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Clarifications vs Discussions
By GeneJ on Friday, May 09, 2003 - 12:34 pm:

Hi All

This is not a real question; yet, so any brainstorming is welcomed.

We were talking what-if scenarios in our evaluation. The question is if an offeror replaces a subcontractor after proposals are due how much information can we get before crossing into discussions.

The puzzle to me is can you look at the response before you decide it was discussions or not. For example if you ask what the impact of this replacement of subcontractors is and they reply "there will be no impact to cost, schedule, or performance." If they did say that, there is no question that they had an opportunity to alter their proposal, but they didn't avail themselves of it. Is it still discussions? Literal minded among us think it clearly is.

On the other hand they say our costs will go up by 1.5% and performance drasticly increases it clearly would be discussions.

With the rapid changes in telecom and software business status, potential bidders buying vendors and vendors going bankrupt this is more than theoretical. Obviously this is only important if you think you could award without discussions, which we always plan on but never do. So for the sake of this argument assume we want to award without discussions.

GeneJ


By formerfed on Friday, May 09, 2003 - 01:22 pm:

Gene,

That's a tough question to answer with the detail you provided. I'm assuming this is a best value (tech/price tradeoff) source selection as most are. How much that subcontractor impacts the merits of the proposal is key. If it does, you might want more than clarifications from the prime. Consequently I think discussions are needed.

On the other hand, if the sub just provides some mundane task or supplies some common components that are readily available from many others, I think a good case for getting by without discussions.

The way I like to look at things like this is the offeror is making promises to you in their proposal. Will a change involve changing the nature of those promises or the risk of them delivering on them. If so, you need to discuss.


By Eric Ottinger on Friday, May 09, 2003 - 01:30 pm:

GeneJ,

My take – strictly thinking out loud – if you want to award without discussions you have to evaluate the proposal as it stood at the time that it was submitted. The new information regarding the change in the subcontractor has to be evaluated as a risk.

Discussions are defined as that which allows the offeror to change his proposal. Once you start talking about the new subcontractor with the offeror you have effectively allowed the offeror to change his proposal.

Regards,

Eric


By Anonymous on Friday, May 09, 2003 - 04:13 pm:

The first question to address is whether or not the offeror is allowed to revise its proposal after the due date, without discussions and the opportunity for the others to revise their proposals.

I'm taking a wild guess here that the instant offeror is the otherwise successful offeror and that the clarification is intended to ensure that the revision doesn't compromise the terms of the offer or reduce the relative advantages of the offer with respect to the others (i.e, it does not lessen the value to the Government). In that case, I'd not further publicize it here and consider it a clarification, if it does not reduce the value of the original offer.


By GeneJ on Monday, May 12, 2003 - 12:28 pm:

Hi

I'm just planning for a possible risk with this thread as we've not even released the RFP yet.

However, most everyone I've talked to agrees with Eric:
"My take – strictly thinking out loud – if you want to award without discussions you have to evaluate the proposal as it stood at the time that it was submitted. The new information regarding the change in the subcontractor has to be evaluated as a risk".

Assuming the subcontractor is more than a supplier of non-complex parts or services, this approach does not seem supportable to me. If the presence (or absence) of the sub-contractor on the team makes a difference to the evaluation of strengths and weaknesses can I realy ignore that the offeror's approach has changed and go to award anyway? It seems that conducting unequal discussions is one of the most common ways to loose a protest so not allowing any proposal revisions until discussions does seem reasonable. Mind you I have not found any discussion on this elsewhere so I'm working fact free here.

Assuming the Prime contractor was otherwise competitive wouldn't I be forced into discussions as I think we'd be unable to award to any of the offerors?

GeneJ


By Vern Edwards on Monday, May 12, 2003 - 01:02 pm:

GeneJ:

Did the offeror literally propose, i.e., promise to use a particular subcontractor? If so, and if the offeror is now telling you that it is not going to use that subcontractor after all, then the offeror has revised its proposal whether you like it or not. You cannot award to that offeror without discussions in that case, because the original offer is no longer on the table.

On the other hand, if the offeror merely informed you of its intent to use a particular subcontractor, but did not make a binding promise to do so, you have a different problem.


By Eric Ottinger on Wednesday, May 14, 2003 - 12:25 pm:

GeneJ,

I haven’t found a case where a subcontractor departed after receipt of proposals. However, in the following case a key person leaves, the evaluators take this into account and proceed to award without discussions.

