REVIEW OF THE MATTER A DIFFERENCE OF $163.83 IS CERTIFIED DUE CLAIMANT.

Emphasis added.

If being the lowest was good enough for the U.S. Comptroller General, despite the lack of any "technical evaluation"...

joel hoffman said:

Jamaal,, if every non-price factor in an LPTA acquisition must be rated “acceptable” for a technically acceptable rating,  then each technical factor is equally important.  Yes, indeed - see Chenega Federal Systems LLC. 

They are not individually “weighted”. By weighted, I mean either numerically or percentage weighted or differentiated using statements of relative importance.

Such a statement may limit someone else's creativity or discretion. I'd rather just go with the plain reading of the statute and regulation and let individuals make up their own mind (the primary step regarding canons of interpretation). Priced and nonprice factors being approximately equal when combined shouldn't cause any issues with doing business as usual.

I forgot what my original line of thinking was when this started, but now I am thinking of an LPTA RFP that has a technical factor and subfactors. For example, picture a situation where a contractor must satisfy some combination of (but not all) subfactors in order to be determined acceptable (No tradeoffs required or allowed). Technical is not limited to product or service function, performance, or design. Technical is a threshold of values (min or max). Technical applies to any attributes one can think up that relate to an offeror or their offer. (Why anyone would craft an RFP this way, I don't know, but who am I to limit people's thinking?)

I understand that this place can be hostile towards so-called 'dumb ideas', but I think it's a great place to test thoughts: one's we believe and some we don't ...

Jamaal Valentine said:

Such a statement may limit someone else's creativity or discretion. I'd rather just go with the plain reading of the statute and regulation and let individuals make up their own mind (the primary step regarding canons of interpretation). Priced and nonprice factors being approximately equal when combined shouldn't cause any issues with doing business as usual.

I forgot what my original line of thinking was when this started, but now I am thinking of an LPTA RFP that has a technical factor and subfactors. For example, picture a situation where a contractor must satisfy some combination of (but not all) subfactors in order to be determined acceptable. Technical is not limited to product or service function, performance, or design. Technical is a threshold of values (min or max). Technical applies to any attributes one can think up that relate to an offeror or their offer. (Why anyone would craft an RFP this way, I don't know, but who am I to limit people's thinking?)

I understand that this place can be hostile towards so-called 'dumb ideas', but I think it's a great place to test thoughts: one's we believe and some we don't ...

Hey, Jamaal. I was wondering myself whether there may be a situation where not every individual factor or sub factor had to pass some acceptability minimum criteria for overall acceptable rating. 

For your hypothetical situation,  perhaps one could use a trade-off with price as substantially more important than technical. They can state that they intend to award  on the basis of initial offers without discussions but reserve the right conduct discussions if necessary. 

 How all this relates to discussion of what fair and reasonable” ,  I don’t know.

The point that I originally tried to make was that what a buyer is willing to pay depends upon their priorities.

I said that , when using the LPTA method, price is more important than providing any more value than minimally required for acceptability, if it will cost more than just meeting the governments requirements. 

Thats the way the design and construction industry understands it.

If there is sufficient interest in the project, product or service, then the competitors  should be sharpening their pens. 

Hopefully, the buyer has some idea how much the requirements might be purchased for. If they don’t have any independent clue, they will probably rely on  the prices received. 

Depending upon the technical complexity of the project, product or service and the number, dollar spread and distribution of offers, when the lowest priced offer is acceptable, it may be a good idea to at least read or review a higher priced offer to validate that you are comparing apples to apples.

If the first technically acceptable offer isn’t the lowest priced, you will already have some comparables for cost and technical. You might be able to correlate what price effect the deficiencies had on the price of those offers for comparison with your ffirst technically acceptable offer. There would likely be no need to examine any higher priced technical proposal. 

Then, depending upon how much flexibility you allowed yourself in the stated evaluation criteria and basis of award and other factors such as time available and offered prices vs. your budget, you could decide whether it would be advantageous to develop a competitive range and conduct discussions. If you are satisfied with the price of your first technically acceptable  offer, you would likely just award. But If some or all of the lower priced but deficient proposals might be susceptible to being corrected without significantly upward affecting their price, it might be worth conducting discussions. 

Of course, then you might well have to consider whether it is necessary and/or advantageous to include any higher priced offerors in the competitive range.  

For construction projects with LPTA,  I hesitated to recommend opening discussions when it would involve including higher priced initial offers.  Conducting discussions in an LPTA could signal to the industry that they might be able to not submit their best price initially in hopes of getting a second bite of the apple. Some firms expressed their surprise in feedback.  

