Briefing for the Government Technology and Services Coalition (GTSC)

Best Practices in Contracting for DHS & DoD

Title slide template by SlideShop.com

Thomas W. Essig, TWE LLC 21 February 2014

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Agenda1. Things you need to know about the “Big A”

Acquisition Process

2. Key Government Procurement Personnel

3. Things to consider during the contracting process• What you should be doing• Evaluation Factors

• Things to pay particular attention to/watch out for

• Recommendations for proposal writing

4. How Things Go Wrong

1. Things you need to know about the “Big A” Acquisition Process

Cost Overruns in the Spotlight

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“Big A” Acquisition ProcessRelated Major Decision Processes

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D

O

T

M

L

P

F

MS A

Analysis of Materiel

Approaches

Demo

Demo

Demo

AoA

TechnologyDevelopment

DABJROC

JROC

Increment 3Increment 3

Increment 1Increment 1

MS B

MS C

MS B

MS B MS C

MS C

- Materiel -Process

DOTLPFProcess

FunctionalArea

Analysis

Functional AreaFunctional Concept

Integrated Architecture

Overarching PolicyNSS/NMS/Joint vision

Joint Concept of Operations

Feedback

ICD

CDD

CPD

ConceptRefinement

CD JROC DAB

DAB

Increment 2Increment 2

RequirementsNeed Driven

AcquisitionEvent Driven

IOCBA

Technology Development

System Development& Demonstration

Production & Deployment

Systems Acquisition

Operations & Support

C

User Needs &Technology Opportunities

Sustainment

Process entry at Milestones A, B, or C

Entrance criteria met before entering phase

Evolutionary Acquisition or Single Step to Full Capability

FRP DecisionReview

FOC

LRIP/IOT&EDesignReadiness Review

Pre-Systems Acquisition

(ProgramInitiation)

Concept Refinement

ConceptDecision

BudgetingCalendar Driven

DoN Acquisition Interfaces

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SECDEF&

DEPSECDEF

USD(AT&L)Defense

AcquisitionExecutive

SECRETARYof theNAVY

ASN(RD&A)Navy

AcquisitionExecutive

Chairman JCS&

VCJCS

CNO/CMC

CONGRESS

OMB

DoDComptroller

DoNComptroller

ProgramExecutiveOfficers

ProgramManagers

ProgramManagers

DirectReportingProgram

Managers

Acquisition Policy,Procedures, & Oversight

Requirements

Budgets & Oversight

CNO/CMC

Heads of Contracting

Activities

PrincipalContracting

Officers

SystemsCommand

Commanders&

DASNs

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Acquisition vs. Procurement/ContractingDHS Acquisition Line of Business Directive

• acquisition:  The conceptualization, initiation, design, development, test, contracting, production, deployment, logistics support, modification, and disposal of systems, supplies, or services (including construction) to satisfy DHS needs.  Acquisitions result from investment decisions, respond to approved requirements, align to strategic direction, and are guided by approved baselines.  Acquisition does not include establishment of agency needs (requirements determination) or financial management. 

• Contracting:  For the purposes of this Directive “Contracting” means purchasing, renting, leasing, or otherwise obtaining supplies or services.  Contracting includes description (but not determination) of supplies and services required, selection and solicitation of sources, preparation and award of contracts, and all phases of contract administration.  It does not include making grants or cooperative agreements.  For the purposes of this Directive, “Contracting” is synonymous with “Procurement”.

Questions?

