Use of Illustrative Task Orders for Price/Cost Analysis

Perhaps CW Gov't Travel, Inc.--Recons., et al., B-295530.2 et al, July 25, 2005, 2005 CPD 139.

Perhaps CW Gov't Travel, Inc.--Recons., et al., B-295530.2 et al, July 25, 2005, 2005 CPD 139.

Thanks! This still leaves the question though, how would you meaningfully evaluate price/cost when the scope of work of the IDIQ provides for a number of different services.

For instance, suppose you have a proposed IDIQ, 1 base with 4 option years, for program management support services. This could cover a numerous amount of specific tasks. Would you be able to utilize a sample task order which had a period of performance the same length of time as the IDIQ and ask the offerors to provide labor rates for the key personnel? Would that meet the GAO's threshold of a reasonable basis of evaluating price/cost and could these proposed costs bind the contractor?

Are you just evaluating price, LPTA, or will you be trading price against technical, past performance, etc.? Just out of curiousity, is this a new or recurring requirement? Do you intend to put labor categories and rates in the basic, and issue orders where the only variable is hours and mix?

This would be trade-off. This would also be a new requirement. The question about rates is interesting, if we put rates in the basic, then we wouldn't have a problem because we'd have a price list to evaluate costs. So the answer regarding the labor categories is no, we wouldn't be putting them in the basic.

You lost me. What rate(s) do you intend to put in the basic? I'm assuming the delivery orders will be FFP or LH. Is that right?

There would be no rates in the basic. The orders would be FFP.

Hello all,

I'm curious on your thoughts regarding using illustrative task orders (ITO) to conduct price/cost analysis on proposed IDIQs. I'm sort of torn myself. I remember seeing, though I can't seem to find it now, a GAO decision stating that, in the instance of the protest, the agency couldn't use illustrative task orders to conduct price/cost analysis to determine reasonableness because the price/cost is not binding ont he contractor. This implies that you could use the ITO for the analysis if the prices/costs were binding to the contractor. The question being, how can these ITO's be structured to bind offerors to the prices/costs they propose? I'm curious as to your thoughts on the matter.

What you are calling "illustrative" task orders are usually called "sample" task orders or "sample tasks." The GAO has consistently held that sample tasks are a valid way of evaluating cost or price in a source selection for the award of a task order (IDIQ) contract. The CW Government Travel decision says that the use of sample tasks is not valid if the rates used to price the samples are not stipulated in the contract, i.e., if they will not be binding on the contractor. See Nash, Evaluating Price or Cost in Task Order Contracts, 19 N&CR ? 52 (Nov. 2005).

In answer to your question about how to structure, the issue is not so much how to structure the sample tasks as how to structure the contract. The usual procedure is to have offerors propose burdened hourly labor rates for each of some number of specified labor classifications or categories. The offerors also submit proposals for sample tasks showing how they would estimate the classifications and hours that would be needed to complete the sample tasks. The proposed rates are used to price the hours. The sample tasks must be reasonably representative of the kind or kinds of work that will be required. The hourly rates are incorporated in the contract upon award. When the government plans to issue a task order, it asks the contractor to propose a fixed-price or ceiling price (for T&M) based on the hourly rates and the number of hours it estimates that will be required to perform the task. The parties negotiate to agreement and the government then issues the task order. There are variations on that procedure, but that, in outline, is how the government makes the rates binding, which makes the use of sample tasks a valid way to evaluate price or cost.

Thanks Vern!

Let me expand on this question to see if the same logic would apply. Suppose you're awarding an IDIQ for construction and are using a sample task order. Requesting fully burdened labor rates for certain labor categories that would be commonly used seems standard. However, how would you evaluate the offerors' other "direct costs" such as material, equipment, etc? Given that the GAO protests, S.J. Thomas (B-283192) and Aurora Assoc. (B-215565), were sustained in part because the Government did not evaluate direct costs, would evaluating only the direct labor suffice? If so, great! If not, would we be able to require offerors to propose direct costs, other than labor, in their proposals that would be binding?

PS: About a year ago I saw you had a post which provided a reading list for those new to contracting who wanted to really delve into the profession. I can't seem to find it now. Would you please be able to provide a link to that post?

A sample task for construction would have to contain project specifications and drawings. The sample task response would presumably include a project cost estimate, including estimates of materials costs based on drawing take-offs. You would evaluate materials costs based on the estimate, looking mainly to supplier pricing relationships and estimating methods. Presumably, the cost of items of material would be virtually the same for every offeror, unless an offeror has advantageous price agreement with certain kinds of suppliers (steel, lumber, etc.), which, I suppose is possible.

I'm not going to write instructions about how to do it. The use of sample tasks is not a new thing. Agencies have been doing it for a long time. It's not very hard. Are we to supposed to understand that there is no one in your organization who knows how to do it?

The blog entry was "Recommended Reading - Part I," and it appeared on 25 January 2009. It's still at the blog site. You'll just have to scroll down until you find it.

I would not expect instructions as I understand it is my responsibility to research and learn how to do this properly. As for people in my organization, there's disagreement between GC and operations (and within GC itself) about how to do this properly and structure these IDIQs so that the evaluated prices/costs are binding on the contractors.

Regarding your explanation, how would the contractor be bound by the proposed material prices given that the project, including drawings, specs, etc, would be only a sample. I understand that you could use these proposed prices to comparatively analyze each of them against the estimates, current market pricing, and historical prices. However, I don't think this would reach the level of binding prices, thus there would be no meaningful way to evaluate cost. I guess you could bind them to the material costs, with the added stipulation of an economic price adjustment to account for market fluctuations.

Quite honestly, the easiest thing to do is to award the IDIQ along with the first task order, which is how we did it back at my old agency. Unfortunately, our program offices here don't necessarily have the money for the first task orders when they want to award the IDIQ, which begs the question as to why you would even need the IDIQ at that particular point in time.

Thanks for the reading reference!

If you are willing to do research, then I suggest that you get a list of the GAO decisions that deal with pricing based on sample tasks and read them. That will show you what is required of an agency using that approach and what other agencies have done. Your legal office should be able to develop the list in a very few minutes using Lexis or Westlaw.

Thanks Vern!

Let me expand on this question to see if the same logic would apply. Suppose you're awarding an IDIQ for construction and are using a sample task order. Requesting fully burdened labor rates for certain labor categories that would be commonly used seems standard. However, how would you evaluate the offerors' other "direct costs" such as material, equipment, etc? Given that the GAO protests, S.J. Thomas (B-283192) and Aurora Assoc. (B-215565), were sustained in part because the Government did not evaluate direct costs, would evaluating only the direct labor suffice? If so, great! If not, would we be able to require offerors to propose direct costs, other than labor, in their proposals that would be binding?

PS: About a year ago I saw you had a post which provided a reading list for those new to contracting who wanted to really delve into the profession. I can't seem to find it now. Would you please be able to provide a link to that post?

One approach would be to "normalize" the ODCs. This means that you would instruct all offerors to use the same amounts for ODCs. If done correctly, the GAO won't take exception. When you're looking up cases on sample tasks, look up normalizing costs, too.

A sample task for construction would have to contain project specifications and drawings. The sample task response would presumably include a project cost estimate, including estimates of materials costs based on drawing take-offs. You would evaluate materials costs based on the estimate, looking mainly to supplier pricing relationships and estimating methods. Presumably, the cost of items of material would be virtually the same for every offeror, unless an offeror has advantageous price agreement with certain kinds of suppliers (steel, lumber, etc.), which, I suppose is possible."

Sample tasks seem to me to be of little value for construction. Unless you are doing a lot of repetitive construction work of a very simple nature, I doubt that actual material prices will be the same for each task let alone for each competitor. They don't usually all go down to the Home Depot or Lowes to get their construction materials. Plus materials tend to fluctuate on at least a monthly basis.

While labor unit rates might be able to be fixed, they are virtually meaningless because the labor quantities depend upon productivity and estimated quantities of work activities.