Awarding without discussions let them know that the government was serious about sharpening their initial prices. 

The only times we conducted discussions in LPTA was when’re didn’t get affordable pricing or when it was deemed advantageous to allow lower priced offeror(s) to cure their deficiencies.

Vern alluded to the IFB method for relying on competition to sssure substantiate or validate fair and reasonable pricing without any regard to technical evaluation. 

I would agree -  with the caveat that in IFB, it isn’t deemed necessary to examine or assure the government that the lowest bidder  will likely meet the solicitation’s technical or other requirements, other than a routine responsibility determination. Competitors are competing strictly on lowest price basis. 

If there isn’t any need to do that, then it should not be necessary or appropriate to use LPTA. Use IFB. 

My LPTA perspective is based primarily on construction contracting. The nature of buying supplies and materials and routine services based upon pricing is a different animal when it comes to pricing plus it is often possible to research the web for prices. 

I found that acquiring more complex services is just that - more complex .

@ Jamaal and Joel:

Jamaal Valentine said:

I am thinking of an LPTA RFP that has a technical factor and subfactors. For example, picture a situation where a contractor must satisfy some combination of (but not all) subfactors in order to be determined acceptable. Technical is not limited to product or service function, performance, or design. Technical is a threshold of values (min or max). Technical applies to any attributes one can think up that relate to an offeror or their offer. (Why anyone would craft an RFP this way, I don't know, but who am I to limit people's thinking?)

I understand that this place can be hostile towards so-called 'dumb ideas', but I think it's a great place to test thoughts: one's we believe and some we don't ...

The relative importance rule is designed to guide offerors when they may have to make tradeoffs among factors when preparing their proposals. It's relative importance. The concept is meaningful when offerors have reached a point in their proposal development at which they cannot give the government more of all that it wants, e.g., higher quality and lower price. They have reached a point at which they can give more of X or more of Y but not more of both. The classic quality/price conundrum. If the government has conflicting objectives---high quality and low price---then telling offerors that quality is more important than price is the same as saying, _If you have to make a choice between giving us higher quality or lower price, then we prefer higher quality. (_Telling them that quality and price are equally important is saying that the government will not or cannot provide guidance, perhaps because it's indifferent about the choice.)

See: "The Relative Importance of Source Selection Evaluation Factors: Analysis of a Misunderstood Rule," The Nash & Cibinic Report (July 1996).

Does the concept of relative importance apply in LPTA? Off the bat, it seems to me that the answer is no. The government will not make technical/price tradeoffs. Technical acceptability is a qualifying criterion. Price is the ultimate source selection decision criterion. There are no nonprice/price tradeoffs, so no need for guidance in that regard.

Procedurally, LPTA is really a just a variation of two-step sealed bidding, the main distinction being that it's done in a single step. Take a look at FAR 14.503-1(a), which describes the contents of requests for "technical proposals." There is a requirement to disclose the evaluation factors, but no requirement to disclose their relative importance. 

It seems to me that technical acceptability is really a compilation of individual requirements that does not entail tradeoffs. I don't understand Jamaal's idea that the "contractor must satisfy some combination of (but not all) subfactors in order to be determined acceptable." I don't see how having to satisfy some but not all subfactors would necessitate tradeoffs. Tradeoffs are required, and relative importance becomes important, when it's necessary to put together a winning combination of conflicting factors.

Is it possible that multiple criteria for technical acceptability could be intertwined in such a way that an offeror might have to make tradeoffs when determining how to be technically acceptable? I won't say no. But it seems to me that if technical acceptability is adequately defined, then the definition should be all the guidance that the offeror needs. Any combination of factors that will yield defined technical acceptability will work and the government will evaluate at the bottom line, so to speak. If it does not specify how to add things up, then any sum that reaches the specified bottom line is technically acceptable. If technical acceptability is not adequately defined, then you have a faulty solicitation.

Think of a column of ten numbers, the sum of which must equal 100 in order to be acceptable, as long as each number has a value of at least five. No single number is more important than the others. A lot of combinations are possible. Which combination should an offeror choose? Who cares, as long as their sum is 100 and each is worth at least five? If the government considers one number or some numbers among the ten to be more important than the others, then the government should specify some specific, minimum, or maximum values to them as conditions of acceptability, and the offerors are free to do whatever they like with the rest. A statement of relative importance is embedded in the definition of technical acceptability.