2. Key Government Procurement Personnel

Contracting Officer

Contracting Officer’s Representative (COR)

Program Manager

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Contracting Officer Authority and Responsibility

• Enter into and sign contracts on behalf of the Government• Administer or terminate contracts

• Only person that can change, modify, or waive contract requirement

• Decision authority for variety of pre-award procurement decisions/processes, including:• Control exchanges with offerors on competitive acquisitions• Make competitive range determinations• Source Selection Authority, unless another specifically

designated• Authorize release of Government’s analysis of proposal to

contractor• Establish price reasonableness• Decide impact of conflict of interest issues & mitigation

plans• Determine contractor responsibility prior to award

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Contracting Officer Authority and Responsibility (continued)

• Ensure that:• All requirements of law and regulation are met before

award of contract• Sufficient funds are available for obligation• Contractors receive impartial, fair, and equitable

treatment• Buy-in losses not recovered during contract performance

• Designate Contracting Officer’s Representative (COR/COTR)

• Limits: • Contracting officers may bind the Government only to

the extent of the authority delegated to them• Certain decisions require approval above level of

contracting officer

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Contracting Officer’s Representative (COR)

• Assists in the technical monitoring or administration of a contract

• Primary point of contact with contractor during contract performance

• Specific authorities and responsibilities identified in contract provision

• Not authorized to make any commitments or changes that affect price, quality, quantity, delivery, or other terms and conditions of the contract

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Program Manager• Manage the Program

• Establish and obtain approval of Program Baselines to meet operational user requirements

• Authorize cost/schedule/performance tradeoffs necessary to satisfy threshold performance requirements

• Accomplish program objectives for development, production, and sustainment to meet the user's operational needs

• Provide credible cost, schedule and performance reporting

• Assist the management of the contract• Monitor contractor performance• Provide technical assistance to the contractor required

for contract performance• Notify contracting officer about any contract

performance problems

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Factors that May Impact SuccessProgram Manager

• Decisions outside the PM’s scope of authority

• Which Requirement?

• Conflicts between the PM and CO responsibilities

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PM vs. CO AuthorityIntegral Part of Internal Controls

During contract performance, program offices are responsible for monitoring the performance of the contractor, providing technical assistance to the contractor that is required for contract performance, and notifying the contracting officer about any contract performance problems. Program offices are not authorized to change contract work, costs, or completion dates or to enforce [c]ontract provisions. Only contracting officers have the authority to do that. This concentration of authority in the contracting officer is an integral part of internal control within the contracting process. 

(From Civilian Agency Procurement: Improvements Needed in Contracting and Contract Administration,? GGD-89-109, at 25 (Sept. 1989); Verne Edwards article online)

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Who do you deal with?PM, CO, or COR

• All: As specifically identified in contract or RFP• Contracting Officer

• Pre-procurement action: Identification of capabilities or agency practices that may negatively impact competition

• Active Source selection: All communications involving selection underway

• Existing contract: Any request for a change, modification, or waiver or issue that may impact performance

• COR (Existing Contract Only)• Primary POC for day to day contract issues• Provides technical and administrative guidance/assistance (within

scope)

• Program Manager• Pre-procurement action: marketing; overall program needs• Active source selection: ongoing contracts only• Existing contract: Overall program and technical guidance/assistance

(within scope)

Questions?

3. Things to consider during the contracting process

•What you should be doing

•Evaluation Factors•Things to pay particular attention to/watch out for

•Recommendations for proposal writing

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Things You Should be Doing Before Contract Award

• Before the procurement is initiated• Review DoD Source Selection Procedures at http://

www.acq.osd.mil/dpap/policy/policyvault/USA007183-10-DPAP.pdf

• Courtesy calls on customer contracting and program personnel• Explore future/upcoming opportunities

• Websites• Industry or Small Business Conferences

• Before the RFP is released• Attend all pre-solicitation conferences and comment on draft

RFPs – especially if they favor competitors

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Things You Should be Doing Before Contract Award (cont’d)

• Anytime you can• Find out about the incumbent, including Government

assessment of its performance• Before proposal due date or other date specified

• Review the solicitation in detail• Challenge provisions that either unduly inhibit

competition or favor one source over others• Request a change to any provision you can’t live with• Decide whether or not to bid as prime or sub• Decide whether to bid at all

• Avoid submitting a proposal for a contract you don’t expect to be able to perform successfully

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Solicitation Section MEvaluation Factors for Award

• Sometimes a separate RFP attachment• Identifies:

• Basis of Award• Award on initial offers, if contemplated• Key evaluation factors, subfactors, and elements• Relative order of importance of factors and subfactors

• Factors and subfactors are individually rated/scored

• Proposal should mirror factor, subfactor, element structure

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Select Evaluation Factors and Related Considerations

• Past Performance• Rated• Pass/Fail (Acceptable/Unacceptable)

• Cost/Price• Reasonableness• Realism• Buying-In

• Responsibility

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Low Price Technically Acceptable (LPTA) Source Selections

• Appropriate when best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price

• Key Rules:• The evaluation factors and significant subfactors that

establish the requirements of acceptability shall be set forth in the solicitation.

