The GAO Comp Gen issued a recent decision related to reverse auctions:

Royal Hawaiin Movers

In this case, the Navy conducted a reverse auction that lasted over 5 hours, only to determine later that ambiguities in the solicitation required correction through final proposal revisions.

Some time saver!

Am I reading too much into footnote 4 of the decision or is the CG chomping at the bit to issue a decision regarding the propriety of reverse auctions?

By formerfed on Wednesday, November 14, 2001 - 01:44 pm:

Linda,

I agree with your read. It looks like GAO is anxious to rule on that issue.

After reading this decision and seeing how mechanical the process has evolved, I can guess where GAO will go. Also what we're seeing now is substanially different that the original concept. The process is much different and more complicated for starters.

By Anon on Wednesday, November 14, 2001 - 01:53 pm:

Is anyone surprised. The simple we make complex, the complex we make impossible...

By Vern Edwards on Wednesday, November 14, 2001 - 02:18 pm:

Linda:

Here's a protest: The government's requirement that offerors agree to participate in a reverse auction is unduly restrictive of competition and therefore violates CICA, since some firms may not wish to publicly disclose their unit prices.

By Ron Vogt on Wednesday, November 14, 2001 - 03:22 pm:

This is purely a side issue, but Vern's comment on unit prices reminded me to ask. I seem to recall a lengthy discussion a while back on unit prices. It was in a thread concerning the MCI Worldcom decision on FOIA requests and the release of unit prices.  Does anyone recall the name of that thread?

By Anon2U on Wednesday, November 14, 2001 - 11:42 pm:

If reverse auctions are done correctly, the firms prices will not be linked to their name.

However, I was taught only 3 years ago that the government considered auctioning to be a bad acquisition strategy and it was against the rules. Now it is the hot new procurement method. What a difference 2 years makes.

By bob antonio on Saturday, November 17, 2001 - 02:24 pm:

Linda:

The Comptroller General appears to be giving the FAR Councils some friendly advice. Here is the statement leading up to the footnote.

"The circumstances of this case, in our view, highlight the importance of having unambiguous ground rules in reverse auctions."

I am pleased to see that the Comptroller General is following my lead and repeating the advice I had given in an earlier forum.

By Linda Koone on Monday, November 19, 2001 - 10:29 am:

Vern:

Couldn't one protest an IFB for the same reason? Public disclosure of prices occurs at bid opening.


Bob:

I've never heard whether the FAR Councils received feedback on their request for comments on whether regulatory guidance was needed for Reverse Auctions. Have you?

I'm starting to think there should be coverage.

By Vern Edwards on Monday, November 19, 2001 - 11:20 am:

Linda:

No, because CICA expressly permits the use of sealed bidding.

By bob antonio on Tuesday, November 20, 2001 - 10:43 am:

Linda:

The request for comments was back in late 2000 (maybe October) with a due date of January 2001 for comment. I have not heard anything since. Maybe it was lost in the transition to a new administration.

By joel hoffman on Tuesday, November 20, 2001 - 11:56 am:

I believe that the root cause of the GAO protest protest, which resulted from the agency protest, was a simple conflict in the solicitation's rules for revising bids/offers. The number of allowed bid revisions, at five minute intervals, exceeded the published time limit for final bids - so there was confusion over when the cut-off for revised bids should have occurred. The basic question was "whose bid was the last legal bid?"

I don't that, in itself, warrants additional rules for reverse auctions.

While reading the case, it was also interesting to note the timing of the bids - at the last minute, each time. Could price reductions have gone on, ad infinitum, if allowed? Also appears that they could have reduced the interval to 3 minutes or so - most revisions occurred within the last allowed minute, each time.
happy sails! joel

By bob antonio on Tuesday, November 20, 2001 - 04:18 pm:

Joel:

Maybe the simplest way to deal with reverse auctions is for the Office of Management and Budget to propose some simple legislation to authorize this process. The legislation can identify reverse auctions as an acceptable "commercial practice" and provide some broad guidance. The FAR Coucil can set up a case and add the "commercial practice" to Part 12 of the FAR as a "commercial practice."