Vern Edwards said:

@ Jamaal and Joel:

The relative importance rule is designed to guide offerors when they may have to make tradeoffs among factors when preparing their proposals. It's relative importance. The concept is meaningful when offerors have reached a point in their proposal development at which they cannot give the government more of all that it wants, e.g., higher quality and lower price. They have reached a point at which they can give more of X or more of Y but not more of both. The classic quality/price conundrum. If the government has conflicting objectives---high quality and low price---then telling offerors that quality is more important than price is the same as saying, _If you have to make a choice between giving us higher quality or lower price, then we prefer higher quality. (_Telling them that quality and price are equally important is saying that the government will not or cannot provide guidance, perhaps because it's indifferent about the choice.)

See: "The Relative Importance of Source Selection Evaluation Factors: Analysis of a Misunderstood Rule," The Nash & Cibinic Report (July 1996).

Does the concept of relative importance apply in LPTA? Off the bat, it seems to me that the answer is no. The government will not make technical/price tradeoffs. Technical acceptability is a qualifying criterion. Price is the ultimate source selection decision criterion. There are no nonprice/price tradeoffs, so no need for guidance in that regard.

Procedurally, LPTA is really a just a variation of two-step sealed bidding, the main distinction being that it's done in a single step. Take a look at FAR 14.503-1(a), which describes the contents of requests for "technical proposals." There is a requirement to disclose the evaluation factors, but no requirement to disclose their relative importance. 

It seems to me that technical acceptability is really a compilation of individual requirements that does not entail tradeoffs. I don't understand Jamaal's idea that the "contractor must satisfy some combination of (but not all) subfactors in order to be determined acceptable." I don't see how having to satisfy some but not all subfactors would necessitate tradeoffs. Tradeoffs are required, and relative importance becomes important, when it's necessary to put together a winning combination of conflicting factors.

Is it possible that multiple criteria for technical acceptability could be intertwined in such a way that an offeror might have to make tradeoffs when determining how to be technically acceptable? I won't say no. But it seems to me that if technical acceptability is adequately defined, then the definition should be all the guidance that the offeror needs. Any combination of factors that will yield defined technical acceptability will work and the government will evaluate at the bottom line, so to speak. If it does not specify how to add things up, then any sum that reaches the specified bottom line is technically acceptable. If technical acceptability is not adequately defined, then you have a faulty solicitation.

Think of a column of ten numbers, the sum of which must equal 100 in order to be acceptable, as long as each number has a value of at least five. No single number is more important than the others. A lot of combinations are possible. Which combination should an offeror choose? Who cares, as long as their sum is 100 and each is worth at least five? If the government considers one number or some numbers among the ten to be more important than the others, then the government should specify some specific, minimum, or maximum values to them as conditions of acceptability, and the offerors are free to do whatever they like with the rest. A statement of relative importance is embedded in the definition of technical acceptability.

Agree. 

 Vern, I forgot about the two-step sealed bid in method. In fact, my very first design build project was in 1971 with the Air Force at Castle Air Force Base California. The Air Force use the two-step sealed bid method for design and construction of a military family housing project. The first step allowed Air Force to evaluate the acceptability of the various proposed designs. I think that they did conduct some kind of discussions and allowed the firms to correct their design proposals. The contract was awarded to the lowest bidder in step two.

All units were back to back duplexes with carports. The exterior architecture of the 250 homes reflected the low bid mentality of this acquisition method (T-111 plywood and batten siding, no eaves or roof overhangs). It was the only allowed way to acquire design build construction at that time. 

Still, it was ahead of its time and the interiors were at least as good quality as most of the military’s then latest design-bid-build housing stock. 

The Navy used two-step sealed bidding extensively for design-build construction up through at least the late 1990’s.

If I were preparing an LPTA RFP, in order to comply with FAR 15.304(d) and (e) I would say:

All technical acceptability factors are equally important, because all must be satisfied in order for an offeror to be eligible for award. Price will be the determining factor when selecting the awardee.

Vern Edwards said:

If I were preparing an LPTA RFP, in order to comply with FAR 15.304(d) and (e) I would say:

All technical acceptability factors are equally important, because all must be satisfied in order for an offeror to be eligible for award. Price will be the determining factor when selecting the awardee.

Clear and concise for both government and industry.

Vern Edwards said:

Is it possible that multiple criteria for technical acceptability could be intertwined in such a way that an offeror might have to make tradeoffs when determining how to be technically acceptable? I won't say no. But it seems to me that if technical acceptability is adequately defined, then the definition should be all the guidance that the offeror needs. Any combination of factors that will yield defined technical acceptability will work and the government will evaluate at the bottom line, so to speak. If it does not specify how to add things up, then any sum that reaches the specified bottom line is technically acceptable. If technical acceptability is not adequately defined, then you have a faulty solicitation.