• Past performance need not be an evaluation factor (but often is)

• Tradeoffs are not permitted• Proposals are evaluated for acceptability but not ranked

using the non-cost/price factors• Exchanges may occur

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Low Price Technically Acceptable (LPTA) Source Selections (cont’d)

• Level of effort (LOE) or labor hour tasks• Single award IDIQ, with most of work awarded in

future task orders • Potential offerors without past performance (no

past performance = acceptable)• Making “acceptable” rating difficult to achieve or

based on factors unlikely to impact performance

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Cost/Price EvaluationFAR 15.402 Pricing Policy

• Federal Acquisition Streamlining Act (FASA) • Contracting officers shall—

• (a) Purchase supplies and services from responsible sources at fair and reasonable prices. 

• Fair and Reasonable Price• Not explicitly defined in FAR• FAR does provide techniques to assess• DAU Acquipedia Definition: the price that a prudent

businessperson would pay for an item or service under competitive market conditions, given a reasonable knowledge of the marketplace.

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Fair and Reasonable Price Determination

• In competitive acquisitions, a “fair and reasonable” price is usually based on the existence of adequate price competition

• In sole-source acquisitions, a “fair and reasonable” price is usually based on detailed cost and price analysis.

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Adequate Price Competition

• Two or more responsible offerors, competing independently, submit priced offers that satisfy the Government’s expressed requirement and • Award will be made to the offeror whose proposal

represents the best value where price is a substantial factor in source selection; and

• There is no finding that the price of the otherwise successful offeror is unreasonable.

• May exist even if only one offer received

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Reasonableness vs. RealismFAR 15.404-1(d)(1)

• Cost realism analysis is the process of independently reviewing and evaluating specific elements of each offeror’s proposed cost estimate to determine whether the estimated proposed cost elements are:• Realistic for the work to be performed• Reflect a clear understanding of the requirements• Consistent with the unique methods of performance and

materials described in the offeror’s technical proposal

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Buying-In (FAR 3.501)• “Definition: Submitting an offer below anticipated

costs, expecting to—• Increase the contract amount after award

(e.g., through unnecessary or excessively priced change orders); or

• Receive follow-on contracts at artificially high prices to recover losses incurred on the buy-in contract.

• Policy• The contracting officer must take appropriate

action to ensure buying-in losses are not recovered by the contractor through:• Change orders• Follow-on contracts not subject to cost analysis.

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ResponsibilityFAR 9.104

• To be determined responsible, a prospective contractor must—• Have adequate financial resources • Have the other resources to be able to meet

the requirement• Have a satisfactory performance record• Have a satisfactory record of integrity and

business ethics• Be otherwise qualified and eligible to receive

an award under applicable laws and regulations• Determination made by Contracting

Officer

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Recommendations for Proposal Writing

1. Read the RFP, especially sections L and M2. Establish your win theme

• Don’t just demonstrate that you can do the work, demonstrate why you can do it better than your competitors

3. Make it easy for the Government to find the information they're looking for• Separate section covering each factor and subfactor

4. Don't simply restate the RFP requirement, or that "we will meet all contract requirements" • Tell them how you will do that

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Recommendations for Proposal Writing(continued)

5. Don't simply give them a textbook answer • Tell them what you will do, but also• Demonstrate that you have established methods and

processes to successfully accomplish the work

6. Prove it• Demonstrate that your proposed methods and

processes work

7. Use various methods of conveying the message, including call-out blocks, tables, charts, etc.

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Recommendations for Proposal Writing(continued)

8. Identify why teammates were selected• What benefits (from the Government’s perspective) do

they bring to the team?