I cannot see anything unfair about reverse auctions for appropriate items. The problem we have is taking a simple commercial practice that appears to work for commodity items and taping our federal negotiation process around it. Once we wrap a commercial practice in FAR Part 15, the Comptroller General and the courts will use Part 15 to judge this commercial practice. We are creating another government mongrel. This is very similar to wrapping a Part 13 procurement as a Part 15 procurement and then having it judged as a Part 15 procurement.

We should have tested reverse auctions under the authority of the Office of Federal Procurement Policy Act. That test could have provided the basis for the legislation and the changes in acquisition regulation.

By Linda Koone on Wednesday, November 21, 2001 - 09:58 am:

Joel:

I've witnessed reverse auction events and the real 'bidding frenzy' does take place at the end of the event. In an hour-long event, not much happens in the first 30-45 minutes. The real price cuts come in the extension periods. In the auctions I watched, there was a time specified for the event, however, in theory, the event could have gone on, ad infinitum, as you suggested because a revised price submitted within the final minute, extended the auction for another minute. There was no final ending time established. I know that Bob thought the absence of a common cutoff time violated FAR 15.307(b), but we never received a protest of that nature.

In the recent protest decision, the Navy established an initial bidding period of 60 minutes, but that period would be extended by 5 minutes anytime a revised price was received within the final 5 minutes, with a final cutoff at 2:00 P.M. In essence, they permitted an hour-long event to cap out at 5 hours.

I think you should choose one or the other. Either permit extensions (but I'd limit it to 1-minute extensions) or establish a specific time for the auction to end, with no extensions permitted.

As the regulations are written, you have to fit the reverse auction process in FAR Part 15, which obviously can and has been done. But I think there some danger there because I've heard suggestions that the reverse auction process could be used in conjunction with trade-offs. I suppose that it's possible, but it seems to be illogical. I'd prefer to see the reverse auction process more closely linked to sealed bidding. In practice, it resembles the 2-step sealed bidding process described in FAR Subpart 14.5. Tying it to the sealed bidding process also eliminates the protest that Vern suggested.

Maybe regulatory coverage isn't required. I just wonder how you prevent a simple process from turning into the monster the Navy activity just dealt with.

By Vern Edwards on Wednesday, November 21, 2001 - 11:06 am:

I do not think that we need new laws or regulations about the reverse auction process. I think that it can be accomodated under Part 15 without any difficulty. Although I like to speculate about protests, I doubt that either the GAO or the Court of Federal Claims would find that the process is illegal, although one never knows about these things.

As Linda points out, the main difficulty seems to be in finding a way to end the procedure that is fair to all involved. It may be that the best way to do it is to set a definite end time and let it go at that. If difficulties arise they are likely to be associated with time extensions.

I think that you can use reverse auctions in a tradeoff process source selection; however, the reverse auction process places a psychological emphasis on price that may seem inconsistent with a statement that that price is the least important evaluation factor.

By Dave Barnett on Wednesday, November 21, 2001 - 12:51 pm:

Vern, my operating administration has had success with the reverse auction technique. Your last paragraph in your previous message is intriguing, I thought the reverse auction process was driven by price (similar to sealed bidding), can you conduct a best value procurement using this process? How would you determine technical superiority with the reverse auction process, isn't the reverse auction conducted on-line? I'm a newbie to this process and pretty much felt this is a price driven selection process so I'm most likely missing something here (or maybe the other procurement shop is...). Any enlightenment is welcome.

By Linda Koone on Wednesday, November 21, 2001 - 01:38 pm:

Vern:

Here's an illustration of why I don't believe the reverse auction is appropriate in a trade-off source selection:

Let's say after initial evaluation of offers, you determine that there are 5 offers in the competitive range, and you invite these 5 offerors to participate in the reverse auction.

During the auction, Offeror A, who happened to offer the lowest rated technical solution, submits a price that can't be beat by any of the remaining offerors (who may have been willing to go lower than the last price they bid, but can't go low enough to beat Offeror A's price).

