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By
FormerCO4AF on Tuesday, January 07,
2003 - 03:38 pm:
I am about to negotiate a task order to an A&E IDIQ
contract. The proposal is in excess of $1 million.
Reading FAR 36.601-2 this particular IDIQ is considered a
competative award.
With this in mind, does FAR 15.403-1(c)(1)(iii) apply as a
waiver to cost and prcing data since the basic contract has a
pre-established price schedule?
My thought is it would be applicable and no cost and pricing
data is required, especially since what we are negotiating is
hours and work classifications.
Thoughts.......
By
Anonymous on Tuesday, January 07,
2003 - 04:44 pm:
Is your IDIQ contract a multiple award contract?
By
FormerCO4AF on Tuesday, January 07,
2003 - 05:25 pm:
Anonymous
We have multiple IDIQ's for particular areas of concern (Geotech,
survey, multidiscipline etc...) This task order was sent to one
IDIQ holder for a proposal.
The schedule in the basic contract establishes the
classifications, hourly rates, overhead, profit etc...
By
Anonymous on Tuesday, January 07,
2003 - 06:15 pm:
Were the multiple IDIQ's awarded based on the same
solicitation? If yes, the contract would be a multiple award
IDIQ and should have provisions that define how each individual
task order will be competed or how each awardee will be given a
"fair opportunity" to receive awards. (See FAR 16.505(b)). If
your contract is a multiple award IDIQ and you did not compete
the task order, I'd say you aren't basing your award on
competition as defined by your contract. If, on the other hand,
your IDIQ contract is a single award contract, I could see why
you'd say you did compete the requirements when you went through
source selection for the basic award. I'd then rely on the
exemption in your original message and not require cost or
pricing data from the AE.
By
joel hoffman on Wednesday, January
08, 2003 - 06:40 am:
Anon - A-E contracts aren't subject to the FAR 16.5
requirements for ID/IQ competition.
FormerCO4AF, you asked for a proposal and received one. Is there
nothing factual to negotiate - only number of estimated hours (judgemental),
work classifications (maybe factual) times the contract unit
rate (already agreed to)? There may be some factual cost or
pricing data to certify, upon completion of negotiations (the
work classifications). If so, have the Contractor sign the
certificate. If there isn't any factual data to certify, what
good is it to have the Contractor certify?
I don't know how the original contract unit rates were
established. It isn't legal (Brooks Act) to compete A-E
contracts on the basis of price - the selection must be
qualifications based. If you followed the law, the unit prices
weren't competitively established. However established, they are
now part of the contract, thus are not considered cost or
pricing data for TINA purposes.
happy sails! joel hoffman
By
Anonymous on Wednesday, January 08,
2003 - 10:03 am:
Joel, by what authority are A-E contracts exempt from
the requirements of FAR 16.5? I understand you can't compete
requirements based on price, but you could still do a best value
determination. I couldn't find the exception. I'd appreciate the
information.
By
FormerCO4AF on Wednesday, January
08, 2003 - 11:21 am:
Anonymous
Look up 41 USC 253 and 259, Brooks Act. It says that A&E firms
are selected based on professional abilities only. After
selecting the tops firms based on abilities and evaluations
forms some of the rates can be negotiated such as profit and
hourly rates. We always have an audit done to confirm overhead
rates since they can be so high. We have some that are over 170%
for overhead.
Joel,
I am interested in hearing your opinion on the applicability of
the Brooks Act to task orders. There's a "school of thought"
that once the IDIQ's are awarded the Brooks Act has been
satisfied and task orders can be now be competed based on price.
This task order I am working on I "competed" between 4 existing
IDIQ's. The selection had nothing to do with price, we did a
selection based on the proposed team members, their
resumes/abilities and experience with Environmental Impact
Studies. The task order is written to restricts the contractor's
ability to arbitrarily replace team members.
By
FormerCO4AF on Wednesday, January
08, 2003 - 11:37 am:
Joel
Forgot to say thanks for the info. Thats the way I was
understanding it but just wanted a second opinion.
By
Anonymous on Wednesday, January 08,
2003 - 11:50 am:
Thanks for the information. I knew you couldn't
compete AE actions based on price, but FAR 16.5 states that if
you have multiple award IDIQ contracts for AE work, you have to
comply with FAR 36.6 when placing task orders. Sounds like you
did that.
By
Vern Edwards on Wednesday, January
08, 2003 - 12:36 pm:
FormerCO4AF:
Your question was whether or not the CO could apply the price
analysis exception (not "waiver," waiver is something else
entirely) in FAR § 15.403-1(c)(1)(iii) when negotiating a $1
million task order under an IDIQ contract, because the
basic contract has a pre-established price schedule.
The answer depends on what you meant by "pre-established price
schedule".