Think of a column of ten numbers, the sum of which must equal 100 in order to be acceptable, as long as each number has a value of at least five. No single number is more important than the others. A lot of combinations are possible. Which combination should an offeror choose? Who cares, as long as their sum is 100 and each is worth at least five? If the government considers one number or some numbers among the ten to be more important than the others, then the government should specify some specific, minimum, or maximum values to them as conditions of acceptability, and the offerors are free to do whatever they like with the rest. A statement of relative importance is embedded in the definition of technical acceptability.

This is what I wanted to convey. (I'm working on my writing)

Vern Edwards said:

If I were preparing an LPTA RFP, in order to comply with FAR 15.304(d) and (e) I would say:

All technical acceptability factors are equally important, because all must be satisfied in order for an offeror to be eligible for award. Price will be the determining factor when selecting the awardee.

Satisfies the requirement and doesn't change how we do business. This is LPTA in a nutshell.

I haven't read every single response on this topic, but going back to the original inquiry, if you were buying a car, would you simply go to the first dealership and if you found a car that met your requirements, buy it right then and there at the sticker price? Even if there were several dealerships in that area that sold the car you wanted, would you simply assume that the pricing was competitive, or would you shop around?

On 9/20/2018 at 7:46 AM, Vern Edwards said:

If I were preparing an LPTA RFP, in order to comply with FAR 15.304(d) and (e) I would say:

All technical acceptability factors are equally important, because all must be satisfied in order for an offeror to be eligible for award. Price will be the determining factor when selecting the awardee.

Out of curiosity, if all technical factors need to be satisfied, what does it add to say that they are of equal importance? Isn't it implied in the LPTA process already that the factors are of equal importance, since you cannot trade off one factor vs. another?

MileHighAcq said:

I haven't read every single response on this topic, but going back to the original inquiry, if you were buying a car, would you simply go to the first dealership and if you found a car that met your requirements, buy it right then and there at the sticker price? Even if there were several dealerships in that area that sold the car you wanted, would you simply assume that the pricing was competitive, or would you shop around?

That analogy is not even close to the situation at hand...

Matthew Fleharty said:

That analogy is not even close to the situation at hand...

👍

MileHighAcq said:

Out of curiosity, if all technical factors need to be satisfied, what does it add to say that they are of equal importance? Isn't it implied in the LPTA process already that the factors are of equal importance, since you cannot trade off one factor vs. another?

Milehigh, I agree with you. However, it apparently isn’t that clear to everyone else. Some people live and die by step-by-step, .literal instructions.And I am not referring to Vern.

Edited to add: At any rate, this is a side issue. What fair and reasonable means and how one can determine that a price is fair and reasonable are the most important aspects of this thread - in my opinion.

Right on. Just making sure I wasn't missing anything. 

Point I was trying to make with my other imperfect analogy is that in real life, you never just settle for the first option or offer that comes along without shopping around an doing your due diligence. Even if the first offer satisfies your technical requirements, you don't know if the price is any good (i.e. fair and reasonable) without comparing it to the other offers to make sure that they're for the same thing (or at least meet your minimum requirements).

MileHighAcq said:

if you were buying a car, would you simply go to the first dealership and if you found a car that met your requirements, buy it right then and there at the sticker price? Even if there were several dealerships in that area that sold the car you wanted, would you simply assume that the pricing was competitive, or would you shop around?

The use of LPTA presumes that the buyer has done thorough market research and built that research into criteria for technical acceptability before soliciting competitive offers. The buyer knows what she wants and knows that she does not want anything more. She then solicits offers, states her criteria for acceptability, verifies offer acceptability, and selects the one that offers the lowest price. This is a variation of the competitive bidding process that is still widely used in government and the private sector for some kinds of buys.

Your "imperfect" analogy does not envision the buyer doing advance market research before going out to buy. Nor does it envision the buyer soliciting competitive bids. Instead, it envisions the buyer going shopping and then posits that the buyer would be foolish to purchase the first thing she sees. If the offer is acceptable, you don't want more, and the price is lowest, what more do you want?

Your analogy is not imperfect. It's inapt.

edit: looks like I screwed up the quote function. sorry. still getting used to the forum functionality.

here's what I wanted to say above:

To clarify,  you're saying it's acceptable for a buyer  to get competitive bids, and in an LPTA environment, simply order the bids by price, start with the lowest price and award to the first technically acceptable offer they come across without looking at the other bids at all? From a technical standpoint, this could ensure that the buyer gets a technically acceptable product, but from a price perspective, how could the buyer be sure that the price is the lowest price without having received at least one other technically acceptable bid?