Non-binding estimates are no more useful than that for a cost reimbursement contract.

Quite honestly, the easiest thing to do is to award the IDIQ along with the first task order, which is how we did it back at my old agency. Unfortunately, our program offices here don't necessarily have the money for the first task orders when they want to award the IDIQ, which begs the question as to why you would even need the IDIQ at that particular point in time.

Thanks for the reading reference!

I agree with you - why not use a seed task order? If your agency doesn't have a project, why do you need to award the base contracts now? My agency is doing billions of dollars worth of construction with Multiple Award ID/IQ (MATOC) contracts. We are using a 2 phase process from FAR 36.3, using a real project for the seed task order in Phase 2. We are inundated with phase 1 proposers (sometimes up to 50).

I remember seeing, though I can't seem to find it now, a GAO decision stating that, in the instance of the protest, the agency couldn't use illustrative task orders to conduct price/cost analysis to determine reasonableness because the price/cost is not binding ont he contractor. This implies that you could use the ITO for the analysis if the prices/costs were binding to the contractor. The question being, how can these ITO's be structured to bind offerors to the prices/costs they propose?

Joel:

The quote above is from the first in the thread. In Post # 7 FSCO said, "There would be no rates in the basic [contract]." That being the case, how would a "seed" task order bind the government to the rates for task orders issued after the seed, since the rates won't be in the basic contract? The GAO said that a CO cannot rely on the evaluation of rates that won't be binding. So how would the evaluation of a seed order solve the pricing problem? What difference does it make to evaluate the rates used to price a real ("seed") task if those rates will not be binding for further tasks? Sample task or seed task, what's the difference with respect to the question that was asked?

Joel:

The quote above is from the first in the thread. In Post # 7 FSCO said, "There would be no rates in the basic [contract]." That being the case, how would a "seed" task order bind the government to the rates for task orders issued after the seed, since the rates won't be in the basic contract? The GAO said that a CO cannot rely on the evaluation of rates that won't be binding. So how would the evaluation of a seed order solve the pricing problem? What difference does it make to evaluate the rates used to price a real ("seed") task if those rates will not be binding for further tasks? Sample task or seed task, what's the difference with respect to the question that was asked?

Probably none, as far as binding the contract holders to unit pricing of some type. Probably none, as far as binding the contract holders to unit pricing of some type. But for construction, which was one of the examples mentioned, what usefulness is there is trying to bind the contract holders to pricing, which is generally highly variable between task orders, except under fairly limited circumstances. And - if you are going to do repetitive type construction, our experience has shown that the contractors may get better as they repeat projects

Probably none, as far as binding the contract holders to unit pricing of some type.

Thanks. Do you think that FSCO understands that?

Why bind the contract holders to pricing? Because it's the law, if you buy GAO's interpretation of CICA. Contracts must be awarded in compliance with CICA. CICA requires evaluation of price as a significant factor. If proposed prices are not binding, cost or price evaluation does not comply with CICA.

Thanks. Do you think that FSCO understands that?

Why bind the contract holders to pricing? Because it's the law, if you buy GAO's interpretation of CICA. Contracts must be awarded in compliance with CICA. CICA requires evaluation of price as a significant factor. If proposed prices are not binding, cost or price evaluation does not comply with CICA.

If you remember, last year or the year before last, there was a Court case concerning the use of ID/IQ contracts for construction that a poster to the Forum was the plaintive or protestor. I'll try to find it but I don't remember which venue or the name of the case...

If you remember, last year or the year before last, there was a Court case concerning the use of ID/IQ contracts for construction that a poster to the Forum was the plaintive or protestor. I'll try to find it but I don't remember which venue or the name of the case...

Are you saying that there was a court decision which held that IDIQ contracts for construction do not have to contain binding prices/rates? I don't remember any such decision.

See, here's something that's bothering me. You wrote: "Sample tasks seem to me to be of little value for construction." You explained as follows:

Unless you are doing a lot of repetitive construction work of a very simple nature, I doubt that actual material prices will be the same for each task let alone for each competitor. They don't usually all go down to the Home Depot or Lowes to get their construction materials. Plus materials tend to fluctuate on at least a monthly basis.

Now, those comments would be equally true of many services, yet sample tasks are commonly and successfully used to evaluate prices in source selections for IDIQ service contracts. Moreover, the use of a "seed" task order would still constitute the use of a "sample" task. Samples can be real or imaginary.

What point have you been trying to make, and what does it have to do with the original question?

Are you saying that there was a court decision which held that IDIQ contracts for construction do not have to contain binding prices/rates? I don't remember any such decision.

No, not necessarily. It was a challenge to the use of ID/IQ for construction. I don't remember all the details or if it mentioned the pricing arrangement being used.

Years ago, we wrote some MATOC's which fixed labor rates, overheads, markups on subs and salaries but the problem was that that this doesn't take total labor or labor mix, which depends upon numerous variables for each project.

The Army's Job Order Contracting program and the Air Force's SABRE Contracts (these are both forms of SATOC's) use unit-price books with contractually established adjustment factors (multipliers), which were competed. For a job (task) order on these contracts, the government still has to perform take-offs and negotiate quantities with the contractor or use estimated quantities, then measure up all the actuals.

Joel:

I have to say that I'm having trouble following your line of thinking. Why did you bring up the mystery court decision?

You seem distracted. Nothing you just wrote seems to be addressed to the problem at hand. What's going on?

See, here's something that's bothering me. You wrote: "Sample tasks seem to me to be of little value for construction." You explained as follows:

Now, those comments would be equally true of many services, yet sample tasks are commonly and successfully used to evaluate prices in source selections for IDIQ service contracts. Moreover, the use of a "seed" task order would still constitute the use of a "sample" task. Samples can be real or imaginary.

What point have you been trying to make, and what does it have to do with the original question?

FSCO doesn't like sample tasks unless you can bind the firms to their pricing. FSCO wanted to know how to bind the firms to pricing. FSCO went on to inquire about construction sample tasks and there was some discussion about capturing or evaluating fifferent costs. Someone mentioned material costs may be somewhat stable and equal to the various contractors. I disagree. In fact, for construction, especially where task orders will be issued for jobs in more than one local area, it is challenging to tie down a whole lot of pricing without locking in stuff that we want to be able to take advantage of competitive market pricing during actual subsequent tasks. The construction market is very volatile and has been for several years. There are chronic (legal) labor shortages, material fluctuations, subcontractor and prime contractor availabilities and specialized capabilities, etc. Right now, there is tremendous competition with a lot of firms pricing jobs just to survive.

Our organization is doing a lot of design-build construction using ID/IQ contracts (several billion $). Many of those are for standardized facility types that Army is building for BRAC, Army Transformation, Grow the Army, etc. It isn't really practical to use individual c-type construction contracts due to the volume of projects that must be awarded. Task orders offer streamlined competition procedures. The idea is that we are looking for firms highly qualified in similar type building construction. Even though each project is distinct from another with respect to climate, architecture, and other local conditions , the basic floor plan and technical criteria is the same, just adapted for different sites and different locations.

We have adapted the 2 phase D-B method to select base contract holders due to the expected numbers of proposers. In some cases, we've had upwards of 50 proposers. The short-listed firms are those evaluated to be most highly qualified. They compete for the award of the base ID/IQ contracts and for the first task order. We evaluate the quality of the designs, project specific performance capability and price for a real project that the firms would actually have to perform if awarded the first task. There is is REAL risk to the proposers in their seed task order pricing, not hypothetical pricing. One firm wins the task order and base contract, some of the others are also awarded base contracts. The base contract holders compete for the follow-on tasks.

I believe that this contract model for construction has been court tested and there have been GAO protests. Apparently it passed the tests for price competition for award.

My comments are limited to construction. Service contracting is different than construction. Don't relate my comments to service contract ID/IQ's.

Thank you Don, Joel, and Vern.