End of auction . . . and you may not have the best value, because you haven't seen the lowest prices of the other 4 offerors.

I suppose you could reserve the right to use the down-select process that you were talking about in another thread after conclusion of the auction, but I question the value of the auction then.

By Vern Edwards on Wednesday, November 21, 2001 - 02:13 pm:

Linda:

I don't understand your illustration or how it shows that reverse auctions don't work well in tradeoff source selections.

What are the nonprice evaluation factors and what is the relative importance of the factors?

Are you saying that A wins because its price is the lowest?

Why haven't I seen the lowest prices of the other four offerors? They have had the same amount of time to participate as A.

The reverse auction constitutes discussions about price, but are you going to conduct discussions about nonprice issues?

If I were doing this procurement I would first conduct nonprice discussions with all offerors in the competitive range. If I thought that any offeror's price was too high or too low I would say so. I would request revised nonprice proposals. After I had received them I would open the reverse auction. (It doesn't have to be done live via the Internet. It could be done by telephone or by email or snail mail.)

After conclusion of the reverse auction process I would compare the offerors on the basis of their nonprice and price offers and make tradeoffs to select the winner. Why wouldn't that work?

Vern

By Linda Koone on Wednesday, November 21, 2001 - 02:39 pm:

Vern:

I'm with you the whole way as far as evaluating non-price factors and holding discussions... then conducting the reverse auction on pricing.

However, an on-line event typically permits pricing that is lower than the last price offered. So if Offeror 'A' submits an early price that the other offerors are unable to beat, you won't see any more revised prices from the other offerors, even if the other offerors were willing to lower the last price they submitted.

If I'm going to make trade-offs, I want to see the best price each competitor has to offer. I might not see that in an on-line reverse auction.

Look at it this way. Say you are at a traditional auction, bidding on an item for which you'd be willing to spend $100.00. Bidding starts out slow, and gets up to $70.00. All of a sudden, someone bids $125.00. You're finished. Even though you would have been willing to pay more than $70.00 for the item, your bids between $50.00 and $100.00 are never heard.

It's the prices between an offeror's last bid and the low bid that might sway my decision in a trade-off, but I'll never see them.

Does this clarify what I was driving at?

By Vern Edwards on Wednesday, November 21, 2001 - 03:18 pm:

Linda:

Now I understand what you were talking about. But this problem is easily remedied. What you do is this:

After conducting discussions and obtaining revised nonprice offers, the CO conducts the reverse auction by disclosing the score and the price of each offeror to the others. He or she can do that without disclosing the identities of the offerors. If you were one of four offerors you would get this information:
 

Each offeror could use this information to submit revised prices. Offerors B and D might cut their prices in order to make themselves more attractive in comparison with Offeror A in light of its nonprice superiority. Offeror A might cut its price in order to preserve its advantage. You might decide to stand pat.

This procedure is a variation of the "pure" reverse auction, but it's an auction and it would work.

By Vern Edwards on Wednesday, November 21, 2001 - 03:46 pm:

Linda:

Addendum to my last post. In the instructions to the offerors the CO should tell them that they can revise their price even if they cannot submit a lower price than another offeror.

In my example, suppose that Offeror B decides that it can offer a lower price than Offeror A, but not a lower price than you. Since Offeror B has a better nonprice score than you, it can still improve its competitive standing relative to you by lowering its price as much as possible. It may be that all it needs to do is close the gap somewhat.

By Linda Koone on Wednesday, November 21, 2001 - 09:03 pm:

Vern:

That's a new twist to the process. I'll digest it (along with my turkey) over the Holiday and get back to you.

Happy Thanksgiving!

By Linda Koone on Wednesday, November 21, 2001 - 09:05 pm:

PS: I KNOW my score was better than Good!

By Vern Edwards on Friday, November 23, 2001 - 10:28 am:

Linda:

That score haunted me all Thanksgiving Day. The evaluation board has told me that they mistakenly transcribed your score and that it was you who received the Excellent and Offeror A the Good. They have asked for forgiveness and understanding.