Veda Incorporated, Comptroller General Decision , No. B-278516.2, March 19, 1998

2. “Protest that the awardee materially misrepresented the availability of 1 of its 45 proposed key personnel, who left after the proposal was submitted, is denied, where the agency was aware of the individual's unavailability and the offer of this individual had minimal impact on the agency's evaluation of proposals and source selection.”

Knowing Vern, I expected that he would raise the question of what is the binding “promise” and what is not. In most situations, I would assume that a prime can substitute a different subcontractor (before or after award) without breaking the binding “promise.” However, I agree that this is a good question to raise with your smart lawyer.

By “risk” I meant that the probablity of not performing 100% suceessfully would almost certainly increase, but the impact might be very small and the evaluators may still be able to determine that the offer was the best value choice without discussions. The proposal is not revised but there should be an impact on the evaluators ratings. I didn’t mean to suggest that nothing changes, or that the evaluators can simply ignore the departure of the subcontractor.

Eric


By GeneJ on Thursday, May 15, 2003 - 12:25 pm:

Hi

Thanks for all the help. Treating a change/ deletion of a subcontractor like key personnel makes sense to me. I have no doubt we will end up in discussions, but we need to identify all of the “risks” that may lead us there. It seems like the only modification to the old acquisition procedures that people understand is to award without discussions. I don’t know when or how discussions became such a bad thing.

Where I was off track was thinking that if an offeror changed their proposal for a valid reason (e.g. bankruptcy of a critical subcontractor) that I would automatically need to open discussions even if I wanted to award to someone else. I think I’m convinced now I was being too considerate (ok everyone called me nuts). I’ve never even worked around the issue of a late proposal before, and I was surprised at the firm attitude that some people have.

Especially as we move towards more oral proposals I hope that we get to a point where we can discuss offer and proposal language and not get blank looks in return.

GeneJ


By Vern Edwards on Thursday, May 15, 2003 - 02:02 pm:

GeneJ:

It seems to me that you may be drawing too many conclusions too quickly.

I am going to assume that your proposal preparation instructions told offerors that they must identify their "proposed subcontractors" and that you are going to evaluate them on that basis.

The question that must be answered is whether or not a change in a "proposed subcontractor" after proposal submission constitutes a proposal revision as defined in FAR § 15.001. If it does, and if you evaluate the proposal as revised, then you will have conducted discussions and cannot then award without discussions.

If an offeror has notified you that it has revised its proposal by changing a "proposed subcontractor," then you cannot evaluate the proposal as originally submitted (i.e., based on the original subcontractor) and you cannot award to that offeror without discussions on the basis of the revised proposal. If you don't want to conduct discussions you can tell the offeror that you will not accept the revision and that it may either compete on the basis of its original proposal or withdraw from the competition.

The Veda decision cited by Eric does not stand for the proposition that a change in subcontractors does not constitute a proposal revision.


By Eric Ottinger on Thursday, May 15, 2003 - 02:59 pm:

GeneJ and Vern,

Veda is fundmentally different from the situation Vern posits. Veda did not notify the Navy that Dr. Hill had left. However, all parties seeem to have been aware of this fact. A parallel situation would be one where the subcontractor goes out of business and all parties read this in the newspaper, but the offeror does not explicitly notify the agency.

“Veda also protests that RCI improperly failed to inform the Navy that Dr. Hill would not be available as one of its project managers as RCI had proposed. The Navy and RCI respond that Dr. Hill did not leave the employ of RCI’s subcontractor until after the submission of proposals and that, because award was made without discussions, RCI had no opportunity to change its proposed personnel. The Navy notes that, in any event, it knew during the evaluation of technical proposals that Dr. Hill had changed employers and may not be available to be assigned to tasks under the contract. The Navy also says that Dr. Hill, as only 1 of 45 key personnel proposed by RCI, was not significant in the agency’s evaluation of RCI’s proposal under the personnel qualifications factor.”

Veda clearly does stand for the proposition that a change in key personnel may not constitute a proposal revision.

A subcontractor may be equally insignificant.

Eric


By jerry on Thursday, May 15, 2003 - 03:07 pm:

FAR 15.306(b)(2) also talks about comunications with offerors before the establishment of the competitive range. Since, under the "what if" scenario, award without discussions is being considered, there is no need to establish a competitive range (15.306(c). Thus, the issue is: Does the change in the subcontractor "materially alter the technical or cost elements of the proposal." If it does not, then, if I understand the FAR, couldn't the contracting officer communicate with the offeror to "facilitate the Government's evaluation process?"


By Eric Ottinger on Thursday, May 15, 2003 - 03:59 pm:

Jerry,

Asking a question which leads the offeror to revise his/her proposal is, by defintion, discussions. I don't see any way the agency can ask the question without getting into discussions.

