Webinar: Making the Right Choices in Government Contracting Part 2

Transcription

1 Public Contracting Institute LLC Webinar: Making the Right Choices in Government Contracting Part 2 Presented by Richard D. Lieberman, FAR Consultant, Website: rliebermanconsultant@gmail.com. Mr. Lieberman is a procurement consultant and retired government contracts attorney. He is the author of eight books including The 100 Worst Government Mistakes in Government Contracting,; The 100 Worst Mistakes in Government Contracting (with Jason D. Morgan), and Elements of Government Contracting. His published articles include 10 Big Mistakes in Government Contract Bidding, 10 Big Mistakes in Government Contract Administration, Incorrect Government Advice Whom Should You Heed and The Ten Big Mistakes Made by Small Businesses and New Government Contractors. Mr. Lieberman is a former Deputy Inspector General and Assistant Inspector General of the Department of Defense. He served as a Professional Staff Member of the Senate Appropriations Committee. He has taught government contracts courses for the Public Contracting Institute, Federal Publications Seminars, LLC, the George Washington University Law School, the University of Maryland and numerous military, aerospace and information technology contractors. Lieberman 1

2 Polling Question You submitted a proposal that was noncompliant in one small material way. Can you resubmit a late, compliant proposal? a. Yes b. No Also, is there any other way to make the proposal compliant? Lieberman 2

3 Answer to Polling Question Lieberman 3

4 Award of Contract-Reading Always read your entire contract again, including all of the amendments and clauses incorporated by reference, and always plan your contract execution. Retain every contractual document for reference (Solicitation, Contract, Modification, Correspondence, Audits etc.) Develop a plan for full contract implementation from the outset of the contract that implements the requirements of every clause and every part of the contract. Lieberman 4

5 Protests Always consider the implications of a bid protest on your future relationship with a particular contracting office May chill relationship with a CO or a contracting office A special problem with CO s use of schedule contracts, where CO has discretion to use GSA Advantage! or get price lists of 3 contractors. FAR (c). Protesting may not hurt you if you do not expect to do business with this contracting office in the future. Always be civil and professional in a bid protest; criticize actions not people. Lieberman 5

6 Protests - 2 Always ensure that any protest you submit contains all the required elements, particularly a statement of how you were prejudiced by the improper agency action 1. In writing, addressed to GAO Gen. Counsel 2. Name, address, , phone & fax of protester 3. Signed by protester or representative (counsel) 4. Identify Agency and solicitation or contract no. 5. Include detailed statement of legal and factual grounds & documents 6. State what law or regulation was violated 7. State how protester was prejudiced by agency actions 8. State why protester is an interested party 9. State why the protest is timely 10. Specifically request a ruling by the Comptroller General (GAO). 11. State the form of relief requested 12. State that a copy of the protest was provided to the CO 13. Request specific documents 14. Request a protective order, if required. Lieberman 6

7 Polling Question You submit a protest of an LPTA award to the GAO 11 days after you received notice of award, explaining the basis of the award. Your protest says you think the award is unlawful because the agency evaluation was wrong. Your offer was technically acceptable but 3 rd lowest in price. GAO dismisses your protest because: 1)Your protest is untimely 2) You are not an interested party 3) GAO frequently dismisses protests of agency evaluations 4) Both 1 & 2 above Lieberman 7

8 Answer to Polling Question Lieberman 8

9 Truth in Negotiations Act If requested to provide certified cost or pricing data, always ensure that the Contracting Officer has a right to obtain that data Not required for actions under $750,000 Not required for commercial items Not required where there is adequate price competition Not required where prices are set by law or regulation Not required where head of contracting activity waives the requirement Lieberman 9

10 Polling Question What would you do if a solicitation stated that all offerors must provide certified cost or pricing data, but you believe there is an exception and such data isn t lawfully required? a) Be quiet and provide the data b) Wait till after offers are submitted to complain or protest c) Submit a protest prior to the RFP closing date Lieberman 10