To date, government reverse auctions appear to have been limited to the commercial, internet, price-only model, such as the dramatic live-action event that Capt. Huff had you folks stage last year. That was fine, but there is no reason to limit them in that way. They can be done without fancy technology and they can provide offerors with more information than just price.

In the commercial marketplace sellers usually have a lot of information about their competitors' products, including information about design, quality and customer attitudes about the relative merits of the competing products and services. Why shouldn't the government provide that kind of information to competing offerors in a source selection? There are often ways to do so that do not disclose trade secrets or otherwise violate FAR 15.306(e).

The secrecy in which the government usually wraps the contents and scores of competiting proposals reflects the fact that the source selection process was developed in the 1950s and 1960s by R&D and weapons acquisition agencies. In those businesses trade secrets are what give offerors a competitive edge; the policies against technical leveling and technical transfusion were promulgated in the early 1970s to encourage offerors to put their best ideas in their proposals by promising to protect them from disclosure to competitors. But these days many source selections do not involve any trade secrets and even when they do the disclosure of nonprice scores does not compromise them.

(The government's practice of allowing offerors to effectively mark every word on every page of their proposals with the restriction on disclosure legend is ridiculous. In some cases the legend is construed to prevent the government from disclosing information that the offerors use in their advertising or otherwise disclose publicly. Agencies should tell offerors to limit such markings to trade secrets, as defined in the Trade Secrets Act. See the definition of trade secrets in Black's Law Dictionary.)

By revealing competitors' scores and prices during discussions, and maybe even specific differences among nonprice proposals (without disclosing trade secrets), the government would be giving offerors information that would enable them to revise their proposals more intelligently. This would be a significant improvement in the quality of the competition obtained in source selections, which would yield better value.

If you sell products or services in the commercial marketplace you know just about everything you need to know about how your competitors' products or services are received in the marketplace (although you may not know your competitor's "secret formula") and you regularly adjust your product or service quality, price, packaging and marketing in order to compete more effectively. This is why the commercial marketplace is so dynamic and yields so many benefits. Why shouldn't the government adopt this commercial practice within the limits of the law and practical considerations?

Vern

By Anonymous on Friday, November 23, 2001 - 11:16 am:

Vern, the views in your November 23 post outside the specifics of reverse auction warrant discussion under their own heading, perhaps even several headings.

Why should the government allow offerors to mark every word on every page of their proposals with restrictions? What steps can be taken to reasonably restrict the practice?

I view the major technical leveling "evil" (excluding actual breach of trade secrets) as information transfer between offers that eventually has the counterproductive effect of making selection the nearly impossible task of distinguishing between microscopic differences. Just what, if anything, is wrong with providing all offerors anonymous information outside of trade secrets that allows all to really put forth their best effort to win the work at the most bang for the taxpayer's buck? Indeed, since most do have effective intelligence on competitors isn't the current practice largely a game rule to government's disadvantage?

By Vern Edwards on Friday, November 23, 2001 - 04:19 pm:

Anonymous:

FAR has never provided much guidance about offerors' use of restrictive markings in proposals. FAR 52.215-1(e) instructs offerors to use restrictive markings whenever they do not want "data" disclosed to the public "for any purpose" or used by the Government "except for evaluation purposes." It does not restrict the kinds of data that offerors can protect.

FAR 15.306(e)(2) tells contracting officers not to reveal an offeror's "technical solution, including unique technology, innovative and unique uses of commercial items, or any information that would compromise an offeror's intellectual property[.]" (You would think that it would tell contracting officers not to disclose data that bears a restrictive marking.)

FAR 15.207(b) tells contracting officers to protect proposals from "unauthorized disclosure," and refers the reader to FAR 3.104.

FAR 3.104-4(a)(1) says that government officials shall not disclose contractor bid or proposal information, which FAR 3.104-3 defines as (a) cost or pricing data, (b) indirect costs and direct labor rates, (c) "proprietary information" about manufacturing processes, operations, or techniques "marked by the contractor in accordance with applicable law or regulation," information marked by the contractor as "contractor bid and proposal information" in accordance with law or regulation, and information marked by the contractor in accordance with FAR 52.215-1(e). However, FAR 3.104-5(d) allows the contracting officer to challenge offerors' restrictive markings if he or she thinks that information marked "proprietary" is not, in fact, proprietary, and to disclose that information despite contractor objections under certain circumstances. (I should point out that the meaning of the word proprietary is not entirely clear.)