As for sample vs seed task orders, I believe that there is a difference with regards to using them to evaluate IDIQ offerors' prices. In the seed TO, offerors are going to be bound to the prices they propose since the task order is awarded along with the IDIQ. This provides for a meaningful basis to evaluate the cost to the Government, which is what GAO is looking for. GAO never stated that the prices need to be binding throughout the IDIQ, only that the evaluation of cost must be done on prices that bind the contractor. The seed task order would satisfy that requirement.

As for normalizing, that sounds like an interesting idea and I'll add it to my research list =)

I believe that this contract model for construction has been court tested and there have been GAO protests. Apparently it passed the tests for price competition for award.

Joel:

If I understand you rightly, you are awarding IDIQ contracts for construction that contain no prices/rates whatsoever. Is that right? No labor rates and no overhead and G&A rates and materials handling rates?

You award the contracts based on the evaluation of a "seed" task, and then rely on competition among the contract holders for future pricing. Right?

And you believe that approach has been tested at the GAO for CICA compliance and passed. Right? But you can't cite any case.

Joel:

If I understand you rightly, you are awarding IDIQ contracts for construction that contain no prices/rates whatsoever. Is that right? No labor rates and no overhead and G&A rates and materials handling rates?

You award the contracts based on the evaluation of a "seed" task, and then rely on competition among the contract holders for future pricing. Right?

And you believe that approach has been tested at the GAO for CICA compliance and passed. Right? But you can't cite any case.

"I'm" not personally awarding any such contracts. I can't cite any protests, though I am aware there have been protests. I don't know if the pricing mechanism was the specific subject of protest.

Joel:

If I understand you rightly, you are awarding IDIQ contracts for construction that contain no prices/rates whatsoever. Is that right? No labor rates and no overhead and G&A rates and materials handling rates?

You award the contracts based on the evaluation of a "seed" task, and then rely on competition among the contract holders for future pricing. Right?

And you believe that approach has been tested at the GAO for CICA compliance and passed. Right? But you can't cite any case.

"I'm" not awarding any such contracts. I just checked with one of the Districts and they are using the see task order but not locking in rates or prices on their contracts, which have been in effect for several years. I was involved in developing the Programmatic two phase selection procedures, the standardized format for the base contracts and the technical format for follow-on task orders. I was not involved in developing the CLIN structure for the seed task orders or the pricing methods. The Centers of Standardization set up their own details for pricing contracts. As far as I know, the Centers of Standardization are using seed task orders for the major contracts.

Yes, there have been some protests involving the IDIQ competition. I don't know if they directly concern the pricing method. There was also a court case involving the organization's whole IDIQ concept for using Regional IDIQ's. I wasn't able to find that case yesterday. It is too early to call my non-East Coast contacts to verify their pricing scheme but I will call some later.

FSCO: We issue SATOC contracts for up to $100 Million to execute SRM type work at military installations. As suggested earlier we typically use a seed T.O. We use the RS Means Cost Works for pricing materials, equipment, etc. Contractors submit their proposals based on the seed or sample T.O. and also propose a coefficient. The coefficient becomes part of the contract and the current version of RS Means is used to price all subsequent T.O.s.

I was able to find three decisions that described a procurement for an IDIQ contract for construction in which the only prices proposed were for a "seed" order. All predated the CW Government Travel decision cited by Jacques in Post # 2. In none of the three cases was pricing or price evaluation the protest issue.

One of the three protests was sustained on other grounds, see Blue Rock Structures, Inc., Comp. Gen. Dec. B-293134, 2004 CPD ? 63, February 6, 2004, in which the seed pricing approach is addressed in Footnotes 4 and 6. See also JCN Construction Co, Inc., Comp. Gen. DEc. B-293063, 2004 CPD ? 12, January 9, 2004, in which the seed pricing is described in Footnote 2; and C Construction Co., Inc., Comp. Gen. Decision B-291792, 2003 CPD ? 73, March 17, 2003, in which the seed pricing is described in Footnote 3. The prospective contracts were to contain no pricing, but in none of those cases did the GAO rule on the permissibility of the approach. In Footnote 6 to Blue Rock, the GAO expressly denied having giving any guidance on pricing in C Construction.

There may be more such "seed" decisions, in which it was said that the contract contained no pricing, but my research did not turn up any. If there are no cases in which the approach was found to be in compliance with CICA when the contract itself contains no pricing, then, in light of CW Government Travel, I say that compliance with CICA has not been determined. I think that the scheme described above by Louis is the more orthodox approach.

I should add that the question of whether a multiple award IDIQ contract must contain prices in order to be in compliance with CICA is an old one. At one time, long ago, both Professors Nash and Cibinic argued at their annual Roundtable that prices are not essential. Clearly, there can be price competition among contract holders for task orders and such competition might produce fair and reasonable prices. I am not opposed to such an approach and think it makes a lot of sense in some circumstances. The question is: Will it withstand protest? Also, in light of FAR 17.207(f), the absence of prices might make the exercise of options an issue.

Vern,

This is a multiple award IDIQ GWAC program and the contracts contain no pricing as you describe. This has been around for a long time and I don't believe there have been protests on the lack of prices in the contract.

http://www.gsa.gov/portal/category/25282

Thanks, formerfed. I think it likely that there are a number of such contracts. Like I said, I think they make sense in certain circumstances. I don't think competitive prepricing of such contracts in always necessary. I have complained about the silliness of hourly rate pricing in MATOCs since 1995. Still, the question is, given GAO's interpretation of CICA (which Prof. Nash has disputed), there is a question of the viability of such an approach.

Vern, would one be able to conclude based on FAR 16.505((3) that pricing is not required in the base IDIQ? The language reads:

"(3) Pricing orders. If the contract did not establish the price for the supply or service, the contracting officer must establish prices for each order using the policies and methods in Subpart 15.4."

It is in the context of multiple award IDIQs so I assume would only be viable in that context

Also, if there would be an issue with evaluating the options (which I see your concern) then you could just award the base IDIQ with no options and have a period of performance for 5 years, or less depending on your needs.

Bah, I can't remove that smiley face. The FAR cite is 16.505 b 3.

I was able to find three decisions that described a procurement for an IDIQ contract for construction in which the only prices proposed were for a "seed" order. All predated the CW Government Travel decision cited by Jacques in Post # 2. In none of the three cases was pricing or price evaluation the protest issue.

One of the three protests was sustained on other grounds, see Blue Rock Structures, Inc., Comp. Gen. Dec. B-293134, 2004 CPD ? 63, February 6, 2004, in which the seed pricing approach is addressed in Footnotes 4 and 6. See also JCN Construction Co, Inc., Comp. Gen. DEc. B-293063, 2004 CPD ? 12, January 9, 2004, in which the seed pricing is described in Footnote 2; and C Construction Co., Inc., Comp. Gen. Decision B-291792, 2003 CPD ? 73, March 17, 2003, in which the seed pricing is described in Footnote 3. The prospective contracts were to contain no pricing, but in none of those cases did the GAO rule on the permissibility of the approach. In Footnote 6 to Blue Rock, the GAO expressly denied having giving any guidance on pricing in C Construction.

There may be more such "seed" decisions, in which it was said that the contract contained no pricing, but my research did not turn up any. If there are no cases in which the approach was found to be in compliance with CICA when the contract itself contains no pricing, then, in light of CW Government Travel, I say that compliance with CICA has not been determined. I think that the scheme described above by Louis is the more orthodox approach.

As I read CW Government Travel, the issue was that there wasn't any meaningful price evaluation as part of the selection for contract award. In the case of seed task orders, there are prices that are binding, if selected for the seed task order. The other base contract awardees would also have to provide fair and reasonable prices in order to be selected for base contract award.

Louis's method of using an estimating guide with a factor multiplier is similar to the single award construction task order contracts using SABRE and JOC methods.

The price is binding for the seed order, true, but the contract itself is not priced. What about the other orders? They could individually or cumulatively amount to much more than the seed order.