If the agency wants to award without discussions the agency must first determine that the impact is less than significant (see Veda), and second determine that the potential impact is not such that it would swing the selection from one offeror to the other.

Eric


By jerry on Thursday, May 15, 2003 - 04:32 pm:

Eric,
I agree. The only thing I was saying is that, as long as the communication is for the purpose of facilitating the government's understanding of the proposal, including the impact a change in subcontractors would have, and the offeror is not allowed to change its proposal, the communication does not fall under the definition of discussions.

Which is what I understand Veda says. No?


By Eric Ottinger on Thursday, May 15, 2003 - 04:46 pm:

Jerry,

On this I agree with Vern. If the subcontractors change, the proposal has been revised.

The only way to stick to the "award without discussion" plan is to determine that it doesn't matter very much who the subcontractor is going to be.

Keep in mind that we don't have privity of contract with the subcontractor and primes don't automatically default just because a subcontractor goes under.

Eric


By Vern Edwards on Thursday, May 15, 2003 - 05:49 pm:

The issues that this discussion raises are the reasons for, and potential consequences of, requiring offerors to "propose" subcontractors.

What does it mean to "propose" a subcontractor? Does "propose" mean "promise"? Would such a proposal be binding upon contract award? If the government awards a contract based upon a proposal that identifies a specific "proposed" subcontractor, would it be breach of contract for the contractor to hire a different firm to do the subcontract work? If an offeror "proposes" a subcontractor and then notifies the government that it is changing the subcontractor, is that a "proposal revision"?

Would it be different if the government asked for a list of "prospective" subcontractors, instead of "proposed" subcontractors, and made it clear in the RFP that the reason for requesting the information was not to obtain the offeror's promise to use specific firms, but to make a risk assessment?

Is it necessary to ask offerors to identify prospective subcontractors in their proposals and to evaluate those subcontractors? If the offeror has a good record of past performance, doesn't that mean that it's doing a good job of selecting and managing subs? Why bother to evaluate subs that the prime is not obligated to use? If the offeror is hoping to get a good past performance evaluation based on a subcontractor's record, shouldn't the government obtain the contractor's binding promise to use that sub?

If it's essential to evaluate prospective subcontractors in order to perform the risk analysis that Eric mentioned, could the government ask for information about subcontractors after the proposal closing date and not as a part of the proposal? Would such a request constitute "discussions," as described in FAR § 15.306(d)?

Just some things to think about and discuss.


By joel hoffman on Thursday, May 15, 2003 - 07:23 pm:

In construction or design-build (D-B) contracts, it is useful and important to evaluate the capabilities, experience and past performance of the proposed team. The team includes the prime and critical trades, whether to be self-performed or subcontracted. The Government defines those trades considered critical in the RFP. We also evaluate the proposed designer for D-B.

The prime often self-performs only the minimum amount of work allowed (ranges from 10-20%). Guess what... A significant degree of the success of the team will depend upon the performance of the critical subs (as well as the designer). Most primes, including the biggest construction firms in the world, can't always directly control or manage the success of their critical subs.

We include a clause entitled "Key Personnel, Subcontractors and Outside Consultants" to attempt to manage proposed substitutions after award. I described that clause and how we use it in another current thread.

We evaluate proposals using a couple alternative approaches. In one approach, the prime must commit to and identify the actual critical subs to be used.

In another approach, we allow the prime to identify a list of potential subs and submit the information on each. In that case, we evaluate all and rate each factor based on what we consider to be the weakest firm.

If discussions are conducted, the offerors may revise their proposals. If discussions have not convened, the late proposals, modifications or revisions provisions of 52.215-1 -- Instructions to Offerors -- Competitive Acquisition will govern.
The premise that "If the offeror has a good record of past performance, doesn't that mean that it's doing a good job of selecting and managing subs?" is too general an assertion in my opinion and experience. I've seen the "A-team", as well as the "B- team" from the same prime, with corresponding results. Few design or construction firms have consistently stellar performance records. The majority don't. That's why we have to evaluate the field. happy sails! joel hoffman


By Vern Edwards on Friday, May 16, 2003 - 12:10 am:

Joel:

"In one approach, the prime must commit to and identify the actual critical subs to be used."

When you say that the prime "must commit to and identify" the actual subs to be used, do you mean that the government's position is that the prime must promise to use those subs and only those subs and is contractually obligated to do so upon award?

Vern


By joel hoffman on Friday, May 16, 2003 - 09:47 pm:

yup. happy sails! joel

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