The point of my "inapt" analogy is that the process you describe could ensure that you get a technically acceptable product, but not that you got it at the lowest price.

MileHighAcq said:

here's what I wanted to say above:

To clarify,  you're saying it's acceptable for a buyer  to get competitive bids, and in an LPTA environment, simply order the bids by price, start with the lowest price and award to the first technically acceptable offer they come across without looking at the other bids at all? From a technical standpoint, this could ensure that the buyer gets a technically acceptable product, but from a price perspective, how could the buyer be sure that the price is the lowest price without having received at least one other technically acceptable bid?

The point of my "inapt" analogy is that the process you describe could ensure that you get a technically acceptable product, but not that you got it at the lowest price.

Short of engaging in discussions/negotiations (which is a completely different topic) how would assessing higher priced proposals for their technical acceptability result in awarding a contract for a lower price than the Lowest Priced Technically Acceptable offer?

Upon further review, reflection, and self-doubt, I think I see the error of my ways.

In my car buying scenario, I didn't consider that in a Federal contracting LPTA scenario, the buyer would already have prices, so he/she would not just be randomly going to the first dealership around the corner and blindly accepting their price if they met the technical specs, but can go to the lowest priced dealership first, thereby ensuring that he/she gets the lowest priced, technically acceptable car. That's the part that was missing in my example. Sometimes just have to think through things.

Matthew Fleharty said:

Short of engaging in discussions/negotiations (which is a completely different topic) how would assessing higher priced proposals for their technical acceptability result in awarding a contract for a lower price than the Lowest Priced Technically Acceptable offer?

For some reason, I was hung up on "what if none of the other offers are acceptable". But I think I see now that it wouldn't matter for the purposes of source selection.

I think this particular "received truth" (i.e. evaluating all offers received - and thank you Vern for that concept I read earlier today in a speech you gave (whether contracting is an intellectual pursuit)) has been so ingrained in me over the years, that I haven't stopped to question what it actually accomplishes and whether it's actually necessary.

MileHighAcq said:

For some reason, I was hung up on "what if none of the other offers are acceptable". But I think I see now that it wouldn't matter for the purposes of source selection.

It might matter if the govt doesn’t otherwise have a clue about the value and if it relies upon comparisons of prices that aren’t reflective of the requirements.

 To clarify - that doesn’t necessarily mean formal full blown technical evaluation of any or all higher priced offers. 

Otherwise it may not matter.

Came across this while reading about the KC-X Tanker deal:

"Rather than weighing the performance features of Boeing and Airbus offerings, the Air Force developed a list of 372 mandatory performance requirements that each team must meet before they could submit a final bid. What this meant in practical terms was that unless one of the teams was disqualified, the key discriminator in the competition would be price."

On 10/16/2018 at 11:48 AM, Jamaal Valentine said:

Came across this while reading about the KC-X Tanker deal:

"Rather than weighing the performance features of Boeing and Airbus offerings, the Air Force developed a list of 372 mandatory performance requirements that each team must meet before they could submit a final bid. What this meant in practical terms was that unless one of the teams was disqualified, the key discriminator in the competition would be price."

The news reported that the Air Force said it would award a fixed price contract to the lowest priced technicality acceptable competitor.

What they didn’t report was that it would be a fixed price incentive contract. Within a few months after the Feb 2011 announcement of award of the first (four?) planes, Boeing announced a huge expected cost overrun, of which the taxpayers were entitled to share with Boeing.

I think that the first plane will be delivered this month, only about 7 years and 8 months later. That’s about twice the length of America’s combat involvement in WWII.

oh yes. The KC-46 is a variant of the B-767, which has been flying since 1981...

The AF has been complaining that Boeing is placing their priorities on their commercial business rather than the AF Tanker. One wouldn’t have thought that when Boeing and its political backers were fighting along with their allies in Congress and in the media, the possibility of an American manufacturing presence of EADS. 

Airbus/Eads is here and they are doing well. They are already expanding their plant in Mobile, AL and are partnering with Bombardier to build a plant and production line in Mobile for the new A-220 series (rebranding of the CRJ C-Series).

On ‎10‎/‎16‎/‎2018 at 6:00 PM, joel hoffman said:

Boeing announced a huge expected cost overrun, of which the taxpayers were entitled to share with Boeing.

"By Grabthar's Hammer, what a savings!"

The program cost overruns are in the billions, I believe...

The Technatomy decision best applies when award is made to a higher-priced offer, such as in a tradeoff situation.  In such a case, a decision that a higher-priced offer is reasonable requires a comparison of prices among offers.