A design engineer provided me with a set of construction plans for several different wave breaking structures. All the designs for these structures were patented. The patent owners maintained the right to build these structures. Our engineer was very impressed with these designs. He wanted me to bid them out as a single demonstration project (3 different structures).

I presented this idea to our attorney. She told me that the Government could not use patented designs without first getting approval from the owner of the patent. I provided this information to the engineer and told him I would try to come up with a way to procure the structures without breaking any laws.

I conferred with others and decided that the best way to accomplish what the engineers wanted was to put out an RFP using a perfomance specifcation. I felt that an RFP would allow the patent owners to build their structures or allow contractors to obtain construction rights from the patent owners. I also thought an RFP would open up competition to other types of wave breaking structures that our engineers were unaware of.

The RFP said that an offeror could supply technical proposals for any number of wave breaking structures. Each proposed structure was to meet the standards of a performance specification that was included with the RFP. Each proposed structure or technical proposal would be rated on the factors provided in the RFP. Each technical proposal would stand on it's own. The RFP said the purpose of the project was for the Government to make comparisons of the effectiveness of different types of wave breaking structures.

I recieved two proposals from two different offerors. One of the proposals didn't meet the go/no-go evaluation criteria. With only one proposal received the purpose of the project couldn't be met, i.e., comparison of different structures. The RFP was cancelled.

My name is now mud with my engineering section because I couldn't come up with a method of getting the structures built that they wanted. I thought the use of the RFP would provide a means of allowing the patent owners and others in this industry to provide their products to the Government. I was wrong.

I would like to know what other courses of action I could have taken in this situation. Any opinion would be appreciated. Also, was the attorney right in her assessment of the Government's use of patented designs?

By joel hoffman on Wednesday, November 15, 2000 - 11:04 pm:

Anon, I think your attorney's name is mud. Assuming that your deisgn engineer KNOWS that there are only three product systems which can meet a bonafide need, there are ways to justify limiting competition to the three products, under FAR part 6, exceptions to free and open competition. Then you need to know how they market their products - self installation or licensed to contractors to install.

If the design engineer does not positively know, you could have conducted market surveys, requesting technical information from the prospective suppliers. Unless absolutely certain, I suppose you could have used performance specs and open up competition. That is usually safe. It probably would have been smart to contact the three patent holders to see if they were interested in participating in this solicitation. I would also ask details concerning how they sell their products - do they only install themselves or do they license installation to others? If only themselves, you would know that no price competion is available and that you will probably have to justify sole source negotiations with each supplier. If they license installation, I'd try to find out who their licensees are and let them know about the upcoming project. I'd try to find out the best way to write the scope of work to accommodate licensees (assure that the project is biddable and constructible). Great 20-20 hindsight, huh? Happy Sails! Joel

By Vern Edwards on Thursday, November 16, 2000 - 08:13 am:

Anonymous:

You say that your engineer was intrigued by a specific design and wanted to determine its effectiveness. I think that you could have justified a sole source acquisition for that purpose.

If your objective is to determine the effectiveness of a specific design, then it does not make sense to use a performance specification.

By Anonymous on Thursday, November 16, 2000 - 09:33 am:

The project was deemed a "demonstration" project. It was to test the effectiveness of new and innovative wave break structures. The three patent holders didn't license the installation of their structures, but did their own installation. They were all sent a copy of the RFP.

I never did any type of follow-up to determine why they did not submit proposals. The project site was isolated and extremely difficult to access. We required very small quantities (400 LF) of structure under the project. Those factors probably had a lot to do with the lack of interest.

Also, I conducted very limited market research. What I found led me to believe that there were numerous wave breaking structures and devices available on the market. Each such potential source was sent a RFP.

I would have loved to been able to justify limiting competition and going out for the patented designs. After I studied Subpart 6.302, however, I felt that since other such structures and devices were available it would be hard to justify limiting competition. Can one justify the use of one type of structure or design over another when others are apparently readily available? Also, can a K.O. limit competition solely on the basis of a design engineer wanting to test the effectiveness of certain structures and devices (especially after market research shows other capable structures and devices available on the market)?

This was new ground for me and I've always kept my distance from sole source situations. That in itself probably had a lot to do with my going out with a performance specification.