Vern, would one be able to conclude based on FAR 16.505((3) that pricing is not required in the base IDIQ? The language reads:

"(3) Pricing orders. If the contract did not establish the price for the supply or service, the contracting officer must establish prices for each order using the policies and methods in Subpart 15.4."

FSCO:

When awarding an IDIQ contract for services, the contract itself may contain hourly rates to be used for pricing purposes, but which do not, in and of themselves, establish the prices of orders. To establish the price, estimated cost, or ceiling price of an order one would have to determine which labor categories to use and how many hours of each. FAR 16.505((3) cannot be read to permit the award of IDIQ contracts without binding prices or rates.

Ah, I see. I did not read it that way.

In the GAO decisions, they are looking for binding prices only in the context of the evaluation. This is to ensure that the evaluation of cost to the Government is reasonable. They haven't stated that the prices need to be binding on the entire IDIQ.

Ah, I see. I did not read it that way.

In the GAO decisions, they are looking for binding prices only in the context of the evaluation. This is to ensure that the evaluation of cost to the Government is reasonable. They haven't stated that the prices need to be binding on the entire IDIQ.

I'll agree with that. Good luck with your procurement.

Ah, I see. I did not read it that way.

In the GAO decisions, they are looking for binding prices only in the context of the evaluation. This is to ensure that the evaluation of cost to the Government is reasonable. They haven't stated that the prices need to be binding on the entire IDIQ.

I think I said that earlier. At any rate, I finally found the US Court of Federal Claims case I was looking for in the WIFCON Archives. It is Tyler Construction Group vs. US. No. 08-94C, August 14, 2008. Tyler challenged the Army Corps of Engineer' use of ID/IQ contracts for construction.

Bob Antonio has summarized it at wifcon.com/pd16_501_2.htm

You can read the decision at: wifcon.com/cofc/08-94c.pdf.

There was some discussion about the pricing arrangement in that prices were only good for the first task order but it did not specifically address the debate in this current WIFCON thread. It would seem that the Court saw the pricing method because it seemed to examine the RFP in detail.

"...Plaintiff points out that the procurement is not for a quantity of buildings (the solicitation only specifically identifies the first task order?the construction of a single basic training barracks) and does not intend the price offered for the first task order to apply to future barracks projects, much less to the other projects identified in the solicitation... "

The Court rejected all of the Plaintiffs arguments.

"Defendant, we conclude, is correct on all counts. We are aware of no law, statute, or regulation that prohibits the use of an IDIQ contract for the procurement of construction services, and the various provisions of the FAR offer little insight into whether ?construction? is included in or excluded from ?supplies or services.? We must therefore conclude that FAR ? 1.102(d)?providing procurement officials with the authority to use innovative approaches to satisfy the government?s procurement needs so long as such approaches are not otherwise addressed in the FAR or prohibited by law?governs the instant procurement. We find that the solicitation represents the sort of innovation envisioned by that section and, with its identification of both a contract dollar value and a general scope of work, constitutes a permissible exercise of IDIQ contracting authority..."

I know that this contract was put out before we developed a standard template for our ID/IQ , MATOC's. We developed that template during the period of the litigation and have since refined it. The template now specifically describes the general scope of work of the Base Contract in the "Instructions to Offerors" and a broad description in the "Summary of Work" section. Then the seed task order includes a detailed "Task Order Statement of Work".

I havent looked at the actual WIFCON thread yet but will do so to examine whether it specifically addressed the task order pricing method used.

Since the case does not resolve the issue at hand, why write about it at such length? Is there something we are supposed to see that I have missed?

Since the case does not resolve the issue at hand, why write about it at such length? Is there something we are supposed to see that I have missed?

The case specifically mentioned the price evaluation method but it apparently wasn't an issue to the Court. I tried to quote the discussion about pricing from the Plaintiff's perspective and the only Court response to that point. But the Decision is only a summary anyway.

I found one WIFCON thread concerning the Tyler Construction decision. It only lightly touches on the topic of price evaluation. wifcon.com/discus/messages/8524...html?1223661612. A couple of posters wondered about the method of pricing only the seed task order.

Here is an earlier thread but it doesn't discuss the pricing technique: "Can MATOCS be used in Construction New buildings?" wifcon.com/discus/messages/8522...html?1208524248

I see -- citations of irrelevant information.

Protests of NAVFAC Competition for MAC (MATOC) with Seed Task Order Pricing in Guam

1. Here are two new GAO Decisions on competition for Base Contract awards, which used price competition on a seed task order as the method for evaluating pricing in the initial IDIQ base contract awards. Both protesters initially alleged that the agency had ignored price in its determination of best value. The agency persuasively rebutted this allegation in its reports with documentation demonstrating that both the source selection board and the source selection authority had considered price in their trade-off determinations.

2. The first one is B-402652.2, AIC International, Inc., June 28, 2010 at the following link:

http://www.gao.gov/decisions/bidpro/4026522.htm#_ftnref1

?B-402652.2, AIC International, Inc., June 28, 2010

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.

Decision

Matter of: AIC International, Inc.

File: B-402652.2

Date: June 28, 2010

David P. Ledger, Esq., Cabot Mantanona LLP, and Shelly L. Ewald, Esq., Watt, Tieder, Hoffar & Fitzgerald, LLP, for the protester.

David A. Rose, Rose Consulting LLC, for Guam Pacific International, LLC, an intervenor.

Richard Huber, Esq., Department of the Navy, Naval Facilities Engineering Command, for the agency.

Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest challenging evaluation of protester's proposal is denied where record shows evaluation was reasonable and consistent with solicitation.

DECISION

AIC International, Inc., of Hagatna, Guam, protests the rejection of its proposal and the award of contracts to Guam Pacific International, LLC (GPI), of Barrigada, Guam, and Overland Corporation, of Ardmore, Oklahoma, under request for proposals (RFP) No. N40192-10-R-2800, issued by the Department of the Navy, Naval Facilities Engineering Command, for the award of multiple contracts for new construction, renovation, and repair of government facilities on Guam. The protester argues that the evaluation of its proposal was unreasonable.

We deny the protest.

BACKGROUND

The RFP, which was set aside for small businesses, provided for the award of up to five indefinite-delivery/indefinite-quantity design/build contracts to the offerors whose proposals were determined to represent the best value to the government, with technical factors of significantly greater weight than price in the determination of best value. Technical factors (of equal weight) were offeror and lead design team experience; past performance; safety; workforce housing and logistics (WH&L); and technical approach (to performance of a specified seed project). Price was to be evaluated on the basis of pricing for the seed project.?

??In its initial protest, AIC also complained that the agency erred in awarding to GPI and Overland without investigating whether the firms were unusually reliant upon--and thus, for size determination purposes, should have been treated as affiliated with--their large business subcontractors. The agency requested, and we granted, dismissal of this argument prior to submission of the agency report. In addition, the protester initially alleged that the agency had ignored price in its determination of best value. The agency persuasively rebutted this allegation in its report with documentation demonstrating that both the source selection board and the source selection authority had considered price in their trade-off determinations, and AIC abandoned this argument.?

3. See also: B-402652; B-402652.3, Reliable Builders, Inc., June 28, 2010 at http://www.gao.gov/decisions/bidpro/4026523.htm

?In addition to the arguments that we address below, RBI argued in its initial protest that the agency had ignored price in its determination of best value. The agency persuasively rebutted this allegation in its report with documentation that demonstrated that both the SSB and the SSA had considered price in their trade-off determinations.?

Here is another new GAO Decisions on competition for Base Contract awards, which used price competition on a seed task order as the method for evaluating pricing in the initial construction IDIQ base contract awards.

http://www.gao.gov/decisions/bidpro/403797.htm (B-403797, Tetra Tech Tesoro, Inc., December 14, 2010)

This protest (NAVFAC in this case) ought to confirm that this is acceptable for price competition for construction type base ID/IQ awards. This doesn't necessarily have any correlation to ID/IQ's for services.