9. Avoid taking any exception to a term or condition of the solicitation if at all possible

• Assumptions can also be risky

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Recommendations for Proposal Writing(continued)

10. Have your proposal drafts reviewed by panels that can ensure both compliance and content

• Compliance: • Have you provided all information required by the RFP?• Is it easy for the evaluator to find information required by

the RFP (especially, Section L proposal instructions)?• Is it easy for the evaluator to map the proposal to the RFP

evaluation criteria (Section M).• Have people with source selection experience on panel

• Content• How well did we understand the customer’s requirement? • How well did we demonstrate superior methods, processes,

experience, etc?• Have people with detailed technical knowledge of the work

scope on the panel.

Questions?

4. How Things Go Wrong

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Government Caused Problems

• Very lengthy source selection process• Significant gaps between program phases• Contract requirement that doesn’t reflect operational user requirements

• Acquisition strategy (and/or contract type) that incentivizes something other than what the Government intended

• Poorly written contract (e.g. significant ambiguities)

• Significant requirements or budget changes after award

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Contractor Caused Problems

• Failure to notify the Government of significant concerns with anything about the acquisition during the pre-award process

• Exclusive focus on winning the contract• Failure to critically assess internal capabilities before

submitting a binding proposal• Heavy reliance on subcontractors without a proven

subcontractor management process• Lack of, or failure to use, other proven management

processes for:• Risk identification and mitigation• Cost, schedule and technical performance

• Insufficient knowledge of the customer(s)• Failure to understand and manage customer

expectations

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When things go VERY wrongPublic Scandals and their Aftermath

• Procurement Integrity Act (41 U.S.C. § 423 and FAR 3.104)• One of several laws enacted following very

public procurement scandals. It provides:• A ban on disclosing procurement information• A ban on obtaining procurement information• A requirement for procurement officers to

report employment contacts by or with a competing contractor

• A 1-year ban for certain personnel on accepting compensation from the contractor.

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Darlene DruyanPrincipal Deputy Undersecretary of the Air Force for Acquisition

• Air Force Acquisition Executive• Plead guilty to:

• Inflating price of the contract to favor her future employer

• Passing information on the competing offer

• Sentenced to nine months in jail for corruption, plus fines…

• Boeing CFO Michael M. Sears• Fired by Boeing• Sentenced to 4 months prison

• Boeing CEO Phil Condit resigned• Boeing fined $615 million fine for

their involvement• CBS News called it "the biggest

Pentagon scandal in 20 years"

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Waste, Fraud & Abuse

• Coffee brewer: $7,622 (Air Force) 

• Pair of pliers: $748 (Air Force) 

• Vinyl armrest pad: $670 (Air Force) 

• Toilet seat: $640 (Navy) 

• Drill set: $599 (Navy) 

• Rechargeable flashlight: $181 (Air Force)

• Hammer: $436 (Navy)

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Vice President Gore’sHammer Award

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National Partnership for Reinventing Government (formerly National Performance Review)

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$436 - $600 Hammer

Steve Kelman (former OFPP Administrator)*• Never was a $600 Hammer• Bulk purchase of spare parts• Approved accounting method allowed

allocation of R&D overhead costs to be applied to each item without regard to item cost

• “The new moral is that numbers, taken as self-explanatory truths by the public and the press, can in fact be the woefully distorted products of a broken accounting system.”

CNET Article

*As reported in “Government Executive”

Other issues:• Hammer vs. Uni-directional impact

generator• Special Tooling & Test Equipment

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Improper Business Practices/Safeguards

• General rule: Avoid even the appearance of a conflict of interest in Government-contractor relationships. 

• Gratuities offered to or solicited by Government personnel

• Collusive Pricing (52.203-2 Certificate of Independent Pricing)

• Unfair competitive advantage from current contract work

Questions?