18 USC § 1832 prohibits the disclosure of "trade secrets," which 18 USC 1839 defines as follows:

"[A]ll forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if -

(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public."

Now, what if an agency is evaluating proposals and the evaluation factors are "hardware cycle time" measured in cycles per second (cps) and price. The RFP specifies a minimum of 350 cps and indicates that the more cps that an offeror can provide the better the score that it will receive. The RFP advises offerors that the government intends to disclose each offeror's proposed cycle time and unit price to the others and that agreement to such disclosure is a condition of participating in the competition.

Two offerors submit proposals, Offeror A for 350 cycles per second at a price of $1,000,000 per unit, and Offeror B for 400 cycles per second at $1,500,000 per unit. The agency's tradeoff analysts decide that although both offers are acceptable, Offeror B's is the best value. However, the contracting officer decides to see if he can't negotiate a better value through discussions and includes both offerors in the competitive range. The RFP said that if the contracting officer decides to conduct discussions the government may conduct a reverse auction.

What's wrong with the CO saying to Offeror A: "Another offeror proposed 400 cps for $1.5 million per unit, which we consider to be a better value than your offer. Can you either (a) propose more than 350 cps at a price that is lower than $1.5 million, or (b) propose a lower price for 350 cps?"

The CO might say to Offeror B: "Another offeror has proposed 350 cps at $1,000,000. We consider your offer to be the better value, but we are negotiating with the other offeror to improve its proposal. You might want to consider that when you submit your final revised proposal and either (a) offer us more than 400 cps for $1.5 million or (b) offer us 400 cps for less than $1.5 million."

I consider this to be a type of reverse auction that is designed to work with a tradeoff process source selection. Anything wrong with this?

I am not interested in the opinions of those of you who think that any attempt to bargain for better terms in a source selection is wrong and that the award should go to Offeror B on principle and without discussions. I know that you don't like what I'm proposing, but we will always disagree. I am mainly interested in opinions of the workability of this technique as a variation of reverse auctions.

By Linda Koone on Monday, November 26, 2001 - 08:29 am:

Vern:

You missed one part of FAR 3.104(a)(1). It not only prohibits disclosure of contractor bid or proposal information, but also prohibits disclosure of source selection information, which is defined at FAR 3.104-3 as:

"Source selection information" means any of the following information which is prepared for use by a Federal agency for the purpose of evaluating a bid or proposal to enter into a Federal agency procurement contract, if that information has not been previously made available to the public or disclosed publicly:

(1) Bid prices submitted in response to a Federal agency invitation for bids, or lists of those bid prices before bid opening.

(2) Proposed costs or prices submitted in response to a Federal agency solicitation, or lists of those proposed costs or prices.

(3) Source selection plans.

(4) Technical evaluation plans.

(5) Technical evaluations of proposals.

(6) Cost or price evaluations of proposals.

(7) Competitive range determinations that identify proposals that have a reasonable chance of being selected for award of a contract.

(8) Rankings of bids, proposals, or competitors.

(9) Reports and evaluations of source selection panels, boards, or advisory councils.

(10) Other information marked as "Source Selection Information -- See FAR 3.104" based on a case-by-case determination by the head of the agency or designee, or the contracting officer, that its disclosure would jeopardize the integrity or successful completion of the Federal agency procurement to which the information relates.

[Seems FAR 3.104(a)(1)conflicts with FAR 15.306(e)(3) as far as disclosing prices]

While your technique would certainly be beneficial from the Government's standpoint, I don't think you could employ the technique without first obtaining some waivers/deviations or specific regulatory coverage authorizing the technique, particularly with respect to disclosure of source selection information.