I know this was debated a while ago, but I'm having discussions about this same topic now - specifically for construction contracts. The problem I see with the cited GAO decisions about seed or sample projects is that they are discussing whether they are valid price evaluation techniques for the BASE contract, but do not address whether not having binding pricing for the subsequent task orders is valid. While I do think that getting pricing from multiple award IDIQ contractors helps ensure price competition, I don't see how it complies with CICA. I'm very aware how pre-pricing construction work is difficult for IDIQs, but don't think "difficult" or even "impossibility" is an exception to CICA.

For example, would anyone ever consider competing elevator maintenance services for a single "seed" building, and then say that we'd limit competition to the best offerors for any other buildings in a six-state area even though we have no binding pricing for those other buildings? I'd think not, so why is it okay for construction?

Mike

Why can't you have binding pricing for such contracts? Tell the offerors to propose rates that will be the maximum that can be charged, but that when competing for task orders they may propose lower rates. That is a pretty common technique.

If your point is that not having binding pricing is not compliant with CICA, what do you make of cost-reimbursement contracts?

I know this was debated a while ago, but I'm having discussions about this same topic now - specifically for construction contracts. The problem I see with the cited GAO decisions about seed or sample projects is that they are discussing whether they are valid price evaluation techniques for the BASE contract, but do not address whether not having binding pricing for the subsequent task orders is valid.

Mike

Mike, I dont know whether NAVFAC used a 2 phase Design-Build process for the MAC awards discussed in the cited Decisions above. But they used a seed task order with pricing for the award of the Base Multiple Award Contracts (MAC) and award of the first task order. The GAO did address this initial price competition in at least 2 of the Decisions that I referred to.

Is there any major difference between initial price competition using a seed task order and price competition on subsequent task order competitions? Perhaps the only difference is the intensity of the price competition in phase 2. There are more firms competing for MATOC Base Contract awards than will be selected for the pool or pools. I don't know what the GAO would have said is different between the initial task order price competition and follow-on task order price competition.

The Corps of Engineers has been using the 2 Phase D-B method in FAR 36.3 for award of Multiple Award Task Order (MATOC) Base contract pools, using a the first task order (seed task order) in phase 2 of the competition for several years. This price competition is similar to what NAVFAC is using and which the GAO addressed as adequate price competition.

Please note that each construction or design-build task order is generally different from the others, either in scope, location, point of time or under different market conditions (material price and availability, labor mix and availability/pricing, equipment choice and availability, subcontractor availability and/or pricing, amount of competition, etc. Construction pricing in this era is highly volatile. I don't think there is any advantage for the owner to lock in pricing or even maximum pricing for an indefinite delivery - indefinite quantity construction or design-build contract. It would be very high risk for a contractor to compete for award of the seed task order, while at the same time having to lock itself in to maximum pricing for subsequent task orders. Those are two opposing pricing conditions for construction. I could see it working for supply or service type MATOC's, but not for construction. Why would firms aggressively price/compete for the seed task order with not to exceed unit prices of some sort at the risk of not being able to cover itself on future task orders of varying scope and market conditions?

The Army's Job Order Contract program is a case on point. JOC contracts have traditionally used fixed mark-up coefficients that are applied to unit-priced activities in a Government provided unit-price book. Those unit-price books are essentially a form of "Means Estimating Guides" (or other similar estimating books). For years, we've had problems making that pricing system work. The single award contracts featured aggressive competition for award generally with coefficients of less than 1. This results in pricing lower than the unit-price book, which doesn't include mark-ups for general conditions, JOC office site full-time management costs, bond or profit.

Then, for the next several years, the contractor often tries its best to maintain that the actual job orders don't align with the unit-price book activities, so that it can spot price as much of the work as possible. Or, if it begins to loose significant amount of money, performance and quality drop, sometimes in the apparent hope that the Army won't exercise the next option period. These have traditionally been no fun to administer at the Installation level or even for the local Corps offices when they are asked to step in and award job orders.

The weekly publication Engineering News Record has almost weekly price reporting for numerous market areas. They will report various construction commodities and trade labor costs, tracked monthly. There are wide swings up and down on a monthly basis. Construction is a very high risk business. An owner that wants to lock in prices or even maximum prices is shooting itself in the foot, in my opinion. I feel that we ought to let task order competition work...

ID/IQ's were developed (I think) for manufactured goods and for services, not for construction. I don't think you can practically price construction ID/IQ's the same way as as for goods and services.

Mike:

Please clarify your question. I understood you to ask whether a competition that does not result in prices that are binding for future task orders satisfies CICA. Is that the question?

Mike:

Please clarify your question. I understood you to ask whether a competition that does not result in prices that are binding for future task orders satisfies CICA. Is that the question?

Vern, yes, that is my question. My understanding is that in order to comply with CICA for a fixed price IDIQ contract that the prices established in the base contract must be binding for the task orders. If not, all the base contract does is establish a pre-qualified list that awards a seed contract (if one is used) and limits competition on future procurements for the task orders without ever actually competing those prices on a full-and-open basis.

Joel,

Thanks very much for the detailed response you gave above. Due to the issues discussed, I don't understand how you can comply with CICA without getting binding prices for the task orders at the time you award the base IDIQ. And given the problems you discussed (which I appreciate because I've been considering structuring an IDIQ based on RS Means coefficients or something similar) is it really possible to structure a good IDIQ for construction and comply with CICA.

I know you have a lot of examples of what has been done, and I've seen many myself, but that all being said, what argument can be made that you do NOT need binding unit prices (for example labor hours and material costs) that apply to task orders and have that be CICA compliant? Obviously the simple fact that it's been done without anyone getting caught doesn't mean that it is CICA compliant.

Mike

Joel,

s it really possible to structure a good IDIQ for construction and comply with CICA.

I know you have a lot of examples of what has been done, and I've seen many myself, but that all being said, what argument can be made that you do NOT need binding unit prices (for example labor hours and material costs) that apply to task orders and have that be CICA compliant? Obviously the simple fact that it's been done without anyone getting caught doesn't mean that it is CICA compliant.

Mike

Mike, you ask a good question. I don't know if the standard of adequate price competition for multiple award construction ID/IQ's requires binding prices or unit prices for future task orders. But in the Decisions that I found, it appeared that the acceptable price competition was based upon one actual task order.

I admit that I'm not a lawyer and don't have the technical skill, resources or time to do a full research study on what constitutes adequate price competition for construction ID/IQ's. However, I think the bottom line of the Competition in Contracting Act of 1984 concerning price competition is that price must be evaluated in every competitive source selection and that the Comptroller General and Courts seem to have decided what constitutes "adequate price competition" or at least what was acceptable in certain construction MATOC competitions.

I'm not sure what you meant by "the simple fact that it's been done without anyone getting caught doesn't mean that it is CICA compliant." There have been some Decisions in which the method of pricing an actual "seed" (initial) task order with binding prices was apparently deemed to be acceptable price competition.

I read both the Military and Civilian versions of "CICA" this morning and couldn't find any specific mention or description of adequate price competition requirements. Among other things, Competition in Contracting Act of 1984 requires "full and open competition", except as specifically permitted by statute. It says that the government shall establish rules for that. So, I went to FAR 15.3 Source Selection, to see what it says about price competition:

15.304 -- Evaluation Factors and Significant Subfactors.

...(c ) The evaluation factors and significant subfactors that apply to an acquisition and their relative importance are within the broad discretion of agency acquisition officials, subject to the following requirements:

(1) Price or cost to the Government shall be evaluated in every source selection (10 U.S.C. 2305(a)(3)(A) (ii) and 41 U.S.C. 253a?(1)() (also see Part 36 for architect-engineer contracts);"

OK, so what does 10 USC 2305(a), say about price evaluation?

For the Military, 10 USC 2305(a)(3)(A) says:

"(A) In prescribing the evaluation factors to be included in each solicitation for competitive proposals, the head of an agency—

...(ii) shall include cost or price to the Federal Government as an evaluation factor that must be considered in the evaluation of proposals;..."