If the basic IDIQ contract includes prices for specific tasks,
i.e., firm-fixed-prices for jobs like designing a 1,000 sq. ft.
warehouse, then you don't need cost or pricing data when issuing
a task order because the price has already been established,
thus you don't need to apply the price analysis exception. But
if the IDIQ contract includes only hourly rates, which is what
it sounds like from your description, then you must price the
task order, because hourly rates are just input charges, not
output prices. This means that if the anticipated price of the
task order exceeds the TINA threshold you must obtain the
submission and certification of cost or pricing data before
issuing the order, unless an exception applies or the HCA grants
a waiver.
In order to use the price analysis exception, the CO must (1)
perform a price analysis and (2) determine that the proposed
task order price is reasonable "in comparison with current or
recent prices for the same or similar" work "under contracts
that resulted from adequate price competition." By law, A-E
contract prices may not be based upon adequate price
competition. Thus, the price analysis exception is not available
for the pricing of A-E task orders. You must obtain the
submission and certification of cost or pricing data unless you
can get a waiver from the HCA.
Also, while IDIQ A-E contracts are not subject to the statutory
preference for multiple-awards [see FAR § 16.500(d)], I believe
that multiple-award IDIQ A-E contracts are subject to the "fair
opportunity" requirement of FAR § 16.505(b)(1), except that
price or cost may not be considered. If I'm wrong about that
based on authoritative information to the contrary, I
would like to know about it.
Vern
By
Vern Edwards on Wednesday, January
08, 2003 - 12:50 pm:
FormerCO4AF:
The Brooks Act does apply to task orders. See FAR §
16.500(d). It says the placement of orders under multiple-award
IDIQ A-E contracts must be consistent with FAR Subpart 36.6.
Vern
By
joel hoffman on Friday, January 10,
2003 - 06:32 am:
I've been TDY since my original response (I was headed
out the door to the airport when I saw the question). If I owe
anyone further explanation, I'll respond when I get to the
office and can take the time to research all the questions and
explain. I think Vern provided many of the references. I was
originally referring to multiple award ID/IQ price competition
when I said that the "A-E contracts aren't subject to the FAR
16.5 requirements for ID/IQ competition", because Anonymous
implied that there would be some price competition. I'll
research the basic question of whether the "fair opportunity"
requirements apply. I think that they do, according to Corps of
Engineers guidance (at least for us). However, that wasn't the
issue. The original question concerned a price proposal from one
selected A-E firm. That's how you negotiate price for A-E task
orders - pick the best qualified (generally) firm - THEN
negotiate price. You don't use price competition for selection
of the A-E firm, therefore can't use it for a TINA exception.
For a sole source price negotation (e.g., you've selected the
IDIQ holder to obtain a price proposal from), there can be cost
or pricing data, even if the unit prices are pre-established.
I think that the portion of the ($1,000,000) proposal that I may
consider to be "cost or pricing data" would be the proposed work
classifications (I assume you mean which type and professional
level is proposed). This is an area where A-E firms sometimes
heavily pad their proposals.
If, for instance, level III architects are primarily proposed,
but the A-E actually performs the design using entirely Level I
and technicians (draftsmen), there may be something wrong. An
A-E firm generally knows what team it will assign to a project.
If it later can be shown that the firm had no intention at the
time of negotiations of using the mix of professional
classifications it proposed, I think you could make a case for
defective pricing.
You might consider such data as judgemental, rather than
factual. I believe I have some literature on relying on certain
judgemental data, which formulate the primary basis for the
proposal, back at the office. Nash and Cibinic may cover it in
"Formation of Government Contracts" - I know I've seen it
and will check.
At any rate, depending upon the circumstances, I might consider
the proposed work classifications to be C&P for the above
reasons. An instance might be where the A-E insists on the mix,
if challenged during negotiations, assuming that I rely on that
information. It's not cut and dry - depends on each particular
negotiation. happy sails! joel
By
joel hoffman on Friday, January 10,
2003 - 07:06 am:
To further clarify - I don't consider the exact mix of
proposed classifications to be "cost or pricing data", only the
concept of the intent to use certain classifications to
accomplish the work. If that concept was intentionally
misleading, there should be a basis for defective pricing
adjustment. happy sails! joel
By
Vern Edwards on Friday, January 10,
2003 - 09:33 am:
Joel:
I'm not sure that I agree with you about "the concept of the
intent" being cost or pricing data. I say I'm not sure I agree
because I'm not sure what you mean by "the concept of the
intent." Cost or pricing data are facts.
Vern
By
FormerCO4AF on Friday, January 10,
2003 - 11:11 am:
Joel:
Thanks for the input. Your reference to the classifications and
the work are right on target for this particular task order.