By Vern Edwards on Monday, November 26, 2001 - 09:52 am:

Linda:

The Procurement Integrity Act prohibits the unauthorized release of source selection information. FAR 3.104-5(a) allows the agency head or designee and the contracting officer to authorize disclosure provided that it is otherwise legal to do so. See 41 U.S.C. 423(h)(1). The CO can release government evaluation information with the permission of the SSA and must get the permission of offerors to release bid and proposal information. I don't think any waivers or deviations are necessary, except as may be required by agency FAR Supps.

By Anonymous on Monday, November 26, 2001 - 10:54 am:

The codified or FAR defined restrictive release issues perhaps should be reviewed. I am sure there are such issues as discouraging even more firms from dealing with Federal contracting involved as well as some undue burdens on the agencies when almost everything is restricted. Of course any "reform" is unpredictable by the time it got through legislative horse trades. There is value in reviewing what practice changes can be made within the rules. In particular three of your comments point this way.

First, one might think the firms ordered preprinted "offer" paper with restrictive wording. I enjoyed one where such wording appeared on "This page left intentionally blank" sheets. There is no need and it does impose a burden on the agency as any information security has an associated cost. There is no need to add this burden to the extent commonly seen.

FAR 15.306(e)(2) wording is explicit and reasonable. If the intent had been simply to let firms determine any page, including "This page left intentionally blank" pages, is to be protected one might assume your parenthetical comment would be the wording. Instead it is directed to a reasonable limit. Wording in FAR 3.104-4(a)(1) appears to support a similar conclusion. FAR 3.104-5(d) appears to offer a seldom used remedy and is also supportive by recognizing firms may extend the practice outside intended bounds.

I agree, "Agencies should tell offerors to limit such markings to trade secrets, as defined in the Trade Secrets Act" and any other specific, positive inclusion statements in law or regulation. An interesting solution might be the RFP advisory you suggest in connection with the cycle time example widely extended to the offer in general. Perhaps a few returns as non responsive due to overzealous restrictions would set an example.

By Vern Edwards on Monday, November 26, 2001 - 11:45 am:

Anonymous:

I would not reject a proposal as nonresponsive due to restrictive markings. FAR allows offerors to place restrictive markings wherever they please.

I think that the release to offerors of more information about the relative differences among them would actually enhance competition. That is the kind of information which fosters product improvement and competition in commercial markets.

In the government market offerors have to compete in the dark. It seems to me that the more information they have--short of trade secrets--the more competitive the process will be and the better the value the government can get. We are already disclosing prices now, so why not disclose nonprice scores and the rationale for them as long as we protect trade secrets?

The Procurement Integrity Act was enacted to prevent unauthorized insider trading of bid and proposal and source selection information. It was not designed to prevent authorized disclosure to enhance competition.

By joel hoffman on Monday, November 26, 2001 - 02:10 pm:

Vern, I agree - if the solicitation for a reverse auction clearly states that the prices and/or technical rating of the competition will be released for competition purposes, the offerors have the choice to compete or not to compete. By competing, they are authorizing release of the information. The solicitiation would likely make it clear that participation means authorized release of the information. happy sails! joel

By anon2 on Monday, November 26, 2001 - 03:28 pm:

I am not sure that companies marketing to the government really want more competition. The point for most is to win, not be the best competitor. To some extent all the corporate talk about being the best competitor is form. Being a really good competitor with a loss record brings about a corporate search for a winner and job hunting for the former staff.

The real interest in competition lies almost exclusively on the government's side. It is up to the government to force play into competition. Policy to use the information described to improve competition must come from this side whether the companies like it or not. The suggestion to disqualify may be no more than an evil grin at an overkill thought. Some disincentive toward excessive marking is needed. What might it be?

By Mike Wolff on Wednesday, November 28, 2001 - 09:23 am:

Vern and Joel - just to make sure I'm understanding you both correctly: Would you both agree that we could put in an RFP that offeror's prices, in addition to past performance and technical scores, may be released to other offerors during negotiations (without identifying the offerors' names), and that by submitting an offer, they agree to this disclosure? I forsee that this may be very benficial in lieu of an electronic reverse auction, and may lend itself to more easily include best value determinations.