I also checked my Third Edition of Formation of Government Contracts by Nash and Cibinic. It basically says that there is little coverage of price competition for ID/IQ's in Statutes or in FAR. It discusses "adequate price competition" under FAR 15.403-1?. Various decisions have developed that "adequate price competition will be found where price is a substantial evaluation factor and is so evaluated" (see pages 1291-1293 or so).

So, it appears that the Comp Gen and Courts have ruled what is adequate or meaningful price competition. I cited some construction ID/IQ decisions above where actual task orders with binding prices for those task orders were used for price competition on the basic award competition. The basis of price evaluation was challenged and the GAO considered the specifics in determining that the price competition was ok.

In Decisions, the GAO has said that "sample task orders", unless they contain binding prices, do not constitute adequate price competition. In other decisions, they have discussed the inadequacy of evaluating price by simply comparing binding unit prices unless there is meaningful way to also compare expected quantities of those units to be required, between proposers.

As for future task orders on multiple awards for construction, the FAR at 16.505 (b ) for orders under multiple award contracts and "Fair Opportunity" procedures prescribe that task orders are generally required to be competed among the pool members, at least for DoD procurements.

Vern, yes, that is my question. My understanding is that in order to comply with CICA for a fixed price IDIQ contract that the prices established in the base contract must be binding for the task orders

Mike:

I hope you're still checking this thread after reading War and Peace about adequate price competition, which has nothing to do with CICA.

Your understanding is correct. The GAO has held that when using a sample task as the basis for evaluating competing proposals, in order to comply with CICA the offorors' proposed prices for the sample task must be based on rates that will be binding after contract award. See CW Government Travel, Inc.--Reconsideration, Comp. Gen. Dec. B-295530.2, 2005 CPD ? 139. The Court of Federal Claims has gone along with that interpretation of CICA. See Magnum Opus Technologies, Inc. v. United States, 94 Fed. Cl. 512 (2010).

Professor Nash discussed the issue in Sample Task Prices in IDIQ Contracting: Valid Only With Binding Rates?, 25 N&CR ? 20 (April 2011).

Mike:

I hope you're still checking this thread after reading War and Peace about adequate price competition, which has nothing to do with CICA.

Your understanding is correct. The GAO has held that when using a sample task as the basis for evaluating competing proposals, in order to comply with CICA the offorors' proposed prices for the sample task must be based on rates that will be binding after contract award. See CW Government Travel, Inc.--Reconsideration, Comp. Gen. Dec. B-295530.2, 2005 CPD ? 139. The Court of Federal Claims has gone along with that interpretation of CICA. See Magnum Opus Technologies, Inc. v. United States, 94 Fed. Cl. 512 (2010).

Professor Nash discussed the issue in Sample Task Prices in IDIQ Contracting: Valid Only With Binding Rates?, 25 N&CR ? 20 (April 2011).

Thanks Vern. My N&CR subscription lapsed for a few months I believe (either that or our mail room lost them because I've started receiving them again) and I didn't get the April 2011 issue. Is there any way to get that article?

Sure. Send me an email and I'll email a copy to you.

Mike:

I hope you're still checking this thread after reading War and Peace about adequate price competition, which has nothing to do with CICA.

Your understanding is correct. The GAO has held that when using a sample task as the basis for evaluating competing proposals, in order to comply with CICA the offorors' proposed prices for the sample task must be based on rates that will be binding after contract award. See CW Government Travel, Inc.--Reconsideration, Comp. Gen. Dec. B-295530.2, 2005 CPD ? 139. The Court of Federal Claims has gone along with that interpretation of CICA. See Magnum Opus Technologies, Inc. v. United States, 94 Fed. Cl. 512 (2010).

Professor Nash discussed the issue in Sample Task Prices in IDIQ Contracting: Valid Only With Binding Rates?, 25 N&CR ? 20 (April 2011).

I think there is a distinction between a sample task order and a binding prices for a task order. In the CW Government Travel Decision, there were no binding prices or rates for anything. Thus, there was no basis for any kind of meaningful price evaluation. The GAO did mention pricing of future task orders. Since the services to be provided were recurring, it seemed logical to me that the proposers should be required to provide rates for future tasks.

However, it seems pretty difficult to overcome the discussion in Magnum Opus Technologies, Inc. v. United States (Filed Under Seal May 13, 2010 and Republished May 28, 2010) concerning "Competition for Task Orders is Not Sufficient to Establish Prices For the Options". http://www.uscfc.uscourts.gov/sites/defaul...STECH052810.pdf

"...It has been established, however, that “[t]he statutory requirement that cost to the government be considered in the evaluation and selection of proposals for award is not satisfied by the promise that cost or price will be considered later, during the award of individual task orders.” CW Gov’t Travel—Reconsideration, 2005 WL 1805945, at *4; MIL Corp., 2004 WL 3190217, at *7 (“[T]here is no exception to the requirement set forth in CICA that cost or price to the government be considered in selecting proposals for award because the selected awardees will be provided the opportunity to compete for task orders under the awarded contracts.”); see also Serco, Inc., 81 Fed. Cl. at 493 (rejecting the Government’s task order competition argument and finding that the agency “gave price neither the weight it was entitled to under the Solicitation nor that which it must be afforded under CICA and the FAR”). The Air Force may not substitute competition at the task order level for compliance with the applicable laws and regulations."

It would then seem from the Claims Court Case that 1) no option extensions for construction ID/IQ base contracts can be exercised unless they are meaningfully priced. 2) Construction ID/IQ's for other than basic recurring type construction work are almost impractical to price without some kind of common unit-price book with a price coefficient.

However, that case seems to conflict with the 3 later GAO Protest Decisions I cited.

1. http://www.gao.gov/decisions/bidpro/403797.htm (B-403797, Tetra Tech Tesoro, Inc., December 14, 2010)

2. http://www.gao.gov/decisions/bidpro/4026522.htm#_ftnref1 (B-402652.2, AIC International, Inc., June 28, 2010)

3.http://www.gao.gov/decisions/bidpro/4026523.htm (B-402652; B-402652.3, Reliable Builders, Inc., June 28, 2010)

Joel, I cannot figure out the point of your last post, and I don't know what bearing it has on Mike's question. Do you agree with something? Disagree? Have a different position entirely? What? Is it possible for you to state your point succinctly?

Joel, I cannot figure out the point of your last post, and I don't know what bearing it has on Mike's question. Do you agree with something? Disagree? Have a different position entirely? What? Is it possible for you to state your point succinctly?

I said that there is a distinction between meaningless price evaluation on a sample, non-binding task order for a contract with recurring services and evaluating binding prices for an actual task order on a construction ID/IQ. And in the context of the (CW Government Travel Decision), it would make sense that the GAO expects the Government to evaluate prices for fees and other recurring costs for future services of a recurring nature as part of a meaningful price evaluation. It makes sense there that prices for recurring services could be evaluated. Indeed, on our Government travel services contract, the travel agency (Carlson Wagonlit Travel) is paid a fee of $14.50 for each travel ticket, whether it takes them 5 minutes or 20 minutes to arrange my travel.

I said that on the other hand, it was also hard to argue about the Court's discussion in Magnum Opus Technologies, Inc. v. United States in the paragraph entitled "Competition for Task Orders is Not Sufficient to Establish Prices For the Options". The Decision also stated that competition for an actual task order wasn't adequate to evaluate future task order pricing within the base contract period.

Finally, I said that the Magnum Opus Technologies case seems to conflict with 3 GAO Decisions that followed in the same year in which the GAO did indicate that the use of binding prices on seed task orders for construction ID/IQ base contracts constituted meaningful price evaluation.

Look -- this is very simple.

When an agency evaluates proposals for an IDIQ contract for services, including construction services, it may use proposed prices for sample tasks or actual ("seed") tasks to evaluate price. However, the GAO and the COFC require that the prices for the sample or actual tasks be based on contractually binding hourly rates or fees. In short, the rates or fees used to price the evaluated task -- sample or actual -- must be binding for all future work under the contract. The obvious reason is that otherwise the contractor could use low rates or fees for evaluation purposes, and then charge a higher rate or fee after award.