By Peggy Richter on Thursday, November 16, 2000 - 10:49 am:

It seems to me that you failed to listen to your engineer: "Our engineer was very impressed with these designs. He wanted me to bid them out as a single demonstration project (3 different structures)". That sounds like this should have been sole sourced as an RDT&E type project. If, as you decided, the intent was ACTUALLY to see what was out there, INCLUDING these patented items, then specifically inviting all sources to a preproposal conference might have enabled you to discover if there was a problem BEFORE the closing date of the RFP. If you conducted limited market research and felt there were numerous "wave breaking structures/devices" out there, did you discuss with your engineer WHY the patented ones were of particular interest? If not, you failed to communicate with that engineer in an effective manner. The first job of a contracting office is to determine WHAT, exactly, is the Government's need.
Presuming that the desire was to explore various designs, including the patented ones (which is not what you indicate the engineer said), then if you only got 2 responses, of which only one was technically adequate, you could still have awarded the remaining proposal and evaluated it. This wouldn't have been as desirable as receiving 10+ proposals all of which were acceptable, but it still would have resulted in being able to evaluate the technical approach of the winner. If the goal was to actually evaluate the SPECIFIC usefulness of the patented designs, yes, IMO, you made a mistake in not going sole source to investigate THOSE specific designs.

By Eric Ottinger on Thursday, November 16, 2000 - 12:14 pm:

We have a very successful SBIR (Small Business Innovative Research) program for this kind of purpose.

Before CICA, government engineers had considerable freedom to initiate small sole source contracts in circumstance like the Anon described. Many valuable large oaks grew from these little acorns. The SBIR program was instituted to reopen a door, which CICA had closed.

This may offend some of our purists. If I were Anon (and I couldn’t go the SBIR route), I would compete an advisory and assistance contract to study recent developments in wave breaking technology. After I had rounded up the usual suspects and selected a contractor to do the study, I would have given the “consultant” contractor a free hand to identify the most promising technologies, then to select subcontractors, do demonstration projects and write up the results.

My underlying assumptions—

-- The demonstration projects may not be the key issue. The process of analyzing the data, evaluating, writing up the report, and publicizing the results may be more important in the long run.
-- I am not unduly impressed with “big name” firms. However, they have their uses, particularly when you need an imprimatur to sell a new idea.
-- Anon’s engineer may be the world’s greatest authority on wave breaking technology. But it wouldn’t hurt to find the other world’s greatest authority on wave breaking to help out.
-- The genius inventor may be more comfortable contracting on commercial terms with a prime contractor and less comfortable contracting directly with the government.

I see Joel’s point but I am not sure that I could justify a sole source simply because the offeror has a patent or my engineer has an opinion. Many patents are trivial.

By the way, I’m not sure that Anon did anything particularly wrong. All we really know is that he didn’t get the result that he intended. My guess is that the typical genius inventor becomes very cautious and suspicious when you offer him a Government contract with a lot of strange terms and conditions.

If I were Anon, I would say that it is simply a good time to regroup and try again. I would call up each of the three patent holders and ask them why they didn’t participate. I expect the answers are going to be, 1) the government contracting process is too confusing for them and 2) they didn’t think the likely pay-off would be enough to justify the effort. Then I would do some strategizing to figure out how to overcome these obstacles.

Eric

By Anonymous on Thursday, November 16, 2000 - 02:37 pm:

Lengthy discussions were held with the design engineer, with several of our engineers for that matter. The engineers main objective was to find something that would work other than a rock structure. Through my limited market research I found at least 25 firms that dealt exclusively with wave breaking structures and/or devices, almost all of them were not located in close proximity to the project site. With that many known sources I felt confident that we would get good competition. I was wrong.

Also, I was taught that sole source procurements are the least preferred and last resort. Least preferred in that if there is any way you can do it competitively, you do it. Last resort in that if you've exhausted all your options for obtaining competition, you cautiously proceed with sole source. Sole source procurement is therefore foreign to me.

Question: If I would have gone sole source, what exactly would have been my authority to go with other than full and open competition (from 6.302)? I am unfamiliar with RDT&E project types.

I will attempt to look at things differently in the future.

By Eric Ottinger on Thursday, November 16, 2000 - 04:48 pm:

Anon,

There is a distinction (largely lost) between “sole source” and “single source.” A sole source is absolutely the only individual or firm that can provide a product or service.