This contractor was selected because of the team make-up and the
task order required the team to be intact for the work. Thats
why they were selected. The proposal arrived, the team was
changed (without prior approval of the CO as required) and yes,
they padded the proposal by changing the team. Example, the
project manager is now identified as the Principle, at the
higher rate, so of course his hours went with him. The person as
the principle for the selection process doesn't even show up on
the proposal. When asked, the contractor said he never took it
"literal" that he couldn't adjust the team. Why spend the time
writing a task order and doing a selection based on team makeup
if your not going to stick to it? Frustrating.
With what you said, compared to what we received in the
proposal, I can see where C&P would be advisable for this task
order.
Thanks again.
By
Anonymous on Friday, January 10,
2003 - 11:22 am:
Joel, I don't believe I implied that there would be
price competition in my original message. Part 36.6 describes
how the AE firm should be selected, which for all intents and
purposes amounts to competition based on technical criteria.
By
joel hoffman on Friday, January 10,
2003 - 04:12 pm:
Vern, in my opinion, if the Contractor led me to rely
on classifications it had no intention of using, at the time of
agreement, it would be considered to be defective cost or
pricing data.
The statutory definition of C&P data at 10 USC 2306a(i) and 41
USC 254b(i) "includes all facts that, as of the date of
agreement on the price of a contract...a prudent buyer or seller
would reasonably expect to affect price negotiations
significantly. Such term does not include information that is
judgemental, but does include the factual information from which
a judgement was derived."
The case law goes back and forth, over what is or isn't
"factual".
What I meant by my statement concerning "the concept of intent"
was this. The number of forecast hours would probably be
considered judgemental. However - in my opinion - the
classifications could be considered factual, depending upon the
circumstances. If an A-E intentionally misleads the Government
negotiator by proposing certain classifications (senior PM,
senior engineer, etc.), knowing at the time that they will only
use junior engineers, PM's and draftsmen to perform the actual
design work - not the higher classifications that they proposed
- there is likely grounds for defective pricing.
Under TINA, I wouldn't have to prove intent to defraud. I'd have
to establish that the Contractor was aware that the data that I
substantially relied on was "incorrect" at the time of
negotiations and agreement (not always easy - information
sometimes obtained from an internal whistleblower or through
casual conversation with an insider, etc.). One reason TINA was
passed was to eliminate the need for the Government to prove
intent to defraud, false statements, false claims, etc. TINA
provides administrative relief, without the need to prove a
criminal act occurred. The standard of proof is also much less
stringent for TINA than for criminal acts.
There is some good discussion of what constitutes C&P data in
Nash and Cibinic's Formation of Government Contracts,
beginning on page 1324 of the 3rd Edition. The October 1989
issue of(Formerly) West Publishing's Briefing Papers also
has some good discussion of the distinction between factual and
judgemental proposal data.
Vern, I don't know whether or not you agree, but does that
further clarify the further clarification? A full explanation
would require a thesis. That's why Nash and Cibinic and Briefing
Papers are published. I'm a practitioner, not a law professor. I
have had several successes with TINA and a couple of
unsuccessful experiences.
I think that FormerCO4AF understands what I mean. In summary to
his/her original question, I think that:
1) the labor classification portion of the proposal can be
considered cost or pricing data in some cases.
2) the adequate price competition exemption is inapplicable on
an A-E task order.
(i) There shouldn't have been price competition in establishing
unit rates.
(ii) The task order isn't being price competed.
(iii) The task order proposal consists of more than just
contract unit prices - it includes contractor determined labor
classifications.
happy sails! joel
By
joel hoffman on Friday, January 10,
2003 - 04:21 pm:
Well, heck - one more clarification - my successes and
failures with Defective Pricing are on construction contracts,
not A-E contracts. I haven't been involved in an A-E contract
defective pricing claim. I doubt if there are many and I'd
rather not explain why, here. Suffice it to say that "we are all
great, professional buds". happy sails! joel
By
Vern Edwards on Friday, January 10,
2003 - 06:35 pm:
Joel:
If a contractor told a the contracting officer during
negotiations that it planned to use labor category X when in
fact it planned to use labor category Y, then the government
might be able to prove defective pricing on the basis of the
contractor's failure to disclose the plan to use category Y. The
government would have to prove that the plan to use category Y
had existed prior to the date of agreement on price.
However, I think that a contractor could argue rather
effectively in its own defense that a statement of mere
intention to use category X is nothing more than an
expression of expectation, an estimate, a judgment, and not a
statement of fact. The contractor could simply say that it had
changed its mind about what labor category to use, which it has
a right to do. Absent a smoking gun, I think the government
would have a hard time proving that an different, undisclosed
plan had existed prior to agreement on price.
Now, Joel, don't spend a lot of time looking up briefing papers
and case law, unless you want to do it for your own purposes. I
think we have answered FormerCO4AF's question.
Have a good weekend.
Vern
By
joel hoffman on Friday, January 10,
2003 - 07:54 pm:
I agree with your analysis. Have a good one, too.
happy sails! joel
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