Professor Nash summed up the rule nicely in his discussion of the GAO's CW Government Travel decision:

This decision has been accepted as stating a mandatory requirement that agencies obtain binding promises of fixed unit prices for tasks or fixed labor rates for services in IDIQ contracts. See Magnum Opus Technologies, Inc. v. United States, 94 Fed. Cl. 512 (2010), 52 GC ? 243 (?It is therefore impermissible to evaluate relative cost based only upon non-binding proposals, because such a comparison is not meaningful.?); Rich, Multiple-Award Indefinite-Delivery, Indefinite-Quantity Contracts: Inclusion of a Price That Binds, 6 CP&A Rep. ? 1 (?to complete a meaningful evaluation of price to determine the cost to the Government, prices proposed at the [multiple award] IDIQ competition level must be binding and incorporated into the resultant contract awards.?).

Vern and Joel,

Thanks much for the renewed discussion on this issue. I believe it has confirmed my understanding that we do need to have binding unit prices established in the base contract that are used in the competition of future task orders. That always seemed relatively clear to me except that the proliferation of contracts that do not comply with that that started to make me doubt my understanding.

I do also agree that it may not make sense in many ways to have such a requirement (although in other ways it does), since when does federal procurement laws and regs have to make sense in order to be required to be followed.

Mike

Vern and Joel,

Thanks much for the renewed discussion on this issue. I believe it has confirmed my understanding that we do need to have binding unit prices established in the base contract that are used in the competition of future task orders. That always seemed relatively clear to me except that the proliferation of contracts that do not comply with that that started to make me doubt my understanding.

I do also agree that it may not make sense in many ways to have such a requirement (although in other ways it does), since when does federal procurement laws and regs have to make sense in order to be required to be followed.

Mike

Mike, if it doesn't make sense and will cost the taxpayers more money or doesn't work for industry, then we should try to get the the laws and regs changed. The lawyers and judges only work with what is there - the judge even said so in one of the Cases that Vern referenced. If those in the acquisition business are really "business advisors", "business professionals" or whatever you aspire to be known as - then we shouldn't simply fit square pegs into round holes that waste money or end up being a poor solution. Several here have pointed out the severe limitations of trying to unit price future complex, non-repetitive projects for follow-on INDEFINITE DELIVERY construction or design-build contracts. Recurring work like fixing plumbing or painting perhaps, but not entire buildings that very in location, time, scope, market conditions, site conditions, etc.

If it doesnt work then dont use an ID/IQ for construction. Above all, don't waste taxpayer money for the "convenience" of a task order contract if you are going to lock in pricing when it doesn't make economic sense to do so. Professor Ralph Nash has a lot of influence and ought to help make the case for something different where it is impractical to lock in pricing for future task orders.

By the way - using price and other competition among highly qualified firms selected to be pool members mirrors the authorized and PREFERRED 2 phase design-build method in FAR 36.3. Its a good fit when a MATOC is used for the right reasons. There ought to be some support in the industry, like the Design-Build Institute of America. Professor Ralph Nash knows them and has a long relationship with them.

It takes more than just knowing and blindly following the "rules"if they are dumb. It takes business judgement to do the right thing and a cry to fix broken contracting systems. The Comp Gen just this week came out , severely criticizing the government for sloppy contracting in Iraq and Afghanistan, wasting many tens of billions of dollars.

The GAO ("Comp Gen") did not issue the report on contracting in Iraq and Afghanistan. The report was issued by the Commission on Wartime Contracting in Iraq and Afghanistan. http://www.wartimecontracting.gov/index.php/reports

The GAO ("Comp Gen") did not issue the report on contracting in Iraq and Afghanistan. The report was issued by the Commission on Wartime Contracting in Iraq and Afghanistan. http://www.wartimecontracting.gov/index.php/reports

Thanks for the correction, Vern. I knew as I typed that I should have verified the agency. I didn't specify the amount of losses was because there were numerous reasons for the waste and losses, not just our contracting "system" (and I'm not trying to single out contracting personnel here ).

One of my points, probably lost in my tirade above, is that for design-build construction, the industry was able to get Congress to implement a more practical method to acquire design-build construction, similar to a pre-qualified ID/IQ pool that competes for task orders. Due to the impracticability of establishing fixed unit prices for some (non-recurring) construction and design-build IDIQ's, perhaps there is a way that some special authorization could be obtained to adapt the 2 phase process for such ID/IQ pricing.

Its has been recently ongoing, whether technically legal or not. I know that several billion dollars of D-B task orders that have successfully been accomplished using such pricing methods. It should be codified if it works.

Mike, if it doesn't make sense and will cost the taxpayers more money or doesn't work for industry, then we should try to get the the laws and regs changed. The lawyers and judges only work with what is there - the judge even said so in one of the Cases that Vern referenced. If those in the acquisition business are really "business advisors", "business professionals" or whatever you aspire to be known as - then we shouldn't simply fit square pegs into round holes that waste money or end up being a poor solution. Several here have pointed out the severe limitations of trying to unit price future complex, non-repetitive projects for follow-on INDEFINITE DELIVERY construction or design-build contracts. Recurring work like fixing plumbing or painting perhaps, but not entire buildings that very in location, time, scope, market conditions, site conditions, etc.

If it doesnt work then dont use an ID/IQ for construction. Above all, don't waste taxpayer money for the "convenience" of a task order contract if you are going to lock in pricing when it doesn't make economic sense to do so. Professor Ralph Nash has a lot of influence and ought to help make the case for something different where it is impractical to lock in pricing for future task orders.

By the way - using price and other competition among highly qualified firms selected to be pool members mirrors the authorized and PREFERRED 2 phase design-build method in FAR 36.3. Its a good fit when a MATOC is used for the right reasons. There ought to be some support in the industry, like the Design-Build Institute of America. Professor Ralph Nash knows them and has a long relationship with them.

It takes more than just knowing and blindly following the "rules"if they are dumb. It takes business judgement to do the right thing and a cry to fix broken contracting systems. The Comp Gen just this week came out , severely criticizing the government for sloppy contracting in Iraq and Afghanistan, wasting many tens of billions of dollars.

Joel,

I'm not sure if you're are speaking to a general audience with the above post, or if you think I'm trying to be one of the people fitting square pegs into round holes, but let me assure you that I definitely am not.

Sadly, COs usually do have to follow (although not blindly - often our eyes are bulging at the stupidity) "dumb" rules - because they are usually based in law. No one has given any CO the right to ignore laws or regs they think are dumb. There are a lot of "dumb" rules Contracting Officers have to follow. We can - and do - work to change them, but just like one man's pork is another man's job program, one man's "dumb" is another man's great idea, so actually getting them changed is rare. This IDIQ issue is a perfect example. I know that it's been written about in N&CR many times, but nothing happens. Performance-based contracting is another one - it's pushed repeatedly but even OFPP has stated (I don't have the memo in front of me so I'm paraphrasing) that they can't prove that it actually works.

Mike

Joel started out by making a good point: Don't use an IDIQ contract for construction if it doesn't make sense to do it.

I'm not sure what laws and regulations he thinks we ought to change, what rules are "dumb," or what part of the contracting system is "broken" with respect to what Mike asked about. And I'm not sure what the recent report about contracting in Iraq and Afghanistan has to do with it.

As far as I'm concerned, the GAO/COFC "binding prices" rule makes perfectly good sense.

I think I understand Joel's point--he can correct me if I'm wrong. Joel's beef is not so much with the "binding prices" rule as it is with the requirement for price competition when making the initial awards of IDIQ contracts under a multiple-award scenario. He would probably be in favor of a change in the law that permitted selection of IDIQ contractors based soley on nonprice factors, the assumption being that price competition would occur at the task order level.

Does that sum it up, Joel?