You need to get in touch with each of these 25 and find out whether the firm has any interest in selling to the Government. If the answer is “No” you should find out why.

Getting back to Small Business Innovative Research-- Although private side funding is not an absolute requirement for our SBIR contractors, it is a big selection factor. Typically, we plant the seed with an initial development contract. The contractor finds venture capital funding and a commercial market, and further develops the technology. Then, somewhere down the road, BMDO incorporates the technology with a great improvement in performance or savings in cost. Successful technologies usually benefit from this kind of Government/commercial market synergy.

I think you need to do more market research. Specifically, you need to ask what your 25 potential sources are doing in other markets. If there is a commercial market for this kind of product, why don’t you leverage off of the commercial market? You may find that your demonstrations have already been accomplished for other customers.

Generally, I sense that you have some reluctance to communicate directly with these 25 potential offerors. You shouldn’t. If before the first competition you had called each of these guys up and sold them on the idea that you really want to do a competition and promote this new technology, you might have received more offers.

Firms tend to interpret a “cold fish” or standoffish attitude on the Government’s part as an indication that the Government isn’t really interested or doesn’t really want competition. This is perfectly rational from their point of view.

Eric

By Peggy Richter on Friday, November 17, 2000 - 10:55 am:

"lengthy discussions were held with the design engineer, with several of our engineers for that matter. The engineers main objective was to find something that would work other than a rock structure. Through my limited market research I found at least 25 firms that dealt exclusively with wave breaking structures and/or devices"

Question: of those 25, how many dealt with other than rock structures? If you didn't know, that was a problem. Of those 25, how many had ever dealt with the Government previously? If it was only a small number, this may have indicated to you that some special encouragement to start dealing with the Government was in order.

And again, you in fact DID get competition - you got 2 proposals, of which one was apparently acceptable. Under FAR regulations, that is a competitive buy (the bidder who won is presumed to have bid in a competitive environment, since they presumably do not know that their only competition is not going to be technically acceptable). So you could easily have awarded to the technically acceptable responder. I am somewhat mystified as to why you did not and can well understand the technical engineer's point of view on it.

By Vern Edwards on Friday, November 17, 2000 - 03:07 pm:

Anonymous:

You have told two very different stories here. Your first story was that your engineer wanted to test particular designs:

"A design engineer provided me with a set of construction plans for several different wave breaking structures. All the designs for these structures were patented. The patent owners maintained the right to build these structures. Our engineer was very impressed with these designs. He wanted me to bid them out as a single demonstration project (3 different structures)."

Your second story appears to be that your engineer was interested in testing any design that was not a rock structure:

"The engineers main objective was to find something that would work other than a rock structure."

Your two stories describe two very different acquisition objectives, for which different acquisition strategies would have been appropriate. Which of your two stories describes what really happened?

By Anonymous on Monday, November 20, 2000 - 09:13 am:

Both.

The engineer was interested in testing any non-traditional structure (traditional being rock)and was also very interested to three of them in particular. He had knowledge of many such structures/devices and if not for limited funding would have wanted to test a lot more than just the three he happen to choose. The engineer happened to choose the three that, in his opinion, would give the test more bang for it's buck.

In my opinion, I couldn't go sole source, knowing that there were other non-traditional structures/devices in existence that could meet the main objective of the project.

And Peggy...all 25 were non-traditional structures/devices; I didn't check if any had done prior Government work; yes, I did get "competition", but not "good competition"; and award to a single offeror would have defeated the purpose of the project, i.e., to compare the effectiveness of different structures.

Could someone explain to me what 6.302 says about competition when more than one offeror exists. I think I'm confused.

By Anonymous on Monday, November 20, 2000 - 09:49 am:

Make that, explain to me how to make a sole source award when it is known that more than one source is able to provide the services.

By Vern Edwards on Monday, November 20, 2000 - 10:52 am:

Anonymous:

All I can say is that the you and your engineer needed to determine the objectives and scope of the acquisition and then select an appropriate acquisition strategy.

Apparently, several firms owned designs of interest but were unwilling to let other firms build wave breakers based on their designs. You therefore would either have had to (a) contract with each of them on a sole source basis or (b) hire a contractor to conduct the demonstrations under subcontracts with the designers. I don't know which approach would have been more appropriate under the circumstances.