11 Answer to Polling Question Lieberman 11

12 Truth In Negotiations Act Always provide accurate, current and complete certified cost or pricing data to the government when cost or pricing data is required Cost or pricing data are all facts (not estimates) that prudent buyer or seller would reasonably expect to affect price negotiation They are used to determine price reasonableness Includes vendor quotes, nonrecurring costs, unit cost trends, make/buy decisions, changes in production methods, other things that are factual. Must certify data are accurate, current and complete If defective pricing, you are subject to price reductions, e.g. FAR Lieberman 12

13 Contract Types Never abuse micropurchase or simplified acquisition programs ( SAT ) or be complicit in such abuse Micropurchases (under $3,500 for goods, under $2,500 for services and under $2,000 for construction) Simplified acquisitions (under $150,000) Abuses: GAO Must solicit three sources for SAT buys Cannot break down requirements to evade any of the thresholds Do not buy improper things such as: Alcohol Internet pornography Six months of personal long distance and cell phone calls Brand name items at high prices (Coach briefcase, Oakley sunglasses) Lieberman 13

14 Contract Types Whenever the government is buying commercial items, insist that it use the procedures in FAR Part 12, commercial item procurements Preference in law & FAR for use of commercial items when they are available to meet agency needs. 41 USC , 10 USC , FAR Definition of commercial items and commercially available off the shelf items in FAR is very broad. Fixed price type contracts only Include, to maximum extent practicable, only clauses specified in FAR , use commercial quality control procedures Do not allow an agency to use a standard government contract, with all of its burdensome terms and conditions, for a commercial item. Tailoring is allowed only based on market research showing what is consistent with commercial practice Lieberman 14

15 Contract Types Be certain you understand economic price adjustment factors in fixed price, economic price adjustment contract. FAR authorizes fixed price contracts with economic price adjustment ( EPA ), upward or downward: Based on established prices in the contract Based on actual costs of labor or material Based on cost indices of labor or material (most common) Request price increases whenever contract allows it In Multiple Award Schedule contracts (up to 20 years) use the price adjustment clause (GSAR ) Initially possible after 12 months, then up to 3 increases per year At least 30 days between price increases Gov t may accept, negotiate price increase or remove item Lieberman 15

16 Contract Types Be certain you understand the rights that a contractor has in a cost-plus-incentive-fee (CPIF) contract A cost-plus-incentive-fee contract is a cost-reimbursement contract that provides for the initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. This contract type specifies a target cost, a target fee, minimum and maximum fees, and a fee adjustment formula. After contract performance, the fee payable to the contractor is determined in accordance with the formula. The formula provides, within limits, for increases in fee above target fee when total allowable costs are less than target costs, and decreases in fee below target fee when total allowable costs exceed target costs. FAR A cost-reimbursement contract incentivizes the contractor to control costs. Contractor must devote managerial attention to maintaining costs at or below target cost in order maximize fee (profit). Lieberman 16

17 Contract Types Be sure you understand the award fee formula and evaluation criteria in your cost-plusaward-fee (CPAF) contract. A CPAF contract is a cost-reimbursement contract that provides for a fee consisting of (1) a base amount fixed at inception of the contract, and (2) an award amount that the contractor may earn in whole or in part during performance and that is sufficient to provide motivation for excellence in the areas of cost, schedule, and technical performance. [] The amount of award fee earned shall be commensurate with the contractor's overall cost, schedule, and technical performance as measured against contract requirements in accordance with the criteria stated in the awardfee plan. Award fee shall not be earned if the contractor's overall cost, schedule, and technical performance in the aggregate is below satisfactory. FAR , FAR (e) Example: Contractor and government estimate total annual cost to be incurred, then allocate 9% of it to an award fee pool, which is the maximum fee (profit) available. Gov t makes evaluations every 6 months, and awards a percentage of pool to contractor based on performance. Lieberman 17

18 Contract Types Always keep in mind the government s wide range of options in requirements and Indef. Deliv. Indef. Quantity (IDIQ) contracts Requirements contract: government buys specified goods or services from ONE contractor for all its needs during a specified period by issuing orders Government can t buy goods from any contractor other than the requirements contractor. Government must inform contractor during formation of its realistic estimates of requirements (including past requirements) IDIQ contract: used to acquire goods or services when exact times or quantities of deliveries are not known as contract award. IDIQ contract must contain minimum quantity or dollar amount and may contain a maximum quantity or dollar value. Orders may only be issued during the contract period, but performance of orders may extend beyond the contract period. Lieberman 18