By Linda Koone on Wednesday, November 28, 2001 - 10:41 am:

Vern:

I agree that you could conduct a 'reverse auction' on a best value basis in the scenario you painted. (For some unknown reason, I always thought the contracting officer's authority to reveal source selection information was limited to unique situations where it was necessary to preserve integrity of the competition . . .)

It would work if you can get all parties to agree to play, which may not always be an easy thing to do.

Just out of curiosity, I'd like your opinion on several 'protest' scenarios that might arise when employing a technique as you suggested.

1) How about the one you initially suggested... that the process is unduly restrictive? CICA requires agencies to solicit offers in a manner designed to achieve full and open competion and permits use of restrictive conditions only to the extent necessary to satisfy agency needs. I'm sure an argument could be made that the method of soliciting offers is restrictive and that using a down-select procedure should bring about the same results without disclosing pricing and source selection information. In your opinion, do you think an agency could successfully argue that the requirement for an offeror to disclose pricing and source selection information is necessary to satisfy the agency's need?

2) Also, I would suspect that when you inform a competitor that its technical score is 'good' instead of 'excellent', you will have objections from the 'good' offeror. If a company believes that the evaluation of its non-price proposal is flawed, would it have to protest to GAO within 10 days of learning of its ranking, or could the protest wait until after award and debriefing, which may be later than 10 days from when it was informed of its ranking?

Just curious.

By Anon2U on Wednesday, November 28, 2001 - 11:17 pm:

On the subject of reverse auctions:

Our agency's senior management is pushing us to use a for-fee service called Fedbid.com to reverse auction as many orders as allowed by the complexity of the items. They believe we can reverse auction all commercial commodities up to $5M as simplified acqs on this web site. They would prefer that the majority of credit card micropurchases be posted on the website first and awarded to the winner because the website collects socio-economic data that can be then used to meet our goals.

The government does not pay the fee, the vendor pays a percentage if he wins the order. I have a couple of problems with this.
1. What advertising requirements are needed? Synopis on Fedbizopps (CBD) that this is how we will procure the item and all interested sources must register with the Fedbid.com to participate?

2. How can we "sole source" our reverse auction business to this one firm? Aren't there several of these auction for fee firms out there?

The website states they have several government contracts attorneys on staff and it complies 100% with the FAR.

Has anyone out there already faced this issue? What legal issues should we watch out for? Your input will be greatly appreciated.

By joel hoffman on Thursday, November 29, 2001 - 09:03 am:

Mike, yes, I believe that it would be 'possible', but for some of the reasons Linda mentioned, highly impractical, to release the relative technical positions during the on-going competitive negotiation. One need only to review the daily dose of protests, resulting from the disappointed offeror disagreeing with a lower technical, past performance or risk rating than the winner. I believe that the Government would spend most of its negotiation effort defending its on-going evaluation process.

I'd rather expend my discussion efforts concentrating on negotiating the weak, objectionable or otherwise deficient aspects of the offerors' proposals, not the Government's position. Too many government negotiators already let contractors turn the tables back on them, so they are negotiating the Government's position, rather than the proposal.

I also feel that those offeror's not making the first cut (competitive range) would take up too much of my time, making comparisons with those still in the range, questioning my judgement, while the process is still on-going.

I see no real point in releasing the prices, unless I'm in an auction effort. As demonstrated by those relating their experience in reverse auctions, there isn't any price movement until the last minute afforded to make revised bids. In the relatively slow process in a normal Part 15 competitive negotiation, I see no advantage in many situations in releasing the prices. It simply tips off the competition concerning the number of competitors, the spread, and other information that offerors could use to second guess the strategy necessary to win the competition.

I wouldn't want to tie down my options as a negotiator. happy sails! joel

By Vern Edwards on Thursday, November 29, 2001 - 09:07 am:

Linda:

I don't think that I could argue that disclosing pricing and other source selection information is necessary to satisfy an agency's need, any more than I could argue that any current procedure is necessary. We use the procedures we use -- oral presentations, benchmark tests, sample tasks -- because we are not prohibited from doing so and because we think they'll help us make a good decision, not because we think they're the only way to satisfy our requirement.