Your strategy may have failed to elicit more than two proposals because your RFP did not make your intentions clear.

Did the RFP say that you planned to make a single award or multiple awards?

If the RFP said that you planned to make a single award, did the S.O.W. say that you wanted the contractor to enter into subcontracts with several firms in order to test their designs?

Before you released the RFP, did you communicate with the top level management of each of the several design firms to explain your objectives and strategy and secure their cooperation?

By Peggy Richter on Monday, November 20, 2000 - 11:09 am:

You are confusing the full and open competition requirements with the RESPONSES from contractors.
FAR 6.003 -- Definitions."Full and open competition," when used with respect to a contract action, means that all responsible sources are permitted to compete. -- if you in fact did that, YOU HAD FULL AND OPEN COMPETITION. What you did not get was the expected # of responses.
You have stated that the engineer was particularly interested in testing a patented design. You opted not to go sole source and attempt to obtain these directly, which could have clearly been possible. You apparently determined that this wasn't really what the engineer wanted - that they wanted to explore multiple non traditional methods and you issued a Full and open solicitation for that and having GOTTEN a responsive responsible proposal, decided that this was not good enough, because you didn't get multiple responses. You weren't REQUIRED to obtain multiple responses. You are required to make a good faith effort to obtain multiple responses via a full and open solicitation. The FAR does not require you to obtain them. The engineer could easily have evaluated the one acceptable response you recieved.
Both FAR part 14 and part 15 address, if indirectly, how you handle a single acceptable response once you have complied with part 6.


14.404-1 -- Cancellation of Invitations After Opening.(a) (1) Preservation of the integrity of the competitive bid system dictates that, after bids have been opened, award must be made to that responsible bidder who submitted the lowest responsive bid, unless there is a compelling reason to reject all bids and cancel the invitation.-- the wording of this section clearly allows you to award to the acceptable source even if you only receive 2 bids, only one of which is acceptable. Same for section 15 which deals with RFPs:
15.403 -- Obtaining Cost or Pricing Data. (A) Based on the offer received, the contracting officer can reasonably conclude that the offer was submitted with the expectation of competition,
e.g., circumstances indicate that --

(1) The offeror believed that at least one other offeror was capable of submitting a meaningful offer; and

(2) The offeror had no reason to believe that other potential offerors did not intend to submit an offer; and

By Anonymous on Monday, November 20, 2000 - 12:09 pm:

RFP said Government intended to make multiple awards (up to four awards for varying structures/devices could be made). There was no conversation between the Government and any of the firms, with the exception of sending out an RFP for them to consider. I've learned through this "chat" that communications between the Government and potential sources are very important, especially when the potential sources have never been involved with Federal contracts. In such cases, the K.O. should, among other things, do a thorough job of market research, communicate needs of Government with potential sources, and carefully listen to concerns of potential sources. K.O. should also do a good job of listening to his/her design engineer in order to best determine the exact needs of the Government and address these needs to the potential sources.

Sounds like a lot of work for such a small project.

By Eric Ottinger on Monday, November 20, 2000 - 12:30 pm:

Anon,

I drafted the following before your latest. I can see that we are getting through, so forgive some redundancy.

The project is small, but it may have some very large long term consequences. You have the opportunity to help make some fundamental changes in the way things are done in this particular field.

The requirement to compete isn’t a preference. It is an imperative.

I agree with my colleagues. (It is kind of nice that we are all saying essentially the same thing.) I have only a somewhat different emphasis.

I can’t really blame your engineer for having a clear idea about what he wants. However, if the other twenty-two already know that he has more or less preselected three out of the twnty-five, you shouldn’t be surprised that none of the other twenty-two chose to participate. Two of the three may have looked at this and decided that there wasn’t enough in it for them to make it worth their while. And there you are, with one offeror.

You should always assume that in a small, specialized community of experts, the grapevine is going to work really well. Accordingly, be very careful what signals you send. (Keep in mind that bureaucratic passivity, defensiveness and standoffishness are also signals.)

However, if your engineer has done his research, there may be some “got to have” selection factors which legitimately narrow the field to three offerors. You may have the basis for a solid J&A, but you need to do your homework.