As far as I'm concerned, the GAO/COFC "binding prices" rule makes perfectly good sense.

Vern, I don't think the rule makes economic sense to use binding prices for follow-on task orders for construction ID/IQ's for projects other than routine, small jobs with repetitive, similar work. I guess we disagree then.

I believe that there ought to be a carefully outlined exception for ID/IQ construction and design-build contracts projects where the scope of each task is unique or different. The process would use a seed task order with binding price competition for the base contract establishment, with follow-on task orders competed among the pool members . If it is practical to lock in any prices for subsequent task orders, that could be included, otherwise follow-on task order price or price and quality competition would be sufficient.

The establishment of the Base Contract pool or pools would follow the 2 phase design-build procedures in FAR 36.3, wherein only the most highly qualified proposers short-listed in phase 1 of the base contract competition compete for the seed task order in phase 2 and for the base contract pool(s) on a Trade-Off Best Value basis. The seed task order prices are binding if awarded the seed task order. Otherwise, the proposed prices along with non-price factors are considered in the selection of the base award pool members, who then will compete for follow-on task orders.

The design-build scenario is already established process in FAR and in industry for single award contracts. For D-B MATOC's the only difference would be in the price competition by not locking in prices for future tasks. By their very nature, Design-Build contracts allow enough flexibility that there will be design, scope, site, material selection, subcontractor selection, design criteria updates, market condition, new Davis-Bacon Act Project wage Decisions, etc. differences between each task order that would preclude locking in prices for future task orders.

The major difference would be allowing its use for straight construction MATOC's - again only authorized for projects other than routine, small jobs with repetitive, similar work. Most of the same variables exist for individual construction projects as for design-build projects.

Simply trying to administer the effects of individual DBA project Wage Decisions on contractually fixed unit prices is a monumental contract administration task that makes such pricing impractical, let alone all the other variables.

I may try to pursue this through the Design-Build Institute of America. They were involved in development of the original D-B coverage in FAR and also have ties to Professor Nash.

I think I understand Joel's point--he can correct me if I'm wrong. Joel's beef is not so much with the "binding prices" rule as it is with the requirement for price competition when making the initial awards of IDIQ contracts under a multiple-award scenario. He would probably be in favor of a change in the law that permitted selection of IDIQ contractors based soley on nonprice factors, the assumption being that price competition would occur at the task order level.

Does that sum it up, Joel?

No, Don. My argument is just the opposite. Sorry that I cant get my point across. The binding seed task order competition for the base contract pool award is spot on. The problem - as I have tried to describe over and over - is with locked in prices for follow-on task orders for major construction projects or for design-build task orders, with too many variables to lock in prices. Since the 2 phase D-B process in FAR 36.3 is favored by industry and is for the most part the only authorization for D-B in the FAR, its use of a pool of highly qualified contractors for pricing task order competition ought to fit well for task order pools.

Joel,

I'm not sure if you're are speaking to a general audience with the above post, or if you think I'm trying to be one of the people fitting square pegs into round holes, but let me assure you that I definitely am not.

Sadly, COs usually do have to follow (although not blindly - often our eyes are bulging at the stupidity) "dumb" rules - because they are usually based in law. No one has given any CO the right to ignore laws or regs they think are dumb. There are a lot of "dumb" rules Contracting Officers have to follow. We can - and do - work to change them, but just like one man's pork is another man's job program, one man's "dumb" is another man's great idea, so actually getting them changed is rare. This IDIQ issue is a perfect example. I know that it's been written about in N&CR many times, but nothing happens. Performance-based contracting is another one - it's pushed repeatedly but even OFPP has stated (I don't have the memo in front of me so I'm paraphrasing) that they can't prove that it actually works.

Mike

Mike - speaking to a general audience, I'm not singlying you out.

Vern, I don't think the rule makes economic sense to use binding prices for follow-on task orders for construction ID/IQ's for projects other than routine, small jobs with repetitive, similar work. I guess we disagree then.

No, we don't disagree on that. But my thought is that one should not use an IDIQ contract for other than routine, small construction jobs with repetitive work.

What we may disagree about is the principle that in order to have price competition to satisfy CICA, offerors must compete on the basis of binding prices. If I understand you rightly, you think that there ought to be an exception to that principle for certain kinds of construction work. I don't see why that should be the case. In my opinion, it is foolish to think that there can be meaningful price competition on the basis of prices that will not be binding after award.

Joel, your posts would be easier to understand if you would be succinct. You have written thousands of words since Mike revived this thread (I quit counting at 2,000), and yet you are still trying to get your point across. Think things through, then post. The fewer words the better. And it is not always necessary to quote every post to which you are responding or to quote a prior post in its entirety. The less you make people read the more effective your posts will be. I love ya' buddy, but you do go on a bit too long.

Vern, the Judge in the Tyler Construction v US case I cited earlier wrote in some detail why such design-build MATOC's can be necessary, reasonable and useful.

The price competition would be the same as the 2 phase D-B concept already deemed acceptable..

I agree with the current requirements being adequate for simple, repetitive construction tasks.

No, we don't disagree on that. But my thought is that one should not use an IDIQ contract for other than routine, small construction jobs with repetitive work.

Verrn, I do agree with you that one should not use a multiple award IDIQ contract for other than routine, small STRAIGHT construction jobs with repetitive work. It isn't necessary for individual, fully designed construction jobs that would require extensive take-offs and estimates to prepare a price proposal. There is nothing extra-special about that. Most all construction companies are capable of doing that. I should have said that earlier and have felt that way for sometime. I was focusing on design-build MATOCs and mistakenly included "construction". A Construction MATOC might possibly be justifiable in some type of contingency operation - but then there is the Commission on Wartime Contracting Report...

I do feel that design-build MATOCS can be very useful for design-build projects, due to the various time and resource savings possible in not having to go through the 1st phase of identifying the most highly qualified firms for each project, if it is applied properly. Our organization requires Acquisition Plans for such MATOC's that get extensively reviewed from an acquisition planning perspective before they may be used. Large, time sensitive programs with many individual projects have been a good fit for this D-B acquisition approach. Design-build projects include many variables by their nature and firms not only compete for task orders on price but on their design, continuing past performance evaluations and often other management aspects, such as time and key subs and key personnel.

Joel:

I think that what you have been saying is that the rules about IDIQ contracts should be changed so that agencies can award design-build MATOCs that do not include binding prices in the base contract. If that is what you are saying, then I have no opinion one way or another. I'm sure that design-build MATOCs can be a good idea, but it appears that agencies are stuck with the binding prices rule whether it makes sense for design-build or not. I don't know how you would go about getting the rule changed without legislation.

MIke's question was whether, when conducting a competition for the award of a construction task order contract, you have to have binding prices in the contract in order to satisfy CICA. The answer, according to the GAO and the COFC, is yes.

When I decide to answer a question, I try to provide a short, clear, and correct answer to the question that was asked. I try to be as to the point, as clear, and as brief as possible. I may edit my answer 20 times in pursuit of that goal. [i keep a coffee mug on my desk bearing the writer's motto: "REVISE. (You know you want to.)"] Once the question has been answered, if possible, then it's fine with me if others want to elaborate, postulate, and speculate.

Vern, 10-4, understood and agreed concerning Mikes question.

As for pricing design-build MATOC's, there have been several GAO and at least one Claims Court case in which the price evaluation method was at least mentioned and not shot down.

But the case law that you cited would appear to require some legislation to clearly allow price competition for follow on D-B tasks without the need for fixed or maximum unit-pricing.

Hi,

What about a situation where a bidder on an IDIQ solicitation did not have government approved rates at that time?

Thank you.

Hi,

What about a situation where a bidder on an IDIQ solicitation did not have government approved rates at that time?

Thank you.

What rates are you talking about? Could you be a little more specific?

What rates are you talking about? Could you be a little more specific?

Forward Pricing Rates

Then you would negotiate the rates with the offeror for that IDIQ, unless for some reason you required all offerors to have FPRAs.