I think that an offeror could protest if it disagrees with the score that it has beem given. An offeror can protest anything.

I don't think that either of my answers is a reason not to try the technique if you think that it would increase the chance of getting best value.

By joel hoffman on Thursday, November 29, 2001 - 09:10 am:

Mike, let me add that the idea of posting all the relative technical ratings and price offers could result in levelling (not bad in itself) of the offers, without resulting in overall improvement of the better offers (the danger). In other words, the better offerors might have little incentive to improve, if they know they are leading the pack. Does that make sense? happy sails! joel

By Vern Edwards on Thursday, November 29, 2001 - 09:19 am:

Mike:

I would not release information about my assessment of any offeror's past performance to other offerors. Otherwise, I agree that you can say in an RFP that you plan to disclose all competitors' technical scores and prices during discussions in order to enable offerors in the competitive range to submit intelligent final proposal revisions. The RFP should make it clear that the Government will not disclose any offeror's trade secrets.

I do not agree with Joel that it is "highly impractical" to reveal offerors' relative technical positions during the competition. It is unorthodox, but so were oral presentations when we first started to do them in 1994. It seems that every time someone suggests an unorthodox idea someone else predicts protests. That's what happened when I started advocating replacing written technical proposals with oral presentations -- "Don't do it! We're going to get protests!" Well, it didn't happen; there have been very few protests about oral presentations.

By joel hoffman on Thursday, November 29, 2001 - 09:32 am:

Vern, I'd think it might be more "practical" to have the leverage to use the relative technical ratings in a fast moving auction, than in a slow moving conventional negotiated RFP. There might be some advantage to releasing technical ratings in a conventional competition. I simply don't see any, off hand, which would improve my bargaining position, if I were the negotiator. To me, past performance, is obviously not a topic to share. If past performance is a major factor, and I don't share it, why share only part of the comparative story? Ok, perhaps, I'm short sighted.

Can Mike or someone else please describe how they think that would be advantageous?

just my opinion. happy sails! joel

By Vern Edwards on Friday, November 30, 2001 - 05:27 am:

Joel:

The reason is this: an offeror cannot change its past performance the way it can change other things in its proposal. If Offeror's A's past performance is better than Offeror B's, Offeror B cannot change its past in order to make its proposal a better value. In general, if an offeror is at a disadvantage because of its past performance, it probably cannot improve its value by cutting its price. This makes past performance a different kind of evaluation factor than proposed product or service quality.

By Anonymous on Friday, November 30, 2001 - 07:46 pm:

Are you saying that humans cannot change the past?

By joel hoffman on Friday, November 30, 2001 - 09:37 pm:

Vern, I understand that past performance can't be changed. I agree that it shouldn't be publicized during the active discussion period. What I meant was why post technical ratings, since we aren't going to give them the entire "comparison" (price, technical, past performance, experience)? I don't see any useful purpose, although Mike or someone else might. How about your ideas, Mike? happy sails! joel

By Vern Edwards on Saturday, December 01, 2001 - 07:01 am:

Joel:

The only useful purpose is to help the offerors make more informed decisions about what to offer in their final proposal revisions!

The government isn't the only organization that has to make tradeoffs during a source selection; offerors have to make tradeoffs, too, when deciding what to offer. The more they know about where they stand in the eyes of the customer vis à vis their competitors, the more intelligently they can make their tradeoffs, even if they don't have all of the information about the government's evaluation, such as the evaluation of their competitors' past performance.

Marketing 101!

By Mike Wolff on Tuesday, December 04, 2001 - 08:47 am:

I don't think I'd want to give out past performance scores during negotiations, because, as mentioned in a previous post, since past performance cannot be changed, the offeror is not in a position to make a tradeoff in their "offered" past performance and their price. But I agree with Vern that if technical proposals are submitted, showing the offeror how they compare to others in relation to tech & price allows them to make tradeoffs in what they are offering. The caveat they face is that while they may be making tradeoffs during negotiations based on others offers, so are their competitors.