If you do another competition, you need to put the selection process in the hands of someone who clearly doesn’t have any preconceived ideas. And you need to talk to the potential offerors and find out what the world looks like from their point of view.

You haven’t really done anything terribly wrong. I think some of criticism is overstated. However, you are doing a good job of illustrating the difference between the old defensive, “go through the right bureaucratic motions” paradigm and the new “think like a businessman” paradigm. In the new paradigm you “add value” by knowing the market (i.e. communicating with those potential offerors), strategizing, and getting a good result for your customer. It is necessary that you do all of this within the rules, but that isn’t where you earn your pay.

Vern is right that you should be talking directly to the top people in these twenty-five firms. I don’t think this would be apparent to most working contract specialists, who have been trained to do everything in writing (staffed and approved), and to be intimidated by real and imagined issues of bureaucratic protocol.

You need to do your market research. You need to find out what the world looks like from the point of view of you potential offereors. Then you need to shape a strategy based on what you find out.

I really think you are doing all right. However, if you don’t get on the phone with some of these folks before you come back to this forum, I shall write you off as hopeless and unteachable.

Tell us what you find out (being careful to omit anything “business sensitive” or “acquisition sensitive,” of course.)

Eric

By Anonymous on Monday, November 20, 2000 - 02:43 pm:

The actions described aren't recent. They occurred some time ago. Unless the action resurfaces I won't make any calls to the entities I identified as possible sources.

When the engineers learned that none of their sources (the three sources whose structures they were very interested in) submitted proposals and that the proposals submitted were not really desirable, they happily decided to go back to a traditional rock structure.

As I originally stated in my first message I was trying to get information on possible alternate courses of action. I believe I have received a lot of useful information on the subject.

There is still one thing I don't understand. What would have given me the authority to award non-competitive contracts to the original three sources provided by the design engineer. To put the question another way, what circumstance described in Subpart 6.302 applies here? I just can't figure that one out.

Hopeless and Unteachable

By Eric Ottinger on Monday, November 20, 2000 - 04:16 pm:

Anon,

FAR 6.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements.
(a) Authority. (1) Citations: 10 U.S.C. 2304(c)(1) or 41 U.S.C. 253(c)(1).

(2) "When the supplies or services required by the agency are available from only one responsible source, or, for DoD, NASA, and the Coast Guard, from only one or a limited number of responsible sources, and no other type of supplies or services will satisfy agency requirements, full and open competition need not be provided for."

If you are DoD, NASA, or the Coast Guard, you write one J&A. Otherwise, I would write three separate sole source, J&As. 1) The supplies and services required are only available from one source. (Only one source owns the patent.) And, 2) no other type of supplies or services will satisfy agency requirements (which are to have three demonstration projects and compare them).

I would talk to enough people to make sure this is the truth. Then I would advertise my intentions in the CBD to give the other potential offerors an opportunity to object, if they should choose to do so.

There are two aspects. 1) Is this only available from one source, and 2) does this uniquely satisfy your agency’s requirement. If you take each in turn, I think you can get a viable answer.

Your agency’s unique need is three approaches to do a demonstration, and each of the three is only available from the owner of the patent.

I commend your good sense of humor.

Eric

By Ramon Jackson on Tuesday, November 21, 2000 - 08:53 am:

It appears to me that everyone became confused on the purpose of the exercise. The demonstration aspect, "He wanted me to bid them out as a single demonstration project (3 different structures)" would seem to support sole source for the explicit items to be demonstrated. I believe specific test articles are obtained routinely for such evaluations.

The effort probably should have been put into justifying the limit on items to be demonstrated as a reasonable scope limitation. Why three and not four? why these designs? I would think a combination of straightforward engineering and budget parameters could provide reasonable justification for picking a limited set of commercially available evaluation subjects to be obtained for that explicit purpose through sole source. It takes work, but most worthwhile results take work.

A more interesting approach warrants discussion (I suggest a different thread). Under what conditions and rules can the government state it has a future requirement for a commercial product along with a call for interested parties to participate in demonstration and tests without direct government funding for acquisition of test items.

I am thinking explicitly of a situation in which government would fund independent analysis of an installed base or perhaps even the developer's own test subjects in with the cooperation of the developer, but other situations might be applicable.