19 Multiple Award Schedules-part A When required, always properly disclose your commercial sales practices on the General Services Administration ( GSA ) Commercial Sales Practice ( CSP ) form Requirement to disclose contractor s actual practices Failure to make full and complete disclosure can result in defective pricing Requires disclosure of all discounts which are very broadly defined Reduction to catalog prices, published or unpublished Rebates, quantity discounts, purchase option credits Anything that reduces the amount of money a customer ultimately pays Any price lower than list price is considered a discount Requires disclosure of all concessions, which are very broadly defined Benefit, enhancement or privilege, other than discount, which reduces cost Includes freight allowance, extended warranty, extended price guarantee, free installation and bonus goods Requires disclosure prior to award of Multiple Award Schedule ( MAS ) contract. GSBCA No Lieberman 19

20 Multiple Award Schedules-part A When required, always give most-favored customer pricing to the Government throughout the entire life of the contract. (a) Before award of a contract, the [parties] will agree upon (1) the customer (or category of customers) which will be the basis of award, and (2) the Government's price or discount relationship to the identified customer (or category of customers). This relationship shall be maintained through out the contract period. Any change in the Contractor's commercial pricing or discount arrangement applicable to the identified customer (or category of customers) which disturbs this relationship shall constitute a price reduction. (c) (1) A price reduction shall apply to purchases under this contract if, after the date negotiations conclude, the Contractor--(i) Revises the commercial catalog, pricelist, schedule or other document upon which contract award was predicated to reduce prices; (ii) Grants more favorable discounts or terms and conditions than those contained in the commercial catalog, pricelist, schedule or other documents upon which contract award was predicated; or (iii) Grants special discounts to the customer (or category of customers) that formed the basis of award, and the change disturbs the price/discount relationship of the Government to the customer (or category of customers) that was the basis of award. (2) The Contractor shall offer the price reduction to the Government with the same effective date, and for the same time period, as extended to the commercial customer (or category of customers) (d) (1)There shall be no price reduction for sales[](1) To commercial customers under firm, fixed-price definite quantity contracts with specified delivery in excess of the maximum order threshold specified in this contract;[or] (2) To Federal agencies. GSAM , Price Reductions. Lieberman 20

21 Multiple Award Schedules-Part B (Excludes Dep t of Veterans Affairs Schedule) New Multiple Award Schedule Approach by GSA known as Transactional Data Reporting ( TDR )-result unknown. 81 Fed. Reg This is a pilot program involving 30% of GSA MAS line items, about 45% of GSA MAS dollars GSA evaluates MAS proposals without requiring a CSP form, uses TDR data to determine reasonableness, or asks for more information other than cost or pricing data Contractor must agree to provide monthly detailed transactional data to GSA Alternate Price Reductions clause in these contracts merely states that gov t may request a temporary or permanent price reduction and the contractor may offer a voluntary price reduction at any time. GSAR (No mandatory price reductions, but remains to be seen) Lieberman 21

22 Polling Question You have a GSA Multiple Award Schedule contract that includes the clause requiring you to grant most favored customer pricing to the government. Your local office in Troy, Ohio sells 15 electronic slide projectors to a local customer, at a 22 percent discount from list. Your contract states that the Government is entitled to a 15 percent discount from list. GSA auditors find this sale 18 months later. During that 18 months, you have sold 100 projectors on the GSA contract at the 15% discount. What is the government entitled to? 1) A refund for the amount that equals a 37% discount off list on all 100 projectors (22 % + 15 %) 2) A refund for the amount that equals the regular 22 % discount on all 100 projectors. 3) A refund for 7% off on all 100 projectors (22% minus 15%) 4) Nothing Lieberman 22

23 Answer to Polling Question Lieberman 23

24 Lessons Learned Today Contract Administration issues can be even more complex than formation issues Learn from the good/bad choices of others don t repeat them. It is important to read the regulations and clauses always. It is impossible to tell you about every bad choice, but as you experience government contracting, you will undoubtedly spot them. Lieberman 24